`[Journal of the House of Representatives, 1995]
[Thursday, October 19, 1995 (131), Para 131.12 Recorded Vote]
[Pages 1555-1567]
[From the U.S. Government Publishing Office, www.gpo.gov]

para.131.12  recorded vote

  A recorded vote by electronic device was ordered in the Committee of 
the Whole on the following amendment in the nature of a substitute 
submitted by Mr. Gibbons:

       Strike all after the enacting clause and insert the 
     following:
                           TITLE XV--MEDICARE

     SEC. 15000. SHORT TITLE OF TITLE; AMENDMENTS AND REFERENCES 
                   TO OBRA; TABLE OF CONTENTS OF TITLE.

       (a) Short Title.--This title may be cited as the ``Medicare 
     Enhancement Act of 1995''.
       (b) 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.
       (c) 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.
       (d) Table of Contents of Title.--The table of contents of 
     this title is as follows:

           Subtitle A--Provisions Relating to Medicare Part A

Sec. 15001. Reductions in inflation updates for inpatient hospital 
              services.

[[Page 1556]]

Sec. 15002. Continuation of current reduction in payments for capital-
              related costs for inpatient hospital services.
Sec. 15003. Elimination of certain additional payments for outlier 
              cases.
Sec. 15004. Clarification of treatment of transfers.
Sec. 15005. Prospective payment for skilled nursing facilities.
Sec. 15006. Maintaining savings resulting from temporary freeze on 
              payment increases for skilled nursing facilities.

           Subtitle B--Provisions Relating to Medicare Part B

Sec. 15101. Payment for physicians' services.
Sec. 15102. Freeze in updates to payment amounts for certain items and 
              services.
Sec. 15103. Reduction in effective beneficiary coinsurance rate for 
              certain hospital outpatient services.
Sec. 15104. Expanding coverage of preventive benefits.
Sec. 15105. Reduction in payment for capital-related costs of hospital 
              outpatient services.
Sec. 15106. Part B premium.
Sec. 15107. Ensuring payment for physician and nurse for jointly 
              furnished anesthesia services.

            Subtitle C--Provisions Relating to Parts A and B

                    Part 1--Medicare Secondary Payor

Sec. 15201. Extension of existing secondary payer requirements.
Sec. 15202. Clarification of time and filing limitations.
Sec. 15203. Clarification of liability of third party-administrators.
Sec. 15204. Clarification of payment amounts to medicare.
Sec. 15205. Conditions for double damages.

           Part 2--Other Provisions Relating to Parts A and B

Sec. 15221. Making additional choices of health plans available to 
              beneficiaries.
Sec. 15222. Teaching hospital and graduate medical education trust 
              fund.
Sec. 15223. Revisions in determination of amount of payment for medical 
              education.
Sec. 15224. Payments for home health services.
Sec. 15225. Requiring health maintenance organizations to cover 
              appropriate range of services.
Sec. 15226. Clarification of medicare coverage of items and services 
              associated with certain medical devices approved for 
              investigational use.
Sec. 15227. Commission on the Future of Medicare and the Protection of 
              the Health of the Nation's Senior Citizens.

                 Subtitle D--Preventing Fraud and Abuse

  Part 1--Amendments to Anti-Fraud and Abuse Provisions Applicable to 
           Medicare, Medicaid, and State Health Care Programs

Sec. 15301. Anti-kickback statutory provisions.
Sec. 15302. Civil money penalties.
Sec. 15303. Private right of action.
Sec. 15304. Amendments to exclusionary provisions in fraud and abuse 
              program.
Sec. 15305. Sanctions against practitioners and persons for failure to 
              comply with statutory obligations relating to quality of 
              care.
Sec. 15306. Revisions to criminal penalties.
Sec. 15307. Definitions.
Sec. 15308. Effective date.

      Part 2--Interpretive Rulings on Kickbacks and Self-referral

Sec. 15311. Establishment of process for issuance of interpretive 
              rulings.
Sec. 15312. Effect of issuance of interpretive ruling.
Sec. 15313. Imposition of fees.

    Part 3--Direct Spending for Anti-Fraud Activities Under Medicare

Sec. 15321. Direct spending for anti-fraud activities under medicare.

   Part 4--Preemption of State Corporate Practice Laws Under Medicare

Sec. 15331. Preemption of State laws prohibiting corporate practice of 
              medicine for purposes of medicare.

            Part 5--Medicare Anti-Fraud and Abuse Commission

Sec. 15341. Establishment of Medicare Anti-Fraud and Abuse Commission.
Sec. 15342. Functions of Commission.
Sec. 15343. Organization and compensation.
Sec. 15344. Staff of Commission.
Sec. 15345. Authority of Commission.
Sec. 15346. Termination.
Sec. 15347. Authorization of appropriations.
           Subtitle A--Provisions Relating to Medicare Part A

     SEC. 15001. REDUCTIONS IN INFLATION UPDATES FOR INPATIENT 
                   HOSPITAL SERVICES.

       (a) PPS Hospitals.--Section 1886(b) (3)(B)(i) (42 U.S.C. 
     1395ww(b)(3)(B)(i)) is amended by striking subclauses (XI), 
     (XII), and (XIII) and inserting the following:
       ``(XI) for each of the fiscal years 1996 through 2002, the 
     market basket percentage increase minus 0.5 percentage point 
     for hospitals located in a rural area and the market basket 
     percentage increase minus 1.0 percentage point for all other 
     hospitals, and
       ``(XII) for fiscal year 2003 and each subsequent fiscal 
     year, the market basket percentage increase for hospitals in 
     all areas.''.
       (b) PPS-Exempt Hospitals.--Section 1886(b)(3)(B)(ii) (42 
     U.S.C. 1395ww(b)(3)(B)(ii)) is amended--
       (1) in subclause (V)--
       (A) by striking ``thorugh 1997'' and inserting ``through 
     1995'', and
       (B) 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) fiscal years 1996 through 2002, is the market basket 
     percentage increase minus 0.5 percentage point for hospitals 
     located in a rural area and the market basket percentage 
     increase minus 1.0 percentage point for all other hospitals, 
     and''.

     SEC. 15002. CONTINUATION OF CURRENT REDUCTION IN PAYMENTS FOR 
                   CAPITAL-RELATED COSTS FOR INPATIENT HOSPITAL 
                   SERVICES.

       (a) Reduction in Payments for PPS Hospitals.--Section 
     1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended in the 
     second sentence by striking ``through 1995'' and inserting 
     ``through 2002''.
       (b) Reduction in Payments for PPS-Exempt Hospitals.--
     Section 1886(g) (42 U.S.C. 1395ww(g)) is amended by adding at 
     the end the following new paragraph:
       ``(4)(A) Except as provided in subparagraph (B), in 
     determining the amount of the payments that may be made under 
     this title with respect to all the capital-related costs of 
     inpatient hospital services furnished during fiscal years 
     1996 through 2002 of a hospital which is not a subsection (d) 
     hospital or a subsection (d) Puerto Rico hospital, the 
     Secretary shall reduce the amounts of such payments otherwise 
     determined under this title by 10 percent.
       ``(B) Subparagraph (A) shall not apply to payments with 
     respect to the capital-related costs of any hospital that is 
     a sole community hospital (as defined in subsection 
     (d)(5)(D)(iii) or a rural primary care hospital (as defined 
     in section 1861(mm)(1)).''.

     SEC. 15003. ELIMINATION OF CERTAIN ADDITIONAL PAYMENTS FOR 
                   OUTLIER CASES.

       (a) Indirect Medical Education.--Section 
     1886(d)(5)(B)(i)(I) (42 U.S.C. 1395ww(d)(5)(B)(i)(I)) is 
     amended--
       (1) by striking ``the sum of''; and
       (2) by striking ``and 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--
       (1) by striking ``the sum of''; and
       (2) by striking ``and the amount paid to the hospital under 
     subparagraph (A) for that discharge''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to discharges occurring on or after October 1, 
     1995.

     SEC. 15004. CLARIFICATION OF TREATMENT OF TRANSFERS.

       (a) In General.--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 making adjustments under clause (i) for transfer 
     cases, the Secretary shall treat as a transfer any transfer 
     to a hospital (without regard to whether or not the hospital 
     is a subsection (d) hospital), a unit thereof, or a skilled 
     nursing facility.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to discharges occurring on or after October 1, 
     1995.

     SEC. 15005. PROSPECTIVE PAYMENT FOR SKILLED NURSING 
                   FACILITIES.

       Section 1888 (42 U.S.C. 1395yy) is amended by adding at the 
     end the following:
       ``(e) Notwithstanding any other provision of this title, 
     the Secretary shall, for cost reporting periods beginning on 
     or after October 1, 1996, provide for payment for routine 
     costs of extended care services in accordance with a 
     prospective payment system established by the Secretary, 
     subject to the limitations in subsections (f) through (h).
       ``(f)(1) The amount of payment under subsection (e) shall 
     be determined on a per diem basis.
       ``(2) The Secretary shall compute the routine costs per 
     diem in a base year (determined by the Secretary) for each 
     skilled nursing facility, and shall update the per diem rate 
     on the basis of a market basket and other factors as the 
     Secretary determines appropriate.
       ``(3) The per diem rate applicable to a skilled nursing 
     facility may not exceed the following limits--
       ``(A) With respect to skilled nursing facilities located in 
     rural areas, the limit shall be equal to 112 percent of the 
     mean per diem routine costs in a base year (determined by the 
     Secretary) for freestanding skilled nursing facilities 
     located in rural areas within the same region, as updated by 
     the same percentage determined under paragraph (2).
       ``(B) With respect to skilled nursing facilities located in 
     urban areas, the limit shall be equal to 112 percent of the 
     mean per diem routine costs in a base year (determined by the 
     Secretary) for freestanding skilled nursing facilities 
     located in urban areas within the same region, updated by the 
     same percentage determined under paragraph (2).
       ``(g) In the case of a hospital-based skilled nursing 
     facility or a skilled nursing facility receiving payment 
     under subsection (d) as of the date of enactment of this 
     provision, the amount of payment to the facility based on 
     application of subsections (e) and (f) may not be less than 
     the per diem rate applicable to the facility for routine 
     costs on the date of enactment of this provision.
       ``(h) Notwithstanding any other provision of this title, 
     the Secretary shall, for cost re

[[Page 1557]]

     porting periods beginning on or after October 1, 1998, 
     provide for payment for all costs of extended care services 
     (including routine service costs, ancillary costs, and 
     capital-related costs) in accordance with a prospective 
     payment system established by the Secretary. The Secretary 
     shall adjust the payment amounts under this subsection in a 
     manner to assure that the aggregate payments made under this 
     subsection in a fiscal year result in a 5 percent reduction 
     (as estimated by the Secretary) in the amount of payments 
     that would otherwise have been made for such fiscal year.
       ``(i) The Secretary may provide for such exceptions as the 
     Secretary determines appropriate to the amount of payment 
     based on application of subsections (e) though (h).''

     SEC. 15006. MAINTAINING SAVINGS RESULTING FROM TEMPORARY 
                   FREEZE ON PAYMENT INCREASES FOR SKILLED NURSING 
                   FACILITIES.

       (a) Basing Updates to Per Diem Cost Limits on Limits for 
     Fiscal Year 1993.--
       (1) In general.--The last sentence of section 1888(a) (42 
     U.S.C. 1395yy(a)) is amended by adding at the end the 
     following: ``(except that such updates may not take into 
     account any changes in the routine service costs of skilled 
     nursing facilities occurring during cost reporting periods 
     which began during fiscal year 1994 or fiscal year 1995).''.
       (2) No exceptions permitted based on amendment.--The 
     Secretary of Health and Human Services shall not consider the 
     amendment made by paragraph (1) in making any adjustments 
     pursuant to section 1888(c) of the Social Security Act.
       (b) Payments Determined on Prospective Basis.--Any change 
     made by the Secretary of Health and Human Services in the 
     amount of any prospective payment paid to a skilled nursing 
     facility under section 1888(d) of the Social Security Act for 
     cost reporting periods beginning on or after October 1, 1995, 
     may not take into account any changes in the costs of 
     services occurring during cost reporting periods which began 
     during fiscal year 1994 or fiscal year 1995.
           Subtitle B--Provisions Relating to Medicare Part B

     SEC. 15101. PAYMENT FOR PHYSICIANS' SERVICES.

