II

105TH CONGRESS

2D SESSION S. 2054

To amend title XVIII of the Social Security Act to require the Secretary

of Veterans Affairs and the Secretary of Health and Human Services

to carry out a model project to provide the Department of Veterans

Affairs with medicare reimbursement for medicare health-care services

provided to certain medicare-eligible veterans.

IN THE SENATE OF THE UNITED STATES

MAY 8, 1998

Mr. JEFFORDS (for himself, Mr. ROCKEFELLER, Mr. SPECTER, Mr. HOLLINGS, Mr. MURKOWSKI, Mr. LEAHY, and Mr. HAGEL) introduced the

following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend title XVIII of the Social Security Act to require

the Secretary of Veterans Affairs and the Secretary of

Health and Human Services to carry out a model project

to provide the Department of Veterans Affairs with medicare reimbursement for medicare health-care services

provided to certain medicare-eligible veterans.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Veterans’ Equality for

5 Treatment and Services Act of 1998 (VETS)’’.
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1 SEC. 2. MEDICARE SUBVENTION FOR VETERANS.

2 Title XVIII of the Social Security Act (42 U.S.C.

3 1395 et seq.) (as amended by section 4015 of the Bal4 anced Budget Act of 1997 (Public Law 105–33; 111 Stat.

5 337)) is amended by adding at the end the following:

6 ‘‘MEDICARE SUBVENTION FOR VETERANS

7 ‘‘SEC. 1897. (a) DEFINITIONS.—In this section:

8 ‘‘(1) ADMINISTERING SECRETARIES.—The term

9 ‘administering Secretaries’ means the Secretary and

10 the Secretary of Veterans Affairs acting jointly.

11 ‘‘(2) DEMONSTRATION PROJECT; PROJECT.—

12 The terms ‘demonstration project’ and ‘project’

13 mean the demonstration project carried out under

14 this section.

15 ‘‘(3) MILITARY RETIREE.—The term ‘military

16 retiree’ means a member or former member of the

17 Armed Forces who is entitled to retired pay.

18 ‘‘(4) TARGETED MEDICARE-ELIGIBLE VET19 ERAN.—The term ‘targeted medicare-eligible vet20 eran’ means an individual who—

21 ‘‘(A) is a veteran (as defined in section

22 101(2) of title 38, United States Code) and is

23 described in section 1710(a)(3) of title 38,

24 United States Code; and
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1 ‘‘(B) is entitled to benefits under part A of

2 this title and is enrolled under part B of this

3 title.

4 ‘‘(5) TRUST FUNDS.—The term ‘trust funds’

5 means the Federal Hospital Insurance Trust Fund

6 established in section 1817 and the Federal Supple7 mentary Medical Insurance Trust Fund established

8 in section 1841.

9 ‘‘(b) DEMONSTRATION PROJECT.—

10 ‘‘(1) IN GENERAL.—

11 ‘‘(A) ESTABLISHMENT.—The administer12 ing Secretaries are authorized to establish a

13 demonstration project (under an agreement en14 tered into by the administering Secretaries)

15 under which the Secretary shall reimburse the

16 Secretary of Veterans Affairs, from the trust

17 funds, for medicare health care services fur18 nished to certain targeted medicare-eligible vet19 erans.

20 ‘‘(B) AGREEMENT.—The agreement en21 tered into under subparagraph (A) shall include

22 at a minimum—

23 ‘‘(i) a description of the benefits to be

24 provided to the participants of the dem-
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1 onstration project established under this

2 section;

3 ‘‘(ii) a description of the eligibility

4 rules for participation in the demonstration

5 project, including any criteria established

6 under subsection (c) and any cost sharing

7 under subsection (d);

8 ‘‘(iii) a description of how the dem9 onstration project will satisfy the require10 ments under this title;

11 ‘‘(iv) a description of the sites selected

12 under paragraph (2);

13 ‘‘(v) a description of how reimburse14 ment and maintenance of effort require15 ments under subsection (l) will be imple16 mented in the demonstration project; and

17 ‘‘(vi) a statement that the Secretary

18 shall have access to all data of the Depart19 ment of Veterans Affairs that the Sec20 retary determines is necessary to conduct

21 independent estimates and audits of the

22 maintenance of effort requirement, the an23 nual reconciliation, and related matters re24 quired under the demonstration project.
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1 ‘‘(2) NUMBER OF SITES.—Subject to para2 graphs (3) and (4), the administering Secretaries

3 shall establish a plan for the selection of up to 12

4 medical centers under the jurisdiction of the Sec5 retary of Veterans Affairs and located in geographi6 cally dispersed locations to participate in the project.

