Calendar No. 436

103D CONGRESS

2D SESSION S. 1974

[Report No. 103–268]

A BILL

To authorize the Secretary of Veterans Affairs to

health care reform.health care systems of States that have enactedof Veterans Affairs health care system in thefeasibility of the participation of the Departmentconduct pilot programs in order to evaluate the

MAY 23 (legislative day, MAY 16), 1994

Reported with an amendment
II

Calendar No. 436

103D CONGRESS

2D SESSION S. 1974

[Report No. 103–268]

To authorize the Secretary of Veterans Affairs to conduct pilot programs

in order to evaluate the feasibility of the participation of the Department

of Veterans Affairs health care system in the health care systems of

States that have enacted health care reform.

IN THE SENATE OF THE UNITED STATES

MARCH 24 (legislative day, FEBRUARY 22), 1994

Mr. ROCKEFELLER (for himself, Mr. MURKOWSKI, Mr. GRAHAM, Mr. AKAKA,

Mr. DASCHLE, Mr. THURMOND, Mr. JEFFORDS, Mr. LEAHY, Mrs. MURRAY, Mr. CAMPBELL, and Mr. WELLSTONE) introduced the following bill;

which was read twice and referred to the Committee on Veterans’ Affairs

MAY 23 (legislative day, MAY 16), 1994

Reported by Mr. ROCKEFELLER, with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]

A BILL

To authorize the Secretary of Veterans Affairs to conduct

pilot programs in order to evaluate the feasibility of

the participation of the Department of Veterans Affairs

health care system in the health care systems of States

that have enacted health care reform.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘VA State Health Care

3 Reform Pilot Program Act’’.

4 SEC. 2. PURPOSE OF PILOT PROGRAMS.

5 The purpose of this Act is to authorize the participa6 tion of the Department of Veterans Affairs health care

7 system in the health care systems of States that have en8 acted health care reform in order to evaluate the most ap9 propriate means of enabling the Department health care

10 system to participate in such systems and in the National

11 health care system contemplated under any plans for Na12 tional health care reform.

13 SEC. 3. HEALTH CARE PILOT PROGRAMS.

14 (a) IN GENERAL.—The Secretary may carry out pilot

15 programs on the participation of the Department of Veter16 ans Affairs health care system in the health care systems

17 of States that have adopted comprehensive health benefit

18 plans. The Secretary shall carry out any pilot program

19 under this Act in accordance with the provisions of this

20 Act.

21 (b) STATES ELIGIBLE FOR DESIGNATION.—(1) The

22 Secretary shall designate each of not more than five States

23 as a location for a pilot program under this Act. The Sec24 retary shall complete the designation of States as locations

25 for pilot programs not later than 30 days after the date

26 of the enactment of this Act.
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1 (2) The Secretary may designate a State as a location

2 for a pilot program under this Act if the Secretary deter3 mines that—

4 (A) the State has enacted, or will soon enact,

5 a statute establishing or providing for a comprehen6 sive health benefit plan; and

7 (B) the participation of the health care system

8 of the Department under the plan is feasible and ap9 propriate in light of the purpose of this Act.

10 (c) DEPARTMENT PARTICIPATION IN STATE HEALTH

11 BENEFIT PLANS.—(1) To the maximum extent prac12 ticable, the Secretary shall provide eligible persons under

13 each pilot program under this Act with the comprehensive

14 package of basic health care benefits that would otherwise

15 be available to such persons under the comprehensive

16 health benefit plan of the State in which the pilot program

17 is carried out. The Secretary shall provide such benefits

18 through the health care system of the Department in such

19 State as if such system were a provider of such benefits

20 under such plan.

21 (2) Notwithstanding any other provision of law, a

22 State may not prohibit the participation of the Depart23 ment under the comprehensive health benefit plan of the

24 State under a pilot program unless the chief executive offi25 cer of the State certifies to the Secretary that—
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1 (A) the benefits to be provided by the Depart2 ment under the pilot program do not meet require3 ments for quality of benefits established by or pro4 vided under the plan; or

5 (B) the location of Department facilities (in6 cluding facilities providing services by contract or

7 agreement with the Secretary) in the State is such

8 that the proximity of eligible persons to such facili9 ties does not meet requirements so established for

10 such proximity.

11 (3) To the maximum extent practicable, the Secretary

12 shall provide health care benefits under a pilot program

13 under this Act in accordance with the statutory require14 ments and regulatory requirements imposed with respect

15 to the provision and availability of such benefits under the

16 comprehensive health benefit plan of the State in which

17 the pilot program is carried out.

18 (4) Not later than 30 days after the designation of

19 a State as a location for a pilot program under this Act,

20 the Secretary and the health system director for that State

21 shall jointly determine the Federal regulations the waiver

22 or modification of which is necessary in order to facilitate

23 the carrying out of the pilot program. Upon such deter24 mination, the Secretary shall waive or modify the applica25 tion of such regulations to the pilot program.
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1 (5) The Secretary shall furnish any eligible person

2 living in a State in which a pilot program is carried out

3 (including any eligible person electing to receive benefits

4 under the pilot program and any eligible person not elect5 ing to receive benefits under the pilot program) with the

6 health care benefits for which such person is eligible under

7 chapter 17 of title 38, United States Code, notwithstand8 ing that the comprehensive package of basic health care

9 benefits provided under the comprehensive health benefit

10 plan of the State does not otherwise include such health

11 care benefits. The Secretary shall furnish any health care

12 benefits under this paragraph in accordance with the pro13 visions of that chapter.