       (a) Replacement of Volume Performance Standard With 
     Cumulative Expenditure Target.--Section 1848(f)(2) (42 U.S.C. 
     1395w-4(f)(2)) is amended to read as follows:
       ``(f) Cumulative Expenditure Target.--
       ``(1) Specification of target.--
       ``(A) Fiscal year 1996.--The cumulative expenditure target 
     for all physicians' services and for each category of such 
     services for fiscal year 1996 shall be equal to the product 
     of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     change in the medicare economic index for 1996 (described in 
     the fourth sentence of section 1842(b)(3)) (divided by 100),
       ``(ii) 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 private plan enrollees) 
     from fiscal year 1995 to fiscal year 1996,
       ``(iii) 1 plus the Secretary's estimate of the projected 
     percentage growth in real gross domestic product per capita 
     (divided by 100) from fiscal year 1995 to fiscal year 1996, 
     plus 2 percentage points, and
       ``(iv) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in expenditures for all physicians' 
     services or of the category of physicians' services in fiscal 
     year 1996 (compared with fiscal year 1995) which will result 
     from changes in law, determined without taking into account 
     estimated changes in expenditures due to changes in the 
     volume and intensity of physicians' services or changes in 
     expenditures resulting from changes in the update to the 
     conversion factor under subsection (d),

     minus 1 and multiplied by 100.
       ``(B) Subsequent fiscal years.--The cumulative expenditure 
     target for all physicians' services and for each category of 
     physicians' services for fiscal year 1997 and each subsequent 
     fiscal year shall be equal to the cumulative expenditure 
     target determined under this paragraph for the previous 
     fiscal year, increased by the product of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     change in the medicare economic index for the fiscal year 
     involved (described in the fourth sentence of section 
     1842(b)(3)) (divided by 100),
       ``(ii) 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 private plan enrollees) 
     from the previous fiscal year to the fiscal year involved,
       ``(iii) 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, plus 2 percentage points, and
       ``(iv) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in expenditures for all physicians' 
     services or of the category of physicians' services in the 
     fiscal year (compared with the previous fiscal year) which 
     will result from changes in law, determined without taking 
     into account estimated changes in expenditures due to changes 
     in the volume and intensity of physicians' services or 
     changes in expenditures resulting from changes in the update 
     to the conversion factor under subsection (d)(3),

     minus 1 and multiplied by 100.''.
       ``(2) Exclusion of services furnished to private plan 
     enrollees.--In this subsection, the term `physicians' 
     services' with respect to a fiscal year does not include 
     services furnished to an individual enrolled under this part 
     who has elected to receive benefits under this title for the 
     fiscal year through enrollment with an eligible organization 
     with a risk-sharing contract under section 1876.''.
       (b) Establishing Update to Conversion Factor to Match 
     Spending Under Cumulative Expenditure Target.--
       (1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)(3)) 
     is amended--
       (A) by striking paragraph (2);
       (B) by amending paragraph (3) to read as follows:
       ``(3) Update.--
       ``(A) In general.--Subject to subparagraph (E), for 
     purposes of this section the update for a year (beginning 
     with 1997) is equal to the product of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     increase in the medicare economic index (described in the 
     fourth sentence of section 1842(b)(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.--The `update adjustment 
     factor' for a year for a category of physicians' services is 
     equal to the quotient of--
       ``(i) the difference between (I) the sum of the allowed 
     expenditures for physicians' services in such category 
     furnished during each of the years 1995 through the year 
     involved and (II) the sum of the amount of actual 
     expenditures for physicians' services furnished in such 
     category during each of the years 1995 through the previous 
     year; divided by
       ``(ii) the Secretary's estimate of allowed expenditures for 
     physicians' services in such category furnished during the 
     year.
       ``(C) Determination of allowed expenditures.--For purposes 
     of subparagraph (B), allowed expenditures for physicians' 
     services in a category of physicians' services shall be 
     determined as follows (as estimated by the Secretary):
       ``(i) In the case of allowed expenditures for 1995, such 
     expenditures shall be equal to actual expenditures for 
     services furnished during the 12-month period ending with 
     June of 1995.
       ``(ii) In the case of allowed expenditures for 1996 and 
     each subsequent year, such expenditures shall be equal to 
     allowed expenditures for the previous year, increased by the 
     cumulative expenditure target under subsection (f) for the 
     fiscal year which begins during the year.
       ``(D) Determination of actual expenditures.--For purposes 
     of subparagraph (B), the amount of actual expenditures for 
     physicians' services in a category of physicians' services 
     furnished during a year shall be equal to the amount of 
     expenditures for such services during the 12-month period 
     ending with June of the previous year.
       ``(E) 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 103 percent of the Secretary's estimate 
     of the percentage increase in the medicare economic index 
     (described in the fourth sentence of section 1842(b)(3)) for 
     the year; or
       ``(ii) less than 92.5 percent of the Secretary's estimate 
     of the percentage increase in the medicare economic index 
     (described in the fourth sentence of section 1842(b)(3)) for 
     the year.''; and
       (C) by adding at the end the following new paragraph:
       ``(4) Reporting requirements.--
       ``(A) In general.--Not later than November 1 of each year 
     (beginning with 1996), the Secretary shall transmit to the 
     Congress a report that describes the update in the conversion 
     factor for physicians' services (as defined in subsection 
     (f)(3)(A)) in the following year.
       ``(B) Commission review.--The Medicare Payment Review 
     Commission shall review the report submitted under 
     subparagraph (A) for a year and shall submit to the Congress, 
     by not later than December 1 of the year, a report containing 
     its analysis of the conversion factor for the following 
     year.''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to physicians' services furnished on or after 
     January 1, 1997.
       (c) Establishment of Single Conversion Factor for 1996.--
     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 new 
     subparagraph:
       ``(C) Special rule for 1996.--For 1996, the conversion 
     factor under this subsection shall be $34.60 for all 
     physicians' services.''.

     SEC. 15102. FREEZE IN UPDATES TO PAYMENT AMOUNTS FOR CERTAIN 
                   ITEMS AND SERVICES.

       (a) Clinical Diagnostic Laboratory Tests.--Section 
     1833(h)(2)(A)(ii)(IV) (42 U.S.C. 1395l(h)(2)(A)(ii)(IV)) is 
     amended striking ``1994 and 1995'' and inserting ``1994, 
     1995, 1996, and 1997''.
       (b) Durable Medical Equipment.--
       (1) 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, and 1995'', and

[[Page 1558]]

       (ii) by striking the period at the end and inserting ``; 
     and''; and
       (C) by adding at the end the following:
       ``(C) for 1996 and 1997, 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) Orthotics and prosthetics.--Section 1834(h)(4)(A)(iii) 
     (42 U.S.C. 1395m(h)(4)(A)(iii)) is amended by striking ``1994 
     and 1995'' and inserting ``1994, 1995, 1996, and 1997''.
       (c) Ambulatory Surgical Center Services.--The Secretary of 
     Health and Human Services shall not provide for any inflation 
     update in the payment amounts under subparagraphs (A) and (B) 
     of section 1833(i)(2) of the Social Security Act for fiscal 
     years 1996 and 1997.

     SEC. 15103. REDUCTION IN EFFECTIVE BENEFICIARY COINSURANCE 
                   RATE FOR CERTAIN HOSPITAL OUTPATIENT SERVICES.

       (a) In General.--
       (1) Ambulatory surgical center procedures.--Section 
     1833(i)(3)(B)(i)(II) (42 U.S.C. 1395l(i)(3)(B)(i)(II)) is 
     amended--
       (A) by striking ``of 80 percent''; and
       (B) 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).''.
       (2) Radiology services and diagnostic procedures.--Section 
     1833(n)(1)(B)(i)(II) (42 U.S.C. 1395l(n)(1)(B)(i)(II)) is 
     amended--
       (A) by striking ``of 80 percent''; and
       (B) 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) Reduction in Beneficiary Coinsurance Rate.--Section 
     1866(a)(2) (42 U.S.C. 1395cc(a)(2)) is amended by adding at 
     the end the following new subparagraph:
       ``(E)(i) In the case of services furnished during a year 
     for which the amount of payment under part B is determined 
     under section 1833(i) or section 1833(n), clause (ii) of 
     subparagraph (A) shall be applied by reducing `20 percent' by 
     the percentage established for the year under clause (ii).
       ``(ii) The percentage established for a year under this 
     clause shall be the percentage which, if applied for the 
     year, will result in a reduction in projected total 
     coinsurance payments under part B during the year in an 
     amount equal to the Secretary's estimate of the reduction in 
     expenditures under part B which would have occurred as a 
     result of the enactment of section 15103(a) of the Medicare 
     Enhancement Act of 1995 if this subparagraph were not in 
     effect for the year.
       ``(iii) The Secretary shall establish and publish the 
     percentage established for a year under this clause not later 
     than October 1 preceding the year involved (or not later than 
     December 1, 1995, in the case of the percentage established 
     for 1996).''.
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall apply to services furnished during portions of 
     cost reporting periods occurring on or after January 1, 1996.

     SEC. 15104. EXPANDING COVERAGE OF PREVENTIVE BENEFITS.

       (a) Providing Annual Screening Mammography for Women Over 
     Age 49.--Section 1834(c)(2)(A) (42 U.S.C. 1395m(c)(2)(A)) is 
     amended--
       (1) in clause (iv), by striking ``but under 65 years of 
     age,''; and
       (2) by striking clause (v).
       (b) Coverage of Screening Pap Smear and Pelvic Exams.--
       (1) Coverage of pelvic exam; increasing frequency of 
     coverage of pap smear.--Section 1861(nn) (42 U.S.C. 
     1395x(nn)) is amended--
       (A) in the heading, by striking ``Smear'' and inserting 
     ``Smear; Screening Pelvic Exam'';
       (B) by striking ``(nn)'' and inserting ``(nn)(1)'';
       (C) 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
       (D) 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 cancer; 
     or
       ``(B) is at high risk of developing cervical cancer (as 
     determined pursuant to factors identified by the 
     Secretary).''.
       (2) Waiver of deductible.--The first sentence of section 
     1833(b) (42 U.S.C. 1395l(b)), as amended by subsection 
     (a)(2), is amended--
       (A) by striking ``and (5)'' and inserting ``(5)''; and
       (B) by striking the period at the end and inserting 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)).''.
       (3) Conforming amendments.--(A) Section 1861(s)(14) (42 
     U.S.C. 1395x(s)(14)) is amended by inserting ``and screening 
     pelvic exam'' after ``screening pap smear''.
       (B) Section 1862(a)(1)(F) (42 U.S.C. 1395y(a)(1)(F)) is 
     amended by inserting ``and screening pelvic exam'' after 
     ``screening pap smear''.
       (c) Coverage of Colorectal Screening.--
       (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 Screening Fecal-
     Occult Blood Tests, Screening Flexible Sigmoidoscopies, and 
     Screening Colonoscopy.--
       ``(1) Frequency limits for screening fecal-occult blood 
     tests.--Subject to revision by the Secretary under paragraph 
     (4), no payment may be made under this part for a screening 
     fecal-occult blood test provided to an individual for the 
     purpose of early detection of colon cancer if the test is 
     performed--
       ``(A) in the case of an individual under 65 years of age, 
     more frequently than is provided in a periodicity schedule 
     established by the Secretary for purposes of this 
     subparagraph; or
       ``(B) in the case of any other individual, within the 11 
     months following the month in which a previous screening 
     fecal-occult blood test was performed.
       ``(2) Screening flexible sigmoidoscopies.--
       ``(A) Payment amount.--The Secretary shall establish a 
     payment amount under section 1848 with respect to screening 
     flexible sigmoidoscopies provided for the purpose of early 
     detection of colon cancer 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) Frequency limits.--Subject to revision by the 
     Secretary under paragraph (4), no payment may be made under 
     this part for a screening flexible sigmoidoscopy provided to 
     an individual for the purpose of early detection of colon 
     cancer if the procedure is performed--
       ``(i) in the case of an individual under 65 years of age, 
     more frequently than is provided in a periodicity schedule 
     established by the Secretary for purposes of this 
     subparagraph; or
       ``(ii) in the case of any other individual, within the 59 
     months following the month in which a previous screening 
     flexible sigmoidoscopy was performed.
       ``(3) Screening colonoscopy for individuals at high risk 
     for colorectal cancer.--
       ``(A) Payment amount.--The Secretary shall establish a 
     payment amount under section 1848 with respect to screening 
     colonoscopy for individuals at high risk for colorectal 
     cancer (as determined in accordance with criteria established 
     by the Secretary) provided for the purpose of early detection 
     of colon cancer 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) Frequency limit.--Subject to revision by the 
     Secretary under paragraph (4), no payment may be made under 
     this part for a screening colonoscopy for individuals at high 
     risk for colorectal cancer provided to an individual for the 
     purpose of early detection of colon cancer if the procedure 
     is performed within the 47 months following the month in 
     which a previous screening colonoscopy was performed.
       ``(C) Factors considered in establishing criteria for 
     determining individuals at high risk.--In establishing 
     criteria for determining whether an individual is at high 
     risk for colorectal cancer for purposes of this paragraph, 
     the Secretary shall take into consideration family history, 
     prior experience of cancer, a history of chronic digestive 
     disease condition, and the presence of any appropriate 
     recognized gene markers for colorectal cancer.
       ``(4) Revision of frequency.--
       ``(A) Review.--The Secretary shall review periodically the 
     appropriate frequency for performing screening fecal-occult 
     blood tests, screening flexible sigmoidoscopies, and 
     screening colonoscopy based on age and such other factors as 
     the Secretary believes to be pertinent.
       ``(B) 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 and 
     procedures may be paid for under this subsection.''.
       (2) Conforming amendments.--(A) Paragraphs (1)(D) and 
     (2)(D) of section 1833(a) (42 U.S.C. 1395l(a)) are each 
     amended by striking ``subsection (h)(1),'' and inserting 
     ``subsection (h)(1) or section 1834(d)(1),''.
       (B) Clauses (i) and (ii) of section 1848(a)(2)(A) (42 
     U.S.C. 1395w-4(a)(2)(A)) are each amended by striking ``a 
     service'' and inserting ``a service (other than a screening 
     flexible sigmoidoscopy provided to an individual for the 
     purpose of early detection of colon cancer or a screening 
     colonoscopy provided to an individual at high risk for 
     colorectal cancer for the purpose of early detection of colon 
     cancer)''.
       (C) Section 1862(a) (42 U.S.C. 1395y(a)) is amended--
       (i) in paragraph (1)--
       (I) in subparagraph (E), by striking ``and'' at the end;
       (II) in subparagraph (F), by striking the semicolon at the 
     end and inserting ``, and''; and
       (III) by adding at the end the following new subparagraph:
       ``(G) in the case of screening fecal-occult blood tests, 
     screening flexible sigmoidoscopies, and screening colonoscopy 
     provided for the purpose of early detection of colon cancer, 
     which are performed more fre