7 ‘‘(3) GENERAL CRITERIA.—The selection plan

8 shall favor selection of those medical centers that

9 are suited to serve targeted medicare-eligible individ10 uals because—

11 ‘‘(A) there is a high potential demand by

12 targeted medicare-eligible veterans for their

13 services;

14 ‘‘(B) they have sufficient capability in bill15 ing and accounting to participate;

16 ‘‘(C) they have favorable indicators of

17 quality of care, including patient satisfaction;

18 ‘‘(D) they deliver a range of services re19 quired by targeted medicare-eligible veterans;

20 and

21 ‘‘(E) they meet other relevant factors iden22 tified in the plan.

23 ‘‘(4) REQUIRED SITES.—At least 1 of each of

24 the following medical centers shall be selected for in25 clusion in the demonstration project:
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1 ‘‘(A) MEDICAL CENTER NEAR CLOSED

2 BASE.—A medical center that is in the same

3 catchment area as a military medical facility

4 which was closed pursuant to either of the fol5 lowing laws:

6 ‘‘(i) The Defense Base Closure and

7 Realignment Act of 1990.

8 ‘‘(ii) Title II of the Defense Author9 ization Amendments and Base Closure and

10 Realignment Act.

11 ‘‘(B) MEDICAL CENTER IN A RURAL

12 AREA.—A medical center that is located in a

13 rural area that does not have reasonably avail14 able and accessible private health care provid15 ers.

16 ‘‘(5) RESTRICTION.—No new facilities will be

17 built or expanded with funds from the demonstration

18 project.

19 ‘‘(6) DURATION.—The administering Secretar20 ies shall conduct the demonstration project during

21 the 3-year period beginning on January 1, 1999.

22 ‘‘(c) VOLUNTARY PARTICIPATION.—Participation of

23 targeted medicare-eligible veterans in the demonstration

24 project shall be voluntary, subject to the capacity of par25 ticipating medical centers and the funding limitations
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1 specified in subsection (l), and shall be subject to such

2 terms and conditions as the administering Secretaries may

3 establish. In the case of a demonstration project at a medi4 cal center described in subsection (b)(3), targeted medi5 care-eligible veterans who are military retirees shall be

6 given preference in participating in the project.

7 ‘‘(d) COST SHARING.—The Secretary of Veterans Af8 fairs may establish cost-sharing requirements for veterans

9 participating in the demonstration project. If such cost

10 sharing requirements are established, those requirements

11 shall be the same as the requirements that apply to tar12 geted medicare-eligible patients at nongovernmental facili13 ties.

14 ‘‘(e) CREDITING OF PAYMENTS.—A payment received

15 by the Secretary of Veterans Affairs under the demonstra16 tion project shall be credited to the applicable Department

17 of Veterans Affairs medical appropriation and (within that

18 appropriation) to funds that have been allotted to the

19 medical center that furnished the services for which the

20 payment is made. Any such payment received during a fis21 cal year for services provided during a prior fiscal year

22 may be obligated by the Secretary of Veterans Affairs dur23 ing the fiscal year during which the payment is received.

24 ‘‘(f) AUTHORITY TO WAIVE CERTAIN MEDICARE RE25 QUIREMENTS.—The Secretary may, to the extent nec-
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1 essary to carry out the demonstration project, waive any

2 requirement under this title. If the Secretary waives any

3 such requirement, the Secretary shall include a description

4 of such waiver in the agreement described in subsection

5 (b)(1)(B).

6 ‘‘(g) INSPECTOR GENERAL.—Nothing in the agree7 ment entered into under subsection (b) shall limit the In8 spector General of the Department of Health and Human

9 Services from investigating any matters regarding the ex10 penditure of funds under this title for the demonstration

11 project, including compliance with the provisions of this

12 title and all other relevant laws.

13 ‘‘(h) REPORT.—At least 30 days prior to the com14 mencement of the demonstration project, the administer15 ing Secretaries shall submit a copy of the agreement en16 tered into under subsection (b) to the committees of juris17 diction in Congress.

18 ‘‘(i) MANAGED HEALTH CARE PLANS.—

19 ‘‘(1) IN GENERAL.—In carrying out the dem20 onstration project, the Secretary of Veterans Affairs

21 may establish and operate managed health care

22 plans.