14 (d) HEALTH SYSTEM DIRECTOR.—The Secretary

15 shall designate a health system director for each State in

16 which a pilot program is carried out under this Act. The

17 health system director of a State shall be the director or

18 chief of staff of a Department medical center located in

19 the State in which the pilot program is carried out. To

20 the maximum extent practicable, the Secretary shall dele21 gate to the health system directors the responsibilities of

22 the Secretary under this Act.

23 (e) ADMINISTRATIVE REORGANIZATION.—The Sec24 retary may carry out any administrative reorganization of

25 an office, facility, activity, or function of the health care
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1 system of the Department in a State in which a pilot pro2 gram is carried out that the Secretary and the health sys3 tem director jointly determine to be necessary in order to

4 facilitate the carrying out of the pilot program. Section

5 510(b) of title 38, United States Code, shall not apply to

6 any such administrative reorganization.

7 (f) PROVISION OF BENEFITS.—(1)(A) Except as pro8 vided in subparagraph (B), the Secretary shall provide

9 health care benefits under a pilot program—

10 (i) through the direct provision of such services

11 by the health care system of the Department in the

12 State in which the pilot program is carried out; or

13 (ii) in the event that such services cannot be

14 provided directly by such system, by contract or

15 other agreement in accordance with paragraph (2).

16 (B) The Secretary may exclude facilities of the De17 partment from participation in a pilot program. Any facili18 ties so excluded shall continue to provide health care bene19 fits to veterans and other persons eligible for such benefits

20 in accordance with the provisions of title 38, United States

21 Code.

22 (2) The health system director of a pilot program

23 may enter into contracts and agreements for the provision

24 of health care services and contracts and agreements for

25 other services with respect to the pilot program under
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1 paragraph (1)(A)(ii). Any such contract or agreement (in2 cluding any lease) shall not be subject to the following pro3 visions of law:

4 (A) Section 8110(c) of title 38, United States

5 Code, relating to contracting of services at Depart6 ment health-care facilities.

7 (B) Section 8122(a)(1) of such title, relating to

8 the lease of Department property.

9 (C) Section 8125 of such title, relating to local

10 contracts for the procurement of health-care items.

11 (D) Section 702 of title 5, United States Code,

12 relating to the right of review of agency wrongs by

13 courts of the United States.

14 (E) Sections 1346(a)(2) and 1491 of title 28,

15 United States Code, relating to the jurisdiction of

16 the district courts of the United States and the

17 United States Court of Federal Claims, respectively,

18 for the actions enumerated in such sections.

19 (F) Subchapter V of chapter 35 of title 31,

20 United States Code, relating to adjudication of pro21 tests of violations of procurement statutes and regu22 lations.

23 (G) Sections 3526 and 3702 of such title, relat24 ing to the settlement of accounts and claims, respec25 tively, of the United States.
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1 (H) Subsections (b)(7), (e), (f), (g), and (h) of

2 section 8 of the Small Business Act (15 U.S.C.

3 637(b)(7), (e), (f), (g), and (h)), relating to require4 ments with respect to small businesses for contracts

5 for property and services.

6 (I) The provisions of law assembled for pur7 poses of codification of the United States Code as

8 section 471 through 544 of title 40 that relate to the

9 authority of the Administrator of General Services

10 over the lease and disposal of Federal Government

11 property.

12 (J) The Office of Federal Procurement Policy

13 Act (41 U.S.C. 401 et seq.), relating to the procure14 ment of property and services by the Federal Gov15 ernment.

16 (K) Chapter 3 of the Federal Property and Ad17 ministrative Services Act of 1949 (41 U.S.C. 251 et

18 seq.), relating to the procurement of property and

19 services by the Federal Government.

20 (L) Office of Management and Budget Circular

21 A–76.

22 (3)(A) Notwithstanding any other provision of law,

23 contracts and agreements for the provision of health care

24 services under this subsection shall include contracts and

25 other agreements with insurers, health care providers, or
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1 other individuals or entities that provide health care serv2 ices in order to obtain health-care resources for eligible

3 persons under a pilot program or to furnish health care

4 benefits to such persons.

5 (B) A health system director of a pilot program may

6 enter into a contract or agreement under this paragraph

7 only if the director determines that the contract or agree8 ment is necessary in order to ensure the provision of

9 health care services of an acceptable level and quality

10 under the pilot program.

11 (C) Contracts and agreements under this paragraph

12 may be entered into without prior review by the Central

13 Office of the Department.

14 (4)(A) Contracts and agreements under this sub15 section for services other than the services referred to in

16 paragraph (3) (including contracts and agreements for

17 procurement of equipment, maintenance and repair serv18 ices, and other services related to the provision of health

19 care services) shall not be subject to review by the Central

20 Office if the amount of such contracts or agreements is

21 less than $250,000.

