I
106TH CONGRESS
2D SESSION
H. R. 4981
To amend title XVIII of the Social Security Act to establish a national
policy on chronic illness care, to improve administrative, delivery, and
financing capabilities, to establish prototype models for serving persons
with serious and disabling chronic conditions, to provide for coverage
under the Medicare Program of disease management services for serious
and disabling chronic illnesses, and to refine Medicare and Medicaid
waiver authority.
IN THE HOUSE OF REPRESENTATIVES
JULY 26, 2000
Mr. STARK introduced the following bill; which was referred to the Committee
on Commerce, and in addition to the Committee on Ways and Means,
for a period to be subsequently determined by the Speaker, in each case
for consideration of such provisions as fall within the jurisdiction of the
committee concerned
A BILL
To amend title XVIII of the Social Security Act to establish
a national policy on chronic illness care, to improve ad-
ministrative, delivery, and financing capabilities, to estab-
lish prototype models for serving persons with serious
and disabling chronic conditions, to provide for coverage
under the Medicare Program of disease management
services for serious and disabling chronic illnesses, and
to refine Medicare and Medicaid waiver authority.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Chronic Illness Care Improvement Act of 2000’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
TITLE I—NATIONAL COMMISSION ON IMPROVING CHRONIC
ILLNESS CARE
Sec. 101. National Commission on Improving Chronic Illness Care.
Sec. 102. Definition of serious and disabling chronic illness.
TITLE II—PREPARING THE GROUNDWORK FOR THE NATIONAL
INITIATIVE TO IMPROVE CHRONIC ILLNESS CARE
Subtitle A—Expansion of Preventive Benefits
Sec. 201. Authority to provide preventive services under part B of the medicare
program to prevent, reduce, delay, or detect serious and dis-
abling chronic illness.
Sec. 202. Information campaign on prevention.
Sec. 203. Study of ways to encourage lifetime preventive care designed to mini-
mize chronic illness costs in the public and private sectors.
Sec. 204. Congressional consideration of cost effectiveness of chronic illness
prevention measures over time.
Subtitle B—Development of National Goals and Measures for the Effective
Management of Chronic Illness
Sec. 211. Establishment of a new office in the Department of Health and
Human Services to ensure coordination of care for chronic ill-
ness.
Sec. 212. Establishment of a national database for chronic illness.
Sec. 213. Establishment of national goals to reduce the prevalence of high-cost
chronic illness.
Sec. 214. Establishment of quality improvement, medical error reduction and
outcomes goals.
Sec. 215. Development and implementation of common patient assessment in-
struments across settings.
Sec. 216. Development of national resource centers on the internet for serious
and disabling chronic illness.
Subtitle C—Payment Incentives for Furnishing Quality Services to the
Chronically Ill
Sec. 221. Bonus payments to Medicare+Choice organizations implementing
comprehensive programs of disease and disability prevention
that achieve prevention goals established by the Secretary.
Sec. 222. Increased attention to payment policies for the chronically ill under
Medicare+Choice.
Sec. 223. Assuring adequate manpower and expertise for the treatment of
chronic illness.
TITLE III—DEVELOPMENT OF PROTOTYPES OF INTEGRATION
AND COORDINATION OF CARE FOR 2 CHRONIC ILLNESS SUB-
POPULATIONS TO BE EXPANDED IN 2007 TO ALL SERIOUS AND
DISABLING CHRONIC ILLNESSES
Sec. 301. Disease management services for serious and disabling chronic illness.
‘‘Sec. 1889. Disease management services for serious and disabling chronic ill-
ness.
TITLE IV—INTEGRATING MEDICARE AND MEDICAID FOR DUAL
ELIGIBLES
Sec. 401. Provision of waiver authority to serve dual eligibles more efficiently.
‘‘Sec. 1897. Demonstrations to coordinate and integrate services and adminis-
tration under this title and title XIX.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) Chronic disease is America’s number one
health care problem, yet chronic care is provided by
a fragmented health care system that was designed
to meet the needs of acute episodes of illness.
(2) Chronic disease is America’s highest cost
and fastest growing health care problem, accounting
for 90 percent of all morbidity and 80 percent of all
deaths. While chronic conditions affect persons of all
ages, the elderly are at the greatest risk. About 88
percent of the elderly have 1 chronic condition and
almost 70 percent have more than 1 condition. The
number of persons over 65 years of age will increase
from 13 percent of the population to almost 21 per-
cent in 2040.
(3) Direct and indirect costs for chronic condi-
tions reached $659,000,000,000 in 1990 and are
projected to nearly double by the year 2050. Per
capita medical expenditures for persons with chronic
conditions are, on average, almost 4 times the costs
for persons with acute conditions. Nearly 70 percent
of the Nation’s personal health care expenditures are
for people with chronic conditions.
(4) The needs of the chronically ill span time,
place, and health profession, yet providers and infor-
mation systems function to deliver separate and un-
related services, even though they are providing care
to the same person. The current structure of admin-
istration, financing, and oversight of Government-
sponsored programs locks into place a fragmented,
institutionally based, reactive approach to care that
is at odds with the coordinated and seamless con-
tinuum of care chronic illness requires.
(5) This systems problem requires a systems so-
lution based on the following components:
(A) Extended care pathways that follow
patients across settings and include preventive,
primary, acute, transitional, and residential and
community-based long-term care services.
(B) Targeted approaches to care delivery
for high-risk populations including screening
programs, early intervention, and clinical guide-
lines for preventing, delaying, or minimizing
disability.
(C) Health promotion strategies, including
patient education, that encourage self-manage-
ment and patient empowerment.
(D) Chronic disease management and case
management with the authority to manage care,
utilization, and costs across the spectrum of
services.
(E) Integrated information systems that
track health status, utilization, cost, and quality
data across providers/settings and throughout
the course of chronic conditions.
(F) Financing strategies that align finan-
cial incentives among providers to achieve mu-
tual and consistent care, quality, and cost ob-
jectives.
(G) Education for health professionals to
meet the long-term comprehensive needs of
chronic conditions.
(H) Support for family caregivers through
the development of integrated models of family
centered care that encompass health and sup-
portive services for patients and family care-
givers.
(6) This transformation of health care delivery
for chronic conditions will result in a dramatic im-
provement in the quality of care characterized by—
(A) a reduction in the prevalence of chron-
ic conditions;
(B) a reduction in the progression of dis-
ability;
(C) improved functional status at all
stages of chronic disease;
(D) improved patient satisfaction; and
(E) improved quality of life.
(7) The cost of this new approach to chronic
care will be borne by a combination of short-term
and long-term savings as follows:
(A) Short-term savings result from a re-
duction of duplicative services (including mul-
tiple admissions and discharges with mandated
comprehensive intake assessments and dis-
charge plans) from today’s ‘‘silos’’ of health
care settings, as well as unnecessary diagnostic
investigations and consultations that result
from inaccessible data.
(B) Long-term savings result from the re-
duction in preventable complications and the
prolongation of functional independence. Soci-
etal costs related to lost productivity and work-
days for both patients and caregivers will also
decline.
TITLE 
I—NATIONAL 
COMMIS-
SION ON IMPROVING CHRON-
IC ILLNESS CARE
SEC. 101. NATIONAL COMMISSION ON IMPROVING CHRONIC
ILLNESS CARE.
(a) ESTABLISHMENT.—There is established a com-
mission to be known as the National Commission on Im-
proving Chronic Illness Care (in this section referred to
as the ‘‘Commission’’).
