267
Title V, Subtitle B
(2) an agreement that the activity will submit
to the Attorney General annually a report that de-
scribes the operations of the activity and information
regarding the impact of the activity on health care
and on competition in health care, and
(3) an agreement that the parties to the activity
will notify the Attorney General and the Secretary of
the termination of the activity not later than 30
days after such termination occurs.
(e) REVIEW OF APPLICATIONS FOR CERTIFICATES.—
Not later than 90 days after an eligible health care col-
laborative activity submits to the Attorney General an ap-
plication that complies with the rules in effect under sub-
section (c) and with subsection (d), the Attorney General
shall issue or deny the issuance of such certificate. If, be-
fore the expiration of such 90-day period, the Attorney
General may extend the time for issuance for good cause.
(f) REVOCATION OF CERTIFICATE.—Whenever the
Attorney General finds that a health care collaborative ac-
tivity with respect to which a certificate is in effect does
not meet the standards specified in subsection (b), the At-
torney General shall revoke such certificate.
(g) WRITTEN REASONS; JUDICIAL REVIEW.—
(1) DENIAL
AND
REVOCATION
OF
CERTIFI-
CATES.—If the Attorney General denies an applica-
268
Title V, Subtitle B
tion for a certificate or revokes a certificate, the At-
torney General shall include in the notice of denial
or revocation a statement of the reasons relied upon
for the denial or revocation of such certificate.
(2) JUDICIAL REVIEW.—
(A) AFTER
ADMINISTRATIVE
PROCEED-
ING.—(i) If the Attorney General denies an ap-
plication submitted or revokes a certificate is-
sued under this section after an opportunity for
hearing on the record, then any party to the
health care collaborative activity involved may
commence a civil action, not later than 60 days
after receiving notice of the denial or revoca-
tion, in an appropriate district court of the
United States for review of the record of such
denial or revocation.
(ii) As part of the Attorney General’s an-
swer, the Attorney General shall file in such
court a certified copy of the record on which
such denial or revocation is based. The findings
of fact of the Attorney General may be set aside
only if found to be unsupported by substantial
evidence in such record taken as a whole.
(B) DENIAL OR REVOCATION WITHOUT AD-
MINISTRATIVE
PROCEEDING.—If the Attorney
269
Title V, Subtitle B
General denies an application submitted or re-
vokes a certificate issued under this section
without an opportunity for hearing on the
record, then any party to the health care col-
laborative activity involved may commence a
civil action, not later than 60 days after receiv-
ing notice of the denial or revocation, in an ap-
propriate district court of the United States for
de novo review of such denial or revocation.
(h) EXEMPTION.—A person shall not be liable under
any of the antitrust laws for conduct necessary—
(1) to prepare, agree to prepare, or attempt to
agree to prepare an application to request a certifi-
cate under this section, or
(2) to attempt to enter into any health care col-
laborative activity with respect to which such a cer-
tificate is in effect.
(i) DEFINITIONS.—In this section:
(1) The term ‘‘antitrust laws’’ has the meaning
given it in section 5101(c)(1).
(2) The term ‘‘certificate’’ means a certificate
of public advantage authorized to be issued under
subsection (a).
(3) The term ‘‘health care collaborative activ-
ity’’ means an agreement (whether existing or pro-
270
Title V, Subtitle B
posed) between 2 or more providers of health care
services that is entered into solely for the purpose of
sharing in the provision and coordination of health
care services and that involves substantial integra-
tion and financial risk-sharing between the parties,
but does not include the exchanging of information,
the entering into of any agreement, or the engage-
ment in any other conduct that is not reasonably re-
quired to carry out such agreement.
(4) The term ‘‘health care services’’ includes
services related to the delivery or administration of
health care services.
(5) The term ‘‘liable’’ means liable for any civil
or criminal violation of the antitrust laws.
(6) The term ‘‘provider of health care services’’
means any individual or entity that is engaged in the
delivery of health care services in a State and that
is required by State law or regulation to be licensed
or certified by the State to engage in the delivery of
such services in the State.
