Medicare Beneficiary Access to Home Care Act of 1998

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Beneficiary Access to Home 
Care Act of 1998''.

SEC. 2. FINDINGS.

    Congress finds that the interim payment system for home health 
services under medicare enacted as part of the Balanced Budget Act of 
1997 is having the following unintended consequences:
            (1) The sickest, most frail medicare beneficiaries are 
        losing access to medically necessary home health services which 
        are otherwise covered under the medicare program.
            (2) Many high-quality, cost-effective agencies have had per 
        beneficiary limits set so low that they are finding it 
        impossible to continue their participation in the medicare 
        program.
            (3) Many agencies are being subjected to aggregate per 
        beneficiary limits which do not accurately reflect their 
        current patient mix and make it impossible for these agencies 
        to compete with similarly situated agencies.
            (4) Residents of certain States and regions of the country 
        are being afforded access to far fewer home health services 
        under medicare than residents of certain other States or 
        regions of the country who have identical medical conditions.
            (5) Under the surety bond requirements, high-quality, law-
        abiding home health agencies which have participated 
        satisfactorily in the medicare program for years are being 
        excluded.

SEC. 3. PAYMENTS TO HOME HEALTH AGENCIES UNDER MEDICARE.

    (a) Retroactive Restoration of Per Visit Cost Limit to 112 Percent 
of the Mean of Costs.--
            (1) In general.--Section 1861(v)(1)(L)(i) of the Social 
        Security Act (42 U.S.C. 1395x(v)(1)(L)(i) is amended--
                    (A) in subclause (II), by adding at the end ``or'';
                    (B) in subclause (III)--
                            (i) by striking ``and before October 1, 
                        1997,''; and
                            (ii) by striking ``, or'' and inserting a 
                        period; and
                    (C) by striking subclause (IV).
            (2) Effective date.--The amendments made by paragraph (1) 
        are effective as if included in the enactment of the Balanced 
        Budget Act of 1997 (Public Law 105-33).
    (b) Revision of Interim Payment System for Home Health Services.--
            (1) Retroactive repeal of new per beneficiary limits.--
                    (A) In general.--Clauses (v) through (vii) of 
                section 1861(v)(1)(L) of the Social Security Act (42 
                U.S.C. 1395x(v)(1)(L)) are repealed
                    (B) Effective date.--The repeal made by 
                subparagraph (A) is effective as if included in the 
                enactment of the Balanced Budget Act of 1997 (Public 
                Law 105-33).
            (2) Establishment of new limits.--
                    (A) In general.--Section 1861(v)(1)(L) of the 
                Social Security Act (42 U.S.C. 1395x(v)(1)(L)), as 
                amended by paragraph (1)(A), is amended by adding at 
                the end the following:
    ``(v)(I) For services furnished by home health agencies for cost 
reporting periods beginning on or after October 1, 1998, 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, an agency-specific, annual per beneficiary 
limitation equal to the sum of the base amount described in clause (vi) 
and the outlier amount described in clause (vii).
    ``(II) Such limitations shall be prorated among agencies for any 
beneficiary who receives covered home health services from more than 
one agency under common ownership or control for cost reporting periods 
beginning in a fiscal year.
    ``(III) The Secretary shall establish such limitations not later 
than October 1, 1998, for cost reporting periods beginning during 
fiscal year 1999 and not later than August 1 before the beginning of 
each succeeding fiscal year for cost reporting periods beginning during 
such fiscal year.
    ``(vi) The base amount described in this clause for a cost 
reporting period is equal to the product of--
            ``(I) the amount of the reasonable costs (including 
        nonroutine medical supplies) of the standardized average cost 
        per unduplicated patient in fiscal year 1994 of providing 
        services for the first 120 days after home health services have 
        commenced (as determined under clause (viii), such costs 
        updated by the home health market basket index; and
            ``(II) the agency's unduplicated census count of base 
        patients (entitled to benefits under this title) for the cost 
        reporting period subject to the limitation, as determined under 
        clause (ix).
    ``(vii) The outlier amount described in this clause for a cost 
reporting period is equal to the product of--
            ``(I) subject to clause (viii)(III), the amount of the 
        reasonable costs (including nonroutine medical supplies) of the 
        standardized average cost per unduplicated patient in fiscal 
        year 1994 of providing services for the more than 120 days 
        after home health services have commenced (as determined under 
        clause (viii), such costs updated by the home health market 
        basket index; and
            ``(II) the agency's unduplicated census count of outlier 
        patients (entitled to benefits under this title) for the cost 
        reporting period subject to the limitation, as determined under 
        clause (ix).
    ``(viii)(I) The standardized average costs per unduplicated patient 
described in clause (vi)(I) or (vii)(I) shall be determined based upon 
an appropriate percentage of a standardized average cost described in 
subclause (II). For cost reporting periods beginning during fiscal year 
1998, such appropriate percentages shall be 82 percent and 110 percent, 
respectively.
    ``(II) The standardized average cost described in this subclause is 
the reasonable costs (including nonroutine medical supplies) of 
standardized average cost per unduplicated patient in fiscal year 1994 
of providing home health services to any patient described in clause 
(vi)(I) or (vii)(I), which are necessary for the efficient delivery of 
needed services covered by the insurance programs established under 
this title. Such standardized average cost shall be determined, for a 
home health agency located in a census division, based 50 percent on 