(b) DUTIES OF THE COMMISSION.—The Commission
shall carry out the following duties:
(1) Develop a national policy to coordinate the
multiple Federal resources devoted to health care for
persons with serious and disabling chronic illnesses
in order to facilitate a comprehensive continuum of
care. With respect to chronically ill persons who are
eligible for health care benefits under any or any
combination of the medicare or medicaid programs
(administered by the Department of Health and
Human Services), or under chapter 17 of title 38,
United States Code (administered by the Depart-
ment of Veterans Affairs), the Commission shall give
special emphasis to coordination of health care and
related services furnished by those departments and
other departments serving medicare beneficiaries, in-
cluding the Departments of Agriculture, Interior,
and Housing and Urban Development. The Commis-
sion shall examine how these programs can be made
to coordinate better with each other and with State
and local programs to provide a continuum of care
to those with serious and disabling chronic illnesses.
(2) Review and analyze whether coordination of
the multiple Federal resources is best accomplished
by a completely new governmental structure, or a
new structure within an existing department, or a
new mechanism for coordination of the various Gov-
ernment programs.
(3) Make suggestions regarding amendments to
the provisions of titles II, III, and IV of this Act.
(4) Identify statutory and regulatory barriers to
effective care for serious and disabling chronic ill-
ness and develop recommendations for legislative
and regulatory changes that would facilitate the
goals in the provisions described in paragraph (4),
including barriers to the coordination of care across
provider settings and the coordination of benefit cov-
erage under Federal and State programs, with spe-
cial attention given to the medicare and medicaid
programs.
(5) Develop a plan to integrate medicare and
medicaid Federal budget functions for purposes of
projecting future costs of serious and disabling
chronic conditions and cost savings from improved
care of the chronically ill. These costs and cost sav-
ings must be measured longitudinally and across
professional disciplines and provider settings.
(6) Develop guidelines for payment methods
that establish compatible financial incentives among
health care providers and professionals serving the
same chronically ill persons in order to facilitate in-
creased quality of care, greater cost effectiveness,
and simplicity of billing for providers and bene-
ficiaries.
(7) Commission an expert panel, including ex-
perts in disease management, care of serious and
disabling chronic illness, and outcomes research, to
make recommendations for the design of the proto-
types, supervise data gathering, generate feedback,
and define endpoints in order to analyze the experi-
ence of the prototypes, (the National Diabetes Pilot
Initiative to Improve Chronic Illness Care and the
National Alzheimer’s Disease Pilot Initiative To Im-
prove Chronic Illness Care established under title
III) in order to enhance the design of the later ex-
panded program (The National Initiative to Improve
Chronic Illness Care). The expert panel will meet
concurrently during the tenure of the Commission
and will reconvene in the third year of the National
Diabetes and Alzheimer’s Disease Pilot Initiatives to
review the operation and outcomes of those initia-
tives and submit a report of their recommendations
not later than 12 months after they reconvene. Such
expert panel may hold hearings and otherwise seek
advice from the public and outside experts, develop
papers, and seek a consensus on its recommenda-
tions.
(8) Commission an expert panel to develop a
plan to introduce a single, integrated medical record
for patients with chronic conditions in order to elimi-
nate duplication of assessment, care planning, and
documentation functions and to allow physician or-
ders, chart information, diagnoses, and assessments
to flow continuously across levels of care. Such ex-
pert panel may hold hearings and otherwise seek ad-
vice from the public and outside experts, develop pa-
pers, and seek a consensus on its recommendations.
(9) Commission an expert panel to recommend
new outcome measures of cost-effectiveness based on
improvements in or maintenance of functional sta-
tus, delayed dependency, reducing the rate of dis-
ability progression, quality of life, and such other re-
lated matters as the panel determines appropriate.
Such expert panel may hold hearings and otherwise
seek advice from the public and outside experts, de-
velop papers, and seek a consensus on its rec-
ommendations.
(10) Contract for reports detailing the need for
changes in current laws and regulations in order to
achieve the aforementioned provisions.
(11) Recommend national goals for reduction in
serious and disabling chronic illness and cost savings
over the next generation.
(12) Analyze the impact of emerging trends in
the management of serious and disabling chronic ill-
ness, disability, and long-term care, including such
issues as genetic testing, Internet technology, patient
empowerment, and increasing utilization of home
health care and their implications for future health
care delivery to the chronically ill.
(13) Review and analyze such other matters as
the Commission determines to be appropriate.
(c) MEMBERSHIP.—
(1) NUMBER AND APPOINTMENT.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the Commission shall be composed
of 17 members of whom—
(i) 4 shall be appointed by the Presi-
dent;
(ii) 6 shall be appointed by the Speak-
er of the House of Representatives, in con-
sultation with the minority leader of the
House of Representatives, of whom not
more that 4 shall be of the same political
party;
(iii) 6 shall be appointed by the ma-
jority leader of the Senate, in consultation
with the minority leader of the Senate, of
whom not more than 4 shall be of the
same political party; and
(iv) 1, who shall serve as Chairman of
the Commission, appointed jointly by the
Speaker of the House of Representatives,
in consultation with the minority leader of
the House of Representatives.
(B) LIMITATION ON NUMBER OF MEMBERS
OF
CONGRESS.—Of the members appointed
under subparagraph (A), no more than 2 mem-
bers of the House of Representatives and 2
members of the Senate may serve as a member
of the Commission.
(C) QUALIFICATIONS.—Members of the
Commission 
shall 
include 
representatives
from—
(i) Federal and State agencies serving
the elderly, disabled, and chronically ill;
(ii) public health;
(iii) consumer representatives for var-
ious chronic diseases;
(iv) primary care providers;
(v) acute care providers;
(vi) 
institutional 
and 
community-
based long-term care providers;
(vii) managed care health plans; and
(viii) researchers in health care fi-
nancing and chronic disease management.
(2) DEADLINE FOR APPOINTMENT.—Members
of the Commission shall be appointed by not later
than 90 days after the enactment of this Act.
(3) TERMS
OF
APPOINTMENT.—The term of
any appointment under paragraph (1) to the Com-
mission shall be for the life of the Commission.
(4) MEETINGS.—The Commission shall meet at
the call of its Chairman or a majority of its mem-
bers.
(5) QUORUM.—A quorum shall consist of 8
members of the Commission, except that 4 members
may conduct a hearing under subsection (e).
(6) VACANCIES.—A vacancy on the Commission
shall be filled in the same manner in which the origi-
nal appointment was made, not later than 30 days
after the Commission is given notice of the vacancy
and shall not affect the power of the remaining
members to execute the duties of the Commission.
(7) COMPENSATION.—Members of the Commis-
sion shall receive no additional pay, allowances, or
benefits by reason of their service on the Commis-
sion.
(8) EXPENSES.—Each member of the Commis-
sion shall receive travel expenses and per diem in
lieu of subsistence in accordance with sections 5702
and 5703 of title 5, United States Code.
(d) STAFF AND SUPPORT SERVICES.—
(1) EXECUTIVE DIRECTOR.—
(5) PHYSICAL FACILITIES.—The Administrator
of the General Services Administration shall locate
suitable office space for the operation of the Com-
mission. The facilities shall serve as the head-
quarters of the Commission and shall include all
necessary equipment and incidentals required for the
proper functioning of the Commission.
(e) POWERS OF COMMISSION.—
(1) HEARINGS
AND
OTHER
ACTIVITIES.—For
the purpose of carrying out its duties, the Commis-
sion may hold such hearings and undertake such
other activities as the Commission determines to be
necessary to carry out its duties.
(2) STUDIES BY GAO.—Upon the request of the
Commission, the Comptroller General shall conduct
such studies or investigations as the Commission de-
termines to be necessary to carry out its duties.
(3) COST
ESTIMATES
BY
CONGRESSIONAL
BUDGET OFFICE AND OFFICE OF THE CHIEF ACTU-
ARY OF HCFA.—
(A) The Director of the Congressional
Budget Office or the Chief Actuary of the
Health Care Financing Administration, or both,
shall provide to the Commission, upon the re-
quest of the Commission, such cost estimates as
the Commission determines to be necessary to
carry out its duties.