22 (B) Contracts and agreements for services under this

23 paragraph shall be subject to review by the Central Office

24 if the amount of such contracts or agreements is $250,000

25 or greater. If the Central Office fails to approve or reject
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1 a contract or agreement under this clause within 30 days

2 of its submittal to the Central Office, such contract or

3 agreement shall be deemed approved by the Central Office.

4 (g) DEPARTMENT PERSONNEL.—(1) Notwithstand5 ing any other provision of law and to the extent necessary

6 to carry out the purpose of a pilot program, the Secretary

7 may—

8 (A) appoint health care personnel to positions

9 in the health care system of the Department in the

10 State in which the pilot program is carried out in

11 accordance with such qualifications for such posi12 tions as the Secretary may establish; and

13 (B) promote and advance personnel serving in

14 such positions in accordance with such qualifications

15 as the Secretary may establish.

16 (2) Not later than 60 days after the designation of

17 a State as a location for a pilot program under this Act,

18 or at such other time as the Secretary may determine, the

19 Secretary shall request authority from the Director of the

20 Office of Management and Budget to permit the Secretary

21 to employ a number of full time equivalent employees in

22 the health care system of the Department in that State

23 which exceeds the number of such employees that would

24 otherwise be authorized for such employment by the Direc25 tor.
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1 (3) Notwithstanding any other provision of law, em2 ployees of the Department at facilities of the Department

3 under a pilot program shall not, during the carrying out

4 of the pilot program, be subject to any reduction in the

5 number of full time employees of the Department or as

6 a result of a reduction in the number of full time employ7 ees of the Federal Government.

8 (h) ELIGIBLE PERSONS.—(1) A person eligible for

9 health care benefits under a pilot program is any person

10 residing in a State in which a pilot program is carried

11 out as follows:

12 (A) Any veteran.

13 (B) Any spouse or child of a veteran.

14 (C) Any individual eligible for care under para15 graph (2) or (3) of section 1713(a) of title 38, Unit16 ed States Code.

17 (2) Notwithstanding any other provision of law, a

18 State may not require that any person other than a person

19 referred to in paragraph (1) be eligible for health care ben20 efits through the Department under a pilot program.

21 (i) COPAYMENTS AND OTHER CHARGES.—(1) Except

22 as provided in paragraph (2), the Secretary may collect

23 from or on behalf of any individual receiving health care

24 benefits from the Secretary under a pilot program under

25 this Act a premium, deductible, copayment, or other
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1 charge with respect to the provision of a benefit under the

2 pilot program. The amount of the premium, deductible,

3 copayment, or other charge collected with respect to a ben4 efit provided under a pilot program may not exceed the

5 maximum amount otherwise permitted for a premium, de6 ductible, copayment, or other charge with respect to that

7 benefit under the comprehensive health benefits plan of

8 the State in which the pilot program is carried out.

9 (2)(A) Except as provided in subparagraph (B), the

10 Secretary shall waive the collection under the pilot pro11 grams of premiums, deductibles, copayments, and other

12 charges with respect to the benefits provided by the De13 partment to the following:

14 (i) Veterans with compensable service-connected

15 disabilities.

16 (ii) Veterans whose discharge or release from

17 active military, naval, or air service was for a com18 pensable disability that was incurred or aggravated

19 in the line of duty.

20 (iii) Veterans who are in receipt of, or who, but

21 for a suspension pursuant to section 1151 of title

22 38, United States Code (or both a suspension and

23 the receipt of retired pay), would be entitled to dis24 ability compensation, but only to the extent that

25 such veterans’ continuing eligibility for such care is
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1 provided for in the judgment or settlement provided

2 for in such section.

3 (iv) Veterans who are a former prisoners of

4 war.

5 (v) Veterans of the Mexican border period or of

6 World War I.

7 (vi) Veterans who are unable to defray the ex8 penses of necessary care, as determined in accord9 ance with section 1722(a) of such title.

10 (B) The Secretary may collect premiums, deductibles,

11 copyaments, and other charges with respect to benefits

12 provided under a pilot program to veterans referred to in

13 subparagraph (A) from any third party obligated to pro14 vide, or to pay the expenses of, such benefits to or for

15 such veterans under the comprehensive health benefits

16 plan of the State in which the pilot program is carried

17 out.

18 (j) FUNDING.—(1) There is established in the Treas19 ury a fund to be known as the Department of Veterans

20 Affairs Health Care Reform Fund (hereafter referred to

21 in this subsection as the ‘‘Fund’’).

22 (2)(A) Notwithstanding any other provision of law,

23 amounts shall be deposited in the Fund as follows:

24 (i) Amounts made available to a pilot program

25 based upon a determination under paragraph (3).
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1 (ii) Amounts collected under a pilot program in

2 accordance with subsection (i).

3 (iii) Amounts determined with respect to a pilot

4 program under paragraph (4).

5 (iv) Such other amounts as the Secretary and

6 the health system directors of the pilot programs

7 jointly determine to be necessary in order to carry

8 out the pilot programs.

9 (v) Such other amounts as may be appropriated

10 to the pilot programs.

11 (B) The Secretary shall make available amounts

12 under clauses (i) and (iv) of subparagraph (A) from

13 amounts appropriated to the Department of Veterans Af14 fairs for the provision of health care services.

15 (C) The Secretary shall establish and maintain a sep16 arate account under the Fund for each pilot program car17 ried out under this Act. Any deposits and expenditures

18 with respect to a pilot program shall be made to or from

19 the account established and maintained with respect to

20 that pilot program.