23 ‘‘(2) REQUIREMENTS.—Any managed health

24 care plan established in accordance with paragraph

25 (1) shall be operated by or through a Department of
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1 Veterans Affairs medical center or group of medical

2 centers and may include the provision of health care

3 services through other facilities under the jurisdic4 tion of the Secretary of Veterans Affairs as well as

5 public and private entities under arrangements made

6 between the Department and the other public or pri7 vate entity concerned. Any such managed health

8 care plan shall be established and operated in con9 formance with standards prescribed by the admin10 istering Secretaries.

11 ‘‘(3) MINIMUM BENEFITS.—The administering

12 Secretaries shall prescribe the minimum health care

13 benefits to be provided under a managed health care

14 plan to veterans enrolled in the plan that shall in15 clude at least all health care services covered under

16 the medicare program under this title.

17 ‘‘(4) INCLUSION IN NUMBER OF SITES.—The

18 establishment of a managed health care plan under

19 this section shall be counted as the selection of a

20 medical center for purposes of applying the numeri21 cal limitation under subsection (b)(1).

22 ‘‘(j) MEDICAL CENTER REQUIREMENTS.—The Sec23 retary of Veterans Affairs may establish a managed health

24 care plan using 1 or more medical centers and other facili25 ties only after the Secretary of Veterans Affairs submits
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1 to Congress a report setting forth a plan for the use of

2 such centers and facilities. The plan may not be imple3 mented until the Secretary of Veterans Affairs has re4 ceived from the Inspector General of the Department of

5 Veterans Affairs, and has forwarded to Congress, certifi6 cation of each of the following:

7 ‘‘(1) The cost accounting system of the Veter8 ans Health Administration (known as the Decision

9 Support System) is operational and is providing reli10 able cost information on care delivered on an inpa11 tient and outpatient basis at such centers and facili12 ties.

13 ‘‘(2) The centers and facilities have operated in

14 conformity with the eligibility reform amendments

15 made by title I of the Veterans Health Care Act of

16 1996 for not less than 3 months.

17 ‘‘(3) The centers and facilities have developed a

18 credible plan (on the basis of market surveys, data

19 from the Decision Support System, actuarial analy20 sis, and other appropriate methods and taking into

21 account the level of payment under subsection (l)

22 and the costs of providing covered services at the

23 centers and facilities) to minimize, to the extent fea24 sible, the risk that appropriated funds allocated to

25 the centers and facilities will be required to meet the
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1 centers’ and facilities’ obligation to targeted medi2 care-eligible veterans under the demonstration

3 project.

4 ‘‘(4) The centers and facilities collectively have

5 available capacity to provide the contracted benefits

6 package to a sufficient number of targeted medicare7 eligible veterans.

8 ‘‘(5) The entity administering the health plan

9 has sufficient systems and safeguards in place to

10 minimize any risk that instituting the managed care

11 model will result in reducing the quality of care de12 livered to enrollees in the demonstration project or

13 to other veterans receiving care under paragraphs

14 subsection (1) or (2) of section 1710(a) of title 38,

15 United States Code.

16 ‘‘(k) RESERVES.—The Secretary of Veterans Affairs

17 shall maintain such reserves as may be necessary to en18 sure against the risk that appropriated funds, allocated

19 to medical centers and facilities participating in the dem20 onstration project through a managed health care plan

21 under this section, will be required to meet the obligations

22 of those medical centers and facilities to targeted medi23 care-eligible veterans.

24 ‘‘(l) PAYMENTS BASED ON REGULAR MEDICARE

25 PAYMENT RATES.—
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1 ‘‘(1) PAYMENTS.—

2 ‘‘(A) IN GENERAL.—Subject to the suc3 ceeding provisions of this subsection, the Sec4 retary shall reimburse the Secretary of Veter5 ans Affairs for services provided under the dem6 onstration project at the following rates:

7 ‘‘(i) NONCAPITATION.—Except as pro8 vided in clause (ii) and subject to subpara9 graphs (B) and (D), at a rate equal to 95

10 percent of the amounts that otherwise

11 would be payable under this title on a

12 noncapitated basis for such services if the

13 medical center were not a Federal medical

14 center, were participating in the program,

15 and imposed charges for such services.

16 ‘‘(ii) CAPITATION.—Subject to sub17 paragraphs (B) and (D), in the case of

18 services provided to an enrollee under a

19 managed health care plan established

20 under subsection (i), at a rate equal to 95

21 percent of the amount paid to a

22 Medicare+Choice organization under part

23 C with respect to such an enrollee.

24 In cases in which a payment amount may not

25 otherwise be readily computed, the Secretaries
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1 shall establish rules for computing equivalent or

2 comparable payment amounts.

