Calendar No. 415

106TH CONGRESS

1ST SESSION S. 1928

[Report No. 106–222]

A BILL

To amend title XVIII of the Social Security Act to

establish a medicare subvention demonstrationproject for veterans, and for other purposes.

NOVEMBER 16, 1999

Read twice and placed on the calendar
II

Calendar No. 415

106TH CONGRESS

1ST SESSION S. 1928

[Report No. 106–222]

To amend title XVIII of the Social Security Act to establish a medicare

subvention demonstration project for veterans, and for other purposes.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 16, 1999

Mr. ROTH, from the Committee on Finance, reported the following original

bill; which was read twice and placed on the calendar

A BILL

To amend title XVIII of the Social Security Act to establish

a medicare subvention demonstration project for veterans, and for other purposes.

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 ‘‘Medicare Subvention

5 Demonstration for Veterans Act of 1999’’.
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1 SEC. 2. ESTABLISHMENT OF MEDICARE SUBVENTION DEM2 ONSTRATION PROJECT FOR VETERANS.

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

4 1395 et seq.) is amended by adding at the end the fol5 lowing:

6 ‘‘MEDICARE SUBVENTION DEMONSTRATION PROJECT FOR

7 VETERANS

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

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

10 ‘administering Secretaries’ means the Secretary and

11 the Secretary of Veterans Affairs acting jointly.

12 ‘‘(2) DEMONSTRATION PROJECT.—The term

13 ‘demonstration project’ means the demonstration

14 project carried out under this section.

15 ‘‘(3) DEMONSTRATION SITE.—

16 ‘‘(A) IN GENERAL.—Subject to subpara17 graph (B), the term ‘demonstration site’ means

18 a Veterans Affairs medical facility that pro19 vides, alone or in conjunction with other facili20 ties under the jurisdiction of the Secretary of

21 Veterans Affairs and affiliated public or private

22 entities—

23 ‘‘(i) in the case of a coordinated care

24 health plan, the health care benefits pre25 scribed in subsection (c)(3) to targeted

26 medicare-eligible veterans residing within
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1 the service area (as prescribed under regu2 lations for the Medicare+Choice program

3 under part C); and

4 ‘‘(ii) in the case of health care bene5 fits being provided on a fee-for-service

6 basis, the health care benefits prescribed in

7 subsection (d)(2) to targeted medicare-eli8 gible veterans.

9 ‘‘(B) EXCLUSION.—The term ‘demonstra10 tion site’ shall not include the entire catchment

11 area of a Veterans Integrated Services Network

12 (VISN).

13 ‘‘(4) MEDICARE HEALTH CARE SERVICES.—The

14 term ‘medicare health care services’ means items or

15 services covered under part A or B of this title.

16 ‘‘(5) TARGETED MEDICARE-ELIGIBLE VET17 ERAN.—The term ‘targeted medicare-eligible vet18 eran’ means an individual who—

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

20 101 of title 38, United States Code) who is eli21 gible for care and services under section

22 1705(a)(7) of title 38, United States Code;

23 ‘‘(B) has attained age 65;

24 ‘‘(C) is entitled to, or enrolled for, benefits

25 under part A of this title; and
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1 ‘‘(D) is enrolled for benefits under part B

2 of this title.

3 ‘‘(6) TRUST FUNDS.—The term ‘trust funds’

4 means the Federal Hospital Insurance Trust Fund

5 established in section 1817 and the Federal Supple6 mentary Medical Insurance Trust Fund established

7 in section 1841.

8 ‘‘(7) VETERANS AFFAIRS MEDICAL FACILITY.—

9 The term ‘Veterans Affairs medical facility’ means a

10 medical facility as defined in section 8101 of title

11 38, United States Code.

12 ‘‘(b) DEMONSTRATION PROJECT.—

13 ‘‘(1) IN GENERAL.—

14 ‘‘(A) ESTABLISHMENT.—The admin15 istering Secretaries are authorized to establish

16 a demonstration project (under agreements en17 tered into by the administering Secretaries)

18 under which the Secretary shall reimburse the

19 Secretary of Veterans Affairs, from the trust

20 funds, for medicare health care services fur21 nished to targeted medicare-eligible veterans.

22 ‘‘(B) AGREEMENT.—Any agreement en23 tered into under this paragraph shall include at

24 a minimum—
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1 ‘‘(i) a detailed description of the

2 health care benefits to be provided to the

3 participants of the demonstration project

4 established under this section;

5 ‘‘(ii) a description of the eligibility

6 rules for participation in the demonstration

7 project, including any criteria established

8 under subsection (e), any premiums estab9 lished for a coordinated care health plan,

10 and any cost-sharing arrangements;

11 ‘‘(iii) a description of how the dem12 onstration project will satisfy the require13 ments under this title;

14 ‘‘(iv) a description of the demonstra15 tion sites selected under paragraph (2);

16 ‘‘(v) a description of how reimburse17 ment requirements under subsection (k),

18 maintenance of effort requirements under

19 subsection (l), and the annual reconcili20 ation under subsection (m) will be imple21 mented in the demonstration project;

22 ‘‘(vi) a statement that the Secretary

23 shall have access to all data of the Depart24 ment of Veterans Affairs that the Sec25 retary determines is necessary to conduct
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1 independent estimates and audits of the

2 maintenance of effort requirement under

3 subsection (l), the annual reconciliation

4 under subsection (m), and related matters

5 required under the demonstration project;

6 ‘‘(vii) a statement that the Comp7 troller General of the United States shall

8 have access to all data of the Department

9 of Veterans Affairs that the Comptroller

10 General determines is necessary to carry

11 out the reporting requirements under sub12 sections (m) or (n).