21 (3)(A) For each year of the operation of a pilot pro22 gram under this Act, the Secretary shall deposit in ac23 count of the Fund for the pilot program an amount (as

24 determined by the Secretary) equal to the amount that

25 would otherwise be made available to the health care sys-
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1 tem of the Department in the State in which the pilot pro2 gram is carried out for the payment of the cost of health

3 care services by such system in that State in that year.

4 The Secretary shall deposit such amount at the beginning

5 of such year.

6 (B) The costs referred to in subparagraph (A) shall

7 not include costs relating to the provision by the Secretary

8 of the following services:

9 (i) Services relating to post-traumatic stress

10 disorder.

11 (ii) Services relating to spinal-cord injuries.

12 (iii) Services relating to substance abuse.

13 (iv) Services relating to the rehabilitation of

14 blind veterans.

15 (4)(A) In each year of the operation of a pilot pro16 gram under this Act, the Secretary shall deposit into the

17 account of the Fund for the pilot program an amount with

18 respect to the pilot program that is equal to the portion

19 of the amount referred to in subparagraph (B) that is allo20 cable to the medical-care cost recovery activities of the De21 partment under section 1729(g)(4) of title 38, United

22 States Code, in the State in which the pilot program is

23 carried out.

24 (B) The amount referred to in subparagraph (A) is

25 the amount by which the unobligated balance in the De-
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1 partment of Veterans Affairs Medical-Care Cost Recovery

2 Fund for the year preceding the date of the deposit under

3 this paragraph exceeds the estimated amount of such un4 obligated balance at the commencement of such preceding

5 year.

6 (C) The Secretary shall make deposits under this

7 paragraph at the same time as the deposit under such sec8 tion.

9 (5)(A) Notwithstanding any other provision of law,

10 the health system director for a State in which a pilot pro11 gram is carried out shall determine the costs for which

12 amounts in the Fund may be expended in carrying out

13 the pilot program.

14 (B)(i) Except as provided in clause (ii), the costs of

15 carrying out a pilot program under this paragraph shall

16 include any costs of marketing and advertising under the

17 program and costs relating to acquisition (including acqui18 sition of land), construction, repair, or renovation of facili19 ties.

20 (ii) Costs under this subparagraph shall not include

21 any costs relating to a major medical facility project or

22 a major medical facility lease as such terms are defined

23 in subparagraphs (A) and (B) of section 8104(a)(3) of

24 title 38, United States Code, respectively.
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1 (C) Amounts in the Fund for the payment of costs

2 of a pilot program under this subsection shall be available

3 for such purpose without fiscal year limitation.

4 (k) TERMINATION.—A pilot program carried out

5 under this Act shall terminate not later than 2 years after

6 the date of the commencement of provision of benefits

7 under the pilot program.

8 SEC. 4. REPORTS ON PILOT PROGRAMS.

9 (a) COLLECTION OF INFORMATION.—(1) The Sec10 retary shall collect such information with respect to the

11 provision of health care benefits under each pilot program

12 as is necessary to permit the Secretary to evaluate the

13 pilot program in light of the purpose of the pilot program

14 under this Act.

15 (2) The information collected by the Secretary under

16 paragraph (1) shall include aggregated data on the follow17 ing:

18 (A) The number of persons participating in

19 each pilot program, including the age, sex, health

20 status, disability ratings (if any), employment sta21 tus, and incomes of such persons.

22 (B) The nature of benefits sought by such per23 sons under each pilot program.

24 (C) The nature and quantity of benefits pro25 vided to such persons under each pilot program.
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1 (D) The cost to the Department of providing

2 such benefits under each pilot program.

3 (b) REPORTS.—(1) Not later than 14 months after

4 the date of the completion of the designation of States

5 as locations for pilot programs under this Act, the Sec6 retary shall submit to the Committees on Veterans’ Affairs

7 of the Senate and House of Representatives a report on

8 the progress of the Secretary in carrying out the pilot pro9 grams. Such report shall include the information referred

10 to in subsection (a)(2) on the date of the report.

11 (2) Not later than November 30 of the year of the

12 termination of the final pilot program under this Act, the

13 Secretary shall submit to the committees referred to in

14 paragraph (1) a report on the pilot programs carried out

15 under this Act. The report shall include the following:

16 (A) The information referred to in subsection

17 (a)(2), together with the comments and conclusions

18 of the Secretary with respect to such information.

19 (B) An assessment by the Secretary of the util20 ity of each pilot program for carrying out the pur21 pose of this Act.

22 (C) An assessment by the Secretary of appro23 priate means of integrating the health care system

24 of the Department into the health care systems of

25 States that have enacted health care reform and into
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1 the National health care system contemplated under

2 any plans for National health care reform.

3 (D) Such other information, assessments, and

4 conclusions as the Secretary considers appropriate.

5 SEC. 5. DEFINITIONS.

6 For the purposes of this Act—

7 (1) The terms ‘‘Secretary’’, ‘‘Department’’,

8 ‘‘veteran’’, ‘‘child’’ and ‘‘spouse’’ have the meanings

9 given such terms in paragraphs (1), (2), (4), and

10 (31) of section 101 of title 38, United States Code,

11 respectively.