(B) The Commission shall reimburse the
Director of the Congressional Budget Office for
expenses relating to the employment in the of-
fice of the Director of such additional staff as
may be necessary for the Director to comply
with requests by the Commission under sub-
paragraph (A).
(4) DETAIL OF FEDERAL EMPLOYEES.—Upon
the request of the Commission, the head of a Fed-
eral agency shall provide such technical assistance to
the Commission as the Commission determines to be
necessary to carry out its duties. Any such detail
shall not interrupt or otherwise affect the civil serv-
ice status or privileges of the Federal employee.
(5) TECHNICAL
ASSISTANCE.—Upon the re-
quest of the Commission, the head of a Federal
agency shall provide such technical assistance to the
Commission as the Commission determines to be
necessary to carry out its duties.
(6) USE OF MAILS.—The Commission may use
the United States mails in the same manner and
under the same conditions as Federal agencies and
shall, for purposes of the frank, be considered a
commission of Congress as described in section 3215
of title 39, United States Code.
(7) OBTAINING
INFORMATION.—The Commis-
sion may secure directly from any Federal agency
information necessary to enable it to carry out its
duties, if the information may be disclosed under
section 552 of title 5, United States Code. Upon re-
quest of the Chairman of the Commission, the head
of such agency shall furnish such information to the
Commission.
(8) ADMINISTRATIVE
SUPPORT
SERVICES.—
Upon the request of the Commission, the Adminis-
trator of General Services shall provide to the Com-
mission on a reimbursable basis such administrative
support services as the Commission may request.
(9) PRINTING.—For purposes of costs relating
to printing and binding, including the cost of per-
sonnel detailed from the Government Printing Of-
fice, the Commission shall be deemed to be a com-
mittee of the Congress.
(f) REPORT.—Not later than 18 months following the
first meeting of the Commission, the Commission shall
submit a report to the President and Congress which shall
contain a detailed statement of only those recommenda-
tions, findings, and conclusions of the Commission that
receive the approval of at least 11 members of the Com-
mission.
(g) TERMINATION.—The Commission shall terminate
30 days after the date of submission of the report required
in subsection (f).
(h) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated $1,500,000 to carry out
this section. 60 percent of such appropriation shall be pay-
able from the Federal hospital insurance trust fund, and
40 percent of such appropriation shall be payable from
the Federal Supplementary Medical Insurance Trust
Fund under title XVIII of the Social Security Act (42
U.S.C. 1395I, 1395t).
SEC. 102. DEFINITION OF SERIOUS AND DISABLING CHRON-
IC ILLNESS.
In this Act, the term ‘‘serious and disabling chronic
illness’ means one or more biological or physical conditions
which are likely to last for an unspecified period of time,
or for the duration of a person’s life, for which there is
no known cure, and which may affect an individual’s abil-
ity to carry out basic activities of daily living, instrumental
activities of daily living, or both. Such conditions include
the following:
(1) Alzheimer’s Disease and related disorders.
(2) Arthritis.
(3) Cancer.
(4) Cerebrovascular disease.
(5) Diabetes.
(6) Emphysema and bronchitis (including
chronic obstructive pulmonary disease.
(7) Hypertension.
(8) Ischemic heart disease.
(9) Multiple sclerosis.
(10) Parkinson’s disease.
(11) Peripheral vascular disease.
(12) Renal disease.
TITLE 
II—PREPARING 
THE
GROUNDWORK FOR THE NA-
TIONAL INITIATIVE TO IM-
PROVE 
CHRONIC 
ILLNESS
CARE
Subtitle A—Expansion of
Preventive Benefits
SEC. 201. AUTHORITY TO PROVIDE PREVENTIVE SERVICES
UNDER PART B OF THE MEDICARE PROGRAM
TO PREVENT, REDUCE, DELAY, OR DETECT
SERIOUS AND DISABLING CHRONIC ILLNESS.
(a) PREVENTIVE SERVICES BENEFIT.—
(1) IN GENERAL.—Section 1861(s) of the So-
cial Security Act (42 U.S.C. 1395x(s)) is amended—
(A) by redesignating paragraphs (16) and
(17) as paragraphs (17) and (18), respectively;
(B) by striking ‘‘and’’ at the end of para-
graph (14);
(C) by striking the period at the end of
paragraph (15) and inserting ‘‘and’’; and
(D) by inserting after paragraph (15) the
following new paragraph:
‘‘(16) qualified preventive services, as defined in
subsection (uu);’’.
(2) 
CONFORMING
AMENDMENTS.—Sections
1864(a), 1902(a)(9)(C), and 1915(a)(1)(B)(ii)(I) of
such Act (42 U.S.C. 1395aa(a), 1396a(a)(9)(C), and
1396n(a)(1)(B)(ii)(I)) are each amended by striking
‘‘paragraphs (16) and (17)’’ each place it appears
and inserting ‘‘paragraphs (17) and (18)’’.
(b) DEFINITION OF PREVENTIVE SERVICES.—Sec-
tion 1861 of such Act (42 U.S.C. 1395x) is amended by
adding at the end the following new subsection:
‘‘Qualified Preventive Services
‘‘(uu)(1) Subject to paragraph (2), the term ‘quali-
fied preventive services’ means items and services deter-
mined by the Secretary, on the basis of evidence, to be
reasonable and necessary for the prevention, reduction,
delay, or early detection of a chronic illness, that are fur-
nished by qualified health care professionals (as deter-
mined by the Secretary) in such amounts and with such
frequency as the Secretary determines appropriate con-
sistent with the provisions of paragraph (2), and includes
the following services so furnished:
‘‘(A) Smoking cessation services.
‘‘(B) Screening for hypertension.
‘‘(C) Screening for cholesterol.
‘‘(D) Screening for end stage renal disease and
kidney function.
‘‘(E) Fall prevention services.
‘‘(F) Counseling for hormone replacement ther-
apy.
‘‘(G) Screening for reduced visual and audio
acuity and low vision rehabilitation services.
‘‘(H) Screening for glaucoma.
‘‘(I) Medical nutrition therapy services, includ-
ing obesity and weight reduction and weight reduc-
tion maintenance services.
(c) EXCLUSION
FROM
COVERAGE
CONFORMING
AMENDMENT.—Section 1862(a)(1)(B) of such Act (42
U.S.C. 1395y(a)(1)(B)) is amended by striking ‘‘section
1861(s)(10)’’ and inserting ‘‘section 1834(e)(6)’’.
(d) PAYMENT FOR PREVENTIVE SERVICES.—
(1) IN GENERAL.—Section 1834 of the Social
Security Act (42 U.S.C. 1395m) is amended by in-
serting after subsection (d) the following new sub-
section:
‘‘(e) ALTERNATIVE
PAYMENT
FOR
PREVENTIVE
SERVICES.—
‘‘(1) GENERAL PAYMENT RULE.—
‘‘(A) QUALIFIED PREVENTIVE SERVICES.—
The Secretary shall establish by regulation a
payment amount for qualified preventive serv-
ices, as defined in section 1861(uu).
‘‘(B) OTHER PREVENTIVE SERVICES.—The
Secretary may establish by regulation a pay-
ment amount for each type of preventive service
described in subparagraphs (A) through (H) of
paragraph (6).
‘‘(2) MINIMUM PAYMENT AMOUNT.—In the case
of a preventive service described in paragraph (6)
that may be performed as a diagnostic or thera-
peutic service under this title, the payment amount
under this subsection for a service performed as a
preventive service may not be less than the payment
amount established under this title for such service
performed as a diagnostic or therapeutic service.
‘‘(3) MANNER OF PAYMENT.—In the case of a
preventive service described in paragraph (6) that
may be performed as a diagnostic or therapeutic
service under this title, the Secretary shall apply the
same method of payment under this subsection for
a service performed as a preventive service as the
Secretary applies under this title for such service
performed as a diagnostic or therapeutic service.