SEC. 5103. STUDY OF IMPACT ON COMPETITION.
The Attorney General, in consultation with the Chair-
man of the Federal Trade Commission, annually shall sub-
mit to the Congress a report as part of the annual budget
oversight proceedings concerning the Antitrust Division of
271
Title VI, Subtitle A
the Department of Justice. The report shall enable the
Congress to determine how enforcement of antitrust laws
is affecting the formation of efficient, cost-saving joint
ventures and if the certificate of public advantage proce-
dure set forth in section 5102 has resulted in undesirable
reduction in competition in the health care marketplace.
The report shall include an evaluation of the factors set
forth in paragraphs (2)(A) and (2)(B) of section 5102(b).
TITLE VI—MEDICARE
Subtitle A—Increased Beneficiary
Choice; Improved Program Effi-
ciency
PART 1—INCREASED BENEFICIARY CHOICE
SEC. 6001. REQUIREMENTS FOR HEALTH MAINTENANCE
ORGANIZATIONS UNDER MEDICARE.
(a) USE OF METROPOLITAN STATISTICAL AREAS TO
DETERMINE ADJUSTED AVERAGE PER CAPITA COST.—
Section 1876(a)(4) of the Social Security Act (42 U.S.C.
1395mm(a)(4)) is amended by striking ‘‘in a geographic
area served by an eligible organization or in a similar
area’’ and inserting ‘‘in the metropolitan statistical area
(as defined by the Office of Management and Budget) in
which the individual resides, or in the entire portion of
the State in which the individual resides which is not lo-
cated in a metropolitan statistical area in the case of an
272
Title VI, Subtitle A
individual who does not reside in a metropolitan statistical
area’’.
(b) 
DETERMINATION
OF
MODEL
ADDITIONAL
HEALTH BENEFIT PACKAGES.—Section 1876(g) of such
Act (42 U.S.C. 1395mm(g)) is amended by inserting after
paragraph (3) the following new paragraph:
‘‘(4) The Secretary shall develop the following model
packages of additional health benefits (referred to in para-
graph (3)(B)) which an eligible organization may provide
(at its option) under paragraph (2):
‘‘(A) Coverage for catastrophic illness (subject
to a limit on out-of-pocket expenditures).
‘‘(B) Coverage for prescription drugs.
‘‘(C) Coverage for preventive services.’’.
(c) REVISION OF MEMBERSHIP LIMITATION.—Sec-
tion 1876(f) of such Act (42 U.S.C. 1395mm(f)) is
amended—
(1) in paragraph (1), by striking ‘‘one-half’’
and inserting ‘‘25 percent’’; and
(2) in paragraph (2)(A), by striking ‘‘50 per-
cent’’ and inserting ‘‘75 percent’’.
(d) ENROLLMENT PERIODS FOR MEDICARE HEALTH
MAINTENANCE ORGANIZATIONS.—
(1) UNIFORM
OPEN
ENROLLMENT
PERIOD.—
Section 1876(c)(3)(A)(i) of such Act (42 U.S.C.
273
Title VI, Subtitle A
1395mm(c)(3)(A)(i)) is amended by striking ‘‘must
have’’ and all that follows through ‘‘and including’’
and inserting the following: ‘‘shall have open enroll-
ment during an annual uniform open enrollment pe-
riod established by the Secretary for all eligible orga-
nizations, together with’’.
(2) 
OPEN
ENROLLMENT
FOR
CERTAIN
DISENROLLED
INDIVIDUALS.—Section
1876(c)(3)(A)(ii)(I) 
of 
such 
Act 
(42 
U.S.C.
1395mm(c)(3)(A)(ii)(I)) is amended by adding at
the end the following: ‘‘Each eligible organization
with a risk-sharing contract under this section shall
have an open enrollment period for individuals resid-
ing in the organization’s service area who disenroll
from another eligible organization with a risk-shar-
ing contract under this section on the grounds that
the individual’s primary care physician is no longer
a member of the organization’s provider network or
for cause (in accordance with such standards, and as
demonstrated through an appeals process that meets
such requirements, as the Secretary may establish).