[[Page 1559]]

     quently than is covered under section 1834(d);''; and
       (ii) in paragraph (7), by striking ``paragraph (1)(B) or 
     under paragraph (1)(F)'' and inserting ``subparagraphs (B), 
     (F), or (G) of paragraph (1)''.
       (d) Prostate Cancer Screening Tests.--
       (1) In general.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) 
     is amended--
       (A) by striking ``and'' at the end of subparagraph (N) and 
     subparagraph (O); and
       (B) by inserting after subparagraph (O) the following new 
     subparagraph:
       ``(P) prostate cancer screening tests (as defined in 
     subsection (oo)); and''.
       (2) Tests described.--Section 1861 (42 U.S.C. 1395x) is 
     amended by adding at the end the following new subsection:

                   ``Prostate Cancer Screening Tests

       ``(oo) The term `prostate cancer screening test' means a 
     test that consists of a digital rectal examination or a 
     prostate-specific antigen blood test (or both) provided for 
     the purpose of early detection of prostate cancer to a man 
     over 40 years of age who has not had such a test during the 
     preceding year.''.
       (3) 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)''.
       (4) Conforming amendment.--Section 1862(a) (42 U.S.C. 
     1395y(a)), as amended by subsection (c)(3)(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 prostate cancer screening test (as 
     defined in section 1861(oo)) provided for the purpose of 
     early detection of prostate cancer, which are performed more 
     frequently than is covered under such section;''; and
       (B) in paragraph (7), by striking ``or (G)'' and inserting 
     ``(G), or (H)''.
       (e) Diabetes Screening Benefits.--
       (1) Diabetes outpatient self-management training 
     services.--
       (A) In general.--Section 1861(s)(2) (42 U.S.C. 
     1395x(s)(2)), as amended by subsection (d)(1), is amended--
       (i) by striking ``and'' at the end of subparagraph (N);
       (ii) by striking ``and'' at the end of subparagraph (O); 
     and
       (iii) by inserting after subparagraph (O) the following new 
     subparagraph:
       ``(P) diabetes outpatient self-management training services 
     (as defined in subsection (pp)); and''.
       (B) Definition.--Section 1861 (42 U.S.C. 1395x), as amended 
     by subsection (d)(2), is amended by adding at the end the 
     following new subsection:


        ``diabetes outpatient self-management training services

       ``(pp)(1) The term `diabetes outpatient self-management 
     training services' means educational and training services 
     furnished to an individual with diabetes by or under 
     arrangements with 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 an individual or entity 
     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) an individual or entity meets the quality standards 
     described in this paragraph if the individual or entity meets 
     quality standards established by the Secretary, except that 
     the individual or entity shall be deemed to have met such 
     standards if the 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 the American Diabetes Association as 
     meeting standards for furnishing the services.''.
       (C) Consultation with organizations in establishing payment 
     amounts for services provided by physicians.--In establishing 
     payment amounts under section 1848(a) 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 the American Diabetes Association, 
     in determining the relative value for such services under 
     section 1848(c)(2) of such Act.
       (2) Blood-testing strips for individuals with diabetes.--
       (A) Including strips as durable medical equipment.--Section 
     1861(n) (42 U.S.C. 1395x(n)) is amended by striking the 
     semicolon in the first sentence and inserting the following: 
     ``, and includes blood-testing strips for individuals with 
     diabetes without regard to whether the individual has Type I 
     or Type II diabetes (as determined under standards 
     established by the Secretary in consultation with the 
     American Diabetes Association);''.
       (2) Payment for strips based on methodology for inexpensive 
     and routinely purchased equipment.--Section 1834(a)(2)(A) (42 
     U.S.C. 1395m(a)(2)(A)) is amended--
       (A) by striking ``or'' at the end of clause (ii);
       (B) by adding ``or'' at the end of clause (iii); and
       (C) by inserting after clause (iii) the following new 
     clause:
       ``(iv) which is a blood-testing strip for an individual 
     with diabetes,''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     January 1, 1996.

     SEC. 15105. REDUCTION IN PAYMENT FOR CAPITAL-RELATED COSTS OF 
                   HOSPITAL OUTPATIENT SERVICES.

       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 2002''.

     SEC. 15106. PART B PREMIUM.

       Section 1839(e)(1) (42 U.S.C. 1395r(e)(1)) is amended--
       (1) in subparagraph (A), by striking ``1995'' and inserting 
     ``1996'', and
       (2) in subparagraph (B)(v), by inserting ``and 1996'' after 
     ``1995''.

     SEC. 15107. ENSURING PAYMENT FOR PHYSICIAN AND NURSE FOR 
                   JOINTLY FURNISHED ANESTHESIA SERVICES.

       (a) Payment for Jointly Furnished Single Case.--
       (1) Payment to physician.--Section 1848(a)(4) (42 U.S.C. 
     1395w-4(a)(4)) is amended by adding at the end the following 
     new subparagraph:
       ``(C) Payment for single case.--Notwithstanding section 
     1862(a)(1)(A), with respect to physicians' services 
     consisting of the furnishing of anesthesia services for a 
     single case that are furnished jointly with a certified 
     registered nurse anesthetist, if the carrier determines that 
     the use of both the physician and the nurse anesthetist to 
     furnish the anesthesia service was not medically necessary, 
     the fee schedule amount for the physicians' services shall be 
     equal to 50 percent (or 55 percent, in the case of services 
     furnished during 1996 or 1997) of the fee schedule amount 
     applicable under this section for anesthesia services 
     personally performed by the physician alone (without regard 
     to this subparagraph). Nothing in this subparagraph may be 
     construed to affect the application of any provision of law 
     regarding balance billing.''.
       (2) Payment to crna.--Section 1833(l)(4)(B) (42 U.S.C. 
     1395l(l)(4)(B)) is amended by adding at the end the following 
     new clause:
       ``(iv) Notwithstanding section 1862(a)(1)(A), in the case 
     of services of a certified registered nurse anesthetist 
     consisting of the furnishing of anesthesia services for a 
     single case that are furnished jointly with a physician, if 
     the carrier determines that the use of both the physician and 
     the nurse anesthetist to furnish the anesthesia service was 
     not medically necessary, the fee schedule amount for the 
     services furnished by the certified registered nurse 
     anesthetist shall be equal to 50 percent (or 40 percent, in 
     the case of services furnished during 1996 or 1997) of the 
     fee schedule amount applicable under section 1848 for 
     anesthesia services personally performed by the physician 
     alone (without regard to this clause).''.
       (b) Effective Date.--The amendments made by subsections (a) 
     shall apply to services furnished on or after July 1, 1996.
            Subtitle C--Provisions Relating to Parts A and B

                    PART 1--MEDICARE SECONDARY PAYER

     SEC. 15201. EXTENSION OF EXISTING SECONDARY PAYER 
                   REQUIREMENTS.

       (a) Data Match.--
       (1) Section 1862(b)(5)(C) (42 U.S.C. 1395y(b)(5)(C)) is 
     amended by striking clause (iii).
       (2) Section 6103(l)(12) of the Internal Revenue Code of 
     1986 is amended by striking subparagraph (F).
       (b) 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)''.
       (c) Period of Application to Individuals with End Stage 
     Renal Disease.--Section 1862(b)(1)(C) (42 U.S.C. 
     1395y(b)(1)(C)) is amended--
       (1) in the first sentence, by striking ``12-month'' each 
     place it appears and inserting ``18-month'', and
       (2) by striking the second sentence.

     SEC. 15202. CLARIFICATION OF TIME AND FILING LIMITATIONS.

       (a) In General.--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) Time, filing, and related provisions under primary 
     plan.--Requirements under a primary plan as to the filing of 
     a claim, time

[[Page 1560]]

     limitations for the filing of a claim, information not 
     maintained by the Secretary, or notification or pre-admission 
     review, shall not apply to a claim by the United States under 
     clause (ii) or (iii).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     applies to items and services furnished after 1993.

     SEC. 15203. CLARIFICATION OF LIABILITY OF THIRD PARTY-
                   ADMINISTRATORS.

       (a) In General.--Section 1862(b)(2)(B)(ii) (42 U.S.C. 
     1395y(b)(2)(B)(ii)) is amended by inserting ``, or which 
     determines claims under the primary plan'' after ``primary 
     plan''.
       (b) Claims Between Parties Other Than the United States.-- 
     Section 1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)), (as amended 
     by section 15201(a)) is further amended by adding at the end 
     the following new clause:
       ``(vi) Claims between parties other than the United 
     States.--A claim by the United States under clause (ii) or 
     (iii) shall not preclude claims between other parties.''.
       (c) Effective Date.--The amendments made by the previous 
     subsections apply to items and services furnished after 1993.

     SEC. 15204. CLARIFICATION OF PAYMENT AMOUNTS TO MEDICARE.

       (a) In General.--Section 1862(b)(2)(B)(i) (42 U.S.C. 
     1395y(b)(2)(B)(i)) is amended to read as follows:
       ``(i) Repayment required.--

       ``(I) Any payment under this title, with respect to any 
     item or service for which payment by a primary plan is 
     required under the preceding provisions of this subsection, 
     shall be conditioned on reimbursement to the appropriate 
     Trust Fund established by this title when notice or other 
     information is received that payment for that item or service 
     has been or should have been made under those provisions. If 
     reimbursement is not made to the appropriate Trust Fund 
     before the expiration of the 60-day period that begins on the 
     date such notice or other information is received, the 
     Secretary may charge interest (beginning with the date on 
     which the notice or other information is received) on the 
     amount of the reimbursement until reimbursement is made (at a 
     rate determined by the Secretary in accordance with 
     regulations of the Secretary of the Treasury applicable to 
     charges for late payments).
       ``(II) The amount owed by a primary plan under the first 
     sentence of subclause (I) is the lesser of the full primary 
     payment required (if that amount is readily determinable) and 
     the amount paid under this title for that item or service.''.

       (b) Conforming and Technical Amendments.--
       (1) Subparagraphs (A)(i)(I) and (B)(i) of section 
     1862(b)(1) (42 U.S.C. 1395y(b)(1)) are each amended by 
     inserting ``(or eligible to be covered)'' after ``covered''.
       (2) Section 1862(b)(1)(C)(ii) (42 U.S.C. 
     1395y(b)(1)(C)(ii)) is amended by striking ``covered by such 
     plan''.
       (3) The matter in section 1861(b)(2)(A) (42 U.S.C. 
     1395x(b)(2)(A)) preceding clause (i) is amended by striking 
     ``, except as provided in subparagraph (B),''.
       (c) Effective Date.--The amendments made by the previous 
     subsections apply to items and services furnished after 1993.

     SEC. 15205. CONDITIONS FOR DOUBLE DAMAGES.