13 ‘‘(viii) a description of any require14 ment that the Secretary waives pursuant

15 to subsection (c)(4) or (d)(4); and

16 ‘‘(ix) a certification, provided after re17 view by the administering Secretaries, that

18 any facility or entity described in sub19 section (a)(3)(A) that is receiving pay20 ments by reason of the demonstration

21 project has sufficient—

22 ‘‘(I) resources and expertise to

23 provide, consistent with payment re24 quirements under subsection (k), the

25 health care benefits required to be
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1 provided to beneficiaries under the

2 demonstration project (as established

3 under subsections (c)(3) and (d)(2));

4 and

5 ‘‘(II) information and billing sys6 tems in place to ensure—

7 ‘‘(aa) accurate and timely

8 submission of claims for health

9 care benefits to the Secretary;

10 and

11 ‘‘(bb) that providers of

12 health care services that are not

13 affiliated with the Department of

14 Veterans Affairs are reimbursed

15 by the Secretary of Veterans Af16 fairs in a timely and accurate

17 manner.

18 ‘‘(C) SEPARATE AGREEMENTS FOR CO19 ORDINATED CARE AND FEE-FOR-SERVICE.—The

20 administering Secretaries shall enter into sepa21 rate agreements with regard to demonstration

22 sites operating under a coordinated care health

23 plan model and a fee-for-service model, and

24 shall include in each agreement only such infor25 mation that is applicable to that model.
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1 ‘‘(2) NUMBER OF DEMONSTRATION SITES.—

2 ‘‘(A) IN GENERAL.—Subject to the suc3 ceeding provisions of this paragraph, the dem4 onstration project established under this section

5 shall be conducted in not more than 8 dem6 onstration sites, designated jointly by the ad7 ministering Secretaries.

8 ‘‘(B) EQUAL NUMBER OF COORDINATED

9 CARE AND FEE-FOR-SERVICE SITES.—The ad10 ministrating Secretaries shall—

11 ‘‘(i) ensure that the number of dem12 onstration sites operated under a coordi13 nated care health plan model equals the

14 number of demonstration sites operated

15 under a fee-for-service model; and

16 ‘‘(ii) attempt to ensure that the vol17 ume of medicare health care services pro18 vided under the demonstration project at

19 demonstration sites operated under a co20 ordinated care health plan model is the

21 same as the volume of such services pro22 vided at demonstration sites operated

23 under a fee-for-service model.
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1 ‘‘(C) RESTRICTION.—A demonstration site

2 may not operate under both a coordinated care

3 health plan model and a fee-for-service model.

4 ‘‘(D) DEMONSTRATION SITES IN RURAL

5 AREAS.—At least 1 of each of the following

6 demonstration sites shall be selected for inclu7 sion in the demonstration project:

8 ‘‘(i) A demonstration site that is oper9 ated under a coordinated care health plan

10 model and that serves a predominantly

11 rural area.

12 ‘‘(ii) A demonstration site that is op13 erated under a fee-for-service model and

14 that serves a predominantly rural area.

15 ‘‘(3) RESTRICTION ON NEW OR EXPANDED FA16 CILITIES.—No new Veterans Affairs medical facili17 ties may be built or expanded with funds from the

18 demonstration project.

19 ‘‘(4) DURATION.—

20 ‘‘(A) COORDINATED CARE HEALTH PLAN

21 MODEL.—The authority of the administering

22 Secretaries to conduct the demonstration

23 project under a coordinated care health plan

24 model shall—

25 ‘‘(i) begin on January 1, 2000; and
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1 ‘‘(ii) terminate on the earlier of—

2 ‘‘(I) the date which is 3 years

3 after the date enrollment in a coordi4 nated care health plan begins at any

5 demonstration site using such a

6 model; or

7 ‘‘(II) December 31, 2003.

8 ‘‘(B) FEE-FOR-SERVICE MODEL.—The au9 thority of the administering Secretaries to con10 duct the demonstration under a fee-for-service

11 model shall—

12 ‘‘(i) begin on January 1, 2001; and

13 ‘‘(ii) terminate on the earlier of—

14 ‘‘(I) the date which is 3 years

15 after the date that health care bene16 fits begin to be provided at any dem17 onstration site using such a model; or

18 ‘‘(II) December 31, 2004.

19 ‘‘(c) COORDINATED CARE HEALTH PLAN MODEL.—

20 ‘‘(1) IN GENERAL.—The Secretary of Veterans

21 Affairs shall establish and operate coordinated care

22 health plans in order to provide the health care ben23 efits prescribed in paragraph (3) to targeted medi24 care-eligible veterans enrolled in the demonstration

25 project consistent with part C of this title.
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1 ‘‘(2) OPERATION BY OR THROUGH A DEM2 ONSTRATION SITE.—Any coordinated care health

3 plan established in accordance with paragraph (1)

4 shall be operated by or through a demonstration

5 site.

6 ‘‘(3) HEALTH CARE BENEFITS.—

7 ‘‘(A) IN GENERAL.—Subject to subpara8 graph (B), the Secretary of Veterans Affairs

9 shall prescribe the health care benefits to be

10 provided to a targeted medicare-eligible veteran

11 enrolled in a coordinated care health plan under

12 the demonstration project.

