[DOCID: f:h2015rh.txt]
Union Calendar No. 89
105th CONGRESS
1st Session
H. R. 2015
[Report No. 105-149]
_______________________________________________________________________
A BILL
To provide for reconciliation pursuant to subsections (b)(1) and (c) of
section 105 of the concurrent resolution on the budget for fiscal year
1998.
_______________________________________________________________________
June 24, 1997
Reported from the Committee on the Budget; committed to the Committee
of the Whole House on the State of the Union and ordered to be printed
105th CONGRESS
1st Session
H. R. 2015
[Report No. 105-149]
To provide for reconciliation pursuant to subsections (b)(1) and (c) of
section 105 of the concurrent resolution on the budget for fiscal year
1998.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 24, 1997
Mr. Kasich from the Committee on the Budget, reported the following
bill; which was committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______________________________________________________________________
A BILL
To provide for reconciliation pursuant to subsections (b)(1) and (c) of
section 105 of the concurrent resolution on the budget for fiscal year
1998.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Balanced Budget Act of 1997''.
SEC. 2. TABLE OF CONTENTS.
Title I--Committee on Agriculture.
Title II--Committee on Banking and Financial Services.
Title III--Committee on Commerce--Nonmedicare.
Title IV--Committee on Commerce--Medicare.
Title V--Committee on Education and the Workforce.
Tittle VI--Committee on Government Reform and Oversight.
Title VII--Committee on Transportation and Infrastructure.
Title VIII--Committee on Veterans' Affairs.
Title IX--Committee on Ways and Means--Nonmedicare.
Title X--Committee on Ways and Means--Medicare.
TITLE I--COMMITTEE ON AGRICULTURE
SEC. 1001. EXEMPTION.
Section 6(o) of the Food Stamp Act of 1977 (7 U.S.C. 2015(o)) is
amended--
(1) in paragraph (2)(D), by striking ``or (5)'' and
inserting ``(5), or (6)'';
(2) by redesignating paragraphs (5) and (6) as paragraphs
(6) and (7), respectively; and
(3) by inserting after paragraph (4) the following new
paragraph:
``(5) 15-percent exemption.--
``(A) Definitions.--In this paragraph:
``(i) Caseload.--The term `caseload' means
the average monthly number of individuals
receiving food stamps during the 12-month
period ending the preceding June 30.
``(ii) Covered individual.--The term
`covered individual' means a food stamp
recipient, or an individual denied eligibility
for food stamp benefits solely due to paragraph
(2), who--
``(I) is not eligible for an
exception under paragraph (3);
``(II) does not reside in an area
covered by a waiver granted under
paragraph (4);
``(III) is not complying with
subparagraph (A), (B), or (C) of
paragraph (2);
``(IV) is not in the first 3 months
of eligibility under paragraph (2); and
``(V) is not receiving benefits
under paragraph (6).
``(B) General rule.--Subject to subparagraphs (C)
through (F), a State agency may provide an exemption
from the requirements of paragraph (2) for covered
individuals.
``(C) Fiscal year 1998.--Subject to subparagraph
(E), for fiscal year 1998, a State agency may provide a
number of exemptions such that the average monthly
number of the exemptions in effect during the fiscal
year does not exceed 15 percent of the number of
covered individuals in the State in fiscal year 1998,
as estimated by the Secretary, based on the survey
conducted to carry out section 16(c) for fiscal year
1996 and such other factors as the Secretary considers
appropriate due to the timing and limitations of the
survey.
``(D) Subsequent fiscal years.--Subject to
subparagraphs (E) and (F), for fiscal year 1999 and
each subsequent fiscal year, a State agency may provide
a number of exemptions such that the average monthly
number of the exemptions in effect during the fiscal
year does not exceed 15 percent of the number of
covered individuals in the State, as estimated by the
Secretary under subparagraph (C), adjusted by the
Secretary to reflect changes in the State's caseload
and the Secretary's estimate of changes in the
proportion of food stamp recipients covered by waivers
granted under paragraph (4).
``(E) Caseload adjustments.--The Secretary shall
adjust the number of individuals estimated for a State
under subparagraph (C) or (D) during a fiscal year if
the number of food stamp recipients in the State varies
by a significant number from the caseload, as
determined by the Secretary.
``(F) Exemption adjustments.--During fiscal year
1999 and each subsequent fiscal year, the Secretary
shall increase or decrease the number of individuals
who may be granted an exemption by a State agency to
the extent that the average monthly number of
exemptions in effect in the State for the preceding
fiscal year is greater or less than the average monthly
number of exemptions estimated for the State agency
during such preceding fiscal year.
``(G) Reporting requirement.--A State agency shall
submit such reports to the Secretary as the Secretary
determines are necessary to ensure compliance with this
paragraph.''.
SEC. 1002. ADDITIONAL FUNDING FOR EMPLOYMENT AND TRAINING.
(a) In General.--Section 16(h) of the Food Stamp Act of 1977 (7
U.S.C. 2025(h)) is amended--
(1) by striking paragraph (1) and inserting the following
new paragraph:
``(1) In general.--
``(A) Amounts.--To carry out employment and
training programs, the Secretary shall reserve for
allocation to State agencies, to remain available until
expended, from funds made available for each fiscal
year under section 18(a)(1) the amount of--
``(i) for fiscal year 1996, $75,000,000;
``(ii) for fiscal year 1997, $79,000,000;
``(iii) for fiscal year 1998, $221,000,000;
``(iv) for fiscal year 1999, $224,000,000;
``(v) for fiscal year 2000, $226,000,000;
``(vi) for fiscal year 2001, $228,000,000;
and
``(vii) for fiscal year 2002, $210,000,000.
``(B) Limitations.--The Secretary shall ensure
that--
``(i) the funds provided in this
subparagraph shall not be used for food stamp
recipients who receive benefits under a State
program funded under part A of title IV of the
Social Security Act (42 U.S.C. 601 et seq.);
and
``(ii) not less than 75 percent of the
funds provided in this subparagraph shall be
used by a State agency for the employment and
training of food stamp recipients not excepted
by section 6(o)(3).
``(C) Allocation.--
``(i) Allocation formula.--The Secretary
shall allocate the amounts reserved under
subparagraph (A) among the State agencies using
a reasonable formula, as determined and
adjusted by the Secretary each fiscal year, to
reflect changes in each State's caseload (as
defined in section 6(o)(5)(A)) that reflects
the proportion of food stamp recipients who
reside in each State--
``(I) who are not eligible for an
exception under section 6(o)(3); and
``(II) who do not reside in an area
subject to the waiver granted by the
Secretary under section 6(o)(4), if the
State agency does not provide
employment and training services in the
area to food stamp recipients not
excepted by section 6(o)(3).
``(ii) Reporting requirement.--A State
agency shall submit such reports to the
Secretary as the Secretary determines are
necessary to ensure compliance with this
paragraph.''; and
``(D) Reallocation.--
``(i) Notification.--A State agency shall
promptly notify the Secretary if the State
agency determines that it will not expend all
of the funds allocated to it under subparagraph
(B).
``(ii) Reallocation.--On notification under
clause (i), the Secretary shall reallocate the
funds that the State agency will not expend as
the Secretary considers appropriate and
equitable.
``(E) Minimum allocation.--Notwithstanding
subparagraphs (A) through (C), the Secretary shall
ensure that each State agency operating an employment
and training program shall receive not less than
$50,000 for each fiscal year.
``(F) Maintenance of effort.--To receive the
additional funding under subparagraph (A), as provided
by the amendment made by section 1002 of the Balanced
Budget Act of 1997, a State agency shall maintain the
expenditures of the State agency for employment and
training programs and workfare programs for any fiscal
year under paragraph (2), and administrative expenses
under section 20(g)(1), at a level that is not less
than the level of the expenditures by the State agency
to carry out the programs for fiscal year 1996.'';
(2) by redesignating paragraphs (2) through (5) as
paragraphs (3) through (6), respectively;
(3) by inserting after paragraph (1) the following new
paragraph:
``(2) Report to congress on additional funding.--Beginning
one year after the date of the enactment of this paragraph, the
Secretary shall submit an annual report to the Committee on
Agriculture of the House of Representatives and the Committee
on Agriculture, Nutrition, and Forestry of the Senate regarding
whether the additional funding provided under paragraph (1)(A)
has been utilized by State agencies to increase the number of
work slots in their employment and training programs and
workfare for recipients subject to section 6(o) in the most
efficient and effective manner.''; and
(4) in paragraph (3) (as so redesignated), by striking
``paragraph (3)'' and inserting ``paragraph (4)''.
(b) Conforming Amendments.--(1) Subsection (b)(1)(B)(iv)(III)(hh)
of section 17 of the Food Stamp Act of 1977 (7 U.S.C. 2026) is amended
by striking ``(h)(2), or (h)(3) of section 16'' and inserting ``(h)(3),
or (h)(4) of section 16''.
(2) Subsection (d)(1)(B)(ii) of section 22 of such Act (7 U.S.C.
2031) is amended by striking ``(h)(2), and (h)(3) of section 16'' and
inserting ``(h)(3), and (h)(4) of section 16''.
SEC. 1003. AUTHORIZING USE OF NONGOVERNMENTAL PERSONNEL IN MAKING
DETERMINATIONS OF ELIGIBILITY FOR BENEFITS UNDER THE FOOD
STAMP PROGRAM.
(a) In General.--Notwithstanding any other provision of law, no
provision of law shall be construed as preventing any State (as defined
in section 3(m) of the Food Stamp Act of 1977 (7 U.S.C. 2012(m))) from
allowing eligibility determinations described in subsection (b) to be
made by an entity that is not a State or local government, or by an
individual who is not an employee of a State or local government, which
meets such qualifications as the State determines. For purposes of any
Federal law, such determinations shall be considered to be made by the
State and by a State agency.
(b) Eligibility Determinations.--An eligibility determination
described in this subsection is a determination of eligibility of
individuals or households to receive benefits under the food stamp
program as defined in section 3(h) of the Food Stamp Act of 1977 (7
U.S.C. 2012(h)).
(c) Construction.--Nothing in this section shall be construed as
affecting--
(1) the conditions for eligibility for benefits (including
any conditions relating to income or resources);
(2) the rights to challenge determinations regarding
eligibility or rights to benefits; and
(3) determinations regarding quality control or error
rates.
TITLE II--COMMITTEE ON BANKING AND FINANCIAL SERVICES
SEC. 2001. TABLE OF CONTENTS.
The table of contents for this title is as follows:
TITLE II--COMMITTEE ON BANKING AND FINANCIAL SERVICES
Sec. 2001. Table of contents.
Sec. 2002. Extension of foreclosure avoidance and borrower assistance
provisions for FHA single family housing
mortgage insurance program.
Sec. 2003. Adjustment of maximum monthly rents for certain dwelling
units in new construction and substantial
or moderate rehabilitation projects
assisted under section 8 rental assistance
program.
Sec. 2004. Adjustment of maximum monthly rents for non-turnover
dwelling units assisted under section 8
rental assistance program.
SEC. 2002. EXTENSION OF FORECLOSURE AVOIDANCE AND BORROWER ASSISTANCE
PROVISIONS FOR FHA SINGLE FAMILY HOUSING MORTGAGE
INSURANCE PROGRAM.
Section 407 of The Balanced Budget Downpayment Act, I (12 U.S.C.
1710 note) is amended--
(1) in subsection (c)--
(A) by striking ``only''; and
(B) by inserting ``, on, or after'' after
``before''; and
(2) by striking subsection (e).
SEC. 2003. ADJUSTMENT OF MAXIMUM MONTHLY RENTS FOR CERTAIN DWELLING
UNITS IN NEW CONSTRUCTION AND SUBSTANTIAL OR MODERATE
REHABILITATION PROJECTS ASSISTED UNDER SECTION 8 RENTAL
ASSISTANCE PROGRAM.
The third sentence of section 8(c)(2)(A) of the United States
Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(A)) is amended by inserting
before the period at the end the following: ``, and during fiscal year
1999 and thereafter''.
SEC. 2004. ADJUSTMENT OF MAXIMUM MONTHLY RENTS FOR NON-TURNOVER
DWELLING UNITS ASSISTED UNDER SECTION 8 RENTAL ASSISTANCE
PROGRAM.
The last sentence of section 8(c)(2)(A) of the United States
Housing Act of 1937 is amended by inserting before the period at the
end the following: ``, and during fiscal year 1999 and thereafter''.
TITLE III--COMMITTEE ON COMMERCE-NONMEDICARE
Subtitle A--Nuclear Regulatory Commission Annual Charges
SEC. 3001. NUCLEAR REGULATORY COMMISSION ANNUAL CHARGES.
Section 6101(a)(3) of the Omnibus Budget Reconciliation Act of 1990
(42 U.S.C. 2214(a)(3)) is amended by striking ``September 30, 1998''
and inserting ``September 30, 2002''.
Subtitle B--Lease of Excess Strategic Petroleum Reserve Capacity
SEC. 3101. LEASE OF EXCESS STRATEGIC PETROLEUM RESERVE CAPACITY.
(a) Amendment.--Part B of title I of the Energy Policy and
Conservation Act (42 U.S.C. 6231 et seq.) is amended by adding at the
end the following:
``use of underutilized facilities
``Sec. 168. (a) Authority.--Notwithstanding any other provision of
this title, the Secretary, by lease or otherwise, for any term and
under such other conditions as the Secretary considers necessary or
appropriate, may store in underutilized Strategic Petroleum Reserve
facilities petroleum product owned by a foreign government or its
representative. Petroleum products stored under this section are not
part of the Strategic Petroleum Reserve and may be exported without
license from the United States.
``(b) Protection of Facilities.--All agreements entered into
pursuant to subsection (a) shall contain provisions providing for fees
to fully compensate the United States for all costs of storage and
removals of petroleum products, including the cost of replacement
facilities necessitated as a result of any withdrawals.
``(c) Access to Stored Oil.--The Secretary shall ensure that
agreements to store petroleum products for foreign governments or their
representatives do not affect the ability of the United States to
withdraw, distribute, or sell petroleum from the Strategic Petroleum
Reserve in response to an energy emergency or to the obligations of the
United States under the Agreement on an International Energy Program.
``(d) Availability of Funds.--Funds collected through the leasing
of Strategic Petroleum Reserve facilities authorized by subsection (a)
after September 30, 2002, shall be used by the Secretary of Energy
without further appropriation for the purchase of oil for, and
operation and maintenance costs of, the Strategic Petroleum Reserve.''.
(b) Table of Contents Amendment.--The table of contents of part B
of title I of the Energy Policy and Conservation Act is amended by
adding at the end the following:
``Sec. 168. Use of underutilized facilities.''.
Subtitle C--Sale of DOE Assets
SEC. 3201. SALE OF DOE SURPLUS URANIUM ASSETS.
(a) In General.--The Secretary of Energy shall, during the period
fiscal year 1999 through fiscal year 2002, sell 3.2 million pounds per
year of natural and low-enriched uranium that the President has
determined is not necessary for national security needs. Such sales
shall be--
(1) made for delivery after January 1, 1999;
(2) subject to a determination, for the period fiscal year
1999 through fiscal year 2002, by the Secretary under section
3112(d)(2)(B) of the USEC Privatization Act (42 U.S.C. 2297h-
10(d)(2)(B)); and
(3) made at a price not less than the fair market value of
the uranium and in a manner that maximizes proceeds to the
Treasury.
The Secretary shall receive the proceeds from such sale in the period
fiscal year 1999 through fiscal year 2002 and shall deposit such
proceeds in the General Fund of the Treasury.
(b) Costs.--The costs of making the sales required by subsection
(a) shall be covered by the unobligated balances of appropriations of
the Department of Energy.
Subtitle D--Communications
SEC. 3301. SPECTRUM AUCTIONS.
(a) Extension and Expansion of Auction Authority.--
(1) Amendments.--Section 309(j) of the Communications Act
of 1934 (47 U.S.C. 309(j)) is amended--
(A) by striking paragraphs (1) and (2) and
inserting in lieu thereof the following:
``(1) General authority.--If, consistent with the
obligations described in paragraph (6)(E), mutually exclusive
applications are accepted for any initial license or
construction permit which will involve an exclusive use of the
electromagnetic spectrum, then the Commission shall grant such
license or permit to a qualified applicant through a system of
competitive bidding that meets the requirements of this
subsection.
``(2) Exemptions.--The competitive bidding authority
granted by this subsection shall not apply to licenses or
construction permits issued by the Commission--
``(A) that, as the result of the Commission
carrying out the obligations described in paragraph
(6)(E), are not mutually exclusive;
``(B) for public safety radio services, including
private internal radio services used by non-Government
entities, that--
``(i) protect the safety of life, health,
or property; and
``(ii) are not made commercially available
to the public;
``(C) for initial licenses or construction permits
assigned by the Commission to existing terrestrial
broadcast licensees for new terrestrial digital
television services; or
``(D) for public telecommunications services, as
defined in section 397(14) of the Communications Act of
1934 (47 U.S.C. 397(14)), when the license application
is for channels reserved for noncommercial use.'';
(B) in paragraph (3)--
(i) by inserting after the second sentence
the following new sentence: ``The Commission
shall, directly or by contract, provide for the
design and conduct (for purposes of testing) of
competitive bidding using a contingent
combinatorial bidding system that permits
prospective bidders to bid on combinations or
groups of licenses in a single bid and to enter
multiple alternative bids within a single
bidding round.'';
(ii) by striking ``and'' at the end of
subparagraph (C);
(iii) by striking the period at the end of
subparagraph (D) and inserting ``; and''; and
(iv) by adding at the end the following new
subparagraph:
``(E) ensuring that, in the scheduling of any
competitive bidding under this subsection, an adequate
period is allowed--
``(i) before issuance of bidding rules, to
permit notice and comment on proposed auction
procedures; and
``(ii) after issuance of bidding rules, to
ensure that interested parties have a
sufficient time to develop business plans,
assess market conditions, and evaluate the
availability of equipment for the relevant
services.'';
(C) in paragraph (8)--
(i) by striking subparagraph (B); and
(ii) by redesignating subparagraph (C) as
subparagraph (B);
(D) in paragraph (11), by striking ``1998'' and
inserting ``2002''; and
(E) in paragraph (13)(F), by striking ``September
30, 1998'' and inserting ``the date of enactment of the
Balanced Budget Act of 1997''.
(2) Conforming amendment.--Subsection (i) of section 309 of
the Communications Act of 1934 (47 U.S.C. 309(i)) is repealed.
(3) Effective date.--The amendment made by paragraph (1)(A)
shall not apply with respect to any license or permit for which
the Federal Communications Commission has accepted mutually
exclusive applications on or before the date of enactment of
this Act.
(b) Commission Obligation To Make Additional Spectrum Available by
Auction.--
(1) In general.--The Federal Communications Commission
shall complete all actions necessary to permit the assignment,
by September 30, 2002, by competitive bidding pursuant to
section 309(j) of the Communications Act of 1934 (47 U.S.C.
309(j)) of licenses for the use of bands of frequencies that--
(A) individually span not less than 25 megahertz,
unless a combination of smaller bands can,
notwithstanding the provisions of paragraph (7) of such
section, reasonably be expected to produce greater
receipts;
(B) in the aggregate span not less than 100
megahertz;
(C) are located below 3 gigahertz;
(D) have not, as of the date of enactment of this
Act--
(i) been designated by Commission
regulation for assignment pursuant to such
section;
(ii) been identified by the Secretary of
Commerce pursuant to section 113 of the
National Telecommunications and Information
Administration Organization Act;
(iii) been allocated for Federal Government
use pursuant to section 305 of the
Communications Act of 1934 (47 U.S.C. 305);
(iv) been designated in section 3303 of
this Act; or
(v) been allocated for unlicensed use
pursuant to part 15 of the Commission's
regulations (47 C.F.R. Part 15), if the
competitive bidding for licenses would
interfere with operation of end-user products
permitted under such regulations; and
(E) notwithstanding section 115(b)(1)(B) of the
National Telecommunications and Information
Administration Organization Act (47 U.S.C.
925(b)(1)(B)) or any proposal pursuant to such section,
include frequencies at 1,710-1,755 megahertz.
(2) Criteria for reassignment.--In making available bands
of frequencies for competitive bidding pursuant to paragraph
(1), the Commission shall--
(A) seek to promote the most efficient use of the
spectrum;
(B) take into account the cost to incumbent
licensees of relocating existing uses to other bands of
frequencies or other means of communication; and
(C) comply with the requirements of international
agreements concerning spectrum allocations.
(3) Notification to ntia.--The Commission shall notify the
Secretary of Commerce if--
(A) the Commission is not able to provide for the
effective relocation of incumbent licensees to bands of
frequencies that are available to the Commission for
assignment; and
(B) the Commission has identified bands of
frequencies that are--
(i) suitable for the relocation of such
licensees; and
(ii) allocated for Federal Government use,
but that could be reallocated pursuant to part
B of the National Telecommunications and
Information Administration Organization Act (as
amended by this Act).
(4) Protection of Space Research Uses.--The licenses
assigned pursuant to paragraph (1) shall require licensees to
avoid interference with communications in space research and
earth exploration-satellite services authorized under notes
750A and US90 to section 2.106 of the regulations of the
Federal Communications Commission (47 C.F.R. 2.106) as in
effect on the date of enactment of this Act.
(c) Identification and Reallocation of Frequencies.--The National
Telecommunications and Information Administration Organization Act (47
U.S.C. 901 et seq.) is amended--
(1) in section 113, by adding at the end the following new
subsection:
``(f) Additional Reallocation Report.--If the Secretary receives a
notice from the Commission pursuant to section 3301(b)(3) of the
Balanced Budget Act of 1997, the Secretary shall prepare and submit to
the President, the Commission, and the Congress a report recommending
for reallocation for use other than by Federal Government stations
under section 305 of the 1934 Act (47 U.S.C. 305), bands of frequencies
that are suitable for the uses identified in the Commission's notice.
The Commission shall, not later than one year after receipt of such
report, prepare, submit to the President and the Congress, and
implement, a plan for the immediate allocation and assignment of such
frequencies under the 1934 Act to incumbent licencees described in
section 3301(b)(3) of the Balanced Budget Act of 1997.''; and
(2) in section 114(a)(1), by striking ``(a) or (d)(1)'' and
inserting ``(a), (d)(1), or (f)''.
(d) Identification and Reallocation of Auctionable Frequencies.--
The National Telecommunications and Information Administration
Organization Act (47 U.S.C. 901 et seq.) is amended--
(1) in section 113(b)--
(A) by striking the heading of paragraph (1) and
inserting ``Initial reallocation report'';
(B) by inserting ``in the first report required by
subsection (a)'' after ``recommend for reallocation''
in paragraph (1);
(C) by inserting ``or (3)'' after ``paragraph (1)''
each place it appears in paragraph (2); and
(D) by inserting after paragraph (2) the following
new paragraph:
``(3) Second reallocation report.--In accordance with the
provisions of this section, the Secretary shall recommend for
reallocation in the second report required by subsection (a),
for use other than by Federal Government stations under section
305 of the 1934 Act (47 U.S.C. 305), a band or bands of
frequencies that--
``(A) in the aggregate span not less than 20
megahertz;
``(B) individually span not less than 20 megahertz,
unless a combination of smaller bands can reasonably be
expected to produce greater receipts;
``(C) are located below 3 gigahertz; and
``(D) meet the criteria specified in paragraphs (1)
through (5) of subsection (a).''; and
(2) in section 115--
(A) in subsection (b), by striking ``the report
required by section 113(a)'' and inserting ``the
initial reallocation report required by section
113(a)''; and
(B) by adding at the end the following new
subsection:
``(c) Allocation and Assignment of Frequencies Identified in the
Second Reallocation Report.--With respect to the frequencies made
available for reallocation pursuant to section 113(b)(3), the
Commission shall, not later than one year after receipt of the second
reallocation report required by such section, prepare, submit to the
President and the Congress, and implement, a plan for the immediate
allocation and assignment under the 1934 Act of all such frequencies in
accordance with section 309(j) of such Act.''.
(e) Minimum Recovery for Public Required.--
(1) Methodology to secure minimum amounts required.--In
establishing, pursuant to section 309(j)(3) of the
Communications Act of 1934 (47 U.S.C. 309(j)(3)), a competitive
bidding methodology with respect to the frequencies required to
be assigned by competitive bidding under subsection (b) of this
section and section 115(c) of the National Telecommunications
and Information Administration Organization Act (47 U.S.C.
925(c)), the Commission shall establish procedures that are
designed to secure winning bids totaling not less than two-
thirds of $7,500,000,000.
(2) Authority.--In establishing such methodology, the
Commission is authorized--
(A) to partition the total required to be obtained
under paragraph (1) among separate competitive bidding
proceedings, or among separate bands, regions, or
markets;
(B) to void any such separated competitive bidding
proceeding that fails to obtain the partitioned
subtotal that pertains to that proceeding; and
(C) to prescribe minimum bids or other bidding
requirements to obtain such total or subtotal.
(3) Licenses withheld.--Notwithstanding any other
requirement of this section, or the amendments made by this
section, the Commission shall refrain from conducting any
competitive bidding pursuant to the methodology established
pursuant to this subsection unless the Commission determines
that such methodology will secure winning bids totaling not
less than two-thirds of $7,500,000,000.
(4) Authority to rebid at a later time to secure statutory
objectives.--Nothing in paragraph (2) or (3) shall preclude or
limit the Commission from assigning the frequencies described
in paragraph (1) by competitive bidding at such later date
(than the date required by this section) as the Commission
determines, in its discretion, will better attain the
objectives of recovering for the public a fair portion of the
value of the public spectrum resource and avoiding unjust
enrichment.
SEC. 3302. AUCTION OF RECAPTURED BROADCAST TELEVISION SPECTRUM.
Section 309(j) of the Communications Act of 1934 (47 U.S.C. 309(j))
is amended by adding at the end the following new paragraph:
``(14) Auction of recaptured broadcast television
spectrum.--
``(A) Limitations on terms of terrestrial
television broadcast licenses.--A television license
that authorizes analog television services may not be
renewed to authorize such service for a period that
extends beyond December 31, 2006. The Commission shall
grant by regulation an extension of such date to
licensees in a market if the Commission determines that
more than 5 percent of households in such market
continue to rely exclusively on over-the-air
terrestrial analog television signals.
``(B) Spectrum reversion and resale.--
``(i) The Commission shall ensure that,
when the authority to broadcast analog
television services under a license expires
pursuant to subparagraph (A), each licensee
shall return spectrum according to the
Commission's direction and the Commission shall
reclaim such spectrum.
``(ii) Licensees for new services occupying
spectrum reclaimed pursuant to clause (i) shall
be selected in accordance with this subsection.
The Commission shall start such selection
process by July 1, 2001, with payment pursuant
to rules established by the Commission under
this subsection.
``(C) Minimum recovery for public required.--
``(i) Methodology to secure minimum amounts
required.--In establishing, pursuant to section
309(j)(3) of the Communications Act of 1934 (47
U.S.C. 309(j)(3)), a competitive bidding
methodology with respect to the frequencies
required to be assigned by competitive bidding
under subparagraph (B) of this paragraph, the
Commission shall establish procedures that are
designed to secure winning bids totaling not
less than two-thirds of $4,000,000,000.
``(ii) Authority.--In establishing such
methodology, the Commission is authorized--
``(I) to partition the total
required to be obtained under clause
(i) among separate competitive bidding
proceedings, or among separate bands,
regions, or markets;
``(II) to void any such separated
competitive bidding proceeding that
fails to obtain the partitioned
subtotal that pertains to that
proceeding; and
``(III) to prescribe minimum bids
or other bidding requirements to obtain
such aggregate total.
``(iii) Licenses withheld.--Notwithstanding
any other requirement of this paragraph, the
Commission shall refrain from conducting any
competitive bidding pursuant to the methodology
established pursuant to this subparagraph
unless the Commission determines that such
methodology will secure winning bids totaling
not less than two-thirds of $4,000,000,000.
``(iv) Authority to rebid at a later time
to secure statutory objectives.--Nothing in
clause (ii) or (iii) shall preclude or limit
the Commission from assigning the frequencies
described in clause (i) by competitive bidding
at such later date (than the date required by
this paragraph) as the Commission determines,
in its discretion, will better attain the
objectives of recovering for the public a fair
portion of the value of the public spectrum
resource and avoiding unjust enrichment.
``(D) Certain limitations on qualified bidders
prohibited.--In prescribing any regulations relating to
the qualification of bidders for spectrum reclaimed
pursuant to subparagraph (B)(i), the Commission shall
not--
``(i) preclude any party from being a
qualified bidder for spectrum that is allocated
for any use that includes digital television
service on the basis of--
``(I) the Commission's duopoly rule
(47 C.F.R. 73.3555(b)); or
``(II) the Commission's newspaper
cross-ownership rule (47 C.F.R.
73.3555(d)); or
``(ii) apply either such rule to preclude
such a party that is a successful bidder in a
competitive bidding for such spectrum from
using such spectrum for digital television
service.
``(E) Definitions.--As used in this paragraph:
``(i) The term `digital television service'
means television service provided using digital
technology to enhance audio quality and video
resolution, as further defined in the
Memorandum Opinion, Report, and Order of the
Commission entitled `Advanced Television
Systems and Their Impact Upon the Existing
Television Service', MM Docket No. 87-268 and
any subsequent Commission proceedings dealing
with digital television.
``(ii) The term `analog television service'
means service provided pursuant to the
transmission standards prescribed by the
Commission in section 73.682(a) of its
regulation (47 CFR 73.682(a)).''.
SEC. 3303. ALLOCATION AND ASSIGNMENT OF NEW PUBLIC SAFETY AND
COMMERCIAL LICENSES.
(a) In General.--The Federal Communications Commission shall, not
later than January 1, 1998, allocate on a national, regional, or market
basis, from radio spectrum between 746 megahertz and 806 megahertz--
(1) 24 megahertz of that spectrum for public safety
services according to the terms and conditions established by
the Commission, unless the Commission determines that the needs
for public safety services can be met in particular areas with
allocations of less than 24 megahertz; and
(2) the remainder of that spectrum for commercial purposes
to be assigned by competitive bidding in accordance with
section 309(j).
(b) Assignment.--The Commission shall--
(1) assign the licenses for public safety created pursuant
to subsection (a) no later than March 31, 1998; and
(2) commence competitive bidding for the commercial
licenses created pursuant to subsection (a) no later than July
1, 2001.
(c) Licensing of Unused Frequencies for Public Safety Radio
Services.--
(1) Use of unused channels for public safety.--It shall be
the policy of the Commission, notwithstanding any other
provision of this Act or any other law, to waive whatever
licensee eligibility and other requirements (including bidding
requirements) are applicable in order to permit the use of
unassigned frequencies for public safety purposes by a State or
local governmental agency upon a showing that--
(A) no other existing satisfactory public safety
channel is immediately available to satisfy the
requested use;
(B) the proposed use is technically feasible
without causing harmful interference to existing
stations in the frequency band entitled to protection
from such interference under the rules of the
Commission; and
(C) use of the channel for public safety purposes
is consistent with other existing public safety channel
allocations in the geographic area of proposed use.
(2) Applicability.--Paragraph (1) shall apply to any
application that is pending before the Federal Communications
Commission, or that is not finally determined under either
section 402 or 405 of the Communications Act of 1934 (47 U.S.C.
402, 405) on May 15, 1997, or that is filed after such date.
(d) Conditions on Licenses.--With respect to public safety and
commercial licenses granted pursuant to this subsection, the Commission
shall--
(1) establish interference limits at the boundaries of the
spectrum block and service area;
(2) establish any additional technical restrictions
necessary to protect full-service analog television service and
digital television service during a transition to digital
television service; and
(3) permit public safety and commercial licensees--
(A) to aggregate multiple licenses to create larger
spectrum blocks and service areas; and
(B) to disaggregate or partition licenses to create
smaller spectrum blocks or service areas.
(e) Minimum Recovery for Public Required.--
(1) Methodology to secure minimum amounts required.--In
establishing, pursuant to section 309(j)(3) of the
Communications Act of 1934 (47 U.S.C. 309(j)(3)), a competitive
bidding methodology with respect to the frequencies required to
be assigned by competitive bidding under this section, the
Commission shall establish procedures that are designed to
secure winning bids totaling not less than two-thirds of
$1,900,000,000.
(2) Authority.--In establishing such methodology, the
Commission is authorized--
(A) to partition the total required to be obtained
under paragraph (1) among separate competitive bidding
proceedings, or among separate bands, regions, or
markets;
(B) to void any such separated competitive bidding
proceeding that fails to obtain the partitioned
subtotal that pertains to that proceeding; and
(C) to prescribe minimum bids or other bidding
requirements to obtain such total or subtotal.
(3) Licenses withheld.--Notwithstanding any other
requirement of this section, the Commission shall refrain from
conducting any competitive bidding pursuant to the methodology
established pursuant to this subsection unless the Commission
determines that such methodology will secure winning bids
totaling not less than two-thirds of $1,900,000,000.
(4) Authority to rebid at a later time to secure statutory
objectives.--Nothing in paragraph (2) or (3) shall preclude or
limit the Commission from assigning the frequencies described
in paragraph (1) by competitive bidding at such later date
(than the date required by this section) as the Commission
determines, in its discretion, will better attain the
objectives of recovering for the public a fair portion of the
value of the public spectrum resource and avoiding unjust
enrichment.
(f) Protection of Qualifying Low-Power Stations.--Prior to making
any allocation or assignment under this section the Commission shall
assure that each qualifying low-power television station is assigned a
frequency below 746 megahertz to permit the continued operation of such
station.
(g) Definitions.--For purposes of this section:
(1) Commission.--The term ``Commission'' means the Federal
Communications Commission.
(2) Digital television service.--The term ``digital
television service'' means television service provided using
digital technology to enhance audio quality and video
resolution, as further defined in the Memorandum Opinion,
Report, and Order of the Commission entitled `Advanced
Television Systems and Their Impact Upon the Existing
Television Service', MM Docket No. 87-268 and any subsequent
Commission proceedings dealing with digital television.
(3) Analog television service.--The term ``analog
television service'' means services provided pursuant to the
transmission standards prescribed by the Commission in section
73.682(a) of its regulation (47 CFR 73.682(a)).
(4) Public safety services.--The term ``public safety
services'' means services--
(A) the sole or principal purpose of which is to
protect the safety of life, health, or property;
(B) that are provided--
(i) by State or local government entities;
or
(ii) by nongovernmental, private
organizations that are authorized by a
governmental entity whose primary mission is
the provision of such services; and
(C) that are not made commercially available to the
public by the provider.
(5) Service area.--The term ``service area'' means the
geographic area over which a licensee may provide service and
is protected from interference.
(6) Spectrum block.--The term ``spectrum block'' means the
range of frequencies over which the apparatus licensed by the
Commission is authorized to transmit signals.
(7) Qualifying low-power television stations.--A station is
a qualifying low-power television station if--
(A) during the 90 days preceding the date of
enactment of this Act--
(i) such station broadcast a minimum of 18
hours per day;
(ii) such station broadcast an average of
at least 3 hours per week of programming that
was produced within the community of license of
such station; and
(iii) such station was in compliance with
the requirements applicable to low-power
television stations; or
(B) the Commission determines that the public
interest, convenience, and necessity would be served by
treating the station as a qualifying low-power
television station for purposes of this section.
SEC. 3304. INQUIRY REQUIRED.
The Federal Communications Commission shall, not later than July 1,
1997, initiate the inquiry required by section 309(j)(12) of the
Communications Act of 1934 (47 U.S.C. 309(j)(12)) for the purposes of
collecting the information required for its report under each of
subparagraphs (A) through (E) of such section, and shall keep the
Congress fully and currently informed with respect to the progress of
such inquiry.
Subtitle E--Medicaid
SEC. 3400. TABLE OF CONTENTS OF SUBTITLE; REFERENCES.
(a) Table of Contents of Subtitle.--The table of contents of this
subtitle is as follows:
Sec. 3400. Table of contents of subtitle; references.
subchapter a--use of managed care
Sec. 3401. State options to provide benefits through managed care
entities.
Sec. 3402. Elimination of 75:25 restriction on risk contracts.
Sec. 3403. Primary care case management services as State option
without need for waiver.
Sec. 3404. Change in threshold amount for contracts requiring
Secretary's prior approval.
Sec. 3405. Determinsubchapter b--payment methodology
Sec. 3411. Flexibility in payment methods for hospital, nursing
facility, and ICF/MR services; flexibility
for home health.
Sec. 3412. Payment for Federally qualified health center services.
Sec. 3413. Treatment of State taxes imposed on certain hospitals that
subchapter c--eligibility
Sec. 3421. State option of continuous eligibility for 12 months;
clarification of State option to cover
children.
Sec. 3422. Payment of home-health-related medicare part B premium
amount for certain low-income individuals.
Sec. 3423. Penalty for fraudulent eligibility.
Sesubchapter d--programs of all-inclusive care for the elderly (pace)
Sec. 3431. Establishment of PACE program as medicaid State option.
Sec. 3432. Coverage of PACE under the medicare program.
Sec. 3433. Effective date; transition.
Sec. 3434. Study and reposubchapter e--benefits
Sec. 3441. Elimination of requirement to pay for private insurance.
Sec. 3442. Permitting same copayments in health maintenance
organizations as in fee-for-service.
Sec. 3443. Physician qualification requirements.
Sec. 3444. Elimination of requirement of prior institutionalization
with respect to habilitation services
furnished under a waiver for home or
community-based services.
Sec. 3445. Benefits for services of physician assistants.
Sec. 3446. Study and rsubchapter f--administrationEPSDT benefit.
Sec. 3451. Elimination of duplicative inspection of care requirements
for ICFS/MR and mental hospitals.
Sec. 3452. Alternative sanctions for noncompliant ICFS/MR.
Sec. 3453. Modification of MMIS requirements.
Sec. 3454. Facilitating imposition of State alternative remedies on
noncompliant nursing facilities.
Sec. 3455. Medically accepted indication.
Sec. 3456. Continuation of State-wide section 1115 medicaid waivers.
Sec. 3457. Authorizing administrative streamlining and privatizing
modifications under the medicaid program.
Sec. 3458. Extension of moratorium.
Chapter 2--Quality Assurance
Sec. 3461. Requirements to ensure quality of and access to care under
managed care plans.
Sec. 3462. Solvency standards for certain health maintenance
organizations.
Sec. 3463. Application of prudent layperson standard for emergency
medical condition and prohibition of gag
rule restrictions.
Sec. 3464. Additional fraud and abuse protections in managed care.
Sec. 3465. Grievances under managed care plans.
Sec. 3466. Standards relating to access to obstetrical and
gynecological services under managed care
plans.
Chapter 3--Federal Payments
Sec. 3471. Reforming disproportionate share payments under State
medicaid programs.
Sec. 3472. Additional funding for State emergency health services
furnished to undocumented aliens.
(b) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this subtitle an amendment is
expressed in terms of an amendment to or repeal of a section or other
provision, the reference is considered to be made to that section or
other provision of the Social Security Act.
CHAPTER 1--STATE FLEXIBILITY
Subchapter A--Use of Managed Care
SEC. 3401. STATE OPTIONS TO PROVIDE BENEFITS THROUGH MANAGED CARE
ENTITIES.
(a) In General.--Section 1915(a) (42 U.S.C. 1396n(a)) is amended--
(1) by striking ``or'' at the end of paragraph (1),
(2) by striking the period at the end of paragraph (2) and
inserting ``; or'', and
(3) by adding at the end the following new paragraph:
``(3) requires individuals, other than special needs
children (as defined in subsection (i)), eligible for medical
assistance for items or services under the State plan to enroll
with an entity that provides or arranges for services for
enrollees under a contract pursuant to section 1903(m), or with
a primary care case manager (as defined in section 1905(t)(2))
(or restricts the number of provider agreements with those
entities under the State plan, consistent with quality of
care), if--
``(A) the State permits an individual to choose the
manager or managed care entity from among the managed
care organizations and primary care case providers who
meet the requirements of this title;
``(B)(i) individuals are permitted to choose
between at least 2 of those entities, or 2 of the
managers, or an entity and a manager, each of which has
sufficient capacity to provide services to enrollees;
or
``(ii) with respect to a rural area--
``(I) individuals who are required to
enroll with a single entity are afforded the
option to obtain covered services by an
alternative provider; and
``(II) an individual who is offered no
alternative to a single entity or manager is
given a choice between at least two providers
within the entity or through the manager;
``(C) no individual who is an Indian (as defined in
section 4 of the Indian Health Care Improvement Act of
1976) is required to enroll in any entity that is not
one of the following (and only if such entity is
participating under the plan): the Indian Health
Service, an Indian health program operated by an Indian
tribe or tribal organization pursuant to a contract,
grant, cooperative agreement, or compact with the
Indian Health Service pursuant to the Indian Self-
Determination Act (25 U.S.C. 450 et seq.), or an urban
Indian health program operated by an urban Indian
organization pursuant to a grant or contract with the
Indian Health Service pursuant to title V of the Indian
Health Care Improvement Act (25 U.S.C. 1601 et seq.);
``(D) the State restricts those individuals from
changing their enrollment without cause for periods no
longer than six months (and permits enrollees to change
enrollment for cause at any time);
``(E) the restrictions do not apply to providers of
family planning services (as defined in section
1905(a)(4)(C)) and are not conditions for payment of
medicare cost sharing pursuant to section 1905(p)(3);
and
``(F) prior to establishing an enrollment
requirement under this paragraph, the State agency
provides for public notice and comment pursuant to
requirements established by the Secretary.''.
(b) Special Needs Children Defined.--Section 1915 (42 U.S.C. 1396n)
is amended by adding at the end the following:
``(i) For purposes of subsection (a)(3), the term `special needs
child' means an individual under 19 years of age who--
``(1) is eligible for supplemental security income under
title XVI,
``(2) is described in section 501(a)(1)(D),
``(3) is described in section 1902(e)(3), or
``(4) is in foster care or otherwise in an out-of-home
placement.''.
(c) Conforming Amendment to Risk-Based Arrangements.--Section
1903(m)(2) (42 U.S.C. 1396b(m)(2)) is amended--
(1) in paragraph (A)(vi)--
(A) by striking ``(I) except as provided under
subparagraph (F),''; and
(B) by striking all that follows ``to terminate
such enrollment'' and inserting ``in accordance with
the provisions of subparagraph (F);''; and
(2) in subparagraph (F)--
(A) by striking ``In the case of--'' and all that
follows through ``a State plan'' and inserting ``A
State plan'', and
(B) by striking ``(A)(vi)(I)'' and inserting
``(A)(vi)''.
(d) Effective Date.--The amendments made by this section take
effect on the date of the enactment of this Act.
SEC. 3402. ELIMINATION OF 75:25 RESTRICTION ON RISK CONTRACTS.
(a) 75 Percent Limit on Medicare and Medicaid Enrollment.--
(1) In general.--Section 1903(m)(2)(A) (42 U.S.C.
1396b(m)(2)(A)) is amended by striking clause (ii).
(2) Conforming amendments.--Section 1903(m)(2) (42 U.S.C.
1396b(m)(2)) is amended--
(A) by striking subparagraphs (C), (D), and (E);
and
(B) in subparagraph (G), by striking ``clauses (i)
and (ii)'' and inserting ``clause (i)''.
(b) Effective Date.--The amendments made by subsection (a) take
effect on the date of the enactment of this Act.
SEC. 3403. PRIMARY CARE CASE MANAGEMENT SERVICES AS STATE OPTION
WITHOUT NEED FOR WAIVER.
(a) Optional Coverage as Part of Medical Assistance.--Section
1905(a) (42 U.S.C. 1396d(a)) is amended--
(1) by striking ``and'' at the end of paragraph (24);
(2) by redesignating paragraph (25) as paragraph (26) and
by striking the period at the end of such paragraph and
inserting a comma; and
(3) by inserting after paragraph (24) the following new
paragraph:
``(25) primary care case management services (as defined in
subsection (t)); and''.
(b) Primary Care Case Management Services Defined.--Section 1905
(42 U.S.C. 1396d) is amended by adding at the end the following new
subsection:
``(t)(1) The term `primary care case management services' means
case-management related services (including coordination and monitoring
of health care services) provided by a primary care case manager under
a primary care case management contract.
``(2)(A) The term `primary care case manager' means, with respect
to a primary care case management contract, a provider described in
subparagraph (B).
``(B) A provider described in this subparagraph is a provider that
provides primary care case management services under contract and is--
``(i) a physician, a physician group practice, or an entity
employing or having other arrangements with physicians; or
``(ii) at State option--
``(I) a nurse practitioner (as described in section
1905(a)(21));
``(II) a certified nurse-midwife (as defined in
section 1861(gg)); or
``(III) a physician assistant (as defined in
section 1861(aa)(5)).
``(3) The term `primary care case management contract' means a
contract with a State agency under which a primary care case manager
undertakes to locate, coordinate and monitor covered primary care (and
such other covered services as may be specified under the contract) to
all individuals enrolled with the primary care case manager, and which
provides for--
``(A) reasonable and adequate hours of operation, including
24-hour availability of information, referral, and treatment
with respect to medical emergencies;
``(B) restriction of enrollment to individuals residing
sufficiently near a service delivery site of the entity to be
able to reach that site within a reasonable time using
available and affordable modes of transportation;
``(C) employment of, or contracts or other arrangements
with, sufficient numbers of physicians and other appropriate
health care professionals to ensure that services under the
contract can be furnished to enrollees promptly and without
compromise to quality of care;
``(D) a prohibition on discrimination on the basis of
health status or requirements for health services in
enrollment, disenrollment, or reenrollment of individuals
eligible for medical assistance under this title; and
``(E) a right for an enrollee to terminate enrollment
without cause during the first month of each enrollment period,
which period shall not exceed six months in duration, and to
terminate enrollment at any time for cause.
``(4) For purposes of this subsection, the term `primary care'
includes all health care services customarily provided in accordance
with State licensure and certification laws and regulations, and all
laboratory services customarily provided by or through, a general
practitioner, family medicine physician, internal medicine physician,
obstetrician/gynecologist, or pediatrician.''.
(c) Conforming Amendments.--Section 1902 (42 U.S.C. 1396a) is
amended--
(1) in subsection (a)(10)(C)(iv), by striking ``(24)'' and
inserting ``(25)'', and
(2) in subsection (j), by striking ``(25)'' and inserting
``(26)''.
(d) Effective Date.--The amendments made by this section apply to
primary care case management services furnished on or after October 1,
1997.
SEC. 3404. CHANGE IN THRESHOLD AMOUNT FOR CONTRACTS REQUIRING
SECRETARY'S PRIOR APPROVAL.
(a) In General.--Section 1903(m)(2)(A)(iii) (42 U.S.C.
1396b(m)(2)(A)(iii)) is amended by striking ``$100,000'' and inserting
``$1,000,000 for 1998 and, for a subsequent year, the amount
established under this clause for the previous year increased by the
percentage increase in the consumer price index for all urban consumers
over the previous year''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to contracts entered into or renewed on or after the date of the
enactment of this Act.
SEC. 3405. DETERMINATION OF HOSPITAL STAY.
(a) In General.--Title XIX, as amended by section 3431(a), is
amended--
(1) by redesignating section 1933 as section 1934, and
(2) by inserting after section 1932 the following new
section:
``determination of hospital stay
``Sec. 1933. (a) In General.--A Medicaid health plan shall cover
the length of an inpatient hospital stay under this title as determined
by the attending physician (or other attending health care provider to
the extent permitted under State law) in consultation with the patient
to be medically appropriate.
``(b) Construction.--Nothing in this title shall be construed--
``(1) as requiring the provision of inpatient coverage if
the attending physician (or other attending health care
provider to the extent permitted under State law) and patient
determine that a shorter period of hospital stay is medically
appropriate, or
``(2) as affecting the application of deductibles and
coinsurance.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to discharges occurring on or after 6 months after the date of
the enactment of this Act.
Subchapter B--Payment Methodology
SEC. 3411. FLEXIBILITY IN PAYMENT METHODS FOR HOSPITAL, NURSING
FACILITY, AND ICF/MR SERVICES; FLEXIBILITY FOR HOME
HEALTH.
(a) Repeal of Boren Requirements.--Section 1902(a)(13) (42 U.S.C.
1396a(a)) is amended--
(1) by amending subparagraphs (A) and (B) to read as
follows:
``(A) for a public process for determination of
rates of payment under the plan for hospital services,
nursing facility services, and services of intermediate
care facilities for the mentally retarded under which--
``(i) proposed rates are published, and
providers, beneficiaries and their
representatives, and other concerned State
residents are given a reasonable opportunity
for review and comment on the proposed rates;
``(ii) final rates are published, together
with justifications, and
``(iii) in the case of hospitals, take into
account (in a manner consistent with section
1923) the situation of hospitals which serve a
disproportionate number of low income patients
with special needs;
``(B) that the State shall provide assurances
satisfactory to the Secretary that the average level of
payments under the plan for nursing facility services
(as determined on an aggregate per resident-day basis)
and the level of payments under the plan for inpatient
hospital services (as determined on an aggregate
hospital payment basis) furnished during the 18-month
period beginning October 1, 1997, is not less than the
average level of payments that would be made under the
plan during such 18-month period for such respective
services (determined on such basis) based on rates or
payment basis in effect as of May 1, 1997;''; and
(2) by striking subparagraph (C).
(b) Repeal of Requirements Relating to Home Health Services.--Such
section is further amended--
(1) by adding ``and'' at the end of subparagraph (D),
(2) by striking ``and'' at the end of subparagraph (E), and
(3) by striking subparagraph (F).
(c) Effective Date.--The amendments made by this section shall
apply to payment for items and services furnished on or after the date
of the enactment of this Act.
SEC. 3412. PAYMENT FOR CENTER AND CLINIC SERVICES.
(a) Phase-Out of Payment Based on Reasonable Costs.--Section
1902(a)(13)(E) (42 U.S.C. 1396a(a)(13)(E)) is amended by inserting
``(or 95 percent for services furnished during fiscal year 2000, 90
percent for service furnished during fiscal year 2001, and 85 percent
for services furnished during fiscal year 2002)'' after ``100
percent''.
(b) Transitional Supplemental Payment for Services Furnished Under
Certain Managed Care Contracts.--
(1) In general.--Section 1902(a)(13)(E) is further
amended--
(A) by inserting ``(i)'' after ``(E)'', and
(B) by inserting before the semicolon at the end
the following: ``and (ii) in carrying out clause (i) in
the case of services furnished by a federally qualified
health center or a rural health clinic pursuant to a
contract between the center and a health maintenance
organization under section 1903(m), for payment by the
State of a supplemental payment equal to the amount (if
any) by which the amount determined under clause (i)
exceeds the amount of the payments provided under such
contract''.
(2) Conforming amendment to managed care contract
requirement.--Clause (ix) of section 1903(m)(2)(A) (42 U.S.C.
1396b(m)(2)(A)) is amended to read as follows:
``(ix) such contract provides, in the case of an entity
that has entered into a contract for the provision of services
with a federally qualified health center or a rural health
clinic, that the entity shall provide payment that is not less
than the level and amount of payment which the entity would
make for the services if the services were furnished by a
provider which is not a federally qualified health center or a
rural health clinic;''.
(3) Effective date.--The amendments made by this section
shall apply to services furnished on or after October 1, 1997.
(c) End of Transitional Payment Rules.--Effective for services
furnished on or after October 1, 2002--
(1) subparagraph (E) of section 1902(a)(13) (42 U.S.C.
1396a(a)(13)) is repealed, and
(2) clause (ix) of section 1903(m)(2)(A) (42 U.S.C.
1396b(m)(2)(A)) is repealed.
(d) Flexibility in Coverage of Non-Freestanding Look-Alikes.--
(1) In general.--Section 1905(l)(2)(B)(iii) (42 U.S.C.
1396d(l)(2)(B)(iii)) is amended by inserting ``and is not other
than an entity that is owned, controlled, or operated by
another provider'' after ``such a grant''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to service furnished on and after the date of the
enactment of this Act.
(e) GAO Report.--By not later than February 1, 2001, the
Comptroller General shall submit to Congress a report on the impact of
the amendments made by this section on access to health care for
medicaid beneficiaries and the uninsured served at health centers and
rural health clinics and the ability of health centers and rural health
clinics to become integrated in a managed care system.
SEC. 3413. TREATMENT OF STATE TAXES IMPOSED ON CERTAIN HOSPITALS THAT
PROVIDE FREE CARE.
(a) Exception From Tax Does Not Disqualify as Broad-Based Tax.--
Section 1903(w)(3) (42 U.S.C. 1396b(w)(3)) is amended--
(1) in subparagraph (B), by striking ``and (E)'' and
inserting ``(E), and (F)'', and
(2) by adding at the end the following:
``(F) In no case shall a tax not qualify as a broad-based health
care related tax under this paragraph because it does not apply to a
hospital that is exempt from taxation under section 501(c)(3) of the
Internal Revenue Code of 1986 and that does not accept payment under
the State plan under this title or under title XVIII.''.
(b) Reduction in Federal Financial Participation in Case of
Imposition of Tax.--Section 1903(b) (42 U.S.C. 1396b(b)) is amended by
adding at the end the following:
``(4) Notwithstanding the preceding provisions of this section, the
amount determined under subsection (a)(1) for any State shall be
decreased in a quarter by the amount of any health care related taxes
(described in section 1902(w)(3)(A)) that are imposed on a hospital
described in subsection (w)(3)(F) in that quarter.''.
(c) Effective Date.--The amendments made by subsection (a) shall
apply to taxes imposed before, on, or after the date of the enactment
of this Act and the amendment made by subsection (b) shall apply to
taxes imposed on or after such date.
Subchapter C--Eligibility
SEC. 3421. STATE OPTION OF CONTINUOUS ELIGIBILITY FOR 12 MONTHS;
CLARIFICATION OF STATE OPTION TO COVER CHILDREN.
(a) Continuous Eligibility Option.--Section 1902(e) (42 U.S.C.
1396a(e)) is amended by adding at the end the following new paragraph:
``(12) At the option of the State, the plan may provide that an
individual who is under an age specified by the State (not to exceed 19
years of age) and who is determined to be eligible for benefits under a
State plan approved under this title under subsection (a)(10)(A) shall
remain eligible for those benefits until the earlier of--
``(A) the end of a period (not to exceed 12 months)
following the determination; or
``(B) the time that the individual exceeds that age.''.
(b) Clarification of State Option To Cover All Children Under 19
Years of Age.--Section 1902(l)(1)(D) (42 U.S.C. 1396a(l)(1)(D)) is
amended by inserting ``(or, at the option of a State, after any earlier
date)'' after ``children born after September 30, 1983''.
(c) Effective Date.--The amendments made by this section shall
apply to medical assistance for items and services furnished on or
after October 1, 1997.
SEC. 3422. PAYMENT OF HOME-HEALTH-RELATED MEDICARE PART B PREMIUM
AMOUNT FOR CERTAIN LOW-INCOME INDIVIDUALS.
(a) Eligibility.--Section 1902(a)(10)(E) (42 U.S.C.
1396a(a)(10)(E)) is amended--
(1) by striking ``and'' at the end of clause (ii), and
(2) by inserting after clause (iii) the following:
``(iv) subject to section 1905(p)(4), for making
medical assistance available for the portion of
medicare cost sharing described in section
1905(p)(3)(A)(ii), that is attributable to the
application under section 1839(a)(5) of section
1833(d)(2) for individuals who would be described in
clause (iii) but for the fact that their income exceeds
120 percent, but is less than 175 percent, of the
official poverty line (referred to in section
1905(p)(2)) for a family of the size involved;''.
(b) 100 Percent Federal Payment.--The third sentence of section
1905(b) (42 U.S.C. 1396d(b)) is amended by inserting ``and with respect
to amounts expended for medical assistance described in section
1902(a)(10)(E)(iv) for individuals described in such section'' before
the period at the end..
SEC. 3423. PENALTY FOR FRAUDULENT ELIGIBILITY.
Section 1128B(a) (42 U.S.C. 1320a-7b(a)), as amended by section 217
of the Health Insurance Portability and Accountability Act of 1996, is
amended--
(1) by amending paragraph (6) to read as follows:
``(6) for a fee knowingly and willfully counsels or assists
an individual to dispose of assets (including by any transfer
in trust) in order for the individual to become eligible for
medical assistance under a State plan under title XIX, if
disposing of the assets results in the imposition of a period
of ineligibility for such assistance under section 1917(c),'';
and
(2) in clause (ii) of the matter following such paragraph,
by striking ``failure, or conversion by any other person'' and
inserting ``failure, conversion, or provision of counsel or
assistance by any other person''.
SEC. 3424. TREATMENT OF CERTAIN SETTLEMENT PAYMENTS.
Notwithstanding any other provision of law, the payments made from
any fund established pursuant to the settlement in the case of In re
Factor VIII or IX Concentrate Blood Products Litigation, MDL-986, no.
93-C7452 (N.D. Ill.) shall not be considered income or resources in
determining eligibility for, or the amount of benefits under, a State
plan of medical assistance approved under title XIX of the Social
Security Act.
Subchapter D--Programs of All-inclusive Care for the Elderly (PACE)
SEC. 3431. ESTABLISHMENT OF PACE PROGRAM AS MEDICAID STATE OPTION.
(a) In General.--Title XIX is amended--
(1) in section 1905(a) (42 U.S.C. 1396d(a)), as amended by
section 3403(a)--
(A) by striking ``and'' at the end of paragraph
(25);
(B) by redesignating paragraph (26) as paragraph
(27); and
(C) by inserting after paragraph (25) the following
new paragraph:
``(26) services furnished under a PACE program under
section 1932 to PACE program eligible individuals enrolled
under the program under such section; and'';
(2) by redesignating section 1932 as section 1933; and
(3) by inserting after section 1931 the following new
section:
``program of all-inclusive care for the elderly (pace)
``Sec. 1932. (a) Option.--
``(1) In general.--A State may elect to provide medical
assistance under this section with respect to PACE program
services to PACE program eligible individuals who are eligible
for medical assistance under the State plan and who are
enrolled in a PACE program under a PACE program agreement. Such
individuals need not be eligible for benefits under part A, or
enrolled under part B, of title XVIII to be eligible to enroll
under this section. In the case of an individual enrolled with
a PACE program pursuant to such an election--
``(A) the individual shall receive benefits under
the plan solely through such program, and
``(B) the PACE provider shall receive payment in
accordance with the PACE program agreement for
provision of such benefits.
A State may limit through its PACE program agreement the number
of individuals who may be enrolled in a PACE program under the
State plan.
``(2) PACE program defined.--For purposes of this section
and section 1894, the term `PACE program' means a program of
all-inclusive care for the elderly that meets the following
requirements:
``(A) Operation.--The entity operating the program
is a PACE provider (as defined in paragraph (3)).
``(B) Comprehensive benefits.--The program provides
comprehensive health care services to PACE program
eligible individuals in accordance with the PACE
program agreement and regulations under this section.
``(C) Transition.--In the case of an individual who
is enrolled under the program under this section and
whose enrollment ceases for any reason (including the
individual no longer qualifies as a PACE program
eligible individual, the termination of a PACE program
agreement, or otherwise), the program provides
assistance to the individual in obtaining necessary
transitional care through appropriate referrals and
making the individual's medical records available to
new providers.
``(3) PACE provider defined.--
``(A) In general.--For purposes of this section,
the term `PACE provider' means an entity that--
``(i) subject to subparagraph (B), is (or
is a distinct part of) a public entity or a
private, nonprofit entity organized for
charitable purposes under section 501(c)(3) of
the Internal Revenue Code of 1986, and
``(ii) has entered into a PACE program
agreement with respect to its operation of a
PACE program.
``(B) Treatment of private, for-profit providers.--
Clause (i) of subparagraph (A) shall not apply--
``(i) to entities subject to a
demonstration project waiver under subsection
(h); and
``(ii) after the date the report under
section 4014(b) of the Balanced Budget Act of
1997 is submitted, unless the Secretary
determines that any of the findings described
in subparagraph (A), (B), (C) or (D) of
paragraph (2) of such section are true.
``(4) PACE program agreement defined.--For purposes of this
section, the term `PACE program agreement' means, with respect
to a PACE provider, an agreement, consistent with this section,
section 1894 (if applicable), and regulations promulgated to
carry out such sections, between the PACE provider, the
Secretary, and a State administering agency for the operation
of a PACE program by the provider under such sections.
``(5) PACE program eligible individual defined.--For
purposes of this section, the term `PACE program eligible
individual' means, with respect to a PACE program, an
individual who--
``(A) is 55 years of age or older;
``(B) subject to subsection (c)(4), is determined
under subsection (c) to require the level of care
required under the State medicaid plan for coverage of
nursing facility services;
``(C) resides in the service area of the PACE
program; and
``(D) meets such other eligibility conditions as
may be imposed under the PACE program agreement for the
program under subsection (e)(2)(A)(ii).
``(6) PACE protocol.--For purposes of this section, the
term `PACE protocol' means the Protocol for the Program of All-
inclusive Care for the Elderly (PACE), as published by On Lok,
Inc., as of April 14, 1995.
``(7) PACE demonstration waiver program defined.--For
purposes of this section, the term `PACE demonstration waiver
program' means a demonstration program under either of the
following sections (as in effect before the date of their
repeal):
``(A) Section 603(c) of the Social Security
Amendments of 1983 (Public Law 98-21), as extended by
section 9220 of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (Public Law 99-272).
``(B) Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 (Public Law 99-509).
``(8) State administering agency defined.--For purposes of
this section, the term `State administering agency' means, with
respect to the operation of a PACE program in a State, the
agency of that State (which may be the single agency
responsible for administration of the State plan under this
title in the State) responsible for administering PACE program
agreements under this section and section 1894 in the State.
``(9) Trial period defined.--
``(A) In general.--For purposes of this section,
the term `trial period' means, with respect to a PACE
program operated by a PACE provider under a PACE
program agreement, the first 3 contract years under
such agreement with respect to such program.
``(B) Treatment of entities previously operating
pace demonstration waiver programs.--Each contract year
(including a year occurring before the effective date
of this section) during which an entity has operated a
PACE demonstration waiver program shall be counted
under subparagraph (A) as a contract year during which
the entity operated a PACE program as a PACE provider
under a PACE program agreement.
``(10) Regulations.--For purposes of this section, the term
`regulations' refers to interim final or final regulations
promulgated under subsection (f) to carry out this section and
section 1894.
``(b) Scope of Benefits; Beneficiary Safeguards.--
``(1) In general.--Under a PACE program agreement, a PACE
provider shall--
``(A) provide to PACE program eligible individuals,
regardless of source of payment and directly or under
contracts with other entities, at a minimum--
``(i) all items and services covered under
title XVIII (for individuals enrolled under
section 1894) and all items and services
covered under this title, but without any
limitation or condition as to amount, duration,
or scope and without application of
deductibles, copayments, coinsurance, or other
cost-sharing that would otherwise apply under
such title or this title, respectively; and
``(ii) all additional items and services
specified in regulations, based upon those
required under the PACE protocol;
``(B) provide such enrollees access to necessary
covered items and services 24 hours per day, every day
of the year;
``(C) provide services to such enrollees through a
comprehensive, multidisciplinary health and social
services delivery system which integrates acute and
long-term care services pursuant to regulations; and
``(D) specify the covered items and services that
will not be provided directly by the entity, and to
arrange for delivery of those items and services
through contracts meeting the requirements of
regulations.
``(2) Quality assurance; patient safeguards.--The PACE
program agreement shall require the PACE provider to have in
effect at a minimum--
``(A) a written plan of quality assurance and
improvement, and procedures implementing such plan, in
accordance with regulations, and
``(B) written safeguards of the rights of enrolled
participants (including a patient bill of rights and
procedures for grievances and appeals) in accordance
with regulations and with other requirements of this
title and Federal and State law designed for the
protection of patients.
``(c) Eligibility Determinations.--
``(1) In general.--The determination of whether an
individual is a PACE program eligible individual--
``(A) shall be made under and in accordance with
the PACE program agreement, and
``(B) who is entitled to medical assistance under
this title, shall be made (or who is not so entitled,
may be made) by the State administering agency.
``(2) Condition.--An individual is not a PACE program
eligible individual (with respect to payment under this
section) unless the individual's health status has been
determined, in accordance with regulations, to be comparable to
the health status of individuals who have participated in the
PACE demonstration waiver programs. Such determination shall be
based upon information on health status and related indicators
(such as medical diagnoses and measures of activities of daily
living, instrumental activities of daily living, and cognitive
impairment) that are part of a uniform minimum data set
collected by PACE providers on potential eligible individuals.
``(3) Annual eligibility recertifications.--
``(A) In general.--Subject to subparagraph (B), the
determination described in subsection (a)(5)(B) for an
individual shall be reevaluated at least once a year.
``(B) Exception.--The requirement of annual
reevaluation under subparagraph (A) may be waived
during a period in accordance with regulations in those
cases where the State administering agency determines
that there is no reasonable expectation of improvement
or significant change in an individual's condition
during the period because of the advanced age, severity
of the advanced age, severity of chronic condition, or
degree of impairment of functional capacity of the
individual involved.
``(4) Continuation of eligibility.--An individual who is a
PACE program eligible individual may be deemed to continue to
be such an individual notwithstanding a determination that the
individual no longer meets the requirement of subsection
(a)(5)(B) if, in accordance with regulations, in the absence of
continued coverage under a PACE program the individual
reasonably would be expected to meet such requirement within
the succeeding 6-month period.
``(5) Enrollment; disenrollment.--The enrollment and
disenrollment of PACE program eligible individuals in a PACE
program shall be pursuant to regulations and the PACE program
agreement and shall permit enrollees to voluntarily disenroll
without cause at any time.
``(d) Payments to PACE Providers on a Capitated Basis.--
``(1) In general.--In the case of a PACE provider with a
PACE program agreement under this section, except as provided
in this subsection or by regulations, the State shall make
prospective monthly payments of a capitation amount for each
PACE program eligible individual enrolled under the agreement
under this section.
``(2) Capitation amount.--The capitation amount to be
applied under this subsection for a provider for a contract
year shall be an amount specified in the PACE program agreement
for the year. Such amount shall be an amount, specified under
the PACE agreement, which is less than the amount that would
otherwise have been made under the State plan if the
individuals were not so enrolled and shall be adjusted to take
into account the comparative frailty of PACE enrollees and such
other factors as the Secretary determines to be appropriate.
The payment under this section shall be in addition to any
payment made under section 1894 for individuals who are
enrolled in a PACE program under such section.
``(e) PACE Program Agreement.--
``(1) Requirement.--
``(A) In general.--The Secretary, in close
cooperation with the State administering agency, shall
establish procedures for entering into, extending, and
terminating PACE program agreements for the operation
of PACE programs by entities that meet the requirements
for a PACE provider under this section, section 1894,
and regulations.
``(B) Numerical limitation.--
``(i) In general.--The Secretary shall not
permit the number of PACE providers with which
agreements are in effect under this section or
under section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 to exceed--
``(I) 40 as of the date of the
enactment of this section, or
``(II) as of each succeeding
anniversary of such date, the numerical
limitation under this subparagraph for
the preceding year plus 20.
Subclause (II) shall apply without regard to
the actual number of agreements in effect as of
a previous anniversary date.
``(ii) Treatment of certain private, for-
profit providers.--The numerical limitation in
clause (i) shall not apply to a PACE provider
that--
``(I) is operating under a
demonstration project waiver under
subsection (h), or
``(II) was operating under such a
waiver and subsequently qualifies for
PACE provider status pursuant to
subsection (a)(3)(B)(ii).
``(2) Service area and eligibility.--
``(A) In general.--A PACE program agreement for a
PACE program--
``(i) shall designate the service area of
the program;
``(ii) may provide additional requirements
for individuals to qualify as PACE program
eligible individuals with respect to the
program;
``(iii) shall be effective for a contract
year, but may be extended for additional
contract years in the absence of a notice by a
party to terminate and is subject to
termination by the Secretary and the State
administering agency at any time for cause (as
provided under the agreement);
``(iv) shall require a PACE provider to
meet all applicable State and local laws and
requirements; and
``(v) shall have such additional terms and
conditions as the parties may agree to
consistent with this section and regulations.
``(B) Service area overlap.--In designating a
service area under a PACE program agreement under
subparagraph (A)(i), the Secretary (in consultation
with the State administering agency) may exclude from
designation an area that is already covered under
another PACE program agreement, in order to avoid
unnecessary duplication of services and avoid impairing
the financial and service viability of an existing
program.
``(3) Data collection.--
``(A) In general.--Under a PACE program agreement,
the PACE provider shall--
``(i) collect data,
``(ii) maintain, and afford the Secretary
and the State administering agency access to,
the records relating to the program, including
pertinent financial, medical, and personnel
records, and
``(iii) make to the Secretary and the State
administering agency reports that the Secretary
finds (in consultation with State administering
agencies) necessary to monitor the operation,
cost, and effectiveness of the PACE program
under this title and title XVIII.
``(B) Requirements during trial period.--During the
first three years of operation of a PACE program
(either under this section or under a PACE
demonstration waiver program), the PACE provider shall
provide such additional data as the Secretary specifies
in regulations in order to perform the oversight
required under paragraph (4)(A).
``(4) Oversight.--
``(A) Annual, close oversight during trial
period.--During the trial period (as defined in
subsection (a)(9)) with respect to a PACE program
operated by a PACE provider, the Secretary (in
cooperation with the State administering agency) shall
conduct a comprehensive annual review of the operation
of the PACE program by the provider in order to assure
compliance with the requirements of this section and
regulations. Such a review shall include--
``(i) an on-site visit to the program site;
``(ii) comprehensive assessment of a
provider's fiscal soundness;
``(iii) comprehensive assessment of the
provider's capacity to provide all PACE
services to all enrolled participants;
``(iv) detailed analysis of the entity's
substantial compliance with all significant
requirements of this section and regulations;
and
``(v) any other elements the Secretary or
State agency considers necessary or
appropriate.
``(B) Continuing oversight.--After the trial
period, the Secretary (in cooperation with the State
administering agency) shall continue to conduct such
review of the operation of PACE providers and PACE
programs as may be appropriate, taking into account the
performance level of a provider and compliance of a
provider with all significant requirements of this
section and regulations.
``(C) Disclosure.--The results of reviews under
this paragraph shall be reported promptly to the PACE
provider, along with any recommendations for changes to
the provider's program, and shall be made available to
the public upon request.
``(5) Termination of pace provider agreements.--
``(A) In general.--Under regulations--
``(i) the Secretary or a State
administering agency may terminate a PACE
program agreement for cause, and
``(ii) a PACE provider may terminate such
an agreement after appropriate notice to the
Secretary, the State agency, and enrollees.
``(B) Causes for termination.--In accordance with
regulations establishing procedures for termination of
PACE program agreements, the Secretary or a State
administering agency may terminate a PACE program
agreement with a PACE provider for, among other
reasons, the fact that--
``(i) the Secretary or State administering
agency determines that--
``(I) there are significant
deficiencies in the quality of care
provided to enrolled participants; or
``(II) the provider has failed to
comply substantially with conditions
for a program or provider under this
section or section 1894; and
``(ii) the entity has failed to develop and
successfully initiate, within 30 days of the
date of the receipt of written notice of such a
determination, and continue implementation of a
plan to correct the deficiencies.
``(C) Termination and transition procedures.--An
entity whose PACE provider agreement is terminated
under this paragraph shall implement the transition
procedures required under subsection (a)(2)(C).
``(6) Secretary's oversight; enforcement authority.--
``(A) In general.--Under regulations, if the
Secretary determines (after consultation with the State
administering agency) that a PACE provider is failing
substantially to comply with the requirements of this
section and regulations, the Secretary (and the State
administering agency) may take any or all of the
following actions:
``(i) Condition the continuation of the
PACE program agreement upon timely execution of
a corrective action plan.
``(ii) Withhold some or all further
payments under the PACE program agreement under
this section or section 1894 with respect to
PACE program services furnished by such
provider until the deficiencies have been
corrected.
``(iii) Terminate such agreement.
``(B) Application of intermediate sanctions.--Under
regulations, the Secretary may provide for the
application against a PACE provider of remedies
described in section 1857(f)(2) (or, for periods before
January 1, 1999, section 1876(i)(6)(B)) or
1903(m)(6)(B) in the case of violations by the provider
of the type described in section 1857(f)(1) (or
1876(i)(6)(A) for such periods) or 1903(m)(6)(A),
respectively (in relation to agreements, enrollees, and
requirements under section 1894 or this section,
respectively).
``(7) Procedures for termination or imposition of
sanctions.--Under regulations, the provisions of section
1857(g) (or for periods before January 1, 1999, section
1876(i)(9)) shall apply to termination and sanctions respecting
a PACE program agreement and PACE provider under this
subsection in the same manner as they apply to a termination
and sanctions with respect to a contract and a MedicarePlus
organization under part C (or for such periods an eligible
organization under section 1876).
``(8) Timely consideration of applications for pace program
provider status.--In considering an application for PACE
provider program status, the application shall be deemed
approved unless the Secretary, within 90 days after the date of
the submission of the application to the Secretary, either
denies such request in writing or informs the applicant in
writing with respect to any additional information that is
needed in order to make a final determination with respect to
the application. After the date the Secretary receives such
additional information, the application shall be deemed
approved unless the Secretary, within 90 days of such date,
denies such request.
``(f) Regulations.--
``(1) In general.--The Secretary shall issue interim final
or final regulations to carry out this section and section
1894.
``(2) Use of pace protocol.--
``(A) In general.--In issuing such regulations, the
Secretary shall, to the extent consistent with the
provisions of this section, incorporate the
requirements applied to PACE demonstration waiver
programs under the PACE protocol.
``(B) Flexibility.--The Secretary (in close
consultation with State administering agencies) may
modify or waive such provisions of the PACE protocol in
order to provide for reasonable flexibility in adapting
the PACE service delivery model to the needs of
particular organizations (such as those in rural areas
or those that may determine it appropriate to use non-
staff physicians accordingly to State licensing law
requirements) under this section and section 1932 where
such flexibility is not inconsistent with and would not
impair the essential elements, objectives, and
requirements of the this section, including--
``(i) the focus on frail elderly qualifying
individuals who require the level of care
provided in a nursing facility;
``(ii) the delivery of comprehensive,
integrated acute and long-term care services;
``(iii) the interdisciplinary team approach
to care management and service delivery;
``(iv) capitated, integrated financing that
allows the provider to pool payments received
from public and private programs and
individuals; and
``(v) the assumption by the provider over
time of full financial risk.
``(3) Application of certain additional beneficiary and
program protections.--
``(A) In general.--In issuing such regulations and
subject to subparagraph (B), the Secretary may apply
with respect to PACE programs, providers, and
agreements such requirements of part C of title XVIII
(or, for periods before January 1, 1999, section 1876)
and section 1903(m) relating to protection of
beneficiaries and program integrity as would apply to
MedicarePlus organizations under such part C (or for
such periods eligible organizations under risk-sharing
contracts under section 1876) and to health maintenance
organizations under prepaid capitation agreements under
section 1903(m).
``(B) Considerations.--In issuing such regulations,
the Secretary shall--
``(i) take into account the differences
between populations served and benefits
provided under this section and under part C of
title XVIII (or, for periods before January 1,
1999, section 1876) and section 1903(m);
``(ii) not include any requirement that
conflicts with carrying out PACE programs under
this section; and
``(iii) not include any requirement
restricting the proportion of enrollees who are
eligible for benefits under this title or title
XVIII.
``(g) Waivers of Requirements.--With respect to carrying out a PACE
program under this section, the following requirements of this title
(and regulations relating to such requirements) shall not apply:
``(1) Section 1902(a)(1), relating to any requirement that
PACE programs or PACE program services be provided in all areas
of a State.
``(2) Section 1902(a)(10), insofar as such section relates
to comparability of services among different population groups.
``(3) Sections 1902(a)(23) and 1915(b)(4), relating to
freedom of choice of providers under a PACE program.
``(4) Section 1903(m)(2)(A), insofar as it restricts a PACE
provider from receiving prepaid capitation payments.
``(h) Demonstration Project for For-Profit Entities.--
``(1) In general.--In order to demonstrate the operation of
a PACE program by a private, for-profit entity, the Secretary
(in close consultation with State administering agencies) shall
grant waivers from the requirement under subsection (a)(3) that
a PACE provider may not be a for-profit, private entity.
``(2) Similar terms and conditions.--
``(A) In general.--Except as provided under
subparagraph (B), and paragraph (1), the terms and
conditions for operation of a PACE program by a
provider under this subsection shall be the same as
those for PACE providers that are nonprofit, private
organizations.
``(B) Numerical limitation.--The number of programs
for which waivers are granted under this subsection
shall not exceed 10. Programs with waivers granted
under this subsection shall not be counted against the
numerical limitation specified in subsection (e)(1)(B).
``(i) Post-Eligibility Treatment of Income.--A State may provide
for post-eligibility treatment of income for individuals enrolled in
PACE programs under this section in the same manner as a State treats
post-eligibility income for individuals receiving services under a
waiver under section 1915(c).
``(j) Miscellaneous Provisions.--
``(1) Construction.--Nothing in this section or section
1894 shall be construed as preventing a PACE provider from
entering into contracts with other governmental or
nongovernmental payers for the care of PACE program eligible
individuals who are not eligible for benefits under part A, or
enrolled under part B, of title XVIII or eligible for medical
assistance under this title.''.
(b) Conforming Amendments.--
(1) Section 1902 (42 U.S.C. 1396a), as amended by section
3403(c), is amended--
(A) in subsection (a)(10)(C)(iv), by striking
``(25)'' and inserting ``(26)'', and
(B) in subsection (j), by striking ``(26)'' and
inserting ``(27)''.
(2) Section 1924(a)(5) (42 U.S.C. 1396r-5(a)(5)) is
amended--
(A) in the heading, by striking ``from
organizations receiving certain waivers'' and inserting
``under pace programs'', and
(B) by striking ``from any organization'' and all
that follows and inserting ``under a PACE demonstration
waiver program (as defined in subsection (a)(7) of
section 1932) or under a PACE program under section
1894.''.
(3) Section 1903(f)(4)(C) (42 U.S.C. 1396b(f)(4)(C)) is
amended by inserting ``or who is a PACE program eligible
individual enrolled in a PACE program under section 1932,''
after ``section 1902(a)(10)(A),''.
SEC. 3432. COVERAGE OF PACE UNDER THE MEDICARE PROGRAM.
Title XVIII (42 U.S.C. 1395 et seq.) is amended by inserting after
section 1894 the following new section:
``payments to, and coverage of benefits under, programs of all-
inclusive care for the elderly (pace)
``Sec. 1894. (a) Receipt of Benefits Through Enrollment in PACE
Program; Definitions for PACE Program Related Terms.--
``(1) Benefits through enrollment in a pace program.--In
accordance with this section, in the case of an individual who
is entitled to benefits under part A or enrolled under part B
and who is a PACE program eligible individual with respect to a
PACE program offered by a PACE provider under a PACE program
agreement--
``(A) the individual may enroll in the program
under this section; and
``(B) so long as the individual is so enrolled and
in accordance with regulations--
``(i) the individual shall receive benefits
under this title solely through such program,
and
``(ii) the PACE provider is entitled to
payment under and in accordance with this
section and such agreement for provision of
such benefits.
``(2) Application of definitions.--The definitions of terms
under section 1932(a) shall apply under this section in the
same manner as they apply under section 1932.
``(b) Application of Medicaid Terms and Conditions.--Except as
provided in this section, the terms and conditions for the operation
and participation of PACE program eligible individuals in PACE programs
offered by PACE providers under PACE program agreements under section
1932 shall apply for purposes of this section.
``(c) Payment.--
``(1) Adjustment in payment amounts.--In the case of
individuals enrolled in a PACE program under this section, the
amount of payment under this section shall not be the amount
calculated under section 1932(d)(2), but shall be an amount,
specified under the PACE agreement, based upon payment rates
established for purposes of payment under section 1854 (or, for
periods before January 1, 1999, for purposes of risk-sharing
contracts under section 1876) and shall be adjusted to take
into account the comparative frailty of PACE enrollees and such
other factors as the Secretary determines to be appropriate.
Such amount under such an agreement shall be computed in a
manner so that the total payment level for all PACE program
eligible individuals enrolled under a program is less than the
projected payment under this title for a comparable population
not enrolled under a PACE program.
``(2) Form.--The Secretary shall make prospective monthly
payments of a capitation amount for each PACE program eligible
individual enrolled under this section in the same manner and
from the same sources as payments are made to a MedicarePlus
organization under section 1854 (or, for periods beginning
before January 1, 1999, to an eligible organization under a
risk-sharing contract under section 1876). Such payments shall
be subject to adjustment in the manner described in section
1854(a)(2) or section 1876(a)(1)(E), as the case may be.
``(d) Waivers of Requirements.--With respect to carrying out a PACE
program under this section, the following requirements of this title
(and regulations relating to such requirements) are waived and shall
not apply:
``(1) Section 1812, insofar as it limits coverage of
institutional services.
``(2) Sections 1813, 1814, 1833, and 1886, insofar as such
sections relate to rules for payment for benefits.
``(3) Sections 1814(a)(2)(B), 1814(a)(2)(C), and
1835(a)(2)(A), insofar as they limit coverage of extended care
services or home health services.
``(4) Section 1861(i), insofar as it imposes a 3-day prior
hospitalization requirement for coverage of extended care
services.
``(5) Sections 1862(a)(1) and 1862(a)(9), insofar as they
may prevent payment for PACE program services to individuals
enrolled under PACE programs.''.
SEC. 3433. EFFECTIVE DATE; TRANSITION.
(a) Timely Issuance of Regulations; Effective Date.--The Secretary
of Health and Human Services shall promulgate regulations to carry out
this subchapter in a timely manner. Such regulations shall be designed
so that entities may establish and operate PACE programs under sections
1894 and 1932 for periods beginning not later than 1 year after the
date of the enactment of this Act.
(b) Expansion and Transition for PACE Demonstration Project
Waivers.--
(1) Expansion in current number and extension of
demonstration projects.--Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986, as amended by section 4118(g) of
the Omnibus Budget Reconciliation Act of 1987, is amended--
(A) in paragraph (1), by inserting before the
period at the end the following: ``, except that the
Secretary shall grant waivers of such requirements to
up to the applicable numerical limitation specified in
section 1932(e)(1)(B) of the Social Security Act''; and
(B) in paragraph (2)--
(i) in subparagraph (A), by striking ``,
including permitting the organization to assume
progressively (over the initial 3-year period
of the waiver) the full financial risk''; and
(ii) in subparagraph (C), by adding at the
end the following: ``In granting further
extensions, an organization shall not be
required to provide for reporting of
information which is only required because of
the demonstration nature of the project.''.
(2) Elimination of replication requirement.--Subparagraph
(B) of paragraph (2) of such section shall not apply to waivers
granted under such section after the date of the enactment of
this Act.
(3) Timely consideration of applications.--In considering
an application for waivers under such section before the
effective date of repeals under subsection (c), subject to the
numerical limitation under the amendment made by paragraph (1),
the application shall be deemed approved unless the Secretary
of Health and Human Services, within 90 days after the date of
its submission to the Secretary, either denies such request in
writing or informs the applicant in writing with respect to any
additional information which is needed in order to make a final
determination with respect to the application. After the date
the Secretary receives such additional information, the
application shall be deemed approved unless the Secretary,
within 90 days of such date, denies such request.
(c) Priority and Special Consideration in Application.--During the
3-year period beginning on the date of the enactment of this Act:
(1) Provider status.--The Secretary of Health and Human
Services shall give priority, in processing applications of
entities to qualify as PACE programs under section 1894 or 1932
of the Social Security Act--
(A) first, to entities that are operating a PACE
demonstration waiver program (as defined in section
1932(a)(7) of such Act), and
(B) then entities that have applied to operate such
a program as of May 1, 1997.
(2) New waivers.--The Secretary shall give priority, in the
awarding of additional waivers under section 9412(b) of the
Omnibus Budget Reconciliation Act of 1986--
(A) to any entities that have applied for such
waivers under such section as of May 1, 1997; and
(B) to any entity that, as of May 1, 1997, has
formally contracted with a State to provide services
for which payment is made on a capitated basis with an
understanding that the entity was seeking to become a
PACE provider.
(3) Special consideration.--The Secretary shall give
special consideration, in the processing of applications
described in paragraph (1) and the awarding of waivers
described in paragraph (2), to an entity which as of May 1,
1997 through formal activities (such as entering into contracts
for feasibility studies) has indicated a specific intent to
become a PACE provider.
(d) Repeal of Current PACE Demonstration Project Waiver
Authority.--
(1) In general.--Subject to paragraphs (2) and (3), the
following provisions of law are repealed:
(A) Section 603(c) of the Social Security
Amendments of 1983 (Public Law 98-21).
(B) Section 9220 of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (Public Law 99-272).
(C) Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 (Public Law 99-509).
(2) Delay in application.--
(A) In general.--Subject to subparagraph (B), the
repeals made by paragraph (1) shall not apply to
waivers granted before the initial effective date of
regulations described in subsection (a).
(B) Application to approved waivers.--Such repeals
shall apply to waivers granted before such date only
after allowing such organizations a transition period
(of up to 24 months) in order to permit sufficient time
for an orderly transition from demonstration project
authority to general authority provided under the
amendments made by this subchapter.
(3) State option.--A State may elect to maintain the PACE
program which (as of the date of the enactment of this Act)
were operating under the authority described in paragraph (1)
without electing to use the authority under section 1932 of the
Public Health Service Act.
SEC. 3434. STUDY AND REPORTS.
(a) Study.--
(1) In general.--The Secretary of Health and Human Services
(in close consultation with State administering agencies, as
defined in section 1932(a)(8) of the Social Security Act) shall
conduct a study of the quality and cost of providing PACE
program services under the medicare and medicaid programs under
the amendments made by this subchapter.
(2) Study of private, for-profit providers.--Such study
shall specifically compare the costs, quality, and access to
services by entities that are private, for-profit entities
operating under demonstration projects waivers granted under
section 1932(h) of the Social Security Act with the costs,
quality, and access to services of other PACE providers.
(b) Report.--
(1) In general.--Not later than 4 years after the date of
the enactment of this Act, the Secretary shall provide for a
report to Congress on the impact of such amendments on quality
and cost of services. The Secretary shall include in such
report such recommendations for changes in the operation of
such amendments as the Secretary deems appropriate.
(2) Treatment of private, for-profit providers.--The report
shall include specific findings on whether any of the following
findings is true:
(A) The number of covered lives enrolled with
entities operating under demonstration project waivers
under section 1932(h) of the Social Security Act is
fewer than 800 (or such lesser number as the Secretary
may find statistically sufficient to make
determinations respecting findings described in the
succeeding subparagraphs).
(B) The population enrolled with such entities is
less frail than the population enrolled with other PACE
providers.
(C) Access to or quality of care for individuals
enrolled with such entities is lower than such access
or quality for individuals enrolled with other PACE
providers.
(D) The application of such section has resulted in
an increase in expenditures under the medicare or
medicaid programs above the expenditures that would
have been made if such section did not apply.
(c) Information Included in Annual Recommendations.--The Medicare
Payment Advisory Commission shall include in its annual report under
section 1805(b)(1)(B) of the Social Security Act recommendations on the
methodology and level of payments made to PACE providers under section
1894(d) of such Act and on the treatment of private, for-profit
entities as PACE providers.
Subchapter E--Benefits
SEC. 3441. ELIMINATION OF REQUIREMENT TO PAY FOR PRIVATE INSURANCE.
(a) Repeal of State Plan Provision.--Section 1902(a)(25) (42 U.S.C.
1396a(a)(25)) is amended--
(1) by striking subparagraph (G); and
(2) by redesignating subparagraphs (H) and (I) as
subparagraphs (G) and (H), respectively.
(b) Making Provision Optional.--Section 1906 (42 U.S.C. 1396e) is
amended--
(1) in subsection (a)--
(A) by striking ``For purposes of section
1902(a)(25)(G) and subject to subsection (d), each''
and inserting ``Each'',
(B) in paragraph (1), by striking ``shall'' and
inserting ``may'', and
(C) in paragraph (2), by striking ``shall'' and
inserting ``may''; and
(2) by striking subsection (d).
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 3442. PERMITTING SAME COPAYMENTS IN HEALTH MAINTENANCE
ORGANIZATIONS AS IN FEE-FOR-SERVICE.
(a) In General.--Section 1916(a)(2)(D) (42 U.S.C. 1396o(a)(2)(D))
is amended by inserting ``(at the option of the State)'' after
``section 1905(a)(4)(C), or''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to cost sharing with respect to deductions, cost sharing and
similar charges imposed for items and services furnished on or after
the date of the enactment of this Act.
SEC. 3443. PHYSICIAN QUALIFICATION REQUIREMENTS.
(a) In General.--Section 1903(i) (42 U.S.C. 1396b(i)) is amended by
striking paragraph (12)
(b) Effective Date.--The amendment made by subsection (a) shall
apply to services furnished on or after the date of the enactment of
this Act.
SEC. 3444. ELIMINATION OF REQUIREMENT OF PRIOR INSTITUTIONALIZATION
WITH RESPECT TO HABILITATION SERVICES FURNISHED UNDER A
WAIVER FOR HOME OR COMMUNITY-BASED SERVICES.
(a) In General.--Section 1915(c)(5) (42 U.S.C. 1396n(c)(5)) is
amended, in the matter preceding subparagraph (A), by striking ``, with
respect to individuals who receive such services after discharge from a
nursing facility or intermediate care facility for the mentally
retarded''.
(b) Effective Date.--The amendment made by subsection (a) apply to
services furnished on or after October 1, 1997.
SEC. 3445. BENEFITS FOR SERVICES OF PHYSICIAN ASSISTANTS.
(a) In General.--Section 1905(a) (42 U.S.C. 1396d(a)), as amended
by sections 3403(a) and 3431(a), is amended--
(1) by redesignating paragraphs (22) through (27) as
paragraphs (23) through (28), and
(2) by inserting after paragraph (21) the following new
paragraph:
``(22) services furnished by an physician assistant (as
defined in section 1861(aa)(5)) which the assistant is legally
authorized to perform under State law and with the supervision
of a physician;''.
(b) Conforming Amendments.--Section 1902 (42 U.S.C. 1396a), as
amended by sections 3403(c) and 3431(b)(1), is amended--
(1) in subsection (a)(10)(C)(iv), by striking ``(26)'' and
inserting ``(27)'', and
(2) in subsection (j), by striking ``(27)'' and inserting
``(28)''.
SEC. 3446. STUDY AND REPORT ON ACTUARIAL VALUE OF EPSDT BENEFIT.
(a) Study.--The Secretary of Health and Human Services shall
provide for a study on the actuarial value of the provision of early
and periodic screening, diagnostic, and treatment services (as defined
in section 1905(r) of the Social Security Act (42 U.S.C. 1396d(r)))
under the medicaid program under title XIX of such Act. Such study
shall include an examination of the portion of such value that is
attributable to paragraph (5) of such section and to the second
sentence of such section.
(b) Report.--By not later than 18 months after the date of the
enactment of this Act, the Secretary shall submit a report to Congress
on the results of the study under subsection (a).
Subchapter F--Administration
SEC. 3451. ELIMINATION OF DUPLICATIVE INSPECTION OF CARE REQUIREMENTS
FOR ICFS/MR AND MENTAL HOSPITALS.
(a) Mental Hospitals.--Section 1902(a)(26) (42 U.S.C. 1396a(a)(26))
is amended--
(1) by striking ``provide--
``(A) with respect to each patient'' and inserting
``provide, with respect to each patient''; and
(2) by striking subparagraphs (B) and (C).
(b) ICFS/MR.--Section 1902(a)(31) (42 U.S.C. 1396a(a)(31)) is
amended--
(1) by striking ``provide--
``(A) with respect to each patient'' and inserting
``provide, with respect to each patient''; and
(2) by striking subparagraphs (B) and (C).
(c) Effective Date.--The amendments made by this section take
effect on the date of the enactment of this Act.
SEC. 3452. ALTERNATIVE SANCTIONS FOR NONCOMPLIANT ICFS/MR.
(a) In General.--Section 1902(i)(1)(B) (42 U.S.C. 1396a(i)(1)(B))
is amended by striking ``provide'' and inserting ``establish
alternative remedies if the State demonstrates to the Secretary's
satisfaction that the alternative remedies are effective in deterring
noncompliance and correcting deficiencies, and may provide''.
(b) Effective Date.--The amendments made by subsection (a) takes
effect on the date of the enactment of this Act.
SEC. 3453. MODIFICATION OF MMIS REQUIREMENTS.
(a) In General.--Section 1903(r) (42 U.S.C. 1396b(r)) is amended--
(1) by striking all that precedes paragraph (5) and
inserting the following:
``(r)(1) In order to receive payments under subsection (a) for use
of automated data systems in administration of the State plan under
this title, a State must have in operation mechanized claims processing
and information retrieval systems that meet the requirements of this
subsection and that the Secretary has found--
``(A) is adequate to provide efficient, economical, and
effective administration of such State plan;
``(B) is compatible with the claims processing and
information retrieval systems used in the administration of
title XVIII, and for this purpose--
``(i) has a uniform identification coding
system for providers, other payees, and
beneficiaries under this title or title XVIII;
``(ii) provides liaison between States and
carriers and intermediaries with agreements
under title XVIII to facilitate timely exchange
of appropriate data; and
``(iii) provides for exchange of data
between the States and the Secretary with
respect to persons sanctioned under this title
or title XVIII;
``(C) is capable of providing accurate and timely data;
``(D) is complying with the applicable provisions of part C
of title XI;
``(E) is designed to receive provider claims in standard
formats to the extent specified by the Secretary; and
``(F) effective for claims filed on or after January 1,
1999, provides for electronic transmission of claims data in
the format specified by the Secretary and consistent with the
Medicaid Statistical Information System (MSIS) (including
detailed individual enrollee encounter data and other
information that the Secretary may find necessary).''.
(2) in paragraph (5)--
(A) by striking subparagraph (B);
(B) by striking all that precedes clause (i) and
inserting the following:
``(2) In order to meet the requirements of this paragraph,
mechanized claims processing and information retrieval systems must
meet the following requirements:'';
(C) in clause (iii), by striking ``under paragraph
(6)''; and
(D) by redesignating clauses (i) through (iii) as
paragraphs (A) through (C); and
(3) by striking paragraphs (6), (7), and (8).
(b) Conforming Amendments.--Section 1902(a)(25)(A)(ii) (42 U.S.C.
1396a(a)(25)(A)(ii)) is amended by striking all that follows ``shall''
and inserting the following: ``be integrated with, and be monitored as
a part of the Secretary's review of, the State's mechanized claims
processing and information retrieval system under section 1903(r);''.
(c) Effective Date.--Except as otherwise specifically provided, the
amendments made by this section shall take effect on January 1, 1998.
SEC. 3454. FACILITATING IMPOSITION OF STATE ALTERNATIVE REMEDIES ON
NONCOMPLIANT NURSING FACILITIES.
(a) In General.--Section 1919(h)(3)(D) (42 U.S.C. 1396r(h)(3)(D))
is amended--
(1) by inserting ``and'' at the end of clause (i);
(2) by striking ``, and'' at the end of clause (ii) and
inserting a period; and
(3) by striking clause (iii).
(b) Effective Date.--The amendments made by subsection (a) take
effect on the date of the enactment of this Act.
SEC. 3455. MEDICALLY ACCEPTED INDICATION.
Section 1927(g)(1)(B)(i) (42 U.S.C. 1396r-8(g)(1)(B)(i)) is
amended--
(1) by striking ``and'' at the end of subclause (II),
(2) by redesignating subclause (III) as subclause (IV), and
(3) by inserting after subclause (II) the following:
``(III) the DRUGDEX Information
System; and''.
SEC. 3456. CONTINUATION OF 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:
``(e)(1) The provisions of this subsection shall apply to the
extension of State-wide comprehensive demonstration project (in this
subsection referred to as `waiver project') for which a waiver of
compliance with requirements of title XIX is granted under subsection
(a).
``(2) Not earlier than 1 year before the date the waiver under
subsection (a) with respect to a waiver project would otherwise expire,
the chief executive officer of the State which is operating the project
may submit to the Secretary a written request for an extension, of up
to 3 years, of the project.
``(3) If the Secretary fails to respond to the request within 6
months after the date it is submitted, the request is deemed to have
been granted.
``(4) If such a request is granted, the deadline for submittal of a
final report under the waiver project is deemed to have been extended
until the date that is 1 year after the date the waivers under
subsection (a) with respect to the project would otherwise have
expired.
``(5) The Secretary shall release an evaluation of each such
project not later than 1 year after the date of receipt of the final
report.
``(6) Subject to paragraphs (4) and (7), the extension of a waiver
project under this subsection shall be on the same terms and conditions
(including applicable terms and conditions relating to quality and
access of services, budget neutrality, data and reporting requirements,
and special population protections) that applied to the project before
its extension under this subsection.
``(7) If an original condition of approval of a waiver project was
that Federal expenditures under the project not exceed the Federal
expenditures that would otherwise have been made, the Secretary shall
take such steps as may be necessary to assure that, in the extension of
the project under this subsection, such condition continues to be met.
In applying the previous sentence, the Secretary shall take into
account the Secretary's best estimate of rates of change in
expenditures at the time of the extension.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to demonstration projects initially approved before, on, or after
the date of the enactment of this Act.
SEC. 3457. AUTHORIZING ADMINISTRATIVE STREAMLINING AND PRIVATIZING
MODIFICATIONS UNDER THE MEDICAID PROGRAM.
Section 1902 (42 U.S.C. 1396a) is amended by adding at the end the
following:
``(aa)(1) Notwithstanding any other provision of law, no provision
of law shall be construed as preventing any State from allowing
determinations of eligibility to receive medical assistance under this
title to be made by an entity that is not a State or local government,
or by an individual who is not an employee of a State or local
government, which meets such qualifications as the State determines.
For purposes of any Federal law, such determinations shall be
considered to be made by the State and by a State agency.
``(2) Nothing in this subsection shall be construed as affecting--
``(A) the conditions for eligibility for benefits
(including any conditions relating to income or resources); and
``(B) the rights to challenge determinations regarding
eligibility or rights to benefits; and
``(C) determinations regarding quality control or error
rates.''.
SEC. 3458. EXTENSION OF MORATORIUM.
Section 6408(a)(3) of the Omnibus Budget Reconciliation Act of
1989, as amended by section 13642 of the Omnibus Budget Reconciliation
Act of 1993, is amended by striking ``December 31, 1995'' and inserting
``December 31, 2002''.
CHAPTER 2--QUALITY ASSURANCE
SEC. 3461. REQUIREMENTS TO ENSURE QUALITY OF AND ACCESS TO CARE UNDER
MANAGED CARE PLANS.
(a) State Plan Requirement.--Section 1902(a) (42 U.S.C. 1396a(a))
is amended--
(1) in paragraph (62), by striking ``; and'' at the end and
inserting a semicolon;
(2) by striking the period at the end of paragraph (63) and
inserting ``; and''; and
(3) by inserting after paragraph (63) the following new
paragraph:
``(64) provide, with respect to all contracts described in
section 1903(m)(2)(A) with an organization or provider, that--
``(A) the State agency develops and implements a
quality assessment and improvement strategy, consistent
with standards that the Secretary shall establish, in
consultation with the States, and monitor and that do
not preempt the application of stricter State
standards, which includes--
``(i) standards for access to care so that
covered services are available within
reasonable timeframes and in a manner that
ensures continuity of care and adequate primary
care and, where applicable, specialized
services capacity, including pediatric
specialized services for special needs children
(as defined in section 1915(i)); and
``(ii) procedures for monitoring and
evaluating the quality and appropriateness of
care and services to beneficiaries that reflect
the full spectrum of populations enrolled under
the contract and that include--
``(I) requirements for provision of
quality assurance data to the State
using the data and information set that
the Secretary shall specify with
respect to entities contracting under
section 1876 or alternative data
requirements approved by the Secretary;
``(II) regular and periodic
examination of the scope and content of
the quality improvement strategy; and
``(III) other aspects of care and
service directly related to the
improvement of quality of care
(including grievance procedures and
marketing and information standards);
and
``(B) that adequate provision is made, consistent
with standards that the Secretary shall specify and
monitor, with respect to financial reporting under the
contracts.''.
(b) Deemed Compliance.--Section 1903(m) (42 U.S.C. 1396b(m)) is
amended by adding at the end the following:
``(7) Deemed compliance.--
``(A) Medicare organizations.--At the option of a State,
the requirements of the previous provisions of this subsection
shall not apply with respect to a health maintenance
organization if the organization is an eligible organization
with a contract in effect under section 1876 or a MedicarePlus
organization with a contract in effect under C of title XVIII.
``(B) Private accreditation.--
``(i) In general.--At the option of a State, such
requirements shall not apply with respect to a health
maintenance organization if--
``(I) the organization is accredited by an
organization meeting the requirements described
in subparagraph (C); and
``(II) the standards and process under
which the organization is accredited meet such
requirements as are established under clause
(ii), without regard to whether or not the time
requirement of such clause is satisfied.
``(ii) Standards and process.--Not later than 180
days after the date of the enactment of this paragraph,
the Secretary shall specify requirements for the
standards and process under which a health maintenance
organization is accredited by an organization meeting
the requirements of subparagraph (C).
``(C) Accrediting organization.--An accrediting
organization meets the requirements of this subparagraph if the
organization--
``(i) is a private, nonprofit organization;
``(ii) exists for the primary purpose of
accrediting managed care organizations or health care
providers; and
``(iii) is independent of health care providers or
associations of health care providers.''.
(c) Application to Managed Care Entities.--Section 1903(m)(2)(A)
(42 U.S.C. 1396b(m)(2)(A)) is amended--
(1) by striking ``and'' at the end of clause (x),
(2) by striking the period at the end of clause (xi) and
inserting ``; and'', and
(3) by adding at the end the following new clause:
``(xii) such contract provides for--
``(I) submitting to the State agency such
information as may be necessary to monitor the care
delivered to members,
``(II) maintenance of an internal quality assurance
program consistent with section 1902(a)(64)(A), and
meeting standards that the Secretary shall establish in
regulations; and
``(III) providing effective procedures for hearing
and resolving grievances between the entity and members
enrolled with the organization under this
subsection.''.
(d) Application to Primary Care Case Management Contracts.--Section
1905(t)(3), as added by section 3403(b), is amended--
(1) by striking ``and'' at the end of subparagraph (D),
(2) by striking the period at the end of subparagraph (E)
and inserting ``; and'', and
(3) by adding at the end the following new subparagraph:
``(F) if payment is made to the organization on a prepaid
capitated or other risk basis, compliance with the requirements
of section 1903(m)(2)(A)(xii) in the same manner such
requirements apply to a health maintenance organization under
section 1903(m)(2)(A).''.
(e) Effective Date.--The amendments made by this section apply to
agreements between a State agency and an organization entered into or
renewed on or after January 1, 1999.
SEC. 3462. SOLVENCY STANDARDS FOR CERTAIN HEALTH MAINTENANCE
ORGANIZATIONS.
(a) In General.--Section 1903(m)(1) (42 U.S.C. 1396b(m)(1)) is
amended--
(1) in subparagraph (A)(ii), by inserting ``, meets the
requirements of subparagraph (C)(i) (if applicable),'' after
``provision is satisfactory to the State'', and
(2) by adding at the end the following:
``(C)(i) Subject to clause (ii), a provision meets the requirements
of this subparagraph for an organization if the organization meets
solvency standards established by the State for private health
maintenance organizations or is licensed or certified by the State as a
risk-bearing entity.
``(ii) Clause (i) shall not apply to an organization if--
``(I) the organization is not responsible for the provision
(directly or through arrangements with providers of services)
of inpatient hospital services and physicians' services;
``(II) the organization is a public entity;
``(III) the solvency of the organization is guaranteed by
the State; or
``(IV) the organization is (or is controlled by) one or
more federally-qualified health centers and meets solvency
standards established by the State for such an organization.
For purposes of subclause (IV), the term `control' means the
possession, whether direct or indirect, of the power to direct or cause
the direction of the management and policies of the organization
through membership, board representation, or an ownership interest
equal to or greater than 50.1 percent.''
(b) Effective Date.--The amendments made by subsection (a) shall
apply to contracts entered into or renewed on or after October 1, 1998.
(c) Transition.--In the case of a health maintenance organization
that as of the date of the enactment of this Act has entered into a
contract with a State for the provision of medical assistance under
title XIX under which the organization assumes full financial risk and
is receiving capitation payments, the amendment made by subsection (a)
shall not apply to such organization until 3 years after the date of
the enactment of this Act.
SEC. 3463. APPLICATION OF PRUDENT LAYPERSON STANDARD FOR EMERGENCY
MEDICAL CONDITION AND PROHIBITION OF GAG RULE
RESTRICTIONS.
Section 1903(m) (42 U.S.C. 1396b(m)) is amended by adding at the
end the following:
``(8)(A)(i) Each contract with a health maintenance organization
under this subsection shall require the organization--
``(I) to provide coverage for emergency services (as
defined in subparagraph (B)) without regard to prior
authorization or the emergency care provider's contractual
relationship with the organization, and
``(II) to comply with guidelines established under section
1852(d)(2) (respecting coordination of post-stabilization care)
in the same manner as such guidelines apply to MedicarePlus
plans offered under part C of title XVIII.
``(B) In subparagraph (A)(i)(I), the term `emergency services'
means, with respect to an individual enrolled with an organization,
covered inpatient and outpatient services that--
``(i) are furnished by a provider that is qualified to
furnish such services under this title, and
``(ii) are needed to evaluate or stabilize an emergency
medical condition (as defined in subparagraph (C)).
``(C) In subparagraph (B)(ii), the term `emergency medical
condition' means a medical condition manifesting itself by acute
symptoms of sufficient severity such that a prudent layperson, who
possesses an average knowledge of health and medicine, could reasonably
expect the absence of immediate medical attention to result in--
``(i) placing the health of the individual (or, with
respect to a pregnant woman, the health of the woman or her
unborn child) in serious jeopardy,
``(ii) serious impairment to bodily functions, or
``(iii) serious dysfunction of any bodily organ or part.
``(9)(A) Subject to subparagraphs (B) and (C), under a contract
under this subsection a health maintenance organization (in relation to
an individual enrolled under the contract) shall not prohibit or
otherwise restrict a covered health care professional (as defined in
subparagraph (D)) from advising such an individual who is a patient of
the professional about the health status of the individual or medical
care or treatment for the individual's condition or disease, regardless
of whether benefits for such care or treatment are provided under the
plan, if the professional is acting within the lawful scope of
practice.
``(B) Subparagraph (A) shall not be construed as requiring a health
maintenance organization to provide, reimburse for, or provide coverage
of a counseling or referral service if the organization--
``(i) objects to the provision of such service on moral or
religious grounds; and
``(ii) in the manner and through the written
instrumentalities such organization deems appropriate, makes
available information on its policies regarding such service to
prospective enrollees before or during enrollment and to
enrollees within 90 days after the date that the organization
or plan adopts a change in policy regarding such a counseling
or referral service.
``(C) Nothing in subparagraph (B) shall be construed to affect
disclosure requirements under State law or under the Employee
Retirement Income Security Act of 1974.
``(D) For purposes of this paragraph, the term `health care
professional' means a physician (as defined in section 1861(r)) or
other health care professional if coverage for the professional's
services is provided under the contract under this subsection for the
services of the professional. Such term includes a podiatrist,
optometrist, chiropractor, psychologist, dentist, physician assistant,
physical or occupational therapist and therapy assistant, speech-
language pathologist, audiologist, registered or licensed practical
nurse (including nurse practitioner, clinical nurse specialist,
certified registered nurse anesthetist, and certified nurse-midwife),
licensed certified social worker, registered respiratory therapist, and
certified respiratory therapy technician.''.
SEC. 3464. ADDITIONAL FRAUD AND ABUSE PROTECTIONS IN MANAGED CARE.
(a) Protection Against Marketing Abuses.--Section 1903(m) (42
U.S.C. 1396b(m)), as amended by section 3463, is amended--
(1) in paragraph (2)(A)(viii), by inserting ``and
compliance with the requirements of paragraphs (10) and (11)''
after ``of this subsection'', and
(2) by adding at the end the following:
``(10)(A)(i) A health maintenance organization with respect to
activities under this subsection may not distribute directly or through
any agent or independent contractor marketing materials within any
State--
``(I) without the prior approval of the State; and
``(II) that contain false or materially misleading
information.
``(ii) In the process of reviewing and approving such materials,
the State shall provide for consultation with a medical care advisory
committee.
``(iii) The State may not enter into or renew a contract with a
health maintenance organization for the provision of services to
individuals enrolled under the State plan under this title if the State
determines that the entity distributed directly or through any agent or
independent contractor marketing materials in violation of clause
(i)(II).
``(B) A health maintenance organization shall distribute marketing
materials to the entire service area of such organization.
``(C) A health maintenance organization, or any agency of such
organization, may not seek to influence an individual's enrollment with
the organization in conjunction with the sale of any other insurance.
``(D) Each health maintenance organization shall comply with such
procedures and conditions as the Secretary prescribes in order to
ensure that, before an individual is enrolled with the organization
under this title, the individual is provided accurate oral and written
and sufficient information to make an informed decision whether or not
to enroll.
``(E) Each health maintenance organization shall not, directly or
indirectly, conduct door-to-door, telephonic, or other `cold call'
marketing of enrollment under this title.''.
(b) Prohibiting Affiliations With Individuals Debarred by Federal
Agencies.--Section 1903(m) (42 U.S.C. 1396b(m)), as amended by section
3463 and subsection (a), is further amended by adding at the end the
following:
``(11)(A) A health maintenance organization may not knowingly--
``(i) have a person described in subparagraph (C) as a
director, officer, partner, or person with beneficial ownership
of more than 5 percent of the organization equity; or
``(ii) have an employment, consulting, or other agreement
with a person described in such subparagraph for the provision
of items and services that are significant and material to the
organization's obligations under its contract with the State.
``(B) If a State finds that a health maintenance organization is
not in compliance with clause (i) or (ii) of subparagraph (A), the
State--
``(i) shall notify the Secretary of such noncompliance;
``(ii) may continue an existing agreement with the
organization unless the Secretary (in consultation with the
Inspector General of the Department of Health and Human
Services) directs otherwise; and
``(iii) may not renew or otherwise extend the duration of
an existing agreement with the organization unless the
Secretary (in consultation with the Inspector General of the
Department of Health and Human Services) provides to the State
and to the Congress a written statement describing compelling
reasons that exist for renewing or extending the agreement.
``(C) A person is described in this subparagraph if such person--
``(i) is debarred, suspended, or otherwise excluded from
participating in procurement activities under the Federal
acquisition regulation or from participating in nonprocurement
activities under regulations issued pursuant to Executive Order
12549; or
``(ii) is an affiliate (within the meaning of the Federal
acquisition regulation) of a person described in clause (i).''.
(c) Application of State Conflict-of-Interest Safeguards.--Section
1903(m)(2)(A) (42 U.S.C. 1396b(m)(2)(A)), as amended by section
3461(c), is amended--
(1) by striking ``and'' at the end of clause (xi),
(2) by striking the period at the end of clause (xii) and
inserting ``; and'', and
(3) by inserting after clause (xi) the following:
``(xiii) the State has in effect conflict-of-interest
safeguards with respect to officers and employees of the State
with responsibilities relating to contracts with such
organizations and to any default enrollment process that are at
least as effective as the Federal safeguards provided under
section 27 of the Office of Federal Procurement Policy Act (41
U.S.C. 423), against conflicts of interest that apply with
respect to Federal procurement officials with comparable
responsibilities with respect to such contracts.''.
(d) Limitation on Availability of FFP for Use of Enrollment
Brokers.--Section 1903(b) (42 U.S.C. 1396b(b)), as amended by section
3413(b), is amended by adding at the end the following:
``(5) Amounts expended by a State for the use an enrollment broker
in marketing health maintenance organizations and other managed care
entities to eligible individuals under this title shall be considered,
for purposes of subsection (a)(7), to be necessary for the proper and
efficient administration of the State plan but only if the following
conditions are met with respect to the broker:
``(A) The broker is independent of any such entity and of
any health care providers (whether or not any such provider
participates in the State plan under this title) that provide
coverage of services in the same State in which the broker is
conducting enrollment activities.
``(B) No person who is an owner, employee, consultant, or
has a contract with the broker either has any direct or
indirect financial interest with such an entity or health care
provider or has been excluded from participation in the program
under this title or title XVIII or debarred by any Federal
agency, or subject to a civil money penalty under this Act.''.
(e) Effective Date.--The amendments made by this section shall take
effect on January 1, 1998.
SEC. 3465. GRIEVANCES UNDER MANAGED CARE PLANS.
Section 1903(m) (42 U.S.C. 1396b(m)) is amended--
(1) in paragraph (2)(A), as amended by sections 3461(c) and
3464(c),--
(A) by striking ``and'' at the end of clause (xii),
(B) by striking the period at the end of clause
(xiii) and inserting ``; and'', and
(C) by inserting after clause (xiii) the following
new clause:
``(xiv) such contract provides for compliance of the
organization with the grievance and appeals requirements
described in paragraph (3).''; and
(2) by inserting after paragraph (2) the following new
paragraph:
``(3)(A) An eligible organization must provide a meaningful and
expedited procedure, which includes notice and hearing requirements,
for resolving grievances between the organization (including any entity
or individual through which the organization provides health care
services) and members enrolled with the organization under this
subsection. Under the procedure any member enrolled with the
organization may at any time file orally or in writing a complaint to
resolve grievances between the member and the organization before a
board of appeals established under subparagraph (C).
``(B)(i) The organization must provide, in a timely manner, such an
enrollee a notice of any denial of services in-network or denial of
payment for out-of-network care or notice of termination or reduction
of services.
``(ii) Such notice shall include the following:
``(I) A clear statement of the reason for the denial.
``(II) An explanation of the complaint process under
subparagraph (C) which is available to the enrollee upon
request.
``(III) An explanation of all other appeal rights available
to all enrollees.
``(IV) A description of how to obtain supporting evidence
for this hearing, including the patient's medical records from
the organization, as well as supporting affidavits from the
attending health care providers.
``(C)(i) Each eligible organization shall establish a board of
appeals to hear and make determinations on complaints by enrollees
under this subsection concerning denials of coverage or payment for
services (whether in-network or out-of-network) and the medical
necessity and appropriateness of covered items and services.
``(ii) A board of appeals of an eligible organization shall consist
of--
``(I) representatives of the organization, including
physicians, nonphysicians, administrators, and enrollees;
``(II) consumers who are not enrollees; and
``(III) providers with expertise in the field of medicine
which necessitates treatment.
``(iii) A board of appeals shall hear and resolve complaints within
30 days after the date the complaint is filed with the board.
``(D) Nothing in this paragraph may be construed to replace or
supersede any appeals mechanism otherwise provided for an individual
entitled to benefits under this title.''.
SEC. 3466. STANDARDS RELATING TO ACCESS TO OBSTETRICAL AND
GYNECOLOGICAL SERVICES UNDER MANAGED CARE PLANS.
(a) In General.--Section 1903(m)(2)(A) (42 U.S.C. 1396b(m)(2)(A)),
as amended by sections 3461(c), 3464(c), and 3465(1), is amended--
(1) by striking ``and'' at the end of clause (xiii),
(2) by striking the period at the end of clause (xiv) and
inserting ``; and'', and
(3) by inserting after clause (xiv) the following:
``(xv) the organization complies with the requirements of
paragraph (12).''.
(b) Requirements.--Section 1903(m) (42 U.S.C. 1396b(m)), as amended
by sections 3463, 3464(a), and 3464(b), is amended by adding at the end
the following new paragraph:
``(12)(A) If a health maintenance organization, under a contract
under this subsection, requires or provides for an enrollee to
designate a participating primary care provider--
``(i) the organization shall permit a female enrollee to
designate an obstetrician-gynecologist who has agreed to be
designated as such, as the enrollee's primary care provider;
and
``(ii) if such an enrollee has not designated such a
provider as a primary care provider, the organization--
``(I) may not require prior authorization by the
enrollee's primary care provider or otherwise for
coverage of obstetric and gynecologic care provided by
a participating obstetrician-gynecologist, or a
participating health care professional practicing in
collaboration with the obstetrician-gynecologist and in
accordance with State law, to the extent such care is
otherwise covered, and
``(II) shall treat the ordering of other
gynecologic care by such a participating physician as
the prior authorization of the primary care provider
with respect to such care under the contract.
``(B) Nothing in subparagraph (A)(ii)(II) shall waive any
requirements of coverage relating to medical necessity or
appropriateness with respect to coverage of gynecologic care so
ordered.''.
(c) Effective Date.--The amendments made by this section shall
apply to contracts entered into, renewed, or extended on or after
January 1, 1998.
CHAPTER 3--FEDERAL PAYMENTS
SEC. 3471. REFORMING DISPROPORTIONATE SHARE PAYMENTS UNDER STATE
MEDICAID PROGRAMS.
(a) Direct Payment by State.--Subsection (a)(1) of section 1923 (42
U.S.C. 1396r-4) is amended--
(1) by striking ``and'' at the end of subparagraph (A),
(2) by striking the period at the end of subparagraph (B)
and inserting ``, and'', and
(3) by adding at the end the following new subparagraph:
``(C) provides that payment adjustments under the
plan under this section for services furnished by a
hospital on or after October 1, 1997, for individuals
entitled to benefits under the plan, and enrolled with
an entity described in section 1903(m), under a primary
care case management system (described in section
1905(t)), or other managed care plan--
``(i) are made directly to the hospital by
the State, and
``(ii) are not used as part of, and are
disregarded in determining the amount of,
prepaid capitation paid under the State plan
with respect to those services.''.
(b) Adjustment to State DSH Allocations.--
(1) In general.--Subsection (f) of such section is
amended--
(A) in paragraph (2)(A), by inserting ``and
paragraph (5)'' after ``subparagraph (B)'', and
(B) by adding at the end the following new
paragraph:
``(5) Adjustments in dsh allotments.--
``(A) Allotment frozen for states with very low dsh
expenditures.--In the case of a State for which its
State 1995 DSH spending did not exceed 1 percent of the
total amount expenditures made under the State plan
under this title for medical assistance during fiscal
year 1995 (as reported by the State no later than
January 1, 1997, on HCFA Form 64), the DSH allotment
for each of fiscal years 1998 through 2002 is equal to
its State 1995 DSH spending.
``(B) Full reduction for high dsh states.--In the
case of a State which was classified under this
subsection as a high DSH State for fiscal year 1997,
the DSH allotment for each of fiscal years 1998 through
2002 is equal to the State 1995 DSH spending reduced by
the full reduction percentage (described in
subparagraph (D)) for the fiscal year involved.
``(C) Half-reduction for other states.--In the case
of a State not described in subparagraph (A) or (B),
the DSH allotment for each of fiscal years 1998 through
2002 is equal to the State 1995 DSH spending reduced by
\1/2\ of the full reduction percentage for the fiscal
year involved.
``(D) Full reduction percentage.--For purposes of
this paragraph, the `full reduction percentage' for--
``(i) fiscal year 1998 is 2 percent,
``(ii) fiscal year 1999 is 5 percent,
``(iii) fiscal year 2000 is 20 percent,
``(iv) fiscal year 2001 is 30 percent, and
``(v) fiscal year 2002 is 40 percent.
``(E) Definitions.-- In this paragraph:
``(i) State.--The term `State' means the 50
States and the District of Columbia.
``(ii) State 1995 dsh spending.--The term
`State 1995 DSH spending' means, with respect
to a State, the total amount of payment
adjustments made under subsection (c) under the
State plan during fiscal year 1995 as reported
by the State no later than January 1, 1997, on
HCFA Form 64.''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to fiscal years beginning with fiscal year 1998.
(c) Transition Rule.--Effective October 1, 1997, section
1923(g)(2)(A) of the Social Security Act (42 U.S.C. 1396r-4(g)(2)(A))
shall be applied to the State of California as though--
(1) ``or that begins on or after October 1, 1997, and
before October 1, 1999'' were inserted in such section after
``January 1, 1995''; and
(2) ``(or 175 percent in the case of a State fiscal year
that begins on or after October 1, 1997, and before October 1,
1999)'' were inserted in such section after ``200 percent''.
SEC. 3472. ADDITIONAL FUNDING FOR STATE EMERGENCY HEALTH SERVICES
FURNISHED TO UNDOCUMENTED ALIENS.
(a) Total Amount Available for Allotment.--There are available for
allotments under this section for each of the 5 fiscal years (beginning
with fiscal year 1998) $20,000,000 for payments to certain States under
this section.
(b) State Allotment Amount.--
(1) In general.--The Secretary of Health and Human Services
shall compute an allotment for each fiscal year beginning with
fiscal year 1998 and ending with fiscal year 2002 for each of
the 12 States with the highest number of undocumented aliens.
The amount of such allotment for each such State for a fiscal
year shall bear the same ratio to the total amount available
for allotments under subsection (a) for the fiscal year as the
ratio of the number of undocumented aliens in the State in the
fiscal year bears to the total of such numbers for all such
States for such fiscal year. The amount of allotment to a State
provided under this paragraph for a fiscal year that is not
paid out under subsection (c) shall be available for payment
during the subsequent fiscal year.
(2) Determination.--For purposes of paragraph (1), the
number of undocumented aliens in a State under this section
shall be determined based on estimates of the resident illegal
alien population residing in each State prepared by the
Statistics Division of the Immigration and Naturalization
Service as of October 1992 (or as of such later date if such
date is at least 1 year before the beginning of the fiscal year
involved),
(c) Use of Funds.--From the allotments made under subsection (b),
the Secretary shall pay to each State amounts the State demonstrates
were paid by the State (or by a political subdivision of the State) for
emergency health services furnished to undocumented aliens.
(d) State Defined.--For purposes of this section, the term
``State'' includes the District of Columbia.
(e) State Entitlement.--This section constitutes budget authority
in advance of appropriations Acts and represents the obligation of the
Federal Government to provide for the payment to States of amounts
provided under subsection (c).
Subtitle F--Child Health Assistance Program (CHAP)
SEC. 3501. SHORT TITLE OF SUBTITLE; TABLE OF CONTENTS OF SUBTITLE.
(a) Short Title of Subtitle.--This subtitle may be cited as the
``Child Health Assistance Program Act of 1997''.
(b) Table of Contents of Subtitle.--The table of contents of this
subtitle is as follows:
Sec. 3501. Short title of subtitle; table of contents.
Sec. 3502. Establishment of Child Health Assistance Program (CHAP).
``TITLE XXI--CHILD HEALTH ASSISTANCE PROGRAM
``Sec. 2101. Purpose; State child health plans.
``Sec. 2102. Contents of State child health plan.
``Sec. 2103. Allotments.
``Sec. 2104. Payments to States.
``Sec. 2105. Process for submission, approval, and amendment of
State child health plans.
``Sec. 2106. Strategic objectives and performance goals; plan
administration.
``Sec. 2107. Annual reports; evaluations.
``Sec. 2108. Definitions.
Sec. 3503. Optional use of State child health assistance funds for
enhanced medicaid match for expanded
medicaid eligibility.
Sec. 3504. Medicaid presumptive eligibility for low-income children.
SEC. 3502. ESTABLISHMENT OF CHILD HEALTH ASSISTANCE PROGRAM (CHAP).
The Social Security Act is amended by adding at the end the
following new title:
``TITLE XXI--CHILD HEALTH ASSISTANCE PROGRAM
``SEC. 2101. PURPOSE; STATE CHILD HEALTH PLANS.
``(a) Purpose.--The purpose of this title is to provide funds to
States to enable them to implement plans to initiate and expand the
provision of child health care assistance to uninsured, low-income
children in an effective and efficient manner that is coordinated with
other sources of coverage for children. Such assistance may be provided
for obtaining creditable health coverage through methods specified in
the plan, which may include any or all of the following:
``(1) Providing benefits under the State's medicaid plan
under title XIX.
``(2) Obtaining coverage under group health plans or group
or individual health insurance coverage.
``(3) Direct purchase of services from providers.
``(4) Other methods specified under the plan.
``(b) State Child Health Plan Required.--A State is not eligible
for payment under section 2104 unless the State has submitted to the
Secretary under section 2105 a plan that--
``(1) sets forth how the State intends to use the funds
provided under this title to provide child health assistance to
needy children consistent with the provisions of this title,
and
``(2) is approved under section 2105.
``(c) State Entitlement.--This title constitutes budget authority
in advance of appropriations Acts and represents the obligation of the
Federal Government to provide for the payment to States of amounts
provided under section 2104.
``(d) Effective Date.--No State is eligible for payments under
section 2104 for any calendar quarter beginning before October 1, 1997.
``SEC. 2102. CONTENTS OF STATE CHILD HEALTH PLAN.
``(a) General Background and Description.--A State child health
plan shall include a description, consistent with the requirements of
this title, of--
``(1) the extent to which, and manner in which, children in
the State, including targeted low-income children and other
classes of children classified by income and other relevant
factors, currently have creditable health coverage (as defined
in section 2108(c)(2));
``(2) current State efforts to provide or obtain creditable
health coverage for uncovered children, including the steps the
State is taking to identify and enroll all uncovered children
who are eligible to participate in public health insurance
programs and health insurance programs that involve public-
private partnerships;
``(3) how the plan is designed to be coordinated with such
efforts to increase coverage of children under creditable
health coverage; and
``(4) how the plan will comply with subsection (c)(5).
``(b) General Description of Eligibility Standards and
Methodology.--
``(1) Eligibility standards.--
``(A) In general.--The plan shall include a
description of the standards used to determine the
eligibility of targeted low-income children for child
health assistance under the plan. Such standards may
include (to the extent consistent with this title)
those relating to the geographic areas to be served by
the plan, age, income and resources (including any
standards relating to spenddowns and disposition of
resources), residency, disability status, immigration
status, access to or coverage under other health
coverage, and duration of eligibility. Such standards
may not discriminate on the basis of diagnosis.
``(B) Limitations on eligibility standards.--Such
eligibility standards--
``(i) shall, within any defined group of
covered targeted low-income children, not cover
such children with higher family income without
covering children with a lower family income,
and
``(ii) may not deny eligibility based on a
child having a preexisting medical condition.
``(2) Methodology.--The plan shall include a description of
methods of establishing and continuing eligibility and
enrollment, including a methodology for computing family income
that is consistent with the methodology used under section
1902(l)(3)(E).
``(3) Eligibility screening; coordination with other health
coverage programs.--The plan shall include a description of
procedures to be used to ensure--
``(A) through both intake and followup screening,
that only targeted low-income children are furnished
child health assistance under the State child health
plan;
``(B) that children found through the screening to
be eligible for medical assistance under the State
medicaid plan under title XIX are enrolled for such
assistance under such plan;
``(C) that the insurance provided under the State
child health plan does not substitute for coverage
under group health plans; and
``(D) coordination with other public and private
programs providing creditable coverage for low-income
children.
``(4) Nonentitlement.--Nothing in this title shall be
construed as providing an individual with an entitlement to
child health assistance under a State child health plan.
``(c) Description of Assistance.--
``(1) In general.--A State child health plan shall include
a description of the child health assistance provided under the
plan for targeted low-income children. The child health
assistance provided to a targeted low-income child under the
plan in the form described in paragraph (2) of section 2101(a)
shall include benefits (in an amount, duration, and scope
specified under the plan) for at least the following categories
of services:
``(A) Inpatient and outpatient hospital services.
``(B) Physicians' surgical and medical services.
``(C) Laboratory and x-ray services.
``(D) Well-baby and well-child care, including age-
appropriate immunizations.
The previous sentence shall not apply to coverage under a group
health plan if the benefits under such coverage for individuals
under this title are no less than the benefits for other
individuals similarly covered under the plan.
``(2) Items.--The description shall include the following:
``(A) Cost sharing.--Subject to paragraph (3), the
amount (if any) of premiums, deductibles, coinsurance,
and other cost sharing imposed.
``(B) Delivery method.--The State's approach to
delivery of child health assistance, including a
general description of--
``(i) the use (or intended use) of
different delivery methods, which may include
the delivery methods used under the medicaid
plan under title XIX, fee-for-service, managed
care arrangements (such as capitated health
care plans, case management, and case
coordination), direct provision of health care
services (such as through community health
centers and disproportionate share hospitals),
vouchers, and other delivery methods; and
``(ii) utilization control systems.
``(3) Limitations on cost sharing.--
``(A) No cost sharing on preventive benefits.--The
plan may not impose deductibles, coinsurance, or
similar cost sharing with respect to benefits for
preventive services.
``(B) Sliding scale.--To the extent practicable,
any premiums imposed under the plan shall be imposed on
a sliding scale related to income and the plan may only
vary premiums, deductibles, coinsurance, and other cost
sharing based on the family income of targeted low-
income children only in a manner that does not favor
children from families with higher income over children
from families with lower income.
``(4) Restriction on application of preexisting condition
exclusions.--
``(A) In general.--Subject to subparagraph (B), the
State child health plan shall not permit the imposition
of any preexisting condition exclusion for covered
benefits under the plan.
``(B) Group health plans and group health insurance
coverage.--If the State child health plan provides for
benefits through payment for, or a contract with, a
group health plan or group health insurance coverage,
the plan may permit the imposition of a preexisting
condition exclusion but only insofar as it is permitted
under the applicable provisions of part 7 of subtitle B
of title I of the Employee Retirement Income Security
Act of 1974 and title XXVII of the Public Health
Service Act.
``(5) Special protection for children with chronic health
conditions and special health care needs.--In the case of a
child who has a chronic condition, life-threatening condition,
or combination of conditions that warrants medical specialty
care and who is eligible for benefits under the plan with
respect to such care, the State child health plan shall assure
access to such care, including the use of a medical specialist
as a primary care provider.
``(6) Secondary payment.--Nothing in this section shall be
construed as preventing a State from denying benefits to an
individual to the extent such benefits are available to the
individual under another public or private health care
insurance program.
``(7) Treatment of cash payments.--Payments in the form of
cash or vouchers provided as child health or other assistance
under the State child health plan to parents, guardians or
other caretakers of a targeted low-income child are not
considered income for purpose of eligibility for, or benefits
provided under, any means-tested Federal or Federally-assisted
program.
``(d) Outreach and Coordination.--A State child health plan shall
include a description of the procedures to be used by the State to
accomplish the following:
``(1) Outreach.--Outreach to families of children likely to
be eligible for child health assistance under the plan or under
other public or private health coverage programs to inform
these families of the availability of, and to assist them in
enrolling their children in, such a program.
``(2) Coordination with other health insurance programs.--
Coordination of the administration of the State program under
this subtitle with other public and private health insurance
programs.
``SEC. 2103. ALLOTMENTS.
``(a) Total Allotment.--The total allotment that is available under
this title for each fiscal year, beginning with fiscal year 1998, is
$2,880,000,000.
``(b) Allotments to 50 States and District of Columbia.--
``(1) In general.--Subject to paragraphs (4) and (5), of
the total allotment available under subsection (a) for a fiscal
year, reduced by the amount of allotments made under subsection
(c) for the fiscal year, the Secretary shall allot to each
State (other than a State described in such subsection) with a
State child health plan approved under this title the same
proportion as the ratio of--
``(A) the product of (i) the number of uncovered
low-income children for the fiscal year in the State
(as determined under paragraph (2)) and (ii) the State
cost factor for that State (established under paragraph
(3)); to
``(B) the sum of the products computed under
subparagraph (A).
``(2) Number of uncovered low-income children.--For the
purposes of paragraph (1)(A)(i), the number of uncovered low-
income children for a fiscal year in a State is equal to the
arithmetic average of the number of low-income children (as
defined in section 2108(c)(4)) with no health insurance
coverage, as reported and defined in the 3 most recent March
supplements to the Current Population Survey of the Bureau of
the Census before the beginning of the fiscal year.
``(3) Adjustment for geographic variations in health
costs.--
``(A) In general.--For purposes of paragraph
(1)(A)(ii), the `State cost factor' for a State for a
fiscal year equal to the sum of--
``(i) 0.15, and
``(ii) 0.85 multiplied by the ratio of--
``(I) the annual average wages per
employee for the State for such year
(as determined under subparagraph (B)),
to
``(II) the annual average wages per
employee for the 50 States and the
District of Columbia.
``(B) Annual average wages per employee.--For
purposes of subparagraph (A), the `annual average wages
per employee' for a State, or for all the States. for a
fiscal year is equal to the average of the annual wages
per employee for the State or for the 50 States and the
District of Columbia for employees in the health
services industry (SIC code 8000), as reported by the
Bureau of Labor Statistics of the Department of Labor
for each of the for the most recent 3 years before the
beginning of the fiscal year involved.
``(4) Floor for states.--Subject to paragraph (5), in no
case shall the amount of the allotment under this subsection
for one of the 50 States or the District of Columbia for a year
be less than $2,000,000. To the extent that the application of
the previous sentence results in an increase in the allotment
to a State above the amount otherwise provided, the allotments
for the other States and the District of Columbia under this
subsection shall be decreased in a pro rata manner (but not
below $2,000,000) so that the total of such allotments in a
fiscal year does not exceed the amount otherwise provided for
allotment under paragraph (1) for that fiscal year.
``(5) Offset for expenditures under medicaid presumptive
eligibility.--The amount of the allotment otherwise provided to
a State under this subsection for a fiscal year shall be
reduced by the amount of the payments made to the State under
section 1903(a) for calendar quarters during such fiscal year
that are attributable to provision of medical assistance to a
child during a presumptive eligibility period under section
1920A.
``(c) Allotments to Territories.--
``(1) In general.--Subject to paragraph (3), of the total
allotment under subsection (a) for a fiscal year, the Secretary
shall allot 0.5 percent among each of the commonwealths and
territories described in paragraph (4) in the same proportion
as the percentage specified in paragraph (2) for such
commonwealth or territory bears to the sum of such percentages
for all such commonwealths or territories so described.
``(2) Percentage.--The percentage specified in this
paragraph for--
``(A) Puerto Rico is 91.6 percent,
``(B) Guam is 3.5 percent,
``(C) Virgin Islands is 2.6 percent,
``(D) American Samoa is 1.2 percent, and
``(E) the Northern Mariana Islands is 1.1 percent.
``(3) Floor.--In no case shall the amount of the allotment
to a commonwealth or territory under paragraph (1) for a fiscal
year be less than $100,000. To the extent that the application
of the previous sentence results in an increase in the
allotment to a commonwealth or territory above the amount
otherwise provided, the allotments for the other commonwealths
and territories under this subsection for the fiscal year shall
be decreased (but not below $100,000) in a pro rata manner so
that the total of such allotments does not exceed the total
amount otherwise provided for allotment under paragraph (1).
``(4) Commonwealths and territories.--A commonwealth or
territory described in this paragraph is any of the following
if it has a State child health plan approved under this title:
``(A) Puerto Rico.
``(B) Guam.
``(C) the Virgin Islands.
``(D) American Samoa.
``(E) the Northern Mariana Islands.
``(d) Adjustment for States Using Enhanced Medicaid Match.--In the
case of a State that elects the increased medicaid matching option
under section 1905(t), the amount of the State's allotment under this
section shall be reduced by the amount of additional payment made under
section 1903 that is attributable to the increase in the Federal
medical assistance percentage effected under such option.
``(e) 3-Year Availability of Amounts Allotted.--Amounts allotted to
a State pursuant to this section for a fiscal year shall remain
available for expenditure by the State through the end of the second
succeeding fiscal year.
``SEC. 2104. PAYMENTS TO STATES.
``(a) In General.--Subject to the succeeding provisions of this
section, the Secretary shall pay to each State with a program approved
under this title, from its allotment under section 2103 (as may be
adjusted under section 2103(d)), an amount for each quarter up to 80
percent of expenditures under that program in the quarter for--
``(1) child health assistance for targeted low-income
children;
``(2) health services initiatives for improving the health
of children (including targeted low-income children and other
low-income children);
``(3) expenditures for outreach activities as provided in
section 2102(d)(1); and
``(4) other reasonable costs incurred by the State to
administer the plan.
``(b) Limitation on Certain Payments for Certain Expenditures.--
``(1) In general.--Funds provided to a State under this
title shall only be used to carry out the purposes of this
title.
``(2) Limitation on expenditures not used for assistance.--
Payment shall not be made under subsection (a) for expenditures
for items described in paragraphs (2), (3), or (4) of
subsection to the extent the total of such expenditures exceeds
15 percent of total expenditures under the plan for the period
involved (including any in such total additional Federal
medical assistance payments under section 1903(a)(1) that are
attributable to an enhanced State medicaid match under section
1905(t)).
``(3) Purchase of family coverage.--The Secretary shall
establish rules regarding the extent to which payment may be
made under subsection (a)(1) for the purchase of family
coverage under a group health plan or health insurance coverage
that includes coverage of targeted low-income children. Under
such rules such payment may be permitted, notwithstanding that
a portion may be considered attributable to purchase of
coverage for other family members, if the State demonstrates
that purchase of such coverage is cost effective relative to
the amounts that the State would have paid to obtain comparable
coverage only of the targeted low-income children involved. In
making such determination, there shall be taken into account
the costs of providing coverage for medical assistance for
children with similar actuarial characteristics under section
1902(l).
``(4) Denial of payment for reduction of medicaid
eligibility standards.--No payment may be made under subsection
(a) with respect to child health assistance provided under a
State child health plan to a targeted low-income child if the
child would be eligible for medical assistance under the State
plan under title XIX (as such plan was in effect as of June 1,
1997) but for a change in the income or assets standards or
methodology under such plan effected after such date.
``(5) Disallowances for excluded providers.--
``(A) In general.--Payment shall not be made to a
State under subsection (a) for expenditures for items
and services furnished--
``(i) by a provider who was excluded from
participation under title V, XVIII, or XX or
under this title pursuant to section 1128,
1128A, 1156, or 1842(j)(2), or
``(ii) under the medical direction or on
the prescription of a physician who was so
excluded, if the provider of the services knew
or had reason to know of the exclusion.
``(B) Exception for emergency services.--
Subparagraph (A) shall not apply to emergency items or
services, not including hospital emergency room
services.
``(6) Use of non-federal funds for state matching
requirement.--Amounts provided by the Federal Government, or
services assisted or subsidized to any significant extent by
the Federal Government, may not be included in determining the
amount of non-Federal contributions required under subsection
(a).
``(7) Treatment of third party liability.--No payment shall
be made to a State under this section for expenditures for
child health assistance provided for a targeted low-income
child under its plan to the extent that a private insurer (as
defined by the Secretary by regulation and including a group
health plan (as defined in section 607(1) of the Employee
Retirement Income Security Act of 1974), a service benefit
plan, and a health maintenance organization) would have been
obligated to provide such assistance but for a provision of its
insurance contract which has the effect of limiting or
excluding such obligation because the individual is eligible
for or is provided child health assistance under the plan.