       (a) In General.--Section 1862(b)(2)(B)(ii) (42 U.S.C. 
     1395y(b)(2)(B)(ii)) is amended--
       (1) by striking ``, in accordance with paragraph (3)(A)'', 
     and
       (2) by inserting ``, unless the entity demonstrates that it 
     did not know, and could not have known, of its obligation to 
     pay'' after ``against that entity''.
       (b) Conforming Amendment.--Section 1862(b)(3)(A) (42 U.S.C. 
     1395y(b)(3)(A)) is amended by striking ``(or appropriate 
     reimbursement)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished after 1993.

           PART 2--OTHER PROVISIONS RELATING TO PARTS A AND B

     SEC. 15221. MAKING ADDITIONAL CHOICES OF HEALTH PLANS 
                   AVAILABLE TO BENEFICIARIES.

       (a) Definition of PPO.--Section 1876 (42 U.S.C. 1395mm) is 
     amended by adding at the end the following new subsection:
       ``(k)(1) A preferred provider organization (as defined in 
     paragraph (2)) shall be considered to be an eligible 
     organization under this section.
       ``(2) In this section, the term `preferred provider 
     organization' means an organization that--
       ``(A) would be an eligible organization (as defined in 
     subsection (b)) if--
       ``(i) clauses (ii) through (iv) of subsection (b)(2)(A) did 
     not apply,
       ``(ii) subsection (b)(2)(C) did not apply, and
       ``(iii) subsection (b)(2)(D) only applied (in the case of 
     services not provided under this title) to the physicians' 
     services the organization provides; and
       ``(B) permits enrollees to obtain benefits through any 
     lawful provider.

     Nothing in subparagraph (B) shall be construed as requiring 
     that the benefits for services provided through providers 
     that do not have a contract with the organization be the same 
     as those for services provided through providers that have 
     such contracts so long as an enrollee's liabilities do not 
     exceed the liabilities that the enrollee would have under 
     parts A and B if the individual were not enrolled under this 
     section.''.
       (b) Partial Risk Payment Methods.--Section 1876 (42 U.S.C. 
     1395mm) is further amended by adding at the end the following 
     new subsection:
       ``(l) Notwithstanding the previous provisions of this 
     section, at the election of an eligible organization the 
     Secretary may establish an alternative partial-risk-sharing 
     mechanism for making payment to the organization under this 
     section. Under such mechanism fee-for-service payments would 
     be made to the organization for some services provided under 
     the contract, under such conditions and subject to such 
     restrictions as the Secretary may determine.''.
       (c) Conforming Amendment.--Section 1876 (42 U.S.C. 1395mm) 
     is further amended--
       (1) in the heading by striking ``Organizations and 
     Competitive Medical Plans'' and inserting ``Organizations, 
     Competitive Medical Plans, and Preferred Provider 
     Organizations'', and
       (2) in subsection (c)(3)(E)(ii), by inserting ``(if any)'' 
     after ``the restrictions''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to contract years beginning on or after January 
     1, 1996.

     SEC. 15222. TEACHING HOSPITAL AND GRADUATE MEDICAL EDUCATION 
                   TRUST FUND.

       (a) Teaching Hospital and Graduate Medical Education Trust 
     Fund.--The Social Security Act (42 U.S.C. 300 et seq.) is 
     amended by adding at the end the following title:

  ``TITLE XXI--TEACHING HOSPITAL AND GRADUATE MEDICAL EDUCATION TRUST 
                                  FUND

                    ``Part A--Establishment of Fund

     ``SEC. 2101. ESTABLISHMENT OF FUND.

       ``(a) In General.--There is established in the Treasury of 
     the United States a fund to be known as the Teaching Hospital 
     and Graduate Medical Education Trust Fund (in this title 
     referred to as the `Fund'), consisting of amounts transferred 
     to the Fund under subsection (c), amounts appropriated to the 
     Fund pursuant to subsections (d) and (e)(3), and such gifts 
     and bequests as may be deposited in the Fund pursuant to 
     subsection (f). Amounts in the Fund are available until 
     expended.
       ``(b) Expenditures From Fund.--Amounts in the Fund are 
     available to the Secretary for making payments under section 
     2111.
       ``(c) Transfers to Fund.--
       ``(1) In general.--From the Federal Hospital Insurance 
     Trust Fund and the Federal Supplementary Medical Insurance 
     Trust Fund, the Secretary shall, for fiscal year 1996 and 
     each subsequent fiscal year, transfer to the Fund an amount 
     determined by the Secretary for the fiscal year involved in 
     accordance with paragraph (2).
       ``(2) Determination of amounts.--For purposes of paragraph 
     (1), the amount determined under this paragraph for a fiscal 
     year is an estimate by the Secretary of an amount equal to 75 
     percent of the difference between--
       ``(A) the nationwide total of the amounts that would have 
     been paid under section 1876(a)(4) during the year but for 
     the exclusion of medical education payments from the adjusted 
     average per capita cost pursuant to section 
     1876(a)(4)(B)(ii); and
       ``(B) the nationwide total of the amounts paid under 
     section 1876(a)(4) during the year.
       ``(3) Allocation between medicare trust funds.--In 
     providing for a transfer under paragraph (1) for a fiscal 
     year, the Secretary shall provide for an allocation of the 
     amounts involved between part A and part B of title XVIII 
     (and the trust funds established under the respective parts) 
     as reasonably reflects the proportion of payments for the 
     indirect costs of medical education and direct graduate 
     medical education costs of hospitals associated with the 
     provision of services under each respective part.
       ``(d) Authorization of Appropriations.--There are 
     authorized to be appropriated to the Fund such sums as may be 
     necessary for each of the fiscal years 1996 through 2002.
       ``(e) Investment.--
       ``(1) In general.--The Secretary of the Treasury shall 
     invest such amounts of the Fund as such Secretary determines 
     are not required to meet current withdrawals from the Fund. 
     Such investments may be made only in interest-bearing 
     obligations of the United States. For such purpose, such 
     obligations may be acquired on original issue at the issue 
     price, or by purchase of outstanding obligations at the 
     market price.
       ``(2) Sale of obligations.--Any obligation acquired by the 
     Fund may be sold by the Secretary of the Treasury at the 
     market price.
       ``(3) Availability of income.--Any interest derived from 
     obligations acquired by the Fund, and proceeds from any sale 
     or redemption of such obligations, are hereby appropriated to 
     the Fund.
       ``(f) Acceptance of Gifts and Bequests.--The Fund may 
     accept on behalf of the United States money gifts and 
     bequests made unconditionally to the Fund for the benefit of 
     the Fund or any activity financed through the Fund.

                ``Part B--Payments to Teaching Hospitals

     ``SEC. 2111. FORMULA PAYMENTS TO TEACHING HOSPITALS.

       ``(a) In General.--In the case of each teaching hospital 
     that in accordance with subsection (b) submits to the 
     Secretary a payment document for fiscal year 1996 or any 
     subsequent fiscal year, the Secretary shall make payments for 
     the year to the teaching hospital for the direct and indirect 
     costs of operating approved medical residency training 
     programs. Such payments shall be made from the Fund, and 
     shall be made in accordance with a formula established by the 
     Secretary.
       ``(b) Payment Document.--For purposes of subsection (a), a 
     payment document is a doc

[[Page 1561]]

     ument containing such information as may be necessary for the 
     Secretary to make payments under such subsection to a 
     teaching hospital for a fiscal year. The document is 
     submitted in accordance with this subsection if the document 
     is submitted not later than the date specified by the 
     Secretary, and the document is in such form and is made in 
     such manner as the Secretary may require. The Secretary may 
     require that information under this subsection be submitted 
     to the Secretary in periodic reports.''.
       (b) National Advisory Council on Postgraduate Medical 
     Education.--
       (1) In general.--There is established within the Department 
     of Health and Human Services an advisory council to be known 
     as the National Advisory Council on Postgraduate Medical 
     Education (in this title referred to as the ``Council'').
       (2) Duties.--The council shall provide advice to the 
     Secretary on appropriate policies for making payments for the 
     support of postgraduate medical education in order to assure 
     an adequate supply of physicians trained in various 
     specialities, consistent with the health care needs of the 
     United States.
       (3) Composition.--
       (A) In general.--The Secretary shall appoint to the Council 
     15 individuals who are not officers or employees of the 
     United States. Such individuals shall include not less than 1 
     individual from each of the following categories of 
     individuals or entities:
       (i) Organizations representing consumers of health care 
     services.
       (ii) Physicians who are faculty members of medical schools, 
     or who supervise approved physician training programs.
       (iii) Physicians in private practice who are not physicians 
     described in clause (ii).
       (iv) Practitioners in public health.
       (v) Advanced-practice nurses.
       (vi) Other health professionals who are not physicians.
       (vii) Medical schools.
       (viii) Teaching hospitals.
       (ix) The Accreditation Council on Graduate Medical 
     Education.
       (x) The American Board of Medical Specialities.
       (xi) The Council on Postdoctoral Training of the American 
     Osteopathic Association.
       (xii) The Council on Podiatric Medical Education of the 
     American Podiatric Medical Association.
       (B) Requirements regarding representative membership.--To 
     the greatest extent feasible, the membership of the Council 
     shall represent the various geographic regions of the United 
     States, shall reflect the racial, ethnic, and gender 
     composition of the population of the United States, and shall 
     be broadly representative of medical schools and teaching 
     hospitals in the United States.
       (C) Ex officio members; other federal officers or 
     employees.--The membership of the Council shall include 
     individuals designated by the Secretary to serve as members 
     of the Council from among Federal officers or employees who 
     are appointed by the President, or by the Secretary (or by 
     other Federal officers who are appointed by the President 
     with the advice and consent of the Senate). Individuals 
     designated under the preceding sentence shall include each of 
     the following officials (or a designee of the official):
       (i) The Secretary of Health and Human Services.
       (ii) The Secretary of Veterans Affairs.
       (iii) The Secretary of Defense.
       (4) Chair.--The Secretary shall, from among members of the 
     council appointed under paragraph (3)(A), designate an 
     individual to serve as the chair of the council.
       (5) Termination.--The Council terminates December 31, 1999.
       (c) Remove Medical Education and Disproportionate Share 
     Hospital Payments From Calculation of Adjusted Average Per 
     Capita Cost.--
       (1) In general.--Section 1876(a)(4) (42 U.S.C. 
     1395mm(a)(4)) is amended--
       (A) by striking ``(4)'' and inserting ``(4)(A)''; and
       (B) by adding at the end the following new subparagraph:
       ``(B) In determining the adjusted average per capita cost 
     for a contract year under subparagraph (A), the Secretary 
     shall exclude any amounts which the Secretary estimates would 
     be payable under this title during the year for--
       ``(i) payment adjustments under section 1886(d)(5)(F) for 
     hospitals serving a disproportionate share of low-income 
     patients; and
       ``(ii) the indirect costs of medical education under 
     section 1886(d)(5)(B) or for direct graduate medical 
     education costs under section 1886(h).''.
       (2) Payments to hospitals of amounts attributable to dsh.--
     Section 1886 (42 U.S.C. 1395ww) is amended by adding at the 
     end the following new subsection:
       ``(j)(1) In addition to amounts paid under subsection 
     (d)(5)(F), the Secretary is authorized to pay hospitals which 
     are eligible for such payments for a fiscal year supplemental 
     amounts that do not exceed the limit provided for in 
     paragraph (2).
       ``(2) The sum of the aggregate amounts paid pursuant to 
     paragraph (1) for a fiscal year shall not exceed the 
     Secretary's estimate of 75 percent of the amount excluded 
     from the adjusted average per capita cost for the fiscal year 
     pursuant to section 1876(a)(4)(B)(i).''.

     SEC. 15223. REVISIONS IN DETERMINATION OF AMOUNT OF PAYMENT 
                   FOR MEDICAL EDUCATION.