13 ‘‘(B) MINIMUM BENEFITS.—The benefits

14 prescribed by the Secretary of Veterans Affairs

15 pursuant to subparagraph (A) shall include at

16 least all medicare health care services that are

17 required to be provided by a Medicare+Choice

18 organization under part C.

19 ‘‘(4) MEDICARE REQUIREMENTS.—

20 ‘‘(A) IN GENERAL.—

21 ‘‘(i) REQUIREMENTS.—Except as pro22 vided under clause (ii), a coordinated care

23 health plan operating under the dem24 onstration project shall meet all require25 ments applicable to a Medicare+Choice
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1 plan under part C of this title and regula2 tions pertaining thereto, and any other re3 quirements for receiving payments under

4 this title, except that the prohibition of

5 payments to Federal providers of services

6 under sections 1814(c) and 1835(d), and

7 paragraphs (2) and (3) of section 1862(a),

8 shall not apply.

9 ‘‘(ii) WAIVER.—Except with respect to

10 any requirement described in subparagraph

11 (B), the Secretary is authorized to waive

12 any requirement described in clause (i), or

13 approve equivalent or alternative ways of

14 meeting such a requirement, but only if

15 such waiver or approval—

16 ‘‘(I) reflects the unique status of

17 the Department of Veterans Affairs as

18 an agency of the Federal Government;

19 and

20 ‘‘(II) is necessary to carry out, or

21 improve the efficiency of, the dem22 onstration project.

23 ‘‘(B) BENEFICIARY PROTECTIONS AND

24 OTHER MATTERS.—A coordinated care health

25 plan shall comply with the requirements of part
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1 C of this title that relate to beneficiary protec2 tions and other related matters, including such

3 requirements relating to the following areas:

4 ‘‘(i) Enrollment and disenrollment.

5 ‘‘(ii) Nondiscrimination.

6 ‘‘(iii) Information provided to bene7 ficiaries.

8 ‘‘(iv) Cost-sharing limitations.

9 ‘‘(v) Appeal and grievance procedures.

10 ‘‘(vi) Provider participation.

11 ‘‘(vii) Access to services.

12 ‘‘(viii) Quality assurance and external

13 review.

14 ‘‘(ix) Advance directives.

15 ‘‘(x) Other areas of beneficiary protec16 tions that the Secretary determines are ap17 plicable to a coordinated health care plan

18 operating under the demonstration project.

19 ‘‘(d) FEE-FOR-SERVICE MODEL.—

20 ‘‘(1) IN GENERAL.—The Secretary of Veterans

21 Affairs shall establish and operate a demonstration

22 site in order to provide, on a fee-for-service basis,

23 the medicare health care services prescribed in para24 graph (2) to targeted medicare-eligible veterans
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1 under the demonstration project in a manner con2 sistent with this title.

3 ‘‘(2) HEALTH CARE BENEFITS.—The admin4 istering Secretaries shall prescribe the medicare

5 health care services available to a targeted medicare6 eligible veteran at a demonstration site operating

7 under a fee-for-service model.

8 ‘‘(3) COST-SHARING.—The Secretary of Vet9 erans Affairs shall establish cost-sharing require10 ments for targeted medicare-eligible veterans that

11 receive medicare health care services under a fee-for12 service model at a demonstration site. Such cost13 sharing requirements shall be the same as those re14 quired under this title.

15 ‘‘(4) MEDICARE REQUIREMENTS.—

16 ‘‘(A) IN GENERAL.—Except as provided

17 under subparagraph (B), any entity or health

18 care provider that provides medicare health care

19 services under the demonstration project on a

20 fee-for-service basis shall meet all of the re21 quirements under this title, except that the pro22 hibition of payments to Federal providers of

23 services under sections 1814(c) and 1835(d),

24 and paragraphs (2) and (3) of section 1862(a),

25 shall not apply.
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1 ‘‘(B) WAIVER.—The Secretary is author2 ized to waive any requirement described under

3 subparagraph (A), or approve equivalent or al4 ternative ways of meeting such a requirement,

5 but only if such waiver or approval—

6 ‘‘(i) reflects the unique status of the

7 Department of Veterans Affairs as an

8 agency of the Federal Government; and

9 ‘‘(ii) is necessary to carry out, or im10 prove the efficiency of, the demonstration

11 project.

12 ‘‘(5) VERIFICATION OF ELIGIBILITY.—

13 ‘‘(A) IN GENERAL.—The Secretary of Vet14 erans Affairs shall establish procedures for de15 termining whether an individual is eligible to re16 ceive medicare health care services on a fee-for17 service basis under the demonstration project.