``(8) Secondary payer provisions.--Except as otherwise
provided by law, no payment shall be made to a State under this
section for expenditures for child health assistance provided
for a targeted low-income child under its plan to the extent
that payment has been made or can reasonably be expected to be
made promptly (as determined in accordance with regulations)
under any other federally operated or financed health care
insurance program, other than an insurance program operated or
financed by the Indian Health Service, as identified by the
Secretary. For purposes of this paragraph, rules similar to the
rules for overpayments under section 1903(d)(2) shall apply.
``(9) Limitation on payment for abortions.--
``(A) In general.--Payment shall not be made to a
State under this section for any amount expended under
the State plan to pay for any abortion or to assist in
the purchase, in whole or in part, of health benefit
coverage that includes coverage of abortion.
``(B) Exception.--Subparagraph (A) shall not apply
to an abortion--
``(i) if the pregnancy is the result of an
act of rape or incest, or
``(ii) in the case where a woman suffers
from a physical disorder, illness, or injury
that would, as certified by a physician, place
the woman in danger of death unless an abortion
is performed.
``(c) Advance Payment; Retrospective Adjustment.--The Secretary may
make payments under this section for each quarter on the basis of
advance estimates of expenditures submitted by the State and other
investigation the Secretary may find necessary, and may reduce or
increase the payments as necessary to adjust for any overpayment or
underpayment for prior quarters.
``SEC. 2105. PROCESS FOR SUBMISSION, APPROVAL, AND AMENDMENT OF STATE
CHILD HEALTH PLANS.
``(a) Initial Plan.--
``(1) In general.--As a condition of receiving funding
under section 2104, a State shall submit to the Secretary a
State child health plan that meets the applicable requirements
of this title.
``(2) Approval.--Except as the Secretary may provide under
subsection (e), a State plan submitted under paragraph (1)--
``(A) shall be approved for purposes of this title,
and
``(B) shall be effective beginning with a calendar
quarter that is specified in the plan, but in no case
earlier than the first calendar quarter that begins at
least 60 days after the date the plan is submitted.
``(b) Plan Amendments.--
``(1) In general.--A State may amend, in whole or in part,
its State child health plan at any time through transmittal of
a plan amendment.
``(2) Approval.--except as the secretary may provide under
subsection (e), an amendment to a state plan submitted under
paragraph (1)--
``(A) shall be approved for purposes of this title,
and
``(B) shall be effective as provided in paragraph
(3).
``(3) Effective dates for amendments.--
``(A) In general.--Subject to the succeeding
provisions of this paragraph, an amendment to a State
plan shall take effect on one or more effective dates
specified in the amendment.
``(B) Amendments relating to eligibility or
benefits.--
``(i) Notice requirement.--Any plan
amendment that eliminates or restricts
eligibility or benefits under the plan may not
take effect unless the State certifies that it
has provided prior or contemporaneous public
notice of the change, in a form and manner
provided under applicable State law.
``(ii) Timely transmittal.--Any plan
amendment that eliminates or restricts
eligibility or benefits under the plan shall
not be effective for longer than a 60-day
period unless the amendment has been
transmitted to the Secretary before the end of
such period.
``(C) Other amendments.--Any plan amendment that is
not described in subparagraph (C) becomes effective in
a State fiscal year may not remain in effect after the
end of such fiscal year (or, if later, the end of the
90-day period on which it becomes effective) unless the
amendment has been transmitted to the Secretary.
``(c) Disapproval of Plans and Plan Amendments.--
``(1) Prompt review of plan submittals.--The Secretary
shall promptly review State plans and plan amendments submitted
under this section to determine if they substantially comply
with the requirements of this title.
``(2) 90-day approval deadlines.--A State plan or plan
amendment is considered approved unless the Secretary notifies
the State in writing, within 90 days after receipt of the plan
or amendment, that the plan or amendment is disapproved (and
the reasons for disapproval) or that specified additional
information is needed.
``(3) Correction.--In the case of a disapproval of a plan
or plan amendment, the Secretary shall provide a State with a
reasonable opportunity for correction before taking financial
sanctions against the State on the basis of such disapproval.
``(d) Program Operation.--
``(1) In general.--The State shall conduct the program in
accordance with the plan (and any amendments) approved under
subsection (c) and with the requirements of this title.
``(2) Violations.--The Secretary shall establish a process
for enforcing requirements under this title. Such process shall
provide for the withholding of funds in the case of substantial
noncompliance with such requirements. In the case of an
enforcement action against a State under this paragraph, the
Secretary shall provide a State with a reasonable opportunity
for correction before taking financial sanctions against the
State on the basis of such an action.
``(e) Continued Approval.--An approved State child health plan
shall continue in effect unless and until the State amends the plan
under subsection (b) or the Secretary finds substantial noncompliance
of the plan with the requirements of this title under section
subsection (d)(2).
``SEC. 2106. STRATEGIC OBJECTIVES AND PERFORMANCE GOALS; PLAN
ADMINISTRATION.
``(a) Strategic Objectives and Performance Goals.--
``(1) Description.--A State child health plan shall include
a description of--
``(A) the strategic objectives,
``(B) the performance goals, and
``(C) the performance measures,
the State has established for providing child health assistance
to targeted low-income children under the plan and otherwise
for maximizing health coverage for other low-income children
and children generally in the State.
``(2) Strategic objectives.--Such plan shall identify
specific strategic objectives relating to increasing the extent
of creditable health coverage among targeted low-income
children and other low-income children.
``(3) Performance goals.--Such plan shall specify one or
more performance goals for each such strategic objective so
identified.
``(4) Performance measures.--Such plan shall describe how
performance under the plan will be--
``(A) measured through objective, independently
verifiable means, and
``(B) compared against performance goals, in order
to determine the State's performance under this title.
``(b) Records, Reports, Audits, and Evaluation.--
``(1) Data collection, records, and reports.--A State child
health plan shall include an assurance that the State will
collect the data, maintain the records, and furnish the reports
to the Secretary, at the times and in the standardized format
the Secretary may require in order to enable the Secretary to
monitor State program administration and compliance and to
evaluate and compare the effectiveness of State plans under
this title.
``(2) State assessment and study.--A State child health
plan shall include a description of the State's plan for the
annual assessments and reports under section 2107(a) and the
evaluation required by section 2107(b).
``(3) Audits.--A State child health plan shall include an
assurance that the State will afford the Secretary access to
any records or information relating to the plan for the
purposes of review or audit.
``(c) Program Development Process.--A State child health plan shall
include a description of the process used to involve the public in the
design and implementation of the plan and the method for ensuring
ongoing public involvement.
``(d) Program Budget.--A State child health plan shall include a
description of the budget for the plan. The description shall be
updated periodically as necessary and shall include details on the
planned use of funds and the sources of the non-Federal share of plan
expenditures, including any requirements for cost sharing by
beneficiaries.
``(e) Application of Certain General Provisions.--The following
sections in part A of title XI shall apply to States under this title
in the same manner as they applied to a State under title XIX:
``(1) Section 1101(a)(1) (relating to definition of State).
``(2) Section 1116 (relating to administrative and judicial
review), but only insofar as consistent with the provisions of
part B.
``(3) Section 1124 (relating to disclosure of ownership and
related information).
``(4) Section 1126 (relating to disclosure of information
about certain convicted individuals).
``(5) Section 1128B(d) (relating to criminal penalties for
certain additional charges).
``(6) Section 1132 (relating to periods within which claims
must be filed).
``SEC. 2107. ANNUAL REPORTS; EVALUATIONS.
``(a) Annual Report.--The State shall--
``(1) assess the operation of the State plan under this
title in each fiscal year, including the progress made in
reducing the number of uncovered low-income children; and
``(2) report to the Secretary, by January 1 following the
end of the fiscal year, on the result of the assessment.
``(b) State Evaluations.--
``(1) In general.--By March 31, 2000, each State that has a
State child health plan shall submit to the Secretary an
evaluation that includes each of the following:
``(A) An assessment of the effectiveness of the
State plan in increasing the number of children with
creditable health coverage.;
``(B) A description and analysis of the
effectiveness of elements of the State plan,
including--
``(i) the characteristics of the children
and families assisted under the State plan
including age of the children, family income,
and the assisted child's access to or coverage
by other health insurance prior to the State
plan and after eligibility for the State plan
ends,
``(ii) the quality of health coverage
provided including the types of benefits
provided,
``(iii) the amount and level (payment of
part or all of the premium) of assistance
provided by the State,
``(iv) the service area of the State plan,
``(v) the time limits for coverage of a
child under the State plan,
``(vi) the State's choice of health
insurance plans and other methods used for
providing child health assistance , and
``(vii) the sources of non-Federal funding
used in the State plan;
``(C) an assessment of the effectiveness of other
public and private programs in the State in increasing
the availability of affordable quality individual and
family health insurance for children;
``(D) a review and assessment of State activities
to coordinate the plan under this title with other
public and private programs providing health care and
health care financing, including Medicaid and maternal
and child health services;
``(E) an analysis of changes and trends in the
State that affect the provision of accessible,
affordable, quality health insurance and health care to
children;
``(F) a description of any plans the State has for
improving the availability of health insurance and
health care for children;
``(G) recommendations for improving the program
under this title; and
``(H) any other matters the State and the Secretary
consider appropriate.
``(2) Report of the secretary.--The Secretary shall submit
to the Congress and make available to the public by December
31, 2000, a report based on the evaluations submitted by States
under paragraph (1), containing any conclusions and
recommendations the Secretary considers appropriate.
``SEC. 2108. DEFINITIONS.
``(a) Child Health Assistance.--For purposes of this title, the
term `child health assistance' means payment of part or all of the cost
of any of the following, or assistance in the purchase, in whole or in
part, of health benefit coverage that includes any of the following,
for targeted low-income children (as defined in subsection (b)) as
specified under the State plan:
``(1) Inpatient hospital services.
``(2) Outpatient hospital services.
``(3) Physician services.
``(4) Surgical services.
``(5) Clinic services (including health center services)
and other ambulatory health care services.
``(6) Prescription drugs and biologicals and the
administration of such drugs and biologicals, only if such
drugs and biologicals are not furnished for the purpose of
causing, or assisting in causing, the death, suicide,
euthanasia, or mercy killing of a person.
``(7) Over-the-counter medications.
``(8) Laboratory and radiological services.
``(9) Prenatal care and prepregnancy family planning
services and supplies.
``(10) Inpatient mental health services, including services
furnished in a State-operated mental hospital and including
residential or other 24-hour therapeutically planned structured
services.
``(11) Outpatient mental health services, including
services furnished in a State-operated mental hospital and
including community-based services.
``(12) Durable medical equipment and other medically-
related or remedial devices (such as prosthetic devices,
implants, eyeglasses, hearing aids, dental devices, and
adaptive devices).
``(13) Disposable medical supplies.
``(14) Home and community-based health care services and
related supportive services (such as home health nursing
services, home health aide services, personal care, assistance
with activities of daily living, chore services, day care
services, respite care services, training for family members,
and minor modifications to the home).
``(15) Nursing care services (such as nurse practitioner
services, nurse midwife services, advanced practice nurse
services, private duty nursing care, pediatric nurse services,
and respiratory care services) in a home, school, or other
setting.
``(16) Abortion only if necessary to save the life of the
mother or if the pregnancy is the result of an act of rape or
incest.
``(17) Dental services.
``(18) Inpatient substance abuse treatment services and
residential substance abuse treatment services.
``(19) Outpatient substance abuse treatment services.
``(20) Case management services.
``(21) Care coordination services.
``(22) Physical therapy, occupational therapy, and services
for individuals with speech, hearing, and language disorders.
``(23) Hospice care.
``(24) Any other medical, diagnostic, screening,
preventive, restorative, remedial, therapeutic, or
rehabilitative services (whether in a facility, home, school,
or other setting) if recognized by State law and only if the
service is--
``(A) prescribed by or furnished by a physician or
other licensed or registered practitioner within the
scope of practice as defined by State law,
``(B) performed under the general supervision or at
the direction of a physician, or
``(C) furnished by a health care facility that is
operated by a State or local government or is licensed
under State law and operating within the scope of the
license.
``(25) Premiums for private health care insurance coverage.
``(26) Medical transportation.
``(27) Enabling services (such as transportation,
translation, and outreach services) only if designed to
increase the accessibility of primary and preventive health
care services for eligible low-income individuals.
``(28) Any other health care services or items specified by
the Secretary and not excluded under this section.
``(b) Targeted Low-Income Child Defined.--For purposes of this
title--
``(1) In general.--The term `targeted low-income child'
means a child--
``(A) who has been determined eligible by the State
for child health assistance under the State plan;
``(B) whose family income (as determined under the
State child health plan)--
``(i) exceeds the medicaid applicable
income level (as defined in paragraph (2) and
expressed as a percentage of the poverty line),
but
``(ii) but does not exceed an income level
that is 75 percentage points higher (as so
expressed) than the medicaid applicable income
level, or, if higher, 133 percent of the
poverty line for a family of the size involved;
and
``(C) who is not found to be eligible for medical
assistance under title XIX or covered under a group
health plan or under health insurance coverage (as such
terms are defined in section 2791 of the Public Health
Service Act).
Such term does not include a child who is an inmate of a public
institution.
``(2) Medicaid applicable income level.--The term `medicaid
applicable income level' means, with respect to a child, the
effective income level (expressed as a percent of the poverty
line) that has been specified under the State plan under title
XIX (including under a waiver authorized by the Secretary or
under section 1902(r)(2)), as of June 1, 1997, for the child to
be eligible for medical assistance under section 1902(l)(2) for
the age of such child. In applying the previous sentence in the
case of a child described in section 1902(l)(2)(D), such level
shall be applied taking into account the expanded coverage
effected among such children under such section with the
passage of time.
``(c) Additional Definitions.--For purposes of this title:
``(1) Child.--The term `child' means an individual under 19
years of age.
``(2) Creditable health coverage.--The term `creditable
health coverage' has the meaning given the term `creditable
coverage' under section 2701(c) of the Public Health Service
Act (42 U.S.C. 300gg(c)) and includes coverage (including the
direct provision of services) provided to a targeted low-income
child under this title.
``(3) Group health plan; health insurance coverage; etc.--
The terms `group health plan', `group health insurance
coverage', and `health insurance coverage' have the meanings
given such terms in section 2191 of the Public Health Service
Act.
``(4) Low-income.--The term `low-income child' means a
child whose family income is below 200 percent of the poverty
line for a family of the size involved.
``(5) Poverty line defined.--The term `poverty line' has
the meaning given such term in section 673(2) of the Community
Services Block Grant Act (42 U.S.C. 9902(2)), including any
revision required by such section.
``(6) Preexisting condition exclusion.--The term
`preexisting condition exclusion' has the meaning given such
term in section 2701(b)(1)(A) of the Public Health Service Act
(42 U.S.C. 300gg(b)(1)(A)).
``(7) State child health plan; plan.--Unless the context
otherwise requires, the terms `State child health plan' and
`plan' mean a State child health plan approved under section
2105.
``(8) Uncovered child.--The term `uncovered child' means a
child that does not have creditable health coverage.''.
(b) Conforming Amendments.--
(1) Definition of state.--Section 1101(a)(1) is amended--
(A) by striking ``and XIX'' and inserting ``XIX,
and XXI'', and
(B) by striking ``title XIX'' and inserting
``titles XIX and XXI''.
SEC. 3503. OPTIONAL USE OF STATE CHILD HEALTH ASSISTANCE FUNDS FOR
ENHANCED MEDICAID MATCH FOR EXPANDED MEDICAID
ELIGIBILITY.
(a) Increased FMAP for Medical Assistance for Expanded Coverage of
Targeted Low-Income Children.--Section 1905 of the Social Security Act
(42 U.S.C. 1396d) is amended--
(1) in subsection (b), by adding at the end the following
new sentence: ``Notwithstanding the first sentence of this
subsection, in the case of a State plan that meets the
condition described in subsection (t)(1), with respect to
expenditures for medical assistance for optional targeted low-
income children described in subsection (t)(2), the Federal
medical assistance percentage is equal to the enhanced medical
assistance percentage described in subsection (t)(3).''; and
(2) by adding at the end the following new subsection:
``(t)(1) The conditions described in this paragraph for a State
plan are as follows:
``(A) The plan is not applying income and resource
standards and methodologies for the purpose of determining
eligibility of individuals under section 1902(l) that are more
restrictive than those applied as of June 1, 1997, for the
purpose of determining eligibility of individuals under such
section.
``(B) The plan provides for such reporting of information
about expenditures and payments attributable to the operation
of this subsection as the Secretary deems necessary in order to
carry out sections 2103(d) and 2104(b)(2).
``(C) The amount of the increased payments under section
1903(a) resulting from the application of this subsection does
not exceed the total amount of any allotment not otherwise
expended by the State under section 2103 for the period
involved.
``(2) For purposes of subsection (b), the term `optional targeted
low-income child' means a targeted low-income child described in
section 2108(b)(1) who would not qualify for medical assistance under
the State plan under this title based on such plan as in effect on June
1, 1997 (taking into account the process of individuals aging into
eligibility under section 1902(l)(2)(D)).
``(3) The enhanced medical assistance percentage described in this
paragraph for a State is equal to the Federal medical assistance
percentage (as defined in the first sentence of subsection (b)) for the
State increased by a number of percentage points equal to 30 percent of
the number of percentage points by which (A) such Federal medical
assistance percentage for the State, is less than (B) 100 percent.
``(4) Notwithstanding any other provision of this title, a State
plan under this title may impose a limit on the number of optional
targeted low-income children described in paragraph (2).''.
(b) Effective Date.--The amendments made by this section shall
apply to medical assistance for items and services furnished on or
after October 1, 1997.
SEC. 3504. MEDICAID PRESUMPTIVE ELIGIBILITY FOR LOW-INCOME CHILDREN.
(a) In General.--Title XIX of the Social Security Act is amended by
inserting after section 1920 the following new section:
``presumptive eligibility for children
``Sec. 1920A. (a) A State plan approved under section 1902 may
provide for making medical assistance with respect to health care items
and services covered under the State plan available to a child during a
presumptive eligibility period.
``(b) For purposes of this section:
``(1) The term `child' means an individual under 19 years
of age.
``(2) The term `presumptive eligibility period' means, with
respect to a child, the period that--
``(A) begins with the date on which a qualified
entity determines, on the basis of preliminary
information, that the family income of the child does
not exceed the applicable income level of eligibility
under the State plan, and
``(B) ends with (and includes) the earlier of--
``(i) the day on which a determination is
made with respect to the eligibility of the
child for medical assistance under the State
plan, or
``(ii) in the case of a child on whose
behalf an application is not filed by the last
day of the month following the month during
which the entity makes the determination
referred to in subparagraph (A), such last day.
``(3)(A) Subject to subparagraph (B), the term `qualified
entity' means any entity that--
``(i)(I) is eligible for payments under a State
plan approved under this title and provides items and
services described in subsection (a) or (II) is
authorized to determine eligibility of a child to
participate in a Head Start program under the Head
Start Act (42 U.S.C. 9821 et seq.), eligibility of a
child to receive child care services for which
financial assistance is provided under the Child Care
and Development Block Grant Act of 1990 (42 U.S.C. 9858
et seq.), eligibility of an infant or child to receive
assistance under the special supplemental nutrition
program for women, infants, and children (WIC) under
section 17 of the Child Nutrition Act of 1966 (42
U.S.C. 1786); and
``(ii) is determined by the State agency to be
capable of making determinations of the type described
in paragraph (1)(A).
``(B) The Secretary may issue regulations further limiting
those entities that may become qualified entities in order to
prevent fraud and abuse and for other reasons.
``(C) Nothing in this section shall be construed as
preventing a State from limiting the classes of entities that
may become qualified entities, consistent with any limitations
imposed under subparagraph (B).
``(c)(1) The State agency shall provide qualified entities with--
``(A) such forms as are necessary for an application to be
made on behalf of a child for medical assistance under the
State plan, and
``(B) information on how to assist parents, guardians, and
other persons in completing and filing such forms.
``(2) A qualified entity that determines under subsection (b)(1)(A)
that a child is presumptively eligible for medical assistance under a
State plan shall--
``(A) notify the State agency of the determination within 5
working days after the date on which determination is made, and
``(B) inform the parent or custodian of the child at the
time the determination is made that an application for medical
assistance under the State plan is required to be made by not
later than the last day of the month following the month during
which the determination is made.
``(3) In the case of a child who is determined by a qualified
entity to be presumptively eligible for medical assistance under a
State plan, the parent, guardian, or other person shall make
application on behalf of the child for medical assistance under such
plan by not later than the last day of the month following the month
during which the determination is made, which application may be the
application used for the receipt of medical assistance by individuals
described in section 1902(l)(1).
``(d) Notwithstanding any other provision of this title, medical
assistance for items and services described in subsection (a) that--
``(1) are furnished to a child--
``(A) during a presumptive eligibility period,
``(B) by a entity that is eligible for payments
under the State plan; and
``(2) are included in the care and services covered by a
State plan;
shall be treated as medical assistance provided by such plan for
purposes of section 1903.''.
(b) Conforming Amendments.--(1) Section 1902(a)(47) of such Act (42
U.S.C. 1396a(a)(47)) is amended by inserting before the semicolon at
the end the following: ``and provide for making medical assistance for
items and services described in subsection (a) of section 1920A
available to children during a presumptive eligibility period in
accordance with such section''.
(2) Section 1903(u)(1)(D)(v) of such Act (42 U.S.C.
1396b(u)(1)(D)(v)) of such Act is amended by inserting before the
period at the end the following: ``or for items and services described
in subsection (a) of section 1920A provided to a child during a
presumptive eligibility period under such section''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
TITLE IV--COMMITTEE ON COMMERCE--MEDICARE
SEC. 4000. AMENDMENTS TO SOCIAL SECURITY ACT AND REFERENCES TO OBRA;
TABLE OF CONTENTS OF TITLE.
(a) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this title an amendment 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 that section or other
provision of the Social Security Act.
(b) References to OBRA.--In this title, the terms ``OBRA-1986'',
``OBRA-1987'', ``OBRA-1989'', ``OBRA-1990'', and ``OBRA-1993'' refer to
the Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509), the
Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203), the
Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239), the
Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508), and the
Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66),
respectively.
(c) Table of Contents of Title.--The table of contents of this
title is as follows:
Sec. 4000. Amendments to Social Security Act and references to OBRA;
table of contents of title.
Subtitle A--MedicarePlus Program
subchapter a--medicareplus program
Sec. 4001. Establishment of MedicarePlus program.
``Part C--MedicarePlus Program
``Sec. 1851. Eligibility, election, and enrollment.
``Sec. 1852. Benefits and beneficiary protections.
``Sec. 1853. Payments to MedicarePlus organizations.
``Sec. 1854. Premiums.
``Sec. 1855. Organizational and financial requirements for
MedicarePlus organizations; provider-
sponsored organizations.
``Sec. 1856. Establishment of standards.
``Sec. 1857. Contracts with MedicarePlus organizations.
``Sec. 1859. Definitions; miscellaneous provisions.
Sec. 4002. Transitional rules for current medicare HMO program.
Ssubchapter b--special rules for medicareplus medical savings accounts
Sesubchapter c--gme, ime, and dsh payments for managed care enrollees
Sec. 4008. Graduate medical education and indirect medical education
payments for managed care enrollees.
Sec. 4009. Disproportionate share hospital payments for managed care
enrollees.
subchapter a--programs of all-inclusive care for the elderly (pace)
Sec. 4011. Reference to coverage of PACE under the medicare program.
Sec. 4012. Reference to establishment of PACE program as medicaid State
subchapter b--social health maintenance organizations (shmos)
Sec. 4015. Social healsubchapter c--other programs (SHMOs).
Sec. 4018. Orderly transition of municipal health service demonstration
projects.
Sec. 4019. Extension of certain medicare community nursing organization
demonstration projects.
Chapter 3--Medicare Payment Advisory Commission
Sec. 4021. Medicare Payment Advisory Commission.
Chapter 4--Medigap Protections
Sec. 4031. Medigap protections.
Sec. 4032. Medicare prepaid competitive pricing demonstration project.
Subtitle B--Prevention Initiatives
Sec. 4101. Screening mammography.
Sec. 4102. Screening pap smear and pelvic exams.
Sec. 4103. Prostate cancer screening tests.
Sec. 4104. Coverage of colorectal screening.
Sec. 4105. Diabetes screening tests.
Sec. 4106. Standardization of medicare coverage of bone mass
measurements.
Sec. 4107. Vaccines outreach expansion.
Sec. 4108. Study on preventive benefits.
Subtitle C--Rural Initiatives
Sec. 4206. Informatics, telemedicine, and education demonstration
project.
Subtitle D--Anti-Fraud and Abuse Provisions
Sec. 4301. Permanent exclusion for those convicted of 3 health care
related crimes.
Sec. 4302. Authority to refuse to enter into medicare agreements with
individuals or entities convicted of
felonies.
Sec. 4303. Inclusion of toll-free number to report medicare waste,
fraud, and abuse in explanation of benefits
forms.
Sec. 4304. Liability of medicare carriers and fiscal intermediaries for
claims submitted by excluded providers.
Sec. 4305. Exclusion of entity controlled by family member of a
sanctioned individual.
Sec. 4306. Imposition of civil money penalties.
Sec. 4307. Disclosure of information and surety bonds.
Sec. 4308. Provision of certain identification numbers.
Sec. 4309. Advisory opinions regarding certain physician self-referral
provisions.
Sec. 4310. Nondiscrimination in post-hospital referral to home health
agencies.
Sec. 4311. Other fraud and abuse related provisions.
Subtitle E--Prospective Payment Systems
subchapter a--payment for hospital outpatient department services
Sec. 4411. Elimination of formula-driven overpayments (FDO) for certain
outpatient hospital services.
Sec. 4412. Extension of reductions in payments for costs of hospital
outpatient services.
Sec. 4413. Prospective payment system for hospital outpatient
subchapter b--rehabilitation services
Sec. 4421. Rehabilitation agencies and services.
Sec. 4422. Comprehensubchapter c--ambulance servicesacilities (corf).
Sec. 4431. Payments for ambulance services.
Sec. 4432. Demonstration of coverage of ambulance services under
medicare through contracts with units of
local government.
Chapter 3--Payment Under Parts A and B
Sec. 4441. Prospective payment for home health services.
Subtitle G--Provisions Relating to Part B Only
Chapter 1--Physicians' Services
Sec. 4601. Establishment of single conversion factor for 1998.
Sec. 4602. Establishing update to conversion factor to match spending
under sustainable growth rate.
Sec. 4603. Replacement of volume performance standard with sustainable
growth rate.
Sec. 4604. Payment rules for anesthesia services.
Sec. 4605. Implementation of resource-based physician practice expense.
Sec. 4606. Dissemination of information on high per admission relative
values for in-hospital physicians'
services.
Sec. 4607. No X-ray required for chiropractic services.
Sec. 4608. Temporary coverage restoration for portable
electrocardiogram transportation.
Chapter 2--Other Payment Provisions
Sec. 4611. Payments for durable medical equipment.
Sec. 4612. Oxygen and oxygen equipment.
Sec. 4613. Reduction in updates to payment amounts for clinical
diagnostic laboratory tests.
Sec. 4614. Simplification in administration of laboratory services
benefit.
Sec. 4615. Updates for ambulatory surgical services.
Sec. 4616. Reimbursement for drugs and biologicals.
Sec. 4617. Coverage of oral anti-nausea drugs under chemotherapeutic
regimen.
Sec. 4618. Rural health clinic services.
Sec. 4619. Increased medicare reimbursement for nurse practitioners and
clinical nurse specialists.
Sec. 4620. Increased medicare reimbursement for physician assistants.
Sec. 4621. Renal dialysis-related services.
Sec. 4622. Payment for cochlear implants as customized durable medical
equipment.
Chapter 3--Part B Premium
Sec. 4631. Part B premium.
Subtitle H--Provisions Relating to Parts A and B
Chapter 1--Provisions Relating to Medicare Secondary Payer
Sec. 4701. Permanent extension and revision of certain secondary payer
provisions.
Sec. 4702. Clarification of time and filing limitations.
Sec. 4703. Permitting recovery against third party administrators.
Chapter 2--Home Health Services
Sec. 4711. Recapturing savings resulting from temporary freeze on
payment increases for home health services.
Sec. 4712. Interim payments for home health services.
Sec. 4713. Clarification of part-time or intermittent nursing care.
Sec. 4714. Study of definition of homebound.
Sec. 4715. Payment based on location where home health service is
furnished.
Sec. 4716. Normative standards for home health claims denials,
Sec. 4717. No home health benefits based solely on drawing blood.
Sec. 4718. Making part B primary payor for certain home health
services.
Chapter 3--Baby Boom Generation Medicare Commission
Sec. 4721. Bipartisan Commission on the Effect of the Baby Boom
Generation on the Medicare Program.
Chapter 4--Provisions Relating to Direct Graduate Medical Education
Sec. 4731. Limitation on payment based on number of residents and
implementation of rolling average FTE
count.
Sec. 4732. Phased-in limitation on hospital overhead and supervisory
physician component of direct medical
education costs.
Sec. 4733. Permitting payment to non-hospital providers.
Sec. 4734. Incentive payments under plans for voluntary reduction in
number of residents.
Sec. 4735. Demonstration project on use of consortia.
Sec. 4736. Recommendations on long-term payment policies regarding
financing teaching hospitals and graduate
medical education.
Sec. 4737. Medicare special reimbursement rule for certain combined
residency programs.
Chapter 5--Other Provisions
Sec. 4741. Centers of excellence.
Sec. 4742. Medicare part B special enrollment period and waiver of part
B late enrollment penalty and medigap
special open enrollment period for certain
military retirees and dependents.
Sec. 4743. Competitive bidding for certain items and services.
Subtitle I--Medical Liability Reform
Chapter 1--General Provisions
Sec. 4801. Federal reform of health care liability actions.
Sec. 4802. Definitions.
Sec. 4803. Effective date.
Chapter 2--Uniform Standards for Health Care Liability Actions
Sec. 4811. Statute of limitations.
Sec. 4812. Calculation and payment of damages.
Sec. 4813. Alternative dispute resolution.
Subtitle A--MedicarePlus Program
CHAPTER 1--MEDICAREPLUS PROGRAM
Subchapter A--MedicarePlus Program
SEC. 4001. ESTABLISHMENT OF MEDICAREPLUS PROGRAM.
(a) In General.--Title XVIII is amended by redesignating part C as
part D and by inserting after part B the following new part:
``Part C--MedicarePlus Program
``eligibility, election, and enrollment
``Sec. 1851. (a) Choice of Medicare Benefits Through MedicarePlus
Plans.--
``(1) In general.--Subject to the provisions of this
section, each MedicarePlus eligible individual (as defined in
paragraph (3)) is entitled to elect to receive benefits under
this title--
``(A) through the medicare fee-for-service program
under parts A and B, or
``(B) through enrollment in a MedicarePlus plan
under this part.
``(2) Types of medicareplus plans that may be available.--A
MedicarePlus plan may be any of the following types of plans of
health insurance:
``(A) Coordinated care plans.--Coordinated care
plans which provide health care services, including
health maintenance organization plans and preferred
provider organization plans.
``(B) Plans offered by provider-sponsored
organization.--A MedicarePlus plan offered by a
provider-sponsored organization, as defined in section
1855(e).
``(C) Combination of msa plan and contributions to
medicareplus msa.--An MSA plan, as defined in section
1859(b)(2), and a contribution into a MedicarePlus
medical savings account (MSA).
``(3) MedicarePlus eligible individual.--
``(A) In general.--In this title, subject to
subparagraph (B), the term `MedicarePlus eligible
individual' means an individual who is entitled to
benefits under part A and enrolled under part B.
``(B) Special rule for end-stage renal disease.--
Such term shall not include an individual medically
determined to have end-stage renal disease, except that
an individual who develops end-stage renal disease
while enrolled in a MedicarePlus plan may continue to
be enrolled in that plan.
``(b) Special Rules.--
``(1) Residence requirement.--
``(A) In general.--Except as the Secretary may
otherwise provide, an individual is eligible to elect a
MedicarePlus plan offered by a MedicarePlus
organization only if the organization serves the
geographic area in which the individual resides.
``(B) Continuation of enrollment permitted.--
Pursuant to rules specified by the Secretary, the
Secretary shall provide that an individual may continue
enrollment in a plan, notwithstanding that the
individual no longer resides in the service area of the
plan, so long as the plan provides benefits for
enrollees located in the area in which the individual
resides.
``(2) Special rule for certain individuals covered under
fehbp or eligible for veterans or military health benefits,
veterans .--
``(A) FEHBP.--An individual who is enrolled in a
health benefit plan under chapter 89 of title 5, United
States Code, is not eligible to enroll in an MSA plan
until such time as the Director of the Office of
Management and Budget certifies to the Secretary that
the Office of Personnel Management has adopted policies
which will ensure that the enrollment of such
individuals in such plans will not result in increased
expenditures for the Federal Government for health
benefit plans under such chapter.
``(B) VA and dod.--The Secretary may apply rules
similar to the rules described in subparagraph (A) in
the case of individuals who are eligible for health
care benefits under chapter 55 of title 10, United
States Code, or under chapter 17 of title 38 of such
Code.
``(3) Limitation on eligibility of qualified medicare
beneficiaries and other medicaid beneficiaries to enroll in an
MSA plan.--An individual who is a qualified medicare
beneficiary (as defined in section 1905(p)(1)), a qualified
disabled and working individual (described in section 1905(s)),
an individual described in section 1902(a)(10)(E)(iii), or
otherwise entitled to medicare cost-sharing under a State plan
under title XIX is not eligible to enroll in an MSA plan.
``(4) Coverage under msa plans on a demonstration basis.--
``(A) In general.--An individual is not eligible to
enroll in an MSA plan under this part--
``(i) on or after January 1, 2003, unless
the enrollment is the continuation of such an
enrollment in effect as of such date; or
``(ii) as of any date if the number of such
individuals so enrolled as of such date has
reached 500,000.
Under rules established by the Secretary, an individual
is not eligible to enroll (or continue enrollment) in
an MSA plan for a year unless the individual provides
assurances satisfactory to the Secretary that the
individual will reside in the United States for at
least 183 days during the year.
``(B) Evaluation.--The Secretary shall regularly
evaluate the impact of permitting enrollment in MSA
plans under this part on selection (including adverse
selection), use of preventive care, access to care, and
the financial status of the Trust Funds under this
title.
``(C) Reports.--The Secretary shall submit to
Congress periodic reports on the numbers of individuals
enrolled in such plans and on the evaluation being
conducted under subparagraph (B). The Secretary shall
submit such a report, by not later than March 1, 2002,
on whether the time limitation under subparagraph
(A)(i) should be extended or removed and whether to
change the numerical limitation under subparagraph
(A)(ii).
``(c) Process for Exercising Choice.--
``(1) In general.--The Secretary shall establish a process
through which elections described in subsection (a) are made
and changed, including the form and manner in which such
elections are made and changed. Such elections shall be made or
changed only during coverage election periods specified under
subsection (e) and shall become effective as provided in
subsection (f).
``(2) Coordination through medicareplus organizations.--
``(A) Enrollment.--Such process shall permit an
individual who wishes to elect a MedicarePlus plan
offered by a MedicarePlus organization to make such
election through the filing of an appropriate election
form with the organization.
``(B) Disenrollment.--Such process shall permit an
individual, who has elected a MedicarePlus plan offered
by a MedicarePlus organization and who wishes to
terminate such election, to terminate such election
through the filing of an appropriate election form with
the organization.
``(3) Default.--
``(A) Initial election.--
``(i) In general.--Subject to clause (ii),
an individual who fails to make an election
during an initial election period under
subsection (e)(1) is deemed to have chosen the
medicare fee-for-service program option.
``(ii) Seamless continuation of coverage.--
The Secretary may establish procedures under
which an individual who is enrolled in a health
plan (other than MedicarePlus plan) offered by
a MedicarePlus organization at the time of the
initial election period and who fails to elect
to receive coverage other than through the
organization is deemed to have elected the
MedicarePlus plan offered by the organization
(or, if the organization offers more than one
such plan, such plan or plans as the Secretary
identifies under such procedures).
``(B) Continuing periods.--An individual who has
made (or is deemed to have made) an election under this
section is considered to have continued to make such
election until such time as--
``(i) the individual changes the election
under this section, or
``(ii) a MedicarePlus plan is discontinued,
if the individual had elected such plan at the
time of the discontinuation.
``(d) Providing Information To Promote Informed Choice.--
``(1) In general.--The Secretary shall provide for
activities under this subsection to broadly disseminate
information to medicare beneficiaries (and prospective medicare
beneficiaries) on the coverage options provided under this
section in order to promote an active, informed selection among
such options.
``(2) Provision of notice.--
``(A) Open season notification.--At least 30 days
before the beginning of each annual, coordinated
election period (as defined in subsection (e)(3)(B)),
the Secretary shall mail to each MedicarePlus eligible
individual residing in an area the following:
``(i) General information.--The general
information described in paragraph (3).
``(ii) List of plans and comparison of plan
options.--A list identifying the MedicarePlus
plans that are (or will be) available to
residents of the area and information described
in paragraph (4) concerning such plans. Such
information shall be presented in a comparative
form.
``(iii) MedicarePlus monthly capitation
rate.--The amount of the monthly MedicarePlus
capitation rate for the area.
``(iv) Additional information.--Any other
information that the Secretary determines will
assist the individual in making the election
under this section.
The mailing of such information shall be coordinated
with the mailing of any annual notice under section
1804.
``(B) Notification to newly medicareplus eligible
individuals.--To the extent practicable, the Secretary
shall, not later than 2 months before the beginning of
the initial MedicarePlus enrollment period for an
individual described in subsection (e)(1), mail to the
individual the information described in subparagraph
(A).
``(C) Form.--The information disseminated under
this paragraph shall be written and formatted using
language that is easily understandable by medicare
beneficiaries.
``(D) Periodic updating.--The information described
in subparagraph (A) shall be updated on at least an
annual basis to reflect changes in the availability of
MedicarePlus plans and the benefits and monthly
premiums (and net monthly premiums) for such plans.
``(3) General information.--General information under this
paragraph, with respect to coverage under this part during a
year, shall include the following:
``(A) Benefits under fee-for-service program
option.--A general description of the benefits covered
(and not covered) under the medicare fee-for-service
program under parts A and B, including--
``(i) covered items and services,
``(ii) beneficiary cost sharing, such as
deductibles, coinsurance, and copayment
amounts, and
``(iii) any beneficiary liability for
balance billing.
``(B) Part b premium.--The part B premium rates
that will be charged for part B coverage.
``(C) Election procedures.--Information and
instructions on how to exercise election options under
this section.
``(D) Rights.--The general description of
procedural rights (including grievance and appeals
procedures) of beneficiaries under the medicare fee-
for-service program and the MedicarePlus program and
right to be protected against discrimination based on
health status-related factors under section 1852(b).
``(E) Information on medigap and medicare select.--
A general description of the benefits, enrollment
rights, and other requirements applicable to medicare
supplemental policies under section 1882 and provisions
relating to medicare select policies described in
section 1882(t).
``(F) Potential for contract termination.--The fact
that a MedicarePlus organization may terminate or
refuse to renew its contract under this part and the
effect the termination or nonrenewal of its contract
may have on individuals enrolled with the MedicarePlus
plan under this part.
``(4) Information comparing plan options.--Information
under this paragraph, with respect to a MedicarePlus plan for a
year, shall include the following:
``(A) Benefits.--The benefits covered (and not
covered) under the plan, including--
``(i) covered items and services beyond
those provided under the medicare fee-for-
service program,
``(ii) any beneficiary cost sharing,
``(iii) any maximum limitations on out-of-
pocket expenses,
``(iv) in the case of an MSA plan,
differences in cost sharing under such a plan
compared to under other MedicarePlus plans,
``(v) the use of provider networks and the
restriction on payments for services furnished
other than by other through the organization,
``(vi) the organization's coverage of
emergency and urgently needed care,
``(vii) the appeal and grievance rights of
enrollees,
``(viii) number of grievances and appeals,
and information on their disposition in the
aggregate,
``(ix) procedures used by the organization
to control utilization of services and
expenditures, and
``(x) any exclusions in the types of
providers participating in the plan's network.
``(B) Premiums.--The monthly premium (and net
monthly premium), if any, for the plan.
``(C) Service area.--The service area of the plan.
``(D) Quality and performance.--To the extent
available, plan quality and performance indicators for
the benefits under the plan (and how they compare to
such indicators under the medicare fee-for-service
program under parts A and B in the area involved),
including--
``(i) disenrollment rates for medicare
enrollees electing to receive benefits through
the plan for the previous 2 years (excluding
disenrollment due to death or moving outside
the plan's service area),
``(ii) information on medicare enrollee
satisfaction,
``(iii) information on health outcomes, and
``(iv) the recent record regarding
compliance of the plan with requirements of
this part (as determined by the Secretary).
``(E) Supplemental benefits options.--Whether the
organization offering the plan offers optional
supplemental benefits and the terms and conditions
(including premiums) for such coverage.
``(5) Maintaining a toll-free number and internet site.--
The Secretary shall maintain a toll-free number for inquiries
regarding MedicarePlus options and the operation of this part
in all areas in which MedicarePlus plans are offered and an
Internet site through which individuals may electronically
obtain information on such options and MedicarePlus plans.
``(6) Use of nonfederal entities.--The Secretary may enter
into contracts with non-Federal entities to carry out
activities under this subsection.
``(7) Provision of information.--A MedicarePlus
organization shall provide the Secretary with such information
on the organization and each MedicarePlus plan it offers as may
be required for the preparation of the information referred to
in paragraph (2)(A).
``(e) Coverage Election Periods.--
``(1) Initial choice upon eligibility to make election if
medicareplus plans available to individual.--If, at the time an
individual first becomes entitled to benefits under part A and
enrolled under part B, there is one or more MedicarePlus plans
offered in the area in which the individual resides, the
individual shall make the election under this section during a
period (of a duration and beginning at a time specified by the
Secretary) at such time. Such period shall be specified in a
manner so that, in the case of an individual who elects a
MedicarePlus plan during the period, coverage under the plan
becomes effective as of the first date on which the individual
may receive such coverage.
``(2) Open enrollment and disenrollment opportunities.--
Subject to paragraph (5)--
``(A) Continuous open enrollment and disenrollment
through 2000.--At any time during 1998, 1999, and 2000,
a MedicarePlus eligible individual may change the
election under subsection (a)(1).
``(B) Continuous open enrollment and disenrollment
for first 6 months during 2001.--
``(i) In general.--Subject to clause (ii),
at any time during the first 6 months of 2001,
or, if the individual first becomes a
MedicarePlus eligible individual during 2001,
during the first 6 months during 2001 in which
the individual is a MedicarePlus eligible
individual, a MedicarePlus eligible individual
may change the election under subsection
(a)(1).
``(ii) Limitation of one change per year.--
An individual may exercise the right under
clause (i) only once during 2001. The
limitation under this clause shall not apply to
changes in elections effected during an annual,
coordinated election period under paragraph (3)
or during a special enrollment period under
paragraph (4).
``(C) Continuous open enrollment and disenrollment
for first 3 months in subsequent years.--
``(i) In general.--Subject to clause (ii),
at any time during the first 3 months of a year
after 2001, or, if the individual first becomes
a MedicarePlus eligible individual during a
year after 2001, during the first 3 months of
such year in which the individual is a
MedicarePlus eligible individual, a
MedicarePlus eligible individual may change the
election under subsection (a)(1).
``(ii) Limitation of one change per year.--
An individual may exercise the right under
clause (i) only once a year. The limitation
under this clause shall not apply to changes in
elections effected during an annual,
coordinated election period under paragraph (3)
or during a special enrollment period under
paragraph (4).
``(3) Annual, coordinated election period.--
``(A) In general.--Subject to paragraph (5), each
individual who is eligible to make an election under
this section may change such election during an annual,
coordinated election period.
``(B) Annual, coordinated election period.--For
purposes of this section, the term `annual, coordinated
election period' means, with respect to a calendar year
(beginning with 2001), the month of October before such
year.
``(C) MedicarePlus health fairs.--In the month of
October of each year (beginning with 1998), the
Secretary shall provide for a nationally coordinated
educational and publicity campaign to inform
MedicarePlus eligible individuals about MedicarePlus
plans and the election process provided under this
section.
``(4) Special election periods.--Effective as of January 1,
2001, an individual may discontinue an election of a
MedicarePlus plan offered by a MedicarePlus organization other
than during an annual, coordinated election period and make a
new election under this section if--
``(A) the organization's or plan's certification
under this part has been terminated or the organization
has terminated or otherwise discontinued providing the
plan;
``(B) the individual is no longer eligible to elect
the plan because of a change in the individual's place
of residence or other change in circumstances
(specified by the Secretary, but not including
termination of the individual's enrollment on the basis
described in clause (i) or (ii) of subsection
(g)(3)(B));
``(C) the individual demonstrates (in accordance
with guidelines established by the Secretary) that--
``(i) the organization offering the plan
substantially violated a material provision of
the organization's contract under this part in
relation to the individual (including the
failure to provide an enrollee on a timely
basis medically necessary care for which
benefits are available under the plan or the
failure to provide such covered care in
accordance with applicable quality standards);
or
``(ii) the organization (or an agent or
other entity acting on the organization's
behalf) materially misrepresented the plan's
provisions in marketing the plan to the
individual; or
``(D) the individual meets such other exceptional
conditions as the Secretary may provide.
``(5) Special rules for msa plans.--Notwithstanding the
preceding provisions of this subsection, an individual--
``(A) may elect an MSA plan only during--
``(i) an initial open enrollment period
described in paragraph (1),
``(ii) an annual, coordinated election
period described in paragraph (3)(B), or
``(iii) the months of October 1998 and
October 1999; and
``(B) may not discontinue an election of an MSA
plan except during the periods described in clause (ii)
or (iii) of subparagraph (A) and under paragraph (4).
``(f) Effectiveness of Elections and Changes of Elections.--
``(1) During initial coverage election period.--An election
of coverage made during the initial coverage election period
under subsection (e)(1) shall take effect upon the date the
individual becomes entitled to benefits under part A and
enrolled under part B, except as the Secretary may provide
(consistent with section 1838) in order to prevent retroactive
coverage.
``(2) During continuous open enrollment periods.--An
election or change of coverage made under subsection (e)(2)
shall take effect with the first day of the first calendar
month following the date on which the election is made.
``(3) Annual, coordinated election period.--An election or
change of coverage made during an annual, coordinated election
period (as defined in subsection (e)(3)(B)) in a year shall
take effect as of the first day of the following year.
``(4) Other periods.--An election or change of coverage
made during any other period under subsection (e)(4) shall take
effect in such manner as the Secretary provides in a manner
consistent (to the extent practicable) with protecting
continuity of health benefit coverage.
``(g) Guaranteed Issue and Renewal.--
``(1) In general.--Except as provided in this subsection, a
MedicarePlus organization shall provide that at any time during
which elections are accepted under this section with respect to
a MedicarePlus plan offered by the organization, the
organization will accept without restrictions individuals who
are eligible to make such election.
``(2) Priority.--If the Secretary determines that a
MedicarePlus organization, in relation to a MedicarePlus plan
it offers, has a capacity limit and the number of MedicarePlus
eligible individuals who elect the plan under this section
exceeds the capacity limit, the organization may limit the
election of individuals of the plan under this section but only
if priority in election is provided--
``(A) first to such individuals as have elected the
plan at the time of the determination, and
``(B) then to other such individuals in such a
manner that does not discriminate, on a basis described
in section 1852(b), among the individuals (who seek to
elect the plan).
The preceding sentence shall not apply if it would result in
the enrollment of enrollees substantially nonrepresentative, as
determined in accordance with regulations of the Secretary, of
the medicare population in the service area of the plan.
``(3) Limitation on termination of election.--
``(A) In general.--Subject to subparagraph (B), a
MedicarePlus organization may not for any reason
terminate the election of any individual under this
section for a MedicarePlus plan it offers.
``(B) Basis for termination of election.--A
MedicarePlus organization may terminate an individual's
election under this section with respect to a
MedicarePlus plan it offers if--
``(i) any net monthly premiums required
with respect to such plan are not paid on a
timely basis (consistent with standards under
section 1856 that provide for a grace period
for late payment of net monthly premiums),
``(ii) the individual has engaged in
disruptive behavior (as specified in such
standards), or
``(iii) the plan is terminated with respect
to all individuals under this part in the area
in which the individual resides.
``(C) Consequence of termination.--
``(i) Terminations for cause.--Any
individual whose election is terminated under
clause (i) or (ii) of subparagraph (B) is
deemed to have elected the medicare fee-for-
service program option described in subsection
(a)(1)(A).
``(ii) Termination based on plan
termination or service area reduction.--Any
individual whose election is terminated under
subparagraph (B)(iii) shall have a special
election period under subsection (e)(4)(A) in
which to change coverage to coverage under
another MedicarePlus plan. Such an individual
who fails to make an election during such
period is deemed to have chosen to change
coverage to the medicare fee-for-service
program option described in subsection
(a)(1)(A).
``(D) Organization obligation with respect to
election forms.--Pursuant to a contract under section
1857, each MedicarePlus organization receiving an
election form under subsection (c)(2) shall transmit to
the Secretary (at such time and in such manner as the
Secretary may specify) a copy of such form or such
other information respecting the election as the
Secretary may specify.
``(h) Approval of Marketing Material and Application Forms.--
``(1) Submission.--No marketing material or application
form may be distributed by a MedicarePlus organization to (or
for the use of) MedicarePlus eligible individuals unless--
``(A) at least 45 days before the date of
distribution the organization has submitted the
material or form to the Secretary for review, and
``(B) the Secretary has not disapproved the
distribution of such material or form.
``(2) Review.--The standards established under section 1856
shall include guidelines for the review of all such material or
form submitted and under such guidelines the Secretary shall
disapprove (or later require the correction of) such material
or form if the material or form is materially inaccurate or
misleading or otherwise makes a material misrepresentation.
``(3) Deemed approval (1-stop shopping).--In the case of
material or form that is submitted under paragraph (1)(A) to
the Secretary or a regional office of the Department of Health
and Human Services and the Secretary or the office has not
disapproved the distribution of marketing material or form
under paragraph (1)(B) with respect to a MedicarePlus plan in
an area, the Secretary is deemed not to have disapproved such
distribution in all other areas covered by the plan and
organization except to the extent that such material or form is
specific only to an area involved.
``(4) Prohibition of certain marketing practices.--Each
MedicarePlus organization shall conform to fair marketing
standards, in relation to MedicarePlus plans offered under this
part, included in the standards established under section 1856.
Such standards shall include a prohibition against a
MedicarePlus organization (or agent of such an organization)
completing any portion of any election form used to carry out
elections under this section on behalf of any individual.
``(i) Effect of Election of MedicarePlus Plan Option.--Subject to
sections 1852(a)(5), 1857(f)(2), and 1857(g)--
``(1) payments under a contract with a MedicarePlus
organization under section 1853(a) with respect to an
individual electing a MedicarePlus plan offered by the
organization shall be instead of the amounts which (in the
absence of the contract) would otherwise be payable under parts
A and B for items and services furnished to the individual, and
``(2) subject to subsections (e) and (f) of section 1853,
only the MedicarePlus organization shall be entitled to receive
payments from the Secretary under this title for services
furnished to the individual.
``benefits and beneficiary protections
``Sec. 1852. (a) Basic Benefits.--
``(1) In general.--Except as provided in section 1859(b)(2)
for MSA plans, each MedicarePlus plan shall provide to members
enrolled under this part, through providers and other persons
that meet the applicable requirements of this title and part A
of title XI--
``(A) those items and services for which benefits
are available under parts A and B to individuals
residing in the area served by the plan, and
``(B) additional benefits required under section
1854(f)(1)(A).
``(2) Satisfaction of requirement.--A MedicarePlus plan
(other than an MSA plan) offered by a MedicarePlus organization
satisfies paragraph (1)(A), with respect to benefits for items
and services furnished other than through a provider that has a
contract with the organization offering the plan, if the plan
provides (in addition to any cost sharing provided for under
the plan) for at least the total dollar amount of payment for
such items and services as would otherwise be authorized under
parts A and B (including any balance billing permitted under
such parts).
``(3) Supplemental benefits.--
``(A) Benefits included subject to secretary's
approval.--Each MedicarePlus organization may provide
to individuals enrolled under this part (without
affording those individuals an option to decline the
coverage) supplemental health care benefits that the
Secretary may approve. The Secretary shall approve any
such supplemental benefits unless the Secretary
determines that including such supplemental benefits
would substantially discourage enrollment by
MedicarePlus eligible individuals with the
organization.
``(B) At enrollees' option.--A MedicarePlus
organization may provide to individuals enrolled under
this part (other than under an MSA plan) supplemental
health care benefits that the individuals may elect, at
their option, to have covered.
``(4) Organization as secondary payer.--Notwithstanding any
other provision of law, a MedicarePlus organization may (in the
case of the provision of items and services to an individual
under a MedicarePlus plan under circumstances in which payment
under this title is made secondary pursuant to section
1862(b)(2)) charge or authorize the provider of such services
to charge, in accordance with the charges allowed under such a
law, plan, or policy--
``(A) the insurance carrier, employer, or other
entity which under such law, plan, or policy is to pay
for the provision of such services, or
``(B) such individual to the extent that the
individual has been paid under such law, plan, or
policy for such services.
``(5) National coverage determinations.--If there is a
national coverage determination made in the period beginning on
the date of an announcement under section 1853(b) and ending on
the date of the next announcement under such section and the
Secretary projects that the determination will result in a
significant change in the costs to a MedicarePlus organization
of providing the benefits that are the subject of such national
coverage determination and that such change in costs was not
incorporated in the determination of the annual MedicarePlus
capitation rate under section 1853 included in the announcement
made at the beginning of such period--
``(A) such determination shall not apply to
contracts under this part until the first contract year
that begins after the end of such period, and
``(B) if such coverage determination provides for
coverage of additional benefits or coverage under
additional circumstances, section 1851(i) shall not
apply to payment for such additional benefits or
benefits provided under such additional circumstances
until the first contract year that begins after the end
of such period,
unless otherwise required by law.
``(b) Antidiscrimination.--
``(1) In general.--A MedicarePlus organization may not
deny, limit, or condition the coverage or provision of benefits
under this part, for individuals permitted to be enrolled with
the organization under this part, based on any health status-
related factor described in section 2702(a)(1) of the Public
Health Service Act.
``(2) Construction.--Paragraph (1) shall not be construed
as requiring a MedicarePlus organization to enroll individuals
who are determined to have end-stage renal disease, except as
provided under section 1851(a)(3)(B).
``(c) Detailed Description of Plan Provisions.--A MedicarePlus
organization shall disclose, in clear, accurate, and standardized form
to each enrollee with a MedicarePlus plan offered by the organization
under this part at the time of enrollment and at least annually
thereafter, the following information regarding such plan:
``(1) Service area.--The plan's service area.
``(2) Benefits.--Benefits offered (and not offered) under
the plan offered, including information described in section
1851(d)(3)(A) and exclusions from coverage and, if it is an MSA
plan, a comparison of benefits under such a plan with benefits
under other MedicarePlus plans.
``(3) Access.--The number, mix, and distribution of plan
providers and any point-of-service option (including the
supplemental premium for such option).
``(4) Out-of-area coverage.--Out-of-area coverage provided
by the plan.
``(5) Emergency coverage.--Coverage of emergency services
and urgently needed care, including--
``(A) the appropriate use of emergency services,
including use of the 911 telephone system or its local
equivalent in emergency situations and an explanation
of what constitutes an emergency situation;
``(B) the process and procedures of the plan for
obtaining emergency services; and
``(C) the locations of (i) emergency departments,
and (ii) other settings, in which plan physicians and
hospitals provide emergency services and post-
stabilization care..
``(6) Supplemental benefits.--Supplemental benefits
available from the organization offering the plan, including--
``(A) whether the supplemental benefits are
optional,
``(B) the supplemental benefits covered, and
``(C) the premium price for the supplemental
benefits.
``(7) Prior authorization rules.--Rules regarding prior
authorization or other review requirements that could result in
nonpayment.
``(8) Plan grievance and appeals procedures.--Any appeal or
grievance rights and procedures.
``(9) Quality assurance program.--A description of the
organization's quality assurance program under subsection (e).
``(d) Access to Services.--
``(1) In general.--A MedicarePlus organization offering a
MedicarePlus plan may select the providers from whom the
benefits under the plan are provided so long as--
``(A) the organization makes such benefits
available and accessible to each individual electing
the plan within the plan service area with reasonable
promptness and in a manner which assures continuity in
the provision of benefits;
``(B) when medically necessary in the opinion of
the treating health care provider the organization
makes such benefits available and accessible 24 hours a
day and 7 days a week;
``(C) the plan provides for reimbursement with
respect to services which are covered under
subparagraphs (A) and (B) and which are provided to
such an individual other than through the organization,
if--
``(i) the services were medically necessary
in the opinion of the treating health care
provider and immediately required because of an
unforeseen illness, injury, or condition, and
it was not reasonable given the circumstances
to obtain the services through the
organization,
``(ii) the services were renal dialysis
services and were provided other than through
the organization because the individual was
temporarily out of the plan's service area, or
``(iii) the services are maintenance care
or post-stabilization care covered under the
guidelines established under paragraph (2);
``(D) the organization provides access to
appropriate providers, including credentialed
specialists, for treatment and services when such
treatment and services are determined to be medically
necessary in the professional opinion of the treating
health care provider, in consultation with the
individual; and
``(E) coverage is provided for emergency services
(as defined in paragraph (3)) without regard to prior
authorization or the emergency care provider's
contractual relationship with the organization.
``(2) Guidelines respecting coordination of post-
stabilization care.--A MedicarePlus plan shall comply with such
guidelines as the Secretary may prescribe relating to promoting
efficient and timely coordination of appropriate maintenance
and post-stabilization care of an enrollee after the enrollee
has been determined to be stable under section 1867.
``(3) Definition of emergency services.--In this
subsection--
``(A) In general.--The term `emergency services'
means, with respect to an individual enrolled with an
organization, covered inpatient and outpatient services
that--
``(i) are furnished by a provider that is
qualified to furnish such services under this
title, and
``(ii) are needed to evaluate or stabilize
an emergency medical condition (as defined in
subparagraph (B)).
``(B) Emergency medical condition based on prudent
layperson.--The term `emergency medical condition'
means a medical condition manifesting itself by acute
symptoms of sufficient severity such that a prudent
layperson, who possesses an average knowledge of health
and medicine, could reasonably expect the absence of
immediate medical attention to result in--
``(i) placing the health of the individual
(or, with respect to a pregnant woman, the
health of the woman or her unborn child) in
serious jeopardy,
``(ii) serious impairment to bodily
functions, or
``(iii) serious dysfunction of any bodily
organ or part.
``(4) Determination of hospital length of stay.--
``(A) In general.--A MedicarePlus organization
shall cover the length of an inpatient hospital stay
under this part as determined by the attending
physician (or other attending health care provider to
the extent permitted under State law) in consultation
with the patient to be medically appropriate.
``(B) Construction.--Nothing in this paragraph
shall be construed--
``(i) as requiring the provision of
inpatient coverage if the attending physician
(or other attending health care provider to the
extent permitted under State law) and patient
determine that a shorter period of hospital
stay is medically appropriate, or
``(ii) as affecting the application of
deductibles and coinsurance.
``(e) Quality Assurance Program.--
``(1) In general.--Each MedicarePlus organization must have
arrangements, consistent with any regulation, for an ongoing
quality assurance program for health care services it provides
to individuals enrolled with MedicarePlus plans of the
organization.
``(2) Elements of program.--The quality assurance program
shall--
``(A) stress health outcomes and provide for the
collection, analysis, and reporting of data (in
accordance with a quality measurement system that the
Secretary recognizes) that will permit measurement of
outcomes and other indices of the quality of
MedicarePlus plans and organizations;
``(B) provide for the establishment of written
protocols for utilization review, based on current
standards of medical practice;
``(C) provide review by physicians and other health
care professionals of the process followed in the
provision of such health care services;
``(D) monitor and evaluate high volume and high
risk services and the care of acute and chronic
conditions;
``(E) evaluate the continuity and coordination of
care that enrollees receive;
``(F) have mechanisms to detect both
underutilization and overutilization of services;
``(G) after identifying areas for improvement,
establish or alter practice parameters;
``(H) take action to improve quality and assesses
the effectiveness of such action through systematic
followup;
``(I) make available information on quality and
outcomes measures to facilitate beneficiary comparison
and choice of health coverage options (in such form and
on such quality and outcomes measures as the Secretary
determines to be appropriate);
``(J) be evaluated on an ongoing basis as to its
effectiveness;
``(K) include measures of consumer satisfaction;
and
``(L) provide the Secretary with such access to
information collected as may be appropriate to monitor
and ensure the quality of care provided under this
part.
``(3) External review.--Each MedicarePlus organization
shall, for each MedicarePlus plan it operates, have an
agreement with an independent quality review and improvement
organization approved by the Secretary to perform functions of
the type described in sections 1154(a)(4)(B) and 1154(a)(14)
with respect to services furnished by MedicarePlus plans for
which payment is made under this title.
``(4) Treatment of accreditation.--The Secretary shall
provide that a MedicarePlus organization is deemed to meet
requirements of paragraphs (1) through (3) of this subsection
and subsection (h) (relating to confidentiality and accuracy of
enrollee records) if the organization is accredited (and
periodically reaccredited) by a private organization under a
process that the Secretary has determined assures that the
organization, as a condition of accreditation, applies and
enforces standards with respect to the requirements involved
that are no less stringent than the standards established under
section 1856 to carry out the respective requirements.
``(f) Coverage Determinations.--
``(1) Decisions on nonemergency care.--A MedicarePlus
organization shall make determinations regarding authorization
requests for nonemergency care on a timely basis, depending on
the urgency of the situation. The organization shall provide
notice of any coverage denial, which notice shall include a
statement of the reasons for the denial and a description of
the grievance and appeals processes available.
``(2) Reconsiderations.--
``(A) In general.--Subject to subsection (g)(4), a
reconsideration of a determination of an organization
denying coverage shall be made within 30 days of the
date of receipt of medical information, but not later
than 60 days after the date of the determination.
``(B) Physician decision on certain
reconsiderations.--A reconsideration relating to a
determination to deny coverage based on a lack of
medical necessity shall be made only by a physician
with appropriate expertise in the field of medicine
which necessitates treatment who is other than a
physician involved in the initial determination.
``(g) Grievances and Appeals.--
``(1) Grievance mechanism.--Each MedicarePlus organization
must provide meaningful procedures for hearing and resolving
grievances between the organization (including any entity or
individual through which the organization provides health care
services) and enrollees with MedicarePlus plans of the
organization under this part.
``(2) Appeals.--An enrollee with a MedicarePlus plan of a
MedicarePlus organization under this part who is dissatisfied
by reason of the enrollee's failure to receive any health
service to which the enrollee believes the enrollee is entitled
and at no greater charge than the enrollee believes the
enrollee is required to pay is entitled, if the amount in
controversy is $100 or more, to a hearing before the Secretary
to the same extent as is provided in section 205(b), and in any
such hearing the Secretary shall make the organization a party.
If the amount in controversy is $1,000 or more, the individual
or organization shall, upon notifying the other party, be
entitled to judicial review of the Secretary's final decision
as provided in section 205(g), and both the individual and the
organization shall be entitled to be parties to that judicial
review. In applying sections 205(b) and 205(g) as provided in
this paragraph, and in applying section 205(l) thereto, any
reference therein to the Commissioner of Social Security or the
Social Security Administration shall be considered a reference
to the Secretary or the Department of Health and Human
Services, respectively.
``(3) Independent review of coverage denials.--The
Secretary shall contract with an independent, outside entity to
review and resolve in a timely manner reconsiderations that
affirm denial of coverage.
``(4) Expedited determinations and reconsiderations.--
``(A) Receipt of requests.--An enrollee in a
MedicarePlus plan may request, either in writing or
orally, an expedited determination or reconsideration
by the MedicarePlus organization regarding a matter
described in paragraph (2). The organization shall also
permit the acceptance of such requests by physicians.
``(B) Organization procedures.--
``(i) In general.--The MedicarePlus
organization shall maintain procedures for
expediting organization determinations and
reconsiderations when, upon request of an
enrollee, the organization determines that the
application of normal time frames for making a
determination (or a reconsideration involving a
determination) could seriously jeopardize the
life or health of the enrollee or the
enrollee's ability to regain maximum function.
``(ii) Timely response.--In an urgent case
described in clause (i), the organization shall
notify the enrollee (and the physician
involved, as appropriate) of the determination
(or determination on the reconsideration) as
expeditiously as the enrollee's health
condition requires, but not later than 72 hours
(or 24 hours in the case of a reconsideration)
of the time of receipt of the request for the
determination or reconsideration (or receipt of
the information necessary to make the
determination or reconsideration), or such
longer period as the Secretary may permit in
specified cases.
``(iii) Secretarial report.--The Secretary
shall annually report publicly on the number
and disposition of denials and appeals within
each MedicarePlus organization, and those
reviewed and resolved by the independent
entities under this subsection.
``(h) Confidentiality and Accuracy of Enrollee Records.--Each
MedicarePlus organization shall establish procedures--
``(1) to safeguard the privacy of individually identifiable
enrollee information,
``(2) to maintain accurate and timely medical records and
other health information for enrollees, and
``(3) to assure timely access of enrollees to their medical
information.
``(i) Information on Advance Directives.--Each MedicarePlus
organization shall meet the requirement of section 1866(f) (relating to
maintaining written policies and procedures respecting advance
directives).
``(j) Rules Regarding Physician Participation.--
``(1) Procedures.--Each MedicarePlus organization shall
establish reasonable procedures relating to the participation
(under an agreement between a physician and the organization)
of physicians under MedicarePlus plans offered by the
organization under this part. Such procedures shall include--
``(A) providing notice of the rules regarding
participation,
``(B) providing written notice of participation
decisions that are adverse to physicians, and
``(C) providing a process within the organization
for appealing such adverse decisions, including the
presentation of information and views of the physician
regarding such decision.
``(2) Consultation in medical policies.--A MedicarePlus
organization shall consult with physicians who have entered
into participation agreements with the organization regarding
the organization's medical policy, quality, and medical
management procedures.
``(3) Prohibiting interference with provider advice to
enrollees.--
``(A) In general.--Subject to subparagraphs (B) and
(C), a MedicarePlus organization (in relation to an
individual enrolled under a MedicarePlus plan offered
by the organization under this part) shall not prohibit
or otherwise restrict a covered health care
professional (as defined in subparagraph (D)) from
advising such an individual who is a patient of the
professional about the health status of the individual
or medical care or treatment for the individual's
condition or disease, regardless of whether benefits
for such care or treatment are provided under the plan,
if the professional is acting within the lawful scope
of practice.
``(B) Conscience protection.--Subparagraph (A)
shall not be construed as requiring a MedicarePlus plan
to provide, reimburse for, or provide coverage of a
counseling or referral service if the MedicarePlus
organization offering the plan--
``(i) objects to the provision of such
service on moral or religious grounds; and
``(ii) in the manner and through the
written instrumentalities such MedicarePlus
organization deems appropriate, makes available
information on its policies regarding such
service to prospective enrollees before or
during enrollment and to enrollees within 90
days after the date that the organization or
plan adopts a change in policy regarding such a
counseling or referral service.
``(C) Construction.--Nothing in subparagraph (B)
shall be construed to affect disclosure requirements
under State law or under the Employee Retirement Income
Security Act of 1974.
``(D) Health care professional defined.--For
purposes of this paragraph, the term `health care
professional' means a physician (as defined in section
1861(r)) or other health care professional if coverage
for the professional's services is provided under the
MedicarePlus plan for the services of the professional.
Such term includes a podiatrist, optometrist,
chiropractor, psychologist, dentist, physician
assistant, physical or occupational therapist and
therapy assistant, speech-language pathologist,
audiologist, registered or licensed practical nurse
(including nurse practitioner, clinical nurse
specialist, certified registered nurse anesthetist, and
certified nurse-midwife), licensed certified social
worker, registered respiratory therapist, and certified
respiratory therapy technician.
``(4) Limitations on health care provider incentive
plans.--
``(A) In general.--No MedicarePlus organization may
operate any health care provider incentive plan (as
defined in subparagraph (B)) unless the following
requirements are met:
``(i) No specific payment is made directly
or indirectly under the plan to a health care
provider or health care provider group as an
inducement to reduce or limit medically
necessary services provided with respect to a
specific individual enrolled with the
organization.
``(ii) If the plan places a health care
provider or health care provider group at
substantial financial risk (as determined by
the Secretary) for services not provided by the
health care provider or health care provider
group, the organization--
``(I) provides stop-loss protection
for the health care provider or group
that is adequate and appropriate, based
on standards developed by the Secretary
that take into account the number of
health care providers placed at such
substantial financial risk in the group
or under the plan and the number of
individuals enrolled with the
organization who receive services from
the health care provider or group, and
``(II) conducts periodic surveys of
both individuals enrolled and
individuals previously enrolled with
the organization to determine the
degree of access of such individuals to
services provided by the organization
and satisfaction with the quality of
such services.
``(iii) The organization provides the
Secretary with descriptive information
regarding the plan, sufficient to permit the
Secretary to determine whether the plan is in
compliance with the requirements of this
subparagraph.
``(B) Health care provider incentive plan
defined.--In this paragraph, the term `health care
provider incentive plan' means any compensation
arrangement between a MedicarePlus organization and a
health care provider or health care provider group that
may directly or indirectly have the effect of reducing
or limiting services provided with respect to
individuals enrolled with the organization under this
part.
``(C) Health care provider defined.--For the
purposes of this paragraph, the term `health care
provider' has the meaning given the term `health care
professional' in paragraph (3)(D).
``(5) Limitation on provider indemnification.--A
MedicarePlus organization may not provide (directly or
indirectly) for a provider (or group of providers) to indemnify
the organization against any liability resulting from a civil
action brought for any damage caused to an enrollee with a
MedicarePlus plan of the organization under this part by the
organization's denial of medically necessary care.
``(6) Limitation on non-compete clause.--A MedicarePlus
organization may not (directly or indirectly) seek to enforce
any contractual provision which prevents a provider whose
contractual obligations to the organization for the provision
of services through the organization have ended from joining or
forming any competing MedicarePlus organization that is a
provider-sponsored organization in the same area.
``(k) Treatment of Services Furnished by Certain Providers.--A
physician or other entity (other than a provider of services) that does
not have a contract establishing payment amounts for services furnished
to an individual enrolled under this part with a MedicarePlus
organization shall accept as payment in full for covered services under
this title that are furnished to such an individual the amounts that
the physician or other entity could collect if the individual were not
so enrolled. Any penalty or other provision of law that applies to such
a payment with respect to an individual entitled to benefits under this
title (but not enrolled with a MedicarePlus organization under this
part) also applies with respect to an individual so enrolled.
``(l) Disclosure of Use of DSH and Teaching Hospitals.--Each
MedicarePlus organization shall provide the Secretary with information
on--
``(1) the extent to which the organization provides
inpatient and outpatient hospital benefits under this part--
``(A) through the use of hospitals that are
eligible for additional payments under section
1886(d)(5)(F)(i) (relating to so-called DSH hospitals),
or
``(B) through the use of teaching hospitals that
receive payments under section 1886(h); and
``(2) the extent to which differences between payment rates
to different hospitals reflect the disproportionate share
percentage of low-income patients and the presence of medical
residency training programs in those hospitals.
``(m) Out-of-Network Access.--If an organization offers to members
enrolled under this section one plan which provides for coverage of
services covered under parts A and B primarily through providers and
other persons who are members of a network of providers and other
persons who have entered into a contract with the organization to
provide such services, nothing in this section shall be construed as
preventing the organization from offering such members (at the time of
enrollment) another plan which provides for coverage of such items
which are not furnished through such network providers.
``(n) Non-Preemption of State Law.--A State may establish or
enforce requirements with respect to beneficiary protections in this
section, but only if such requirements are more stringent than the
requirements established under this section.
``(o) Nondiscrimination in Selection of Network Health
Professionals.--
``(1) In general.--A MedicarePlus organization offering a
MedicarePlus plan offering network coverage shall not
discriminate in selecting the members of its health
professional network (or in establishing the terms and
conditions for membership in such network) on the basis of the
race, national origin, gender, age, or disability (other than a
disability that impairs the ability of an individual to provide
health care services or that may threaten the health of
enrollees) of the health professional.
``(2) Appropriate range of services.--A MedicarePlus
organization shall not deny any health care professionals,
based solely on the license or certification as applicable
under State law, the ability to participate in providing
covered health care services, or be reimbursed or indemnified
by a network plan for providing such services under this part.
``(2) Definitions.--For purposes of this subsection:
``(A) Network.--The term `network' means, with
respect to a MedicarePlus organization offering a
MedicarePlus plan, the participating health
professionals and providers through whom the
organization provides health care items and services to
enrollees.
``(B) Network coverage.--The term `network
coverage' means a MedicarePlus plan offered by a
MedicarePlus organization that provides or arranges for
the provision of health care items and services to
enrollees through participating health professionals
and providers.
``(C) Participating.--The term `participating'
means, with respect to a health professional or
provider, a health professional or provider that
provides health care items and services to enrollees
under network coverage under an agreement with the
MedicarePlus organization offering the coverage.
``(p) Special Rule for Unrestricted Fee-for-Service MSA Plans.--
Subsections (j)(1) and (k) shall not apply to a MedicarePlus
organization with respect to an MSA plan it offers if the plan does not
limit the providers through whom benefits may be obtained under the
plan.
``payments to medicareplus organizations
``Sec. 1853. (a) Payments to Organizations.--
``(1) Monthly payments.--
``(A) In general.--Under a contract under section
1857 and subject to subsections (e) and (f), the
Secretary shall make monthly payments under this
section in advance to each MedicarePlus organization,
with respect to coverage of an individual under this
part in a MedicarePlus payment area for a month, in an
amount equal to \1/12\ of the annual MedicarePlus
capitation rate (as calculated under subsection (c))
with respect to that individual for that area, adjusted
for such risk factors as age, disability status,
gender, institutional status, and such other factors as
the Secretary determines to be appropriate, so as to
ensure actuarial equivalence. The Secretary may add to,
modify, or substitute for such factors, if such changes
will improve the determination of actuarial
equivalence.
``(B) Special rule for end-stage renal disease.--
The Secretary shall establish separate rates of payment
to a MedicarePlus organization with respect to classes
of individuals determined to have end-stage renal
disease and enrolled in a MedicarePlus plan of the
organization. Such rates of payment shall be
actuarially equivalent to rates paid to other enrollees
in the MedicarePlus payment area (or such other area as
specified by the Secretary). In accordance with
regulations, the Secretary shall provide for the
application of the seventh sentence of section
1881(b)(7) to payments under this section covering the
provision of renal dialysis treatment in the same
manner as such sentence applies to composite rate
payments described in such sentence.
``(2) Adjustment to reflect number of enrollees.--
``(A) In general.--The amount of payment under this
subsection may be retroactively adjusted to take into
account any difference between the actual number of
individuals enrolled with an organization under this
part and the number of such individuals estimated to be
so enrolled in determining the amount of the advance
payment.
``(B) Special rule for certain enrollees.--
``(i) In general.--Subject to clause (ii),
the Secretary may make retroactive adjustments
under subparagraph (A) to take into account
individuals enrolled during the period
beginning on the date on which the individual
enrolls with a MedicarePlus organization under
a plan operated, sponsored, or contributed to
by the individual's employer or former employer
(or the employer or former employer of the
individual's spouse) and ending on the date on
which the individual is enrolled in the
organization under this part, except that for
purposes of making such retroactive adjustments
under this subparagraph, such period may not
exceed 90 days.
``(ii) Exception.--No adjustment may be
made under clause (i) with respect to any
individual who does not certify that the
organization provided the individual with the
information required to be disclosed under
section 1852(c) at the time the individual
enrolled with the organization.
``(3) Establishment of risk adjustment factors.--
``(A) Report.--The Secretary shall develop, and
submit to Congress by not later than October 1, 1999, a
report on a method of risk adjustment of payment rates
under this section that accounts for variations in per
capita costs based on health status. Such report shall
include an evaluation of such method by an outside,
independent actuary of the actuarial soundness of the
proposal.
``(B) Data collection.--In order to carry out this
paragraph, the Secretary shall require MedicarePlus
organizations (and eligible organizations with risk-
sharing contracts under section 1876) to submit, for
periods beginning on or after January 1, 1998, data
regarding inpatient hospital services and other
services and other information the Secretary deems
necessary.
``(C) Initial implementation.--The Secretary shall
first provide for implementation of a risk adjustment
methodology that accounts for variations in per capita
costs based on health status and other demographic
factors for payments by no later than January 1, 2000.
``(b) Annual Announcement of Payment Rates.--
``(1) Annual announcement.--The Secretary shall annually
determine, and shall announce (in a manner intended to provide
notice to interested parties) not later than August 1 before
the calendar year concerned--
``(A) the annual MedicarePlus capitation rate for
each MedicarePlus payment area for the year, and
``(B) the risk and other factors to be used in
adjusting such rates under subsection (a)(1)(A) for
payments for months in that year.
``(2) Advance notice of methodological changes.--At least
45 days before making the announcement under paragraph (1) for
a year, the Secretary shall provide for notice to MedicarePlus
organizations of proposed changes to be made in the methodology
from the methodology and assumptions used in the previous
announcement and shall provide such organizations an
opportunity to comment on such proposed changes.
``(3) Explanation of assumptions.--In each announcement
made under paragraph (1), the Secretary shall include an
explanation of the assumptions and changes in methodology used
in the announcement in sufficient detail so that MedicarePlus
organizations can compute monthly adjusted MedicarePlus
capitation rates for individuals in each MedicarePlus payment
area which is in whole or in part within the service area of
such an organization.
``(c) Calculation of Annual MedicarePlus Capitation Rates.--
``(1) In General.--For purposes of this part, each annual
MedicarePlus capitation rate, for a MedicarePlus payment area
for a contract year consisting of a calendar year, is equal to
the largest of the amounts specified in the following
subparagraphs (A), (B), or (C):
``(A) Blended capitation rate.--The sum of--
``(i) area-specific percentage for the year
(as specified under paragraph (2) for the year)
of the annual area-specific MedicarePlus
capitation rate for the year for the
MedicarePlus payment area, as determined under
paragraph (3), and
``(ii) national percentage (as specified
under paragraph (2) for the year) of the input-
price-adjusted annual national MedicarePlus
capitation rate for the year, as determined
under paragraph (4),
multiplied by the payment adjustment factors described
in subparagraphs (A) and (B) of paragraph (5).
``(B) Minimum amount.--12 multiplied by the
following amount:
``(i) For 1998, $350 (but not to exceed, in
the case of an area outside the 50 States and
the District of Columbia, 150 percent of the
annual per capita rate of payment for 1997
determined under section 1876(a)(1)(C) for the
area).
``(ii) For a succeeding year, the minimum
amount specified in this clause (or clause (i))
for the preceding year increased by the
national per capita MedicarePlus growth
percentage, specified under paragraph (6) for
that succeeding year.
``(C) Minimum percentage increase.--
``(i) For 1998, the annual per capita rate
of payment for 1997 determined under section
1876(a)(1)(C) for the MedicarePlus payment
area.
``(ii) For 1999 and 2000, 101 percent of
the annual MedicarePlus capitation rate under
this paragraph for the area for the previous
year.
``(iii) For a subsequent year, 102 percent
of the annual MedicarePlus capitation rate
under this paragraph for the area for the
previous year.
``(2) Area-specific and national percentages.--For purposes
of paragraph (1)(A)--
``(A) for 1998, the `area-specific percentage' is
90 percent and the `national percentage' is 10 percent,
``(B) for 1999, the `area-specific percentage' is
85 percent and the `national percentage' is 15 percent,
``(C) for 2000, the `area-specific percentage' is
80 percent and the `national percentage' is 20 percent,
``(D) for 2001, the `area-specific percentage' is
75 percent and the `national percentage' is 25 percent,
and
``(E) for a year after 2001, the `area-specific
percentage' is 70 percent and the `national percentage'
is 30 percent.
``(3) Annual area-specific medicareplus capitation rate.--
``(A) In general.--For purposes of paragraph
(1)(A), subject to subparagraph (B), the annual area-
specific MedicarePlus capitation rate for a
MedicarePlus payment area--
``(i) for 1998 is the annual per capita
rate of payment for 1997 determined under
section 1876(a)(1)(C) for the area, increased
by the national per capita MedicarePlus growth
percentage for 1998 (as defined in paragraph
(6)); or
``(ii) for a subsequent year is the annual
area-specific MedicarePlus capitation rate for
the previous year determined under this
paragraph for the area, increased by the
national per capita MedicarePlus growth
percentage for such subsequent year.
``(B) Removal of medical education and
disproportionate share hospital payments from
calculation of adjusted average per capita cost.--
``(i) In general.--In determining the area-
specific MedicarePlus capitation rate under
subparagraph (A), for a year (beginning with
1998), the annual per capita rate of payment
for 1997 determined under section 1876(a)(1)(C)
shall be adjusted to exclude from the rate the
applicable percent (specified in clause (ii))
of the payment adjustments described in
subparagraph (C).
``(ii) Applicable percent.--For purposes of
clause (i), the applicable percent for--
``(I) 1998 is 20 percent,
``(II) 1999 is 40 percent,
``(III) 2000 is 60 percent,
``(IV) 2001 is 80 percent, and
``(V) a succeeding year is 100
percent.
``(C) Payment adjustment.--The payment adjustments
described in this subparagraph are payment adjustments
which the Secretary estimates were payable during
1997--
``(i) under section 1886(d)(5)(F) for
hospitals serving a disproportionate share of
low-income patients,
``(ii) for the indirect costs of medical
education under section 1886(d)(5)(B), and
``(iii) for direct graduate medical
education costs under section 1886(h),
multiplied by a ratio (estimated by the Secretary) of
total payments under subsection (h) and section 1858 in
1998 to payments under such subsection and payments
under such section in such year for hospitals not
reimbursed under section 1814(b)(3).
``(4) Input-price-adjusted annual national medicareplus
capitation rate.--
``(A) In general.--For purposes of paragraph
(1)(A), the input-price-adjusted annual national
MedicarePlus capitation rate for a MedicarePlus payment
area for a year is equal to the sum, for all the types
of medicare services (as classified by the Secretary),
of the product (for each such type of service) of--
``(i) the national standardized annual
MedicarePlus capitation rate (determined under
subparagraph (B)) for the year,
``(ii) the proportion of such rate for the
year which is attributable to such type of
services, and
``(iii) an index that reflects (for that
year and that type of services) the relative
input price of such services in the area
compared to the national average input price of
such services.
In applying clause (iii), the Secretary shall, subject
to subparagraph (C), apply those indices under this
title that are used in applying (or updating) national
payment rates for specific areas and localities.
``(B) National standardized annual medicareplus
capitation rate.--In subparagraph (A)(i), the `national
standardized annual MedicarePlus capitation rate' for a
year is equal to--
``(i) the sum (for all MedicarePlus payment
areas) of the product of--
``(I) the annual area-specific
MedicarePlus capitation rate for that
year for the area under paragraph (3),
and
``(II) the average number of
medicare beneficiaries residing in that
area in the year, multiplied by the
average of the risk factor weights used
to adjust payments under subsection
(a)(1)(A) for such beneficiaries in
such area; divided by
``(ii) the sum of the products described in
clause (i)(II) for all areas for that year.
``(C) Special rules for 1998.--In applying this
paragraph for 1998--
``(i) medicare services shall be divided
into 2 types of services: part A services and
part B services;
``(ii) the proportions described in
subparagraph (A)(ii)--
``(I) for part A services shall be
the ratio (expressed as a percentage)
of the national average annual per
capita rate of payment for part A for
1997 to the total national average
annual per capita rate of payment for
parts A and B for 1997, and
``(II) for part B services shall be
100 percent minus the ratio described
in subclause (I);
``(iii) for part A services, 70 percent of
payments attributable to such services shall be
adjusted by the index used under section
1886(d)(3)(E) to adjust payment rates for
relative hospital wage levels for hospitals
located in the payment area involved;
``(iv) for part B services--
``(I) 66 percent of payments
attributable to such services shall be
adjusted by the index of the geographic
area factors under section 1848(e) used
to adjust payment rates for physicians'
services furnished in the payment area,
and
``(II) of the remaining 34 percent
of the amount of such payments, 40
percent shall be adjusted by the index
described in clause (iii); and
``(v) the index values shall be computed
based only on the beneficiary population who
are 65 years of age or older and who are not
determined to have end stage renal disease.
The Secretary may continue to apply the rules described
in this subparagraph (or similar rules) for 1999.
``(5) Payment adjustment budget neutrality factors.--For
purposes of paragraph (1)(A)--
``(A) Blended rate payment adjustment factor.--For
each year, the Secretary shall compute a blended rate
payment adjustment factor such that, not taking into
account subparagraphs (B) and (C) of paragraph (1) and
the application of the payment adjustment factor
described in subparagraph (B) but taking into account
paragraph (7), the aggregate of the payments that would
be made under this part is equal to the aggregate
payments that would have been made under this part (not
taking into account such subparagraphs and such other
adjustment factor) if the area-specific percentage
under paragraph (1) for the year had been 100 percent
and the national percentage had been 0 percent.
``(B) Floor-and-minimum-update payment adjustment
factor.--For each year, the Secretary shall compute a
floor-and-minimum-update payment adjustment factor so
that, taking into account the application of the
blended rate payment adjustment factor under
subparagraph (A) and subparagraphs (B) and (C) of
paragraph (1) and the application of the adjustment
factor under this subparagraph, the aggregate of the
payments under this part shall not exceed the aggregate
payments that would have been made under this part if
subparagraphs (B) and (C) of paragraph (1) did not
apply and if the floor-and-minimum-update payment
adjustment factor under this subparagraph was 1.
``(6) National per capita medicareplus growth percentage
defined.--
``(A) In general.--In this part, the `national per
capita MedicarePlus growth percentage' for a year is
the percentage determined by the Secretary, by April
30th before the beginning of the year involved, to
reflect the Secretary's estimate of the projected per
capita rate of growth in expenditures under this title
for an individual entitled to benefits under part A and
enrolled under part B, reduced by the number of
percentage points specified in subparagraph (B) for the
year. Separate determinations may be made for aged
enrollees, disabled enrollees, and enrollees with end-
stage renal disease. Such percentage shall include an
adjustment for over or under projection in the growth
percentage for previous years.
``(B) Adjustment.--The number of percentage points
specified in this subparagraph is--
``(i) for 1998, 0.5 percentage points,
``(ii) for 1999, 0.5 percentage points,
``(iii) for 2000, 0.5 percentage points,
``(iv) for 2001, 0.5 percentage points,
``(v) for 2002, 0.5 percentage points, and
``(vi) for a year after 2002, 0 percentage
points.
``(7) treatment of areas with highly variable payment
rates.--In the case of a MedicarePlus payment area for which
the annual per capita rate of payment determined under section
1876(a)(1)(C) for 1997 varies by more than 20 percent from such
rate for 1996, for purposes of this subsection the Secretary
may substitute for such rate for 1997 a rate that is more
representative of the costs of the enrollees in the area.
``(d) MedicarePlus Payment Area Defined.--
``(1) In general.--In this part, except as provided in
paragraph (3), the term `MedicarePlus payment area' means a
county, or equivalent area specified by the Secretary.
``(2) Rule for esrd beneficiaries.--In the case of
individuals who are determined to have end stage renal disease,
the MedicarePlus payment area shall be a State or such other
payment area as the Secretary specifies.
``(3) Geographic adjustment.--
``(A) In general.--Upon written request of the
chief executive officer of a State for a contract year
(beginning after 1998) made at least 7 months before
the beginning of the year, the Secretary shall make a
geographic adjustment to a MedicarePlus payment area in
the State otherwise determined under paragraph (1)--
``(i) to a single statewide MedicarePlus
payment area,
``(ii) to the metropolitan based system
described in subparagraph (C), or
``(iii) to consolidating into a single
MedicarePlus payment area noncontiguous
counties (or equivalent areas described in
paragraph (1)) within a State.
Such adjustment shall be effective for payments for
months beginning with January of the year following the
year in which the request is received.
``(B) Budget neutrality adjustment.--In the case of
a State requesting an adjustment under this paragraph,
the Secretary shall adjust the payment rates otherwise
established under this section for MedicarePlus payment
areas in the State in a manner so that the aggregate of
the payments under this section in the State shall not
exceed the aggregate payments that would have been made
under this section for MedicarePlus payment areas in
the State in the absence of the adjustment under this
paragraph.
``(C) Metropolitan based system.--The metropolitan
based system described in this subparagraph is one in
which--
``(i) all the portions of each metropolitan
statistical area in the State or in the case of
a consolidated metropolitan statistical area,
all of the portions of each primary
metropolitan statistical area within the
consolidated area within the State, are treated
as a single MedicarePlus payment area, and
``(ii) all areas in the State that do not
fall within a metropolitan statistical area are
treated as a single MedicarePlus payment area.
``(D) Areas.--In subparagraph (C), the terms
`metropolitan statistical area', `consolidated
metropolitan statistical area', and `primary
metropolitan statistical area' mean any area designated
as such by the Secretary of Commerce.
``(e) Special Rules for Individuals Electing MSA Plans.--
``(1) In general.--If the amount of the monthly premium for
an MSA plan for a MedicarePlus payment area for a year is less
than \1/12\ of the annual MedicarePlus capitation rate applied
under this section for the area and year involved, the
Secretary shall deposit an amount equal to 100 percent of such
difference in a MedicarePlus MSA established (and, if
applicable, designated) by the individual under paragraph (2).
``(2) Establishment and designation of medicareplus medical
savings account as requirement for payment of contribution.--In
the case of an individual who has elected coverage under an MSA
plan, no payment shall be made under paragraph (1) on behalf of
an individual for a month unless the individual--
``(A) has established before the beginning of the
month (or by such other deadline as the Secretary may
specify) a MedicarePlus MSA (as defined in section
138(b)(2) of the Internal Revenue Code of 1986), and
``(B) if the individual has established more than
one such MedicarePlus MSA, has designated one of such
accounts as the individual's MedicarePlus MSA for
purposes of this part.
Under rules under this section, such an individual may change
the designation of such account under subparagraph (B) for
purposes of this part.
``(3) Lump sum deposit of medical savings account
contribution.--In the case of an individual electing an MSA
plan effective beginning with a month in a year, the amount of
the contribution to the MedicarePlus MSA on behalf of the
individual for that month and all successive months in the year
shall be deposited during that first month. In the case of a
termination of such an election as of a month before the end of
a year, the Secretary shall provide for a procedure for the
recovery of deposits attributable to the remaining months in
the year.
``(f) Payments From Trust Fund.--The payment to a MedicarePlus
organization under this section for individuals enrolled under this
part with the organization and payments to a MedicarePlus MSA under
subsection (e)(1) shall be made from the Federal Hospital Insurance
Trust Fund and the Federal Supplementary Medical Insurance Trust Fund
in such proportion as the Secretary determines reflects the relative
weight that benefits under part A and under part B represents of the
actuarial value of the total benefits under this title. Monthly
payments otherwise payable under this section for October 2001 shall be
paid on the last business day of September 2001.
``(g) Special Rule for Certain Inpatient Hospital Stays.--In the
case of an individual who is receiving inpatient hospital services from
a subsection (d) hospital (as defined in section 1886(d)(1)(B)) as of
the effective date of the individual's--
``(1) election under this part of a MedicarePlus plan
offered by a MedicarePlus organization--
``(A) payment for such services until the date of
the individual's discharge shall be made under this
title through the MedicarePlus plan or the medicare
fee-for-service program option described in section
1851(a)(1)(A) (as the case may be) elected before the
election with such organization,
``(B) the elected organization shall not be
financially responsible for payment for such services
until the date after the date of the individual's
discharge, and
``(C) the organization shall nonetheless be paid
the full amount otherwise payable to the organization
under this part; or
``(2) termination of election with respect to a
MedicarePlus organization under this part--
``(A) the organization shall be financially
responsible for payment for such services after such
date and until the date of the individual's discharge,
``(B) payment for such services during the stay
shall not be made under section 1886(d) or by any
succeeding MedicarePlus organization, and
``(C) the terminated organization shall not receive
any payment with respect to the individual under this
part during the period the individual is not enrolled.
``premiums
``Sec. 1854. (a) Submission and Charging of Premiums.--
``(1) In general.--Subject to paragraph (3), each
MedicarePlus organization shall file with the Secretary each
year, in a form and manner and at a time specified by the
Secretary--
``(A) the amount of the monthly premium for
coverage for services under section 1852(a) under each
MedicarePlus plan it offers under this part in each
MedicarePlus payment area (as defined in section
1853(d)) in which the plan is being offered; and
``(B) the enrollment capacity in relation to the
plan in each such area.
``(2) Terminology.--In this part--
``(A) the term `monthly premium' means, with
respect to a MedicarePlus plan offered by a
MedicarePlus organization, the monthly premium filed
under paragraph (1), not taking into account the amount
of any payment made toward the premium under section
1853; and
``(B) the term `net monthly premium' means, with
respect to such a plan and an individual enrolled with
the plan, the premium (as defined in subparagraph (A))
for the plan reduced by the amount of payment made
toward such premium under section 1853.
``(b) Monthly Premium Charged.--The monthly amount of the premium
charged by a MedicarePlus organization for a MedicarePlus plan offered
in a MedicarePlus payment area to an individual under this part shall
be equal to the net monthly premium plus any monthly premium charged in
accordance with subsection (e)(2) for supplemental benefits.
``(c) Uniform Premium.--The monthly premium and monthly amount
charged under subsection (b) of a MedicarePlus organization under this
part may not vary among individuals who reside in the same MedicarePlus
payment area.
``(d) Terms and Conditions of Imposing Premiums.--Each MedicarePlus
organization shall permit the payment of net monthly premiums on a
monthly basis and may terminate election of individuals for a
MedicarePlus plan for failure to make premium payments only in
accordance with section 1851(g)(3)(B)(i). A MedicarePlus organization
is not authorized to provide for cash or other monetary rebates as an
inducement for enrollment or otherwise.
``(e) Limitation on Enrollee Cost-Sharing.--
``(1) For basic and additional benefits.--Except as
provided in paragraph (2), in no event may--
``(A) the net monthly premium (multiplied by 12)
and the actuarial value of the deductibles,
coinsurance, and copayments applicable on average to
individuals enrolled under this part with a
MedicarePlus plan of an organization with respect to
required benefits described in section 1852(a)(1) and
additional benefits (if any) required under subsection
(f)(1) for a year, exceed
``(B) the actuarial value of the deductibles,
coinsurance, and copayments that would be applicable on
average to individuals entitled to benefits under part
A and enrolled under part B if they were not members of
a MedicarePlus organization for the year.
``(2) For supplemental benefits.--If the MedicarePlus
organization provides to its members enrolled under this part
supplemental benefits described in section 1852(a)(3), the sum
of the monthly premium rate (multiplied by 12) charged for such
supplemental benefits and the actuarial value of its
deductibles, coinsurance, and copayments charged with respect
to such benefits may not exceed the adjusted community rate for
such benefits (as defined in subsection (f)(4)).
``(3) Exception for msa plans.--Paragraphs (1) and (2) do
not apply to an MSA plan.
``(4) Determination on other basis.--If the Secretary
determines that adequate data are not available to determine
the actuarial value under paragraph (1)(A) or (2), the
Secretary may determine such amount with respect to all
individuals in the MedicarePlus payment area, the State, or in
the United States, eligible to enroll in the MedicarePlus plan
involved under this part or on the basis of other appropriate
data.
``(f) Requirement for Additional Benefits.--
``(1) Requirement.--
``(A) In general.--Each MedicarePlus organization
(in relation to a MedicarePlus plan it offers) shall
provide that if there is an excess amount (as defined
in subparagraph (B)) for the plan for a contract year,
subject to the succeeding provisions of this
subsection, the organization shall provide to
individuals such additional benefits (as the
organization may specify) in a value which is at least
equal to the adjusted excess amount (as defined in
subparagraph (C)).
``(B) Excess amount.--For purposes of this
paragraph, the `excess amount', for an organization for
a plan, is the amount (if any) by which--
``(i) the average of the capitation
payments made to the organization under section
1853 for the plan at the beginning of contract
year, exceeds
``(ii) the actuarial value of the required
benefits described in section 1852(a)(1) under
the plan for individuals under this part, as
determined based upon an adjusted community
rate described in paragraph (4) (as reduced for
the actuarial value of the coinsurance and
deductibles under parts A and B).
``(C) Adjusted excess amount.--For purposes of this
paragraph, the `adjusted excess amount', for an
organization for a plan, is the excess amount reduced
to reflect any amount withheld and reserved for the
organization for the year under paragraph (2).
``(D) No application to msa plans.--Subparagraph
(A) shall not apply to an MSA plan.
``(E) Uniform application.--This paragraph shall be
applied uniformly for all enrollees for a plan in a
MedicarePlus payment area.
``(F) Construction.--Nothing in this subsection
shall be construed as preventing a MedicarePlus
organization from providing health care benefits that
are in addition to the benefits otherwise required to
be provided under this paragraph and from imposing a
premium for such additional benefits.
``(2) Stabilization fund.--A MedicarePlus organization may
provide that a part of the value of an excess amount described
in paragraph (1) be withheld and reserved in the Federal
Hospital Insurance Trust Fund and in the Federal Supplementary
Medical Insurance Trust Fund (in such proportions as the
Secretary determines to be appropriate) by the Secretary for
subsequent annual contract periods, to the extent required to
stabilize and prevent undue fluctuations in the additional
benefits offered in those subsequent periods by the
organization in accordance with such paragraph. Any of such
value of the amount reserved which is not provided as
additional benefits described in paragraph (1)(A) to
individuals electing the MedicarePlus plan of the organization
in accordance with such paragraph prior to the end of such
periods, shall revert for the use of such trust funds.
``(3) Determination based on insufficient data.--For
purposes of this subsection, if the Secretary finds that there
is insufficient enrollment experience (including no enrollment
experience in the case of a provider-sponsored organization) to
determine an average of the capitation payments to be made
under this part at the beginning of a contract period, the
Secretary may determine such an average based on the enrollment
experience of other contracts entered into under this part.
``(4) Adjusted community rate.--
``(A) In general.--For purposes of this subsection,
subject to subparagraph (B), the term `adjusted
community rate' for a service or services means, at the
election of a MedicarePlus organization, either--
``(i) the rate of payment for that service
or services which the Secretary annually
determines would apply to an individual
electing a MedicarePlus plan under this part if
the rate of payment were determined under a
`community rating system' (as defined in
section 1302(8) of the Public Health Service
Act, other than subparagraph (C)), or
``(ii) such portion of the weighted
aggregate premium, which the Secretary annually
estimates would apply to such an individual, as
the Secretary annually estimates is
attributable to that service or services,
but adjusted for differences between the utilization
characteristics of the individuals electing coverage
under this part and the utilization characteristics of
the other enrollees with the plan (or, if the Secretary
finds that adequate data are not available to adjust
for those differences, the differences between the
utilization characteristics of individuals selecting
other MedicarePlus coverage, or MedicarePlus eligible
individuals in the area, in the State, or in the United
States, eligible to elect MedicarePlus coverage under
this part and the utilization characteristics of the
rest of the population in the area, in the State, or in
the United States, respectively).
``(B) Special rule for provider-sponsored
organizations.--In the case of a MedicarePlus
organization that is a provider-sponsored organization,
the adjusted community rate under subparagraph (A) for
a MedicarePlus plan of the organization may be computed
(in a manner specified by the Secretary) using data in
the general commercial marketplace or (during a
transition period) based on the costs incurred by the
organization in providing such a plan.
``(g) Periodic Auditing.--The Secretary shall provide for the
annual auditing of the financial records (including data relating to
medicare utilization, costs, and computation of the adjusted community
rate) of at least one-third of the MedicarePlus organizations offering
MedicarePlus plans under this part. The Comptroller General shall
monitoring auditing activities conducted under this subsection.
``(h) Prohibition of State Imposition of Premium Taxes.--No State
may impose a premium tax or similar tax with respect to premiums on
MedicarePlus plans or the offering of such plans.
``organizational and financial requirements for medicareplus
organizations; provider-sponsored organizations
``Sec. 1855. (a) Organized and Licensed Under State Law.--
``(1) In general.--Subject to paragraphs (2) and (3), a
MedicarePlus organization shall be organized and licensed under
State law as a risk-bearing entity eligible to offer health
insurance or health benefits coverage in each State in which it
offers a MedicarePlus plan.
``(2) Special exception for provider-sponsored
organizations.--
``(A) In general.--In the case of a provider-
sponsored organization that seeks to offer a
MedicarePlus plan in a State, the Secretary shall waive
the requirement of paragraph (1) that the organization
be licensed in that State if--
``(i) the organization files an application
for such waiver with the Secretary, and
``(ii) the Secretary determines, based on
the application and other evidence presented to
the Secretary, that any of the grounds for
approval of the application described in
subparagraph (B), (C), or (D) has been met.
``(B) Failure to act on licensure application on a
timely basis.--A ground for approval of such a waiver
application is that the State has failed to complete
action on a licensing application of the organization
within 90 days of the date of the State's receipt of
the application. No period before the date of the
enactment of this section shall be included in
determining such 90-day period.
``(C) Denial of application based on discriminatory
treatment.--A ground for approval of such a waiver
application is that the State has denied such a
licensing application and--
``(i) the State has imposed documentation
or information requirements not related to
solvency requirements that are not generally
applicable to other entities engaged in
substantially similar business, or
``(ii) the standards or review process
imposed by the State as a condition of approval
of the license imposes any material
requirements, procedures, or standards (other
than requirements and standards relating to
solvency) to such organizations that are not
generally applicable to other entities engaged
in substantially similar business.
``(D) Denial of application based on application of
solvency requirements.--A ground for approval of such a
waiver application is that the State has denied such a
licensing application based (in whole or in part) on
the organization's failure to meet applicable solvency
requirements and--
``(i) such requirements are not the same as
the solvency standards established under
section 1856(a); or
``(ii) the State has imposed as a condition
of approval of the license any documentation or
information requirements relating to solvency
or other material requirements, procedures, or
standards relating to solvency that are
different from the requirements, procedures,
and standards applied by the Secretary under
subsection (d)(2).
For purposes of this subparagraph, the term `solvency
requirements' means requirements relating to solvency
and other matters covered under the standards
established under section 1856(a).
``(E) Treatment of waiver.--Subject to section
1852(m), in the case of a waiver granted under this
paragraph for a provider-sponsored organization--
``(i) the waiver shall be effective for a
36-month period, except it may be renewed based
on a subsequent application filed during the
last 6 months of such period,
``(ii) the waiver is conditioned upon the
pendency of the licensure application during
the period the waiver is in effect, and
``(iii) any provisions of State law which
relate to the licensing of the organization and
which prohibit the organization from providing
coverage pursuant to a contract under this part
shall be superseded.
Nothing in this subparagraph shall be construed as
limiting the number of times such a waiver may be
renewed. Nothing in clause (iii) shall be construed as
waiving any provision of State law which relates to
quality of care or consumer protection (and does not
relate to solvency standards) and which is imposed on a
uniform basis and is generally applicable to other
entities engaged in substantially similar business.
``(F) Prompt action on application.--The Secretary
shall grant or deny such a waiver application within 60
days after the date the Secretary determines that a
substantially complete application has been filed.
Nothing in this section shall be construed as
preventing an organization which has had such a waiver
application denied from submitting a subsequent waiver
application.
``(3) Exception if required to offer more than medicareplus
plans.--Paragraph (1) shall not apply to a MedicarePlus
organization in a State if the State requires the organization,
as a condition of licensure, to offer any product or plan other
than a MedicarePlus plan.
``(4) Licensure does not substitute for or constitute
certification.--The fact that an organization is licensed in
accordance with paragraph (1) does not deem the organization to
meet other requirements imposed under this part.
``(b) Prepaid Payment.--A MedicarePlus organization shall be
compensated (except for premiums, deductibles, coinsurance, and
copayments) for the provision of health care services to enrolled
members under the contract under this part by a payment which is paid
on a periodic basis without regard to the date the health care services
are provided and which is fixed without regard to the frequency,
extent, or kind of health care service actually provided to a member.
``(c) Assumption of Full Financial Risk.--The MedicarePlus
organization shall assume full financial risk on a prospective basis
for the provision of the health care services (except, at the election
of the organization, hospice care) for which benefits are required to
be provided under section 1852(a)(1), except that the organization--
``(1) may obtain insurance or make other arrangements for
the cost of providing to any enrolled member such services the
aggregate value of which exceeds $5,000 in any year,
``(2) may obtain insurance or make other arrangements for
the cost of such services provided to its enrolled members
other than through the organization because medical necessity
required their provision before they could be secured through
the organization,
``(3) may obtain insurance or make other arrangements for
not more than 90 percent of the amount by which its costs for
any of its fiscal years exceed 115 percent of its income for
such fiscal year, and
``(4) may make arrangements with physicians or other health
professionals, health care institutions, or any combination of
such individuals or institutions to assume all or part of the
financial risk on a prospective basis for the provision of
basic health services by the physicians or other health
professionals or through the institutions.
``(d) Certification of Provision Against Risk of Insolvency for
Unlicensed PSOs.--
``(1) In general.--Each MedicarePlus organization that is a
provider-sponsored organization, that is not licensed by a
State under subsection (a), and for which a waiver application
has been approved under subsection (a)(2), shall meet standards
established under section 1856(a) relating to the financial
solvency and capital adequacy of the organization.
``(2) Certification process for solvency standards for
psos.--The Secretary shall establish a process for the receipt
and approval of applications of a provider-sponsored
organization described in paragraph (1) for certification (and
periodic recertification) of the organization as meeting such
solvency standards. Under such process, the Secretary shall act
upon such an application not later than 60 days after the date
the application has been received.
``(e) Provider-Sponsored Organization Defined.--
``(1) In general.--In this part, the term `provider-
sponsored organization' means a public or private entity--
``(A) that is established or organized by a health
care provider, or group of affiliated health care
providers,
``(B) that provides a substantial proportion (as
defined by the Secretary in accordance with paragraph
(2)) of the health care items and services under the
contract under this part directly through the provider
or affiliated group of providers, and
``(C) with respect to which those affiliated
providers that share, directly or indirectly,
substantial financial risk with respect to the
provision of such items and services have at least a
majority financial interest in the entity.
``(2) Substantial proportion.--In defining what is a
`substantial proportion' for purposes of paragraph (1)(B), the
Secretary--
``(A) shall take into account (i) the need for such
an organization to assume responsibility for a
substantial proportion of services in order to assure
financial stability and (ii) the practical difficulties
in such an organization integrating a very wide range
of service providers; and
``(B) may vary such proportion based upon relevant
differences among organizations, such as their location
in an urban or rural area.
``(3) Affiliation.--For purposes of this subsection, a
provider is `affiliated' with another provider if, through
contract, ownership, or otherwise--
``(A) one provider, directly or indirectly,
controls, is controlled by, or is under common control
with the other,
``(B) both providers are part of a controlled group
of corporations under section 1563 of the Internal
Revenue Code of 1986, or
``(C) both providers are part of an affiliated
service group under section 414 of such Code.
``(4) Control.--For purposes of paragraph (3), control is
presumed to exist if one party, directly or indirectly, owns,
controls, or holds the power to vote, or proxies for, not less
than 51 percent of the voting rights or governance rights of
another.
``(5) Health care provider defined.--In this subsection,
the term `health care provider' means--
``(A) any individual who is engaged in the delivery
of health care services in a State and who is required
by State law or regulation to be licensed or certified
by the State to engage in the delivery of such services
in the State, and
``(B) any entity that is engaged in the delivery of
health care services in a State and that, if it is
required by State law or regulation to be licensed or
certified by the State to engage in the delivery of
such services in the State, is so licensed.
``(6) Regulations.--The Secretary shall issue regulations
to carry out this subsection.
``establishment of standards
``Sec. 1856. (a) Establishment of Solvency Standards for Provider-
Sponsored Organizations.--
``(1) Establishment.--
``(A) In general.--The Secretary shall establish,
on an expedited basis and using a negotiated rulemaking
process under subchapter III of chapter 5 of title 5,
United States Code, standards described in section
1855(d)(1) (relating to the financial solvency and
capital adequacy of the organization) that entities
must meet to qualify as provider-sponsored
organizations under this part.
``(B) Factors to consider for solvency standards.--
In establishing solvency standards under subparagraph
(A) for provider-sponsored organizations, the Secretary
shall consult with interested parties and shall take
into account--
``(i) the delivery system assets of such an
organization and ability of such an
organization to provide services directly to
enrollees through affiliated providers, and
``(ii) alternative means of protecting
against insolvency, including reinsurance,
unrestricted surplus, letters of credit,
guarantees, organizational insurance coverage,
partnerships with other licensed entities, and
valuation attributable to the ability of such
an organization to meet its service obligations
through direct delivery of care.
``(C) Enrollee protection against insolvency.--Such
standards shall include provisions to prevent enrollees
from being held liable to any person or entity for the
MedicarePlus organization's debts in the event of the
organization's insolvency.
``(2) Publication of notice.--In carrying out the
rulemaking process under this subsection, the Secretary, after
consultation with the National Association of Insurance
Commissioners, the American Academy of Actuaries, organizations
representative of medicare beneficiaries, and other interested
parties, shall publish the notice provided for under section
564(a) of title 5, United States Code, by not later than 45
days after the date of the enactment of this section.
``(3) Target date for publication of rule.--As part of the
notice under paragraph (2), and for purposes of this
subsection, the `target date for publication' (referred to in
section 564(a)(5) of such title) shall be April 1, 1998.
``(4) Abbreviated period for submission of comments.--In
applying section 564(c) of such title under this subsection,
`15 days' shall be substituted for `30 days'.
``(5) Appointment of negotiated rulemaking committee and
facilitator.--The Secretary shall provide for--
``(A) the appointment of a negotiated rulemaking
committee under section 565(a) of such title by not
later than 30 days after the end of the comment period
provided for under section 564(c) of such title (as
shortened under paragraph (4)), and
``(B) the nomination of a facilitator under section
566(c) of such title by not later than 10 days after
the date of appointment of the committee.
``(6) Preliminary committee report.--The negotiated
rulemaking committee appointed under paragraph (5) shall report
to the Secretary, by not later than January 1, 1998, regarding
the committee's progress on achieving a consensus with regard
to the rulemaking proceeding and whether such consensus is
likely to occur before one month before the target date for
publication of the rule. If the committee reports that the
committee has failed to make significant progress towards such
consensus or is unlikely to reach such consensus by the target
date, the Secretary may terminate such process and provide for
the publication of a rule under this subsection through such
other methods as the Secretary may provide.
``(7) Final committee report.--If the committee is not
terminated under paragraph (6), the rulemaking committee shall
submit a report containing a proposed rule by not later than
one month before the target date of publication.
``(8) Interim, final effect.--The Secretary shall publish a
rule under this subsection in the Federal Register by not later
than the target date of publication. Such rule shall be
effective and final immediately on an interim basis, but is
subject to change and revision after public notice and
opportunity for a period (of not less than 60 days) for public
comment. In connection with such rule, the Secretary shall
specify the process for the timely review and approval of
applications of entities to be certified as provider-sponsored
organizations pursuant to such rules and consistent with this
subsection.
``(9) Publication of rule after public comment.--The
Secretary shall provide for consideration of such comments and
republication of such rule by not later than 1 year after the
target date of publication.
``(b) Establishment of Other Standards.--
``(1) In general.--The Secretary shall establish by
regulation other standards (not described in subsection (a))
for MedicarePlus organizations and plans consistent with, and
to carry out, this part.
``(2) Use of current standards.--Consistent with the
requirements of this part, standards established under this
subsection shall be based on standards established under
section 1876 to carry out analogous provisions of such section.
The Secretary shall also consider State model and other
standards relating to consumer protection and assuring quality
of care.
``(3) Use of interim standards.--For the period in which
this part is in effect and standards are being developed and
established under the preceding provisions of this subsection,
the Secretary shall provide by not later than June 1, 1998, for
the application of such interim standards (without regard to
any requirements for notice and public comment) as may be
appropriate to provide for the expedited implementation of this
part. Such interim standards shall not apply after the date
standards are established under the preceding provisions of
this subsection.
``(4) Application of new standards to entities with a
contract.--In the case of a MedicarePlus organization with a
contract in effect under this part at the time standards
applicable to the organization under this section are changed,
the organization may elect not to have such changes apply to
the organization until the end of the current contract year
(or, if there is less than 6 months remaining in the contract
year, until 1 year after the end of the current contract year).
``(5) Relation to state laws.--Subject to section 1852(m),
the standards established under this subsection shall supersede
any State law or regulation with respect to MedicarePlus plans
which are offered by MedicarePlus organizations under this part
to the extent such law or regulation is inconsistent with such
standards. The previous sentence shall not be construed as
superseding a State law or regulation that is not related to
solvency, that is applied on a uniform basis and is generally
applicable to other entities engaged in substantially similar
business, and that provides consumer protections in addition
to, or more stringent than, those provided under the standards
under this subsection.
``contracts with medicareplus organizations
``Sec. 1857. (a) In General.--The Secretary shall not permit the
election under section 1851 of a MedicarePlus plan offered by a
MedicarePlus organization under this part, and no payment shall be made
under section 1853 to an organization, unless the Secretary has entered
into a contract under this section with the organization with respect
to the offering of such plan. Such a contract with an organization may
cover more than one MedicarePlus plan. Such contract shall provide that
the organization agrees to comply with the applicable requirements and
standards of this part and the terms and conditions of payment as
provided for in this part.
``(b) Minimum Enrollment Requirements.--
``(1) In general.--Subject to paragraphs (2) and (3), the
Secretary may not enter into a contract under this section with
a MedicarePlus organization unless the organization has at
least 5,000 individuals (or 1,500 individuals in the case of an
organization that is a provider-sponsored organization) who are
receiving health benefits through the organization, except that
the standards under section 1856 may permit the organization to
have a lesser number of beneficiaries (but not less than 500 in
the case of an organization that is a provider-sponsored
organization) if the organization primarily serves individuals
residing outside of urbanized areas.
``(2) Exception for msa plan.--Paragraph (1) shall not
apply with respect to a contract that relates only to an MSA
plan.
``(3) Allowing transition.--The Secretary may waive the
requirement of paragraph (1) during the first 3 contract years
with respect to an organization.
``(c) Contract Period and Effectiveness.--
``(1) Period.--Each contract under this section shall be
for a term of at least one year, as determined by the
Secretary, and may be made automatically renewable from term to
term in the absence of notice by either party of intention to
terminate at the end of the current term.
``(2) Termination authority.--In accordance with procedures
established under subsection (h), the Secretary may at any time
terminate any such contract or may impose the intermediate
sanctions described in an applicable paragraph of subsection
(g)(3) on the MedicarePlus organization if the Secretary
determines that the organization--
``(A) has failed substantially to carry out the
contract;
``(B) is carrying out the contract in a manner
inconsistent with the efficient and effective
administration of this part; or
``(C) no longer substantially meets the applicable
conditions of this part.
``(3) Effective date of contracts.--The effective date of
any contract executed pursuant to this section shall be
specified in the contract, except that in no case shall a
contract under this section which provides for coverage under
an MSA plan be effective before January 1998 with respect to
such coverage.
``(4) Previous terminations.--The Secretary may not enter
into a contract with a MedicarePlus organization if a previous
contract with that organization under this section was
terminated at the request of the organization within the
preceding five-year period, except in circumstances which
warrant special consideration, as determined by the Secretary.
``(5) Contracting authority.--The authority vested in the
Secretary by this part may be performed without regard to such
provisions of law or regulations relating to the making,
performance, amendment, or modification of contracts of the
United States as the Secretary may determine to be inconsistent
with the furtherance of the purpose of this title.
``(d) Protections Against Fraud and Beneficiary Protections.--
``(1) Inspection and audit.--Each contract under this
section shall provide that the Secretary, or any person or
organization designated by the Secretary--
``(A) shall have the right to inspect or otherwise
evaluate (i) the quality, appropriateness, and
timeliness of services performed under the contract and
(ii) the facilities of the organization when there is
reasonable evidence of some need for such inspection,
and
``(B) shall have the right to audit and inspect any
books and records of the MedicarePlus organization that
pertain (i) to the ability of the organization to bear
the risk of potential financial losses, or (ii) to
services performed or determinations of amounts payable
under the contract.
``(2) Enrollee notice at time of termination.--Each
contract under this section shall require the organization to
provide (and pay for) written notice in advance of the
contract's termination, as well as a description of
alternatives for obtaining benefits under this title, to each
individual enrolled with the organization under this part.
``(3) Disclosure.--
``(A) In general.--Each MedicarePlus organization
shall, in accordance with regulations of the Secretary,
report to the Secretary financial information which
shall include the following:
``(i) Such information as the Secretary may
require demonstrating that the organization has
a fiscally sound operation.
``(ii) A copy of the report, if any, filed
with the Health Care Financing Administration
containing the information required to be
reported under section 1124 by disclosing
entities.
``(iii) A description of transactions, as
specified by the Secretary, between the
organization and a party in interest. Such
transactions shall include--
``(I) any sale or exchange, or
leasing of any property between the
organization and a party in interest;
``(II) any furnishing for
consideration of goods, services
(including management services), or
facilities between the organization and
a party in interest, but not including
salaries paid to employees for services
provided in the normal course of their
employment and health services provided
to members by hospitals and other
providers and by staff, medical group
(or groups), individual practice
association (or associations), or any
combination thereof; and
``(III) any lending of money or
other extension of credit between an
organization and a party in interest.
The Secretary may require that information reported
respecting an organization which controls, is
controlled by, or is under common control with, another
entity be in the form of a consolidated financial
statement for the organization and such entity.
``(B) Party in interest defined.--For the purposes
of this paragraph, the term `party in interest' means--
``(i) any director, officer, partner, or
employee responsible for management or
administration of a MedicarePlus organization,
any person who is directly or indirectly the
beneficial owner of more than 5 percent of the
equity of the organization, any person who is
the beneficial owner of a mortgage, deed of
trust, note, or other interest secured by, and
valuing more than 5 percent of the
organization, and, in the case of a
MedicarePlus organization organized as a
nonprofit corporation, an incorporator or
member of such corporation under applicable
State corporation law;
``(ii) any entity in which a person
described in clause (i)--
``(I) is an officer or director;
``(II) is a partner (if such entity
is organized as a partnership);
``(III) has directly or indirectly
a beneficial interest of more than 5
percent of the equity; or
``(IV) has a mortgage, deed of
trust, note, or other interest valuing
more than 5 percent of the assets of
such entity;
``(iii) any person directly or indirectly
controlling, controlled by, or under common
control with an organization; and
``(iv) any spouse, child, or parent of an
individual described in clause (i).
``(C) Access to information.--Each MedicarePlus
organization shall make the information reported
pursuant to subparagraph (A) available to its enrollees
upon reasonable request.
``(4) Loan information.--The contract shall require the
organization to notify the Secretary of loans and other special
financial arrangements which are made between the organization
and subcontractors, affiliates, and related parties.
``(e) Additional Contract Terms.--
``(1) In general.--The contract shall contain such other
terms and conditions not inconsistent with this part (including
requiring the organization to provide the Secretary with such
information) as the Secretary may find necessary and
appropriate.
``(2) Cost-sharing in enrollment-related costs.--The
contract with a MedicarePlus organization shall require the
payment to the Secretary for the organization's pro rata share
(as determined by the Secretary) of the estimated costs to be
incurred by the Secretary in carrying out section 1851
(relating to enrollment and dissemination of information) and
section 4360 of the Omnibus Budget Reconciliation Act of 1990
(relating to the health insurance counseling and assistance
program). Such payments are appropriated to defray the costs
described in the preceding sentence, to remain available until
expended.
``(3) Notice to enrollees in case of decertification.--If a
contract with a MedicarePlus organization is terminated under
this section, the organization shall notify each enrollee with
the organization under this part of such termination.
``(f) Prompt Payment by MedicarePlus Organization.--
``(1) Requirement.--A contract under this part shall
require a MedicarePlus organization to provide prompt payment
(consistent with the provisions of sections 1816(c)(2) and
1842(c)(2)) of claims submitted for services and supplies
furnished to individuals pursuant to the contract, if the
services or supplies are not furnished under a contract between
the organization and the provider or supplier.
``(2) Secretary's option to bypass noncomplying
organization.--In the case of a MedicarePlus eligible
organization which the Secretary determines, after notice and
opportunity for a hearing, has failed to make payments of
amounts in compliance with paragraph (1), the Secretary may
provide for direct payment of the amounts owed to providers and
suppliers for covered services and supplies furnished to
individuals enrolled under this part under the contract. If the
Secretary provides for the direct payments, the Secretary shall
provide for an appropriate reduction in the amount of payments
otherwise made to the organization under this part to reflect
the amount of the Secretary's payments (and the Secretary's
costs in making the payments).
``(g) Intermediate Sanctions.--
``(1) In general.--If the Secretary determines that a
MedicarePlus organization with a contract under this section--
``(A) fails substantially to provide medically
necessary items and services that are required (under
law or under the contract) to be provided to an
individual covered under the contract, if the failure
has adversely affected (or has substantial likelihood
of adversely affecting) the individual;
``(B) imposes net monthly premiums on individuals
enrolled under this part in excess of the net monthly
premiums permitted;
``(C) acts to expel or to refuse to re-enroll an
individual in violation of the provisions of this part;
``(D) engages in any practice that would reasonably
be expected to have the effect of denying or
discouraging enrollment (except as permitted by this
part) by eligible individuals with the organization
whose medical condition or history indicates a need for
substantial future medical services;
``(E) misrepresents or falsifies information that
is furnished--
``(i) to the Secretary under this part, or
``(ii) to an individual or to any other
entity under this part;
``(F) fails to comply with the requirements of
section 1852(j)(3); or
``(G) employs or contracts with any individual or
entity that is excluded from participation under this
title under section 1128 or 1128A for the provision of
health care, utilization review, medical social work,
or administrative services or employs or contracts with
any entity for the provision (directly or indirectly)
through such an excluded individual or entity of such
services;
the Secretary may provide, in addition to any other remedies
authorized by law, for any of the remedies described in
paragraph (2).
``(2) Remedies.--The remedies described in this paragraph
are--
``(A) civil money penalties of not more than
$25,000 for each determination under paragraph (1) or,
with respect to a determination under subparagraph (D)
or (E)(i) of such paragraph, of not more than $100,000
for each such determination, plus, with respect to a
determination under paragraph (1)(B), double the excess
amount charged in violation of such paragraph (and the
excess amount charged shall be deducted from the
penalty and returned to the individual concerned), and
plus, with respect to a determination under paragraph
(1)(D), $15,000 for each individual not enrolled as a
result of the practice involved,
``(B) suspension of enrollment of individuals under
this part after the date the Secretary notifies the
organization of a determination under paragraph (1) and
until the Secretary is satisfied that the basis for
such determination has been corrected and is not likely
to recur, or
``(C) suspension of payment to the organization
under this part for individuals enrolled after the date
the Secretary notifies the organization of a
determination under paragraph (1) and until the
Secretary is satisfied that the basis for such
determination has been corrected and is not likely to
recur.
``(3) Other intermediate sanctions.--In the case of a
MedicarePlus organization for which the Secretary makes a
determination under subsection (c)(2) the basis of which is not
described in paragraph (1), the Secretary may apply the
following intermediate sanctions:
``(A) Civil money penalties of not more than
$25,000 for each determination under subsection (c)(2)
if the deficiency that is the basis of the
determination has directly adversely affected (or has
the substantial likelihood of adversely affecting) an
individual covered under the organization's contract
``(B) Civil money penalties of not more than
$10,000 for each week beginning after the initiation of
procedures by the Secretary under subsection (g) during
which the deficiency that is the basis of a
determination under subsection (c)(2) exists.
``(C) Suspension of enrollment of individuals under
this part after the date the Secretary notifies the
organization of a determination under subsection (c)(2)
and until the Secretary is satisfied that the
deficiency that is the basis for the determination has
been corrected and is not likely to recur.
``(h) Procedures for Termination.--
``(1) In general.--The Secretary may terminate a contract
with a MedicarePlus organization under this section in
accordance with formal investigation and compliance procedures
established by the Secretary under which--
``(A) the Secretary provides the organization with
the reasonable opportunity to develop and implement a
corrective action plan to correct the deficiencies that
were the basis of the Secretary's determination under
subsection (c)(2);
``(B) the Secretary shall impose more severe
sanctions on an organization that has a history of
deficiencies or that has not taken steps to correct
deficiencies the Secretary has brought to the
organization's attention;
``(C) there are no unreasonable or unnecessary
delays between the finding of a deficiency and the
imposition of sanctions; and
``(D) the Secretary provides the organization with
reasonable notice and opportunity for hearing
(including the right to appeal an initial decision)
before terminating the contract.
``(2) Civil money penalties.--The provisions of section
1128A (other than subsections (a) and (b)) shall apply to a
civil money penalty under subsection (f) or under paragraph (2)
or (3) of subsection (g) in the same manner as they apply to a
civil money penalty or proceeding under section 1128A(a).
``(3) Exception for imminent and serious risk to health.--
Paragraph (1) shall not apply if the Secretary determines that
a delay in termination, resulting from compliance with the
procedures specified in such paragraph prior to termination,
would pose an imminent and serious risk to the health of
individuals enrolled under this part with the organization.
``definitions; miscellaneous provisions
``Sec. 1859. (a) Definitions Relating to MedicarePlus
Organizations.--In this part--
``(1) MedicarePlus organization.--The term `MedicarePlus
organization' means a public or private entity that is
certified under section 1856 as meeting the requirements and
standards of this part for such an organization.
``(2) Provider-sponsored organization.--The term `provider-
sponsored organization' is defined in section 1855(e)(1).
``(b) Definitions Relating to MedicarePlus Plans.--
``(1) MedicarePlus plan.--The term `MedicarePlus plan'
means health benefits coverage offered under a policy,
contract, or plan by a MedicarePlus organization pursuant to
and in accordance with a contract under section 1857.
``(2) MSA plan.--
``(A) In general.--The term `MSA plan' means a
MedicarePlus plan that--
``(i) provides reimbursement for at least
the items and services described in section
1852(a)(1) in a year but only after the
enrollee incurs countable expenses (as
specified under the plan) equal to the amount
of an annual deductible (described in
subparagraph (B));
``(ii) counts as such expenses (for
purposes of such deductible) at least all
amounts that would have been payable under
parts A and B, and that would have been payable
by the enrollee as deductibles, coinsurance, or
copayments, if the enrollee had elected to
receive benefits through the provisions of such
parts; and
``(iii) provides, after such deductible is
met for a year and for all subsequent expenses
for items and services referred to in clause
(i) in the year, for a level of reimbursement
that is not less than--
``(I) 100 percent of such expenses,
or
``(II) 100 percent of the amounts
that would have been paid (without
regard to any deductibles or
coinsurance) under parts A and B with
respect to such expenses,
whichever is less.
``(B) Deductible.--The amount of annual deductible
under an MSA plan--
``(i) for contract year 1999 shall be not
more than $6,000; and
``(ii) for a subsequent contract year shall
be not more than the maximum amount of such
deductible for the previous contract year under
this subparagraph increased by the national per
capita MedicarePlus growth percentage under
section 1853(c)(6) for the year.
If the amount of the deductible under clause (ii) is
not a multiple of $50, the amount shall be rounded to
the nearest multiple of $50.
``(c) Other References to Other Terms.--
``(1) MedicarePlus eligible individual.--The term
`MedicarePlus eligible individual' is defined in section
1851(a)(3).
``(2) MedicarePlus payment area.--The term `MedicarePlus
payment area' is defined in section 1853(d).
``(3) National per capita medicareplus growth percentage.--
The `national per capita MedicarePlus growth percentage' is
defined in section 1853(c)(6).
``(4) Monthly premium; net monthly premium.--The terms
`monthly premium' and `net monthly premium' are defined in
section 1854(a)(2).
``(d) Coordinated Acute and Long-term Care Benefits Under a
MedicarePlus Plan.--Nothing in this part shall be construed as
preventing a State from coordinating benefits under a medicaid plan
under title XIX with those provided under a MedicarePlus plan in a
manner that assures continuity of a full-range of acute care and long-
term care services to poor elderly or disabled individuals eligible for
benefits under this title and under such plan.
``(e) Restriction on Enrollment for Certain MedicarePlus Plans.--
``(1) In general.--In the case of a MedicarePlus religious
fraternal benefit society plan described in paragraph (2),
notwithstanding any other provision of this part to the
contrary and in accordance with regulations of the Secretary,
the society offering the plan may restrict the enrollment of
individuals under this part to individuals who are members of
the church, convention, or group described in paragraph (3)(B)
with which the society is affiliated.
``(2) Medicareplus religious fraternal benefit society plan
described.--For purposes of this subsection, a MedicarePlus
religious fraternal benefit society plan described in this
paragraph is a MedicarePlus plan described in section
1851(a)(2)(A) that--
``(A) is offered by a religious fraternal benefit
society described in paragraph (3) only to members of
the church, convention, or group described in paragraph
(3)(B); and
``(B) permits all such members to enroll under the
plan without regard to health status-related factors.
Nothing in this subsection shall be construed as waiving any
plan requirements relating to financial solvency. In developing
solvency standards under section 1856, the Secretary shall take
into account open contract and assessment features
characteristic of fraternal insurance certificates.
``(3) Religious fraternal benefit society defined.--For
purposes of paragraph (2)(A), a `religious fraternal benefit
society' described in this section is an organization that--
``(A) is exempt from Federal income taxation under
section 501(c)(8) of the Internal Revenue Code of 1986;
``(B) is affiliated with, carries out the tenets
of, and shares a religious bond with, a church or
convention or association of churches or an affiliated
group of churches;
``(C) offers, in addition to a MedicarePlus
religious fraternal benefit society plan, health
coverage to individuals not entitled to benefits under
this title who are members of such church, convention,
or group; and
``(D) does not impose any limitation on membership
in the society based on any health status-related
factor.
``(4) Payment adjustment.--Under regulations of the
Secretary, in the case of individuals enrolled under this part
under a MedicarePlus religious fraternal benefit society plan
described in paragraph (2), the Secretary shall provide for
such adjustment to the payment amounts otherwise established
under section 1854 as may be appropriate to assure an
appropriate payment level, taking into account the actuarial
characteristics and experience of such individuals.''.
(b) Report on Coverage of Beneficiaries with End-Stage Renal
Disease.--The Secretary of Health and Human Services shall provide for
a study on the feasibility and impact of removing the limitation under
section 1851(b)(3)(B) of the Social Security Act (as inserted by
subsection (a)) on eligibility of most individuals medically determined
to have end-stage renal disease to enroll in MedicarePlus plans. By not
later than October 1, 1998, the Secretary shall submit to Congress a
report on such study and shall include in the report such
recommendations regarding removing or restricting the limitation as may
be appropriate.
(c) Report on MedicarePlus Teaching Programs and Use of DSH and
Teaching Hospitals.--Based on the information provided to the Secretary
of Health and Human Services under section 1852(k) of the Social
Security Act and such information as the Secretary may obtain, by not
later than October 1, 1999, the Secretary shall submit to Congress a
report on graduate medical education programs operated by MedicarePlus
organizations and the extent to which MedicarePlus organizations are
providing for payments to hospitals described in such section.
SEC. 4002. TRANSITIONAL RULES FOR CURRENT MEDICARE HMO PROGRAM.
(a) Authorizing Transitional Waiver of 50:50 Rule.--Section 1876(f)
(42 U.S.C. 1395mm(f)) is amended--
(1) in paragraph (2), by striking ``The Secretary'' and
inserting ``Subject to paragraph (4), the Secretary'', and
(2) by adding at the end the following new paragraph:
``(4) Effective for contract periods beginning after December 31,
1996, the Secretary may waive or modify the requirement imposed by
paragraph (1) to the extent the Secretary finds that it is in the
public interest.''.
(b) Transition.--Section 1876 (42 U.S.C. 1395mm) is amended by
adding at the end the following new subsection:
``(k)(1) Except as provided in paragraph (3), the Secretary shall
not enter into, renew, or continue any risk-sharing contract under this
section with an eligible organization for any contract year beginning
on or after--
``(A) the date standards for MedicarePlus organizations and
plans are first established under section 1856 with respect to
MedicarePlus organizations that are insurers or health
maintenance organizations, or
``(B) in the case of such an organization with such a
contract in effect as of the date such standards were first
established, 1 year after such date.
``(2) The Secretary shall not enter into, renew, or continue any
risk-sharing contract under this section with an eligible organization
for any contract year beginning on or after January 1, 2000.
``(3) An individual who is enrolled in part B only and is enrolled
in an eligible organization with a risk-sharing contract under this
section on December 31, 1998, may continue enrollment in such
organization in accordance with regulations issued by not later then
July 1, 1998.
``(4) Notwithstanding subsection (a), the Secretary shall provide
that payment amounts under risk-sharing contracts under this section
for months in a year (beginning with January 1998) shall be computed--
``(A) with respect to individuals entitled to benefits
under both parts A and B, by substituting payment rates under
section 1853(a) for the payment rates otherwise established
under subsection 1876(a), and
``(B) with respect to individuals only entitled to benefits
under part B, by substituting an appropriate proportion of such
rates (reflecting the relative proportion of payments under
this title attributable to such part) for the payment rates
otherwise established under subsection (a).
For purposes of carrying out this paragraph for payments for months in
1998, the Secretary shall compute, announce, and apply the payment
rates under section 1853(a) (notwithstanding any deadlines specified in
such section) in as timely a manner as possible and may (to the extent
necessary) provide for retroactive adjustment in payments made under
this section not in accordance with such rates.''.
(c) Enrollment Transition Rule.--An individual who is enrolled on
December 31, 1998, with an eligible organization under section 1876 of
the Social Security Act (42 U.S.C. 1395mm) shall be considered to be
enrolled with that organization on January 1, 1999, under part C of
title XVIII of such Act if that organization has a contract under that
part for providing services on January 1, 1999 (unless the individual
has disenrolled effective on that date).
(d) Advance Directives.--Section 1866(f) (42 U.S.C. 1395c(f)) is
amended--
(1) in paragraph (1)--
(A) by inserting ``1855(i),'' after ``1833(s),'',
and
(B) by inserting ``, MedicarePlus organization,''
after ``provider of services''; and
(2) in paragraph (2)(E), by inserting ``or a MedicarePlus
organization'' after ``section 1833(a)(1)(A)''.
(e) Extension of Provider Requirement.--Section 1866(a)(1)(O) (42
U.S.C. 1395cc(a)(1)(O)) is amended--
(1) by striking ``in the case of hospitals and skilled
nursing facilities,'';
(2) by striking ``inpatient hospital and extended care'';
(3) by inserting ``with a MedicarePlus organization under
part C or'' after ``any individual enrolled'';
(4) by striking ``(in the case of hospitals) or limits (in
the case of skilled nursing facilities)''; and
(5) by inserting ``(less any payments under section 1858)''
after ``under this title''.
(f) Additional Conforming Changes.--
(1) Conforming references to previous part C.--Any
reference in law (in effect before the date of the enactment of
this Act) to part C of title XVIII of the Social Security Act
is deemed a reference to part D of such title (as in effect
after such date).
(2) Secretarial submission of legislative proposal.--Not
later than 90 days after the date of the enactment of this Act,
the Secretary of Health and Human Services shall submit to the
appropriate committees of Congress a legislative proposal
providing for such technical and conforming amendments in the
law as are required by the provisions of this chapter.
(g) Immediate Effective Date for Certain Requirements for
Demonstrations.--Section 1857(e)(2) of the Social Security Act
(requiring contribution to certain costs related to the enrollment
process comparative materials) applies to demonstrations with respect
to which enrollment is effected or coordinated under section 1851 of
such Act.
(h) Use of Interim, Final Regulations.--In order to carry out the
amendments made by this chapter in a timely manner, the Secretary of
Health and Human Services may promulgate regulations that take effect
on an interim basis, after notice and pending opportunity for public
comment.
(i) Transition Rule for PSO Enrollment.--In applying subsection
(g)(1) of section 1876 of the Social Security Act (42 U.S.C. 1395mm) to
a risk-sharing contract entered into with an eligible organization that
is a provider-sponsored organization (as defined in section 1855(e)(1)
of such Act, as inserted by section 4001) for a contract year beginning
on or after January 1, 1998, there shall be substituted for the minimum
number of enrollees provided under such section the minimum number of
enrollees permitted under section 1857(b)(1) of such Act (as so
inserted).
SEC. 4003. CONFORMING CHANGES IN MEDIGAP PROGRAM.
(a) Conforming Amendments to MedicarePlus Changes.--
(1) In general.--Section 1882(d)(3)(A)(i) (42 U.S.C.
1395ss(d)(3)(A)(i)) is amended--
(A) in the matter before subclause (I), by
inserting ``(including an individual electing a
MedicarePlus plan under section 1851)'' after ``of this
title''; and
(B) in subclause (II)--
(i) by inserting ``in the case of an
individual not electing a MedicarePlus plan''
after ``(II)'', and
(ii) by inserting before the comma at the
end the following: ``or in the case of an
individual electing a MedicarePlus plan, a
medicare supplemental policy with knowledge
that the policy duplicates health benefits to
which the individual is otherwise entitled
under the MedicarePlus plan or under another
medicare supplemental policy''.
(2) Conforming amendments.--Section 1882(d)(3)(B)(i)(I) (42
U.S.C. 1395ss(d)(3)(B)(i)(I)) is amended by inserting
``(including any MedicarePlus plan)'' after ``health insurance
policies''.
(3) MedicarePlus plans not treated as medicare
supplementary policies.--Section 1882(g)(1) (42 U.S.C.
1395ss(g)(1)) is amended by inserting ``or a MedicarePlus plan
or'' after ``does not include''
(b) Additional Rules Relating to Individuals Enrolled in MSA
Plans.--Section 1882 (42 U.S.C. 1395ss) is further amended by adding at
the end the following new subsection:
``(u)(1) It is unlawful for a person to sell or issue a policy
described in paragraph (2) to an individual with knowledge that the
individual has in effect under section 1851 an election of an MSA plan.
``(2) A policy described in this subparagraph is a health insurance
policy that provides for coverage of expenses that are otherwise
required to be counted toward meeting the annual deductible amount
provided under the MSA plan.''.
Subchapter B--Special Rules for MedicarePlus Medical Savings Accounts
SEC. 4006. MEDICAREPLUS MSA.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to amounts specifically
excluded from gross income) is amended by redesignating section 138 as
section 139 and by inserting after section 137 the following new
section:
``SEC. 138. MEDICAREPLUS MSA.
``(a) Exclusion.--Gross income shall not include any payment to the
MedicarePlus MSA of an individual by the Secretary of Health and Human
Services under part C of title XVIII of the Social Security Act.