such average determined on a national basis for all agencies and 50 
percent on such average determined on a regional basis for all agencies 
located in that census division.
    ``(III) In determining the amount described in clause (vii)(I) in 
the case of a patient who may be counted in the base patient count 
under clause (vi)(II) for a cost reporting period and who may also be 
counted in the outlier patient count under clause (vii)(II) for the 
period, the amount described in clause (vii)(II) with respect to that 
patient shall be \2/3\ of the amount otherwise determined under such 
clause.
    ``(ix)(I) For purposes of determining an agency's unduplicated 
census count of base patients for purposes of clause (vi)(II) for a 
cost reporting period, an individual who has been counted in the 
agency's unduplicated census count under such clause may not be counted 
again under such clause during the same home health spell of illness. 
For purposes of this clause, the term `home health spell of illness' 
has the meaning given such term in section 1861(tt)(2) except that such 
spell shall begin with the first day (not included in a previous home 
health spell of illness) on which the individual is furnished any home 
health services for which benefits are available under this title and 
which occurs in a month for which the individual is entitled to 
benefits under either part A or part B.
    ``(II) No patient shall be included in the outlier census count 
under subclause (vi)(II) for a home health agency unless the fiscal 
intermediary involved has determined that the patient meets the 
conditions for coverage of home health services beyond 120 days in a 
home health spell of illness. The Secretary shall establish a 
precertification process to ensure that such determinations are made in 
a timely manner that avoids interruptions in coverage for individuals 
who continuously meet such conditions of coverage. Such a determination 
that a patient does not meet such conditions is reviewable under 
section 1869(b) to the same extent as a claim for benefits involving 
$1,000 or more in controversy.''.
                    (B) Effective date.--The amendment made by 
                subparagraph (A) applies to cost reporting periods 
                beginning on or after October 1, 1998.
                    (C) Transitional rule for counting current patients 
                in count of outlier patients.--In the case of a patient 
                who--
                            (i) is receiving covered home health 
                        services from a home health agency as of the 
                        first day of the first cost reporting period in 
                        which clause (v) of section 1861(v)(1)(L) of 
                        the Social Security Act (as added by paragraph 
                        (2)) applies to the agency, and
                            (ii) received such services from such 
                        agency for more than 120 days during a home 
                        health spell of illness (as defined for 
                        purposes of clause (ix) of such section, as so 
                        added),
                the patient shall be counted in the count of outlier 
                patients under clause (vii)(II) of such section and not 
                in the count of base patients under clause (vi)(II) of 
                such section.
    (c) Application of Wage Index Based on Location of Agency.--
            (1) In general.--Section 1861(v)(1)(L)(iii) of such Act (42 
        U.S.C. 1395x(v)(1)(L)(iii)) is amended by inserting before the 
        period at the end the following: ``, or, in the case of limits 
        established under clause (v), based upon the geographic area in 
        which the agency is located''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies to cost reporting periods beginning on or after October 
        1, 1998.
    (d) Limitation on Application of Freeze in Update to Per Visit 
Limits.--
            (1) In general.--Section 1861(v)(1)(L)(iv) of such Act (42 
        U.S.C. 1395x(v)(1)(L)(iv)) is amended by striking ``under this 
        subparagraph'' and inserting ``under clause (i)''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies to cost reporting periods beginning on or after October 
        1, 1998.
    (e) Adjustment in 15 Percent Reduction To Achieve Original CBO 
Spending Targets.--
            (1) In general.--Section 4603(e) of the Balanced Budget Act 
        of 1997 is amended by striking ``by 15 percent'' and inserting 
        before the period at the end the following: ``, by a percentage 
        which is sufficient to assure that total expenditures under 
        this title for benefits for home health services in each of 
        fiscal years 1999 through 2002 do not exceed the amount of such 
        expenditures for such fiscal year, as estimated by the 
        Congressional Budget Office immediately before the date of the 
        enactment of this Act''.
            (2) Conforming amendment to prospective payment system.--
        Section 1895(b)(3)(A)(ii) of the Social Security Act (42 U.S.C. 
        1395fff(b)(3)(A)(ii)) is amended by striking ``by 15 percent'' 
        and inserting before the period at the end the following: ``, 
        by a percentage which is sufficient to assure that total 
        expenditures under this title for benefits for home health 
        services in each of fiscal years 1999 through 2002 do not 
        exceed the amount of such expenditures for such fiscal year, as 
        estimated by the Congressional Budget Office immediately before 
        the date of the enactment of this section.''.
            (3) Effective date.--The amendments made by this subsection 
        apply to cost reporting periods beginning on or after October 
        1, 1999.
    (f) Restoration of Periodic Interim Payments for Home Health 
Agencies.--
            (1) In general.--Section 1815(e)(2) of the Social Security 
        Act (42 U.S.C. 1395g(e)(2)) is amended--
                    (A) in subparagraph (C), by striking ``and'' at the 
                end;
                    (B) by redesignating subparagraph (D) as 
                subparagraph (E); and
                    (C) by inserting after subparagraph (C) the 
                following:
            ``(D) home health services; and''.
            (2) Effective date.--The amendments made by paragraph (1) 
        apply to payment for services furnished on or after October 1, 
        1999.