18 ‘‘(B) RESTRICTION.—No payments shall

19 be made under this section for any medicare

20 health care service provided to an individual on

21 a fee-for-service basis under the demonstration

22 project unless the individual has been deter23 mined to be eligible for the service pursuant to

24 the procedures established under subparagraph

25 (A).
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1 ‘‘(e) DEMONSTRATION SITE REQUIREMENTS.—The

2 Secretary of Veterans Affairs may operate a coordinated

3 care health plan at a demonstration site, may provide

4 medicare health care services using the fee-for-service

5 model at a demonstration site, and may authorize a dem6 onstration site to submit claims for payment under the

7 demonstration project only after the Secretary of Veterans

8 Affairs submits to the committees of jurisdiction of Con9 gress a report setting forth a plan for the establishment

10 of such demonstration site and for the oversight by the

11 Secretary of Veterans Affairs of the demonstration project

12 conducted at such demonstration site. The administering

13 Secretaries may not implement the plan until the Sec14 retary of Veterans Affairs has received from the Inspector

15 General of the Department of Health and Human Serv16 ices, and has forwarded to Congress, certification that—

17 ‘‘(1) the—

18 ‘‘(A) cost accounting and related trans19 action systems of the Veterans Health Adminis20 tration provide cost information and encounter

21 data regarding health care delivered at each

22 demonstration site (or delivered by any entity

23 or health care provider with which the Sec24 retary of Veterans Affairs has a contract or
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1 sharing agreement) on an inpatient and out2 patient basis; and

3 ‘‘(B) cost information and encounter data

4 provided by such systems is accurate, reliable,

5 and consistent across all the demonstration

6 sites;

7 ‘‘(2) the Secretary of Veterans Affairs has

8 minimized the risk that any amount appropriated to

9 the Department of Veterans Affairs will be required

10 to meet any obligation of the demonstration sites

11 under the demonstration project to a targeted medi12 care-eligible veteran by developing a credible plan—

13 ‘‘(A) based on market surveys, data from

14 the Decision Support System, actuarial anal15 ysis, and other appropriate methods; and

16 ‘‘(B) taking into account the level of pay17 ment under subsection (k) and the costs of

18 health care benefits provided at the demonstra19 tion sites with regard to each demonstration

20 site;

21 ‘‘(3) each demonstration site has the capacity

22 to provide to a sufficient number of targeted medi23 care-eligible veterans, at a minimum—
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1 ‘‘(A) under the coordinated care health

2 plan model, the health care benefits prescribed

3 in subsection (c)(3); or

4 ‘‘(B) under the fee-for-service model, the

5 health care benefits prescribed in subsection

6 (d)(2); and

7 ‘‘(4) the Veterans Affairs medical facility ad8 ministering the demonstration site has sufficient sys9 tems and safeguards in place to minimize any risk

10 that instituting the coordinated care health plan

11 model or the fee-for-service model will result in

12 reducing—

13 ‘‘(A) the quality of care delivered to par14 ticipants in the demonstration project; or

15 ‘‘(B) the quality of, or the access to, care

16 to veterans not participating in the demonstra17 tion project.

18 ‘‘(f) VOLUNTARY PARTICIPATION.—Participation of a

19 targeted medicare-eligible veteran in the demonstration

20 project shall be voluntary, subject to the capacity of par21 ticipating demonstration sites and the annual limitations

22 on medicare payments specified in subsection (k)(4), and

23 shall be subject to such terms and conditions as the ad24 ministering Secretaries may establish.
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1 ‘‘(g) CREDITING OF PAYMENTS.—A payment re2 ceived by the Secretary of Veterans Affairs under the dem3 onstration project shall be credited to the applicable De4 partment of Veterans Affairs medical appropriation unless

5 the Secretary of Veterans Affairs has a compelling reason

6 to do otherwise. Any such payment received during a fiscal

7 year for services provided during a prior fiscal year may

8 be obligated by the Secretary of Veterans Affairs during

9 the fiscal year during which the payment is received.

10 ‘‘(h) WAIVER OF CERTAIN VA REQUIREMENTS.—

11 Notwithstanding any other provision of law, the Secretary

12 of Veterans Affairs shall furnish medicare health care

13 services to targeted medicare-eligible veterans pursuant to

14 the demonstration project.

15 ‘‘(i) INSPECTOR GENERAL.—Nothing in any agree16 ment entered into under subsection (b) shall limit the In17 spector General of the Department of Health and Human

18 Services from investigating any matters regarding the ex19 penditure of funds under this title for the demonstration

20 project, including compliance with the provisions of this

21 title and all other relevant laws.

22 ‘‘(j) REPORT.—

23 ‘‘(1) IN GENERAL.—At least 30 days prior to

24 the commencement of the demonstration project (for

25 both the coordinated care health plan model and the
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1 fee-for-service model), the administering Secretaries

2 shall submit a copy of any agreement entered into

3 under subsection (b) to the committees of jurisdic4 tion of Congress.

5 ‘‘(2) SUBSEQUENT WAIVER OF MEDICARE RE6 QUIREMENTS.—If the Secretary waives any require7 ment under subsection (c)(4) or (d)(4) that was not

8 described in any agreement submitted to Congress

9 under paragraph (1), the Secretary shall submit a

10 report to the committees of jurisdiction of Congress

11 describing such waiver.

12 ‘‘(k) PAYMENTS BASED ON REGULAR MEDICARE

13 PAYMENT RATES.—

14 ‘‘(1) AMOUNT.—Subject to the succeeding pro15 visions of this subsection and subsection (m), the

16 Secretary shall reimburse the Secretary of Veterans

17 Affairs for health care benefits provided under the

18 demonstration project at the following rates:

19 ‘‘(A) COORDINATED CARE HEALTH

20 PLANS.—In the case of health care benefits pro21 vided under the demonstration project to a tar22 geted medicare-eligible veteran enrolled in a co23 ordinated care health plan, at a rate equal to

24 95 percent of the amount paid to a

25 Medicare+Choice organization under part C for
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1 an enrollee in a Medicare+Choice plan offered

2 by such organization (as risk adjusted under

3 section 1853(a)(1)(B)).