``(b) MedicarePlus MSA.--For purposes of this section, the term
`MedicarePlus MSA' means a medical savings account (as defined in
section 220(d))--
``(1) which is designated as a MedicarePlus MSA,
``(2) with respect to which no contribution may be made
other than--
``(A) a contribution made by the Secretary of
Health and Human Services pursuant to part C of title
XVIII of the Social Security Act, or
``(B) a trustee-to-trustee transfer described in
subsection (c)(4),
``(3) the governing instrument of which provides that
trustee-to-trustee transfers described in subsection (c)(4) may
be made to and from such account, and
``(4) which is established in connection with an MSA plan
described in section 1859(b)(2) of the Social Security Act.
``(c) Special Rules for Distributions.--
``(1) Distributions for qualified medical expenses.--In
applying section 220 to a MedicarePlus MSA--
``(A) qualified medical expenses shall not include
amounts paid for medical care for any individual other
than the account holder, and
``(B) section 220(d)(2)(C) shall not apply.
``(2) Penalty for distributions from medicareplus msa not
used for qualified medical expenses if minimum balance not
maintained.--
``(A) In general.--The tax imposed by this chapter
for any taxable year in which there is a payment or
distribution from a MedicarePlus MSA which is not used
exclusively to pay the qualified medical expenses of
the account holder shall be increased by 50 percent of
the excess (if any) of--
``(i) the amount of such payment or
distribution, over
``(ii) the excess (if any) of--
``(I) the fair market value of the
assets in such MSA as of the close of
the calendar year preceding the
calendar year in which the taxable year
begins, over
``(II) an amount equal to 60
percent of the deductible under the
MedicarePlus MSA plan covering the
account holder as of January 1 of the
calendar year in which the taxable year
begins.
Section 220(f)(2) shall not apply to any payment or
distribution from a MedicarePlus MSA.
``(B) Exceptions.--Subparagraph (A) shall not apply
if the payment or distribution is made on or after the
date the account holder--
``(i) becomes disabled within the meaning
of section 72(m)(7), or
``(ii) dies.
``(C) Special rules.--For purposes of subparagraph
(A)--
``(i) all MedicarePlus MSAs of the account
holder shall be treated as 1 account,
``(ii) all payments and distributions not
used exclusively to pay the qualified medical
expenses of the account holder during any
taxable year shall be treated as 1
distribution, and
``(iii) any distribution of property shall
be taken into account at its fair market value
on the date of the distribution.
``(3) Withdrawal of erroneous contributions.--Section
220(f)(2) and paragraph (2) of this subsection shall not apply
to any payment or distribution from a MedicarePlus MSA to the
Secretary of Health and Human Services of an erroneous
contribution to such MSA and of the net income attributable to
such contribution.
``(4) Trustee-to-trustee transfers.--Section 220(f)(2) and
paragraph (2) of this subsection shall not apply to any
trustee-to-trustee transfer from a MedicarePlus MSA of an
account holder to another MedicarePlus MSA of such account
holder.
``(d) Special Rules for Treatment of Account After Death of Account
Holder.--In applying section 220(f)(8)(A) to an account which was a
MedicarePlus MSA of a decedent, the rules of section 220(f) shall apply
in lieu of the rules of subsection (c) of this section with respect to
the spouse as the account holder of such MedicarePlus MSA.
``(e) Reports.--In the case of a MedicarePlus MSA, the report under
section 220(h)--
``(1) shall include the fair market value of the assets in
such MedicarePlus MSA as of the close of each calendar year,
and
``(2) shall be furnished to the account holder--
``(A) not later than January 31 of the calendar
year following the calendar year to which such reports
relate, and
``(B) in such manner as the Secretary prescribes in
such regulations.
``(f) Coordination With Limitation on Number of Taxpayers Having
Medical Savings Accounts.--Subsection (i) of section 220 shall not
apply to an individual with respect to a MedicarePlus MSA, and
MedicarePlus MSA's shall not be taken into account in determining
whether the numerical limitations under section 220(j) are exceeded.''
(b) Technical Amendments.--
(1) The last sentence of section 4973(d) of such Code is
amended by inserting ``or section 138(c)(3)'' after ``section
220(f)(3)''.
(2) Subsection (b) of section 220 of such Code is amended
by adding at the end the following new paragraph:
``(7) Medicare eligible individuals.--The limitation under
this subsection for any month with respect to an individual
shall be zero for the first month such individual is entitled
to benefits under title XVIII of the Social Security Act and
for each month thereafter.''
(3) The table of sections for part III of subchapter B of
chapter 1 of such Code is amended by striking the last item and
inserting the following:
``Sec. 138. MedicarePlus MSA.
``Sec. 139. Cross references to other
Acts.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1998.
Subchapter C--GME, IME, and DSH Payments for Managed Care Enrollees
SEC. 4008. GRADUATE MEDICAL EDUCATION AND INDIRECT MEDICAL EDUCATION
PAYMENTS FOR MANAGED CARE ENROLLEES.
(a) Payments to Managed Care Organizations Operating Graduate
Medical Education Programs.--Section 1853 (as inserted by section 4001)
is amended by adding at the end the following:
``(h) Payments for Direct Costs of Graduate Medical Education
Programs.--
``(1) Additional payment to be made.--Effective January 1,
1998, each contract with a MedicarePlus organization under this
section (and each risk-sharing contract with an eligible
organization under section 1876) shall provide for an
additional payment for Medicare's share of allowable direct
graduate medical education costs incurred by such an
organization for an approved medical residency program.
``(2) Allowable costs.--If the organization has an approved
medical residency program that incurs all or substantially all
of the costs of the program, subject to section 1858(a)(3), the
allowable costs for such a program shall equal the national
average per resident amount times the number of full-time-
equivalent residents in the program in non-hospital settings.
``(3) Definitions.--As used in this subsection:
``(A) The terms `approved medical residency
program', `direct graduate medical education costs',
and `full-time-equivalent residents' have the same
meanings as under section 1886(h).
``(B) The term `Medicare's share' means, with
respect to a MedicarePlus or eligible organization, the
ratio of the number of individuals enrolled with the
organization under this part (or enrolled under a risk-
sharing contract under section 1876, respectively) to
the total number of individuals enrolled with the
organization.
``(C) The term `national average per resident
amount' means an amount estimated by the Secretary to
equal the weighted average amount that would be paid
per full-time-equivalent resident under section 1886(h)
for the calendar year (determined separately for
primary care residency programs as defined under
section 1886(h) (including obstetrics and gynecology
residency programs) and for other residency
programs).''.
(b) Payments to Hospitals for Direct and Indirect Costs of Graduate
Medical Education Programs Attributable to Managed Care Enrollees.--
Part C of title XVIII, as amended by section 4001, is amended by
inserting after section 1857 the following new section:
``payments to hospitals for certain costs attributable to managed care
enrollees
``Sec. 1858. (a) Costs of Graduate Medical Education.--
``(1) In general.--For portions of cost reporting periods
occurring on or after January 1, 1998, the Secretary shall
provide for an additional payment amount for each subsection
(d) hospital (as defined in section 1886(d)(1)(B)), each PPS-
exempt hospital described in clause (i) through (v) of such
section, and for each hospital reimbursed under a reimbursement
system authorized section 1814(b)(3) that--
``(A) furnishes services to individuals who are
enrolled under a risk-sharing contract with an eligible
organization under section 1876 and who are entitled to
part A and to individuals who are enrolled with a
MedicarePlus organization under part C, and
``(B) has an approved medical residency training
program.
``(2) Payment amount.--
``(A) In general.--Subject to paragraph (3)(B), the
amount of the payment under this subsection shall be
the sum of--
``(i) the amount determined under
subparagraph (B), and
``(ii) the amount determined under
subparagraph (C).
Clause (ii) shall not apply in the case of a hospital
that is not a PPS-exempt hospital described in clause
(i) through (v) of section 1886(d)(1)(B),
``(B) Direct amount.--The amount determined under
this subparagraph for a period is equal to the product
of--
``(i) the aggregate approved amount (as
defined in section 1886(h)(3)(B)) for that
period; and
``(ii) the fraction of the total number of
inpatient-bed-days (as established by the
Secretary) during the period which are
attributable to individuals described in
paragraph (1).
``(C) Indirect amount.--The amount determined under
this subparagraph is equal to the product of--
``(i) the amount of the indirect teaching
adjustment factor applicable to the hospital
under section 1886(d)(5)(B); and
``(ii) the product of--
``(I) the number of discharges
attributable to individuals described
in paragraph (1), and
``(II) the estimated average per
discharge amount that would otherwise
have been paid under section
1886(d)(1)(A) if the individuals had
not been enrolled as described in such
paragraph.
``(D) Special rule.--The Secretary shall establish
rules for the application of subparagraph (B) and for
the computation of the amounts described in
subparagraph (C)(i)) and subparagraph (C)(ii)(I) to a
hospital reimbursed under a reimbursement system
authorized under section 1814(b)(3) in a manner similar
to the manner of applying such subparagraph and
computing such amounts as if the hospital were not
reimbursed under such section.
``(3) Limitation.--
``(A) Determinations.--At the beginning of each
year, the Secretary shall--
``(i) estimate the sum of the amount of the
payments under this subsection and the payments
under section 1853(h), for services or
discharges occurring in the year, and
``(ii) determine the amount of the annual
payment limit under subparagraph (C) for such
year.
``(B) Imposition of limit.--If the amount estimated
under subparagraph (A)(i) for a year exceeds the amount
determined under subparagraph (A)(ii) for the year,
then the Secretary shall adjust the amounts of the
payments described in subparagraph (A)(i) for the year
in a pro rata manner so that the total of such payments
in the year do not exceed the annual payment limit
determined under subparagraph (A)(ii) for that year.
``(C) Annual payment limit.--
``(i) In general.--The annual payment limit
under this subparagraph for a year is the sum,
over all counties or MedicarePlus payment
areas, of the product of--
``(I) the annual GME per capita
payment rate (described in clause (ii))
for the county or area, and
``(II) the Secretary's projection
of average enrollment of individuals
described in paragraph (1) who are
residents of that county or area,
adjusted to reflect the relative
demographic or risk characteristics of
such enrollees.
``(ii) GME per capita payment rate.--The
GME per capita payment rate described in this
clause for a particular county or MedicarePlus
payment area for a year is the GME proportion
(as specified in clause (iii)) of the annual
MedicarePlus capitation rate (as calculated
under section 1853(c)) for the county or area
and year involved.
``(iii) GME proportion.--For purposes of
clause (ii), the GME proportion for a county or
area and a year is equal to the phase-in
percentage (specified in clause (vi)) of the
ratio of (I) the projected GME payment amount
for the county or area (as determined under
clause (v)), to (II) the average per capita
cost for the county or area for the year
(determined under clause (vi)).
``(iv) Phase-in percentage.--The phase-in
percentage specified in this clause for--
``(I) 1998 is 20 percent,
``(II) 1999 is 40 percent,
``(III) 2000 is 60 percent,
``(IV) 2001 is 80 percent, or
``(V) any subsequent year is 100
percent.
``(v) Projected GME payment amount.--he
projected GME payment amount for a county or
area--
``(I) for 1998, is the amount
included in the per capita rate of
payment for 1997 determined under
section 1876(a)(1)(C) for the payment
adjustments described in section
1886(d)(5)(B) and section 1886(h) for
that county or area, adjusted by the
general GME update factor (as defined
in clause (vii)) for 1998, or
``(II) for a subsequent year, is
the projected GME payment amount for
the county or area for the previous
year, adjusted by the general GME
update factor for such subsequent year.
The Secretary shall determine the amount described in subclause (I) for
a county or other area that includes hospitals reimbursed under section
1814(b)(3) as though such hospitals had not been reimbursed under such
section.
``(vi) Average per capita cost.--The
average per capita cost for the county or area
determined under this clause for--
``(I) 1998 is the annual per capita
rate of payment for 1997 determined
under section 1876(a)(1)(C) for the
county or area, increased by the
national per capita MedicarePlus growth
percentage for 1998 (as defined in
section 1853(c)(6), but determined
without regard to the adjustment
described in subparagraph (B) of such
section); or
``(II) a subsequent year is the
average per capita cost determined
under this clause for the previous year
increased by the national per capita
MedicarePlus growth percentage for the
year involved (as defined in section
1853(c)(6), but determined without
regard to the adjustment described in
subparagraph (B) of such section).
``(vii) General gme update factor.--For
purposes of clause (v), the `general GME update
factor' for a year is equal to the Secretary's
estimate of the national average percentage
change in average per capita payments under
sections 1886(d)(5)(B) and 1886(h) from the
previous year to the year involved. Such amount
takes into account changes in law and
regulation affecting payment amounts under such
sections.''.
SEC. 4009. DISPROPORTIONATE SHARE HOSPITAL PAYMENTS FOR MANAGED CARE
ENROLLEES.
Section 1858, as inserted by section 4008(b), is further amended by
adding at the end the following new subsection:
``(b) Disproportionate Share Hospital Payments.--
``(1) In general.--For portions of cost reporting periods
occurring on or after January 1, 1998, the Secretary shall
provide for an additional payment amount for each subsection
(d) hospital (as defined in section 1886(d)(1)(B)) and for each
hospital reimbursed a demonstration project reimbursement
system under section 1814(b)(3) that--
``(A) furnishes services to individuals who are
enrolled under a risk-sharing contract with an eligible
organization under section 1876 and who are entitled to
part A and to individuals who are enrolled with a
MedicarePlus organization under this part, and
``(B) is (or, if it were not reimbursed under
section 1814(b)(3), would qualify as) a
disproportionate share hospital described in section
1886(d)(5)(F)(i).
``(2) Amount of payment.--Subject to paragraph (3)(B), the
amount of the payment under this subsection shall be the
product of--
``(A) the amount of the disproportionate share
adjustment percentage applicable to the hospital under
section 1886(d)(5)(F); and
``(B) the product described in subsection
(a)(2)(C)(ii).
The Secretary shall establish rules for the computation of the
amount described in subparagraph (A) for a hospital reimbursed
under section 1814(b)(3).
``(3) Limit.--
``(A) Determination.--At the beginning of each
year, the Secretary shall--
``(i) estimate the sum of the payments
under this subsection for services or
discharges occurring in the year, and
``(ii) determine the amount of the annual
payment limit under subparagraph (C)) for such
year.
``(B) Imposition of limit.--If the amount estimated
under subparagraph (A)(i) for a year exceeds the amount
determined under subparagraph (A)(ii) for the year,
then the Secretary shall adjust the amounts of the
payments under this subsection for the year in a pro
rata manner so that the total of such payments in the
year do not exceed the annual payment limit determined
under subparagraph (A)(ii) for that year.
``(C) Annual payment limit.--The annual payment
limit under this subparagraph for a year shall be
determined in the same manner as the annual payment
limit is determined under clause (i) of subsection
(a)(3)(C), except that, for purposes of this clause,
any reference in clauses (i) through (vii) of such
subsection--
``(i) to a payment adjustment under
subsection (a) is deemed a reference to a
payment adjustment under this subsection, or
``(ii) to payments or payment adjustments
under section 1886(d)(5)(B) and 1886(h) is
deemed a reference to payments and payment
adjustments under section 1886(d)(5)(F).''.
CHAPTER 2--INTEGRATED LONG-TERM CARE PROGRAMS
Subchapter A--Programs of All-inclusive Care for the Elderly (PACE)
SEC. 4011. REFERENCE TO COVERAGE OF PACE UNDER THE MEDICARE PROGRAM.
For provision amending title XVIII of the Social Security Act to
provide for payments to, and coverage of benefits under, Programs of
All-inclusive Care for the Elderly (PACE), see section 3431.
SEC. 4012. REFERENCE TO ESTABLISHMENT OF PACE PROGRAM AS MEDICAID STATE
OPTION.
For provision amending title XIX of the Social Security Act to
establish the PACE program as a medicaid State option, see section
3432.
Subchapter B--Social Health Maintenance Organizations
SEC. 4015. SOCIAL HEALTH MAINTENANCE ORGANIZATIONS (SHMOS).
(a) Extension of Demonstration Project Authorities.--Section
4018(b) of the Omnibus Budget Reconciliation Act of 1987 is amended--
(1) in paragraph (1), by striking ``1997'' and inserting
``2000'', and
(2) in paragraph (4), by striking ``1998'' and inserting
``2001''.
(b) Expansion of Cap.--Section 13567(c) of the Omnibus Budget
Reconciliation Act of 1993 is amended by striking ``12,000'' and
inserting ``36,000''.
(b) Report on Integration and Transition.--
(1) In general.--The Secretary of Health and Human Services
shall submit to Congress, by not later than January 1, 1999, a
plan for the integration of health plans offered by social
health maintenance organizations (including SHMO I and SHMO II
sites developed under section 2355 of the Deficit Reduction Act
of 1984 and under the amendment made by section
4207(b)(3)(B)(i) of OBRA-1990, respectively) and similar plans
as an option under the MedicarePlus program under part C of
title XVIII of the Social Security Act.
(2) Provision for transition.--Such plan shall include a
transition for social health maintenance organizations
operating under demonstration project authority under such
section.
(3) Payment policy.--The report shall also include
recommendations on appropriate payment levels for plans offered
by such organizations, including an analysis of the application
of risk adjustment factors appropriate to the population served
by such organizations.
Subchapter C--Other Programs
SEC. 4018. ORDERLY TRANSITION OF MUNICIPAL HEALTH SERVICE DEMONSTRATION
PROJECTS.
Section 9215 of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended by section 6135 of OBRA-1989 and section 13557 of
OBRA-1993, is further amended--
(1) by inserting ``(a)'' before ``The Secretary'', and
(2) by adding at the end the following: ``Subject to
subsection (c), the Secretary may further extend such
demonstration projects through December 31, 2000, but only with
respect to individuals are enrolled with such projects before
January 1, 1998.
``(b) The Secretary shall work with each such demonstration project
to develop a plan, to be submitted to the Committee on Ways and Means
of the House of Representatives and the Committee on Finance of the
Senate by March 31, 1998, for the orderly transition of demonstration
projects and the project enrollees to a non-demonstration project
health care delivery system, such as through integration with private
or public health plan, including a medicaid managed care or
MedicarePlus plan.
``(c) A demonstration project under subsection (a) which does not
develop and submit a transition plan under subsection (b) by March 31,
1998, or, if later, 6 months after the date of the enactment of this
Act, shall be discontinued as of December 31, 1998. The Secretary shall
provide appropriate technical assistance to assist in the transition so
that disruption of medical services to project enrollees may be
minimized.''.
SEC. 4019. EXTENSION OF CERTAIN MEDICARE COMMUNITY NURSING ORGANIZATION
DEMONSTRATION PROJECTS.
Notwithstanding any other provision of law, demonstration projects
conducted under section 4079 of the Omnibus Budget Reconciliation Act
of 1987 may be conducted for an additional period of 2 years, and the
deadline for any report required relating to the results of such
projects shall be not later than 6 months before the end of such
additional period.
CHAPTER 3--MEDICARE PAYMENT ADVISORY COMMISSION
SEC. 4021. MEDICARE PAYMENT ADVISORY COMMISSION.
(a) In General.--Title XVIII is amended by inserting after section
1804 the following new section:
``medicare payment advisory commission
``Sec. 1805. (a) Establishment.--There is hereby established the
Medicare Payment Advisory Commission (in this section referred to as
the `Commission').
``(b) Duties.--
``(1) Review of payment policies and annual reports.--The
Commission shall--
``(A) review payment policies under this title,
including the topics described in paragraph (2);
``(B) make recommendations to Congress concerning
such payment policies; and
``(C) by not later than March 1 of each year
(beginning with 1998), submit a report to Congress
containing the results of such reviews and its
recommendations concerning such policies and an
examination of issues affecting the medicare program.
``(2) Specific topics to be reviewed.--
``(A) Medicareplus program.--Specifically, the
Commission shall review, with respect to the
MedicarePlus program under part C, the following:
``(i) The methodology for making payment to
plans under such program, including the making
of differential payments and the distribution
of differential updates among different payment
areas.
``(ii) The mechanisms used to adjust
payments for risk and the need to adjust such
mechanisms to take into account health status
of beneficiaries.
``(iii) The implications of risk selection
both among MedicarePlus organizations and
between the MedicarePlus option and the
medicare fee-for-service option.
``(iv) The development and implementation
of mechanisms to assure the quality of care for
those enrolled with MedicarePlus organizations.
``(v) The impact of the MedicarePlus
program on access to care for medicare
beneficiaries.
``(vi) The appropriate role for the
medicare program in addressing the needs of
individuals with chronic illnesses.
``(vii) Other major issues in
implementation and further development of the
MedicarePlus program.
``(B) Fee-for-service system.--Specifically, the
Commission shall review payment policies under parts A
and B, including--
``(i) the factors affecting expenditures
for services in different sectors, including
the process for updating hospital, skilled
nursing facility, physician, and other fees,
``(ii) payment methodologies, and
``(iii) their relationship to access and
quality of care for medicare beneficiaries.
``(C) Interaction of medicare payment policies with
health care delivery generally.--Specifically, the
Commission shall review the effect of payment policies
under this title on the delivery of health care
services other than under this title and assess the
implications of changes in health care delivery in the
United States and in the general market for health care
services on the medicare program.
``(3) Comments on certain secretarial reports.--If the
Secretary submits to Congress (or a committee of Congress) a
report that is required by law and that relates to payment
policies under this title, the Secretary shall transmit a copy
of the report to the Commission. The Commission shall review
the report and, not later than 6 months after the date of
submittal of the Secretary's report to Congress, shall submit
to the appropriate committees of Congress written comments on
such report. Such comments may include such recommendations as
the Commission deems appropriate.
``(4) Agenda and additional reviews.--The Commission shall
consult periodically with the chairmen and ranking minority
members of the appropriate committees of Congress regarding the
Commission's agenda and progress towards achieving the agenda.
The Commission may conduct additional reviews, and submit
additional reports to the appropriate committees of Congress,
from time to time on such topics relating to the program under
this title as may be requested by such chairmen and members and
as the Commission deems appropriate.
``(5) Availability of reports.--The Commission shall
transmit to the Secretary a copy of each report submitted under
this subsection and shall make such reports available to the
public.
``(6) Appropriate committees.--For purposes of this
section, the term `appropriate committees of Congress' means
the Committees on Ways and Means and Commerce of the House of
Representatives and the Committee on Finance of the Senate.
``(c) Membership.--
``(1) Number and appointment.--The Commission shall be
composed of 11 members appointed by the Comptroller General.
``(2) Qualifications.--
``(A) In general.--The membership of the Commission
shall include individuals with national recognition for
their expertise in health finance and economics,
actuarial science, health facility management, health
plans and integrated delivery systems, reimbursement of
health facilities, allopathic and osteopathic
physicians, and other providers of health services, and
other related fields, who provide a mix of different
professionals, broad geographic representation, and a
balance between urban and rural representatives.
``(B) Inclusion.--The membership of the Commission
shall include (but not be limited to) physicians and
other health professionals, employers, third party
payers, individuals skilled in the conduct and
interpretation of biomedical, health services, and
health economics research and expertise in outcomes and
effectiveness research and technology assessment. Such
membership shall also include representatives of
consumers and the elderly.
``(C) Majority nonproviders.--Individuals who are
directly involved in the provision, or management of
the delivery, of items and services covered under this
title shall not constitute a majority of the membership
of the Commission.
``(D) Ethical disclosure.--The Comptroller General
shall establish a system for public disclosure by
members of the Commission of financial and other
potential conflicts of interest relating to such
members.
``(3) Terms.--
``(A) In general.--The terms of members of the
Commission shall be for 3 years except that the
Comptroller General shall designate staggered terms for
the members first appointed.
``(B) Vacancies.--Any member appointed to fill a
vacancy occurring before the expiration of the term for
which the member's predecessor was appointed shall be
appointed only for the remainder of that term. A member
may serve after the expiration of that member's term
until a successor has taken office. A vacancy in the
Commission shall be filled in the manner in which the
original appointment was made.
``(4) Compensation.--While serving on the business of the
Commission (including traveltime), a member of the Commission
shall be entitled to compensation at the per diem equivalent of
the rate provided for level IV of the Executive Schedule under
section 5315 of title 5, United States Code; and while so
serving away from home and member's regular place of business,
a member may be allowed travel expenses, as authorized by the
Chairman of the Commission. Physicians serving as personnel of
the Commission may be provided a physician comparability
allowance by the Commission in the same manner as Government
physicians may be provided such an allowance by an agency under
section 5948 of title 5, United States Code, and for such
purpose subsection (i) of such section shall apply to the
Commission in the same manner as it applies to the Tennessee
Valley Authority. For purposes of pay (other than pay of
members of the Commission) and employment benefits, rights, and
privileges, all personnel of the Commission shall be treated as
if they were employees of the United States Senate.
``(5) Chairman; vice chairman.--The Comptroller General
shall designate a member of the Commission, at the time of
appointment of the member, as Chairman and a member as Vice
Chairman for that term of appointment.
``(6) Meetings.--The Commission shall meet at the call of
the Chairman.
``(d) Director and Staff; Experts and Consultants.--Subject to such
review as the Comptroller General deems necessary to assure the
efficient administration of the Commission, the Commission may--
``(1) employ and fix the compensation of an Executive
Director (subject to the approval of the Comptroller General)
and such other personnel as may be necessary to carry out its
duties (without regard to the provisions of title 5, United
States Code, governing appointments in the competitive
service);
``(2) seek such assistance and support as may be required
in the performance of its duties from appropriate Federal
departments and agencies;
``(3) enter into contracts or make other arrangements, as
may be necessary for the conduct of the work of the Commission
(without regard to section 3709 of the Revised Statutes (41
U.S.C. 5));
``(4) make advance, progress, and other payments which
relate to the work of the Commission;
``(5) provide transportation and subsistence for persons
serving without compensation; and
``(6) prescribe such rules and regulations as it deems
necessary with respect to the internal organization and
operation of the Commission.
``(e) Powers.--
``(1) Obtaining official data.--The Commission may secure
directly from any department or agency of the United States
information necessary to enable it to carry out this section.
Upon request of the Chairman, the head of that department or
agency shall furnish that information to the Commission on an
agreed upon schedule.
``(2) Data collection.--In order to carry out its
functions, the Commission shall--
``(A) utilize existing information, both published
and unpublished, where possible, collected and assessed
either by its own staff or under other arrangements
made in accordance with this section,
``(B) carry out, or award grants or contracts for,
original research and experimentation, where existing
information is inadequate, and
``(C) adopt procedures allowing any interested
party to submit information for the Commission's use in
making reports and recommendations.
``(3) Access of gao to information.--The Comptroller
General shall have unrestricted access to all deliberations,
records, and nonproprietary data of the Commission, immediately
upon request.
``(4) Periodic audit.--The Commission shall be subject to
periodic audit by the Comptroller General.
``(f) Authorization of Appropriations.--
``(1) Request for appropriations.--The Commission shall
submit requests for appropriations in the same manner as the
Comptroller General submits requests for appropriations, but
amounts appropriated for the Commission shall be separate from
amounts appropriated for the Comptroller General.
``(2) Authorization.--There are authorized to be
appropriated such sums as may be necessary to carry out the
provisions of this section. 60 percent of such appropriation
shall be payable from the Federal Hospital Insurance Trust
Fund, and 40 percent of such appropriation shall be payable
from the Federal Supplementary Medical Insurance Trust Fund.''.
(b) Abolition of ProPAC and PPRC.--
(1) Propac.--
(A) In general.--Section 1886(e) (42 U.S.C.
1395ww(e)) is amended--
(i) by striking paragraphs (2) and (6); and
(ii) in paragraph (3), by striking ``(A)
The Commission'' and all that follows through
``(B)''.
(B) Conforming amendment.--Section 1862 (42 U.S.C.
1395y) is amended by striking ``Prospective Payment
Assessment Commission'' each place it appears in
subsection (a)(1)(D) and subsection (i) and inserting
``Medicare Payment Advisory Commission''.
(2) PPRC.--
(A) In general.--Title XVIII is amended by striking
section 1845 (42 U.S.C. 1395w-1).
(B) Elimination of certain reports.--Section 1848
(42 U.S.C. 1395w-4) is amended by striking subparagraph
(B) of subsection (f)(1).
(C) Conforming amendments.--Section 1848 (42 U.S.C.
1395w-4) is amended by striking ``Physician Payment
Review Commission'' and inserting ``Medicare Payment
Advisory Commission'' each place it appears in
subsections (c)(2)(B)(iii), (g)(6)(C), and (g)(7)(C).
(c) Effective Date; Transition.--
(1) In general.--The Comptroller General shall first
provide for appointment of members to the Medicare Payment
Advisory Commission (in this subsection referred to as
``MedPAC'') by not later than September 30, 1997.
(2) Transition.--As quickly as possible after the date a
majority of members of MedPAC are first appointed, the
Comptroller General, in consultation with the Prospective
Payment Assessment Commission (in this subsection referred to
as ``ProPAC'') and the Physician Payment Review Commission (in
this subsection referred to as ``PPRC''), shall provide for the
termination of the ProPAC and the PPRC. As of the date of
termination of the respective Commissions, the amendments made
by paragraphs (1) and (2), respectively, of subsection (b)
become effective. The Comptroller General, to the extent
feasible, shall provide for the transfer to the MedPAC of
assets and staff of the ProPAC and the PPRC, without any loss
of benefits or seniority by virtue of such transfers. Fund
balances available to the ProPAC or the PPRC for any period
shall be available to the MedPAC for such period for like
purposes.
(3) Continuing responsibility for reports.--The MedPAC
shall be responsible for the preparation and submission of
reports required by law to be submitted (and which have not
been submitted by the date of establishment of the MedPAC) by
the ProPAC and the PPRC, and, for this purpose, any reference
in law to either such Commission is deemed, after the
appointment of the MedPAC, to refer to the MedPAC.
CHAPTER 4--MEDIGAP PROTECTIONS
SEC. 4031. MEDIGAP PROTECTIONS.
(a) Guaranteeing Issue Without Preexisting Conditions for
Continuously Covered Individuals.--Section 1882(s) (42 U.S.C.
1395ss(s)) is amended--
(1) in paragraph (3), by striking ``paragraphs (1) and
(2)'' and inserting ``this subsection'',
(2) by redesignating paragraph (3) as paragraph (4), and
(3) by inserting after paragraph (2) the following new
paragraph:
``(3)(A) The issuer of a medicare supplemental policy--
``(i) may not deny or condition the issuance or
effectiveness of a medicare supplemental policy described in
subparagraph (C) that is offered and is available for issuance
to new enrollees by such issuer;
``(ii) may not discriminate in the pricing of such policy,
because of health status, claims experience, receipt of health
care, or medical condition; and
``(iii) may not impose an exclusion of benefits based on a
pre-existing condition under such policy,
in the case of an individual described in subparagraph (B) who seeks to
enroll under the policy not later than 63 days after the date of the
termination of enrollment described in such subparagraph and who
submits evidence of the date of termination or disenrollment along with
the application for such medicare supplemental policy.
``(B) An individual described in this subparagraph is an individual
described in any of the following clauses:
``(i) The individual is enrolled under an employee welfare
benefit plan that provides health benefits that supplement the
benefits under this title and the plan terminates or ceases to
provide all such supplemental health benefits to the
individual.
``(ii) The individual is enrolled with a MedicarePlus
organization under a MedicarePlus plan under part C, and there
are circumstances permitting discontinuance of the individual's
election of the plan under section 1851(e)(4).
``(iii) The individual is enrolled with an eligible
organization under a contract under section 1876, a similar
organization operating under demonstration project authority,
with an organization under an agreement under section
1833(a)(1)(A), or with an organization under a policy described
in subsection (t), and such enrollment ceases under the same
circumstances that would permit discontinuance of an
individual's election of coverage under section 1851(e)(4) and,
in the case of a policy described in subsection (t), there is
no provision under applicable State law for the continuation of
coverage under such policy.
``(iv) The individual is enrolled under a medicare
supplemental policy under this section and such enrollment
ceases because--
``(I) of the bankruptcy or insolvency of the issuer
or because of other involuntary termination of coverage
or enrollment under such policy and there is no
provision under applicable State law for the
continuation of such coverage;
``(II) the issuer of the policy substantially
violated a material provision of the policy; or
``(III) the issuer (or an agent or other entity
acting on the issuer's behalf) materially
misrepresented the policy's provisions in marketing the
policy to the individual.
``(v) The individual--
``(I) was enrolled under a medicare supplemental
policy under this section,
``(II) subsequently terminates such enrollment and
enrolls, for the first time, with any MedicarePlus
organization under a MedicarePlus plan under part C,
any eligible organization under a contract under
section 1876, any similar organization operating under
demonstration project authority, any organization under
an agreement under section 1833(a)(1)(A), or any policy
described in subsection (t), and
``(III) the subsequent enrollment under subclause
(II) is terminated by the enrollee during the first 6
months (or 3 months for terminations occurring on or
after January 1, 2003) of such enrollment.
``(vi) The individual--
``(I) was enrolled under a medicare supplemental
policy under this section,
``(II) subsequently terminates such enrollment and
enrolls, for the first time, during or after the
annual, coordinated election period under section
1851(e)(3)(B) occurring during 2002, with an
organization or policy described in clause (v)(II), and
``(III) the subsequent enrollment under subclause
(II) is terminated by the enrollee during the next
annual, coordinated election period under such section.
``(C)(i) Subject to clauses (ii) and (iii), a medicare supplemental
policy described in this subparagraph has a benefit package classified
as `A', `B', `C', or `F' under the standards established under
subsection (p)(2).
``(ii) Only for purposes of an individual described in subparagraph
(B)(v), a medicare supplemental policy described in this subparagraph
also includes (if available from the same issuer) the same medicare
supplemental policy referred to in such subparagraph in which the
individual was most recently previously enrolled.
``(iii) For purposes of applying this paragraph in the case of a
State that provides for offering of benefit packages other than under
the classification referred to in clause (i), the references to benefit
packages in such clause are deemed references to comparable benefit
packages offered in such State.
``(D) At the time of an event described in subparagraph (B) because
of which an individual ceases enrollment or loses coverage or benefits
under a contract or agreement, policy, or plan, the organization that
offers the contract or agreement, the insurer offering the policy, or
the administrator of the plan, respectively, shall notify the
individual of the rights of the individual, and obligations of issuers
of medicare supplemental policies, under subparagraph (A).''.
(b) Limitation on Imposition of Preexisting Condition Exclusion
During Initial Open Enrollment Period.--Section 1882(s)(2) (42 U.S.C.
1395ss(s)(2)) is amended--
(1) in subparagraph (B), by striking ``subparagraph (C)''
and inserting ``subparagraphs (C) and (D)'', and
(2) by adding at the end the following new subparagraph:
``(D) In the case of a policy issued during the 6-month period
described in subparagraph (A) to an individual who is 65 years of age
or older as of the date of issuance and who as of the date of the
application for enrollment has a continuous period of creditable
coverage (as defined in 2701(c) of the Public Health Service Act) of--
``(i) at least 6 months, the policy may not exclude
benefits based on a pre-existing condition; or
``(ii) of less than 6 months, if the policy excludes
benefits based on a preexisting condition, the policy shall
reduce the period of any preexisting condition exclusion by the
aggregate of the periods of creditable coverage (if any, as so
defined) applicable to the individual as of the enrollment
date.
The Secretary shall specify the manner of the reduction under clause
(ii), based upon the rules used by the Secretary in carrying out
section 2701(a)(3) of such Act.''.
(c) Effective Dates.--
(1) Guaranteed issue.--The amendment made by subsection (a)
shall take effect on July 1, 1998.
(2) Limit on preexisting condition exclusions.--The
amendment made by subsection (b) shall apply to policies issued
on or after July 1, 1998.
(d) Transition Provisions.--
(1) In general.--If the Secretary of Health and Human
Services identifies a State as requiring a change to its
statutes or regulations to conform its regulatory program to
the changes made by this section, the State regulatory program
shall not be considered to be out of compliance with the
requirements of section 1882 of the Social Security Act due
solely to failure to make such change until the date specified
in paragraph (4).
(2) NAIC standards.--If, within 9 months after the date of
the enactment of this Act, the National Association of
Insurance Commissioners (in this subsection referred to as the
``NAIC'') modifies its NAIC Model Regulation relating to
section 1882 of the Social Security Act (referred to in such
section as the 1991 NAIC Model Regulation, as modified pursuant
to section 171(m)(2) of the Social Security Act Amendments of
1994 (Public Law 103-432) and as modified pursuant to section
1882(d)(3)(A)(vi)(IV) of the Social Security Act, as added by
section 271(a) of the Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-191) to conform to
the amendments made by this section, such revised regulation
incorporating the modifications shall be considered to be the
applicable NAIC model regulation (including the revised NAIC
model regulation and the 1991 NAIC Model Regulation) for the
purposes of such section.
(3) Secretary standards.--If the NAIC does not make the
modifications described in paragraph (2) within the period
specified in such paragraph, the Secretary of Health and Human
Services shall make the modifications described in such
paragraph and such revised regulation incorporating the
modifications shall be considered to be the appropriate
Regulation for the purposes of such section.
(4) Date specified.--
(A) In general.--Subject to subparagraph (B), the
date specified in this paragraph for a State is the
earlier of--
(i) the date the State changes its statutes
or regulations to conform its regulatory
program to the changes made by this section, or
(ii) 1 year after the date the NAIC or the
Secretary first makes the modifications under
paragraph (2) or (3), respectively.
(B) Additional legislative action required.--In the
case of a State which the Secretary identifies as--
(i) requiring State legislation (other than
legislation appropriating funds) to conform its
regulatory program to the changes made in this
section, but
(ii) having a legislature which is not
scheduled to meet in 1999 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first day
of the first calendar quarter beginning after the close
of the first legislative session of the State
legislature that begins on or after July 1, 1999. For
purposes of the previous sentence, in the case of a
State that has a 2-year legislative session, each year
of such session shall be deemed to be a separate
regular session of the State legislature.
SEC. 4032. MEDICARE PREPAID COMPETITIVE PRICING DEMONSTRATION PROJECT.
(a) Establishment of Project.--The Secretary of Health and Human
Services shall provide, beginning not later than 1 year after the date
of the enactment of this Act, for implementation of a project (in this
section referred to as the ``project'') to demonstrate the application
of, and the consequences of applying, a market-oriented pricing system
for the provision of a full range of medicare benefits in a geographic
area.
(b) Research Design Advisory Committee.--
(1) In general.--Before implementing the project under this
section, the Secretary shall appoint a national advisory
committee, including independent actuaries and individuals with
expertise in competitive health plan pricing, to make
recommendations to the Secretary concerning the appropriate
research design for implementing the project.
(2) Initial recommendations.--The committee initially shall
submit recommendations respecting the method for area
selection, benefit design among plans offered, structuring
choice among health plans offered, methods for setting the
price to be paid to plans, collection of plan information
(including information concerning quality and access to care),
information dissemination, and methods of evaluating the
results of the project.
(3) Advice during implementation.--Upon implementation of
the project, the committee shall continue to advise the
Secretary on the application of the design in different areas
and changes in the project based on experience with its
operations.
(c) Area Selection.--
(1) In general.--Taking into account the recommendations of
the advisory committee submitted under subsection (b), the
Secretary shall designate areas in which the project will
operate.
(2) Appointment of area advisory committee.--Upon the
designation of an area for inclusion in the project, the
Secretary shall appoint an area advisory committee, composed of
representatives of health plans, providers, and medicare
beneficiaries in the area, to advise the Secretary concerning
how the project will actually be implemented in the area. Such
advice may include advice concerning the marketing and pricing
of plans in the area and other salient factors relating.
(d) Monitoring and Report.--
(1) Monitoring impact.--Taking into consideration the
recommendations of the general advisory committee (appointed
under subsection (b)), the Secretary shall closely monitor the
impact of projects in areas on the price and quality of, and
access to, medicare covered services, choice of health plan,
changes in enrollment, and other relevant factors.
(2) Report.--The Secretary shall periodically report to
Congress on the progress under the project under this section.
(e) Waiver Authority.--The Secretary of Health and Human Services
may waive such requirements of section 1876 (and such requirements of
part C of title XVIII, as amended by chapter 1), of the Social Security
Act as may be necessary for the purposes of carrying out the project.
(f) Relationship to Other Authority.--Except pursuant to this
section the Secretary of Health and Human Services may not conduct or
continue any medicare demonstration project relating to payment of
health maintenance organizations, MedicarePlus organizations, or
similar prepaid managed care entities on the basis of a competitive
bidding process or pricing system described in subsection (a) rather
than on the bases described in section 1853 or 1876 of the Social
Security Act.
Subtitle B--Prevention Initiatives
SEC. 4101. SCREENING MAMMOGRAPHY.
(a) Providing Annual Screening Mammography for Women Over Age 39.--
Section 1834(c)(2)(A) (42 U.S.C. 1395m(c)(2)(A)) is amended--
(1) in clause (iii), to read as follows:
``(iii) In the case of a woman over 39
years of age, payment may not be made under
this part for screening mammography performed
within 11 months following the month in which a
previous screening mammography was
performed.''; and
(2) by striking clauses (iv) and (v).
(b) Waiver of Deductible.--The first sentence of section 1833(b)
(42 U.S.C. 1395l(b)) is amended--
(1) by striking ``and'' before ``(4)'', and
(2) by inserting before the period at the end the
following: ``, and (5) such deductible shall not apply with
respect to screening mammography (as described in section
1861(jj))''.
(c) Conforming Amendment.--Section 1834(c)(1)(C) of such Act (42
U.S.C. 1395m(c)(1)(C)) is amended by striking ``, subject to the
deductible established under section 1833(b),''.
(d) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.
SEC. 4102. SCREENING PAP SMEAR AND PELVIC EXAMS.
(a) Coverage of Pelvic Exam; Increasing Frequency of Coverage of
Pap Smear.--Section 1861(nn) (42 U.S.C. 1395x(nn)) is amended--
(1) in the heading, by striking ``Smear'' and inserting
``Smear; Screening Pelvic Exam'';
(2) by inserting ``or vaginal'' after ``cervical'' each
place it appears;
(3) by striking ``(nn)'' and inserting ``(nn)(1)'';
(4) by striking ``3 years'' and all that follows and
inserting ``3 years, or during the preceding year in the case
of a woman described in paragraph (3).''; and
(5) by adding at the end the following new paragraphs:
``(2) The term `screening pelvic exam' means an pelvic examination
provided to a woman if the woman involved has not had such an
examination during the preceding 3 years, or during the preceding year
in the case of a woman described in paragraph (3), and includes a
clinical breast examination.
``(3) A woman described in this paragraph is a woman who--
``(A) is of childbearing age and has not had a test
described in this subsection during each of the preceding 3
years that did not indicate the presence of cervical or vaginal
cancer; or
``(B) is at high risk of developing cervical or vaginal
cancer (as determined pursuant to factors identified by the
Secretary).''.
(b) Waiver of Deductible.--The first sentence of section 1833(b)
(42 U.S.C. 1395l(b)), as amended by section 4101(b), is amended--
(1) by striking ``and'' before ``(5)'', and
(2) by inserting before the period at the end the
following: ``, and (6) such deductible shall not apply with
respect to screening pap smear and screening pelvic exam (as
described in section 1861(nn))''.
(c) Conforming Amendments.--Sections 1861(s)(14) and 1862(a)(1)(F)
(42 U.S.C. 1395x(s)(14), 1395y(a)(1)(F)) are each amended by inserting
``and screening pelvic exam'' after ``screening pap smear''.
(d) Payment Under Physician Fee Schedule.--Section 1848(j)(3)(42
U.S.C. 1395w-4(j)(3)) is amended by striking ``and (4)'' and inserting
``, (4) and (14) (with respect to services described in section
1861(nn)(2))''.
(e) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.
(f) Report on Rescreening Pap Smears.--Not later than 6 months
after the date of the enactment of this Act, the Secretary of Health
and Human Services shall submit to Congress a report on the extent to
which the use of supplemental computer-assisted diagnostic tests
consisting of interactive automated computer-imaging of an exfoliative
cytology test, in conjunction with the pap smears, improves the early
detection of cervical or vaginal cancer and the costs implications for
coverage of such supplemental tests under the medicare program.
SEC. 4103. PROSTATE CANCER SCREENING TESTS.
(a) Coverage.--Section 1861 (42 U.S.C. 1395x) is amended--
(1) in subsection (s)(2)--
(A) by striking ``and'' at the end of subparagraphs
(N) and (O), and
(B) by inserting after subparagraph (O) the
following new subparagraph:
``(P) prostate cancer screening tests (as defined in
subsection (oo)); and''; and
(2) by adding at the end the following new subsection:
``Prostate Cancer Screening Tests
``(oo)(1) The term `prostate cancer screening test' means a test
that consists of any (or all) of the procedures described in paragraph
(2) provided for the purpose of early detection of prostate cancer to a
man over 50 years of age who has not had such a test during the
preceding year.
``(2) The procedures described in this paragraph are as follows:
``(A) A digital rectal examination.
``(B) A prostate-specific antigen blood test.
``(C) For years beginning after 2001, such other procedures
as the Secretary finds appropriate for the purpose of early
detection of prostate cancer, taking into account changes in
technology and standards of medical practice, availability,
effectiveness, costs, and such other factors as the Secretary
considers appropriate.''.
(b) Payment for Prostate-specific Antigen Blood Test Under Clinical
Diagnostic Laboratory Test Fee Schedules.--Section 1833(h)(1)(A) (42
U.S.C. 1395l(h)(1)(A)) is amended by inserting after ``laboratory
tests'' the following: ``(including prostate cancer screening tests
under section 1861(oo) consisting of prostate-specific antigen blood
tests)''.
(c) Conforming Amendment.--Section 1862(a) (42 U.S.C. 1395y(a)) is
amended--
(1) in paragraph (1)--
(A) in subparagraph (E), by striking ``and'' at the
end,
(B) in subparagraph (F), by striking the semicolon
at the end and inserting ``, and'', and
(C) by adding at the end the following new
subparagraph:
``(G) in the case of prostate cancer screening tests (as
defined in section 1861(oo)), which are performed more
frequently than is covered under such section;''; and
(2) in paragraph (7), by striking ``paragraph (1)(B) or
under paragraph (1)(F)'' and inserting ``subparagraphs (B),
(F), or (G) of paragraph (1)''.
(d) Payment Under Physician Fee Schedule.--Section 1848(j)(3)(42
U.S.C. 1395w-4(j)(3)), as amended by section 4102, is amended by
inserting ``(2)(P) (with respect to services described in subparagraphs
(A) and (C) of section 1861(oo),'' after ``(2)(G)''
(e) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.
SEC. 4104. COVERAGE OF COLORECTAL SCREENING.
(a) Coverage.--
(1) In general.--Section 1861 (42 U.S.C. 1395x), as amended
by section 4103(a), is amended--
(A) in subsection (s)(2)--
(i) by striking ``and'' at the end of
subparagraph (P);
(ii) by adding ``and'' at the end of
subparagraph (Q); and
(iii) by adding at the end the following
new subparagraph:
``(R) colorectal cancer screening tests (as defined in
subsection (pp)); and''; and
(B) by adding at the end the following new
subsection:
``Colorectal Cancer Screening Tests
``(pp)(1) The term `colorectal cancer screening test' means any of
the following procedures furnished to an individual for the purpose of
early detection of colorectal cancer:
``(A) Screening fecal-occult blood test.
``(B) Screening flexible sigmoidoscopy.
``(C) In the case of an individual at high risk for
colorectal cancer, screening colonoscopy.
``(D) Screening barium enema, if found by the Secretary to
be an appropriate alternative to screening flexible
sigmoidoscopy under subparagraph (B) or screening colonoscopy
under subparagraph (C).
``(E) For years beginning after 2002, such other procedures
as the Secretary finds appropriate for the purpose of early
detection of colorectal cancer, taking into account changes in
technology and standards of medical practice, availability,
effectiveness, costs, and such other factors as the Secretary
considers appropriate.
``(2) In paragraph (1)(C), an `individual at high risk for
colorectal cancer' is an individual who, because of family history,
prior experience of cancer or precursor neoplastic polyps, a history of
chronic digestive disease condition (including inflammatory bowel
disease, Crohn's Disease, or ulcerative colitis), the presence of any
appropriate recognized gene markers for colorectal cancer, or other
predisposing factors, faces a high risk for colorectal cancer.''.
(2) Deadline for decision on coverage of screening barium
enema.--Not later than 2 years after the date of the enactment
of this section, the Secretary of Health and Human Services
shall issue and publish a determination on the treatment of
screening barium enema as a colorectal cancer screening test
under section 1861(pp) (as added by subparagraph (B)) as an
alternative procedure to a screening flexible sigmoidoscopy or
screening colonoscopy.
(b) Frequency and Payment Limits.--
(1) In general.--Section 1834 (42 U.S.C. 1395m) is amended
by inserting after subsection (c) the following new subsection:
``(d) Frequency and Payment Limits for Colorectal Cancer Screening
Tests.--
``(1) Screening fecal-occult blood tests.--
``(A) Payment limit.--In establishing fee schedules
under section 1833(h) with respect to colorectal cancer
screening tests consisting of screening fecal-occult
blood tests, except as provided by the Secretary under
paragraph (4)(A), the payment amount established for
tests performed--
``(i) in 1998 shall not exceed $5; and
``(ii) in a subsequent year, shall not
exceed the limit on the payment amount
established under this subsection for such
tests for the preceding year, adjusted by the
applicable adjustment under section 1833(h) for
tests performed in such year.
``(B) Frequency limit.--Subject to revision by the
Secretary under paragraph (4)(B), no payment may be
made under this part for colorectal cancer screening
test consisting of a screening fecal-occult blood
test--
``(i) if the individual is under 50 years
of age; or
``(ii) if the test is performed within the
11 months after a previous screening fecal-
occult blood test.
``(2) Screening flexible sigmoidoscopies.--
``(A) Fee schedule.--The Secretary shall establish
a payment amount under section 1848 with respect to
colorectal cancer screening tests consisting of
screening flexible sigmoidoscopies that is consistent
with payment amounts under such section for similar or
related services, except that such payment amount shall
be established without regard to subsection (a)(2)(A)
of such section.
``(B) Payment limit.--In the case of screening
flexible sigmoidoscopy services--
``(i) the payment amount may not exceed
such amount as the Secretary specifies, based
upon the rates recognized under this part for
diagnostic flexible sigmoidoscopy services; and
``(ii) that, in accordance with
regulations, may be performed in an ambulatory
surgical center and for which the Secretary
permits ambulatory surgical center payments
under this part and that are performed in an
ambulatory surgical center or hospital
outpatient department, the payment amount under
this part may not exceed the lesser of (I) the
payment rate that would apply to such services
if they were performed in a hospital outpatient
department, or (II) the payment rate that would
apply to such services if they were performed
in an ambulatory surgical center.
``(C) Special rule for detected lesions.--If during
the course of such screening flexible sigmoidoscopy, a
lesion or growth is detected which results in a biopsy
or removal of the lesion or growth, payment under this
part shall not be made for the screening flexible
sigmoidoscopy but shall be made for the procedure
classified as a flexible sigmoidoscopy with such biopsy
or removal.
``(D) Frequency limit.--Subject to revision by the
Secretary under paragraph (4)(B), no payment may be
made under this part for a colorectal cancer screening
test consisting of a screening flexible sigmoidoscopy--
``(i) if the individual is under 50 years
of age; or
``(ii) if the procedure is performed within
the 47 months after a previous screening
flexible sigmoidoscopy.
``(3) Screening colonoscopy for individuals at high risk
for colorectal cancer.--
``(A) Fee schedule.--The Secretary shall establish
a payment amount under section 1848 with respect to
colorectal cancer screening test consisting of a
screening colonoscopy for individuals at high risk for
colorectal cancer (as defined in section 1861(pp)(2))
that is consistent with payment amounts under such
section for similar or related services, except that
such payment amount shall be established without regard
to subsection (a)(2)(A) of such section.
``(B) Payment limit.--In the case of screening
colonoscopy services--
``(i) the payment amount may not exceed
such amount as the Secretary specifies, based
upon the rates recognized under this part for
diagnostic colonoscopy services; and
``(ii) that are performed in an ambulatory
surgical center or hospital outpatient
department, the payment amount under this part
may not exceed the lesser of (I) the payment
rate that would apply to such services if they
were performed in a hospital outpatient
department, or (II) the payment rate that would
apply to such services if they were performed
in an ambulatory surgical center.
``(C) Special rule for detected lesions.--If during
the course of such screening colonoscopy, a lesion or
growth is detected which results in a biopsy or removal
of the lesion or growth, payment under this part shall
not be made for the screening colonoscopy but shall be
made for the procedure classified as a colonoscopy with
such biopsy or removal.
``(D) Frequency limit.--Subject to revision by the
Secretary under paragraph (4)(B), no payment may be
made under this part for a colorectal cancer screening
test consisting of a screening colonoscopy for
individuals at high risk for colorectal cancer if the
procedure is performed within the 23 months after a
previous screening colonoscopy.
``(4) Reductions in payment limit and revision of
frequency.--
``(A) Reductions in payment limit for screening
fecal-occult blood tests.--The Secretary shall review
from time to time the appropriateness of the amount of
the payment limit established for screening fecal-
occult blood tests under paragraph (1)(A). The
Secretary may, with respect to tests performed in a
year after 2000, reduce the amount of such limit as it
applies nationally or in any area to the amount that
the Secretary estimates is required to assure that such
tests of an appropriate quality are readily and
conveniently available during the year.
``(B) Revision of frequency.--
``(i) Review.--The Secretary shall review
periodically the appropriate frequency for
performing colorectal cancer screening tests
based on age and such other factors as the
Secretary believes to be pertinent.
``(ii) Revision of frequency.--The
Secretary, taking into consideration the review
made under clause (i), may revise from time to
time the frequency with which such tests may be
paid for under this subsection, but no such
revision shall apply to tests performed before
January 1, 2001.
``(5) Limiting charges of nonparticipating physicians.--
``(A) In general.--In the case of a colorectal
cancer screening test consisting of a screening
flexible sigmoidoscopy or a screening colonoscopy
provided to an individual at high risk for colorectal
cancer for which payment may be made under this part,
if a nonparticipating physician provides the procedure
to an individual enrolled under this part, the
physician may not charge the individual more than the
limiting charge (as defined in section 1848(g)(2)).
``(B) Enforcement.--If a physician or supplier
knowing and willfully imposes a charge in violation of
subparagraph (A), the Secretary may apply sanctions
against such physician or supplier in accordance with
section 1842(j)(2).''.
(2) Special rule for screening barium enema.--If the
Secretary of Health and Human Services issues a determination
under subsection (a)(2) that screening barium enema should be
covered as a colorectal cancer screening test under section
1861(pp) (as added by subsection (a)(1)(B)), the Secretary
shall establish frequency limits (including revisions of
frequency limits) for such procedure consistent with the
frequency limits for other colorectal cancer screening tests
under section 1834(d) (as added by subsection (b)(1)), and
shall establish payment limits (including limits on charges of
nonparticipating physicians) for such procedure consistent with
the payment limits under part B of title XVIII for diagnostic
barium enema procedures.
(c) Conforming Amendments.--(1) Paragraphs (1)(D) and (2)(D) of
section 1833(a) (42 U.S.C. 1395l(a)) are each amended by inserting ``or
section 1834(d)(1)'' after ``subsection (h)(1)''.
(2) Section 1833(h)(1)(A) (42 U.S.C. 1395l(h)(1)(A)) is amended by
striking ``The Secretary'' and inserting ``Subject to paragraphs (1)
and (4)(A) of section 1834(d), the Secretary''.
(3) Clauses (i) and (ii) of section 1848(a)(2)(A) (42 U.S.C. 1395w-
4(a)(2)(A)) are each amended by inserting after ``a service'' the
following: ``(other than a colorectal cancer screening test consisting
of a screening colonoscopy provided to an individual at high risk for
colorectal cancer or a screening flexible sigmoidoscopy)''.
(4) Section 1862(a) (42 U.S.C. 1395y(a)), as amended by section
4103(c), is amended--
(A) in paragraph (1)--
(i) in subparagraph (F), by striking ``and'' at the
end,
(ii) in subparagraph (G), by striking the semicolon
at the end and inserting ``, and'', and
(iii) by adding at the end the following new
subparagraph:
``(H) in the case of colorectal cancer screening tests,
which are performed more frequently than is covered under
section 1834(d);''; and
(B) in paragraph (7), by striking ``or (G)'' and inserting
``(G), or (H)''.
(d) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.
SEC. 4105. DIABETES SCREENING TESTS.
(a) Coverage of Diabetes Outpatient Self-management Training
Services.--
(1) In general.--Section 1861 (42 U.S.C. 1395x), as amended
by sections 4103(a) and 4104(a), is amended--
(A) in subsection (s)(2)--
(i) by striking ``and'' at the end of
subparagraph (Q);
(ii) by adding ``and'' at the end of
subparagraph (R); and
(iii) by adding at the end the following
new subparagraph:
``(S) diabetes outpatient self-management training services
(as defined in subsection (qq)); and''; and
(B) by adding at the end the following new
subsection:
``Diabetes Outpatient Self-Management Training Services
``(qq)(1) The term `diabetes outpatient self-management training
services' means educational and training services furnished to an
individual with diabetes by a certified provider (as described in
paragraph (2)(A)) in an outpatient setting by an individual or entity
who meets the quality standards described in paragraph (2)(B), but only
if the physician who is managing the individual's diabetic condition
certifies that such services are needed under a comprehensive plan of
care related to the individual's diabetic condition to provide the
individual with necessary skills and knowledge (including skills
related to the self-administration of injectable drugs) to participate
in the management of the individual's condition.
``(2) In paragraph (1)--
``(A) a `certified provider' is a physician, or other
individual or entity designated by the Secretary, that, in
addition to providing diabetes outpatient self-management
training services, provides other items or services for which
payment may be made under this title; and
``(B) a physician, or such other individual or entity,
meets the quality standards described in this paragraph if the
physician, or individual or entity, meets quality standards
established by the Secretary, except that the physician or
other individual or entity shall be deemed to have met such
standards if the physician or other individual or entity meets
applicable standards originally established by the National
Diabetes Advisory Board and subsequently revised by
organizations who participated in the establishment of
standards by such Board, or is recognized by an organization
that represents individuals (including individuals under this
title) with diabetes as meeting standards for furnishing the
services.''.
(2) Payment Under Physician Fee Schedule.--Section
1848(j)(3)(42 U.S.C. 1395w-4(j)(3)) as amended in sections 4102
and 4103, is amended by inserting ``(2)(S),'' before ``(3),''.
(3) Consultation with organizations in establishing payment
amounts for services provided by physicians.--In establishing
payment amounts under section 1848 of the Social Security Act
for physicians' services consisting of diabetes outpatient
self-management training services, the Secretary of Health and
Human Services shall consult with appropriate organizations,
including such organizations representing individuals or
medicare beneficiaries with diabetes, in determining the
relative value for such services under section 1848(c)(2) of
such Act.
(b) Blood-testing Strips for Individuals With Diabetes.--
(1) Including strips and monitors as durable medical
equipment.--The first sentence of section 1861(n) (42 U.S.C.
1395x(n)) is amended by inserting before the semicolon the
following: ``, and includes blood-testing strips and blood
glucose monitors for individuals with diabetes without regard
to whether the individual has Type I or Type II diabetes or to
the individual's use of insulin (as determined under standards
established by the Secretary in consultation with the
appropriate organizations)''.
(2) 10 percent reduction in payments for testing strips.--
Section 1834(a)(2)(B)(iv) (42 U.S.C. 1395m(a)(2)(B)(iv)) is
amended by adding before the period the following: ``(reduced
by 10 percent, in the case of a blood glucose testing strip
furnished after 1997 for an individual with diabetes)''.
(c) Establishment of Outcome Measures for Beneficiaries With
Diabetes.--
(1) In general.--The Secretary of Health and Human
Services, in consultation with appropriate organizations, shall
establish outcome measures, including glysolated hemoglobin
(past 90-day average blood sugar levels), for purposes of
evaluating the improvement of the health status of medicare
beneficiaries with diabetes mellitus.
(2) Recommendations for modifications to screening
benefits.--Taking into account information on the health status
of medicare beneficiaries with diabetes mellitus as measured
under the outcome measures established under subparagraph (A),
the Secretary shall from time to time submit recommendations to
Congress regarding modifications to the coverage of services
for such beneficiaries under the medicare program.
(d) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.
SEC. 4106. STANDARDIZATION OF MEDICARE COVERAGE OF BONE MASS
MEASUREMENTS.
(a) In General.--Section 1861 (42 U.S.C. 1395x), as amended by
sections 4103(a), 4104(a), 4105(a), is amended--
(1) in subsection (s)--
(A) in paragraph (12)(C), by striking ``and'' at
the end,
(B) by striking the period at the end of paragraph
(14) and inserting ``; and'',
(C) by redesignating paragraphs (15) and (16) as
paragraphs (16) and (17), respectively, and
(D) by inserting after paragraph (14) the following
new paragraph:
``(15) bone mass measurement (as defined in subsection
(rr)).''; and
(2) by inserting after subsection (qq) the following new
subsection:
``Bone Mass Measurement
``(rr)(1) The term `bone mass measurement' means a radiologic or
radioisotopic procedure or other procedure approved by the Food and
Drug Administration performed on a qualified individual (as defined in
paragraph (2)) for the purpose of identifying bone mass or detecting
bone loss or determining bone quality, and includes a physician's
interpretation of the results of the procedure.
``(2) For purposes of this subsection, the term `qualified
individual' means an individual who is (in accordance with regulations
prescribed by the Secretary)--
``(A) an estrogen-deficient woman at clinical risk for
osteoporosis;
``(B) an individual with vertebral abnormalities;
``(C) an individual receiving long-term glucocorticoid
steroid therapy;
``(D) an individual with primary hyperparathyroidism; or
``(E) an individual being monitored to assess the response
to or efficacy of an approved osteoporosis drug therapy.
``(3) The Secretary shall establish such standards regarding the
frequency with which a qualified individual shall be eligible to be
provided benefits for bone mass measurement under this title.''.
(b) Payment under Physician Fee Schedule.--Section 1848(j)(3) (42
U.S.C. 1395w-4(j)(3)), as amended by sections 4102, 4103, and 4105, is
amended--
(1) by striking ``(4) and (14)'' and inserting ``(4),
(14)'' and
(2) by inserting `` and (15)'' after ``1861(nn)(2))''.
(c) Conforming Amendments.--Sections 1864(a), 1902(a)(9)(C), and
1915(a)(1)(B)(ii)(I) (42 U.S.C. 1395aa(a), 1396a(a)(9)(C), and
1396n(a)(1)(B)(ii)(I)) are amended by striking ``paragraphs (15) and
(16)'' each place it appears and inserting ``paragraphs (16) and
(17)''.
(d) Effective Date.--The amendments made by this section shall
apply to bone mass measurements performed on or after July 1, 1998.
SEC. 4107. VACCINES OUTREACH EXPANSION.
(a) Extension of Influenza and Pneumococcal Vaccination Campaign.--
In order to increase utilization of pneumococcal and influenza vaccines
in medicare beneficiaries, the Influenza and Pneumococcal Vaccination
Campaign carried out by the Health Care Financing Administration in
conjunction with the Centers for Disease Control and Prevention and the
National Coalition for Adult Immunization, is extended until the end of
fiscal year 2002.
(b) Appropriation.--There are hereby appropriated for each of
fiscal years 1998 through 2002, $8,000,000 to the Campaign described in
subsection (a). Of the amount of such appropriation in each fiscal
year, 60 percent of such appropriation shall be payable from the
Federal Hospital Insurance Trust Fund, and 40 percent shall be payable
from the Federal Supplementary Medical Insurance Trust Fund under title
XVIII of the Social Security Act (42 U.S.C. 1395i, 1395t).
SEC. 4108. STUDY ON PREVENTIVE BENEFITS.
(a) Study.--The Secretary of Health and Human Services shall
request the National Academy of Sciences, in conjunction with the
United States Preventive Services Task Force, to analyze the expansion
or modification of preventive benefits provided to medicare
beneficiaries under title XVIII of the Social Security Act. The
analysis shall consider both the short term and long term benefits, and
costs to the medicare program, of such expansion or modification,
(b) Report.--
(1) Initial report.--Not later than 2 years after the date
of the enactment of this Act, the Secretary shall submit a
report on the findings of the analysis conducted under
subsection (a) 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.
(2) Contents.--Such report shall include specific findings
with respect to coverage of the following preventive benefits:
(A) Nutrition therapy, including parenteral and
enteral nutrition.
(B) Skin cancer screening.
(C) Medically necessary dental care.
(D) Routine patient care costs for beneficiaries
enrolled in approved clinical trial programs.
(E) Elimination of time limitation for coverage of
immunosuppressive drugs for transplant patients.
(3) Funding.--From funds appropriated to the Department of
Health and Human Services for fiscal years 1998 and 1999, the
Secretary shall provide for such funding as may be necessary
for the conduct of the analysis by the National Academy of
Sciences under this section.
Subtitle C--Rural Initiatives
SEC. 4206. INFORMATICS, TELEMEDICINE, AND EDUCATION DEMONSTRATION
PROJECT.
(a) Purpose and Authorization.--
(1) In general.--Not later than 9 months after the date of
enactment of this section, the Secretary of Health and Human
Services shall provide for a demonstration project described in
paragraph (2).
(2) Description of project.--
(A) In general.--The demonstration project
described in this paragraph is a single demonstration
project to use eligible health care provider
telemedicine networks to apply high-capacity computing
and advanced networks to improve primary care (and
prevent health care complications) to medicare
beneficiaries with diabetes mellitus who are residents
of medically underserved rural areas or residents of
medically underserved inner-city areas.
(B) Medically underserved defined.--As used in this
paragraph, the term ``medically underserved'' has the
meaning given such term in section 330(b)(3) of the
Public Health Service Act (42 U.S.C. 254b(b)(3)).
(3) Waiver.--The Secretary shall waive such provisions of
title XVIII of the Social Security Act as may be necessary to
provide for payment for services under the project in
accordance with subsection (d).
(4) Duration of project.--The project shall be conducted
over a 4-year period.
(b) Objectives of Project.--The objectives of the project include
the following:
(1) Improving patient access to and compliance with
appropriate care guidelines for individuals with diabetes
mellitus through direct telecommunications link with
information networks in order to improve patient quality-of-
life and reduce overall health care costs.
(2) Developing a curriculum to train, and providing
standards for credentialing and licensure of, health
professionals (particularly primary care health professionals)
in the use of medical informatics and telecommunications.
(3) Demonstrating the application of advanced technologies,
such as video-conferencing from a patient's home, remote
monitoring of a patient's medical condition, interventional
informatics, and applying individualized, automated care
guidelines, to assist primary care providers in assisting
patients with diabetes in a home setting.
(4) Application of medical informatics to residents with
limited English language skills.
(5) Developing standards in the application of telemedicine
and medical informatics.
(6) Developing a model for the cost-effective delivery of
primary and related care both in a managed care environment and
in a fee-for-service environment.
(c) Eligible Health Care Provider Telemedicine Network Defined.--
For purposes of this section, the term ``eligible health care provider
telemedicine network'' means a consortium that includes at least one
tertiary care hospital (but no more than 2 such hospitals), at least
one medical school, no more than 4 facilities in rural or urban areas,
and at least one regional telecommunications provider and that meets
the following requirements:
(1) The consortium is located in an area with one of the
highest concentrations of medical schools and tertiary care
facilities in the United States and has appropriate
arrangements (within or outside the consortium) with such
schools and facilities, universities, and telecommunications
providers, in order to conduct the project.
(2) The consortium submits to the Secretary an application
at such time, in such manner, and containing such information
as the Secretary may require, including a description of the
use to which the consortium would apply any amounts received
under the project and the source and amount of non-Federal
funds used in the project.
(3) The consortium guarantees that it will be responsible
for payment for all costs of the project that are not paid
under this section and that the maximum amount of payment that
may be made to the consortium under this section shall not
exceed the amount specified in subsection (d)(3).
(d) Coverage as Medicare Part B Services.--
(1) In general.--Subject to the succeeding provisions of
this subsection, services related to the treatment or
management of (including prevention of complications from)
diabetes for medicare beneficiaries furnished under the project
shall be considered to be services covered under part B of
title XVIII of the Social Security Act.
(2) Payments.--
(A) In general.--Subject to paragraph (3), payment
for such services shall be made at a rate of 50 percent
of the costs that are reasonable and related to the
provision of such services. In computing such costs,
the Secretary shall include costs described in
subparagraph (B), but may not include costs described
in subparagraph (C).
(B) Costs that may be included.--The costs
described in this subparagraph are the permissible
costs (as recognized by the Secretary) for the
following:
(i) The acquisition of telemedicine
equipment for use in patients' homes (but only
in the case of patients located in medically
underserved areas).
(ii) Curriculum development and training of
health professionals in medical informatics and
telemedicine.
(iii) Payment of telecommunications costs
(including salaries and maintenance of
equipment), including costs of
telecommunications between patients' homes and
the eligible network and between the network
and other entities under the arrangements
described in subsection (c)(1).
(iv) Payments to practitioners and
providers under the medicare programs.
(C) Costs not included.--The costs described in
this subparagraph are costs for any of the following:
(i) The purchase or installation of
transmission equipment (other than such
equipment used by health professionals to
deliver medical informatics services under the
project).
(ii) The establishment or operation of a
telecommunications common carrier network.
(iii) Construction (except for minor
renovations related to the installation of
reimbursable equipment) or the acquisition or
building of real property.
(3) Limitation.--The total amount of the payments that may
be made under this section shall not exceed $30,000,000.
(4) Limitation on cost-sharing.--The project may not impose
cost sharing on a medicare beneficiary for the receipt of
services under the project in excess of 20 percent of the
recognized costs of the project attributable to such services.
(e) Reports.--The Secretary shall submit to the Committees on Ways
and Means and Commerce of the House of Representatives and the
Committee on Finance of the Senate interim reports on the project and a
final report on the project within 6 months after the conclusion of the
project. The final report shall include an evaluation of the impact of
the use of telemedicine and medical informatics on improving access of
medicare beneficiaries to health care services, on reducing the costs
of such services, and on improving the quality of life of such
beneficiaries.
(f) Definitions.--For purposes of this section:
(1) Interventional informatics.--The term ``interventional
informatics'' means using information technology and virtual
reality technology to intervene in patient care.
(2) Medical informatics.--The term ``medical informatics''
means the storage, retrieval, and use of biomedical and related
information for problem solving and decision-making through
computing and communications technologies.
(3) Project.--The term ``project'' means the demonstration
project under this section.
Subtitle D--Anti-Fraud and Abuse Provisions
SEC. 4301. PERMANENT EXCLUSION FOR THOSE CONVICTED OF 3 HEALTH CARE
RELATED CRIMES.
Section 1128(c)(3) (42 U.S.C. 1320a-7(c)(3)) is amended--
(1) in subparagraph (A), by inserting ``or in the case
described in subparagraph (G)'' after ``subsection (b)(12)'';
(2) in subparagraphs (B) and (D), by striking ``In the
case'' and inserting ``Subject to subparagraph (G), in the
case''; and
(3) by adding at the end the following new subparagraph:
``(G) In the case of an exclusion of an individual under subsection
(a) based on a conviction occurring on or after the date of the
enactment of this subparagraph, if the individual has (before, on, or
after such date and before the date of the conviction for which the
exclusion is imposed) been convicted--
``(i) on one previous occasion of one or more offenses for
which an exclusion may be effected under such subsection, the
period of the exclusion shall be not less than 10 years, or
``(ii) on 2 or more previous occasions of one or more
offenses for which an exclusion may be effected under such
subsection, the period of the exclusion shall be permanent.''.
SEC. 4302. AUTHORITY TO REFUSE TO ENTER INTO MEDICARE AGREEMENTS WITH
INDIVIDUALS OR ENTITIES CONVICTED OF FELONIES.
(a) Medicare Part A.--Section 1866(b)(2) (42 U.S.C. 1395cc(b)(2))
is amended--
(1) by striking ``or'' at the end of subparagraph (B);
(2) by striking the period at the end of subparagraph (C)
and inserting ``, or''; and
(3) by adding after subparagraph (C) the following new
subparagraph:
``(D) has ascertained that the provider has been
convicted of a felony under Federal or State law for an
offense which the Secretary determines is inconsistent
with the best interests of program beneficiaries.''.
(b) Medicare Part B.--Section 1842 (42 U.S.C. 1395u) is amended by
adding after subsection (r) the following new subsection:
``(s) The Secretary may refuse to enter into an agreement with a
physician or supplier under subsection (h) or may terminate or refuse
to renew such agreement, in the event that such physician or supplier
has been convicted of a felony under Federal or State law for an
offense which the Secretary determines is inconsistent with the best
interests of program beneficiaries.''.
(c) Medicaid.--Section 1902(a)(23) (42 U.S.C. 1396(a)) is amended--
(1) by relocating the matter that precedes ``provide that,
(A)'' immediately before the semicolon;
(2) by inserting a semicolon after ``1915'';
(3) by striking the comma after ``Guam'' and inserting a
semicolon; and
(4) by inserting before the semicolon at the end the
following: ``and except that this provision does not require a
State to provide medical assistance for such services furnished
by a person or entity convicted of a felony under Federal or
State law for an offense which the State agency determines is
inconsistent with the best interests of beneficiaries under the
State plan''.
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act and apply to the entry
and renewal of contracts on or after such date.
SEC. 4303. INCLUSION OF TOLL-FREE NUMBER TO REPORT MEDICARE WASTE,
FRAUD, AND ABUSE IN EXPLANATION OF BENEFITS FORMS.
(a) In General.--Section 1842(h)(7) (42 U.S.C. 1395u(h)(7)) is
amended--
(1) by striking ``and'' at the end of subparagraph (D),
(2) by striking the period at the end of subparagraph (E),
and
(3) by adding at the end the following new subparagraph:
``(E) a toll-free telephone number maintained by the
Inspector General in the Department of Health and Human
Services for the receipt of complaints and information about
waste, fraud, and abuse in the provision or billing of services
under this title.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to explanations of benefits provided on or after such date (not
later than January 1, 1999) as the Secretary of Health and Human
Services shall provide.
SEC. 4304. LIABILITY OF MEDICARE CARRIERS AND FISCAL INTERMEDIARIES FOR
CLAIMS SUBMITTED BY EXCLUDED PROVIDERS.
(a) Reimbursement to the Secretary for Amounts Paid to Excluded
Providers.--
(1) Requirements for fiscal intermediaries.--
(A) In general.--Section 1816 (42 U.S.C. 1395h) is
amended by adding at the end the following new
subsection:
``(m) An agreement with an agency or organization under this
section shall require that such agency or organization reimburse the
Secretary for any amounts paid by the agency or organization for a
service under this title which is furnished, directed, or prescribed by
an individual or entity during any period for which the individual or
entity is excluded pursuant to section 1128, 1128A, or 1156, from
participation in the program under this title, if the amounts are paid
after the Secretary notifies the agency or organization of the
exclusion.''.
(B) Conforming amendment.--Subsection (i) of such
section is amended by adding at the end the following
new paragraph:
``(4) Nothing in this subsection shall be construed to prohibit
reimbursement by an agency or organization under subsection (m).''.
(2) Requirements for carriers.--Section 1842(b)(3) (42
U.S.C. 1395u(b)(3)) is amended--
(A) by striking ``and'' at the end of subparagraph
(I); and
(B) by inserting after subparagraph (I) the
following new subparagraph:
``(J) will reimburse the Secretary for any amounts paid by
the carrier for an item or service under this part which is
furnished, directed, or prescribed by an individual or entity
during any period for which the individual or entity is
excluded pursuant to section 1128, 1128A, or 1156, from
participation in the program under this title, if the amounts
are paid after the Secretary notifies the carrier of the
exclusion, and''.
(3) Medicaid Provision.--Section 1902(a)(39) (42 U.S.C.
1396a(a)(39)) is amended by inserting before the semicolon at
the end the following: ``, and provide further for
reimbursement to the Secretary of any payments made under the
plan or any item or service furnished, directed, or prescribed
by the excluded individual or entity during such period, after
the Secretary notifies the State of such exclusion''.
(b) Conforming Repeal of Mandatory Payment Rule.--Paragraph (2) of
section 1862(e) (42 U.S.C. 1395y(e)) is amended to read as follows:
``(2) No individual or entity may bill (or collect any amount from)
any individual for any item or service for which payment is denied
under paragraph (1). No person is liable for payment of any amounts
billed for such an item or service in violation of the previous
sentence.''.
(c) Effective Dates.--The amendments made by this section shall
apply to contracts and agreements entered into, renewed, or extended
after the date of the enactment of this Act, but only with respect to
claims submitted on or after the later of January 1, 1998, or the date
such entry, renewal, or extension becomes effective.
SEC. 4305. EXCLUSION OF ENTITY CONTROLLED BY FAMILY MEMBER OF A
SANCTIONED INDIVIDUAL.
(a) In General.--Section 1128 (42 U.S.C. 1320a-7) is amended--
(1) in subsection (b)(8)(A)--
(A) by striking ``or'' at the end of clause (i),
and
(B) by striking the dash at the end of clause (ii)
and inserting ``; or'', and
(C) by inserting after clause (ii) the following:
``(iii) who was described in clause (i) but is no
longer so described because of a transfer of ownership
or control interest, in anticipation of (or following)
a conviction, assessment, or exclusion described in
subparagraph (B) against the person, to an immediate
family member (as defined in subsection (j)(1)) or a
member of the household of the person (as defined in
subsection (j)(2)) who continues to maintain an
interest described in such clause--''; and
(2) by adding after subsection (i) the following new
subsection:
``(j) Definition of Immediate Family Member and Member of
Household.--For purposes of subsection (b)(8)(A)(iii):
``(1) The term `immediate family member' means, with
respect to a person--
``(A) the husband or wife of the person;
``(B) the natural or adoptive parent, child, or
sibling of the person;
``(C) the stepparent, stepchild, stepbrother, or
stepsister of the person;
``(D) the father-, mother-, daughter-, son-,
brother-, or sister-in-law of the person;
``(E) the grandparent or grandchild of the person;
and
``(F) the spouse of a grandparent or grandchild of
the person.
``(2) The term `member of the household' means, with
respect to an person, any individual sharing a common abode as
part of a single family unit with the person, including
domestic employees and others who live together as a family
unit, but not including a roomer or boarder.''.
(b) Effective Date.--The amendments made by subsection (a) shall
take effect on the date that is 45 days after the date of the enactment
of this Act.
SEC. 4306. IMPOSITION OF CIVIL MONEY PENALTIES.
(a) Civil Money Penalties for Persons That Contract With Excluded
Individuals.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)) is amended--
(1) by striking ``or'' at the end of paragraph (4);
(2) by adding ``or'' at the end of paragraph (5); and
(3) by adding after paragraph (5) the following new
paragraph:
``(6) arranges or contracts (by employment or otherwise)
with an individual or entity that the person knows or should
know is excluded from participation in a Federal health care
program (as defined in section 1128B(f)), for the provision of
items or services for which payment may be made under such a
program;''.
(b) Effective Dates.--The amendments made by subsection (a) shall
apply to arrangements and contracts entered into after the date of the
enactment of this Act.
SEC. 4307. DISCLOSURE OF INFORMATION AND SURETY BONDS.
(a) Disclosure of Information and Surety Bond Requirement for
Suppliers of Durable Medical Equipment.--Section 1834(a) (42 U.S.C.
1395m(a)) is amended by inserting after paragraph (15) the following
new paragraph:
``(16) Conditions for issuance of provider number.--The
Secretary shall not provide for the issuance (or renewal) of a
provider number for a supplier of durable medical equipment,
for purposes of payment under this part for durable medical
equipment furnished by the supplier, unless the supplier
provides the Secretary on a continuing basis with--
``(A)(i) full and complete information as to the
identity of each person with an ownership or control
interest (as defined in section 1124(a)(3)) in the
supplier or in any subcontractor (as defined by the
Secretary in regulations) in which the supplier
directly or indirectly has a 5 percent or more
ownership interest, and
``(ii) to the extent determined to be feasible
under regulations of the Secretary, the name of any
disclosing entity (as defined in section 1124(a)(2))
with respect to which a person with such an ownership
or control interest in the supplier is a person with
such an ownership or control interest in the disclosing
entity; and
``(B) a surety bond in a form specified by the
Secretary and in an amount that is not less than
$50,000.
The Secretary may waive the requirement of a bond under
subparagraph (B) in the case of a supplier that provides a
comparable surety bond under State law.''.
(b) Surety Bond Requirement for Home Health Agencies.--
(1) In general.--Section 1861(o) (42 U.S.C. 1395x(o)) is
amended--
(A) in paragraph (7), by inserting ``and including
providing the Secretary on a continuing basis with a
surety bond in a form specified by the Secretary and in
an amount that is not less than $50,000,'' after
``financial security of the program'', and
(B) by adding at the end the following: ``The
Secretary may waive the requirement of a bond under
paragraph (7) in the case of an agency or organization
that provides a comparable surety bond under State
law.''.
(2) Conforming amendments.--Section 1861(v)(1)(H) (42
U.S.C. 1395x(v)(1)(H)) is amended--
(A) in clause (i), by striking ``the financial
security requirement'' and inserting ``the financial
security and surety bond requirements''; and
(B) in clause (ii), by striking ``the financial
security requirement described in subsection (o)(7)
applies'' and inserting ``the financial security and
surety bond requirements described in subsection (o)(7)
apply''.
(3) Reference to current disclosure requirement.--For
provision of current law requiring home health agencies to
disclose information on ownership and control interests, see
section 1124 of the Social Security Act.
(c) Authorizing Application of Disclosure and Surety Bond
Requirements to Ambulance Services and Certain Clinics.--Section
1834(a)(16) (42 U.S.C. 1395m(a)(16)), as added by subsection (a), is
amended by adding at the end the following: ``The Secretary, in the
Secretary's discretion, may impose the requirements of the previous
sentence with respect to some or all classes of suppliers of ambulance
services described in section 1861(s)(7) and clinics that furnish
medical and other health services (other than physicians' services)
under this part.''.
(d) Application to Comprehensive Outpatient Rehabilitation
Facilities (CORFs).--Section 1861(cc)(2) (42 U.S.C. 1395x(cc)(2)) is
amended--
(1) in subparagraph (I), by inserting before the period at
the end the following: ``and providing the Secretary on a
continuing basis with a surety bond in a form specified by the
Secretary and in an amount that is not less than $50,000'', and
(2) by adding after and below subparagraph (I) the
following:
``The Secretary may waive the requirement of a bond under subparagraph
(I) in the case of a facility that provides a comparable surety bond
under State law.''.
(e) Application to Rehabilitation Agencies.--Section 1861(p) (42
U.S.C. 1395x(p)) is amended--
(1) in paragraph (4)(A)(v), by inserting after ``as the
Secretary may find necessary,'' the following: ``and provides
the Secretary, to the extent required by the Secretary, on a
continuing basis with a surety bond in a form specified by the
Secretary and in an amount that is not less than $50,000'', and
(2) by adding at the end the following: ``The Secretary may
waive the requirement of a bond under paragraph (4)(A)(v) in
the case of a clinic or agency that provides a comparable
surety bond under State law.''.
(f) Effective Dates.--(1) The amendment made by subsection (a)
shall apply to suppliers of durable medical equipment with respect to
such equipment furnished on or after January 1, 1998.
(2) The amendments made by subsection (b) shall apply to home
health agencies with respect to services furnished on or after such
date. The Secretary of Health and Human Services shall modify
participation agreements under section 1866(a)(1) of the Social
Security Act with respect to home health agencies to provide for
implementation of such amendments on a timely basis.
(3) The amendments made by subsections (c) through (e) shall take
effect on the date of the enactment of this Act and may be applied with
respect to items and services furnished on or after the date specified
in paragraph (1).
SEC. 4308. PROVISION OF CERTAIN IDENTIFICATION NUMBERS.
(a) Requirements to Disclose Employer Identification Numbers (EINS)
and Social Security Account Numbers (SSNs).--Section 1124(a)(1) (42
U.S.C. 1320a-3(a)(1)) is amended by inserting before the period at the
end the following: ``and supply the Secretary with the both the
employer identification number (assigned pursuant to section 6109 of
the Internal Revenue Code of 1986) and social security account number
(assigned under section 205(c)(2)(B)) of the disclosing entity, each
person with an ownership or control interest (as defined in subsection
(a)(3)), and any subcontractor in which the entity directly or
indirectly has a 5 percent or more ownership interest. Use of the
social security account number under this section shall be limited to
identity verification and identity matching purposes only. The social
security account number shall not be disclosed to any person or entity
other than the Secretary, the Social Security Administration, or the
Secretary of the Treasury, In obtaining the social security account
numbers of the disclosing entity and other persons described in this
section, the Secretary shall comply with section 7 of the Privacy Act
of 1974 (5 U.S.C. 552a note)''.
(b) Other Medicare Providers.--Section 1124A (42 U.S.C. 1320a-3a)
is amended--
(1) in subsection (a)--
(A) by striking ``and'' at the end of paragraph
(1);
(B) by striking the period at the end of paragraph
(2) and inserting ``; and''; and
(C) by adding at the end the following new
paragraph:
``(3) including the employer identification number
(assigned pursuant to section 6109 of the Internal Revenue Code
of 1986) and social security account number (assigned under
section 205(c)(2)(B)) of the disclosing part B provider and any
person, managing employee, or other entity identified or
described under paragraph (1) or (2).''; and
(2) in subsection (c) by inserting ``(or, for purposes of
subsection (a)(3), any entity receiving payment)'' after ``on
an assignment-related basis''.
(c) Verification by Social Security Administration (SSA).--Section
1124A (42 U.S.C. 1320a-3a) is amended--
(1) by redesignating subsection (c) as subsection (d); and
(2) by inserting after subsection (b) the following new
subsection:
``(c) Verification.--
``(1) Transmittal by hhs.--The Secretary shall transmit--
``(A) to the Commissioner of Social Security
information concerning each social security account
number (assigned under section 205(c)(2)(B)), and
``(B) to the Secretary of the Treasury information
concerning each employer identification number
(assigned pursuant to section 6109 of the Internal
Revenue Code of 1986),
supplied to the Secretary pursuant to subsection (a)(3) or
section 1124(c) to the extent necessary for verification of
such information in accordance with paragraph (2).
``(2) Verification.--The Commissioner of Social Security
and the Secretary of the Treasury shall verify the accuracy of,
or correct, the information supplied by the Secretary to such
official pursuant to paragraph (1), and shall report such
verifications or corrections to the Secretary.
``(3) Fees for verification.--The Secretary shall reimburse
the Commissioner and Secretary of the Treasury, at a rate
negotiated between the Secretary and such official, for the
costs incurred by such official in performing the verification
and correction services described in this subsection.''.
(d) Report.--Before this subsection shall be effective, the
Secretary of Health and Human Services shall submit to Congress a
report on steps the Secretary has taken to assure the confidentiality
of social security account numbers that will be provided to the
Secretary under the amendments made by this section. If Congress
determines that the Secretary has not taken adequate steps to assure
the confidentiality of social security account numbers to be provided
to the Secretary under the amendments made by this section, the
amendments made by this section shall not take effect.
(e) Effective Dates.--Subject to subsection (d)--
(1) the amendment made by subsection (a) shall apply to the
application of conditions of participation, and entering into
and renewal of contracts and agreements, occurring more than 90
days after the date of submission of the report under
subsection (d); and
(2) the amendments made by subsection (b) shall apply to
payment for items and services furnished more than 90 days
after the date of submission of such report.
SEC. 4309. ADVISORY OPINIONS REGARDING CERTAIN PHYSICIAN SELF-REFERRAL
PROVISIONS.
Section 1877(g) (42 U.S.C. 1395nn(g)) is amended by adding at the
end the following new paragraph:
``(6) Advisory opinions.--
``(A) In general.--The Secretary shall issue
written advisory opinions concerning whether a referral
relating to designated health services (other than
clinical laboratory services) is prohibited under this
section.
``(B) Binding as to secretary and parties
involved.--Each advisory opinion issued by the
Secretary shall be binding as to the Secretary and the
party or parties requesting the opinion.
``(C) Application of certain procedures.--The
Secretary shall, to the extent practicable, apply the
regulations promulgated under section 1128D(b)(5) to
the issuance of advisory opinions under this paragraph.
``(D) Applicability.--This paragraph shall apply to
requests for advisory opinions made during the period
described in section 1128D(b)(6).''.
SEC. 4310. NONDISCRIMINATION IN POST-HOSPITAL REFERRAL TO HOME HEALTH
AGENCIES.
(a) Notification of Availability of Home Health Agencies As Part of
Discharge Planning Process.--Section 1861(ee)(2) (42 U.S.C.
1395x(ee)(2)) is amended--
(1) in subparagraph (D), by inserting before the period the
following: ``, including the availability of home health
services through individuals and entities that participate in
the program under this title and that serve the area in which
the patient resides and that request to be listed by the
hospital as available''; and
(2) by adding at the end the following:
``(H) Consistent with section 1802, the discharge plan
shall--
``(i) not specify or otherwise limit the qualified
provider which may provide post-hospital home health
services, and
``(ii) identify (in a form and manner specified by
the Secretary) any home health agency (to whom the
individual is referred) in which the hospital has a
disclosable financial interest (as specified by the
Secretary consistent with section 1866(a)(1)(R)) or
which has such an interest in the hospital.''.
(b) Maintenance and Disclosure of Information on Post-Hospital Home
Health Agencies.--Section 1866(a)(1) (42 U.S.C. 1395cc(a)(1)) is
amended--
(1) by striking ``and'' at the end of subparagraph (Q),
(2) by striking the period at the end of subparagraph (R),
and
(3) by adding at the end the following:
``(S) in the case of a hospital that has a financial
interest (as specified by the Secretary in regulations) in a
home health agency, or in which such an agency has such a
financial interest, or in which another entity has such a
financial interest (directly or indirectly) with such hospital
and such an agency, to maintain and disclose to the Secretary
(in a form and manner specified by the Secretary) information
on--
``(i) the nature of such financial interest,
``(ii) the number of individuals who were
discharged from the hospital and who were identified as
requiring home health services, and
``(iii) the percentage of such individuals who
received such services from such provider (or another
such provider).''.
(c) Disclosure of Information to the Public.--Title XI is amended
by inserting after section 1145 the following new section:
``public disclosure of certain information on hospital financial
interest and referral patterns
``Sec. 1146. The Secretary shall make available to the public, in a
form and manner specified by the Secretary, information disclosed to
the Secretary pursuant to section 1866(a)(1)(R).''.
(d) Effective Dates.--
(1) The amendments made by subsection (a) shall apply to
discharges occurring on or after 90 days after the date of the
enactment of this Act.
(2) The Secretary of Health and Human Services shall issue
regulations by not later than 1 year after the date of the
enactment of this Act to carry out the amendments made by
subsections (b) and (c) and such amendments shall take effect
as of such date (on or after the issuance of such regulations)
as the Secretary specifies in such regulations.
SEC. 4311. OTHER FRAUD AND ABUSE RELATED PROVISIONS.
(a) Reference Correction.--(1) Section 1128D(b)(2)(D) (42 U.S.C.
1320a-7d(b)(2)(D)), as added by section 205 of the Health Insurance
Portability and Accountability Act of 1996, is amended by striking
``1128B(b)'' and inserting ``1128A(b)''.
(2) Section 1128E(g)(3)(C) (42 U.S.C. 1320a-7e(g)(3)(C)) is amended
by striking ``Veterans' Administration'' and inserting ``Department of
Veterans Affairs''.
(b) Language in Definition of Conviction.--Section 1128E(g)(5) (42
U.S.C. 1320a-7e(g)(5)), as inserted by section 221(a) of the Health
Insurance Portability and Accountability Act of 1996, is amended by
striking ``paragraph (4)'' and inserting ``paragraphs (1) through
(4)''.
(c) Implementation of Exclusions.--Section 1128 (42 U.S.C. 1320a-7)
is amended--
(1) in subsection (a), by striking ``any program under
title XVIII and shall direct that the following individuals and
entities be excluded from participation in any State health
care program (as defined in subsection (h))'' and inserting
``any Federal health care program (as defined in section
1128B(f))''; and
(2) in subsection (b), by striking ``any program under
title XVIII and may direct that the following individuals and
entities be excluded from participation in any State health
care program'' and inserting ``any Federal health care program
(as defined in section 1128B(f))''.
(d) Sanctions for Failure to Report.--Section 1128E(b) (42 U.S.C.
1320a-7e(b)), as inserted by section 221(a) of the Health Insurance
Portability and Accountability Act of 1996, is amended by adding at the
end the following:
``(6) Sanctions for failure to report.--
``(A) Health plans.--Any health plan that fails to
report information on an adverse action required to be
reported under this subsection shall be subject to a
civil money penalty of not more than $25,000 for each
such adverse action not reported. Such penalty shall be
imposed and collected in the same manner as civil money
penalties under subsection (a) of section 1128A are
imposed and collected under that section.
``(B) Governmental agencies.--The Secretary shall
provide for a publication of a public report that
identifies those Government agencies that have failed
to report information on adverse actions as required to
be reported under this subsection.''.
(e) Effective Dates.--
(1) In general.--Except as provided in this subsection, the
amendments made by this section shall be effective as if
included in the enactment of the Health Insurance Portability
and Accountability Act of 1996.
(2) Federal health program.--The amendments made by
subsection (c) shall take effect on the date of the enactment
of this Act.
(3) Sanction for failure to report.--The amendment made by
subsection (d) shall apply to failures occurring on or after
the date of the enactment of this Act.
Subtitle E--Prospective Payment Systems
CHAPTER 2--PAYMENT UNDER PART B
Subchapter A--Payment for Hospital Outpatient Department Services
SEC. 4411. ELIMINATION OF FORMULA-DRIVEN OVERPAYMENTS (FDO) FOR CERTAIN
OUTPATIENT HOSPITAL SERVICES.
(a) Elimination of FDO for Ambulatory Surgical Center Procedures.--
Section 1833(i)(3)(B)(i)(II) (42 U.S.C. 1395l(i)(3)(B)(i)(II)) is
amended--
(1) by striking ``of 80 percent''; and
(2) by striking the period at the end and inserting the
following: ``, less the amount a provider may charge as
described in clause (ii) of section 1866(a)(2)(A).''.
(b) Elimination of FDO for Radiology Services and Diagnostic
Procedures.--Section 1833(n)(1)(B)(i) (42 U.S.C. 1395l(n)(1)(B)(i)) is
amended--
(1) by striking ``of 80 percent'', and
(2) by inserting before the period at the end the
following: ``, less the amount a provider may charge as
described in clause (ii) of section 1866(a)(2)(A)''.
(c) Effective Date.--The amendments made by this section shall
apply to services furnished during portions of cost reporting periods
occurring on or after October 1, 1997.
SEC. 4412. EXTENSION OF REDUCTIONS IN PAYMENTS FOR COSTS OF HOSPITAL
OUTPATIENT SERVICES.
(a) Reduction in Payments for Capital-Related Costs.--Section
1861(v)(1)(S)(ii)(I) (42 U.S.C. 1395x(v)(1)(S)(ii)(I)) is amended by
striking ``through 1998'' and inserting ``through 1999 and during
fiscal year 2000 before January 1, 2000''.
(b) Reduction in Payments for Other Costs.--Section
1861(v)(1)(S)(ii)(II) (42 U.S.C. 1395x(v)(1)(S)(ii)(II)) is amended by
striking ``through 1998'' and inserting ``through 1999 and during
fiscal year 2000 before January 1, 2000''.
SEC. 4413. PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES.
(a) In General.--Section 1833 (42 U.S.C. 1395l) is amended by
adding at the end the following:
``(t) Prospective Payment System for Hospital Outpatient Department
Services.--
``(1) In general.--With respect to hospital outpatient
services designated by the Secretary (in this section referred
to as `covered OPD services') and furnished during a year
beginning with 1999, the amount of payment under this part
shall be determined under a prospective payment system
established by the Secretary in accordance with this
subsection.
``(2) System requirements.--Under the payment system--
``(A) the Secretary shall develop a classification
system for covered OPD services;
``(B) the Secretary may establish groups of covered
OPD services, within the classification system
described in subparagraph (A), so that services
classified within each group are comparable clinically
and with respect to the use of resources;
``(C) the Secretary shall, using data on claims
from 1996 and using data from the most recent available
cost reports, establish relative payment weights for
covered OPD services (and any groups of such services
described in subparagraph (B)) based on median hospital
costs and shall determine projections of the frequency
of utilization of each such service (or group of
services) in 1999;
``(D) the Secretary shall determine a wage
adjustment factor to adjust the portion of payment and
coinsurance attributable to labor-related costs for
relative differences in labor and labor-related costs
across geographic regions in a budget neutral manner;
``(E) the Secretary shall establish other
adjustments, in a budget neutral manner, as determined
to be necessary to ensure equitable payments, such as
outlier adjustments, adjustments to account for
variations in coinsurance payments for procedures with
similar resource costs, or adjustments for certain
classes of hospitals; and
``(F) the Secretary shall develop a method for
controlling unnecessary increases in the volume of
covered OPD services.
``(3) Calculation of base amounts.--
``(A) Aggregate amounts that would be payable if
deductibles were disregarded.--The Secretary shall
estimate the total amounts that would be payable from
the Trust Fund under this part for covered OPD services
in 1999, determined without regard to this subsection,
as though the deductible under section 1833(b) did not
apply, and as though the coinsurance described in
section 1866(a)(2)(A)(ii) (as in effect before the date
of the enactment of this subsection) continued to
apply.
``(B) Unadjusted copayment amount.--
``(i) In general.--For purposes of this
subsection, subject to clause (ii), the
`unadjusted copayment amount' applicable to a
covered OPD service (or group of such services)
is 20 percent of national median of the charges
for the service (or services within the group)
furnished during 1996, updated to 1999 using
the Secretary's estimate of charge growth
during the period.
``(ii) Adjusted to be 20 percent when fully
phased in.--If the pre-deductible payment
percentage for a covered OPD service (or group
of such services) furnished in a year would be
equal to or exceed 80 percent, then the
unadjusted copayment amount shall be 25 percent
of amount determined under subparagraph (D)(i).
``(iii) Rules for new services.--The
Secretary shall establish rules for
establishment of an unadjusted copayment amount
for a covered OPD service not furnished during
1996, based upon its classification within a
group of such services.
``(C) Calculation of conversion factors.--
``(I) In general.--The Secretary
shall establish a 1999 conversion
factor for determining the medicare
pre-deductible OPD fee payment amounts
for each covered OPD service (or group
of such services) furnished in 1999.
Such conversion factor shall be
established on the basis of the weights
and frequencies described in paragraph
(2)(C) and in a manner such that the
sum for all services and groups of the
products (described in subclause (II)
for each such service or group) equals
the total projected amount described in
subparagraph (A).
``(II) Product described.--The product
described in this subclause, for a service or
group, is the product of the medicare pre-
deductible OPD fee payment amounts (taking into
account appropriate adjustments described in
paragraphs (2)(D) and (2)(E)) and the
frequencies for such service or group.
``(ii) Subsequent years.--Subject to
paragraph (8)(B), the Secretary shall establish
a conversion factor for covered OPD services
furnished in subsequent years in an amount
equal to the conversion factor established
under this subparagraph and applicable to such
services furnished in the previous year
increased by the OPD payment increase factor
specified under clause (iii) for the year
involved.
``(iii) OPD payment increase factor.--For
purposes of this subparagraph, the `OPD payment
increase factor' for services furnished in a
year is equal to the sum of--
``(I) market basket percentage
increase (applicable under section
1886(b)(3)(B)(iii) to hospital
discharges occurring during the fiscal
year ending in such year, and
``(II) in the case of a covered OPD
service (or group of such services)
furnished in a year in which the pre-
deductible payment percentage would not
exceed 80 percent, 3.5 percentage
points, but in no case greater than
such number of percentage points as
will result in the pre-deductible
payment percentage exceeding 80
percent.
In applying the previous sentence for years
beginning with 2000, the Secretary may
substitute for the market basket percentage
increase under subclause (I) an annual
percentage increase that is computed and
applied with respect to covered OPD services
furnished in a year in the same manner as the
market basket percentage increase is determined
and applied to inpatient hospital services for
discharges occurring in a fiscal year.
``(D) Pre-deductible payment percentage.--The pre-
deductible payment percentage for a covered OPD service
(or group of such services) furnished in a year is
equal to the ratio of--
``(i) the conversion factor established
under subparagraph (C) for the year, multiplied
by the weighting factor established under
paragraph (2)(C) for the service (or group), to
``(ii) the sum of the amount determined
under clause (i) and the unadjusted copayment
amount determined under subparagraph (B) for
such service or group.
``(E) Calculation of medicare opd fee schedule
amounts.--The Secretary shall compute a medicare OPD
fee schedule amount for each covered OPD service (or
group of such services) furnished in a year, in an
amount equal to the product of--
``(i) the conversion factor computed under
subparagraph (C) for the year, and
``(ii) the relative payment weight
(determined under paragraph (2)(C)) for the
service or group.
``(4) Medicare payment amount.--The amount of payment made
from the Trust Fund under this part for a covered OPD service
(and such services classified within a group) furnished in a
year is determined as follows:
``(A) Fee schedule and copayment amount.--Add (i)
the medicare OPD fee schedule amount (computed under
paragraph (3)(E)) for the service or group and year,
and (ii) the unadjusted copayment amount (determined
under paragraph (3)(B)) for the service or group.
``(B) Subtract applicable deductible.--Reduce the
adjusted sum by the amount of the deductible under
section 1833(b), to the extent applicable.
``(C) Apply payment proportion to remainder.--
Multiply the amount so determined under subparagraph
(B) by the pre-deductible payment percentage (as
determined under paragraph (3)(D)) for the service or
group and year involved.
``(D) Labor-related adjustment.--The amount of
payment is the product determined under subparagraph
(C) with the labor-related portion of such product
adjusted for relative differences in the cost of labor
and other factors determined by the Secretary, as
computed under paragraph (2)(D).
``(5) Copayment amount.--
``(A) In general.--Except as provided in
subparagraph (B), the copayment amount under this
subsection is determined as follows:
``(i) Unadjusted copayment.--Compute the
amount by which the amount described in
paragraph (4)(B) exceeds the amount of payment
determined under paragraph (4)(C).
``(ii) Labor adjustment.--The copayment
amount is the difference determined under
clause (i) with the labor-related portion of
such difference adjusted for relative
differences in the cost of labor and other
factors determined by the Secretary, as
computed under paragraphs (2)(D). The
adjustment under this clause shall be made in a
manner that does not result in any change in
the aggregate copayments made in any year if
the adjustment had not been made.
``(B) Election to offer reduced copayment amount.--
The Secretary shall establish a procedure under which a
hospital, before the beginning of a year (beginning
with 1999), may elect to reduce the copayment amount
otherwise established under subparagraph (A) for some
or all covered OPD services to an amount that is not
less than 25 percent of the medicare OPD fee schedule
amount (computed under paragraph (3)(E)) for the
service involved, adjusted for relative differences in
the cost of labor and other factors determined by the
Secretary, as computed under subparagraphs (D) and (E)
of paragraph (2). Under such procedures, such reduced
copayment amount may not be further reduced or
increased during the year involved and the hospital may
disseminate information on the reduction of copayment
amount effected under this subparagraph.
``(C) No impact on deductibles.--Nothing in this
paragraph shall be construed as affecting a hospital's
authority to waive the charging of a deductible under
section 1833(b).
``(6) Periodic review and adjustments components of
prospective payment system.--
``(A) Periodic review.--The Secretary may
periodically review and revise the groups, the relative
payment weights, and the wage and other adjustments
described in paragraph (2) to take into account changes
in medical practice, changes in technology, the
addition of new services, new cost data, and other
relevant information and factors.
``(B) Budget neutrality adjustment.--If the
Secretary makes adjustments under subparagraph (A),
then the adjustments for a year may not cause the
estimated amount of expenditures under this part for
the year to increase or decrease from the estimated
amount of expenditures under this part that would have
been made if the adjustments had not been made.
``(C) Update factor.--If the Secretary determines
under methodologies described in subparagraph (2)(F)
that the volume of services paid for under this
subsection increased beyond amounts established through
those methodologies, the Secretary may appropriately
adjust the update to the conversion factor otherwise
applicable in a subsequent year.
``(7) Special rule for ambulance services.--The Secretary
shall pay for hospital outpatient services that are ambulance
services on the basis described in the matter in subsection
(a)(1) preceding subparagraph (A).
``(8) Special rules for certain hospitals.--In the case of
hospitals described in section 1886(d)(1)(B)(v)--
``(A) the system under this subsection shall not
apply to covered OPD services furnished before January
1, 2000; and
``(B) the Secretary may establish a separate
conversion factor for such services in a manner that
specifically takes into account the unique costs
incurred by such hospitals by virtue of their patient
population and service intensity.
``(9) Limitation on review.--There shall be no
administrative or judicial review under section 1869, 1878, or
otherwise of--
``(A) the development of the classification system
under paragraph (2), including the establishment of
groups and relative payment weights for covered OPD
services, of wage adjustment factors, other
adjustments, and methods described in paragraph (2)(F);
``(B) the calculation of base amounts under
paragraph (3);
``(C) periodic adjustments made under paragraph
(6); and
``(D) the establishment of a separate conversion
factor under paragraph (8)(B).''.
(b) Coinsurance.--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 items and services for which payment is made under
part B under the prospective payment system established under section
1833(t), clause (ii) of the first sentence shall be applied by
substituting for 20 percent of the reasonable charge, the applicable
copayment amount established under section 1833(t)(5).''.
(c) Treatment of Reduction in Copayment Amount.--Section
1128A(i)(6) (42 U.S.C. 1320a-7a(i)(6)) is amended--
(1) by striking ``or'' at the end of subparagraph (B),
(2) by striking the period at the end of subparagraph (C)
and inserting ``; or'', and
(3) by adding at the end the following new subparagraph:
``(D) a reduction in the copayment amount for
covered OPD services under section 1833(t)(5)(B).''.
(d) Conforming Amendments.--
(1) Approved asc procedures performed in hospital
outpatient departments.--
(A)(i) Section 1833(i)(3)(A) (42 U.S.C.
13951(i)(3)(A)) is amended--
(I) by inserting ``before January 1,
1999,'' after ``furnished'', and
(II) by striking ``in a cost reporting
period''.
(ii) The amendment made by clause (i) shall apply
to services furnished on or after January 1, 1999.
(B) Section 1833(a)(4) (42 U.S.C. 13951(a)(4)) is
amended by inserting ``or subsection (t)'' before the
semicolon.
(2) Radiology and other diagnostic procedures.--
(A) Section 1833(n)(1)(A) (42 U.S.C.
1395l(n)(1)(A)) is amended by inserting ``and before
January 1, 1999,'' after ``October 1, 1988,'' and after
``October 1, 1989,''.
(B) Section 1833(a)(2)(E) (42 U.S.C.
1395l(a)(2)(E)) is amended by inserting ``or, for
services or procedures performed on or after January 1,
1999, (t)'' before the semicolon.
(3) Other hospital outpatient services.--Section -
1833(a)(2)(B) (42 U.S.C. 1395l(a)(2)(B)) is amended--
(A) in clause (i), by inserting ``furnished before
January 1, 1999,'' after ``(i)'',
(B) in clause (ii), by inserting ``before January
1, 1999,'' after ``furnished'',
(C) by redesignating clause (iii) as clause
(iv),and
(D) by inserting after clause (ii), the following
new clause:
``(iii) if such services are furnished on
or after January 1, 1999, the amount determined
under subsection (t), or''.
Subchapter B--Rehabilitation Services
SEC. 4421. REHABILITATION AGENCIES AND SERVICES.
(a) Payment Based on Fee Schedule.--
(1) Special payment rules.--Section 1833(a) (42 U.S.C.
1395l(a)) is amended--
(A) in paragraph (2) in the matter before
subparagraph (A), by inserting ``(C),'' before ``(D)'';
(B) in paragraph (6), by striking ``and'' at the
end;
(C) in paragraph (7), by striking the period at the
end and inserting ``; and'';
(D) by adding at the end the following new
paragraph:
``(8) in the case of services described in section
1832(a)(2)(C) (that are not described in section
1832(a)(2)(B)), 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.--
``(1) In general.--With respect to outpatient physical
therapy services (which includes outpatient speech-language
pathology services) and outpatient occupational therapy
services 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 charges or 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 paragraph,
the term `applicable fee schedule amount' means, with respect
to services furnished in a year, the fee schedule amount
established under section 1848 for such services furnished
during the year or, if there is no such fee schedule amount
established for such services, for such comparable services as
the Secretary specifies.
``(4) Adjusted reasonable costs.--In paragraph (2), the
term `adjusted reasonable costs' means reasonable costs
determined reduced by--
``(A) 5.8 percent of the reasonable costs for
operating costs, and
``(B) 10 percent of the reasonable costs for
capital costs.
``(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 services 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).''.
(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 section 4401(b),
(42 U.S.C. 1395y(a)) is amended--
(1) by striking ``or'' at the end of paragraph (16);
(2) by striking the period at the end of paragraph (17) and
inserting ``; or''; and
(3) by inserting after paragraph (17) the following:
``(18) 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 under the second sentence of section
1861(g) or 1861(p) 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. 1395l(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) (regardless of who furnishes the services or whether
the services may be covered as physicians' services so long as
the services are furnished other than in a hospital setting)'',
and
(2) in the second sentence, by striking ``outpatient
occupational therapy services which are described in the second
sentence of section 1861(p) through the operation of section
1861(g)'' and inserting ``occupational therapy services (of the
type that are described in section 1861(p) through the
operation of section 1861(g)), regardless of who furnishes the
services or whether the services may be covered as physicians'
services so long as the services are furnished other than in a
hospital setting''.
(d) Effective Date.--The amendments made by this section apply to
services furnished on or after January 1, 1998; except that the
amendments made by subsection (c) apply to services furnished on or
after January 1, 1999.
SEC. 4422. COMPREHENSIVE OUTPATIENT REHABILITATION FACILITIES (CORF).
(a) Payment Based on Fee Schedule.--
(1) Special payment rules.--Section 1833(a) (42 U.S.C.
1395l(a)), as amended by section 4421(a), is amended--
(A) in paragraph (3), by striking ``subparagraphs
(D) and (E) of section 1832(a)(2)'' and inserting
``section 1832(a)(2)(E)'';
(B) in paragraph (7), by striking ``and'' at the
end;
(C) in paragraph (8), by striking the period at the
end and inserting ``; and'';
(D) by adding at the end the following new
paragraph:
``(9) in the case of services described in section
1832(a)(2)(E), the amounts described in section 1834(k).''.
(2) Payment rates.--Section 1834(k) (42 U.S.C. 1395m(k)),
as added by section 4421(a), is amended--
(A) in the heading, by inserting ``and
Comprehensive Outpatient Rehabilitation Facility
Services'' after ``Therapy Services''; and
(B) in paragraph (1), by inserting ``and with
respect to comprehensive outpatient rehabilitation
facility services'' after ``occupational therapy
services''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to services furnished on or after January 1, 1998, and to
portions of cost reporting periods occurring on or after such date.
Subchapter C--Ambulance Services
SEC. 4431. PAYMENTS FOR AMBULANCE SERVICES.
(a) Interim Reductions.--
(1) Payments determined on reasonable cost basis.--Section
1861(v)(1) (42 U.S.C. 1395x(v)(1)) is amended by adding at the
end the following new subparagraph:
``(U) In determining the reasonable cost of ambulance
services (as described in subsection (s)(7)) provided during a
fiscal year (beginning with fiscal year 1998 and ending with
fiscal year 2002), the Secretary shall not recognize the costs
per trip in excess of costs recognized as reasonable for
ambulance services provided on a per trip basis during the
previous fiscal year after application of this subparagraph,
increased by the percentage increase in the consumer price
index for all urban consumers (U.S. city average) as estimated
by the Secretary for the 12-month period ending with the
midpoint of the fiscal year involved reduced (in the case of
each of fiscal years 1998 and 1999) by 1 percentage point.''.
(2) Payments determined on reasonable charge basis.--
Section 1842(b) (42 U.S.C. 1395u(b)) is amended by adding at
the end the following new paragraph:
``(19) For purposes of section 1833(a)(1), the reasonable charge
for ambulance services (as described in section 1861(s)(7)) provided
during a fiscal year (beginning with fiscal year 1998 and ending with
fiscal year 2002) may not exceed the reasonable charge for such
services provided during the previous fiscal year after the application
of this subparagraph, increased by the percentage increase in the
consumer price index for all urban consumers (U.S. city average) as
estimated by the Secretary for the 12-month period ending with the
midpoint of the year involved reduced (in the case of each of fiscal
years 1998 and 1999) by 1 percentage point.''.
(b) Establishment of Prospective Fee Schedule.--
(1) Payment in accordance with fee schedule.--Section
1833(a)(1) (42 U.S.C. 1395l(a)(1)), as amended by section
4619(b)(1), is amended--
(A) by striking ``and (P)'' and inserting ``(P)'';
and
(B) by striking the semicolon at the end and
inserting the following: ``, and (Q) with respect to
ambulance service, the amounts paid shall be 80 percent
of the lesser of the actual charge for the services or
the amount determined by a fee schedule established by
the Secretary under section 1834(l);''.
(2) Establishment of schedule.--Section 1834 (42 U.S.C.
1395m), as amended by section 4421(a)(2), is amended by adding
at the end the following new subsection:
``(l) Establishment of Fee Schedule for Ambulance Services.--
``(1) In general.--The Secretary shall establish a fee
schedule for payment for ambulance services under this part
through a negotiated rulemaking process described in title 5,
United States Code, and in accordance with the requirements of
this subsection.
``(2) Considerations.--In establishing such fee schedule
the Secretary shall--
``(A) establish mechanisms to control increases in
expenditures for ambulance services under this part;
``(B) establish definitions for ambulance services
which link payments to the type of services provided;
``(C) consider appropriate regional and operational
differences;
``(D) consider adjustments to payment rates to
account for inflation and other relevant factors; and
``(E) phase in the application of the payment rates
under the fee schedule in an efficient and fair manner.
``(3) Savings.--In establishing such fee schedule the
Secretary shall--
``(A) ensure that the aggregate amount of payments
made for ambulance services under this part during 2000
does not exceed the aggregate amount of payments which
would have been made for such services under this part
during such year if the amendments made by section 4431
of the Balanced Budget Act of 1997 had not been made;
and
``(B) set the payment amounts provided under the
fee schedule for services furnished in 2001 and each
subsequent year at amounts equal to the payment amounts
under the fee schedule for service furnished during the
previous year, increased by the percentage increase in
the consumer price index for all urban consumers (U.S.
city average) for the 12-month period ending with June
of the previous year.
``(4) Consultation.--In establishing the fee schedule for
ambulance services under this subsection, the Secretary shall
consult with various national organizations representing
individuals and entities who furnish and regulate ambulance
services and share with such organizations relevant data in
establishing such schedule.
``(5) Limitation on review.--There shall be no
administrative or judicial review under section 1869 or
otherwise of the amounts established under the fee schedule for
ambulance services under this subsection, including matters
described in paragraph (2).
``(6) Restraint on billing.--The provisions of
subparagraphs (A) and (B) of section 1842(b)(18) shall apply to
ambulance services 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) Effective date.--The amendments made by this section
apply to ambulance services furnished on or after January 1,
2000.
(c) Authorizing Payment for Paramedic Intercept Service Providers
in Rural Communities.--In promulgating regulations to carry out section
1861(s)(7) of the Social Security Act (42 U.S.C. 1395x(s)(7)) with
respect to the coverage of ambulance service, the Secretary of Health
and Human Services may include coverage of advanced life support
services (in this subsection referred to as ``ALS intercept services'')
provided by a paramedic intercept service provider in a rural area if
the following conditions are met:
(1) The ALS intercept services are provided under a
contract with one or more volunteer ambulance services and are
medically necessary based on the health condition of the
individual being transported.
(2) The volunteer ambulance service involved--
(A) is certified as qualified to provide ambulance
service for purposes of such section,
(B) provides only basic life support services at
the time of the intercept, and
(C) is prohibited by State law from billing for any
services.
(3) The entity supplying the ALS intercept services--
(A) is certified as qualified to provide such
services under the medicare program under title XVIII
of the Social Security Act, and
(B) bills all recipients who receive ALS intercept
services from the entity, regardless of whether or not
such recipients are medicare beneficiaries.
SEC. 4432. DEMONSTRATION OF COVERAGE OF AMBULANCE SERVICES UNDER
MEDICARE THROUGH CONTRACTS WITH UNITS OF LOCAL
GOVERNMENT.
(a) Demonstration Project Contracts with Local Governments.--The
Secretary of Health and Human Services shall establish up to 3
demonstration projects under which, at the request of a county or
parish, the Secretary enters into a contract with the county or parish
under which--
(1) the county or parish furnishes (or arranges for the
furnishing) of ambulance services for which payment may be made
under part B of title XVIII of the Social Security Act for
individuals residing in the county or parish who are enrolled
under such part, except that the county or parish may not enter
into the contract unless the contract covers at least 80
percent of the individuals residing in the county or parish who
are enrolled under such part;
(2) any individual or entity furnishing ambulance services
under the contract meets the requirements otherwise applicable
to individuals and entities furnishing such services under such
part; and
(3) for each month during which the contract is in effect,
the Secretary makes a capitated payment to the county or parish
in accordance with subsection (b).
The projects may extend over a period of not to exceed 3 years each.
(b) Amount of Payment.--
(1) In general.--The amount of the monthly payment made for
months occurring during a calendar year to a county or parish
under a demonstration project contract under subsection (a)
shall be equal to the product of--
(A) the Secretary's estimate of the number of
individuals covered under the contract for the month;
and
(B) \1/12\ of the capitated payment rate for the
year established under paragraph (2).
(2) Capitated payment rate defined.--In this subsection,
the ``capitated payment rate'' applicable to a contract under
this subsection for a calendar year is equal to 95 percent of--
(A) for the first calendar year for which the
contract is in effect, the average annual per capita
payment made under part B of title XVIII of the Social
Security Act with respect to ambulance services
furnished to such individuals during the 3 most recent
calendar years for which data on the amount of such
payment is available; and
(B) for a subsequent year, the amount provided
under this paragraph for the previous year increased by
the percentage increase in the consumer price index for
all urban consumers (U.S. city average) for the 12-
month period ending with June of the previous year.
(c) Other Terms of Contract.--The Secretary and the county or
parish may include in a contract under this section such other terms as
the parties consider appropriate, including--
(1) covering individuals residing in additional counties or
parishes (under arrangements entered into between such counties
or parishes and the county or parish involved);
(2) permitting the county or parish to transport
individuals to non-hospital providers if such providers are
able to furnish quality services at a lower cost than hospital
providers; or
(3) implementing such other innovations as the county or
parish may propose to improve the quality of ambulance services
and control the costs of such services.
(d) Contract Payments in Lieu of Other Benefits.--Payments under a
contract to a county or parish under this section shall be instead of
the amounts which (in the absence of the contract) would otherwise be
payable under part B of title XVIII of the Social Security Act for the
services covered under the contract which are furnished to individuals
who reside in the county or parish.
(e) Report on Effects of Capitated Contracts.--
(1) Study.--The Secretary shall evaluate the demonstration
projects conducted under this section. Such evaluation shall
include an analysis of the quality and cost-effectiveness of
ambulance services furnished under the projects.
(2) Report.--Not later than January 1, 2000, the Secretary
shall submit a report to Congress on the study conducted under
paragraph (1), and shall include in the report such
recommendations as the Secretary considers appropriate,
including recommendations regarding modifications to the
methodology used to determine the amount of payments made under
such contracts and extending or expanding such projects.
CHAPTER 3--PAYMENT UNDER PARTS A AND B
SEC. 4441. PROSPECTIVE PAYMENT FOR HOME HEALTH SERVICES.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.), as amended
by section 4011, is amended by adding at the end the following new
section:
``prospective payment for home health services
``Sec. 1895. (a) In General.--Notwithstanding section 1861(v), the
Secretary shall provide, for cost reporting periods beginning on or
after October 1, 1999, for payments for home health services in
accordance with a prospective payment system established by the
Secretary under this section.
``(b) System of Prospective Payment for Home Health Services.--
``(1) In general.--The Secretary shall establish under this
subsection a prospective payment system for payment for all
costs of home health services. Under the system under this
subsection all services covered and paid on a reasonable cost
basis under the medicare home health benefit as of the date of
the enactment of the this section, including medical supplies,
shall be paid for on the basis of a prospective payment amount
determined under this subsection and applicable to the services
involved. In implementing the system, the Secretary may provide
for a transition (of not longer than 4 years) during which a
portion of such payment is based on agency-specific costs, but
only if such transition does not result in aggregate payments
under this title that exceed the aggregate payments that would
be made if such a transition did not occur.
``(2) Unit of payment.--In defining a prospective payment
amount under the system under this subsection, the Secretary
shall consider an appropriate unit of service and the number,
type, and duration of visits provided within that unit,
potential changes in the mix of services provided within that
unit and their cost, and a general system design that provides
for continued access to quality services.
``(3) Payment basis.--
``(A) Initial basis.--
``(i) In general.--Under such system the
Secretary shall provide for computation of a
standard prospective payment amount (or
amounts). Such amount (or amounts) shall
initially be based on the most current audited
cost report data available to the Secretary and
shall be computed in a manner so that the total
amounts payable under the system for fiscal
year 2000 shall be equal to the total amount
that would have been made if the system had not
been in effect but if the reduction in limits
described in clause (ii) had been in effect.
Such amount shall be standardized in a manner
that eliminates the effect of variations in
relative case mix and wage levels among
different home health agencies in a budget
neutral manner consistent with the case mix and
wage level adjustments provided under paragraph
(4)(A). Under the system, the Secretary may
recognize regional differences or differences
based upon whether or not the services or
agency are in an urbanized area.
``(ii) Reduction.--The reduction described
in this clause is a reduction by 15 percent in
the cost limits and per beneficiary limits
described in section 1861(v)(1)(L), as those
limits are in effect on September 30, 1999.
``(B) Annual update.--
``(i) In general.--The standard prospective
payment amount (or amounts) shall be adjusted
for each fiscal year (beginning with fiscal
year 2001) in a prospective manner specified by
the Secretary by the home health market basket
percentage increase applicable to the fiscal
year involved.
``(ii) Home health market basket percentage
increase.--For purposes of this subsection, the
term `home health market basket percentage
increase' means, with respect to a fiscal year,
a percentage (estimated by the Secretary before
the beginning of the fiscal year) determined
and applied with respect to the mix of goods
and services included in home health services
in the same manner as the market basket
percentage increase under section
1886(b)(3)(B)(iii) is determined and applied to
the mix of goods and services comprising
inpatient hospital services for the fiscal
year.
``(C) Adjustment for outliers.--The Secretary shall
reduce the standard prospective payment amount (or
amounts) under this paragraph applicable to home health
services furnished during a period by such proportion
as will result in an aggregate reduction in payments
for the period equal to the aggregate increase in
payments resulting from the application of paragraph
(5) (relating to outliers).
``(4) Payment computation.--
``(A) In general.--The payment amount for a unit of
home health services shall be the applicable standard
prospective payment amount adjusted as follows:
``(i) Case mix adjustment.--The amount
shall be adjusted by an appropriate case mix
adjustment factor (established under
subparagraph (B)).
``(ii) Area wage adjustment.--The portion
of such amount that the Secretary estimates to
be attributable to wages and wage-related costs
shall be adjusted for geographic differences in
such costs by an area wage adjustment factor
(established under subparagraph (C)) for the
area in which the services are furnished or
such other area as the Secretary may specify.
``(B) Establishment of case mix adjustment
factors.--The Secretary shall establish appropriate
case mix adjustment factors for home health services in
a manner that explains a significant amount of the
variation in cost among different units of services.
``(C) Establishment of area wage adjustment
factors.--The Secretary shall establish area wage
adjustment factors that reflect the relative level of
wages and wage-related costs applicable to the
furnishing of home health services in a geographic area
compared to the national average applicable level. Such
factors may be the factors used by the Secretary for
purposes of section 1886(d)(3)(E).
``(5) Outliers.--The Secretary may provide for an addition
or adjustment to the payment amount otherwise made in the case
of outliers because of unusual variations in the type or amount
of medically necessary care. The total amount of the additional
payments or payment adjustments made under this paragraph with
respect to a fiscal year may not exceed 5 percent of the total
payments projected or estimated to be made based on the
prospective payment system under this subsection in that year.
``(6) Proration of prospective payment amounts.--If a
beneficiary elects to transfer to, or receive services from,
another home health agency within the period covered by the
prospective payment amount, the payment shall be prorated
between the home health agencies involved.
``(c) Requirements for Payment Information.--With respect to home
health services furnished on or after October 1, 1998, no claim for
such a service may be paid under this title unless--
``(1) the claim has the unique identifier (provided under
section 1842(r)) for the physician who prescribed the services
or made the certification described in section 1814(a)(2) or
1835(a)(2)(A); and
``(2) in the case of a service visit described in paragraph
(1), (2), (3), or (4) of section 1861(m), the claim has
information (coded in an appropriate manner) on the length of
time of the service visit, as measured in 15 minute increments.
``(d) Limitation on Review.--There shall be no administrative or
judicial review under section 1869, 1878, or otherwise of--
``(1) the establishment of a transition period under
subsection (b)(1);
``(2) the definition and application of payment units under
subsection (b)(2);
``(3) the computation of initial standard prospective
payment amounts under subsection (b)(3)(A) (including the
reduction described in clause (ii) of such subsection);
``(4) the adjustment for outliers under subsection
(b)(3)(C);
``(5) case mix and area wage adjustments under subsection
(b)(4);
``(6) any adjustments for outliers under subsection (b)(5);
and
``(7) the amounts or types of exceptions or adjustments
under subsection (b)(7).''.
(b) Elimination of Periodic Interim Payments for Home Health
Agencies.--Section 1815(e)(2) (42 U.S.C. 1395g(e)(2)) is amended--
(1) by inserting ``and'' at the end of subparagraph (C),
(2) by striking subparagraph (D), and
(3) by redesignating subparagraph (E) as subparagraph (D).
(c) Conforming Amendments.--
(1) Payments under part a.--Section 1814(b) (42 U.S.C.
1395f(b)) is amended in the matter preceding paragraph (1) by
striking ``and 1886'' and inserting ``1886, and 1895''.
(2) Treatment of items and services paid under part b.--
(A) Payments under part b.--Section 1833(a)(2) (42
U.S.C. 1395l(a)(2)) is amended--
(i) by amending subparagraph (A) to read as
follows:
``(A) with respect to home health services (other
than a covered osteoporosis drug) (as defined in
section 1861(kk)), the amount determined under the
prospective payment system under section 1895;'';
(ii) by striking ``and'' at the end of
subparagraph (E);
(iii) by adding ``and'' at the end of
subparagraph (F); and
(iv) by adding at the end the following new
subparagraph:
``(G) with respect to items and services described
in section 1861(s)(10)(A), the lesser of--
``(i) the reasonable cost of such services,
as determined under section 1861(v), or
``(ii) the customary charges with respect
to such services,
or, if such services are furnished by a public provider
of services, or by another provider which demonstrates
to the satisfaction of the Secretary that a significant
portion of its patients are low-income (and requests
that payment be made under this provision), free of
charge or at nominal charges to the public, the amount
determined in accordance with section 1814(b)(2);''.
(B) Requiring payment for all items and services to
be made to agency.--
(i) In general.--The first sentence of
section 1842(b)(6) (42 U.S.C. 1395u(b)(6)), as
amended by section 4401(b)(2), is amended--
(I) by striking ``and (E)'' and
inserting ``(E)''; and
(II) by striking the period at the
end and inserting the following: ``,
and (F) in the case of home health
services furnished to an individual who
(at the time the item or service is
furnished) is under a plan of care of a
home health agency, payment shall be
made to the agency (without regard to
whether or not the item or service was
furnished by the agency, by others
under arrangement with them made by the
agency, or when any other contracting
or consulting arrangement, or
otherwise).''.
(ii) Conforming amendment.--Section
1832(a)(1) (42 U.S.C. 1395k(a)(1)), as amended
by section 4401(b), is amended by striking
``and section 1842(b)(6)(E)'' and inserting ``,
section 1842(b)(6)(E), and section
1842(b)(6)(F)''.
(C) Exclusions from coverage.--Section 1862(a) (42
U.S.C. 1395y(a)), as amended by sections 4401(b) and
4421(b), is amended--
(i) by striking ``or'' at the end of
paragraph (17);
(ii) by striking the period at the end of
paragraph (18) and inserting ``; or''; and
(iii) inserting after paragraph (18) the
following new paragraph:
``(19) where such expenses are for home health services
furnished to an individual who is under a plan of care of the
home health agency if the claim for payment for such services
is not submitted by the agency.''.
(d) Effective Date.--Except as otherwise provided, the amendments
made by this section shall apply to cost reporting periods beginning on
or after October 1, 1999.
Subtitle G--Provisions Relating to Part B Only
CHAPTER 1--PHYSICIANS' SERVICES
SEC. 4601. ESTABLISHMENT OF SINGLE CONVERSION FACTOR FOR 1998.
(a) In General.--Section 1848(d)(1) (42 U.S.C. 1395w-4(d)(1)) is
amended--
(1) by redesignating subparagraph (C) as subparagraph (D),
and
(2) by inserting after subparagraph (B) the following:
``(C) Special rules for 1998.--The single
conversion factor for 1998 under this subsection shall
be the conversion factor for primary care services for
1997, increased by the Secretary's estimate of the
weighted average of the three separate updates that
would otherwise occur were it not for the enactment of
chapter 1 of subtitle G of title X of the Balanced
Budget Act of 1997.''.
(b) Conforming Amendments.--Section 1848 (42 U.S.C. 1395w-4) is
amended--
(1) by striking ``(or factors)'' each place it appears in
subsection (d)(1)(A) and (d)(1)(D)(ii) (as redesignated by
subsection (a)(1)),
(2) in subsection (d)(1)(A), by striking ``or updates'',
(3) in subsection (d)(1)(D) (as redesignated by subsection
(a)(1)), by striking ``(or updates)'' each place it appears,
and
(4) in subsection (i)(1)(C), by striking ``conversion
factors'' and inserting ``the conversion factor''.
SEC. 4602. ESTABLISHING UPDATE TO CONVERSION FACTOR TO MATCH SPENDING
UNDER SUSTAINABLE GROWTH RATE.
(a) Update.--
(1) In general.--Section 1848(d)(3) (42 U.S.C. 1395w-
4(d)(3)) is amended to read as follows:
``(3) Update.--
``(A) In general.--Unless otherwise provided by
law, subject to subparagraph (D) and the budget-
neutrality factor determined by the Secretary under
subsection (c)(2)(B)(ii), the update to the single
conversion factor established in paragraph (1)(C) for a
year beginning with 1999 is equal to the product of--
``(i) 1 plus the Secretary's estimate of
the percentage increase in the MEI (as defined
in section 1842(i)(3)) for the year (divided by
100), and
``(ii) 1 plus the Secretary's estimate of
the update adjustment factor for the year
(divided by 100),
minus 1 and multiplied by 100.
``(B) Update adjustment factor.--For purposes of
subparagraph (A)(ii), the `update adjustment factor'
for a year is equal to the quotient (as estimated by
the Secretary) of--
``(i) the difference between (I) the sum of
the allowed expenditures for physicians'
services (as determined under subparagraph (C))
during the period beginning July 1, 1997, and
ending on June 30 of the year involved, and
(II) the sum of the amount of actual
expenditures for physicians' services furnished
during the period beginning July 1, 1997, and
ending on June 30 of the preceding year;
divided by
``(ii) the actual expenditures for
physicians' services for the 12-month period
ending on June 30 of the preceding year,
increased by the sustainable growth rate under
subsection (f) for the fiscal year which begins
during such 12-month period.
``(C) Determination of allowed expenditures.--For
purposes of this paragraph, the allowed expenditures
for physicians' services for the 12-month period ending
with June 30 of--
``(i) 1997 is equal to the actual
expenditures for physicians' services furnished
during such 12-month period, as estimated by
the Secretary; or
``(ii) a subsequent year is equal to the
allowed expenditures for physicians' services
for the previous year, increased by the
sustainable growth rate under subsection (f)
for the fiscal year which begins during such
12-month period.
``(D) Restriction on variation from medicare
economic index.--Notwithstanding the amount of the
update adjustment factor determined under subparagraph
(B) for a year, the update in the conversion factor
under this paragraph for the year may not be--
``(i) greater than 100 times the following
amount: (1.03 + (MEI percentage/100)) -1; or
``(ii) less than 100 times the following
amount: (0.93 + (MEI percentage/100)) -1,
where `MEI percentage' means the Secretary's estimate
of the percentage increase in the MEI (as defined in
section 1842(i)(3)) for the year involved.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to the update for years beginning with 1999.
(b) Elimination of Report.--Section 1848(d) (42 U.S.C. 1395w-4(d))
is amended by striking paragraph (2).
SEC. 4603. REPLACEMENT OF VOLUME PERFORMANCE STANDARD WITH SUSTAINABLE
GROWTH RATE.
(a) In General.--Section 1848(f) (42 U.S.C. 1395w-4(f)) is amended
by striking paragraphs (2) through (5) and inserting the following:
``(2) Specification of growth rate.--The sustainable growth
rate for all physicians' services for a fiscal year (beginning
with fiscal year 1998) shall be equal to the product of--
``(A) 1 plus the Secretary's estimate of the
weighted average percentage increase (divided by 100)
in the fees for all physicians' services in the fiscal
year involved,
``(B) 1 plus the Secretary's estimate of the
percentage change (divided by 100) in the average
number of individuals enrolled under this part (other
than MedicarePlus plan enrollees) from the previous
fiscal year to the fiscal year involved,
``(C) 1 plus the Secretary's estimate of the
projected percentage growth in real gross domestic
product per capita (divided by 100) from the previous
fiscal year to the fiscal year involved, and
``(D) 1 plus the Secretary's estimate of the
percentage change (divided by 100) in expenditures for
all physicians' services in the fiscal year (compared
with the previous fiscal year) which will result from
changes in law and regulations, determined without
taking into account estimated changes in expenditures
due to changes in the volume and intensity of
physicians' services resulting from changes in the
update to the conversion factor under subsection
(d)(3),
minus 1 and multiplied by 100.
``(3) Definitions.--In this subsection:
``(A) Services included in physicians' services.--
The term `physicians' services' includes other items
and services (such as clinical diagnostic laboratory
tests and radiology services), specified by the
Secretary, that are commonly performed or furnished by
a physician or in a physician's office, but does not
include services furnished to a MedicarePlus plan
enrollee.
``(B) MedicarePlus plan enrollee.--The term
`MedicarePlus plan enrollee' means, with respect to a
fiscal year, an individual enrolled under this part who
has elected to receive benefits under this title for
the fiscal year through a MedicarePlus plan offered
under part C, and also includes an individual who is
receiving benefits under this part through enrollment
with an eligible organization with a risk-sharing
contract under section 1876.''.
(b) Conforming Amendments.--Section 1848(f) (42 U.S.C. 1395w-4(f))
is amended--
(1) in the heading, by striking ``Volume Performance
Standard Rates of Increase'' and inserting ``Sustainable Growth
Rate''; and
(2) in paragraph (1)--
(A) in the heading, by striking ``volume
performance standard rates of increase'' and inserting
``sustainable growth rate'',
(B) by striking subparagraphs (A) and (B); and
(C) in paragraph (1)(C)--
(i) in the heading, by striking
``performance standard rates of increase'' and
inserting ``sustainable growth rate'';
(ii) in the first sentence, by striking
``with 1991), the performance standard rates of
increase'' and all that follows through the
first period and inserting ``with 1999), the
sustainable growth rate for the fiscal year
beginning in that year.''; and
(iii) in the second sentence, by striking
``January 1, 1990, the performance standard
rate of increase under subparagraph (D) for
fiscal year 1990'' and inserting ``January 1,
1999, the sustainable growth rate for fiscal
year 1999''.
SEC. 4604. PAYMENT RULES FOR ANESTHESIA SERVICES.
(a) In General.--Section 1848(d)(1) (42 U.S.C. 1395w-4(d)(1)), as
amended by section 4601, is amended--
(A) in subparagraph (C), striking ``The single''
and inserting ``Except as provided in subparagraph (D),
the single'';
(B) by redesignating subparagraph (D) as
subparagraph (E); and
(C) by inserting after subparagraph (C) the
following new subparagraph:
``(D) Special rules for anesthesia services.--The
separate conversion factor for anesthesia services for
a year shall be equal to 46 percent of the single
conversion factor established for other physicians'
services, except as adjusted for changes in work,
practice expense, or malpractice relative value units.
''.
(b) Classification of Anesthesia Services.--The first sentence of
section 1848(j)(1) (42 U.S.C. 1395w-4(j)(1)) is amended--
(1) by striking ``and including anesthesia services''; and
(2) by inserting before the period the following:
``(including anesthesia services)''.
(c) Effective Date.--The amendments made by this section shall
apply to services furnished on or after January 1, 1998.
SEC. 4605. IMPLEMENTATION OF RESOURCE-BASED PHYSICIAN PRACTICE EXPENSE.
(a) 1-Year Delay in Implementation.--Section 1848(c) (42 U.S.C.
1395w-4(c)) is amended--
(1) in paragraph (2)(C)(ii), in the matter before subclause
(I) and after subclause (II), by striking ``1998'' and
inserting ``1999'' each place it appears; and
(2) in paragraph (3)(C)(ii), by striking ``1998'' and
inserting ``1999''.
(b) Phased-in Implementation.--
(1) In general.--Section 1848(c)(2)(C)(ii) (42 U.S.C.
1395w-4(c)(2)(C)(ii)) is further amended--
(A) by striking the comma at the end of clause (ii)
and inserting a period and the following:
``For 1999, such number of units shall be
determined based 75 percent on such product and
based 25 percent on the relative practice
expense resources involved in furnishing the
service. For 2000, such number of units shall
be determined based 50 percent on such product
and based 50 percent on such relative practice
expense resources. For 2001, such number of
units shall be determined based 25 percent on
such product and based 75 percent on such
relative practice expense resources. For a
subsequent year, such number of units shall be
determined based entirely on such relative
practice expense resources.''.
(2) Conforming amendment.--Section 1848(c)(3)(C)(ii) (42
U.S.C. 1395w-4(c)(3)(C)(ii)), as amended by subsection (a)(2),
is amended by striking ``1999'' and inserting ``2002''.
(c) Requirements for Developing New Resource-Based Practice Expense
Relative Value Units.--
(1) Development.--For purposes of section 1848(c)(2)(C) of
the Social Security Act, the Secretary of Health and Human
Services shall develop new resource-based relative value units.