12 (2) The term ‘‘comprehensive health benefit

13 plan’’, in the case of a State, means a plan or sys14 tem established under the law of the State that—

15 (A) ensures the access of all residents of

16 the State to a comprehensive package of basic

17 health care benefits; and

18 (B) ensures such access by providing that

19 such benefits shall be provided directly or by

20 contract by public and private entities.

21 (3) The term ‘‘comprehensive package of basic

22 health care benefits’’ means the health care benefits

23 provided for by a State under the comprehensive

24 health benefit plan of the State.
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1 (4) The term ‘‘health care system of the De2 partment’’, in the case of a State designated as a lo3 cation for a pilot program, means the facilities and

4 personnel of the Department located in that State

5 that provide health care services under chapter 17 of

6 title 38, United States Code.

7 SECTION 1. SHORT TITLE.

8 This Act may be cited as the ‘‘VA State Health Care

9 Reform Pilot Program Act’’.

10 SEC. 2. PURPOSE OF PILOT PROGRAMS.

11 The purpose of this Act is to authorize the participa12 tion of the Department of Veterans Affairs health care sys13 tem in the health care systems of States that have enacted

14 health care reform in order to evaluate the most appropriate

15 means of enabling the Department health care system to

16 participate in such systems and in the National health care

17 system contemplated under any plans for National health

18 care reform.

19 SEC. 3. HEALTH CARE PILOT PROGRAMS.

20 (a) IN GENERAL.—The Secretary may carry out pilot

21 programs on the participation of the Department of Veter22 ans Affairs health care system in the health care systems

23 of States that have adopted comprehensive health benefit

24 plans. The Secretary shall carry out any pilot program
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1 under this Act in accordance with the provisions of this

2 Act.

3 (b) STATES ELIGIBLE FOR DESIGNATION.—(1) The

4 Secretary shall designate each of not more than five States

5 as a location for a pilot program under this Act. The Sec6 retary shall complete the designation of States as locations

7 for pilot programs not later than 30 days after the date

8 of the enactment of this Act.

9 (2) The Secretary may designate a State as a location

10 for a pilot program under this Act if the Secretary deter11 mines that—

12 (A) the State has enacted, or will soon enact, a

13 statute establishing or providing for a comprehensive

14 health benefit plan; and

15 (B) the participation of the health care system of

16 the Department under the plan is feasible and appro17 priate in light of the purpose of this Act.

18 (c) DEPARTMENT PARTICIPATION IN STATE HEALTH

19 BENEFIT PLANS—(1) To the maximum extent practicable,

20 the Secretary shall provide eligible persons under each pilot

21 program under this Act with the comprehensive package of

22 basic health care benefits that would otherwise be available

23 to such persons under the comprehensive health benefit plan

24 of the State in which the pilot program is carried out. The

25 Secretary shall provide such benefits through the health care
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1 system of the Department in such State as if such system

2 were a provider of such benefits under such plan.

3 (2) Notwithstanding any other provision of law, a

4 State may not prohibit the participation of the Department

5 under the comprehensive health benefit plan of the State

6 under a pilot program unless the chief executive officer of

7 the State certifies to the Secretary that—

8 (A) the benefits to be provided by the Depart9 ment under the pilot program do not meet require10 ments for quality of benefits established by or pro11 vided under the plan; or

12 (B) the location of Department facilities (includ13 ing facilities providing services by contract or agree14 ment with the Secretary) in the State is such that the

15 proximity of eligible persons to such facilities does not

16 meet requirements so established for such proximity.

17 (3) Not later than 30 days after the designation of a

18 State as a location for a pilot program under this Act, and

19 at such other times as the Secretary may determine, the

20 Secretary and the health system director for that State shall

21 jointly determine the regulations under the authority of the

22 Secretary the waiver or modification of which is necessary

23 in order to facilitate the carrying out of the pilot program.

24 Upon such determination, the Secretary shall waive or
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1 modify the application of such regulations to the pilot pro2 gram.

3 (4) The Secretary shall furnish any eligible person liv4 ing in a State in which a pilot program is carried out (in5 cluding any eligible person electing to receive benefits under

6 the pilot program and any eligible person not electing to

7 receive benefits under the pilot program) with the health

8 care benefits for which such person is eligible under chapter

9 17 of title 38, United States Code, notwithstanding that the

10 comprehensive package of basic health care benefits provided

11 under the comprehensive health benefit plan of the State

12 does not otherwise include such health care benefits. The

13 Secretary shall furnish any health care benefits under this

14 paragraph in accordance with the provisions of that chap15 ter.

16 (d) HEALTH SYSTEM DIRECTOR.—(1) The Secretary

17 shall designate a health system director for each State in

18 which a pilot program is carried out under this Act. To

19 the maximum extent feasible, the Secretary shall delegate

20 to the health system directors the responsibilities of the Sec21 retary under this Act.

22 (2)(A) Subject to subparagraph (B), the Secretary

23 shall designate an individual as health system director for

24 a State from among nominees for that position selected by

25 a panel composed of individuals who are senior manage-
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1 ment personnel of the Department medical centers located

2 in that State.