4 ‘‘(B) FEE-FOR-SERVICE MODEL.—In the

5 case of a medicare health care service pre6 scribed in subsection (d)(2) that is provided at

7 a demonstration site operating under a fee-for8 service model, at a rate equal to 95 percent of

9 the amounts that otherwise would be payable

10 under this title on a noncapitated basis for such

11 service if the demonstration site was not part of

12 this demonstration project, was participating in

13 the medicare program, and imposed charges for

14 such service.

15 ‘‘(2) EXCLUSION OF CERTAIN AMOUNTS.—In

16 computing the amount of payment under paragraph

17 (1), the following amounts shall be excluded:

18 ‘‘(A) DISPROPORTIONATE SHARE HOS19 PITAL ADJUSTMENT.—Any amount attributable

20 to an adjustment under section 1886(d)(5)(F).

21 ‘‘(B) DIRECT GRADUATE MEDICAL EDU22 CATION PAYMENTS.—Any amount attributable

23 to a payment under section 1886(h).
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1 ‘‘(C) INDIRECT MEDICAL EDUCATION AD2 JUSTMENT.—Any amount attributable to the

3 adjustment under section 1886(d)(5)(B).

4 ‘‘(D) PERCENTAGE OF CAPITAL PAY5 MENTS.—67 percent of any amounts attrib6 utable to payments for capital-related costs

7 under medicare payment policies under section

8 1886(g).

9 ‘‘(3) PERIODIC PAYMENTS FROM MEDICARE

10 TRUST FUNDS.—Payments under this subsection

11 shall be made—

12 ‘‘(A) on a periodic basis consistent with

13 the periodicity of payments under this title; and

14 ‘‘(B) in appropriate part, as determined by

15 the Secretary, from the trust funds.

16 ‘‘(4) ANNUAL LIMIT ON MEDICARE PAY17 MENTS.—

18 ‘‘(A) COORDINATED CARE HEALTH PLAN

19 MODEL.—Subject to subparagraphs (C) and

20 (D), the total amount paid to the Department

21 of Veterans Affairs under this subsection for

22 enrollees in coordinated care health plans for

23 any of the 3 consecutive 12-month periods (the

24 first of which begins on the date that enroll25 ment in such a plan begins at any demonstra-
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1 tion site) shall be equal to an amount deter2 mined appropriate by the administering Secre3 taries.

4 ‘‘(B) FEE-FOR-SERVICE MODEL.—Subject

5 to subparagraphs (C) and (D), the total

6 amount paid to the Department of Veterans Af7 fairs under this subsection for health care bene8 fits provided on a fee-for-service basis at a dem9 onstration site for any of the 3 consecutive 12-

10 month periods (the first of which begins on the

11 date that benefits begin to be provided at any

12 demonstration site using the fee-for-service

13 model) shall be equal to an amount determined

14 appropriate by the administering Secretaries.

15 ‘‘(C) NO PAYMENTS FOR BENEFITS PRO16 VIDED AFTER TERMINATION DATE.—No

17 amounts shall be paid to the Department of

18 Veterans Affairs under this section for health

19 care benefits provided under the demonstration

20 project after the date that the project termi21 nates pursuant to subparagraph (A)(ii) or

22 (B)(ii) of subsection (b)(4).

23 ‘‘(D) CAP.—The sum of the amounts paid

24 to the Department of Veterans Affairs under

25 this section—
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1 ‘‘(i) during the first 12-month periods

2 described in subparagraphs (A) and (B)

3 shall not exceed $50,000,000;

4 ‘‘(ii) during the second 12-month peri5 ods so described shall not exceed

6 $50,000,000; and

7 ‘‘(iii) during the third 12-month peri8 ods so described shall not exceed

9 $50,000,000.

10 ‘‘(l) MAINTENANCE OF EFFORT.—The Secretary may

11 not reimburse the Secretary of Veterans Affairs, from the

12 trust funds, for medicare health care services furnished

13 under the demonstration project to targeted medicare-eli14 gible veterans at a demonstration site in a year until the

15 expenditures during that year by the Department of Vet16 erans Affairs for such services provided at that site to in17 dividuals that meet the definition of a targeted medicare18 eligible veteran under subsection (a)(4) (without regard to

19 subparagraph (D) of such section) exceeds such expendi20 tures at the site for such services provided to such individ21 uals during a baseline period determined by the admin22 istering Secretaries.

23 ‘‘(m) ANNUAL RECONCILIATION TO ASSURE NO IN24 CREASE IN COSTS TO MEDICARE PROGRAM.—
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1 ‘‘(1) MONITORING EFFECT OF DEMONSTRATION

2 PROGRAM ON COSTS TO MEDICARE PROGRAM.—

3 ‘‘(A) IN GENERAL.—The administering

4 Secretaries, in consultation with the Comp5 troller General of the United States, shall close6 ly monitor the expenditures made under the

7 medicare program under this title for targeted

8 medicare-eligible veterans at each demonstra9 tion site during the period of the demonstration

10 project compared to the expenditures that

11 would have been made for such veterans during

12 that period if the demonstration project had not

13 been conducted.