In developing such units the Secretary shall--
(A) utilize, to the maximum extent practicable,
generally accepted accounting principles and standards
which (i) recognize all staff, equipment, supplies, and
expenses, not just those which can be tied to specific
procedures, and (ii) use actual data on equipment
utilization and other key assumptions, such as the
proportion of costs which are direct versus indirect;
(B) study whether hospital cost reduction efforts
and changing practice patterns may have increased
physician practice costs under part B of the medicare
program;
(C) consider potential adverse effects on patient
access under the medicare program; and
(D) consult with organizations representing
physicians regarding methodology and data to be used,
including data for impact projections, in order to
ensure that sufficient input has been received by the
affected physician community.
(2) Report.--The Secretary shall transmit a report by March
1, 1998, on the development of resource-based relative value
units under paragraph (1) 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. The report shall
include a presentation of data to be used in developing the
value units and an explanation of the methodology.
(3) Notice of proposed rulemaking.--The Secretary shall
publish a notice of proposed rulemaking with the new resource-
based relative value units on or before May 1, 1998, and shall
allow for a 90-day public comment period.
(4) Items included.--The proposed new rule shall include
the following:
(A) Detailed impact projections which compare new
proposed payment amounts on data on actual physician
practice expenses.
(B) Impact projections for specialties and
subspecialties, geographic payment localities, urban
versus rural localities, and academic versus
nonacademic medical staffs.
(C) Impact projections on access to care for
medicare patients and physician employment of clinical
and administrative staff.
SEC. 4606. DISSEMINATION OF INFORMATION ON HIGH PER DISCHARGE RELATIVE
VALUES FOR IN-HOSPITAL PHYSICIANS' SERVICES.
(a) Determination and Notice Concerning Hospital-Specific Per
Discharge Relative Values.--
(1) In general.--For 1999 and 2001 the Secretary of Health
and Human Services shall determine for each hospital--
(A) the hospital-specific per discharge relative
value under subsection (b); and
(B) whether the hospital-specific relative value is
projected to be excessive (as determined based on such
value represented as a percentage of the median of
hospital-specific per discharge relative values
determined under subsection (b)).
(2) Notice to medical staffs and carriers.--The Secretary
shall notify the medical executive committee of each hospital
identifies under paragraph (1)(B) as having an excessive
hospital-specific relative value, of the determinations made
with respect to the medical staff under paragraph (1).
(b) Determination of Hospital-Specific Per Discharge Relative
Values.--
(1) In general.--For purposes of this section, the
hospital-specific per discharge relative value for the medical
staff of a hospital (other than a teaching hospital) for a
year, shall be equal to the average per discharge relative
value (as determined under section 1848(c)(2) of the Social
Security Act) for physicians' services furnished to inpatients
of the hospital by the hospital's medical staff (excluding
interns and residents) during the second year preceding that
calendar year, adjusted for variations in case-mix and
disproportionate share status among hospitals (as determined by
the Secretary under paragraph (3)).
(2) Special rule for teaching hospitals.--The hospital-
specific relative value projected for a teaching hospital in a
year shall be equal to the sum of--
(A) the average per discharge relative value (as
determined under section 1848(c)(2) of such Act) for
physicians' services furnished to inpatients of the
hospital by the hospital's medical staff (excluding
interns and residents) during the second year preceding
that calendar year, and
(B) the equivalent per discharge relative value (as
determined under such section) for physicians' services
furnished to inpatients of the hospital by interns and
residents of the hospital during the second year
preceding that calendar year, adjusted for variations
in case-mix, disproportionate share status, and
teaching status among hospitals (as determined by the
Secretary under paragraph (3)).
The Secretary shall determine the equivalent relative value
unit per discharge for interns and residents based on the best
available data and may make such adjustment in the aggregate.
(3) Adjustment for teaching and disproportionate share
hospitals.--The Secretary shall adjust the allowable per
discharge relative values otherwise determined under this
subsection to take into account the needs of teaching hospitals
and hospitals receiving additional payments under subparagraphs
(F) and (G) of section 1886(d)(5) of the Social Security Act.
The adjustment for teaching status or disproportionate share
shall not be less than zero.
(c) Definitions.--For purposes of this section:
(1) Hospital.--The term ``hospital'' means a subsection (d)
hospital as defined in section 1886(d) of the Social Security
Act (42 U.S.C. 1395ww(d)).
(2) Medical staff.--An individual furnishing a physician's
service is considered to be on the medical staff of a
hospital--
(A) if (in accordance with requirements for
hospitals established by the Joint Commission on
Accreditation of Health Organizations)--
(i) the individual is subject to bylaws,
rules, and regulations established by the
hospital to provide a framework for the self-
governance of medical staff activities,
(ii) subject to the bylaws, rules, and
regulations, the individual has clinical
privileges granted by the hospital's governing
body, and
(iii) under the clinical privileges, the
individual may provide physicians'' services
independently within the scope of the
individual's clinical privileges, or
(B) if the physician provides at least one service
to an individual entitled to benefits under this title
in that hospital.
(3) Physicians' services.--The term ``physicians''
services'' means the services described in section 1848(j)(3)
of the Social Security Act (42 U.S.C. 1395w-4(j)(3)).
(4) Rural area; urban area.--The terms ``rural area'' and
``urban area'' have the meaning given those terms under section
1886(d)(2)(D) of such Act (42 U.S.C. 1395ww(d)(2)(D)).
(5) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(6) Teaching hospital.--The term ``teaching hospital''
means a hospital which has a teaching program approved as
specified in section 1861(b)(6) of the Social Security Act (42
U.S.C. 1395x(b)(6)).
SEC. 4607. NO X-RAY REQUIRED FOR CHIROPRACTIC SERVICES.
(a) In General.--Section 1861(r)(5) (42 U.S.C. 1395x(r)(5)) is
amended by striking ``demonstrated by X-ray to exist''.
(b) Effective Date.--The amendment made by subsection (a) applies
to services furnished on or after January 1, 1998.
(c) Utilization Guidelines.--The Secretary of Health and Human
Services shall develop and implement utilization guidelines relating to
the coverage of chiropractic services under part B of title XVIII of
the Social Security Act in cases in which a subluxation has not been
demonstrated by X-ray to exist.
SEC. 4608. TEMPORARY COVERAGE RESTORATION FOR PORTABLE
ELECTROCARDIOGRAM TRANSPORTATION.
(a) In General.--Effective for electrocardiogram tests performed
during 1998, the Secretary of Health and Human Services shall restore
separate payment, under part B of title XVIII of the Social Security
Act, for the transportation of electrocardiogram equipment (HCPCS code
R0076) based upon the status code and relative value units established
for such service as of December 31, 1996.
(b) Report.--By not later than July 1, 1998, the Comptroller
General shall submit to Congress a report on the appropriateness of
continuing such payment.
CHAPTER 2--OTHER PAYMENT PROVISIONS
SEC. 4611. PAYMENTS FOR DURABLE MEDICAL EQUIPMENT.
(a) Reduction in Payment Amounts for Items of Durable Medical
Equipment.--
(1) Freeze in update for covered items.--Section
1834(a)(14) (42 U.S.C. 1395m(a)(14)) is amended--
(A) by striking ``and'' at the end of subparagraph
(A);
(B) in subparagraph (B)--
(i) by striking ``a subsequent year'' and
inserting ``1993, 1994, 1995, 1996, and 1997'',
and
(ii) by striking the period at the end and
inserting a semicolon; and
(C) by adding at the end the following:
``(C) for each of the years 1998 through 2002, 0
percentage points; and
``(D) for a subsequent year, the percentage
increase in the consumer price index for all urban
consumers (U.S. urban average) for the 12-month period
ending with June of the previous year.''.
(2) Update for orthotics and prosthetics.--Section
1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is amended--
(A) by striking ``, and'' at the end of clause
(iii) and inserting a semicolon;
(B) in clause (iv), by striking ``a subsequent
year'' and inserting ``1996 and 1997'', and
(C) by adding at the end the following new clauses:
``(v) for each of the years 1998 through
2002, 1 percent, and
``(vi) for a subsequent year, the
percentage increase in the consumer price index
for all urban consumers (United States city
average) for the 12-month period ending with
June of the previous year;''.
(c) Payment Freeze for Parenteral and Enteral Nutrients, Supplies,
and Equipment.--In determining the amount of payment under part B of
title XVIII of the Social Security Act with respect to parenteral and
enteral nutrients, supplies, and equipment during each of the years
1998 through 2002, the charges determined to be reasonable with respect
to such nutrients, supplies, and equipment may not exceed the charges
determined to be reasonable with respect to such nutrients, supplies,
and equipment during 1995.
SEC. 4612. OXYGEN AND OXYGEN EQUIPMENT.
Section 1834(a)(9)(C) (42 U.S.C. 1395m(a)(9)(C)) is amended--
(1) by striking ``and'' at the end of clause (iii);
(2) in clause (iv)--
(A) by striking ``a subsequent year'' and inserting
``1993, 1994, 1995, 1996, and 1997'', and
(B) by striking the period at the end and inserting
a semicolon; and
(3) by adding at the end the following new clauses:
``(v) in each of the years 1998 through
2002, is 80 percent of the national limited
monthly payment rate computed under
subparagraph (B) for the item for the year; and
``(vi) in a subsequent year, is the
national limited monthly payment rate computed
under subparagraph (B) for the item for the
year.''.
SEC. 4613. REDUCTION IN UPDATES TO PAYMENT AMOUNTS FOR CLINICAL
DIAGNOSTIC LABORATORY TESTS.
(a) Change in Update.--Section 1833(h)(2)(A)(ii)(IV) (42 U.S.C.
1395l(h)(2)(A)(ii)(IV)) is amended by inserting ``and 1998 through
2002'' after ``1995''.
(b) Lowering Cap on Payment Amounts.--Section 1833(h)(4)(B) (42
U.S.C. 1395l(h)(4)(B)) is amended--
(1) in clause (vi), by striking ``and'' at the end;
(2) in clause (vii)--
(A) by inserting ``and before January 1, 1998,''
after ``1995,'', and
(B) by striking the period at the end and inserting
``, and''; and
(3) by adding at the end the following new clause:
``(viii) after December 31, 1997, is equal to 72 percent of
such median.''.
SEC. 4614. SIMPLIFICATION IN ADMINISTRATION OF LABORATORY TESTS.
(a) Selection of Regional Carriers.--
(1) In general.--The Secretary of Health and Human Services
(in this section referred to as the ``Secretary'') shall--
(A) divide the United States into no more than 5
regions, and
(B) designate a single carrier for each such
region,
for the purpose of payment of claims under part B of title
XVIII of the Social Security Act with respect to clinical
diagnostic laboratory tests (other than for tests performed in
physician offices) furnished on or after such date (not later
than January 1, 1999) as the Secretary specifies.
(2) Designation.--In designating such carriers, the
Secretary shall consider, among other criteria--
(A) a carrier's timeliness, quality, and experience
in claims processing, and
(B) a carrier's capacity to conduct electronic data
interchange with laboratories and data matches with
other carriers.
(3) Single data resource.--The Secretary may select one of
the designated carriers to serve as a central statistical
resource for all claims information relating to such clinical
diagnostic laboratory tests handled by all the designated
carriers under such part.
(4) Allocation of claims.--The allocation of claims for
clinical diagnostic laboratory tests to particular designated
carriers shall be based on whether a carrier serves the
geographic area where the laboratory specimen was collected or
other method specified by the Secretary.
(b) Adoption of Uniform Policies for Clinical Laboratory Tests.--
(1) In general.--Not later than July 1, 1998, the Secretary
shall first adopt, consistent with paragraph (2), uniform
coverage, administration, and payment policies for clinical
diagnostic laboratory tests under part B of title XVIII of the
Social Security Act, using a negotiated rulemaking process
under subchapter III of chapter 5 of title 5, United States
Code.
(2) Considerations in design of uniform policies.--The
policies under paragraph (1) shall be designed to promote
uniformity and program integrity and reduce administrative
burdens with respect to clinical diagnostic laboratory tests
payable under such part in connection with the following:
(A) Beneficiary information required to be
submitted with each claim or order for laboratory
tests.
(B) Physicians' obligations regarding documentation
requirements and recordkeeping.
(C) Procedures for filing claims and for providing
remittances by electronic media.
(D) The documentation of medical necessity.
(E) Limitation on frequency of coverage for the
same tests performed on the same individual.
(3) Changes in carrier requirements pending adoption of
uniform policy.--During the period that begins on the date of
the enactment of this Act and ends on the date the Secretary
first implements uniform policies pursuant to regulations
promulgated under this subsection, a carrier under such part
may implement changes relating to requirements for the
submission of a claim for clinical diagnostic laboratory tests.
(4) Use of interim regional policies.--After the date the
Secretary first implements such uniform policies, the Secretary
shall permit any carrier to develop and implement interim
policies of the type described in paragraph (1), in accordance
with guidelines established by the Secretary, in cases in which
a uniform national policy has not been established under this
subsection and there is a demonstrated need for a policy to
respond to aberrant utilization or provision of unnecessary
services. Except as the Secretary specifically permits, no
policy shall be implemented under this paragraph for a period
of longer than 2 years.
(5) Interim national policies.--After the date the
Secretary first designates regional carriers under subsection
(a), the Secretary shall establish a process under which
designated carriers can collectively develop and implement
interim national standards of the type described in paragraph
(1). No such policy shall be implemented under this paragraph
for a period of longer than 2 years.
(6) Biennial review process.--Not less often than once
every 2 years, the Secretary shall solicit and review comments
regarding changes in the uniform policies established under
this subsection. As part of such biennial review process, the
Secretary shall specifically review and consider whether to
incorporate or supersede interim, regional, or national
policies developed under paragraph (4) or (5). Based upon such
review, the Secretary may provide for appropriate changes in
the uniform policies previously adopted under this subsection.
(7) Notice.-- Before a carrier implements a change or
policy under paragraph (3), (4), or (5), the carrier shall
provide for advance notice to interested parties and a 45-day
period in which such parties may submit comments on the
proposed change.
(c) Inclusion of Laboratory Representative on Carrier Advisory
Committees.--The Secretary shall direct that any advisory committee
established by such a carrier, to advise with respect to coverage,
administration or payment policies under part B of title XVIII of the
Social Security Act, shall include an individual to represent the
interest and views of independent clinical laboratories and such other
laboratories as the Secretary deems appropriate. Such individual shall
be selected by such committee from among nominations submitted by
national and local organizations that represent independent clinical
laboratories.
SEC. 4615. UPDATES FOR AMBULATORY SURGICAL SERVICES.
Section 1833(i)(2)(C) (42 U.S.C. 1395l(i)(2)(C)) is amended by
striking all that follows ``shall be increased'' and inserting the
following: ``as follows:
``(i) For fiscal years 1996 and 1997, by the percentage
increase in the consumer price index for all urban consumers
(U.S. city average) as estimated by the Secretary for the 12-
month period ending with the midpoint of the year involved.
``(ii) For each of fiscal years 1998 through 2002 by such
percentage increase minus 2.0 percentage points.
``(iii) For each succeeding fiscal year by such percentage
increase.''.
SEC. 4616. REIMBURSEMENT FOR DRUGS AND BIOLOGICALS.
(a) In General.--Section 1842 (42 U.S.C. 1395u) is amended by
inserting after subsection (n) the following new subsection:
``(o) If a physician's, supplier's, or any other person's bill or
request for payment for services includes a charge for a drug or
biological for which payment may be made under this part and the drug
or biological is not paid on a cost or prospective payment basis as
otherwise provided in this part, the amount payable for the drug or
biological is equal to 95 percent of the average wholesale price.''.
(b) Effective Date.--The amendments made by subsection (a) apply to
drugs and biologicals furnished on or after January 1, 1998.
SEC. 4617. COVERAGE OF ORAL ANTI-NAUSEA DRUGS UNDER CHEMOTHERAPEUTIC
REGIMEN.
(a) In General.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)), as
amended, is amended by inserting after subparagraph (S) the following
new subparagraph:
``(T) an oral drug (which is approved by the Federal Food
and Drug Administration) prescribed for use as an acute anti-
emetic used as part of an anticancer chemotherapeutic regimen
if the drug is administered by a physician (or as prescribed by
a physician)--
``(i) for use immediately before, immediately
after, or at the time of the administration of the
anticancer chemotherapeutic agent; and
``(ii) as a full replacement for the anti-emetic
therapy which would otherwise be administered
intravenously.''.
(b) Payment Levels.--Section 1834 (42 U.S.C. 1395m), as amended by
sections 4421(a)(2) and 4431(b)(2), is amended by adding at the end the
following new subsection:
``(m) Special Rules for Payment for Oral Anti-Nausea Drugs.--
``(1) Limitation on per dose payment basis.--Subject to
paragraph (2), the per dose payment basis under this part for
oral anti-nausea drugs (as defined in paragraph (3))
administered during a year shall not exceed 90 percent of the
average per dose payment basis for the equivalent intravenous
anti-emetics administered during the year, as computed based on
the payment basis applied during 1996.
``(2) Aggregate limit.--The Secretary shall make such
adjustment in the coverage of, or payment basis for, oral anti-
nausea drugs so that coverage of such drugs under this part
does not result in any increase in aggregate payments per
capita under this part above the levels of such payments per
capita that would otherwise have been made if there were no
coverage for such drugs under this part.
``(3) Oral anti-nausea drugs defined.--For purposes of this
subsection, the term `oral anti-nausea drugs' means drugs for
which coverage is provided under this part pursuant to section
1861(s)(2)(P).''.
(c) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.
SEC. 4618. RURAL HEALTH CLINIC SERVICES.
(a) Per-Visit Payment Limits for Provider-Based Clinics.--
(1) Extension of limit.--
(A) In general.--The matter in section 1833(f) (42
U.S.C. 1395l(f)) preceding paragraph (1) is amended by
striking ``independent rural health clinics'' and
inserting ``rural health clinics (other than such
clinics in rural hospitals with less than 50 beds)''.
(B) Effective date.--The amendment made by
subparagraph (A) applies to services furnished after
1997.
(2) Technical clarification.--Section 1833(f)(1) (42 U.S.C.
1395l(f)(1)) is amended by inserting ``per visit'' after
``$46''.
(b) Assurance of Quality Services.--
(1) In general.--Subparagraph (I) of the first sentence of
section 1861(aa)(2) (42 U.S.C. 1395x(aa)(2)) is amended to read
as follows:
``(I) has a quality assessment and performance
improvement program, and appropriate procedures for
review of utilization of clinic services, as the
Secretary may specify,''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on January 1, 1998.
(c) Waiver of Certain Staffing Requirements Limited to Clinics in
Program.--
(1) In general.--Section 1861(aa)(7)(B) (42 U.S.C.
1395x(aa)(7)(B)) is amended by inserting before the period at
the end the following: ``, or if the facility has not yet been
determined to meet the requirements (including subparagraph (J)
of the first sentence of paragraph (2)) of a rural health
clinic''.
(2) Effective date.--The amendment made by paragraph (1)
applies to waiver requests made after 1997.
(d) Refinement of Shortage Area Requirements.--
(1) Designation reviewed triennially.--Section 1861(aa)(2)
(42 U.S.C. 1395x(aa)(2)) is amended in the second sentence, in
the matter in clause (i) preceding subclause (I)--
(A) by striking ``and that is designated'' and
inserting ``and that, within the previous three-year
period, has been designated''; and
(B) by striking ``or that is designated'' and
inserting ``or designated''.
(2) Area must have shortage of health care practitioners.--
Section 1861(aa)(2) (42 U.S.C. 1395x(aa)(2)), as amended by
paragraph (1), is further amended in the second sentence, in
the matter in clause (i) preceding subclause (I)--
(A) by striking the comma after ``personal health
services''; and
(B) by inserting ``and in which there are
insufficient numbers of needed health care
practitioners (as determined by the Secretary),'' after
``Bureau of the Census)''.
(3) Previously qualifying clinics grandfathered only to
prevent shortage.--Section 1861(aa)(2) (42 U.S.C. 1395x(aa)(2))
is amended in the third sentence by inserting before the period
``if it is determined, in accordance with criteria established
by the Secretary in regulations, to be essential to the
delivery of primary care services that would otherwise be
unavailable in the geographic area served by the clinic''.
(4) Effective dates; implementing regulations.--
(A) In general.--Except as otherwise provided, the
amendments made by the preceding paragraphs take effect
on January 1 of the first calendar year beginning at
least one month after enactment of this Act.
(B) Current rural health clinics.--The amendments
made by the preceding paragraphs take effect, with
respect to entities that are rural health clinics under
title XVIII of the Social Security Act on the date of
enactment of this Act, on January 1 of the second
calendar year following the calendar year specified in
subparagraph (A).
(C) Grandfathered clinics.--
(i) In general.--The amendment made by
paragraph (3) shall take effect on the
effective date of regulations issued by the
Secretary under clause (ii).
(ii) Regulations.--The Secretary shall
issue final regulations implementing paragraph
(3) that shall take effect no later than
January 1 of the third calendar year beginning
at least one month after enactment of this Act.
SEC. 4619. INCREASED MEDICARE REIMBURSEMENT FOR NURSE PRACTITIONERS AND
CLINICAL NURSE SPECIALISTS.
(a) Removal of Restrictions on Settings.--
(1) In general.--Clause (ii) of section 1861(s)(2)(K) (42
U.S.C. 1395x(s)(2)(K)) is amended to read as follows:
``(ii) services which would be physicians' services if
furnished by a physician (as defined in subsection (r)(1)) and
which are performed by a nurse practitioner or clinical nurse
specialist (as defined in subsection (aa)(5)) working in
collaboration (as defined in subsection (aa)(6)) with a
physician (as defined in subsection (r)(1)) which the nurse
practitioner or clinical nurse specialist is legally authorized
to perform by the State in which the services are performed,
and such services and supplies furnished as an incident to such
services as would be covered under subparagraph (A) if
furnished incident to a physician's professional service, but
only if no facility or other provider charges or is paid any
amounts with respect to the furnishing of such services;''.
(2) Conforming amendments.--(A) Section 1861(s)(2)(K) of
such Act (42 U.S.C. 1395x(s)(2)(K)) is further amended--
(i) in clause (i), by inserting ``and such services
and supplies furnished as incident to such services as
would be covered under subparagraph (A) if furnished
incident to a physician's professional service; and''
after ``are performed,''; and
(ii) by striking clauses (iii) and (iv).
(B) Section 1861(b)(4) (42 U.S.C. 1395x(b)(4)) is amended
by striking ``clauses (i) or (iii) of subsection (s)(2)(K)''
and inserting ``subsection (s)(2)(K)''.
(C) Section 1862(a)(14) (42 U.S.C. 1395y(a)(14)) is amended
by striking ``section 1861(s)(2)(K)(i) or 1861(s)(2)(K)(iii)''
and inserting ``section 1861(s)(2)(K)''.
(D) Section 1866(a)(1)(H) (42 U.S.C. 1395cc(a)(1)(H)) is
amended by striking ``section 1861(s)(2)(K)(i) or
1861(s)(2)(K)(iii)'' and inserting ``section 1861(s)(2)(K)''.
(E) Section 1888(e)(2)(A)(ii) (42 U.S.C.
1395yy(e)(2)(A)(ii)), as added by section 10401(a), is amended
by striking ``through (iii)'' and inserting ``and (ii)''.
(b) Increased Payment.--
(1) Fee schedule amount.--Clause (O) of section 1833(a)(1)
(42 U.S.C. 1395l(a)(1)) is amended to read as follows: ``(O)
with respect to services described in section 1861(s)(2)(K)(ii)
(relating to nurse practitioner or clinical nurse specialist
services), the amounts paid shall be equal to 80 percent of (i)
the lesser of the actual charge or 85 percent of the fee
schedule amount provided under section 1848, or (ii) in the
case of services as an assistant at surgery, the lesser of the
actual charge or 85 percent of the amount that would otherwise
be recognized if performed by a physician who is serving as an
assistant at surgery; and''.
(2) Conforming amendments.--(A) Section 1833(r) (42 U.S.C.
1395l(r)) is amended--
(i) in paragraph (1), by striking ``section
1861(s)(2)(K)(iii) (relating to nurse practitioner or
clinical nurse specialist services provided in a rural
area)'' and inserting ``section 1861(s)(2)(K)(ii)
(relating to nurse practitioner or clinical nurse
specialist services)'';
(ii) by striking paragraph (2);
(iii) in paragraph (3), by striking ``section
1861(s)(2)(K)(iii)'' and inserting ``section
1861(s)(2)(K)(ii)''; and
(iv) by redesignating paragraph (3) as paragraph
(2).
(B) Section 1842(b)(12)(A) (42 U.S.C. 1395u(b)(12)(A)) is
amended, in the matter preceding clause (i), by striking
``clauses (i), (ii), or (iv) of section 1861(s)(2)(K) (relating
to a physician assistants and nurse practitioners)'' and
inserting ``section 1861(s)(2)(K)(i) (relating to physician
assistants)''.
(c) Direct Payment for Nurse Practitioners and Clinical Nurse
Specialists.--
(1) In general.--Section 1832(a)(2)(B)(iv) (42 U.S.C.
1395k(a)(2)(B)(iv)) is amended by striking ``provided in a
rural area (as defined in section 1886(d)(2)(D))'' and
inserting ``but only if no facility or other provider charges
or is paid any amounts with respect to the furnishing of such
services''.
(2) Conforming amendment.--Section 1842(b)(6)(C) (42 U.S.C.
1395u(b)(6)(C)) is amended--
(A) by striking ``clauses (i), (ii), or (iv)'' and
inserting ``clause (i)''; and
(B) by striking ``or nurse practitioner''.
(d) Definition of Clinical Nurse Specialist Clarified.--Section
1861(aa)(5) (42 U.S.C. 1395x(aa)(5)) is amended--
(1) by inserting ``(A)'' after ``(5)'';
(2) by striking ``The term `physician assist-ant''' and all
that follows through ``who performs'' and inserting ``The term
`physician assistant' and the term `nurse practitioner' mean,
for purposes of this title, a physician assistant or nurse
practitioner who performs''; and
(3) by adding at the end the following new subparagraph:
``(B) The term `clinical nurse specialist' means, for purposes of
this title, an individual who--
``(i) is a registered nurse and is licensed to practice
nursing in the State in which the clinical nurse specialist
services are performed; and
``(ii) holds a master's degree in a defined clinical area
of nursing from an accredited educational institution.''.
(e) Effective Date.--The amendments made by this section shall
apply with respect to services furnished and supplies provided on and
after January 1, 1998.
SEC. 4620. INCREASED MEDICARE REIMBURSEMENT FOR PHYSICIAN ASSISTANTS.
(a) Removal of Restriction on Settings.--Section 1861(s)(2)(K)(i)
(42 U.S.C. 1395x(s)(2)(K)(i)) is amended--
(1) by striking ``(I) in a hospital'' and all that follows
through ``shortage area,'', and
(2) by adding at the end the following: ``but only if no
facility or other provider charges or is paid any amounts with
respect to the furnishing of such services,''.
(b) Increased Payment.--Paragraph (12) of section 1842(b) (42
U.S.C. 1395u(b)), as amended by section 4619(b)(2)(B), is amended to
read as follows:
``(12) With respect to services described in section
1861(s)(2)(K)(i)--
``(A) payment under this part may only be made on an
assignment-related basis; and
``(B) the amounts paid under this part shall be equal to 80
percent of (i) the lesser of the actual charge or 85 percent of
the fee schedule amount provided under section 1848 for the
same service provided by a physician who is not a specialist;
or (ii) in the case of services as an assistant at surgery, the
lesser of the actual charge or 85 percent of the amount that
would otherwise be recognized if performed by a physician who
is serving as an assistant at surgery.''.
(c) Removal of Restriction on Employment Relationship.--Section
1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended by adding at the end the
following new sentence: ``For purposes of clause (C) of the first
sentence of this paragraph, an employment relationship may include any
independent contractor arrangement, and employer status shall be
determined in accordance with the law of the State in which the
services described in such clause are performed.''.
(d) Effective Date.--The amendments made by this section shall
apply with respect to services furnished and supplies provided on and
after January 1, 1998.
SEC. 4621. RENAL DIALYSIS-RELATED SERVICES.
(a) Auditing of Cost Reports.--The Secretary shall audit a sample
of cost reports of renal dialysis providers for 1995 and for each third
year thereafter.
(b) Implementation of Quality Standards.--The Secretary of Health
and Human Services shall develop and implement, by not later than
January 1, 1999, a method to measure and report quality of renal
dialysis services provided under the medicare program under title XVIII
of the Social Security Act in order to reduce payments for
inappropriate or low quality care.
SEC. 4622. PAYMENT FOR COCHLEAR IMPLANTS AS CUSTOMIZED DURABLE MEDICAL
EQUIPMENT.
(a) In General.--Section 1834(h)(1)(E) (42 U.S.C. 1395m(h)(1)(E))
is amended by adding at the end the following: ``Payment for cochlear
implants shall be made in accordance with subsection (a)(4), and, in
applying such subsection to cochlear implants, carriers shall take into
consideration technological innovations and data on charges to the
extent that such charges reflect such innovations.''.
(b) Effective Date.--The amendment made by subsection (a) applies
to implants implanted on or after January 1, 1998.
CHAPTER 3--PART B PREMIUM
SEC. 4631. PART B PREMIUM.
(a) In General.--The first, second and third sentences of section
1839(a)(3) (42 U.S.C. 1395r(a)(3)) are amended to read as follows:
``The Secretary, during September of each year, shall determine and
promulgate a monthly premium rate for the succeeding calendar year.
That monthly premium rate shall be equal to 50 percent of the monthly
actuarial rate for enrollees age 65 and over, determined according to
paragraph (1), for that succeeding calendar year.''.
(b) Conforming and Technical Amendments.--
(1) Section 1839.--Section 1839 (42 U.S.C. 1395r) is
amended--
(A) in subsection (a)(2), by striking ``(b) and
(e)'' and inserting ``(b), (c), and (f)'',
(B) in the last sentence of subsection (a)(3)--
(i) by inserting ``rate'' after
``premium'', and
(ii) by striking ``and the derivation of
the dollar amounts specified in this
paragraph'',
(C) by striking subsection (e), and
(D) by redesignating subsection (g) as subsection
(e) and inserting that subsection after subsection (d).
(2) Section 1844.--Subparagraphs (A)(i) and (B)(i) of
section 1844(a)(1) (42 U.S.C. 1395w(a)(1)) are each amended by
striking ``or 1839(e), as the case may be''.
Subtitle H--Provisions Relating to Parts A and B
CHAPTER 1--PROVISIONS RELATING TO MEDICARE SECONDARY PAYER
SEC. 4701. PERMANENT EXTENSION AND REVISION OF CERTAIN SECONDARY PAYER
PROVISIONS.
(a) Application to Disabled Individuals in Large Group Health
Plans.--
(1) In general.--Section 1862(b)(1)(B) (42 U.S.C.
1395y(b)(1)(B)) is amended--
(A) in clause (i), by striking ``clause (iv)'' and
inserting ``clause (iii)'',
(B) by striking clause (iii), and
(C) by redesignating clause (iv) as clause (iii).
(2) Conforming amendments.--Paragraphs (1) through (3) of
section 1837(i) (42 U.S.C. 1395p(i)) and the second sentence of
section 1839(b) (42 U.S.C. 1395r(b)) are each amended by
striking ``1862(b)(1)(B)(iv)'' each place it appears and
inserting ``1862(b)(1)(B)(iii)''.
(b) Individuals With End Stage Renal Disease.--
(1) In general.--Section 1862(b)(1)(C) (42 U.S.C.
1395y(b)(1)(C)) is amended--
(A) in the first sentence, by striking ``12-month''
each place it appears and inserting ``30-month'', and
(B) by striking the second sentence.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to items and services furnished on or after the
date of the enactment of this Act and with respect to periods
beginning on or after the date that is 18 months prior to such
date.
(c) IRS-SSA-HCFA Data Match.--
(1) Social security act.--Section 1862(b)(5)(C) (42 U.S.C.
1395y(b)(5)(C)) is amended by striking clause (iii).
(2) Internal revenue code.--Section 6103(l)(12) of the
Internal Revenue Code of 1986 is amended by striking
subparagraph (F).
SEC. 4702. CLARIFICATION OF TIME AND FILING LIMITATIONS.
(a) Extension of Claims Filing Period.--Section 1862(b)(2)(B) (42
U.S.C. 1395y(b)(2)(B)) is amended by adding at the end the following
new clause:
``(v) Claims-filing period.--
Notwithstanding any other time limits that may
exist for filing a claim under an employer
group health plan, the United States may seek
to recover conditional payments in accordance
with this subparagraph where the request for
payment is submitted to the entity required or
responsible under this subsection to pay with
respect to the item or service (or any portion
thereof) under a primary plan within the 3-year
period beginning on the date on which the item
or service was furnished.''.
(b) Effective Date.--The amendment made by subsection (a) applies
to items and services furnished after 1990. The previous sentence shall
not be construed as permitting any waiver of the 3-year-period
requirement (imposed by such amendment) in the case of items and
services furnished more than 3 years before the date of the enactment
of this Act.
SEC. 4703. PERMITTING RECOVERY AGAINST THIRD PARTY ADMINISTRATORS.
(a) Permitting Recovery Against Third Party Administrators of
Primary Plans.--Section 1862(b)(2)(B)(ii) (42 U.S.C.
1395y(b)(2)(B)(ii)) is amended--
(1) by striking ``under this subsection to pay'' and
inserting ``(directly, as a third-party administrator, or
otherwise) to make payment'', and
(2) by adding at the end the following: ``The United States
may not recover from a third-party administrator under this
clause in cases where the third-party administrator would not
be able to recover the amount at issue from the employer or
group health plan for whom it provides administrative services
due to the insolvency or bankruptcy of the employer or plan.''.
(b) Clarification of Beneficiary Liability.--Section 1862(b)(1) (42
U.S.C. 1395y(b)(1)) is amended by adding at the end the following new
subparagraph:
``(F) Limitation on beneficiary liability.--An
individual who is entitled to benefits under this title
and is furnished an item or service for which such
benefits are incorrectly paid is not liable for
repayment of such benefits under this paragraph unless
payment of such benefits was made to the individual.''.
(c) Effective Date.--The amendments made by this section apply to
items and services furnished on or after the date of the enactment of
this Act.
CHAPTER 2--HOME HEALTH SERVICES
SEC. 4711. RECAPTURING SAVINGS RESULTING FROM TEMPORARY FREEZE ON
PAYMENT INCREASES FOR HOME HEALTH SERVICES.
(a) Basing Updates to Per Visit Cost Limits on Limits for Fiscal
Year 1993.--Section 1861(v)(1)(L) (42 U.S.C. 1395x(v)(1)(L)) is amended
by adding at the end the following:
``(iv) In establishing limits under this subparagraph for cost
reporting periods beginning after September 30, 1997, the Secretary
shall not take into account any changes in the home health market
basket, as determined by the Secretary, with respect to cost reporting
periods which began on or after July 1, 1994, and before July 1,
1996.''.
(b) No Exceptions Permitted Based on Amendment.--The Secretary of
Health and Human Services shall not consider the amendment made by
subsection (a) in making any exemptions and exceptions pursuant to
section 1861(v)(1)(L)(ii) of the Social Security Act (42 U.S.C.
1395x(v)(1)(L)(ii)).
SEC. 4712. INTERIM PAYMENTS FOR HOME HEALTH SERVICES.
(a) Reductions in Cost Limits.--Section 1861(v)(1)(L)(i) (42 U.S.C.
1395x(v)(1)(L)(i)) is amended--
(1) by moving the indentation of subclauses (I) through
(III) 2-ems to the left;
(2) in subclause (I), by inserting ``of the mean of the
labor-related and nonlabor per visit costs for freestanding
home health agencies'' before the comma at the end;
(3) in subclause (II), by striking ``, or'' and inserting
``of such mean,'';
(4) in subclause (III)--
(A) by inserting ``and before October 1, 1997,''
after ``July 1, 1987,'', and
(B) by striking the comma at the end and inserting
``of such mean, or''; and
(5) by striking the matter following subclause (III) and
inserting the following:
``(IV) October 1, 1997, 105 percent of the median of the
labor-related and nonlabor per visit costs for freestanding
home health agencies.''.
(b) Delay In Updates.--Section 1861(v)(1)(L)(iii) (42 U.S.C.
1395x(v)(1)(L)(iii)) is amended by inserting ``, or on or after July 1,
1997, and before October 1, 1997'' after ``July 1, 1996''.
(c) Additions to Cost Limits.--Section 1861(v)(1)(L) (42 U.S.C.
1395x(v)(1)(L)), as amended by section 4711(a), is amended by inserting
adding at the end the following new clauses:
``(v) 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--
``(I) an agency-specific per beneficiary annual limitation
calculated based 75 percent on the reasonable costs (including
nonroutine medical supplies) for the agency's 12-month cost
reporting period ending during 1994, and based 25 percent on
the standardized regional average of such costs for the
agency's region for cost reporting periods ending during 1994,
such costs updated by the home health market basket index; and
``(II) the agency's unduplicated census count of patients
(entitled to benefits under this title) for the cost reporting
period subject to the limitation.
``(vi) For services furnished by home health agencies for cost
reporting periods beginning on or after October 1, 1997, the following
rules apply:
``(I) For new providers and those providers without a 12-
month cost reporting period ending in calendar year 1994, the
per beneficiary limitation shall be equal to the median of
these limits (or the Secretary's best estimates thereof)
applied to other home health agencies as determined by the
Secretary. A home health agency that has altered its corporate
structure or name shall not be considered a new provider for
this purpose.
``(II) For beneficiaries who use services furnished by more
than one home health agency, the per beneficiary limitations
shall be prorated among the agencies.''.
(d) Development of Case Mix System.--The Secretary of Health and
Human Services shall expand research on a prospective payment system
for home health agencies under the medicare program that ties
prospective payments to a unit of service, including an intensive
effort to develop a reliable case mix adjuster that explains a
significant amount of the variances in costs.
(e) Submission of Data for Case Mix System.--Effective for cost
reporting periods beginning on or after October 1, 1997, the Secretary
of Health and Human Services may require all home health agencies to
submit additional information that the Secretary considers necessary
for the development of a reliable case mix system.
SEC. 4713. CLARIFICATION OF PART-TIME OR INTERMITTENT NURSING CARE.
(a) In General.--Section 1861(m) (42 U.S.C. 1395x(m)) is amended by
adding at the end the following: ``For purposes of paragraphs (1) and
(4), the term `part-time or intermittent services' means skilled
nursing and home health aide services furnished any number of days per
week as long as they are furnished (combined) less than 8 hours each
day and 28 or fewer hours each week (or, subject to review on a case-
by-case basis as to the need for care, less than 8 hours each day and
35 or fewer hours per week). For purposes of sections 1814(a)(2)(C) and
1835(a)(2)(A), `intermittent' means skilled nursing care that is either
provided or needed on fewer than 7 days each week, or less than 8 hours
of each day for periods of 21 days or less (with extensions in
exceptional circumstances when the need for additional care is finite
and predictable).''.
(b) Effective Date.--The amendment made by subsection (a) applies
to services furnished on or after October 1, 1997.
SEC. 4714. STUDY ON DEFINITION OF HOMEBOUND.
(a) Study.--The Secretary of Health and Human Services shall
conduct a study of the criteria that should be applied, and the method
of applying such criteria, in the determination of whether an
individual is homebound for purposes of qualifying for receipt of
benefits for home health services under the medicare program. Such
criteria shall include the extent and circumstances under which a
person may be absent from the home but nonetheless qualify.
(b) Report.--Not later than October 1, 1998, the Secretary shall
submit a report to the Congress on the study conducted under subsection
(a). The report shall include specific recommendations on such criteria
and methods.
SEC. 4715. PAYMENT BASED ON LOCATION WHERE HOME HEALTH SERVICE IS
FURNISHED.
(a) Conditions of Participation.--Section 1891 (42 U.S.C. 1395bbb)
is amended by adding at the end the following:
``(g) Payment on Basis of Location of Service.--A home health
agency shall submit claims for payment for home health services under
this title only on the basis of the geographic location at which the
service is furnished, as determined by the Secretary.''.
(b) Wage Adjustment.--Section 1861(v)(1)(L)(iii) (42 U.S.C.
1395x(v)(1)(L)(iii)) is amended by striking ``agency is located'' and
inserting ``service is furnished''.
(c) Effective Date.--The amendments made by this section apply to
cost reporting periods beginning on or after October 1, 1997.
SEC. 4716. NORMATIVE STANDARDS FOR HOME HEALTH CLAIMS DENIALS,
(a) In General.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)), as
amended by section 4103(c), is amended--
(1) by striking ``and'' at the end of subparagraph (G),
(2) by striking the semicolon at the end of subparagraph
(H) and inserting ``, and'', and
(3) by inserting after subparagraph (H) the following new
subparagraph:
``(I) the frequency and duration of home health services
which are in excess of normative guidelines that the Secretary
shall establish by regulation;''.
(b) Notification.--The Secretary of Health and Human Services may
establish a process for notifying a physician in cases in which the
number of home health service visits furnished under the medicare
program pursuant to a prescription or certification of the physician
significantly exceeds such threshold (or thresholds) as the Secretary
specifies. The Secretary may adjust such threshold to reflect
demonstrated differences in the need for home health services among
different beneficiaries.
(c) Effective Date.--The amendments made by this section apply to
services furnished on or after October 1, 1997.
SEC. 4717. NO HOME HEALTH BENEFITS BASED SOLELY ON DRAWING BLOOD.
(a) In General.--Sections 1814(a)(2)(C) and 1835(a)(2)(A) (42
U.S.C. 1395f(a)(2)(C), 1395n(a)(2)(A)) are each amended by inserting
``(other than solely venipuncture for the purpose of obtaining a blood
sample)'' after ``skilled nursing care''.
(b) Effective Date.--The amendments made by subsection (a) apply to
home health services furnished after the 6-month period beginning after
the date of enactment of this Act.
SEC. 4718. MAKING PART B PRIMARY PAYOR FOR CERTAIN HOME HEALTH
SERVICES.
(a) In General.--Section 1833(d) (42 U.S.C. 1395l(d)) is amended--
(1) by striking ``(d) No'' and inserting ``(d)(1) Subject
to paragraph (2), no'', and
(2) by adding at the end the following new paragraph:
``(2) Payment shall be made under this part (rather than under part
A), for an individual entitled to benefits under part A, for home
health services, other than the first 100 visits of post-hospital home
health services furnished to an individual.''.
(b) Post-hospital Home Health Services.--Section 1861 (42 U.S.C.
1395x) is amended by adding at the end the following:
``(ss) Post-Hospital Home Health Services.--The term `post-hospital
home health services' means home health services furnished to an
individual under a plan of treatment established when the individual
was an inpatient of a hospital or rural primary care hospital for not
less than 3 consecutive days before discharge, or during a covered
post-hospital extended care stay, if home health services are initiated
for the individual within 30 days after discharge from the hospital,
rural primary care hospital or extended care facility.''.
(c) Payments Under Part B.--Subparagraph (A) of section 1833(a)(2)
(42 U.S.C. 1395l(a)(2)) is amended to read as follows:
``(A) with respect to home health services (other
than a covered osteoporosis drug (as defined in section
1861(kk)), and to items and services described in
section 1861(s)(10)(A), the amounts determined under
section 1861(v)(1)(L) or section 1893, or, if the
services are furnished by a public provider of
services, or by another provider which demonstrates to
the satisfaction of the Secretary that a significant
portion of its patients are low-income (and requests
that payment be made under this provision), free of
charge, or at nominal charges to the public, the amount
determined in accordance with section 1814(b)(2);''.
(d) Phase-In of Additional Part B Costs In Determination of Part B
Monthly Premium.--Section 1839(a) (42 U.S.C. 1395r(a)) is amended--
(1) in paragraph (3) in last the sentence inserted by
section 4631(a) of this title, by inserting ``(except as
provided in paragraph (5)(B))'' before the period, and
(2) by adding after paragraph (4) the following:
``(5)(A) The Secretary shall, at the time of determining the
monthly actuarial rate under paragraph (1) for 1998 through 2003, shall
determine a transitional monthly actuarial rate for enrollees age 65
and over in the same manner as such rate is determined under paragraph
(1), except that there shall be excluded from such determination an
estimate of any benefits and administrative costs attributable to home
health services for which payment would have been made under part A
during the year but for paragraph (2) of section 1833(d).
``(B) The monthly premium for each individual enrolled under this
part for each month for a year (beginning with 1998 and ending with
2003) shall be equal to 50 percent of the monthly actuarial rate
determined under subparagraph (A) increased by the following proportion
of the difference between such premium and the monthly premium
otherwise determined under paragraph (3) (without regard to this
paragraph):
``(i) For a month in 1998, \1/7\.
``(ii) For a month in 1999, \2/7\.
``(iii) For a month in 2000, \3/7\.
``(iv) For a month in 2001, \4/7\.
``(v) For a month in 2002, \5/7\.
``(vi) For a month in 2003, \6/7\.''.
(e) Maintaining Appeal Rights for Home Health Services.--Section
1869(b)(2)(B) (42 U.S.C. 1395ff(b)(2)(B)) is amended by inserting ``(or
$100 in the case of home health services)'' after ``$500''.
(f) Report.--Not later than October 1, 1999, the Secretary of
Health and Human Services shall submit a report to the Committees on
Commerce and Ways and Means of the House of Representatives and the
Committee on Finance of the Senate on the impact on home health
utilization and admissions to hospitals and skilled nursing facilities
of the amendment made by subsection (b). The Secretary shall further
reexamine and submit a report to such Committees on this impact 1 year
after the full implementation of the prospective payment system for
home health services into the medicare program, effected under the
amendments made by section 4441.
(g) Effective Date.--The amendments made by this section apply to
services furnished on or after October 1, 1997.
CHAPTER 3--BABY BOOM GENERATION MEDICARE COMMISSION
SEC. 4721. BIPARTISAN COMMISSION ON THE EFFECT OF THE BABY BOOM
GENERATION ON THE MEDICARE PROGRAM.
(a) Establishment.--There is established a commission to be known
as the Bipartisan Commission on the Effect of the Baby Boom Generation
on the Medicare Program (in this section referred to as the
``Commission'').
(b) Duties.--
(1) In general.--The Commission shall--
(A) examine the financial impact on the medicare
program of the significant increase in the number of
medicare eligible individuals which will occur
beginning approximately during 2010 and lasting for
approximately 25 years, and
(B) make specific recommendations to the Congress
respecting a comprehensive approach to preserve the
medicare program for the period during which such
individuals are eligible for medicare.
(2) Considerations in making recommendations.--In making
its recommendations, the Commission shall consider the
following:
(A) The amount and sources of Federal funds to
finance the medicare program, including the potential
use of innovative financing methods.
(B) Methods used by other nations to respond to
comparable demographic patterns in eligibility for
health care benefits for elderly and disabled
individuals.
(C) Modifying age-based eligibility to correspond
to changes in age-based eligibility under the OASDI
program.
(D) Trends in employment-related health care for
retirees, including the use of medical savings accounts
and similar financing devices.
(E) The role medicare should play in addressing the
needs of persons with chronic illness.
(c) Membership.--
(1) Appointment.--The Commission shall be composed of 15
voting members as follows:
(A) The Majority Leader of the Senate shall
appoint, after consultation with the minority leader of
the Senate, 6 members, of whom not more than 4 may be
of the same political party.
(B) The Speaker of the House of Representatives
shall appoint, after consultation with the minority
leader of the House of Representatives, 6 members, of
whom not more than 4 may be of the same political
party.
(C) The 3 ex officio members of the Board of
Trustees of the Federal Hospital Insurance Trust Fund
and of the Federal Supplementary Medical Insurance
Trust Fund who are Cabinet level officials.
(2) Chairman and vice chairman.--As the first item of
business at the Commission's first meeting (described in
paragraph (5)(B)), the Commission shall elect a Chairman and
Vice Chairman from among its members. The individuals elected
as Chairman and Vice Chairman may not be of the same political
party and may not have been appointed to the Commission by the
same appointing authority.
(3) Vacancies.--Any vacancy in the membership of the
Commission shall be filled in the manner in which the original
appointment was made and shall not affect the power of the
remaining members to execute the duties of the Commission.
(4) Quorum.--A quorum shall consist of 8 members of the
Commission, except that 4 members may conduct a hearing under
subsection (f).
(5) Meetings.--
(A) The Commission shall meet at the call of its
Chairman or a majority of its members.
(B) The Commission shall hold its first meeting not
later than February 1, 1998.
(6) Compensation and reimbursement of expenses.--Members of
the Commission are not entitled to receive compensation for
service on the Commission. Members may be reimbursed for
travel, subsistence, and other necessary expenses incurred in
carrying out the duties of the Commission.
(d) Advisory Panel.--
(1) In general.--The Chairman, in consultation with the
Vice Chairman, may establish a panel (in this section referred
to as the ``Advisory Panel'') consisting of health care
experts, consumers, providers, and others to advise and assist
the members of the Commission in carrying out the duties
described in subsection (b). The panel shall have only those
powers that the Chairman, in consultation with the Vice
Chairman, determines are necessary and appropriate to assist
the Commission in carrying out such duties.
(2) Compensation.--Members of the Advisory Panel are not
entitled to receive compensation for service on the Advisory
Panel. Subject to the approval of the chairman of the
Commission, members may be reimbursed for travel, subsistence,
and other necessary expenses incurred in carrying out the
duties of the Advisory Panel.
(e) Staff and Consultants.--
(1) Staff.--The Commission may appoint and determine the
compensation of such staff as may be necessary to carry out the
duties of the Commission. Such appointments and compensation
may be made without regard to the provisions of title 5, United
States Code, that govern appointments in the competitive
services, and the provisions of chapter 51 and subchapter III
of chapter 53 of such title that relate to classifications and
the General Schedule pay rates.
(2) Consultants.--The Commission may procure such temporary
and intermittent services of consultants under section 3109(b)
of title 5, United States Code, as the Commission determines to
be necessary to carry out the duties of the Commission.
(f) Powers.--
(1) Hearings and other activities.--For the purpose of
carrying out its duties, the Commission may hold such hearings
and undertake such other activities as the Commission
determines to be necessary to carry out its duties.
(2) Studies by gao.--Upon the request of the Commission,
the Comptroller General shall conduct such studies or
investigations as the Commission determines to be necessary to
carry out its duties.
(3) Cost estimates by congressional budget office.--
(A) Upon the request of the Commission, the
Director of the Congressional Budget Office shall
provide to the Commission such cost estimates as the
Commission determines to be necessary to carry out its
duties.
(B) The Commission shall reimburse the Director of
the Congressional Budget Office for expenses relating
to the employment in the office of the Director of such
additional staff as may be necessary for the Director
to comply with requests by the Commission under
subparagraph (A).
(4) Detail of federal employees.--Upon the request of the
Commission, the head of any Federal agency is authorized to
detail, without reimbursement, any of the personnel of such
agency to the Commission to assist the Commission in carrying
out its duties. Any such detail shall not interrupt or
otherwise affect the civil service status or privileges of the
Federal employee.
(5) Technical assistance.--Upon the request of the
Commission, the head of a Federal agency shall provide such
technical assistance to the Commission as the Commission
determines to be necessary to carry out its duties.
(6) Use of mails.--The Commission may use the United States
mails in the same manner and under the same conditions as
Federal agencies and shall, for purposes of the frank, be
considered a commission of Congress as described in section
3215 of title 39, United States Code.
(7) Obtaining information.--The Commission may secure
directly from any Federal agency information necessary to
enable it to carry out its duties, if the information may be
disclosed under section 552 of title 5, United States Code.
Upon request of the Chairman of the Commission, the head of
such agency shall furnish such information to the Commission.
(8) Administrative support services.--Upon the request of
the Commission, the Administrator of General Services shall
provide to the Commission on a reimbursable basis such
administrative support services as the Commission may request.
(9) Printing.--For purposes of costs relating to printing
and binding, including the cost of personnel detailed from the
Government Printing Office, the Commission shall be deemed to
be a committee of the Congress.
(g) Report.--Not later than May 1, 1999, the Commission shall
submit to Congress a report containing its findings and recommendations
regarding how to protect and preserve the medicare program in a
financially solvent manner until 2030 (or, if later, throughout the
period of projected solvency of the Federal Old-Age and Survivors
Insurance Trust Fund). The report shall include detailed
recommendations for appropriate legislative initiatives respecting how
to accomplish this objective.
(h) Termination.--The Commission shall terminate 30 days after the
date of submission of the report required in subsection (g).
(i) Authorization of Appropriations.--There are authorized to be
appropriated $1,500,000 to carry out this section. 60 percent of such
appropriation shall be payable from the Federal Hospital Insurance
Trust Fund, and 40 percent of such appropriation shall be payable from
the Federal Supplementary Medical Insurance Trust Fund under title
XVIII of the Social Security Act (42 U.S.C. 1395i, 1395t).
CHAPTER 4--PROVISIONS RELATING TO DIRECT GRADUATE MEDICAL EDUCATION
SEC. 4731. LIMITATION ON PAYMENT BASED ON NUMBER OF RESIDENTS AND
IMPLEMENTATION OF ROLLING AVERAGE FTE COUNT.
Section 1886(h)(4) (42 U.S.C. 1395ww(h)(4)) is amended by adding
after subparagraph (E) the following:
``(F) Limitation on number of residents for certain
fiscal years.--Such rules shall provide that for
purposes of a cost reporting period beginning on or
after October 1, 1997, the total number of full-time
equivalent residents before application of weighting
factors (as determined under this paragraph) with
respect to a hospital's approved medical residency
training program may not exceed the number of full-time
equivalent residents with respect to the hospital's
most recent cost reporting period ending on or before
December 31, 1996.
``(G) Counting interns and residents for fy 1998
and subsequent years.--
``(i) FY 1998.--For the hospital's first
cost reporting period beginning during fiscal
year 1998, subject to the limit described in
subparagraph (F), the total number of full-time
equivalent residents, for determining the
hospital's graduate medical education payment,
shall equal the average of the full-time
equivalent resident counts for the cost
reporting period and the preceding cost
reporting period.
``(ii) Subsequent years.--For each
subsequent cost reporting period, subject to
the limit described in subparagraph (F), the
total number of full-time equivalent residents,
for determining the hospital's graduate medical
education payment, shall equal the average of
the actual full-time equivalent resident counts
for the cost reporting period and preceding two
cost reporting periods.
``(iii) Adjustment for short periods.--If a
hospital's cost reporting period beginning on
or after October 1, 1997, is not equal to
twelve months, the Secretary shall make
appropriate modifications to ensure that the
average full-time equivalent resident counts
pursuant to clause (ii) are based on the
equivalent of full 12-month cost reporting
periods.
``(iv) Exclusion of residents in
dentistry.--Residents in an approved medical
residency training program in dentistry shall
not be counted for purposes of this
subparagraph and subparagraph (F).''.
SEC. 4732. PHASED-IN LIMITATION ON HOSPITAL OVERHEAD AND SUPERVISORY
PHYSICIAN COMPONENT OF DIRECT MEDICAL EDUCATION COSTS.
(a) In General.--Section 1886(h)(3) (42 U.S.C. 1395ww(h)(3)) is
amended--
(1) in subparagraph (B), by inserting ``subject to
subparagraph (D),'' after ``subparagraph (A)'', and
(2) by adding at the end the following:
``(D) Phased-in limitation on hospital overhead and
supervisory physician component.--
``(i) In general.--In the case of a
hospital for which the overhead GME amount (as
defined in clause (ii)) for the base period
exceeds an amount equal to the 75th percentile
of the overhead GME amounts in such period for
all hospitals (weighted to reflect the full-
time equivalent resident counts for all
approved medical residency training programs),
subject to clause (iv), the hospital's approved
FTE resident amount (for periods beginning on
or after October 1, 1997) shall be reduced from
the amount otherwise applicable (as previously
reduced under this subparagraph) by an overhead
reduction amount. The overhead reduction amount
is equal to the lesser of--
``(I) 20 percent of the reference
reduction amount (described in clause
(iii)) for the period, or
``(II) 15 percent of the hospital's
overhead GME amount for the period (as
otherwise determined before the
reduction provided under this
subparagraph for the period involved).
``(ii) Overhead gme amount.--For purposes
of this subparagraph, the term `overhead GME
amount' means, for a hospital for a period, the
product of--
``(I) the percentage of the
hospital's approved FTE resident amount
for the base period that is not
attributable to resident salaries and
fringe benefits, and
``(II) the hospital's approved FTE
resident amount for the period
involved.
``(iii) Reference reduction amount.--
``(I) In general.--The reference
reduction amount described in this
clause for a hospital for a cost
reporting period is the base difference
(described in subclause (II)) updated,
in a compounded manner for each period
from the base period to the period
involved, by the update applied for
such period to the hospital's approved
FTE resident amount.
``(II) Base difference.--The base
difference described in this subclause
for a hospital is the amount by which
the hospital's overhead GME amount in
the base period exceeded the 75th
percentile of such amounts (as
described in clause (i)).
``(iv) Maximum reduction to 75th
percentile.--In no case shall the reduction
under this subparagraph effected for a hospital
for a period (below the amount that would
otherwise apply for the period if this
subparagraph did not apply for any period)
exceed the reference reduction amount for the
hospital for the period.
``(v) Base period.--For purposes of this
subparagraph, the term `base period' means the
cost reporting period beginning in fiscal year
1984 or the period used to establish the
hospital's approved FTE resident amount for
hospitals that did not have approved residency
training programs in fiscal year 1984.
``(vi) Rules for hospitals initiating
residency training programs.--The Secretary
shall establish rules for the application of
this subparagraph in the case of a hospital
that initiates medical residency training
programs during or after the base period.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to per resident payment amounts attributable to periods beginning
on or after October 1, 1997.
SEC. 4733. PERMITTING PAYMENT TO NON-HOSPITAL PROVIDERS.
(a) In General.-- Section 1886 (42 U.S.C. 1395ww) is amended by
adding at the end the following:
``(k) Payment to Non-Hospital Providers.--
``(1) Report.--The Secretary shall submit to Congress, not
later than 18 months after the date of the enactment of this
subsection, a proposal for payment to qualified non-hospital
providers for their direct costs of medical education, if those
costs are incurred in the operation of an approved medical
residency training program described in subsection (h). Such
proposal shall specify the amounts, form, and manner in which
such payments will be made and the portion of such payments
that will be made from each of the trust funds under this
title.
``(2) Effectiveness.--Except as otherwise provided in law,
the Secretary may implement such proposal for residency years
beginning not earlier than 6 months after the date of submittal
of the report under paragraph (1).
``(3) Qualified non-hospital providers.--For purposes of
this subsection, the term `qualified non-hospital provider'
means--
``(A) a Federally qualified health center, as
defined in section 1861(aa)(4);
``(B) a rural health clinic, as defined in section
1861(aa)(2); and
``(C) such other providers (other than hospitals)
as the Secretary determines to be appropriate.''.
(b) Prohibition on Double Payments; Budget Neutrality Adjustment.--
Section 1886(h)(3)(B) (42 U.S.C. 1395ww(h)(3)(B)) is amended by adding
at the end the following:
``The Secretary shall reduce the aggregate approved
amount to the extent payment is made under subsection
(k) for residents included in the hospital's count of
full-time equivalent residents and, in the case of
residents not included in any such count, the Secretary
shall provide for such a reduction in aggregate
approved amounts under this subsection as will assure
that the application of subsection (k) does not result
in any increase in expenditures under this title in
excess of those that would have occurred if subsection
(k) were not applicable.''.
SEC. 4734. INCENTIVE PAYMENTS UNDER PLANS FOR VOLUNTARY REDUCTION IN
NUMBER OF RESIDENTS.
Section 1886(h) (42 U.S.C. 1395ww(h)) is further amended by adding
at the end the following new paragraph:
``(6) Incentive payment under plans for voluntary reduction
in number of residents.--
``(A) In general.--In the case of a voluntary
residency reduction plan for which an application is
approved under subparagraph (B), the qualifying entity
submitting the plan shall be paid an applicable hold
harmless percentage (as specified in subparagraph (E))
of the sum of--
``(i) amount (if any) by which--
``(I) the amount of payment which
would have been made under this
subsection if there had been a 5
percent reduction in the number of
full-time equivalent residents in the
approved medical education training
programs of the qualifying entity as of
June 30, 1997, exceeds
``(II) the amount of payment which
is made under this subsection, taking
into account the reduction in such
number effected under the reduction
plan; and
``(ii) the amount of the reduction in
payment under 1886(d)(5)(B) (for hospitals
participating in the qualifying entity) that is
attributable to the reduction in number of
residents effected under the plan below 95
percent of the number of full-time equivalent
residents in such programs of such entity as of
June 30, 1997.
``(B) Approval of plan applications.--The Secretary
may not approve the application of an qualifying entity
unless--
``(i) the application is submitted in a
form and manner specified by the Secretary and
by not later than March 1, 2000,
``(ii) the application provides for the
operation of a plan for the reduction in the
number of full-time equivalent residents in the
approved medical residency training programs of
the entity consistent with the requirements of
subparagraph (D);
``(iii) the entity elects in the
application whether such reduction will occur
over--
``(I) a period of not longer than 5
residency training years, or
``(II) a period of 6 residency
training years,
except that a qualifying entity described in
subparagraph (C)(i)(III) may not make the
election described in subclause (II); and
``(iv) the Secretary determines that the
application and the entity and such plan meet
such other requirements as the Secretary
specifies in regulations.
``(C) Qualifying entity.--
``(i) In general.--For purposes of this
paragraph, any of the following may be a
qualifying entity:
``(I) Individual hospitals
operating one or more approved medical
residency training programs.
``(II) Subject to clause (ii), two
or more hospitals that operate such
programs and apply for treatment under
this paragraph as a single qualifying
entity.
``(III) Subject to clause (iii), a
qualifying consortium (as described in
section 4735 of the Balanced Budget Act
of 1997).
``(ii) Additional requirement for joint
programs.--In the case of an application by a
qualifying entity described in clause (i)(II),
the Secretary may not approve the application
unless the application represents that the
qualifying entity either--
``(I) in the case of an entity that
meets the requirements of clause (v) of
subparagraph (D) will not reduce the
number of full-time equivalent
residents in primary care during the
period of the plan, or
``(II) in the case of another
entity will not reduce the proportion
of its residents in primary care (to
the total number of residents) below
such proportion as in effect as of the
applicable time described in
subparagraph (D)(vi).
``(iii) Additional requirement for
consortia.--In the case of an application by a
qualifying entity described in clause (i)(III),
the Secretary may not approve the application
unless the application represents that the
qualifying entity will not reduce the
proportion of its residents in primary care (to
the total number of residents) below such
proportion as in effect as of the applicable
time described in subparagraph (D)(vi).
``(D) Residency reduction requirements.--
``(i) Individual hospital applicants.--In
the case of a qualifying entity described in
subparagraph (C)(i)(I), the number of full-time
equivalent residents in all the approved
medical residency training programs operated by
or through the entity shall be reduced as
follows:
``(I) If base number of residents
exceeds 750 residents, by a number
equal to at least 20 percent of such
base number.
``(II) Subject to subclause (IV),
if base number of residents exceeds
500, but is less than 750, residents,
by 150 residents.
``(III) Subject to subclause (IV),
if base number of residents does not
exceed 500 residents, by a number equal
to at least 25 percent of such base
number.
``(IV) In the case of a qualifying
entity which is described in clause (v)
and which elects treatment under this
subclause, by a number equal to at
least 20 percent of such base number.
``(ii) Joint applicants.--In the case of a
qualifying entity described in subparagraph
(C)(i)(II), the number of full-time equivalent
residents in all the approved medical residency
training programs operated by or through the
entity shall be reduced as follows:
``(I) Subject to subclause (II), by
a number equal to at least 25 percent
of such base number.
``(II) In the case of a qualifying
entity which is described in clause (v)
and which elects treatment under this
subclause, by a number equal to at
least 20 percent of such base number.
``(iii) Consortia.--In the case of a
qualifying entity described in subparagraph
(C)(i)(III), the number of full-time equivalent
residents in all the approved medical residency
training programs operated by or through the
entity shall be reduced by a number equal to at
least 20 percent of such base number.
``(iv) Manner of reduction.--The reductions
specified under the preceding provisions of
this subparagraph for a qualifying entity shall
be below the base number of residents for that
entity and shall be fully effective not later
than--
``(I) the 5th residency training
year in which the application under
subparagraph (B) is effective, in the
case of an entity making the election
described in subparagraph (B)(iii)(I),
or
``(II) the 6th such residency
training year, in the case of an entity
making the election described in
subparagraph (B)(iii)(II).
``(v) Entities providing assurance of
maintenance of primary care residents.--An
entity is described in this clause if--
``(I) the base number of residents
for the entity is less than 750;
``(II) the number of full-time
equivalent residents in primary care
included in the base number of
residents for the entity is at least 10
percent of such base number; and
``(III) the entity represents in
its application under subparagraph (B)
that there will be no reduction under
the plan in the number of full-time
equivalent residents in primary care.
If a qualifying entity fails to comply with the
representation described in subclause (III),
the entity shall be subject to repayment of all
amounts paid under this paragraph, in
accordance with procedures established to carry
out subparagraph (F).
``(vi) Base number of residents defined.--
For purposes of this paragraph, the term `base
number of residents' means, with respect to a
qualifying entity operating approved medical
residency training programs, the number of
full-time equivalent residents in such programs
(before application of weighting factors) of
the entity as of the most recent cost reporting
period ending before June 30, 1997, or, if
less, for any subsequent cost reporting period
that ends before the date the entity makes
application under this paragraph.
``(E) Applicable hold harmless percentage.--
``(i) In general.--For purposes of
subparagraph (A), the `applicable hold harmless
percentage' is the percentages specified in
clause (ii) or clause (iii), as elected by the
qualifying entity in the application submitted
under subparagraph (B).
``(ii) 5-year reduction plan.--In the case
of an entity making the election described in
subparagraph (B)(iii)(I), the percentages
specified in this clause are, for the--
``(I) first and second residency
training years in which the reduction
plan is in effect, 100 percent,
``(II) third such year, 75 percent,
``(III) fourth such year, 50
percent, and
``(IV) fifth such year, 25 percent.
``(iii) 6-year reduction plan.--In the case
of an entity making the election described in
subparagraph (B)(iii)(II), the percentages
specified in this clause are, for the--
``(I) first residency training year
in which the reduction plan is in
effect, 100 percent,
``(II) second such year, 95
percent,
``(III) third such year, 85
percent,
``(IV) fourth such year, 70
percent,
``(V) fifth such year, 50 percent,
and
``(VI) sixth such year, 25 percent.
``(F) Penalty for increase in number of residents
in subsequent years.--If payments are made under this
paragraph to a qualifying entity, if the entity (or any
hospital operating as part of the entity) increases the
number of full-time equivalent residents above the
number of such residents permitted under the reduction
plan as of the completion of the plan, then, as
specified by the Secretary, the entity is liable for
repayment to the Secretary of the total amounts paid
under this paragraph to the entity.
``(G) Treatment of rotating residents.--In applying
this paragraph, the Secretary shall establish rules
regarding the counting of residents who are assigned to
institutions the medical residency training programs in
which are not covered under approved applications under
this paragraph.''.
(b) Relation to Demonstration Projects and Authority.--
(1) Section 1886(h)(6) of the Social Security Act, added by
subsection (a), shall not apply to any residency training
program with respect to which a demonstration project described
in paragraph (3) has been approved by the Health Care Financing
Administration as of May 27, 1997. The Secretary of Health and
Human Services shall take such actions as may be necessary to
assure that (in the manner described in subparagraph (A) of
such section) in no case shall payments be made under such a
project with respect to the first 5 percent reduction in the
base number of full-time equivalent residents otherwise used
under the project.
(2) Effective May 27, 1997, the Secretary of Health and
Human Services is not authorized to approve any demonstration
project described in paragraph (3) for any residency training
year beginning before July 1, 2006.
(3) A demonstration project described in this paragraph is
a project that provides for additional payments under title
XVIII of the Social Security Act in connection with reduction
in the number of residents in a medical residency training
program.
(c) Interim, Final Regulations.--In order to carry out the
amendment made by subsection (a) in a timely manner, the Secretary of
Health and Human Services may first promulgate regulations, that take
effect on an interim basis, after notice and pending opportunity for
public comment, by not later than 6 months after the date of the
enactment of this Act.
SEC. 4735. DEMONSTRATION PROJECT ON USE OF CONSORTIA.
(a) In General.--The Secretary of Health and Human Services (in
this section referred to as the Secretary) shall establish a
demonstration project under which, instead of making payments to
teaching hospitals pursuant to section 1886(h) of the Social Security
Act, the Secretary shall make payments under this section to each
consortium that meets the requirements of subsection (b).
(b) Qualifying Consortia.--For purposes of subsection (a), a
consortium meets the requirements of this subsection if the consortium
is in compliance with the following:
(1) The consortium consists of an approved medical
residency training program in a teaching hospital and one or
more of the following entities:
(A) A school of allopathic medicine or osteopathic
medicine.
(B) Another teaching hospital, which may be a
children's hospital.
(C) Another approved medical residency training
program.
(D) A Federally qualified health center.
(E) A medical group practice.
(F) A managed care entity.
(G) An entity furnishing outpatient services.
(I) Such other entity as the Secretary determines
to be appropriate.
(2) The members of the consortium have agreed to
participate in the programs of graduate medical education that
are operated by the entities in the consortium.
(3) With respect to the receipt by the consortium of
payments made pursuant to this section, the members of the
consortium have agreed on a method for allocating the payments
among the members.
(4) The consortium meets such additional requirements as
the Secretary may establish.
(c) Amount and Source of Payment.--The total of payments to a
qualifying consortium for a fiscal year pursuant to subsection (a)
shall not exceed the amount that would have been paid under section
1886(h) of the Social Security Act for the teaching hospital (or
hospitals) in the consortium. Such payments shall be made in such
proportion from each of the trust funds established under title XVIII
of such Act as the Secretary specifies.
SEC. 4736. RECOMMENDATIONS ON LONG-TERM PAYMENT POLICIES REGARDING
FINANCING TEACHING HOSPITALS AND GRADUATE MEDICAL
EDUCATION.
(a) In General.--The Medicare Payment Advisory Commission
(established under section 1805 of the Social Security Act and in this
section referred to as the ``Commission'') shall examine and develop
recommendations on whether and to what extent medicare payment policies
and other Federal policies regarding teaching hospitals and graduate
medical education should be reformed. Such recommendations shall
include recommendations regarding each of the following:
(1) The financing of graduate medical education, including
consideration of alternative broad-based sources of funding for
such education and models for the distribution of payments
under any all-payer financing mechanism.
(2) The financing of teaching hospitals, including
consideration of the difficulties encountered by such hospitals
as competition among health care entities increases. Matters
considered under this paragraph shall include consideration of
the effects on teaching hospitals of the method of financing
used for the MedicarePlus program under part C of title XVIII
of the Social Security Act.
(3) Possible methodologies for making payments for graduate
medical education and the selection of entities to receive such
payments. Matters considered under this paragraph shall
include--
(A) issues regarding children's hospitals and
approved medical residency training programs in
pediatrics, and
(B) whether and to what extent payments are being
made (or should be made) for training in the various
nonphysician health professions, including social
workers and psychologists.
(4) Federal policies regarding international medical
graduates.
(5) The dependence of schools of medicine on service-
generated income.
(6) Whether and to what extent the needs of the United
States regarding the supply of physicians, in the aggregate and
in different specialties, will change during the 10-year period
beginning on October 1, 1997, and whether and to what extent
any such changes will have significant financial effects on
teaching hospitals.
(7) Methods for promoting an appropriate number, mix, and
geographical distribution of health professionals.
(c) Consultation.--In conducting the study under subsection (a),
the Commission shall consult with the Council on Graduate Medical
Education and individuals with expertise in the area of graduate
medical education, including--
(1) deans from allopathic and osteopathic schools of
medicine;
(2) chief executive officers (or equivalent administrative
heads) from academic health centers, integrated health care
systems, approved medical residency training programs, and
teaching hospitals that sponsor approved medical residency
training programs;
(3) chairs of departments or divisions from allopathic and
osteopathic schools of medicine, schools of dentistry, and
approved medical residency training programs in oral surgery;
(4) individuals with leadership experience from
representative fields of non-physician health professionals;
(5) individuals with substantial experience in the study of
issues regarding the composition of the health care workforce
of the United States; and
(6) individuals with expertise on the financing of health
care.
(d) Report.--Not later than 2 years after the date of the enactment
of this Act, the Commission shall submit to the Congress a report
providing its recommendations under this section and the reasons and
justifications for such recommendations.
SEC. 4737. MEDICARE SPECIAL REIMBURSEMENT RULE FOR CERTAIN COMBINED
RESIDENCY PROGRAMS.
(a) In General.--Section 1886(h)(5)(G) (42 U.S.C. 1395ww(h)(5)(G))
is amended--
(1) in clause (i), by striking ``and (iii)'' and inserting
``, (iii), and (iv)''; and
(2) by adding at the end the following:
``(iv) Special rule for certain combined
residency programs.--(I) In the case of a
resident enrolled in a combined medical
residency training program in which all of the
individual programs (that are combined) are for
training a primary care resident (as defined in
subparagraph (H)), the period of board
eligibility shall be the minimum number of
years of formal training required to satisfy
the requirements for initial board eligibility
in the longest of the individual programs plus
one additional year.
``(II) A resident enrolled in a combined
medical residency training program that
includes an obstetrics and gynecology program
shall qualify for the period of board
eligibility under subclause (I) if the other
programs such resident combines with such
obstetrics and gynecology program are for
training a primary care resident.''.
(b) Effective Date.--The amendments made by subsection (a) apply to
combined medical residency programs for residency years beginning on or
after July 1, 1998.
CHAPTER 5--OTHER PROVISIONS
SEC. 4741. CENTERS OF EXCELLENCE.
(a) In General.--Title XVIII is amended by inserting after section
1888 the following:
``centers of excellence
``Sec. 1889. (a) In General.--The Secretary shall use a competitive
process to contract with specific hospitals or other entities for
furnishing services related to surgical procedures, and for furnishing
services (unrelated to surgical procedures) to hospital inpatients that
the Secretary determines to be appropriate. The services may include
any services covered under this title that the Secretary determines to
be appropriate, including post-hospital services.
``(b) Quality Standards.--
``(1) In general.--Only entities that meet quality
standards established by the Secretary shall be eligible to
contract under this section. Contracting entities shall
implement a quality improvement plan approved by the Secretary.
``(2) Participation decision based on quality.--Subject to
subsection (c), the Secretary shall consider quality as the
primary factor in selecting hospitals or other entities to
enter into contracts under this section.
``(c) Payment.--Payment under this section shall be made on the
basis of negotiated all-inclusive rates. The amount of payment made by
the Secretary to an entity under this title for services covered under
a contract shall not exceed the aggregate amount of the payments that
the Secretary would have otherwise made for the services.
``(d) Contract Period.--A contract period shall be 3 years (subject
to renewal), so long as the entity continues to meet quality and other
contractual standards.
``(e) Incentives for Use of Centers.--Entities under a contract
under this section may furnish additional services (at no cost to an
individual entitled to benefits under this title) or waive cost-
sharing, subject to the approval of the Secretary.
``(f) Limit on Number of Centers.--The Secretary shall limit the
number of centers in a geographic area to the number needed to meet
projected demand for contracted services.''.
(b) Effective Date.--The amendment made by subsection (a) applies
to services furnished on or after October 1, 1997.
SEC. 4742. MEDICARE PART B SPECIAL ENROLLMENT PERIOD AND WAIVER OF PART
B LATE ENROLLMENT PENALTY AND MEDIGAP SPECIAL OPEN
ENROLLMENT PERIOD FOR CERTAIN MILITARY RETIREES AND
DEPENDENTS.
(a) Medicare Part B Special Enrollment Period; Waiver of Part B
Penalty for Late Enrollment.--
(1) In general.--In the case of any eligible individual (as
defined in subsection (c)), the Secretary of Health and Human
Services shall provide for a special enrollment period during
which the individual may enroll under part B of title XVIII of
the Social Security Act. Such period shall be for a period of 6
months and shall begin with the first month that begins at
least 45 days after the date of the enactment of this Act.
(2) Coverage period.--In the case of an eligible individual
who enrolls during the special enrollment period provided under
paragraph (1), the coverage period under part B of title XVIII
of the Social Security Act shall begin on the first day of the
month following the month in which the individual enrolls.
(3) Waiver of part b late enrollment penalty.--In the case
of an eligible individual who enrolls during the special
enrollment period provided under paragraph (1), there shall be
no increase pursuant to section 1839(b) of the Social Security
Act in the monthly premium under part B of title XVIII of such
Act.
(b) Medigap Special Open Enrollment Period.--Notwithstanding any
other provision of law, an issuer of a medicare supplemental policy (as
defined in section 1882(g) of the Social Security Act)--
(1) may not deny or condition the issuance or effectiveness
of a medicare supplemental policy that has a benefit package
classified as ``A'', ``B'', ``C'', or ``F'' under the standards
established under section 1882(p)(2) of the Social Security Act
(42 U.S.C. 1395rr(p)(2)); and
(2) may not discriminate in the pricing of the policy on
the basis of the individual's health status, medical condition
(including both physical and mental illnesses), claims
experience, receipt of health care, medical history, genetic
information, evidence of insurability (including conditions
arising out of acts of domestic violence), or disability;
in the case of an eligible individual who seeks to enroll (and is
enrolled) during the 6-month period described in subsection (a)(1).
(c) Eligible Individual Defined.--In this section, the term
``eligible individual'' means an individual--
(1) who, as of the date of the enactment of this Act, has
attained 65 years of age and was eligible to enroll under part
B of title XVIII of the Social Security Act, and
(2) who at the time the individual first satisfied
paragraph (1) or (2) of section 1836 of the Social Security
Act--
(A) was a covered beneficiary (as defined in
section 1072(5) of title 10, United States Code), and
(B) did not elect to enroll (or to be deemed
enrolled) under section 1837 of the Social Security Act
during the individual's initial enrollment period.
The Secretary of Health and Human Services shall consult with the
Secretary of Defense in the identification of eligible individuals.
SEC. 4743. COMPETITIVE BIDDING FOR CERTAIN ITEMS AND SERVICES.
(a) Establishment of Demonstration.--Not later than 1 year after
the date of the enactment of this Act, the Secretary of Health and
Human Services shall establish and operate over a 2-year period a
demonstration project in 2 geographic regions selected by the Secretary
under which (notwithstanding any provision of title XVIII of the Social
Security Act to the contrary) the amount of payment made under the
medicare program for a selected item or service furnished in the region
shall be equal to the price determined pursuant to a competitive
bidding process which meets the requirements of subsection (b).
(b) Requirements for Competitive Bidding Process.--The competitive
bidding process used under the demonstration project under this section
shall meet such requirements as the Secretary may impose to ensure the
cost-effective delivery to medicare beneficiaries in the project region
of items and services of high quality.
(c) Determination of Selected Items or Services.--The Secretary
shall select items and services to be subject to the demonstration
project under this section if the Secretary determines that the use of
competitive bidding with respect to the item or service under the
project will be appropriate and cost-effective. In determining the
items or services to be selected, the Secretary shall consult with an
advisory taskforce which includes representatives of providers and
suppliers of items and services (including small business providers and
suppliers) in each geographic region in which the project will be
effective.
Subtitle I--Medical Liability Reform
CHAPTER 1--GENERAL PROVISIONS
SEC. 4801. FEDERAL REFORM OF HEALTH CARE LIABILITY ACTIONS.
(a) Applicability.--This subtitle governs any health care liability
action brought in any State or Federal court, except that this subtitle
shall not apply to an action for damages arising from a vaccine-related
injury or death to the extent that title XXI of the Public Health
Service Act applies to the action.
(b) Preemption.--This subtitle shall preempt any State or
applicable Federal law to the extent such law is inconsistent with the
limitations contained in this subtitle. This subtitle shall not preempt
any State or applicable Federal law that provides for defenses or
places limitations on a person's liability in addition to those
contained in this subtitle or otherwise imposes greater restrictions
than those provided in this subtitle.
(c) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in subsection (b) shall be construed to--
(1) waive or affect any defense of sovereign immunity
asserted by any State under any provision of law;
(2) waive or affect any defense of sovereign immunity
asserted by the United States;
(3) affect the applicability of any provision of chapter 97
of title 28, United States Code;
(4) preempt State choice-of-law rules with respect to
claims brought by a foreign nation or a citizen of a foreign
nation; or
(5) affect the right of any court to transfer venue or to
apply the law of a foreign nation or to dismiss a claim of a
foreign nation or of a citizen of a foreign nation on the
ground of inconvenient forum.
(d) Amount in Controversy.--In an action to which this subtitle
applies and which is brought under section 1332 of title 28, United
States Code, the amount of noneconomic damages or punitive damages, and
attorneys' fees or costs, shall not be included in determining whether
the matter in controversy exceeds the sum or value of $50,000.
(e) Federal Court Jurisdiction Not Established on Federal Question
Grounds.--Nothing in this subtitle shall be construed to establish any
jurisdiction in the district courts of the United States over health
care liability actions on the basis of section 1331 or 1337 of title
28, United States Code.
SEC. 4802. DEFINITIONS.
As used in this subtitle:
(1) Actual damages.--The term ``actual damages'' means
damages awarded to pay for economic loss.
(2) Alternative dispute resolution system; adr.--The term
``alternative dispute resolution system'' or ``ADR'' means a
system established under Federal or State law that provides for
the resolution of health care liability claims in a manner
other than through health care liability actions.
(3) Claimant.--The term ``claimant'' means any person who
brings a health care liability action and any person on whose
behalf such an action is brought. If such action is brought
through or on behalf of an estate, the term includes the
claimant's decedent. If such action is brought through or on
behalf of a minor or incompetent, the term includes the
claimant's legal guardian.
(4) Clear and convincing evidence.--The term ``clear and
convincing evidence'' is that measure or degree of proof that
will produce in the mind of the trier of fact a firm belief or
conviction as to the truth of the allegations sought to be
established, except that such measure or degree of proof is
more than that required under preponderance of the evidence but
less than that required for proof beyond a reasonable doubt.
(5) Collateral source payments.--The term ``collateral
source payments'' means any amount paid or reasonably likely to
be paid in the future to or on behalf of a claimant, or any
service, product, or other benefit provided or reasonably
likely to be provided in the future to or on behalf of a
claimant, as a result of an injury or wrongful death, pursuant
to--
(A) any State or Federal health, sickness, income-
disability, accident or workers' compensation Act;
(B) any health, sickness, income-disability, or
accident insurance that provides health benefits or
income-disability coverage;
(C) any contract or agreement of any group,
organization, partnership, or corporation to provide,
pay for, or reimburse the cost of medical, hospital,
dental, or income disability benefits; and
(D) any other publicly or privately funded program.
(6) Device.--The term ``device'' has the same meaning given
such term in section 201(h) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 321(h)).
(7) Drug.--The term ``drug'' has the same meaning given
such term in section 201(g)(1) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 321(g)(1)).
(8) Economic loss.--The term ``economic loss'' means any
pecuniary loss resulting from harm (including the loss of
earnings or other benefits related to employment, medical
expense loss, replacement services loss, loss due to death,
burial costs, and loss of business or employment
opportunities), to the extent recovery for such loss is allowed
under applicable State or Federal law.
(9) Harm.--The term ``harm'' means--
(A) any physical injury, illness, or death of the
claimant, or
(B) any mental anguish or emotional injury to the
claimant caused by or causing the claimant physical
injury or illness.
(10) Health care liability action.--The term ``health care
liability action'' means a civil action brought in a State or
Federal court against a health care provider, an entity which
is obligated to provide or pay for health benefits under any
health plan (including any person or entity acting under a
contract or arrangement to provide or administer any health
benefit), or the manufacturer, distributor, supplier, marketer,
promoter, or seller of a medical product, in which the claimant
alleges a health care liability claim.
(11) Health care liability claim.--The term ``health care
liability claim'' means a claim in which the claimant alleges
that harm was caused by the provision of (or the failure to
provide) health care services or the use of a medical product,
regardless of the theory of liability on which the claim is
based.
(12) Health care provider.--The term ``health care
provider'' means any individual, organization, or institution
that is engaged in the delivery of health care services in a
State and that is required by the laws or regulations of the
State to be licensed or certified by the State to engage in the
delivery of such services in the State.
(13) Manufacturer.--The term ``manufacturer'' means--
(A) any person who is engaged in a business to
produce, create, make, or construct any product (or
component part of a product) and who (i) designs or
formulates the product (or component part of the
product), or (ii) has engaged another person to design
or formulate the product (or component part of the
product);
(B) a product seller, but only with respect to
those aspects of a product (or component part of a
product) which are created or affected when, before
placing the product in the stream of commerce, the
product seller produces, creates, makes or constructs
and designs, or formulates, or has engaged another
person to design or formulate, an aspect of the product
(or component part of the product) made by another
person; or
(C) any product seller not described in
subparagraph (B) which holds itself out as a
manufacturer to the user of the product.
(14) Noneconomic damages.--The term ``noneconomic damages''
means damages paid to an individual for pain and suffering,
inconvenience, emotional distress, mental anguish, loss of
society and companionship, injury to reputation, humiliation,
and other subjective, nonpecuniary losses.
(15) Person.--The term ``person'' means any individual,
corporation, company, association, firm, partnership, society,
joint stock company, or any other entity, including any
governmental entity.
(16) Product seller.--
(A) In general.--The term ``product seller'' means
a person who in the course of a business conducted for
that purpose--
(i) sells, distributes, rents, leases,
prepares, blends, packages, labels, or
otherwise is involved in placing a product in
the stream of commerce; or
(ii) installs, repairs, refurbishes,
reconditions, or maintains the harm-causing
aspect of the product.
(B) Exclusion.--The term ``product seller'' does
not include--
(i) a seller or lessor of real property;
(ii) a provider of professional services in
any case in which the sale or use of a product
is incidental to the transaction and the
essence of the transaction is the furnishing of
judgment, skill, or services; or
(iii) any person who--
(I) acts in only a financial
capacity with respect to the sale of a
product; or
(II) leases a product under a lease
arrangement in which the lessor does
not initially select the leased product
and does not during the lease term
ordinarily control the daily operations
and maintenance of the product.
(17) Punitive damages.--The term ``punitive damages'' means
damages awarded against any person not to compensate for actual
injury suffered, but to punish or deter such person or others
from engaging in similar behavior in the future.
(18) State.--The term ``State'' means each of the several
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, American Samoa, the Northern
Mariana Islands, the Trust Territories of the Pacific Islands,
and any other territory or possession of the United States or
any political subdivision of any of the foregoing.
SEC. 4803. EFFECTIVE DATE.
This subtitle will apply to any health care liability action
brought in a Federal or State court and to any health care liability
claim subject to an alternative dispute resolution system, that is
initiated on or after the date of enactment of this subtitle.
CHAPTER 2--UNIFORM STANDARDS FOR HEALTH CARE LIABILITY ACTIONS
SEC. 4811. STATUTE OF LIMITATIONS.
(a) General Rule.--Except as provided in subsection (b), a health
care liability action may be filed not later than 2 years after the
date on which the claimant discovered or, in the exercise of reasonable
care, should have discovered--
(1) the harm that is the subject of the action; and
(2) the cause of the harm.
(b) Exception.--A person with a legal disability (as determined
under applicable law) may file a health care liability action not later
than 2 years after the date on which the person ceases to have the
legal disability.
(c) Transitional Provision Relating to Extension of Period for
Bringing Certain Actions.--If any provision of subsection (a) or (b)
shortens the period during which a health care liability action could
be otherwise brought pursuant to another provision of law, the claimant
may, notwithstanding subsections (a) and (b), bring the health care
liability action not later than 2 years after the date of enactment of
this Act.
SEC. 4812. CALCULATION AND PAYMENT OF DAMAGES.
(a) Treatment of Noneconomic Damages.--
(1) Limitation on noneconomic damages.--The total amount of
noneconomic damages that may be awarded to a claimant for harm
which is the subject of a health care liability action may not
exceed $250,000, regardless of the number of parties against
whom the action is brought or the number of actions brought
with respect to the injury.
(2) Fair share rule for noneconomic damages.--
(A) General rule.--In a health care liability
action, the liability of each defendant for noneconomic
damages shall be several only and shall not be joint.
(B) Amount of liability.--
(i) In general.--Each defendant shall be
liable only for the amount of noneconomic
damages attributable to the defendant in direct
proportion to the percentage of responsibility
of the defendant (determined in accordance with
paragraph (2)) for the harm to the claimant
with respect to which the defendant is liable.
The court shall render a separate judgment
against each defendant in an amount determined
pursuant to the preceding sentence.
(ii) Percentage of responsibility.--For
purposes of determining the amount of
noneconomic damages attributable to a defendant
under this section, the trier of fact shall
determine the percentage of responsibility of
each person responsible for the claimant's
harm, whether or not such person is a party to
the action.
(b) Treatment of Punitive Damages.--
(1) General rule.--Punitive damages may, to the extent
permitted by applicable law, be awarded in a health care
liability action against a defendant if the claimant
establishes by clear and convincing evidence that the harm
suffered was result of conduct manifesting a conscious,
flagrant indifference to the rights or safety of others.
(2) Required proportionality.--The amount of punitive
damages that may be awarded in a health care liability action
shall not exceed 3 times the amount of damages awarded to the
claimant for economic loss, or $250,000, whichever is greater.
This subsection shall be applied by the court, and application
of this subsection shall not be disclosed to the jury.
(c) Bifurcation at Request of Any Party.--
(1) In general.--At the request of any party the trier of
fact in any action that is subject to this section shall
consider in a separate proceeding, held subsequent to the
determination of the amount of compensatory damages, whether
punitive damages are to be awarded for the harm that is the
subject of the action and the amount of the award.
(2) Inadmissibility of evidence relative only to a claim of
punitive damages in a proceeding concerning compensatory
damages.--If any party requests a separate proceeding under
paragraph (1), in a proceeding to determine whether the
claimant may be awarded compensatory damages, any evidence,
argument, or contention that is relevant only to the claim of
punitive damages, as determined by applicable law, shall be
inadmissible.
(d) Drugs and Devices.--
(1)(A) Punitive damages shall not be awarded against a
manufacturer or product seller of a drug or device which caused
the claimant's harm where--
(i) such drug or device was subject to premarket
approval by the Food and Drug Administration with
respect to the safety of the formulation or performance
of the aspect of such drug or device which caused the
claimant's harm or the adequacy of the packaging or
labeling of such drug or device, and such drug or
device was approved by the Food and Drug
Administration; or
(ii) the drug or device is generally recognized as
safe and effective pursuant to conditions established
by the Food and Drug Administration and applicable
regulations, including packaging and labeling
regulations.
(B) Subparagraph (A) shall not apply in any case in which
the defendant, before or after premarket approval of a drug or
device--
(i) intentionally and wrongfully withheld from or
misrepresented to the Food and Drug Administration
information concerning such drug or device required to
be submitted under the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 301 et seq.) or section 351 of the
Public Health Service Act (42 U.S.C. 262) that is
material and relevant to the harm suffered by the
claimant, or
(ii) made an illegal payment to an official or
employee of the Food and Drug Administration for the
purpose of securing or maintaining approval of such
drug or device.
(2) Packaging.--In a health care liability action which is
alleged to relate to the adequacy of the packaging (or labeling
relating to such packaging) of a drug which is required to have
tamper-resistant packaging under regulations of the Secretary
of Health and Human Services (including labeling regulations
related to such packaging), the manufacturer of the drug shall
not be held liable for punitive damages unless the drug is
found by the court by clear and convincing evidence to be
substantially out of compliance with such regulations.
(e) Periodic Payments for Future Losses.--
(1) General rule.--In any health care liability action in
which the damages awarded for future economic and noneconomic
loss exceed $50,000, a person shall not be required to pay such
damages in a single, lump-sum payment, but shall be permitted
to make such payments periodically based on when the damages
are found likely to occur, with the amount and schedule of such
payments determined by the court.
(2) Finality of judgment.--The judgment of the court
awarding periodic payments under this subsection may not, in
the absence of fraud, be reopened at any time to contest,
amend, or modify the schedule or amount of the payments.
(3) Lump-sum settlements.--This subsection shall not be
construed to preclude a settlement providing for a single,
lump-sum payment.
(f) Treatment of Collateral Source Payments.--
(1) Introduction into evidence.--In any health care
liability action, any defendant may introduce evidence of
collateral source payments. If a defendant elects to introduce
such evidence, the claimant may introduce evidence of any
amount paid or contributed or reasonably likely to be paid or
contributed in the future by or on behalf of the claimant to
secure the right to such collateral source payments.
(2) No subrogation.--No provider of collateral source
payments shall recover any amount against the claimant or
receive any lien or credit against the claimant's recovery or
be equitably or legally subrogated the right of the claimant in
a health care liability action. This subsection shall apply to
an action that is settled as well as an action that is resolved
by a fact finder.
SEC. 4813. ALTERNATIVE DISPUTE RESOLUTION.
Any ADR used to resolve a health care liability action or claim
shall contain provisions relating to statute of limitations, non-
economic damages, joint and several liability, punitive damages,
collateral source rule, and periodic payments which are identical to
the provisions relating to such matters in this subtitle.
TITLE V--COMMITTEE ON EDUCATION AND THE WORKFORCE
Subtitle A--TANF Block Grant
SEC. 5001. WELFARE-TO-WORK GRANTS.
(a) Grants to States.--Section 403(a) of the Social Security Act
(42 U.S.C. 603(a)) is amended by adding at the end the following:
``(5) Welfare-to-work grants.--
``(A) Formula grants.--
``(i) Entitlement.--A State shall be
entitled to receive from the Secretary a grant
for each fiscal year specified in subparagraph
(H) of this paragraph for which the State is a
welfare-to-work State, in an amount that does
not exceed the lesser of--
``(I) 2 times the total of the
expenditures by the State (excluding
qualified State expenditures (as
defined in section 409(a)(7)(B)(i)) and
expenditures described in section
409(a)(7)(B)(iv)) during the fiscal
year for activities described in
subpargraph (C)(i) of this paragraph;
or
``(II) the allotment of the State
under clause (iii) of this subparagraph
for the fiscal year.
``(ii) Welfare-to-work state.--A State
shall be considered a welfare-to-work State for
a fiscal year for purposes of this subparagraph
if the Secretary, after consultation (and the
sharing of any plan or amendment thereto
submitted under this clause) with the Secretary
of Health and Human Services and the Secretary
of Housing and Urban Development, determines
that the State meets the following
requirements:
``(I) The State has submitted to
the Secretary (in the form of an
addendum to the State plan submitted
under section 402) a plan which--
``(aa) describes how,
consistent with this
subparagraph, the State will
use any funds provided under
this subparagraph during the
fiscal year;
``(bb) specifies the
formula to be used pursuant to
clause (vi) to distribute funds
in the State, and describes the
process by which the formula
was developed; and
``(cc) contains evidence
that the plan was developed
through a collaborative process
that, at a minimum, included
sub-State areas.
``(II) The State has provided the
Secretary with an estimate of the
amount that the State intends to expend
during the fiscal year (excluding
expenditures described in section
409(a)(7)(B)(iv)) for activities
described in subparagraph (C)(i) of
this paragraph.
``(III) The State has agreed to
negotiate in good faith with the
Secretary of Health and Human Services
with respect to the substance of any
evaluation under section 413(j), and to
cooperate with the conduct of any such
evaluation.
``(IV) The State is an eligible
State for the fiscal year.
``(iii) Allotments to welfare-to-work
states.--The allotment of a welfare-to-work
State for a fiscal year shall be the available
amount for the fiscal year multiplied by the
State percentage for the fiscal year.
``(iv) Available amount.--As used in clause
(iii), the term `available amount' means, for a
fiscal year, 95 percent of--
``(I) the amount specified in
subparagraph (H) for the fiscal year;
minus
``(II) the total of the amounts
reserved pursuant to subparagraphs (F)
and (G) for the fiscal year.
``(v) State percentage.--As used in
clause (iii), the term `State
percentage' means, with respect to a
fiscal year, \1/2\ of the sum of--
``(aa) the percentage
represented by the number of
individuals in the State whose
income is less than the poverty
line divided by the number of
such individuals in the United
States; and
``(bb) the percentage
represented by the number of
individuals who are adult
recipients of assistance under
the State program funded under
this part divided by the number
of individuals in the United
States who are adult recipients
of assistance under any State
program funded under this part.
``(vi) Distribution of funds within
states.--
``(I) In general.--A State to which
a grant is made under this subparagraph
shall distribute not less than 85
percent of the grant funds among the
service delivery areas in the State, in
accordance with a formula which--
``(aa) determines the
amount to be distributed for
the benefit of a service
delivery area in proportion to
the number (if any) by which
the number of individuals
residing in the service
delivery area with an income
that is less than the poverty
line exceeds 5 percent of the
population of the service
delivery area, relative to such
number for the other service
delivery areas in the State,
and accords a weight of not
less than 50 percent to this
factor;
``(bb) may determine the
amount to be distributed for
the benefit of a service
delivery area in proportion to
the number of adults residing
in the service delivery area
who are recipients of
assistance under the State
program funded under this part
(whether in effect before or
after the amendments made by
section 103(a) of the Personal
Responsibility and Work
Opportunity Reconciliation Act
first applied to the State) for
at least 30 months (whether or
not consecutive) relative to
the number of such adults
residing in the other service
delivery areas in the State;
and
``(cc) may determine the
amount to be distributed for
the benefit of a service
delivery area in proportion to
the number of unemployed
individuals residing in the
service delivery area relative
to the number of such
individuals residing in the
other service delivery areas in
the State.
``(II) Special rule.--
Notwithstanding subclause (I), if the
formula used pursuant to subclause (I)
would result in the distribution of
less than $100,000 during a fiscal year
for the benefit of a service delivery
area, then in lieu of distributing such
sum in accordance with the formula,
such sum shall be available for
distribution under subclause (III)
during the fiscal year.
``(III) Projects to help long-term
recipients of assistance into the work
force.--The Governor of a State to
which a grant is made under this
subparagraph may distribute not more
than 15 percent of the grant funds
(plus any amount required to be
distributed under this subclause by
reason of subclause (II)) to projects
that appear likely to help long-term
recipients of assistance under the
State program funded under this part
(whether in effect before or after the
amendments made by section 103(a) of
the Personal Responsibility and Work
Opportunity Reconciliation Act first
applied to the State) enter the work
force.
``(vii) Administration.--
``(I) In general.--A grant made
under this subparagraph to a State
shall be administered by the State
agency that is administering, or
supervising the administration of, the
State program funded under this part,
or by another State agency designated
by the Governor of the State.
``(II) Spending by private industry
councils.--The private industry council
for a service delivery area shall have
sole authority, in coordination with
the chief elected official (as
described in section 103(c) of the Job
Training Partnership Act) of the
service delivery area, to expend the
amounts provided for a service delivery
area under subparagraph (vi)(I).
``(B) Demonstration projects.--
``(i) In general.--The Secretary, in
consultation with the Secretary of Health and
Human Services and the Secretary of Housing and
Urban Development, shall make grants in
accordance with this subparagraph among
eligible applicants based on the likelihood
that the applicant can successfully make long-
term placements of individuals into the work
force.
``(ii) Eligible applicants.--As used in
clause (i), the term `eligible applicant' means
a private industry council or a political
subdivision of a State.
``(iii) Determination of grant amount.--In
determining the amount of a grant to be made
under this subparagraph for a demonstration
project proposed by an applicant, the Secretary
shall provide the applicant with an amount
sufficient to ensure that the project has a
reasonable opportunity to be successful, taking
into account the number of long-term recipients
of assistance under a State program funded
under this part, the level of unemployment, the
job opportunities and job growth, the poverty
rate, and such other factors as the Secretary
deems appropriate, in the area to be served by
the project.
``(iv) Funding.--For grants under this
subparagraph for each fiscal year specified in
subparagraph (H), there shall be available to
the Secretary an amount equal to the sum of--
``(I) 5 percent of--
``(aa) the amount specified
in subparagraph (H) for the
fiscal year; minus
``(bb) the total of the
amounts reserved pursuant to
subparagraphs (F) and (G) for
the fiscal year;
``(II) any amount available for
grants under this paragraph for the
immediately preceding fiscal year that
has not been obligated;
``(III) any amount reserved
pursuant to subparagraph (F) for the
immediately preceding fiscal year that
has not been obligated; and
``(IV) any available amount (as
defined in subparagraph (A)(iv)) for
the immediately preceding fiscal year
that has not been obligated by a State
or sub-State entity.
Amounts made available pursuant to this clause
are authorized to remain available until the
end of fiscal year 2001.
``(C) Limitations on use of funds.--
``(i) Allowable activities.--An entity to
which funds are provided under this paragraph
may use the funds to move into the work force
recipients of assistance under the program
funded under this part of the State in which
the entity is located, by means of any of the
following:
``(I) Job creation through public
or private sector employment wage
subsidies.
``(II) On-the-job training.
``(III) Contracts with job
placement companies or public job
placement programs.
``(IV) Job vouchers.
``(V) Job retention or support
services if such services are not
otherwise available.
``(ii) Required beneficiaries.--An entity
that operates a project with funds provided
under this paragraph shall expend at least 90
percent of all funds provided to the project
for the benefit of recipients of assistance
under the program funded under this part of the
State in which the entity is located who meet
the requirements of any of the following
subclauses:
``(I) The individual has received
assistance under the State program
funded under this part (whether in
effect before or after the amendments
made by section 103 of the Personal
Responsibility and Work Opportunity
Reconciliation Act of 1996 first apply
to the State) for at least 30 months
(whether or not consecutive).
``(II) At least 2 of the following
apply to the recipient:
``(aa) The individual has
not completed secondary school
or obtained a certificate of
general equivalency, and has
low skills in reading and
mathematics.
``(bb) The individual
requires substance abuse
treatment for employment.
``(cc) The individual has a
poor work history.
The Secretary shall prescribe such
regulations as may be necessary to
interpret this subclause.
``(III) Within 12 months, the
individual will become ineligible for
assistance under the State program
funded under this part by reason of a
durational limit on such assistance,
without regard to any exemption
provided pursuant to section
408(a)(7)(C) that may apply to the
individual.
``(iii) Limitation on applicability of
section 404.--The rules of section 404, other
than subsections (b), (f), and (h) of section
404, shall not apply to a grant made under this
paragraph.
``(iv) Prohibition against provision of
services by private industry council.--A
private industry council may not directly
provide services using funds provided under
this paragraph.
``(v) Prohibition against use of grant
funds for any other fund matching
requirement.--An entity to which funds are
provided under this paragraph shall not use any
part of the funds to fulfill any obligation of
any State, political subdivision, or private
industry council to contribute funds under
other Federal law.
``(vi) Deadline for expenditure.--An entity
to which funds are provided under this
paragraph shall remit to the Secretary any part
of the funds that are not expended within 3
years after the date the funds are so provided.
``(D) Individuals with income less than the poverty
line.--For purposes of this paragraph, the number of
individuals with an income that is less than the
poverty line shall be determined based on the
methodology used by the Bureau of the Census to produce
and publish intercensal poverty data for 1993 for
States and counties.
``(E) Definitions.--As used in this paragraph:
``(i) Private industry council.--The term
`private industry council' means, with respect
to a service delivery area, the private
industry council (or successor entity)
established for the service delivery area
pursuant to the Job Training Partnership Act.
``(ii) Secretary.--The term `Secretary'
means the Secretary of Labor, except as
otherwise expressly provided.
``(iii) Service delivery area.--The term
`service delivery area' shall have the meaning
given such term for purposes of the Job
Training Partnership Act (or successor area).
``(F) Funding for indian tribes.--1 percent of the
amount specified in subparagraph (H) for each fiscal
year shall be reserved for grants to Indian tribes
under section 412(a)(3).
``(G) Evaluations.--0.5 percent of the amount
specified in subparagraph (H) for each fiscal year
shall be reserved for use by the Secretary of Health
and Human Services to carry out section 413(j).
``(H) Funding.--The amount specified in this
subparagraph is--
``(i) $750,000,000 for fiscal year 1998;
``(ii) $1,250,000,000 for fiscal year 1999;
and
``(iii) $1,000,000,000 for fiscal year
2000.
``(I) Budget scoring.--Notwithstanding section
457(b)(2) of the Balanced Budget and Emergency Deficit
Control Act of 1985, the baseline shall assume that no
grant shall be made under this paragraph or under
section 412(a)(3) after fiscal year 2001.''.
(b) Grants to Territories.--Section 1108(a) of such Act (42 U.S.C.
1308(a)) is amended by inserting ``(except section 403(a)(5))'' after
``title IV''.
(c) Grants to Indian Tribes.--Section 412(a) of such Act (42 U.S.C.
612(a)) is amended by adding at the end the following:
``(3) Welfare-to-work grants.--
``(A) In general.--The Secretary shall make a grant
in accordance with this paragraph to an Indian tribe
for each fiscal year specified in section 403(a)(5)(H)
for which the Indian tribe is a welfare-to-work tribe,
in such amount as the Secretary deems appropriate,
subject to subparagraph (B) of this paragraph.
``(B) Welfare-to-work tribe.--An Indian tribe shall
be considered a welfare-to-work tribe for a fiscal year
for purposes of this paragraph if the Indian tribe
meets the following requirements:
``(i) The Indian tribe has submitted to the
Secretary (in the form of an addendum to the
tribal family assistance plan, if any, of the
Indian tribe) a plan which describes how,
consistent with section 403(a)(5), the Indian
tribe will use any funds provided under this
paragraph during the fiscal year.
``(ii) The Indian tribe has provided the
Secretary with an estimate of the amount that
the Indian tribe intends to expend during the
fiscal year (excluding tribal expenditures
described in section 409(a)(7)(B)(iv)) for
activities described in section
403(a)(5)(C)(i).
``(iii) The Indian tribe has agreed to
negotiate in good faith with the Secretary of
Health and Human Services with respect to the
substance of any evaluation under section
413(j), and to cooperate with the conduct of
any such evaluation.
``(C) Limitations on use of funds.--Section
403(a)(5)(C) shall apply to funds provided to Indian
tribes under this paragraph in the same manner in which
such section applies to funds provided under section
403(a)(5).''.
(d) Funds Received From Grants to be Disregarded in Applying
Durational Limit on Assistance.--Section 408(a)(7) of such Act (42
U.S.C. 608(a)(7)) is amended by adding at the end the following:
``(G) Inapplicability to welfare-to-work grants and
assistance.--For purposes of subparagraph (A) of this
paragraph, a grant made under section 403(a)(5) shall
not be considered a grant made under section 403, and
assistance from funds provided under section 403(a)(5)
shall not be considered assistance.''.
(e) Evaluations.--Section 413 of such Act (42 U.S.C. 613) is
amended by adding at the end the following:
``(j) Evaluation of Welfare-To-Work Programs.--The Secretary--
``(1) shall, in consultation with the Secretary of Labor,
develop a plan to evaluate how grants made under sections
403(a)(5) and 412(a)(3) have been used; and
``(2) may evaluate the use of such grants by such grantees
as the Secretary deems appropriate, in accordance with an
agreement entered into with the grantees after good-faith
negotiations.''.
SEC. 5002. NONDISPLACEMENT.
Section 407(f) of the Social Security Act (42 U.S.C. 607(f)) is
amended to read as follows:
``(f) Nondisplacement in Work Activities.--
``(1) Prohibitions.--
``(A) General prohibition.--A participant in a work
activity pursuant to section 403(a)(5) or this section
shall not displace (including a partial displacement,
such as a reduction in the hours of nonovertime work,
wages, or employment benefits) any individual who, as
of the date of the participation, is an employee.
``(B) Prohibition on impairment of contracts.--A
work activity shall not impair an existing contract for
services or collective bargaining agreement, and a work
activity that would be inconsistent with the terms of a
collective bargaining agreement shall not be undertaken
without the written concurrence of the labor
organization and employer concerned.
``(C) Other prohibitions.--A participant in a work
activity shall not be employed in a job--
``(i) when any other individual is on
layoff from the same or any substantially
equivalent job;
``(ii) when the employer has terminated the
employment of any regular employee or otherwise
reduced the workforce of the employer with the
intention of filling the vacancy so created
with the participant; or
``(iii) which is created in a promotional
line that will infringe in any way upon the
promotional opportunities of employed
individuals.
``(2) Health and safety.--Health and safety standards
established under Federal and State law otherwise applicable to
working conditions of employees shall be equally applicable to
working conditions of participants engaged in a work activity.
To the extent that a State workers' compensation law applies,
workers' compensation shall be provided to participants on the
same basis as the compensation is provided to other individuals
in the State in similar employment.
``(3) Nondiscrimination.--In addition to the protections
provided under the provisions of law specified in section
408(c), an individual may not be discriminated against with
respect to participation in work activities by reason of
gender.
``(4) Grievance procedure.--
``(A) In general.--Each State to which a grant is
made under section 403 shall establish and maintain a
procedure for grievances or complaints alleging
violations of paragraph (1), (2), or (3) from
participants and other interested or affected parties.
The procedure shall include an opportunity for a
hearing and be completed within 60 days after the
grievance or complaint is filed.
``(B) Investigation.--
``(i) In general.--The Secretary of Labor
shall investigate an allegation of a violation
of paragraph (1), (2), or (3) if--
``(I) a decision relating to the
violation is not reached within 60 days
after the date of the filing of the
grievance or complaint, and either
party appeals to the Secretary of
Labor; or
``(II) a decision relating to the
violation is reached within the 60-day
period, and the party to which the
decision is adverse appeals the
decision to the Secretary of Labor.
``(ii) Additional requirement.--The
Secretary of Labor shall make a final
determination relating to an appeal made under
clause (i) no later than 120 days after
receiving the appeal.
``(C) Remedies.--Remedies for violation of
paragraph (1), (2), or (3) shall be limited to--
``(i) suspension or termination of payments
under section 403;
``(ii) prohibition of placement of a
participant with an employer that has violated
paragraph (1), (2), or (3);
``(iii) where applicable, reinstatement of
an employee, payment of lost wages and
benefits, and reestablishment of other relevant
terms, conditions and privileges of employment;
and
``(iv) where appropriate, other equitable
relief.''.
SEC. 5003. CLARIFICATION OF LIMITATION ON NUMBER OF PERSONS WHO MAY BE
TREATED AS ENGAGED IN WORK BY REASON OF PARTICIPATION IN
EDUCATIONAL ACTIVITIES.
(a) In General.--Section 407(c)(2)(D) of the Social Security Act
(42 U.S.C. 607(c)(2)(D)) is amended to read as follows:
``(D) Limitation on number of persons who may be
treated as engaged in work by reason of participation
in educational activities.--For purposes of determining
monthly participation rates under paragraphs (1)(B)(i)
and (2)(B) of subsection (b), not more than 20 percent
of the number of individuals in all families and in 2-
parent families, respectively, in a State who are
treated as engaged in work for a month may consist of
individuals who are determined to be engaged in work
for the month by reason of participation in vocational
educational training, or deemed to be engaged in work
for the month by reason of subparagraph (C) of this
paragraph.''.
(b) Retroactivity.--The amendment made by subsection (a) of this
section shall take effect as if included in the enactment of section
103(a) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996.
SEC. 5004. COMPENSATION; MAXIMUM REQUIRED HOURS OF WORK ACTIVITIES.
(a) In General.--Section 407 of the Social Security Act (42 U.S.C.
607) is amended by adding at the end the following:
``(j) Compensation.--A State to which a grant is made under section
403 may not require a recipient of assistance under the State program
funded under this part to participate in a work activity described in
paragraph (1), (2), or (3) of subsection (d) unless the recipient is
compensated at the same rates, including periodic increases, as
trainees or employees who are similarly situated in similar occupations
by the same employer and who have similar training, experience and
skills, and such rates shall be in accordance with applicable law.
``(k) Limitation on Number of Hours Per Month That a Recipient of
Assistance May Be Required to Participate in On-The-Job Training, and
with a Public Agency or Nonprofit Organization.--
``(1) In general.--A State to which a grant is made under
section 403 may not require a recipient of assistance under the
State program funded under this part to be assigned to on-the-
job training, and to a work experience or community service
position with a public agency or nonprofit organization during
a month for more than the allowable number of hours determined
for the month under paragraph (2).
``(2) Allowable number of hours.--
``(A) In general.--Subject to subparagraph (B), the
allowable number of hours determined for a month under
this paragraph is--
``(i) the value of the includible benefits
provided by the State to the recipient during
the month; divided by
``(ii) the minimum wage rate in effect
during the month under section 6 of the Fair
Labor Standards Act of 1938.
``(B) State option to take account of certain work
activities.--
``(i) In general.--In determining the
allowable number of hours for a month for a
sufficiently employed recipient, the State may
subtract from the allowable number of hours
calculated under subparagraph (A) the number of
hours during the month for which the recipient
participates in a work activity described in
paragraph (6), (8), (9), or (11) of subsection
(d).
``(ii) Sufficiently employed recipient.--As
used in clause (i), the term `sufficiently
employed recipient' means, with respect to a
month, a recipient who is employed during the
month for a number of hours that is not less
than--
``(I) the sum of the dollar value
of any assistance provided to the
recipient during the month under the
State program funded under this part,
and the dollar value equivalent of any
benefits provided to the recipient
during the month under the food stamp
program under the Food Stamp Act of
1977; divided by
``(II) the minimum wage rate in
effect during the month under section 6
of the Fair Labor Standards Act of
1938.
``(3) Definition of value of the includible benefits.--As
used in paragraph (2)(A), the term `value of the includible
benefits' means, with respect to a recipient--
``(A) the dollar value of any assistance under the
State program funded under this part;
``(B) the dollar value equivalent of any benefits
under the food stamp program under the Food Stamp Act
of 1977;
``(C) at the option of the State, the dollar value
of benefits under the State plan approved under title
XIX, as determined in accordance with paragraph (4);
``(D) at the option of the State, the dollar value
of child care assistance; and
``(E) at the option of the State, the dollar value
of housing benefits.
``(4) Valuation of medicaid benefits.--Annually, the
Secretary shall publish a table that specifies the dollar value
of the insurance coverage provided under title XIX to a family
of each size, which may take account of geographical variations
or other factors identified by the Secretary.
``(5) Treatment of recipients assigned to certain positions
with a public agency or nonprofit organization.--A recipient of
assistance under a State program funded under this part who is
engaged in work experience or community service with a public
agency or nonprofit organization shall not be considered an
employee of the public agency or the nonprofit organization.''.
(b) Retroactivity.--The amendment made by subsection (a) of this
section shall take effect as if included in the enactment of section
103(a) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996.
SEC. 5005. PENALTY FOR FAILURE OF STATE TO REDUCE ASSISTANCE FOR
RECIPIENTS REFUSING WITHOUT GOOD CAUSE TO WORK.
(a) In General.--Section 409(a) of the Social Security Act (42
U.S.C. 609(a)) is amended by adding at the end the following:
``(13) Penalty for failure to reduce assistance for
recipients refusing without good cause to work.--
``(A) In general.--If the Secretary determines that
a State to which a grant is made under section 403 in a
fiscal year has violated section 407(e) during the
fiscal year, the Secretary shall reduce the grant
payable to the State under section 403(a)(1) for the
immediately succeeding fiscal year by an amount equal
to not less than 1 percent and not more than 5 percent
of the State family assistance grant.
``(B) Penalty based on severity of failure.--The
Secretary shall impose reductions under subparagraph
(A) with respect to a fiscal year based on the degree
of noncompliance.''.
(b) Retroactivity.--The amendment made by subsection (a) of this
section shall take effect as if included in the enactment of section
103(a) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996.
Subtitle B--Higher Education Programs
SEC. 5101. MANAGEMENT AND RECOVERY OF RESERVES.
(a) Amendment.--Section 422 of the Higher Education Act of 1965 (20
U.S.C. 1072) is amended by adding after subsection (g) the following
new subsection:
``(h) Recall of Reserves; Limitations on Use of Reserve Funds and
Assets.--(1) Notwithstanding any other provision of law, the Secretary
shall, except as otherwise provided in this subsection, recall
$1,000,000,000 from the reserve funds held by guaranty agencies on
September 1, 2002.
``(2) Funds recalled by the Secretary under this subsection shall
be deposited in the Treasury.
``(3) The Secretary shall require each guaranty agency to return
reserve funds under paragraph (1) based on such agency's required share
of recalled reserve funds held by guaranty agencies as of September 30,
1996. For purposes of this paragraph, a guaranty agency's required
share of recalled reserve funds shall be determined as follows:
``(A) The Secretary shall compute each agency's reserve
ratio by dividing (i) the amount held in such agency's reserve
funds as of September 30, 1996 (but reflecting later accounting
or auditing adjustments approved by the Secretary), by (ii) the
original principal amount of all loans for which such agency
has an outstanding insurance obligation as of such date.
``(B) If the reserve ratio of any agency as computed under
subparagraph (A) exceeds 2.0 percent, the agency's required
share shall include so much of the amounts held in such
agency's reserve fund as exceed a reserve ratio of 2.0 percent.
``(C) If any additional amount is required to be recalled
under paragraph (1) (after deducting the total of the required
shares calculated under subparagraph (B)), the agencies'
required shares shall include additional amounts--
``(i) determined by imposing on each such agency an
equal percentage reduction in the amount of each
agency's reserve fund remaining after deduction of the
amount recalled under subparagraph (B); and
``(ii) the total of which equals the additional
amount that is required to be recalled under paragraph
(1) (after deducting the total of the required shares
calculated under subparagraph (B)).
``(4) Within 90 days after the beginning of each of fiscal years
1998 through 2002, each guaranty agency shall transfer a portion of
each agency's required share determined under paragraph (3) to a
restricted account established by the guaranty agency that is of a type
selected by the guaranty agency with the approval of the Secretary.
Funds transferred to such restricted accounts shall be invested in
obligations issued or guaranteed by the United States or in other
similarly low-risk securities. A guaranty agency shall not use the
funds in such a restricted account for any purpose without the express
written permission of the Secretary, except that a guaranty agency may
use the earnings from such restricted account to assist in meeting the
agency's operational expenses under this part. In each of fiscal years
1998 through 2002, each agency shall transfer its required share to
such restricted account in 5 equal annual installments, except that--
``(A) a guarantee agency that has a reserve ratio (as
computed under subparagraph (3)(A)) equal to or less than 1.10
percent may transfer its required share to such account in 4
equal installments beginning in fiscal year 1999; and
``(B) a guarantee agency may transfer such required share
to such account in accordance with such other payment schedules
as are approved by the Secretary.
``(5) If, on September 1, 2002, the total amount in the restricted
accounts described in paragraph (4) is less than the amount the
Secretary is required to recall under paragraph (1), the Secretary may
require the return of the amount of the shortage from other reserve
funds held by guaranty agencies under procedures established by the
Secretary.
``(6) The Secretary may take such reasonable measures, and require
such information, as may be necessary to ensure that guaranty agencies
comply with the requirements of this subsection. Notwithstanding any
other provision of this part, if the Secretary determines that a
guaranty agency is not in compliance with the requirements of this
subsection, such agency may not receive any other funds under this part
until the Secretary determines that such agency is in compliance.
``(7) The Secretary shall not have any authority to direct a
guaranty agency to return reserve funds under subsection (g)(1)(A)
during the period from the date of enactment of this subsection through
September 30, 2002, and any reserve funds otherwise returned under
subsection (g)(1) during such period shall be treated as amounts
recalled under this subsection and shall not be available under
subsection (g)(4).
``(8) For purposes of this subsection, the term `reserve funds'
when used with respect to a guaranty agency--
``(A) includes any cash reserve funds held by the guaranty
agency, or held by, or under the control of, any other entity;
and
``(B) does not include buildings, equipment, or other
nonliquid assets.''.
(b) Conforming Amendment.--Section 428(c)(9)(A) of the Higher
Education Act of 1965 (20 U.S.C. 1078(c)(9)(A)) is amended--
(1) in the first sentence, by striking ``for the fiscal
year of the agency that begins in 1993''; and
(2) by striking the third sentence.
SEC. 5102. REPEAL OF DIRECT LOAN ORIGINATION FEES TO INSTITUTIONS OF
HIGHER EDUCATION.
Section 452 of the Higher Education Act of 1965 (20 U.S.C. 1087b)
is amended--
(1) by striking subsection (b); and
(2) by redesignating subsections (c) and (d) as subsections
(b) and (c), respectively.
SEC. 5103. FUNDS FOR ADMINISTRATIVE EXPENSES.
Subsection (a) of section 458 of the Higher Education Act of 1965
(20 U.S.C. 1087h(a)) is amended to read as follows:
``(a) In General.--(1) Each fiscal year, there shall be available
to the Secretary from funds not otherwise appropriated, funds to be
obligated for--
``(A) administrative costs under this part and part B,
including the costs of the direct student loan programs under
this part, and
``(B) administrative cost allowances payable to guaranty
agencies under part B and calculated in accordance with
paragraph (2),
not to exceed (from such funds not otherwise appropriated) $532,000,000
in fiscal year 1998, $610,000,000 in fiscal year 1999, $705,000,000 in
fiscal year 2000, $750,000,000 in fiscal year 2001, and $750,000,000 in
fiscal year 2002. Administrative cost allowances under subparagraph (B)
of this paragraph shall be paid quarterly and used in accordance with
section 428(f). The Secretary may carry over funds available under this
section to a subsequent fiscal year.
``(2) Administrative cost allowances payable to guaranty agencies
under paragraph (1)(B) shall be calculated on the basis of 0.85 percent
of the total principal amount of loans upon which insurance is issued
on or after the date of enactment of the Balanced Budget Act of 1997,
except that such allowances shall not exceed--
``(A) $170,000,000 for each of the fiscal years 1998 and
1999; or
``(B) $150,000,000 for each of the fiscal years 2000, 2001,
and 2002.''.
SEC. 5104. SECRETARY'S EQUITABLE SHARE OF COLLECTIONS ON CONSOLIDATED
DEFAULTED LOANS.
Section 428(c)(6)(A) of the Higher Education Act of 1965 (20 U.S.C.
1078(c)(6)(A)) is amended--
(1) in the matter preceding clause (i), by striking ``made
by the borrower'' and inserting ``made by or on behalf of the
borrower, including payments made to discharge loans made under
this title to obtain a consolidation loan pursuant to this part
or part D,''; and
(2) in clause (ii), by striking ``(ii) an amount equal to
27 percent of such payments (subject to subparagraph (D) of
this paragraph) for costs related'' and inserting the
following:
``(ii) an amount equal to 27 percent of such payments for
covered costs, except that the amount determined under this
clause for such covered costs shall be (I) 18.5 percent of such
payments for defaulted loans consolidated pursuant to this part
or part D on or after July 1, 1997; and (II) 18.5 percent of
such payments for defaulted loans consolidated pursuant to this
part or part D on or after the date of enactment of the Higher
Education Amendments of 1992 with respect to any guaranty
agency that has, after such date, made deductions from such
payments under this clause (ii) in an amount equal to 18.5
percent of such payments.
For purposes of clause (ii) of this subparagraph, the term `covered
costs' means costs related''.
SEC. 5105. EXTENSION OF STUDENT AID PROGRAMS.
Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et
seq.) is amended--
(1) in section 424(a), by striking ``1998.'' and ``2002.''
and inserting ``2002.'' and ``2006.'', respectively;
(2) in section 428(a)(5), by striking ``1998,'' and
``2002.'' and inserting ``2002,'' and ``2006.'', respectively;
and
(3) in section 428C(e), by striking ``1998.'' and inserting
``2002.''.
Subtitle C--Repeal of Smith-Hughes Vocational Education Act
SEC. 5201. REPEAL OF SMITH-HUGHES VOCATIONAL EDUCATION ACT.
The Act of February 23, 1917 (39 Stat. 929; 20 U.S.C. 11) (commonly
known as the ``Smith-Hughes Vocational Education Act'') is repealed.
Subtitle D--Expansion of Portability and Health Insurance Coverage
SEC. 5301. SHORT TITLE OF SUBTITLE.
This subtitle may be cited as the ``Expansion of Portability and
Health Insurance Coverage Act of 1997''.
SEC. 5302. RULES GOVERNING ASSOCIATION HEALTH PLANS.
(a) In General.--Subtitle B of title I of the Employee Retirement
Income Security Act of 1974 is amended by adding after part 7 the
following new part:
``Part 8--Rules Governing Association Health Plans
``SEC. 801. ASSOCIATION HEALTH PLANS.
``(a) In General.--For purposes of this part, the term `association
health plan' means a group health plan--
``(1) whose sponsor is (or is deemed under this part to be)
described in subsection (b), and
``(2) under which at least one option of health insurance
coverage offered by a health insurance issuer (which may
include, among other options, managed care options, point of
service options, and preferred provider options) is provided to
participants and beneficiaries.
``(b) Sponsorship.--The sponsor of a group health plan is described
in this subsection if such sponsor--
``(1) is organized and maintained in good faith, with a
constitution and bylaws specifically stating its purpose and
providing for periodic meetings on at least an annual basis, as
a trade association, an industry association (including a rural
electric cooperative association or a rural telephone
cooperative association), a professional association, or a
chamber of commerce (or similar business group, including a
corporation or similar organization that operates on a
cooperative basis (within the meaning of section 1381 of the
Internal Revenue Code of 1986)), for substantial purposes other
than that of obtaining or providing medical care,
``(2) is established as a permanent entity which receives
the active support of its members and collects from its members
on a periodic basis dues or payments necessary to maintain
eligibility for membership in the sponsor, and
``(3) does not condition such dues or payments or coverage
under the plan on the basis of health status-related factors
with respect to the employees of its members (or affiliated
members), or the dependents of such employees, and does not
condition such dues or payments on the basis of group health
plan participation.
Any sponsor consisting of an association of entities which meet the
requirements of paragraphs (1) and (2) shall be deemed to be a sponsor
described in this subsection.
``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.
``(a) In General.--The Secretary shall prescribe by regulation a
procedure under which, subject to subsection (b), the Secretary shall
certify association health plans which apply for certification as
meeting the requirements of this part.
``(b) Standards.--Under the procedure prescribed pursuant to
subsection (a), the Secretary shall certify an association health plan
as meeting the requirements of this part only if the Secretary is
satisfied that--
``(1) such certification--
``(A) is administratively feasible,
``(B) is not adverse to the interests of the
individuals covered under the plan, and
``(C) is protective of the rights and benefits of
the individuals covered under the plan, and
``(2) the applicable requirements of this part are met (or,
upon the date on which the plan is to commence operations, will
be met) with respect to the plan.
``(c) Requirements Applicable to Certified Plans.--An association
health plan with respect to which certification under this part is in
effect shall meet the applicable requirements of this part, effective
on the date of certification (or, if later, on the date on which the
plan is to commence operations).
``(d) Requirements for Continued Certification.--The Secretary may
provide by regulation for continued certification under this part,
including requirements relating to any commencement, by an association
health plan which has been certified under this part, of a benefit
option which does not consist of health insurance coverage.
``(e) Class Certification for Fully-Insured Plans.--The Secretary
shall establish a class certification procedure for association health
plans under which all benefits consist of health insurance coverage.
Under such procedure, the Secretary shall provide for the granting of
certification under this part to the plans in each class of such
association health plans upon appropriate filing under such procedure
in connection with plans in such class and payment of the prescribed
fee under section 807(a).
``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF TRUSTEES.
``(a) Sponsor.--The requirements of this subsection are met with
respect to an association health plan if--
``(1) the sponsor (together with its immediate predecessor,
if any) has met (or is deemed under this part to have met) for
a continuous period of not less than 3 years ending with the
date of the application for certification under this part, the
requirements of paragraphs (1) and (2) of section 801(b), and
``(2) the sponsor meets (or is deemed under this part to
meet) the requirements of section 801(b)(3).
``(b) Board of Trustees.--The requirements of this subsection are
met with respect to an association health plan if the following
requirements are met:
``(1) Fiscal control.--The plan is operated, pursuant to a
trust agreement, by a board of trustees which has complete
fiscal control over the plan and which is responsible for all
operations of the plan.
``(2) Rules of operation and financial controls.--The board
of trustees has in effect rules of operation and financial
controls, based on a 3-year plan of operation, adequate to
carry out the terms of the plan and to meet all requirements of
this title applicable to the plan.
``(3) Rules governing relationship to participating
employers and to contractors.--
``(A) In general.--Except as provided in
subparagraph (B), the members of the board of trustees
are individuals selected from individuals who are the
owners, officers, directors, or employees of the
participating employers or who are partners in the
participating employers and actively participate in the
business.
``(B) Limitation.--
``(i) General rule.--Except as provided in
clauses (ii) and (iii), no such member is an
owner, officer, director, or employee of, or
partner in, a contract administrator or other
service provider to the plan.
``(ii) Limited exception for providers of
services solely on behalf of the sponsor.--
Officers or employees of a sponsor which is a
service provider (other than a contract
administrator) to the plan may be members of
the board if they constitute not more than 25
percent of the membership of the board and they
do not provide services to the plan other than
on behalf of the sponsor.
``(iii) Treatment of providers of medical
care.--In the case of a sponsor which is an
association whose membership consists primarily
of providers of medical care, clause (i) shall
not apply in the case of any service provider
described in subparagraph (A) who is a provider
of medical care under the plan.
``(C) Sole authority.--The board has sole authority
to approve applications for participation in the plan
and to contract with a service provider to administer
the day-to-day affairs of the plan.
``(c) Treatment of Franchise Networks.--In the case of a group
health plan which is established and maintained by a franchiser for a
franchise network consisting of its franchisees--
``(1) the requirements of subsection (a) and section
801(a)(1) shall be deemed met if such requirements would
otherwise be met if the franchiser were deemed to be the
sponsor referred to in section 801(b), such network were deemed
to be an association described in section 801(b), and each
franchisee were deemed to be a member (of the association and
the sponsor) referred to in section 801(b), and
``(2) the requirements of section 804(a)(1) shall be deemed
met.
``(d) Certain Collectively Bargained Plans.--
``(1) In general.--In the case of a group health plan
described in paragraph (2)--
``(A) the requirements of subsection (a) and
section 801(a)(1) shall be deemed met,
``(B) the joint board of trustees shall be deemed a
board of trustees with respect to which the
requirements of subsection (b) are met, and
``(C) the requirements of section 804 shall be
deemed met.
``(2) Requirements.--A group health plan is described in
this paragraph if--
``(A) the plan is a multiemployer plan,
``(B) the plan is in existence on April 1, 1997,
and would be described in section 3(40)(A)(i) but
solely for the failure to meet the requirements of
section 3(40)(C)(ii) or (to the extent provided in
regulations of the Secretary) solely for the failure to
meet the requirements of subparagraph (D) of section
3(40), or
``(C)(i) the plan is in existence on April 1, 1997,
has been in existence as of such date for at least 3
years, meets the requirements of paragraphs (2) and (3)
of section 801(b), and would be described in section
3(40)(A)(i) but solely for the failure to meet the
requirements of subparagraph (C)(i) or (C)(ii), and
``(ii) individuals who are members of the plan
sponsor--
``(I) participate by elections in the
organizational governance of the plan sponsor,
``(II) are eligible for appointment as
trustee of the plan or for participation in the
appointment of trustees of the plan, and
``(III) if covered under the plan, have
full rights under the plan of a participant in
an employee welfare benefit plan.
``(e) Certain Plans Not Meeting Single Employer Requirement.--
``(1) In general.--In any case in which the majority of the
employees covered under a group health plan are employees of a
single employer (within the meaning of clauses (i) and (ii) of
section 3(40)(B)), if all other employees covered under the
plan are employed by employers who are related to such single
employer--
``(A) the requirements of subsection (a) and
section 801(a)(1) shall not apply if such single
employer is the sponsor of the plan, and
``(B) the requirements of subsection (b) shall be
deemed met if the board of trustees is the named
fiduciary in connection with the plan.
``(2) Related employers.--For purposes of paragraph (1),
employers are `related' if there is among all such employers a
common ownership interest or a substantial commonality of
business operations based on common suppliers or customers.
``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.
``(a) Covered Employers and Individuals.--The requirements of this
subsection are met with respect to an association health plan if, under
the terms of the plan--
``(1) all participating employers must be members or
affiliated members of the sponsor, except that, in the case of
a sponsor which is a professional association or other
individual-based association, if at least one of the officers,
directors, or employees of an employer, or at least one of the
individuals who are partners in an employer and who actively
participates in the business, is a member or affiliated member
of the sponsor, participating employers may also include such
employer, and
``(2) all individuals commencing coverage under the plan
after certification under this part must be--
``(A) active or retired owners (including self-
employed individuals), officers, directors, or
employees of, or partners in, participating employers,
or
``(B) the beneficiaries of individuals described in
subparagraph (A).
``(b) Coverage of Previously Uninsured Employees.--The requirements
of this subsection are met with respect to an association health plan
if, under the terms of the plan, no affiliated member of the sponsor
may be offered coverage under the plan as a participating employer
unless--
``(1) the affiliated member was an affiliated member on the
date of certification under this part, or
``(2) during the 12-month period preceding the date of the
offering of such coverage, the affiliated member has not
maintained or contributed to a group health plan with respect
to any of its employees who would otherwise be eligible to
participate in such association health plan.
``(c) Individual Market Unaffected.--The requirements of this
subsection are met with respect to an association health plan if, under
the terms of the plan, no participating employer may provide health
insurance coverage in the individual market for any employee not
covered under the plan which is similar to the coverage
contemporaneously provided to employees of the employer under the plan,
if such exclusion of the employee from coverage under the plan is based
on a health status-related factor with respect to the employee and such
employee would, but for such exclusion on such basis, be eligible for
coverage under the plan.
``(d) Prohibition of Discrimination Against Employers and Employees
Eligible to Participate.--The requirements of this subsection are met
with respect to an association health plan if--
``(1) under the terms of the plan, no employer meeting the
preceding requirements of this section is excluded as a
participating employer, unless--
``(A) participation or contribution requirements of
the type referred to in section 2711 of the Public
Health Service Act are not met with respect to the
excluded employer, or
``(B) the excluded employer does not satisfy a
required minimum level of employment uniformly
applicable to participating employers,
``(2) the applicable requirements of sections 701, 702, and
703 are met with respect to the plan, and
``(3) applicable benefit options under the plan are
actively marketed to all eligible participating employers.
``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, CONTRIBUTION
RATES, AND BENEFIT OPTIONS.
``(a) In General.--The requirements of this section are met with
respect to an association health plan if the following requirements are
met:
``(1) Contents of governing instruments.--The instruments
governing the plan include a written instrument, meeting the
requirements of an instrument required under section 402(a)(1),
which--
``(A) provides that the board of trustees serves as
the named fiduciary required for plans under section
402(a)(1) and serves in the capacity of a plan
administrator (referred to in section 3(16)(A)),
``(B) provides that the sponsor of the plan is to
serve as plan sponsor (referred to in section
3(16)(B)), and
``(C) incorporates the requirements of section 806.
``(2) Contribution rates must be nondiscriminatory.--
``(A) The contribution rates for any participating
employer do not vary significantly on the basis of the
claims experience of such employer and do not vary on
the basis of the type of business or industry in which
such employer is engaged.
``(B) Nothing in this title or any other provision
of law shall be construed to preclude an association
health plan, or a health insurance issuer offering
health insurance coverage in connection with an
association health plan, from setting contribution
rates based on the claims experience of the plan, to
the extent contribution rates under the plan meet the
requirements of section 702(b).
``(3) Floor for number of covered individuals with respect
to certain plans.--If any benefit option under the plan does
not consist of health insurance coverage, the plan has as of
the beginning of the plan year not fewer than 1,000
participants and beneficiaries.
``(4) Regulatory requirements.--Such other requirements as
the Secretary may prescribe by regulation as necessary to carry
out the purposes of this part.
``(b) Ability of Association Health Plans to Design Benefit
Options.--Nothing in this part or any provision of State law (as
defined in section 514(c)(1)) shall be construed to preclude an
association health plan, or a health insurance issuer offering health
insurance coverage in connection with an association health plan, from
exercising its sole discretion in selecting the specific items and
services consisting of medical care to be included as benefits under
such plan or coverage, except in the case of any law to the extent that
it (1) prohibits an exclusion of a specific disease from such coverage,
or (2) is not preempted under section 731(a)(1) with respect to matters
governed by section 711 or 712.
``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR SOLVENCY FOR
PLANS PROVIDING HEALTH BENEFITS IN ADDITION TO HEALTH
INSURANCE COVERAGE.
``(a) In General.--The requirements of this section are met with
respect to an association health plan if--
``(1) the benefits under the plan consist solely of health
insurance coverage, or
``(2) if the plan provides any additional benefit options
which do not consist of health insurance coverage, the plan--
``(A) establishes and maintains reserves with
respect to such additional benefit options, in amounts
recommended by the qualified actuary, consisting of--
``(i) a reserve sufficient for unearned
contributions,
``(ii) a reserve sufficient for benefit
liabilities which have been incurred, which
have not been satisfied, and for which risk of
loss has not yet been transferred, and for
expected administrative costs with respect to
such benefit liabilities,
``(iii) a reserve sufficient for any other
obligations of the plan, and
``(iv) a reserve sufficient for a margin of
error and other fluctuations, taking into
account the specific circumstances of the plan,
and
``(B) establishes and maintains aggregate excess/
stop loss insurance and solvency indemnification, with
respect to such additional benefit options for which
risk of loss has not yet been transferred, as follows:
``(i) The plan shall secure aggregate
excess/stop loss insurance for the plan with an
attachment point which is not greater than 125
percent of expected gross annual claims. The
Secretary may by regulation provide for upward
adjustments in the amount of such percentage in
specified circumstances in which the plan
specifically provides for and maintains
reserves in excess of the amounts required
under subparagraph (A).
``(ii) The plan shall secure a means of
indemnification for any claims which the plan
is unable to satisfy by reason of a termination
pursuant to section 809(b) (relating to
mandatory termination).
Any regulations prescribed by the Secretary pursuant to paragraph
(2)(B)(i) may allow for such adjustments in the required levels of
excess/stop loss insurance as the qualified actuary may recommend,
taking into account the specific circumstances of the plan.
``(b) Minimum Surplus in Addition to Claims Reserves.--The
requirements of this subsection are met if the plan establishes and
maintains surplus in an amount at least equal to the excess of--
``(1) the greater of--
``(A) 25 percent of expected incurred claims and
expenses for the plan year, or
``(B) $400,000,
over
``(2) the amount required under subsection (a)(2)(A)(ii).
``(c) Additional Requirements.--In the case of any association
health plan described in subsection (a)(2), the Secretary may provide
such additional requirements relating to reserves and excess/stop loss
insurance as the Secretary considers appropriate. Such requirements may
be provided, by regulation or otherwise, with respect to any such plan
or any class of such plans.
``(d) Adjustments for Excess/Stop Loss Insurance.--The Secretary
may provide for adjustments to the levels of reserves otherwise
required under subsections (a) and (b) with respect to any plan or
class of plans to take into account excess/stop loss insurance provided
with respect to such plan or plans.