‘‘(4) AUTHORITY
TO
WAIVE
COINSURANCE.—
Notwithstanding any other provision of this title, in
the case of a preventive service described in para-
graph (6), the Secretary may waive the imposition of
any applicable coinsurance amount with respect to
such service.
‘‘(5) PROHIBITION ON BALANCE BILLING.—The
provisions of subparagraphs (A) and (B) of section
1842(b)(18) shall apply to the furnishing of preven-
tive services described in paragraph (6) for which
payment is made under this subsection in the same
manner as such subparagraphs apply to services fur-
nished by a practitioner described in subparagraph
(C) of such section.
‘‘(6) PREVENTIVE SERVICES DESCRIBED.—For
purposes of this subsection, the preventive services
described in this paragraph are any of the following
services:
‘‘(A) 
Antigens 
(under 
section
1861(s)(2)(G)).
‘‘(B) Prostate cancer screening tests (as
defined in section 1861(oo)).
‘‘(C) Colorectal cancer screening tests (as
defined in section 1861(pp)).
‘‘(D) Blood-testing strips, lancets, and
blood glucose monitors for individuals with dia-
betes described in section 1861(n).
‘‘(E) Diabetes outpatient self-management
training 
services 
(as 
defined 
in 
section
1861(qq)).
‘‘(F)(i) Pneumococcal vaccine and its ad-
ministration and influenza vaccine and its ad-
ministration (under section 1861(s)(10)(A)).
‘‘(ii) Hepatitis B vaccine and its adminis-
tration (under section 1861(s)(10)(B)).
‘‘(G) Screening mammography (as defined
in section 1861(jj)).
‘‘(H) Screening pap smear and screening
pelvic exam (as defined in paragraphs (1) and
(2), respectively, of section 1861(nn)).
‘‘(I) Bone mass measurement (as defined
in section 1861(rr)).
‘‘(J) Qualified preventive services (as de-
fined in section 1861(uu)).’’.
(2) WAIVER OF DEDUCTIBLE.—The first sen-
tence of section 1833(b) of such Act (42 U.S.C.
1395l(b)) is amended by striking ‘‘, (5) such deduct-
ible’’ and all that follows through the period and in-
serting: ‘‘, and (5) such deductible shall not apply
with respect to preventive services (as described in
section 1834(e)(6)).’’.
(3) CONFORMING AMENDMENTS.—(A) Section
1833(a)(1)(B) 
of 
such 
Act 
(42 
U.S.C.
1395l(a)(1)(B)) is amended by inserting ‘‘subject to
section 1834(e),’’ before ‘‘the amounts paid shall be
100 percent of the reasonable charges for such items
and services,’’.
(B) Section 1833(a)(2)(G) of such Act (42
U.S.C. 1395l(a)(2)(G)) is amended by inserting
‘‘subject to section 1834(e),’’ before ‘‘with respect to
items and services’’.
(C) Section 1834(c)(1)(C) of such Act (42
U.S.C. 1395m(c)) is amended by striking ‘‘the
amount of the payment’’ and inserting ‘‘except as
provided by the Secretary under subsection (e), the
amount of the payment’’
(D) Section 1834(d) of such Act (42 U.S.C.
1395m(d)) is amended—
(i) in paragraph (1)(A), by striking ‘‘The
payment amount’’ and inserting ‘‘Except as
provided by the Secretary under subsection (e),
the payment amount’’; and
(ii) in paragraphs (2)(A) and (3)(A), by
striking ‘‘payment under section 1848’’ each
place it appears and inserting ‘‘except as pro-
vided by the Secretary under subsection (e),
payment under section 1848’’.
(E) Section 1848(g)(2)(C) of such Act (42
U.S.C. 1395w–4(g)(2)(C)) is amended—
(i) by striking ‘‘For’’ and inserting ‘‘(i)
Subject to clause (ii), for’’; and
(ii) by adding at the end the following new
clause:
‘‘(ii) For physicians’ services consisting of
preventive services (as described in section
1834(e)(6)) furnished on or after February 1,
2000, the ‘limiting charge’ shall be 100 percent
of the recognized payment amount under this
part for nonparticipating physicians or for non-
participating suppliers or other persons.’’.
(F) Section 1848(g)(2)(D) of such Act (42
U.S.C. 1395w–4(g)(2)(D)) is amended by striking
‘‘the fee schedule amount determined under sub-
section (a)’’ and all that follows and inserting ‘‘the
fee schedule amount determined under subsection
(a), in the case of preventive services (as described
in section 1834(e)(6)) the amount determined by the
Secretary under section 1834(e), or, if payment
under this part is made on a basis other than the
fee schedule under this section or other than the
amount established under section 1834(e) with re-
spect to such preventive services, 95 percent of the
other payment basis.’’.
(e) ADDING ‘‘LANCET’’ TO DEFINITION OF DME.—
Section 1861(n) of such Act (42 U.S.C. 1395x(n)) is
amended by striking ‘‘blood-testing strips and blood glu-
cose monitors’’ and inserting ‘‘blood-testing strips, lancets,
and blood glucose monitors’’.
(f) EFFECTIVE DATE.—The amendments made by
this Act apply to items and services furnished on or after
January 1, 2002.
SEC. 202. INFORMATION CAMPAIGN ON PREVENTION.
The Secretary of Health and Human Services shall
carry out, during 2002 and 2003, a nationwide education
campaign to promote awareness among all Americans
about the nature of chronic diseases and disabilities and
strategies for preventing, delaying, or minimizing dis-
ability progression at various stages of chronic conditions,
including health promotion and self-care activities. This
campaign shall include the following activities:
(1) An information campaign, in collaboration
with the Social Security Administration, State health
insurance assistance programs, area agencies on
aging, and the private sector, designed to educate all
Americans (especially individuals with disabilities)
about the importance of preventive health care.
(2) Activities designed to encourage medicare
beneficiaries to use medicare preventive benefits, in-
cluding distribution of comprehensive information on
medicare preventive benefits to all medicare bene-
ficiaries.
(3) Development and testing of a health status
assessment tool with follow-up interventions, to as-
sist medicare beneficiaries and their providers in
identifying and mitigating health risks.
(4) A nationwide education and awareness cam-
paign designed to educate older Americans on ad-
justments to behavior and the home environment
that can prevent falls and other injuries.
SEC. 203. STUDY OF WAYS TO ENCOURAGE LIFETIME PRE-
VENTIVE 
CARE 
DESIGNED 
TO 
MINIMIZE
CHRONIC ILLNESS COSTS IN THE PUBLIC
AND PRIVATE SECTORS.
(a) STUDY.—The Secretary of Health and Human
Services shall conduct a study to estimate what preventive
care services (such as smoking cessation and hypertension
reduction.) if furnished to individuals before eligibility for
medicare (either due to qualification by age or by social
security disability) could reasonably be expected to save
the medicare program and other Government programs
(including the tax revenues to the Treasury from contin-
ued employment by individuals free of morbidity) more in
future discounted costs under those programs than the
cost of furnishing such preventive services.
(b) REPORT.—Not later than January 1, 2003, the
Secretary shall submit to Congress a report on the study
conducted under subsection (a) that includes such rec-
ommendations as the Secretary determines appropriate for
legislative or administrative changes in tax-qualified pri-
vate health insurance plans and in Government health in-
surance plans (including medicaid) to encourage the provi-
sion of such preventive care services by such plans and
the use of such services by individuals. The Secretary shall
also recommend methodologies to extend preventive care
services to the uninsured and to those ineligible for em-
ployer-assisted health insurance plans.
SEC. 204. CONGRESSIONAL CONSIDERATION OF COST EF-
FECTIVENESS OF CHRONIC ILLNESS PREVEN-
TION MEASURES OVER TIME.