3 (B) An individual selected for nomination to be a

4 health system director of a State under subparagraph (A)

5 shall be—

6 (i) the director or chief of staff of a Department

7 medical center located in the State in which the pilot

8 program is carried out; or

9 (ii) any other individual having experience with

10 the Department medical system that is equivalent to

11 the experience with that system of an individual in

12 a position referred to in clause (i).

13 (e) ADMINISTRATIVE REORGANIZATION.—The Sec14 retary may carry out any administrative reorganization of

15 an office, facility, activity, or function of the health care

16 system of the Department in a State in which a pilot pro17 gram is carried out that the Secretary and the health system

18 director jointly determine to be necessary in order to facili19 tate the carrying out of the pilot program. Section 510(b)

20 of title 38, United States Code, shall not apply to any such

21 administrative reorganization.

22 (f) PROVISION OF BENEFITS.—(1)(A) Except as pro23 vided in subparagraph (B), the Secretary shall provide

24 health care benefits under a pilot program—
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1 (i) through the direct provision of such services

2 by the health care system of the Department in the

3 State in which the pilot program is carried out; or

4 (ii) by contract or other agreement in accordance

5 with paragraph (2).

6 (B) The Secretary may exclude facilities of the Depart7 ment from participation in a pilot program. Any facilities

8 so excluded shall continue to provide health care benefits

9 to veterans and other persons eligible for such benefits in

10 accordance with the provisions of laws administered by the

11 Secretary.

12 (2) The health system director of a pilot program may

13 enter into contracts and agreements for the provision of

14 health care services and contracts and agreements for other

15 services with respect to the pilot program under paragraph

16 (1)(A)(ii). Any such contract or agreement (including any

17 lease) shall not be subject to the following provisions of law:

18 (A) Section 8110(c) of title 38, United States

19 Code, relating to contracting of services at Depart20 ment health-care facilities.

21 (B) Section 8122(a)(1) of such title, relating to

22 the lease of Department property.

23 (C) Section 8125 of such title, relating to local

24 contracts for the procurement of health-care items.
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1 (D) Section 702 of title 5, United States Code,

2 relating to the right of review of agency wrongs by

3 courts of the United States.

4 (E) Sections 1346(a)(2) and 1491 of title 28,

5 United States Code, relating to the jurisdiction of the

6 district courts of the United States and the United

7 States Court of Federal Claims, respectively, for the

8 actions enumerated in such sections.

9 (F) Subchapter V of chapter 35 of title 31,

10 United States Code, relating to adjudication of pro11 tests of violations of procurement statutes and regula12 tions.

13 (G) Sections 3526 and 3702 of such title, relat14 ing to the settlement of accounts and claims, respec15 tively, of the United States.

16 (H) Subsections (b)(7), (e), (f), (g), and (h) of

17 section 8 of the Small Business Act (15 U.S.C.

18 637(b)(7), (e), (f), (g), and (h)), relating to require19 ments with respect to small businesses for contracts

20 for property and services.

21 (I) The provisions of law assembled for purposes

22 of codification of the United States Code as section

23 471 through 544 of title 40 that relate to the author24 ity of the Administrator of General Services over the

25 lease and disposal of Federal Government property.
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1 (J) The Office of Federal Procurement Policy Act

2 (41 U.S.C. 401 et seq.), relating to the procurement

3 of property and services by the Federal Government.

4 (K) Chapter 3 of the Federal Property and Ad5 ministrative Services Act of 1949 (41 U.S.C. 251 et

6 seq.), relating to the procurement of property and

7 services by the Federal Government.

8 (L) Office of Management and Budget Circular

9 A–76.

10 (3)(A) Notwithstanding any other provision of law,

11 contracts and agreements for the provision of health care

12 services under this subsection may include contracts and

13 other agreements with insurers, health care providers, or

14 other individuals or entities that provide health care serv15 ices.

16 (B) Contracts and agreements under this paragraph

17 may be entered into without prior review by the Central

18 Office of the Department.

19 (4)(A) Contracts and agreements under this subsection

20 for services other than the services referred to in paragraph

21 (3) (including contracts and agreements for procurement of

22 equipment, maintenance and repair services, and other

23 services related to the provision of health care services) shall

24 not be subject to prior review by the Central Office if the
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1 amount of such contracts or agreements is less than

2 $250,000.

3 (B) Contracts and agreements for services under this

4 paragraph shall be subject to prior review by the Central

5 Office if the amount of such contracts or agreements is

6 $250,000 or greater. If the Central Office fails to approve

7 or reject a contract or agreement under this clause within

8 30 days of its submittal to the Central Office, such contract

9 or agreement shall be deemed approved by the Central Of10 fice.

11 (g) DEPARTMENT PERSONNEL.—(1) Notwithstanding

12 any other provision of law and to the extent necessary to

13 carry out the purpose of a pilot program, the Secretary

14 may—

15 (A) appoint personnel to positions in the health

16 care system of the Department in the State in which

17 the pilot program is carried out in accordance with

18 such standards for such positions as the Secretary

19 may establish; and

20 (B) promote and advance personnel serving in

21 such positions in accordance with such standards as

22 the Secretary may establish.