       (a) Indirect Medical Education.--
       (1) In general.--Section 1886(d)(5)(B) (42 U.S.C. 
     1395ww(d)(5)(B)) is amended by adding at the end the 
     following new clauses:
       ``(v) In determining such adjustment with respect to a 
     hospital for discharges occurring on or after October 1, 
     1995, and on or before September 30, 2002--
       ``(I) the total number of interns and residents counted by 
     the Secretary may not exceed the number of interns and 
     residents counted with respect to the hospital as of August 
     1, 1995, and
       ``(II) the number of interns and residents counted by the 
     Secretary who are not primary care residents (as defined in 
     subsection (h)(5)(H)) may not exceed the number of such 
     residents counted with respect to the hospital as of such 
     date.
       ``(vi) In calculating the number of full-time-equivalent 
     interns and residents of a hospital in determining such 
     adjustment with respect to the hospital, the Secretary shall 
     provide for a weighting factor of .50 with respect to each 
     intern and resident who is not in an initial residency period 
     (as defined in subsection (h)(5)(F)).''.
       (2) Payment for interns and residents providing off-site 
     services.--Section 1886(d)(5)(B)(iv) (42 U.S.C. 
     1395ww(d)(5)(B)(iv)) is amended by striking ``any entity'' 
     and all that follows through ``and residents)'' and inserting 
     ``any other entity under an agreement with the hospital''.
       (b) Direct Medical Education.--
       (1) Limitation on number of residents.--Section 1886(h)(4) 
     (42 U.S.C. 1395ww(h)(4)) is amended by adding at the end the 
     following new subparagraph:
       ``(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, 1995, and 
     on or before September 30, 2002--
       ``(i) the total number of full-time-equivalent residents 
     determined under this paragraph with respect to an approved 
     medical residency training program may not exceed the number 
     of full-time-equivalent residents with respect to the program 
     as of August 1, 1995, and
       ``(ii) the number of full-time-equivalent residents 
     determined under this paragraph with respect to the program 
     who are not primary care residents (as defined in paragraph 
     (5)(H)) may not exceed the number of such residents counted 
     with respect to the program as of such date.''.
       (2) Continuation of freeze on updates to fte resident 
     amounts.--Section 1886(h)(2)(D)(ii) (42 U.S.C. 
     1395ww(h)(2)(D)(ii)) is amended by striking ``fiscal year 
     1994 or fiscal year 1995'' and inserting ``fiscal years 1994, 
     1995, 1996, or 1997''.
       (3) Permitting payment to non-hospital providers.--Section 
     1886 (42 U.S.C. 1395ww) is amended by adding at the end the 
     following new subsection:
       ``(j) Beginning with cost reporting periods beginning on or 
     after July 1, 1996, notwithstanding any other provision of 
     this title, the Secretary may make payments (in such amounts 
     and in such form as the Secretary considers appropriate) to 
     entities other than hospitals for the direct costs of medical 
     education, if such costs are incurred in the operation of an 
     approved medical residency training program described in 
     subsection (h).''.
       (c) Expanding Definition of Primary Care Residents.--
     Section 1886(h)(5)(H) (42 U.S.C. 1395ww(h)(5)(H)) is amended 
     by inserting ``obstetrics and gynecology,'' after ``geriatric 
     medicine,''.
       (d) Effective Date.--Except as provided otherwise in this 
     section (or in the amendments made by this section), the 
     amendments made by this section apply to hospital cost 
     reporting periods beginning on or after October 1, 1995.

     SEC. 15224. 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 inserting ``and before October 1, 1996,'' after 
     ``July 1, 1987'' in subclause (III),
       (2) by striking the period at the end of the matter 
     following subclause (III), and inserting ``, and'',
       (3) by adding at the end the following new subclause:

       ``(IV) October 1, 1996, 105 percent of the median of the 
     labor-related and nonlabor per visit costs for free standing 
     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 striking ``July 1, 
     1996'' and inserting ``October 1, 1996''.
       (c) Additions to Cost Limits.--Section 1861(v)(1)(L) (42 
     U.S.C. 1395x(v)(1)(L)) is amended by adding at the end the 
     following new clauses:
       ``(iv) For services furnished by home health agencies for 
     cost reporting periods beginning on or after October 1, 1996, 
     the Secretary shall provide for an interim system of limits. 
     Payment shall be the lower of--

       ``(I) costs determined under the preceding provisions of 
     this subparagraph, or
       ``(II) an agency-specific per beneficiary annual limit 
     calculated from the agency's 12-month cost reporting period 
     ending on or after January 1, 1994 and on or before December 
     31, 1994 based on reasonable costs (including non-routine 
     medical supplies), updated by the home health market basket 
     index. The per beneficiary limitation shall be multiplied by 
     the agency's unduplicated census count of Medicare patients 
     for the year subject to the limitation. The limitation shall

[[Page 1562]]

     represent total Medicare reasonable costs divided by the 
     unduplicated census count of Medicare patients.

       ``(v) For services furnished by home health agencies for 
     cost reporting periods beginning on or after October 1, 1996, 
     the following rules shall apply:

       ``(I) For new providers and those providers without a 12-
     month cost reporting period ending in calendar year 1994, the 
     per beneficiary limit shall be equal to the mean of these 
     limits (or the Secretary's best estimates thereof) applied to 
     home health agencies as determined by the Secretary. Home 
     health agencies that have altered their corporate structure 
     or name may not be considered new providers for payment 
     purposes.
       ``(II) For beneficiaries who use services furnished by more 
     than one home health agency, the per beneficiary limitation 
     shall be pro-rated among agencies.

       ``(vi) Home health agencies whose cost or utilization 
     experience is below 125 percent of the mean national or 
     census region aggregate per beneficiary cost or utilization 
     experience for 1994, or best estimates thereof, and whose 
     year-end reasonable costs are below the agency-specific per 
     beneficiary limit, shall receive payment equal to 50 percent 
     of the difference between the agency's reasonable costs and 
     its limit for fiscal years 1996, 1997, 1998, and 1999. Such 
     payments may not exceed 5 percent of an agency's aggregate 
     Medicare reasonable cost in a year.
       ``(vii) Effective January 1, 1997, or as soon as feasible, 
     the Secretary shall modify the agency specific per 
     beneficiary annual limit described in clause (iv) to provide 
     for regional or national variations in utilization. For 
     purposes of determining payment under clause (iv), the limit 
     shall be calculated through a blend of 75 percent of the 
     agency-specific cost or utilization experience in 1994 with 
     25 percent of the national or census region cost or 
     utilization experience in 1994, or the Secretary's best 
     estimates thereof.''.
       (d) Use of Interim Final Regulations.--The Secretary shall 
     implement the payment limits described in section 
     1861(v)(1)(L)(iv) of the Social Security Act by publishing in 
     the Federal Register a notice of interim final payment limits 
     by August 1, 1996 and allowing for a period of public 
     comments thereon. Payments subject to these limits will be 
     effective for cost reporting periods beginning on or after 
     October 1, 1996, without the necessity for consideration of 
     comments received, but the Secretary shall, by Federal 
     Register notice, affirm or modify the limits after 
     considering those comments.
       (e) Studies.--The Secretary shall expand research on a 
     prospective payment system for home health agencies that 
     shall tie prospective payments to an episode of care, 
     including an intensive effort to develop a reliable case mix 
     adjuster that explains a significant amount of the variances 
     in costs. The Secretary shall develop such a system for 
     implementation in fiscal year 2000.
       (f) Payments Determined on Prospective Basis.--Title XVIII 
     is amended by adding at the end the following new section:


             ``Prospective Payment for Home Health Services

       ``Sec. 1893. (a) Notwithstanding section 1861(v), the 
     Secretary shall, for cost reporting periods beginning on or 
     after fiscal year 2000, provide for payments for home health 
     services in accordance with a prospective payment system, 
     which pays home health agencies on a per episode basis, 
     established by the Secretary.
       ``(b) Such a system shall include the following:
       ``(1) Per episode rates under the system shall be 15 
     percent less than those that would otherwise occur under 
     fiscal year 2000 Medicare expenditures for home health 
     services.
       ``(2) 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 Medicare Enhancement Act of 1995, 
     including medical supplies, shall be subject to the per 
     episode amount. In defining an episode of care, the Secretary 
     shall consider an appropriate length of time for an episode 
     the use of services and the number of visits provided within 
     an episode, potential changes in the mix of services provided 
     within an episode and their cost, and a general system design 
     that will provide for continued access to quality services. 
     The per episode amount shall be based on the most current 
     audited cost report data available to the Secretary.
       ``(c) The Secretary shall employ an appropriate case mix 
     adjuster that explains a significant amount of the variation 
     in cost.
       ``(d) The episode payment amount shall be adjusted annually 
     by the home health market basket index. The labor portion of 
     the episode amount shall be adjusted for geographic 
     differences in labor-related costs based on the most current 
     hospital wage index.
       ``(e) The Secretary may designate a payment provision for 
     outliers, recognizing the need to adjust payments due to 
     unusual variations in the type or amount of medically 
     necessary care.
       ``(f) A home health agency shall be responsible for 
     coordinating all care for a beneficiary. If a beneficiary 
     elects to transfer to, or receive services from, another home 
     health agency within an episode period, the episode payment 
     shall be pro-rated between home health agencies.''.
       (g) Limitation on Part A Coverage.--
       (1) In general.--Section 1812(a)(3) (42 U.S.C. 1395d(a)(3)) 
     is amended by striking the semicolon and inserting ``for up 
     to 160 visits during any spell of illness;''.
       (2) Conforming amendment.--Section 1812(b) (42 U.S.C. 
     1395d(b)) is amended--
       (A) by striking ``or'' at the end of paragraph (2),
       (B) by striking the period at the end of paragraph (3) and 
     inserting ``; or'', and
       (C) by adding at the end the following new paragraph:
       ``(4) home health services furnished to the individual 
     during such spell after such services have been furnished to 
     the individual for 160 visits during such spell.''.
       (3) Exclusion of additional part b costs from determination 
     of part b monthly premium.--Section 1839(a) (42 U.S.C. 
     1395r(a)) is amended--
       (A) in the second sentence of paragraph (1), by striking 
     ``enrollees.'' and inserting ``enrollees (except as provided 
     in paragraph (5)).''; and
       (B) by adding at the end the following new paragraph:
       ``(5) In estimating the benefits and administrative costs 
     which will be payable from the Federal Supplementary Medical 
     Insurance Trust Fund for a year (beginning with 1996), the 
     Secretary shall exclude an estimate of any benefits and costs 
     attributable to home health services for which payment would 
     have been made under part A during the year but for paragraph 
     (4) of section 1812(b).''.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to spells of illness beginning on or after 
     October 1, 1995.
       (h) Requiring Billing and Payment to be Based on Site Where 
     Service Furnished.--Section 1891 (42 U.S.C. 1395bbb) is 
     amended by adding at the end the following new subsection:
       ``(g) 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.''.
       (i) Maintaining Savings Resulting From Temporary Freeze on 
     Payment Increases.--
       (1) Basing updates to per visit cost limits on limits for 
     fiscal year 1993.--Section 1861(v)(1)(L)(iii) (42 U.S.C. 
     1395x(v)(1)(L)(iii)) is amended by adding at the end the 
     following sentence: ``In establishing limits under this 
     subparagraph, the Secretary may not take into account any 
     changes in the costs of the provision of services furnished 
     by home health agencies with respect to cost reporting 
     periods which began on or after July 1, 1994, and before July 
     1, 1996.''.
       (2) No exceptions permitted based on amendment.--The 
     Secretary of Health and Human Services shall not consider the 
     amendment made by paragraph (1) in making any exemptions and 
     exceptions pursuant to section 1861(v)(1)(L)(ii) of the 
     Social Security Act.

     SEC. 15225. REQUIRING HEALTH MAINTENANCE ORGANIZATIONS TO 
                   COVER APPROPRIATE RANGE OF SERVICES.

       (a) In General.--Section 1876(c) (42 U.S.C. 1395mm(c)) is 
     amended by adding at the end the following new paragraph:
       ``(9) The 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 services covered under the contract under this 
     section, or be reimbursed or indemnified or by a network plan 
     for providing such services under the contract.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to risk-sharing contracts under section 1876 of 
     the Social Security Act which entered into or renewed on or 
     after January 1, 1996.

     SEC. 15226. CLARIFICATION OF MEDICARE COVERAGE OF ITEMS AND 
                   SERVICES ASSOCIATED WITH CERTAIN MEDICAL 
                   DEVICES APPROVED FOR INVESTIGATIONAL USE.

       (a) Coverage.--Nothing in title XVIII of the Social 
     Security Act may be construed to prohibit coverage under part 
     A or part B of the medicare program of items and services 
     associated with the use of a medical device in the furnishing 
     of inpatient or outpatient hospital services (including 
     outpatient diagnostic imaging services) for which payment may 
     be made under the program solely on the grounds that the 
     device is not an approved device, if--
       (1) the device is an investigational device; and
       (2) the device is used instead of either an approved device 
     or a covered procedure.
       (b) Clarification of Payment Amount.--Notwithstanding any 
     other provision of title XVIII of the Social Security Act, 
     the amount of payment made under the medicare program for any 
     item or service associated with the use of an investigational 
     device in the furnishing of inpatient or outpatient hospital 
     services (including outpatient diagnostic imaging services) 
     for which payment may be made under the program may not 
     exceed the amount of the payment which would have been made 
     under the program for the item or service if the item or 
     service were associated with the use of an approved device or 
     a covered procedure.
       (c) Definitions.--In this section--
       (1) the term ``approved device'' means a medical device (or 
     devices) which has been approved for marketing under pre-
     market approval under the Federal Food, Drug, and Cosmetic 
     Act or cleared for marketing under a 510(k) notice under such 
     Act; and
       (2) the term ``investigational device'' means--
       (A) a medical device or devices (other than a device 
     described in paragraph (1)) approved for investigational use 
     under section 520(g) of

[[Page 1563]]

     the Federal Food, Drug, and Cosmetic Act, or
       (B) an investigational combination product under section 
     503(g) of the Federal Food, Drug, and Cosmetic Act which 
     includes a device (or devices) authorized for use under 
     section 505(i) of such Act.