``(e) Alternative Means of Compliance.--The Secretary may permit an
association health plan described in subsection (a)(2) to substitute,
for all or part of the requirements of this section, such security,
guarantee, hold-harmless arrangement, or other financial arrangement as
the Secretary determines to be adequate to enable the plan to fully
meet all its financial obligations on a timely basis and is otherwise
no less protective of the interests of participants and beneficiaries
than the requirements for which it is substituted. The Secretary may
take into account, for purposes of this subsection, evidence provided
by the plan or sponsor which demonstrates an assumption of liability
with respect to the plan. Such evidence may be in the form of a
contract of indemnification, lien, bonding, insurance, letter of
credit, recourse under applicable terms of the plan in the form of
assessments of participating employers, security, or other financial
arrangement.
``(f) Excess/Stop Loss Insurance.--For purposes of this section,
the term `excess/stop loss insurance' means, in connection with an
association health plan, a contract under which an insurer (meeting
such minimum standards as may be prescribed in regulations of the
Secretary) provides for payment to the plan with respect to claims
under the plan in excess of an amount or amounts specified in such
contract.
``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED REQUIREMENTS.
``(a) Filing Fee.--Under the procedure prescribed pursuant to
section 802(a), an association health plan shall pay to the Secretary
at the time of filing an application for certification under this part
a filing fee in the amount of $5,000, which shall be available, to the
extent provided in appropriation Acts, to the Secretary for the sole
purpose of administering the certification procedures applicable with
respect to association health plans.
``(b) Information To Be Included in Application for
Certification.--An application for certification under this part meets
the requirements of this section only if it includes, in a manner and
form prescribed in regulations of the Secretary, at least the following
information:
``(1) Identifying information.--The names and addresses
of--
``(A) the sponsor, and
``(B) the members of the board of trustees of the
plan.
``(2) States in which plan intends to do business.--The
States in which participants and beneficiaries under the plan
are to be located and the number of them expected to be located
in each such State.
``(3) Bonding requirements.--Evidence provided by the board
of trustees that the bonding requirements of section 412 will
be met as of the date of the application or (if later)
commencement of operations.
``(4) Plan documents.--A copy of the documents governing
the plan (including any bylaws and trust agreements), the
summary plan description, and other material describing the
benefits that will be provided to participants and
beneficiaries under the plan.
``(5) Agreements with service providers.--A copy of any
agreements between the plan and contract administrators and
other service providers.
``(6) Funding report.--In the case of association health
plans providing benefits options in addition to health
insurance coverage, a report setting forth information with
respect to such additional benefit options determined as of a
date within the 120-day period ending with the date of the
application, including the following:
``(A) Reserves.--A statement, certified by the
board of trustees of the plan, and a statement of
actuarial opinion, signed by a qualified actuary, that
all applicable requirements of section 806 are or will
be met in accordance with regulations which the
Secretary shall prescribe.
``(B) Adequacy of contribution rates.--A statement
of actuarial opinion, signed by a qualified actuary,
which sets forth a description of the extent to which
contribution rates are adequate to provide for the
payment of all obligations and the maintenance of
required reserves under the plan for the 12-month
period beginning with such date within such 120-day
period, taking into account the expected coverage and
experience of the plan. If the contribution rates are
not fully adequate, the statement of actuarial opinion
shall indicate the extent to which the rates are
inadequate and the changes needed to ensure adequacy.
``(C) Current and projected value of assets and
liabilities.--A statement of actuarial opinion signed
by a qualified actuary, which sets forth the current
value of the assets and liabilities accumulated under
the plan and a projection of the assets, liabilities,
income, and expenses of the plan for the 12-month
period referred to in subparagraph (B). The income
statement shall identify separately the plan's
administrative expenses and claims.
``(D) Costs of coverage to be charged and other
expenses.--A statement of the costs of coverage to be
charged, including an itemization of amounts for
administration, reserves, and other expenses associated
with the operation of the plan.
``(E) Other information.--Any other information
which may be prescribed in regulations of the Secretary
as necessary to carry out the purposes of this part.
``(c) Filing Notice of Certification With States.--A certification
granted under this part to an association health plan shall not be
effective unless written notice of such certification is filed with the
applicable State authority of each State in which at least 25 percent
of the participants and beneficiaries under the plan are located. For
purposes of this subsection, an individual shall be considered to be
located in the State in which a known address of such individual is
located or in which such individual is employed.
``(d) Notice of Material Changes.--In the case of any association
health plan certified under this part, descriptions of material changes
in any information which was required to be submitted with the
application for the certification under this part shall be filed in
such form and manner as shall be prescribed in regulations of the
Secretary. The Secretary may require by regulation prior notice of
material changes with respect to specified matters which might serve as
the basis for suspension or revocation of the certification.
``(e) Reporting Requirements for Certain Association Health
Plans.--An association health plan certified under this part which
provides benefit options in addition to health insurance coverage for
such plan year shall meet the requirements of section 103 by filing an
annual report under such section which shall include information
described in subsection (b)(6) with respect to the plan year and,
notwithstanding section 104(a)(1)(A), shall be filed not later than 90
days after the close of the plan year (or on such later date as may be
prescribed by the Secretary).
``(f) Engagement of Qualified Actuary.--The board of trustees of
each association health plan which provides benefits options in
addition to health insurance coverage and which is applying for
certification under this part or is certified under this part shall
engage, on behalf of all participants and beneficiaries, a qualified
actuary who shall be responsible for the preparation of the materials
comprising information necessary to be submitted by a qualified actuary
under this part. The qualified actuary shall utilize such assumptions
and techniques as are necessary to enable such actuary to form an
opinion as to whether the contents of the matters reported under this
part--
``(1) are in the aggregate reasonably related to the
experience of the plan and to reasonable expectations, and
``(2) represent such actuary's best estimate of anticipated
experience under the plan.
The opinion by the qualified actuary shall be made with respect to, and
shall be made a part of, the annual report.
``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.
``Except as provided in section 809(b), an association health plan
which is or has been certified under this part may terminate (upon or
at any time after cessation of accruals in benefit liabilities) only if
the board of trustees--
``(1) not less than 60 days before the proposed termination
date, provides to the participants and beneficiaries a written
notice of intent to terminate stating that such termination is
intended and the proposed termination date,
``(2) develops a plan for winding up the affairs of the
plan in connection with such termination in a manner which will
result in timely payment of all benefits for which the plan is
obligated, and
``(3) submits such plan in writing to the Secretary.
Actions required under this section shall be taken in such form and
manner as may be prescribed in regulations of the Secretary.
``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.
``(a) Actions To Avoid Depletion of Reserves.--An association
health plan which is certified under this part and which provides
benefits other than health insurance coverage shall continue to meet
the requirements of section 806, irrespective of whether such
certification continues in effect. The board of trustees of such plan
shall determine quarterly whether the requirements of section 806 are
met. In any case in which the board determines that there is reason to
believe that there is or will be a failure to meet such requirements,
or the Secretary makes such a determination and so notifies the board,
the board shall immediately notify the qualified actuary engaged by the
plan, and such actuary shall, not later than the end of the next
following month, make such recommendations to the board for corrective
action as the actuary determines necessary to ensure compliance with
section 806. Not later than 30 days after receiving from the actuary
recommendations for corrective actions, the board shall notify the
Secretary (in such form and manner as the Secretary may prescribe by
regulation) of such recommendations of the actuary for corrective
action, together with a description of the actions (if any) that the
board has taken or plans to take in response to such recommendations.
The board shall thereafter report to the Secretary, in such form and
frequency as the Secretary may specify to the board, regarding
corrective action taken by the board until the requirements of section
806 are met.
``(b) Mandatory Termination.--In any case in which--
``(1) the Secretary has been notified under subsection (a)
of a failure of an association health plan which is or has been
certified under this part and is described in section 806(a)(2)
to meet the requirements of section 806 and has not been
notified by the board of trustees of the plan that corrective
action has restored compliance with such requirements, and
``(2) the Secretary determines that there is a reasonable
expectation that the plan will continue to fail to meet the
requirements of section 806,
the board of trustees of the plan shall, at the direction of the
Secretary, terminate the plan and, in the course of the termination,
take such actions as the Secretary may require, including satisfying
any claims referred to in section 806(a)(2)(B)(ii) and recovering for
the plan any liability under subsection (a)(2)(B)(ii) or (e) of section
806, as necessary to ensure that the affairs of the plan will be, to
the maximum extent possible, wound up in a manner which will result in
timely provision of all benefits for which the plan is obligated.
``(c) Guarantee Fund.--In any case in which claims against an
association health plan terminated under subsection (b) remain
outstanding after all actions required under subsection (b) have been
undertaken in connection with the termination, the Secretary shall
assess all ongoing association health plans which are or have been
certified under this part and are described in section 806(a)(2) in an
amount--
``(1) expressed as a uniform percentage of claims paid by
such plans per year for coverage, other than health insurance
coverage, commencing with the last plan year ending before the
date of the termination, and
``(2) equal, in the aggregate, to the total amount of such
outstanding claims,
except that any such assessment shall not exceed 2 percent per year.
The Secretary shall promptly pay such outstanding claims with the
amounts assessed pursuant to this subsection. The Secretary shall
deposit and hold such assessments in a guarantee fund which shall be
established by the Secretary for payment of such claims until such
payment of such claims has been completed. The Secretary may invest
amounts of the fund in such obligations as the Secretary considers
appropriate.
``SEC. 810. SPECIAL RULES FOR CHURCH PLANS.
``(a) Election for Church Plans.--Notwithstanding section 4(b)(2),
if a church, a convention or association of churches, or an
organization described in section 3(33)(C)(i) maintains a church plan
which is a group health plan (as defined in section 733(a)(1)), and
such church, convention, association, or organization makes an election
with respect to such plan under this subsection (in such form and
manner as the Secretary may by regulation prescribe), then the
provisions of this section shall apply to such plan, with respect to
benefits provided under such plan consisting of medical care, as if
section 4(b)(2) did not contain an exclusion for church plans. Nothing
in this paragraph shall be construed to render any other section of
this title applicable to church plans, except to the extent that such
other section is incorporated by reference in this section.
``(b) Effect of Election.--
``(1) Preemption of state insurance laws regulating covered
church plans.--Subject to paragraphs (2) and (3), this section
shall supersede any and all State laws which regulate insurance
insofar as they may now or hereafter regulate church plans to
which this section applies or trusts established under such
church plans.
``(2) General state insurance regulation unaffected.--
``(A) In general.--Except as provided in
subparagraph (B) and paragraph (3), nothing in this
section shall be construed to exempt or relieve any
person from any provision of State law which regulates
insurance.
``(B) Church plans not to be deemed insurance
companies or insurers.--Neither a church plan to which
this section applies, nor any trust established under
such a church plan, shall be deemed to be an insurance
company or other insurer or to be engaged in the
business of insurance for purposes of any State law
purporting to regulate insurance companies or insurance
contracts.
``(3) Preemption of certain state laws relating to premium
rate regulation and benefit mandates.--The provisions of
subsections (a)(2)(B) and (b) of section 805 shall apply with
respect to a church plan to which this section applies in the
same manner and to the same extent as such provisions apply
with respect to association health plans.
``(4) Definitions.--For purposes of this subsection--
``(A) State law.--The term `State law' includes all
laws, decisions, rules, regulations, or other State
action having the effect of law, of any State. A law of
the United States applicable only to the District of
Columbia shall be treated as a State law rather than a
law of the United States.
``(B) State.--The term `State' includes a State,
any political subdivision thereof, or any agency or
instrumentality of either, which purports to regulate,
directly or indirectly, the terms and conditions of
church plans covered by this section.
``(c) Requirements for Covered Church Plans.--
``(1) Fiduciary rules and exclusive purpose.--A fiduciary
shall discharge his duties with respect to a church plan to
which this section applies--
``(A) for the exclusive purpose of:
``(i) providing benefits to participants
and their beneficiaries; and
``(ii) defraying reasonable expenses of
administering the plan;
``(B) with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a
like character and with like aims; and
``(C) in accordance with the documents and
instruments governing the plan.
The requirements of this paragraph shall not be treated as not
satisfied solely because the plan assets are commingled with
other church assets, to the extent that such plan assets are
separately accounted for.
``(2) Claims procedure.--In accordance with regulations of
the Secretary, every church plan to which this section applies
shall--
``(A) provide adequate notice in writing to any
participant or beneficiary whose claim for benefits
under the plan has been denied, setting forth the
specific reasons for such denial, written in a manner
calculated to be understood by the participant;
``(B) afford a reasonable opportunity to any
participant whose claim for benefits has been denied
for a full and fair review by the appropriate fiduciary
of the decision denying the claim; and
``(C) provide a written statement to each
participant describing the procedures established
pursuant to this paragraph.
``(3) Annual statements.--In accordance with regulations of
the Secretary, every church plan to which this section applies
shall file with the Secretary an annual statement--
``(A) stating the names and addresses of the plan
and of the church, convention, or association
maintaining the plan (and its principal place of
business);
``(B) certifying that it is a church plan to which
this section applies and that it complies with the
requirements of paragraphs (1) and (2);
``(C) identifying the States in which participants
and beneficiaries under the plan are or likely will be
located during the 1-year period covered by the
statement; and
``(D) containing a copy of a statement of actuarial
opinion signed by a qualified actuary that the plan
maintains capital, reserves, insurance, other financial
arrangements, or any combination thereof adequate to
enable the plan to fully meet all of its financial
obligations on a timely basis.
``(4) Disclosure.--At the time that the annual statement is
filed by a church plan with the Secretary pursuant to paragraph
(3), a copy of such statement shall be made available by the
Secretary to the State insurance commissioner (or similar
official) of any State. The name of each church plan and
sponsoring organization filing an annual statement in
compliance with paragraph (3) shall be published annually in
the Federal Register.
``(c) Enforcement.--The Secretary may enforce the provisions of
this section in a manner consistent with section 502, to the extent
applicable with respect to actions under section 502(a)(5), and with
section 3(33)(D), except that, other than for the purpose of seeking a
temporary restraining order, a civil action may be brought with respect
to the plan's failure to meet any requirement of this section only if
the plan fails to correct its failure within the correction period
described in section 3(33)(D). The other provisions of part 5 (except
sections 501(a), 503, 512, 514, and 515) shall apply with respect to
the enforcement and administration of this section.
``(d) Definitions and Other Rules.--For purposes of this section--
``(1) In general.--Except as otherwise provided in this
section, any term used in this section which is defined in any
provision of this title shall have the definition provided such
term by such provision.
``(2) Seminary students.--Seminary students who are
enrolled in an institution of higher learning described in
section 3(33)(C)(iv) and who are treated as participants under
the terms of a church plan to which this section applies shall
be deemed to be employees as defined in section 3(6) if the
number of such students constitutes an insignificant portion of
the total number of individuals who are treated as participants
under the terms of the plan.
``SEC. 811. DEFINITIONS AND RULES OF CONSTRUCTION.
``(a) Definitions.--For purposes of this part--
``(1) Group health plan.--The term `group health plan' has
the meaning provided in section 733(a)(1).
``(2) Medical care.--The term `medical care' has the
meaning provided in section 733(a)(2).
``(3) Health insurance coverage.--The term `health
insurance coverage' has the meaning provided in section
733(b)(1).
``(4) Health insurance issuer.--The term `health insurance
issuer' has the meaning provided in section 733(b)(2).
``(5) Health status-related factor.--The term `health
status-related factor' has the meaning provided in section
733(d)(2).
``(6) Individual market.--
``(A) In general.--The term `individual market'
means the market for health insurance coverage offered
to individuals other than in connection with a group
health plan.
``(B) Treatment of very small groups.--
``(i) In general.--Subject to clause (ii),
such term includes coverage offered in
connection with a group health plan that has
fewer than 2 participants as current employees
or participants described in section 732(d)(3)
on the first day of the plan year.
``(ii) State exception.--Clause (i) shall
not apply in the case of health insurance
coverage offered in a State if such State
regulates the coverage described in such clause
in the same manner and to the same extent as
coverage in the small group market (as defined
in section 2791(e)(5) of the Public Health
Service Act) is regulated by such State.
``(7) Participating employer.--The term `participating
employer' means, in connection with an association health plan,
any employer, if any individual who is an employee of such
employer, a partner in such employer, or a self-employed
individual who is such employer (or any dependent, as defined
under the terms of the plan, of such individual) is or was
covered under such plan in connection with the status of such
individual as such an employee, partner, or self-employed
individual in relation to the plan.
``(8) Applicable state authority.--The term `applicable
State authority' means, with respect to a health insurance
issuer in a State, the State insurance commissioner or official
or officials designated by the State to enforce the
requirements of title XXVII of the Public Health Service Act
for the State involved with respect to such issuer.
``(9) Qualified actuary.--The term `qualified actuary'
means an individual who is a member of the American Academy of
Actuaries or meets such reasonable standards and qualifications
as the Secretary may provide by regulation.
``(10) Affiliated member.--The term `affiliated member'
means, in connection with a sponsor, a person eligible to be a
member of the sponsor or, in the case of a sponsor with member
associations, a person who is a member, or is eligible to be a
member, of a member association.
``(b) Rules of Construction.--
``(1) Employers and employees.--For purposes of determining
whether a plan, fund, or program is an employee welfare benefit
plan which is an association health plan, and for purposes of
applying this title in connection with such plan, fund, or
program so determined to be such an employee welfare benefit
plan--
``(A) in the case of a partnership, the term
`employer' (as defined in section (3)(5)) includes the
partnership in relation to the partners, and the term
`employee' (as defined in section (3)(6)) includes any
partner in relation to the partnership, and
``(B) in the case of a self-employed individual,
the term `employer' (as defined in section 3(5)) and
the term `employee' (as defined in section 3(6)) shall
include such individual.
``(2) Plans, funds, and programs treated as employee
welfare benefit plans.--In the case of any plan, fund, or
program which was established or is maintained for the purpose
of providing medical care (through the purchase of insurance or
otherwise) for employees (or their dependents) covered
thereunder and which demonstrates to the Secretary that all
requirements for certification under this part would be met
with respect to such plan, fund, or program if such plan, fund,
or program were a group health plan, such plan, fund, or
program shall be treated for purposes of this title as an
employee welfare benefit plan on and after the date of such
demonstration.''.
(b) Conforming Amendments to Preemption Rules.--
(1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is
amended by adding at the end the following new subparagraph:
``(E) The preceding subparagraphs of this paragraph do not apply
with respect to any State law in the case of an association health plan
which is certified under part 8.''.
(2) Section 514 of such Act (29 U.S.C. 1144) is amended--
(A) in subsection (b)(4), by striking ``Subsection
(a)'' and inserting ``Subsections (a) and (d)'';
(B) in subsection (b)(5), by striking ``subsection
(a)'' in subparagraph (A) and inserting ``subsection
(a) of this section and subsections (a)(2)(B) and (b)
of section 805'', and by striking ``subsection (a)'' in
subparagraph (B) and inserting ``subsection (a) of this
section or subsection (a)(2)(B) or (b) of section
805'';
(C) by redesignating subsection (d) as subsection
(e); and
(D) by inserting after subsection (c) the following
new subsection:
``(d)(1) Except as provided in subsection (b)(4), the provisions of
this title shall supersede any and all State laws insofar as they may
now or hereafter preclude a health insurance issuer from offering
health insurance coverage in connection with an association health plan
which is certified under part 8.
``(2) Except as provided in paragraphs (4) and (5) of subsection
(b) of this section--
``(A) In any case in which health insurance coverage of any
policy type is offered under an association health plan
certified under part 8 to a participating employer operating in
such State, the provisions of this title shall supersede any
and all laws of such State insofar as they may preclude a
health insurance issuer from offering health insurance coverage
of the same policy type to other employers operating in the
State which are eligible for coverage under such association
health plan, whether or not such other employers are
participating employers in such plan.
``(B) In any case in which health insurance coverage of any
policy type is offered under an association health plan in a
State and the filing, with the applicable State authority, of
the policy form in connection with such policy type is approved
by such State authority, the provisions of this title shall
supersede any and all laws of any other State in which health
insurance coverage of such type is offered, insofar as they may
preclude, upon the filing in the same form and manner of such
policy form with the applicable State authority in such other
State, the approval of the filing in such other State.
``(3) For additional provisions relating to association health
plans, see subsections (a)(2)(B) and (b) of section 805.
``(4) For purposes of this subsection, the term `association health
plan' has the meaning provided in section 801(a), and the terms `health
insurance coverage', `participating employer', and `health insurance
issuer' have the meanings provided such terms in section 811,
respectively.''.
(3) Section 514(b)(6)(A) of such Act (29 U.S.C.
1144(b)(6)(A)) is amended--
(A) in clause (i)(II), by striking ``and'' at the
end;
(B) in clause (ii), by inserting ``and which does
not provide medical care (within the meaning of section
733(a)(2)),'' after ``arrangement,'', and by striking
``title.'' and inserting ``title, and''; and
(C) by adding at the end the following new clause:
``(iii) subject to subparagraph (E), in the case of any
other employee welfare benefit plan which is a multiple
employer welfare arrangement and which provides medical care
(within the meaning of section 733(a)(2)), any law of any State
which regulates insurance may apply.''.
(c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C.
102(16)(B)) is amended by adding at the end the following new sentence:
``Such term also includes a person serving as the sponsor of an
association health plan under part 8.''.
(d) Savings Clause.--Section 731(c) of such Act is amended by
inserting ``or part 8'' after ``this part''.
(e) Clerical Amendment.--The table of contents in section 1 of the
Employee Retirement Income Security Act of 1974 is amended by inserting
after the item relating to section 734 the following new items:
``Part 8--Rules Governing Association Health Plans
``Sec. 801. Association health plans.
``Sec. 802. Certification of association health plans.
``Sec. 803. Requirements relating to sponsors and boards of trustees.
``Sec. 804. Participation and coverage requirements.
``Sec. 805. Other requirements relating to plan documents, contribution
rates, and benefit options.
``Sec. 806. Maintenance of reserves and provisions for solvency for
plans providing health benefits in addition
to health insurance coverage.
``Sec. 807. Requirements for application and related requirements.
``Sec. 808. Notice requirements for voluntary termination.
``Sec. 809. Corrective actions and mandatory termination.
``Sec. 810. Special rules for church plans.
``Sec. 811. Definitions and rules of construction.''
SEC. 5303. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.
Section 3(40)(B) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1002(40)(B)) is amended--
(1) in clause (i), by inserting ``for any plan year of any
such plan, or any fiscal year of any such other arrangement;''
after ``single employer'', and by inserting ``during such year
or at any time during the preceding 1-year period'' after
``control group'';
(2) in clause (iii)--
(A) by striking ``common control shall not be based
on an interest of less than 25 percent'' and inserting
``an interest of greater than 25 percent may not be
required as the minimum interest necessary for common
control''; and
(B) by striking ``similar to'' and inserting
``consistent and coextensive with'';
(3) by redesignating clauses (iv) and (v) as clauses (v)
and (vi), respectively; and
(4) by inserting after clause (iii) the following new
clause:
``(iv) in determining, after the application of clause (i),
whether benefits are provided to employees of two or more
employers, the arrangement shall be treated as having only 1
participating employer if, after the application of clause (i),
the number of individuals who are employees and former
employees of any one participating employer and who are covered
under the arrangement is greater than 75 percent of the
aggregate number of all individuals who are employees or former
employees of participating employers and who are covered under
the arrangement,''.
SEC. 5304. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY BARGAINED
ARRANGEMENTS.
(a) In General.--Section 3(40)(A)(i) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(40)(A)(i)) is amended to
read as follows:
``(i)(I) under or pursuant to one or more collective
bargaining agreements which are reached pursuant to collective
bargaining described in section 8(d) of the National Labor
Relations Act (29 U.S.C. 158(d)) or paragraph Fourth of section
2 of the Railway Labor Act (45 U.S.C. 152, paragraph Fourth) or
which are reached pursuant to labor-management negotiations
under similar provisions of State public employee relations
laws, and (II) in accordance with subparagraphs (C), (D), and
(E),''.
(b) Limitations.--Section 3(40) of such Act (29 U.S.C. 1002(40)) is
amended by adding at the end the following new subparagraphs:
``(C) For purposes of subparagraph (A)(i)(II), a plan or other
arrangement shall be treated as established or maintained in accordance
with this subparagraph only if the following requirements are met:
``(i) The plan or other arrangement, and the employee
organization or any other entity sponsoring the plan or other
arrangement, do not--
``(I) utilize the services of any licensed
insurance agent or broker for soliciting or enrolling
employers or individuals as participating employers or
covered individuals under the plan or other
arrangement; or
``(II) pay a commission or any other type of
compensation to a person, other than a full time
employee of the employee organization (or a member of
the organization to the extent provided in regulations
of the Secretary), that is related either to the volume
or number of employers or individuals solicited or
enrolled as participating employers or covered
individuals under the plan or other arrangement, or to
the dollar amount or size of the contributions made by
participating employers or covered individuals to the
plan or other arrangement;
except to the extent that the services used by the plan,
arrangement, organization, or other entity consist solely of
preparation of documents necessary for compliance with the
reporting and disclosure requirements of part 1 or
administrative, investment, or consulting services unrelated to
solicitation or enrollment of covered individuals.
``(ii) As of the end of the preceding plan year, the number
of covered individuals under the plan or other arrangement who
are identified to the plan or arrangement and who are neither--
``(I) employed within a bargaining unit covered by
any of the collective bargaining agreements with a
participating employer (nor covered on the basis of an
individual's employment in such a bargaining unit); nor
``(II) present employees (or former employees who
were covered while employed) of the sponsoring employee
organization, of an employer who is or was a party to
any of the collective bargaining agreements, or of the
plan or other arrangement or a related plan or
arrangement (nor covered on the basis of such present
or former employment);
does not exceed 15 percent of the total number of individuals
who are covered under the plan or arrangement and who are
present or former employees who are or were covered under the
plan or arrangement pursuant to a collective bargaining
agreement with a participating employer. The requirements of
the preceding provisions of this clause shall be treated as
satisfied if, as of the end of the preceding plan year, such
covered individuals are comprised solely of individuals who
were covered individuals under the plan or other arrangement as
of the date of the enactment of the Expansion of Portability
and Health Insurance Coverage Act of 1997 and, as of the end of
the preceding plan year, the number of such covered individuals
does not exceed 25 percent of the total number of present and
former employees enrolled under the plan or other arrangement.
``(iii) The employee organization or other entity
sponsoring the plan or other arrangement certifies to the
Secretary each year, in a form and manner which shall be
prescribed in regulations of the Secretary that the plan or
other arrangement meets the requirements of clauses (i) and
(ii).
``(D) For purposes of subparagraph (A)(i)(II), a plan or
arrangement shall be treated as established or maintained in accordance
with this subparagraph only if--
``(i) all of the benefits provided under the plan or
arrangement consist of health insurance coverage; or
``(ii)(I) the plan or arrangement is a multiemployer plan;
and
``(II) the requirements of clause (B) of the proviso to
clause (5) of section 302(c) of the Labor Management Relations
Act, 1947 (29 U.S.C. 186(c)) are met with respect to such plan
or other arrangement.
``(E) For purposes of subparagraph (A)(i)(II), a plan or
arrangement shall be treated as established or maintained in accordance
with this subparagraph only if--
``(i) the plan or arrangement is in effect as of the date
of the enactment of the Expansion of Portability and Health
Insurance Coverage Act of 1997, or
``(ii) the employee organization or other entity sponsoring
the plan or arrangement--
``(I) has been in existence for at least 3 years or
is affiliated with another employee organization which
has been in existence for at least 3 years, or
``(II) demonstrates to the satisfaction of the
Secretary that the requirements of subparagraphs (C)
and (D) are met with respect to the plan or other
arrangement.''.
(c) Conforming Amendments to Definitions of Participant and
Beneficiary.--Section 3(7) of such Act (29 U.S.C. 1002(7)) is amended
by adding at the end the following new sentence: ``Such term includes
an individual who is a covered individual described in paragraph
(40)(C)(ii).''.
SEC. 5305. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION HEALTH PLANS.
(a) Criminal Penalties for Certain Willful Misrepresentations.--
Section 501 of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1131) is amended--
(1) by inserting ``(a)'' after ``Sec. 501.''; and
(2) by adding at the end the following new subsection:
``(b) Any person who, either willfully or with willful blindness,
falsely represents, to any employee, any employee's beneficiary, any
employer, the Secretary, or any State, a plan or other arrangement
established or maintained for the purpose of offering or providing any
benefit described in section 3(1) to employees or their beneficiaries
as--
``(1) being an association health plan which has been
certified under part 8;
``(2) having been established or maintained under or
pursuant to one or more collective bargaining agreements which
are reached pursuant to collective bargaining described in
section 8(d) of the National Labor Relations Act (29 U.S.C.
158(d)) or paragraph Fourth of section 2 of the Railway Labor
Act (45 U.S.C. 152, paragraph Fourth) or which are reached
pursuant to labor-management negotiations under similar
provisions of State public employee relations laws; or
``(3) being a plan or arrangement with respect to which the
requirements of subparagraph (C), (D), or (E) of section 3(40)
are met;
shall, upon conviction, be imprisoned not more than five years, be
fined under title 18, United States Code, or both.''.
(b) Cease Activities Orders.--Section 502 of such Act (29 U.S.C.
1132) is amended by adding at the end the following new subsection:
``(n)(1) Subject to paragraph (2), upon application by the
Secretary showing the operation, promotion, or marketing of an
association health plan (or similar arrangement providing benefits
consisting of medical care (as defined in section 733(a)(2))) that--
``(A) is not certified under part 8, is subject under
section 514(b)(6) to the insurance laws of any State in which
the plan or arrangement offers or provides benefits, and is not
licensed, registered, or otherwise approved under the insurance
laws of such State; or
``(B) is an association health plan certified under part 8
and is not operating in accordance with the requirements under
part 8 for such certification,
a district court of the United States shall enter an order requiring
that the plan or arrangement cease activities.
``(2) Paragraph (1) shall not apply in the case of an association
health plan or other arrangement if the plan or arrangement shows
that--
``(A) all benefits under it referred to in paragraph (1)
consist of health insurance coverage; and
``(B) with respect to each State in which the plan or
arrangement offers or provides benefits, the plan or
arrangement is operating in accordance with applicable State
laws that are not superseded under section 514.
``(3) The court may grant such additional equitable relief,
including any relief available under this title, as it deems necessary
to protect the interests of the public and of persons having claims for
benefits against the plan.''.
(c) Responsibility for Claims Procedure.--Section 503 of such Act
(29 U.S.C. 1133) is amended by adding at the end (after and below
paragraph (2)) the following new sentence:
``The terms of each association health plan which is or has been
certified under part 8 shall require the board of trustees or the named
fiduciary (as applicable) to ensure that the requirements of this
section are met in connection with claims filed under the plan.''.
SEC. 5306. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.
Section 506 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1136) is amended by adding at the end the following new
subsection:
``(c) Responsibility of States With Respect to Association Health
Plans.--
``(1) Agreements with states.--A State may enter into an
agreement with the Secretary for delegation to the State of
some or all of the Secretary's authority under sections 502 and
504 to enforce the requirements for certification under part 8.
The Secretary shall enter into the agreement if the Secretary
determines that the delegation provided for therein would not
result in a lower level or quality of enforcement of the
provisions of this title.
``(2) Delegations.--Any department, agency, or
instrumentality of a State to which authority is delegated
pursuant to an agreement entered into under this paragraph may,
if authorized under State law and to the extent consistent with
such agreement, exercise the powers of the Secretary under this
title which relate to such authority.
``(3) Recognition of primary domicile state.--In entering
into any agreement with a State under subparagraph (A), the
Secretary shall ensure that, as a result of such agreement and
all other agreements entered into under subparagraph (A), only
one State will be recognized, with respect to any particular
association health plan, as the primary domicile State to which
authority has been delegated pursuant to such agreements.''.
SEC. 5307. EFFECTIVE DATE AND TRANSITIONAL RULES.
(a) Effective Date.--The amendments made by sections 5302, 5305,
and 5306 shall take effect on January 1, 1999. The amendments made by
sections 5303 and 5304 shall take effect on the date of the enactment
of this Act. The Secretary of Labor shall issue all regulations
necessary to carry out the amendments made by this Act before January
1, 1999.
(b) Exception.--Section 801(a)(2) of the Employee Retirement Income
Security Act of 1974 (added by section 5302) does not apply with
respect to group health plans (as defined in section 733(a)(1) of such
Act) existing on April 1, 1997, which do not provide health insurance
coverage (as defined in section 733(b)(1) of such Act) on such date.
TITLE VI--COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
Subtitle A--Postal Service
SEC. 6001. REPEAL OF AUTHORIZATION OF TRANSITIONAL APPROPRIATIONS FOR
THE UNITED STATES POSTAL SERVICE.
(a) Repeal.--
(1) In general.--Section 2004 of title 39, United States
Code, is repealed.
(2) Technical and conforming amendments.--
(A) The table of sections for chapter 20 of such
title is amended by repealing the item relating to
section 2004.
(B) Section 2003(e)(2) of such title is amended by
striking ``sections 2401 and 2004'' each place it
appears and inserting ``section 2401''.
(b) Clarification That Liabilities Formerly Paid Pursuant to
Section 2004 Remain Liabilities Payable by the Postal Service.--Section
2003 of title 39, United States Code, is amended by adding at the end
the following:
``(h) Liabilities of the former Post Office Department to the
Employees' Compensation Fund (appropriations for which were authorized
by former section 2004, as in effect before the effective date of this
subsection) shall be liabilities of the Postal Service payable out of
the Fund.''.
(c) Effective Date.--
(1) In general.--This section and the amendments made by
this section shall take effect on the date of the enactment of
this Act or October 1, 1997, whichever is later.
(2) Provisions relating to payments for fiscal year 1998.--
(A) Amounts not yet paid.--No payment may be made
to the Postal Service Fund, on or after the date of the
enactment of this Act, pursuant to any appropriation
for fiscal year 1998 authorized by section 2004 of
title 39, United States Code (as in effect before the
effective date of this section).
(B) Amounts paid.--If any payment to the Postal
Service Fund is or has been made pursuant to an
appropriation for fiscal year 1998 authorized by such
section 2004, then, an amount equal to the amount of
such payment shall be paid from such Fund into the
Treasury as miscellaneous receipts before October 1,
1998.
Subtitle B--Civil Service
SEC. 6101. CONTRIBUTIONS UNDER THE CIVIL SERVICE RETIREMENT SYSTEM.
(a) Individual Contributions.--
(1) In General.--Subsection (c) of section 8334 of
title 5, United States Code, is amended to read as
follows:
``(c) Each employee or Member credited with civilian service after
July 31, 1920, for which retirement deductions or deposits have not
been made, may deposit with interest an amount equal to the following
percentages of his basic pay received for that service:
``Percentage of basic
pay Service period
Employee................................ 2.50................... August 1, 1920, to June 30, 1926.
3.50................... July 1, 1926, to June 30, 1942.
5...................... July 1, 1942, to June 30, 1948.
6...................... July 1, 1948, to October 31, 1956.
6.50................... November 1, 1956, to December 31, 1969.
7...................... January 1, 1970, to December 31, 1998.
7.25................... January 1, 1999, to December 31, 1999.
7.40................... January 1, 2000, to December 31, 2000.
7.50................... January 1, 2001, to December 31, 2002.
7...................... After December 31, 2002.
Member or employee for Congressional
employee service....................... 2.50................... August 1, 1920, to June 30, 1926.
3.50................... July 1, 1926, to June 30, 1942.
5...................... July 1, 1942, to June 30, 1948.
6...................... July 1, 1948, to October 31, 1956.
6.50................... November 1, 1956, to December 31, 1969.
7.50................... January 1, 1970, to December 31, 1998.
7.75................... January 1, 1999, to December 31, 1999.
7.90................... January 1, 2000, to December 31, 2000.
8...................... January 1, 2001, to December 31, 2002.
7.50................... After December 31, 2002.
Member for Member service............... 2.50................... August 1, 1920, to June 30, 1926.
3.50................... July 1, 1926, to June 30, 1942.
5...................... July 1, 1942, to August 1, 1946.
6...................... August 2, 1946, to October 31, 1956.
7.50................... November 1, 1956, to December 31, 1969.
8...................... January 1, 1970, to December 31, 1998.
8.25................... January 1, 1999, to December 31, 1999.
8.40................... January 1, 2000, to December 31, 2000.
8.50................... January 1, 2001, to December 31, 2002.
8...................... After December 31, 2002.
Law enforcement officer for law
enforcement service and firefighter for
firefighter service.................... 2.50...................
3.50................... August 1, 1920, to June 30, 1926.
July 1, 1926, to June 30, 1942.
5...................... July 1, 1942, to June 30, 1948.
6...................... July 1, 1948, to October 31, 1956.
6.50................... November 1, 1956, to December 31, 1969.
7...................... January 1, 1970, to December 31, 1974.
7.50................... January 1, 1975, to December 31, 1998.
7.75................... January 1, 1999, to December 31, 1999.
7.90................... January 1, 2000, to December 31, 2000.
8...................... January 1, 2001, to December 31, 2002.
7.50................... After December 31, 2002.
Bankruptcy judge........................ 2.50................... August 1, 1920, to June 30, 1926.
3.50................... July 3, 1926, to June 30, 1942.
5...................... July 1, 1942, to June 30, 1948.
6...................... July 1, 1948, to October 31, 1956.
6.50................... November 1, 1956, to December 31, 1969.
7...................... January 1, 1970, to December 31, 1983.
8...................... January 1, 1984, to December 31, 1998.
8.25................... January 1, 1999, to December 31, 1999.
8.40................... January 1, 2000, to December 31, 2000.
8.50................... January 1, 2001, to December 31, 2002.
8...................... After December 31, 2002.
Judge of the United States Court of
Appeals for the Armed Forces for
service as a judge of that court....... 6......................
6.50................... May 5, 1950, to October 31, 1956.
November 1, 1956, to December 31, 1969.
7...................... January 1, 1970, to (but not including) the
date of the enactment of the Department of
Defense Authorization Act, 1984.
8...................... The date of the enactment of the Department
of Defense Authorization Act, 1984, to
December 31, 1998.
8.25................... January 1, 1999, to December 31, 1999.
8.40................... January 1, 2000, to December 31, 2000.
8.50................... January 1, 2001, to December 31, 2002.
8...................... After December 31, 2002.
United States magistrate................ 2.50................... August 1, 1920, to June 30, 1926.
3.50................... July 1, 1926, to June 30, 1942.
5...................... July 1, 1942, to June 30, 1948.
6...................... July 1, 1948, to October 31, 1956.
6.50................... November 1, 1956, to December 31, 1969.
7...................... January 1, 1970, to September 30, 1987.
8...................... October 1, 1987, to December 31, 1998.
8.25................... January 1, 1999, to December 31, 1999.
8.40................... January 1, 2000, to December 31, 2000.
8.50................... January 1, 2001, to December 31, 2002.
8...................... After December 31, 2002.
Claims Court Judge...................... 2.50................... August 1, 1920, to June 30, 1926.
3.50................... July 1, 1926, to June 30, 1942.
5...................... July 1, 1942, to June 30, 1948.
6...................... July 1, 1948, to October 31, 1956.
6.50................... November 1, 1956, to December 31, 1969.
7...................... January 1, 1970, to September 30, 1988.
8...................... October 1, 1988, to December 31, 1998.
8.25................... January 1, 1999, to December 31, 1999.
8.40................... January 1, 2000, to December 31, 2000.
8.50................... January 1, 2001, to December 31, 2002.
8...................... After December 31, 2002.
Notwithstanding the preceding provisions of this subsection and any
provision of section 206(b)(3) of the Federal Employees' Retirement
Contribution Temporary Adjustment Act of 1983, the percentage of basic
pay required under this subsection in the case of an individual
described in section 8402(b)(2) shall, with respect to any covered
service (as defined by section 203(a)(3) of such Act) performed by such
individual after December 31, 1983, and before January 1, 1987, be
equal to 1.3 percent, and, with respect to any such service performed
after December 31, 1986, be equal to the amount that would have been
deducted from the employee's basic pay under subsection (k) of this
section if the employee's pay had been subject to that subsection
during such period.''.
(2) Deductions.--The first sentence of section 8334(a)(1)
of title 5, United States Code, is amended to read as follows:
``The employing agency shall deduct and withhold from the basic
pay of an employee, Member, Congressional employee, law
enforcement officer, firefighter, bankruptcy judge, judge of
the United States Court of Appeals for the Armed Forces, United
States magistrate, or Claims Court judge, as the case may be,
the percentage of basic pay applicable under subsection (c).''.
(3) Other service.--
(A) Military service.--Section 8334(j) of title 5,
United States Code, is amended--
(i) in paragraph (1)(A) by inserting ``and
subject to paragraph (5),'' after ``Except as
provided in subparagraph (B),''; and
(ii) by adding at the end the following:
``(5) Effective with respect to any period of military service
performed after December 31, 1998, and before January 1, 2003, the
percentage of basic pay under section 204 of title 37 payable under
paragraph (1) shall be equal to the same percentage as would be
applicable under section 8334(c) for that same period for service as an
`employee', subject to paragraph (1)(B).''.
(B) Volunteer service.--Section 8334(l) of title 5,
United States Code, is amended--
(i) in paragraph (1) by striking the period
at the end and inserting ``, subject to
paragraph (4).''; and
(ii) by adding at the end the following:
``(4) Effective with respect to any period of service as a
volunteer or volunteer leader performed after December 31, 1998, and
before January 1, 2003, the percentage of the readjustment allowance or
stipend (as the case may be) payable under paragraph (1) shall be equal
to the same percentage as would be applicable under section 8334(c) for
that same period for service as an `employee'.''.
(b) Government Contributions.--
(1) In general.--Section 8334 of title 5, United States
Code, is amended by adding at the end the following:
``(m)(1) This subsection shall govern for purposes of determining
the amount to be contributed under the second sentence of subsection
(a)(1) with respect to any service--
``(A) which is performed after September 30, 1997, and
before January 1, 2003; and
``(B) as to which a contribution under such sentence would
otherwise be payable.
``(2) The amount of the contribution required under the second
sentence of subsection (a)(1) with respect to any service described in
paragraph (1) shall (instead of the amount which would otherwise apply
under such sentence) be equal to the amount of basic pay received for
such service by the employee or Member involved, multiplied by the
percentage under paragraph (3).
``(3)(A) The percentage under this paragraph is, with respect to
any service, equal to the sum of--
``(i) the percentage which would have been applicable under
subsection (c), with respect to such service, if it had been
performed in fiscal year 1997, plus
``(ii) the applicable percentage under subparagraph (B).
``(B) The applicable percentage under this subparagraph is, with
respect to service performed--
``(i) after September 30, 1997, and before October 1, 2002,
1.51 percent; or
``(ii) after September 30, 2002, and before January 1,
2003, 0 percent.
``(4) An amount determined under this subsection with respect to
any period of service shall, for purposes of subsection (k)(1)(B) (and
any other provision of law which similarly refers to contributions
under the second sentence of subsection (a)(1)), be treated as the
amount required under such sentence with respect to such service.
``(5)(A) Notwithstanding paragraphs (1) through (4), the amount to
be contributed by the Postal Service by reason of the second sentence
of subsection (a)(1) with respect to any service performed by an
officer or employee of the Postal Service during the period described
in subparagraph (A) of paragraph (1) shall be determined as if section
6101 of the Balanced Budget Act of 1997 had never been enacted.
``(B) For purposes of this paragraph, the term `Postal Service'
means the United States Postal Service and the Postal Rate
Commission.''.
(2) Conforming amendment.--The second sentence of section
8334(a)(1) of title 5, United States Code, is amended by
striking the period and inserting ``, subject to subsection
(m).''.
SEC. 6102. CONTRIBUTIONS UNDER THE FEDERAL EMPLOYEES' RETIREMENT
SYSTEM.
(a) Individual Contributions.--
(1) In general.--Subsection (a) of section 8422 of title 5,
United States Code, is amended--
(A) in paragraph (1) by striking ``paragraph (2).''
and inserting ``paragraph (2) or (3), as applicable.'';
(B) in paragraph (2) by striking ``The applicable''
and inserting ``Subject to paragraph (3), the
applicable''; and
(C) by adding at the end the following:
``(3)(A) The applicable percentage under this subsection shall, for
purposes of service performed after December 31, 1998, and before
January 1, 2003, be equal to--
``(i) the applicable percentage under subparagraph (B),
minus
``(ii) the percentage then in effect under section 3101(a)
of the Internal Revenue Code of 1986 (relating to rate of tax
for old-age, survivors, and disability insurance).
``(B) The applicable percentage under this subparagraph shall be as
follows:
``Percentage of basic
pay Service period
Employee................................ 7.25................... January 1, 1999, to December 31, 1999.
7.40................... January 1, 2000, to December 31, 2000.
7.50................... January 1, 2001, to December 31, 2002.
Congressional employee.................. 7.75................... January 1, 1999, to December 31, 1999.
7.90................... January 1, 2000, to December 31, 2000.
8...................... January 1, 2001, to December 31, 2002.
Member.................................. 7.75................... January 1, 1999, to December 31, 1999.
7.90................... January 1, 2000, to December 31, 2000.
8...................... January 1, 2001, to December 31, 2002.
Law enforcement officer................. 7.75................... January 1, 1999, to December 31, 1999.
7.90................... January 1, 2000, to December 31, 2000.
8...................... January 1, 2001, to December 31, 2002.
Firefighter............................. 7.75................... January 1, 1999, to December 31, 1999.
7.90................... January 1, 2000, to December 31, 2000.
8...................... January 1, 2001, to December 31, 2002.
Air traffic controller.................. 7.75................... January 1, 1999, to December 31, 1999.
7.90................... January 1, 2000, to December 31, 2000.
8...................... January 1, 2001, to December 31, 2002.''.
(2) Other service.--
(A) Military service.--Section 8422(e) of title 5,
United States Code, is amended--
(i) in paragraph (1)(A) by inserting ``and
subject to paragraph (5),'' after ``Except as
provided in subparagraph (B),''; and
(ii) by adding at the end the following:
``(5) Effective with respect to any period of military service
performed after December 31, 1998, and before January 1, 2003, the
percentage of basic pay under section 204 of title 37 payable under
paragraph (1) shall be equal to the sum of the percentage specified in
paragraph (1), plus--
``(A) .25 percent, if performed after December 31, 1998,
and before January 1, 2000;
``(B) .40 percent, if performed after December 31, 1999,
and before January 1, 2001;
``(C) .50 percent, if performed after December 31, 2000,
and before January 1, 2003.''.
(B) Volunteer service.--Section 8422(f) of title 5,
United States Code, is amended--
(i) in paragraph (1) by striking the period
at the end and inserting ``, subject to
paragraph (4).''; and
(ii) by adding at the end the following:
``(4) Effective with respect to any period of service as a
volunteer or volunteer leader performed after December 31, 1998, and
before January 1, 2003, the percentage of the readjustment allowance or
stipend (as the case may be) payable under paragraph (1) shall be equal
to the sum of the percentage specified in paragraph (1), plus--
``(A) .25 percent, if performed after December 31, 1998,
and before January 1, 2000;
``(B) .40 percent, if performed after December 31, 1999,
and before January 1, 2001;
``(C) .50 percent, if performed after December 31, 2000,
and before January 1, 2003.''.
(b) Government Contributions.--
(1) In general.--Section 8423 of title 5, United States
Code, is amended by adding at the end the following:
``(d)(1) This subsection shall govern for purposes of determining
the amount to be contributed by an employing agency for any period (or
portion thereof)--
``(A) which is occurs after September 30, 1997, and before
January 1, 2003; and
``(B) as to which a contribution under subsection (a) would
otherwise be payable by such agency.
``(2) The amount of the contribution required under subsection (a)
with respect to any period (or portion thereof) described in paragraph
(1) shall (instead of the amount which would otherwise apply) be equal
to the amount which would be required under subsection (a) if section
6102(a) of the Balanced Budget Act of 1997 had never been enacted.''.
(2) Conforming amendment.--Section 8423(a)(1) of title 5,
United States Code, is amended by striking ``Each'' and
inserting ``Subject to subsection (d), each''.
SEC. 6103. GOVERNMENT CONTRIBUTION FOR HEALTH BENEFITS.
(a) In General.--Section 8906 of title 5, United States Code, is
amended by striking subsection (a) and all that follows through the end
of paragraph (1) of subsection (b) and inserting the following:
``(a)(1) The Office of Personnel Management shall, not later than
October 1 of each year, determine the weighted average of the
subscription charges that will be in effect during the following
contract year with respect to--
``(A) enrollments under this chapter for self alone; and
``(B) enrollments under this chapter for self and family.
``(2) In determining each weighted average under paragraph (1), the
weight to be given to a particular subscription charge shall, with
respect to each plan (and option) to which it is to apply, be
commensurate with the number of enrollees enrolled in such plan (and
option) as of March 31 of the year in which the determination is being
made.
``(3) For purposes of paragraph (2), the term `enrollee' means any
individual who, during the contract year for which the weighted average
is to be used under this section, will be eligible for a Government
contribution for health benefits.
``(b)(1) Except as provided in paragraphs (2) and (3), the biweekly
Government contribution for health benefits for an employee or
annuitant enrolled in a health benefits plan under this chapter is
adjusted to an amount equal to 72 percent of the weighted average under
subsection (a)(1)(A) or (B), as applicable. For an employee, the
adjustment begins on the first day of the employee's first pay period
of each year. For an annuitant, the adjustment begins on the first day
of the first period of each year for which an annuity payment is
made.''.
(b) Effective Date.--This section and the amendment made by this
section shall take effect on the first day of the contract year that
begins in 1999, except that nothing in this subsection shall prevent
the Office of Personnel Management from taking any action, before such
first day, which it considers necessary in order to ensure the timely
implementation of such amendment.
SEC. 6104. EFFECTIVE DATE.
(a) In General.--Except as provided in section 6103, this subtitle
shall take effect on--
(1) October 1, 1997; or
(2) if later, the date of the enactment of this Act.
(b) Special Rule.--If the date of the enactment of this Act is
later than October 1, 1997, then, for purposes of applying the
amendments made by sections 6101 and 6102--
(1) any reference in any such amendment to ``September 30,
1997'' shall be treated as referring to the day before the date
of the enactment of this Act; and
(2) any reference in any such amendment to ``October 1,
1997'' shall be treated as referring to the date of the
enactment of this Act.
TITLE VII--COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
SEC. 7001. EXTENSION OF HIGHER VESSEL TONNAGE DUTIES.
(a) Extension of Duties.--Section 36 of the Act of August 5, 1909
(36 Stat. 111; 46 U.S.C. App. 121), is amended by striking ``for fiscal
years 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998,'' each place it
appears and inserting ``for fiscal years through fiscal year 2002,''.
(b) Conforming Amendment.--The Act entitled ``An Act concerning
tonnage duties on vessels entering otherwise than by sea'', approved
March 8, 1910 (36 Stat. 234; 46 U.S.C. App. 132), is amended by
striking ``for fiscal years 1991, 1992, 1993, 1994, 1995, 1996, 1997,
and 1998,'' and inserting ``for fiscal years through fiscal year
2002,''.
SEC. 7002. SALE OF GOVERNORS ISLAND, NEW YORK.
(a) In General.--Notwithstanding any other provision of law, no
earlier than fiscal year 2002, the Administrator of General Services
shall dispose of by sale at fair market value all rights, title, and
interests of the United States in and to the land of, and improvements
to, Governors Island, New York.
(b) Right of First Refusal.--Before a sale is made under subsection
(a) to any other parties, the State of New York and the city of New
York shall be given the right of first refusal to purchase all or part
of Governors Island. Such right may be exercised by either the State of
New York or the city of New York or by both parties acting jointly.
(c) Proceeds.--Proceeds from the disposal of Governors Island under
subsection (a) shall be deposited in the general fund of the Treasury
and credited as miscellaneous receipts.
SEC. 7003. SALE OF AIR RIGHTS.
(a) In General.--Notwithstanding any other provision of law, the
Administrator of General Services shall sell, at fair market value and
in a manner to be determined by the Administrator, the air rights
adjacent to Washington Union Station described in subsection (b),
including air rights conveyed to the Administrator under subsection
(d). The Administrator shall complete the sale by such date as is
necessary to ensure that the proceeds from the sale will be deposited
in accordance with subsection (c).
(b) Description.--The air rights referred to in subsection (a)
total approximately 16.5 acres and are depicted on the plat map of the
District of Columbia as follows:
(1) Part of lot 172, square 720.
(2) Part of lots 172 and 823, square 720.
(3) Part of lot 811, square 717.
(c) Proceeds.--Before September 30, 2002, proceeds from the sale of
air rights under subsection (a) shall be deposited in the general fund
of the Treasury and credited as miscellaneous receipts.
(d) Conveyance of Amtrak Air Rights.--
(1) General rule.--As a condition of future Federal
financial assistance, Amtrak shall convey to the Administrator
of General Services on or before December 31, 1997, at no
charge, all of the air rights of Amtrak described in subsection
(b).
(2) Failure to comply.--If Amtrak does not meet the
condition established by paragraph (1), Amtrak shall be
prohibited from obligating Federal funds after March 1, 1998.
TITLE VIII--COMMITTEE ON VETERANS' AFFAIRS
SEC. 8001. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This title may be cited as the ``Veterans
Reconciliation Act of 1997''.
(b) Table of Contents.--The table of contents for this title is as
follows:
Sec. 8001. Short title; table of contents.
Subtitle A--Extension of Temporary Authorities
Sec. 8011. Authority to require that certain veterans make copayments
in exchange for receiving health-care
benefits.
Sec. 8012. Medical care cost recovery for non-service-connected
disabilities of service-connected veterans.
Sec. 8013. Department of Veterans Affairs medical-care receipts.
Sec. 8014. Income verification authority.
Sec. 8015. Limitation on pension for certain recipients of medicaid-
covered nursing home care.
Sec. 8016. Home loan fees.
Sec. 8017. Procedures applicable to liquidation sales on defaulted home
loans guaranteed by the Secretary of
Veterans Affairs.
Sec. 8018. Enhanced loan asset sale authority.
Subtitle B--Other Matters
Sec. 8021. Rounding down of cost-of-living adjustments in compensation
and DIC rates.
Sec. 8022. Withholding of payments and benefits.
Subtitle A--Extension of Temporary Authorities
SEC. 8011. AUTHORITY TO REQUIRE THAT CERTAIN VETERANS MAKE COPAYMENTS
IN EXCHANGE FOR RECEIVING HEALTH-CARE BENEFITS.
(a) Hospital and Medical Care.--
(1) Extension.--Section 1710(f)(2)(B) of title 38, United
States Code, is amended by inserting ``before September 30,
2002,'' after ``(B)''.
(2) Repeal of superseded provision.--Section 8013(e) of the
Omnibus Budget Reconciliation Act of 1990 (38 U.S.C. 1710 note)
is repealed.
(b) Outpatient Medications.--Section 1722A(c) of title 38, United
States Code, is amended by striking out ``September 30, 1998'' and
inserting in lieu thereof ``September 30, 2002''.
[HVAC Reconciliation]
SEC. 8012. MEDICAL CARE COST RECOVERY FOR NON-SERVICE-CONNECTED
DISABILITIES OF SERVICE-CONNECTED VETERANS.
Section 1729(a)(2)(E) of title 38, United States Code, is amended
by striking out ``before October 1, 1998,'' and inserting ``before
October 1, 2002,''.
SEC. 8013. DEPARTMENT OF VETERANS AFFAIRS MEDICAL-CARE RECEIPTS.
(a) Allocation of Receipts.--(1) Chapter 17 of title 38, United
States Code, is amended by inserting after section 1729 the following
new section:
``Sec. 1729A. Department of Veterans Affairs Medical Care Collections
Fund
``(a) There is in the Treasury a fund to be known as the Department
of Veterans Affairs Medical Care Collections Fund.
``(b) Amounts recovered or collected after September 30, 1997,
under any of the following provisions of law shall be deposited in the
fund:
``(1) Section 1710(f) of this title.
``(2) Section 1710(g) of this title.
``(3) Section 1711 of this title.
``(4) Section 1722A of this title.
``(5) Section 1729 of this title.
``(6) Public Law 87-693, popularly known as the `Federal
Medical Care Recovery Act' (42 U.S.C. 2651 et seq.), to the
extent that a recovery or collection under that law is based on
medical care or services furnished under this chapter.
``(c)(1) Amounts in the fund are available to the Secretary for the
following purposes:
``(A) Furnishing medical care and services under this
chapter, to be available during any fiscal year for the same
purposes and subject to the same limitations as apply to
amounts appropriated for that fiscal year for medical care.
``(B) Expenses of the Department for the identification,
billing, auditing, and collection of amounts owed the United
States by reason of medical care and services furnished under
this chapter.
``(2)(A) If for fiscal year 1998, 1999, or 2000 the Secretary
determines that the total amount to be recovered for that fiscal year
under the provisions of law specified in subsection (b) will be less
than the amount contained in the latest Congressional Budget Office
baseline estimate (computed under section 257 of the Balanced Budget
and Emergency Deficit Control Act of 1985) for the amount of such
recoveries for that fiscal year by at least $25,000,000, the Secretary
shall promptly certify to the Secretary of the Treasury the amount of
the shortfall (as estimated by the Secretary) that is in excess of
$25,000,000. Upon receipt of such a certification, the Secretary of the
Treasury shall, not later than 30 days after receiving the
certification, deposit in the fund, from any unobligated amounts in the
Treasury, an amount equal to the amount certified by the Secretary.
``(B) For a fiscal year for which a deposit is made under
subparagraph (A), if the Secretary subsequently determines that the
actual amount recovered for that fiscal year under the provisions of
law specified in subsection (b) is greater than the amount estimated by
the Secretary that was used for purposes of the certification by the
Secretary under subparagraph (A), the Secretary shall pay into the
general fund of the Treasury, from amounts available for medical care,
an amount equal to the difference between the amount actually recovered
and the amount so estimated (but not in excess of the amount of the
deposit under subparagraph (A) pursuant to such certification).
``(C) For a fiscal year for which a deposit is made under
subparagraph (A), if the Secretary subsequently determines that the
actual amount recovered for that fiscal year under the provisions of
law specified in subsection (b) is less than the amount estimated by
the Secretary that was used for purposes of the certification by the
Secretary under subparagraph (A), the Secretary shall promptly certify
to the Secretary of the Treasury the amount of the shortfall. Upon
receipt of such a certification, the Secretary of the Treasury shall,
not later than 30 days after receiving the certification, deposit in
the fund, from any unobligated amounts in the Treasury, an amount equal
to the amount certified by the Secretary.
``(d)(1) The Secretary may allocate amounts available to the
Secretary under subsection (c) among components of the Department in
such manner as the Secretary considers appropriate.
``(2) The Secretary shall establish a policy for the allocation
under paragraph (1) of amounts in the fund. Such policy shall be
designed so as to facilitate the realization of the maximum feasible
collections under the provisions of law specified in subsection (b). In
developing the policy, the Secretary shall take into account any
factors beyond the control of the Secretary that the Secretary
considers may impede such collections.
``(e)(1) The Secretary shall submit to the Committees on Veterans'
Affairs of the Senate and House of Representatives quarterly reports on
the operation of this section for fiscal years 1998, 1999, and 2000 and
for the first quarter of fiscal year 2001. Each such report shall
specify the amount collected under each of the provisions specified in
subsection (b) during the preceding quarter and the amount originally
estimated to be collected under each such provision during such
quarter.
``(2) A report under paragraph (1) for a quarter shall be submitted
not later than 45 days after the end of that quarter.''.
(2) The table of sections at the beginning of such chapter is
amended by inserting after the item relating to section 1729 the
following new item:
``1729A. Department of Veterans Affairs Medical Care Collections
Fund.''.
(b) Conforming Amendments.--Chapter 17 of such title is amended as
follows:
(1) Section 1710(f) is amended by striking out paragraph
(4) and redesignating paragraph (5) as paragraph (4).
(2) Section 1710(g) is amended by striking out paragraph
(4).
(3) Section 1722A(b) is amended by striking out
``Department of Veterans Affairs Medical-Care Cost Recovery
Fund'' and inserting in lieu thereof ``Department of Veterans
Affairs Medical Care Collections Fund''.
(4) Section 1729 is amended by striking out subsection (g).
(c) Termination of Medical-Care Cost Recovery Fund.--The amount of
the unobligated balance remaining in the Department of Veterans Affairs
Medical-Care Cost Recovery Fund (established pursuant to section
1729(g)(1) of title 38, United States Code), at the close of September
30, 1997, shall be deposited, not later than December 31, 1997, in the
Treasury as miscellaneous receipts, and that fund shall be terminated
when the deposit occurs.
(d) Determination of Amounts Subject to Recovery.--Section 1729 of
title 38, United States Code, is amended--
(1) in subsection (a)(1), by striking out ``the reasonable
cost of'' and inserting in lieu thereof ``reasonable charges
for'';
(2) in subsection (c)(2)--
(A) by striking out ``the reasonable cost of'' in
the first sentence of subparagraph (A) and in
subparagraph (B) and inserting in lieu thereof
``reasonable charges for''; and
(B) by striking out ``cost'' in the second sentence
of subparagraph (A) and inserting in lieu thereof
``charges''.
(e) Technical Amendment.--Paragraph (2) of section 712(b) of title
38, United States Code, is amended--
(1) by striking out subparagraph (B); and
(2) by redesignating subparagraph (C) as subparagraph (B).
(f) Implementation.--(1) Not later than January 1, 1999, the
Secretary of Veterans Affairs shall submit to the Committees on
Veterans' Affairs of the Senate and House of Representatives a report
on the implementation of this section. The report shall describe the
collections under each of the provisions specified in section 1729A(b)
of title 38, United States Code, as added by subsection (a).
Information on such collections shall be shown for each of the health
service networks (known as Veterans Integrated Service Networks) and,
to the extent practicable for each facility within each such network.
The Secretary shall include in the report an analysis of differences
among the networks with respect to (A) the market in which the networks
operates, (B) the effort expended to achieve collections, (C) the
efficiency of such effort, and (D) any other relevant information.
(2) The Secretary shall adjust the allocation policy established
under section 1729A(d)(2) of title 38, United States Code, as added by
subsection (a), to take account of differences in collections that the
Secretary determines are attributable to the different markets in which
networks operate and shall include in the report under paragraph (1) a
description of such adjustments.
(g) Effective Date.--(1) Except as provided in paragraph (2), this
section and the amendments made by this section shall take effect on
October 1, 1997.
(2) The amendments made by subsection (d) shall take effect on the
date of the enactment of this Act.
SEC. 8014. INCOME VERIFICATION AUTHORITY.
(a) Extension.--Section 5317(g) of title 38, United States Code, is
amended by striking out ``September 30, 1998'' and inserting in lieu
thereof ``September 30, 2002''.
(b) Social Security and Tax Return Information.--Section 6103(l)(7)
of the Internal Revenue Code of 1986 is amended by striking out
``Clause (viii) shall not apply after September 30, 1998'' and
inserting in lieu thereof ``Clause (viii) shall not apply after
September 30, 2002''.
SEC. 8015. LIMITATION ON PENSION FOR CERTAIN RECIPIENTS OF MEDICAID-
COVERED NURSING HOME CARE.
Section 5503(f)(7) of title 38, United States Code, is amended by
striking out ``September 30, 1998'' and inserting in lieu thereof
``September 30, 2002''.
SEC. 8016. HOME LOAN FEES.
(a) Increase in Loan Fee Under Property Management Program.--
Paragraph (2) of section 3729(a) of title 38, United States Code, is
amended--
(1) in subparagraph (A), by striking out ``or 3733(a)'';
(2) by striking out ``and'' at the end of subparagraph (D);
(3) by striking out the period at the end of subparagraph
(E) and inserting in lieu thereof ``; and''; and
(4) by adding at the end the following new subparagraph:
``(F) in the case of a loan made under section 3733(a) of
this title, the amount of such fee shall be 2.25 percent of the
total loan amount.''.
(b) Extensions.--Such section is further amended--
(1) in paragraph (4)--
(A) by striking out ``October 1, 1998'' and
inserting in lieu thereof ``October 1, 2002''; and
(B) by striking out ``or (E)'' and inserting in
lieu thereof ``(E), or (F)''; and
(2) in paragraph (5)(C), by striking out ``October 1,
1998'' and inserting in lieu thereof ``October 1, 2002''.
SEC. 8017. PROCEDURES APPLICABLE TO LIQUIDATION SALES ON DEFAULTED HOME
LOANS GUARANTEED BY THE SECRETARY OF VETERANS AFFAIRS.
Section 3732(c)(11) of title 38, United States Code, is amended by
striking out ``October 1, 1998'' and inserting ``October 1, 2002''.
SEC. 8018. ENHANCED LOAN ASSET SALE AUTHORITY.
Section 3720(h)(2) of title 38, United States Code, is amended by
striking out ``December 31, 1997'' and inserting in lieu thereof
``September 30, 2002''.
Subtitle B--Other Matters
SEC. 8021. ROUNDING DOWN OF COST-OF-LIVING ADJUSTMENTS IN COMPENSATION
AND DIC RATES.
(a) Compensation COLAS.--(1) Chapter 11 of title 38, United States
Code, is amended by inserting after section 1102 the following new
section:
``Sec. 1103. Cost-of-living adjustments
``(a) In the computation of cost-of-living adjustments for fiscal
years 1998 through 2002 in the rates of, and dollar limitations
applicable to, compensation payable under this chapter, such
adjustments shall be made by a uniform percentage that is no more than
the percentage equal to the social security increase for that fiscal
year, with all increased monthly rates and limitations (other than
increased rates or limitations equal to a whole dollar amount) rounded
down to the next lower whole dollar amount.
``(b) For purposes of this section, the term `social security
increase' means the percentage by which benefit amounts payable under
title II of the Social Security Act (42 U.S.C. 401 et seq.) are
increased for any fiscal year as a result of a determination under
section 215(i) of such Act (42 U.S.C. 415(i)).''.
(2) The table of sections at the beginning of such chapter is
amended by inserting after the item relating to section 1102 the
following new item:
``1103. Cost-of-living adjustments.''.
(b) Out-Year DIC COLAs.--(1) Chapter 13 of title 38, United States
Code, is amended by inserting after section 1302 the following new
section:
``Sec. 1303. Cost-of-living adjustments
``(a) In the computation of cost-of-living adjustments for fiscal
years 1998 through 2002 in the rates of dependency and indemnity
compensation payable under this chapter, such adjustments shall be made
by a uniform percentage that is no more than the percentage equal to
the social security increase for that fiscal year, with all increased
monthly rates (other than increased rates equal to a whole dollar
amount) rounded down to the next lower whole dollar amount.
``(b) For purposes of this section, the term `social security
increase' means the percentage by which benefit amounts payable under
title II of the Social Security Act (42 U.S.C. 401 et seq.) are
increased for any fiscal year as a result of a determination under
section 215(i) of such Act (42 U.S.C. 415(i)).''.
(2) The table of sections at the beginning of such chapter is
amended by inserting after the item relating to section 1302 the
following new item:
``1303. Cost-of-living adjustments.''.
SEC. 8022. WITHHOLDING OF PAYMENTS AND BENEFITS.
(a) Notice Required in Lieu of Consent or Court Order.--Section
3726 of title 38, United States Code, is amended by striking out
``unless'' and all that follows and inserting in lieu thereof the
following: ``unless the Secretary provides such veteran or surviving
spouse with notice by certified mail with return receipt requested of
the authority of the Secretary to waive the payment of indebtedness
under section 5302(b) of this title. If the Secretary does not waive
the entire amount of the liability, the Secretary shall then determine
whether the veteran or surviving spouse should be released from
liability under section 3713(b) of this title. If the Secretary
determines that the veteran or surviving spouse should not be released
from liability, the Secretary shall notify the veteran or surviving
spouse of that determination and provide a notice of the procedure for
appealing that determination, unless the Secretary has previously made
such determination and notified the veteran or surviving spouse of the
procedure for appealing the determination.''.
(b) Conforming Amendment.--Section 5302(b) of such title is amended
by inserting ``with return receipt requested'' after ``certified
mail''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to any indebtedness to the United States arising
pursuant to chapter 37 of title 38, United States Code, before, on, or
after the date of the enactment of this Act.
TITLE IX--COMMITTEE ON WAYS AND MEANS--NONMEDICARE
SEC. 9000. TABLE OF CONTENTS.
The table of contents of this title is as follows:
Sec. 9000. Table of contents.
Subtitle A--TANF Block Grant
Sec. 9001. Welfare-to-work grants.
Sec. 9002. Limitation on amount of Federal funds transferable to title
XX programs.
Sec. 9003. Clarification of limitation on number of persons who may be
treated as engaged in work by reason of
participation in vocational educational
training.
Sec. 9004. Required hours of work; health and safety.
Sec. 9005. Penalty for failure of State to reduce assistance for
recipients refusing without good cause to
work.
Subtitle B--Supplemental Security Income
Sec. 9101. Requirement to perform childhood disability redeterminations
in missed cases.
Sec. 9102. Repeal of maintenance of effort requirements applicable to
optional State programs for supplementation
of SSI benefits.
Sec. 9103. Fees for Federal administration of State supplementary
payments.
Subtitle C--Child Support Enforcement
Sec. 9201. Clarification of authority to permit certain redisclosures
of wage and claim information.
Subtitle D--Restricting Welfare and Public Benefits for Aliens
Sec. 9301. Extension of eligibility period for refugees and certain
other qualified aliens from 5 to 7 years
for SSI and medicaid.
Sec. 9302. SSI eligibility for aliens receiving SSI on August 22, 1996.
Sec. 9303. SSI eligibility for permanent resident aliens who are
members of an Indian tribe.
Sec. 9304. Verification of eligibility for State and local public
benefits.
Sec. 9305. Derivative eligibility for benefits.
Sec. 9306. Effective date.
Subtitle E--Unemployment Compensation
Sec. 9401. Clarifying provision relating to base periods.
Sec. 9402. Increase in Federal unemployment account ceiling.
Sec. 9403. Special distribution to States from Unemployment Trust Fund.
Sec. 9404. Interest-free advances to State accounts in Unemployment
Trust Fund restricted to States which meet
funding goals.
Sec. 9405. Exemption of service performed by election workers from the
Federal unemployment tax.
Sec. 9406. Treatment of certain services performed by inmates.
Sec. 9407. Exemption of service performed for an elementary or
secondary school operated primarily for
religious purposes from the Federal
unemployment tax.
Sec. 9408. State program integrity activities for unemployment
compensation.
Subtitle F--Increase in Public Debt Limit
Sec. 9501. Increase in public debt limit.
Subtitle A--TANF Block Grant
SEC. 9001. WELFARE-TO-WORK GRANTS.
(a) Grants to States.--
(1) In general.--Section 403(a) of the Social Security Act
(42 U.S.C. 603(a)) is amended by adding at the end the
following:
``(5) Welfare-to-work grants.--
``(A) Noncompetitive grants.--
``(i) Entitlement.--A State shall be
entitled to receive from the Secretary a grant
for each fiscal year specified in subparagraph
(H) of this paragraph for which the State is a
welfare-to-work State, in an amount that does
not exceed the lesser of----
``(I) 2 times the total of the
expenditures by the State (excluding
qualified State expenditures (as
defined in section 409(a)(7)(B)(i)) and
any expenditure described in subclause
(I), (II), or (IV) of section
409(a)(7)(B)(iv)) during the fiscal
year for activities described in
subparagraph (C)(i) of this paragraph;
or
``(II) the allotment of the State
under clause (iii) of this subparagraph
for the fiscal year.
``(ii) Welfare-to-work state.--A State
shall be considered a welfare-to-work State for
a fiscal year for purposes of this subparagraph
if the Secretary, after consultation (and the
sharing of any plan or amendment thereto
submitted under this clause) with the Secretary
of Health and Human Services and the Secretary
of Housing and Urban Development, determines
that the State meets the following
requirements:
``(I) The State has submitted to
the Secretary (in the form of an
addendum to the State plan submitted
under section 402) a plan which--
``(aa) describes how,
consistent with this
subparagraph, the State will
use any funds provided under
this subparagraph during the
fiscal year;
``(bb) specifies the
formula to be used pursuant to
clause (vi) to distribute funds
in the State, and describes the
process by which the formula
was developed;
``(cc) contains evidence
that the plan was developed in
consultation and coordination
with sub-State areas; and
``(dd) is approved by the
agency administering the State
program funded under this part.
``(II) The State has provided the
Secretary with an estimate of the
amount that the State intends to expend
during the fiscal year (excluding
expenditures described in section
409(a)(7)(B)(iv)) for activities
described in subparagraph (C)(i) of
this paragraph.
``(III) The State has agreed to
negotiate in good faith with the
Secretary of Health and Human Services
with respect to the substance of any
evaluation under section 413(j), and to
cooperate with the conduct of any such
evaluation.
``(IV) The State is an eligible
State for the fiscal year.
``(V) Qualified State expenditures
(within the meaning of section
409(a)(7)) are at least 80 percent of
historic State expenditures (within the
meaning of such section), with respect
to the fiscal year or the immediately
preceding fiscal year.
``(iii) Allotments to welfare-to-work
states.--The allotment of a welfare-to-work
State for a fiscal year shall be the available
amount for the fiscal year multiplied by the
State percentage for the fiscal year.
``(iv) Available amount.--As used in this
subparagraph, the term `available amount'
means, for a fiscal year, the sum of--
``(I) 50 percent of the sum of--
``(aa) the amount specified
in subparagraph (H) for the
fiscal year, minus the total of
the amounts reserved pursuant
to subparagraphs (F) and (G)
for the fiscal year; and
``(bb) any amount reserved
pursuant to subparagraph (F)
for the immediately preceding
fiscal year that has not been
obligated; and
``(II) any available amount for the
immediately preceding fiscal year that
has not been obligated by a State or
sub-State entity.
``(v) State percentage.--As used in
clause (iii), the term `State
percentage' means, with respect to a
fiscal year, \1/3\ of the sum of--
``(aa) the percentage
represented by the number of
individuals in the State whose
income is less than the poverty
line divided by the number of
such individuals in the United
States;
``(bb) the percentage
represented by the number of
unemployed individuals in the
State divided by the number of
such individuals in the United
States; and
``(cc) the percentage
represented by the number of
individuals who are adult
recipients of assistance under
the State program funded under
this part divided by the number
of individuals in the United
States who are adult recipients
of assistance under any State
program funded under this part.
``(vi) Distribution of funds within
states.--
``(I) In general.--A State to which
a grant is made under this subparagraph
shall distribute not less than 85
percent of the grant funds among the
service delivery areas in the State, in
accordance with a formula which--
``(aa) determines the
amount to be distributed for
the benefit of a service
delivery area in proportion to
the number (if any) by which
the number of individuals
residing in the service
delivery area with an income
that is less than the poverty
line exceeds 5 percent of the
population of the service
delivery area, relative to such
number for the other service
delivery areas in the State,
and accords a weight of not
less than 50 percent to this
factor;
``(bb) may determine the
amount to be distributed for
the benefit of a service
delivery area in proportion to
the number of adults residing
in the service delivery area
who are recipients of
assistance under the State
program funded under this part
(whether in effect before or
after the amendments made by
section 103(a) of the Personal
Responsibility and Work
Opportunity Reconciliation Act
first applied to the State) for
at least 30 months (whether or
not consecutive) relative to
the number of such adults
residing in the other service
delivery areas in the State;
and
``(cc) may determine the
amount to be distributed for
the benefit of a service
delivery area in proportion to
the number of unemployed
individuals residing in the
service delivery area relative
to the number of such
individuals residing in the
other service delivery areas in
the State.
``(II) Special rule.--
Notwithstanding subclause (I), if the
formula used pursuant to subclause (I)
would result in the distribution of
less than $100,000 during a fiscal year
for the benefit of a service delivery
area, then in lieu of distributing such
sum in accordance with the formula,
such sum shall be available for
distribution under subclause (III)
during the fiscal year.
``(III) Projects to help long-term
recipients of assistance into the work
force.--The Governor of a State to
which a grant is made under this
subparagraph may distribute not more
than 15 percent of the grant funds
(plus any amount required to be
distributed under this subclause by
reason of subclause (II)) to projects
that appear likely to help long-term
recipients of assistance under the
State program funded under this part
(whether in effect before or after the
amendments made by section 103(a) of
the Personal Responsibility and Work
Opportunity Reconciliation Act first
applied to the State) enter the work
force.
``(vii) Administration.--
``(I) In general.--A grant made
under this subparagraph to a State
shall be administered by the State
agency that is administering, or
supervising the administration of, the
State program funded under this part,
or by another State agency designated
by the Governor of the State.
``(II) Spending by private industry
councils.--The private industry council
for a service delivery area shall have
sole authority to expend the amounts
provided for the benefit of a service
delivery area under subparagraph
(vi)(I), pursuant to an agreement with
the agency that is administering the
State program funded under this part in
the service delivery area.
``(B) Competitive grants.--
``(i) In general.--The Secretary, in
consultation with the Secretary of Health and
Human Services and the Secretary of Housing and
Urban Development, shall award grants in
accordance with this subparagraph, in fiscal
years 1998 and 2000, for projects proposed by
eligible applicants, based on the following:
``(I) The effectiveness of the
proposal in--
``(aa) expanding the base
of knowledge about programs
aimed at moving recipients of
assistance under State programs
funded under this part who are
least job ready into the work
force.
``(bb) moving recipients of
assistance under State programs
funded under this part who are
least job ready into the work
force; and
``(cc) moving recipients of
assistance under State programs
funded under this part who are
least job ready into the work
force, even in labor markets
that have a shortage of low-
skill jobs.
``(II) At the discretion of the
Secretary, any of the following:
``(aa) The history of
success of the applicant in
moving individuals with
multiple barriers into work.
``(bb) Evidence of the
applicant's ability to leverage
private, State, and local
resources.
``(cc) Use by the applicant
of State and local resources
beyond those required by
subparagraph (A).
``(dd) Plans of the
applicant to coordiate with
other organizations at the
local and State level.
``(ee) Use by the applicant
of current or former recipients
of assistance under a State
program funded under this part
as mentors, case managers, or
service providers.
``(ii) Eligible applicants.--As used in
clause (i), the term `eligible applicant' means
a private industry council or a political
subdivision of a State that submits a proposal
that is approved by the agency administering
the State program funded under this part.
``(iii) Determination of grant amount.--In
determining the amount of a grant to be made
under this subparagraph for a project proposed
by an applicant, the Secretary shall provide
the applicant with an amount sufficient to
ensure that the project has a reasonable
opportunity to be successful, taking into
account the number of long-term recipients of
assistance under a State program funded under
this part, the level of unemployment, the job
opportunities and job growth, the poverty rate,
and such other factors as the Secretary deems
appropriate, in the area to be served by the
project.
``(iv) Targeting of funds to certain
areas.--
``(I) Cities with greatest number
of persons with income less than the
poverty line.--The Secretary shall use
not less than 65 percent of the funds
available for grants under this
subparagraph for a fiscal year to award
grants for expenditures in cities that
are among the 100 cities in the United
States with the highest number of
residents with an income that is less
than the poverty line.
``(II) Rural areas.--
``(aa) In general.--The
Secretary shall use not less
than 25 percent of the funds
available for grants under this
subparagraph for a fiscal year
to award grants for
expenditures in rural areas.
``(bb) Rural area
defined.--As used in item (aa),
the term `rural area' means a
city, town, or unincorporated
area that has a population of
50,000 or fewer inhabitants and
that is not an urbanized area
immediately adjacent to a city,
town, or unincorporated area
that has a population of more
than 50,000 inhabitants.
``(v) Funding.--For grants under this
subparagraph for each fiscal year specified in
subparagraph (H), there shall be available to
the Secretary an amount equal to the sum of--
``(I) 50 percent of the sum of--
``(aa) the amount specified
in subparagraph (H) for the
fiscal year, minus the total of
the amounts reserved pursuant
to subparagraphs (F) and (G)
for the fiscal year; and
``(bb) any amount reserved
pursuant to subparagraph (F)
for the immediately preceding
fiscal year that has not been
obligated; and
``(II) any amount available for
grants under this subparagraph for the
immediately preceding fiscal year that
has not been obligated.
``(C) Limitations on use of funds.--
``(i) Allowable activities.--An entity to
which funds are provided under this paragraph
may use the funds to move into the work force
recipients of assistance under the program
funded under this part of the State in which
the entity is located and the noncustodial
parent of any minor who is such a recipient, by
means of any of the following:
``(I) Job creation through public
or private sector employment wage
subsidies.
``(II) On-the-job training.
``(III) Contracts with public or
private providers of readiness,
placement, and post-employment
services.
``(IV) Job vouchers for placement,
readiness, and postemployment services.
``(V) Job support services
(excluding child care services) if such
services are not otherwise available.
``(ii) Required beneficiaries.--An entity
that operates a project with funds provided
under this paragraph shall expend at least 90
percent of all funds provided to the project
for the benefit of recipients of assistance
under the program funded under this part of the
State in which the entity is located who meet
the requirements of each of the following
subclauses:
``(I) At least 2 of the following
apply to the recipient:
``(aa) The individual has
not completed secondary school
or obtained a certificate of
general equivalency, and has
low skills in reading and
mathematics.
``(bb) The individual
requires substance abuse
treatment for employment.
``(cc) The individual has a
poor work history.
The Secretary shall prescribe such
regulations as may be necessary to
interpret this subclause.
``(II) The individual--
``(aa) has received
assistance under the State
program funded under this part
(whether in effect before or
after the amendments made by
section 103 of the Personal
Responsibility and Work
Opportunity Reconciliation Act
of 1996 first apply to the
State) for at least 30 months
(whether or not consecutive);
or
``(bb) within 12 months,
will become ineligible for
assistance under the State
program funded under this part
by reason of a durational limit
on such assistance, without
regard to any exemption
provided pursuant to section
408(a)(7)(C) that may apply to
the individual.
``(iii) Limitation on applicability of
section 404.--The rules of section 404, other
than subsections (b), (f), and (h) of section
404, shall not apply to a grant made under this
paragraph.
``(iv) Limitations relating to private
industry councils.--
``(I) No direct provision of
services.--A private industry council
may not directly provide services using
funds provided under this paragraph.
``(II) Cooperation with tanf
agency.--On a determination by the
Secretary, in consultation with the
Secretary of Health and Human Services
and the Secretary of Housing and Urban
Development, that the private industry
council for a service delivery area in
a State for which funds are provided
under this paragraph and the agency
administering the State program funded
under this part are not adhering to the
agreement referred to in subparagraph
(A)(vii)(II) to implement any plan or
project for which the funds are
provided, the recipient of the funds
shall remit the funds to the Secretary.
``(v) Prohibition against use of grant
funds for any other fund matching
requirement.--An entity to which funds are
provided under this paragraph shall not use any
part of the funds to fulfill any obligation of
any State, political subdivision, or private
industry council to contribute funds under
other Federal law.
``(vi) Deadline for expenditure.--An entity
to which funds are provided under this
paragraph shall remit to the Secretary any part
of the funds that are not expended within 3
years after the date the funds are so provided.
``(D) Individuals with income less than the poverty
line.--For purposes of this paragraph, the number of
individuals with an income that is less than the
poverty line shall be determined based on the
methodology used by the Bureau of the Census to produce
and publish intercensal poverty data for 1993 for
States and counties.
``(E) Definitions.--As used in this paragraph:
``(i) Private industry council.--The term
`private industry council' means, with respect
to a service delivery area, the private
industry council (or successor entity)
established for the service delivery area
pursuant to the Job Training Partnership Act.
``(ii) Secretary.--The term `Secretary'
means the Secretary of Labor, except as
otherwise expressly provided.
``(iii) Service delivery area.--The term
`service delivery area' shall have the meaning
given such term for purposes of the Job
Training Partnership Act.
``(F) Set-aside for indian tribes.--1 percent of
the amount specified in subparagraph (H) for each
fiscal year shall be reserved for grants to Indian
tribes under section 412(a)(3).
``(G) Set-aside for evaluations.--0.5 percent of
the amount specified in subparagraph (H) for each
fiscal year shall be reserved for use by the Secretary
of Health and Human Services to carry out section
413(j).
``(H) Funding.--The amount specified in this
subparagraph is--
``(i) $750,000,000 for fiscal year 1998;
``(ii) $1,250,000,000 for fiscal year 1999;
and
``(iii) $1,000,000,000 for fiscal year
2000.
``(I) Availability of funds.--Amounts appropriated
pursuant to this paragraph shall remain available
through fiscal year 2002.
``(J) Budget scoring.--Notwithstanding section
457(b)(2) of the Balanced Budget and Emergency Deficit
Control Act of 1985, the baseline shall assume that no
grant shall be awarded under this paragraph or under
section 412(a)(3) after fiscal year 2000.
``(K) Worker protections.--
``(i) Labor standards.--
``(I) Displacement.--
``(aa) Prohibition.--A
participant in an activity
under this paragraph shall not
displace (including a partial
displacement, such as a
reduction in the hours of
nonovertime work, wages, or
employment benefits) any
currently employed employee (as
of the date of the
participation).
``(bb) Prohibition on
impairment of contracts.--An
activity under this paragraph
shall not impair an existing
contract for services or
collective bargaining
agreement, and no such activity
that would be inconsistent with
the terms of a collective
bargaining agreement shall be
undertaken without the written
concurrence of the labor
organization and employer
concerned.
``(II) Other prohibitions.--A
participant in an activity under this
paragraph shall not be employed in a
job--
``(aa) when any other
individual is on layoff from
the same or any substantially
equivalent job;
``(bb) when the employer
has terminated the employment
of any regular employee or
otherwise reduced the workforce
of the employer with the
intention of filling the
vacancy so created with the
participant; or
``(cc) which is created in
a promotional line that will
infringe in any way upon the
promotional opportunities of
currently employed individuals.
``(III) Health and safety.--Health
and safety standards established under
Federal and State law otherwise
applicable to working conditions of
employees shall be equally applicable
to working conditions of participants
engaged in activities under this
paragraph. To the extent that a State
workers' compensation law applies,
workers' compensation shall be provided
to participants on the same basis as
the compensation is provided to other
individuals in the State in similar
employment.
``(IV) Employment conditions.--
Individuals in on-the-job training or
individuals employed in activities
under this paragraph shall be provided
benefits and working conditions at the
same level and to the same extent as
other trainees or employees working a
similar length of time and doing the
same type of work.
``(V) Opportunity to submit
comments.--Interested parties shall be
provided an opportunity to submit
comments with respect to training
programs proposed to be funded under
this paragraph.
``(ii) Grievance procedure.--
``(I) In general.--A State to which
funds are provided under this paragraph
shall establish and maintain a
procedure for addressing grievances or
complaints alleging violations of this
paragraph from participants and other
interested or affected parties. The
procedure shall include an opportunity
for a hearing and be completed within
60 days of filing the greivance or
complaint.
``(II) Investigation.--
``(aa) In general.--The
Secretary shall investigate an
allegation of a violation of
this paragraph if a decision
relating to the allegation is
made within 60 days after the
date of the filing of the
grievance or complaint and
either party appeals to the
Secretary, or if a decision
relating to the allegation is
made within the 60-day period
and the party to which the
decision is adverse appeals the
decision to the Secretary.
``(bb) Additional
requirement.--The Secretary
shall make a final
determination relating to an
appeal made under item (aa) no
later than 120 days after
receiving the appeal.
``(III) Remedies.--Remedies shall
be limited to--
``(aa) suspension or
termination of payments under
this paragraph;
``(bb) prohibition of
placement of a participant with
an employer who has violated
this subparagraph;
``(cc) where applicable,
reinstatement of an employee,
payment of lost wages and
benefits, and reestablishment
of other relevant terms,
conditions and privileges of
employment; and
``(dd) where appropriate,
other equitable relief.''.
(2) Conforming amendment.--Section 409(a)(7)(B)(iv) of such
Act (42 U.S.C. 609(a)(7)(B)(iv)) is amended to read as follows:
``(iv) Expenditures by the state.--The term
`expenditures by the State' does not include--
``(I) any expenditure from amounts
made available by the Federal
Government;
``(II) any State funds expended for
the medicaid program under title XIX;
``(III) any State funds which are
used to match Federal funds provided
under section 403(a)(5); or
``(IV) any State funds which are
expended as a condition of recieving
Federal funds other than under this
part.
Notwithstanding subclause (IV) of the preceding
sentence, such term includes expenditures by a
State for child care in a fiscal year to the
extent that the total amount of the
expenditures does not exceed the amount of
State expenditures in fiscal year 1994 or 1995
(whichever is the greater) that equal the non-
Federal share for the programs described in
section 418(a)(1)(A).''.
(b) Grants to Outlying Areas.--Section 1108(a) of such Act (42
U.S.C. 1308(a)) is amended by inserting ``(except section 403(a)(5))''
after ``title IV''.
(c) Grants to Indian Tribes.--Section 412(a) of such Act (42 U.S.C.
612(a)) is amended by adding at the end the following:
``(3) Welfare-to-work grants.--
``(A) In general.--The Secretary shall award a
grant in accordance with this paragraph to an Indian
tribe for each fiscal year specified in section
403(a)(5)(H) for which the Indian tribe is a welfare-
to-work tribe, in such amount as the Secretary deems
appropriate, subject to subparagraph (B) of this
paragraph.
``(B) Welfare-to-work tribe.--An Indian tribe shall
be considered a welfare-to-work tribe for a fiscal year
for purposes of this paragraph if the Indian tribe
meets the following requirements:
``(i) The Indian tribe has submitted to the
Secretary (in the form of an addendum to the
tribal family assistance plan, if any, of the
Indian tribe) a plan which describes how,
consistent with section 403(a)(5), the Indian
tribe will use any funds provided under this
paragraph during the fiscal year.
``(ii) The Indian tribe has provided the
Secretary with an estimate of the amount that
the Indian tribe intends to expend during the
fiscal year (excluding tribal expenditures
described in section 409(a)(7)(B)(iv)) for
activities described in section
403(a)(5)(C)(i).
``(iii) The Indian tribe has agreed to
negotiate in good faith with the Secretary of
Health and Human Services with respect to the
substance of any evaluation under section
413(j), and to cooperate with the conduct of
any such evaluation.
``(C) Limitations on use of funds.--Section
403(a)(5)(C) shall apply to funds provided to Indian
tribes under this paragraph in the same manner in which
such section applies to funds provided under section
403(a)(5).''.
(d) Funds Received From Grants to be Disregarded in Applying
Durational Limit on Assistance.--Section 408(a)(7) of such Act (42
U.S.C. 608(a)(7)) is amended by adding at the end the following:
``(G) Inapplicability to welfare-to-work grants and
assistance.--For purposes of subparagraph (A) of this
paragraph, a grant made under section 403(a)(5) shall
not be considered a grant made under section 403, and
assistance from funds provided under section 403(a)(5)
shall not be considered assistance.''.
(e) Evaluations.--Section 413 of such Act (42 U.S.C. 613) is
amended by adding at the end the following:
``(j) Evaluation of Welfare-To-Work Programs.--
``(1) Evaluation.--The Secretary--
``(A) shall, in consultation with the Secretary of
Labor, develop a plan to evaluate how grants made under
sections 403(a)(5) and 412(a)(3) have been used;
``(B) may evaluate the use of such grants by such
grantees as the Secretary deems appropriate, in
accordance with an agreement entered into with the
grantees after good-faith negotiations; and
``(C) is urged to include the following outcome
measures in the plan developed under subparagraph (A):
``(i) Placements in the labor force and
placements in the labor force that last for at
least 6 months.
``(ii) Placements in the private and public
sectors.
``(iii) Earnings of individuals who obtain
employment.
``(iv) Average expenditures per placement.
``(2) Reports to the congress.--
``(A) In general.--Subject to subparagraphs (B) and
(C), the Secretary, in consultation with the Secretary
of Labor and the Secretary of Housing and Urban
Development, shall submit to the Congress reports on
the projects funded under section 403(a)(5) and
412(a)(3) and on the evaluations of the projects.
``(B) Interim report.--Not later than January 1,
1999, the Secretary shall submit an interim report on
the matter described in subparagraph (A).
``(C) Final report.--Not later than January 1,
2001, (or at a later date, if the Secretary informs the
Committees of the Congress with jurisdiction over the
subject matter of the report) the Secretary shall
submit a final report on the matter described in
subparagraph (A).''.
SEC. 9002. LIMITATION ON AMOUNT OF FEDERAL FUNDS TRANSFERABLE TO TITLE
XX PROGRAMS.
(a) In General.--Section 404(d) of the Social Security Act (42
U.S.C. 604(d)) is amended--
(1) in paragraph (1), by striking ``A State may'' and
inserting ``Subject to paragraph (2), a State may''; and
(2) by amending paragraph (2) to read as follows:
``(2) Limitation on amount transferable to title xx
programs.--A State may use not more than 10 percent of the
amount of any grant made to the State under section 403(a) for
a fiscal year to carry out State programs pursuant to title
XX.''.
(b) Retroactivity.--The amendments made by subsection (a) of this
section shall take effect as if included in the enactment of section
103(a) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996.
SEC. 9003. CLARIFICATION OF LIMITATION ON NUMBER OF PERSONS WHO MAY BE
TREATED AS ENGAGED IN WORK BY REASON OF PARTICIPATION IN
VOCATIONAL EDUCATIONAL TRAINING.
(a) In General.--Section 407(c)(2)(D) of the Social Security Act
(42 U.S.C. 607(c)(2)(D)) is amended to read as follows:
``(D) Limitation on number of persons who may be
treated as engaged in work by reason of participation
in vocational educational training.--For purposes of
determining monthly participation rates under
paragraphs (1)(B)(i) and (2)(B) of subsection (b), not
more than 30 percent of the number of individuals in
all families and in 2-parent families, respectively, in
a State who are treated as engaged in work for a month
may consist of individuals who are determined to be
engaged in work for the month by reason of
participation in vocational educational training.''.
(b) Retroactivity.--The amendment made by subsection (a) of this
section shall take effect as if included in the enactment of section
103(a) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996.
SEC. 9004. REQUIRED HOURS OF WORK; HEALTH AND SAFETY.
(a) In General.--Section 407 of the Social Security Act (42 U.S.C.
607) is amended by adding at the end the following:
``(j) Limitation on Number of Hours Per Month That a Recipient of
Assistance May Be Required to Work for a Public Agency or Nonprofit
Organization.--
``(1) In general.--A State to which a grant is made under
section 403 may not require a recipient of assistance under the
State program funded under this part to be assigned to a work
experience, on-the-job training, or community service position
with a public agency or nonprofit organization during a month
for more than the allowable number of hours determined for the
month under paragraph (2).
``(2) Allowable number of hours.--
``(A) General method.--Subject to this paragraph,
the allowable number of hours determined for a month
under this paragraph--
``(i) for a recipient to whom the benefit
described in paragraph (3)(A) is provided
during the month is--
``(I) the average value of the
benefit provided by the State during
the month to families that the State
determines are similarly situated to
the family of the recipient, or (at the
option of the State) the value of the
benefit provided by the State to the
recipient during the month; divided by
``(II) the minimum wage rate in
effect during the month under section 6
of the Fair Labor Standards Act of
1938;
``(ii) for a recipient to whom the benefits
described in subparagraphs (A) and (B) of
paragraph (3) are provided during the month
is--
``(I) the average value of such
benefits provided by the State during
the month to families that the State
determines are similarly situated to
the family of the recipient, or (at the
option of the State) the value of such
benefits provided by the State to the
recipient during the month; divided by
``(II) the minimum wage rate in
effect during the month under section 6
of the Fair Labor Standards Act of
1938;
``(iii) for a recipient to whom the
benefits described in subparagraphs (A), (B),
and (C) of paragraph (3) are provided during
the month is--
``(I) the average value of such
benefits provided by the State during
the month to families that the State
determines are similarly situated to
the family of the recipient, or (at the
option of the State) the value of such
benefits provided by the State to the
recipient during the month; divided by
``(II) the minimum wage rate in
effect during the month under section 6
of the Fair Labor Standards Act of
1938;
``(iv) for a recipient to whom the benefits
described in subparagraphs (A), (B), (C), and
(D) of paragraph (3) are provided during the
month is--
``(I) the average value of such
benefits provided by the State during
the month to families that the State
determines are similarly situated to
the family of the recipient, or (at the
option of the State) the value of such
benefits provided by the State to the
recipient during the month; divided by
``(II) the minimum wage rate in
effect during the month under section 6
of the Fair Labor Standards Act of
1938; and
``(v) for a recipient to whom the benefits
described in subparagraphs (A), (B), (C), (D),
and (E) of paragraph (3) are provided during
the month is--
``(I) the average value of such
benefits provided by the State during
the month to families that the State
determines are similarly situated to
the family of the recipient, or (at the
option of the State) the value of such
benefits provided by the State to the
recipient during the month; divided by
``(II) the minimum wage rate in
effect during the month under section 6
of the Fair Labor Standards Act of
1938.
``(B) State option to take account of certain work
activities.--
``(i) In general.--In determining the
number of hours for a month for which a
sufficiently employed recipient may be
determined to be engaged in work under
subsection (c)(1), the State may,
notwithstanding subsection (c)(2), count the
number of hours during the month for which the
recipient participates in a work activity
described in paragraph (6), (8), (9), (10), or
(11) of subsection (d).
``(ii) Sufficiently employed recipient.--As
used in clause (i), the term `sufficiently
employed recipient' means, with respect to a
month, a recipient who is in a position
described in paragraph (1) during the month for
a number of hours that is not less than--
``(I) the sum of the dollar value
of any assistance provided to the
recipient during the month under the
State program funded under this part,
and the dollar value equivalent of any
benefits provided to the recipient
during the month under the food stamp
program under the Food Stamp Act of
1977; divided by
``(II) the minimum wage rate in
effect during the month under section 6
of the Fair Labor Standards Act of
1938.
``(3) Benefits.--As used in paragraph (2)(A), the term
`value of the benefits' means--
``(A) in the case of assistance under the State
program funded under this part, the dollar value of
such assistance;
``(B) in the case of food stamp benefits under the
food stamp program under the Food Stamp Act of 1977,
the dollar value equivalent of such benefits;
``(C) at the option of the State, in the case of
medical assistance benefits provided under the State
plan approved under title XIX, the dollar value of such
benefits, as determined in accordance with paragraph
(4);
``(D) at the option of the State, in the case of
child care assistance, the dollar value of such
assistance; and
``(E) at the option of the State, in the case of
housing benefits, the dollar value of such benefits.
``(4) Valuation of medicaid benefits.--Annually, the
Secretary shall publish a table that specifies the dollar value
of the insurance coverage provided under title XIX to a family
of each size, which may take account of geographical variations
or other factors identified by the Secretary.
``(5) Treatment of recipients assigned to certain positions
with a public agency or nonprofit organization.--A recipient of
assistance under a State program funded under this part who is
engaged in work experience or community service with a public
agency or nonprofit organization shall not be considered an
employee of the public agency or the nonprofit organization.
``(k) Health and Safety.--Health and safety standards established
under Federal and State law otherwise applicable to working conditions
of employees shall be equally applicable to working conditions of
participants engaged in a work activity. To the extent that a State
workers' compensation law applies, workers' compensation shall be
provided to participants on the same basis as the compensation is
provided to other individuals in the State in similar employment.''.
(b) Retroactivity.--The amendment made by subsection (a) of this
section shall take effect as if included in the enactment of section
103(a) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996.
SEC. 9005. PENALTY FOR FAILURE OF STATE TO REDUCE ASSISTANCE FOR
RECIPIENTS REFUSING WITHOUT GOOD CAUSE TO WORK.
(a) In General.--Section 409(a) of the Social Security Act (42
U.S.C. 609(a)) is amended by adding at the end the following:
``(13) Penalty for failure to reduce assistance for
recipients refusing without good cause to work.--
``(A) In general.--If the Secretary determines that
a State to which a grant is made under section 403 in a
fiscal year has violated section 407(e) during the
fiscal year, the Secretary shall reduce the grant
payable to the State under section 403(a)(1) for the
immediately succeeding fiscal year by an amount equal
to not less than 1 percent and not more than 5 percent
of the State family assistance grant.
``(B) Penalty based on severity of failure.--The
Secretary shall impose reductions under subparagraph
(A) with respect to a fiscal year based on the degree
of noncompliance.''.
(b) Retroactivity.--The amendment made by subsection (a) of this
section shall take effect as if included in the enactment of section
103(a) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996.
Subtitle B--Supplemental Security Income
SEC. 9101. REQUIREMENT TO PERFORM CHILDHOOD DISABILITY REDETERMINATIONS
IN MISSED CASES.
Section 211(d)(2) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (110 Stat. 2190) is amended--
(1) in subparagraph (A)--
(A) in the 1st sentence, by striking ``1 year'' and
inserting ``18 months''; and
(B) by inserting after the 1st sentence the
following: ``Any redetermination required by the
preceding sentence that is not performed before the end
of the period described in the preceding sentence shall
be performed as soon as is practicable thereafter.'';
and
(2) in subparagraph (C), by adding at the end the
following: ``Before commencing a redetermination under the 2nd
sentence of subparagraph (A), in any case in which the
individual involved has not already been notified of the
provisions of this paragraph, the Commissioner of Social
Security shall notify the individual involved of the provisions
of this paragraph.''.
SEC. 9102. REPEAL OF MAINTENANCE OF EFFORT REQUIREMENTS APPLICABLE TO
OPTIONAL STATE PROGRAMS FOR SUPPLEMENTATION OF SSI
BENEFITS.
Section 1618 of the Social Security Act (42 U.S.C. 1382g) is
repealed.
SEC. 9103. FEES FOR FEDERAL ADMINISTRATION OF STATE SUPPLEMENTARY
PAYMENTS.
(a) Fee Schedule.--
(1) Optional state supplementary payments.--
(A) In general.--Section 1616(d)(2)(B) of the
Social Security Act (42 U.S.C. 1382e(d)(2)(B)) is
amended--
(i) by striking ``and'' at the end of
clause (iii); and
(ii) by striking clause (iv) and inserting
the following:
``(iv) for fiscal year 1997, $5.00;
``(v) for fiscal year 1998, $6.20;
``(vi) for fiscal year 1999, $7.60;
``(vii) for fiscal year 2000, $7.80;
``(viii) for fiscal year 2001, $8.10;
``(ix) for fiscal year 2002, $8.50; and
``(x) for fiscal year 2003 and each succeeding fiscal
year--
``(I) the applicable rate in the preceding fiscal
year, increased by the percentage, if any, by which the
Consumer Price Index for the month of June of the
calendar year of the increase exceeds the Consumer
Price Index for the month of June of the calendar year
preceding the calendar year of the increase, and
rounded to the nearest whole cent; or
``(II) such different rate as the Commissioner
determines is appropriate for the State.''.
(B) Conforming amendment.--Section 1616(d)(2)(C) of
such Act (42 U.S.C. 1382e(d)(2)(C)) is amended by
striking ``(B)(iv)'' and inserting ``(B)(x)(II)''.
(2) Mandatory state supplementary payments.--
(A) In general.--Section 212(b)(3)(B)(ii) of Public
Law 93-66 (42 U.S.C. 1382 note) is amended--
(i) by striking ``and'' at the end of
subclause (III); and
(ii) by striking subclause (IV) and
inserting the following:
``(IV) for fiscal year 1997, $5.00;
``(V) for fiscal year 1998, $6.20;
``(VI) for fiscal year 1999, $7.60;
``(VII) for fiscal year 2000, $7.80;
``(VIII) for fiscal year 2001, $8.10;
``(IX) for fiscal year 2002, $8.50; and
``(X) for fiscal year 2003 and each succeeding fiscal
year--
``(aa) the applicable rate in the preceding fiscal
year, increased by the percentage, if any, by which the
Consumer Price Index for the month of June of the
calendar year of the increase exceeds the Consumer
Price Index for the month of June of the calendar year
preceding the calendar year of the increase, and
rounded to the nearest whole cent; or
``(bb) such different rate as the Commissioner
determines is appropriate for the State.''.
(B) Conforming amendment.--Section
212(b)(3)(B)(iii) of such Act (42 U.S.C. 1382 note) is
amended by striking ``(ii)(IV)'' and inserting
``(ii)(X)(bb)''.
(b) Use of New Fees To Defray the Social Security Administration's
Administrative Expenses.--
(1) Credit to special fund for fiscal year 1998 and
subsequent years.--
(A) Optional state supplementary payment fees.--
Section 1616(d)(4) of the Social Security Act (42
U.S.C. 1382e(d)(4)) is amended to read as follows:
``(4)(A) The first $5 of each administration fee assessed pursuant
to paragraph (2), upon collection, shall be deposited in the general
fund of the Treasury of the United States as miscellaneous receipts.
``(B) That portion of each administration fee in excess of $5, and
100 percent of each additional services fee charged pursuant to
paragraph (3), upon collection for fiscal year 1998 and each subsequent
fiscal year, shall be credited to a special fund established in the
Treasury of the United States for State supplementary payment fees. The
amounts so credited, to the extent and in the amounts provided in
advance in appropriations Acts, shall be available to defray expenses
incurred in carrying out this title and related laws.''.
(B) Mandatory state supplementary payment fees.--
Section 212(b)(3)(D) of Public Law 93-66 (42 U.S.C.
1382 note) is amended to read as follows:
``(D)(i) The first $5 of each administration fee assessed pursuant
to subparagraph (B), upon collection, shall be deposited in the general
fund of the Treasury of the United States as miscellaneous receipts.
``(ii) The portion of each administration fee in excess of $5, and
100 percent of each additional services fee charged pursuant to
subparagraph (C), upon collection for fiscal year 1998 and each
subsequent fiscal year, shall be credited to a special fund established
in the Treasury of the United States for State supplementary payment
fees. The amounts so credited, to the extent and in the amounts
provided in advance in appropriations Acts, shall be available to
defray expenses incurred in carrying out this section and title XVI of
the Social Security Act and related laws.''.
(2) Limitations on authorization of appropriations.--From
amounts credited pursuant to section 1616(d)(4)(B) of the
Social Security Act and section 212(b)(3)(D)(ii) of Public Law
93-66 to the special fund established in the Treasury of the
United States for State supplementary payment fees, there is
authorized to be appropriated an amount not to exceed
$35,000,000 for fiscal year 1998, and such sums as may be
necessary for each fiscal year thereafter.
Subtitle C--Child Support Enforcement
SEC. 9201. CLARIFICATION OF AUTHORITY TO PERMIT CERTAIN REDISCLOSURES
OF WAGE AND CLAIM INFORMATION.
Section 303(h)(1)(C) of the Social Security Act (42 U.S.C.
503(h)(1)(C)) is amended by striking ``section 453(i)(1) in carrying
out the child support enforcement program under title IV'' and
inserting ``subsections (i)(1), (i)(3), and (j) of section 453''.
Subtitle D--Restricting Welfare and Public Benefits for Aliens
SEC. 9301. EXTENSION OF ELIGIBILITY PERIOD FOR REFUGEES AND CERTAIN
OTHER QUALIFIED ALIENS FROM 5 TO 7 YEARS FOR SSI AND
MEDICAID.
(a) SSI.--Section 402(a)(2)(A) of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 1612(a)(2)(A)) is
amended to read as follows:
``(A) Time-limited exception for refugees and
asylees.--
``(i) SSI.--With respect to the specified
Federal program described in paragraph (3)(A)
paragraph 1 shall not apply to an alien until 7
years after the date--
``(I) an alien is admitted to the
United States as a refugee under
section 207 of the Immigration and
Nationality Act;
``(II) an alien is granted asylum
under section 208 of such Act; or
``(III) an alien's deportation is
withheld under section 243(h) of such
Act.
``(ii) Food stamps.--With respect to the
specified Federal program described in
paragraph (3)(B), paragraph 1 shall not apply
to an alien until 5 years after the date--
``(I) an alien is admitted to the
United States as a refugee under
section 207 of the Immigration and
Nationality Act;
``(II) an alien is granted asylum
under section 208 of such Act; or
``(III) an alien's deportation is
withheld under section 243(h) of such
Act.''.
(b) Medicaid.--Section 402(b)(2)(A) of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 (8 U.S.C.
1612(b)(2)(A)) is amended to read as follows:
``(A) Time-limited exception for refugees and
asylees.--
``(i) Medicaid.--With respect to the
designated Federal program described in
paragraph (3)(C), paragraph 1 shall not apply
to an alien until 7 years after the date--
``(I) an alien is admitted to the
United States as a refugee under
section 207 of the Immigration and
Nationality Act;
``(II) an alien is granted asylum
under section 208 of such Act; or
``(III) an alien's deportation is
withheld under section 243(h) of such
Act.
``(ii) Other designated federal programs.--
With respect to the designated Federal programs
under paragraph (3) (other than subparagraph
(C)), paragraph 1 shall not apply to an alien
until 5 years after the date--
``(I) an alien is admitted to the
United States as a refugee under
section 207 of the Immigration and
Nationality Act;
``(II) an alien is granted asylum
under section 208 of such Act; or
``(III) an alien's deportation is
withheld under section 243(h) of such
Act.''.
SEC. 9302. SSI ELIGIBILITY FOR ALIENS RECEIVING SSI ON AUGUST 22, 1996.
(a) In General.--Section 402(a)(2) of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 1612(a)(2))
is amended by adding after subparagraph (D) the following new
subparagraph:
``(E) Aliens receiving ssi on august 22, 1996.--
With respect to eligibility for benefits for the
program defined in paragraph (3)(A) (relating to the
supplemental security income program), paragraph (1)
shall not apply to an alien who was receiving such
benefits on August 22, 1996.''.
(b) Status of Cuban and Haitian Entrants and Amerasian Permanent
Resident Aliens.--For purposes of section 402(a)(2)(E) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996, the
following aliens shall be considered qualified aliens:
(1) An alien who is a Cuban and Haitian entrant as defined
in section 501(e) of the Refugee Education Assistance Act of
1980.
(2) An alien admitted to the United States as an Amerasian
immigrant pursuant to section 584 of the Foreign Operations,
Export Financing, and Related Programs Appropriations Act,
1988, as contained in section 101(e) of Public Law 100-202,
(other than an alien admitted pursuant to section
584(b)(1)(C)).
(c) Conforming Amendments.--Section 402(a)(2)(D) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 (8
U.S.C. 1612(a)(D)) is amended--
(1) by striking clause (i);
(2) in the subparagraph heading by striking ``benefits''
and inserting ``food stamps'';
(3) by striking ``(ii) Food stamps'.--';
(3) by redesignating subclauses (I), (II), and (III) as
clauses (i), (ii), and (iii).
SEC. 9303. SSI ELIGIBILITY FOR PERMANENT RESIDENT ALIENS WHO ARE
MEMBERS OF AN INDIAN TRIBE.
Section 402(a)(2) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (8 U.S.C. 1612(a)(2)) (as
amended by section 9302) is amended by adding after subparagraph (E)
the following new subparagraph:
``(F) Permanent resident aliens who are members of
an indian tribe.--With respect to eligibility for
benefits for the program defined in paragraph (3)(A)
(relating to the supplemental security income program),
paragraph (1) shall not apply to an alien who--
``(i) is lawfully admitted for permanent
residence under the Immigration and Nationality
Act; and
``(ii) is a member of an Indian tribe (as
defined in section 4(e) of the Indian Self-
Determination and Education Assistance Act).''.
SEC. 9304. VERIFICATION OF ELIGIBILITY FOR STATE AND LOCAL PUBLIC
BENEFITS.
(a) In General.--The Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 is amended by adding after section 412 the
following new section:
``SEC. 413. AUTHORIZATION FOR VERIFICATION OF ELIGIBILITY FOR STATE AND
LOCAL PUBLIC BENEFITS.
``A State or political subdivision of a State is authorized to
require an applicant for State and local public benefits (as defined in
section 411(c)) to provide proof of eligibility.''.
(b) Clerical Amendment.--Section 2 of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 is amended by adding
after the item related to section 412 the following:
``Sec. 413. Authorization for verification of eligibility for state and
local public benefits.''.
SEC. 9305. DERIVATIVE ELIGIBILITY FOR BENEFITS.
(a) In General.--The Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 is amended by adding after section 435 the
following new section:
``SEC. 436. DERIVATIVE ELIGIBILITY FOR BENEFITS.
``(a) Food Stamps.--Notwithstanding any other provision of law, an
alien who under the provisions of this title is ineligible for benefits
under the food stamp program (as defined in section 402(a)(3)(A)) shall
not be eligible for such benefits because the alien receives benefits
under the supplemental security income program (as defined in section
402(a)(3)(B)).
``(b) Medicaid.--Notwithstanding any other provision of this title,
an alien who under the provisions of this title is ineligible for
benefits under the medicaid program (as defined in section
402(b)(3)(C)) shall be eligible for such benefits if the alien is
receiving benefits under the supplemental security income program and
title XIX of the Social Security Act provides for such derivative
eligibility.''.
(b) Clerical Amendment.--Section 2 of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 is amended by adding
after the item related to section 435 the following:
``Sec. 436. Derivative eligibility for benefits.''.
SEC. 9306. EFFECTIVE DATE.
Except as otherwise provided, the amendments made by this subtitle
shall be effective as if included in the enactment of title IV of the
Personal Responsibility and Work Opportunity Reconciliation Act of
1996.
Subtitle E--Unemployment Compensation
SEC. 9401. CLARIFYING PROVISION RELATING TO BASE PERIODS.
(a) In General.--No provision of a State law under which the base
period for such State is defined or otherwise determined shall, for
purposes of section 303(a)(1) of the Social Security Act (42 U.S.C.
503(a)(1)), be considered a provision for a method of administration.
(b) Definitions.--For purposes of this section, the terms ``State
law'', ``base period'', and ``State'' shall have the meanings given
them under section 205 of the Federal-State Extended Unemployment
Compensation Act of 1970 (26 U.S.C. 3304 note).
(c) Effective Date.--This section shall apply for purposes of any
period beginning before, on, or after the date of the enactment of this
Act.
SEC. 9402. INCREASE IN FEDERAL UNEMPLOYMENT ACCOUNT CEILING.
(a) In General.--Section 902(a)(2) of the Social Security Act (42
U.S.C. 1102(a)(2)) is amended by striking ``0.25 percent'' and
inserting ``0.5 percent''.
(b) Effective Date.--This section and the amendment made by this
section--
(1) shall take effect on October 1, 2001, and
(2) shall apply to fiscal years beginning on or after that
date.
SEC. 9403. SPECIAL DISTRIBUTION TO STATES FROM UNEMPLOYMENT TRUST FUND.
(a) In General.--Subsection (a) of section 903 of the Social
Security Act (42 U.S.C. 1103(a)) is amended by adding at the end the
following new paragraph:
``(3)(A) Notwithstanding any other provision of this section, for
purposes of carrying out this subsection with respect to any excess
amount (referred to in paragraph (1)) remaining in the employment
security administration account as of the close of fiscal year 1999,
2000, or 2001, such amount shall--
``(i) to the extent of any amounts not in excess of
$100,000,000, be subject to subparagraph (B), and
``(ii) to the extent of any amounts in excess of
$100,000,000, be subject to subparagraph (C).
``(B) Paragraphs (1) and (2) shall apply with respect to any
amounts described in subparagraph (A)(i), except that--
``(i) in carrying out the provisions of paragraph (2)(B)
with respect to such amounts (to determine the portion of such
amounts which is to be allocated to a State for a succeeding
fiscal year), the ratio to be applied under such provisions
shall be the same as the ratio that--
``(I) the amount of funds to be allocated to such
State for such fiscal year pursuant to title III, bears
to
``(II) the total amount of funds to be allocated to
all States for such fiscal year pursuant to title III,
as determined by the Secretary of Labor, and
``(ii) the amounts allocated to a State pursuant to this
subparagraph shall be available to such State, subject to the
last sentence of subsection (c)(2).
Nothing in this paragraph shall preclude the application of subsection
(b) with respect to any allocation determined under this subparagraph.
``(C) Any amounts described in clause (ii) of subparagraph (A)
(remaining in the employment security administration account as of the
close of any fiscal year specified in such subparagraph) shall, as of
the beginning of the succeeding fiscal year, accrue to the Federal
unemployment account, without regard to the limit provided in section
902(a).''
(b) Conforming Amendment.--Paragraph (2) of section 903(c) of the
Social Security Act is amended by adding at the end, as a flush left
sentence, the following:
``Any amount allocated to a State under this section for fiscal year
2000, 2001, or 2002 may be used by such State only to pay expenses
incurred by it for the administration of its unemployment compensation
law, and may be so used by it without regard to any of the conditions
prescribed in any of the preceding provisions of this paragraph.''
SEC. 9404. INTEREST-FREE ADVANCES TO STATE ACCOUNTS IN UNEMPLOYMENT
TRUST FUND RESTRICTED TO STATES WHICH MEET FUNDING GOALS.
(a) In General.--Paragraph (2) of section 1202(b) of the Social
Security Act (42 U.S.C. 1322(b)) is amended--
(1) by striking ``and'' at the end of subparagraph (A),
(2) by striking the period at the end of subparagraph (B)
and inserting ``, and'', and
(3) by adding at the end the following new subparagraph:
``(C) the average daily balance in the account of such
State in the Unemployment Trust Fund for each of 4 of the 5
calendar quarters preceding the calendar quarter in which such
advances were made exceeds the funding goal of such State (as
defined in subsection (d)).''
(b) Funding Goal Defined.--Section 1202 of the Social Security Act
is amended by adding at the end the following new subsection:
``(d) For purposes of subsection (b)(2)(C), the term `funding goal'
means, for any State for any calendar quarter, the average of the
unemployment insurance benefits paid by such State during each of the 3
years, in the 20-year period ending with the calendar year containing
such calendar quarter, during which the State paid the greatest amount
of unemployment benefits.''
(c) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after the date of the enactment of
this Act.
SEC. 9405. EXEMPTION OF SERVICE PERFORMED BY ELECTION WORKERS FROM THE
FEDERAL UNEMPLOYMENT TAX.
(a) In General.--Paragraph (3) of section 3309(b) of the Internal
Revenue Code of 1986 (relating to exemption for certain services) is
amended--
(1) by striking ``or'' at the end of subparagraph (D),
(2) by adding ``or'' at the end of subparagraph (E), and
(3) by inserting after subparagraph (E) the following new
subparagraph:
``(F) as an election official or election worker if
the amount of remuneration received by the individual
during the calendar year for services as an election
official or election worker is less than $1,000;''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to service performed after the date of the enactment
of this Act.
SEC. 9406. TREATMENT OF CERTAIN SERVICES PERFORMED BY INMATES.
(a) In General.--Subsection (c) of section 3306 of the Internal
Revenue Code of 1986 (defining employment) is amended--
(1) by striking ``or'' at the end of paragraph (19),
(2) by striking the period at the end of paragraph (20) and
inserting ``; or'', and
(3) by adding at the end the following new paragraph:
``(21) service performed by a person committed to a penal
institution.''
(b) Effective Date.--The amendments made by this section shall
apply with respect to service performed after March 26, 1996.
SEC. 9407. EXEMPTION OF SERVICE PERFORMED FOR AN ELEMENTARY OR
SECONDARY SCHOOL OPERATED PRIMARILY FOR RELIGIOUS
PURPOSES FROM THE FEDERAL UNEMPLOYMENT TAX.
(a) In General.--Paragraph (1) of section 3309(b) of the Internal
Revenue Code of 1986 (relating to exemption for certain services) is
amended--
(1) by striking ``or'' at the end of subparagraph (A), and
(2) by inserting before the semicolon at the end the
following: ``, or (C) an elementary or secondary school which
is operated primarily for religious purposes, which is
described in section 501(c)(3), and which is exempt from tax
under section 501(a)''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to service performed after the date of the enactment
of this Act.
SEC. 9408. STATE PROGRAM INTEGRITY ACTIVITIES FOR UNEMPLOYMENT
COMPENSATION.
Section 901(c) of the Social Security Act (42 U.S.C. 1101(c)) is
amended by adding at the end the following new paragraph:
``(5)(A) There are authorized to be appropriated out of the
employment security administration account to carry out program
integrity activities, in addition to any amounts available under
paragraph (1)(A)(i)--
``(i) $89,000,000 for fiscal year 1998;
``(ii) $91,000,000 for fiscal year 1999;
``(iii) $93,000,000 fiscal year 2000;
``(iv) $96,000,000 for fiscal year 2001; and
``(v) $98,000,000 for fiscal year 2002.
``(B) In any fiscal year in which a State receives funds
appropriated pursuant to this paragraph, the State shall expend a
proportion of the funds appropriated pursuant to paragraph (1)(A)(i) to
carry out program integrity activities that is not less than the
proportion of the funds appropriated under such paragraph that was
expended by the State to carry out program integrity activities in
fiscal year 1997.
``(C) For purposes of this paragraph, the term `program integrity
activities' means initial claims review activities, eligibility review
activities, benefit payments control activities, and employer liability
auditing activities.''.
Subtitle F--Increase in Public Debt Limit
SEC. 9501. INCREASE IN PUBLIC DEBT LIMIT.
Subsection (b) of section 3101 of title 31, United States Code, is
amended by striking the dollar amount contained therein and inserting
``$5,950,000,000,000''.
TITLE X--COMMITTEE ON WAYS AND MEANS--MEDICARE
SEC. 10000. AMENDMENTS TO SOCIAL SECURITY ACT AND REFERENCES TO OBRA;
TABLE OF CONTENTS OF TITLE.
(a) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this title an amendment 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 that section or other
provision of the Social Security Act.
(b) References to OBRA.--In this title, the terms ``OBRA-1986'',
``OBRA-1987'', ``OBRA-1989'', ``OBRA-1990'', and ``OBRA-1993'' refer to
the Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509), the
Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203), the
Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239), the
Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508), and the
Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66),
respectively.
(c) Table of Contents of Title.--The table of contents of this
title is as follows:
Sec. 10000. Amendments to Social Security Act and references to OBRA;
table of contents of title.
Subtitle A--MedicarePlus Program
subchapter a--medicareplus program
Sec. 10001. Establishment of MedicarePlus program.
``Part C--MedicarePlus Program
``Sec. 1851. Eligibility, election, and enrollment.
``Sec. 1852. Benefits and beneficiary protections.
``Sec. 1853. Payments to MedicarePlus organizations.
``Sec. 1854. Premiums.
``Sec. 1855. Organizational and financial requirements for
MedicarePlus organizations; provider-
sponsored organizations.
``Sec. 1856. Establishment of standards.
``Sec. 1857. Contracts with MedicarePlus organizations.
``Sec. 1859. Definitions; miscellaneous provisions.
Sec. 10002. Transitional rules for current medicare HMO program.
Ssubchapter b--special rules for medicareplus medical savings accounts
Sec. 10006. MedicarePlus MSA.
subchapter a--programs of all-inclusive care for the elderly (pace)
Sec. 10011. Coverage of PACE under the medicare program.
Sec. 10012. Establishment of PACE program as medicaid State option.
Sec. 10013. Effective date; transition.
Sec. 1001subchapter b--social health maintenance organizations
Sec. 10015. Social heasubchapter c--other programss (SHMOs).
Sec. 10018. Orderly transition of municipal health service
demonstration projects.
Sec. 10019. Extension of certain medicare community nursing
organization demonstration projects.
Chapter 3--Medicare Payment Advisory Commission
Sec. 10021. Medicare Payment Advisory Commission.
Chapter 4--Medigap Protections
Sec. 10031. Medigap protections.
Sec. 10032. Medicare prepaid competitive pricing demonstration project.
Chapter 5--Tax Treatment of Hospitals Participating in Provider-
sponsored Organizations
Sec. 10041. Tax treatment of hospitals which participate in provider-
sponsored organizations.
Subtitle B--Prevention Initiatives
Sec. 10101. Screening mammography.
Sec. 10102. Screening pap smear and pelvic exams.
Sec. 10103. Prostate cancer screening tests.
Sec. 10104. Coverage of colorectal screening.
Sec. 10105. Diabetes screening tests.
Sec. 10106. Standardization of medicare coverage of bone mass
measurements.
Sec. 10107. Vaccines outreach expansion.
Sec. 10108. Study on preventive benefits.
Subtitle C--Rural Initiatives
Sec. 10201. Rural primary care hospital program.
Sec. 10202. Prohibiting denial of request by rural referral centers for
reclassification on basis of comparability
of wages.
Sec. 10203. Hospital geographic reclassification permitted for purposes
of disproportionate share payment
adjustments.
Sec. 10204. Medicare-dependent, small rural hospital payment extension.
Sec. 10205. Geographic reclassification for certain disproportionately
large hospitals.
Sec. 10206. Floor on area wage index.
Sec. 10207. Informatics, telemedicine, and education demonstration
project.
Subtitle D--Anti-Fraud and Abuse Provisions
Sec. 10301. Permanent exclusion for those convicted of 3 health care
related crimes.
Sec. 10302. Authority to refuse to enter into medicare agreements with
individuals or entities convicted of
felonies.
Sec. 10303. Inclusion of toll-free number to report medicare waste,
fraud, and abuse in explanation of benefits
forms.
Sec. 10304. Liability of medicare carriers and fiscal intermediaries
for claims submitted by excluded providers.
Sec. 10305. Exclusion of entity controlled by family member of a
sanctioned individual.
Sec. 10306. Imposition of civil money penalties.
Sec. 10307. Disclosure of information and surety bonds.
Sec. 10308. Provision of certain identification numbers.
Sec. 10309. Advisory opinions regarding certain physician self-referral
provisions.
Sec. 10310. Other fraud and abuse related provisions.
Subtitle E--Prospective Payment Systems
Chapter 1--Payment Under Part A
Sec. 10401. Prospective payment for skilled nursing facility services.
Sec. 10402. Prospective payment for inpatient rehabilitation hospital
services.
subchapter a--payment for hospital outpatient department services
Sec. 10411. Elimination of formula-driven overpayments (FDO) for
certain outpatient hospital services.
Sec. 10412. Extension of reductions in payments for costs of hospital
outpatient services.
Sec. 10413. Prospective payment system for hospital outpatient
subchapter b--rehabilitation services
Sec. 10421. Rehabilitation agencies and services.
Sec. 10422. Comprehesubchapter c--ambulance servicesfacilities (corf).
Sec. 10431. Payments for ambulance services.
Sec. 10432. Demonstration of coverage of ambulance services under
medicare through contracts with units of
local government.
Chapter 3--Payment Under Parts A and B
Sec. 10441. Prospective payment for home health services.
Subtitle F--Provisions Relating to Part A
Chapter 1--Payment Of PPS Hospitals
Sec. 10501. PPS hospital payment update.
Sec. 10502. Capital payments for PPS hospitals.
Sec. 10503. Freeze in disproportionate share.
Sec. 10504. Medicare capital asset sales price equal to book value.
Sec. 10505. Elimination of IME and DSH payments attributable to outlier
payments.
Sec. 10506. Reduction in adjustment for indirect medical education.
Sec. 10507. Treatment of transfer cases.
Sec. 10508. Increase base payment rate to Puerto Rico hospitals.
Chapter 2--Payment Of PPS Exempt Hospitals
Sec. 10511. Payment update.
Sec. 10512. Reductions to capital payments for certain PPS-exempt
hospitals and units.
Sec. 10513. Cap on TEFRA limits.
Sec. 10514. Change in bonus and relief payments.
Sec. 10515. Change in payment and target amount for new providers.
Sec. 10516. Rebasing.
Sec. 10517. Treatment of certain long-term care hospitals.
Sec. 10518. Elimination of exemptions; report on exceptions and
adjustments.
Chapter 3--Provisions Related to Hospice Services
Sec. 10521. Payments for hospice services.
Sec. 10522. Payment for home hospice care based on location where care
is furnished.
Sec. 10523. Hospice care benefits periods.
Sec. 10524. Other items and services included in hospice care.
Sec. 10525. Contracting with independent physicians or physician groups
for hospice care services permitted.
Sec. 10526. Waiver of certain staffing requirements for hospice care
programs in non-urbanized areas.
Sec. 10527. Limitation on liability of beneficiaries for certain
hospice coverage denials.
Sec. 10528. Extending the period for physician certification of an
individual's terminal illness.
Sec. 10529. Effective date.
Chapter 4--Modification of Part A Home Health Benefit
Sec. 10531. Modification of part A home health benefit for individuals
enrolled under part B.
Chapter 5--Other Payment Provisions
Sec. 10541. Reductions in payments for enrollee bad debt.
Sec. 10542. Permanent extension of hemophilia pass-through.
Sec. 10543. Reduction in part A medicare premium for certain public
retirees.
Subtitle G--Provisions Relating to Part B Only
Chapter 1--Physicians' Services
Sec. 10601. Establishment of single conversion factor for 1998.
Sec. 10602. Establishing update to conversion factor to match spending
under sustainable growth rate.
Sec. 10603. Replacement of volume performance standard with sustainable
growth rate.
Sec. 10604. Payment rules for anesthesia services.
Sec. 10605. Implementation of resource-based physician practice
expense.
Sec. 10606. Dissemination of information on high per discharge relative
values for in-hospital physicians'
services.
Sec. 10607. No X-ray required for chiropractic services.
Sec. 10608. Temporary coverage restoration for portable
electrocardiogram transportation.
Chapter 2--Other Payment Provisions
Sec. 10611. Payments for durable medical equipment.
Sec. 10612. Oxygen and oxygen equipment.
Sec. 10613. Reduction in updates to payment amounts for clinical
diagnostic laboratory tests.
Sec. 10614. Simplification in administration of laboratory tests.
Sec. 10615. Updates for ambulatory surgical services.
Sec. 10616. Reimbursement for drugs and biologicals.
Sec. 10617. Coverage of oral anti-nausea drugs under chemotherapeutic
regimen.
Sec. 10618. Rural health clinic services.
Sec. 10619. Increased medicare reimbursement for nurse practitioners
and clinical nurse specialists.
Sec. 10620. Increased medicare reimbursement for physician assistants.
Sec. 10621. Renal dialysis-related services.
Chapter 3--Part B Premium
Sec. 10631. Part B premium.
Subtitle H--Provisions Relating to Parts A and B
Chapter 1--Provisions Relating to Medicare Secondary Payer
Sec. 10701. Permanent extension and revision of certain secondary payer
provisions.
Sec. 10702. Clarification of time and filing limitations.
Sec. 10703. Permitting recovery against third party administrators.
Chapter 2--Home Health Services
Sec. 10711. Recapturing savings resulting from temporary freeze on
payment increases for home health services.
Sec. 10712. Interim payments for home health services.
Sec. 10713. Clarification of part-time or intermittent nursing care.
Sec. 10714. Study of definition of homebound.
Sec. 10715. Payment based on location where home health service is
furnished.
Sec. 10716. Normative standards for home health claims denials,
Sec. 10717. No home health benefits based solely on drawing blood.
Chapter 3--Baby Boom Generation Medicare Commission
Sec. 10721. Bipartisan Commission on the Effect of the Baby Boom
Generation on the Medicare Program.
Chapter 4--Provisions Relating to Direct Graduate Medical Education
Sec. 10731. Limitation on payment based on number of residents and
implementation of rolling average FTE
count.
Sec. 10732. Phased-in limitation on hospital overhead and supervisory
physician component of direct medical
education costs.
Sec. 10733. Permitting payment to non-hospital providers.
Sec. 10734. Incentive payments under plans for voluntary reduction in
number of residents.
Sec. 10735. Demonstration project on use of consortia.
Sec. 10736. Recommendations on long-term payment policies regarding
financing teaching hospitals and graduate
medical education.
Sec. 10737. Medicare special reimbursement rule for certain combined
residency programs.
Chapter 5--Other Provisions
Sec. 10741. Centers of excellence.
Sec. 10742. Medicare part B special enrollment period and waiver of
part B late enrollment penalty and medigap
special open enrollment period for certain
military retirees and dependents.
Sec. 10743. Protections under the medicare program for disabled workers
who lose benefits under a group health
plan.
Sec. 10744. Placement of advance directive in medical record.
Subtitle I--Medical Liability Reform
Chapter 1--General Provisions
Sec. 10801. Federal reform of health care liability actions.
Sec. 10802. Definitions.
Sec. 10803. Effective date.
Chapter 2--Uniform Standards for Health Care Liability Actions
Sec. 10811. Statute of limitations.
Sec. 10812. Calculation and payment of damages.
Sec. 10813. Alternative dispute resolution.
Subtitle A--MedicarePlus Program
CHAPTER 1--MEDICAREPLUS PROGRAM
Subchapter A--MedicarePlus Program
SEC. 10001. ESTABLISHMENT OF MEDICAREPLUS PROGRAM.
(a) In General.--Title XVIII is amended by redesignating part C as
part D and by inserting after part B the following new part:
``Part C--MedicarePlus Program
``eligibility, election, and enrollment
``Sec. 1851. (a) Choice of Medicare Benefits Through MedicarePlus
Plans.--
``(1) In general.--Subject to the provisions of this
section, each MedicarePlus eligible individual (as defined in
paragraph (3)) is entitled to elect to receive benefits under
this title--
``(A) through the medicare fee-for-service program
under parts A and B, or
``(B) through enrollment in a MedicarePlus plan
under this part.
``(2) Types of medicareplus plans that may be available.--A
MedicarePlus plan may be any of the following types of plans of
health insurance:
``(A) Coordinated care plans.--Coordinated care
plans which provide health care services, including
health maintenance organization plans and preferred
provider organization plans.
``(B) Plans offered by provider-sponsored
organization.--A MedicarePlus plan offered by a
provider-sponsored organization, as defined in section
1855(e).
``(C) Combination of msa plan and contributions to
medicareplus msa.--An MSA plan, as defined in section
1859(b)(2), and a contribution into a MedicarePlus
medical savings account (MSA).
``(3) MedicarePlus eligible individual.--
``(A) In general.--In this title, subject to
subparagraph (B), the term `MedicarePlus eligible
individual' means an individual who is entitled to
benefits under part A and enrolled under part B.
``(B) Special rule for end-stage renal disease.--
Such term shall not include an individual medically
determined to have end-stage renal disease, except that
an individual who develops end-stage renal disease
while enrolled in a MedicarePlus plan may continue to
be enrolled in that plan.
``(b) Special Rules.--
``(1) Residence requirement.--
``(A) In general.--Except as the Secretary may
otherwise provide, an individual is eligible to elect a
MedicarePlus plan offered by a MedicarePlus
organization only if the organization serves the
geographic area in which the individual resides.
``(B) Continuation of enrollment permitted.--
Pursuant to rules specified by the Secretary, the
Secretary shall provide that an individual may continue
enrollment in a plan, notwithstanding that the
individual no longer resides in the service area of the
plan, so long as the plan provides benefits for
enrollees located in the area in which the individual
resides.
``(2) Special rule for certain individuals covered under
fehbp or eligible for veterans or military health benefits,
veterans .--
``(A) FEHBP.--An individual who is enrolled in a
health benefit plan under chapter 89 of title 5, United
States Code, is not eligible to enroll in an MSA plan
until such time as the Director of the Office of
Management and Budget certifies to the Secretary that
the Office of Personnel Management has adopted policies
which will ensure that the enrollment of such
individuals in such plans will not result in increased
expenditures for the Federal Government for health
benefit plans under such chapter.
``(B) VA and dod.--The Secretary may apply rules
similar to the rules described in subparagraph (A) in
the case of individuals who are eligible for health
care benefits under chapter 55 of title 10, United
States Code, or under chapter 17 of title 38 of such
Code.
``(3) Limitation on eligibility of qualified medicare
beneficiaries and other medicaid beneficiaries to enroll in an
MSA plan.--An individual who is a qualified medicare
beneficiary (as defined in section 1905(p)(1)), a qualified
disabled and working individual (described in section 1905(s)),
an individual described in section 1902(a)(10)(E)(iii), or
otherwise entitled to medicare cost-sharing under a State plan
under title XIX is not eligible to enroll in an MSA plan.
``(4) Coverage under msa plans on a demonstration basis.--
``(A) In general.--An individual is not eligible to
enroll in an MSA plan under this part--
``(i) on or after January 1, 2003, unless
the enrollment is the continuation of such an
enrollment in effect as of such date; or
``(ii) as of any date if the number of such
individuals so enrolled as of such date has
reached 500,000.
Under rules established by the Secretary, an individual
is not eligible to enroll (or continue enrollment) in
an MSA plan for a year unless the individual provides
assurances satisfactory to the Secretary that the
individual will reside in the United States for at
least 183 days during the year.
``(B) Evaluation.--The Secretary shall regularly
evaluate the impact of permitting enrollment in MSA
plans under this part on selection (including adverse
selection), use of preventive care, access to care, and
the financial status of the Trust Funds under this
title.
``(C) Reports.--The Secretary shall submit to
Congress periodic reports on the numbers of individuals
enrolled in such plans and on the evaluation being
conducted under subparagraph (B). The Secretary shall
submit such a report, by not later than March 1, 2002,
on whether the time limitation under subparagraph
(A)(i) should be extended or removed and whether to
change the numerical limitation under subparagraph
(A)(ii).
``(c) Process for Exercising Choice.--
``(1) In general.--The Secretary shall establish a process
through which elections described in subsection (a) are made
and changed, including the form and manner in which such
elections are made and changed. Such elections shall be made or
changed only during coverage election periods specified under
subsection (e) and shall become effective as provided in
subsection (f).
``(2) Coordination through medicareplus organizations.--
``(A) Enrollment.--Such process shall permit an
individual who wishes to elect a MedicarePlus plan
offered by a MedicarePlus organization to make such
election through the filing of an appropriate election
form with the organization.
``(B) Disenrollment.--Such process shall permit an
individual, who has elected a MedicarePlus plan offered
by a MedicarePlus organization and who wishes to
terminate such election, to terminate such election
through the filing of an appropriate election form with
the organization.
``(3) Default.--
``(A) Initial election.--
``(i) In general.--Subject to clause (ii),
an individual who fails to make an election
during an initial election period under
subsection (e)(1) is deemed to have chosen the
medicare fee-for-service program option.
``(ii) Seamless continuation of coverage.--
The Secretary may establish procedures under
which an individual who is enrolled in a health
plan (other than MedicarePlus plan) offered by
a MedicarePlus organization at the time of the
initial election period and who fails to elect
to receive coverage other than through the
organization is deemed to have elected the
MedicarePlus plan offered by the organization
(or, if the organization offers more than one
such plan, such plan or plans as the Secretary
identifies under such procedures).
``(B) Continuing periods.--An individual who has
made (or is deemed to have made) an election under this
section is considered to have continued to make such
election until such time as--
``(i) the individual changes the election
under this section, or
``(ii) a MedicarePlus plan is discontinued,
if the individual had elected such plan at the
time of the discontinuation.
``(d) Providing Information To Promote Informed Choice.--
``(1) In general.--The Secretary shall provide for
activities under this subsection to broadly disseminate
information to medicare beneficiaries (and prospective medicare
beneficiaries) on the coverage options provided under this
section in order to promote an active, informed selection among
such options.
``(2) Provision of notice.--
``(A) Open season notification.--At least 30 days
before the beginning of each annual, coordinated
election period (as defined in subsection (e)(3)(B)),
the Secretary shall mail to each MedicarePlus eligible
individual residing in an area the following:
``(i) General information.--The general
information described in paragraph (3).