14 ‘‘(B) ANNUAL REPORTS BY THE COMP15 TROLLER GENERAL.—

16 ‘‘(i) COORDINATED CARE HEALTH

17 PLAN MODEL.—Not later than 6 months

18 after the end of each of the 3 consecutive

19 12-month periods (the first of which begins

20 on the date that enrollment in a coordi21 nated care health plan begins at any dem22 onstration site), the Comptroller General of

23 the United States shall submit to the ad24 ministering Secretaries and the appro25 priate committees of Congress a report on
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1 the extent, if any, to which the costs of the

2 Secretary under the medicare program

3 under this title for each demonstration site

4 operating under such a model increased as

5 a result of the demonstration project dur6 ing the 12-month period to which the re7 port applies.

8 ‘‘(ii) FEE-FOR-SERVICE MODEL.—Not

9 later than 6 months after the end of each

10 of the 3 consecutive 12-month periods (the

11 first of which begins on the date that

12 medicare health care services begin to be

13 provided at any demonstration site using

14 such a fee-for-service model), the Comp15 troller General of the United States shall

16 submit to the administering Secretaries

17 and the appropriate committees of jurisdic18 tion of Congress a report described in

19 clause (i) with respect to such a model.

20 ‘‘(2) REQUIRED RESPONSE IN CASE OF IN21 CREASE IN COSTS.—

22 ‘‘(A) IN GENERAL.—If the administering

23 Secretaries find, based on paragraph (1), that

24 the expenditures under the medicare program

25 under this title for each demonstration site in-
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1 creased (or are expected to increase) during a

2 fiscal year because of the demonstration

3 project, the administering Secretaries shall take

4 such steps as may be needed—

5 ‘‘(i) to recoup for the medicare pro6 gram the amount of such increase in ex7 penditures; and

8 ‘‘(ii) to prevent any such increase in

9 any succeeding fiscal year.

10 ‘‘(B) STEPS.—Such steps—

11 ‘‘(i) under subparagraph (A)(i), shall

12 include payment of an amount equal to the

13 amount of such increased expenditures by

14 the Secretary of Veterans Affairs from the

15 current medical care appropriation of the

16 Department of Veterans Affairs to the

17 trust funds; and

18 ‘‘(ii) under subparagraph (A)(ii), shall

19 include suspending or terminating the

20 demonstration project (in whole or in part)

21 or reducing the amount of payment under

22 subsection (k).

23 ‘‘(n) EVALUATION AND REPORTS.—

24 ‘‘(1) INDEPENDENT EVALUATION.—
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1 ‘‘(A) IN GENERAL.—The Comptroller Gen2 eral of the United States shall conduct an eval3 uation of the demonstration project,

4 including—

5 ‘‘(i) an evaluation of demonstration

6 sites operating under a coordinated care

7 health plan model and under a fee-for-serv8 ice model; and

9 ‘‘(ii) where appropriate, a comparison

10 of such models.

11 ‘‘(B) CONTENTS.—Any evaluation con12 ducted under subparagraph (A) shall include an

13 assessment, based on the agreement entered

14 into under subsection (b), of the following:

15 ‘‘(i) Any savings or costs to the medi16 care program under this title resulting

17 from the demonstration project.

18 ‘‘(ii) Compliance of participating dem19 onstration sites with applicable measures

20 of quality of care, compared to such com21 pliance by other entities that participate in

22 medicare and are not Veterans Affairs

23 medical facilities.
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1 ‘‘(iii) Compliance by the Department

2 of Veterans Affairs with the requirements

3 under this title.

4 ‘‘(iv) The number of targeted medi5 care-eligible veterans opting to receive

6 health care benefits under the demonstra7 tion project instead of receiving such bene8 fits through another health insurance plan

9 (including health care benefits under this

10 title).

11 ‘‘(v) A comparison of the costs of par12 ticipation of the demonstration sites in the

13 program with the reimbursements for

14 health care services provided by such sites.

15 ‘‘(vi) Any impact the demonstration

16 project has on the access to health care

17 services, or the quality of such services,

18 for—

19 ‘‘(I) targeted medicare-eligible

20 veterans receiving health care benefits

21 under the demonstration project; and

22 ‘‘(II) veterans (including targeted

23 medicare-eligible veterans) that are

24 not receiving health care benefits

25 under the demonstration project.
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1 ‘‘(vii) Any impact the demonstration

2 project has on private health care providers

3 and on beneficiaries under this title that

4 are not receiving health care benefits under

5 the demonstration project.

6 ‘‘(viii) Any effect that the demonstra7 tion project has on the enrollment in

8 Medicare+Choice plans offered by

9 Medicare+Choice organizations under part

10 C of this title in the established dem11 onstration site areas.

12 ‘‘(ix) Any impact that the exclusion of

13 the amounts described in subsection (k)(2)

14 from the reimbursement amounts under

15 the demonstration has on the Department

16 of Veterans Affairs or on targeted medi17 care-eligible veterans.

18 ‘‘(x) A description of the difficulties

19 (if any) experienced by—

20 ‘‘(I) the Department of Veterans

21 Affairs in managing the demonstra22 tion project; or

23 ‘‘(II) the Department of Health

24 and Human Services in overseeing the

25 demonstration project.
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1 ‘‘(xi) Any additional elements speci2 fied in the agreement entered into under

3 subsection (b).