SEC. 4. EXTENSION OF HOME HEALTH PER EPISODE PROSPECTIVE PAYMENT 
              DEMONSTRATION PROJECT.

    The Secretary of Health and Human Services shall continue the home 
health per episode prospective payment demonstration project authorized 
under section 4027 of the Omnibus Budget Reconciliation Act of 1987 (42 
U.S.C. 1395n note) until the prospective payment system is established 
and implemented under section 1895 of the Social Security Act (42 
U.S.C. 1395fff). Any final report otherwise required under section 4027 
shall be due not later than 6 months after the date such demonstration 
project is completed.

SEC. 5. REVISION OF SURETY BOND REQUIREMENT FOR HOME HEALTH AGENCIES.

    (a) Under Medicare Program.--Section 1861(o)(7) of the Social 
Security Act (42 U.S.C. 1395x(o)(7)) is amended to read as follows:
            ``(7) provides the Secretary, prior to the initial 
        certification of the home health agency and for 1 year 
        thereafter, with a surety bond against fraudulent or abusive 
        activities in a form specified by the Secretary and in an 
        amount equal to $25,000; and''.
    (b) Under Medicaid Program.--Section 1903(i)(18) of such Act (42 
U.S.C. 1396b(i)(18)) is amended to read as follows:
            ``(18) with respect to any amount expended for home health 
        care services provided by an agency or organization unless the 
        agency or organization provides the State agency, prior to the 
        initial certification of the home health agency and for 1 year 
        thereafter, with a surety bond against fraudulent or abusive 
        activities in a form specified by the Secretary under paragraph 
        (7) of section 1861(o) and in an amount equal to $25,000 or 
        such comparable surety bond as the Secretary may permit under 
        the last sentence of such section.''.
    (c) Effective Date.--The amendments made by this section apply to 
services furnished on or after the date of enactment of this Act.

SEC. 6. REQUIREMENT FOR FRAUD AND ABUSE COMPLIANCE PROGRAM AS A 
              CONDITION OF PARTICIPATION FOR HOME HEALTH AGENCIES UNDER 
              THE MEDICARE PROGRAM.

    (a) In General.--Section 1891(a) of the Social Security Act (42 
U.S.C. 1395bbb(a)) is amended by adding at the end the following:
            ``(8) The agency has developed and implemented a fraud and 
        abuse compliance program.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to services furnished on or after such date as the Secretary of Health 
and Human Services specifies in regulations promulgated to carry out 
such amendment. The Secretary shall promulgate such regulations as soon 
as practicable after the date of the enactment of this Act.

Summary: Medicare Beneficiary Access to Home Care Act of 1998 - Amends title XVIII (Medicare) of the Social Security Act (SSA), as amended by the Balanced Budget Act of 1997 , with respect to the computation formula of the interim system of limited payments for services provided by home health agencies. Repeals the current interim system, retroactive to the enactment of BBA '97. Mandates a new interim system of limits for cost reporting periods beginning on or after October 1, 1998, with a revised formula that includes: (1) retroactive restoration of the per visit cost limit to 112 percent of the mean of costs. (2) an agency-specific, annual per beneficiary limitation equal to the sum of certain base and outlier amounts, based generally on the standardized average cost per unduplicated patient in FY 1994. And (3) application of a wage index based on the locality of the agency. Amends BBA '97 to revise the mandatory reduction in cost and per beneficiary limits in the event that the Secretary of Health and Human Services does not establish the prospective payment system (PPS) for home health services. Replaces the current 15 percent reduction in such limits with a percentage reduction sufficient to assure that total expenditures for home health services benefits in each of FY 1999 through 2002 do not exceed the original Congressional Budget Office spending targets for such fiscal years. Amends SSA title XVIII to direct the Secretary to restore periodic interim payments for home health services. Directs the Secretary to continue the home health per episode prospective payment demonstration project under the Omnibus Budget Reconciliation Act of 1987 until the PPS for home health services is established and implemented under Medicare. Revises surety bond requirements for home health agencies under the Medicare program and the Medicaid program of SSA title XIX to: (1) specify a surety bond against fraudulent or abusive activities. And (2) reduce the amount of such bond from a minimum of $50,000 to $25,000. Amends SSA title XVIII to require home health agencies to have fraud and abuse compliance programs as a condition of their Medicare participation.