``(ii) List of plans and comparison of plan
options.--A list identifying the MedicarePlus
plans that are (or will be) available to
residents of the area and information described
in paragraph (4) concerning such plans. Such
information shall be presented in a comparative
form.
``(iii) MedicarePlus monthly capitation
rate.--The amount of the monthly MedicarePlus
capitation rate for the area.
``(iv) Additional information.--Any other
information that the Secretary determines will
assist the individual in making the election
under this section.
The mailing of such information shall be coordinated
with the mailing of any annual notice under section
1804.
``(B) Notification to newly medicareplus eligible
individuals.--To the extent practicable, the Secretary
shall, not later than 2 months before the beginning of
the initial MedicarePlus enrollment period for an
individual described in subsection (e)(1), mail to the
individual the information described in subparagraph
(A).
``(C) Form.--The information disseminated under
this paragraph shall be written and formatted using
language that is easily understandable by medicare
beneficiaries.
``(D) Periodic updating.--The information described
in subparagraph (A) shall be updated on at least an
annual basis to reflect changes in the availability of
MedicarePlus plans and the benefits and monthly
premiums (and net monthly premiums) for such plans.
``(3) General information.--General information under this
paragraph, with respect to coverage under this part during a
year, shall include the following:
``(A) Benefits under fee-for-service program
option.--A general description of the benefits covered
(and not covered) under the medicare fee-for-service
program under parts A and B, including--
``(i) covered items and services,
``(ii) beneficiary cost sharing, such as
deductibles, coinsurance, and copayment
amounts, and
``(iii) any beneficiary liability for
balance billing.
``(B) Part b premium.--The part B premium rates
that will be charged for part B coverage.
``(C) Election procedures.--Information and
instructions on how to exercise election options under
this section.
``(D) Rights.--The general description of
procedural rights (including grievance and appeals
procedures) of beneficiaries under the medicare fee-
for-service program and the MedicarePlus program and
right to be protected against discrimination based on
health status-related factors under section 1852(b).
``(E) Information on medigap and medicare select.--
A general description of the benefits, enrollment
rights, and other requirements applicable to medicare
supplemental policies under section 1882 and provisions
relating to medicare select policies described in
section 1882(t).
``(F) Potential for contract termination.--The fact
that a MedicarePlus organization may terminate or
refuse to renew its contract under this part and the
effect the termination or nonrenewal of its contract
may have on individuals enrolled with the MedicarePlus
plan under this part.
``(4) Information comparing plan options.--Information
under this paragraph, with respect to a MedicarePlus plan for a
year, shall include the following:
``(A) Benefits.--The benefits covered (and not
covered) under the plan, including--
``(i) covered items and services beyond
those provided under the medicare fee-for-
service program,
``(ii) any beneficiary cost sharing,
``(iii) any maximum limitations on out-of-
pocket expenses, and
``(iv) in the case of an MSA plan,
differences in cost sharing and balance billing
under such a plan compared to under other
MedicarePlus plans.
``(B) Premiums.--The monthly premium (and net
monthly premium), if any, for the plan.
``(C) Service area.--The service area of the plan.
``(D) Quality and performance.--To the extent
available, plan quality and performance indicators for
the benefits under the plan (and how they compare to
such indicators under the medicare fee-for-service
program under parts A and B in the area involved),
including--
``(i) disenrollment rates for medicare
enrollees electing to receive benefits through
the plan for the previous 2 years (excluding
disenrollment due to death or moving outside
the plan's service area),
``(ii) information on medicare enrollee
satisfaction,
``(iii) information on health outcomes, and
``(iv) the recent record regarding
compliance of the plan with requirements of
this part (as determined by the Secretary).
``(E) Supplemental benefits options.--Whether the
organization offering the plan offers optional
supplemental benefits and the terms and conditions
(including premiums) for such coverage.
``(5) Maintaining a toll-free number and internet site.--
The Secretary shall maintain a toll-free number for inquiries
regarding MedicarePlus options and the operation of this part
in all areas in which MedicarePlus plans are offered and an
Internet site through which individuals may electronically
obtain information on such options and MedicarePlus plans.
``(6) Use of nonfederal entities.--The Secretary may enter
into contracts with non-Federal entities to carry out
activities under this subsection.
``(7) Provision of information.--A MedicarePlus
organization shall provide the Secretary with such information
on the organization and each MedicarePlus plan it offers as may
be required for the preparation of the information referred to
in paragraph (2)(A).
``(e) Coverage Election Periods.--
``(1) Initial choice upon eligibility to make election if
medicareplus plans available to individual.--If, at the time an
individual first becomes entitled to benefits under part A and
enrolled under part B, there is one or more MedicarePlus plans
offered in the area in which the individual resides, the
individual shall make the election under this section during a
period (of a duration and beginning at a time specified by the
Secretary) at such time. Such period shall be specified in a
manner so that, in the case of an individual who elects a
MedicarePlus plan during the period, coverage under the plan
becomes effective as of the first date on which the individual
may receive such coverage.
``(2) Open enrollment and disenrollment opportunities.--
Subject to paragraph (5)--
``(A) Continuous open enrollment and disenrollment
through 2000.--At any time during 1998, 1999, and 2000,
a MedicarePlus eligible individual may change the
election under subsection (a)(1).
``(B) Continuous open enrollment and disenrollment
for first 6 months during 2001.--
``(i) In general.--Subject to clause (ii),
at any time during the first 6 months of 2001,
or, if the individual first becomes a
MedicarePlus eligible individual during 2001,
during the first 6 months during 2001 in which
the individual is a MedicarePlus eligible
individual, a MedicarePlus eligible individual
may change the election under subsection
(a)(1).
``(ii) Limitation of one change per year.--
An individual may exercise the right under
clause (i) only once during 2001. The
limitation under this clause shall not apply to
changes in elections effected during an annual,
coordinated election period under paragraph (3)
or during a special enrollment period under
paragraph (4).
``(C) Continuous open enrollment and disenrollment
for first 3 months in subsequent years.--
``(i) In general.--Subject to clause (ii),
at any time during the first 3 months of a year
after 2001, or, if the individual first becomes
a MedicarePlus eligible individual during a
year after 2001, during the first 3 months of
such year in which the individual is a
MedicarePlus eligible individual, a
MedicarePlus eligible individual may change the
election under subsection (a)(1).
``(ii) Limitation of one change per year.--
An individual may exercise the right under
clause (i) only once a year. The limitation
under this clause shall not apply to changes in
elections effected during an annual,
coordinated election period under paragraph (3)
or during a special enrollment period under
paragraph (4).
``(3) Annual, coordinated election period.--
``(A) In general.--Subject to paragraph (5), each
individual who is eligible to make an election under
this section may change such election during an annual,
coordinated election period.
``(B) Annual, coordinated election period.--For
purposes of this section, the term `annual, coordinated
election period' means, with respect to a calendar year
(beginning with 2001), the month of October before such
year.
``(C) MedicarePlus health fairs.--In the month of
October of each year (beginning with 1998), the
Secretary shall provide for a nationally coordinated
educational and publicity campaign to inform
MedicarePlus eligible individuals about MedicarePlus
plans and the election process provided under this
section.
``(4) Special election periods.--Effective as of January 1,
2001, an individual may discontinue an election of a
MedicarePlus plan offered by a MedicarePlus organization other
than during an annual, coordinated election period and make a
new election under this section if--
``(A) the organization's or plan's certification
under this part has been terminated or the organization
has terminated or otherwise discontinued providing the
plan;
``(B) the individual is no longer eligible to elect
the plan because of a change in the individual's place
of residence or other change in circumstances
(specified by the Secretary, but not including
termination of the individual's enrollment on the basis
described in clause (i) or (ii) of subsection
(g)(3)(B));
``(C) the individual demonstrates (in accordance
with guidelines established by the Secretary) that--
``(i) the organization offering the plan
substantially violated a material provision of
the organization's contract under this part in
relation to the individual (including the
failure to provide an enrollee on a timely
basis medically necessary care for which
benefits are available under the plan or the
failure to provide such covered care in
accordance with applicable quality standards);
or
``(ii) the organization (or an agent or
other entity acting on the organization's
behalf) materially misrepresented the plan's
provisions in marketing the plan to the
individual; or
``(D) the individual meets such other exceptional
conditions as the Secretary may provide.
``(5) Special rules for msa plans.--Notwithstanding the
preceding provisions of this subsection, an individual--
``(A) may elect an MSA plan only during--
``(i) an initial open enrollment period
described in paragraph (1),
``(ii) an annual, coordinated election
period described in paragraph (3)(B), or
``(iii) the months of October 1998 and
October 1999; and
``(B) may not discontinue an election of an MSA
plan except during the periods described in clause (ii)
or (iii) of subparagraph (A) and under paragraph (4).
``(f) Effectiveness of Elections and Changes of Elections.--
``(1) During initial coverage election period.--An election
of coverage made during the initial coverage election period
under subsection (e)(1) shall take effect upon the date the
individual becomes entitled to benefits under part A and
enrolled under part B, except as the Secretary may provide
(consistent with section 1838) in order to prevent retroactive
coverage.
``(2) During continuous open enrollment periods.--An
election or change of coverage made under subsection (e)(2)
shall take effect with the first day of the first calendar
month following the date on which the election is made.
``(3) Annual, coordinated election period.--An election or
change of coverage made during an annual, coordinated election
period (as defined in subsection (e)(3)(B)) in a year shall
take effect as of the first day of the following year.
``(4) Other periods.--An election or change of coverage
made during any other period under subsection (e)(4) shall take
effect in such manner as the Secretary provides in a manner
consistent (to the extent practicable) with protecting
continuity of health benefit coverage.
``(g) Guaranteed Issue and Renewal.--
``(1) In general.--Except as provided in this subsection, a
MedicarePlus organization shall provide that at any time during
which elections are accepted under this section with respect to
a MedicarePlus plan offered by the organization, the
organization will accept without restrictions individuals who
are eligible to make such election.
``(2) Priority.--If the Secretary determines that a
MedicarePlus organization, in relation to a MedicarePlus plan
it offers, has a capacity limit and the number of MedicarePlus
eligible individuals who elect the plan under this section
exceeds the capacity limit, the organization may limit the
election of individuals of the plan under this section but only
if priority in election is provided--
``(A) first to such individuals as have elected the
plan at the time of the determination, and
``(B) then to other such individuals in such a
manner that does not discriminate, on a basis described
in section 1852(b), among the individuals (who seek to
elect the plan).
The preceding sentence shall not apply if it would result in
the enrollment of enrollees substantially nonrepresentative, as
determined in accordance with regulations of the Secretary, of
the medicare population in the service area of the plan.
``(3) Limitation on termination of election.--
``(A) In general.--Subject to subparagraph (B), a
MedicarePlus organization may not for any reason
terminate the election of any individual under this
section for a MedicarePlus plan it offers.
``(B) Basis for termination of election.--A
MedicarePlus organization may terminate an individual's
election under this section with respect to a
MedicarePlus plan it offers if--
``(i) any net monthly premiums required
with respect to such plan are not paid on a
timely basis (consistent with standards under
section 1856 that provide for a grace period
for late payment of net monthly premiums),
``(ii) the individual has engaged in
disruptive behavior (as specified in such
standards), or
``(iii) the plan is terminated with respect
to all individuals under this part in the area
in which the individual resides.
``(C) Consequence of termination.--
``(i) Terminations for cause.--Any
individual whose election is terminated under
clause (i) or (ii) of subparagraph (B) is
deemed to have elected the medicare fee-for-
service program option described in subsection
(a)(1)(A).
``(ii) Termination based on plan
termination or service area reduction.--Any
individual whose election is terminated under
subparagraph (B)(iii) shall have a special
election period under subsection (e)(4)(A) in
which to change coverage to coverage under
another MedicarePlus plan. Such an individual
who fails to make an election during such
period is deemed to have chosen to change
coverage to the medicare fee-for-service
program option described in subsection
(a)(1)(A).
``(D) Organization obligation with respect to
election forms.--Pursuant to a contract under section
1857, each MedicarePlus organization receiving an
election form under subsection (c)(2) shall transmit to
the Secretary (at such time and in such manner as the
Secretary may specify) a copy of such form or such
other information respecting the election as the
Secretary may specify.
``(h) Approval of Marketing Material and Application Forms.--
``(1) Submission.--No marketing material or application
form may be distributed by a MedicarePlus organization to (or
for the use of) MedicarePlus eligible individuals unless--
``(A) at least 45 days before the date of
distribution the organization has submitted the
material or form to the Secretary for review, and
``(B) the Secretary has not disapproved the
distribution of such material or form.
``(2) Review.--The standards established under section 1856
shall include guidelines for the review of all such material or
form submitted and under such guidelines the Secretary shall
disapprove (or later require the correction of) such material
or form if the material or form is materially inaccurate or
misleading or otherwise makes a material misrepresentation.
``(3) Deemed approval (1-stop shopping).--In the case of
material or form that is submitted under paragraph (1)(A) to
the Secretary or a regional office of the Department of Health
and Human Services and the Secretary or the office has not
disapproved the distribution of marketing material or form
under paragraph (1)(B) with respect to a MedicarePlus plan in
an area, the Secretary is deemed not to have disapproved such
distribution in all other areas covered by the plan and
organization except to the extent that such material or form is
specific only to an area involved.
``(4) Prohibition of certain marketing practices.--Each
MedicarePlus organization shall conform to fair marketing
standards, in relation to MedicarePlus plans offered under this
part, included in the standards established under section 1856.
Such standards shall include a prohibition against a
MedicarePlus organization (or agent of such an organization)
completing any portion of any election form used to carry out
elections under this section on behalf of any individual.
``(i) Effect of Election of MedicarePlus Plan Option.--Subject to
sections 1852(a)(5), 1857(f)(2), and 1857(g)--
``(1) payments under a contract with a MedicarePlus
organization under section 1853(a) with respect to an
individual electing a MedicarePlus plan offered by the
organization shall be instead of the amounts which (in the
absence of the contract) would otherwise be payable under parts
A and B for items and services furnished to the individual, and
``(2) subject to subsections (e) and (f) of section 1853,
only the MedicarePlus organization shall be entitled to receive
payments from the Secretary under this title for services
furnished to the individual.
``benefits and beneficiary protections
``Sec. 1852. (a) Basic Benefits.--
``(1) In general.--Except as provided in section 1859(b)(2)
for MSA plans, each MedicarePlus plan shall provide to members
enrolled under this part, through providers and other persons
that meet the applicable requirements of this title and part A
of title XI--
``(A) those items and services for which benefits
are available under parts A and B to individuals
residing in the area served by the plan, and
``(B) additional benefits required under section
1854(f)(1)(A).
``(2) Satisfaction of requirement.--A MedicarePlus plan
(other than an MSA plan) offered by a MedicarePlus organization
satisfies paragraph (1)(A), with respect to benefits for items
and services furnished other than through a provider that has a
contract with the organization offering the plan, if the plan
provides (in addition to any cost sharing provided for under
the plan) for at least the total dollar amount of payment for
such items and services as would otherwise be authorized under
parts A and B (including any balance billing permitted under
such parts).
``(3) Supplemental benefits.--
``(A) Benefits included subject to secretary's
approval.--Each MedicarePlus organization may provide
to individuals enrolled under this part, other than
under an MSA plan, (without affording those individuals
an option to decline the coverage) supplemental health
care benefits that the Secretary may approve. The
Secretary shall approve any such supplemental benefits
unless the Secretary determines that including such
supplemental benefits would substantially discourage
enrollment by MedicarePlus eligible individuals with
the organization.
``(B) At enrollees' option.--A MedicarePlus
organization may provide to individuals enrolled under
this part, other than under an MSA plan, supplemental
health care benefits that the individuals may elect, at
their option, to have covered.
``(4) Organization as secondary payer.--Notwithstanding any
other provision of law, a MedicarePlus organization may (in the
case of the provision of items and services to an individual
under a MedicarePlus plan under circumstances in which payment
under this title is made secondary pursuant to section
1862(b)(2)) charge or authorize the provider of such services
to charge, in accordance with the charges allowed under such a
law, plan, or policy--
``(A) the insurance carrier, employer, or other
entity which under such law, plan, or policy is to pay
for the provision of such services, or
``(B) such individual to the extent that the
individual has been paid under such law, plan, or
policy for such services.
``(5) National coverage determinations.--If there is a
national coverage determination made in the period beginning on
the date of an announcement under section 1853(b) and ending on
the date of the next announcement under such section and the
Secretary projects that the determination will result in a
significant change in the costs to a MedicarePlus organization
of providing the benefits that are the subject of such national
coverage determination and that such change in costs was not
incorporated in the determination of the annual MedicarePlus
capitation rate under section 1853 included in the announcement
made at the beginning of such period--
``(A) such determination shall not apply to
contracts under this part until the first contract year
that begins after the end of such period, and
``(B) if such coverage determination provides for
coverage of additional benefits or coverage under
additional circumstances, section 1851(i) shall not
apply to payment for such additional benefits or
benefits provided under such additional circumstances
until the first contract year that begins after the end
of such period,
unless otherwise required by law.
``(b) Antidiscrimination.--
``(1) In general.--A MedicarePlus organization may not
deny, limit, or condition the coverage or provision of benefits
under this part, for individuals permitted to be enrolled with
the organization under this part, based on any health status-
related factor described in section 2702(a)(1) of the Public
Health Service Act.
``(2) Construction.--Paragraph (1) shall not be construed
as requiring a MedicarePlus organization to enroll individuals
who are determined to have end-stage renal disease, except as
provided under section 1851(a)(3)(B).
``(c) Detailed Description of Plan Provisions.--A MedicarePlus
organization shall disclose, in clear, accurate, and standardized form
to each enrollee with a MedicarePlus plan offered by the organization
under this part at the time of enrollment and at least annually
thereafter, the following information regarding such plan:
``(1) Service area.--The plan's service area.
``(2) Benefits.--Benefits offered (and not offered) under
the plan offered, including information described in section
1851(d)(3)(A) and exclusions from coverage and, if it is an MSA
plan, a comparison of benefits under such a plan with benefits
under other MedicarePlus plans.
``(3) Access.--The number, mix, and distribution of plan
providers.
``(4) Out-of-area coverage.--Out-of-area coverage provided
by the plan.
``(5) Emergency coverage.--Coverage of emergency services
and urgently needed care, including--
``(A) the appropriate use of emergency services,
including use of the 911 telephone system or its local
equivalent in emergency situations and an explanation
of what constitutes an emergency situation;
``(B) the process and procedures of the plan for
obtaining emergency services; and
``(C) the locations of (i) emergency departments,
and (ii) other settings, in which plan physicians and
hospitals provide emergency services and post-
stabilization care.
``(6) Supplemental benefits.--Supplemental benefits
available from the organization offering the plan, including--
``(A) whether the supplemental benefits are
optional,
``(B) the supplemental benefits covered, and
``(C) the premium price for the supplemental
benefits.
``(7) Prior authorization rules.--Rules regarding prior
authorization or other review requirements that could result in
nonpayment.
``(8) Plan grievance and appeals procedures.--Any appeal or
grievance rights and procedures.
``(9) Quality assurance program.--A description of the
organization's quality assurance program under subsection (e).
``(d) Access to Services.--
``(1) In general.--A MedicarePlus organization offering a
MedicarePlus plan may select the providers from whom the
benefits under the plan are provided so long as--
``(A) the organization makes such benefits
available and accessible to each individual electing
the plan within the plan service area with reasonable
promptness and in a manner which assures continuity in
the provision of benefits;
``(B) when medically necessary the organization
makes such benefits available and accessible 24 hours a
day and 7 days a week;
``(C) the plan provides for reimbursement with
respect to services which are covered under
subparagraphs (A) and (B) and which are provided to
such an individual other than through the organization,
if--
``(i) the services were medically necessary
and immediately required because of an
unforeseen illness, injury, or condition, and
it was not reasonable given the circumstances
to obtain the services through the
organization,
``(ii) the services were renal dialysis
services and were provided other than through
the organization because the individual was
temporarily out of the plan's service area, or
``(iii) the services are maintenance care
or post-stabilization care covered under the
guidelines established under paragraph (2);
``(D) the organization provides access to
appropriate providers, including credentialed
specialists, for medically necessary treatment and
services; and
``(E) coverage is provided for emergency services
(as defined in paragraph (3)) without regard to prior
authorization or the emergency care provider's
contractual relationship with the organization.
``(2) Guidelines respecting coordination of post-
stabilization care.--A MedicarePlus plan shall comply with such
guidelines as the Secretary may prescribe relating to promoting
efficient and timely coordination of appropriate maintenance
and post-stabilization care of an enrollee after the enrollee
has been determined to be stable under section 1867.
``(3) Definition of emergency services.--In this
subsection--
``(A) In general.--The term `emergency services'
means, with respect to an individual enrolled with an
organization, covered inpatient and outpatient services
that--
``(i) are furnished by a provider that is
qualified to furnish such services under this
title, and
``(ii) are needed to evaluate or stabilize
an emergency medical condition (as defined in
subparagraph (B)).
``(B) Emergency medical condition based on prudent
layperson.--The term `emergency medical condition'
means a medical condition manifesting itself by acute
symptoms of sufficient severity such that a prudent
layperson, who possesses an average knowledge of health
and medicine, could reasonably expect the absence of
immediate medical attention to result in--
``(i) placing the health of the individual
(or, with respect to a pregnant woman, the
health of the woman or her unborn child) in
serious jeopardy,
``(ii) serious impairment to bodily
functions, or
``(iii) serious dysfunction of any bodily
organ or part.
``(e) Quality Assurance Program.--
``(1) In general.--Each MedicarePlus organization must have
arrangements, consistent with any regulation, for an ongoing
quality assurance program for health care services it provides
to individuals enrolled with MedicarePlus plans of the
organization.
``(2) Elements of program.--The quality assurance program
shall--
``(A) stress health outcomes and provide for the
collection, analysis, and reporting of data (in
accordance with a quality measurement system that the
Secretary recognizes) that will permit measurement of
outcomes and other indices of the quality of
MedicarePlus plans and organizations;
``(B) provide for the establishment of written
protocols for utilization review, based on current
standards of medical practice;
``(C) provide review by physicians and other health
care professionals of the process followed in the
provision of such health care services;
``(D) monitor and evaluate high volume and high
risk services and the care of acute and chronic
conditions;
``(E) evaluate the continuity and coordination of
care that enrollees receive;
``(F) have mechanisms to detect both
underutilization and overutilization of services;
``(G) after identifying areas for improvement,
establish or alter practice parameters;
``(H) take action to improve quality and assesses
the effectiveness of such action through systematic
followup;
``(I) make available information on quality and
outcomes measures to facilitate beneficiary comparison
and choice of health coverage options (in such form and
on such quality and outcomes measures as the Secretary
determines to be appropriate);
``(J) be evaluated on an ongoing basis as to its
effectiveness;
``(K) include measures of consumer satisfaction;
and
``(L) provide the Secretary with such access to
information collected as may be appropriate to monitor
and ensure the quality of care provided under this
part.
``(3) External review.--Each MedicarePlus organization
shall, for each MedicarePlus plan it operates, have an
agreement with an independent quality review and improvement
organization approved by the Secretary to perform functions of
the type described in sections 1154(a)(4)(B) and 1154(a)(14)
with respect to services furnished by MedicarePlus plans for
which payment is made under this title.
``(4) Treatment of accreditation.--The Secretary shall
provide that a MedicarePlus organization is deemed to meet
requirements of paragraphs (1) through (3) of this subsection
and subsection (h) (relating to confidentiality and accuracy of
enrollee records) if the organization is accredited (and
periodically reaccredited) by a private organization under a
process that the Secretary has determined assures that the
organization, as a condition of accreditation, applies and
enforces standards with respect to the requirements involved
that are no less stringent than the standards established under
section 1856 to carry out the respective requirements.
``(f) Coverage Determinations.--
``(1) Decisions on nonemergency care.--A MedicarePlus
organization shall make determinations regarding authorization
requests for nonemergency care on a timely basis, depending on
the urgency of the situation.
``(2) Reconsiderations.--
``(A) In general.--Subject to subsection (g)(4), a
reconsideration of a determination of an organization
denying coverage shall be made within 30 days of the
date of receipt of medical information, but not later
than 60 days after the date of the determination.
``(B) Physician decision on certain
reconsiderations.--A reconsideration relating to a
determination to deny coverage based on a lack of
medical necessity shall be made only by a physician
other than a physician involved in the initial
determination.
``(g) Grievances and Appeals.--
``(1) Grievance mechanism.--Each MedicarePlus organization
must provide meaningful procedures for hearing and resolving
grievances between the organization (including any entity or
individual through which the organization provides health care
services) and enrollees with MedicarePlus plans of the
organization under this part.
``(2) Appeals.--An enrollee with a MedicarePlus plan of a
MedicarePlus organization under this part who is dissatisfied
by reason of the enrollee's failure to receive any health
service to which the enrollee believes the enrollee is entitled
and at no greater charge than the enrollee believes the
enrollee is required to pay is entitled, if the amount in
controversy is $100 or more, to a hearing before the Secretary
to the same extent as is provided in section 205(b), and in any
such hearing the Secretary shall make the organization a party.
If the amount in controversy is $1,000 or more, the individual
or organization shall, upon notifying the other party, be
entitled to judicial review of the Secretary's final decision
as provided in section 205(g), and both the individual and the
organization shall be entitled to be parties to that judicial
review. In applying sections 205(b) and 205(g) as provided in
this paragraph, and in applying section 205(l) thereto, any
reference therein to the Commissioner of Social Security or the
Social Security Administration shall be considered a reference
to the Secretary or the Department of Health and Human
Services, respectively.
``(3) Independent review of certain coverage denials.--The
Secretary shall contract with an independent, outside entity to
review and resolve reconsiderations that affirm denial of
coverage.
``(4) Expedited determinations and reconsiderations.--
``(A) Receipt of requests.--An enrollee in a
MedicarePlus plan may request, either in writing or
orally, an expedited determination or reconsideration
by the MedicarePlus organization regarding a matter
described in paragraph (2). The organization shall also
permit the acceptance of such requests by physicians.
``(B) Organization procedures.--
``(i) In general.--The MedicarePlus
organization shall maintain procedures for
expediting organization determinations and
reconsiderations when, upon request of an
enrollee, the organization determines that the
application of normal time frames for making a
determination (or a reconsideration involving a
determination) could seriously jeopardize the
life or health of the enrollee or the
enrollee's ability to regain maximum function.
``(ii) Timely response.--In an urgent case
described in clause (i), the organization shall
notify the enrollee (and the physician
involved, as appropriate) of the determination
(or determination on the reconsideration) as
expeditiously as the enrollee's health
condition requires, but not later than 72 hours
(or 24 hours in the case of a reconsideration)
of the time of receipt of the request for the
determination or reconsideration (or receipt of
the information necessary to make the
determination or reconsideration), or such
longer period as the Secretary may permit in
specified cases.
``(h) Confidentiality and Accuracy of Enrollee Records.--Each
MedicarePlus organization shall establish procedures--
``(1) to safeguard the privacy of individually identifiable
enrollee information,
``(2) to maintain accurate and timely medical records and
other health information for enrollees, and
``(3) to assure timely access of enrollees to their medical
information.
``(i) Information on Advance Directives.--Each MedicarePlus
organization shall meet the requirement of section 1866(f) (relating to
maintaining written policies and procedures respecting advance
directives).
``(j) Rules Regarding Physician Participation.--
``(1) Procedures.--Each MedicarePlus organization shall
establish reasonable procedures relating to the participation
(under an agreement between a physician and the organization)
of physicians under MedicarePlus plans offered by the
organization under this part. Such procedures shall include--
``(A) providing notice of the rules regarding
participation,
``(B) providing written notice of participation
decisions that are adverse to physicians, and
``(C) providing a process within the organization
for appealing such adverse decisions, including the
presentation of information and views of the physician
regarding such decision.
``(2) Consultation in medical policies.--A MedicarePlus
organization shall consult with physicians who have entered
into participation agreements with the organization regarding
the organization's medical policy, quality, and medical
management procedures.
``(3) Prohibiting interference with provider advice to
enrollees.--
``(A) In general.--Subject to subparagraphs (B) and
(C), a MedicarePlus organization (in relation to an
individual enrolled under a MedicarePlus plan offered
by the organization under this part) shall not prohibit
or otherwise restrict a covered health care
professional (as defined in subparagraph (D)) from
advising such an individual who is a patient of the
professional about the health status of the individual
or medical care or treatment for the individual's
condition or disease, regardless of whether benefits
for such care or treatment are provided under the plan,
if the professional is acting within the lawful scope
of practice.
``(B) Conscience protection.--Subparagraph (A)
shall not be construed as requiring a MedicarePlus plan
to provide, reimburse for, or provide coverage of a
counseling or referral service if the MedicarePlus
organization offering the plan--
``(i) objects to the provision of such
service on moral or religious grounds; and
``(ii) in the manner and through the
written instrumentalities such MedicarePlus
organization deems appropriate, makes available
information on its policies regarding such
service to prospective enrollees before or
during enrollment and to enrollees within 90
days after the date that the organization or
plan adopts a change in policy regarding such a
counseling or referral service.
``(C) Construction.--Nothing in subparagraph (B)
shall be construed to affect disclosure requirements
under State law or under the Employee Retirement Income
Security Act of 1974.
``(D) Health care professional defined.--For
purposes of this paragraph, the term `health care
professional' means a physician (as defined in section
1861(r)) or other health care professional if coverage
for the professional's services is provided under the
MedicarePlus plan for the services of the professional.
Such term includes a podiatrist, optometrist,
chiropractor, psychologist, dentist, physician
assistant, physical or occupational therapist and
therapy assistant, speech-language pathologist,
audiologist, registered or licensed practical nurse
(including nurse practitioner, clinical nurse
specialist, certified registered nurse anesthetist, and
certified nurse-midwife), licensed certified social
worker, registered respiratory therapist, and certified
respiratory therapy technician.
``(4) Limitations on physician incentive plans.--
``(A) In general.--No MedicarePlus organization may
operate any physician incentive plan (as defined in
subparagraph (B)) unless the following requirements are
met:
``(i) No specific payment is made directly
or indirectly under the plan to a physician or
physician group as an inducement to reduce or
limit medically necessary services provided
with respect to a specific individual enrolled
with the organization.
``(ii) If the plan places a physician or
physician group at substantial financial risk
(as determined by the Secretary) for services
not provided by the physician or physician
group, the organization--
``(I) provides stop-loss protection
for the physician or group that is
adequate and appropriate, based on
standards developed by the Secretary
that take into account the number of
physicians placed at such substantial
financial risk in the group or under
the plan and the number of individuals
enrolled with the organization who
receive services from the physician or
group, and
``(II) conducts periodic surveys of
both individuals enrolled and
individuals previously enrolled with
the organization to determine the
degree of access of such individuals to
services provided by the organization
and satisfaction with the quality of
such services.
``(iii) The organization provides the
Secretary with descriptive information
regarding the plan, sufficient to permit the
Secretary to determine whether the plan is in
compliance with the requirements of this
subparagraph.
``(B) Physician incentive plan defined.--In this
paragraph, the term `physician incentive plan' means
any compensation arrangement between a MedicarePlus
organization and a physician or physician group that
may directly or indirectly have the effect of reducing
or limiting services provided with respect to
individuals enrolled with the organization under this
part.
``(5) Limitation on provider indemnification.--A
MedicarePlus organization may not provide (directly or
indirectly) for a provider (or group of providers) to indemnify
the organization against any liability resulting from a civil
action brought for any damage caused to an enrollee with a
MedicarePlus plan of the organization under this part by the
organization's denial of medically necessary care.
``(k) Treatment of Services Furnished by Certain Providers.--A
physician or other entity (other than a provider of services) that does
not have a contract establishing payment amounts for services furnished
to an individual enrolled under this part with a MedicarePlus
organization (other than under an MSA plan) shall accept as payment in
full for covered services under this title that are furnished to such
an individual the amounts that the physician or other entity could
collect if the individual were not so enrolled. Any penalty or other
provision of law that applies to such a payment with respect to an
individual entitled to benefits under this title (but not enrolled with
a MedicarePlus organization under this part) also applies with respect
to an individual so enrolled.
``(l) Disclosure of Use of DSH and Teaching Hospitals.--Each
MedicarePlus organization shall provide the Secretary with information
on--
``(1) the extent to which the organization provides
inpatient and outpatient hospital benefits under this part--
``(A) through the use of hospitals that are
eligible for additional payments under section
1886(d)(5)(F)(i) (relating to so-called DSH hospitals),
or
``(B) through the use of teaching hospitals that
receive payments under section 1886(h); and
``(2) the extent to which differences between payment rates
to different hospitals reflect the disproportionate share
percentage of low-income patients and the presence of medical
residency training programs in those hospitals.
``payments to medicareplus organizations
``Sec. 1853. (a) Payments to Organizations.--
``(1) Monthly payments.--
``(A) In general.--Under a contract under section
1857 and subject to subsections (e) and (f), the
Secretary shall make monthly payments under this
section in advance to each MedicarePlus organization,
with respect to coverage of an individual under this
part in a MedicarePlus payment area for a month, in an
amount equal to \1/12\ of the annual MedicarePlus
capitation rate (as calculated under subsection (c))
with respect to that individual for that area, adjusted
for such risk factors as age, disability status,
gender, institutional status, and such other factors as
the Secretary determines to be appropriate, so as to
ensure actuarial equivalence. The Secretary may add to,
modify, or substitute for such factors, if such changes
will improve the determination of actuarial
equivalence.
``(B) Special rule for end-stage renal disease.--
The Secretary shall establish separate rates of payment
to a MedicarePlus organization with respect to classes
of individuals determined to have end-stage renal
disease and enrolled in a MedicarePlus plan of the
organization. Such rates of payment shall be
actuarially equivalent to rates paid to other enrollees
in the MedicarePlus payment area (or such other area as
specified by the Secretary). In accordance with
regulations, the Secretary shall provide for the
application of the seventh sentence of section
1881(b)(7) to payments under this section covering the
provision of renal dialysis treatment in the same
manner as such sentence applies to composite rate
payments described in such sentence.
``(2) Adjustment to reflect number of enrollees.--
``(A) In general.--The amount of payment under this
subsection may be retroactively adjusted to take into
account any difference between the actual number of
individuals enrolled with an organization under this
part and the number of such individuals estimated to be
so enrolled in determining the amount of the advance
payment.
``(B) Special rule for certain enrollees.--
``(i) In general.--Subject to clause (ii),
the Secretary may make retroactive adjustments
under subparagraph (A) to take into account
individuals enrolled during the period
beginning on the date on which the individual
enrolls with a MedicarePlus organization under
a plan operated, sponsored, or contributed to
by the individual's employer or former employer
(or the employer or former employer of the
individual's spouse) and ending on the date on
which the individual is enrolled in the
organization under this part, except that for
purposes of making such retroactive adjustments
under this subparagraph, such period may not
exceed 90 days.
``(ii) Exception.--No adjustment may be
made under clause (i) with respect to any
individual who does not certify that the
organization provided the individual with the
information required to be disclosed under
section 1852(c) at the time the individual
enrolled with the organization.
``(3) Establishment of risk adjustment factors.--
``(A) Report.--The Secretary shall develop, and
submit to Congress by not later than October 1, 1999, a
report on a method of risk adjustment of payment rates
under this section that accounts for variations in per
capita costs based on health status. Such report shall
include an evaluation of such method by an outside,
independent actuary of the actuarial soundness of the
proposal.
``(B) Data collection.--In order to carry out this
paragraph, the Secretary shall require MedicarePlus
organizations (and eligible organizations with risk-
sharing contracts under section 1876) to submit, for
periods beginning on or after January 1, 1998, data
regarding inpatient hospital services and other
services and other information the Secretary deems
necessary.
``(C) Initial implementation.--The Secretary shall
first provide for implementation of a risk adjustment
methodology that accounts for variations in per capita
costs based on health status and other demographic
factors for payments by no later than January 1, 2000.
``(b) Annual Announcement of Payment Rates.--
``(1) Annual announcement.--The Secretary shall annually
determine, and shall announce (in a manner intended to provide
notice to interested parties) not later than August 1 before
the calendar year concerned--
``(A) the annual MedicarePlus capitation rate for
each MedicarePlus payment area for the year, and
``(B) the risk and other factors to be used in
adjusting such rates under subsection (a)(1)(A) for
payments for months in that year.
``(2) Advance notice of methodological changes.--At least
45 days before making the announcement under paragraph (1) for
a year, the Secretary shall provide for notice to MedicarePlus
organizations of proposed changes to be made in the methodology
from the methodology and assumptions used in the previous
announcement and shall provide such organizations an
opportunity to comment on such proposed changes.
``(3) Explanation of assumptions.--In each announcement
made under paragraph (1), the Secretary shall include an
explanation of the assumptions and changes in methodology used
in the announcement in sufficient detail so that MedicarePlus
organizations can compute monthly adjusted MedicarePlus
capitation rates for individuals in each MedicarePlus payment
area which is in whole or in part within the service area of
such an organization.
``(c) Calculation of Annual MedicarePlus Capitation Rates.--
``(1) In General.--For purposes of this part, each annual
MedicarePlus capitation rate, for a MedicarePlus payment area
for a contract year consisting of a calendar year, is equal to
the largest of the amounts specified in the following
subparagraphs (A), (B), or (C):
``(A) Blended capitation rate.--The sum of--
``(i) area-specific percentage for the year
(as specified under paragraph (2) for the year)
of the annual area-specific MedicarePlus
capitation rate for the year for the
MedicarePlus payment area, as determined under
paragraph (3), and
``(ii) national percentage (as specified
under paragraph (2) for the year) of the input-
price-adjusted annual national MedicarePlus
capitation rate for the year, as determined
under paragraph (4),
multiplied by the payment adjustment factors described
in subparagraphs (A) and (B) of paragraph (5).
``(B) Minimum amount.--12 multiplied by the
following amount:
``(i) For 1998, $350 (but not to exceed, in
the case of an area outside the 50 States and
the District of Columbia, 150 percent of the
annual per capita rate of payment for 1997
determined under section 1876(a)(1)(C) for the
area).
``(ii) For a succeeding year, the minimum
amount specified in this clause (or clause (i))
for the preceding year increased by the
national per capita MedicarePlus growth
percentage, specified under paragraph (6) for
that succeeding year.
``(C) Minimum percentage increase.--
``(i) For 1998, 102 percent of the annual
per capita rate of payment for 1997 determined
under section 1876(a)(1)(C) for the
MedicarePlus payment area.
``(ii) For a subsequent year, 102 percent
of the annual MedicarePlus capitation rate
under this paragraph for the area for the
previous year.
``(2) Area-specific and national percentages.--For purposes
of paragraph (1)(A)--
``(A) for 1998, the `area-specific percentage' is
90 percent and the `national percentage' is 10 percent,
``(B) for 1999, the `area-specific percentage' is
80 percent and the `national percentage' is 20 percent,
``(C) for 2000, the `area-specific percentage' is
70 percent and the `national percentage' is 30 percent,
``(D) for 2001, the `area-specific percentage' is
60 percent and the `national percentage' is 40 percent,
and
``(E) for a year after 2001, the `area-specific
percentage' is 50 percent and the `national percentage'
is 50 percent.
``(3) Annual area-specific medicareplus capitation rate.--
For purposes of paragraph (1)(A), the annual area-specific
MedicarePlus capitation rate for a MedicarePlus payment area--
``(A) for 1998 is the annual per capita rate of
payment for 1997 determined under section 1876(a)(1)(C)
for the area, increased by the national per capita
MedicarePlus growth percentage for 1998 (as defined in
paragraph (6)); or
``(B) for a subsequent year is the annual area-
specific MedicarePlus capitation rate for the previous
year determined under this paragraph for the area,
increased by the national per capita MedicarePlus
growth percentage for such subsequent year.
``(4) Input-price-adjusted annual national medicareplus
capitation rate.--
``(A) In general.--For purposes of paragraph
(1)(A), the input-price-adjusted annual national
MedicarePlus capitation rate for a MedicarePlus payment
area for a year is equal to the sum, for all the types
of medicare services (as classified by the Secretary),
of the product (for each such type of service) of--
``(i) the national standardized annual
MedicarePlus capitation rate (determined under
subparagraph (B)) for the year,
``(ii) the proportion of such rate for the
year which is attributable to such type of
services, and
``(iii) an index that reflects (for that
year and that type of services) the relative
input price of such services in the area
compared to the national average input price of
such services.
In applying clause (iii), the Secretary shall, subject
to subparagraph (C), apply those indices under this
title that are used in applying (or updating) national
payment rates for specific areas and localities.
``(B) National standardized annual medicareplus
capitation rate.--In subparagraph (A)(i), the `national
standardized annual MedicarePlus capitation rate' for a
year is equal to--
``(i) the sum (for all MedicarePlus payment
areas) of the product of--
``(I) the annual area-specific
MedicarePlus capitation rate for that
year for the area under paragraph (3),
and
``(II) the average number of
medicare beneficiaries residing in that
area in the year, multiplied by the
average of the risk factor weights used
to adjust payments under subsection
(a)(1)(A) for such beneficiaries in
such area; divided by
``(ii) the sum of the products described in
clause (i)(II) for all areas for that year.
``(C) Special rules for 1998.--In applying this
paragraph for 1998--
``(i) medicare services shall be divided
into 2 types of services: part A services and
part B services;
``(ii) the proportions described in
subparagraph (A)(ii)--
``(I) for part A services shall be
the ratio (expressed as a percentage)
of the national average annual per
capita rate of payment for part A for
1997 to the total national average
annual per capita rate of payment for
parts A and B for 1997, and
``(II) for part B services shall be
100 percent minus the ratio described
in subclause (I);
``(iii) for part A services, 70 percent of
payments attributable to such services shall be
adjusted by the index used under section
1886(d)(3)(E) to adjust payment rates for
relative hospital wage levels for hospitals
located in the payment area involved;
``(iv) for part B services--
``(I) 66 percent of payments
attributable to such services shall be
adjusted by the index of the geographic
area factors under section 1848(e) used
to adjust payment rates for physicians'
services furnished in the payment area,
and
``(II) of the remaining 34 percent
of the amount of such payments, 40
percent shall be adjusted by the index
described in clause (iii); and
``(v) the index values shall be computed
based only on the beneficiary population who
are 65 years of age or older and who are not
determined to have end stage renal disease.
The Secretary may continue to apply the rules described
in this subparagraph (or similar rules) for 1999.
``(5) Payment adjustment budget neutrality factors.--For
purposes of paragraph (1)(A)--
``(A) Blended rate payment adjustment factor.--For
each year, the Secretary shall compute a blended rate
payment adjustment factor such that, not taking into
account subparagraphs (B) and (C) of paragraph (1) and
the application of the payment adjustment factor
described in subparagraph (B), the aggregate of the
payments that would be made under this part is equal to
the aggregate payments that would have been made under
this part (not taking into account such subparagraphs
and such other adjustment factor) if the area-specific
percentage under paragraph (1) for the year had been
100 percent and the national percentage had been 0
percent.
``(B) Floor-and-minimum-update payment adjustment
factor.--For each year, the Secretary shall compute a
floor-and-minimum-update payment adjustment factor so
that, taking into account the application of the
blended rate payment adjustment factor under
subparagraph (A) and subparagraphs (B) and (C) of
paragraph (1) and the application of the adjustment
factor under this subparagraph, the aggregate of the
payments under this part shall not exceed the aggregate
payments that would have been made under this part if
subparagraphs (B) and (C) of paragraph (1) did not
apply and if the floor-and-minimum-update payment
adjustment factor under this subparagraph was 1.
``(6) National per capita medicareplus growth percentage
defined.--
``(A) In general.--In this part, the `national per
capita MedicarePlus growth percentage' for a year is
the percentage determined by the Secretary, by April
30th before the beginning of the year involved, to
reflect the Secretary's estimate of the projected per
capita rate of growth in expenditures under this title
for an individual entitled to benefits under part A and
enrolled under part B, reduced by the number of
percentage points specified in subparagraph (B) for the
year. Separate determinations may be made for aged
enrollees, disabled enrollees, and enrollees with end-
stage renal disease. Such percentage shall include an
adjustment for over or under projection in the growth
percentage for previous years.
``(B) Adjustment.--The number of percentage points
specified in this subparagraph is--
``(i) for 1998, 0.5 percentage points,
``(ii) for 1999, 0.5 percentage points,
``(iii) for 2000, 0.5 percentage points,
``(iv) for 2001, 0.5 percentage points,
``(v) for 2002, 0.5 percentage points, and
``(vi) for a year after 2002, 0 percentage
points.
``(d) MedicarePlus Payment Area Defined.--
``(1) In general.--In this part, except as provided in
paragraph (3), the term `MedicarePlus payment area' means a
county, or equivalent area specified by the Secretary.
``(2) Rule for esrd beneficiaries.--In the case of
individuals who are determined to have end stage renal disease,
the MedicarePlus payment area shall be a State or such other
payment area as the Secretary specifies.
``(3) Geographic adjustment.--
``(A) In general.--Upon written request of the
chief executive officer of a State for a contract year
(beginning after 1998) made at least 7 months before
the beginning of the year, the Secretary shall make a
geographic adjustment to a MedicarePlus payment area in
the State otherwise determined under paragraph (1)--
``(i) to a single statewide MedicarePlus
payment area,
``(ii) to the metropolitan based system
described in subparagraph (C), or
``(iii) to consolidating into a single
MedicarePlus payment area noncontiguous
counties (or equivalent areas described in
paragraph (1)) within a State.
Such adjustment shall be effective for payments for
months beginning with January of the year following the
year in which the request is received.
``(B) Budget neutrality adjustment.--In the case of
a State requesting an adjustment under this paragraph,
the Secretary shall adjust the payment rates otherwise
established under this section for MedicarePlus payment
areas in the State in a manner so that the aggregate of
the payments under this section in the State shall not
exceed the aggregate payments that would have been made
under this section for MedicarePlus payment areas in
the State in the absence of the adjustment under this
paragraph.
``(C) Metropolitan based system.--The metropolitan
based system described in this subparagraph is one in
which--
``(i) all the portions of each metropolitan
statistical area in the State or in the case of
a consolidated metropolitan statistical area,
all of the portions of each primary
metropolitan statistical area within the
consolidated area within the State, are treated
as a single MedicarePlus payment area, and
``(ii) all areas in the State that do not
fall within a metropolitan statistical area are
treated as a single MedicarePlus payment area.
``(D) Areas.--In subparagraph (C), the terms
`metropolitan statistical area', `consolidated
metropolitan statistical area', and `primary
metropolitan statistical area' mean any area designated
as such by the Secretary of Commerce.
``(e) Special Rules for Individuals Electing MSA Plans.--
``(1) In general.--If the amount of the monthly premium for
an MSA plan for a MedicarePlus payment area for a year is less
than \1/12\ of the annual MedicarePlus capitation rate applied
under this section for the area and year involved, the
Secretary shall deposit an amount equal to 100 percent of such
difference in a MedicarePlus MSA established (and, if
applicable, designated) by the individual under paragraph (2).
``(2) Establishment and designation of medicareplus medical
savings account as requirement for payment of contribution.--In
the case of an individual who has elected coverage under an MSA
plan, no payment shall be made under paragraph (1) on behalf of
an individual for a month unless the individual--
``(A) has established before the beginning of the
month (or by such other deadline as the Secretary may
specify) a MedicarePlus MSA (as defined in section
138(b)(2) of the Internal Revenue Code of 1986), and
``(B) if the individual has established more than
one such MedicarePlus MSA, has designated one of such
accounts as the individual's MedicarePlus MSA for
purposes of this part.
Under rules under this section, such an individual may change
the designation of such account under subparagraph (B) for
purposes of this part.
``(3) Lump sum deposit of medical savings account
contribution.--In the case of an individual electing an MSA
plan effective beginning with a month in a year, the amount of
the contribution to the MedicarePlus MSA on behalf of the
individual for that month and all successive months in the year
shall be deposited during that first month. In the case of a
termination of such an election as of a month before the end of
a year, the Secretary shall provide for a procedure for the
recovery of deposits attributable to the remaining months in
the year.
``(f) Payments From Trust Fund.--The payment to a MedicarePlus
organization under this section for individuals enrolled under this
part with the organization and payments to a MedicarePlus MSA under
subsection (e)(1) shall be made from the Federal Hospital Insurance
Trust Fund and the Federal Supplementary Medical Insurance Trust Fund
in such proportion as the Secretary determines reflects the relative
weight that benefits under part A and under part B represents of the
actuarial value of the total benefits under this title. Monthly
payments otherwise payable under this section for October 2001 shall be
paid on the last business day of September 2001.
``(g) Special Rule for Certain Inpatient Hospital Stays.--In the
case of an individual who is receiving inpatient hospital services from
a subsection (d) hospital (as defined in section 1886(d)(1)(B)) as of
the effective date of the individual's--
``(1) election under this part of a MedicarePlus plan
offered by a MedicarePlus organization--
``(A) payment for such services until the date of
the individual's discharge shall be made under this
title through the MedicarePlus plan or the medicare
fee-for-service program option described in section
1851(a)(1)(A) (as the case may be) elected before the
election with such organization,
``(B) the elected organization shall not be
financially responsible for payment for such services
until the date after the date of the individual's
discharge, and
``(C) the organization shall nonetheless be paid
the full amount otherwise payable to the organization
under this part; or
``(2) termination of election with respect to a
MedicarePlus organization under this part--
``(A) the organization shall be financially
responsible for payment for such services after such
date and until the date of the individual's discharge,
``(B) payment for such services during the stay
shall not be made under section 1886(d) or by any
succeeding MedicarePlus organization, and
``(C) the terminated organization shall not receive
any payment with respect to the individual under this
part during the period the individual is not enrolled.
``premiums
``Sec. 1854. (a) Submission and Charging of Premiums.--
``(1) In general.--Subject to paragraph (3), each
MedicarePlus organization shall file with the Secretary each
year, in a form and manner and at a time specified by the
Secretary--
``(A) the amount of the monthly premium for
coverage for services under section 1852(a) under each
MedicarePlus plan it offers under this part in each
MedicarePlus payment area (as defined in section
1853(d)) in which the plan is being offered; and
``(B) the enrollment capacity in relation to the
plan in each such area.
``(2) Terminology.--In this part--
``(A) the term `monthly premium' means, with
respect to a MedicarePlus plan offered by a
MedicarePlus organization, the monthly premium filed
under paragraph (1), not taking into account the amount
of any payment made toward the premium under section
1853; and
``(B) the term `net monthly premium' means, with
respect to such a plan and an individual enrolled with
the plan, the premium (as defined in subparagraph (A))
for the plan reduced by the amount of payment made
toward such premium under section 1853.
``(b) Monthly Premium Charged.--The monthly amount of the premium
charged by a MedicarePlus organization for a MedicarePlus plan offered
in a MedicarePlus payment area to an individual under this part shall
be equal to the net monthly premium plus any monthly premium charged in
accordance with subsection (e)(2) for supplemental benefits.
``(c) Uniform Premium.--The monthly premium and monthly amount
charged under subsection (b) of a MedicarePlus organization under this
part may not vary among individuals who reside in the same MedicarePlus
payment area.
``(d) Terms and Conditions of Imposing Premiums.--Each MedicarePlus
organization shall permit the payment of net monthly premiums on a
monthly basis and may terminate election of individuals for a
MedicarePlus plan for failure to make premium payments only in
accordance with section 1851(g)(3)(B)(i). A MedicarePlus organization
is not authorized to provide for cash or other monetary rebates as an
inducement for enrollment or otherwise.
``(e) Limitation on Enrollee Cost-Sharing.--
``(1) For basic and additional benefits.--Except as
provided in paragraph (2), in no event may--
``(A) the net monthly premium (multiplied by 12)
and the actuarial value of the deductibles,
coinsurance, and copayments applicable on average to
individuals enrolled under this part with a
MedicarePlus plan of an organization with respect to
required benefits described in section 1852(a)(1) and
additional benefits (if any) required under subsection
(f)(1) for a year, exceed
``(B) the actuarial value of the deductibles,
coinsurance, and copayments that would be applicable on
average to individuals entitled to benefits under part
A and enrolled under part B if they were not members of
a MedicarePlus organization for the year.
``(2) For supplemental benefits.--If the MedicarePlus
organization provides to its members enrolled under this part
supplemental benefits described in section 1852(a)(3), the sum
of the monthly premium rate (multiplied by 12) charged for such
supplemental benefits and the actuarial value of its
deductibles, coinsurance, and copayments charged with respect
to such benefits may not exceed the adjusted community rate for
such benefits (as defined in subsection (f)(4)).
``(3) Exception for msa plans.--Paragraphs (1) and (2) do
not apply to an MSA plan.
``(4) Determination on other basis.--If the Secretary
determines that adequate data are not available to determine
the actuarial value under paragraph (1)(A) or (2), the
Secretary may determine such amount with respect to all
individuals in the MedicarePlus payment area, the State, or in
the United States, eligible to enroll in the MedicarePlus plan
involved under this part or on the basis of other appropriate
data.
``(f) Requirement for Additional Benefits.--
``(1) Requirement.--
``(A) In general.--Each MedicarePlus organization
(in relation to a MedicarePlus plan it offers) shall
provide that if there is an excess amount (as defined
in subparagraph (B)) for the plan for a contract year,
subject to the succeeding provisions of this
subsection, the organization shall provide to
individuals such additional benefits (as the
organization may specify) in a value which is at least
equal to the adjusted excess amount (as defined in
subparagraph (C)).
``(B) Excess amount.--For purposes of this
paragraph, the `excess amount', for an organization for
a plan, is the amount (if any) by which--
``(i) the average of the capitation
payments made to the organization under section
1853 for the plan at the beginning of contract
year, exceeds
``(ii) the actuarial value of the required
benefits described in section 1852(a)(1) under
the plan for individuals under this part, as
determined based upon an adjusted community
rate described in paragraph (4) (as reduced for
the actuarial value of the coinsurance and
deductibles under parts A and B).
``(C) Adjusted excess amount.--For purposes of this
paragraph, the `adjusted excess amount', for an
organization for a plan, is the excess amount reduced
to reflect any amount withheld and reserved for the
organization for the year under paragraph (2).
``(D) No application to msa plans.--Subparagraph
(A) shall not apply to an MSA plan.
``(E) Uniform application.--This paragraph shall be
applied uniformly for all enrollees for a plan in a
MedicarePlus payment area.
``(F) Construction.--Nothing in this subsection
shall be construed as preventing a MedicarePlus
organization from providing health care benefits that
are in addition to the benefits otherwise required to
be provided under this paragraph and from imposing a
premium for such additional benefits.
``(2) Stabilization fund.--A MedicarePlus organization may
provide that a part of the value of an excess amount described
in paragraph (1) be withheld and reserved in the Federal
Hospital Insurance Trust Fund and in the Federal Supplementary
Medical Insurance Trust Fund (in such proportions as the
Secretary determines to be appropriate) by the Secretary for
subsequent annual contract periods, to the extent required to
stabilize and prevent undue fluctuations in the additional
benefits offered in those subsequent periods by the
organization in accordance with such paragraph. Any of such
value of the amount reserved which is not provided as
additional benefits described in paragraph (1)(A) to
individuals electing the MedicarePlus plan of the organization
in accordance with such paragraph prior to the end of such
periods, shall revert for the use of such trust funds.
``(3) Determination based on insufficient data.--For
purposes of this subsection, if the Secretary finds that there
is insufficient enrollment experience (including no enrollment
experience in the case of a provider-sponsored organization) to
determine an average of the capitation payments to be made
under this part at the beginning of a contract period, the
Secretary may determine such an average based on the enrollment
experience of other contracts entered into under this part.
``(4) Adjusted community rate.--
``(A) In general.--For purposes of this subsection,
subject to subparagraph (B), the term `adjusted
community rate' for a service or services means, at the
election of a MedicarePlus organization, either--
``(i) the rate of payment for that service
or services which the Secretary annually
determines would apply to an individual
electing a MedicarePlus plan under this part if
the rate of payment were determined under a
`community rating system' (as defined in
section 1302(8) of the Public Health Service
Act, other than subparagraph (C)), or
``(ii) such portion of the weighted
aggregate premium, which the Secretary annually
estimates would apply to such an individual, as
the Secretary annually estimates is
attributable to that service or services,
but adjusted for differences between the utilization
characteristics of the individuals electing coverage
under this part and the utilization characteristics of
the other enrollees with the plan (or, if the Secretary
finds that adequate data are not available to adjust
for those differences, the differences between the
utilization characteristics of individuals selecting
other MedicarePlus coverage, or MedicarePlus eligible
individuals in the area, in the State, or in the United
States, eligible to elect MedicarePlus coverage under
this part and the utilization characteristics of the
rest of the population in the area, in the State, or in
the United States, respectively).
``(B) Special rule for provider-sponsored
organizations.--In the case of a MedicarePlus
organization that is a provider-sponsored organization,
the adjusted community rate under subparagraph (A) for
a MedicarePlus plan of the organization may be computed
(in a manner specified by the Secretary) using data in
the general commercial marketplace or (during a
transition period) based on the costs incurred by the
organization in providing such a plan.
``(g) Periodic Auditing.--The Secretary shall provide for the
annual auditing of the financial records (including data relating to
medicare utilization, costs, and computation of the adjusted community
rate) of at least one-third of the MedicarePlus organizations offering
MedicarePlus plans under this part. The Comptroller General shall
monitoring auditing activities conducted under this subsection.
``(h) Prohibition of State Imposition of Premium Taxes.--No State
may impose a premium tax or similar tax with respect to premiums on
MedicarePlus plans or the offering of such plans.
``organizational and financial requirements for medicareplus
organizations; provider-sponsored organizations
``Sec. 1855. (a) Organized and Licensed Under State Law.--
``(1) In general.--Subject to paragraphs (2) and (3), a
MedicarePlus organization shall be organized and licensed under
State law as a risk-bearing entity eligible to offer health
insurance or health benefits coverage in each State in which it
offers a MedicarePlus plan.
``(2) Special exception for provider-sponsored
organizations.--
``(A) In general.--In the case of a provider-
sponsored organization that seeks to offer a
MedicarePlus plan in a State, the Secretary shall waive
the requirement of paragraph (1) that the organization
be licensed in that State if--
``(i) the organization files an application
for such waiver with the Secretary, and
``(ii) the Secretary determines, based on
the application and other evidence presented to
the Secretary, that any of the grounds for
approval of the application described in
subparagraph (B), (C), or (D) has been met.
``(B) Failure to act on licensure application on a
timely basis.--A ground for approval of such a waiver
application is that the State has failed to complete
action on a licensing application of the organization
within 90 days of the date of the State's receipt of
the completed application. No period before the date of
the enactment of this section shall be included in
determining such 90-day period.
``(C) Denial of application based on discriminatory
treatment.--A ground for approval of such a waiver
application is that the State has denied such a
licensing application and--
``(i) the State has imposed documentation
or information requirements not related to
solvency requirements that are not generally
applicable to other entities engaged in
substantially similar business, or
``(ii) the standards or review process
imposed by the State as a condition of approval
of the license imposes any material
requirements, procedures, or standards (other
than requirements and standards relating to
solvency) to such organizations that are not
generally applicable to other entities engaged
in substantially similar business.
``(D) Denial of application based on application of
solvency requirements.--A ground for approval of such a
waiver application is that the State has denied such a
licensing application based (in whole or in part) on
the organization's failure to meet applicable solvency
requirements and--
``(i) such requirements are not the same as
the solvency standards established under
section 1856(a); or
``(ii) the State has imposed as a condition
of approval of the license any documentation or
information requirements relating to solvency
or other material requirements, procedures, or
standards relating to solvency that are
different from the requirements, procedures,
and standards applied by the Secretary under
subsection (d)(2).
For purposes of this subparagraph, the term `solvency
requirements' means requirements relating to solvency
and other matters covered under the standards
established under section 1856(a).
``(E) Treatment of waiver.--In the case of a waiver
granted under this paragraph for a provider-sponsored
organization--
``(i) the waiver shall be effective for a
36-month period, except it may be renewed based
on a subsequent application filed during the
last 6 months of such period, and
``(ii) any provisions of State law which
relate to the licensing of the organization and
which prohibit the organization from providing
coverage pursuant to a contract under this part
shall be superseded.
Nothing in this subparagraph shall be construed as
limiting the number of times such a waiver may be
renewed.
``(F) Prompt action on application.--The Secretary
shall grant or deny such a waiver application within 60
days after the date the Secretary determines that a
substantially complete application has been filed.
Nothing in this section shall be construed as
preventing an organization which has had such a waiver
application denied from submitting a subsequent waiver
application.
``(3) Exception if required to offer more than medicareplus
plans.--Paragraph (1) shall not apply to a MedicarePlus
organization in a State if the State requires the organization,
as a condition of licensure, to offer any product or plan other
than a MedicarePlus plan.
``(4) Licensure does not substitute for or constitute
certification.--The fact that an organization is licensed in
accordance with paragraph (1) does not deem the organization to
meet other requirements imposed under this part.
``(b) Prepaid Payment.--A MedicarePlus organization shall be
compensated (except for premiums, deductibles, coinsurance, and
copayments) for the provision of health care services to enrolled
members under the contract under this part by a payment which is paid
on a periodic basis without regard to the date the health care services
are provided and which is fixed without regard to the frequency,
extent, or kind of health care service actually provided to a member.
``(c) Assumption of Full Financial Risk.--The MedicarePlus
organization shall assume full financial risk on a prospective basis
for the provision of the health care services (except, at the election
of the organization, hospice care) for which benefits are required to
be provided under section 1852(a)(1), except that the organization--
``(1) may obtain insurance or make other arrangements for
the cost of providing to any enrolled member such services the
aggregate value of which exceeds $5,000 in any year,
``(2) may obtain insurance or make other arrangements for
the cost of such services provided to its enrolled members
other than through the organization because medical necessity
required their provision before they could be secured through
the organization,
``(3) may obtain insurance or make other arrangements for
not more than 90 percent of the amount by which its costs for
any of its fiscal years exceed 115 percent of its income for
such fiscal year, and
``(4) may make arrangements with physicians or other health
professionals, health care institutions, or any combination of
such individuals or institutions to assume all or part of the
financial risk on a prospective basis for the provision of
basic health services by the physicians or other health
professionals or through the institutions.
``(d) Certification of Provision Against Risk of Insolvency for
Unlicensed PSOs.--
``(1) In general.--Each MedicarePlus organization that is a
provider-sponsored organization, that is not licensed by a
State under subsection (a), and for which a waiver application
has been approved under subsection (a)(2), shall meet standards
established under section 1856(a) relating to the financial
solvency and capital adequacy of the organization.
``(2) Certification process for solvency standards for
psos.--The Secretary shall establish a process for the receipt
and approval of applications of a provider-sponsored
organization described in paragraph (1) for certification (and
periodic recertification) of the organization as meeting such
solvency standards. Under such process, the Secretary shall act
upon such an application not later than 60 days after the date
the application has been received.
``(e) Provider-Sponsored Organization Defined.--
``(1) In general.--In this part, the term `provider-
sponsored organization' means a public or private entity--
``(A) that is established or organized by a health
care provider, or group of affiliated health care
providers,
``(B) that provides a substantial proportion (as
defined by the Secretary in accordance with paragraph
(2)) of the health care items and services under the
contract under this part directly through the provider
or affiliated group of providers, and
``(C) with respect to which those affiliated
providers that share, directly or indirectly,
substantial financial risk with respect to the
provision of such items and services have at least a
majority financial interest in the entity.
``(2) Substantial proportion.--In defining what is a
`substantial proportion' for purposes of paragraph (1)(B), the
Secretary--
``(A) shall take into account (i) the need for such
an organization to assume responsibility for a
substantial proportion of services in order to assure
financial stability and (ii) the practical difficulties
in such an organization integrating a very wide range
of service providers; and
``(B) may vary such proportion based upon relevant
differences among organizations, such as their location
in an urban or rural area.
``(3) Affiliation.--For purposes of this subsection, a
provider is `affiliated' with another provider if, through
contract, ownership, or otherwise--
``(A) one provider, directly or indirectly,
controls, is controlled by, or is under common control
with the other,
``(B) both providers are part of a controlled group
of corporations under section 1563 of the Internal
Revenue Code of 1986, or
``(C) both providers are part of an affiliated
service group under section 414 of such Code.
``(4) Control.--For purposes of paragraph (3), control is
presumed to exist if one party, directly or indirectly, owns,
controls, or holds the power to vote, or proxies for, not less
than 51 percent of the voting rights or governance rights of
another.
``(5) Health care provider defined.--In this subsection,
the term `health care provider' means--
``(A) any individual who is engaged in the delivery
of health care services in a State and who is required
by State law or regulation to be licensed or certified
by the State to engage in the delivery of such services
in the State, and
``(B) any entity that is engaged in the delivery of
health care services in a State and that, if it is
required by State law or regulation to be licensed or
certified by the State to engage in the delivery of
such services in the State, is so licensed.
``(6) Regulations.--The Secretary shall issue regulations
to carry out this subsection.
``establishment of standards
``Sec. 1856. (a) Establishment of Solvency Standards for Provider-
Sponsored Organizations.--
``(1) Establishment.--
``(A) In general.--The Secretary shall establish,
on an expedited basis and using a negotiated rulemaking
process under subchapter III of chapter 5 of title 5,
United States Code, standards described in section
1855(d)(1) (relating to the financial solvency and
capital adequacy of the organization) that entities
must meet to qualify as provider-sponsored
organizations under this part.
``(B) Factors to consider for solvency standards.--
In establishing solvency standards under subparagraph
(A) for provider-sponsored organizations, the Secretary
shall consult with interested parties and shall take
into account--
``(i) the delivery system assets of such an
organization and ability of such an
organization to provide services directly to
enrollees through affiliated providers, and
``(ii) alternative means of protecting
against insolvency, including reinsurance,
unrestricted surplus, letters of credit,
guarantees, organizational insurance coverage,
partnerships with other licensed entities, and
valuation attributable to the ability of such
an organization to meet its service obligations
through direct delivery of care.
``(C) Enrollee protection against insolvency.--Such
standards shall include provisions to prevent enrollees
from being held liable to any person or entity for the
MedicarePlus organization's debts in the event of the
organization's insolvency.
``(2) Publication of notice.--In carrying out the
rulemaking process under this subsection, the Secretary, after
consultation with the National Association of Insurance
Commissioners, the American Academy of Actuaries, organizations
representative of medicare beneficiaries, and other interested
parties, shall publish the notice provided for under section
564(a) of title 5, United States Code, by not later than 45
days after the date of the enactment of this section.
``(3) Target date for publication of rule.--As part of the
notice under paragraph (2), and for purposes of this
subsection, the `target date for publication' (referred to in
section 564(a)(5) of such title) shall be April 1, 1998.
``(4) Abbreviated period for submission of comments.--In
applying section 564(c) of such title under this subsection,
`15 days' shall be substituted for `30 days'.
``(5) Appointment of negotiated rulemaking committee and
facilitator.--The Secretary shall provide for--
``(A) the appointment of a negotiated rulemaking
committee under section 565(a) of such title by not
later than 30 days after the end of the comment period
provided for under section 564(c) of such title (as
shortened under paragraph (4)), and
``(B) the nomination of a facilitator under section
566(c) of such title by not later than 10 days after
the date of appointment of the committee.
``(6) Preliminary committee report.--The negotiated
rulemaking committee appointed under paragraph (5) shall report
to the Secretary, by not later than January 1, 1998, regarding
the committee's progress on achieving a consensus with regard
to the rulemaking proceeding and whether such consensus is
likely to occur before one month before the target date for
publication of the rule. If the committee reports that the
committee has failed to make significant progress towards such
consensus or is unlikely to reach such consensus by the target
date, the Secretary may terminate such process and provide for
the publication of a rule under this subsection through such
other methods as the Secretary may provide.
``(7) Final committee report.--If the committee is not
terminated under paragraph (6), the rulemaking committee shall
submit a report containing a proposed rule by not later than
one month before the target date of publication.
``(8) Interim, final effect.--The Secretary shall publish a
rule under this subsection in the Federal Register by not later
than the target date of publication. Such rule shall be
effective and final immediately on an interim basis, but is
subject to change and revision after public notice and
opportunity for a period (of not less than 60 days) for public
comment. In connection with such rule, the Secretary shall
specify the process for the timely review and approval of
applications of entities to be certified as provider-sponsored
organizations pursuant to such rules and consistent with this
subsection.
``(9) Publication of rule after public comment.--The
Secretary shall provide for consideration of such comments and
republication of such rule by not later than 1 year after the
target date of publication.
``(b) Establishment of Other Standards.--
``(1) In general.--The Secretary shall establish by
regulation other standards (not described in subsection (a))
for MedicarePlus organizations and plans consistent with, and
to carry out, this part.
``(2) Use of current standards.--Consistent with the
requirements of this part, standards established under this
subsection shall be based on standards established under
section 1876 to carry out analogous provisions of such section.
``(3) Use of interim standards.--For the period in which
this part is in effect and standards are being developed and
established under the preceding provisions of this subsection,
the Secretary shall provide by not later than June 1, 1998, for
the application of such interim standards (without regard to
any requirements for notice and public comment) as may be
appropriate to provide for the expedited implementation of this
part. Such interim standards shall not apply after the date
standards are established under the preceding provisions of
this subsection.
``(4) Application of new standards to entities with a
contract.--In the case of a MedicarePlus organization with a
contract in effect under this part at the time standards
applicable to the organization under this section are changed,
the organization may elect not to have such changes apply to
the organization until the end of the current contract year
(or, if there is less than 6 months remaining in the contract
year, until 1 year after the end of the current contract year).
``(5) Relation to state laws.--The standards established
under this subsection shall supersede any State law or
regulation with respect to MedicarePlus plans which are offered
by MedicarePlus organizations under this part to the extent
such law or regulation is inconsistent with such standards.
``contracts with medicareplus organizations
``Sec. 1857. (a) In General.--The Secretary shall not permit the
election under section 1851 of a MedicarePlus plan offered by a
MedicarePlus organization under this part, and no payment shall be made
under section 1853 to an organization, unless the Secretary has entered
into a contract under this section with the organization with respect
to the offering of such plan. Such a contract with an organization may
cover more than one MedicarePlus plan. Such contract shall provide that
the organization agrees to comply with the applicable requirements and
standards of this part and the terms and conditions of payment as
provided for in this part.
``(b) Minimum Enrollment Requirements.--
``(1) In general.--Subject to paragraphs (2) and (3), the
Secretary may not enter into a contract under this section with
a MedicarePlus organization unless the organization has at
least 5,000 individuals (or 1,500 individuals in the case of an
organization that is a provider-sponsored organization) who are
receiving health benefits through the organization, except that
the standards under section 1856 may permit the organization to
have a lesser number of beneficiaries (but not less than 500 in
the case of an organization that is a provider-sponsored
organization) if the organization primarily serves individuals
residing outside of urbanized areas.
``(2) Exception for msa plan.--Paragraph (1) shall not
apply with respect to a contract that relates only to an MSA
plan.
``(3) Allowing transition.--The Secretary may waive the
requirement of paragraph (1) during the first 3 contract years
with respect to an organization.
``(c) Contract Period and Effectiveness.--
``(1) Period.--Each contract under this section shall be
for a term of at least one year, as determined by the
Secretary, and may be made automatically renewable from term to
term in the absence of notice by either party of intention to
terminate at the end of the current term.
``(2) Termination authority.--In accordance with procedures
established under subsection (h), the Secretary may at any time
terminate any such contract if the Secretary determines that
the organization--
``(A) has failed substantially to carry out the
contract;
``(B) is carrying out the contract in a manner
inconsistent with the efficient and effective
administration of this part; or
``(C) no longer substantially meets the applicable
conditions of this part.
``(3) Effective date of contracts.--The effective date of
any contract executed pursuant to this section shall be
specified in the contract, except that in no case shall a
contract under this section which provides for coverage under
an MSA plan be effective before January 1999 with respect to
such coverage.
``(4) Previous terminations.--The Secretary may not enter
into a contract with a MedicarePlus organization if a previous
contract with that organization under this section was
terminated at the request of the organization within the
preceding five-year period, except in circumstances which
warrant special consideration, as determined by the Secretary.
``(5) Contracting authority.--The authority vested in the
Secretary by this part may be performed without regard to such
provisions of law or regulations relating to the making,
performance, amendment, or modification of contracts of the
United States as the Secretary may determine to be inconsistent
with the furtherance of the purpose of this title.
``(d) Protections Against Fraud and Beneficiary Protections.--
``(1) Inspection and audit.--Each contract under this
section shall provide that the Secretary, or any person or
organization designated by the Secretary--
``(A) shall have the right to inspect or otherwise
evaluate (i) the quality, appropriateness, and
timeliness of services performed under the contract and
(ii) the facilities of the organization when there is
reasonable evidence of some need for such inspection,
and
``(B) shall have the right to audit and inspect any
books and records of the MedicarePlus organization that
pertain (i) to the ability of the organization to bear
the risk of potential financial losses, or (ii) to
services performed or determinations of amounts payable
under the contract.
``(2) Enrollee notice at time of termination.--Each
contract under this section shall require the organization to
provide (and pay for) written notice in advance of the
contract's termination, as well as a description of
alternatives for obtaining benefits under this title, to each
individual enrolled with the organization under this part.
``(3) Disclosure.--
``(A) In general.--Each MedicarePlus organization
shall, in accordance with regulations of the Secretary,
report to the Secretary financial information which
shall include the following:
``(i) Such information as the Secretary may
require demonstrating that the organization has
a fiscally sound operation.
``(ii) A copy of the report, if any, filed
with the Health Care Financing Administration
containing the information required to be
reported under section 1124 by disclosing
entities.
``(iii) A description of transactions, as
specified by the Secretary, between the
organization and a party in interest. Such
transactions shall include--
``(I) any sale or exchange, or
leasing of any property between the
organization and a party in interest;
``(II) any furnishing for
consideration of goods, services
(including management services), or
facilities between the organization and
a party in interest, but not including
salaries paid to employees for services
provided in the normal course of their
employment and health services provided
to members by hospitals and other
providers and by staff, medical group
(or groups), individual practice
association (or associations), or any
combination thereof; and
``(III) any lending of money or
other extension of credit between an
organization and a party in interest.
The Secretary may require that information reported
respecting an organization which controls, is
controlled by, or is under common control with, another
entity be in the form of a consolidated financial
statement for the organization and such entity.
``(B) Party in interest defined.--For the purposes
of this paragraph, the term `party in interest' means--
``(i) any director, officer, partner, or
employee responsible for management or
administration of a MedicarePlus organization,
any person who is directly or indirectly the
beneficial owner of more than 5 percent of the
equity of the organization, any person who is
the beneficial owner of a mortgage, deed of
trust, note, or other interest secured by, and
valuing more than 5 percent of the
organization, and, in the case of a
MedicarePlus organization organized as a
nonprofit corporation, an incorporator or
member of such corporation under applicable
State corporation law;
``(ii) any entity in which a person
described in clause (i)--
``(I) is an officer or director;
``(II) is a partner (if such entity
is organized as a partnership);
``(III) has directly or indirectly
a beneficial interest of more than 5
percent of the equity; or
``(IV) has a mortgage, deed of
trust, note, or other interest valuing
more than 5 percent of the assets of
such entity;
``(iii) any person directly or indirectly
controlling, controlled by, or under common
control with an organization; and
``(iv) any spouse, child, or parent of an
individual described in clause (i).
``(C) Access to information.--Each MedicarePlus
organization shall make the information reported
pursuant to subparagraph (A) available to its enrollees
upon reasonable request.
``(4) Loan information.--The contract shall require the
organization to notify the Secretary of loans and other special
financial arrangements which are made between the organization
and subcontractors, affiliates, and related parties.
``(e) Additional Contract Terms.--
``(1) In general.--The contract shall contain such other
terms and conditions not inconsistent with this part (including
requiring the organization to provide the Secretary with such
information) as the Secretary may find necessary and
appropriate.
``(2) Cost-sharing in enrollment-related costs.--The
contract with a MedicarePlus organization shall require the
payment to the Secretary for the organization's pro rata share
(as determined by the Secretary) of the estimated costs to be
incurred by the Secretary in carrying out section 1851
(relating to enrollment and dissemination of information). Such
payments are appropriated to defray the costs described in the
preceding sentence, to remain available until expended.
``(f) Prompt Payment by MedicarePlus Organization.--
``(1) Requirement.--A contract under this part shall
require a MedicarePlus organization to provide prompt payment
(consistent with the provisions of sections 1816(c)(2) and
1842(c)(2)) of claims submitted for services and supplies
furnished to individuals pursuant to the contract, if the
services or supplies are not furnished under a contract between
the organization and the provider or supplier.
``(2) Secretary's option to bypass noncomplying
organization.--In the case of a MedicarePlus eligible
organization which the Secretary determines, after notice and
opportunity for a hearing, has failed to make payments of
amounts in compliance with paragraph (1), the Secretary may
provide for direct payment of the amounts owed to providers and
suppliers for covered services and supplies furnished to
individuals enrolled under this part under the contract. If the
Secretary provides for the direct payments, the Secretary shall
provide for an appropriate reduction in the amount of payments
otherwise made to the organization under this part to reflect
the amount of the Secretary's payments (and the Secretary's
costs in making the payments).
``(g) Intermediate Sanctions.--
``(1) In general.--If the Secretary determines that a
MedicarePlus organization with a contract under this section--
``(A) fails substantially to provide medically
necessary items and services that are required (under
law or under the contract) to be provided to an
individual covered under the contract, if the failure
has adversely affected (or has substantial likelihood
of adversely affecting) the individual;
``(B) imposes net monthly premiums on individuals
enrolled under this part in excess of the net monthly
premiums permitted;
``(C) acts to expel or to refuse to re-enroll an
individual in violation of the provisions of this part;
``(D) engages in any practice that would reasonably
be expected to have the effect of denying or
discouraging enrollment (except as permitted by this
part) by eligible individuals with the organization
whose medical condition or history indicates a need for
substantial future medical services;
``(E) misrepresents or falsifies information that
is furnished--
``(i) to the Secretary under this part, or
``(ii) to an individual or to any other
entity under this part;
``(F) fails to comply with the requirements of
section 1852(j)(3); or
``(G) employs or contracts with any individual or
entity that is excluded from participation under this
title under section 1128 or 1128A for the provision of
health care, utilization review, medical social work,
or administrative services or employs or contracts with
any entity for the provision (directly or indirectly)
through such an excluded individual or entity of such
services;
the Secretary may provide, in addition to any other remedies
authorized by law, for any of the remedies described in
paragraph (2).
``(2) Remedies.--The remedies described in this paragraph
are--
``(A) civil money penalties of not more than
$25,000 for each determination under paragraph (1) or,
with respect to a determination under subparagraph (D)
or (E)(i) of such paragraph, of not more than $100,000
for each such determination, plus, with respect to a
determination under paragraph (1)(B), double the excess
amount charged in violation of such paragraph (and the
excess amount charged shall be deducted from the
penalty and returned to the individual concerned), and
plus, with respect to a determination under paragraph
(1)(D), $15,000 for each individual not enrolled as a
result of the practice involved,
``(B) suspension of enrollment of individuals under
this part after the date the Secretary notifies the
organization of a determination under paragraph (1) and
until the Secretary is satisfied that the basis for
such determination has been corrected and is not likely
to recur, or
``(C) suspension of payment to the organization
under this part for individuals enrolled after the date
the Secretary notifies the organization of a
determination under paragraph (1) and until the
Secretary is satisfied that the basis for such
determination has been corrected and is not likely to
recur.
``(3) Other intermediate sanctions.--In the case of a
MedicarePlus organization for which the Secretary makes a
determination under subsection (c)(2) the basis of which is not
described in paragraph (1), the Secretary may apply the
following intermediate sanctions:
``(A) Civil money penalties of not more than
$25,000 for each determination under subsection (c)(2)
if the deficiency that is the basis of the
determination has directly adversely affected (or has
the substantial likelihood of adversely affecting) an
individual covered under the organization's contract
``(B) Civil money penalties of not more than
$10,000 for each week beginning after the initiation of
procedures by the Secretary under subsection (g) during
which the deficiency that is the basis of a
determination under subsection (c)(2) exists.
``(C) Suspension of enrollment of individuals under
this part after the date the Secretary notifies the
organization of a determination under subsection (c)(2)
and until the Secretary is satisfied that the
deficiency that is the basis for the determination has
been corrected and is not likely to recur.
``(h) Procedures for Termination.--
``(1) In general.--The Secretary may terminate a contract
with a MedicarePlus organization under this section in
accordance with formal investigation and compliance procedures
established by the Secretary under which--
``(A) the Secretary provides the organization with
the reasonable opportunity to develop and implement a
corrective action plan to correct the deficiencies that
were the basis of the Secretary's determination under
subsection (c)(2);
``(B) the Secretary provides the organization with
reasonable notice and opportunity for hearing
(including the right to appeal an initial decision)
before terminating the contract.
``(2) Civil money penalties.--The provisions of section
1128A (other than subsections (a) and (b)) shall apply to a
civil money penalty under subsection (f) or under paragraph (2)
or (3) of subsection (g) in the same manner as they apply to a
civil money penalty or proceeding under section 1128A(a).
``(3) Exception for imminent and serious risk to health.--
Paragraph (1) shall not apply if the Secretary determines that
a delay in termination, resulting from compliance with the
procedures specified in such paragraph prior to termination,
would pose an imminent and serious risk to the health of
individuals enrolled under this part with the organization.
``definitions; miscellaneous provisions
``Sec. 1859. (a) Definitions Relating to MedicarePlus
Organizations.--In this part--
``(1) MedicarePlus organization.--The term `MedicarePlus
organization' means a public or private entity that is
certified under section 1856 as meeting the requirements and
standards of this part for such an organization.
``(2) Provider-sponsored organization.--The term `provider-
sponsored organization' is defined in section 1855(e)(1).
``(b) Definitions Relating to MedicarePlus Plans.--
``(1) MedicarePlus plan.--The term `MedicarePlus plan'
means health benefits coverage offered under a policy,
contract, or plan by a MedicarePlus organization pursuant to
and in accordance with a contract under section 1857.
``(2) MSA plan.--
``(A) In general.--The term `MSA plan' means a
MedicarePlus plan that--
``(i) provides reimbursement for at least
the items and services described in section
1852(a)(1) in a year but only after the
enrollee incurs countable expenses (as
specified under the plan) equal to the amount
of an annual deductible (described in
subparagraph (B));
``(ii) counts as such expenses (for
purposes of such deductible) at least all
amounts that would have been payable under
parts A and B, and that would have been payable
by the enrollee as deductibles, coinsurance, or
copayments, if the enrollee had elected to
receive benefits through the provisions of such
parts; and
``(iii) provides, after such deductible is
met for a year and for all subsequent expenses
for items and services referred to in clause
(i) in the year, for a level of reimbursement
that is not less than--
``(I) 100 percent of such expenses,
or
``(II) 100 percent of the amounts
that would have been paid (without
regard to any deductibles or
coinsurance) under parts A and B with
respect to such expenses,
whichever is less.
``(B) Deductible.--The amount of annual deductible
under an MSA plan--
``(i) for contract year 1999 shall be not
more than $6,000; and
``(ii) for a subsequent contract year shall
be not more than the maximum amount of such
deductible for the previous contract year under
this subparagraph increased by the national per
capita MedicarePlus growth percentage under
section 1853(c)(6) for the year.
If the amount of the deductible under clause (ii) is
not a multiple of $50, the amount shall be rounded to
the nearest multiple of $50.
``(c) Other References to Other Terms.--
``(1) MedicarePlus eligible individual.--The term
`MedicarePlus eligible individual' is defined in section
1851(a)(3).
``(2) MedicarePlus payment area.--The term `MedicarePlus
payment area' is defined in section 1853(d).
``(3) National per capita medicareplus growth percentage.--
The `national per capita MedicarePlus growth percentage' is
defined in section 1853(c)(6).
``(4) Monthly premium; net monthly premium.--The terms
`monthly premium' and `net monthly premium' are defined in
section 1854(a)(2).
``(d) Coordinated Acute and Long-term Care Benefits Under a
MedicarePlus Plan.--Nothing in this part shall be construed as
preventing a State from coordinating benefits under a medicaid plan
under title XIX with those provided under a MedicarePlus plan in a
manner that assures continuity of a full-range of acute care and long-
term care services to poor elderly or disabled individuals eligible for
benefits under this title and under such plan.
``(e) Restriction on Enrollment for Certain MedicarePlus Plans.--
``(1) In general.--In the case of a MedicarePlus religious
fraternal benefit society plan described in paragraph (2),
notwithstanding any other provision of this part to the
contrary and in accordance with regulations of the Secretary,
the society offering the plan may restrict the enrollment of
individuals under this part to individuals who are members of
the church, convention, or group described in paragraph (3)(B)
with which the society is affiliated.
``(2) Medicareplus religious fraternal benefit society plan
described.--For purposes of this subsection, a MedicarePlus
religious fraternal benefit society plan described in this
paragraph is a MedicarePlus plan described in section
1851(a)(2)(A) that--
``(A) is offered by a religious fraternal benefit
society described in paragraph (3) only to members of
the church, convention, or group described in paragraph
(3)(B); and
``(B) permits all such members to enroll under the
plan without regard to health status-related factors.
Nothing in this subsection shall be construed as waiving any
plan requirements relating to financial solvency. In developing
solvency standards under section 1856, the Secretary shall take
into account open contract and assessment features
characteristic of fraternal insurance certificates.
``(3) Religious fraternal benefit society defined.--For
purposes of paragraph (2)(A), a `religious fraternal benefit
society' described in this section is an organization that--
``(A) is exempt from Federal income taxation under
section 501(c)(8) of the Internal Revenue Code of 1986;
``(B) is affiliated with, carries out the tenets
of, and shares a religious bond with, a church or
convention or association of churches or an affiliated
group of churches;
``(C) offers, in addition to a MedicarePlus
religious fraternal benefit society plan, health
coverage to individuals not entitled to benefits under
this title who are members of such church, convention,
or group; and
``(D) does not impose any limitation on membership
in the society based on any health status-related
factor.
``(4) Payment adjustment.--Under regulations of the
Secretary, in the case of individuals enrolled under this part
under a MedicarePlus religious fraternal benefit society plan
described in paragraph (2), the Secretary shall provide for
such adjustment to the payment amounts otherwise established
under section 1854 as may be appropriate to assure an
appropriate payment level, taking into account the actuarial
characteristics and experience of such individuals.''.
(b) Report on Coverage of Beneficiaries with End-Stage Renal
Disease.--The Secretary of Health and Human Services shall provide for
a study on the feasibility and impact of removing the limitation under
section 1851(b)(3)(B) of the Social Security Act (as inserted by
subsection (a)) on eligibility of most individuals medically determined
to have end-stage renal disease to enroll in MedicarePlus plans. By not
later than October 1, 1998, the Secretary shall submit to Congress a
report on such study and shall include in the report such
recommendations regarding removing or restricting the limitation as may
be appropriate.
(c) Report on MedicarePlus Teaching Programs and Use of DSH and
Teaching Hospitals.--Based on the information provided to the Secretary
of Health and Human Services under section 1852(k) of the Social
Security Act and such information as the Secretary may obtain, by not
later than October 1, 1999, the Secretary shall submit to Congress a
report on graduate medical education programs operated by MedicarePlus
organizations and the extent to which MedicarePlus organizations are
providing for payments to hospitals described in such section.
SEC. 10002. TRANSITIONAL RULES FOR CURRENT MEDICARE HMO PROGRAM.
(a) Authorizing Transitional Waiver of 50:50 Rule.--Section 1876(f)
(42 U.S.C. 1395mm(f)) is amended--
(1) in paragraph (2), by striking ``The Secretary'' and
inserting ``Subject to paragraph (4), the Secretary'', and
(2) by adding at the end the following new paragraph:
``(4) Effective for contract periods beginning after December 31,
1996, the Secretary may waive or modify the requirement imposed by
paragraph (1) to the extent the Secretary finds that it is in the
public interest.''.
(b) Transition.--Section 1876 (42 U.S.C. 1395mm) is amended by
adding at the end the following new subsection:
``(k)(1) Except as provided in paragraph (3), the Secretary shall
not enter into, renew, or continue any risk-sharing contract under this
section with an eligible organization for any contract year beginning
on or after--
``(A) the date standards for MedicarePlus organizations and
plans are first established under section 1856 with respect to
MedicarePlus organizations that are insurers or health
maintenance organizations, or
``(B) in the case of such an organization with such a
contract in effect as of the date such standards were first
established, 1 year after such date.
``(2) The Secretary shall not enter into, renew, or continue any
risk-sharing contract under this section with an eligible organization
for any contract year beginning on or after January 1, 2000.
``(3) An individual who is enrolled in part B only and is enrolled
in an eligible organization with a risk-sharing contract under this
section on December 31, 1998, may continue enrollment in such
organization in accordance with regulations issued by not later then
July 1, 1998.
``(4) Notwithstanding subsection (a), the Secretary shall provide
that payment amounts under risk-sharing contracts under this section
for months in a year (beginning with January 1998) shall be computed--
``(A) with respect to individuals entitled to benefits
under both parts A and B, by substituting payment rates under
section 1853(a) for the payment rates otherwise established
under subsection 1876(a), and
``(B) with respect to individuals only entitled to benefits
under part B, by substituting an appropriate proportion of such
rates (reflecting the relative proportion of payments under
this title attributable to such part) for the payment rates
otherwise established under subsection (a).
For purposes of carrying out this paragraph for payments for months in
1998, the Secretary shall compute, announce, and apply the payment
rates under section 1853(a) (notwithstanding any deadlines specified in
such section) in as timely a manner as possible and may (to the extent
necessary) provide for retroactive adjustment in payments made under
this section not in accordance with such rates.''.
(c) Enrollment Transition Rule.--An individual who is enrolled on
December 31, 1998, with an eligible organization under section 1876 of
the Social Security Act (42 U.S.C. 1395mm) shall be considered to be
enrolled with that organization on January 1, 1999, under part C of
title XVIII of such Act if that organization has a contract under that
part for providing services on January 1, 1999 (unless the individual
has disenrolled effective on that date).
(d) Advance Directives.--Section 1866(f) (42 U.S.C. 1395cc(f)) is
amended--
(1) in paragraph (1)--
(A) by inserting ``1855(i),'' after ``1833(s),'',
and
(B) by inserting ``, MedicarePlus organization,''
after ``provider of services''; and
(2) in paragraph (2)(E), by inserting ``or a MedicarePlus
organization'' after ``section 1833(a)(1)(A)''.
(e) Extension of Provider Requirement.--Section 1866(a)(1)(O) (42
U.S.C. 1395cc(a)(1)(O)) is amended--
(1) by striking ``in the case of hospitals and skilled
nursing facilities,'';
(2) by striking ``inpatient hospital and extended care'';
(3) by inserting ``with a MedicarePlus organization under
part C or'' after ``any individual enrolled''; and
(4) by striking ``(in the case of hospitals) or limits (in
the case of skilled nursing facilities)''.
(f) Additional Conforming Changes.--
(1) Conforming references to previous part C.--Any
reference in law (in effect before the date of the enactment of
this Act) to part C of title XVIII of the Social Security Act
is deemed a reference to part D of such title (as in effect
after such date).
(2) Secretarial submission of legislative proposal.--Not
later than 90 days after the date of the enactment of this Act,
the Secretary of Health and Human Services shall submit to the
appropriate committees of Congress a legislative proposal
providing for such technical and conforming amendments in the
law as are required by the provisions of this chapter.
(g) Immediate Effective Date for Certain Requirements for
Demonstrations.--Section 1857(e)(2) of the Social Security Act
(requiring contribution to certain costs related to the enrollment
process comparative materials) applies to demonstrations with respect
to which enrollment is effected or coordinated under section 1851 of
such Act.
(h) Use of Interim, Final Regulations.--In order to carry out the
amendments made by this chapter in a timely manner, the Secretary of
Health and Human Services may promulgate regulations that take effect
on an interim basis, after notice and pending opportunity for public
comment.
(i) Transition Rule for PSO Enrollment.--In applying subsection
(g)(1) of section 1876 of the Social Security Act (42 U.S.C. 1395mm) to
a risk-sharing contract entered into with an eligible organization that
is a provider-sponsored organization (as defined in section 1855(e)(1)
of such Act, as inserted by section 10001) for a contract year
beginning on or after January 1, 1998, there shall be substituted for
the minimum number of enrollees provided under such section the minimum
number of enrollees permitted under section 1857(b)(1) of such Act (as
so inserted).
SEC. 10003. CONFORMING CHANGES IN MEDIGAP PROGRAM.
(a) Conforming Amendments to MedicarePlus Changes.--
(1) In general.--Section 1882(d)(3)(A)(i) (42 U.S.C.
1395ss(d)(3)(A)(i)) is amended--
(A) in the matter before subclause (I), by
inserting ``(including an individual electing a
MedicarePlus plan under section 1851)'' after ``of this
title''; and
(B) in subclause (II)--
(i) by inserting ``in the case of an
individual not electing a MedicarePlus plan''
after ``(II)'', and
(ii) by inserting before the comma at the
end the following: ``or in the case of an
individual electing a MedicarePlus plan, a
medicare supplemental policy with knowledge
that the policy duplicates health benefits to
which the individual is otherwise entitled
under the MedicarePlus plan or under another
medicare supplemental policy''.
(2) Conforming amendments.--Section 1882(d)(3)(B)(i)(I) (42
U.S.C. 1395ss(d)(3)(B)(i)(I)) is amended by inserting
``(including any MedicarePlus plan)'' after ``health insurance
policies''.
(3) MedicarePlus plans not treated as medicare
supplementary policies.--Section 1882(g)(1) (42 U.S.C.
1395ss(g)(1)) is amended by inserting ``or a MedicarePlus plan
or'' after ``does not include''
(b) Additional Rules Relating to Individuals Enrolled in MSA
Plans.--Section 1882 (42 U.S.C. 1395ss) is further amended by adding at
the end the following new subsection:
``(u)(1) It is unlawful for a person to sell or issue a policy
described in paragraph (2) to an individual with knowledge that the
individual has in effect under section 1851 an election of an MSA plan.
``(2) A policy described in this subparagraph is a health insurance
policy that provides for coverage of expenses that are otherwise
required to be counted toward meeting the annual deductible amount
provided under the MSA plan.''.
Subchapter B--Special Rules for MedicarePlus Medical Savings Accounts
SEC. 10006. MEDICAREPLUS MSA.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to amounts specifically
excluded from gross income) is amended by redesignating section 138 as
section 139 and by inserting after section 137 the following new
section:
``SEC. 138. MEDICAREPLUS MSA.
``(a) Exclusion.--Gross income shall not include any payment to the
MedicarePlus MSA of an individual by the Secretary of Health and Human
Services under part C of title XVIII of the Social Security Act.
``(b) MedicarePlus MSA.--For purposes of this section, the term
`MedicarePlus MSA' means a medical savings account (as defined in
section 220(d))--
``(1) which is designated as a MedicarePlus MSA,
``(2) with respect to which no contribution may be made
other than--
``(A) a contribution made by the Secretary of
Health and Human Services pursuant to part C of title
XVIII of the Social Security Act, or
``(B) a trustee-to-trustee transfer described in
subsection (c)(4),
``(3) the governing instrument of which provides that
trustee-to-trustee transfers described in subsection (c)(4) may
be made to and from such account, and
``(4) which is established in connection with an MSA plan
described in section 1859(b)(2) of the Social Security Act.
``(c) Special Rules for Distributions.--
``(1) Distributions for qualified medical expenses.--In
applying section 220 to a MedicarePlus MSA--
``(A) qualified medical expenses shall not include
amounts paid for medical care for any individual other
than the account holder, and
``(B) section 220(d)(2)(C) shall not apply.
``(2) Penalty for distributions from medicareplus msa not
used for qualified medical expenses if minimum balance not
maintained.--
``(A) In general.--The tax imposed by this chapter
for any taxable year in which there is a payment or
distribution from a MedicarePlus MSA which is not used
exclusively to pay the qualified medical expenses of
the account holder shall be increased by 50 percent of
the excess (if any) of--
``(i) the amount of such payment or
distribution, over
``(ii) the excess (if any) of--
``(I) the fair market value of the
assets in such MSA as of the close of
the calendar year preceding the
calendar year in which the taxable year
begins, over
``(II) an amount equal to 60
percent of the deductible under the
MedicarePlus MSA plan covering the
account holder as of January 1 of the
calendar year in which the taxable year
begins.
Section 220(f)(2) shall not apply to any payment or
distribution from a MedicarePlus MSA.
``(B) Exceptions.--Subparagraph (A) shall not apply
if the payment or distribution is made on or after the
date the account holder--
``(i) becomes disabled within the meaning
of section 72(m)(7), or
``(ii) dies.
``(C) Special rules.--For purposes of subparagraph
(A)--
``(i) all MedicarePlus MSAs of the account
holder shall be treated as 1 account,
``(ii) all payments and distributions not
used exclusively to pay the qualified medical
expenses of the account holder during any
taxable year shall be treated as 1
distribution, and
``(iii) any distribution of property shall
be taken into account at its fair market value
on the date of the distribution.
``(3) Withdrawal of erroneous contributions.--Section
220(f)(2) and paragraph (2) of this subsection shall not apply
to any payment or distribution from a MedicarePlus MSA to the
Secretary of Health and Human Services of an erroneous
contribution to such MSA and of the net income attributable to
such contribution.
``(4) Trustee-to-trustee transfers.--Section 220(f)(2) and
paragraph (2) of this subsection shall not apply to any
trustee-to-trustee transfer from a MedicarePlus MSA of an
account holder to another MedicarePlus MSA of such account
holder.
``(d) Special Rules for Treatment of Account After Death of Account
Holder.--In applying section 220(f)(8)(A) to an account which was a
MedicarePlus MSA of a decedent, the rules of section 220(f) shall apply
in lieu of the rules of subsection (c) of this section with respect to
the spouse as the account holder of such MedicarePlus MSA.
``(e) Reports.--In the case of a MedicarePlus MSA, the report under
section 220(h)--
``(1) shall include the fair market value of the assets in
such MedicarePlus MSA as of the close of each calendar year,
and
``(2) shall be furnished to the account holder--
``(A) not later than January 31 of the calendar
year following the calendar year to which such reports
relate, and
``(B) in such manner as the Secretary prescribes in
such regulations.
``(f) Coordination With Limitation on Number of Taxpayers Having
Medical Savings Accounts.--Subsection (i) of section 220 shall not
apply to an individual with respect to a MedicarePlus MSA, and
MedicarePlus MSA's shall not be taken into account in determining
whether the numerical limitations under section 220(j) are exceeded.''
(b) Technical Amendments.--
(1) The last sentence of section 4973(d) of such Code is
amended by inserting ``or section 138(c)(3)'' after ``section
220(f)(3)''.
(2) Subsection (b) of section 220 of such Code is amended
by adding at the end the following new paragraph:
``(7) Medicare eligible individuals.--The limitation under
this subsection for any month with respect to an individual
shall be zero for the first month such individual is entitled
to benefits under title XVIII of the Social Security Act and
for each month thereafter.''
(3) The table of sections for part III of subchapter B of
chapter 1 of such Code is amended by striking the last item and
inserting the following:
``Sec. 138. MedicarePlus MSA.
``Sec. 139. Cross references to other
Acts.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1998.
CHAPTER 2--INTEGRATED LONG-TERM CARE PROGRAMS
Subchapter A--Programs of All-inclusive Care for the Elderly (PACE)
SEC. 10011. COVERAGE OF PACE UNDER THE MEDICARE PROGRAM.
Title XVIII (42 U.S.C. 1395 et seq.) is amended by adding at the
end the following new section:
``payments to, and coverage of benefits under, programs of all-
inclusive care for the elderly (pace)
``Sec. 1894. (a) Receipt of Benefits Through Enrollment in PACE
Program; Definitions for PACE Program Related Terms.--
``(1) Benefits through enrollment in a pace program.--In
accordance with this section, in the case of an individual who
is entitled to benefits under part A or enrolled under part B
and who is a PACE program eligible individual (as defined in
paragraph (5)) with respect to a PACE program offered by a PACE
provider under a PACE program agreement--
``(A) the individual may enroll in the program
under this section; and
``(B) so long as the individual is so enrolled and
in accordance with regulations--
``(i) the individual shall receive benefits
under this title solely through such program,
and
``(ii) the PACE provider is entitled to
payment under and in accordance with this
section and such agreement for provision of
such benefits.
``(2) PACE program defined.--For purposes of this section
and section 1932, the term `PACE program' means a program of
all-inclusive care for the elderly that meets the following
requirements:
``(A) Operation.--The entity operating the program
is a PACE provider (as defined in paragraph (3)).
``(B) Comprehensive benefits.--The program provides
comprehensive health care services to PACE program
eligible individuals in accordance with the PACE
program agreement and regulations under this section.
``(C) Transition.--In the case of an individual who
is enrolled under the program under this section and
whose enrollment ceases for any reason (including the
individual no longer qualifies as a PACE program
eligible individual, the termination of a PACE program
agreement, or otherwise), the program provides
assistance to the individual in obtaining necessary
transitional care through appropriate referrals and
making the individual's medical records available to
new providers.
``(3) PACE provider defined.--
``(A) In general.--For purposes of this section,
the term `PACE provider' means an entity that--
``(i) subject to subparagraph (B), is (or
is a distinct part of) a public entity or a
private, nonprofit entity organized for
charitable purposes under section 501(c)(3) of
the Internal Revenue Code of 1986, and
``(ii) has entered into a PACE program
agreement with respect to its operation of a
PACE program.
``(B) Treatment of private, for-profit providers.--
Clause (i) of subparagraph (A) shall not apply--
``(i) to entities subject to a
demonstration project waiver under subsection
(h); and
``(ii) after the date the report under
section 10014(b) of the Balanced Budget Act of
1997 is submitted, unless the Secretary
determines that any of the findings described
in subparagraph (A), (B), (C) or (D) of
paragraph (2) of such section are true.
``(4) PACE program agreement defined.--For purposes of this
section, the term `PACE program agreement' means, with respect
to a PACE provider, an agreement, consistent with this section,
section 1932 (if applicable), and regulations promulgated to
carry out such sections, between the PACE provider and the
Secretary, or an agreement between the PACE provider and a
State administering agency for the operation of a PACE program
by the provider under such sections.
``(5) PACE program eligible individual defined.--For
purposes of this section, the term `PACE program eligible
individual' means, with respect to a PACE program, an
individual who--
``(A) is 55 years of age or older;
``(B) subject to subsection (c)(4), is determined
under subsection (c) to require the level of care
required under the State medicaid plan for coverage of
nursing facility services;
``(C) resides in the service area of the PACE
program; and
``(D) meets such other eligibility conditions as
may be imposed under the PACE program agreement for the
program under subsection (e)(2)(A)(ii).
``(6) PACE protocol.--For purposes of this section, the
term `PACE protocol' means the Protocol for the Program of All-
inclusive Care for the Elderly (PACE), as published by On Lok,
Inc., as of April 14, 1995.
``(7) PACE demonstration waiver program defined.--For
purposes of this section, the term `PACE demonstration waiver
program' means a demonstration program under either of the
following sections (as in effect before the date of their
repeal):
``(A) Section 603(c) of the Social Security
Amendments of 1983 (Public Law 98-21), as extended by
section 9220 of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (Public Law 99-272).
``(B) Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 (Public Law 99-509).
``(8) State administering agency defined.--For purposes of
this section, the term `State administering agency' means, with
respect to the operation of a PACE program in a State, the
agency of that State (which may be the single agency
responsible for administration of the State plan under title
XIX in the State) responsible for administering PACE program
agreements under this section and section 1932 in the State.
``(9) Trial period defined.--
``(A) In general.--For purposes of this section,
the term `trial period' means, with respect to a PACE
program operated by a PACE provider under a PACE
program agreement, the first 3 contract years under
such agreement with respect to such program.
``(B) Treatment of entities previously operating
pace demonstration waiver programs.--Each contract year
(including a year occurring before the effective date
of this section) during which an entity has operated a
PACE demonstration waiver program shall be counted
under subparagraph (A) as a contract year during which
the entity operated a PACE program as a PACE provider
under a PACE program agreement.
``(10) Regulations.--For purposes of this section, the term
`regulations' refers to interim final or final regulations
promulgated under subsection (f) to carry out this section and
section 1932.
``(b) Scope of Benefits; Beneficiary Safeguards.--
``(1) In general.--Under a PACE program agreement, a PACE
provider shall--
``(A) provide to PACE program eligible individuals,
regardless of source of payment and directly or under
contracts with other entities, at a minimum--
``(i) all items and services covered under
this title (for individuals enrolled under this
section) and all items and services covered
under title XIX, but without any limitation or
condition as to amount, duration, or scope and
without application of deductibles, copayments,
coinsurance, or other cost-sharing that would
otherwise apply under this title or such title,
respectively; and
``(ii) all additional items and services
specified in regulations, based upon those
required under the PACE protocol;
``(B) provide such enrollees access to necessary
covered items and services 24 hours per day, every day
of the year;
``(C) provide services to such enrollees through a
comprehensive, multidisciplinary health and social
services delivery system which integrates acute and
long-term care services pursuant to regulations; and
``(D) specify the covered items and services that
will not be provided directly by the entity, and to
arrange for delivery of those items and services
through contracts meeting the requirements of
regulations.
``(2) Quality assurance; patient safeguards.--The PACE
program agreement shall require the PACE provider to have in
effect at a minimum--
``(A) a written plan of quality assurance and
improvement, and procedures implementing such plan, in
accordance with regulations, and
``(B) written safeguards of the rights of enrolled
participants (including a patient bill of rights and
procedures for grievances and appeals) in accordance
with regulations and with other requirements of this
title and Federal and State law designed for the
protection of patients.
``(c) Eligibility Determinations.--
``(1) In general.--The determination of whether an
individual is a PACE program eligible individual--
``(A) shall be made under and in accordance with
the PACE program agreement, and
``(B) who is entitled to medical assistance under
title XIX, shall be made (or who is not so entitled,
may be made) by the State administering agency.
``(2) Condition.--An individual is not a PACE program
eligible individual (with respect to payment under this
section) unless the individual's health status has been
determined, in accordance with regulations, to be comparable to
the health status of individuals who have participated in the
PACE demonstration waiver programs. Such determination shall be
based upon information on health status and related indicators
(such as medical diagnoses and measures of activities of daily
living, instrumental activities of daily living, and cognitive
impairment) that are part of a uniform minimum data set
collected by PACE providers on potential eligible individuals.
``(3) Annual eligibility recertifications.--
``(A) In general.--Subject to subparagraph (B), the
determination described in subsection (a)(5)(B) for an
individual shall be reevaluated at least once a year.
``(B) Exception.--The requirement of annual
reevaluation under subparagraph (A) may be waived
during a period in accordance with regulations in those
cases where the State administering agency determines
that there is no reasonable expectation of improvement
or significant change in an individual's condition
during the period because of the advanced age, severity
of the advanced age, severity of chronic condition, or
degree of impairment of functional capacity of the
individual involved.
``(4) Continuation of eligibility.--An individual who is a
PACE program eligible individual may be deemed to continue to
be such an individual notwithstanding a determination that the
individual no longer meets the requirement of subsection
(a)(5)(B) if, in accordance with regulations, in the absence of
continued coverage under a PACE program the individual
reasonably would be expected to meet such requirement within
the succeeding 6-month period.
``(5) Enrollment; disenrollment.--The enrollment and
disenrollment of PACE program eligible individuals in a PACE
program shall be pursuant to regulations and the PACE program
agreement and shall permit enrollees to voluntarily disenroll
without cause at any time.
``(d) Payments to PACE Providers on a Capitated Basis.--
``(1) In general.--In the case of a PACE provider with a
PACE program agreement under this section, except as provided
in this subsection or by regulations, the Secretary shall make
prospective monthly payments of a capitation amount for each
PACE program eligible individual enrolled under the agreement
under this section in the same manner and from the same sources
as payments are made to a MedicarePlus organization under
section 1854 (or, for periods beginning before January 1, 1999,
to an eligible organization under a risk-sharing contract under
section 1876). Such payments shall be subject to adjustment in
the manner described in section 1854(a)(2) or section
1876(a)(1)(E), as the case may be.
``(2) Capitation amount.--The capitation amount to be
applied under this subsection for a provider for a contract
year shall be an amount specified in the PACE program agreement
for the year. Such amount shall be based upon payment rates
established for purposes of payment under section 1854 (or, for
periods before January 1, 1999, for purposes of risk-sharing
contracts under section 1876) and shall be adjusted to take
into account the comparative frailty of PACE enrollees and such
other factors as the Secretary determines to be appropriate.
Such amount under such an agreement shall be computed in a
manner so that the total payment level for all PACE program
eligible individuals enrolled under a program is less than the
projected payment under this title for a comparable population
not enrolled under a PACE program.
``(e) PACE Program Agreement.--
``(1) Requirement.--
``(A) In general.--The Secretary, in close
cooperation with the State administering agency, shall
establish procedures for entering into, extending, and
terminating PACE program agreements for the operation
of PACE programs by entities that meet the requirements
for a PACE provider under this section, section 1932,
and regulations.
``(B) Numerical limitation.--
``(i) In general.--The Secretary shall not
permit the number of PACE providers with which
agreements are in effect under this section or
under section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 to exceed--
``(I) 40 as of the date of the
enactment of this section, or
``(II) as of each succeeding
anniversary of such date, the numerical
limitation under this subparagraph for
the preceding year plus 20.
Subclause (II) shall apply without regard to
the actual number of agreements in effect as of
a previous anniversary date.
``(ii) Treatment of certain private, for-
profit providers.--The numerical limitation in
clause (i) shall not apply to a PACE provider
that--
``(I) is operating under a
demonstration project waiver under
subsection (h), or
``(II) was operating under such a
waiver and subsequently qualifies for
PACE provider status pursuant to
subsection (a)(3)(B)(ii).
``(2) Service area and eligibility.--
``(A) In general.--A PACE program agreement for a
PACE program--
``(i) shall designate the service area of
the program;
``(ii) may provide additional requirements
for individuals to qualify as PACE program
eligible individuals with respect to the
program;
``(iii) shall be effective for a contract
year, but may be extended for additional
contract years in the absence of a notice by a
party to terminate and is subject to
termination by the Secretary and the State
administering agency at any time for cause (as
provided under the agreement);
``(iv) shall require a PACE provider to
meet all applicable State and local laws and
requirements; and
``(v) shall have such additional terms and
conditions as the parties may agree to
consistent with this section and regulations.
``(B) Service area overlap.--In designating a
service area under a PACE program agreement under
subparagraph (A)(i), the Secretary (in consultation
with the State administering agency) may exclude from
designation an area that is already covered under
another PACE program agreement, in order to avoid
unnecessary duplication of services and avoid impairing
the financial and service viability of an existing
program.
``(3) Data collection.--
``(A) In general.--Under a PACE program agreement,
the PACE provider shall--
``(i) collect data,
``(ii) maintain, and afford the Secretary
and the State administering agency access to,
the records relating to the program, including
pertinent financial, medical, and personnel
records, and
``(iii) make to the Secretary and the State
administering agency reports that the Secretary
finds (in consultation with State administering
agencies) necessary to monitor the operation,
cost, and effectiveness of the PACE program
under this title and title XIX.
``(B) Requirements during trial period.--During the
first three years of operation of a PACE program
(either under this section or under a PACE
demonstration waiver program), the PACE provider shall
provide such additional data as the Secretary specifies
in regulations in order to perform the oversight
required under paragraph (4)(A).
``(4) Oversight.--
``(A) Annual, close oversight during trial
period.--During the trial period (as defined in
subsection (a)(9)) with respect to a PACE program
operated by a PACE provider, the Secretary (in
cooperation with the State administering agency) shall
conduct a comprehensive annual review of the operation
of the PACE program by the provider in order to assure
compliance with the requirements of this section and
regulations. Such a review shall include--
``(i) an on-site visit to the program site;
``(ii) comprehensive assessment of a
provider's fiscal soundness;
``(iii) comprehensive assessment of the
provider's capacity to provide all PACE
services to all enrolled participants;
``(iv) detailed analysis of the entity's
substantial compliance with all significant
requirements of this section and regulations;
and
``(v) any other elements the Secretary or
State agency considers necessary or
appropriate.
``(B) Continuing oversight.--After the trial
period, the Secretary (in cooperation with the State
administering agency) shall continue to conduct such
review of the operation of PACE providers and PACE
programs as may be appropriate, taking into account the
performance level of a provider and compliance of a
provider with all significant requirements of this
section and regulations.
``(C) Disclosure.--The results of reviews under
this paragraph shall be reported promptly to the PACE
provider, along with any recommendations for changes to
the provider's program, and shall be made available to
the public upon request.
``(5) Termination of pace provider agreements.--
``(A) In general.--Under regulations--
``(i) the Secretary or a State
administering agency may terminate a PACE
program agreement for cause, and
``(ii) a PACE provider may terminate such
an agreement after appropriate notice to the
Secretary, the State agency, and enrollees.
``(B) Causes for termination.--In accordance with
regulations establishing procedures for termination of
PACE program agreements, the Secretary or a State
administering agency may terminate a PACE program
agreement with a PACE provider for, among other
reasons, the fact that--
``(i) the Secretary or State administering
agency determines that--
``(I) there are significant
deficiencies in the quality of care
provided to enrolled participants; or
``(II) the provider has failed to
comply substantially with conditions
for a program or provider under this
section or section 1932; and
``(ii) the entity has failed to develop and
successfully initiate, within 30 days of the
date of the receipt of written notice of such a
determination, and continue implementation of a
plan to correct the deficiencies.
``(C) Termination and transition procedures.--An
entity whose PACE provider agreement is terminated
under this paragraph shall implement the transition
procedures required under subsection (a)(2)(C).
``(6) Secretary's oversight; enforcement authority.--
``(A) In general.--Under regulations, if the
Secretary determines (after consultation with the State
administering agency) that a PACE provider is failing
substantially to comply with the requirements of this
section and regulations, the Secretary (and the State
administering agency) may take any or all of the
following actions:
``(i) Condition the continuation of the
PACE program agreement upon timely execution of
a corrective action plan.
``(ii) Withhold some or all further
payments under the PACE program agreement under
this section or section 1932 with respect to
PACE program services furnished by such
provider until the deficiencies have been
corrected.
``(iii) Terminate such agreement.
``(B) Application of intermediate sanctions.--Under
regulations, the Secretary may provide for the
application against a PACE provider of remedies
described in section 1857(f)(2) (or, for periods before
January 1, 1999, section 1876(i)(6)(B)) or
1903(m)(5)(B) in the case of violations by the provider
of the type described in section 1857(f)(1) (or
1876(i)(6)(A) for such periods) or 1903(m)(5)(A),
respectively (in relation to agreements, enrollees, and
requirements under this section or section 1932,
respectively).
``(7) Procedures for termination or imposition of
sanctions.--Under regulations, the provisions of section
1857(g) (or for periods before January 1, 1999, section
1876(i)(9)) shall apply to termination and sanctions respecting
a PACE program agreement and PACE provider under this
subsection in the same manner as they apply to a termination
and sanctions with respect to a contract and a MedicarePlus
organization under part C (or for such periods an eligible
organization under section 1876).
``(8) Timely consideration of applications for pace program
provider status.--In considering an application for PACE
provider program status, the application shall be deemed
approved unless the Secretary, within 90 days after the date of
the submission of the application to the Secretary, either
denies such request in writing or informs the applicant in
writing with respect to any additional information that is
needed in order to make a final determination with respect to
the application. After the date the Secretary receives such
additional information, the application shall be deemed
approved unless the Secretary, within 90 days of such date,
denies such request.
``(f) Regulations.--
``(1) In general.--The Secretary shall issue interim final
or final regulations to carry out this section and section
1932.
``(2) Use of pace protocol.--
``(A) In general.--In issuing such regulations, the
Secretary shall, to the extent consistent with the
provisions of this section, incorporate the
requirements applied to PACE demonstration waiver
programs under the PACE protocol.
``(B) Flexibility.--The Secretary (in close
consultation with State administering agencies) may
modify or waive such provisions of the PACE protocol in
order to provide for reasonable flexibility in adapting
the PACE service delivery model to the needs of
particular organizations (such as those in rural areas
or those that may determine it appropriate to use non-
staff physicians accordingly to State licensing law
requirements) under this section and section 1932 where
such flexibility is not inconsistent with and would not
impair the essential elements, objectives, and
requirements of the this section, including--
``(i) the focus on frail elderly qualifying
individuals who require the level of care
provided in a nursing facility;
``(ii) the delivery of comprehensive,
integrated acute and long-term care services;
``(iii) the interdisciplinary team approach
to care management and service delivery;
``(iv) capitated, integrated financing that
allows the provider to pool payments received
from public and private programs and
individuals; and
``(v) the assumption by the provider over
time of full financial risk.
``(3) Application of certain additional beneficiary and
program protections.--
``(A) In general.--In issuing such regulations and
subject to subparagraph (B), the Secretary may apply
with respect to PACE programs, providers, and
agreements such requirements of part C (or, for periods
before January 1, 1999, section 1876) and section
1903(m) relating to protection of beneficiaries and
program integrity as would apply to MedicarePlus
organizations under part C (or for such periods
eligible organizations under risk-sharing contracts
under section 1876) and to health maintenance
organizations under prepaid capitation agreements under
section 1903(m).
``(B) Considerations.--In issuing such regulations,
the Secretary shall--
``(i) take into account the differences
between populations served and benefits
provided under this section and under part C
(or, for periods before January 1, 1999,
section 1876) and section 1903(m);
``(ii) not include any requirement that
conflicts with carrying out PACE programs under
this section; and
``(iii) not include any requirement
restricting the proportion of enrollees who are
eligible for benefits under this title or title
XIX.
``(g) Waivers of Requirements.--With respect to carrying out a PACE
program under this section, the following requirements of this title
(and regulations relating to such requirements) are waived and shall
not apply:
``(1) Section 1812, insofar as it limits coverage of
institutional services.
``(2) Sections 1813, 1814, 1833, and 1886, insofar as such
sections relate to rules for payment for benefits.
``(3) Sections 1814(a)(2)(B), 1814(a)(2)(C), and
1835(a)(2)(A), insofar as they limit coverage of extended care
services or home health services.
``(4) Section 1861(i), insofar as it imposes a 3-day prior
hospitalization requirement for coverage of extended care
services.
``(5) Sections 1862(a)(1) and 1862(a)(9), insofar as they
may prevent payment for PACE program services to individuals
enrolled under PACE programs.
``(h) Demonstration Project for For-Profit Entities.--
``(1) In general.--In order to demonstrate the operation of
a PACE program by a private, for-profit entity, the Secretary
(in close consultation with State administering agencies) shall
grant waivers from the requirement under subsection (a)(3) that
a PACE provider may not be a for-profit, private entity.
``(2) Similar terms and conditions.--
``(A) In general.--Except as provided under
subparagraph (B), and paragraph (1), the terms and
conditions for operation of a PACE program by a
provider under this subsection shall be the same as
those for PACE providers that are nonprofit, private
organizations.
``(B) Numerical limitation.--The number of programs
for which waivers are granted under this subsection
shall not exceed 10. Programs with waivers granted
under this subsection shall not be counted against the
numerical limitation specified in subsection (e)(1)(B).
``(i) Construction.--Nothing in this section or section 1932 shall
be construed as preventing a PACE provider from entering into contracts
with other governmental or nongovernmental payers for the care of PACE
program eligible individuals who are not eligible for benefits under
part A, or enrolled under part B, or eligible for medical assistance
under title XIX.''.
SEC. 10012. ESTABLISHMENT OF PACE PROGRAM AS MEDICAID STATE OPTION.
(a) In General.--Title XIX is amended--
(1) in section 1905(a) (42 U.S.C. 1396d(a))--
(A) by striking ``and'' at the end of paragraph
(24);
(B) by redesignating paragraph (25) as paragraph
(26); and
(C) by inserting after paragraph (24) the following
new paragraph:
``(25) services furnished under a PACE program under
section 1932 to PACE program eligible individuals enrolled
under the program under such section; and'';
(2) by redesignating section 1932, as redesignated by
section 114(a) of Public Law 104-193, as section 1933, and
(3) by inserting after section 1931 the following new
section:
``SEC. 1932. PROGRAM OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE).
``(a) Option.--
``(1) In general.--A State may elect to provide medical
assistance under this section with respect to PACE program
services to PACE program eligible individuals who are eligible
for medical assistance under the State plan and who are
enrolled in a PACE program under a PACE program agreement. Such
individuals need not be eligible for benefits under part A, or
enrolled under part B, of title XVIII to be eligible to enroll
under this section.
``(2) Benefits through enrollment in pace program.--In the
case of an individual enrolled with a PACE program pursuant to
such an election--
``(A) the individual shall receive benefits under
the plan solely through such program, and
``(B) the PACE provider shall receive payment in
accordance with the PACE program agreement for
provision of such benefits.
``(3) Application of definitions.--The definitions of terms
under section 1894(a) shall apply under this section in the
same manner as they apply under section 1894.
``(b) Application of Medicare Terms and Conditions.--Except as
provided in this section, the terms and conditions for the operation
and participation of PACE program eligible individuals in PACE programs
offered by PACE providers under PACE program agreements under section
1894 shall apply for purposes of this section.
``(c) Adjustment in Payment Amounts.--In the case of individuals
enrolled in a PACE program under this section, the amount of payment
under this section shall not be the amount calculated under section
1894(d), but shall be an amount, specified under the PACE agreement,
which is less than the amount that would otherwise have been made under
the State plan if the individuals were not so enrolled. The payment
under this section shall be in addition to any payment made under
section 1894 for individuals who are enrolled in a PACE program under
such section.
``(d) Waivers of Requirements.--With respect to carrying out a PACE
program under this section, the following requirements of this title
(and regulations relating to such requirements) shall not apply:
``(1) Section 1902(a)(1), relating to any requirement that
PACE programs or PACE program services be provided in all areas
of a State.
``(2) Section 1902(a)(10), insofar as such section relates
to comparability of services among different population groups.
``(3) Sections 1902(a)(23) and 1915(b)(4), relating to
freedom of choice of providers under a PACE program.
``(4) Section 1903(m)(2)(A), insofar as it restricts a PACE
provider from receiving prepaid capitation payments.
``(e) Post-Eligibility Treatment of Income.--A State may provide
for post-eligibility treatment of income for individuals enrolled in
PACE programs under this section in the same manner as a State treats
post-eligibility income for individuals receiving services under a
waiver under section 1915(c).''.
(b) Conforming Amendments.--
(1) Section 1902(j) (42 U.S.C. 1396a(j)) is amended by
striking ``(25)'' and inserting ``(26)''.
(2) Section 1924(a)(5) (42 U.S.C. 1396r-5(a)(5)) is
amended--
(A) in the heading, by striking ``from
organizations receiving certain waivers'' and inserting
``under pace programs'', and
(B) by striking ``from any organization'' and all
that follows and inserting ``under a PACE demonstration
waiver program (as defined in subsection (a)(7) of
section 1894) or under a PACE program under section
1932.''.
(3) Section 1903(f)(4)(C) (42 U.S.C. 1396b(f)(4)(C)) is
amended by inserting ``or who is a PACE program eligible
individual enrolled in a PACE program under section 1932,''
after ``section 1902(a)(10)(A),''.
SEC. 10013. EFFECTIVE DATE; TRANSITION.
(a) Timely Issuance of Regulations; Effective Date.--The Secretary
of Health and Human Services shall promulgate regulations to carry out
this subchapter in a timely manner. Such regulations shall be designed
so that entities may establish and operate PACE programs under sections
1894 and 1932 for periods beginning not later than 1 year after the
date of the enactment of this Act.
(b) Expansion and Transition for PACE Demonstration Project
Waivers.--
(1) Expansion in current number and extension of
demonstration projects.--Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986, as amended by section 4118(g) of
the Omnibus Budget Reconciliation Act of 1987, is amended--
(A) in paragraph (1), by inserting before the
period at the end the following: ``, except that the
Secretary shall grant waivers of such requirements to
up to the applicable numerical limitation specified in
section 1894(e)(1)(B) of the Social Security Act''; and
(B) in paragraph (2)--
(i) in subparagraph (A), by striking ``,
including permitting the organization to assume
progressively (over the initial 3-year period
of the waiver) the full financial risk''; and
(ii) in subparagraph (C), by adding at the
end the following: ``In granting further
extensions, an organization shall not be
required to provide for reporting of
information which is only required because of
the demonstration nature of the project.''.
(2) Elimination of replication requirement.--Subparagraph
(B) of paragraph (2) of such section shall not apply to waivers
granted under such section after the date of the enactment of
this Act.
(3) Timely consideration of applications.--In considering
an application for waivers under such section before the
effective date of repeals under subsection (c), subject to the
numerical limitation under the amendment made by paragraph (1),
the application shall be deemed approved unless the Secretary
of Health and Human Services, within 90 days after the date of
its submission to the Secretary, either denies such request in
writing or informs the applicant in writing with respect to any
additional information which is needed in order to make a final
determination with respect to the application. After the date
the Secretary receives such additional information, the
application shall be deemed approved unless the Secretary,
within 90 days of such date, denies such request.
(c) Priority and Special Consideration in Application.--During the
3-year period beginning on the date of the enactment of this Act:
(1) Provider status.--The Secretary of Health and Human
Services shall give priority, in processing applications of
entities to qualify as PACE programs under section 1894 or 1932
of the Social Security Act--
(A) first, to entities that are operating a PACE
demonstration waiver program (as defined in section
1894(a)(7) of such Act), and
(B) then entities that have applied to operate such
a program as of May 1, 1997.
(2) New waivers.--The Secretary shall give priority, in the
awarding of additional waivers under section 9412(b) of the
Omnibus Budget Reconciliation Act of 1986--
(A) to any entities that have applied for such
waivers under such section as of May 1, 1997; and
(B) to any entity that, as of May 1, 1997, has
formally contracted with a State to provide services
for which payment is made on a capitated basis with an
understanding that the entity was seeking to become a
PACE provider.
(3) Special consideration.--The Secretary shall give
special consideration, in the processing of applications
described in paragraph (1) and the awarding of waivers
described in paragraph (2), to an entity which as of May 1,
1997 through formal activities (such as entering into contracts
for feasibility studies) has indicated a specific intent to
become a PACE provider.
(d) Repeal of Current PACE Demonstration Project Waiver
Authority.--
(1) In general.--Subject to paragraph (2), the following
provisions of law are repealed:
(A) Section 603(c) of the Social Security
Amendments of 1983 (Public Law 98-21).
(B) Section 9220 of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (Public Law 99-272).
(C) Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 (Public Law 99-509).
(2) Delay in application.--
(A) In general.--Subject to subparagraph (B), the
repeals made by paragraph (1) shall not apply to
waivers granted before the initial effective date of
regulations described in subsection (a).
(B) Application to approved waivers.--Such repeals
shall apply to waivers granted before such date only
after allowing such organizations a transition period
(of up to 24 months) in order to permit sufficient time
for an orderly transition from demonstration project
authority to general authority provided under the
amendments made by this subchapter.
SEC. 10014. STUDY AND REPORTS.
(a) Study.--
(1) In general.--The Secretary of Health and Human Services
(in close consultation with State administering agencies, as
defined in section 1894(a)(8) of the Social Security Act) shall
conduct a study of the quality and cost of providing PACE
program services under the medicare and medicaid programs under
the amendments made by this subchapter.
(2) Study of private, for-profit providers.--Such study
shall specifically compare the costs, quality, and access to
services by entities that are private, for-profit entities
operating under demonstration projects waivers granted under
section 1894(h) of the Social Security Act with the costs,
quality, and access to services of other PACE providers.
(b) Report.--
(1) In general.--Not later than 4 years after the date of
the enactment of this Act, the Secretary shall provide for a
report to Congress on the impact of such amendments on quality
and cost of services. The Secretary shall include in such
report such recommendations for changes in the operation of
such amendments as the Secretary deems appropriate.
(2) Treatment of private, for-profit providers.--The report
shall include specific findings on whether any of the following
findings is true:
(A) The number of covered lives enrolled with
entities operating under demonstration project waivers
under section 1894(h) of the Social Security Act is
fewer than 800 (or such lesser number as the Secretary
may find statistically sufficient to make
determinations respecting findings described in the
succeeding subparagraphs).
(B) The population enrolled with such entities is
less frail than the population enrolled with other PACE
providers.
(C) Access to or quality of care for individuals
enrolled with such entities is lower than such access
or quality for individuals enrolled with other PACE
providers.
(D) The application of such section has resulted in
an increase in expenditures under the medicare or
medicaid programs above the expenditures that would
have been made if such section did not apply.
(c) Information Included in Annual Recommendations.--The Medicare
Payment Advisory Commission shall include in its annual report under
section 1805(b)(1)(B) of the Social Security Act recommendations on the
methodology and level of payments made to PACE providers under section
1894(d) of such Act and on the treatment of private, for-profit
entities as PACE providers.
Subchapter B--Social Health Maintenance Organizations
SEC. 10015. SOCIAL HEALTH MAINTENANCE ORGANIZATIONS (SHMOS).
(a) Extension of Demonstration Project Authorities.--Section
4018(b) of the Omnibus Budget Reconciliation Act of 1987 is amended--
(1) in paragraph (1), by striking ``1997'' and inserting
``2000'', and
(2) in paragraph (4), by striking ``1998'' and inserting
``2001''.
(b) Expansion of Cap.--Section 13567(c) of the Omnibus Budget
Reconciliation Act of 1993 is amended by striking ``12,000'' and
inserting ``36,000''.
(b) Report on Integration and Transition.--
(1) In general.--The Secretary of Health and Human Services
shall submit to Congress, by not later than January 1, 1999, a
plan for the integration of health plans offered by social
health maintenance organizations (including SHMO I and SHMO II
sites developed under section 2355 of the Deficit Reduction Act
of 1984 and under the amendment made by section
4207(b)(3)(B)(i) of OBRA-1990, respectively) and similar plans
as an option under the MedicarePlus program under part C of
title XVIII of the Social Security Act.
(2) Provision for transition.--Such plan shall include a
transition for social health maintenance organizations
operating under demonstration project authority under such
section.
(3) Payment policy.--The report shall also include
recommendations on appropriate payment levels for plans offered
by such organizations, including an analysis of the application
of risk adjustment factors appropriate to the population served
by such organizations.
Subchapter C--Other Programs
SEC. 10018. ORDERLY TRANSITION OF MUNICIPAL HEALTH SERVICE
DEMONSTRATION PROJECTS.
Section 9215 of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended by section 6135 of OBRA-1989 and section 13557 of
OBRA-1993, is further amended--
(1) by inserting ``(a)'' before ``The Secretary'', and
(2) by adding at the end the following: ``Subject to
subsection (c), the Secretary may further extend such
demonstration projects through December 31, 2000, but only with
respect to individuals are enrolled with such projects before
January 1, 1998.
``(b) The Secretary shall work with each such demonstration project
to develop a plan, to be submitted to the Committee on Ways and Means
of the House of Representatives and the Committee on Finance of the
Senate by March 31, 1998, for the orderly transition of demonstration
projects and the project enrollees to a non-demonstration project
health care delivery system, such as through integration with private
or public health plan, including a medicaid managed care or
MedicarePlus plan.
``(c) A demonstration project under subsection (a) which does not
develop and submit a transition plan under subsection (b) by March 31,
1998, or, if later, 6 months after the date of the enactment of this
Act, shall be discontinued as of December 31, 1998. The Secretary shall
provide appropriate technical assistance to assist in the transition so
that disruption of medical services to project enrollees may be
minimized.''.
SEC. 10019. EXTENSION OF CERTAIN MEDICARE COMMUNITY NURSING
ORGANIZATION DEMONSTRATION PROJECTS.
Notwithstanding any other provision of law, demonstration projects
conducted under section 4079 of the Omnibus Budget Reconciliation Act
of 1987 may be conducted for an additional period of 2 years, and the
deadline for any report required relating to the results of such
projects shall be not later than 6 months before the end of such
additional period.
CHAPTER 3--MEDICARE PAYMENT ADVISORY COMMISSION
SEC. 10021. MEDICARE PAYMENT ADVISORY COMMISSION.
(a) In General.--Title XVIII is amended by inserting after section
1804 the following new section:
``medicare payment advisory commission
``Sec. 1805. (a) Establishment.--There is hereby established the
Medicare Payment Advisory Commission (in this section referred to as
the `Commission').
``(b) Duties.--
``(1) Review of payment policies and annual reports.--The
Commission shall--
``(A) review payment policies under this title,
including the topics described in paragraph (2);
``(B) make recommendations to Congress concerning
such payment policies;
``(C) by not later than March 1 of each year
(beginning with 1998), submit a report to Congress
containing the results of such reviews and its
recommendations concerning such policies; and
``(D) by not later than June 1 of each year
(beginning with 1998), submit a report to Congress
containing an examination of issues affecting the
medicare program, including the implications of changes
in health care delivery in the United States and in the
market for health care services on the medicare
program.
``(2) Specific topics to be reviewed.--
``(A) Medicareplus program.--Specifically, the
Commission shall review, with respect to the
MedicarePlus program under part C, the following:
``(i) The methodology for making payment to
plans under such program, including the making
of differential payments and the distribution
of differential updates among different payment
areas.
``(ii) The mechanisms used to adjust
payments for risk and the need to adjust such
mechanisms to take into account health status
of beneficiaries.
``(iii) The implications of risk selection
both among MedicarePlus organizations and
between the MedicarePlus option and the
medicare fee-for-service option.
``(iv) The development and implementation
of mechanisms to assure the quality of care for
those enrolled with MedicarePlus organizations.
``(v) The impact of the MedicarePlus
program on access to care for medicare
beneficiaries.
``(vi) Other major issues in implementation
and further development of the MedicarePlus
program.
``(B) Fee-for-service system.--Specifically, the
Commission shall review payment policies under parts A
and B, including--
``(i) the factors affecting expenditures
for services in different sectors, including
the process for updating hospital, skilled
nursing facility, physician, and other fees,
``(ii) payment methodologies, and
``(iii) their relationship to access and
quality of care for medicare beneficiaries.
``(C) Interaction of medicare payment policies with
health care delivery generally.--Specifically, the
Commission shall review the effect of payment policies
under this title on the delivery of health care
services other than under this title and assess the
implications of changes in health care delivery in the
United States and in the general market for health care
services on the medicare program.
``(3) Comments on certain secretarial reports.--If the
Secretary submits to Congress (or a committee of Congress) a
report that is required by law and that relates to payment
policies under this title, the Secretary shall transmit a copy
of the report to the Commission. The Commission shall review
the report and, not later than 6 months after the date of
submittal of the Secretary's report to Congress, shall submit
to the appropriate committees of Congress written comments on
such report. Such comments may include such recommendations as
the Commission deems appropriate.
``(4) Agenda and additional reviews.--The Commission shall
consult periodically with the chairmen and ranking minority
members of the appropriate committees of Congress regarding the
Commission's agenda and progress towards achieving the agenda.
The Commission may conduct additional reviews, and submit
additional reports to the appropriate committees of Congress,
from time to time on such topics relating to the program under
this title as may be requested by such chairmen and members and
as the Commission deems appropriate.
``(5) Availability of reports.--The Commission shall
transmit to the Secretary a copy of each report submitted under
this subsection and shall make such reports available to the
public.
``(6) Appropriate committees.--For purposes of this
section, the term `appropriate committees of Congress' means
the Committees on Ways and Means and Commerce of the House of
Representatives and the Committee on Finance of the Senate.
``(c) Membership.--
``(1) Number and appointment.--The Commission shall be
composed of 19 members appointed by the Comptroller General.
``(2) Qualifications.--
``(A) In general.--The membership of the Commission
shall include individuals with national recognition for
their expertise in health finance and economics,
actuarial science, health facility management, health
plans and integrated delivery systems, reimbursement of
health facilities, allopathic and osteopathic
physicians, and other providers of health services, and
other related fields, who provide a mix of different
professionals, broad geographic representation, and a
balance between urban and rural representatives.
``(B) Inclusion.--The membership of the Commission
shall include (but not be limited to) physicians and
other health professionals, employers, third party
payers, individuals skilled in the conduct and
interpretation of biomedical, health services, and
health economics research and expertise in outcomes and
effectiveness research and technology assessment. Such
membership shall also include representatives of
consumers and the elderly.
``(C) Majority nonproviders.--Individuals who are
directly involved in the provision, or management of
the delivery, of items and services covered under this
title shall not constitute a majority of the membership
of the Commission.
``(D) Ethical disclosure.--The Comptroller General
shall establish a system for public disclosure by
members of the Commission of financial and other
potential conflicts of interest relating to such
members.
``(3) Terms.--
``(A) In general.--The terms of members of the
Commission shall be for 3 years except that the
Comptroller General shall designate staggered terms for
the members first appointed.
``(B) Vacancies.--Any member appointed to fill a
vacancy occurring before the expiration of the term for
which the member's predecessor was appointed shall be
appointed only for the remainder of that term. A member
may serve after the expiration of that member's term
until a successor has taken office. A vacancy in the
Commission shall be filled in the manner in which the
original appointment was made.
``(4) Compensation.--While serving on the business of the
Commission (including traveltime), a member of the Commission
shall be entitled to compensation at the per diem equivalent of
the rate provided for level IV of the Executive Schedule under
section 5315 of title 5, United States Code; and while so
serving away from home and member's regular place of business,
a member may be allowed travel expenses, as authorized by the
Chairman of the Commission. Physicians serving as personnel of
the Commission may be provided a physician comparability
allowance by the Commission in the same manner as Government
physicians may be provided such an allowance by an agency under
section 5948 of title 5, United States Code, and for such
purpose subsection (i) of such section shall apply to the
Commission in the same manner as it applies to the Tennessee
Valley Authority. For purposes of pay (other than pay of
members of the Commission) and employment benefits, rights, and
privileges, all personnel of the Commission shall be treated as
if they were employees of the United States Senate.
``(5) Chairman; vice chairman.--The Comptroller General
shall designate a member of the Commission, at the time of
appointment of the member, as Chairman and a member as Vice
Chairman for that term of appointment.
``(6) Meetings.--The Commission shall meet at the call of
the Chairman.
``(d) Director and Staff; Experts and Consultants.--Subject to such
review as the Comptroller General deems necessary to assure the
efficient administration of the Commission, the Commission may--
``(1) employ and fix the compensation of an Executive
Director (subject to the approval of the Comptroller General)
and such other personnel as may be necessary to carry out its
duties (without regard to the provisions of title 5, United
States Code, governing appointments in the competitive
service);
``(2) seek such assistance and support as may be required
in the performance of its duties from appropriate Federal
departments and agencies;
``(3) enter into contracts or make other arrangements, as
may be necessary for the conduct of the work of the Commission
(without regard to section 3709 of the Revised Statutes (41
U.S.C. 5));
``(4) make advance, progress, and other payments which
relate to the work of the Commission;
``(5) provide transportation and subsistence for persons
serving without compensation; and
``(6) prescribe such rules and regulations as it deems
necessary with respect to the internal organization and
operation of the Commission.