Not later than January 1, 2002, the Director of the
Congressional Budget Office shall submit to Congress a
report that describes methodologies to measure aggregate
savings, to both society and the individual, in payments
that would otherwise be made under the medicare, med-
icaid, and other Federal health care programs that are at-
tributable to preventive services of the type described in
section 1834(e) of the Social Security Act (as added by
section 201(d)) if such services were furnished over the
course of an individual’s life prior to entitlement to bene-
fits under those programs.
Subtitle B—Development of Na-
tional Goals and Measures for
the Effective Management of
Chronic Illness
SEC. 211. ESTABLISHMENT OF A NEW OFFICE IN THE DE-
PARTMENT OF HEALTH AND HUMAN SERV-
ICES TO ENSURE COORDINATION OF CARE
FOR CHRONIC ILLNESS.
(a) IN GENERAL.—There is established within the
Department of Health and Human Services an office to
be known as the Office of Integration and Coordination
of Care for Chronic Illness.
(b) MISSION STATEMENT.—The Office of Integration
and Coordination of Care for Chronic Illness shall ensure
the satisfactory implementation of the provisions of this
Act.
SEC. 212. ESTABLISHMENT OF A NATIONAL DATABASE FOR
CHRONIC ILLNESS.
(a) ESTABLISHMENT OF DATABASE.—The Secretary
of Health and Human Services shall develop a database
to be known as the ‘‘National Database for Serious and
Disabling Chronic Illness’’. The purpose of the database
is—
(1) to generate accurate information about the
prevalence, demographics, health status, functional
status, financial status, support systems, and quality
of life of persons suffering from serious and dis-
abling chronic illnesses;
(2) to compile aggregate data on the utilization,
cost, and outcomes of chronic illness; and
(3) to enable the Secretary to set goals and
measure progress in reducing the cost to society of
improving care of the chronically ill.
(b) EFFECTIVE DATE.—The Secretary shall establish
the database referred to in subsection (a) by not later than
the date that is 18 months after the date of the enactment
of this Act.
SEC. 213. ESTABLISHMENT OF NATIONAL GOALS TO RE-
DUCE 
THE 
PREVALENCE 
OF 
HIGH-COST
CHRONIC ILLNESS.
The Secretary of Health and Human Services shall
establish targets for reducing the prevalence of the high-
est-cost and fastest-growing chronic illnesses.
(1) In 2005, the Secretary shall establish and
issue national goals for reducing the prevalence of
high-cost chronic care conditions. Every 5 years
thereafter, the Secretary shall issue new national
goals to reflect past progress.
(2) Each year starting in 2010, the Secretary
shall issue a report on the progress in meeting the
goals issued under paragraph (1), the reasons for
success or failure in meeting those goals, and the es-
timated savings achieved by reduced prevalence of
those conditions, including the relationship between
medicare spending and medicaid savings and the
cost-effectiveness of preventive benefits within and
across the medicare and medicaid programs.
(3) In establishing the national goal under
paragraph (1) for 2005, the Secretary shall give pri-
ority to achieving the maximum feasible reduction in
the chronic conditions that represent the largest pro-
portion of national health care expenditures and
shall consider the goals recommended by the Com-
mission established in section 101(b)(10).
SEC. 214. ESTABLISHMENT OF QUALITY IMPROVEMENT,
MEDICAL 
ERROR 
REDUCTION 
AND 
OUT-
COMES GOALS.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall carry out the following requirements
as soon as practicable:
(1) Identify risk factors associated with pro-
gression of serious and disabling chronic illnesses,
and identify interventions for primary, secondary,
and tertiary prevention.
(2) Prior to January 1, 2005, conduct no less
than 5 patient-oriented research trials (PORTs) that
the Secretary determines will have the greatest and
most immediate impact on the largest number of
people with chronic illness.
(3) Develop disease prevention guidelines for
the highest-cost chronic diseases and disabilities,
measured by severity and prevalence.
(4) Develop disability-based outcome measures
that evaluate effectiveness in preventing, delaying, or
minimizing the progression of chronic diseases and
disabilities and associated comorbidities and loss of
independence on a longitudinal basis.
(b) 
MEDICARE+CHOICE
ORGANIZATIONS.—For
years beginning on or after January 1, 2005, each
Medicare+Choice organization shall conduct on an annual
basis—
(1) at least 1 new continuous quality improve-
ment initiative involving chronic care focusing on de-
laying the progression of disability and preventing
the emergence of disease-related complications; or
(2) at least 1 new initiative to reduce prevent-
able medical errors involving chronic care.
SEC. 215. DEVELOPMENT AND IMPLEMENTATION OF COM-
MON PATIENT ASSESSMENT INSTRUMENTS
ACROSS SETTINGS.
(a) ESTABLISHMENT OF STANDARD PATIENT AS-
SESSMENT INSTRUMENTS.—The Secretary of Health and
Human Services, through negotiated rulemaking in ac-
cordance with subchapter III of chapter 5 of title 5,
United States Code, and in accordance with the require-
ments of this section, shall establish and implement stand-
ard patient assessment instruments under the medicare
program under title XVIII of the Social Security Act that
provide comparability of information and to the maximum
extent feasible, reduce the need for repeated evaluations
and data entry at each new site of service.
(b) CONSULTATION.—In establishing the standard
patient assessment instruments under subsection (a), the
Secretary shall consult with representatives of providers
of services, suppliers, and with appropriate organizations
and entities representing private sector entities to promote
the development and use of common sets of quality meas-
ures that represent the full spectrum of care obtained by
individuals entitled to benefits under the medicare pro-
gram under such title.
(c) SOLE ASSESSMENT INSTRUMENTS.—No later
than January 1, 2005, standard patient assessment in-
struments established under this section shall be the sole
patient assessment instrument utilized by the Secretary
of Health and Human Services with respect to items and
services furnished under the medicare and medicaid pro-
grams, and shall supersede any patient assessment instru-
ment or method utilized by the Secretary with respect to
such items and services.
SEC. 216. DEVELOPMENT OF NATIONAL RESOURCE CEN-
TERS ON THE INTERNET FOR SERIOUS AND
DISABLING CHRONIC ILLNESS.
(a) IN GENERAL.—The Agency of Healthcare Re-
search and Quality shall develop and make available in
electronic format an authoritative, reliable national re-
source center for serious and disabling chronic illnesses,
to be used by patients and their families that include infor-
mation necessary for patient education and facilitate self-
management. The resource center shall include informa-
tion for patients and health care providers on current clin-
ical guidelines that is, as of the date of the enactment of
this Act, available in the National Guidelines Clearing-
house maintained by the Agency.
(b) NO FEE FOR USE OF INFORMATION.—The Agen-
cy of Healthcare Research and Quality may not charge
a fee for the use of the national resource center developed
under subsection (a).
Subtitle C—Payment Incentives for
Furnishing Quality Services to
the Chronically Ill
SEC. 221. BONUS PAYMENTS TO MEDICARE+CHOICE ORGA-
NIZATIONS IMPLEMENTING COMPREHENSIVE
PROGRAMS OF DISEASE AND DISABILITY
PREVENTION THAT ACHIEVE PREVENTION
GOALS ESTABLISHED BY THE SECRETARY.
(a) ESTABLISHMENT OF PERFORMANCE POOL AC-
COUNT.—There is created within the Federal Supple-
mental Medical Insurance Trust Fund established by sec-
tion 1841 an account to be known as the ‘‘Performance
Bonus Pool Account’’ (in this section referred to as the
‘‘Account’’).
(b) AMOUNTS IN ACCOUNT.—
(1) IN GENERAL.—The Account shall consist of
the amounts deposited by the Secretary of Health
and Human Services that are attributable to reduc-
tions in payments to Medicare+Choice organizations
by reason of paragraph (2).