3 ‘‘(B) EXCLUSION OF CERTAIN AMOUNTS.—

4 In computing the amount of payment under

5 subparagraph (A), the following shall be ex6 cluded:

7 ‘‘(i) DISPROPORTIONATE SHARE HOS8 PITAL ADJUSTMENT.—Any amount attrib9 utable to an adjustment under subsection

10 (d)(5)(F) of section 1886 of the Social Se11 curity Act (42 U.S.C. 1395ww).

12 ‘‘(ii) DIRECT GRADUATE MEDICAL

13 EDUCATION PAYMENTS.—Any amount at14 tributable to a payment under subsection

15 (h) of such section.

16 ‘‘(iii) PERCENTAGE OF INDIRECT

17 MEDICAL EDUCATION ADJUSTMENT.—40

18 percent of any amount attributable to the

19 adjustment under subsection (d)(5)(B) of

20 such section.

21 ‘‘(iv) PERCENTAGE OF CAPITAL PAY22 MENTS.—67 percent of any amounts at23 tributable to payments for capital-related

24 costs under subsection (g) of such section.
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1 ‘‘(C) PERIODIC PAYMENTS FROM MEDI2 CARE TRUST FUNDS.—Payments under this

3 subsection shall be made—

4 ‘‘(i) on a periodic basis consistent

5 with the periodicity of payments under this

6 title; and

7 ‘‘(ii) in appropriate part, as deter8 mined by the Secretary, from the trust

9 funds.

10 ‘‘(D) ANNUAL LIMIT ON MEDICARE PAY11 MENTS.—The amount paid to the Department

12 of Veterans Affairs under this subsection for

13 any year for the demonstration project may not

14 exceed $50,000,000.

15 ‘‘(2) REDUCTION IN PAYMENT FOR VA FAILURE

16 TO MAINTAIN EFFORT.—

17 ‘‘(A) IN GENERAL.—In order to avoid

18 shifting onto the medicare program under this

19 title costs previously assumed by the Depart20 ment of Veterans Affairs for the provision of

21 medicare-covered services to targeted medicare22 eligible veterans, the payment amount under

23 this subsection for the project for a fiscal year

24 shall be reduced by the amount (if any) by

25 which—
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1 ‘‘(i) the amount of the VA effort level

2 for targeted veterans (as defined in sub3 paragraph (B)) for the fiscal year ending

4 in such year, is less than

5 ‘‘(ii) the amount of the VA effort level

6 for targeted veterans for fiscal year 1998.

7 ‘‘(B) VA EFFORT LEVEL FOR TARGETED

8 VETERANS DEFINED.—For purposes of sub9 paragraph (A), the term ‘VA effort level for

10 targeted veterans’ means, for a fiscal year, the

11 amount, as estimated by the administering Sec12 retaries, that would have been expended under

13 the medicare program under this title for VA14 provided medicare-covered services for targeted

15 veterans (as defined in subparagraph (C)) for

16 that fiscal year if benefits were available under

17 the medicare program for those services. Such

18 amount does not include expenditures attrib19 utable to services for which reimbursement is

20 made under the demonstration project.

21 ‘‘(C) VA-PROVIDED MEDICARE-COVERED

22 SERVICES FOR TARGETED VETERANS.—For

23 purposes of subparagraph (B), the term ‘VA24 provided medicare-covered services for targeted
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1 veterans’ means, for a fiscal year, items and

2 services—

3 ‘‘(i) that are provided during the fis4 cal year by the Department of Veterans

5 Affairs to targeted medicare-eligible veter6 ans;

7 ‘‘(ii) that constitute hospital care and

8 medical services under chapter 17 of title

9 38, United States Code; and

10 ‘‘(iii) for which benefits would be

11 available under the medicare program

12 under this title if they were provided other

13 than by a Federal provider of services that

14 does not charge for those services.

15 ‘‘(3) ASSURING NO INCREASE IN COST TO MEDI16 CARE PROGRAM.—

17 ‘‘(A) MONITORING EFFECT OF DEM18 ONSTRATION PROGRAM ON COSTS TO MEDICARE

19 PROGRAM.—

20 ‘‘(i) IN GENERAL.—The Secretaries,

21 in consultation with the Comptroller Gen22 eral, shall closely monitor the expenditures

23 made under the medicare program for tar24 geted medicare-eligible veterans during the

25 period of the demonstration project com-
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1 pared to the expenditures that would have

2 been made for such veterans during that

3 period if the demonstration project had not

4 been conducted.