``(e) Powers.--
``(1) Obtaining official data.--The Commission may secure
directly from any department or agency of the United States
information necessary to enable it to carry out this section.
Upon request of the Chairman, the head of that department or
agency shall furnish that information to the Commission on an
agreed upon schedule.
``(2) Data collection.--In order to carry out its
functions, the Commission shall--
``(A) utilize existing information, both published
and unpublished, where possible, collected and assessed
either by its own staff or under other arrangements
made in accordance with this section,
``(B) carry out, or award grants or contracts for,
original research and experimentation, where existing
information is inadequate, and
``(C) adopt procedures allowing any interested
party to submit information for the Commission's use in
making reports and recommendations.
``(3) Access of gao to information.--The Comptroller
General shall have unrestricted access to all deliberations,
records, and nonproprietary data of the Commission, immediately
upon request.
``(4) Periodic audit.--The Commission shall be subject to
periodic audit by the Comptroller General.
``(f) Authorization of Appropriations.--
``(1) Request for appropriations.--The Commission shall
submit requests for appropriations in the same manner as the
Comptroller General submits requests for appropriations, but
amounts appropriated for the Commission shall be separate from
amounts appropriated for the Comptroller General.
``(2) Authorization.--There are authorized to be
appropriated such sums as may be necessary to carry out the
provisions of this section. 60 percent of such appropriation
shall be payable from the Federal Hospital Insurance Trust
Fund, and 40 percent of such appropriation shall be payable
from the Federal Supplementary Medical Insurance Trust Fund.''.
(b) Abolition of ProPAC and PPRC.--
(1) Propac.--
(A) In general.--Section 1886(e) (42 U.S.C.
1395ww(e)) is amended--
(i) by striking paragraphs (2) and (6); and
(ii) in paragraph (3), by striking ``(A)
The Commission'' and all that follows through
``(B)''.
(B) Conforming amendment.--Section 1862 (42 U.S.C.
1395y) is amended by striking ``Prospective Payment
Assessment Commission'' each place it appears in
subsection (a)(1)(D) and subsection (i) and inserting
``Medicare Payment Advisory Commission''.
(2) PPRC.--
(A) In general.--Title XVIII is amended by striking
section 1845 (42 U.S.C. 1395w-1).
(B) Elimination of certain reports.--Section 1848
(42 U.S.C. 1395w-4) is amended--
(i) by striking subparagraph (F) of
subsection (d)(2),
(ii) by striking subparagraph (B) of
subsection (f)(1), and
(iii) in subsection (f)(3), by striking
``Physician Payment Review Commission,''.
(C) Conforming amendments.--Section 1848 (42 U.S.C.
1395w-4) is amended by striking ``Physician Payment
Review Commission'' and inserting ``Medicare Payment
Advisory Commission'' each place it appears in
subsections (c)(2)(B)(iii), (g)(6)(C), and (g)(7)(C).
(c) Effective Date; Transition.--
(1) In general.--The Comptroller General shall first
provide for appointment of members to the Medicare Payment
Advisory Commission (in this subsection referred to as
``MedPAC'') by not later than September 30, 1997.
(2) Transition.--As quickly as possible after the date a
majority of members of MedPAC are first appointed, the
Comptroller General, in consultation with the Prospective
Payment Assessment Commission (in this subsection referred to
as ``ProPAC'') and the Physician Payment Review Commission (in
this subsection referred to as ``PPRC''), shall provide for the
termination of the ProPAC and the PPRC. As of the date of
termination of the respective Commissions, the amendments made
by paragraphs (1) and (2), respectively, of subsection (b)
become effective. The Comptroller General, to the extent
feasible, shall provide for the transfer to the MedPAC of
assets and staff of the ProPAC and the PPRC, without any loss
of benefits or seniority by virtue of such transfers. Fund
balances available to the ProPAC or the PPRC for any period
shall be available to the MedPAC for such period for like
purposes.
(3) Continuing responsibility for reports.--The MedPAC
shall be responsible for the preparation and submission of
reports required by law to be submitted (and which have not
been submitted by the date of establishment of the MedPAC) by
the ProPAC and the PPRC, and, for this purpose, any reference
in law to either such Commission is deemed, after the
appointment of the MedPAC, to refer to the MedPAC.
CHAPTER 4--MEDIGAP PROTECTIONS
SEC. 10031. MEDIGAP PROTECTIONS.
(a) Guaranteeing Issue Without Preexisting Conditions for
Continuously Covered Individuals.--Section 1882(s) (42 U.S.C.
1395ss(s)) is amended--
(1) in paragraph (3), by striking ``paragraphs (1) and
(2)'' and inserting ``this subsection'',
(2) by redesignating paragraph (3) as paragraph (4), and
(3) by inserting after paragraph (2) the following new
paragraph:
``(3)(A) The issuer of a medicare supplemental policy--
``(i) may not deny or condition the issuance or
effectiveness of a medicare supplemental policy described in
subparagraph (C) that is offered and is available for issuance
to new enrollees by such issuer;
``(ii) may not discriminate in the pricing of such policy,
because of health status, claims experience, receipt of health
care, or medical condition; and
``(iii) may not impose an exclusion of benefits based on a
pre-existing condition under such policy,
in the case of an individual described in subparagraph (B) who seeks to
enroll under the policy not later than 63 days after the date of the
termination of enrollment described in such subparagraph and who
submits evidence of the date of termination or disenrollment along with
the application for such medicare supplemental policy.
``(B) An individual described in this subparagraph is an individual
described in any of the following clauses:
``(i) The individual is enrolled under an employee welfare
benefit plan that provides health benefits that supplement the
benefits under this title and the plan terminates or ceases to
provide all such supplemental health benefits to the
individual.
``(ii) The individual is enrolled with a MedicarePlus
organization under a MedicarePlus plan under part C, and there
are circumstances permitting discontinuance of the individual's
election of the plan under section 1851(c)(4).
``(iii) The individual is enrolled with an eligible
organization under a contract under section 1876, a similar
organization operating under demonstration project authority,
with an organization under an agreement under section
1833(a)(1)(A), or with an organization under a policy described
in subsection (t), and such enrollment ceases under the same
circumstances that would permit discontinuance of an
individual's election of coverage under section 1851(c)(4) and,
in the case of a policy described in subsection (t), there is
no provision under applicable State law for the continuation of
coverage under such policy.
``(iv) The individual is enrolled under a medicare
supplemental policy under this section and such enrollment
ceases because--
``(I) of the bankruptcy or insolvency of the issuer
or because of other involuntary termination of coverage
or enrollment under such policy and there is no
provision under applicable State law for the
continuation of such coverage;
``(II) the issuer of the policy substantially
violated a material provision of the policy; or
``(III) the issuer (or an agent or other entity
acting on the issuer's behalf) materially
misrepresented the policy's provisions in marketing the
policy to the individual.
``(v) The individual--
``(I) was enrolled under a medicare supplemental
policy under this section,
``(II) subsequently terminates such enrollment and
enrolls, for the first time, with any MedicarePlus
organization under a MedicarePlus plan under part C,
any eligible organization under a contract under
section 1876, any similar organization operating under
demonstration project authority, any organization under
an agreement under section 1833(a)(1)(A), or any policy
described in subsection (t), and
``(III) the subsequent enrollment under subclause
(II) is terminated by the enrollee during the first 6
months (or 3 months for terminations occurring on or
after January 1, 2003) of such enrollment.
``(C)(i) Subject to clauses (ii) and (iii), a medicare supplemental
policy described in this subparagraph has a benefit package classified
as `A', `B', `C', or `F' under the standards established under
subsection (p)(2).
``(ii) Only for purposes of an individual described in subparagraph
(B)(v), a medicare supplemental policy described in this subparagraph
also includes (if available from the same issuer) the same medicare
supplemental policy referred to in such subparagraph in which the
individual was most recently previously enrolled.
``(iii) For purposes of applying this paragraph in the case of a
State that provides for offering of benefit packages other than under
the classification referred to in clause (i), the references to benefit
packages in such clause are deemed references to comparable benefit
packages offered in such State.
``(D) At the time of an event described in subparagraph (B) because
of which an individual ceases enrollment or loses coverage or benefits
under a contract or agreement, policy, or plan, the organization that
offers the contract or agreement, the insurer offering the policy, or
the administrator of the plan, respectively, shall notify the
individual of the rights of the individual, and obligations of issuers
of medicare supplemental policies, under subparagraph (A).''.
(b) Limitation on Imposition of Preexisting Condition Exclusion
During Initial Open Enrollment Period.--Section 1882(s)(2) (42 U.S.C.
1395ss(s)(2)) is amended--
(1) in subparagraph (B), by striking ``subparagraph (C)''
and inserting ``subparagraphs (C) and (D)'', and
(2) by adding at the end the following new subparagraph:
``(D) In the case of a policy issued during the 6-month period
described in subparagraph (A) to an individual who is 65 years of age
or older as of the date of issuance and who as of the date of the
application for enrollment has a continuous period of creditable
coverage (as defined in 2701(c) of the Public Health Service Act) of--
``(i) at least 6 months, the policy may not exclude
benefits based on a pre-existing condition; or
``(ii) of less than 6 months, if the policy excludes
benefits based on a preexisting condition, the policy shall
reduce the period of any preexisting condition exclusion by the
aggregate of the periods of creditable coverage (if any, as so
defined) applicable to the individual as of the enrollment
date.
The Secretary shall specify the manner of the reduction under clause
(ii), based upon the rules used by the Secretary in carrying out
section 2701(a)(3) of such Act.''.
(c) Effective Dates.--
(1) Guaranteed issue.--The amendment made by subsection (a)
shall take effect on July 1, 1998.
(2) Limit on preexisting condition exclusions.--The
amendment made by subsection (b) shall apply to policies issued
on or after July 1, 1998.
(d) Transition Provisions.--
(1) In general.--If the Secretary of Health and Human
Services identifies a State as requiring a change to its
statutes or regulations to conform its regulatory program to
the changes made by this section, the State regulatory program
shall not be considered to be out of compliance with the
requirements of section 1882 of the Social Security Act due
solely to failure to make such change until the date specified
in paragraph (4).
(2) NAIC standards.--If, within 9 months after the date of
the enactment of this Act, the National Association of
Insurance Commissioners (in this subsection referred to as the
``NAIC'') modifies its NAIC Model Regulation relating to
section 1882 of the Social Security Act (referred to in such
section as the 1991 NAIC Model Regulation, as modified pursuant
to section 171(m)(2) of the Social Security Act Amendments of
1994 (Public Law 103-432) and as modified pursuant to section
1882(d)(3)(A)(vi)(IV) of the Social Security Act, as added by
section 271(a) of the Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-191) to conform to
the amendments made by this section, such revised regulation
incorporating the modifications shall be considered to be the
applicable NAIC model regulation (including the revised NAIC
model regulation and the 1991 NAIC Model Regulation) for the
purposes of such section.
(3) Secretary standards.--If the NAIC does not make the
modifications described in paragraph (2) within the period
specified in such paragraph, the Secretary of Health and Human
Services shall make the modifications described in such
paragraph and such revised regulation incorporating the
modifications shall be considered to be the appropriate
Regulation for the purposes of such section.
(4) Date specified.--
(A) In general.--Subject to subparagraph (B), the
date specified in this paragraph for a State is the
earlier of--
(i) the date the State changes its statutes
or regulations to conform its regulatory
program to the changes made by this section, or
(ii) 1 year after the date the NAIC or the
Secretary first makes the modifications under
paragraph (2) or (3), respectively.
(B) Additional legislative action required.--In the
case of a State which the Secretary identifies as--
(i) requiring State legislation (other than
legislation appropriating funds) to conform its
regulatory program to the changes made in this
section, but
(ii) having a legislature which is not
scheduled to meet in 1999 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first day
of the first calendar quarter beginning after the close
of the first legislative session of the State
legislature that begins on or after July 1, 1999. For
purposes of the previous sentence, in the case of a
State that has a 2-year legislative session, each year
of such session shall be deemed to be a separate
regular session of the State legislature.
SEC. 10032. MEDICARE PREPAID COMPETITIVE PRICING DEMONSTRATION PROJECT.
(a) Establishment of Project.--The Secretary of Health and Human
Services shall provide, beginning not later than 1 year after the date
of the enactment of this Act, for implementation of a project (in this
section referred to as the ``project'') to demonstrate the application
of, and the consequences of applying, a market-oriented pricing system
for the provision of a full range of medicare benefits in a geographic
area.
(b) Research Design Advisory Committee.--
(1) In general.--Before implementing the project under this
section, the Secretary shall appoint a national advisory
committee, including independent actuaries and individuals with
expertise in competitive health plan pricing, to make
recommendations to the Secretary concerning the appropriate
research design for implementing the project.
(2) Initial recommendations.--The committee initially shall
submit recommendations respecting the method for area
selection, benefit design among plans offered, structuring
choice among health plans offered, methods for setting the
price to be paid to plans, collection of plan information
(including information concerning quality and access to care),
information dissemination, and methods of evaluating the
results of the project.
(3) Advice during implementation.--Upon implementation of
the project, the committee shall continue to advise the
Secretary on the application of the design in different areas
and changes in the project based on experience with its
operations.
(c) Area Selection.--
(1) In general.--Taking into account the recommendations of
the advisory committee submitted under subsection (b), the
Secretary shall designate areas in which the project will
operate.
(2) Appointment of area advisory committee.--Upon the
designation of an area for inclusion in the project, the
Secretary shall appoint an area advisory committee, composed of
representatives of health plans, providers, and medicare
beneficiaries in the area, to advise the Secretary concerning
how the project will actually be implemented in the area. Such
advice may include advice concerning the marketing and pricing
of plans in the area and other salient factors relating.
(d) Monitoring and Report.--
(1) Monitoring impact.--Taking into consideration the
recommendations of the general advisory committee (appointed
under subsection (b)), the Secretary shall closely monitor the
impact of projects in areas on the price and quality of, and
access to, medicare covered services, choice of health plan,
changes in enrollment, and other relevant factors.
(2) Report.--The Secretary shall periodically report to
Congress on the progress under the project under this section.
(e) Waiver Authority.--The Secretary of Health and Human Services
may waive such requirements of section 1876 (and such requirements of
part C of title XVIII, as amended by chapter 1), of the Social Security
Act as may be necessary for the purposes of carrying out the project.
CHAPTER 5--TAX TREATMENT OF HOSPITALS PARTICIPATING IN PROVIDER-
SPONSORED ORGANIZATIONS
SEC. 10041. TAX TREATMENT OF HOSPITALS WHICH PARTICIPATE IN PROVIDER-
SPONSORED ORGANIZATIONS.
(a) In General.--Section 501 of the Internal Revenue Code of 1986
(relating to exemption from tax on corporations, certain trusts, etc.)
is amended by redesignating subsection (o) as subsection (p) and by
inserting after subsection (n) the following new subsection:
``(o) Treatment of Hospitals Participating in Provider-Sponsored
Organizations.--An organization shall not fail to be treated as
organized and operated exclusively for a charitable purpose for
purposes of subsection (c)(3) solely because a hospital which is owned
and operated by such organization participates in a provider-sponsored
organization (as defined in section 1853(e) of the Social Security
Act), whether or not the provider-sponsored organization is exempt from
tax. For purposes of subsection (c)(3), any person with a material
financial interest in such a provider-sponsored organization shall be
treated as a private shareholder or individual with respect to the
hospital.''
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
Subtitle B--Prevention Initiatives
SEC. 10101. SCREENING MAMMOGRAPHY.
(a) Providing Annual Screening Mammography for Women Over Age 39.--
Section 1834(c)(2)(A) (42 U.S.C. 1395m(c)(2)(A)) is amended--
(1) in clause (iii), to read as follows:
``(iii) In the case of a woman over 39
years of age, payment may not be made under
this part for screening mammography performed
within 11 months following the month in which a
previous screening mammography was
performed.''; and
(2) by striking clauses (iv) and (v).
(b) Waiver of Deductible.--The first sentence of section 1833(b)
(42 U.S.C. 1395l(b)) is amended--
(1) by striking ``and'' before ``(4)'', and
(2) by inserting before the period at the end the
following: ``, and (5) such deductible shall not apply with
respect to screening mammography (as described in section
1861(jj))''.
(c) Conforming Amendment.--Section 1834(c)(1)(C) of such Act (42
U.S.C. 1395m(c)(1)(C)) is amended by striking ``, subject to the
deductible established under section 1833(b),''.
(d) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.
SEC. 10102. SCREENING PAP SMEAR AND PELVIC EXAMS.
(a) Coverage of Pelvic Exam; Increasing Frequency of Coverage of
Pap Smear.--Section 1861(nn) (42 U.S.C. 1395x(nn)) is amended--
(1) in the heading, by striking ``Smear'' and inserting
``Smear; Screening Pelvic Exam'';
(2) by inserting ``or vaginal'' after ``cervical'' each
place it appears;
(3) by striking ``(nn)'' and inserting ``(nn)(1)'';
(4) by striking ``3 years'' and all that follows and
inserting ``3 years, or during the preceding year in the case
of a woman described in paragraph (3).''; and
(5) by adding at the end the following new paragraphs:
``(2) The term `screening pelvic exam' means an pelvic examination
provided to a woman if the woman involved has not had such an
examination during the preceding 3 years, or during the preceding year
in the case of a woman described in paragraph (3), and includes a
clinical breast examination.
``(3) A woman described in this paragraph is a woman who--
``(A) is of childbearing age and has not had a test
described in this subsection during each of the preceding 3
years that did not indicate the presence of cervical or vaginal
cancer; or
``(B) is at high risk of developing cervical or vaginal
cancer (as determined pursuant to factors identified by the
Secretary).''.
(b) Waiver of Deductible.--The first sentence of section 1833(b)
(42 U.S.C. 1395l(b)), as amended by section 10101(b), is amended--
(1) by striking ``and'' before ``(5)'', and
(2) by inserting before the period at the end the
following: ``, and (6) such deductible shall not apply with
respect to screening pap smear and screening pelvic exam (as
described in section 1861(nn))''.
(c) Conforming Amendments.--Sections 1861(s)(14) and 1862(a)(1)(F)
(42 U.S.C. 1395x(s)(14), 1395y(a)(1)(F)) are each amended by inserting
``and screening pelvic exam'' after ``screening pap smear''.
(d) Payment Under Physician Fee Schedule.--Section 1848(j)(3)(42
U.S.C. 1395w-4(j)(3)) is amended by striking ``and (4)'' and inserting
``(4) and (14) (with respect to services described in section
1861(nn)(2))''.
(e) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.
SEC. 10103. PROSTATE CANCER SCREENING TESTS.
(a) Coverage.--Section 1861 (42 U.S.C. 1395x) is amended--
(1) in subsection (s)(2)--
(A) by striking ``and'' at the end of subparagraphs
(N) and (O), and
(B) by inserting after subparagraph (O) the
following new subparagraph:
``(P) prostate cancer screening tests (as defined in
subsection (oo)); and''; and
(2) by adding at the end the following new subsection:
``Prostate Cancer Screening Tests
``(oo)(1) The term `prostate cancer screening test' means a test
that consists of any (or all) of the procedures described in paragraph
(2) provided for the purpose of early detection of prostate cancer to a
man over 50 years of age who has not had such a test during the
preceding year.
``(2) The procedures described in this paragraph are as follows:
``(A) A digital rectal examination.
``(B) A prostate-specific antigen blood test.
``(C) For years beginning after 2001, such other procedures
as the Secretary finds appropriate for the purpose of early
detection of prostate cancer, taking into account changes in
technology and standards of medical practice, availability,
effectiveness, costs, and such other factors as the Secretary
considers appropriate.''.
(b) Payment for Prostate-specific Antigen Blood Test Under Clinical
Diagnostic Laboratory Test Fee Schedules.--Section 1833(h)(1)(A) (42
U.S.C. 1395l(h)(1)(A)) is amended by inserting after ``laboratory
tests'' the following: ``(including prostate cancer screening tests
under section 1861(oo) consisting of prostate-specific antigen blood
tests)''.
(c) Conforming Amendment.--Section 1862(a) (42 U.S.C. 1395y(a)) is
amended--
(1) in paragraph (1)--
(A) in subparagraph (E), by striking ``and'' at the
end,
(B) in subparagraph (F), by striking the semicolon
at the end and inserting ``, and'', and
(C) by adding at the end the following new
subparagraph:
``(G) in the case of prostate cancer screening tests (as
defined in section 1861(oo)), which are performed more
frequently than is covered under such section;''; and
(2) in paragraph (7), by striking ``paragraph (1)(B) or
under paragraph (1)(F)'' and inserting ``subparagraphs (B),
(F), or (G) of paragraph (1)''.
(d) Payment Under Physician Fee Schedule.--Section 1848(j)(3)(42
U.S.C. 1395w-4(j)(3)), as amended by section 10102, is amended by
inserting ``, (2)(P) (with respect to services described in
subparagraphs (A) and (C) of section 1861(oo)'' after ``(2)(G)''
(e) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.
SEC. 10104. COVERAGE OF COLORECTAL SCREENING.
(a) Coverage.--
(1) In general.--Section 1861 (42 U.S.C. 1395x), as amended
by section 10103(a), is amended--
(A) in subsection (s)(2)--
(i) by striking ``and'' at the end of
subparagraph (P);
(ii) by adding ``and'' at the end of
subparagraph (Q); and
(iii) by adding at the end the following
new subparagraph:
``(R) colorectal cancer screening tests (as defined in
subsection (pp)); and''; and
(B) by adding at the end the following new
subsection:
``Colorectal Cancer Screening Tests
``(pp)(1) The term `colorectal cancer screening test' means any of
the following procedures furnished to an individual for the purpose of
early detection of colorectal cancer:
``(A) Screening fecal-occult blood test.
``(B) Screening flexible sigmoidoscopy.
``(C) In the case of an individual at high risk for
colorectal cancer, screening colonoscopy.
``(D) Screening barium enema, if found by the Secretary to
be an appropriate alternative to screening flexible
sigmoidoscopy under subparagraph (B) or screening colonoscopy
under subparagraph (C).
``(E) For years beginning after 2002, such other procedures
as the Secretary finds appropriate for the purpose of early
detection of colorectal cancer, taking into account changes in
technology and standards of medical practice, availability,
effectiveness, costs, and such other factors as the Secretary
considers appropriate.
``(2) In paragraph (1)(C), an `individual at high risk for
colorectal cancer' is an individual who, because of family history,
prior experience of cancer or precursor neoplastic polyps, a history of
chronic digestive disease condition (including inflammatory bowel
disease, Crohn's Disease, or ulcerative colitis), the presence of any
appropriate recognized gene markers for colorectal cancer, or other
predisposing factors, faces a high risk for colorectal cancer.''.
(2) Deadline for decision on coverage of screening barium
enema.--Not later than 2 years after the date of the enactment
of this section, the Secretary of Health and Human Services
shall issue and publish a determination on the treatment of
screening barium enema as a colorectal cancer screening test
under section 1861(pp) (as added by subparagraph (B)) as an
alternative procedure to a screening flexible sigmoidoscopy or
screening colonoscopy.
(b) Frequency and Payment Limits.--
(1) In general.--Section 1834 (42 U.S.C. 1395m) is amended
by inserting after subsection (c) the following new subsection:
``(d) Frequency and Payment Limits for Colorectal Cancer Screening
Tests.--
``(1) Screening fecal-occult blood tests.--
``(A) Payment limit.--In establishing fee schedules
under section 1833(h) with respect to colorectal cancer
screening tests consisting of screening fecal-occult
blood tests, except as provided by the Secretary under
paragraph (4)(A), the payment amount established for
tests performed--
``(i) in 1998 shall not exceed $5; and
``(ii) in a subsequent year, shall not
exceed the limit on the payment amount
established under this subsection for such
tests for the preceding year, adjusted by the
applicable adjustment under section 1833(h) for
tests performed in such year.
``(B) Frequency limit.--Subject to revision by the
Secretary under paragraph (4)(B), no payment may be
made under this part for colorectal cancer screening
test consisting of a screening fecal-occult blood
test--
``(i) if the individual is under 50 years
of age; or
``(ii) if the test is performed within the
11 months after a previous screening fecal-
occult blood test.
``(2) Screening flexible sigmoidoscopies.--
``(A) Fee schedule.--The Secretary shall establish
a payment amount under section 1848 with respect to
colorectal cancer screening tests consisting of
screening flexible sigmoidoscopies that is consistent
with payment amounts under such section for similar or
related services, except that such payment amount shall
be established without regard to subsection (a)(2)(A)
of such section.
``(B) Payment limit.--In the case of screening
flexible sigmoidoscopy services--
``(i) the payment amount may not exceed
such amount as the Secretary specifies, based
upon the rates recognized under this part for
diagnostic flexible sigmoidoscopy services; and
``(ii) that, in accordance with
regulations, may be performed in an ambulatory
surgical center and for which the Secretary
permits ambulatory surgical center payments
under this part and that are performed in an
ambulatory surgical center or hospital
outpatient department, the payment amount under
this part may not exceed the lesser of (I) the
payment rate that would apply to such services
if they were performed in a hospital outpatient
department, or (II) the payment rate that would
apply to such services if they were performed
in an ambulatory surgical center.
``(C) Special rule for detected lesions.--If during
the course of such screening flexible sigmoidoscopy, a
lesion or growth is detected which results in a biopsy
or removal of the lesion or growth, payment under this
part shall not be made for the screening flexible
sigmoidoscopy but shall be made for the procedure
classified as a flexible sigmoidoscopy with such biopsy
or removal.
``(D) Frequency limit.--Subject to revision by the
Secretary under paragraph (4)(B), no payment may be
made under this part for a colorectal cancer screening
test consisting of a screening flexible sigmoidoscopy--
``(i) if the individual is under 50 years
of age; or
``(ii) if the procedure is performed within
the 47 months after a previous screening
flexible sigmoidoscopy.
``(3) Screening colonoscopy for individuals at high risk
for colorectal cancer.--
``(A) Fee schedule.--The Secretary shall establish
a payment amount under section 1848 with respect to
colorectal cancer screening test consisting of a
screening colonoscopy for individuals at high risk for
colorectal cancer (as defined in section 1861(pp)(2))
that is consistent with payment amounts under such
section for similar or related services, except that
such payment amount shall be established without regard
to subsection (a)(2)(A) of such section.
``(B) Payment limit.--In the case of screening
colonoscopy services--
``(i) the payment amount may not exceed
such amount as the Secretary specifies, based
upon the rates recognized under this part for
diagnostic colonoscopy services; and
``(ii) that are performed in an ambulatory
surgical center or hospital outpatient
department, the payment amount under this part
may not exceed the lesser of (I) the payment
rate that would apply to such services if they
were performed in a hospital outpatient
department, or (II) the payment rate that would
apply to such services if they were performed
in an ambulatory surgical center.
``(C) Special rule for detected lesions.--If during
the course of such screening colonoscopy, a lesion or
growth is detected which results in a biopsy or removal
of the lesion or growth, payment under this part shall
not be made for the screening colonoscopy but shall be
made for the procedure classified as a colonoscopy with
such biopsy or removal.
``(D) Frequency limit.--Subject to revision by the
Secretary under paragraph (4)(B), no payment may be
made under this part for a colorectal cancer screening
test consisting of a screening colonoscopy for
individuals at high risk for colorectal cancer if the
procedure is performed within the 23 months after a
previous screening colonoscopy.
``(4) Reductions in payment limit and revision of
frequency.--
``(A) Reductions in payment limit for screening
fecal-occult blood tests.--The Secretary shall review
from time to time the appropriateness of the amount of
the payment limit established for screening fecal-
occult blood tests under paragraph (1)(A). The
Secretary may, with respect to tests performed in a
year after 2000, reduce the amount of such limit as it
applies nationally or in any area to the amount that
the Secretary estimates is required to assure that such
tests of an appropriate quality are readily and
conveniently available during the year.
``(B) Revision of frequency.--
``(i) Review.--The Secretary shall review
periodically the appropriate frequency for
performing colorectal cancer screening tests
based on age and such other factors as the
Secretary believes to be pertinent.
``(ii) Revision of frequency.--The
Secretary, taking into consideration the review
made under clause (i), may revise from time to
time the frequency with which such tests may be
paid for under this subsection, but no such
revision shall apply to tests performed before
January 1, 2001.
``(5) Limiting charges of nonparticipating physicians.--
``(A) In general.--In the case of a colorectal
cancer screening test consisting of a screening
flexible sigmoidoscopy or a screening colonoscopy
provided to an individual at high risk for colorectal
cancer for which payment may be made under this part,
if a nonparticipating physician provides the procedure
to an individual enrolled under this part, the
physician may not charge the individual more than the
limiting charge (as defined in section 1848(g)(2)).
``(B) Enforcement.--If a physician or supplier
knowing and willfully imposes a charge in violation of
subparagraph (A), the Secretary may apply sanctions
against such physician or supplier in accordance with
section 1842(j)(2).''.
(2) Special rule for screening barium enema.--If the
Secretary of Health and Human Services issues a determination
under subsection (a)(2) that screening barium enema should be
covered as a colorectal cancer screening test under section
1861(pp) (as added by subsection (a)(1)(B)), the Secretary
shall establish frequency limits (including revisions of
frequency limits) for such procedure consistent with the
frequency limits for other colorectal cancer screening tests
under section 1834(d) (as added by subsection (b)(1)), and
shall establish payment limits (including limits on charges of
nonparticipating physicians) for such procedure consistent with
the payment limits under part B of title XVIII for diagnostic
barium enema procedures.
(c) Conforming Amendments.--(1) Paragraphs (1)(D) and (2)(D) of
section 1833(a) (42 U.S.C. 1395l(a)) are each amended by inserting ``or
section 1834(d)(1)'' after ``subsection (h)(1)''.
(2) Section 1833(h)(1)(A) (42 U.S.C. 1395l(h)(1)(A)) is amended by
striking ``The Secretary'' and inserting ``Subject to paragraphs (1)
and (4)(A) of section 1834(d), the Secretary''.
(3) Clauses (i) and (ii) of section 1848(a)(2)(A) (42 U.S.C. 1395w-
4(a)(2)(A)) are each amended by inserting after ``a service'' the
following: ``(other than a colorectal cancer screening test consisting
of a screening colonoscopy provided to an individual at high risk for
colorectal cancer or a screening flexible sigmoidoscopy)''.
(4) Section 1862(a) (42 U.S.C. 1395y(a)), as amended by section
10103(c), is amended--
(A) in paragraph (1)--
(i) in subparagraph (F), by striking ``and'' at the
end,
(ii) in subparagraph (G), by striking the semicolon
at the end and inserting ``, and'', and
(iii) by adding at the end the following new
subparagraph:
``(H) in the case of colorectal cancer screening tests,
which are performed more frequently than is covered under
section 1834(d);''; and
(B) in paragraph (7), by striking ``or (G)'' and inserting
``(G), or (H)''.
(d) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.
SEC. 10105. DIABETES SCREENING TESTS.
(a) Coverage of Diabetes Outpatient Self-management Training
Services.--
(1) In general.--Section 1861 (42 U.S.C. 1395x), as amended
by sections 10103(a) and 10104(a), is amended--
(A) in subsection (s)(2)--
(i) by striking ``and'' at the end of
subparagraph (Q);
(ii) by adding ``and'' at the end of
subparagraph (R); and
(iii) by adding at the end the following
new subparagraph:
``(S) diabetes outpatient self-management training services
(as defined in subsection (qq)); and''; and
(B) by adding at the end the following new
subsection:
``Diabetes Outpatient Self-Management Training Services
``(qq)(1) The term `diabetes outpatient self-management training
services' means educational and training services furnished to an
individual with diabetes by a certified provider (as described in
paragraph (2)(A)) in an outpatient setting by an individual or entity
who meets the quality standards described in paragraph (2)(B), but only
if the physician who is managing the individual's diabetic condition
certifies that such services are needed under a comprehensive plan of
care related to the individual's diabetic condition to provide the
individual with necessary skills and knowledge (including skills
related to the self-administration of injectable drugs) to participate
in the management of the individual's condition.
``(2) In paragraph (1)--
``(A) a `certified provider' is a physician, or other
individual or entity designated by the Secretary, that, in
addition to providing diabetes outpatient self-management
training services, provides other items or services for which
payment may be made under this title; and
``(B) a physician, or such other individual or entity,
meets the quality standards described in this paragraph if the
physician, or individual or entity, meets quality standards
established by the Secretary, except that the physician or
other individual or entity shall be deemed to have met such
standards if the physician or other individual or entity meets
applicable standards originally established by the National
Diabetes Advisory Board and subsequently revised by
organizations who participated in the establishment of
standards by such Board, or is recognized by an organization
that represents individuals (including individuals under this
title) with diabetes as meeting standards for furnishing the
services.''.
(2) Payment Under Physician Fee Schedule.--Section
1848(j)(3)(42 U.S.C. 1395w-4(j)(3)) as amended in sections
10102 and 10103, is amended by inserting ``(2)(S),'' before
``(3),''.
(3) Consultation with organizations in establishing payment
amounts for services provided by physicians.--In establishing
payment amounts under section 1848 of the Social Security Act
for physicians' services consisting of diabetes outpatient
self-management training services, the Secretary of Health and
Human Services shall consult with appropriate organizations,
including such organizations representing individuals or
medicare beneficiaries with diabetes, in determining the
relative value for such services under section 1848(c)(2) of
such Act.
(b) Blood-testing Strips for Individuals With Diabetes.--
(1) Including strips and monitors as durable medical
equipment.--The first sentence of section 1861(n) (42 U.S.C.
1395x(n)) is amended by inserting before the semicolon the
following: ``, and includes blood-testing strips and blood
glucose monitors for individuals with diabetes without regard
to whether the individual has Type I or Type II diabetes or to
the individual's use of insulin (as determined under standards
established by the Secretary in consultation with the
appropriate organizations)''.
(2) 10 percent reduction in payments for testing strips.--
Section 1834(a)(2)(B)(iv) (42 U.S.C. 1395m(a)(2)(B)(iv)) is
amended by adding before the period the following: ``(reduced
by 10 percent, in the case of a blood glucose testing strip
furnished after 1997 for an individual with diabetes)''.
(c) Establishment of Outcome Measures for Beneficiaries With
Diabetes.--
(1) In general.--The Secretary of Health and Human
Services, in consultation with appropriate organizations, shall
establish outcome measures, including glysolated hemoglobin
(past 90-day average blood sugar levels), for purposes of
evaluating the improvement of the health status of medicare
beneficiaries with diabetes mellitus.
(2) Recommendations for modifications to screening
benefits.--Taking into account information on the health status
of medicare beneficiaries with diabetes mellitus as measured
under the outcome measures established under subparagraph (A),
the Secretary shall from time to time submit recommendations to
Congress regarding modifications to the coverage of services
for such beneficiaries under the medicare program.
(d) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.
SEC. 10106. STANDARDIZATION OF MEDICARE COVERAGE OF BONE MASS
MEASUREMENTS.
(a) In General.--Section 1861 (42 U.S.C. 1395x), as amended by
sections 10103(a), 10104(a), 10105(a), is amended--
(1) in subsection (s)--
(A) in paragraph (12)(C), by striking ``and'' at
the end,
(B) by striking the period at the end of paragraph
(14) and inserting ``; and'',
(C) by redesignating paragraphs (15) and (16) as
paragraphs (16) and (17), respectively, and
(D) by inserting after paragraph (14) the following
new paragraph:
``(15) bone mass measurement (as defined in subsection
(rr)).''; and
(2) by inserting after subsection (qq) the following new
subsection:
``Bone Mass Measurement
``(rr)(1) The term `bone mass measurement' means a radiologic or
radioisotopic procedure or other procedure approved by the Food and
Drug Administration performed on a qualified individual (as defined in
paragraph (2)) for the purpose of identifying bone mass or detecting
bone loss or determining bone quality, and includes a physician's
interpretation of the results of the procedure.
``(2) For purposes of this subsection, the term `qualified
individual' means an individual who is (in accordance with regulations
prescribed by the Secretary)--
``(A) an estrogen-deficient woman at clinical risk for
osteoporosis;
``(B) an individual with vertebral abnormalities;
``(C) an individual receiving long-term glucocorticoid
steroid therapy;
``(D) an individual with primary hyperparathyroidism; or
``(E) an individual being monitored to assess the response
to or efficacy of an approved osteoporosis drug therapy.
``(3) The Secretary shall establish such standards regarding the
frequency with which a qualified individual shall be eligible to be
provided benefits for bone mass measurement under this title.''.
(b) Payment under Physician Fee Schedule.--Section 1848(j)(3) (42
U.S.C. 1395w-4(j)(3)), as amended by sections 10102, 10103, and 10105,
is amended--
(1) by striking ``(4) and (14)'' and inserting ``(4),
(14)'' and
(2) by inserting `` and (15)'' after ``1861(nn)(2))''.
(c) Conforming Amendments.--Sections 1864(a), 1902(a)(9)(C), and
1915(a)(1)(B)(ii)(I) (42 U.S.C. 1395aa(a), 1396a(a)(9)(C), and
1396n(a)(1)(B)(ii)(I)) are amended by striking ``paragraphs (15) and
(16)'' each place it appears and inserting ``paragraphs (16) and
(17)''.
(d) Effective Date.--The amendments made by this section shall
apply to bone mass measurements performed on or after July 1, 1998.
SEC. 10107. VACCINES OUTREACH EXPANSION.
(a) Extension of Influenza and Pneumococcal Vaccination Campaign.--
In order to increase utilization of pneumococcal and influenza vaccines
in medicare beneficiaries, the Influenza and Pneumococcal Vaccination
Campaign carried out by the Health Care Financing Administration in
conjunction with the Centers for Disease Control and Prevention and the
National Coalition for Adult Immunization, is extended until the end of
fiscal year 2002.
(b) Authorization of Appropriation.--There are hereby authorized to
be appropriated for each of fiscal years 1998 through 2002, $8,000,000
for the Campaign described in subsection (a). Of the amount so
authorized to be appropriated in each fiscal year, 60 percent of the
amount so appropriated shall be payable from the Federal Hospital
Insurance Trust Fund, and 40 percent shall be payable from the Federal
Supplementary Medical Insurance Trust Fund.
SEC. 10108. STUDY ON PREVENTIVE BENEFITS.
(a) Study.--The Secretary of Health and Human Services shall
request the National Academy of Sciences, in conjunction with the
United States Preventive Services Task Force, to analyze the expansion
or modification of preventive benefits provided to medicare
beneficiaries under title XVIII of the Social Security Act. The
analysis shall consider both the short term and long term benefits, and
costs to the medicare program, of such expansion or modification,
(b) Report.--
(1) Initial report.--Not later than 2 years after the date
of the enactment of this Act, the Secretary shall submit a
report on the findings of the analysis conducted under
subsection (a) 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.
(2) Contents.--Such report shall include specific findings
with respect to coverage of the following preventive benefits:
(A) Nutrition therapy, including parenteral and
enteral nutrition.
(B) Medically necessary dental care.
(C) Routine patient care costs for beneficiaries
enrolled in approved clinical trial programs.
(D) Elimination of time limitation for coverage of
immunosuppressive drugs for transplant patients.
(3) Funding.--From funds appropriated to the Department of
Health and Human Services for fiscal years 1998 and 1999, the
Secretary shall provide for such funding as may be necessary
for the conduct of the analysis by the National Academy of
Sciences under this section.
Subtitle C--Rural Initiatives
SEC. 10201. RURAL PRIMARY CARE HOSPITAL PROGRAM.
(a) Rural Primary Care Hospital Program.--Section 1820 (42 U.S.C.
1395i-4) is amended to read as follows:
``medicare rural primary care hospital program
``Sec. 1820. (a) State Designation of Facilities.--
``(1) In general.--A State may designate one or more
facilities as a rural primary care hospital in accordance with
paragraph (2).
``(2) Criteria for designation as rural primary care
hospital.--A State may designate a facility as a rural primary
care hospital if the facility--
``(A) is a nonprofit or public hospital, and is
located in a county (or equivalent unit of local
government) in a rural area (as defined in section
1886(d)(2)(D)) that--
``(i) is located a distance that
corresponds to a travel time of greater than 30
minutes (using the guidelines specified under
part IB1(b) of Appendix A to part 5 of title
42, Code of Federal Regulations, as in effect
on October 1, 1996), from a hospital, or
another facility described in this subsection,
or
``(ii) is certified by the State as being a
necessary provider of health care services to
residents in the area because of local
geography or service patterns;
``(B) makes available 24-hour emergency care
services;
``(C) provides at any time not more than 15 acute
care inpatient beds (meeting such standards as the
Secretary may establish) for providing inpatient care
for a period not to exceed 96 hours (unless a longer
period is required because transfer to a hospital is
precluded because of inclement weather or other
emergency conditions), except that a peer review
organization or equivalent entity may, on request,
waive the 96-hour restriction on a case-by-case basis;
``(D) meets such staffing requirements as would
apply under section 1861(e) to a hospital located in a
rural area, except that--
``(i) the facility need not meet hospital
standards relating to the number of hours
during a day, or days during a week, in which
the facility must be open and fully staffed,
except insofar as the facility is required to
make available emergency care services as
determined under subparagraph (B) and must have
nursing services available on a 24-hour basis,
but need not otherwise staff the facility
except when an inpatient is present,
``(ii) the facility may provide any
services otherwise required to be provided by a
full-time, on-site dietitian, pharmacist,
laboratory technician, medical technologist,
and radiological technologist on a part-time,
off-site basis under arrangements as defined in
section 1861(w)(1), and
``(iii) the inpatient care described in
subparagraph (C) may be provided by a
physician's assistant, nurse practitioner, or
clinical nurse specialist subject to the
oversight of a physician who need not be
present in the facility;
``(E) meets the requirements of subparagraph (I) of
paragraph (2) of section 1861(aa); and
``(F) has executed and in effect an agreement
described in subsection (b)(1).
``(b) Agreements.--
``(1) In general.--Each rural primary care hospital shall
have an agreement with respect to each item described in
paragraph (2) with at least 1 hospital (as defined in section
1861(e)).
``(2) Items described.--The items described in this
paragraph are the following:
``(A) Patient referral and transfer.
``(B) The development and use of communications
systems including (where feasible)--
``(i) telemetry systems, and
``(ii) systems for electronic sharing of
patient data.
``(C) The provision of emergency and non-emergency
transportation between the facility and the hospital.
``(3) Credentialing and quality assurance.--Each rural
primary care hospital shall have an agreement with respect to
credentialing and quality assurance with at least 1--
``(A) hospital,
``(B) peer review organization or equivalent
entity, or
``(C) other appropriate and qualified entity
identified by the State.
``(c) Certification by the Secretary.--The Secretary shall certify
a facility as a rural primary care hospital if the facility--
``(1) is designated as a rural primary care hospital by the
State in which it is located; and
``(2) meets such other criteria as the Secretary may
require.
``(d) Permitting Maintenance of Swing Beds.--Nothing in this
section shall be construed to prohibit a State from designating or the
Secretary from certifying a facility as a rural primary care hospital
solely because, at the time the facility applies to the State for
designation as a rural primary care hospital, there is in effect an
agreement between the facility and the Secretary under section 1883
under which the facility's inpatient hospital facilities are used for
the provision of extended care services, so long as the total number of
beds that may be used at any time for the furnishing of either such
services or acute care inpatient services does not exceed 25 beds and
the number of beds used at any time for acute care inpatient services
does not exceed 15 beds. For purposes of the previous sentence, any bed
of a unit of the facility that is licensed as a distinct-part skilled
nursing facility at the time the facility applies to the State for
designation as a rural primary care hospital shall not be counted.
``(e) Waiver of Conflicting Part A Provisions.--The Secretary is
authorized to waive such provisions of this part and part C as are
necessary to conduct the program established under this section.''.
(b) Payment on a Reasonable Cost Basis.--
(1) Medicare part a.--Section 1814(l) (42 U.S.C. 1395f(l))
is amended to read as follows:
``(l) Payment for Inpatient Rural Primary Care Hospital Services.--
The amount of payment under this part for inpatient rural primary care
hospital services is the reasonable costs of the rural primary care
hospital in providing such services.''.
(2) Medicare part b.--Section 1834(g) (42 U.S.C. 1395m(g))
is amended to read as follows:
``(g) Payment for Outpatient Rural Primary Care Hospital
Services.--The amount of payment under this part for outpatient rural
primary care hospital services is the reasonable costs of the rural
primary care hospital in providing such services.''.
(c) Lengthening Maximum Period of Permitted Inpatient Stay.--
Section 1814(a)(8) (42 U.S.C. 1395f(a)(8)) is amended by striking ``72
hours'' and inserting ``96 hours''.
(d) Payment Continued to Designated Essential Access Community
Hospitals and Designated Rural Primary Care Hospitals.--
(1) Essential access community hospitals.--Section
1886(d)(5)(D) (42 U.S.C. 1395ww(d)(5)(D)) is amended--
(A) in clause (iii)(III), by inserting ``as in
effect on September 30, 1997'' before the period at the
end; and
(B) in clause (v), by inserting ``as in effect on
September 30, 1997'' after ``1820(i)(1)'' and after
``1820(g)''.
(2) Rural primary care hospitals.--Section 1861(mm)(1) (42
U.S.C. 1395x(mm)(1)) is amended by striking ``1820(i)(2).'' and
inserting ``1820(c), and includes a facility designated by the
Secretary under section 1820(i)(2) as in effect on September
30, 1997.''.
(3) Medical assistance facility.--Any facility that, as of
March 1, 1997, operated as a limited service rural hospital
under a demonstration described in section 4008(i)(1) of the
Omnibus Budget Reconciliation Act of 1990 (42 U.S.C. 1395b-1
note) shall be treated as a rural primary care hospital for the
purposes of title XVIII of the Social Security Act so long as
it continues to meet the requirements of the demonstration
protocol relating to staffing, services, quality assurance, and
related factors.
(e) Conforming Amendment.--Section 1883(a)(1) (42 U.S.C.
1395tt(a)(1)) is amended by inserting ``or rural primary care
hospital'' after ``Any hospital''.
(f) Effective Date.--The amendments made by this section shall
apply to services furnished in cost reporting periods beginning on or
after October 1, 1997.
SEC. 10202. PROHIBITING DENIAL OF REQUEST BY RURAL REFERRAL CENTERS FOR
RECLASSIFICATION ON BASIS OF COMPARABILITY OF WAGES.
(a) In General.--Section 1886(d)(10)(D) (42 U.S.C.
1395ww(d)(10)(D)) is amended--
(1) by redesignating clause (iii) as clause (iv); and
(2) by inserting after clause (ii) the following new
clause:
``(iii) Under the guidelines published by the Secretary under
clause (i), in the case of a hospital which has ever been classified by
the Secretary as a rural referral center under paragraph (5)(C), the
Board may not reject the application of the hospital under this
paragraph on the basis of any comparison between the average hourly
wage of the hospital and the average hourly wage of hospitals in the
area in which it is located.''.
(b) Continuing Treatment of Previously Designated Centers.--
(1) In general.--Any hospital classified as a rural
referral center by the Secretary of Health and Human Services
under section 1886(d)(5)(C) of the Social Security Act for
fiscal year 1991 shall be classified as such a rural referral
center for fiscal year 1998 and each subsequent fiscal year.
(2) Budget neutrality.--The provisions of section
1886(d)(8)(D) of the Social Security Act shall apply to
reclassifications made pursuant to paragraph (1) in the same
manner as such provisions apply to a reclassification under
section 1886(d)(10) of such Act.
SEC. 10203. HOSPITAL GEOGRAPHIC RECLASSIFICATION PERMITTED FOR PURPOSES
OF DISPROPORTIONATE SHARE PAYMENT ADJUSTMENTS.
(a) In General.--Section 1886(d)(10)(C)(i) (42 U.S.C.
1395ww(d)(10)(C)(i)) is amended--
(1) by striking ``or'' at the end of subclause (I);
(2) by striking the period at the end of subclause (II) and
inserting ``, or''; and
(3) by inserting after subclause (II) the following:
``(III) eligibility for and amount of additional payment
amounts under paragraph (5)(F).''.
(b) Applicable Guidelines.--Such Board shall apply the guidelines
established for reclassification under subclause (I) of section
1886(d)(10)(C)(i) of such Act to reclassification under subclause (III)
of such section until the Secretary of Health and Human Services
promulgates separate guidelines for reclassification under such
subclause (III).
SEC. 10204. MEDICARE-DEPENDENT, SMALL RURAL HOSPITAL PAYMENT EXTENSION.
(a) Special Treatment Extended.--
(1) Payment methodology.--Section 1886(d)(5)(G) (42 U.S.C.
1395ww(d)(5)(G)) is amended--
(A) in clause (i), by striking ``October 1, 1994,''
and inserting ``October 1, 1994, or beginning on or
after October 1, 1997, and before October 1, 2001,'';
and
(B) in clause (ii)(II), by striking ``October 1,
1994,'' and inserting ``October 1, 1994, or beginning
on or after October 1, 1997, and before October 1,
2001,''.
(2) Extension of target amount.--Section 1886(b)(3)(D) (42
U.S.C. 1395ww(b)(3)(D)) is amended--
(A) in the matter preceding clause (i), by striking
``September 30, 1994,'' and inserting ``September 30,
1994, and for cost reporting periods beginning on or
after October 1, 1997, and before October 1, 2001,'';
(B) in clause (ii), by striking ``and'' at the end;
(C) in clause (iii), by striking the period at the
end and inserting ``, and''; and
(D) by adding after clause (iii) the following new
clause:
``(iv) with respect to discharges occurring during fiscal
year 1998 through fiscal year 2000, the target amount for the
preceding year increased by the applicable percentage increase
under subparagraph (B)(iv).''.
(3) Permitting hospitals to decline reclassification.--
Section 13501(e)(2) of OBRA-93 (42 U.S.C. 1395ww note) is
amended by striking ``or fiscal year 1994'' and inserting ``,
fiscal year 1994, fiscal year 1998, fiscal year 1999, or fiscal
year 2000''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply with respect to discharges occurring on or after October 1, 1997.
SEC. 10205. GEOGRAPHIC RECLASSIFICATION FOR CERTAIN DISPROPORTIONATELY
LARGE HOSPITALS.
(a) New Guidelines for Reclassification.--Notwithstanding the
guidelines published under subparagraph (D)(i)(I) of section
1886(d)(10) of the Social Security Act (42 U.S.C. 1395ww(d)(10)), the
Secretary of Health and Human Services shall publish and use
alternative guidelines under which a hospital described in subsection
(b) qualifies for geographic reclassification under such section for a
fiscal year beginning with fiscal year 1998.
(b) Hospitals Covered.--A hospital described in this subsection is
a hospital that demonstrates that--
(1) the average hourly wage paid by the hospital is not
less than 108 percent of the average hourly wage paid by all
other hospitals located in the Metropolitan Statistical Area
(or the New England County Metropolitan Area) in which the
hospital is located; and
(2) not less than 40 percent of the adjusted uninflated wages paid
by all hospitals located in such Area is attributable to wages paid by
the hospital.
SEC. 10206. FLOOR ON AREA WAGE INDEX.
(a) In General.--For purposes of section 1886(d)(3)(E) of the
Social Security Act for discharges occurring on or after October 1,
1997, the area wage index applicable under such section to any hospital
which is not located in a rural area (as defined in section
1886(d)(2)(D) of such Act) may not be less than the area wage indices
applicable under such section to hospitals located in rural areas in
the State in which the hospital is located.
(b) Implementation.--The Secretary of Health and Human Services
shall adjust the area wage indices referred to in subsection (a) for
hospitals not described in such subsection in a manner which assures
that the aggregate payments made under section 1886(d) of the Social
Security Act in a fiscal year for the operating costs of inpatient
hospital services are not greater or less than those which would have
been made in the year if this section did not apply.
SEC. 10207. INFORMATICS, TELEMEDICINE, AND EDUCATION DEMONSTRATION
PROJECT.
(a) Purpose and Authorization.--
(1) In general.--Not later than 9 months after the date of
enactment of this section, the Secretary of Health and Human
Services shall provide for a demonstration project described in
paragraph (2).
(2) Description of project.--
(A) In general.--The demonstration project
described in this paragraph is a single demonstration
project to use eligible health care provider
telemedicine networks to apply high-capacity computing
and advanced networks to improve primary care (and
prevent health care complications) to medicare
beneficiaries with diabetes mellitus who are residents
of medically underserved rural areas or residents of
medically underserved inner-city areas.
(B) Medically underserved defined.--As used in this
paragraph, the term ``medically underserved'' has the
meaning given such term in section 330(b)(3) of the
Public Health Service Act (42 U.S.C. 254b(b)(3)).
(3) Waiver.--The Secretary shall waive such provisions of
title XVIII of the Social Security Act as may be necessary to
provide for payment for services under the project in
accordance with subsection (d).
(4) Duration of project.--The project shall be conducted
over a 4-year period.
(b) Objectives of Project.--The objectives of the project include
the following:
(1) Improving patient access to and compliance with
appropriate care guidelines for individuals with diabetes
mellitus through direct telecommunications link with
information networks in order to improve patient quality-of-
life and reduce overall health care costs.
(2) Developing a curriculum to train, and providing
standards for credentialing and licensure of, health
professionals (particularly primary care health professionals)
in the use of medical informatics and telecommunications.
(3) Demonstrating the application of advanced technologies,
such as video-conferencing from a patient's home, remote
monitoring of a patient's medical condition, interventional
informatics, and applying individualized, automated care
guidelines, to assist primary care providers in assisting
patients with diabetes in a home setting.
(4) Application of medical informatics to residents with
limited English language skills.
(5) Developing standards in the application of telemedicine
and medical informatics.
(6) Developing a model for the cost-effective delivery of
primary and related care both in a managed care environment and
in a fee-for-service environment.
(c) Eligible Health Care Provider Telemedicine Network Defined.--
For purposes of this section, the term ``eligible health care provider
telemedicine network'' means a consortium that includes at least one
tertiary care hospital (but no more than 2 such hospitals), at least
one medical school, no more than 4 facilities in rural or urban areas,
and at least one regional telecommunications provider and that meets
the following requirements:
(1) The consortium is located in an area with one of the
highest concentrations of medical schools and tertiary care
facilities in the United States and has appropriate
arrangements (within or outside the consortium) with such
schools and facilities, universities, and telecommunications
providers, in order to conduct the project.
(2) The consortium submits to the Secretary an application
at such time, in such manner, and containing such information
as the Secretary may require, including a description of the
use to which the consortium would apply any amounts received
under the project and the source and amount of non-Federal
funds used in the project.
(3) The consortium guarantees that it will be responsible
for payment for all costs of the project that are not paid
under this section and that the maximum amount of payment that
may be made to the consortium under this section shall not
exceed the amount specified in subsection (d)(3).
(d) Coverage as Medicare Part B Services.--
(1) In general.--Subject to the succeeding provisions of
this subsection, services related to the treatment or
management of (including prevention of complications from)
diabetes for medicare beneficiaries furnished under the project
shall be considered to be services covered under part B of
title XVIII of the Social Security Act.
(2) Payments.--
(A) In general.--Subject to paragraph (3), payment
for such services shall be made at a rate of 50 percent
of the costs that are reasonable and related to the
provision of such services. In computing such costs,
the Secretary shall include costs described in
subparagraph (B), but may not include costs described
in subparagraph (C).
(B) Costs that may be included.--The costs
described in this subparagraph are the permissible
costs (as recognized by the Secretary) for the
following:
(i) The acquisition of telemedicine
equipment for use in patients' homes (but only
in the case of patients located in medically
underserved areas).
(ii) Curriculum development and training of
health professionals in medical informatics and
telemedicine.
(iii) Payment of telecommunications costs
(including salaries and maintenance of
equipment), including costs of
telecommunications between patients' homes and
the eligible network and between the network
and other entities under the arrangements
described in subsection (c)(1).
(iv) Payments to practitioners and
providers under the medicare programs.
(C) Costs not included.--The costs described in
this subparagraph are costs for any of the following:
(i) The purchase or installation of
transmission equipment (other than such
equipment used by health professionals to
deliver medical informatics services under the
project).
(ii) The establishment or operation of a
telecommunications common carrier network.
(iii) Construction (except for minor
renovations related to the installation of
reimbursable equipment) or the acquisition or
building of real property.
(3) Limitation.--The total amount of the payments that may
be made under this section shall not exceed $30,000,000.
(4) Limitation on cost-sharing.--The project may not impose
cost sharing on a medicare beneficiary for the receipt of
services under the project in excess of 20 percent of the
recognized costs of the project attributable to such services.
(e) Reports.--The Secretary shall submit to the Committees on Ways
and Means and Commerce of the House of Representatives and the
Committee on Finance of the Senate interim reports on the project and a
final report on the project within 6 months after the conclusion of the
project. The final report shall include an evaluation of the impact of
the use of telemedicine and medical informatics on improving access of
medicare beneficiaries to health care services, on reducing the costs
of such services, and on improving the quality of life of such
beneficiaries.
(f) Definitions.--For purposes of this section:
(1) Interventional informatics.--The term ``interventional
informatics'' means using information technology and virtual
reality technology to intervene in patient care.
(2) Medical informatics.--The term ``medical informatics''
means the storage, retrieval, and use of biomedical and related
information for problem solving and decision-making through
computing and communications technologies.
(3) Project.--The term ``project'' means the demonstration
project under this section.
Subtitle D--Anti-Fraud and Abuse Provisions
SEC. 10301. PERMANENT EXCLUSION FOR THOSE CONVICTED OF 3 HEALTH CARE
RELATED CRIMES.
Section 1128(c)(3) (42 U.S.C. 1320a-7(c)(3)) is amended--
(1) in subparagraph (A), by inserting ``or in the case
described in subparagraph (G)'' after ``subsection (b)(12)'';
(2) in subparagraphs (B) and (D), by striking ``In the
case'' and inserting ``Subject to subparagraph (G), in the
case''; and
(3) by adding at the end the following new subparagraph:
``(G) In the case of an exclusion of an individual under subsection
(a) based on a conviction occurring on or after the date of the
enactment of this subparagraph, if the individual has (before, on, or
after such date and before the date of the conviction for which the
exclusion is imposed) been convicted--
``(i) on one previous occasion of one or more offenses for
which an exclusion may be effected under such subsection, the
period of the exclusion shall be not less than 10 years, or
``(ii) on 2 or more previous occasions of one or more
offenses for which an exclusion may be effected under such
subsection, the period of the exclusion shall be permanent.''.
SEC. 10302. AUTHORITY TO REFUSE TO ENTER INTO MEDICARE AGREEMENTS WITH
INDIVIDUALS OR ENTITIES CONVICTED OF FELONIES.
(a) Medicare Part A.--Section 1866(b)(2) (42 U.S.C. 1395cc(b)(2))
is amended--
(1) by striking ``or'' at the end of subparagraph (B);
(2) by striking the period at the end of subparagraph (C)
and inserting ``, or''; and
(3) by adding after subparagraph (C) the following new
subparagraph:
``(D) has ascertained that the provider has been
convicted of a felony under Federal or State law for an
offense which the Secretary determines is inconsistent
with the best interests of program beneficiaries.''.
(b) Medicare Part B.--Section 1842 (42 U.S.C. 1395u) is amended by
adding after subsection (r) the following new subsection:
``(s) The Secretary may refuse to enter into an agreement with a
physician or supplier under subsection (h) or may terminate or refuse
to renew such agreement, in the event that such physician or supplier
has been convicted of a felony under Federal or State law for an
offense which the Secretary determines is inconsistent with the best
interests of program beneficiaries.''.
(c) Medicaid.--For provisions amending title XIX of the Social
Security Act to provide similar treatment under the medicaid program,
see section ____.
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act and apply to the entry
and renewal of contracts on or after such date.
SEC. 10303. INCLUSION OF TOLL-FREE NUMBER TO REPORT MEDICARE WASTE,
FRAUD, AND ABUSE IN EXPLANATION OF BENEFITS FORMS.
(a) In General.--Section 1842(h)(7) (42 U.S.C. 1395u(h)(7)) is
amended--
(1) by striking ``and'' at the end of subparagraph (C),
(2) by striking the period at the end of subparagraph (D)
and inserting ``; and'', and
(3) by adding at the end the following new subparagraph:
``(E) a toll-free telephone number maintained by the
Inspector General in the Department of Health and Human
Services for the receipt of complaints and information about
waste, fraud, and abuse in the provision or billing of services
under this title.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to explanations of benefits provided on or after such date (not
later than January 1, 1999) as the Secretary of Health and Human
Services shall provide.
SEC. 10304. LIABILITY OF MEDICARE CARRIERS AND FISCAL INTERMEDIARIES
FOR CLAIMS SUBMITTED BY EXCLUDED PROVIDERS.
(a) Reimbursement to the Secretary for Amounts Paid to Excluded
Providers.--
(1) Requirements for fiscal intermediaries.--
(A) In general.--Section 1816 (42 U.S.C. 1395h) is
amended by adding at the end the following new
subsection:
``(m) An agreement with an agency or organization under this
section shall require that such agency or organization reimburse the
Secretary for any amounts paid by the agency or organization for a
service under this title which is furnished, directed, or prescribed by
an individual or entity during any period for which the individual or
entity is excluded pursuant to section 1128, 1128A, or 1156, from
participation in the program under this title, if the amounts are paid
after the Secretary notifies the agency or organization of the
exclusion.''.
(B) Conforming amendment.--Subsection (i) of such
section is amended by adding at the end the following
new paragraph:
``(4) Nothing in this subsection shall be construed to prohibit
reimbursement by an agency or organization under subsection (m).''.
(2) Requirements for carriers.--Section 1842(b)(3) (42
U.S.C. 1395u(b)(3)) is amended--
(A) by striking ``and'' at the end of subparagraph
(I); and
(B) by inserting after subparagraph (I) the
following new subparagraph:
``(J) will reimburse the Secretary for any amounts paid by
the carrier for an item or service under this part which is
furnished, directed, or prescribed by an individual or entity
during any period for which the individual or entity is
excluded pursuant to section 1128, 1128A, or 1156, from
participation in the program under this title, if the amounts
are paid after the Secretary notifies the carrier of the
exclusion, and''.
(3) Reference to medicaid provision.--For provision
imposing similar restrictions on States under the medicaid
program under title XIX of the Social Security Act, see section
____.
(b) Conforming Repeal of Mandatory Payment Rule.--Paragraph (2) of
section 1862(e) (42 U.S.C. 1395y(e)) is amended to read as follows:
``(2) No individual or entity may bill (or collect any amount from)
any individual for any item or service for which payment is denied
under paragraph (1). No person is liable for payment of any amounts
billed for such an item or service in violation of the previous
sentence.''.
(c) Effective Dates.--The amendments made by this section shall
apply to contracts and agreements entered into, renewed, or extended
after the date of the enactment of this Act, but only with respect to
claims submitted on or after the later of January 1, 1998, or the date
such entry, renewal, or extension becomes effective.
SEC. 10305. EXCLUSION OF ENTITY CONTROLLED BY FAMILY MEMBER OF A
SANCTIONED INDIVIDUAL.
(a) In General.--Section 1128 (42 U.S.C. 1320a-7) is amended--
(1) in subsection (b)(8)(A)--
(A) by striking ``or'' at the end of clause (i),
and
(B) by striking the dash at the end of clause (ii)
and inserting ``; or'', and
(C) by inserting after clause (ii) the following:
``(iii) who was described in clause (i) but is no
longer so described because of a transfer of ownership
or control interest, in anticipation of (or following)
a conviction, assessment, or exclusion described in
subparagraph (B) against the person, to an immediate
family member (as defined in subsection (j)(1)) or a
member of the household of the person (as defined in
subsection (j)(2)) who continues to maintain an
interest described in such clause--''; and
(2) by adding after subsection (i) the following new
subsection:
``(j) Definition of Immediate Family Member and Member of
Household.--For purposes of subsection (b)(8)(A)(iii):
``(1) The term `immediate family member' means, with
respect to a person--
``(A) the husband or wife of the person;
``(B) the natural or adoptive parent, child, or
sibling of the person;
``(C) the stepparent, stepchild, stepbrother, or
stepsister of the person;
``(D) the father-, mother-, daughter-, son-,
brother-, or sister-in-law of the person;
``(E) the grandparent or grandchild of the person;
and
``(F) the spouse of a grandparent or grandchild of
the person.
``(2) The term `member of the household' means, with
respect to an person, any individual sharing a common abode as
part of a single family unit with the person, including
domestic employees and others who live together as a family
unit, but not including a roomer or boarder.''.
(b) Effective Date.--The amendments made by subsection (a) shall
take effect on the date that is 45 days after the date of the enactment
of this Act.
SEC. 10306. IMPOSITION OF CIVIL MONEY PENALTIES.
(a) Civil Money Penalties for Persons That Contract With Excluded
Individuals.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)) is amended--
(1) by striking ``or'' at the end of paragraph (4);
(2) by adding ``or'' at the end of paragraph (5); and
(3) by adding after paragraph (5) the following new
paragraph:
``(6) arranges or contracts (by employment or otherwise)
with an individual or entity that the person knows or should
know is excluded from participation in a Federal health care
program (as defined in section 1128B(f)), for the provision of
items or services for which payment may be made under such a
program;''.
(b) Civil Money Penalties for Services Ordered or Prescribed by an
Excluded Individual or Entity.--Section 1128A(a)(1) (42 U.S.C. 1320a-
7a(a)(1)) is amended--
(1) in subparagraph (D)--
(A) by inserting ``, ordered, or prescribed by such
person'' after ``other item or service furnished'';
(B) by inserting ``(pursuant to this title or title
XVIII)'' after ``period in which the person was
excluded''; and
(C) by striking ``pursuant to a determination by
the Secretary'' and all that follows through ``the
provisions of section 1842(j)(2)''; and
(D) by striking ``or'' at the end;
(2) by redesignating subparagraph (E) as subparagraph (F);
and
(3) by inserting after subparagraph (D) the following new
subparagraph:
``(E) is for a medical or other item or service
ordered or prescribed by a person excluded (pursuant to
this title or title XVIII) from the program under which
the claim was made, and the person furnishing such item
or service knows or should know of such exclusion,
or''.
(c) Effective Dates.--
(1) Contracts with excluded persons.--The amendments made
by subsection (a) shall apply to arrangements and contracts
entered into after the date of the enactment of this Act.
(2) Services ordered or prescribed.--The amendments made by
subsection (b) shall apply to items and services furnished
ordered or prescribed after the date of the enactment of this
Act.
SEC. 10307. DISCLOSURE OF INFORMATION AND SURETY BONDS.
(a) Disclosure of Information and Surety Bond Requirement for
Suppliers of Durable Medical Equipment.--Section 1834(a) (42 U.S.C.
1395m(a)) is amended by inserting after paragraph (15) the following
new paragraph:
``(16) Conditions for issuance of provider number.--The
Secretary shall not provide for the issuance (or renewal) of a
provider number for a supplier of durable medical equipment,
for purposes of payment under this part for durable medical
equipment furnished by the supplier, unless the supplier
provides the Secretary on a continuing basis with--
``(A)(i) full and complete information as to the
identity of each person with an ownership or control
interest (as defined in section 1124(a)(3)) in the
supplier or in any subcontractor (as defined by the
Secretary in regulations) in which the supplier
directly or indirectly has a 5 percent or more
ownership interest, and
``(ii) to the extent determined to be feasible
under regulations of the Secretary, the name of any
disclosing entity (as defined in section 1124(a)(2))
with respect to which a person with such an ownership
or control interest in the supplier is a person with
such an ownership or control interest in the disclosing
entity; and
``(B) a surety bond in a form specified by the
Secretary and in an amount that is not less than
$50,000.
The Secretary may waive the requirement of a bond under
subparagraph (B) in the case of a supplier that provides a
comparable surety bond under State law.''.
(b) Surety Bond Requirement for Home Health Agencies.--
(1) In general.--Section 1861(o) (42 U.S.C. 1395x(o)) is
amended--
(A) in paragraph (7), by inserting ``and including
providing the Secretary on a continuing basis with a
surety bond in a form specified by the Secretary and in
an amount that is not less than $50,000'' after
``financial security of the program'', and
(B) by adding at the end the following: ``The
Secretary may waive the requirement of a bond under
paragraph (7) in the case of an agency or organization
that provides a comparable surety bond under State
law.''.
(2) Conforming amendments.--Section 1861(v)(1)(H) (42
U.S.C. 1395x(v)(1)(H)) is amended--
(A) in clause (i), by striking ``the financial
security requirement'' and inserting ``the financial
security and surety bond requirements''; and
(B) in clause (ii), by striking ``the financial
security requirement described in subsection (o)(7)
applies'' and inserting ``the financial security and
surety bond requirements described in subsection (o)(7)
apply''.
(3) Reference to current disclosure requirement.--For
provision of current law requiring home health agencies to
disclose information on ownership and control interests, see
section 1124 of the Social Security Act.
(c) Authorizing Application of Disclosure and Surety Bond
Requirements to Ambulance Services and Certain Clinics.--Section
1834(a)(16) (42 U.S.C. 1395m(a)(16)), as added by subsection (a), is
amended by adding at the end the following: ``The Secretary, in the
Secretary's discretion, may impose the requirements of the previous
sentence with respect to some or all classes of suppliers of ambulance
services described in section 1861(s)(7) and clinics that furnish
medical and other health services (other than physicians' services)
under this part.''.
(d) Application to Comprehensive Outpatient Rehabilitation
Facilities (CORFs).--Section 1861(cc)(2) (42 U.S.C. 1395x(cc)(2)) is
amended--
(1) in subparagraph (I), by inserting before the period at
the end the following: ``and providing the Secretary on a
continuing basis with a surety bond in a form specified by the
Secretary and in an amount that is not less than $50,000'', and
(2) by adding after and below subparagraph (I) the
following:
``The Secretary may waive the requirement of a bond under subparagraph
(I) in the case of a facility that provides a comparable surety bond
under State law.''.
(e) Application to Rehabilitation Agencies.--Section 1861(p) (42
U.S.C. 1395x(p)) is amended--
(1) in paragraph (4)(A)(v), by inserting after ``as the
Secretary may find necessary,'' the following: ``and provides
the Secretary, to the extent required by the Secretary, on a
continuing basis with a surety bond in a form specified by the
Secretary and in an amount that is not less than $50,000,'',
and
(2) by adding at the end the following: ``The Secretary may
waive the requirement of a bond under paragraph (4)(A)(v) in
the case of a clinic or agency that provides a comparable
surety bond under State law.''.
(f) Effective Dates.--(1) The amendment made by subsection (a)
shall apply to suppliers of durable medical equipment with respect to
such equipment furnished on or after January 1, 1998.
(2) The amendments made by subsection (b) shall apply to home
health agencies with respect to services furnished on or after such
date. The Secretary of Health and Human Services shall modify
participation agreements under section 1866(a)(1) of the Social
Security Act with respect to home health agencies to provide for
implementation of such amendments on a timely basis.
(3) The amendments made by subsections (c) through (e) shall take
effect on the date of the enactment of this Act and may be applied with
respect to items and services furnished on or after the date specified
in paragraph (1).
SEC. 10308. PROVISION OF CERTAIN IDENTIFICATION NUMBERS.
(a) Requirements to Disclose Employer Identification Numbers (EINS)
and Social Security Account Numbers (SSNs).--Section 1124(a)(1) (42
U.S.C. 1320a-3(a)(1)) is amended by inserting before the period at the
end the following: ``and supply the Secretary with the both the
employer identification number (assigned pursuant to section 6109 of
the Internal Revenue Code of 1986) and social security account number
(assigned under section 205(c)(2)(B)) of the disclosing entity, each
person with an ownership or control interest (as defined in subsection
(a)(3)), and any subcontractor in which the entity directly or
indirectly has a 5 percent or more ownership interest''.
(b) Other Medicare Providers.--Section 1124A (42 U.S.C. 1320a-3a)
is amended--
(1) in subsection (a)--
(A) by striking ``and'' at the end of paragraph
(1);
(B) by striking the period at the end of paragraph
(2) and inserting ``; and''; and
(C) by adding at the end the following new
paragraph:
``(3) including the employer identification number
(assigned pursuant to section 6109 of the Internal Revenue Code
of 1986) and social security account number (assigned under
section 205(c)(2)(B)) of the disclosing part B provider and any
person, managing employee, or other entity identified or
described under paragraph (1) or (2).''; and
(2) in subsection (c) by inserting ``(or, for purposes of
subsection (a)(3), any entity receiving payment)'' after ``on
an assignment-related basis''.
(c) Verification by Social Security Administration (ssa).--Section
1124A (42 U.S.C. 1320a-3a) is amended--
(1) by redesignating subsection (c) as subsection (d); and
(2) by inserting after subsection (b) the following new
subsection:
``(c) Verification.--
``(1) Transmittal by hhs.--The Secretary shall transmit--
``(A) to the Commissioner of Social Security
information concerning each social security account
number (assigned under section 205(c)(2)(B)), and
``(B) to the Secretary of the Treasury information
concerning each employer identification number
(assigned pursuant to section 6109 of the Internal
Revenue Code of 1986),
supplied to the Secretary pursuant to subsection (a)(3) or
section 1124(c) to the extent necessary for verification of
such information in accordance with paragraph (2).
``(2) Verification.--The Commissioner of Social Security
and the Secretary of the Treasury shall verify the accuracy of,
or correct, the information supplied by the Secretary to such
official pursuant to paragraph (1), and shall report such
verifications or corrections to the Secretary.
``(3) Fees for verification.--The Secretary shall reimburse
the Commissioner and Secretary of the Treasury, at a rate
negotiated between the Secretary and such official, for the
costs incurred by such official in performing the verification
and correction services described in this subsection.''.
(d) Report.--The Secretary of Health and Human Services shall
submit to Congress a report on steps the Secretary has taken to assure
the confidentiality of social security account numbers that will be
provided to the Secretary under the amendments made by this section.
(e) Effective Dates.--
(1) The amendment made by subsection (a) shall apply to the
application of conditions of participation, and entering into
and renewal of contracts and agreements, occurring more than 90
days after the date of submission of the report under
subsection (d).
(2) The amendments made by subsection (b) shall apply to
payment for items and services furnished more than 90 days
after the date of submission of such report.
SEC. 10309. ADVISORY OPINIONS REGARDING CERTAIN PHYSICIAN SELF-REFERRAL
PROVISIONS.
Section 1877(g) (42 U.S.C. 1395nn(g)) is amended by adding at the
end the following new paragraph:
``(6) Advisory opinions.--
``(A) In general.--The Secretary shall issue
written advisory opinions concerning whether a referral
relating to designated health services (other than
clinical laboratory services) is prohibited under this
section.
``(B) Binding as to secretary and parties
involved.--Each advisory opinion issued by the
Secretary shall be binding as to the Secretary and the
party or parties requesting the opinion.
``(C) Application of certain procedures.--The
Secretary shall, to the extent practicable, apply the
regulations promulgated under section 1128D(b)(5) to
the issuance of advisory opinions under this paragraph.
``(D) Applicability.--This paragraph shall apply to
requests for advisory opinions made during the period
described in section 1128D(b)(6).''.
SEC. 10310. OTHER FRAUD AND ABUSE RELATED PROVISIONS.
(a) Reference Correction.--(1) Section 1128D(b)(2)(D) (42 U.S.C.
1320a-7d(b)(2)(D)), as added by section 205 of the Health Insurance
Portability and Accountability Act of 1996, is amended by striking
``1128B(b)'' and inserting ``1128A(b)''.
(2) Section 1128E(g)(3)(C) (42 U.S.C. 1320a-7e(g)(3)(C)) is amended
by striking ``Veterans' Administration'' and inserting ``Department of
Veterans Affairs''.
(b) Language in Definition of Conviction.--Section 1128E(g)(5) (42
U.S.C. 1320a-7e(g)(5)), as inserted by section 221(a) of the Health
Insurance Portability and Accountability Act of 1996, is amended by
striking ``paragraph (4)'' and inserting ``paragraphs (1) through
(4)''.
(c) Implementation of Exclusions.--Section 1128 (42 U.S.C. 1320a-7)
is amended--
(1) in subsection (a), by striking ``any program under
title XVIII and shall direct that the following individuals and
entities be excluded from participation in any State health
care program (as defined in subsection (h))'' and inserting
``any Federal health care program (as defined in section
1128B(f))''; and
(2) in subsection (b), by striking ``any program under
title XVIII and may direct that the following individuals and
entities be excluded from participation in any State health
care program'' and inserting ``any Federal health care program
(as defined in section 1128B(f))''.
(d) Sanctions for Failure to Report.--Section 1128E(b) (42 U.S.C.
1320a-7e(b)), as inserted by section 221(a) of the Health Insurance
Portability and Accountability Act of 1996, is amended by adding at the
end the following:
``(6) Sanctions for failure to report.--
``(A) Health plans.--Any health plan that fails to
report information on an adverse action required to be
reported under this subsection shall be subject to a
civil money penalty of not more than $25,000 for each
such adverse action not reported. Such penalty shall be
imposed and collected in the same manner as civil money
penalties under subsection (a) of section 1128A are
imposed and collected under that section.
``(B) Governmental agencies.--The Secretary shall
provide for a publication of a public report that
identifies those Government agencies that have failed
to report information on adverse actions as required to
be reported under this subsection.''.
(e) Effective Dates.--
(1) In general.--Except as provided in this subsection, the
amendments made by this section shall be effective as if
included in the enactment of the Health Insurance Portability
and Accountability Act of 1996.
(2) Federal health program.--The amendments made by
subsection (c) shall take effect on the date of the enactment
of this Act.
(3) Sanction for failure to report.--The amendment made by
subsection (d) shall apply to failures occurring on or after
the date of the enactment of this Act.
Subtitle E--Prospective Payment Systems
CHAPTER 1--PAYMENT UNDER PART A
SEC. 10401. PROSPECTIVE PAYMENT FOR SKILLED NURSING FACILITY SERVICES.
(a) In General.--Section 1888 (42 U.S.C. 1395yy) is amended by
adding at the end the following new subsection:
``(e) Prospective Payment.--
``(1) Payment provision.--Notwithstanding any other
provision of this title, subject to paragraph (7), the amount
of the payment for all costs (as defined in paragraph (2)(B))
of covered skilled nursing facility services (as defined in
paragraph (2)(A)) for each day of such services furnished--
``(A) in a cost reporting period during the
transition period (as defined in paragraph (2)(E)), is
equal to the sum of--
``(i) the non-Federal percentage of the
facility-specific per diem rate (computed under
paragraph (3)), and
``(ii) the Federal percentage of the
adjusted Federal per diem rate (determined
under paragraph (4)) applicable to the
facility; and
``(B) after the transition period is equal to the
adjusted Federal per diem rate applicable to the
facility.
``(2) Definitions.--For purposes of this subsection:
``(A) Covered skilled nursing facility services.--
``(i) In general.--The term `covered
skilled nursing facility services'--
``(I) means post-hospital extended
care services as defined in section
1861(i) for which benefits are provided
under part A; and
``(II) includes all items and
services (other than services described
in clause (ii)) for which payment may
be made under part B and which are
furnished to an individual who is a
resident of a skilled nursing facility
during the period in which the
individual is provided covered post-
hospital extended care services.
``(ii) Services excluded.--Services
described in this clause are physicians'
services, services described by clauses (i)
through (iii) of section 1861(s)(2)(K),
certified nurse-midwife services, qualified
psychologist services, services of a certified
registered nurse anesthetist, items and
services described in subparagraphs in (F) and
(O) of section 1861(s)(2), and, only with
respect to services furnished during 1998, the
transportation costs of electrocardiagram
equipment for electrocardiogram tests services
(HCPCS Code R0076). Services described in this
clause do not include any physical,
occupational, or speech-language therapy
services regardless of whether or not the
services are furnished by, or under the
supervision of, a physician or other health
care professional.
``(B) All costs.--The term `all costs' means
routine service costs, ancillary costs, and capital-
related costs of covered skilled nursing facility
services, but does not include costs associated with
approved educational activities.
``(C) Non-federal percentage; federal percentage.--
For--
``(i) the first cost reporting period (as
defined in subparagraph (D)) of a facility, the
`non-Federal percentage' is 75 percent and the
`Federal percentage' is 25 percent;
``(ii) the next cost reporting period of
such facility, the `non-Federal percentage' is
50 percent and the `Federal percentage' is 50
percent; and
``(iii) the subsequent cost reporting
period of such facility, the `non-Federal
percentage' is 25 percent and the `Federal
percentage' is 75 percent.
``(D) First cost reporting period.--The term `first
cost reporting period' means, with respect to a skilled
nursing facility, the first cost reporting period of
the facility beginning on or after July 1, 1998.
``(E) Transition period.--
``(i) In general.--The term `transition
period' means, with respect to a skilled
nursing facility, the 3 cost reporting periods
of the facility beginning with the first cost
reporting period.
``(ii) Treatment of new skilled nursing
facilities.--In the case of a skilled nursing
facility that does not have a settled cost
report for a cost reporting period before July
1, 1998, payment for such services shall be
made under this subsection as if all services
were furnished after the transition period.
``(3) Determination of facility specific per diem rates.--
The Secretary shall determine a facility-specific per diem rate
for each skilled nursing facility for a cost reporting period
as follows:
``(A) Determining base payments.--The Secretary
shall determine, on a per diem basis, the total of--
``(i) the allowable costs of extended care
services for the facility for cost reporting
periods beginning in 1995 with appropriate
adjustments (as determined by the Secretary) to
non-settled cost reports, and
``(ii) an estimate of the amounts that
would be payable under part B (disregarding any
applicable deductibles, coinsurance and
copayments) for covered skilled nursing
facility services described in paragraph
(2)(A)(i)(II) furnished during such period to
an individual who is a resident of the
facility, regardless of whether or not the
payment was made to the facility or to another
entity.
``(B) Update to cost reporting period before first
cost reporting period.--The Secretary shall update the
amount determined under subparagraph (A), for each cost
reporting period after the cost reporting period
described in subparagraph (A)(i) and up to the cost
reporting period immediately preceding the first cost
reporting period, by the skilled nursing facility
historical trend factor.
``(C) Updating to applicable cost reporting
period.--The Secretary shall further update such amount
for each cost reporting period beginning with the first
cost reporting period and up to and including the cost
reporting period involved by a factor equal to the
skilled nursing facility market basket percentage
increase.
``(4) Federal per diem rate.--
``(A) Determination of historical per diem for
freestanding facilities.--For each freestanding skilled
nursing facility that received payments for post-
hospital extended care services during a cost reporting
period beginning in fiscal year 1995 and that was
subject to (and not exempted from) the per diem limits
referred to in paragraph (1) or (2) of subsection (a)
(and facilities described in subsection (d), if
appropriate), the Secretary shall estimate, on a per
diem basis for such cost reporting period, the total
of--
``(i) the allowable costs of extended care
services for the facility for cost reporting
periods beginning in 1995 with appropriate
adjustments (as determined by the Secretary) to
non-settled cost reports, and
``(ii) an estimate of the amounts that
would be payable under part B (disregarding any
applicable deductibles, coinsurance and
copayments) for covered skilled nursing
facility services described in paragraph
(2)(A)(i)(II) furnished during such period to
an individual who is a resident of the
facility, regardless of whether or not the
payment was made to the facility or to another
entity.
``(B) Update to fiscal year 1998.--The Secretary
shall update the amount determined under subparagraph
(A), for each cost reporting period after the cost
reporting period described in subparagraph (A)(i) and
up to the cost reporting period immediately preceding
the first cost reporting period, by the skilled nursing
facility historical trend factor for such period.
``(C) Computation of standardized per diem rate.--
The Secretary shall standardize the amount updated
under subparagraph (B) for each facility by--
``(i) adjusting for variations among
facility by area in the average facility wage
level per diem, and
``(ii) adjusting for variations in case mix
per diem among facilities.
``(D) Computation of weighted average per diem
rate.--The Secretary shall compute a weighted average
per diem rate by computing an average of the
standardized amounts computed under subparagraph (C),
weighted for each facility by number of days of
extended care services furnished during the cost
reporting period referred to in subparagraph (A). The
Secretary may compute and apply such average separately
for facilities located in urban and rural areas (as
defined in section 1886(d)(2)(D)).
``(E) Updating.--
``(i) Fiscal year 1998.--For fiscal year
1998, the Secretary shall compute for each
skilled nursing facility an unadjusted Federal
per diem rate equal to the weighted average per
diem rate computed under subparagraph (D) and
applicable to the facility increased by skilled
nursing facility market basket percentage
change for the fiscal year involved.
``(ii) Subsequent fiscal years.--For each
subsequent fiscal year the Secretary shall
compute for each skilled nursing facility an
unadjusted Federal per diem rate equal to the
Federal per diem rate computed under this
subparagraph for the previous fiscal year and
applicable to the facility increased by the
skilled nursing facility market basket
percentage change for the fiscal year involved.
``(F) Adjustment for case mix creep.--
Insofar as the Secretary determines that such
adjustments under subparagraph (G)(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 residents that do
not reflect real changes in case mix, the
Secretary may adjust unadjusted Federal per
diem rates for subsequent years so as to
discount the effect of such coding or
classification changes.
``(G) Application to specific facilities.--The
Secretary shall compute for each skilled nursing
facility for each fiscal year (beginning with fiscal
year 1998) an adjusted Federal per diem rate equal to
the unadjusted Federal per diem rate determined under
subparagraph (E), as adjusted under subparagraph (F),
and as further adjusted as follows:
``(i) Adjustment for case mix.--The
Secretary shall provide for an appropriate
adjustment to account for case mix. Such
adjustment shall be based on a resident
classification system, established by the
Secretary, that accounts for the relative
resource utilization of different patient
types. The case mix adjustment shall be based
on resident assessment data and other data that
the Secretary considers appropriate.
``(ii) Adjustment for geographic variations
in labor costs.--The Secretary shall adjust the
portion of such per diem rate attributable to
wages and wage-related costs for the area in
which the facility is located compared to the
national average of such costs using an
appropriate wage index as determined by the
Secretary. Such adjustment shall be done in a
manner that does not result in aggregate
payments under this subsection that are greater
or less than those that would otherwise be made
if such adjustment had not been made.
``(H) Publication of information on per diem
rates.--The Secretary shall provide for publication in
the Federal Register, before the July 1 preceding each
fiscal year (beginning with fiscal year 1999), of--
``(i) the unadjusted Federal per diem rates
to be applied to days of covered skilled
nursing facility services furnished during the
fiscal year,
``(ii) the case mix classification system
to be applied under subparagraph (G)(i) with
respect to such services during the fiscal
year, and
``(iii) the factors to be applied in making
the area wage adjustment under subparagraph
(G)(ii) with respect to such services.
``(5) Skilled nursing facility market basket index,
percentage, and historical trend factor.--For purposes of this
subsection:
``(A) Skilled nursing facility market basket
index.--The Secretary shall establish a skilled nursing
facility market basket index that reflects changes over
time in the prices of an appropriate mix of goods and
services included in covered skilled nursing facility
services.
``(B) Skilled nursing facility market basket
percentage.--The term `skilled nursing facility market
basket percentage' means, for a fiscal year or other
annual period and as calculated by the Secretary, the
percentage change in the skilled nursing facility
market basket index (established under subparagraph
(A)) from the midpoint of the prior fiscal year (or
period) to the midpoint of the fiscal year (or other
period) involved.
``(C) Skilled nursing facility historical trend
factor.--The term `skilled nursing facility historical
trend factor' means, for a fiscal year or other annual
period and as calculated by the Secretary, the
percentage change in the skilled nursing facility
routine cost index (used in applying per diem routine
cost limits under subsection (a)) from the midpoint of
the prior fiscal year (or period) to the midpoint of
the fiscal year (or other period) involved, reduced (on
an annualized basis) by 1 percentage point.
``(6) Submission of resident assessment data.--A skilled
nursing facility shall provide the Secretary, in a manner and
within the timeframes prescribed by the Secretary, the resident
assessment data necessary to develop and implement the rates
under this subsection. For purposes of meeting such
requirement, a skilled nursing facility may submit the resident
assessment data required under section 1819(b)(3), using the
standard instrument designated by the State under section
1819(e)(5).
``(7) Transition for medicare low volume skilled nursing
facilities and swing bed hospitals.--
``(A) In general.--The Secretary shall determine an
appropriate manner in which to apply this subsection to
the facilities described in subparagraph (B), taking
into account the purposes of this subsection, and shall
provide that at the end of the transition period (as
defined in paragraph (2)(E)) such facilities shall be
paid only under this subsection. Payment shall not be
made under this subsection to such facilities for cost
reporting periods beginning before such date (not
earlier than July 1, 1999) as the Secretary specifies.
``(B) Facilities described.--The facilities
described in this subparagraph are--
``(i) skilled nursing facilities for which
payment is made for routine service costs
during a cost reporting period, ending prior to
the date of the implementation of this
paragraph, on the basis of prospective payments
under section 1888(d), or
``(ii) facilities that have in effect an
agreement described in section 1883, for which
payment is made for the furnishing of extended
care services on a reasonable cost basis under
section 1814(l) (as in effect on and after such
date).
``(8) Limitation on review.--There shall be no
administrative or judicial review under section 1869, 1878, or
otherwise of--
``(A) the establishment of facility specific per
diem rates under paragraph (3);
``(B) the establishment of Federal per diem rates
under paragraph (4), including the computation of the
standardized per diem rates under paragraph (4)(C),
adjustments and corrections for case mix under
paragraphs (4)(F) and (4)(G)(i), and adjustments for
variations in labor-related costs under paragraph
(4)(G)(ii); and
``(C) the establishment of transitional amounts
under paragraph (7).''.
(b) Consolidated Billing.--
(1) For snf services.--Section 1862(a) (42 U.S.C. 1395y(a))
is amended--
(A) by striking ``or'' at the end of paragraph
(15),
(B) by striking the period at the end of paragraph
(16) and inserting ``; or'', and
(C) by inserting after paragraph (16) the following
new paragraph:
``(17) which are covered skilled nursing facility services
described in section 1888(e)(2)(A)(i) and which are furnished
to an individual who is a resident of a skilled nursing
facility by an entity other than the skilled nursing facility,
unless the services are furnished under arrangements (as
defined in section 1861(w)(1)) with the entity made by the
skilled nursing facility.''.
(2) Requiring payment for all part b items and services to
be made to facility.--The first sentence of section 1842(b)(6)
(42 U.S.C. 1395u(b)(6)) is amended--
(A) by striking ``and (D)'' and inserting ``(D)'';
and
(B) by striking the period at the end and inserting
the following: ``, and (E) in the case of an item or
service (other than services described in section
1888(e)(2)(A)(ii)) furnished to an individual who (at
the time the item or service is furnished) is a
resident of a skilled nursing facility, payment shall
be made to the facility (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).''.
(3) Payment rules.--Section 1888(e) (42 U.S.C. 1395yy(e)),
as added by subsection (a), is amended by adding at the end the
following:
``(9) Payment for certain services.--In the case of an item
or service furnished by a skilled nursing facility (or by
others under arrangement with them made by a skilled nursing
facility or under any other contracting or consulting
arrangement or otherwise) for which payment would otherwise
(but for this paragraph) be made under part B in an amount
determined in accordance with section 1833(a)(2)(B), the amount
of the payment under such part shall be based on such existing
or other fee schedules as the Secretary establishes.
``(10) Required coding.--No payment may be made under part
B for items and services (other than services described in
paragraph (2)(A)(ii)) furnished to an individual who is a
resident of a skilled nursing facility unless the claim for
such payment includes a code (or codes) under a uniform coding
system specified by the Secretary that identifies the items or
services delivered.''.
(4) Conforming amendments.--
(A) Section 1819(b)(3)(C)(i) (42 U.S.C. 1395i-
3(b)(3)(C)(i)) is amended by striking ``Such'' and
inserting ``Subject to the timeframes prescribed by the
Secretary under section 1888(t)(6), such''.
(B) Section 1832(a)(1) (42 U.S.C. 1395k(a)(1)) is
amended by striking ``(2);'' and inserting ``(2) and
section 1842(b)(6)(E);''.
(C) Section 1833(a)(2)(B) (42 U.S.C.
1395l(a)(2)(B)) is amended by inserting ``or section
1888(e)(9)'' after ``section 1886''.
(D) Section 1861(h) (42 U.S.C 1395x(h)) is
amended--
(i) in the opening paragraph, by striking
``paragraphs (3) and (6)'' and inserting
``paragraphs (3), (6), and (7)'', and
(ii) in paragraph (7), after ``skilled
nursing facilities'', by inserting ``, or by
others under arrangements with them made by the
facility''.
(E) Section 1866(a)(1)(H) (42 U.S.C.
1395cc(a)(1)(H)) is amended--
(i) by redesignating clauses (i) and (ii)
as subclauses (I) and (II) respectively,
(ii) by inserting ``(i)'' after ``(H)'',
and
(iii) by adding after clause (i), as so
redesignated, the following new clause:
``(ii) in the case of skilled nursing facilities which
provide covered skilled nursing facility services--
``(I) that are furnished to an individual who is a
resident of the skilled nursing facility, and
``(II) for which the individual is entitled to have
payment made under this title,
to have items and services (other than services described in
section 1888(e)(2)(A)(ii)) furnished by the skilled nursing
facility or otherwise under arrangements (as defined in section
1861(w)(1)) made by the skilled nursing facility,''.
(c) Medical Review Process.--In order to ensure that medicare
beneficiaries are furnished appropriate services in skilled nursing
facilities, the Secretary of Health and Human Services shall establish
and implement a thorough medical review process to examine the effects
of the amendments made by this section on the quality of covered
skilled nursing facility services furnished to medicare beneficiaries.
In developing such a medical review process, the Secretary shall place
a particular emphasis on the quality of non-routine covered services
and physicians' services for which payment is made under title XVIII of
the Social Security Act for which payment is made under section 1848 of
such Act.
(d) Effective Date.--The amendments made by this section are
effective for cost reporting periods beginning on or after July 1,
1998; except that the amendments made by subsection (b) shall apply to
items and services furnished on or after July 1, 1998.
SEC. 10402. PROSPECTIVE PAYMENT FOR INPATIENT REHABILITATION HOSPITAL
SERVICES.
(a) In General.--Section 1886 (42 U.S.C. 1395ww) is amended by
adding at the end the following new subsection:
``(j) Prospective Payment for Inpatient Rehabilitation Services.--
``(1) Payment during transition period.--
``(A) In general.--Notwithstanding section 1814(b),
but subject to the provisions of section 1813, the
amount of the payment with respect to the operating and
capital costs of inpatient hospital services of a
rehabilitation hospital or a rehabilitation unit (in
this subsection referred to as a `rehabilitation
facility'), in a cost reporting period beginning on or
after October 1, 2000, and before October 1, 2003, is
equal to the sum of--
``(i) the TEFRA percentage (as defined in
subparagraph (C)) of the amount that would have
been paid under part A with respect to such
costs if this subsection did not apply, and
``(ii) the prospective payment percentage
(as defined in subparagraph (C)) of the product
of (I) the per unit payment rate established
under this subsection for the fiscal year in
which the payment unit of service occurs, and
(II) the number of such payment units occurring
in the cost reporting period.
``(B) Fully implemented system.--Notwithstanding
section 1814(b), but subject to the provisions of
section 1813, the amount of the payment with respect to
the operating and capital costs of inpatient hospital
services of a rehabilitation facility for a payment
unit in a cost reporting period beginning on or after
October 1, 2003, is equal to the per unit payment rate
established under this subsection for the fiscal year
in which the payment unit of service occurs.
``(C) TEFRA and prospective payment percentages
specified.--For purposes of subparagraph (A), for a
cost reporting period beginning--
``(i) on or after October 1, 2000, and
before October 1, 2001, the `TEFRA percentage'
is 75 percent and the `prospective payment
percentage' is 25 percent;
``(ii) on or after October 1, 2001, and
before October 1, 2002, the `TEFRA percentage'
is 50 percent and the `prospective payment
percentage' is 50 percent; and
``(iii) on or after October 1, 2002, and
before October 1, 2003, the `TEFRA percentage'
is 25 percent and the `prospective payment
percentage' is 75 percent.
``(D) Payment unit.--For purposes of this
subsection, the term `payment unit' means a discharge,
day of inpatient hospital services, or other unit of
payment defined by the Secretary.
``(2) Patient case mix groups.--
``(A) Establishment.--The Secretary shall
establish--
``(i) classes of patients of rehabilitation
facilities (each in this subsection referred to
as a `case mix group'), based on such factors
as the Secretary deems appropriate, which may
include impairment, age, related prior
hospitalization, comorbidities, and functional
capability of the patient; and
``(ii) a method of classifying specific
patients in rehabilitation facilities within
these groups.
``(B) Weighting factors.--For each case mix group
the Secretary shall assign an appropriate weighting
which reflects the relative facility resources used
with respect to patients classified within that group
compared to patients classified within other groups.
``(C) Adjustments for case mix.--
``(i) In general.--The Secretary shall from
time to time adjust the classifications and
weighting factors established under this
paragraph as appropriate to reflect changes in
treatment patterns, technology, case mix,
number of payment units for which payment is
made under this title, and other factors which
may affect the relative use of resources. Such
adjustments shall be made in a manner so that
changes in aggregate payments under the
classification system are a result of real
changes and are not a result of changes in
coding that are unrelated to real changes in
case mix.
``(ii) Adjustment.--Insofar as the
Secretary determines that such adjustments 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 the classification system during
the fiscal year that are a result of changes in
the coding or classification of patients that
do not reflect real changes in case mix, the
Secretary shall adjust the per payment unit
payment rate for subsequent years so as to
discount the effect of such coding or
classification changes.
``(D) Data collection.--The Secretary is authorized
to require rehabilitation facilities that provide
inpatient hospital services to submit such data as the
Secretary deems necessary to establish and administer
the prospective payment system under this subsection.
``(3) Payment rate.--
``(A) In general.--The Secretary shall determine a
prospective payment rate for each payment unit for
which such rehabilitation facility is entitled to
receive payment under this title. Subject to
subparagraph (B), such rate for payment units occurring
during a fiscal year shall be based on the average
payment per payment unit under this title for inpatient
operating and capital costs of rehabilitation
facilities using the most recent data available (as
estimated by the Secretary as of the date of
establishment of the system) adjusted--
``(i) by updating such per-payment-unit
amount to the fiscal year involved by the
weighted average of the applicable percentage
increases provided under subsection
(b)(3)(B)(ii) (for cost reporting periods
beginning during the fiscal year) covering the
period from the midpoint of the period for such
data through the midpoint of fiscal year 2000
and by an increase factor (described in
subparagraph (C)) specified by the Secretary
for subsequent fiscal years up to the fiscal
year involved;
``(ii) by reducing such rates by a factor
equal to the proportion of payments under this
subsection (as estimated by the Secretary)
based on prospective payment amounts which are
additional payments described in paragraph (4)
(relating to outlier and related payments) or
paragraph (7);
``(iii) for variations among rehabilitation
facilities by area under paragraph (6);
``(iv) by the weighting factors established
under paragraph (2)(B); and
``(v) by such other factors as the
Secretary determines are necessary to properly
reflect variations in necessary costs of
treatment among rehabilitation facilities.
``(B) Budget neutral rates.--The Secretary shall
establish the prospective payment amounts under this
subsection for payment units during fiscal years 2001
through 2004 at levels such that, in the Secretary's
estimation, the amount of total payments under this
subsection for such fiscal years (including any payment
adjustments pursuant to paragraphs (4), (6), and (7))
shall be equal to 99 percent of the amount of payments
that would have been made under this title during the
fiscal years for operating and capital costs of
rehabilitation facilities had this subsection not been
enacted. In establishing such payment amounts, the
Secretary shall consider the effects of the prospective
payment system established under this subsection on the
total number of payment units from rehabilitation
facilities and other factors described in subparagraph
(A).
``(C) Increase factor.--For purposes of this
subsection for payment units in each fiscal year
(beginning with fiscal year 2001), the Secretary shall
establish an increase factor. Such factor shall be
based on an appropriate percentage increase in a market
basket of goods and services comprising services for
which payment is made under this subsection, which may
be the market basket percentage increase described in
subsection (b)(3)(B)(iii).
``(4) Outlier and special payments.--
``(A) Outliers.--
``(i) In general.--The Secretary may
provide for an additional payment to a
rehabilitation facility for patients in a case
mix group, based upon the patient being
classified as an outlier based on an unusual
length of stay, costs, or other factors
specified by the Secretary.
``(ii) Payment based on marginal cost of
care.--The amount of such additional payment
under clause (i) shall be determined by the
Secretary and shall approximate the marginal
cost of care beyond the cutoff point applicable
under clause (i).
``(iii) Total payments.--The total amount
of the additional payments made under this
subparagraph for payment units in a fiscal year
may not exceed 5 percent of the total payments
projected or estimated to be made based on
prospective payment rates for payment units in
that year.
``(B) Adjustment.--The Secretary may provide for
such adjustments to the payment amounts under this
subsection as the Secretary deems appropriate to take
into account the unique circumstances of rehabilitation
facilities located in Alaska and Hawaii.
``(5) Publication.--The Secretary shall provide for
publication in the Federal Register, on or before September 1
before each fiscal year (beginning with fiscal year 2001, of
the classification and weighting factors for case mix groups
under paragraph (2) for such fiscal year and a description of
the methodology and data used in computing the prospective
payment rates under this subsection for that fiscal year.
``(6) Area wage adjustment.--The Secretary shall adjust the
proportion, (as estimated by the Secretary from time to time)
of rehabilitation facilities' costs which are attributable to
wages and wage-related costs, of the prospective payment rates
computed under paragraph (3) for area differences in wage
levels by a factor (established by the Secretary) reflecting
the relative hospital wage level in the geographic area of the
rehabilitation facility compared to the national average wage
level for such facilities. Not later than October 1, 2001 (and
at least every 36 months thereafter), the Secretary shall
update the factor under the preceding sentence on the basis of
a survey conducted by the Secretary (and updated as
appropriate) of the wages and wage-related costs incurred in
furnishing rehabilitation services. Any adjustments or updates
made under this paragraph for a fiscal year shall be made in a
manner that assures that the aggregated payments under this
subsection in the fiscal year are not greater or less than
those that would have been made in the year without such
adjustment.
``(7) Additional adjustments.--The Secretary may provide by
regulation for--
``(A) an additional payment to take into account
indirect costs of medical education and the special
circumstances of hospitals that serve a significantly
disproportionate number of low-income patients in a
manner similar to that provided under subparagraphs (B)
and (F), respectively, of subsection (d)(5); and
``(B) such other exceptions and adjustments to
payment amounts under this subsection in a manner
similar to that provided under subsection (d)(5)(I) in
relation to payments under subsection (d).
``(8) Limitation on review.--There shall be no
administrative or judicial review under section 1869, 1878, or
otherwise of--
``(A) the establishment of case mix groups, of the
methodology for the classification of patients within
such groups, and of the appropriate weighting factors
thereof under paragraph (2),
``(B) the establishment of the prospective payment
rates under paragraph (3),
``(C) the establishment of outlier and special
payments under paragraph (4),
``(D) the establishment of area wage adjustments
under paragraph (6), and
``(E) the establishment of additional adjustments
under paragraph (7).''.
(b) Conforming Amendments.--Section 1886(b) of such Act (42 U.S.C.
1395ww(b)) is amended--
(1) in paragraph (1), by inserting ``and other than a
rehabilitation facility described in subsection (j)(1)'' after
``subsection (d)(1)(B)'', and
(2) in paragraph (3)(B)(i), by inserting ``and subsection
(j)'' after ``For purposes of subsection (d)''.
(c) Effective Date.--The amendments made by this section shall
apply to cost reporting periods beginning on or after October 1, 2000,
except that the Secretary of Health and Human Services may require the
submission of data under section 1886(j)(2)(D) of the Social Security
Act (as added by subsection (a)) on and after the date of the enactment
of this section.
CHAPTER 2--PAYMENT UNDER PART B
Subchapter A--Payment for Hospital Outpatient Department Services
SEC. 10411. ELIMINATION OF FORMULA-DRIVEN OVERPAYMENTS (FDO) FOR
CERTAIN OUTPATIENT HOSPITAL SERVICES.
(a) Elimination of FDO for Ambulatory Surgical Center Procedures.--
Section 1833(i)(3)(B)(i)(II) (42 U.S.C. 1395l(i)(3)(B)(i)(II)) is
amended--
(1) by striking ``of 80 percent''; and
(2) by striking the period at the end and inserting the
following: ``, less the amount a provider may charge as
described in clause (ii) of section 1866(a)(2)(A).''.
(b) Elimination of FDO for Radiology Services and Diagnostic
Procedures.--Section 1833(n)(1)(B)(i) (42 U.S.C. 1395l(n)(1)(B)(i)) is
amended--
(1) by striking ``of 80 percent'', and
(2) by inserting before the period at the end the
following: ``, less the amount a provider may charge as
described in clause (ii) of section 1866(a)(2)(A)''.
(c) Effective Date.--The amendments made by this section shall
apply to services furnished during portions of cost reporting periods
occurring on or after October 1, 1997.
SEC. 10412. EXTENSION OF REDUCTIONS IN PAYMENTS FOR COSTS OF HOSPITAL
OUTPATIENT SERVICES.
(a) Reduction in Payments for Capital-Related Costs.--Section
1861(v)(1)(S)(ii)(I) (42 U.S.C. 1395x(v)(1)(S)(ii)(I)) is amended by
striking ``through 1998'' and inserting ``through 1999 and during
fiscal year 2000 before January 1, 2000''.
(b) Reduction in Payments for Other Costs.--Section
1861(v)(1)(S)(ii)(II) (42 U.S.C. 1395x(v)(1)(S)(ii)(II)) is amended by
striking ``through 1998'' and inserting ``through 1999 and during
fiscal year 2000 before January 1, 2000''.
SEC. 10413. PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES.
(a) In General.--Section 1833 (42 U.S.C. 1395l) is amended by
adding at the end the following:
``(t) Prospective Payment System for Hospital Outpatient Department
Services.--
``(1) In general.--With respect to hospital outpatient
services designated by the Secretary (in this section referred
to as `covered OPD services') and furnished during a year
beginning with 1999, the amount of payment under this part
shall be determined under a prospective payment system
established by the Secretary in accordance with this
subsection.
``(2) System requirements.--Under the payment system--
``(A) the Secretary shall develop a classification
system for covered OPD services;
``(B) the Secretary may establish groups of covered
OPD services, within the classification system
described in subparagraph (A), so that services
classified within each group are comparable clinically
and with respect to the use of resources;
``(C) the Secretary shall, using data on claims
from 1996 and using data from the most recent available
cost reports, establish relative payment weights for
covered OPD services (and any groups of such services
described in subparagraph (B)) based on median hospital
costs and shall determine projections of the frequency
of utilization of each such service (or group of
services) in 1999;
``(D) the Secretary shall determine a wage
adjustment factor to adjust the portion of payment and
coinsurance attributable to labor-related costs for
relative differences in labor and labor-related costs
across geographic regions in a budget neutral manner;
``(E) the Secretary shall establish other
adjustments, in a budget neutral manner, as determined
to be necessary to ensure equitable payments, such as
outlier adjustments, adjustments to account for
variations in coinsurance payments for procedures with
similar resource costs, or adjustments for certain
classes of hospitals; and
``(F) the Secretary shall develop a method for
controlling unnecessary increases in the volume of
covered OPD services.
``(3) Calculation of base amounts.--
``(A) Aggregate amounts that would be payable if
deductibles were disregarded.--The Secretary shall
estimate the total amounts that would be payable from
the Trust Fund under this part for covered OPD services
in 1999, determined without regard to this subsection,
as though the deductible under section 1833(b) did not
apply, and as though the coinsurance described in
section 1866(a)(2)(A)(ii) (as in effect before the date
of the enactment of this subsection) continued to
apply.
``(B) Unadjusted copayment amount.--
``(i) In general.--For purposes of this
subsection, subject to clause (ii), the
`unadjusted copayment amount' applicable to a
covered OPD service (or group of such services)
is 20 percent of national median of the charges
for the service (or services within the group)
furnished during 1996, updated to 1999 using
the Secretary's estimate of charge growth
during the period.
``(ii) Adjusted to be 20 percent when fully
phased in.--If the pre-deductible payment
percentage for a covered OPD service (or group
of such services) furnished in a year would be
equal to or exceed 80 percent, then the
unadjusted copayment amount shall be 25 percent
of amount determined under subparagraph (D)(i).
``(iii) Rules for new services.--The
Secretary shall establish rules for
establishment of an unadjusted copayment amount
for a covered OPD service not furnished during
1996, based upon its classification within a
group of such services.
``(C) Calculation of conversion factors.--
``(i) For 1999.--
``(I) In general.--The Secretary
shall establish a 1999 conversion
factor for determining the medicare
pre-deductible OPD fee payment amounts
for each covered OPD service (or group
of such services) furnished in 1999.
Such conversion factor shall be
established on the basis of the weights
and frequencies described in paragraph
(2)(C) and in a manner such that the
sum for all services and groups of the
products (described in subclause (II)
for each such service or group) equals
the total projected amount described in
subparagraph (A).
``(II) Product described.--The product
described in this subclause, for a service or
group, is the product of the medicare pre-
deductible OPD fee payment amounts (taking into
account appropriate adjustments described in
paragraphs (2)(D) and (2)(E)) and the
frequencies for such service or group.
``(ii) Subsequent years.--Subject to
paragraph (8)(B), the Secretary shall establish
a conversion factor for covered OPD services
furnished in subsequent years in an amount
equal to the conversion factor established
under this subparagraph and applicable to such
services furnished in the previous year
increased by the OPD payment increase factor
specified under clause (iii) for the year
involved.
``(iii) OPD payment increase factor.--For
purposes of this subparagraph, the `OPD payment
increase factor' for services furnished in a
year is equal to the sum of--
``(I) market basket percentage
increase (applicable under section
1886(b)(3)(B)(iii) to hospital
discharges occurring during the fiscal
year ending in such year, and
``(II) in the case of a covered OPD
service (or group of such services)
furnished in a year in which the pre-
deductible payment percentage would not
exceed 80 percent, 3.5 percentage
points, but in no case greater than
such number of percentage points as
will result in the pre-deductible
payment percentage exceeding 80
percent.
In applying the previous sentence for years
beginning with 2000, the Secretary may
substitute for the market basket percentage
increase under subclause (I) an annual
percentage increase that is computed and
applied with respect to covered OPD services
furnished in a year in the same manner as the
market basket percentage increase is determined
and applied to inpatient hospital services for
discharges occurring in a fiscal year.
``(D) Pre-deductible payment percentage.--The pre-
deductible payment percentage for a covered OPD service
(or group of such services) furnished in a year is
equal to the ratio of--
``(i) the conversion factor established
under subparagraph (C) for the year, multiplied
by the weighting factor established under
paragraph (2)(C) for the service (or group), to
``(ii) the sum of the amount determined
under clause (i) and the unadjusted copayment
amount determined under subparagraph (B) for
such service or group.
``(E) Calculation of medicare opd fee schedule
amounts.--The Secretary shall compute a medicare OPD
fee schedule amount for each covered OPD service (or
group of such services) furnished in a year, in an
amount equal to the product of--
``(i) the conversion factor computed under
subparagraph (C) for the year, and
``(ii) the relative payment weight
(determined under paragraph (2)(C)) for the
service or group.
``(4) Medicare payment amount.--The amount of payment made
from the Trust Fund under this part for a covered OPD service
(and such services classified within a group) furnished in a
year is determined as follows:
``(A) Fee schedule and copayment amount.--Add (i)
the medicare OPD fee schedule amount (computed under
paragraph (3)(E)) for the service or group and year,
and (ii) the unadjusted copayment amount (determined
under paragraph (3)(B)) for the service or group.
``(B) Subtract applicable deductible.--Reduce the
sum determined under subparagraph (A) by the amount of
the deductible under section 1833(b), to the extent
applicable.
``(C) Apply payment proportion to remainder.--
Multiply the amount so determined under subparagraph
(B) by the pre-deductible payment percentage (as
determined under paragraph (3)(D)) for the service or
group and year involved.
``(D) Labor-related adjustment.--The amount of
payment is the product determined under subparagraph
(C) with the labor-related portion of such product
adjusted for relative differences in the cost of labor
and other factors determined by the Secretary, as
computed under paragraph (2)(D).
``(5) Copayment amount.--
``(A) In general.--Except as provided in
subparagraph (B), the copayment amount under this
subsection is determined as follows:
``(i) Unadjusted copayment.--Compute the
amount by which the amount described in
paragraph (4)(B) exceeds the amount of payment
determined under paragraph (4)(C).
``(ii) Labor adjustment.--The copayment
amount is the difference determined under
clause (i) with the labor-related portion of
such difference adjusted for relative
differences in the cost of labor and other
factors determined by the Secretary, as
computed under paragraphs (2)(D). The
adjustment under this clause shall be made in a
manner that does not result in any change in
the aggregate copayments made in any year if
the adjustment had not been made.
``(B) Election to offer reduced copayment amount.--
The Secretary shall establish a procedure under which a
hospital, before the beginning of a year (beginning
with 1999), may elect to reduce the copayment amount
otherwise established under subparagraph (A) for some
or all covered OPD services to an amount that is not
less than 25 percent of the medicare OPD fee schedule
amount (computed under paragraph (3)(E)) for the
service involved, adjusted for relative differences in
the cost of labor and other factors determined by the
Secretary, as computed under subparagraphs (D) and (E)
of paragraph (2). Under such procedures, such reduced
copayment amount may not be further reduced or
increased during the year involved and the hospital may
disseminate information on the reduction of copayment
amount effected under this subparagraph.
``(C) No impact on deductibles.--Nothing in this
paragraph shall be construed as affecting a hospital's
authority to waive the charging of a deductible under
section 1833(b).
``(6) Periodic review and adjustments components of
prospective payment system.--
``(A) Periodic review.--The Secretary may
periodically review and revise the groups, the relative
payment weights, and the wage and other adjustments
described in paragraph (2) to take into account changes
in medical practice, changes in technology, the
addition of new services, new cost data, and other
relevant information and factors.
``(B) Budget neutrality adjustment.--If the
Secretary makes adjustments under subparagraph (A),
then the adjustments for a year may not cause the
estimated amount of expenditures under this part for
the year to increase or decrease from the estimated
amount of expenditures under this part that would have
been made if the adjustments had not been made.
``(C) Update factor.--If the Secretary determines
under methodologies described in subparagraph (2)(F)
that the volume of services paid for under this
subsection increased beyond amounts established through
those methodologies, the Secretary may appropriately
adjust the update to the conversion factor otherwise
applicable in a subsequent year.
``(7) Special rule for ambulance services.--The Secretary
shall pay for hospital outpatient services that are ambulance
services on the basis described in the matter in subsection
(a)(1) preceding subparagraph (A).
``(8) Special rules for certain hospitals.--In the case of
hospitals described in section 1886(d)(1)(B)(v)--
``(A) the system under this subsection shall not
apply to covered OPD services furnished before January
1, 2000; and
``(B) the Secretary may establish a separate
conversion factor for such services in a manner that
specifically takes into account the unique costs
incurred by such hospitals by virtue of their patient
population and service intensity.
``(9) Limitation on review.--There shall be no
administrative or judicial review under section 1869, 1878, or
otherwise of--
``(A) the development of the classification system
under paragraph (2), including the establishment of
groups and relative payment weights for covered OPD
services, of wage adjustment factors, other
adjustments, and methods described in paragraph (2)(F);
``(B) the calculation of base amounts under
paragraph (3);
``(C) periodic adjustments made under paragraph
(6); and
``(D) the establishment of a separate conversion
factor under paragraph (8)(B).''.
(b) Coinsurance.--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 items and services for which payment is made under
part B under the prospective payment system established under section
1833(t), clause (ii) of the first sentence shall be applied by
substituting for 20 percent of the reasonable charge, the applicable
copayment amount established under section 1833(t)(5).''.
(c) Treatment of Reduction in Copayment Amount.--Section
1128A(i)(6) (42 U.S.C. 1320a-7a(i)(6)) is amended--
(1) by striking ``or'' at the end of subparagraph (B),
(2) by striking the period at the end of subparagraph (C)
and inserting ``; or'', and
(3) by adding at the end the following new subparagraph:
``(D) a reduction in the copayment amount for
covered OPD services under section 1833(t)(5)(B).''.
(d) Conforming Amendments.--
(1) Approved asc procedures performed in hospital
outpatient departments.--
(A)(i) Section 1833(i)(3)(A) (42 U.S.C.
13951(i)(3)(A)) is amended--
(I) by inserting ``before January 1,
1999,'' after ``furnished'', and
(II) by striking ``in a cost reporting
period''.
(ii) The amendment made by clause (i) shall apply
to services furnished on or after January 1, 1999.
(B) Section 1833(a)(4) (42 U.S.C. 13951(a)(4)) is
amended by inserting ``or subsection (t)'' before the
semicolon.
(2) Radiology and other diagnostic procedures.--
(A) Section 1833(n)(1)(A) (42 U.S.C.
1395l(n)(1)(A)) is amended by inserting ``and before
January 1, 1999,'' after ``October 1, 1988,'' and after
``October 1, 1989,''.
(B) Section 1833(a)(2)(E) (42 U.S.C.
1395l(a)(2)(E)) is amended by inserting ``or, for
services or procedures performed on or after January 1,
1999, (t)'' before the semicolon.
(3) Other hospital outpatient services.--Section -
1833(a)(2)(B) (42 U.S.C. 1395l(a)(2)(B)) is amended--
(A) in clause (i), by inserting ``furnished before
January 1, 1999,'' after ``(i)'',
(B) in clause (ii), by inserting ``before January
1, 1999,'' after ``furnished'',
(C) by redesignating clause (iii) as clause
(iv),and
(D) by inserting after clause (ii), the following
new clause:
``(iii) if such services are furnished on
or after January 1, 1999, the amount determined
under subsection (t), or''.
Subchapter B--Rehabilitation Services
SEC. 10421. REHABILITATION AGENCIES AND SERVICES.
(a) Payment Based on Fee Schedule.--
(1) Special payment rules.--Section 1833(a) (42 U.S.C.
1395l(a)) is amended--
(A) in paragraph (2) in the matter before
subparagraph (A), by inserting ``(C),'' before ``(D)'';
(B) in paragraph (6), by striking ``and'' at the
end;
(C) in paragraph (7), by striking the period at the
end and inserting ``; and'';
(D) by adding at the end the following new
paragraph:
``(8) in the case of services described in section
1832(a)(2)(C) (that are not described in section
1832(a)(2)(B)), 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.--
``(1) In general.--With respect to outpatient physical
therapy services (which includes outpatient speech-language
pathology services) and outpatient occupational therapy
services 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 paragraph,
the term `applicable fee schedule amount' means, with respect
to services furnished in a year, the fee schedule amount
established under section 1848 for such services furnished
during the year or, if there is no such fee schedule amount
established for such services, for such comparable services as
the Secretary specifies.
``(4) Adjusted reasonable costs.--In paragraph (2), the
term `adjusted reasonable costs' means reasonable costs
determined reduced by--
``(A) 5.8 percent of the reasonable costs for
operating costs, and
``(B) 10 percent of the reasonable costs for
capital costs.
``(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 services 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).''.
(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 section
10401(b), (42 U.S.C. 1395y(a)) is amended--
(1) by striking ``or'' at the end of paragraph (16);
(2) by striking the period at the end of paragraph (17) and
inserting ``; or''; and
(3) by inserting after paragraph (17) the following:
``(18) 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 under the second sentence of section
1861(g) or 1861(p) 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. 1395l(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) (regardless of who furnishes the services or whether
the services may be covered as physicians' services so long as
the services are furnished other than in a hospital setting)'',
and
(2) in the second sentence, by striking ``outpatient
occupational therapy services which are described in the second
sentence of section 1861(p) through the operation of section
1861(g)'' and inserting ``occupational therapy services (of the
type that are described in section 1861(p) through the
operation of section 1861(g)), regardless of who furnishes the
services or whether the services may be covered as physicians'
services so long as the services are furnished other than in a
hospital setting''.
(d) Indexing Limitation.--Section 1833(g) (42 U.S.C. 1395l(g)), as
amended by subsection (c), is further amended--
(1) by striking ``$900'' each place it appears and
inserting ``the amount specified in paragraph (2) for the
year'',
(2) by inserting ``(1)'' after ``(g)'',
(3) by designating the last sentence as a paragraph (3),
and
(4) by inserting before paragraph (3), as so designated,
the following:
``(2) The amount specified in this paragraph--
``(A) for 1999, and each preceding year, is $900, and
``(B) for a subsequent year is the amount specified in this
paragraph for the preceding year increased by the Secretary's
estimate of the projected percentage growth in real gross
domestic product per capita from the fiscal year ending in the
preceding year to the fiscal year ending in such subsequent
year.''.
(e) Effective Date.--The amendments made by this section apply to
services furnished on or after January 1, 1998; except that the
amendments made by subsection (c) apply to services furnished on or
after January 1, 1999.
SEC. 10422. COMPREHENSIVE OUTPATIENT REHABILITATION FACILITIES (CORF).
(a) Payment Based on Fee Schedule.--
(1) Special payment rules.--Section 1833(a) (42 U.S.C.
1395l(a)), as amended by section 10421(a), is amended--
(A) in paragraph (3), by striking ``subparagraphs
(D) and (E) of section 1832(a)(2)'' and inserting
``section 1832(a)(2)(E)'';
(B) in paragraph (7), by striking ``and'' at the
end;
(C) in paragraph (8), by striking the period at the
end and inserting ``; and'';
(D) by adding at the end the following new
paragraph:
``(9) in the case of services described in section
1832(a)(2)(E), the amounts described in section 1834(k).''.
(2) Payment rates.--Section 1834(k) (42 U.S.C. 1395m(k)),
as added by section 10421(a), is amended--
(A) in the heading, by inserting ``and
Comprehensive Outpatient Rehabilitation Facility
Services'' after ``Therapy Services''; and
(B) in paragraph (1), by inserting ``and with
respect to comprehensive outpatient rehabilitation
facility services'' after ``occupational therapy
services''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to services furnished on or after January 1, 1998, and to
portions of cost reporting periods occurring on or after such date.
Subchapter C--Ambulance Services
SEC. 10431. PAYMENTS FOR AMBULANCE SERVICES.
(a) Interim Reductions.--
(1) Payments determined on reasonable cost basis.--Section
1861(v)(1) (42 U.S.C. 1395x(v)(1)) is amended by adding at the
end the following new subparagraph:
``(U) In determining the reasonable cost of ambulance
services (as described in subsection (s)(7)) provided during a
fiscal year (beginning with fiscal year 1998 and ending with
fiscal year 2002), the Secretary shall not recognize any costs
in excess of costs recognized as reasonable for ambulance
services provided during the previous fiscal year after
application of this subparagraph, increased by the percentage
increase in the consumer price index for all urban consumers
(U.S. city average) as estimated by the Secretary for the 12-
month period ending with the midpoint of the fiscal year
involved reduced (in the case of each of fiscal years 1998 and
1999) by 1 percentage point.''.
(2) Payments determined on reasonable charge basis.--
Section 1842(b) (42 U.S.C. 1395u(b)) is amended by adding at
the end the following new paragraph:
``(19) For purposes of section 1833(a)(1), the reasonable charge
for ambulance services (as described in section 1861(s)(7)) provided
during a fiscal year (beginning with fiscal year 1998 and ending with
fiscal year 2002) may not exceed the reasonable charge for such
services provided during the previous fiscal year after the application
of this paragraph, increased by the percentage increase in the consumer
price index for all urban consumers (U.S. city average) as estimated by
the Secretary for the 12-month period ending with the midpoint of the
year involved reduced (in the case of each of fiscal years 1998 and
1999) by 1 percentage point.''.
(b) Establishment of Prospective Fee Schedule.--
(1) Payment in accordance with fee schedule.--Section
1833(a)(1) (42 U.S.C. 1395l(a)(1)), as amended by section
10619(b)(1), is amended--
(A) by striking ``and (P)'' and inserting ``(P)'';
and
(B) by striking the semicolon at the end and
inserting the following: ``, and (Q) with respect to
ambulance service, the amounts paid shall be 80 percent
of the lesser of the actual charge for the services or
the amount determined by a fee schedule established by
the Secretary under section 1834(l);''.
(2) Establishment of schedule.--Section 1834 (42 U.S.C.
1395m), as amended by section 10421(a)(2), is amended by adding
at the end the following new subsection:
``(l) Establishment of Fee Schedule for Ambulance Services.--
``(1) In general.--The Secretary shall establish a fee
schedule for payment for ambulance services under this part
through a negotiated rulemaking process described in title 5,
United States Code, and in accordance with the requirements of
this subsection.
``(2) Considerations.--In establishing such fee schedule
the Secretary shall--
``(A) establish mechanisms to control increases in
expenditures for ambulance services under this part;
``(B) establish definitions for ambulance services
which link payments to the type of services provided;
``(C) consider appropriate regional and operational
differences;
``(D) consider adjustments to payment rates to
account for inflation and other relevant factors; and
``(E) phase in the application of the payment rates
under the fee schedule in an efficient and fair manner.
``(3) Savings.--In establishing such fee schedule the
Secretary shall--
``(A) ensure that the aggregate amount of payments
made for ambulance services under this part during 2000
does not exceed the aggregate amount of payments which
would have been made for such services under this part
during such year if the amendments made by section
10431 of the Balanced Budget Act of 1997 had not been
made; and
``(B) set the payment amounts provided under the
fee schedule for services furnished in 2001 and each
subsequent year at amounts equal to the payment amounts
under the fee schedule for service furnished during the
previous year, increased by the percentage increase in
the consumer price index for all urban consumers (U.S.
city average) for the 12-month period ending with June
of the previous year.
``(4) Consultation.--In establishing the fee schedule for
ambulance services under this subsection, the Secretary shall
consult with various national organizations representing
individuals and entities who furnish and regulate ambulance
services and share with such organizations relevant data in
establishing such schedule.
``(5) Limitation on review.--There shall be no
administrative or judicial review under section 1869 or
otherwise of the amounts established under the fee schedule for
ambulance services under this subsection, including matters
described in paragraph (2).
``(6) Restraint on billing.--The provisions of
subparagraphs (A) and (B) of section 1842(b)(18) shall apply to
ambulance services 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) Effective date.--The amendments made by this section
apply to ambulance services furnished on or after January 1,
2000.
(c) Authorizing Payment for Paramedic Intercept Service Providers
in Rural Communities.--In promulgating regulations to carry out section
1861(s)(7) of the Social Security Act (42 U.S.C. 1395x(s)(7)) with
respect to the coverage of ambulance service, the Secretary of Health
and Human Services may include coverage of advanced life support
services (in this subsection referred to as ``ALS intercept services'')
provided by a paramedic intercept service provider in a rural area if
the following conditions are met:
(1) The ALS intercept services are provided under a
contract with one or more volunteer ambulance services and are
medically necessary based on the health condition of the
individual being transported.
(2) The volunteer ambulance service involved--
(A) is certified as qualified to provide ambulance
service for purposes of such section,
(B) provides only basic life support services at
the time of the intercept, and
(C) is prohibited by State law from billing for any
services.
(3) The entity supplying the ALS intercept services--
(A) is certified as qualified to provide such
services under the medicare program under title XVIII
of the Social Security Act, and
(B) bills all recipients who receive ALS intercept
services from the entity, regardless of whether or not
such recipients are medicare beneficiaries.
SEC. 10432. DEMONSTRATION OF COVERAGE OF AMBULANCE SERVICES UNDER
MEDICARE THROUGH CONTRACTS WITH UNITS OF LOCAL
GOVERNMENT.
(a) Demonstration Project Contracts with Local Governments.--The
Secretary of Health and Human Services shall establish up to 3
demonstration projects under which, at the request of a county or
parish, the Secretary enters into a contract with the county or parish
under which--
(1) the county or parish furnishes (or arranges for the
furnishing) of ambulance services for which payment may be made
under part B of title XVIII of the Social Security Act for
individuals residing in the county or parish who are enrolled
under such part, except that the county or parish may not enter
into the contract unless the contract covers at least 80
percent of the individuals residing in the county or parish who
are enrolled under such part;
(2) any individual or entity furnishing ambulance services
under the contract meets the requirements otherwise applicable
to individuals and entities furnishing such services under such
part; and
(3) for each month during which the contract is in effect,
the Secretary makes a capitated payment to the county or parish
in accordance with subsection (b).
The projects may extend over a period of not to exceed 3 years each.
(b) Amount of Payment.--
(1) In general.--The amount of the monthly payment made for
months occurring during a calendar year to a county or parish
under a demonstration project contract under subsection (a)
shall be equal to the product of--
(A) the Secretary's estimate of the number of
individuals covered under the contract for the month;
and
(B) \1/12\ of the capitated payment rate for the
year established under paragraph (2).
(2) Capitated payment rate defined.--In this subsection,
the ``capitated payment rate'' applicable to a contract under
this subsection for a calendar year is equal to 95 percent of--
(A) for the first calendar year for which the
contract is in effect, the average annual per capita
payment made under part B of title XVIII of the Social
Security Act with respect to ambulance services
furnished to such individuals during the 3 most recent
calendar years for which data on the amount of such
payment is available; and
(B) for a subsequent year, the amount provided
under this paragraph for the previous year increased by
the percentage increase in the consumer price index for
all urban consumers (U.S. city average) for the 12-
month period ending with June of the previous year.
(c) Other Terms of Contract.--The Secretary and the county or
parish may include in a contract under this section such other terms as
the parties consider appropriate, including--
(1) covering individuals residing in additional counties or
parishes (under arrangements entered into between such counties
or parishes and the county or parish involved);
(2) permitting the county or parish to transport
individuals to non-hospital providers if such providers are
able to furnish quality services at a lower cost than hospital
providers; or
(3) implementing such other innovations as the county or
parish may propose to improve the quality of ambulance services
and control the costs of such services.
(d) Contract Payments in Lieu of Other Benefits.--Payments under a
contract to a county or parish under this section shall be instead of
the amounts which (in the absence of the contract) would otherwise be
payable under part B of title XVIII of the Social Security Act for the
services covered under the contract which are furnished to individuals
who reside in the county or parish.
(e) Report on Effects of Capitated Contracts.--
(1) Study.--The Secretary shall evaluate the demonstration
projects conducted under this section. Such evaluation shall
include an analysis of the quality and cost-effectiveness of
ambulance services furnished under the projects.
(2) Report.--Not later than January 1, 2000, the Secretary
shall submit a report to Congress on the study conducted under
paragraph (1), and shall include in the report such
recommendations as the Secretary considers appropriate,
including recommendations regarding modifications to the
methodology used to determine the amount of payments made under
such contracts and extending or expanding such projects.
CHAPTER 3--PAYMENT UNDER PARTS A AND B
SEC. 10441. PROSPECTIVE PAYMENT FOR HOME HEALTH SERVICES.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.), as amended
by section 10011, is amended by adding at the end the following new
section:
``prospective payment for home health services
``Sec. 1895. (a) In General.--Notwithstanding section 1861(v), the
Secretary shall provide, for cost reporting periods beginning on or
after October 1, 1999, for payments for home health services in
accordance with a prospective payment system established by the
Secretary under this section.
``(b) System of Prospective Payment for Home Health Services.--
``(1) In general.--The Secretary shall establish under this
subsection a prospective payment system for payment for all
costs of home health services. Under the system under this
subsection all services covered and paid on a reasonable cost
basis under the medicare home health benefit as of the date of
the enactment of the this section, including medical supplies,
shall be paid for on the basis of a prospective payment amount
determined under this subsection and applicable to the services
involved. In implementing the system, the Secretary may provide
for a transition (of not longer than 4 years) during which a
portion of such payment is based on agency-specific costs, but
only if such transition does not result in aggregate payments
under this title that exceed the aggregate payments that would
be made if such a transition did not occur.
``(2) Unit of payment.--In defining a prospective payment
amount under the system under this subsection, the Secretary
shall consider an appropriate unit of service and the number,
type, and duration of visits provided within that unit,
potential changes in the mix of services provided within that
unit and their cost, and a general system design that provides
for continued access to quality services.
``(3) Payment basis.--
``(A) Initial basis.--
``(i) In general.--Under such system the
Secretary shall provide for computation of a
standard prospective payment amount (or
amounts). Such amount (or amounts) shall
initially be based on the most current audited
cost report data available to the Secretary and
shall be computed in a manner so that the total
amounts payable under the system for fiscal
year 2000 shall be equal to the total amount
that would have been made if the system had not
been in effect but if the reduction in limits
described in clause (ii) had been in effect.
Such amount shall be standardized in a manner
that eliminates the effect of variations in
relative case mix and wage levels among
different home health agencies in a budget
neutral manner consistent with the case mix and
wage level adjustments provided under paragraph
(4)(A). Under the system, the Secretary may
recognize regional differences or differences
based upon whether or not the services or
agency are in an urbanized area.
``(ii) Reduction.--The reduction described
in this clause is a reduction by 15 percent in
the cost limits and per beneficiary limits
described in section 1861(v)(1)(L), as those
limits are in effect on September 30, 1999.
``(B) Annual update.--
``(i) In general.--The standard prospective
payment amount (or amounts) shall be adjusted
for each fiscal year (beginning with fiscal
year 2001) in a prospective manner specified by
the Secretary by the home health market basket
percentage increase applicable to the fiscal
year involved.
``(ii) Home health market basket percentage
increase.--For purposes of this subsection, the
term `home health market basket percentage
increase' means, with respect to a fiscal year,
a percentage (estimated by the Secretary before
the beginning of the fiscal year) determined
and applied with respect to the mix of goods
and services included in home health services
in the same manner as the market basket
percentage increase under section
1886(b)(3)(B)(iii) is determined and applied to
the mix of goods and services comprising
inpatient hospital services for the fiscal
year.
``(C) Adjustment for outliers.--The Secretary shall
reduce the standard prospective payment amount (or
amounts) under this paragraph applicable to home health
services furnished during a period by such proportion
as will result in an aggregate reduction in payments
for the period equal to the aggregate increase in
payments resulting from the application of paragraph
(5) (relating to outliers).
``(4) Payment computation.--
``(A) In general.--The payment amount for a unit of
home health services shall be the applicable standard
prospective payment amount adjusted as follows:
``(i) Case mix adjustment.--The amount
shall be adjusted by an appropriate case mix
adjustment factor (established under
subparagraph (B)).
``(ii) Area wage adjustment.--The portion
of such amount that the Secretary estimates to
be attributable to wages and wage-related costs
shall be adjusted for geographic differences in
such costs by an area wage adjustment factor
(established under subparagraph (C)) for the
area in which the services are furnished or
such other area as the Secretary may specify.
``(B) Establishment of case mix adjustment
factors.--The Secretary shall establish appropriate
case mix adjustment factors for home health services in
a manner that explains a significant amount of the
variation in cost among different units of services.
``(C) Establishment of area wage adjustment
factors.--The Secretary shall establish area wage
adjustment factors that reflect the relative level of
wages and wage-related costs applicable to the
furnishing of home health services in a geographic area
compared to the national average applicable level. Such
factors may be the factors used by the Secretary for
purposes of section 1886(d)(3)(E).
``(5) Outliers.--The Secretary may provide for an addition
or adjustment to the payment amount otherwise made in the case
of outliers because of unusual variations in the type or amount
of medically necessary care. The total amount of the additional
payments or payment adjustments made under this paragraph with
respect to a fiscal year may not exceed 5 percent of the total
payments projected or estimated to be made based on the
prospective payment system under this subsection in that year.
``(6) Proration of prospective payment amounts.--If a
beneficiary elects to transfer to, or receive services from,
another home health agency within the period covered by the
prospective payment amount, the payment shall be prorated
between the home health agencies involved.
``(c) Requirements for Payment Information.--With respect to home
health services furnished on or after October 1, 1998, no claim for
such a service may be paid under this title unless--
``(1) the claim has the unique identifier (provided under
section 1842(r)) for the physician who prescribed the services
or made the certification described in section 1814(a)(2) or
1835(a)(2)(A); and
``(2) in the case of a service visit described in paragraph
(1), (2), (3), or (4) of section 1861(m), the claim has
information (coded in an appropriate manner) on the length of
time of the service visit, as measured in 15 minute increments.
``(d) Limitation on Review.--There shall be no administrative or
judicial review under section 1869, 1878, or otherwise of--
``(1) the establishment of a transition period under
subsection (b)(1);
``(2) the definition and application of payment units under
subsection (b)(2);
``(3) the computation of initial standard prospective
payment amounts under subsection (b)(3)(A) (including the
reduction described in clause (ii) of such subsection);
``(4) the establishment of the adjustment for outliers
under subsection (b)(3)(C);
``(5) the establishment of case mix and area wage
adjustments under subsection (b)(4);
``(6) the establishment of any adjustments for outliers
under subsection (b)(5); and
``(7) the amounts or types of adjustments under subsection
(b)(7).''.
(b) Elimination of Periodic Interim Payments for Home Health
Agencies.--Section 1815(e)(2) (42 U.S.C. 1395g(e)(2)) is amended--
(1) by inserting ``and'' at the end of subparagraph (C),
(2) by striking subparagraph (D), and
(3) by redesignating subparagraph (E) as subparagraph (D).
(c) Conforming Amendments.--
(1) Payments under part a.--Section 1814(b) (42 U.S.C.
1395f(b)) is amended in the matter preceding paragraph (1) by
striking ``and 1886'' and inserting ``1886, and 1895''.
(2) Treatment of items and services paid under part b.--
(A) Payments under part b.--Section 1833(a)(2) (42
U.S.C. 1395l(a)(2)) is amended--
(i) by amending subparagraph (A) to read as
follows:
``(A) with respect to home health services (other
than a covered osteoporosis drug) (as defined in
section 1861(kk)), the amount determined under the
prospective payment system under section 1895;'';
(ii) by striking ``and'' at the end of
subparagraph (E);
(iii) by adding ``and'' at the end of
subparagraph (F); and
(iv) by adding at the end the following new
subparagraph:
``(G) with respect to items and services described
in section 1861(s)(10)(A), the lesser of--
``(i) the reasonable cost of such services,
as determined under section 1861(v), or
``(ii) the customary charges with respect
to such services,
or, if such services are furnished by a public provider
of services, or by another provider which demonstrates
to the satisfaction of the Secretary that a significant
portion of its patients are low-income (and requests
that payment be made under this provision), free of
charge or at nominal charges to the public, the amount
determined in accordance with section 1814(b)(2);''.
(B) Requiring payment for all items and services to
be made to agency.--
(i) In general.--The first sentence of
section 1842(b)(6) (42 U.S.C. 1395u(b)(6)), as
amended by section 10401(b)(2), is amended--
(I) by striking ``and (E)'' and
inserting ``(E)''; and
(II) by striking the period at the
end and inserting the following: ``,
and (F) in the case of home health
services furnished to an individual who
(at the time the item or service is
furnished) is under a plan of care of a
home health agency, payment shall be
made to the agency (without regard to
whether or not the item or service was
furnished by the agency, by others
under arrangement with them made by the
agency, or when any other contracting
or consulting arrangement, or
otherwise).''.