4 ‘‘(xii) Any additional elements that

5 the Comptroller General of the United

6 States determines are appropriate to as7 sess regarding the demonstration project.

8 ‘‘(C) PERIODIC REPORTS.—

9 ‘‘(i) COORDINATED CARE HEALTH

10 PLAN MODEL.—With respect to the portion

11 of the demonstration project that is oper12 ating under a coordinated care health plan

13 model, the Comptroller General of the

14 United States shall submit reports on the

15 evaluation conducted under subparagraph

16 (A) to the administering Secretaries and to

17 the committees of jurisdiction of Congress

18 as follows:

19 ‘‘(I) INITIAL REPORT.—An initial

20 report shall be submitted not later

21 than 12 months after the date that

22 enrollment in a coordinated care

23 health plan begins at any demonstra24 tion site.
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1 ‘‘(II) SECOND REPORT.—A sec2 ond report shall be submitted not

3 later than 30 months after such date.

4 ‘‘(III) FINAL REPORT.—A final

5 report shall be submitted not later

than 31 6 ⁄2 years after such date.

7 ‘‘(ii) FEE-FOR-SERVICE MODEL.—

8 With respect to the portion of the dem9 onstration project that is operating under

10 a fee-for-service model, the Comptroller

11 General of the United States shall submit

12 reports on the evaluation conducted under

13 subparagraph (A) to the administering

14 Secretaries and to the committees of juris15 diction of Congress as follows:

16 ‘‘(I) INITIAL REPORT.—An initial

17 report shall be submitted not later

18 than 12 months after the date that

19 medicare health care services begin to

20 be provided at any demonstration site

21 using such a model.

22 ‘‘(II) SECOND REPORT.—A sec23 ond report shall be submitted not

24 later than 30 months after such date.
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1 ‘‘(III) FINAL REPORT.—A final

2 report shall be submitted not later

than 31 3 ⁄2 years after such date.

4 ‘‘(2) REPORTS ON EXTENSION AND EXPANSION

5 OF THE DEMONSTRATION PROJECT.—

6 ‘‘(A) COORDINATED CARE HEALTH PLAN

7 MODEL.—With respect to the demonstration

8 project that is operating under a coordinated

9 care health plan model, not later than 3 months

10 after the date of the submission of the final re11 port by the Comptroller General of the United

12 States under paragraph (1)(C)(i)(III), the ad13 ministering Secretaries shall submit to the com14 mittees of jurisdiction of Congress a report con15 taining the final recommendations of such Sec16 retaries as to—

17 ‘‘(i) whether expenditures for targeted

18 medicare-eligible veterans under the dem19 onstration project exceed the expenditures

20 that would have been incurred under the

21 medicare program under this title with re22 gard to such veterans had this section not

23 been enacted;

24 ‘‘(ii) whether the demonstration

25 project could be expanded or extended
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1 without increasing the cost to the medicare

2 program under this title or to the Federal

3 Government;

4 ‘‘(iii) whether to extend the duration

5 of the demonstration project;

6 ‘‘(iv) whether to increase the number

7 of demonstration sites operating under

8 such a model;

9 ‘‘(v) whether to increase the maximum

10 amount of reimbursement under the dem11 onstration project in any year; and

12 ‘‘(vi) whether the terms and condi13 tions of the demonstration project should

14 be altered if the project is extended or ex15 panded.

16 ‘‘(B) FEE-FOR-SERVICE MODEL.—With re17 spect to the demonstration project that is oper18 ating under a fee-for-service model, not later

19 than 3 months after the date of the submission

20 of the final report by the Comptroller General

21 of the United States under paragraph

22 (1)(C)(ii)(III), the administering Secretaries

23 shall submit to the committees of jurisdiction of

24 Congress a report described in subparagraph

25 (A) with respect to such model.’’.
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1 SEC. 3. EXTENSION AND EXPANSION OF MEDICARE SUB2 VENTION DEMONSTRATION PROJECT FOR

3 MILITARY RETIREES.

4 (a) ONE-YEAR EXTENSION OF PROJECT.—Section

5 1896 of the Social Security Act (42 U.S.C. 1395ggg) is

6 amended—

7 (1) in subsection (b)(4), by striking ‘‘3-year’’

8 and inserting ‘‘4-year’’;

9 (2) in subsection (i)(4)—

10 (A) in subparagraph (B), by striking

11 ‘‘and’’ at the end;

12 (B) in subparagraph (C), by striking the

13 period at the end and inserting ‘‘; and’’; and

14 (C) by adding at the end the following:

15 ‘‘(D) $65,000,000 for calendar year

16 2001.’’; and

17 (3) in subsection (k)(1), in the matter preceding subparagraph (A), by striking ‘‘31 18 ⁄2 years’’

and inserting ‘‘41 19 ⁄2 years’’.

20 (b) PERMITTING PAYMENT ON A FEE-FOR-SERVICE

21 BASIS.—

22 (1) IN GENERAL.—Section 1896 of the Social

23 Security Act (42 U.S.C. 1395ggg) (as amended by

24 subsection (a)) is amended—

25 (A) by redesignating subsection (k) as sub26 section (l); and
36

•S 1928 PCS

1 (B) by inserting after subsection (j) the

2 following:

3 ‘‘(k) REIMBURSEMENT ON FEE-FOR-SERVICE BASIS

4 FOR SERVICES PROVIDED TO UNENROLLED INDIVID5 UALS.—

6 ‘‘(1) IN GENERAL.—In the case of medicare-eli7 gible military retirees or dependents who are not en8 rolled in the demonstration project under this sec9 tion, the Secretary, if the administering Secretaries

10 determine it to be appropriate, may reimburse the

11 Secretary of Defense for medicare health care serv12 ices provided to such retirees or dependents at a

13 military treatment facility under the demonstration

14 project. Such reimbursement shall only be made for

15 services provided at demonstration project sites that

16 receive reimbursement under subsection (i)(1)(A).

