Preserve Access to Care in the Home (PATCH) Act of 1999

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Preserve Access to Care in the Home 
(PATCH) Act of 1999''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds the following:
            (1) Home health services are a vital component of the 
        benefits that are provided to beneficiaries under the medicare 
        program under title XVIII of the Social Security Act.
            (2) Home health services under the medicare program enable 
        homebound individuals who are at great risk for costly 
        institutionalized care to stay in their own homes and 
        communities.
            (3) Implementation of the home health interim payment 
        system under the medicare program has inadvertently exacerbated 
        payment disparities for home health services between regions, 
        penalizing efficient, low-cost home health agencies in rural 
        areas and providing insufficient compensation for the care of 
        higher acuity, medically complex patients.
            (4) The frequency and volume of prepayment medical reviews, 
        including requests for medical records, and other 
        administrative changes imposed upon home health agencies, 
        particularly those agencies that are located in rural areas, 
        has had a devastating effect on smaller care agencies.
            (5) The combination of insufficient payments and new 
        administrative changes has precipitated the closure of nearly 
        2,000 home health agencies and branch offices and has forced 
        many surviving agencies to shrink their service areas or limit 
        the types of patients they may serve, resulting in restricted 
        access to home health services in many areas.
            (6) The scheduled additional 15 percent across the board 
        reduction in home health payments under the medicare program 
        will severely compromise existing access to home health 
        services, particularly in low-cost rural areas.
    (b) Purposes.--The purposes of this Act are as follows:
            (1) To ensure access to care for patients with high medical 
        needs by establishing a process for home health agencies to 
        exclude high acuity, medically complex patients from the per-
        beneficiary limits under the interim payment system for home 
        health services and instead receive cost-based reimbursement 
        for services provided such patients.
            (2) To eliminate the 15 percent across the board reduction 
        in home health payments under the medicare program.
            (3) To bring relief from certain administrative 
        requirements to home health agencies with--
                    (A) strong, established compliance records; and
                    (B) a history of claim denial rates of less than 5 
                percent.

SEC. 3. ELIMINATION OF AUTOMATIC 15 PERCENT REDUCTION IN HOME HEALTH 
              PAYMENTS.

    (a) Contingency Reduction.--Section 4603 of the Balanced Budget Act 
of 1997 (42 U.S.C. 1395fff note) (as amended by section 5101(c)(3) of 
the Tax and Trade Relief Extension Act of 1998 (contained in division J 
of Public Law 105-277)) is amended by striking subsection (e).
    (b) Prospective Payment System.--Section 1895(b)(3)(A) of the 
Social Security Act (42 U.S.C. 1395fff(b)(3)(A)) is amended--
            (1) by striking ``Initial basis.--'' and all that follows 
        through ``Under such system'', and inserting ``Initial basis.--
        Under such system'';
            (2) in the matter preceding clause (ii), by striking ``but 
        if the reduction in limits described in clause (ii) had been in 
        effect''; and
            (3) by striking clause (ii).

SEC. 4. OUTLIER PAYMENTS FOR HOME HEALTH SERVICES.

    (a) Waiver of Applicable Home Health Payment Limits for Outliers.--
            (1) In general.--Section 1861(v)(1)(L) of the Social 
        Security Act (42 U.S.C. 1395x(v)(1)(L)) (as amended by section 
        5101 of the Tax and Trade Relief Extension Act of 1998 
        (contained in Division J of Public Law 105-277) is amended--
                    (A) by redesignating clause (ix) as clause (x); and
                    (B) by inserting after clause (viii) the following:
    ``(ix)(I) Notwithstanding the applicable limit under this 
subparagraph, in the case of a provider that demonstrates to the 
Secretary that with respect to an individual to whom the provider 
furnished home health services appropriate to the individual's 
condition (as determined by the Secretary) at a reasonable cost (as 
determined by the Secretary), and that such reasonable cost 
significantly exceeded such applicable limit because of unusual 
variations in the type or amount of medically necessary care required 
to treat the individual, the Secretary, upon application by the 
provider, shall pay to such provider for such individual such 
reasonable cost.
    ``(II) The Secretary shall establish such criteria as is required 
for payment under this clause, including a description of the type of 
patient, patient condition, unusual variations, and home health service 
that qualifies for such payment.
    ``(III) In making determinations under subclause (I), the Secretary 
shall use data from the cost report, or from other data collected by 
the Secretary, of the provider for such year.
    ``(IV) A provider may make an application for payment under this 
clause for a fiscal year no earlier than the end of the cost reporting 
period beginning in such fiscal year.
    ``(V) In the case of an application for payment under this clause 
that is approved by the Secretary, a home health agency may elect to 
receive payment on a quarterly basis.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on September 30, 1999, and apply with respect to each 
application for payment of reasonable costs for outliers submitted by 
any home health agency for cost reporting periods ending on or after 
such date.

SEC. 5. CLARIFICATION OF THE DEFINITION OF HOMEBOUND.