(ii) Conforming amendment.--Section
1832(a)(1) (42 U.S.C. 1395k(a)(1)), as amended
by section 10401(b), is amended by striking
``and section 1842(b)(6)(E)'' and inserting ``,
section 1842(b)(6)(E), and section
1842(b)(6)(F)''.
(C) Exclusions from coverage.--Section 1862(a) (42
U.S.C. 1395y(a)), as amended by sections 10401(b) and
10421(b), is amended--
(i) by striking ``or'' at the end of
paragraph (17);
(ii) by striking the period at the end of
paragraph (18) and inserting ``; or''; and
(iii) inserting after paragraph (18) the
following new paragraph:
``(19) where such expenses are for home health services
furnished to an individual who is under a plan of care of the
home health agency if the claim for payment for such services
is not submitted by the agency.''.
(d) Effective Date.--Except as otherwise provided, the amendments
made by this section shall apply to cost reporting periods beginning on
or after October 1, 1999.
Subtitle F--Provisions Relating to Part A
CHAPTER 1--PAYMENT OF PPS HOSPITALS
SEC. 10501. PPS HOSPITAL PAYMENT UPDATE.
Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)) is
amended--
(1) by striking ``and'' at the end of subclause (XII), and
(2) by striking subclause (XIII) and inserting the
following:
``(XIII) for fiscal year 1998, 0 percent,
``(XIV) for each of the fiscal years 1999 through 2002, the
market basket percentage increase minus 1.0 percentage point
for hospitals in all areas, and
``(XV) for fiscal year 2003 and each subsequent fiscal
year, the market basket percentage increase for hospitals in
all areas.''.
SEC. 10502. CAPITAL PAYMENTS FOR PPS HOSPITALS.
(a) Maintaining Savings From Temporary Reduction in PPS Capital
Rates.--Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended by
adding at the end the following: ``In addition to the reduction
described in the preceding sentence, for discharges occurring on or
after October 1, 1997, the Secretary shall apply the budget neutrality
adjustment factor used to determine the Federal capital payment rate in
effect on September 30, 1995 (as described in section 412.352 of title
42 of the Code of Federal Regulations), to (i) the unadjusted standard
Federal capital payment rate (as described in section 412.308(c) of
that title, as in effect on September 30, 1997), and (ii) the
unadjusted hospital-specific rate (as described in section
412.328(e)(1) of that title, as in effect on September 30, 1997).''.
(b) Revision of Exceptions Process Under Prospective Payment System
for Certain Projects.--
(1) In general.--Section 1886(g)(1) (42 U.S.C.
1395ww(g)(1)) is amended--
(A) by redesignating subparagraph (C) as
subparagraph (F), and
(B) by inserting after subparagraph (B) the
following subparagraphs:
``(C) The exceptions under the system provided by the Secretary
under subparagraph (B)(iii) shall include the provision of exception
payments under the special exceptions process provided under section
412.348(g) of title 42, Code of Federal Regulations (as in effect on
September 1, 1995), except that the Secretary shall revise such
process, effective for discharges occurring after September 30, 1997,
as follows:
``(i) A hospital with at least 100 beds which is located in
an urban area shall be eligible under such process without
regard to its disproportionate patient percentage under
subsection (d)(5)(F) or whether it qualifies for additional
payment amounts under such subsection.
``(ii) The minimum payment level for qualifying hospitals
shall be 85 percent (or such lower percentage, but no lower
than 75 percent, as the Secretary may provide to comply with
subparagraph (D)).
``(iii) A hospital shall be considered to meet the
requirement that it complete the project involved no later than
the end of the hospital's last cost reporting period beginning
before October 1, 2001, if--
``(I) the hospital has obtained a certificate of
need for the project approved by the State or a local
planning authority by September 1, 1995, and
``(II) by September 1, 1995, the hospital has
expended on the project at least $750,000 or 10 percent
of the estimated cost of the project.
``(iv) Offsetting amounts, as described in section
412.348(g)(8)(ii) of title 42, Code of Federal Regulations,
shall apply except that subparagraph (B) of such section shall
be revised to require that the additional payment that would
otherwise be payable for the cost reporting period shall be
reduced by the amount (if any) by which the hospital's current
year medicare capital payments (excluding, if applicable, 75
percent of the hospital's capital-related disproportionate
share payments) exceeds its medicare capital costs for such
year.
``(D) The Secretary may reduce the percent specified under
subparagraph (C)(ii) (but not below 75 percent) and shall reduce the
Federal capital rate for a fiscal year by such percentage as the
Secretary determines to be necessary to ensure that the application of
subparagraph (C) does not result in an increase in the total amount
that would have been paid under this subsection in the fiscal year if
such subparagraph did not apply.
``(E) The Secretary shall provide for publication in the Federal
Register each year (beginning with 1999) a description of the
distributional impact of the application of subparagraph (C) on
hospitals which receive, and do not receive, an exception payment under
such subparagraph.''.
(2) Conforming amendment.--Section 1886(g)(1)(B)(iii) (42
U.S.C. 1395ww(g)(1)(B)(iii)) is amended by striking ``may
provide'' and inserting ``shall provide (in accordance with
subparagraph (C))''.
SEC. 10503. FREEZE IN DISPROPORTIONATE SHARE.
(a) No Update in Disproportionate Share for Fiscal Years 1998 and
1999.--Section 1886(d)(5)(F) (42 U.S.C. 1395ww(d)(5)(F)) is amended in
clause (ii) by adding at the end the following new sentence: ``For
discharges occurring on or after October 1, 1997, the sum described in
subclause (I) shall be determined as if the applicable percentage
increase described in subsection (b)(3)(B)(i) for discharges for fiscal
years 1998 and 1999 were zero percent.''.
(b) Development of Revised Qualifying Criteria and Payment
Methodology for Hospitals That Serve a Disproportionate Share of Low-
Income Patients.--
(1) Development of proposal.--The Secretary of Health and
Human Services shall develop a proposal to modify the current
qualifying criteria and payment methodology under which
hospitals that are paid under section 1886(d) of the Social
Security Act (42 U.S.C. 1395ww(d)) receive an additional
payment because they serve a disproportionate share of low-
income patients.
(2) Report.--Not later than April 1, 1999, the Secretary
shall transmit the proposal developed under paragraph (1) to
the Committee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate.
SEC. 10504. MEDICARE CAPITAL ASSET SALES PRICE EQUAL TO BOOK VALUE.
(a) In General.--Section 1861(v)(1)(O) (42 U.S.C. 1395x(v)(1)(O))
is amended--
(1) in clause (i)--
(A) by striking ``and (if applicable) a return on
equity capital'';
(B) by striking ``hospital or skilled nursing
facility'' and inserting ``provider of services'';
(C) by striking ``clause (iv)'' and inserting
``clause (iii)''; and
(D) by striking ``the lesser of the allowable
acquisition cost'' and all that follows and inserting
``the historical cost of the asset, as recognized under
this title, less depreciation allowed, to the owner of
record as of the date of enactment of the Balanced
Budget Act of 1997 (or, in the case of an asset not in
existence as of that date, the first owner of record of
the asset after that date).'';
(2) by striking clause (ii); and
(3) by redesignating clauses (iii) and (iv) as clauses (ii)
and (iii), respectively.
(b) Effective Date.--The amendments made by subsection (a) apply to
changes of ownership that occur after the third month beginning after
the date of enactment of this section.
SEC. 10505. ELIMINATION OF IME AND DSH PAYMENTS ATTRIBUTABLE TO OUTLIER
PAYMENTS.
(a) Indirect Medical Education.--Section 1886(d)(5)(B)(i)(I) (42
U.S.C. 1395ww(d)(5)(B)(i)(I)) is amended by inserting ``, for cases
qualifying for additional payment under subparagraph (A)(i),'' before
``the amount paid to the hospital under subparagraph (A)''.
(b) Disproportionate Share Adjustments.--Section
1886(d)(5)(F)(ii)(I) (42 U.S.C. 1395ww(d)(5)(F)(ii)(I)) is amended by
inserting ``, for cases qualifying for additional payment under
subparagraph (A)(i),'' before ``the amount paid to the hospital under
subparagraph (A)''.
(c) Cost Outlier Payments.--Section 1886(d)(5)(A)(ii) (42 U.S.C.
1395ww(d)(5)(A)(ii)) is amended by striking ``exceed the applicable DRG
prospective payment rate'' and inserting ``exceed the sum of the
applicable DRG prospective payment rate plus any amounts payable under
paragraphs (d)(5)(B) and (d)(5)(F)''.
(d) Effective Date.--The amendments made by this section apply to
discharges occurring after September 30, 1997.
SEC. 10506. REDUCTION IN ADJUSTMENT FOR INDIRECT MEDICAL EDUCATION.
(a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C.
1395ww(d)(5)(B)(ii)) is amended to read as follows:
``(ii) For purposes of clause (i)(II), the indirect
teaching adjustment factor for discharges occurring--
``(I) on or after October 1, 1988 and before
October 1, 1997, is equal to 1.89 x (((1+r) to the
nth power) -1),
``(II) during fiscal year 1998, is equal to 1.62
x (((1+r) to the nth power) -1), and
``(III) during or after fiscal year 1999, is equal
to 1.35 x (((1+r) to the nth power) -1),
where `r' is the ratio of the hospital's full-time equivalent
interns and residents to beds and `n' equals 0.405, subject to
clause (vi).''.
(b) Conforming Amendment Relating to Determination of Standardized
Amounts.--Section 1886(d)(2)(C)(i) (42 U.S.C. 1395ww(d)(2)(C)(i)) is
amended by adding at the end the following: ``except that the Secretary
shall not take into account any reductions in the amount of additional
payments under paragraph (5)(B)(ii) resulting from the amendments made
by section 10506(a) of the Balanced Budget Act of 1997,''.
(c) Limitation on Number of Residents for Certain Fiscal Years.--
Section 1886(d)(5)(B) (42 U.S.C. 1395ww(d)(5)(B)), as amended by
subsection (a), is amended by adding at the end the following new
clauses:
``(v) In determining the adjustment with respect to a
hospital for discharges occurring on or after October 1, 1997,
the total number of interns and residents in either a hospital
or non-hospital setting may not exceed the number of interns
and residents in the hospital with respect to the hospital's
cost reporting period beginning on or before December 31, 1996.
``(vi) For purposes of clause (ii)--
``(I) `r' may not exceed the ratio of the number of
interns and residents as determined under clause (v)
with respect to the hospital for its most recent cost
reporting period, to the hospital's available beds (as
defined by the Secretary) during that cost reporting
period,
``(II) for the hospital's first cost reporting
period beginning on or after October 1, 1997, subject
to the limits described in clauses (iv) and (v), the
total number of full-time equivalent residents for
payment purposes shall equal the average of the actual
full-time equivalent resident count for the hospital's
most recent cost reporting period and the preceding
cost reporting period, and
``(III) for the cost reporting period beginning on
or after October 1, 1998, and each subsequent cost
reporting period, subject to the limits described in
clauses (iv) and (v), the total number of full-time
equivalent residents for payment purposes shall equal
the average of the actual full-time equivalent resident
count for the cost reporting period and the preceding
two cost reporting periods.
``(vii) If the hospital's fiscal year 1998 or later cost
reporting period is not equal to twelve months, the Secretary
shall make appropriate modifications to ensure that the average
full-time equivalent residency count pursuant to subclauses
(II) and (III) of clause (vi) is based on the equivalent of
full twelve month cost reporting periods.
``(viii) The Secretary may establish rules, consistent with
the policies in clauses (v) through (vii) and in subsection
(h)(6)(A)(ii), with respect to the application of clauses (v)
through (vii) in the case of medical residency training
programs established on or after January 1, 1997.''.
SEC. 10507. TREATMENT OF TRANSFER CASES.
(a) Transfers to PPS Exempt Hospitals and Skilled Nursing
Facilities.--Section 1886(d)(5)(I) (42 U.S.C. 1395ww(d)(5)(I)) is
amended by adding at the end the following new clause:
``(iii) In carrying out this subparagraph, the Secretary shall
treat the term `transfer case' as including the case of an individual
who, upon discharge from a subsection (d) hospital--
``(I) is admitted as an inpatient to a hospital or hospital
unit that is not a subsection (d) hospital for the receipt of
inpatient hospital services; or
``(II) is admitted to a skilled nursing facility or
facility described in section 1861(y)(1) for the receipt of
extended care services.''.
(b) Transfers for Purposes of Home Health Services.--Section
1886(d)(5)(I)(iii) (42 U.S.C. 1395ww(d)(5)(I)(iii)), as amended by
subsection (a), is amended--
(1) in subclause (I), by striking ``or'';
(2) in subclause (II), by striking the period at the end
and inserting ``; or'' and
(2) by adding at the end the following new subclause:
``(III) receives home health services from a home health
agency, if such services relate to the condition or diagnosis
for which such individual received inpatient hospital services
from the subsection (d) hospital, and if such services are
provided within an appropriate period as determined by the
Secretary in regulations promulgated not later than September
1, 1998.''.
(c) Effective Dates.--
(1) The amendment made by subsection (a) shall apply with
respect to discharges occurring on or after October 1, 1997.
(2) The amendment made by subsection (b) shall apply with
respect to discharges occurring on or after October 1, 1998.
SEC. 10508. INCREASE BASE PAYMENT RATE TO PUERTO RICO HOSPITALS.
Section 1886(d)(9)(A) (42 U.S.C. 1395ww(d)(9)(A)) is amended--
(1) in the matter preceding clause (i), by striking ``in a
fiscal year beginning on or after October 1, 1987,'',
(2) in clause (i), by striking ``75 percent'' and
inserting, ``for discharges beginning on or after October 1,
1997, 50 percent (and for discharges between October 1, 1987,
and September 30, 1997, 75 percent)'', and
(3) in clause (ii), by striking ``25 percent'' and
inserting, ``for discharges beginning in a fiscal year
beginning on or after October 1, 1997, 50 percent (and for
discharges between October 1, 1987 and September 30, 1997, 25
percent)''.
CHAPTER 2--PAYMENT OF PPS EXEMPT HOSPITALS
SEC. 10511. PAYMENT UPDATE.
(a) In General.--Section 1886(b)(3)(B) (42 U.S.C. 1395ww(b)(3)(B))
is amended--
(1) in clause (ii)--
(A) by striking ``and'' at the end of subclause
(V),
(B) by redesignating subclause (VI) as subclause
(VIII); and
(C) by inserting after subclause (V), the following
subclauses:
``(VI) for fiscal year 1998, is 0 percent;
``(VII) for fiscal years 1999 through 2002, is the
applicable update factor specified under clause (vi) for the
fiscal year; and''; and
(2) by adding at the end the following new clause:
``(vi) For purposes of clause (ii)(VII) for a fiscal year, if a
hospital's allowable operating costs of inpatient hospital services
recognized under this title for the most recent cost reporting period
for which information is available--
``(I) is equal to, or exceeds, 110 percent of the
hospital's target amount (as determined under subparagraph (A))
for such cost reporting period, the applicable update factor
specified under this clause is the market basket percentage;
``(II) exceeds 100 percent, but is less than 110 percent,
of such target amount for the hospital, the applicable update
factor specified under this clause is 0 percent or, if greater,
the market basket percentage minus 0.25 percentage points for
each percentage point by which such allowable operating costs
(expressed as a percentage of such target amount) is less than
110 percent of such target amount;
``(III) is equal to, or less than 100 percent, but exceeds
\2/3\ of such target amount for the hospital, the applicable
update factor specified under this clause is 0 percent or, if
greater, the market basket percentage minus 2.5 percentage
points; or
``(IV) does not exceed \2/3\ of such target amount for the
hospital, the applicable update factor specified under this
clause is 0 percent.''.
(b) No Effect of Payment Reduction on Exceptions and Adjustments.--
Section 1886(b)(4)(A)(ii) (42 U.S.C. 1395ww(b)(4)(A)(ii)) is amended by
adding at the end the following new sentence: ``In making such
reductions, the Secretary shall treat the applicable update factor
described in paragraph (3)(B)(vi) for a fiscal year as being equal to
the market basket percentage for that year.''.
SEC. 10512. REDUCTIONS TO CAPITAL PAYMENTS FOR CERTAIN PPS-EXEMPT
HOSPITALS AND UNITS.
Section 1886(g) (42 U.S.C. 1395ww(g)) is amended by adding at the
end the following new paragraph:
``(4) In determining the amount of the payments that are
attributable to portions of cost reporting periods occurring during
fiscal years 1998 through 2002 and that may be made under this title
with respect to capital-related costs of inpatient hospital services of
a hospital which is described in clause (i), (ii), or (iv) of
subsection (d)(1)(B) or a unit described in the matter after clause (v)
of such subsection, the Secretary shall reduce the amounts of such
payments otherwise determined under this title by 10 percent.''.
SEC. 10513. CAP ON TEFRA LIMITS.
Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)) is amended--
(1) in subparagraph (A) by striking ``subparagraphs (C),
(D), and (E)'' and inserting ``subparagraph (C) and succeeding
subparagraphs'', and
(2) by adding at the end the following:
``(F)(i) In the case of a hospital or unit that is within a class
of hospital described in clause (ii), for cost reporting periods
beginning on or after October 1, 1997, and before October 1, 2002, such
target amount may not be greater than the 90th percentile of the target
amounts for such hospitals within such class for cost reporting periods
beginning during that fiscal year.
``(ii) For purposes of this subparagraph, each of the following
shall be treated as a separate class of hospital:
``(I) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
``(II) Hospitals described in clause (ii) of such
subsection and rehabilitation units described in the matter
following clause (v) of such subsection.
``(III) Hospitals described in clause (iv) of such
subsection.''.
SEC. 10514. CHANGE IN BONUS AND RELIEF PAYMENTS.
(a) Change in Bonus Payment.--Section 1886(b)(1)(A) (42 U.S.C.
1395ww(b)(1)(A)) is amended by striking all that follows ``plus--'' and
inserting the following:
``(i) 10 percent of the amount by which the target
amount exceeds the amount of the operating costs, or
``(ii) 1 percent of the operating costs,
whichever is less;''.
(b) Change in Relief Payments.--Section 1886(b)(1) (42 U.S.C.
1395ww(b)(1)) is amended--
(1) in subparagraph (B)--
(A) by striking ``greater than the target amount''
and inserting ``greater than 110 percent of the target
amount'',
(B) by striking ``exceed the target amount'' and
inserting ``exceed 110 percent of the target amount'',
(C) by striking ``10 percent'' and inserting ``20
percent'', and
(D) by redesignating such subparagraph as
subparagraph (C); and
(2) by inserting after subparagraph (A) the following new
subparagraph:
``(B) are greater than the target amount but do not exceed
110 percent of the target amount, the amount of the payment
with respect to those operating costs payable under part A on a
per discharge basis shall equal the target amount; or''.
SEC. 10515. CHANGE IN PAYMENT AND TARGET AMOUNT FOR NEW PROVIDERS.
Section 1886(b) (42 U.S.C. 1395ww(b)) is amended--
(1) by inserting after paragraph (1) the following new
paragraph:
``(2)(A) Notwithstanding paragraph (1), in the case of a hospital
or unit that is within a class of hospital described in subparagraph
(B) which first receives payments under this section on or after
October 1, 1997--
``(i) for each of the first 2 full or partial cost
reporting periods, the amount of the payment with respect to
operating costs described in paragraph (1) under part A on a
per discharge or per admission basis (as the case may be) is
equal to the lesser of--
``(I) the amount of operating costs for such
respective period, or
``(II) 150 percent of the national median of the
operating costs for hospitals in the same class as the
hospital for cost reporting periods beginning during
the same fiscal year, as adjusted under subparagraph
(C); and
``(ii) for purposes of computing the target amount for the
subsequent cost reporting period, the target amount for the
preceding cost reporting period is equal to the amount
determined under clause (i) for such preceding period.
``(B) For purposes of this paragraph, each of the following shall
be treated as a separate class of hospital:
``(i) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
``(ii) Hospitals described in clause (ii) of such
subsection and rehabilitation units described in the matter
following clause (v) of such subsection.
``(iii) A class of hospitals described in subsection
(d)(1)(B)(iv) that the Secretary shall establish based upon a
measure of case mix that takes into account acuity.
``(iv) Hospitals described in subsection (d)(1)(B)(iv) that
are not within the class described in clause (iii).
``(C) In applying subparagraph (A)(i)(II) in the case of a hospital
or unit, the Secretary shall provide for an appropriate adjustment to
the labor-related portion of the amount determined under such
subparagraph to take into account differences between average wage-
related costs in the area of the hospital and the national average of
such costs within the same class of hospital.''; and
(2) in paragraph (3)(A), as amended in section 10513, by
inserting ``and in paragraph (2)(A)(ii),'' before ``for
purposes of''.
SEC. 10516. REBASING.
(a) Option of Rebasing for Hospitals In Operation Before 1990.--
Section 1886(b)(3)(42 U.S.C. 1395ww(b)(3)), as amended in section
10513, is amended by adding at the end the following new subparagraph:
``(G)(i) In the case of a hospital (or unit described in the matter
following clause (v) of subsection (d)(1)(B)) that received payment
under this subsection for inpatient hospital services furnished during
cost reporting periods before October 1, 1990, that is within a class
of hospital described in clause (iii), and that elects (in a form and
manner determined by the Secretary) this subparagraph to apply to the
hospital, the target amount for the hospital's 12-month cost reporting
period beginning during fiscal year 1998 is equal to the average
described in clause (ii).
``(ii) The average described in this clause for a hospital or unit
shall be determined by the Secretary as follows:
``(I) The Secretary shall determine the allowable operating
costs for inpatient hospital services for the hospital or unit
for each of the 5 cost reporting periods for which the
Secretary has the most recent settled cost reports as of the
date of the enactment of this subparagraph.
``(II) The Secretary shall increase the amount determined
under subclause (I) for each cost reporting period by the
applicable percentage increase under subparagraph (B)(ii) for
each subsequent cost reporting period up to the cost reporting
period described in clause (i).
``(III) The Secretary shall identify among such 5 cost
reporting periods the cost reporting periods for which the
amount determined under subclause (II) is the highest, and the
lowest.
``(IV) The Secretary shall compute the averages of the
amounts determined under subclause (II) for the 3 cost
reporting periods not identified under subclause (III).
``(iii) For purposes of this subparagraph, each of the following
shall be treated as a separate class of hospital:
``(I) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
``(II) Hospitals described in clause (ii) of such
subsection and rehabilitation units described in the matter
following clause (v) of such subsection.
``(III) Hospitals described in clause (iii) of such
subsection.
``(IV) Hospitals described in clause (iv) of such
subsection.
``(V) Hospitals described in clause (v) of such
subsection.''.
(b) Certain Long-Term Care Hospitals.--Section 1886(b)(3) (42
U.S.C. 1395ww(b)(3)), as amended by subsection (a), is amended by
adding at the end the following new subparagraph:
``(H)(i) In the case of a qualified long-term care hospital (as
defined in clause (ii)) that elects (in a form and manner determined by
the Secretary) this subparagraph to apply to the hospital, the target
amount for the hospital's 12-month cost reporting period beginning
during fiscal year 1998 is equal to the allowable operating costs of
inpatient hospital services (as defined in subsection (a)(4))
recognized under this title for the hospital for the 12-month cost
reporting period beginning during fiscal year 1996, increased by the
applicable percentage increase for the cost reporting period beginning
during fiscal year 1997.
``(ii) In clause (i), a `qualified long-term care hospital' means,
with respect to a cost reporting period, a hospital described in clause
(iv) of subsection (d)(1)(B) during each of the 2 cost reporting
periods for which the Secretary has the most recent settled cost
reports as of the date of the enactment of this subparagraph for each
of which--
``(I) the hospital's allowable operating costs of inpatient
hospital services recognized under this title exceeded 115
percent of the hospital's target amount, and
``(II) the hospital would have a disproportionate patient
percentage of at least 70 percent (as determined by the
Secretary under subsection (d)(5)(F)(vi)) if the hospital were
a subsection (d) hospital.''.
(c) Certain Long-Term Care Cancer Hospitals.--
(1) In general.--Section 1886(d)(1)(B)(iv) (42 U.S.C.
1395ww(d)(1)(B)(iv)) is amended by adding at the end the
following: ``a hospital that first received payment under this
subsection in 1986 which has an average inpatient length of
stay (as determined by the Secretary) of greater than 20 days
and that has 80 percent or more of its annual total inpatient
discharges with a principal diagnosis that reflects a finding
of neoplastic disease, or''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to cost reporting periods beginning on or after the
date of the enactment of this Act.
SEC. 10517. TREATMENT OF CERTAIN LONG-TERM CARE HOSPITALS.
(a) In General.--Section 1886(d)(1)(B) (42 U.S.C. 1395ww(d)(1)(B))
is amended by adding at the end the following new sentence: ``A
hospital that was classified by the Secretary on or before September
30, 1995, as a hospital described in clause (iv) shall continue to be
so classified notwithstanding that it is located in the same building
as, or on the same campus as, another hospital.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to discharges occurring on or after October 1, 1995.
SEC. 10518. ELIMINATION OF EXEMPTIONS; REPORT ON EXCEPTIONS AND
ADJUSTMENTS.
(a) Elimination of Exemptions.--
(1) In general.--Section 1886(b)(4)(A)(i) (42 U.S.C.
1395ww(b)(4)(A)(i)) is amended by striking ``exemption from, or
an exception and adjustment to,'' and inserting ``an exception
and adjustment to'' each place it appears.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to hospitals or units that first qualify as a
hospital or unit described in section 1886(d)(1)(B) (42 U.S.C.
1395ww(d)(1)(B)) on or after October 1, 1997.
(b) Report.--The Secretary of Health and Human Services shall
publish annually in the Federal Register a report describing the total
amount of payments made to hospitals by reason of section 1886(b)(4) of
the Social Security Act (42 U.S.C. 1395ww(b)(4)), as amended by
subsection (a), for cost reporting periods ending during the previous
fiscal year.
CHAPTER 3--PROVISIONS RELATED TO HOSPICE SERVICES
SEC. 10521. PAYMENTS FOR HOSPICE SERVICES.
(a) Payment Update.--Section 1814(i)(1)(C)(ii) (42 U.S.C.
1395f(i)(1)(C)(ii)) is amended--
(1) in subclause (V), by striking ``and'' at the end;
(2) by redesignating subclause (VI) as subclause (VII); and
(3) by inserting after subclause (V) the following new
subclause:
``(VI) for each of fiscal years 1998 through 2002, the
market basket percentage increase for the fiscal year involved
minus 1.0 percentage points; and''.
(b) Report.--Section 1814(i) (42 U.S.C. 1395f(i)) is amended by
adding at the end the following new paragraph:
``(3) The Secretary shall provide for the collection of data, from
hospice programs providing hospice care for which payment is made under
this subsection, with respect to the costs for providing such care for
each fiscal year beginning with fiscal year 1999.''.
SEC. 10522. PAYMENT FOR HOME HOSPICE CARE BASED ON LOCATION WHERE CARE
IS FURNISHED.
(a) In General.--Section 1814(i)(2) (42 U.S.C. 1395f(i)(2)) is
amended by adding at the end the following:
``(D) A hospice program shall submit claims for payment for hospice
care furnished in an individual's home under this title only on the
basis of the geographic location at which the service is furnished, as
determined by the Secretary.''.
(b) Effective Date.--The amendment made by subsection (a) applies
to cost reporting periods beginning on or after October 1, 1997.
SEC. 10523. HOSPICE CARE BENEFITS PERIODS.
(a) Restructuring of Benefit Period.--Section 1812 (42 U.S.C.
1395d) is amended, in subsections (a)(4) and (d)(1), by striking ``, a
subsequent period of 30 days, and a subsequent extension period'' and
inserting ``and an unlimited number of subsequent periods of 60 days
each''.
(b) Conforming Amendments.--(1) Section 1812 (42 U.S.C. 1395d) is
amended in subsection (d)(2)(B) by striking ``90- or 30-day period or a
subsequent extension period'' and inserting ``90-day period or a
subsequent 60-day period''.
(2) Section 1814(a)(7)(A) (42 U.S.C. 1395f(a)(7)(A)) is amended--
(A) in clause (i), by inserting ``and'' at the end;
(B) in clause (ii)--
(i) by striking ``30-day'' and inserting ``60-
day''; and
(ii) by striking ``, and'' at the end and inserting
a period; and
(C) by striking clause (iii).
SEC. 10524. OTHER ITEMS AND SERVICES INCLUDED IN HOSPICE CARE.
Section 1861(dd)(1) (42 U.S.C. 1395x(dd)(1)) is amended--
(1) in subparagraph (G), by striking ``and'' at the end;
(2) in subparagraph (H), by striking the period at the end
and inserting ``, and''; and
(3) by inserting after subparagraph (H) the following:
``(I) any other item or service which is specified in the
plan and for which payment may otherwise be made under this
title.''.
SEC. 10525. CONTRACTING WITH INDEPENDENT PHYSICIANS OR PHYSICIAN GROUPS
FOR HOSPICE CARE SERVICES PERMITTED.
Section 1861(dd)(2) (42 U.S.C. 1395x(dd)(2)) is amended--
(1) in subparagraph (A)(ii)(I), by striking ``(F),''; and
(2) in subparagraph (B)(i), by inserting ``or, in the case
of a physician described in subclause (I), under contract
with'' after ``employed by''.
SEC. 10526. WAIVER OF CERTAIN STAFFING REQUIREMENTS FOR HOSPICE CARE
PROGRAMS IN NON-URBANIZED AREAS.
Section 1861(dd)(5) (42 U.S.C. 1395x(dd)(5)) is amended--
(1) in subparagraph (B), by inserting ``or (C)'' after
``subparagraph (A)'' each place it appears; and
(2) by adding at the end the following:
``(C) The Secretary may waive the requirements of paragraph
(2)(A)(i) and (2)(A)(ii) for an agency or organization with respect to
the services described in paragraph (1)(B) and, with respect to dietary
counseling, paragraph (1)(H), if such agency or organization--
``(i) is located in an area which is not an urbanized area
(as defined by the Bureau of Census), and
``(ii) demonstrates to the satisfaction of the Secretary
that the agency or organization has been unable, despite
diligent efforts, to recruit appropriate personnel.''.
SEC. 10527. LIMITATION ON LIABILITY OF BENEFICIARIES FOR CERTAIN
HOSPICE COVERAGE DENIALS.
Section 1879(g) (42 U.S.C. 1395pp(g)) is amended--
(1) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively, and moving such
subparagraphs 2 ems to the right;
(2) by striking ``is,'' and inserting ``is--'';
(3) by making the remaining text of subsection (g), as
amended, that follows ``is--'' a new paragraph (1) and
indenting such paragraph 2 ems to the right;
(4) by striking the period at the end and inserting ``;
and''; and
(5) by adding at the end the following new paragraph:
``(2) with respect to the provision of hospice care to an
individual, a determination that the individual is not
terminally ill.''.
SEC. 10528. EXTENDING THE PERIOD FOR PHYSICIAN CERTIFICATION OF AN
INDIVIDUAL'S TERMINAL ILLNESS.
Section 1814(a)(7)(A)(i) (42 U.S.C. 1395f(a)(7)(A)(i)) is amended,
in the matter following subclause (II), by striking ``, not later than
2 days after hospice care is initiated (or, if each certify verbally
not later than 2 days after hospice care is initiated, not later than 8
days after such care is initiated)'' and inserting ``at the beginning
of the period''.
SEC. 10529. EFFECTIVE DATE.
Except as otherwise provided in this chapter, the amendments made
by this chapter apply to benefits provided on or after the date of the
enactment of this chapter, regardless of whether or not an individual
has made an election under section 1812(d) of the Social Security Act
(42 U.S.C. 1395d(d)) before such date.
CHAPTER 4--MODIFICATION OF PART A HOME HEALTH BENEFIT
SEC. 10531. MODIFICATION OF PART A HOME HEALTH BENEFIT FOR INDIVIDUALS
ENROLLED UNDER PART B.
(a) In General.--Section 1812 (42 U.S.C. 1395d) is amended--
(1) in subsection (a)(3), by striking ``home health
services'' and inserting ``for individuals not enrolled in part
B, home health services, and for individuals so enrolled, part
A home health services (as defined in subsection (g))'';
(2) by redesignating subsection (g) as subsection (h); and
(3) by inserting after subsection (f) the following new
subsection:
``(g)(1) For purposes of this section, the term `part A home health
services' means--
``(A) for services furnished during each year beginning
with 1998 and ending with 2002, home health services subject to
the transition reduction applied under paragraph (2)(C) for
services furnished during the year, and
``(B) for services furnished on or after January 1, 2003,
post-institutional home health services for up to 100 visits
during a home health spell of illness.
``(2) For purposes of paragraph (1)(B), the Secretary shall
specify, before the beginning of each year beginning with 1998 and
ending with 2002, a transition reduction in the home health services
benefit under this part as follows:
``(A) The Secretary first shall estimate the amount of
payments that would have been made under this part for home
health services furnished during the year if--
``(i) part A home health services were all home
health services, and
``(ii) part A home health services were limited to
services described in paragraph (1)(B).
``(B)(i) The Secretary next shall compute a transfer
reduction amount equal to the appropriate proportion (specified
under clause (ii)) of the amount by which the amount estimated
under subparagraph (A)(i) for the year exceeds the amount
estimated under subparagraph (A)(ii) for the year.
``(ii) For purposes of clause (i), the `appropriate
proportion' is equal to--
``(I) \1/6\ for 1998,
``(II) \2/6\ for 1999,
``(III) \3/6\ for 2000,
``(IV) \4/6\ for 2001, and
``(V) \5/6\ for 2002.
``(C) The Secretary shall establish a transition reduction
by specifying such a visit limit (during a home health spell of
illness) or such a post-institutional limitation on home health
services furnished under this part during the year as the
Secretary estimates will result in a reduction in the amount of
payments that would otherwise be made under this part for home
health services furnished during the year equal to the transfer
amount computed under subparagraph (B)(i) for the year.
``(3) Payment under this part for home health services furnished an
individual enrolled under part B--
``(A) during a year beginning with 1998 and ending
with 2003, may not be made for services that are not
within the visit limit or other limitation specified by
the Secretary under the transition reduction under
paragraph (3)(C) for services furnished during the
year; or
``(B) on or after January 1, 2004, may not be made
for home health services that are not post-
institutional home health services or for post-
institutional furnished to the individual after such
services have been furnished to the individual for a
total of 100 visits during a home health spell of
illness.
``(4) With respect to computing the monthly actuarial rate for
enrollees age 65 and over for purposes of applying section 1839, such
rate shall be computed as though any reference in a previous provision
of this subsection to 2002 or 2003 is a reference to the succeeding
year and as through the appropriate proportion described in paragraph
(3)(B)(ii) were equal to--
``(A) \1/7\ for 1998,
``(B) \2/7\ for 1999,
``(C) \3/7\ for 2000,
``(D) \4/7\ for 2001,
``(E) \5/7\ for 2002, and
``(F) \6/7\ for 2003.''.
(b) Post-institutional Home Health Services Defined.--Section 1861
(42 U.S.C. 1395x), as amended by section 10105(a)(1)(B) is amended by
adding at the end the following:
``Post-Institutional Home Health Services; Home Health Spell of Illness
``(rr)(1) The term `post-institutional home health services' means
home health services furnished to an individual--
``(A) after discharge from a hospital or rural primary care
hospital in which the individual was an inpatient for not less
than 3 consecutive days before such discharge if such home
health services were initiated within 14 days after the date of
such discharge; or
``(B) after discharge from a skilled nursing facility in
which the individual was provided post-hospital extended care
services if such home health services were initiated within 14
days after the date of such discharge.
``(2) The term `home health spell of illness' with respect to any
individual means a period of consecutive days--
``(A) beginning with the first day (not included in a
previous home health spell of illness) (i) on which such
individual is furnished post-institutional home health
services, and (B) which occurs in a month for which the
individual is entitled to benefits under part A, and
``(B) ending with the close of the first period of 60
consecutive days thereafter on each of which the individual is
neither an inpatient of a hospital or rural primary care
hospital nor an inpatient of a facility described in section
1819(a)(1) or subsection (y)(1) nor provided home health
services.''.
(c) Maintaining Appeal Rights for Home Health Services.--Section
1869(b)(2)(B) (42 U.S.C. 1395ff(b)(2)(B)) is amended by inserting ``(or
$100 in the case of home health services)'' after ``$500''.
(d) Maintaining Seamless Administration Through Fiscal
Intermediaries.--Section 1842(b)(2) (42 U.S.C. 1395u(b)(2)) is amended
by adding at the end the following:
``(E) With respect to the payment of claims for home health
services under this part that, but for the amendments made by section
10531 of the Balanced Budget Act of 1997, would be payable under part A
instead of under this part, the Secretary shall continue administration
of such claims through fiscal intermediaries under section 1816.''.
(e) Effective Date.--The amendments made by this section apply to
services furnished on or after January 1, 1998. For purpose of applying
such amendments, any home health spell of illness that began, but not
end, before such date shall be considered to have begun as of such
date.
CHAPTER 5--OTHER PAYMENT PROVISIONS
SEC. 10541. REDUCTIONS IN PAYMENTS FOR ENROLLEE BAD DEBT.
Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)) is amended by adding at
the end the following new subparagraph:
``(T) In determining such reasonable costs for hospitals, the
amount of bad debts otherwise treated as allowable costs which are
attributable to the deductibles and coinsurance amounts under this
title shall be reduced--
``(i) for cost reporting periods beginning during fiscal
year 1998, by 25 percent of such amount otherwise allowable,
``(ii) for cost reporting periods beginning during fiscal
year 1999, by 40 percent of such amount otherwise allowable,
and
``(iii) for cost reporting periods beginning during a
subsequent fiscal year, by 50 percent of such amount otherwise
allowable.''.
SEC. 10542. PERMANENT EXTENSION OF HEMOPHILIA PASS-THROUGH.
Effective October 1, 1997, section 6011(d) of OBRA-1989 (as amended
by section 13505 of OBRA-1993) is amended by striking ``and shall
expire September 30, 1994''.
SEC. 10543. REDUCTION IN PART A MEDICARE PREMIUM FOR CERTAIN PUBLIC
RETIREES.
(a) In General.--Section 1818(d) (42 U.S.C. 1395i-2(d)) is
amended--
(1) in paragraph (2), by striking ``paragraph (4)'' and
inserting ``paragraphs (4) and (5)''; and
(2) by adding at the end the following new paragraph:
``(5)(A) The amount of the monthly premium shall be zero in the
case of an individual who is a person described in subparagraph (B) for
a month, if--
``(i) the individual's premium under this section for the
month is not (and will not be) paid for, in whole or in part,
by a State (under title XIX or otherwise), a political
subdivision of a State, or an agency or instrumentality of one
or more States or political subdivisions thereof; and
``(ii) in each of 60 months before such month, the
individual was enrolled in this part under this section and the
payment of the individual's premium under this section for the
month was not paid for, in whole or in part, by a State (under
title XIX or otherwise), a political subdivision of a State, or
an agency or instrumentality of one or more States or political
subdivisions thereof.
``(B) A person described in this subparagraph for an month is a
person who establishes to the satisfaction of the Secretary that, as of
the last day of the previous month--
``(i)(I) the person was receiving cash benefits under a
qualified State or local government retirement system (as
defined in subparagraph (C)) on the basis of the person's
employment in one or more positions covered under any such
system, and (II) the person would have at least 40 quarters of
coverage under title II if remuneration for medicare qualified
government employment (as defined in paragraph (1) of section
210(p), but determined without regard to paragraph (3) of such
section) paid to such person were treated as wages paid to such
person and credited for purposes of determining quarters of
coverage under section 213;
``(ii)(I) the person was married (and had been married for
the previous 1-year period) to an individual who is described
in clause (i), or (II) the person met the requirement of clause
(i)(II) and was married (and had been married for the previous
1-year period) to an individual described in clause (i)(I);
``(iii) the person had been married to an individual for a
period of at least 1 year (at the time of such individual's
death) if (I) the individual was described in clause (i) at the
time of the individual's death, or (II) the person met the
requirement of clause (i)(II) and the individual was described
in clause (i)(I) at the time of the individual's death; or
``(iv) the person is divorced from an individual and had
been married to the individual for a period of at least 10
years (at the time of the divorce) if (I) the individual was
described in clause (i) at the time of the divorce, or (II) the
person met the requirement of clause (i)(II) and the individual
was described in clause (i)(I) at the time of the divorce.
``(C) For purposes of subparagraph (B)(i)(I), the term `qualified
State or local government retirement system' means a retirement system
that--
``(i) is established or maintained by a State or political
subdivision thereof, or an agency or instrumentality of one or
more States or political subdivisions thereof;
``(ii) covers positions of some or all employees of such a
State, subdivision, agency, or instrumentality; and
``(iii) does not adjust cash retirement benefits based on
eligibility for a reduction in premium under this paragraph.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to premiums for months beginning with January 1998, and months
before such month may be taken into account for purposes of meeting the
requirement of section 1818(d)(5)(B)(iii) of the Social Security Act,
as added by subsection (a).
Subtitle G--Provisions Relating to Part B Only
CHAPTER 1--PHYSICIANS' SERVICES
SEC. 10601. ESTABLISHMENT OF SINGLE CONVERSION FACTOR FOR 1998.
(a) In General.--Section 1848(d)(1) (42 U.S.C. 1395w-4(d)(1)) is
amended--
(1) by redesignating subparagraph (C) as subparagraph (D),
and
(2) by inserting after subparagraph (B) the following:
``(C) Special rules for 1998.--The single
conversion factor for 1998 under this subsection shall
be the conversion factor for primary care services for
1997, increased by the Secretary's estimate of the
weighted average of the three separate updates that
would otherwise occur were it not for the enactment of
chapter 1 of subtitle G of title X of the Balanced
Budget Act of 1997.''.
(b) Conforming Amendments.--Section 1848 (42 U.S.C. 1395w-4) is
amended--
(1) by striking ``(or factors)'' each place it appears in
subsection (d)(1)(A) and (d)(1)(D)(ii) (as redesignated by
subsection (a)(1)),
(2) in subsection (d)(1)(A), by striking ``or updates'',
(3) in subsection (d)(1)(D) (as redesignated by subsection
(a)(1)), by striking ``(or updates)'' each place it appears,
and
(4) in subsection (i)(1)(C), by striking ``conversion
factors'' and inserting ``the conversion factor''.
SEC. 10602. ESTABLISHING UPDATE TO CONVERSION FACTOR TO MATCH SPENDING
UNDER SUSTAINABLE GROWTH RATE.
(a) Update.--
(1) In general.--Section 1848(d)(3) (42 U.S.C. 1395w-
4(d)(3)) is amended to read as follows:
``(3) Update.--
``(A) In general.--Unless otherwise provided by
law, subject to subparagraph (D) and the budget-
neutrality factor determined by the Secretary under
subsection (c)(2)(B)(ii), the update to the single
conversion factor established in paragraph (1)(C) for a
year beginning with 1999 is equal to the product of--
``(i) 1 plus the Secretary's estimate of
the percentage increase in the MEI (as defined
in section 1842(i)(3)) for the year (divided by
100), and
``(ii) 1 plus the Secretary's estimate of
the update adjustment factor for the year
(divided by 100),
minus 1 and multiplied by 100.
``(B) Update adjustment factor.--For purposes of
subparagraph (A)(ii), the `update adjustment factor'
for a year is equal to the quotient (as estimated by
the Secretary) of--
``(i) the difference between (I) the sum of
the allowed expenditures for physicians'
services (as determined under subparagraph (C))
during the period beginning July 1, 1997, and
ending on June 30 of the year involved, and
(II) the sum of the amount of actual
expenditures for physicians' services furnished
during the period beginning July 1, 1997, and
ending on June 30 of the preceding year;
divided by
``(ii) the actual expenditures for
physicians' services for the 12-month period
ending on June 30 of the preceding year,
increased by the sustainable growth rate under
subsection (f) for the fiscal year which begins
during such 12-month period.
``(C) Determination of allowed expenditures.--For
purposes of this paragraph, the allowed expenditures
for physicians' services for the 12-month period ending
with June 30 of--
``(i) 1997 is equal to the actual
expenditures for physicians' services furnished
during such 12-month period, as estimated by
the Secretary; or
``(ii) a subsequent year is equal to the
allowed expenditures for physicians' services
for the previous year, increased by the
sustainable growth rate under subsection (f)
for the fiscal year which begins during such
12-month period.
``(D) Restriction on variation from medicare
economic index.--Notwithstanding the amount of the
update adjustment factor determined under subparagraph
(B) for a year, the update in the conversion factor
under this paragraph for the year may not be--
``(i) greater than 100 times the following
amount: (1.03 + (MEI percentage/100)) - 1; or
``(ii) less than 100 times the following
amount: (0.93 + (MEI percentage/100)) -1,
where `MEI percentage' means the Secretary's estimate
of the percentage increase in the MEI (as defined in
section 1842(i)(3)) for the year involved.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to the update for years beginning with 1999.
(b) Elimination of Report.--Section 1848(d) (42 U.S.C. 1395w-4(d))
is amended by striking paragraph (2).
SEC. 10603. REPLACEMENT OF VOLUME PERFORMANCE STANDARD WITH SUSTAINABLE
GROWTH RATE.
(a) In General.--Section 1848(f) (42 U.S.C. 1395w-4(f)) is amended
by striking paragraphs (2) through (5) and inserting the following:
``(2) Specification of growth rate.--The sustainable growth
rate for all physicians' services for a fiscal year (beginning
with fiscal year 1998) shall be equal to the product of--
``(A) 1 plus the Secretary's estimate of the
weighted average percentage increase (divided by 100)
in the fees for all physicians' services in the fiscal
year involved,
``(B) 1 plus the Secretary's estimate of the
percentage change (divided by 100) in the average
number of individuals enrolled under this part (other
than MedicarePlus plan enrollees) from the previous
fiscal year to the fiscal year involved,
``(C) 1 plus the Secretary's estimate of the
projected percentage growth in real gross domestic
product per capita (divided by 100) from the previous
fiscal year to the fiscal year involved, and
``(D) 1 plus the Secretary's estimate of the
percentage change (divided by 100) in expenditures for
all physicians' services in the fiscal year (compared
with the previous fiscal year) which will result from
changes in law and regulations, determined without
taking into account estimated changes in expenditures
due to changes in the volume and intensity of
physicians' services resulting from changes in the
update to the conversion factor under subsection
(d)(3),
minus 1 and multiplied by 100.
``(3) Definitions.--In this subsection:
``(A) Services included in physicians' services.--
The term `physicians' services' includes other items
and services (such as clinical diagnostic laboratory
tests and radiology services), specified by the
Secretary, that are commonly performed or furnished by
a physician or in a physician's office, but does not
include services furnished to a MedicarePlus plan
enrollee.
``(B) MedicarePlus plan enrollee.--The term
`MedicarePlus plan enrollee' means, with respect to a
fiscal year, an individual enrolled under this part who
has elected to receive benefits under this title for
the fiscal year through a MedicarePlus plan offered
under part C, and also includes an individual who is
receiving benefits under this part through enrollment
with an eligible organization with a risk-sharing
contract under section 1876.''.
(b) Conforming Amendments.--Section 1848(f) (42 U.S.C. 1395w-4(f))
is amended--
(1) in the heading, by striking ``Volume Performance
Standard Rates of Increase'' and inserting ``Sustainable Growth
Rate''; and
(2) in paragraph (1)--
(A) in the heading, by striking ``volume
performance standard rates of increase'' and inserting
``sustainable growth rate'',
(B) by striking subparagraphs (A) and (B); and
(C) in paragraph (1)(C)--
(i) in the heading, by striking
``performance standard rates of increase'' and
inserting ``sustainable growth rate'';
(ii) in the first sentence, by striking
``with 1991), the performance standard rates of
increase'' and all that follows through the
first period and inserting ``with 1999), the
sustainable growth rate for the fiscal year
beginning in that year.''; and
(iii) in the second sentence, by striking
``January 1, 1990, the performance standard
rate of increase under subparagraph (D) for
fiscal year 1990'' and inserting ``January 1,
1999, the sustainable growth rate for fiscal
year 1999''.
SEC. 10604. PAYMENT RULES FOR ANESTHESIA SERVICES.
(a) In General.--Section 1848(d)(1) (42 U.S.C. 1395w-4(d)(1)), as
amended by section 10601(a), is amended--
(1) in subparagraph (C), striking ``The single'' and
inserting ``Except as provided in subparagraph (D), the
single'';
(2) by redesignating subparagraph (D) as subparagraph (E);
and
(3) by inserting after subparagraph (C) the following new
subparagraph:
``(D) Special rules for anesthesia services.--The
separate conversion factor for anesthesia services for
a year shall be equal to 46 percent of the single
conversion factor established for other physicians'
services, except as adjusted for changes in work,
practice expense, or malpractice relative value units.
''.
(b) Classification of Anesthesia Services.--The first sentence of
section 1848(j)(1) (42 U.S.C. 1395w-4(j)(1)) is amended--
(1) by striking ``and including anesthesia services''; and
(2) by inserting before the period the following:
``(including anesthesia services)''.
(c) Effective Date.--The amendments made by this section shall
apply to services furnished on or after January 1, 1998.
SEC. 10605. IMPLEMENTATION OF RESOURCE-BASED PHYSICIAN PRACTICE
EXPENSE.
(a) 1-Year Delay in Implementation.--Section 1848(c) (42 U.S.C.
1395w-4(c)) is amended--
(1) in paragraph (2)(C)(ii), in the matter before subclause
(I) and after subclause (II), by striking ``1998'' and
inserting ``1999'' each place it appears; and
(2) in paragraph (3)(C)(ii), by striking ``1998'' and
inserting ``1999''.
(b) Phased-in Implementation.--Section 1848(c)(2)(C)(ii) (42 U.S.C.
1395w-4(c)(2)(C)(ii)) is further amended--
(1) in subparagraph (C)(ii), in the matter following
subclause (II), by inserting ``, to the extent provided under
subparagraph (G),'' after ``based'', and
(2) by adding at the end the following new subparagraph:
``(G) Transitional rule for resource-based practice
expense units.--In applying subparagraph (C)(ii) for
1999, 2000, 2001, and any subsequent year, the number
of units under such subparagraph shall be based 75
percent, 50 percent, 25 percent, and 0 percent,
respectively, on the practice expense relative value
units in effect in 1998 (or the Secretary's imputation
of such units for new or revised codes) and the
remainder on the relative value expense resources
involved in furnishing the service.''.
SEC. 10606. DISSEMINATION OF INFORMATION ON HIGH PER DISCHARGE RELATIVE
VALUES FOR IN-HOSPITAL PHYSICIANS' SERVICES.
(a) Determination and Notice Concerning Hospital-Specific Per
Discharge Relative Values.--
(1) In general.--For 1999 and 2001 the Secretary of Health
and Human Services shall determine for each hospital--
(A) the hospital-specific per discharge relative
value under subsection (b); and
(B) whether the hospital-specific relative value is
projected to be excessive (as determined based on such
value represented as a percentage of the median of
hospital-specific per discharge relative values
determined under subsection (b)).
(2) Notice to medical staffs and carriers.--The Secretary
shall notify the medical executive committee of each hospital
identifies under paragraph (1)(B) as having an excessive
hospital-specific relative value, of the determinations made
with respect to the medical staff under paragraph (1).
(b) Determination of Hospital-Specific Per Discharge Relative
Values.--
(1) In general.--For purposes of this section, the
hospital-specific per discharge relative value for the medical
staff of a hospital (other than a teaching hospital) for a
year, shall be equal to the average per discharge relative
value (as determined under section 1848(c)(2) of the Social
Security Act) for physicians' services furnished to inpatients
of the hospital by the hospital's medical staff (excluding
interns and residents) during the second year preceding that
calendar year, adjusted for variations in case-mix and
disproportionate share status among hospitals (as determined by
the Secretary under paragraph (3)).
(2) Special rule for teaching hospitals.--The hospital-
specific relative value projected for a teaching hospital in a
year shall be equal to the sum of--
(A) the average per discharge relative value (as
determined under section 1848(c)(2) of such Act) for
physicians' services furnished to inpatients of the
hospital by the hospital's medical staff (excluding
interns and residents) during the second year preceding
that calendar year, and
(B) the equivalent per discharge relative value (as
determined under such section) for physicians' services
furnished to inpatients of the hospital by interns and
residents of the hospital during the second year
preceding that calendar year, adjusted for variations
in case-mix, disproportionate share status, and
teaching status among hospitals (as determined by the
Secretary under paragraph (3)).
The Secretary shall determine the equivalent relative value
unit per discharge for interns and residents based on the best
available data and may make such adjustment in the aggregate.
(3) Adjustment for teaching and disproportionate share
hospitals.--The Secretary shall adjust the allowable per
discharge relative values otherwise determined under this
subsection to take into account the needs of teaching hospitals
and hospitals receiving additional payments under subparagraphs
(F) and (G) of section 1886(d)(5) of the Social Security Act.
The adjustment for teaching status or disproportionate share
shall not be less than zero.
(c) Definitions.--For purposes of this section:
(1) Hospital.--The term ``hospital'' means a subsection (d)
hospital as defined in section 1886(d) of the Social Security
Act (42 U.S.C. 1395ww(d)) .
(2) Medical staff.--An individual furnishing a physician's
service is considered to be on the medical staff of a
hospital--
(A) if (in accordance with requirements for
hospitals established by the Joint Commission on
Accreditation of Health Organizations)--
(i) the individual is subject to bylaws,
rules, and regulations established by the
hospital to provide a framework for the self-
governance of medical staff activities,
(ii) subject to the bylaws, rules, and
regulations, the individual has clinical
privileges granted by the hospital's governing
body, and
(iii) under the clinical privileges, the
individual may provide physicians'' services
independently within the scope of the
individual's clinical privileges, or
(B) if the physician provides at least one service
to an individual entitled to benefits under this title
in that hospital.
(3) Physicians' services.--The term ``physicians''
services'' means the services described in section 1848(j)(3)
of the Social Security Act (42 U.S.C. 1395w-4(j)(3)).
(4) Rural area; urban area.--The terms ``rural area'' and
``urban area'' have the meaning given those terms under section
1886(d)(2)(D) of such Act (42 U.S.C. 1395ww(d)(2)(D)).
(5) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services .
(6) Teaching hospital.--The term ``teaching hospital''
means a hospital which has a teaching program approved as
specified in section 1861(b)(6) of the Social Security Act (42
U.S.C. 1395x(b)(6)).
SEC. 10607. NO X-RAY REQUIRED FOR CHIROPRACTIC SERVICES.
(a) In General.--Section 1861(r)(5) (42 U.S.C. 1395x(r)(5)) is
amended by striking ``demonstrated by X-ray to exist''.
(b) Effective Date.--The amendment made by subsection (a) applies
to services furnished on or after January 1, 1998.
SEC. 10608. TEMPORARY COVERAGE RESTORATION FOR PORTABLE
ELECTROCARDIOGRAM TRANSPORTATION.
(a) In General.--Effective for electrocardiogram tests furnished
during 1998, the Secretary of Health and Human Services shall restore
separate payment, under part B of title XVIII of the Social Security
Act, for the transportation of electrocardiogram equipment (HCPCS code
R0076) based upon the status code and relative value units established
for such service as of December 31, 1996.
(b) Determination.--By not later than July 1, 1998, the Secretary
of Health and Human Services shall determine, taking into account the
study of coverage of portable electrocardiogram transportation
conducted by the Comptroller General and other relevant information,
including information submitted by interested parties, whether coverage
of portable electrocardiogram transportation should be provided under
part B of title XVIII of the Social Security Act.
CHAPTER 2--OTHER PAYMENT PROVISIONS
SEC. 10611. PAYMENTS FOR DURABLE MEDICAL EQUIPMENT.
(a) Reduction in Payment Amounts for Items of Durable Medical
Equipment.--
(1) Freeze in update for covered items.--Section
1834(a)(14) (42 U.S.C. 1395m(a)(14)) is amended--
(A) by striking ``and'' at the end of subparagraph
(A);
(B) in subparagraph (B)--
(i) by striking ``a subsequent year'' and
inserting ``1993, 1994, 1995, 1996, and 1997'',
and
(ii) by striking the period at the end and
inserting a semicolon; and
(C) by adding at the end the following:
``(C) for each of the years 1998 through 2002, 0
percentage points; and
``(D) for a subsequent year, the percentage
increase in the consumer price index for all urban
consumers (U.S. urban average) for the 12-month period
ending with June of the previous year.''.
(2) Update for orthotics and prosthetics.--Section
1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is amended--
(A) by striking ``, and'' at the end of clause
(iii) and inserting a semicolon;
(B) in clause (iv), by striking ``a subsequent
year'' and inserting ``1996 and 1997'', and
(C) by adding at the end the following new clauses:
``(v) for each of the years 1998 through
2002, 1 percent, and
``(vi) for a subsequent year, the
percentage increase in the consumer price index
for all urban consumers (United States city
average) for the 12-month period ending with
June of the previous year;''.
(c) Payment Freeze for Parenteral and Enteral Nutrients, Supplies,
and Equipment.--In determining the amount of payment under part B of
title XVIII of the Social Security Act with respect to parenteral and
enteral nutrients, supplies, and equipment during each of the years
1998 through 2002, the charges determined to be reasonable with respect
to such nutrients, supplies, and equipment may not exceed the charges
determined to be reasonable with respect to such nutrients, supplies,
and equipment during 1995.
SEC. 10612. OXYGEN AND OXYGEN EQUIPMENT.
Section 1834(a)(9)(C) (42 U.S.C. 1395m(a)(9)(C)) is amended--
(1) by striking ``and'' at the end of clause (iii);
(2) in clause (iv)--
(A) by striking ``a subsequent year'' and inserting
``1993, 1994, 1995, 1996, and 1997'', and
(B) by striking the period at the end and inserting
a semicolon; and
(3) by adding at the end the following new clauses:
``(v) in each of the years 1998 through
2002, is 80 percent of the national limited
monthly payment rate computed under
subparagraph (B) for the item for the year; and
``(vi) in a subsequent year, is the
national limited monthly payment rate computed
under subparagraph (B) for the item for the
year.''.
SEC. 10613. REDUCTION IN UPDATES TO PAYMENT AMOUNTS FOR CLINICAL
DIAGNOSTIC LABORATORY TESTS.
(a) Change in Update.--Section 1833(h)(2)(A)(ii)(IV) (42 U.S.C.
1395l(h)(2)(A)(ii)(IV)) is amended by inserting ``and 1998 through
2002'' after ``1995''.
(b) Lowering Cap on Payment Amounts.--Section 1833(h)(4)(B) (42
U.S.C. 1395l(h)(4)(B)) is amended--
(1) in clause (vi), by striking ``and'' at the end;
(2) in clause (vii)--
(A) by inserting ``and before January 1, 1998,''
after ``1995,'', and
(B) by striking the period at the end and inserting
``, and''; and
(3) by adding at the end the following new clause:
``(viii) after December 31, 1997, is equal to 72 percent of
such median.''.
SEC. 10614. SIMPLIFICATION IN ADMINISTRATION OF LABORATORY TESTS.
(a) Selection of Regional Carriers.--
(1) In general.--The Secretary of Health and Human Services
(in this section referred to as the ``Secretary'') shall--
(A) divide the United States into no more than 5
regions, and
(B) designate a single carrier for each such
region,
for the purpose of payment of claims under part B of title
XVIII of the Social Security Act with respect to clinical
diagnostic laboratory tests (other than for independent
physician offices) furnished on or after such date (not later
than January 1, 1999) as the Secretary specifies.
(2) Designation.--In designating such carriers, the
Secretary shall consider, among other criteria--
(A) a carrier's timeliness, quality, and experience
in claims processing, and
(B) a carrier's capacity to conduct electronic data
interchange with laboratories and data matches with
other carriers.
(3) Single data resource.--The Secretary may select one of
the designated carriers to serve as a central statistical
resource for all claims information relating to such clinical
diagnostic laboratory tests handled by all the designated
carriers under such part.
(4) Allocation of claims.--The allocation of claims for
clinical diagnostic laboratory tests to particular designated
carriers shall be based on whether a carrier serves the
geographic area where the laboratory specimen was collected or
other method specified by the Secretary.
(b) Adoption of Uniform Policies for Clinical Laboratory Tests.--
(1) In general.--Not later than July 1, 1998, the Secretary
shall first adopt, consistent with paragraph (2), uniform
coverage, administration, and payment policies for clinical
diagnostic laboratory tests under part B of title XVIII of the
Social Security Act, using a negotiated rulemaking process
under subchapter III of chapter 5 of title 5, United States
Code.
(2) Considerations in design of uniform policies.--The
policies under paragraph (1) shall be designed to promote
uniformity and program integrity and reduce administrative
burdens with respect to clinical diagnostic laboratory tests
payable under such part in connection with the following:
(A) Beneficiary information required to be
submitted with each claim or order for laboratory
tests.
(B) Physicians' obligations regarding documentation
requirements and recordkeeping.
(C) Procedures for filing claims and for providing
remittances by electronic media.
(D) The documentation of medical necessity.
(E) Limitation on frequency of coverage for the
same tests performed on the same individual.
(3) Changes in carrier requirements pending adoption of
uniform policy.--During the period that begins on the date of
the enactment of this Act and ends on the date the Secretary
first implements uniform policies pursuant to regulations
promulgated under this subsection, a carrier under such part
may implement changes relating to requirements for the
submission of a claim for clinical diagnostic laboratory tests.
(4) Use of interim regional policies.--After the date the
Secretary first implements such uniform policies, the Secretary
shall permit any carrier to develop and implement interim
policies of the type described in paragraph (1), in accordance
with guidelines established by the Secretary, in cases in which
a uniform national policy has not been established under this
subsection and there is a demonstrated need for a policy to
respond to aberrant utilization or provision of unnecessary
services. Except as the Secretary specifically permits, no
policy shall be implemented under this paragraph for a period
of longer than 2 years.
(5) Interim national policies.--After the date the
Secretary first designates regional carriers under subsection
(a), the Secretary shall establish a process under which
designated carriers can collectively develop and implement
interim national standards of the type described in paragraph
(1). No such policy shall be implemented under this paragraph
for a period of longer than 2 years.
(6) Biennial review process.--Not less often than once
every 2 years, the Secretary shall solicit and review comments
regarding changes in the uniform policies established under
this subsection. As part of such biennial review process, the
Secretary shall specifically review and consider whether to
incorporate or supersede interim, regional, or national
policies developed under paragraph (4) or (5). Based upon such
review, the Secretary may provide for appropriate changes in
the uniform policies previously adopted under this subsection.
(7) Notice.-- Before a carrier implements a change or
policy under paragraph (3), (4), or (5), the carrier shall
provide for advance notice to interested parties and a 45-day
period in which such parties may submit comments on the
proposed change.
(c) Inclusion of Laboratory Representative on Carrier Advisory
Committees.--The Secretary shall direct that any advisory committee
established by such a carrier, to advise with respect to coverage,
administration or payment policies under part B of title XVIII of the
Social Security Act, shall include an individual to represent the
interest and views of independent clinical laboratories and such other
laboratories as the Secretary deems appropriate. Such individual shall
be selected by such committee from among nominations submitted by
national and local organizations that represent independent clinical
laboratories.
SEC. 10615. UPDATES FOR AMBULATORY SURGICAL SERVICES.
Section 1833(i)(2)(C) (42 U.S.C. 1395l(i)(2)(C)) is amended by
striking all that follows ``shall be increased'' and inserting the
following: ``as follows:
``(i) For fiscal years 1996 and 1997, by the percentage
increase in the consumer price index for all urban consumers
(U.S. city average) as estimated by the Secretary for the 12-
month period ending with the midpoint of the year involved.
``(ii) For each of fiscal years 1998 through 2002 by such
percentage increase minus 2.0 percentage points.
``(iii) For each succeeding fiscal year by such percentage
increase.''.
SEC. 10616. REIMBURSEMENT FOR DRUGS AND BIOLOGICALS.
(a) In General.--Section 1842 (42 U.S.C. 1395u) is amended by
inserting after subsection (n) the following new subsection:
``(o) If a physician's, supplier's, or any other person's bill or
request for payment for services includes a charge for a drug or
biological for which payment may be made under this part and the drug
or biological is not paid on a cost or prospective payment basis as
otherwise provided in this part, the amount payable for the drug or
biological is equal to 95 percent of the average wholesale price.''.
(b) Effective Date.--The amendments made by subsection (a) apply to
drugs and biologicals furnished on or after January 1, 1998.
SEC. 10617. COVERAGE OF ORAL ANTI-NAUSEA DRUGS UNDER CHEMOTHERAPEUTIC
REGIMEN.
(a) In General.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)), as
amended, is further amended--
(1) by striking ``and'' at the end of subparagraph (R); and
(2) by inserting after subparagraph (S) the following new
subparagraph:
``(T) an oral drug (which is approved by the Federal Food
and Drug Administration) prescribed for use as an acute anti-
emetic used as part of an anticancer chemotherapeutic regimen
if the drug is administered by a physician (or under the
supervision of a physician)--
``(i) for use immediately before, immediately
after, or at the time of the administration of the
anticancer chemotherapeutic agent; and
``(ii) as a full replacement for the anti-emetic
therapy which would otherwise be administered
intravenously.''.
(b) Payment Levels.--Section 1834 (42 U.S.C. 1395m), as amended by
sections 10421(a)(2) and 10431(b)(2), is amended by adding at the end
the following new subsection:
``(m) Special Rules for Payment for Oral Anti-Nausea Drugs.--
``(1) Limitation on per dose payment basis.--Subject to
paragraph (2), the per dose payment basis under this part for
oral anti-nausea drugs (as defined in paragraph (3))
administered during a year shall not exceed 90 percent of the
average per dose payment basis for the equivalent intravenous
anti-emetics administered during the year, as computed based on
the payment basis applied during 1996.
``(2) Aggregate limit.--The Secretary shall make such
adjustment in the coverage of, or payment basis for, oral anti-
nausea drugs so that coverage of such drugs under this part
does not result in any increase in aggregate payments per
capita under this part above the levels of such payments per
capita that would otherwise have been made if there were no
coverage for such drugs under this part.
``(3) Oral anti-nausea drugs defined.--For purposes of this
subsection, the term `oral anti-nausea drugs' means drugs for
which coverage is provided under this part pursuant to section
1861(s)(2)(P).''.
(c) Effective Date.--The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.
SEC. 10618. RURAL HEALTH CLINIC SERVICES.
(a) Per-Visit Payment Limits for Provider-Based Clinics.--
(1) Extension of limit.--
(A) In general.--The matter in section 1833(f) (42
U.S.C. 1395l(f)) preceding paragraph (1) is amended by
striking ``independent rural health clinics'' and
inserting ``rural health clinics (other than such
clinics in rural hospitals with less than 50 beds)''.
(B) Effective date.--The amendment made by
subparagraph (A) applies to services furnished after
1997.
(2) Technical clarification.--Section 1833(f)(1) (42 U.S.C.
1395l(f)(1)) is amended by inserting ``per visit'' after
``$46''.
(b) Assurance of Quality Services.--
(1) In general.--Subparagraph (I) of the first sentence of
section 1861(aa)(2) (42 U.S.C. 1395x(aa)(2)) is amended to read
as follows:
``(I) has a quality assessment and performance improvement
program, and appropriate procedures for review of utilization
of clinic services, as the Secretary may specify,''.
(2) Effective date.--The amendment made by
paragraph (1) shall take effect on January 1, 1998.
(c) Waiver of Certain Staffing Requirements Limited to Clinics in
Program.--
(1) In general.--Section 1861(aa)(7)(B) (42 U.S.C.
1395x(aa)(7)(B)) is amended by inserting before the period at
the end the following: ``, or if the facility has not yet been
determined to meet the requirements (including subparagraph (J)
of the first sentence of paragraph (2)) of a rural health
clinic''.
(2) Effective date.--The amendment made by paragraph (1)
applies to waiver requests made after 1997.
(d) Refinement of Shortage Area Requirements.--
(1) Designation reviewed triennially.--Section 1861(aa)(2)
(42 U.S.C. 1395x(aa)(2)) is amended in the second sentence, in
the matter in clause (i) preceding subclause (I)--
(A) by striking ``and that is designated'' and
inserting ``and that, within the previous three-year
period, has been designated''; and
(B) by striking ``or that is designated'' and
inserting ``or designated''.
(2) Area must have shortage of health care practitioners.--
Section 1861(aa)(2) (42 U.S.C. 1395x(aa)(2)), as amended by
paragraph (1), is further amended in the second sentence, in
the matter in clause (i) preceding subclause (I)--
(A) by striking the comma after ``personal health
services''; and
(B) by inserting ``and in which there are
insufficient numbers of needed health care
practitioners (as determined by the Secretary),'' after
``Bureau of the Census)''.
(3) Previously qualifying clinics grandfathered only to
prevent shortage.--Section 1861(aa)(2) (42 U.S.C. 1395x(aa)(2))
is amended in the third sentence by inserting before the period
``if it is determined, in accordance with criteria established
by the Secretary in regulations, to be essential to the
delivery of primary care services that would otherwise be
unavailable in the geographic area served by the clinic''.
(4) Effective dates; implementing regulations.--
(A) In general.--Except as otherwise provided, the
amendments made by the preceding paragraphs take effect
on January 1 of the first calendar year beginning at
least one month after enactment of this Act.
(B) Current rural health clinics.--The amendments
made by the preceding paragraphs take effect, with
respect to entities that are rural health clinics under
title XVIII of the Social Security Act on the date of
enactment of this Act, on January 1 of the second
calendar year following the calendar year specified in
subparagraph (A).
(C) Grandfathered clinics.--
(i) In general.--The amendment made by
paragraph (3) shall take effect on the
effective date of regulations issued by the
Secretary under clause (ii).
(ii) Regulations.--The Secretary shall
issue final regulations implementing paragraph
(3) that shall take effect no later than
January 1 of the third calendar year beginning
at least one month after enactment of this Act.
SEC. 10619. INCREASED MEDICARE REIMBURSEMENT FOR NURSE PRACTITIONERS
AND CLINICAL NURSE SPECIALISTS.
(a) Removal of Restrictions on Settings.--
(1) In general.--Clause (ii) of section 1861(s)(2)(K) (42
U.S.C. 1395x(s)(2)(K)) is amended to read as follows:
``(ii) services which would be physicians' services if
furnished by a physician (as defined in subsection (r)(1)) and
which are performed by a nurse practitioner or clinical nurse
specialist (as defined in subsection (aa)(5)) working in
collaboration (as defined in subsection (aa)(6)) with a
physician (as defined in subsection (r)(1)) which the nurse
practitioner or clinical nurse specialist is legally authorized
to perform by the State in which the services are performed,
and such services and supplies furnished as an incident to such
services as would be covered under subparagraph (A) if
furnished incident to a physician's professional service, but
only if no facility or other provider charges or is paid any
amounts with respect to the furnishing of such services;''.
(2) Conforming amendments.--(A) Section 1861(s)(2)(K) of
such Act (42 U.S.C. 1395x(s)(2)(K)) is further amended--
(i) in clause (i), by inserting ``and such services
and supplies furnished as incident to such services as
would be covered under subparagraph (A) if furnished
incident to a physician's professional service,'' after
``are performed,''; and
(ii) by striking clauses (iii) and (iv).
(B) Section 1861(b)(4) (42 U.S.C. 1395x(b)(4)) is amended
by striking ``clauses (i) or (iii) of subsection (s)(2)(K)''
and inserting ``subsection (s)(2)(K)''.
(C) Section 1862(a)(14) (42 U.S.C. 1395y(a)(14)) is amended
by striking ``section 1861(s)(2)(K)(i) or 1861(s)(2)(K)(iii)''
and inserting ``section 1861(s)(2)(K)''.
(D) Section 1866(a)(1)(H) (42 U.S.C. 1395cc(a)(1)(H)) is
amended by striking ``section 1861(s)(2)(K)(i) or
1861(s)(2)(K)(iii)'' and inserting ``section 1861(s)(2)(K)''.
(E) Section 1888(e)(2)(A)(ii) (42 U.S.C.
1395yy(e)(2)(A)(ii)), as added by section 10401(a), is amended
by striking ``through (iii)'' and inserting ``and (ii)''.
(b) Increased Payment.--
(1) Fee schedule amount.--Clause (O) of section 1833(a)(1)
(42 U.S.C. 1395l(a)(1)) is amended to read as follows: ``(O)
with respect to services described in section 1861(s)(2)(K)(ii)
(relating to nurse practitioner or clinical nurse specialist
services), the amounts paid shall be equal to 80 percent of (i)
the lesser of the actual charge or 85 percent of the fee
schedule amount provided under section 1848, or (ii) in the
case of services as an assistant at surgery, the lesser of the
actual charge or 85 percent of the amount that would otherwise
be recognized if performed by a physician who is serving as an
assistant at surgery; and''.
(2) Conforming amendments.--(A) Section 1833(r) (42 U.S.C.
1395l(r)) is amended--
(i) in paragraph (1), by striking ``section
1861(s)(2)(K)(iii) (relating to nurse practitioner or
clinical nurse specialist services provided in a rural
area)'' and inserting ``section 1861(s)(2)(K)(ii)
(relating to nurse practitioner or clinical nurse
specialist services)'';
(ii) by striking paragraph (2);
(iii) in paragraph (3), by striking ``section
1861(s)(2)(K)(iii)'' and inserting ``section
1861(s)(2)(K)(ii)''; and
(iv) by redesignating paragraph (3) as paragraph
(2).
(B) Section 1842(b)(12)(A) (42 U.S.C. 1395u(b)(12)(A)) is
amended, in the matter preceding clause (i), by striking
``clauses (i), (ii), or (iv) of section 1861(s)(2)(K) (relating
to a physician assistants and nurse practitioners)'' and
inserting ``section 1861(s)(2)(K)(i) (relating to physician
assistants),''.
(c) Direct Payment for Nurse Practitioners and Clinical Nurse
Specialists.--
(1) In general.--Section 1832(a)(2)(B)(iv) (42 U.S.C.
1395k(a)(2)(B)(iv)) is amended by striking ``provided in a
rural area (as defined in section 1886(d)(2)(D))'' and
inserting ``but only if no facility or other provider charges
or is paid any amounts with respect to the furnishing of such
services''.
(2) Conforming amendment.--Section 1842(b)(6)(C) (42 U.S.C.
1395u(b)(6)(C)) is amended--
(A) by striking ``clauses (i), (ii), or (iv)'' and
inserting ``clause (i)''; and
(B) by striking ``or nurse practitioner''.
(d) Definition of Clinical Nurse Specialist Clarified.-- Section
1861(aa)(5) (42 U.S.C. 1395x(aa)(5)) is amended--
(1) by inserting ``(A)'' after ``(5)'';
(2) by striking ``The term `physician assistant' '' and all
that follows through ``who performs'' and inserting ``The term
`physician assistant' and the term `nurse practitioner' mean,
for purposes of this title, a physician assistant or nurse
practitioner who performs''; and
(3) by adding at the end the following new subparagraph:
``(B) The term `clinical nurse specialist' means, for purposes of
this title, an individual who--
``(i) is a registered nurse and is licensed to practice
nursing in the State in which the clinical nurse specialist
services are performed; and
``(ii) holds a master's degree in a defined clinical area
of nursing from an accredited educational institution.''.
(e) Effective Date.--The amendments made by this section shall
apply with respect to services furnished and supplies provided on and
after January 1, 1998.
SEC. 10620. INCREASED MEDICARE REIMBURSEMENT FOR PHYSICIAN ASSISTANTS.
(a) Removal of Restriction on Settings.--Section 1861(s)(2)(K)(i)
(42 U.S.C. 1395x(s)(2)(K)(i)) is amended--
(1) by striking ``(I) in a hospital'' and all that follows
through ``shortage area,'', and
(2) by adding at the end the following: ``but only if no
facility or other provider charges or is paid any amounts with
respect to the furnishing of such services,''.
(b) Increased Payment.--Paragraph (12) of section 1842(b) (42
U.S.C. 1395u(b)), as amended by section 10619(b)(2)(B), is amended to
read as follows:
``(12) With respect to services described in section
1861(s)(2)(K)(i)--
``(A) payment under this part may only be made on an
assignment-related basis; and
``(B) the amounts paid under this part shall be equal to 80
percent of (i) the lesser of the actual charge or 85 percent of
the fee schedule amount provided under section 1848 for the
same service provided by a physician who is not a specialist;
or (ii) in the case of services as an assistant at surgery, the
lesser of the actual charge or 85 percent of the amount that
would otherwise be recognized if performed by a physician who
is serving as an assistant at surgery.''.
(c) Removal of Restriction on Employment Relationship.--Section
1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended by adding at the end the
following new sentence: ``For purposes of clause (C) of the first
sentence of this paragraph, an employment relationship may include any
independent contractor arrangement, and employer status shall be
determined in accordance with the law of the State in which the
services described in such clause are performed.''.
(d) Effective Date.--The amendments made by this section shall
apply with respect to services furnished and supplies provided on and
after January 1, 1998.
SEC. 10621. RENAL DIALYSIS-RELATED SERVICES.
(a) Auditing of Cost Reports.--The Secretary shall audit a sample
of cost reports of renal dialysis providers for 1995 and for each third
year thereafter.
(b) Implementation of Quality Standards.--The Secretary of Health
and Human Services shall develop and implement, by not later than
January 1, 1999, a method to measure and report quality of renal
dialysis services provided under the medicare program under title XVIII
of the Social Security Act in order to reduce payments for
inappropriate or low quality care.
CHAPTER 3--PART B PREMIUM
SEC. 10631. PART B PREMIUM.
(a) In General.--The first, second and third sentences of section
1839(a)(3) (42 U.S.C. 1395r(a)(3)) are amended to read as follows:
``The Secretary, during September of each year, shall determine and
promulgate a monthly premium rate for the succeeding calendar year.
That monthly premium rate shall be equal to 50 percent of the monthly
actuarial rate for enrollees age 65 and over, determined according to
paragraph (1), for that succeeding calendar year.''.
(b) Conforming and Technical Amendments.--
(1) Section 1839.--Section 1839 (42 U.S.C. 1395r) is
amended--
(A) in subsection (a)(2), by striking ``(b) and
(e)'' and inserting ``(b), (c), and (f)'',
(B) in the last sentence of subsection (a)(3)--
(i) by inserting ``rate'' after
``premium'', and
(ii) by striking ``and the derivation of
the dollar amounts specified in this
paragraph'',
(C) by striking subsection (e), and
(D) by redesignating subsection (g) as subsection
(e) and inserting that subsection after subsection (d).
(2) Section 1844.--Subparagraphs (A)(i) and (B)(i) of
section 1844(a)(1) (42 U.S.C. 1395w(a)(1)) are each amended by
striking ``or 1839(e), as the case may be''.
Subtitle H--Provisions Relating to Parts A and B
CHAPTER 1--PROVISIONS RELATING TO MEDICARE SECONDARY PAYER
SEC. 10701. PERMANENT EXTENSION AND REVISION OF CERTAIN SECONDARY PAYER
PROVISIONS.
(a) Application to Disabled Individuals in Large Group Health
Plans.--
(1) In general.--Section 1862(b)(1)(B) (42 U.S.C.
1395y(b)(1)(B)) is amended--
(A) in clause (i), by striking ``clause (iv)'' and
inserting ``clause (iii)'',
(B) by striking clause (iii), and
(C) by redesignating clause (iv) as clause (iii).
(2) Conforming amendments.--Paragraphs (1) through (3) of
section 1837(i) (42 U.S.C. 1395p(i)) and the second sentence of
section 1839(b) (42 U.S.C. 1395r(b)) are each amended by
striking ``1862(b)(1)(B)(iv)'' each place it appears and
inserting ``1862(b)(1)(B)(iii)''.
(b) Individuals With End Stage Renal Disease.--
(1) In general.--Section 1862(b)(1)(C) (42 U.S.C.
1395y(b)(1)(C)) is amended--
(A) in the first sentence, by striking ``12-month''
each place it appears and inserting ``30-month'', and
(B) by striking the second sentence.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to items and services furnished on or after the
date of the enactment of this Act and with respect to periods
beginning on or after the date that is 18 months prior to such
date.
(c) IRS-SSA-HCFA Data Match.--
(1) Social security act.--Section 1862(b)(5)(C) (42 U.S.C.
1395y(b)(5)(C)) is amended by striking clause (iii).
(2) Internal revenue code.--Section 6103(l)(12) of the
Internal Revenue Code of 1986 is amended by striking
subparagraph (F).
SEC. 10702. CLARIFICATION OF TIME AND FILING LIMITATIONS.
(a) Extension of Claims Filing Period.--Section 1862(b)(2)(B) (42
U.S.C. 1395y(b)(2)(B)) is amended by adding at the end the following
new clause:
``(v) Claims-filing period.--
Notwithstanding any other time limits that may
exist for filing a claim under an employer
group health plan, the United States may seek
to recover conditional payments in accordance
with this subparagraph where the request for
payment is submitted to the entity required or
responsible under this subsection to pay with
respect to the item or service (or any portion
thereof) under a primary plan within the 3-year
period beginning on the date on which the item
or service was furnished.''.
(b) Effective Date.--The amendment made by subsection (a) applies
to items and services furnished after 1990. The previous sentence shall
not be construed as permitting any waiver of the 3-year-period
requirement (imposed by such amendment) in the case of items and
services furnished more than 3 years before the date of the enactment
of this Act.
SEC. 10703. PERMITTING RECOVERY AGAINST THIRD PARTY ADMINISTRATORS.
(a) Permitting Recovery Against Third Party Administrators of
Primary Plans.--Section 1862(b)(2)(B)(ii) (42 U.S.C.
1395y(b)(2)(B)(ii)) is amended--
(1) by striking ``under this subsection to pay'' and
inserting ``(directly, as a third-party administrator, or
otherwise) to make payment'', and
(2) by adding at the end the following: ``The United States
may not recover from a third-party administrator under this
clause in cases where the third-party administrator would not
be able to recover the amount at issue from the employer or
group health plan for whom it provides administrative services
due to the insolvency or bankruptcy of the employer or plan.''.
(b) Clarification of Beneficiary Liability.--Section 1862(b)(1) (42
U.S.C. 1395y(b)(1)) is amended by adding at the end the following new
subparagraph:
``(F) Limitation on beneficiary liability.--An
individual who is entitled to benefits under this title
and is furnished an item or service for which such
benefits are incorrectly paid is not liable for
repayment of such benefits under this paragraph unless
payment of such benefits was made to the individual.''.
(c) Effective Date.--The amendments made by this section apply to
items and services furnished on or after the date of the enactment of
this Act.
CHAPTER 2--HOME HEALTH SERVICES
SEC. 10711. RECAPTURING SAVINGS RESULTING FROM TEMPORARY FREEZE ON
PAYMENT INCREASES FOR HOME HEALTH SERVICES.
(a) Basing Updates to Per Visit Cost Limits on Limits for Fiscal
Year 1993.--Section 1861(v)(1)(L) (42 U.S.C. 1395x(v)(1)(L)) is amended
by adding at the end the following:
``(iv) In establishing limits under this subparagraph for cost
reporting periods beginning after September 30, 1997, the Secretary
shall not take into account any changes in the home health market
basket, as determined by the Secretary, with respect to cost reporting
periods which began on or after July 1, 1994, and before July 1,
1996.''.
(b) No Exceptions Permitted Based on Amendment.--The Secretary of
Health and Human Services shall not consider the amendment made by
subsection (a) in making any exemptions and exceptions pursuant to
section 1861(v)(1)(L)(ii) of the Social Security Act (42 U.S.C.
1395x(v)(1)(L)(ii)).
SEC. 10712. INTERIM PAYMENTS FOR HOME HEALTH SERVICES.
(a) Reductions in Cost Limits.--Section 1861(v)(1)(L)(i) (42 U.S.C.
1395x(v)(1)(L)(i)) is amended--
(1) by moving the indentation of subclauses (I) through
(III) 2-ems to the left;
(2) in subclause (I), by inserting ``of the mean of the
labor-related and nonlabor per visit costs for freestanding
home health agencies'' before the comma at the end;
(3) in subclause (II), by striking ``, or'' and inserting
``of such mean,'';
(4) in subclause (III)--
(A) by inserting ``and before October 1, 1997,''
after ``July 1, 1987,'', and
(B) by striking the comma at the end and inserting
``of such mean, or''; and
(5) by striking the matter following subclause (III) and
inserting the following:
``(IV) October 1, 1997, 105 percent of the median of the
labor-related and nonlabor per visit costs for freestanding
home health agencies.''.
(b) Delay In Updates.--Section 1861(v)(1)(L)(iii) (42 U.S.C.
1395x(v)(1)(L)(iii)) is amended by inserting ``, or on or after July 1,
1997, and before October 1, 1997'' after ``July 1, 1996''.
(c) Additions to Cost Limits.--Section 1861(v)(1)(L) (42 U.S.C.
1395x(v)(1)(L)), as amended by section 10711(a), is amended by adding
at the end the following new clauses:
``(v) 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--
``(I) an agency-specific per beneficiary annual limitation
calculated based 75 percent on the reasonable costs (including
nonroutine medical supplies) for the agency's 12-month cost
reporting period ending during 1994, and based 25 percent on
the standardized regional average of such costs for the
agency's region, as applied to such agency, for cost reporting
periods ending during 1994, such costs updated by the home
health market basket index; and
``(II) the agency's unduplicated census count of patients
(entitled to benefits under this title) for the cost reporting
period subject to the limitation.
``(vi) For services furnished by home health agencies for cost
reporting periods beginning on or after October 1, 1997, the following
rules apply:
``(I) For new providers and those providers without a 12-
month cost reporting period ending in calendar year 1994, the
per beneficiary limitation shall be equal to the median of
these limits (or the Secretary's best estimates thereof)
applied to other home health agencies as determined by the
Secretary. A home health agency that has altered its corporate
structure or name shall not be considered a new provider for
this purpose.
``(II) For beneficiaries who use services furnished by more
than one home health agency, the per beneficiary limitations
shall be prorated among the agencies.''.
(d) Development of Case Mix System.--The Secretary of Health and
Human Services shall expand research on a prospective payment system
for home health agencies under the medicare program that ties
prospective payments to a unit of service, including an intensive
effort to develop a reliable case mix adjuster that explains a
significant amount of the variances in costs.
(e) Submission of Data for Case Mix System.--Effective for cost
reporting periods beginning on or after October 1, 1997, the Secretary
of Health and Human Services may require all home health agencies to
submit additional information that the Secretary considers necessary
for the development of a reliable case mix system.
SEC. 10713. CLARIFICATION OF PART-TIME OR INTERMITTENT NURSING CARE.
(a) In General.--Section 1861(m) (42 U.S.C. 1395x(m)) is amended by
adding at the end the following: ``For purposes of paragraphs (1) and
(4), the term `part-time or intermittent services' means skilled
nursing and home health aide services furnished any number of days per
week as long as they are furnished (combined) less than 8 hours each
day and 28 or fewer hours each week (or, subject to review on a case-
by-case basis as to the need for care, less than 8 hours each day and
35 or fewer hours per week). For purposes of sections 1814(a)(2)(C) and
1835(a)(2)(A), `intermittent' means skilled nursing care that is either
provided or needed on fewer than 7 days each week, or less than 8 hours
of each day for periods of 21 days or less (with extensions in
exceptional circumstances when the need for additional care is finite
and predictable).''.
(b) Effective Date.--The amendment made by subsection (a) applies
to services furnished on or after October 1, 1997.
SEC. 10714. STUDY ON DEFINITION OF HOMEBOUND.
(a) Study.--The Secretary of Health and Human Services shall
conduct a study of the criteria that should be applied, and the method
of applying such criteria, in the determination of whether an
individual is homebound for purposes of qualifying for receipt of
benefits for home health services under the medicare program. Such
criteria shall include the extent and circumstances under which a
person may be absent from the home but nonetheless qualify.
(b) Report.--Not later than October 1, 1998, the Secretary shall
submit a report to the Congress on the study conducted under subsection
(a). The report shall include specific recommendations on such criteria
and methods.
SEC. 10715. PAYMENT BASED ON LOCATION WHERE HOME HEALTH SERVICE IS
FURNISHED.
(a) Conditions of Participation.--Section 1891 (42 U.S.C. 1395bbb)
is amended by adding at the end the following:
``(g) Payment on Basis of Location of Service.--A home health
agency shall submit claims for payment for home health services under
this title only on the basis of the geographic location at which the
service is furnished, as determined by the Secretary.''.
(b) Wage Adjustment.--Section 1861(v)(1)(L)(iii) (42 U.S.C.
1395x(v)(1)(L)(iii)) is amended by striking ``agency is located'' and
inserting ``service is furnished''.
(c) Effective Date.--The amendments made by this section apply to
cost reporting periods beginning on or after October 1, 1997.
SEC. 10716. NORMATIVE STANDARDS FOR HOME HEALTH CLAIMS DENIALS,
(a) In General.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)), as
amended by section 10616(c), is amended--
(1) by striking ``and'' at the end of subparagraph (G),
(2) by striking the semicolon at the end of subparagraph
(H) and inserting ``, and'', and
(3) by inserting after subparagraph (H) the following new
subparagraph:
``(I) the frequency and duration of home health services
which are in excess of normative guidelines that the Secretary
shall establish by regulation;''.
(b) Notification.--The Secretary of Health and Human Services may
establish a process for notifying a physician in cases in which the
number of home health service visits furnished under the medicare
program pursuant to a prescription or certification of the physician
significantly exceeds such threshold (or thresholds) as the Secretary
specifies. The Secretary may adjust such threshold to reflect
demonstrated differences in the need for home health services among
different beneficiaries.
(c) Effective Date.--The amendments made by this section apply to
services furnished on or after October 1, 1997.
SEC. 10717. NO HOME HEALTH BENEFITS BASED SOLELY ON DRAWING BLOOD.
(a) In General.--Sections 1814(a)(2)(C) and 1835(a)(2)(A) (42
U.S.C. 1395f(a)(2)(C), 1395n(a)(2)(A)) are each amended by inserting
``(other than solely venipuncture for the purpose of obtaining a blood
sample)'' after ``skilled nursing care''.
(b) Effective Date.--The amendments made by subsection (a) apply to
home health services furnished after the 6-month period beginning after
the date of enactment of this Act.
CHAPTER 3--BABY BOOM GENERATION MEDICARE COMMISSION
SEC. 10721. BIPARTISAN COMMISSION ON THE EFFECT OF THE BABY BOOM
GENERATION ON THE MEDICARE PROGRAM.
(a) Establishment.--There is established a commission to be known
as the Bipartisan Commission on the Effect of the Baby Boom Generation
on the Medicare Program (in this section referred to as the
``Commission'').
(b) Duties.--
(1) In general.--The Commission shall--
(A) examine the financial impact on the medicare
program of the significant increase in the number of
medicare eligible individuals which will occur
beginning approximately during 2010 and lasting for
approximately 25 years,
(B) make specific recommendations to the Congress
respecting a comprehensive approach to preserve the
medicare program for the period during which such
individuals are eligible for medicare, and
(C) study the feasibility and desirability of
establishing--
(i) an independent commission on medicare
to make recommendations annually on how best to
match the structure of the medicare program to
available funding for the program,
(ii) an expedited process for consideration
of such recommendations by Congress, and
(iii) a default mechanism to enforce
Congressional spending targets for the program
if Congress fails to approve such
recommendations.
(2) Considerations in making recommendations.--In making
its recommendations, the Commission shall consider the
following:
(A) The amount and sources of Federal funds to
finance the medicare program, including the potential
use of innovative financing methods.
(B) Methods used by other nations to respond to
comparable demographic patterns in eligibility for
health care benefits for elderly and disabled
individuals.
(C) Modifying age-based eligibility to correspond
to changes in age-based eligibility under the OASDI
program.
(D) Trends in employment-related health care for
retirees, including the use of medical savings accounts
and similar financing devices.
(c) Membership.--
(1) Appointment.--The Commission shall be composed of 15
voting members as follows:
(A) The Majority Leader of the Senate shall
appoint, after consultation with the minority leader of
the Senate, 6 members, of whom not more than 4 may be
of the same political party.
(B) The Speaker of the House of Representatives
shall appoint, after consultation with the minority
leader of the House of Representatives, 6 members, of
whom not more than 4 may be of the same political
party.
(C) The 3 ex officio members of the Board of
Trustees of the Federal Hospital Insurance Trust Fund
and of the Federal Supplementary Medical Insurance
Trust Fund who are Cabinet level officials.
(2) Chairman and vice chairman.--As the first item of
business at the Commission's first meeting (described in
paragraph (5)(B)), the Commission shall elect a Chairman and
Vice Chairman from among its members. The individuals elected
as Chairman and Vice Chairman may not be of the same political
party and may not have been appointed to the Commission by the
same appointing authority.
(3) Vacancies.--Any vacancy in the membership of the
Commission shall be filled in the manner in which the original
appointment was made and shall not affect the power of the
remaining members to execute the duties of the Commission.
(4) Quorum.--A quorum shall consist of 8 members of the
Commission, except that 4 members may conduct a hearing under
subsection (f).
(5) Meetings.--
(A) The Commission shall meet at the call of its
Chairman or a majority of its members.
(B) The Commission shall hold its first meeting not
later than February 1, 1998.
(6) Compensation and reimbursement of expenses.--Members of
the Commission are not entitled to receive compensation for
service on the Commission. Members may be reimbursed for
travel, subsistence, and other necessary expenses incurred in
carrying out the duties of the Commission.
(d) Advisory Panel.--
(1) In general.--The Chairman, in consultation with the
Vice Chairman, may establish a panel (in this section referred
to as the ``Advisory Panel'') consisting of health care
experts, consumers, providers, and others to advise and assist
the members of the Commission in carrying out the duties
described in subsection (b). The panel shall have only those
powers that the Chairman, in consultation with the Vice
Chairman, determines are necessary and appropriate to assist
the Commission in carrying out such duties.
(2) Compensation.--Members of the Advisory Panel are not
entitled to receive compensation for service on the Advisory
Panel. Subject to the approval of the chairman of the
Commission, members may be reimbursed for travel, subsistence,
and other necessary expenses incurred in carrying out the
duties of the Advisory Panel.
(e) Staff and Consultants.--
(1) Staff.--The Commission may appoint and determine the
compensation of such staff as may be necessary to carry out the
duties of the Commission. Such appointments and compensation
may be made without regard to the provisions of title 5, United
States Code, that govern appointments in the competitive
services, and the provisions of chapter 51 and subchapter III
of chapter 53 of such title that relate to classifications and
the General Schedule pay rates.
(2) Consultants.--The Commission may procure such temporary
and intermittent services of consultants under section 3109(b)
of title 5, United States Code, as the Commission determines to
be necessary to carry out the duties of the Commission.
(f) Powers.--
(1) Hearings and other activities.--For the purpose of
carrying out its duties, the Commission may hold such hearings
and undertake such other activities as the Commission
determines to be necessary to carry out its duties.
(2) Studies by gao.--Upon the request of the Commission,
the Comptroller General shall conduct such studies or
investigations as the Commission determines to be necessary to
carry out its duties.
(3) Cost estimates by congressional budget office.--
(A) Upon the request of the Commission, the
Director of the Congressional Budget Office shall
provide to the Commission such cost estimates as the
Commission determines to be necessary to carry out its
duties.
(B) The Commission shall reimburse the Director of
the Congressional Budget Office for expenses relating
to the employment in the office of the Director of such
additional staff as may be necessary for the Director
to comply with requests by the Commission under
subparagraph (A).
(4) Detail of federal employees.--Upon the request of the
Commission, the head of any Federal agency is authorized to
detail, without reimbursement, any of the personnel of such
agency to the Commission to assist the Commission in carrying
out its duties. Any such detail shall not interrupt or
otherwise affect the civil service status or privileges of the
Federal employee.
(5) Technical assistance.--Upon the request of the
Commission, the head of a Federal agency shall provide such
technical assistance to the Commission as the Commission
determines to be necessary to carry out its duties.
(6) Use of mails.--The Commission may use the United States
mails in the same manner and under the same conditions as
Federal agencies and shall, for purposes of the frank, be
considered a commission of Congress as described in section
3215 of title 39, United States Code.
(7) Obtaining information.--The Commission may secure
directly from any Federal agency information necessary to
enable it to carry out its duties, if the information may be
disclosed under section 552 of title 5, United States Code.
Upon request of the Chairman of the Commission, the head of
such agency shall furnish such information to the Commission.
(8) Administrative support services.--Upon the request of
the Commission, the Administrator of General Services shall
provide to the Commission on a reimbursable basis such
administrative support services as the Commission may request.
(9) Printing.--For purposes of costs relating to printing
and binding, including the cost of personnel detailed from the
Government Printing Office, the Commission shall be deemed to
be a committee of the Congress.
(g) Report.--(1) Not later than May 1, 1999, the Commission shall
submit to Congress a report containing its findings and recommendations
regarding how to protect and preserve the medicare program in a
financially solvent manner until 2030 (or, if later, throughout the
period of projected solvency of the Federal Old-Age and Survivors
Insurance Trust Fund). The report shall include detailed
recommendations for appropriate legislative initiatives respecting how
to accomplish this objective.
(2) Not later than 12 months after the date of the enactment of
this Act, the Commission shall report to the Congress on the matters
specified in subsection (b)(1)(C). If the Commission determines that it
is feasible and desirable to establish the processes described in such
subsection, the report under this paragraph shall include specific
recommendations on changes in law (such as changes in the Congressional
Budget Act of 1974 and the Balanced Budget and Emergency Deficit
Control Act of 1985) as are needed to implement its recommendations.
(h) Termination.--The Commission shall terminate 30 days after the
date of submission of the report required in subsection (g).
(i) Authorization of Appropriations.--There are authorized to be
appropriated $1,500,000 to carry out this section. 60 percent of such
appropriation shall be payable from the Federal Hospital Insurance
Trust Fund, and 40 percent of such appropriation shall be payable from
the Federal Supplementary Medical Insurance Trust Fund under title
XVIII of the Social Security Act (42 U.S.C. 1395i, 1395t).
CHAPTER 4--PROVISIONS RELATING TO DIRECT GRADUATE MEDICAL EDUCATION
SEC. 10731. LIMITATION ON PAYMENT BASED ON NUMBER OF RESIDENTS AND
IMPLEMENTATION OF ROLLING AVERAGE FTE COUNT.
Section 1886(h)(4) (42 U.S.C. 1395ww(h)(4)) is amended by adding
after subparagraph (E) the following:
``(F) Limitation on number of residents for certain
fiscal years.--Such rules shall provide that for
purposes of a cost reporting period beginning on or
after October 1, 1997, the total number of full-time
equivalent residents before application of weighting
factors (as determined under this paragraph) with
respect to a hospital's approved medical residency
training program may not exceed the number of full-time
equivalent residents with respect to the hospital's
most recent cost reporting period ending on or before
December 31, 1996. The Secretary may establish rules,
consistent with the policies in the previous sentence
and paragraph (6), with respect to the application of
the previous sentence in the case of medical residency
training programs established on or after January 1,
1997.
``(G) Counting interns and residents for fy 1998
and subsequent years.--
``(i) FY 1998.--For the hospital's first
cost reporting period beginning during fiscal
year 1998, subject to the limit described in
subparagraph (F), the total number of full-time
equivalent residents, for determining the
hospital's graduate medical education payment,
shall equal the average of the full-time
equivalent resident counts for the cost
reporting period and the preceding cost
reporting period.
``(ii) Subsequent years.--For each
subsequent cost reporting period, subject to
the limit described in subparagraph (F), the
total number of full-time equivalent residents,
for determining the hospital's graduate medical
education payment, shall equal the average of
the actual full-time equivalent resident counts
for the cost reporting period and preceding two
cost reporting periods.
``(iii) Adjustment for short periods.--If a
hospital's cost reporting period beginning on
or after October 1, 1997, is not equal to
twelve months, the Secretary shall make
appropriate modifications to ensure that the
average full-time equivalent resident counts
pursuant to clause (ii) are based on the
equivalent of full 12-month cost reporting
periods.''.
SEC. 10732. PHASED-IN LIMITATION ON HOSPITAL OVERHEAD AND SUPERVISORY
PHYSICIAN COMPONENT OF DIRECT MEDICAL EDUCATION COSTS.
(a) In General.--Section 1886(h)(3) (42 U.S.C. 1395ww(h)(3)) is
amended--
(1) in subparagraph (B), by inserting ``subject to
subparagraph (D),'' after ``subparagraph (A)'', and
(2) by adding at the end the following:
``(D) Phased-in limitation on hospital overhead and
supervisory physician component.--
``(i) In general.--In the case of a
hospital for which the overhead GME amount (as
defined in clause (ii)) for the base period
exceeds an amount equal to the 75th percentile
of the overhead GME amounts in such period for
all hospitals (weighted to reflect the full-
time equivalent resident counts for all
approved medical residency training programs),
subject to clause (iv), the hospital's approved
FTE resident amount (for periods beginning on
or after October 1, 1997) shall be reduced from
the amount otherwise applicable (as previously
reduced under this subparagraph) by an overhead
reduction amount. The overhead reduction amount
is equal to the lesser of--
``(I) 20 percent of the reference
reduction amount (described in clause
(iii)) for the period, or
``(II) 15 percent of the hospital's
overhead GME amount for the period (as
otherwise determined before the
reduction provided under this
subparagraph for the period involved).
``(ii) Overhead gme amount.--For purposes
of this subparagraph, the term `overhead GME
amount' means, for a hospital for a period, the
product of--
``(I) the percentage of the
hospital's approved FTE resident amount
for the base period that is not
attributable to resident salaries and
fringe benefits, and
``(II) the hospital's approved FTE
resident amount for the period
involved.
``(iii) Reference reduction amount.--
``(I) In general.--The reference
reduction amount described in this
clause for a hospital for a cost
reporting period is the base difference
(described in subclause (II)) updated,
in a compounded manner for each period
from the base period to the period
involved, by the update applied for
such period to the hospital's approved
FTE resident amount.
``(II) Base difference.--The base
difference described in this subclause
for a hospital is the amount by which
the hospital's overhead GME amount in
the base period exceeded the 75th
percentile of such amounts (as
described in clause (i)).
``(iv) Maximum reduction to 75th
percentile.--In no case shall the reduction
under this subparagraph effected for a hospital
for a period (below the amount that would
otherwise apply for the period if this
subparagraph did not apply for any period)
exceed the reference reduction amount for the
hospital for the period.
``(v) Base period.--For purposes of this
subparagraph, the term `base period' means the
cost reporting period beginning in fiscal year
1984 or the period used to establish the
hospital's approved FTE resident amount for
hospitals that did not have approved residency
training programs in fiscal year 1984.
``(vi) Rules for hospitals initiating
residency training programs.--The Secretary
shall establish rules for the application of
this subparagraph in the case of a hospital
that initiates medical residency training
programs during or after the base period.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to per resident payment amounts attributable to periods beginning
on or after October 1, 1997.
SEC. 10733. PERMITTING PAYMENT TO NON-HOSPITAL PROVIDERS.
(a) In General.-- Section 1886 (42 U.S.C. 1395ww) is amended by
adding at the end the following:
``(k) Payment to Non-Hospital Providers.--
``(1) Report.--The Secretary shall submit to Congress, not
later than 18 months after the date of the enactment of this
subsection, a proposal for payment to qualified non-hospital
providers for their direct costs of medical education, if those
costs are incurred in the operation of an approved medical
residency training program described in subsection (h). Such
proposal shall specify the amounts, form, and manner in which
such payments will be made and the portion of such payments
that will be made from each of the trust funds under this
title.
``(2) Effectiveness.--Except as otherwise provided in law,
the Secretary may implement such proposal for residency years
beginning not earlier than 6 months after the date of submittal
of the report under paragraph (1).
``(3) Qualified non-hospital providers.--For purposes of
this subsection, the term `qualified non-hospital provider'
means--
``(A) a Federally qualified health center, as
defined in section 1861(aa)(4);
``(B) a rural health clinic, as defined in section
1861(aa)(2);
``(C) MedicarePlus organizations; and
``(D) such other providers (other than hospitals)
as the Secretary determines to be appropriate.''.
(b) Prohibition on Double Payments; Budget Neutrality Adjustment.--
Section 1886(h)(3)(B) (42 U.S.C. 1395ww(h)(3)(B)) is amended by adding
at the end the following:
``The Secretary shall reduce the aggregate approved
amount to the extent payment is made under subsection
(k) for residents included in the hospital's count of
full-time equivalent residents and, in the case of
residents not included in any such count, the Secretary
shall provide for such a reduction in aggregate
approved amounts under this subsection as will assure
that the application of subsection (k) does not result
in any increase in expenditures under this title in
excess of those that would have occurred if subsection
(k) were not applicable.''.
SEC. 10734. INCENTIVE PAYMENTS UNDER PLANS FOR VOLUNTARY REDUCTION IN
NUMBER OF RESIDENTS.
(a) In General.--Section 1886(h) (42 U.S.C. 1395ww(h)) is further
amended by adding at the end the following new paragraph:
``(6) Incentive payment under plans for voluntary reduction
in number of residents.--
``(A) In general.--In the case of a voluntary
residency reduction plan for which an application is
approved under subparagraph (B), the qualifying entity
submitting the plan shall be paid an applicable hold
harmless percentage (as specified in subparagraph (E))
of the sum of--
``(i) amount (if any) by which--
``(I) the amount of payment which
would have been made under this
subsection if there had been a 5
percent reduction in the number of
full-time equivalent residents in the
approved medical education training
programs of the qualifying entity as of
June 30, 1997, exceeds
``(II) the amount of payment which
is made under this subsection, taking
into account the reduction in such
number effected under the reduction
plan; and
``(ii) the amount of the reduction in
payment under 1886(d)(5)(B) (for hospitals
participating in the qualifying entity) that is
attributable to the reduction in number of
residents effected under the plan below 95
percent of the number of full-time equivalent
residents in such programs of such entity as of
June 30, 1997.
``(B) Approval of plan applications.--The Secretary
may not approve the application of an qualifying entity
unless--
``(i) the application is submitted in a
form and manner specified by the Secretary and
by not later than March 1, 2000,
``(ii) the application provides for the
operation of a plan for the reduction in the
number of full-time equivalent residents in the
approved medical residency training programs of
the entity consistent with the requirements of
subparagraph (D);
``(iii) the entity elects in the
application whether such reduction will occur
over--
``(I) a period of not longer than 5
residency training years, or
``(II) a period of 6 residency
training years,
except that a qualifying entity described in
subparagraph (C)(i)(III) may not make the
election described in subclause (II); and
``(iv) the Secretary determines that the
application and the entity and such plan meet
such other requirements as the Secretary
specifies in regulations.
``(C) Qualifying entity.--
``(i) In general.--For purposes of this
paragraph, any of the following may be a
qualifying entity:
``(I) Individual hospitals
operating one or more approved medical
residency training programs.
``(II) Subject to clause (ii), two
or more hospitals that operate such
programs and apply for treatment under
this paragraph as a single qualifying
entity.
``(III) Subject to clause (iii), a
qualifying consortium (as described in
section 10735 of the Balanced Budget
Act of 1997).
``(ii) Additional requirement for joint
programs.--In the case of an application by a
qualifying entity described in clause (i)(II),
the Secretary may not approve the application
unless the application represents that the
qualifying entity either--
``(I) in the case of an entity that
meets the requirements of clause (v) of
subparagraph (D) will not reduce the
number of full-time equivalent
residents in primary care during the
period of the plan, or
``(II) in the case of another
entity will not reduce the proportion
of its residents in primary care (to
the total number of residents) below
such proportion as in effect as of the
applicable time described in
subparagraph (D)(vi).
``(iii) Additional requirement for
consortia.--In the case of an application by a
qualifying entity described in clause (i)(III),
the Secretary may not approve the application
unless the application represents that the
qualifying entity will not reduce the
proportion of its residents in primary care (to
the total number of residents) below such
proportion as in effect as of the applicable
time described in subparagraph (D)(vi).
``(D) Residency reduction requirements.--
``(i) Individual hospital applicants.--In
the case of a qualifying entity described in
subparagraph (C)(i)(I), the number of full-time
equivalent residents in all the approved
medical residency training programs operated by
or through the entity shall be reduced as
follows:
``(I) If base number of residents
exceeds 750 residents, by a number
equal to at least 20 percent of such
base number.
``(II) Subject to subclause (IV),
if base number of residents exceeds
500, but is less than 750, residents,
by 150 residents.
``(III) Subject to subclause (IV),
if base number of residents does not
exceed 500 residents, by a number equal
to at least 25 percent of such base
number.
``(IV) In the case of a qualifying
entity which is described in clause (v)
and which elects treatment under this
subclause, by a number equal to at
least 20 percent of such base number.
``(ii) Joint applicants.--In the case of a
qualifying entity described in subparagraph
(C)(i)(II), the number of full-time equivalent
residents in all the approved medical residency
training programs operated by or through the
entity shall be reduced as follows:
``(I) Subject to subclause (II), by
a number equal to at least 25 percent
of such base number.
``(II) In the case of a qualifying
entity which is described in clause (v)
and which elects treatment under this
subclause, by a number equal to at
least 20 percent of such base number.
``(iii) Consortia.--In the case of a
qualifying entity described in subparagraph
(C)(i)(III), the number of full-time equivalent
residents in all the approved medical residency
training programs operated by or through the
entity shall be reduced by a number equal to at
least 20 percent of such base number.
``(iv) Manner of reduction.--The reductions
specified under the preceding provisions of
this subparagraph for a qualifying entity shall
be below the base number of residents for that
entity and shall be fully effective not later
than--
``(I) the 5th residency training
year in which the application under
subparagraph (B) is effective, in the
case of an entity making the election
described in subparagraph (B)(iii)(I),
or
``(II) the 6th such residency
training year, in the case of an entity
making the election described in
subparagraph (B)(iii)(II).
``(v) Entities providing assurance of
maintenance of primary care residents.--An
entity is described in this clause if--
``(I) the base number of residents
for the entity is less than 750;
``(II) the number of full-time
equivalent residents in primary care
included in the base number of
residents for the entity is at least 10
percent of such base number; and
``(III) the entity represents in
its application under subparagraph (B)
that there will be no reduction under
the plan in the number of full-time
equivalent residents in primary care.
If a qualifying entity fails to comply with the
representation described in subclause (III),
the entity shall be subject to repayment of all
amounts paid under this paragraph, in
accordance with procedures established to carry
out subparagraph (F).
``(vi) Base number of residents defined.--
For purposes of this paragraph, the term `base
number of residents' means, with respect to a
qualifying entity operating approved medical
residency training programs, the number of
full-time equivalent residents in such programs
(before application of weighting factors) of
the entity as of the most recent cost reporting
period ending before June 30, 1997, or, if
less, for any subsequent cost reporting period
that ends before the date the entity makes
application under this paragraph.
``(E) Applicable hold harmless percentage.--
``(i) In general.--For purposes of
subparagraph (A), the `applicable hold harmless
percentage' is the percentages specified in
clause (ii) or clause (iii), as elected by the
qualifying entity in the application submitted
under subparagraph (B).
``(ii) 5-year reduction plan.--In the case
of an entity making the election described in
subparagraph (B)(iii)(I), the percentages
specified in this clause are, for the--
``(I) first and second residency
training years in which the reduction
plan is in effect, 100 percent,
``(II) third such year, 75 percent,
``(III) fourth such year, 50
percent, and
``(IV) fifth such year, 25 percent.
``(iii) 6-year reduction plan.--In the case
of an entity making the election described in
subparagraph (B)(iii)(II), the percentages
specified in this clause are, for the--
``(I) first residency training year
in which the reduction plan is in
effect, 100 percent,
``(II) second such year, 95
percent,
``(III) third such year, 85
percent,
``(IV) fourth such year, 70
percent,
``(V) fifth such year, 50 percent,
and
``(VI) sixth such year, 25 percent.
``(F) Penalty for increase in number of residents
in subsequent years.--If payments are made under this
paragraph to a qualifying entity, if the entity (or any
hospital operating as part of the entity) increases the
number of full-time equivalent residents above the
number of such residents permitted under the reduction
plan as of the completion of the plan, then, as
specified by the Secretary, the entity is liable for
repayment to the Secretary of the total amounts paid
under this paragraph to the entity.
``(G) Treatment of rotating residents.--In applying
this paragraph, the Secretary shall establish rules
regarding the counting of residents who are assigned to
institutions the medical residency training programs in
which are not covered under approved applications under
this paragraph.''.
(b) Relation to Demonstration Projects and Authority.--
(1) Section 1886(h)(6) of the Social Security Act, added by
subsection (a), shall not apply to any residency training
program with respect to which a demonstration project described
in paragraph (3) has been approved by the Health Care Financing
Administration as of May 27, 1997. The Secretary of Health and
Human Services shall take such actions as may be necessary to
assure that (in the manner described in subparagraph (A) of
such section) in no case shall payments be made under such a
project with respect to the first 5 percent reduction in the
base number of full-time equivalent residents otherwise used
under the project.
(2) Effective May 27, 1997, the Secretary of Health and
Human Services is not authorized to approve any demonstration
project described in paragraph (3) for any residency training
year beginning before July 1, 2006.
(3) A demonstration project described in this paragraph is
a project that provides for additional payments under title
XVIII of the Social Security Act in connection with reduction
in the number of residents in a medical residency training
program.
(c) Interim, Final Regulations.--In order to carry out the
amendment made by subsection (a) in a timely manner, the Secretary of
Health and Human Services may first promulgate regulations, that take
effect on an interim basis, after notice and pending opportunity for
public comment, by not later than 6 months after the date of the
enactment of this Act.
SEC. 10735. DEMONSTRATION PROJECT ON USE OF CONSORTIA.
(a) In General.--The Secretary of Health and Human Services (in
this section referred to as the Secretary) shall establish a
demonstration project under which, instead of making payments to
teaching hospitals pursuant to section 1886(h) of the Social Security
Act, the Secretary shall make payments under this section to each
consortium that meets the requirements of subsection (b).
(b) Qualifying Consortia.--For purposes of subsection (a), a
consortium meets the requirements of this subsection if the consortium
is in compliance with the following:
(1) The consortium consists of an approved medical
residency training program in a teaching hospital and one or
more of the following entities:
(A) A school of allopathic medicine or osteopathic
medicine.
(B) Another teaching hospital, which may be a
children's hospital.
(C) Another approved medical residency training
program.
(D) A Federally qualified health center.
(E) A medical group practice.
(F) A managed care entity.
(G) An entity furnishing outpatient services.
(H) Such other entity as the Secretary determines
to be appropriate.
(2) The members of the consortium have agreed to
participate in the programs of graduate medical education that
are operated by the entities in the consortium.
(3) With respect to the receipt by the consortium of
payments made pursuant to this section, the members of the
consortium have agreed on a method for allocating the payments
among the members.
(4) The consortium meets such additional requirements as
the Secretary may establish.
(c) Amount and Source of Payment.--The total of payments to a
qualifying consortium for a fiscal year pursuant to subsection (a)
shall not exceed the amount that would have been paid under section
1886(h) of the Social Security Act for the teaching hospital (or
hospitals) in the consortium. Such payments shall be made in such
proportion from each of the trust funds established under title XVIII
of such Act as the Secretary specifies.
SEC. 10736. RECOMMENDATIONS ON LONG-TERM PAYMENT POLICIES REGARDING
FINANCING TEACHING HOSPITALS AND GRADUATE MEDICAL
EDUCATION.
(a) In General.--The Medicare Payment Advisory Commission
(established under section 1805 of the Social Security Act and in this
section referred to as the ``Commission'') shall examine and develop
recommendations on whether and to what extent medicare payment policies
and other Federal policies regarding teaching hospitals and graduate
medical education should be reformed. Such recommendations shall
include recommendations regarding each of the following:
(1) The financing of graduate medical education, including
consideration of alternative broad-based sources of funding for
such education and models for the distribution of payments
under any all-payer financing mechanism.
(2) The financing of teaching hospitals, including
consideration of the difficulties encountered by such hospitals
as competition among health care entities increases. Matters
considered under this paragraph shall include consideration of
the effects on teaching hospitals of the method of financing
used for the MedicarePlus program under part C of title XVIII
of the Social Security Act.
(3) Possible methodologies for making payments for graduate
medical education and the selection of entities to receive such
payments. Matters considered under this paragraph shall
include--
(A) issues regarding children's hospitals and
approved medical residency training programs in
pediatrics, and
(B) whether and to what extent payments are being
made (or should be made) for training in the various
nonphysician health professions.
(4) Federal policies regarding international medical
graduates.
(5) The dependence of schools of medicine on service-
generated income.
(6) Whether and to what extent the needs of the United
States regarding the supply of physicians, in the aggregate and
in different specialties, will change during the 10-year period
beginning on October 1, 1997, and whether and to what extent
any such changes will have significant financial effects on
teaching hospitals.
(7) Methods for promoting an appropriate number, mix, and
geographical distribution of health professionals.
(c) Consultation.--In conducting the study under subsection (a),
the Commission shall consult with the Council on Graduate Medical
Education and individuals with expertise in the area of graduate
medical education, including--
(1) deans from allopathic and osteopathic schools of
medicine;
(2) chief executive officers (or equivalent administrative
heads) from academic health centers, integrated health care
systems, approved medical residency training programs, and
teaching hospitals that sponsor approved medical residency
training programs;
(3) chairs of departments or divisions from allopathic and
osteopathic schools of medicine, schools of dentistry, and
approved medical residency training programs in oral surgery;
(4) individuals with leadership experience from
representative fields of non-physician health professionals;
(5) individuals with substantial experience in the study of
issues regarding the composition of the health care workforce
of the United States; and
(6) individuals with expertise on the financing of health
care.
(d) Report.--Not later than 2 years after the date of the enactment
of this Act, the Commission shall submit to the Congress a report
providing its recommendations under this section and the reasons and
justifications for such recommendations.
SEC. 10737. MEDICARE SPECIAL REIMBURSEMENT RULE FOR CERTAIN COMBINED
RESIDENCY PROGRAMS.
(a) In General.--Section 1886(h)(5)(G) (42 U.S.C. 1395ww(h)(5)(G))
is amended--
(1) in clause (i), by striking ``and (iii)'' and inserting
``, (iii), and (iv)''; and
(2) by adding at the end the following:
``(iv) Special rule for certain combined
residency programs.--(I) In the case of a
resident enrolled in a combined medical
residency training program in which all of the
individual programs (that are combined) are for
training a primary care resident (as defined in
subparagraph (H)), the period of board
eligibility shall be the minimum number of
years of formal training required to satisfy
the requirements for initial board eligibility
in the longest of the individual programs plus
one additional year.
``(II) A resident enrolled in a combined
medical residency training program that
includes an obstetrics and gynecology program
shall qualify for the period of board
eligibility under subclause (I) if the other
programs such resident combines with such
obstetrics and gynecology program are for
training a primary care resident.''.
(b) Effective Date.--The amendments made by subsection (a) apply to
combined medical residency programs for residency years beginning on or
after July 1, 1998.
CHAPTER 5--OTHER PROVISIONS
SEC. 10741. CENTERS OF EXCELLENCE.
(a) In General.--Title XVIII is amended by inserting after section
1888 the following:
``centers of excellence
``Sec. 1889. (a) In General.--The Secretary shall use a competitive
process to contract with specific hospitals or other entities for
furnishing services related to surgical procedures, and for furnishing
services (unrelated to surgical procedures) to hospital inpatients that
the Secretary determines to be appropriate. The services may include
any services covered under this title that the Secretary determines to
be appropriate, including post-hospital services.
``(b) Quality Standards.--Only entities that meet quality standards
established by the Secretary shall be eligible to contract under this
section. Contracting entities shall implement a quality improvement
plan approved by the Secretary.
``(c) Payment.--Payment under this section shall be made on the
basis of negotiated all-inclusive rates. The amount of payment made by
the Secretary to an entity under this title for services covered under
a contract shall be less than the aggregate amount of the payments that
the Secretary would have otherwise made for the services.
``(d) Contract Period.--A contract period shall be 3 years (subject
to renewal), so long as the entity continues to meet quality and other
contractual standards.
``(e) Incentives for Use of Centers.--Entities under a contract
under this section may furnish additional services (at no cost to an
individual entitled to benefits under this title) or waive cost-
sharing, subject to the approval of the Secretary.
``(f) Limit on Number of Centers.--The Secretary shall limit the
number of centers in a geographic area to the number needed to meet
projected demand for contracted services.''.
(b) Effective Date.--The amendment made by subsection (a) applies
to services furnished on or after October 1, 1997.
SEC. 10742. MEDICARE PART B SPECIAL ENROLLMENT PERIOD AND WAIVER OF
PART B LATE ENROLLMENT PENALTY AND MEDIGAP SPECIAL OPEN
ENROLLMENT PERIOD FOR CERTAIN MILITARY RETIREES AND
DEPENDENTS.
(a) Medicare Part B Special Enrollment Period; Waiver of Part B
Penalty for Late Enrollment.--
(1) In general.--In the case of any eligible individual (as
defined in subsection (c)), the Secretary of Health and Human
Services shall provide for a special enrollment period during
which the individual may enroll under part B of title XVIII of
the Social Security Act. Such period shall be for a period of 6
months and shall begin with the first month that begins at
least 45 days after the date of the enactment of this Act.
(2) Coverage period.--In the case of an eligible individual
who enrolls during the special enrollment period provided under
paragraph (1), the coverage period under part B of title XVIII
of the Social Security Act shall begin on the first day of the
month following the month in which the individual enrolls.
(3) Waiver of part b late enrollment penalty.--In the case
of an eligible individual who enrolls during the special
enrollment period provided under paragraph (1), there shall be
no increase pursuant to section 1839(b) of the Social Security
Act in the monthly premium under part B of title XVIII of such
Act.
(b) Medigap Special Open Enrollment Period.--Notwithstanding any
other provision of law, an issuer of a medicare supplemental policy (as
defined in section 1882(g) of the Social Security Act)--
(1) may not deny or condition the issuance or effectiveness
of a medicare supplemental policy that has a benefit package
classified as ``A'', ``B'', ``C'', or ``F'' under the standards
established under section 1882(p)(2) of the Social Security Act
(42 U.S.C. 1395rr(p)(2)); and
(2) may not discriminate in the pricing of the policy on
the basis of the individual's health status, medical condition
(including both physical and mental illnesses), claims
experience, receipt of health care, medical history, genetic
information, evidence of insurability (including conditions
arising out of acts of domestic violence), or disability;
in the case of an eligible individual who seeks to enroll (and is
enrolled) during the 6-month period described in subsection (a)(1).
(c) Eligible Individual Defined.--In this section, the term
``eligible individual'' means an individual--
(1) who, as of the date of the enactment of this Act, has
attained 65 years of age and was eligible to enroll under part
B of title XVIII of the Social Security Act, and
(2) who at the time the individual first satisfied
paragraph (1) or (2) of section 1836 of the Social Security
Act--
(A) was a covered beneficiary (as defined in
section 1072(5) of title 10, United States Code), and
(B) did not elect to enroll (or to be deemed
enrolled) under section 1837 of the Social Security Act
during the individual's initial enrollment period.
The Secretary of Health and Human Services shall consult with the
Secretary of Defense in the identification of eligible individuals.
SEC. 10743. PROTECTIONS UNDER THE MEDICARE PROGRAM FOR DISABLED WORKERS
WHO LOSE BENEFITS UNDER A GROUP HEALTH PLAN.
(a) No Premium Penalty for Late Enrollment.--The second sentence of
section 1839(b) (42 U.S.C. 1395r(b)) is amended by inserting ``and not
pursuant to a special enrollment period under section 1837(i)(4)''
after ``section 1837)''.
(b) Special Medicare Enrollment Period.--
(1) In general.--Section 1837(i) (42 U.S.C. 1395p(i)) is
amended by adding at the end the following new paragraph:
``(4)(A) In the case of an individual who is entitled to benefits
under part A pursuant to section 226(b) and--
``(i) who at the time the individual first satisfies
paragraph (1) or (2) of section 1836--
``(I) is enrolled in a group health plan described
in section 1862(b)(1)(A)(v) by reason of the
individual's (or the individual's spouse's) current
employment or otherwise, and
``(II) has elected not to enroll (or to be deemed
enrolled) under this section during the individual's
initial enrollment period; and
``(ii) whose continuous enrollment under such group health
plan is involuntarily terminated at a time when the enrollment
under the plan is not by reason of the individual's (or the
individual's spouse's) current employment,
there shall be a special enrollment period described in subparagraph
(B).
``(B) The special enrollment period referred to in subparagraph (A)
is the 6-month period beginning on the date of the enrollment
termination described in subparagraph (A)(ii).''.
(2) Coverage period.--Section 1838(e) (42 U.S.C. 1395q(e))
is amended--
(A) by inserting ``or 1837(i)(4)(B)'' after
``1837(i)(3)'' the first place it appears, and
(B) by inserting ``or specified in section
1837(i)(4)(A)(i)'' after ``1837(i)(3)'' the second
place it appears''.
(c) Effective Date.--The amendments made by this section shall
apply to involuntary terminations of coverage under a group health plan
occurring on or after the date of the enactment of this Act.
SEC. 10744. PLACEMENT OF ADVANCE DIRECTIVE IN MEDICAL RECORD.
(a) In General.--Section 1866(f)(1)(B) (42 U.S.C. 1395cc(f)(1)(B))
is amended by striking ``in the individual's medical record'' and
inserting ``in a prominent part of the individual's current medical
record''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to provider agreements entered into, renewed, or extended on or
after such date (not later than 1 year after the date of the enactment
of this Act) as the Secretary of Health and Human Services specifies.
Subtitle I--Medical Liability Reform
CHAPTER 1--GENERAL PROVISIONS
SEC. 10801. FEDERAL REFORM OF HEALTH CARE LIABILITY ACTIONS.
(a) Applicability.--This subtitle shall apply with respect to any
health care liability action brought in any State or Federal court,
except that this subtitle shall not apply to--
(1) an action for damages arising from a vaccine-related
injury or death to the extent that title XXI of the Public
Health Service Act applies to the action, or
(2) an action under the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1001 et seq.).
(b) Preemption.--This subtitle shall preempt any State law to the
extent such law is inconsistent with the limitations contained in this
subtitle. This subtitle shall not preempt any State law that provides
for defenses or places limitations on a person's liability in addition
to those contained in this subtitle or otherwise imposes greater
restrictions than those provided in this subtitle.
(c) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in subsection (b) shall be construed to--
(1) waive or affect any defense of sovereign immunity
asserted by any State under any provision of law;
(2) waive or affect any defense of sovereign immunity
asserted by the United States;
(3) affect the applicability of any provision of the
Foreign Sovereign Immunities Act of 1976;
(4) preempt State choice-of-law rules with respect to
claims brought by a foreign nation or a citizen of a foreign
nation; or
(5) affect the right of any court to transfer venue or to
apply the law of a foreign nation or to dismiss a claim of a
foreign nation or of a citizen of a foreign nation on the
ground of inconvenient forum.
(d) Amount in Controversy.--In an action to which this subtitle
applies and which is brought under section 1332 of title 28, United
States Code, the amount of noneconomic damages or punitive damages, and
attorneys' fees or costs, shall not be included in determining whether
the matter in controversy exceeds the sum or value of $50,000.
(e) Federal Court Jurisdiction Not Established on Federal Question
Grounds.--Nothing in this subtitle shall be construed to establish any
jurisdiction in the district courts of the United States over health
care liability actions on the basis of section 1331 or 1337 of title
28, United States Code.
SEC. 10802. DEFINITIONS.
As used in this subtitle:
(1) Actual damages.--The term ``actual damages'' means
damages awarded to pay for economic loss.
(2) Alternative dispute resolution system; adr.--The term
``alternative dispute resolution system'' or ``ADR'' means a
system established under Federal or State law that provides for
the resolution of health care liability claims in a manner
other than through health care liability actions.
(3) Claimant.--The term ``claimant'' means any person who
brings a health care liability action and any person on whose
behalf such an action is brought. If such action is brought
through or on behalf of an estate, the term includes the
claimant's decedent. If such action is brought through or on
behalf of a minor or incompetent, the term includes the
claimant's legal guardian.
(4) Clear and convincing evidence.--The term ``clear and
convincing evidence'' is that measure or degree of proof that
will produce in the mind of the trier of fact a firm belief or
conviction as to the truth of the allegations sought to be
established. Such measure or degree of proof is more than that
required under preponderance of the evidence but less than that
required for proof beyond a reasonable doubt.
(5) Collateral source payments.--The term ``collateral
source payments'' means any amount paid or reasonably likely to
be paid in the future to or on behalf of a claimant, or any
service, product, or other benefit provided or reasonably
likely to be provided in the future to or on behalf of a
claimant, as a result of an injury or wrongful death, pursuant
to--
(A) any State or Federal health, sickness, income-
disability, accident or workers' compensation Act;
(B) any health, sickness, income-disability, or
accident insurance that provides health benefits or
income-disability coverage;
(C) any contract or agreement of any group,
organization, partnership, or corporation to provide,
pay for, or reimburse the cost of medical, hospital,
dental, or income disability benefits; and
(D) any other publicly or privately funded program.
(6) Drug.--The term ``drug'' has the meaning given such
term in section 201(g)(1) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 321(g)(1)).
(7) Economic loss.--The term ``economic loss'' means any
pecuniary loss resulting from injury (including the loss of
earnings or other benefits related to employment, medical
expense loss, replacement services loss, loss due to death,
burial costs, and loss of business or employment
opportunities), to the extent recovery for such loss is allowed
under applicable State law.
(8) Harm.--The term ``harm'' means any legally cognizable
wrong or injury for which punitive damages may be imposed.
(9) Health benefit plan.--The term ``health benefit plan''
means--
(A) a hospital or medical expense incurred policy
or certificate,
(B) a hospital or medical service plan contract,
(C) a health maintenance subscriber contract, or
(D) a MedicarePlus product (offered under part C of
title XVIII of the Social Security Act),
that provides benefits with respect to health care services.
(10) Health care liability action.--The term ``health care
liability action'' means a civil action brought in a State or
Federal court against a health care provider, an entity which
is obligated to provide or pay for health benefits under any
health benefit plan (including any person or entity acting
under a contract or arrangement to provide or administer any
health benefit), or the manufacturer, distributor, supplier,
marketer, promoter, or seller of a medical product, in which
the claimant alleges a claim (including third party claims,
cross claims, counter claims, or distribution claims) based
upon the provision of (or the failure to provide or pay for)
health care services or the use of a medical product,
regardless of the theory of liability on which the claim is
based or the number of plaintiffs, defendants, or causes of
action.
(11) Health care liability claim.--The term ``health care
liability claim'' means a claim in which the claimant alleges
that injury was caused by the provision of (or the failure to
provide) health care services.
(12) Health care provider.--The term ``health care
provider'' means any person that is engaged in the delivery of
health care services in a State and that is required by the
laws or regulations of the State to be licensed or certified by
the State to engage in the delivery of such services in the
State.
(13) Health care service.--The term ``health care service''
means any service for which payment may be made under a health
benefit plan including services related to the delivery or
administration of such service.
(14) Medical device.--The term ``medical device'' has the
meaning given such term in section 201(h) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 321(h)).
(15) Noneconomic damages.--The term ``noneconomic damages''
means damages paid to an individual for pain and suffering,
inconvenience, emotional distress, mental anguish, loss of
consortium, injury to reputation, humiliation, and other
nonpecuniary losses.
(16) Person.--The term ``person'' means any individual,
corporation, company, association, firm, partnership, society,
joint stock company, or any other entity, including any
governmental entity.
(17) Product seller.--
(A) In general.--Subject to subparagraph (B), the
term ``product seller'' means a person who, in the
course of a business conducted for that purpose--
(i) sells, distributes, rents, leases,
prepares, blends, packages, labels, or is
otherwise involved in placing, a product in the
stream of commerce, or
(ii) installs, repairs, or maintains the
harm-causing aspect of a product.
(B) Exclusion.--Such term does not include--
(i) a seller or lessor of real property;
(ii) a provider of professional services in
any case in which the sale or use of a product
is incidental to the transaction and the
essence of the transaction is the furnishing of
judgment, skill, or services; or
(iii) any person who--
(I) acts in only a financial
capacity with respect to the sale of a
product; or
(II) leases a product under a lease
arrangement in which the selection,
possession, maintenance, and operation
of the product are controlled by a
person other than the lessor.
(18) Punitive damages.--The term ``punitive damages'' means
damages awarded against any person not to compensate for actual
injury suffered, but to punish or deter such person or others
from engaging in similar behavior in the future.
(19) State.--The term ``State'' means each of the several
States, the District of Columbia, Puerto Rico, the Virgin
Islands, Guam, American Samoa, the Northern Mariana Islands,
and any other territory or possession of the United States.
SEC. 10803. EFFECTIVE DATE.
This subtitle will apply to any health care liability action
brought in a Federal or State court and to any health care liability
claim subject to an alternative dispute resolution system, that is
initiated on or after the date of enactment of this subtitle, except
that any health care liability claim or action arising from an injury
occurring prior to the date of enactment of this subtitle shall be
governed by the applicable statute of limitations provisions in effect
at the time the injury occurred.
CHAPTER 2--UNIFORM STANDARDS FOR HEALTH CARE LIABILITY ACTIONS
SEC. 10811. STATUTE OF LIMITATIONS.
A health care liability action may not be brought after the
expiration of the 2-year period that begins on the date on which the
alleged injury that is the subject of the action was discovered or
should reasonably have been discovered, but in no case after the
expiration of the 5-year period that begins on the date the alleged
injury occurred.
SEC. 10812. CALCULATION AND PAYMENT OF DAMAGES.
(a) Treatment of Noneconomic Damages.--
(1) Limitation on noneconomic damages.--The total amount of
noneconomic damages that may be awarded to a claimant for
losses resulting from the injury which is the subject of a
health care liability action may not exceed $250,000,
regardless of the number of parties against whom the action is
brought or the number of actions brought with respect to the
injury.
(2) Joint and several liability.--In any health care
liability action brought in State or Federal court, a defendant
shall be liable only for the amount of noneconomic damages
attributable to such defendant in direct proportion to such
defendant's share of fault or responsibility for the claimant's
actual damages, as determined by the trier of fact. In all such
cases, the liability of a defendant for noneconomic damages
shall be several and not joint.
(b) Treatment of Punitive Damages.--
(1) General rule.--Punitive damages may, to the extent
permitted by applicable State law, be awarded in any health
care liability action for harm in any Federal or State court
against a defendant if the claimant establishes by clear and
convincing evidence that the harm suffered was the result of
conduct--
(A) specifically intended to cause harm, or
(B) conduct manifesting a conscious, flagrant
indifference to the rights or safety of others.
(2) Proportional awards.--The amount of punitive damages
that may be awarded in any health care liability action subject
to this subtitle shall not exceed 3 times the amount of damages
awarded to the claimant for economic loss, or $250,000,
whichever is greater. This paragraph shall be applied by the
court and shall not be disclosed to the jury.
(3) Applicability.--This subsection shall apply to any
health care liability action brought in any Federal or State
court on any theory where punitive damages are sought. This
subsection does not create a cause of action for punitive
damages. This subsection does not preempt or supersede any
State or Federal law to the extent that such law would further
limit the award of punitive damages.
(4) Bifurcation.--At the request of any party, the trier of
fact shall consider in a separate proceeding whether punitive
damages are to be awarded and the amount of such award. If a
separate proceeding is requested, evidence relevant only to the
claim of punitive damages, as determined by applicable State
law, shall be inadmissible in any proceeding to determine
whether actual damages are to be awarded.
(5) Drugs and devices.--
(A) In general.--(i) Punitive damages shall not be
awarded against a manufacturer or product seller of a
drug or medical device which caused the claimant's harm
where--
(I) such drug or device was subject to
premarket approval by the Food and Drug
Administration with respect to the safety of
the formulation or performance of the aspect of
such drug or device which caused the claimant's
harm, or the adequacy of the packaging or
labeling of such drug or device which caused
the harm, and such drug, device, packaging, or
labeling was approved by the Food and Drug
Administration; or
(II) the drug is generally recognized as
safe and effective pursuant to conditions
established by the Food and Drug Administration
and applicable regulations, including packaging
and labeling regulations.
(ii) Clause (i) shall not apply in any case in
which the defendant, before or after premarket approval
of a drug or device--
(I) intentionally and wrongfully withheld
from or misrepresented to the Food and Drug
Administration information concerning such drug
or device required to be submitted under the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
301 et seq.) or section 351 of the Public
Health Service Act (42 U.S.C. 262) that is
material and relevant to the harm suffered by
the claimant, or
(II) made an illegal payment to an official
or employee of the Food and Drug Administration
for the purpose of securing or maintaining
approval of such drug or device.
(B) Packaging.--In a health care liability action
for harm which is alleged to relate to the adequacy of
the packaging or labeling of a drug which is required
to have tamper-resistant packaging under regulations of
the Secretary of Health and Human Services (including
labeling regulations related to such packaging), the
manufacturer or product seller of the drug shall not be
held liable for punitive damages unless such packaging
or labeling is found by the court by clear and
convincing evidence to be substantially out of
compliance with such regulations.
(c) Periodic Payments for Future Losses.--
(1) General rule.--In any health care liability action in
which the damages awarded for future economic and noneconomic
loss exceeds $50,000, a person shall not be required to pay
such damages in a single, lump-sum payment, but shall be
permitted to make such payments periodically based on when the
damages are found likely to occur, as such payments are
determined by the court.
(2) Finality of judgment.--The judgment of the court
awarding periodic payments under this subsection may not, in
the absence of fraud, be reopened at any time to contest,
amend, or modify the schedule or amount of the payments.
(3) Lump-sum settlements.--This subsection shall not be
construed to preclude a settlement providing for a single,
lump-sum payment.
(d) Treatment of Collateral Source Payments.--
(1) Introduction into evidence.--In any health care
liability action, any defendant may introduce evidence of
collateral source payments. If any defendant elects to
introduce such evidence, the claimant may introduce evidence of
any amount paid or contributed or reasonably likely to be paid
or contributed in the future by or on behalf of the claimant to
secure the right to such collateral source payments.
(2) No subrogation.--No provider of collateral source
payments shall recover any amount against the claimant or
receive any lien or credit against the claimant's recovery or
be equitably or legally subrogated the right of the claimant in
a health care liability action.
(3) Application to settlements.--This subsection shall
apply to an action that is settled as well as an action that is
resolved by a fact finder.
SEC. 10813. ALTERNATIVE DISPUTE RESOLUTION.
Any ADR used to resolve a health care liability action or claim
shall contain provisions relating to statute of limitations, non-
economic damages, joint and several liability, punitive damages,
collateral source rule, and periodic payments which are identical to
the provisions relating to such matters in this subtitle.