23 (2) Not later than 60 days after the designation of a

24 State as a location for a pilot program under this Act, or

25 at such other time as the Secretary may determine, the Sec-
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1 retary shall request authority from the Director of the Office

2 of Management and Budget to permit the Secretary to em3 ploy a number of full time equivalent employees in the

4 health care system of the Department in that State which

5 exceeds the number of such employees that would otherwise

6 be authorized for such employment by the Director.

7 (3) Notwithstanding any other provision of law, em8 ployees of the Department at facilities of the Department

9 under a pilot program shall not, during the carrying out

10 of the pilot program, be subject to any reduction in the

11 number of full time employees of the Department or as a

12 result of a reduction in the number of full time employees

13 of the Federal Government.

14 (h) ELIGIBLE PERSONS.—(1) A person eligible for

15 health care benefits under a pilot program is any person

16 residing in a State in which a pilot program is carried

17 out as follows:

18 (A) Any veteran.

19 (B) Any spouse or child of a veteran.

20 (C) Any individual eligible for care under para21 graph (2) or (3) of section 1713(a) of title 38, United

22 States Code.

23 (2) Notwithstanding any other provision of law, a

24 State may not require that any person other than a person
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1 referred to in paragraph (1) be eligible for health care bene2 fits through the Department under a pilot program.

3 (i) COPAYMENTS AND OTHER CHARGES.—(1) Except

4 as provided in paragraph (2), the Secretary may collect

5 from or on behalf of any individual receiving health care

6 benefits from the Secretary under a pilot program under

7 this Act a premium, deductible, copayment, or other charge

8 with respect to the provision of a benefit under the pilot

9 program. The amount of the premium, deductible,

10 copayment, or other charge collected with respect to a bene11 fit provided under a pilot program may not exceed the max12 imum amount otherwise permitted for a premium, deduct13 ible, copayment, or other charge with respect to that benefit

14 under the comprehensive health benefits plan of the State

15 in which the pilot program is carried out.

16 (2)(A) Except as provided in subparagraph (B), the

17 Secretary shall not collect under the pilot programs pre18 miums, deductibles, copayments, and other charges with re19 spect to the benefits provided by the Department to the fol20 lowing:

21 (i) Veterans with compensable service-connected

22 disabilities.

23 (ii) Veterans whose discharge or release from ac24 tive military, naval, or air service was for a compen-
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1 sable disability that was incurred or aggravated in

2 the line of duty.

3 (iii) Veterans who are in receipt of, or who, but

4 for a suspension pursuant to section 1151 of title 38,

5 United States Code (or both a suspension and the re6 ceipt of retired pay), would be entitled to disability

7 compensation, but only to the extent that such veter8 ans’ continuing eligibility for such care is provided

9 for in the judgment or settlement provided for in such

10 section.

11 (iv) Veterans who are former prisoners of war.

12 (v) Veterans of the Mexican border period or of

13 World War I.

14 (vi) Veterans who are unable to defray the ex15 penses of necessary care, as determined in accordance

16 with section 1722(a) of such title.

17 (B) The Secretary may collect premiums, deductibles,

18 copayments, and other charges with respect to benefits pro19 vided under a pilot program to veterans referred to in sub20 paragraph (A) from any third party obligated to provide,

21 or to pay the expenses of, such benefits to or for such veter22 ans under the comprehensive health benefits plan of the

23 State in which the pilot program is carried out.

24 (j) FUNDING.—(1) There is established in the Treasury

25 a fund to be known as the Department of Veterans Affairs
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1 Health Care Reform Fund (hereafter referred to in this sub2 section as the ‘‘Fund’’).

3 (2)(A) Notwithstanding any other provision of law,

4 amounts shall be deposited in the Fund as follows:

5 (i) Amounts collected under a pilot program in

6 accordance with subsection (i).

7 (ii) Amounts made available to a pilot program

8 based upon a determination under paragraph (3).

9 (iii) Amounts transferred to the Fund with re10 spect to a pilot program under paragraph (4).

11 (iv) Such other amounts as the Secretary and

12 the health system directors of the pilot programs

13 jointly determine to be necessary in order to carry out

14 the pilot programs.

15 (v) Such other amounts as may be appropriated

16 to the pilot programs.

17 (B) The Secretary shall make available amounts under

18 clauses (ii) and (iv) of subparagraph (A) from amounts ap19 propriated to the Department of Veterans Affairs for the

20 provision of health care services.

21 (C) The Secretary shall establish and maintain a sepa22 rate account under the Fund for each pilot program carried

23 out under this Act. Any deposits and expenditures with re24 spect to a pilot program shall be made to or from the ac-
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1 count established and maintained with respect to that pilot

2 program.

3 (3)(A) For each year of the operation of a pilot pro4 gram under this Act, the Secretary shall deposit in account

5 of the Fund for the pilot program an amount (as deter6 mined by the Secretary) equal to the amount that would

7 otherwise be made available to the health care system of the

8 Department in the State in which the pilot program is car9 ried out for the payment of the cost of health care services

10 by such system in that State in that year. The Secretary

11 shall deposit such amount at the beginning of such year.

12 (B) The costs referred to in subparagraph (A) shall

13 not include costs relating to the provision by the Secretary

14 of the following services:

15 (i) Services relating to post-traumatic stress dis16 order.

17 (ii) Services relating to spinal-cord dysfunction.

18 (iii) Services relating to substance abuse.