(2) 
REDUCTIONS
IN
PAYMENTS
TO
MEDICARE+CHOICE
ORGANIZATIONS.—For months
on occurring on or after January 1, 2005, the Sec-
retary shall reduce by 1 percent the annual
Medicare+Choice capitation rate under section
1853(c) of the Social Security Act (42 U.S.C.
1395w–23(c)) for Medicare+Choice organizations
offering Medicare+Choice plans.
(3) SEPARATION OF FUNDS.—Funds provided
under this part to the Account shall be kept sepa-
rate from all other funds within the Federal Supple-
mental Medical Insurance Trust Fund.
(c) PAYMENTS FROM ACCOUNT.—
(1) BONUS
PAYMENTS
TO
ORGANIZATIONS
THAT MEET OR EXCEED CHRONIC ILLNESS TARGET
GOALS.—At the end of each year, beginning with
2005, the Secretary shall make payments from the
Account (in the aggregate of the total amount de-
posited in the Account during the year) to those
Medicare+Choice organizations offering items and
services under the Medicare+Choice plan in a man-
ner that meets or exceeds the chronic illness target
goals established in section 212 of the Chronic Ill-
ness Care Improvement Act of 2000.
(2) 
AMOUNT
OF
BONUS
PAYMENT.—The
amount of a bonus payment under paragraph (1) to
a Medicare+Choice organization shall be weighted
for excellence in reduction in high-cost chronic con-
ditions under the Medicare+Choice plan, for further
delaying disability progression and improving health
outcomes, and by such other factors as the Secretary
determines appropriate under such target goals.
(d) REPORT ON BONUS PAYMENTS TO PROVIDERS IN
FEE-FOR-SERVICE.—Not later than January 1, 2002, the
Secretary shall submit to Congress a report containing
recommendations 
for 
legislative 
and 
administrative
changes under the medicare program to provide additional
payments for excellence in reduction in high-cost chronic
conditions to providers furnishing services to medicare
beneficiaries 
who 
are 
not 
enrolled 
under 
a
Medicare+Choice plan offered by a Medicare+Choice or-
ganization under part C of the medicare program.
SEC. 222. INCREASED ATTENTION TO PAYMENT POLICIES
FOR 
THE 
CHRONICALLY 
ILL 
UNDER
MEDICARE+CHOICE.
(a) IN GENERAL.—Section 511(b)(2) of the Medi-
care, Medicaid, and SCHIP Balanced Budget Refinement
Act of 1999 (42 U.S.C. 1395W–23 note) is amended by
adding at the end the following new subsection:
‘‘(G) Suggestions for more accurately measuring the
costs of preventing, delaying, and managing chronic illness
and disability.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect as if included in the enact-
ment of the Medicare, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999 (Public Law 106–113).
SEC. 223. ASSURING ADEQUATE MANPOWER AND EXPER-
TISE FOR THE TREATMENT OF CHRONIC ILL-
NESS.
(a) STUDY.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall conduct a study to evaluate
the need for additional physician and nonphysician
health care staff and expertise in the management of
chronic illness of medicare beneficiaries. To the ex-
tent that the Secretary determines that any physi-
cian and nonphysician health care staff and exper-
tise shortages exist, or may be likely to exist, the
Secretary shall evaluate methods to prevent short-
ages in physician and nonphysician health care staff
and expertise.
(2) EMPHASIS ON CERTAIN MATTERS.—Special
emphasis shall be given to studying strategies for
ensuring an adequate supply of allied health profes-
sionals (such as nurses) and paraprofessionals (such
as nurse aides). Strategies to be studied may
include—
(A) defining ‘‘health worker shortage
areas’’ to target Federal funds toward recruit-
ment and retention initiatives for professional
and paraprofessional workers in health care;
(B) loan forgiveness for registered nurses
and licensed practical nurses under the Public
Health Service Act;
(C) stipends for paraprofessionals to cover
training requirements for certified nursing as-
sistants;
(D) day care, transportation, housing, and
health insurance subsidies;
(E) tax credits for persons that remain
employed by providers in health professional
shortage areas for a specified period of time;
(F) tax incentives to support employees
who care for elders in their own homes; and
(G) salary subsidies for providers located
in areas with low unemployment levels, as de-
fined by the Secretary of Health and Human
Services in consultation with the Secretary of
Labor.
(b) REPORT.—Not later than January 1, 2003, the
Secretary shall submit to Congress a report on the study
conducted under subsection (a), and shall include any rec-
ommendations for legislation or administrative action to
prevent shortages in physician and nonphysician health
care staff and expertise.
(c) AUTHORITY TO ADJUST GME PAYMENTS.—
(1) IN GENERAL.—If the Secretary determines
that a shortage of physicians exists, or is likely to
exist, in a specialty or subspecialty of medicine that
has as a component the diagnosis and management
of chronic illness, then notwithstanding any provi-
sion of section 1886(h) of the Social Security Act
(42 U.S.C. 1395ww(h)) to the contrary—
(A) the Secretary may adjust, on a revenue
neutral basis, the graduate medical education
payment weight for approved medical residency
training programs in that specialty or sub-
specialty in order to encourage the movement of
additional medical residents into that specialty
or subspecialty, and
(B) the Secretary may increase the number
of residents in that specialty or subspecialty.
(2) EFFECTIVE DATE.—The provisions of para-
graph (1) shall apply with respect to cost reporting
periods beginning on or after October 1, 2002.
TITLE 
III—DEVELOPMENT 
OF
PROTOTYPES 
OF 
INTEGRA-
TION AND COORDINATION OF
CARE FOR 2 CHRONIC ILL-
NESS 
SUBPOPULATIONS 
TO
BE EXPANDED IN 2007 TO ALL
SERIOUS 
AND 
DISABLING
CHRONIC ILLNESSES
SEC. 301. DISEASE MANAGEMENT SERVICES FOR SERIOUS
AND DISABLING CHRONIC ILLNESS.
Title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.) is amended by inserting after section 1888
the following new section:
‘‘DISEASE MANAGEMENT SERVICES FOR SERIOUS AND
DISABLING CHRONIC ILLNESS
‘‘SEC. 1889. (a) IMPLEMENTATION
OF DISEASE
MANAGEMENT SERVICES PROGRAM.—
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish and implement a comprehensive program in ac-
cordance with the provisions of this section to pro-
vide for the coverage under this title of disease man-
agement services for serious and disabling chronic
illnesses furnished to eligible individuals described in
subsection 
(b), 
under 
such 
appropriate 
cir-
cumstances as the Secretary prescribes, by entities
designated by the Secretary with respect to diag-
noses that the Secretary determines may be helped
by such management. The program shall be known
as the National Initiative to Improve Chronic Illness
Care.
‘‘(2) INITIAL PILOT PROJECTS.—
‘‘(A) 
DIABETES
MELLITUS; 
ALZ-
HEIMER’S.—Not later than 6 months after the
date of the termination of the National Com-
mission on Improving Chronic Illness Care (es-
tablished under section 101), the Secretary
shall establish and implement a pilot project to
provide for the coverage described in paragraph
(1) with respect to diabetes mellitus and an-
other pilot project to provide for such coverage
for Alzheimer’s disease.
‘‘(B) DESIGNATION OF PILOT PROJECTS.—
The pilot project established under subpara-
graph (A) providing for coverage for diabetes
mellitus shall be known as the ‘National Diabe-
tes Pilot Initiative to Improve Chronic Illness
Care’. The pilot project established under sub-
paragraph (A) providing for coverage for Alz-
heimer’s disease shall be known as the ‘Na-
tional Alzheimer’s Disease Pilot Initiative to
Improve Chronic Illness Care’.