     SEC. 15227. COMMISSION ON THE FUTURE OF MEDICARE AND THE 
                   PROTECTION OF THE HEALTH OF THE NATION'S SENIOR 
                   CITIZENS.

       (a) Establishment.--There is established a commission to be 
     known as the Commission on the Future of Medicare and the 
     Protection of the Health of the Nation's Senior Citizens (in 
     this section referred to as the ``Commission'').
       (b) Duties.--
       (1) In general.--The Commission shall--
       (A) analyze indicators of the health status of individuals 
     in the United States who are eligible for benefits under the 
     medicare program;
       (B) make specific recommendations on actions which may be 
     taken to improve the medicare program which would promote the 
     health of medicare beneficiaries;
       (C) analyze the effect of changes in the medicare program 
     (including changes in medicare payments) on the access to and 
     delivery of health care services to individuals who are not 
     medicare beneficiaries;
       (D) 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
       (E) 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.
       (B) The most efficient and effective manner of 
     administering the program.
       (C) Methods used by other nations to finance the delivery 
     of health care services to their citizens.
       (D) The financial impact on the medicare program of 
     increases in the number of individuals in the United States 
     without health insurance coverage.
       (c) Membership.--
       (1) Appointment.--The Commission shall be composed of 15 
     members appointed as follows:
       (A) The President shall appoint 3 members.
       (B) The Majority Leader of the Senate shall appoint 3 
     members.
       (C) The Minority Leader of the Senate shall appoint 3 
     members.
       (D) The Speaker of the House of Representatives shall 
     appoint 3 members.
       (E) The Minority Leader of the House of Representatives 
     shall appoint 3 members.
       (2) Chairman and vice chairman.--The Commission shall elect 
     a Chairman and Vice Chairman from among its members.
       (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 (e).
       (5) Meetings.--The Commission shall meet at the call of its 
     Chairman or a majority of its members.
       (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) 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.
       (e) 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) Acceptance of donations.--The Commission may accept, 
     use, and dispose of gifts or donations of services or 
     property.
       (10) 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.
       (f) Report.--Not later than May 1, 1997, 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.
       (g) Termination.--The Commission shall terminate 60 days 
     after the date of submission of the report required in 
     subsection (f).
       (h) Authorization of Appropriations.--There are authorized 
     to be appropriated $1,500,000 to carry out this section. 
     Amounts appropriated to carry out this section shall remain 
     available until expended.
                 Subtitle D--Preventing Fraud and Abuse

  PART 1--AMENDMENTS TO ANTI-FRAUD AND ABUSE PROVISIONS APPLICABLE TO 
           MEDICARE, MEDICAID, AND STATE HEALTH CARE PROGRAMS

     SEC. 15301. ANTI-KICKBACK STATUTORY PROVISIONS.

       (a) Revision to Penalties.--
       (1) Permitting secretary to impose civil monetary 
     penalty.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)) is 
     amended--
       (A) by striking ``or'' at the end of paragraphs (1) and 
     (2);
       (B) by striking the semicolon at the end of paragraph (3) 
     and inserting ``; or''; and
       (C) by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) carries out any activity in violation of paragraph 
     (1) or (2) of section 1128B(b);''.
       (2) Description of civil monetary penalty applicable.--
     Section 1128A(a) (42 U.S.C. 1320a-7a(a)) is amended--
       (A) by striking ``given).'' at the end of the first 
     sentence and inserting the following: ``given or, in cases 
     under paragraph (4), $50,000 for each such violation).''; and
       (B) by striking ``claim.'' at the end of the second 
     sentence and inserting the following: ``claim (or, in cases 
     under paragraph (4), damages of not more than three times the 
     total amount of remuneration offered, paid, solicited, or 
     received.''.
       (3) Increase in criminal penalty.--Paragraphs (1) and (2) 
     of section 1128B(b) (42 U.S.C. 1320a-7b(b)) are each 
     amended--
       (A) by striking ``$25,000'' and inserting ``$50,000''; and
       (B) by striking the period at the end and inserting the 
     following: ``, and shall be subject to damages of not more 
     than three times the total remuneration offered, paid, 
     solicited, or received.''.
       (b) Revisions to Exceptions.--
       (1) Exception for discounts.--Section 1128B(b)(3)(A) (42 
     U.S.C. 1320a-7b(b)(3)(A)) is amended by striking ``program;'' 
     and inserting ``program and is not in the form of a cash 
     payment;''.
       (2) Exception for payments to employees.--Section 
     1128B(b)(3)(B) (42 U.S.C. 1320a-7b(b)(3)(B)) is amended by 
     inserting at the end ``if the amount of remuneration under 
     the arrangement is consistent with the fair market value of 
     the services and is not determined in a manner that takes 
     into account (directly or indirectly) the volume or value of 
     any referrals, except that such employee can be paid 
     remuneration in the form of a productivity bonus based on 
     services personally performed by the employee.''.
       (3) Exception for waiver of coinsurance by certain 
     providers.--Section

[[Page 1564]]

     1128B(b)(3)(D) (42 U.S.C. 1320a-7b(b)(3)(D)) is amended to 
     read as follows:
       ``(D) a waiver or reduction of any coinsurance or other 
     copayment if--
       ``(i) the waiver or reduction is made pursuant to a public 
     schedule of discounts which the person is obligated as a 
     matter of law to apply to certain individuals,
       ``(ii) the waiver or reduction is made pursuant to an 
     established program and applies to a defined group of 
     individuals whose incomes do not exceed 150 percent (or such 
     higher percentage as the Secretary may permit) of the 
     official poverty line (as defined by the Office of Management 
     and Budget, and revised annually in accordance with section 
     673(2) of the Omnibus Budget Reconciliation Act of 1981) 
     applicable to a family of the size involved,
       ``(iii) the waiver or reduction of coinsurance is not 
     offered as part of any advertisement or solicitation and the 
     person offering the waiver or reduction determines in good 
     faith that the individual is in financial need,
       ``(iv) the person offering the waiver or reduction fails to 
     collect the coinsurance or other payment after making 
     reasonable collection efforts, or
       ``(v) the waiver or reduction of coinsurance is in 
     accordance with a cost sharing schedule or a supplemental 
     benefit package which may be offered by a managed care plan 
     (as defined in section 1128(j)); and''.
       (4) New exception for capitated payments.--Section 
     1128B(b)(3) (42 U.S.C. 1320a-7b(b)(3)) is amended--
       (A) by striking ``and'' at the end of subparagraph (D);
       (B) by striking the period at the end of subparagraph (E) 
     and inserting ``; and''; and
       (C) by adding at the end the following new subparagraphs:
       ``(F) any reduction in cost sharing or increased benefits 
     given to an individual, any amounts paid to a provider for an 
     item or service furnished to an individual, or any discount 
     or reduction in price given by the provider for such an item 
     or service, if the individual is enrolled with and such item 
     or service is covered under any of the following:
       ``(i) A health plan which is furnishing items or services 
     under a risk-sharing contract under section 1876 or section 
     1903(m).
       ``(ii) A health plan receiving payments on a prepaid basis, 
     under a demonstration project under section 402(a) of the 
     Social Security Amendments of 1967 or under section 222(a) of 
     the Social Security Amendments of 1972; and
       ``(G) any amounts paid to a provider for an item or service 
     furnished to an individual or any discount or reduction in 
     price given by the provider for such an item or service, if 
     the individual is enrolled with and such item or service is 
     covered under a health plan under which the provider 
     furnishing the item or service is paid by the health plan for 
     furnishing the item or service only on a capitated basis 
     pursuant to a written arrangement between the plan and the 
     provider in which the provider assumes financial risk for 
     furnishing the item or service.''.
       (c) Authorization for the Secretary To Issue Regulations.--
     Section 1128B(b) (42 U.S.C. 1320a-7b(b)) is amended by adding 
     at the end the following new paragraph:
       ``(4) The Secretary is authorized to impose by regulation 
     such other requirements as needed to protect against program 
     or patient abuse with respect to any of the exceptions 
     described in paragraph (3).''.
       (d) Clarification of Other Elements of Offense.--Section 
     1128B(b) (42 U.S.C. 1320a-7b(b)) is amended--
       (1) in paragraph (1)(A), by striking ``in return for 
     referring'' and inserting ``to refer'';
       (2) in paragraph (1)(B), by striking ``in return for 
     purchasing, leasing, ordering, or arranging for or 
     recommending'' and inserting ``to purchase, lease, order, or 
     arrange for or recommend''; and
       (3) by adding at the end of paragraphs (1) and (2) the 
     following sentence: ``A violation exists under this paragraph 
     if one or more purposes of the remuneration is unlawful under 
     this paragraph.''.

     SEC. 15302. CIVIL MONEY PENALTIES.

       (a) Prohibition Against Offering Inducements to Individuals 
     Enrolled Under Plans.--
       (1) Offer of remuneration.--Section 1128A(a) (42 U.S.C. 
     1320a-7a(a)), as amended by section 15301(a)(1), is amended--
       (A) by striking ``; or'' at the end of paragraph (3) and 
     inserting a semicolon;
       (B) by striking the semicolon at the end of paragraph (4) 
     and inserting ``; or''; and
       (C) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) offers, pays, or transfers remuneration to any 
     individual eligible for benefits under title XVIII of this 
     Act, or under a State health care program (as defined in 
     section 1128(h)) that such person knows or should know is 
     likely to influence such individual to order or receive from 
     a particular provider, practitioner, or supplier any item or 
     service for which payment may be made, in whole or in part, 
     under title XVIII, or a State health care program, other than 
     to influence an individual enrolled in a managed care plan or 
     a point-of-service plan (as defined in section 1128(j)) to 
     receive benefits under the plan in accordance with 
     established practice patterns for the delivery of medically 
     necessary services;''.
       (2) Remuneration defined.--Section 1128A(i) (42 U.S.C. 
     1320a-7a(i)) is amended by adding at the end the following 
     new paragraph:
       ``(6) The term `remuneration' includes the waiver or 
     reduction of coinsurance amounts, and transfers of items or 
     services for free or for other than fair market value, except 
     that such term does not include the waiver or reduction of 
     coinsurance amounts by a person or entity, if--
       ``(A) the waiver or reduction is made pursuant to a public 
     schedule of discounts which the person is obligated as a 
     matter of law to apply to certain individuals,
       ``(B) the waiver or reduction is made pursuant to an 
     established program and applies to a defined group of 
     individuals whose incomes do not exceed 150 percent (or such 
     higher percentage as the Secretary may permit) of the 
     official poverty line (as defined by the Office of Management 
     and Budget, and revised annually in accordance with section 
     673(2) of the Omnibus Budget Reconciliation Act of 1981) 
     applicable to a family of the size involved,
       ``(C) the waiver or reduction of coinsurance is not offered 
     as part of any advertisement or solicitation and the person 
     offering the waiver or reduction determines in good faith 
     that the individual is in financial need,
       ``(D) the person offering the waiver or reduction fails to 
     collect the coinsurance or other payment after making 
     reasonable collection efforts, or
       ``(E) the waiver or reduction of coinsurance is in 
     accordance with a cost sharing schedule or a supplemental 
     benefit package which may be offered by a managed care plan 
     under section 1128(j).''.
       (b) Additional Offenses.--Section 1128A(a) of such Act, as 
     amended by section 15301(a)(1) and subsection (a)(1), is 
     further amended--
       (1) by striking ``or'' at the end of paragraph (4);
       (2) by striking the semicolon at the end of paragraph (5) 
     and inserting ``; or''; and
       (3) by inserting after paragraph (5) the following new 
     paragraphs:
       ``(6) engages in a practice which has the effect of 
     limiting or discouraging (as compared to other plan 
     enrollees) the utilization of medically necessary health care 
     services covered by law or under the service contract by 
     title XIX or other publicly subsidized patients, including 
     but not limited to differential standards for the location 
     and hours of service offered by providers participating in 
     the plan;
       ``(7) substantially fails to cooperate with a quality 
     assurance program or a utilization review activity; or
       ``(8) engaging in a pattern of failing substantially to 
     provide or authorize medically necessary items and services 
     that are required to be provided to an individual covered 
     under a health plan (as defined in section 1128(j)) or public 
     program for the delivery of or payment for health care items 
     or services, if the failure has adversely affected (or had a 
     substantial likelihood of adversely affecting) the 
     individual;''.
       ``(9) submits false or fraudulent statements, data or 
     information on claims to the Secretary, a State health care 
     agency, or any other Federal, State or local agency charged 
     with implementation or oversight of a health plan or a public 
     program that the person knows or should know is 
     fraudulent;''.
       (c) Modifications of Amounts of Penalties and 
     Assessments.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)), as 
     amended by section 15301(a), subsection (a)(1), and 
     subsection (b), is amended in the matter following paragraph 
     (9)--
       (1) by striking ``$2,000'' and inserting ``$10,000'';
       (2) by inserting after ``under paragraph (4), $50,000 for 
     each such violation'' the following: ``; in cases under 
     paragraph (5), $10,000 for each such offer, payment, or 
     transfer; in cases under paragraphs (6) through (9), an 
     amount not to exceed $10,000 for each such determination by 
     the Secretary''; and
       (3) by striking ``twice the amount'' and inserting ``three 
     times the amount''.
       (d) Interest on Penalties.--Section 1128A(f) (42 U.S.C. 
     1320a-7a(f)) is amended by adding after the first sentence 
     the following: ``Interest shall accrue on the penalties and 
     assessments imposed by a final determination of the Secretary 
     in accordance with an annual rate established by the 
     Secretary under the Federal Claims Collection Act. The rate 
     of interest charged shall be the rate in effect on the date 
     the determination becomes final and shall remain fixed at 
     that rate until the entire amount due is paid. In addition, 
     the Secretary is authorized to recover the costs of 
     collection in any case where the penalties and assessments 
     are not paid within 30 days after the determination becomes 
     final, or in the case of a compromised amount, where payments 
     are more than 90 days past due. In lieu of actual costs, the 
     Secretary is authorized to impose a charge of up to 10 
     percent of the amount of penalties and assessments owed to 
     cover the costs of collection.''.
       (e) Authorization To Act.--
       (1) In general.--The first sentence of section 1128A(c)(1) 
     (42 U.S.C. 1320a-7a(c)(1)) is amended by striking all that 
     follows ``(b)'' and inserting the following: ``unless, within 
     one year after the date the Secretary presents a case to the 
     Attorney General for consideration, the Attorney General 
     brings an action in a district court of the United States.''.
       (2) Effective date.--The amendment made by this paragraph 
     (1) shall apply to cases presented by the Secretary of Health 
     and Human Services for consideration on or after the date of 
     the enactment of this Act.
       (f) Clarification of Penalty Imposed on Excluded Provider 
     Furnishing Services.--Section 1128A(a)(1)(D) (42 U.S.C. 
     1320a-7a(a)(1)(D)) is amended by inserting ``who