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to contracts entered into on or
after the date of the enactment of this Act.
274
Title VI, Subtitle A
SEC. 6002. EXPANSION AND REVISION OF MEDICARE SE-
LECT POLICIES.
(a) PERMITTING MEDICARE SELECT POLICIES IN
ALL STATES.—
(1) IN
GENERAL.—Subsection (c) of section
4358 of the Omnibus Budget Reconciliation Act of
1990 (hereafter referred to as ‘‘OBRA–1990’’) is
hereby repealed.
(2) CONFORMING AMENDMENT.—Section 4358
of OBRA–1990 is amended by redesignating sub-
section (d) as subsection (c).
(b) REQUIREMENTS OF MEDICARE SELECT POLI-
CIES.—Section 1882(t)(1) of the Social Security Act (42
U.S.C. 1395ss(t)(1)) is amended to read as follows:
‘‘(1)(A) If a medicare supplemental policy meets the
1991 NAIC Model Regulation or 1991 Federal Regulation
and otherwise complies with the requirements of this sec-
tion except that—
‘‘(i) the benefits under such policy are re-
stricted to items and services furnished by certain
entities (or reduced benefits are provided when items
or services are furnished by other entities), and
‘‘(ii) in the case of a policy described in sub-
paragraph (C)(i)—
275
Title VI, Subtitle A
‘‘(I) the benefits under such policy are not
one of the groups or packages of benefits de-
scribed in subsection (p)(2)(A),
‘‘(II) except for nominal copayments im-
posed for services covered under part B of this
title, such benefits include at least the core
group of basic benefits described in subsection
(p)(2)(B), and
‘‘(III) an enrollee’s liability under such pol-
icy for physician’s services covered under part
B of this title is limited to the nominal
copayments described in subclause (II),
the policy shall nevertheless be treated as meeting those
standards if the policy meets the requirements of subpara-
graph (B).
‘‘(B) A policy meets the requirements of this sub-
paragraph if—
‘‘(i) full benefits are provided for items and
services furnished through a network of entities
which have entered into contracts or agreements
with the issuer of the policy,
‘‘(ii) full benefits are provided for items and
services furnished by other entities if the services are
medically necessary and immediately required be-
cause of an unforeseen illness, injury, or condition
276
Title VI, Subtitle A
and it is not reasonable given the circumstances to
obtain the services through the network,
‘‘(iii) the network offers sufficient access,
‘‘(iv) the issuer of the policy has arrangements
for an ongoing quality assurance program for items
and services furnished through the network,
‘‘(v)(I) the issuer of the policy provides to each
enrollee at the time of enrollment an explanation
of—
‘‘(aa) the restrictions on payment under
the policy for services furnished other than by
or through the network,
‘‘(bb) out of area coverage under the pol-
icy,
‘‘(cc) the policy’s coverage of emergency
services and urgently needed care, and
‘‘(dd) the availability of a policy through
the entity that meets the 1991 Model NAIC
Regulation or 1991 Federal Regulation without
regard to this subsection and the premium
charged for such policy, and
‘‘(II) each enrollee prior to enrollment acknowl-
edges receipt of the explanation provided under
subclause (I), and
277
Title VI, Subtitle A
‘‘(vi) the issuer of the policy makes available to
individuals, in addition to the policy described in this
subsection, any policy (otherwise offered by the is-
suer to individuals in the State) that meets the 1991
Model NAIC Regulation or 1991 Federal Regulation
and other requirements of this section without re-
gard to this subsection.
‘‘(C)(i) A policy described in this subparagraph—
‘‘(I) is offered by an eligible organization (as
defined in section 1876(b)),
‘‘(II) is not a policy or plan providing benefits
pursuant to a contract under section 1876 or an ap-
proved demonstration project described in section
603(c) of the Social Security Amendments of 1983,
section 2355 of the Deficit Reduction Act of 1984,
or section 9412(b) of the Omnibus Budget Reconcili-
ation Act of 1986, and
‘‘(III) provides benefits which, when combined
with benefits which are available under this title, are
substantially similar to benefits under policies of-
fered to individuals who are not entitled to benefits
under this title.