‘‘(C) INITIAL
REPORT
TO
CONGRESS
ON
COSTS AND COST SAVINGS.—Not later than 2
years after the beginning of the pilot projects
under this paragraph, the Secretary shall sub-
mit to Congress a report on the impact of the
pilot projects on costs and savings under this
title, and in considering savings, shall include
impacts on quality of life for patients and their
families and costs avoided across settings and
over time.
‘‘(3) 
NATIONAL
INITIATIVE
TO
IMPROVE
CHRONIC ILLNESS CARE.—
‘‘(A) IN GENERAL.—Not later than Janu-
ary 1, 2007, the Secretary shall expand the pro-
gram, based upon the prototype established for
the pilot projects under paragraph (2) and the
recommendations of the expert panel described
in subparagraph (B), to provide for the cov-
erage described in paragraph (1) for all serious
and disabling chronic illnesses, and those ill-
nesses that may potentially be serious and dis-
abling chronic illnesses, as determined by the
Secretary.
‘‘(B) EXPERT
PANEL
DESCRIBED.—The
expert panel referred to in subparagraph (A) is
the expert panel commissioned under section
101(b)(6) of the Chronic Illness Care Improve-
ment Act of 2000 to analyze the experience and
outcomes of the initial pilot projects established
in paragraph (2) and to provide recommenda-
tions to the Secretary for use in the final devel-
opment of the National Initiative to Improve
Chronic Illness Care.
‘‘(b) ADMINISTRATION
BY CONTRACT.—Except as
otherwise specifically provided for in this section, the Sec-
retary may administer the program under this section as
follows:
‘‘(1) IN GENERAL.—The Secretary may admin-
ister the program through a contract with a pro-
gram administrator in accordance with the provi-
sions of this subsection.
‘‘(2) SCOPE OF PROGRAM ADMINISTRATOR CON-
TRACTS.—A contract under this subsection may, at
the Secretary’s discretion, relate to administration of
any or all of the programs or projects specified in
subsection (a). The Secretary may enter into such
contracts for a limited geographic area, or on a re-
gional or national basis.
‘‘(3) ELIGIBLE CONTRACTORS.—The Secretary
may contract for the administration of the program
with—
‘‘(A) an entity that, under a contract
under section 1816 or 1842, determines the
amount of and makes payments for health care
items and services furnished under this title; or
‘‘(B) any other entity with substantial ex-
perience in managing the type of program con-
cerned.
‘‘(4) CONTRACT AWARD, DURATION, AND RE-
NEWAL.—
‘‘(A) IN GENERAL.—A contract under this
subsection shall be for an initial term of up to
three years, renewable for additional terms of
up to three years.
‘‘(B) NONCOMPETITIVE
AWARD
AND
RE-
NEWAL FOR ENTITIES ADMINISTERING PART A
OR
PART
B
PAYMENTS.—The Secretary may
enter or renew a contract under this subsection
with an entity described in paragraph (3)(A)
without regard to the requirements of section 5
of title 41, United States Code.
‘‘(5) APPLICABILITY OF FEDERAL ACQUISITION
REGULATION.—The Federal Acquisition Regulation
shall apply to program administration contracts
under this subsection.
‘‘(6) PERFORMANCE
STANDARDS.—The Sec-
retary shall establish performance standards for the
program administrator including, as applicable,
standards for the quality and cost-effectiveness of
the program administered, and such other factors as
the Secretary finds appropriate. The eligibility of en-
tities for the initial award, continuation, and renewal
of program administration contracts shall be condi-
tioned, at a minimum, on performance that meets or
exceeds such standards.
‘‘(7) 
FUNCTIONS
OF
PROGRAM
ADMINIS-
TRATOR.—A program administrator shall perform
any or all of the following functions, as specified by
the Secretary:
‘‘(A) AGREEMENTS WITH INDIVIDUALS OR
ENTITIES
FURNISHING
HEALTH
CARE
ITEMS
AND
SERVICES.—Determine the qualifications
of individuals or entities seeking to enter or
renew agreements to provide services under a
program specified in subsection (a), and as ap-
propriate enter or renew (or refuse to enter or
renew) such agreements on behalf of the Sec-
retary.
‘‘(B) 
ESTABLISHMENT
OF
PAYMENT
RATES.—Negotiate or otherwise establish, sub-
ject to the Secretary’s approval, payment rates
for covered health care items and services.
‘‘(C) PAYMENT OF CLAIMS OR FEES.—Ad-
minister payments for health care items or serv-
ices furnished under any such program.
‘‘(D) PAYMENT OF BONUSES.—Using such
guidelines as the Secretary shall establish, and
subject to the approval of the Secretary, make
bonus payments as described in subsection
(c)(2)(A)(ii) to individuals and entities fur-
nishing items or services for which payment
may be made under any such program.
‘‘(E) LIST OF PROGRAM PARTICIPANTS.—
Maintain and regularly update a list of individ-
uals or entities with agreements to provide
health care items and services under any such
program, and ensure that such list, in electronic
and hard copy formats, is readily available, as
applicable, to—
‘‘(i) individuals residing in the service
area who are entitled to benefits under
part A or enrolled in the program under
part B;
‘‘(ii) the entities responsible under
sections 1816 and 1842 for administering
payments for health care items and serv-
ices furnished; and
‘‘(iii) individuals and entities pro-
viding health care items and services in the
service area.
‘‘(F) BENEFICIARY ENROLLMENT.—Deter-
mine eligibility of individuals to enroll under a
program specified in subsection (a) and provide
enrollment-related services (but only if the Sec-
retary finds that the program administrator has
no conflict of interest caused by a financial re-
lationship with any individual or entity fur-
nishing items or services for which payment
may be made under any such program, or any
other conflict of interest with respect to such
function).
‘‘(G) OVERSIGHT.—Monitor the compli-
ance of individuals and entities with agreements
under any such program with the conditions of
participation.
‘‘(H) ADMINISTRATIVE REVIEW.—Conduct
reviews of adverse determinations specified in
subparagraph (A).
‘‘(I) 
REVIEW
OF
MARKETING
MATE-
RIALS.—Conduct a review of marketing mate-
rials proposed by an individual or entity fur-
nishing services under any such program.
‘‘(J) ADDITIONAL
FUNCTIONS.—Perform
such other functions as the Secretary may
specify.
‘‘(8) LIMITATION
OF
LIABILITY.—The provi-
sions of section 1157(b) shall apply with respect to
activities of contractors and their officers, employ-
ees, and agents under a contract under this sub-
section.
‘‘(9) INFORMATION SHARING.—Notwithstanding
section 1106 and section 552a of title 5, United
States Code, the Secretary may disclose to an entity
with a program administration contract under this
subsection such information (including medical in-
formation) on individuals receiving health care items
and services under the program as the entity may
require to carry out its responsibilities under the
contract.
‘‘(c) RULES APPLICABLE TO PROGRAM ADMINISTRA-
TION CONTRACTS.—
‘‘(1) RECORDS, REPORTS, AND AUDITS.—The
Secretary is authorized to require individuals and
entities with agreements to provide health care items
or services under programs specified under sub-
section (a), and entities with program administration
contracts under subsection (b), to maintain adequate
records, to afford the Secretary access to such
records (including for audit purposes), and to fur-
nish such reports and other materials (including au-
dited financial statements and performance data) as
the Secretary may require for purposes of implemen-
tation, oversight, and evaluation of such program
and of individuals’ and entities’ effectiveness in per-
formance of such agreements or contracts.
‘‘(2) BONUSES.—Notwithstanding any other
provision of law, but subject to subparagraph
(B)(ii), the Secretary may make bonus payments
under a program specified in subsection (a) from the
Federal Hospital Insurance and Federal Supple-
mentary Medical Insurance Trust Funds in amounts
that do not exceed 50 percent of the savings to such
Trust Funds attributable to such programs in
amounts authorized under such program, in accord-
ance with the following:
‘‘(A) PAYMENTS
TO
PROGRAM
ADMINIS-
TRATORS.—The Secretary may make bonus
payments under each program specified in sub-
section (a) to program administrators.