[[Page 1565]]

     furnished the service'' after ``in which the person''.

     SEC. 15303. PRIVATE RIGHT OF ACTION.

       Section 1128A (42 U.S.C. 1320a-7a) is amended by adding at 
     the end the following new subsection:
       ``(m)(1) Subject to paragraphs (2) and (3), a carrier 
     offering an insured health plan and the sponsor of a self-
     insured health plan that suffers financial harm as a direct 
     result of the submission of claims by an individual or entity 
     for payment for items and services furnished under the plan 
     which makes the individual or entity subject to a civil 
     monetary penalty under this section may, in a civil action 
     against the individual or entity in the United States 
     District Court, obtain damages against the individual or 
     entity and such equitable relief as is appropriate.
       ``(2) A carrier or sponsor may bring a civil action under 
     this subsection only if the carrier or sponsor provides the 
     Secretary and the Attorney General with written notice of the 
     intent to bring an action under this subsection, the 
     identities of the individuals or entities the carrier or 
     sponsor intends to name as defendants to the action, and all 
     information the carrier or sponsor possesses regarding the 
     activity that is the subject of the action that may 
     materially affect the Secretary's decision to initiate a 
     proceeding to impose a civil monetary penalty under this 
     section against the defendants.
       ``(3) A carrier or sponsor may bring a civil action under 
     this subsection only if any of the following conditions are 
     met:
       ``(A) During the 60-day period that begins on the date the 
     Secretary receives the written notice described in paragraph 
     (2), the Secretary does not notify the carrier or sponsor 
     that the Secretary intends to initiate a proceeding to impose 
     a civil monetary penalty under this section against the 
     defendants.
       ``(B) If the Secretary notifies the carrier or sponsor 
     during the 60-day period described in subparagraph (A) that 
     the Secretary intends to initiate a proceeding to impose a 
     civil monetary penalty under this section against the 
     defendants, the Secretary subsequently notifies the carrier 
     or sponsor that the Secretary no longer intends to initiate 
     such a proceeding against the defendants.
       ``(C) After the expiration of the 2-year period that begins 
     on the date the Secretary notifies the carrier or sponsor 
     that the Secretary intends to initiate a proceeding to impose 
     a civil monetary penalty under this section against the 
     defendants, the Secretary has not made a good faith effort to 
     initiate such a proceeding against the defendants.
       ``(4) No action may be brought under this subsection more 
     than 6 years after the date of the activity with respect to 
     which the action is brought.''.

     SEC. 15304. AMENDMENTS TO EXCLUSIONARY PROVISIONS IN FRAUD 
                   AND ABUSE PROGRAM.

       (a) Mandatory Exclusion of Individual Convicted of Criminal 
     Offense Related to Health Care Fraud.--
       (1) In general.--Section 1128(a) (42 U.S.C. 1320a-7(a)) is 
     amended by adding at the end the following new paragraph:
       ``(3) Felony conviction relating to fraud.--Any individual 
     or entity that has been convicted under Federal or State law, 
     in connection with the delivery of a health care item or 
     service on or after January 1, 1997, or with respect to any 
     act or omission on or after such date in a program operated 
     by or financed in whole or in part by any Federal, State, or 
     local government agency, of a criminal offense consisting of 
     a felony relating to fraud, theft, embezzlement, breach of 
     fiduciary responsibility, or other financial misconduct.''.
       (2) Conforming amendment.--Section 1128(b)(1) (42 U.S.C. 
     1320a-7(b)(1)) is amended--
       (A) in the heading, by striking ``Conviction'' and 
     inserting ``Misdemeanor conviction''; and
       (B) by striking ``criminal offense'' and inserting 
     ``criminal offense consisting of a misdemeanor''.
       (b) Establishment of Minimum Period of Exclusion for 
     Certain Individuals and Entities Subject to Permissive 
     Exclusion From Medicare and State Health Care Programs.--
       (1) In general.--Section 1128(c)(3) (42 U.S.C. 1320a-
     7(c)(3)) is amended by adding at the end the following new 
     subparagraphs:
       ``(D) In the case of an exclusion of an individual or 
     entity under paragraphs (1), (2), or (3) of subsection (b), 
     the period of exclusion shall be a minimum of 3 years, unless 
     the Secretary determines that an alternative period is 
     appropriate because of aggravating or mitigating 
     circumstances.
       ``(E) In the case of an exclusion of an individual or 
     entity under paragraph (4) or (5) of subsection (b), the 
     period of the exclusion shall not be less than the period 
     during which the individual's or entity's license to provide 
     health care is revoked, suspended, or surrendered, or the 
     individual or the entity is excluded or suspended from a 
     Federal or State health care program.
       ``(F) In the case of an exclusion of an individual or 
     entity under subsection (b)(6)(B), the period of the 
     exclusion shall be not less than 1 year.''.
       (2) Conforming amendment.--Section 1128(c)(3)(A) (42 U.S.C. 
     1320a-7(c)(3)(A)) is amended by striking ``subsection 
     (b)(12)'' and inserting ``paragraph (1), (2), (3), (4), 
     (6)(B), or (12) of subsection (b)''.

     SEC. 15305. SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR 
                   FAILURE TO COMPLY WITH STATUTORY OBLIGATIONS 
                   RELATING TO QUALITY OF CARE.

       (a) Minimum Period of Exclusion for Practitioners and 
     Persons Failing To Meet Statutory Obligations.--
       (1) In general.--The second sentence of section 1156(b)(1) 
     (42 U.S.C. 1320c-5(b)(1)) is amended by striking ``may 
     prescribe)'' and inserting ``may prescribe, except that such 
     period may not be less than one year)''.
       (2) Conforming amendment.--Section 1156(b)(2) (42 U.S.C. 
     1320c-5(b)(2)) is amended by striking ``shall remain'' and 
     inserting ``shall (subject to the minimum period specified in 
     the second sentence of paragraph (1)) remain''.
       (b) Amount of Civil Money Penalty.--Section 1156(b)(3) (42 
     U.S.C. 1320c-5(b)(3)) is amended by striking ``the actual or 
     estimated cost'' and inserting the following: ``$10,000 for 
     each instance''.
       (c) Repeal of ``Unwilling or Unable'' Condition for 
     Imposition of Sanction.--Section 1156(b)(1) (42 U.S.C. 1320c-
     5(b)(1)) is amended--
       (1) in the second sentence, by striking ``and determines'' 
     and all that follows through ``such obligations,'' and
       (2) by striking the third sentence.

     SEC. 15306. REVISIONS TO CRIMINAL PENALTIES.

       (a) Treble Damages for Criminal Sanctions.--Section 1128B 
     (42 U.S.C. 1320a-7b) is amended by adding at the end the 
     following new subsection:
       ``(f) In addition to the fines that may be imposed under 
     subsection (a) or (c) any individual found to have violated 
     the provisions of any of such subsections may be subject to 
     treble damages.''.
       (b) Identification of Community Service Opportunities.--
     Section 1128B (42 U.S.C. 1320a-7b), as amended by subsection 
     (a), is further amended by adding at the end the following 
     new subsection:
       ``(g) The Secretary shall--
       ``(1) in consultation with State and local health care 
     officials, identify opportunities for the satisfaction of 
     community service obligations that a court may impose upon 
     the conviction of an offense under this section, and
       ``(2) make information concerning such opportunities 
     available to Federal and State law enforcement officers and 
     State and local health care officials.''.

     SEC. 15307. DEFINITIONS.

       Section 1128 (42 U.S.C. 1320a-7) is amended by adding at 
     the end the following new subsection:
       ``(j) Other Definitions Relating to Health Plans.--
       ``(1) Health plan.--The term `health plan' means--
       ``(A) any contract of health insurance, including any 
     hospital or medical service policy or certificate, hospital 
     or medical service plan contract, or health maintenance 
     organization group contract, that is provided by a carrier in 
     a State; or
       ``(B) an employee welfare benefit plan or other arrangement 
     insofar as the plan or arrangement provides health benefits 
     in a State and is funded in a manner other than through the 
     purchase of one or more policies or contracts described in 
     subparagraph (A).
       ``(2) Managed care plan.--The term `managed care plan' 
     means a health plan that provides for items and services 
     covered under the plan primarily through providers in the 
     provider network of the plan.
       ``(3) Point-of-service plan.--The term `point-of-service 
     plan' means a health plan other than a managed care plan that 
     permits an enrollee to receive benefits through a provider 
     network.
       ``(4) Provider network.--The term `provider network' means, 
     with respect to a health plan, providers who have entered 
     into an agreement with the plan under which such providers 
     are obligated to provide items and services covered under the 
     plan to individuals enrolled in the plan.''.

     SEC. 15308. EFFECTIVE DATE.

       The amendments made by this part shall take effect January 
     1, 1997.

      PART 2--INTERPRETIVE RULINGS ON KICKBACKS AND SELF-REFERRAL

     SEC. 15311. ESTABLISHMENT OF PROCESS FOR ISSUANCE OF 
                   INTERPRETIVE RULINGS.

       (a) Establishment.--Not later than 1 year after the date of 
     the enactment of this Act, the Secretary of Health and Human 
     Services (acting through the Inspector General of the 
     Department of Health and Human Services) shall establish a 
     process under which individuals and entities may submit a 
     request to the Secretary for an interpretive ruling regarding 
     the provisions of section 1128B(b) of the Social Security Act 
     or part 3 which relate to kickbacks, bribes, and rebates, or 
     the provisions of section 1877 of the Social Security Act.
       (b) Deadline for Rejection of Request.--If the Secretary of 
     Health and Human Services rejects a request for an 
     interpretive ruling submitted under this section, the 
     Secretary shall notify the individual submitting the request 
     of the rejection not later than 60 days after receiving the 
     request.

     SEC. 15312. EFFECT OF ISSUANCE OF INTERPRETIVE RULING.

       (a) No Legal Effect.--If the Secretary of Health and Human 
     Services issues an interpretive ruling under section 15311, 
     the ruling shall not be binding upon the Secretary, the party 
     requesting the ruling, or any other party.
       (b) Publication of Rulings.--The Secretary of Health and 
     Human Services shall publish each interpretive ruling issued 
     under section 15311 in the Federal Register.