‘‘(ii) In making a determination under subclause (III)
of clause (i) as to whether certain benefits are substan-
tially similar, there shall not be taken into account, except
278
Title VI, Subtitle A
in the case of preventive services, benefits provided under
policies offered to individuals who are not entitled to bene-
fits under this title which are in addition to the benefits
covered by this title and which are benefits an entity must
provide in order to meet the definition of an eligible orga-
nization under section 1876(b)(1).’’.
(c) RENEWABILITY
OF MEDICARE SELECT POLI-
CIES.—Section 1882(q)(1) of the Social Security Act (42
U.S.C. 1395ss(q)(1)) is amended—
(1) by striking ‘‘(1) Each’’ and inserting
‘‘(1)(A) Except as provided in subparagraph (B),
each’’;
(2) by redesignating subparagraphs (A) and
(B) as clauses (i) and (ii), respectively; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(B)(i) Except as provided in clause (ii), in the
case of a policy that meets the requirements of sub-
section (t), an issuer may cancel or nonrenew such
policy with respect to an individual who leaves the
service area of such policy.
‘‘(ii) If an individual described in clause (i)
moves to a geographic area where an issuer de-
scribed in clause (i), or where an affiliate of such is-
suer, is issuing medicare supplemental policies, such
279
Title VI, Subtitle A
individual must be permitted to enroll in any medi-
care supplemental policy offered by such issuer or
affiliate that provides benefits comparable to or less
than the benefits provided in the policy being can-
celed or nonrenewed. An individual whose coverage
is canceled or nonrenewed under this subparagraph
shall, as part of the notice of termination or
nonrenewal, be notified of the right to enroll in other
medicare supplemental policies offered by the issuer
or its affiliates.
‘‘(iii) For purposes of this subparagraph, the
term ‘affiliate’ shall have the meaning given such
term by the 1991 NAIC Model Regulation.’’.
(d) CIVIL MONEY PENALTY.—Section 1882(t)(2) of
the Social Security Act (42 U.S.C. 1395ss(t)(2)) is
amended—
(1) by striking ‘‘(2)’’ and inserting ‘‘(2)(A)’’;
(2) by redesignating subparagraphs (A), (B),
(C), and (D) as clauses (i), (ii), (iii), and (iv), re-
spectively;
(3) in clause (iv), as so redesignated—
(A) by striking ‘‘paragraph (1)(E)(i)’’ and
inserting ‘‘paragraph (1)(B)(v)(I), and
(B) by striking ‘‘paragraph (1)(E)(ii)’’ and
inserting ‘‘paragraph (1)(B)(v)(II)’’;
280
Title VI, Subtitle A
(4) by striking ‘‘the previous sentence’’ and in-
serting ‘‘this subparagraph’’; and
(5) by adding at the end the following new sub-
paragraph:
‘‘(B) If the Secretary determines that an issuer of
a policy approved under paragraph (1) has made a mis-
representation to the Secretary or has provided the Sec-
retary with false information regarding such policy, the
issuer is subject to a civil money penalty in an amount
not to exceed $100,000 for each such determination. The
provisions of section 1128A (other than the first sentence
of subsection (a) and other than subsection (b)) shall
apply to a civil money penalty under this subparagraph
in the same manner as such provisions apply to a penalty
or proceeding under section 1128A(a).’’.
(e) EFFECTIVE DATES.—
(1) NAIC STANDARDS.—If, within 6 months
after the date of the enactment of this Act, the Na-
tional Association of Insurance Commissioners
(hereafter in this subsection referred to as the
‘‘NAIC’’) makes changes in the 1991 NAIC Model
Regulation (as defined in section 1882(p)(1)(A) of
the Social Security Act) to incorporate the additional
requirements imposed by the amendments made by
this section, section 1882(g)(2)(A) of such Act shall
281
Title VI, Subtitle A
be applied in each State, effective for policies issued
to policyholders on and after the date specified in
paragraph (3), as if the reference to the Model Reg-
ulation adopted on June 6, 1979, were a reference
to the 1991 NAIC Model Regulation (as so defined)
as changed under this paragraph (such changed
Regulation referred to in this subsection as the
‘‘1994 NAIC Model Regulation’’).