‘‘(B) PAYMENTS TO INDIVIDUALS AND EN-
TITIES FURNISHING SERVICES.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), the Secretary may make bonus pay-
ments to individuals or entities furnishing
items or services for which payment may
be made under the programs under sub-
section (a), or may authorize a program
administrator to make such bonus pay-
ments in accordance with such guidelines
as the Secretary shall establish and subject
to the Secretary’s approval.
‘‘(ii) LIMITATIONS.—The Secretary
may limit bonus payments under clause (i)
to particular service areas, types of individ-
uals or entities furnishing items or services
under a program, or kinds of items or
services, and may condition such payments
on the achievement of such standards re-
lated to efficiency, improvement in proc-
esses or outcomes of care, or such other
factors as the Secretary determines to be
appropriate.
‘‘(iii) RURAL
AREAS.—In a health
professional shortage area located in a
rural or frontier county in which the provi-
sion of comprehensive disease management
for serious and disabling chronic illness is
difficult due to a shortage in health profes-
sional providing items and services under
this title, the Secretary may provide for
bonus payments under this section for
rural disease management services fur-
nished by such physician or other health
care provider to medicare beneficiaries.
‘‘(3) ANTIDISCRIMINATION LIMITATION.—
‘‘(A) IN
GENERAL.—The Secretary shall
not enter into an agreement with an individual
or entity to provide health care items or serv-
ices under a program specified under subsection
(a), or with an entity to administer such a pro-
gram, unless such individual or entity guaran-
tees that it will not deny, limit, or condition the
coverage or provision of benefits under such
program, for individuals eligible to be enrolled
under such program, based on any health sta-
tus-related 
factor 
described 
in 
section
2702(a)(1) of the Public Health Service Act.
‘‘(B) CONSTRUCTION.—Subparagraph (A)
shall not be construed to prohibit such indi-
vidual or entity from taking any action explic-
itly authorized by the provisions of this section.
‘‘(d) INDIVIDUALS ELIGIBLE FOR DISEASE MANAGE-
MENT SERVICES FOR CHRONIC ILLNESS.—No individual
shall be eligible for enrollment in a disease management
program under this section unless the Secretary finds the
following with respect to the individual:
‘‘(1) NATIONAL DIABETES PILOT INITIATIVE TO
IMPROVE CHRONIC ILLNESS CARE.—With respect to
individuals participating in the National Diabetes
Pilot Initiative To Improve Chronic Illness Care, the
individual has been diagnosed with diabetes mellitus.
‘‘(2) NATIONAL ALZHEIMER’S DISEASE PILOT
INITIATIVE TO IMPROVE CHRONIC ILLNESS CARE.—
With respect to individuals participating in the Na-
tional Alzheimer’s Disease Pilot Initiative To Im-
prove Chronic Illness Care, the individual has been
diagnosed with Alzheimer’s disease.
‘‘(3) 
NATIONAL
INITIATIVE
TO
IMPROVE
CHRONIC ILLNESS CARE.—With respect to individ-
uals participating in the National Initiative To Im-
prove Chronic Illness Care, as follows:
‘‘(A) DIAGNOSIS.—The individual has been
diagnosed with congestive heart failure, chronic
obstructive pulmonary disease, diabetes, Alz-
heimer’s disease and other progressive demen-
tias, Parkinson’s disease, multiple sclerosis, de-
pression, or any other diagnosis, if the Sec-
retary has determined with respect to such di-
agnoses that there is evidence that the provision
of disease management services, over clinically
relevant time periods, to cohorts of individuals
with such diagnoses can reasonably be expected
to improve processes or outcomes of health care
(or in the case of individuals with advanced ill-
ness, improved quality of life) for the medicare
population and to have some (partial or total)
offsetting savings in this title or other Federal
programs.
‘‘(B) ADDITIONAL
FACTORS.—The Sec-
retary may establish such additional clinical cri-
teria for eligibility for enrollment under such a
disease management program as the Secretary
determines appropriate, including certain clin-
ical characteristics or conditions of the indi-
vidual, certain patterns of utilization of the in-
dividual, or other factors indicating the need for
and potential effectiveness of disease manage-
ment for the individual.
‘‘(e) PROCEDURES TO FACILITATE ENROLLMENT.—
The Secretary shall develop and implement procedures de-
signed to facilitate enrollment of eligible individuals in the
programs under this section.
‘‘(f) INTEGRATION AND COORDINATION OF CARE FOR
CHRONIC ILLNESS.—The Secretary shall develop an inte-
grated and coordinated health care delivery system for se-
rious and disabling chronic illness based on the following
components:
‘‘(1) A chronic care network of providers char-
acterized by coordination of medicare, medicaid and
other programs or agencies that provide directly or
otherwise for the care of patients with serious and
disabling chronic illness.
‘‘(2) A payment model that aligns the financial
incentives of the health care providers of the chron-
ically ill in order to reduce disincentives to providing
high quality care with improved cost effectiveness
and simplicity in billing for providers and bene-
ficiaries. Under the payment model, the Secretary
may waive any other provision of this title that re-
stricts access to the most appropriate care in the
lowest cost setting, such as the 3-day hospitalization
rule before a beneficiary is eligible for skilled nurs-
ing facility care, the homebound definition as a bar-
rier to care at an adult day care facility, and such
other provisions as the Secretary determines appro-
priate.
‘‘(3) An administrative model that functions to
efficiently match health care services to the range of
health care needs and reduces unnecessary, duplica-
tive services and paperwork.
‘‘(4) Integrated information systems, including
integrated administrative and financial data systems
as well as a common medical record for participating
chronic care enrollees that is used by chronic care
network providers and continuously supplemented
and updated over time.
‘‘(5) Ongoing evaluation of cost effectiveness of
services based on longitudinal and aggregate system
costs.
‘‘(g) DISEASE MANAGEMENT FOR CHRONIC ILLNESS
SERVICES.—
‘‘(1) IN GENERAL.— Subject to the cost-effec-
tiveness standards established under subsection
(b)(6), disease management services provided to an
individual under this section shall include the fol-
lowing:
‘‘(A) Initial and periodic health screening
and assessment.
‘‘(B) Management that provides a com-
prehensive range of services to the chronically
ill, based on best practices and established clin-
ical guidelines (including coordination with
other providers), and referral for medical and
other health services related to the managed di-
agnosis.
‘‘(C) Case management to facilitate con-
tinuity of care and patient adherence to the
plan of care with provisions for reimbursement
for case management.
‘‘(D) Monitoring and control of medica-
tions.
‘‘(E) Interdisciplinary, collaborative care
by a health care team based on efficient com-
munication between the various health care pro-
viders.
‘‘(F) Preventive care designed to foster
early recognition of symptoms, reduce the prev-
alence of comorbidities, and reduce or delay the
onset and progression of disability and depend-
ence.
‘‘(G) Quality improvement and enhance-
ment of patient safety with reduction of pre-
ventable medical errors.
‘‘(H) Health care delivery that fosters self-
management, patient goalsetting, patient em-
powerment, self-reliance, dignity, and independ-
ence.
‘‘(I) Education and counseling for patient
and family directed at issues of coping and ad-
justment, practical concerns, spiritual needs,
and others that serve the distinct needs of the
patient and family at each stage of illness, in-
cluding the time of diagnosis, early illness, mid-
dle stages of illness, and advanced illness.
‘‘(J) Nursing or other health professional
home visits, as appropriate.
‘‘(K) Providing access for electronic con-
sultations with physicians or other appropriate
medical professionals, including 24-hour avail-
ability for emergency consultations; in devel-
oping such electronic consultations, the Sec-
retary shall draw on the results, to the extent
available, of section 4207 of the Balanced
Budget Act.