17 ‘‘(2) AGREEMENT.—If the administering Secre18 taries determine that reimbursement on a fee-for19 service basis pursuant to paragraph (1) is appro20 priate, at least 60 days prior to providing such reim21 bursement, the administering Secretaries shall enter

22 into an agreement described in subsection (b) re23 garding the fee-for-service model and shall submit a

24 copy of the agreement to the committees of jurisdic25 tion under this title.’’.
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1 (2) CONFORMING AMENDMENTS.—

2 (A) SITES.—Section 1896(b)(2) of the So3 cial Security Act (42 U.S.C. 1395ggg(b)(2)) is

4 amended by adding at the end the following: ‘‘If

5 feasible, reimbursement shall be made using the

6 fee-for-service model pursuant to subsection (k)

7 at at least 1 of the demonstration project sites

8 receiving reimbursement under subsection

9 (i)(1)(A).’’.

10 (B) MEDICARE REQUIREMENTS.—Section

11 1896(d) of the Social Security Act (42 U.S.C.

12 1395ggg(d)) is amended—

13 (i) in paragraph (1)(A)—

14 (I) by inserting ‘‘(insofar as it

15 provides for the enrollment of individ16 uals and payment on the basis de17 scribed in subsection (i)(1)(A))’’ be18 fore ‘‘shall meet’’; and

19 (II) by inserting ‘‘and the project

20 (insofar as it provides for payment for

21 medicare health care services provided

22 at a military treatment facility on the

23 basis described in subsection

24 (i)(1)(B)) shall meet all requirements

25 that are applicable to facilities and
38

•S 1928 PCS

1 health care providers that provide

2 such services under this title’’ after

3 ‘‘medicare payments’’; and

4 (ii) in paragraph (2), by inserting ‘‘,

5 insofar as it provides for the enrollment of

6 individuals and payment on the basis de7 scribed in subsection (i)(1)(A),’’ before

8 ‘‘shall comply’’.

9 (C) TRICARE.—Section 1896(g)(1) of the

10 Social Security Act (42 U.S.C. 1395ggg(g)(1))

11 is amended by inserting ‘‘insofar as it provides

12 for the enrollment of individuals and payment

13 on the basis described in subsection (i)(1)(A),’’

14 before ‘‘the Secretary of Defense’’.

15 (D) PAYMENT AMOUNTS.—Section

16 1896(i)(1) of the Social Security Act (42

17 U.S.C. 1395ggg(i)(1)) is amended to read as

18 follows:

19 ‘‘(1) IN GENERAL.—Subject to the succeeding

20 provisions of this subsection, the Secretary shall re21 imburse the Secretary of Defense for services pro22 vided under the demonstration project at the fol23 lowing rates:

24 ‘‘(A) MANAGED CARE.—In the case of

25 services provided under the demonstration
39

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1 project to a medicare-eligible military retiree or

2 dependent enrolled in a managed care plan of3 fered under such project, at a rate equal to 95

4 percent of the amount paid to a

5 Medicare+Choice organization under part C of

6 this title with respect to such an enrollee.

7 ‘‘(B) FEE-FOR-SERVICE MODEL.—In the

8 case of a medicare health care service that is

9 provided to a medicare-eligible military retiree

10 or dependent at a military treatment facility

11 pursuant to subsection (k), at a rate equal to

12 95 percent of the amounts that otherwise would

13 be payable under this title on a noncapitated

14 basis for such service if the military treatment

15 facility was not part of this demonstration

16 project, was participating in the medicare pro17 gram, and imposed charges for such service.

18 ‘‘(C) OTHER CASES.—In cases in which a

19 payment amount may not otherwise be readily

20 computed under subparagraphs (A) or (B), the

21 Secretary shall establish rules for computing

22 equivalent or comparable payment amounts.’’.

23 (E) EVALUATION AND REPORTS.—Section

24 1896(l)(1) of the Social Security Act (42

25 U.S.C. 1395ggg(l)(1)) (as redesignated by
40

•S 1928 PCS

1 paragraph (1)(A)) is amended by inserting

2 ‘‘(with respect to the managed care portion of

3 the project and, if applicable, the fee-for-service

4 portion of the project)’’ after ‘‘evaluation of the

5 demonstration project’’.

6 (3) EFFECTIVE DATE.—The amendments made

7 by this subsection shall take effect on the date of en8 actment of this Act, and shall apply to items and

9 services furnished on or after January 1, 2000.

10 SEC. 4. REDUCTION IN PAYMENTS FOR ENROLLEE BAD

11 DEBT.

12 (a) IN GENERAL.—Section 1861(v)(1)(T)(iii) of the

13 Social Security Act (42 U.S.C. 1395x(v)(1)(T)(iii)) is

14 amended by striking ‘‘45 percent’’ and inserting ‘‘51 per15 cent’’.

16 (b) EFFECTIVE DATE.—The amendment made by

17 subsection (a) shall apply to cost reporting periods begin18 ning during a fiscal year beginning after September 30,

19 1999.