19 (iv) Services relating to the rehabilitation of

20 blind veterans.

21 (v) Services relating to prosthetics.

22 (4) Funds deposited in the Medical-Care Cost Recovery

23 Fund established under section 1729(g) of title 38, United

24 States Code, during any fiscal year in an amount in excess

25 of the Congressional Budget Office baseline (as of the date
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1 of the enactment of this Act) for deposits in that fund for

2 that fiscal year shall not be subject to paragraph (4) of sec3 tion 1710(f), 1712(f), or 1729(g) (as the case may be) of

4 that title, but shall be transferred to the fund established

5 under this subsection. Such transfer for any fiscal year shall

6 be made at any time that the total of amounts so received

7 less amounts estimated to cover the expenses, payments, and

8 costs described in paragraph (3) of section 1729(g) of that

9 title is in excess of the applicable Congressional Budget Of10 fice baseline.

11 (5)(A) Notwithstanding any other provision of law, the

12 health system director for a State in which a pilot program

13 is carried out shall determine the costs for which amounts

14 in the Fund may be expended in carrying out the pilot pro15 gram.

16 (B)(i) Except as provided in clause (ii), the costs of

17 carrying out a pilot program under this paragraph shall

18 include any costs of marketing and advertising under the

19 program, costs of legal services provided to such pilot pro20 gram by the General Counsel of the Department of Veterans

21 Affairs, and costs relating to acquisition (including acquisi22 tion of land), construction, repair, or renovation of facili23 ties.

24 (ii) Costs under this subparagraph shall not include

25 any costs relating to a major medical facility project or
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1 a major medical facility lease as such terms are defined

2 in subparagraphs (A) and (B) of section 8104(a)(3) of title

3 38, United States Code, respectively.

4 (C) Amounts in the Fund for the payment of costs of

5 a pilot program under this subsection shall be available for

6 such purpose without fiscal year limitation.

7 (k) TERMINATION.—A pilot program carried out under

8 this Act shall terminate not later than 2 years after the

9 date of the commencement of provision of benefits under the

10 pilot program.

11 SEC. 4. REPORTS ON PILOT PROGRAMS.

12 (a) COLLECTION OF INFORMATION.—(1) The Secretary

13 shall collect such information with respect to the provision

14 of health care benefits under each pilot program as is nec15 essary to permit the Secretary to evaluate the pilot program

16 in light of the purpose of the pilot program under this Act.

17 (2) The information collected by the Secretary under

18 paragraph (1) shall include aggregated data on the follow19 ing:

20 (A) The number of persons participating in each

21 pilot program, including the age, sex, health status,

22 disability ratings (if any), employment status, and

23 incomes of such persons.

24 (B) The nature of benefits sought by such persons

25 under each pilot program.
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1 (C) The nature and quantity of benefits provided

2 to such persons under each pilot program.

3 (D) The cost to the Department of providing

4 such benefits under each pilot program.

5 (b) REPORTS.—(1) Not later than 14 months after the

6 date of the completion of the designation of States as loca7 tions for pilot programs under this Act, the Secretary shall

8 submit to the Committees on Veterans’ Affairs of the Senate

9 and House of Representatives a report on the progress of

10 the Secretary in carrying out the pilot programs. Such re11 port shall include the information referred to in subsection

12 (a)(2) on the date of the report.

13 (2) Not later than November 30 of the year of the ter14 mination of the final pilot program under this Act, the Sec15 retary shall submit to the committees referred to in para16 graph (1) a report on the pilot programs carried out under

17 this Act. The report shall include the following:

18 (A) The information referred to in subsection

19 (a)(2), together with the comments and conclusions of

20 the Secretary with respect to such information.

21 (B) An assessment by the Secretary of the utility

22 of each pilot program for carrying out the purpose of

23 this Act.

24 (C) An assessment by the Secretary of appro25 priate means of integrating the health care system of
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1 the Department into the health care systems of States

2 that have enacted health care reform and into the Na3 tional health care system contemplated under any

4 plans for National health care reform.

5 (D) Such other information, assessments, and

6 conclusions as the Secretary considers appropriate.

7 SEC. 5. DEFINITIONS.

8 For the purposes of this Act—

9 (1) The terms ‘‘Secretary’’, ‘‘Department’’, ‘‘vet10 eran’’, ‘‘child’’ and ‘‘spouse’’ have the meanings given

11 such terms in paragraphs (1), (2), (4), and (31) of

12 section 101 of title 38, United States Code, respec13 tively.

14 (2) The term ‘‘comprehensive health benefit

15 plan’’, in the case of a State, means a plan or system

16 established under the law of the State that—

17 (A) attempts to ensure the access of resi18 dents of the State to a comprehensive package of

19 basic health care benefits; and

20 (B) ensures such access by providing that

21 such benefits shall be provided directly or by con22 tract by public and private entities.

23 (3) The term ‘‘comprehensive package of basic

24 health care benefits’’ means the health care benefits
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1 provided for by a State under the comprehensive

2 health benefit plan of the State.

3 (4) The term ‘‘health care system of the Depart4 ment’’, in the case of a State designated as a location

5 for a pilot program, means the facilities and person6 nel of the Department located in that State that pro7 vide health care services under chapter 17 of title 38,

8 United States Code.

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