    (a) In General.--The last sentence of sections 1814(a) and 1835(a) 
of the Social Security Act (42 U.S.C. 1395f(a); 1395n(a)) are each 
amended--
            (1) by striking ``leave home,'' and inserting ``leave home 
        and''; and
            (2) by striking ``, and that absences'' and all that 
        follows before the period.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to items and services provided on or after the date of enactment 
of this Act.

SEC. 6. REVIEW OF CLAIMS SUBMITTED BY HOME HEALTH AGENCIES.

    (a) In General.--Section 1816(c)(2) of the Social Security Act (42 
U.S.C. 1395h(c)(2)) is amended by adding at the end the following:
    ``(D)(i) Each agreement under this section shall provide that if 
the average finalized denial rate of claims submitted by a home health 
agency (determined for the 3 most recent cost reporting periods ending 
before the date of such determination) is less than 5 percent--
            ``(I) no prepayment medical review, including requests for 
        medical records and focused medical reviews, may be conducted 
        with respect to a claim submitted by such agency (absent 
        probable cause that the particular claim is invalid) during the 
        agency's next succeeding cost reporting period; and
            ``(II) post-payment review of claims submitted by the 
        agency during the agency's next succeeding cost reporting 
        period shall not exceed 10 percent of the dollar value of all 
        of the services provided by the agency for which a claim for 
        reimbursement is filed under this title during such period.
    ``(ii) For purposes of clause (i), the finalized denial rate of 
claims submitted by a home health agency for any cost reporting period 
is equal to the percentage determined by dividing--
            ``(I) the dollar value of all of the services provided by 
        the agency for which--
                    ``(aa) a claim for reimbursement is filed under 
                this title during such period; and
                    ``(bb) a denial for such claim has become final 
                after all rights to request reconsideration or to 
                appeal have been exhausted, by
            ``(II) the dollar value of all of the services provided by 
        the agency for which a claim for reimbursement is--
                    ``(aa) filed under this title during such period; 
                and
                    ``(bb) reviewed by the Secretary or an agency or 
                organization with an agreement under this section.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of enactment of this Act and shall apply to 
agreements entered into or renewed on or after such date.

SEC. 7. RESTORATION OF PERIODIC INTERIM PAYMENTS FOR HOME HEALTH 
              AGENCIES.

    Section 4603(b) of Public Law 105-33 is repealed.

SEC. 8. SENSE OF THE CONGRESS REGARDING THE IMPLEMENTATION OF PPS FOR 
              HOME HEALTH SERVICES.

    It is the sense of the Congress that the Secretary of Health and 
Human Services should--
            (1) ensure that the prospective payment system for home 
        health services under section 1895 of the Social Security Act 
        (42 U.S.C. 1395fff) provides for appropriate payment of 
        services that are provided to beneficiaries;
            (2) ensure that reimbursement rates under such system--
                    (A) include incentives to provide services 
                efficiently to all beneficiaries; and
                    (B) do not create unintentional incentives to 
                discriminate against beneficiaries with medically 
                complex conditions;
            (3) ensure that the establishment of the case mix 
        adjustment for such services under subsection (b)(4) of such 
        section--
                    (A) does not penalize agencies that serve 
                beneficiaries with medically complex conditions;
                    (B) provides some predictive value and accounts for 
                a fair portion of the variation in costs associated 
                with providing services to beneficiaries; and
                    (C) takes into account such variables as the health 
                status, age, and socioeconomic status of beneficiaries;
            (4) establish a nationally uniform process to ensure that 
        fiscal intermediaries have the training and ability to provide 
        timely and accurate coverage and payment information to home 
        health agencies under the medicare program under title XVIII of 
        such Act (42 U.S.C. 1395 et seq.);
            (5) assess the costs to home health agencies of 
        implementing new regulations and interpretations associated 
        with the prospective payment system for home health services 
        and consider the impact of such costs on the ability of such 
        agencies to provide home health services to beneficiaries; and
            (6) provide periodic updates to Congress and home health 
        agencies regarding the progress by the Secretary of 
        implementing the prospective payment system for home health 
        services.

Summary: Amends SSA title XVIII to: (1) create outlier provisions for home health services, (2) revise the definition of homebound. And (3) restructure the review process for claims submitted by home health agencies. Amends BBA '97 for the stated purpose of restoring periodic interim payments for home health agencies. Expresses the sense of the Senate that the Secretary of Health and Human Services should: (1) ensure that the prospective payment system (PPS) for home health services provides for appropriate payment of services provided to beneficiaries at rates that include incentives to provide services efficiently to all beneficiaries and do not create unintentional incentives to discriminate against beneficiaries with complex medical conditions. (2) ensure that the establishment of the case mix adjustment for such services does not penalize agencies that serve such beneficiaries, provides some predictive value, and accounts for appropriate variables, such as age and health status. (3) establish a nationally uniform process to ensure that fiscal intermediaries have the training and ability to provide timely and accurate coverage and payment information to Medicare home health agencies. (4) assess home health agency regulatory costs associated with the PPS for home health services and consider the cost impact on the agency's ability to provide such services. And (5) provide periodic updates to Congress and home health agencies on the Secretary's progress in implementing such PPS.