To establish a Medicare demonstration program on the use of third-party interest-free payment arrangements to reduce Medicare hospital part A bad debt claims.

Summary: This bill requires the Centers for Medicare &amp; Medicaid Services (CMS) to establish a three-year demonstration program to determine the impact of third-party, interest-free payment arrangements on: (1)&nbsp;health outcomes, (2)&nbsp;patient engagement and satisfaction, and (3) claims for bad debt that are attributable to a hospital's inability to collect&nbsp;deductibles and coinsurance&nbsp;for Medicare hospital services.&nbsp;Under the program, the CMS&nbsp;shall&nbsp;provide a payment incentive to a hospital that participates in such a payment&nbsp;arrangement and demonstrates improvement in those three areas.

SECTION 1. MEDICARE DEMONSTRATION PROGRAM ON THE USE OF THIRD-PARTY 
              INTEREST-FREE PAYMENT ARRANGEMENTS TO REDUCE MEDICARE 
              HOSPITAL PART A BAD DEBT CLAIMS.

    (a) In General.--The Secretary of Health and Human Services (in 
this section referred to as the ``Secretary'') shall establish a 3-year 
demonstration program (in this section referred to as the 
``demonstration program'') in 5 States to determine the impact on 
patient engagement and satisfaction, health outcomes, and claims for 
Medicare hospital part A bad debt (as defined in subsection (d)(2)) of 
hospitals' implementing third-party interest-free payment arrangements 
(as defined in subsection (b)).
    (b) Third-Party Interest-Free Payment Arrangement Defined.--In this 
section, the term ``third-party interest-free payment arrangement'' 
means, with respect to a hospital and individuals who are receiving 
inpatient hospital services for which payment may be made under part A 
of title XVIII of the Social Security Act, an arrangement between the 
hospital, a third-party, and such individuals under which--
            (1) the hospital offers to all such individuals the option 
        of making payment of Medicare part A cost-sharing under such an 
        arrangement for such services rather than through the routine 
        billing process for such cost-sharing;
            (2) in the case of any such individual who agrees to such 
        offer, the hospital assigns to the third party the rights of 
        collection for such Medicare part A cost-sharing from such 
        individual and efforts for such collection by the third party 
        pursuant to this section shall be treated as reasonable 
        collection efforts by the hospital for purposes of section 
        413.89(e) of title 42 of the Code of Federal Regulations (or 
        any successor regulation);
            (3) in the case of any such individual who does not agree 
        to such offer, the hospital payment of Medicare part A cost-
        sharing for such services shall continue to be made through the 
        routine billing process for such cost-sharing (including with 
        respect to claims for Medicare hospital part A bad debt); and
            (4) the third party--
                    (A) participates in a level of financial engagement 
                and education with all such individuals who agree to 
                such offer to ensure such individuals are able to 
                afford such cost-sharing payments;
                    (B) in collecting the amounts so owed, permits all 
                such individuals who agree to such offer to make 
                payment over time through a payment plan that does not 
                charge interest with respect to the balance of the 
                amount so owed; and
                    (C) pays the hospital the amount so collected under 
                the arrangement less a fee that does not exceed 15 
                percent of the amount so collected.
    (c) Payment Incentive.--The demonstration program shall provide 
that a hospital that participates in such a third-party interest free 
payment arrangement under the program and demonstrates improved patient 
engagement and satisfaction, improved health outcomes, and a reduction 
in the number of claims for Medicare hospital part A bad debt that are 
reported to the Secretary is paid an amount equal to 10 percent of the 
original amount owed in Medicare part A cost-sharing that is collected 
under the arrangement. Such amount shall be paid from funds 
appropriated (under subsection (f)(1) of section 1115A of the Social 
Security Act (42 U.S.C. 1315a)) for activities to carry out such 
section.
    (d) Report to Congress.--After the completion of the demonstration 
program, the Secretary shall submit a report on the demonstration 
program to the Committee on Ways and Means of the House of 
Representatives and the Committee on Finance of the Senate. The report 
shall include an analysis of whether the demonstration program reduced 
the number and amount of Medicare hospital part A bad debt claims and 
if there were improved health outcomes for Medicare beneficiaries who 
did not forgo medical care due to their inability to pay for Medicare 
part A cost-sharing.
    (e) Other Definitions.--In this section:
            (1) Medicare part a cost-sharing.--The term ``Medicare part 
        A cost-sharing'' means, with respect to a hospital, amounts 
        owed to the hospital that are derived from deductibles and 
        coinsurance imposed under part A of title XVIII of the Social 
        Security Act (42 U.S.C. 1395c et seq.).
            (2) Medicare hospital part a bad debt.--The term ``Medicare 
        hospital part A bad debt'' means bad debt of a hospital that is 
        attributable to the inability of the hospital to collect 
        Medicare part A cost-sharing, taking into account collections 
        made under third-party interest-free payment arrangements made 
        under the demonstration program.