[[Page 1566]]

     SEC. 15313. IMPOSITION OF FEES.

       (a) In General.--The Secretary of Health and Human Services 
     shall require an individual or entity requesting an 
     interpretive ruling under section 15311 to submit a fee.
       (b) Amount.--The amount of the fee required under 
     subsection (a) shall be equal to the costs incurred by the 
     Secretary in responding to the request.

    PART 3--DIRECT SPENDING FOR ANTI-FRAUD ACTIVITIES UNDER MEDICARE

     SEC. 15321. DIRECT SPENDING FOR ANTI-FRAUD ACTIVITIES UNDER 
                   MEDICARE.

       Title XVIII (42 U.S.C. 1395 et seq.), as amended by section 
     15224(f), is amended by adding at the end the following new 
     section:


             ``appropriations for combating fraud and abuse

       ``Sec. 1894. (a) Direct Spending for Payment Safeguard 
     Activities.--
       ``(1) In general.--There are appropriated from the Federal 
     Hospital Insurance Trust Fund and the Federal Supplementary 
     Medical Insurance Trust Fund for each fiscal year such 
     amounts as are necessary to carry out the payment safeguard 
     activities described in paragraph (2), subject to paragraph 
     (3).
       ``(2) Activities described.--The payment safeguard 
     activities described in this paragraph are as follows:
       ``(A) Review of activities of providers of services or 
     other individuals and entities furnishing items and services 
     for which payment may be made under this title (including 
     skilled nursing facilities and home health agencies), 
     including medical and utilization review and fraud review.
       ``(B) Audit of cost reports.
       ``(C) Determinations as to whether payment should not be, 
     or should not have been, made under this title by reason of 
     section 1862(b), and recovery of payments that should not 
     have been made.
       ``(D) Education of providers of services, beneficiaries, 
     and other persons with respect to payment integrity and 
     benefit quality assurance issues.
       ``(3) Amounts specified.--The amount appropriated under 
     paragraph (1) for a fiscal year is as follows:
       ``(A) For fiscal year 1996, such amount shall be not less 
     than $430,000,000 and not more than $440,000,000.
       ``(B) For fiscal year 1997, such amount shall be not less 
     than $490,000,000 and not more than $500,000,000.
       ``(C) For fiscal year 1998, such amount shall be not less 
     than $550,000,000 and not more than $560,000,000.
       ``(D) For fiscal year 1999, such amount shall be not less 
     than $620,000,000 and not more than $630,000,000.
       ``(E) For fiscal year 2000, such amount shall be not less 
     than $670,000,000 and not more than $680,000,000.
       ``(F) For fiscal year 2001, such amount shall be not less 
     than $690,000,000 and not more than $700,000,000.
       ``(G) For fiscal year 2002, such amount shall be not less 
     than $710,000,000 and not more than $720,000,000.
       ``(b) Direct Spending for Medicare-Related Activities of 
     Inspector General.--
       ``(1) In general.--There are appropriated from the Federal 
     Hospital Insurance Trust Fund and the Federal Supplementary 
     Medical Insurance Trust Fund to the Inspector General of the 
     Department of Health and Human Services for each fiscal year 
     such amounts as are necessary to enable the Inspector General 
     to carry out activities relating to the medicare program (as 
     described in paragraph (2)), subject to paragraph (3).
       ``(2) Activities described.--The activities described in 
     this paragraph are as follows:
       ``(A) Prosecuting medicare-related matters through 
     criminal, civil, and administrative proceedings.
       ``(B) Conducting investigations relating to the medicare 
     program.
       ``(C) Performing financial and performance audits of 
     programs and operations relating to the medicare program.
       ``(D) Performing inspections and other evaluations relating 
     to the medicare program.
       ``(E) Conducting provider and consumer education activities 
     regarding the requirements of this title.
       ``(3) Amounts specified.--The amount appropriated under 
     paragraph (1) for a fiscal year is as follows:
       ``(A) For fiscal year 1996, such amount shall be 
     $130,000,000.
       ``(B) For fiscal year 1997, such amount shall be 
     $181,000,000.
       ``(C) For fiscal year 1998, such amount shall be 
     $204,000,000.
       ``(D) For each subsequent fiscal year, the amount 
     appropriated for the previous fiscal year, increased by the 
     percentage increase in aggregate expenditures under this 
     title for the fiscal year involved over the previous fiscal 
     year.
       ``(c) Allocation of Payments Among Trust Funds.--The 
     appropriations made under subsection (a) and subsection (b) 
     shall be in an allocation as reasonably reflects the 
     proportion of such expenditures associated with part A and 
     part B.''.

   PART 4--PREEMPTION OF STATE CORPORATE PRACTICE LAWS UNDER MEDICARE

     SEC. 15331. PREEMPTION OF STATE LAWS PROHIBITING CORPORATE 
                   PRACTICE OF MEDICINE FOR PURPOSES OF MEDICARE.

       Title XVIII (42 U.S.C. 1395 et seq.) is amended by adding 
     at the end the following new section:


            ``permitting corporations to serve as providers

       ``Sec. 1893. The Secretary may not refuse to treat any 
     individual or entity as a provider of services under this 
     title or refuse to make payment under this title to the 
     individual or entity on the grounds that the individual or 
     entity is prohibited from practicing medicine under a 
     provision of State or local law which prohibits a corporation 
     from practicing medicine.''.

            PART 5--MEDICARE ANTI-FRAUD AND ABUSE COMMISSION

     SEC. 15341. ESTABLISHMENT OF MEDICARE ANTI-FRAUD AND ABUSE 
                   COMMISSION

       (a) In General.--There is established a commission to be 
     known as the ``Medicare Anti-Fraud and Abuse Commission'' (in 
     this title referred to as the ``Commission'').
       (b) Composition.--The Commission shall be composed of 8 
     members as follows:
       (1) Officials.--
       (A) The Secretary of Health and Human Services (or the 
     Secretary's designee).
       (B) The Inspector General of the Department of Health and 
     Human Services (or the Inspector General's designee).
       (C) The Administrator of the Health Care Financing 
     Administration (or the Administrator's designee).
       (2) Public members.--Five members, appointed by the 
     President, of which--
       (A) one shall be a representative of physicians;
       (B) one shall be a representative of hospital 
     administrators;
       (C) one shall be a representative of medicare carriers;
       (D) one shall be a representative of medicare peer review 
     organizations; and
       (E) one shall be a representative of medicare 
     beneficiaries.

     In making appointments under this paragraph of an individual 
     who is a representative of persons or organizations, the 
     President shall consider the recommendations of national 
     organizations that represent such persons or organizations. 
     The President shall report to Congress, within 90 days after 
     the date of the enactment of this Act, the names of the 
     members appointed under this paragraph.
       (c) Terms.--Each member shall be appointed for the life of 
     the Commission. A vacancy in the Commission shall be filled 
     in the manner in which the original appointment was made.

     SEC. 15342. FUNCTIONS OF COMMISSION.

       (a) In General.--The Commission shall--
       (1) investigate the nature, magnitude, and cost of health 
     care fraud and abuse in the medicare program, and
       (2) identify and develop the most effective methods of 
     preventing, detecting, and prosecuting or litigating such 
     fraud and abuse, with particular emphasis on coordinating 
     public and private prevention, detection, and enforcement 
     efforts.
       (b) Particulars.--Among other items, the Commission shall 
     examine at least the following:
       (1) Mechanisms to provide greater standardization of claims 
     administration in order to accommodate fraud prevention and 
     detection.
       (2) Mechanisms to allow more freedom of the medicare 
     program to exchange information for coordinating case 
     development and prosecution or litigation efforts, without 
     undermining patient and provider privacy protections or 
     violating anti-trust laws.
       (3) Criteria for physician referrals to facilities in which 
     they (or family members) have a financial interest.
       (4) The availability of resources to the medicare program 
     to combat fraud and abuse.
       (c) Report.--After approval by a majority vote, a quorum 
     being present, the Commission shall transmit to Congress a 
     report on its activities. The report shall be transmitted not 
     later than 18 months after the date that a majority of the 
     public members of the Commission have been appointed. The 
     report shall contain a detailed statement of the Commission's 
     findings, together with such recommendations as the 
     Commission considers appropriate.

     SEC. 15343. ORGANIZATION AND COMPENSATION.

       (a) Organization.--
       (1) Quorum.--A majority of the members of the Commission 
     shall constitute a quorum but a lesser number may hold 
     hearings.
       (2) Chairman.--The Commission shall elect one of its 
     members to serve as chairman of the Commission.
       (3) Meetings.--The Commission shall meet at the call of the 
     chairman or a majority of its members. Meetings of the 
     Commission are open to the public under section 10(a)(10) of 
     the Federal Advisory Committee Act, except that the 
     Commission may conduct meetings in executive session but only 
     if a majority of the members of the Commission (a quorum 
     being present) approve going into executive session.
       (b) Compensation of Members.--Members of the Commission 
     shall serve without compensation, but shall be reimbursed for 
     travel, subsistence, and other necessary expenses incurred in 
     the performance of their duties as members of the Commission.

     SEC. 15344. STAFF OF COMMISSION.

       (a) In General.--The Commission may appoint and fix the 
     compensation of a staff director and such other additional 
     personnel as may be necessary to enable the Commission to 
     carry out its functions, without regard to the laws, rules, 
     and regulations governing appointment and compensation and 
     other

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     conditions of service in the competitive service.
       (b) Detail of Federal Employees.--Upon request of the 
     chairman, any Federal employee who is subject to such laws, 
     rules, and regulations, may be detailed to the Commission to 
     assist it in carrying out its functions under this title, and 
     such detail shall be without interruption or loss of civil 
     service status or privilege.
       (c) Experts and Consultants.--The Commission may procure 
     temporary and intermittent services under section 3109(b) of 
     title 5, United States Code, but at rates for individuals not 
     to exceed the daily equivalent of 120 percent of the maximum 
     annual rate of basic pay payable for GS-15 of the General 
     Schedule.

     SEC. 15345. AUTHORITY OF COMMISSION.

       (a) Hearings and Sessions.--The Commission may, for the 
     purpose of carrying out this title, hold hearings, sit and 
     act at times and places, take testimony, and receive evidence 
     as the Commission considers appropriate. The Commission may 
     administer oaths or affirmations to witnesses appearing 
     before it.
       (b) Obtaining Official Data.--
       (1) In general.--The Commission may secure directly from 
     any department or agency of the United States information 
     necessary to enable it to carry out this title. Upon request 
     of the chairman of the Commission, the head of that 
     department or agency shall furnish that information to the 
     Commission.
       (2) Access to information.--Information obtained by the 
     Commission is available to the public in the same manner in 
     which information may be made available under sections 552 
     and 552a of title 5, United States Code.
       (c) Gifts, Bequests, and Devises.--The Commission may 
     accept, use, and dispose of gifts, bequests, or devises of 
     services or property for the purpose of aiding or 
     facilitating the work of the Commission.
       (d) Mails.--The Commission may use the United States mails 
     in the same manner and under the same conditions as other 
     departments and agencies of the United States.
       (e) Administrative Support Services.--Upon the request of 
     the Commission, the Administrator of General Services shall 
     provide to the Commission, on a reimbursable basis, the 
     administrative support services necessary for the Commission 
     to carry out its responsibilities under this title.
       (f) Subpoena Power.--
       (1) In general.--The Commission may issue subpoenas 
     requiring the attendance and testimony of witnesses and the 
     production of any evidence relating to any matter which the 
     Commission is authorized to investigate under this title. The 
     attendance of witnesses and the production of evidence may be 
     required from any place within the United States at any 
     designated place of hearing within the United States.
       (2) Failure to obey a subpoena.--If a person refuses to 
     obey a subpoena issued under paragraph (1), the Commission 
     may apply to a United States district court for an order 
     requiring that person to appear before the Commission to give 
     testimony, produce evidence, or both, relating to the matter 
     under investigation. The application may be made within the 
     judicial district where the hearing is conducted or where 
     that person is found, resides, or transacts business. Any 
     failure to obey the order of the court may be punished by the 
     court as civil contempt.
       (3) Service of subpoenas.--The subpoenas of the Commission 
     shall be served in the manner provided for subpoenas issued 
     by a United States district court under the Federal Rules of 
     Civil Procedure for the United States district courts.
       (4) Service of process.--All process of any court to which 
     application is to be made under paragraph (2) may be served 
     in the judicial district in which the person required to be 
     served resides or may be found.

     SEC. 15346. TERMINATION.

       The Commission shall terminate 90 days after the date the 
     report is submitted under section 15342(c).

     SEC. 15347. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to the Commission 
     such sums as are necessary to carry out its functions, to 
     remain available until expended.

It was decided in the

Yeas

149

<3-line {>

negative

Nays

283`