5 ‘‘(ii) ANNUAL REPORT BY THE COMP6 TROLLER GENERAL.—Not later than De7 cember 31 of each year during which the

8 demonstration project is conducted, the

9 Comptroller General shall submit to the

10 Secretaries and the appropriate committees

11 of Congress a report on the extent, if any,

12 to which the costs of the Secretary under

13 the medicare program under this title in14 creased during the preceding fiscal year as

15 a result of the demonstration project.

16 ‘‘(B) REQUIRED RESPONSE IN CASE OF IN17 CREASE IN COSTS.—

18 ‘‘(i) IN GENERAL.—If the administer19 ing Secretaries find, based on subpara20 graph (A), that the expenditures under the

21 medicare program under this title in22 creased (or are expected to increase) dur23 ing a fiscal year because of the demonstra24 tion project, the administering Secretaries

25 shall take such steps as may be needed—
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1 ‘‘(I) to recoup for the medicare

2 program the amount of such increase

3 in expenditures; and

4 ‘‘(II) to prevent any such in5 crease in the future.

6 ‘‘(ii) STEPS.—Such steps—

7 ‘‘(I) under clause (i)(I) shall in8 clude payment of the amount of such

9 increased expenditures by the Sec10 retary of Veterans Affairs from the

11 current medical care appropriation of

12 the Department of Veterans Affairs to

13 the trust funds; and

14 ‘‘(II) under clause (i)(II) shall in15 clude suspending or terminating the

16 demonstration project (in whole or in

17 part) or lowering the amount of pay18 ment under paragraph (1)(A).

19 ‘‘(m) EVALUATION AND REPORTS.—

20 ‘‘(1) INDEPENDENT EVALUATION.—The admin21 istering Secretaries shall arrange for an independent

22 entity with expertise in the evaluation of health serv23 ices to conduct an evaluation of the demonstration

24 project. The entity shall submit annual reports on

25 the demonstration project to the administering Sec-
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1 retaries and to the committees of jurisdiction in the

2 Congress. The first report shall be submitted not

3 later than 12 months after the date on which the

4 demonstration project begins operation, and the final

report not later than 31 5 ⁄2 years after that date. The

6 evaluation and reports shall include an assessment,

7 based on the agreement entered into under sub8 section (b), of the following:

9 ‘‘(A) The cost to the Department of Veter10 ans Affairs of providing care to veterans under

11 the project.

12 ‘‘(B) Compliance of participating medical

13 centers with applicable measures of quality of

14 care, compared to such compliance for other

15 medicare-participating medical centers.

16 ‘‘(C) A comparison of the costs of medical

17 centers’ participation in the program with the

18 reimbursements provided for services of such

19 medical centers.

20 ‘‘(D) Any savings or costs to the medicare

21 program under this title from the project.

22 ‘‘(E) Any change in access to care or qual23 ity of care for targeted medicare-eligible veter24 ans participating in the project.
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1 ‘‘(F) Any effect of the project on the ac2 cess to care and quality of care for targeted

3 medicare-eligible veterans not participating in

4 the project and other veterans not participating

5 in the project.

6 ‘‘(G) The provision of services under man7 aged health care plans under subsection (l), in8 cluding the circumstances (if any) under which

9 the Secretary of Veterans Affairs uses reserves

10 described in subsection (k) and the Secretary of

11 Veterans Affairs’ response to such cir12 cumstances (including the termination of man13 aged health care plans requiring the use of such

14 reserves).

15 ‘‘(H) Any effect that the demonstration

16 project has on the enrollment in

17 Medicare+Choice organizations under part C of

18 this title in the established site areas.

19 ‘‘(2) REPORT ON EXTENSION AND EXPANSION

20 OF DEMONSTRATION PROJECT.—Not later than six

21 months after the date of the submission of the pe22 nultimate report under paragraph (1), the admin23 istering Secretaries shall submit to Congress a re24 port containing their recommendation as to—
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1 ‘‘(A) whether to extend the demonstration

2 project or make the project permanent;

3 ‘‘(B) whether to expand the project to

4 cover additional sites and areas and to increase

5 the maximum amount of reimbursement (or the

6 maximum amount of reimbursement permitted

7 for managed health care plans under this sec8 tion) under the project in any year; and

9 ‘‘(C) whether the terms and conditions of

10 the project should be continued (or modified) if

11 the project is extended or expanded.’’.

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