SECTION 1. MEDICARE MEDICAL ADULT DAY CARE SERVICES DEMONSTRATION 
              PROGRAM.

    Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is 
amended by inserting after section 1895 the following new section:

        ``medical adult day care services demonstration program

    ``Sec. 1895A. (a) Establishment.--Subject to the succeeding 
provisions of this section, the Secretary shall establish a 
demonstration program under which the Secretary shall reimburse a 
qualified provider of services for medical adult day care services 
furnished as part of a plan of care for home health services 
established for a medicare beneficiary if elected by the beneficiary. 
Requirements applicable to eligibility for receipt of home health 
services shall apply for medical adult day care services, including 
requirements for the beneficiary to be homebound.
    ``(b) Demonstration Project Sites.--The program established under 
this section shall be conducted in States selected by the Secretary 
that license or certify providers of services that furnish medical 
adult day care services, and shall be conducted in no more than 5 such 
States. Of the States selected by the Secretary, one shall include a 
State that has, as a percentage of its resident population, the 1 of 
the 5 highest percentages of medicare beneficiaries residing in the 
State.
    ``(c) Duration.--The Secretary shall conduct the demonstration 
program for a period of 4 and one half years.
    ``(d) Voluntary Participation.--Participation of medicare 
beneficiaries in the demonstration program shall be voluntary. The 
total number of such beneficiaries that may participate in the project 
at any given time may not exceed 15,000. Medicare beneficiaries with a 
secondary diagnosis or comorbidity of Alzheimer's or Parkinson's 
disease shall be given preference in determining who may participate in 
the demonstration project.
    ``(e) Payment.--Payment to qualified providers of services for 
medical adult day care services furnished under the demonstration 
project shall be equal to 95 percent of the rate that would otherwise 
apply under section 1895 for home health services furnished.
    ``(f) Provisions Relating to Providers.--
            ``(1) Limitation on number of providers and service 
        areas.--Not more than 25 qualified providers of services may 
        furnish medical adult day care services under the demonstration 
        project, and not more than 17 such providers may have as its 
        primary service area an urban area. Qualified providers of 
        services that are under common ownership or control of an 
        organization that furnish medical adult day care services under 
        the project shall all be treated, for purposes of the 
        limitation of this paragraph, as a single qualified provider of 
        services.
            ``(2) Preference to certain classes of providers.--In 
        selecting qualified providers of services to furnish medical 
        adult day care services under the demonstration program, the 
        Secretary shall give preference to those providers that are 
        home health agencies, as defined in section 1861(o), under 
        common ownership or control of an organization that proposes to 
        furnish medical adult day care services in a service area that 
        encompasses more than one State.
    ``(g) Evaluation and Report.--The Secretary shall conduct an 
evaluation of the clinical and cost effectiveness of the demonstration 
program under this section. Not later 3 years after the commencement of 
the program, the Secretary shall submit to Congress a report on the 
evaluation, and shall include in the report the following:
            ``(1) An analysis of the patient outcomes and costs of 
        furnishing care to the medicare beneficiaries participating in 
        the program as compared to such outcomes and costs to 
        beneficiaries receiving only home health services for the same 
        health conditions.
            ``(2) Such recommendations regarding the extension, 
        expansion, or termination of the program as the Secretary 
        determines appropriate.
In conducting the evaluation and analysis under this subsection, the 
Secretary shall utilize data collected through the OASIS system 
referred to in subsection (e), and may collect such supplemental data 
from qualified providers of services participating in the demonstration 
program as the Secretary determines appropriate.
    ``(h) Definitions.--In this section:
            ``(1) Qualified provider of services.--The term `qualified 
        provider of services' means, with respect to the furnishing of 
        medical adult day care services--
                    ``(A) a public agency or private organization, or a 
                subdivision of such an agency or organization, that--
                            ``(i) is engaged in providing skilled 
                        nursing services and other therapeutic services 
                        directly or under arrangement with a home 
                        health agency;
                            ``(ii) meets such standards established by 
                        the Secretary to assure quality of care and 
                        such other requirements as the Secretary finds 
                        necessary in the interest of the health and 
                        safety of individuals who are furnished 
                        services in the facility;
                            ``(iii) provides the medical adult day care 
                        services described in paragraph (2)(B);
                            ``(iv) meets the requirements of paragraphs 
                        (2) through (8) of section 1861(o), but the 
                        Secretary may waive the requirement for a 
                        surety bond under paragraph (7) of such section 
                        in the same manner as is provided under such 
                        section; and
                            ``(v) has been licensed or certified by a 
                        State to furnish medical adult day care 
                        services in the State for a continuous period 
                        of not less than 24 months; or
                    ``(B) a home health agency (as defined in section 
                1861(o)), either directly or under arrangements with an 
                agency or organization described in subparagraph (A) 
                that has been licensed or certified by a State to 
                furnish home health services in the State for a 
                continuous period of not less than 24 months.
            ``(2) Medical adult day care services.--
                    ``(A) In general.--The term `medical adult day care 
                services' means the items and services described in 
                subparagraph (B) that are furnished to a medicare 
                beneficiary by a qualified provider of services as a 
                part of a plan under section 1861(m) that describes the 
                home health service items and services that are to be 
                furnished in the individual's residence and the medical 
                adult day care items and services described in 
                subparagraph (B) that are furnished by the qualified 
                provider of services in a medical adult day care 
                setting, as determined by the physician establishing 
                the plan pursuant to a comprehensive patient assessment 
                conducted by the qualified provider of services and 
                approved by the physician.
                    ``(B) Items described.--The items and services 
                described in this subparagraph are the following:
                            ``(i) Home health service items and 
                        services described in paragraphs (1) through 
                        (7) of section 1861(m).
                            ``(ii) Transportation of the individual to 
                        and from the qualified provider of services in 
                        connection with any such item or service.
                            ``(iii) Meals.
                            ``(iv) A program of supervised activities 
                        (that meets such criteria as the Secretary 
                        determines appropriate) designed to promote 
                        physical and mental health that are furnished 
                        to the individual by the qualified provider of 
                        services in a group setting.
            ``(3) Medicare beneficiary.--The term `medicare 
        beneficiary' means an individual entitled to benefits under 
        part A of this title, enrolled under part B of this title, or 
        both.''.
Amends Title XVIII (Medicare) of the Social Security Act to require the Secretary of Health and Human Services to establish a demonstration program to examine the clinical and cost effectiveness of providing medical adult day care center services to Medicare beneficiaries.
To amend title XVIII of the Social Security Act to direct the Secretary of Health and Human Services to carry out a demonstration program under the Medicare Program to examine the clinical and cost effectiveness of providing medical adult day care center services to Medicare beneficiaries.