(2) SECRETARY
STANDARDS.—If the NAIC
does not make changes in the 1991 NAIC Model
Regulation (as so defined) within the 6-month period
specified in paragraph (1), the Secretary of Health
and Human Services (in this subsection as the ‘‘Sec-
retary’’) shall promulgate a regulation and section
1882(g)(2)(A) of the Social Security Act shall be ap-
plied in each State, effective for policies issued to
policyholders on and after the date specified in para-
graph (3), as if the reference to the Model Regula-
tion adopted in June 6, 1979, were a reference to
the 1991 NAIC Model Regulation (as so defined) as
changed by the Secretary under this paragraph
(such changed Regulation referred to in this sub-
section as the ‘‘1994 Federal Regulation’’).
(3) DATE SPECIFIED.—
282
Title VI, Subtitle A
(A) IN
GENERAL.—Subject to subpara-
graph (B), the date specified in this paragraph
for a State is the earlier of—
(i) the date the State adopts the 1994
NAIC Model Regulation or the 1994 Fed-
eral Regulation; or
(ii) 1 year after the date the NAIC or
the Secretary first adopts such regulations.
(B) ADDITIONAL LEGISLATIVE ACTION RE-
QUIRED.—In the case of a State which the Sec-
retary identifies, in consultation with the NAIC,
as—
(i) requiring State legislation (other
than legislation appropriating funds) in
order for medicare supplemental policies to
meet the 1994 NAIC Model Regulation or
the 1994 Federal Regulation, but
(ii) having a legislature which is not
scheduled to meet in 1995 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first
day of the first calendar quarter beginning after
the close of the first legislative session of the
State legislature that begins on or after Janu-
283
Title VI, Subtitle A
ary 1, 1995. For purposes of the previous sen-
tence, in the case of a State that has a 2-year
legislative session, each year of such session
shall be deemed to be a separate regular session
of the State legislature.
SEC. 6003. INCLUDING NOTICE OF AVAILABLE HEALTH
MAINTENANCE ORGANIZATIONS IN ANNUAL
NOTICE TO BENEFICIARIES.
Section 1804 of the Social Security Act (42 U.S.C.
1395b–2) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(2);
(2) by striking the period at the end of para-
graph (3) and inserting ‘‘, and’’; and
(3) by inserting after paragraph (3) the follow-
ing new paragraph:
‘‘(4) with respect to the area in which the indi-
vidual receiving the notice resides, a description of
the eligible organizations under section 1833(a)(1)
or section 1876 and the carriers offering a medicare
supplemental policy described in section 1882(t)(1)
which serve the area in which the individual receiv-
ing the notice resides.’’.
284
Title VI, Subtitle A
SEC. 6004. LEGISLATIVE PROPOSAL ON ENROLLING MEDI-
CARE BENEFICIARIES IN QUALIFIED HEALTH
PLANS.
(a) IN GENERAL.—
(1) LEGISLATIVE PROPOSAL.—Not later than 1
year after the date of the enactment of this Act, the
Secretary shall develop and submit to Congress a
proposal for legislation which provides for the vol-
untary enrollment of medicare beneficiaries in pri-
vate health insurance plans.
(2) MEDICARE BENEFICIARY.—For purposes of
this section, the term ‘‘medicare beneficiary’’ means
an individual who is eligible for benefits under part
A of title XVIII of the Social Security Act and is en-
rolled under part B of such title.
(b) CONTENTS OF THE PROPOSAL.—A proposal for
legislation submitted under subsection (a) shall—
(1) provide for an appropriate methodology by
which the Secretary shall make payment to private
health insurance plans for the enrollment of medi-
care beneficiaries;
(2) provide individuals the opportunity to re-
main enrolled in such a plan without an interruption
in coverage upon becoming medicare beneficiaries;
and
285
Title VI, Subtitle A
(3) provide medicare beneficiaries with the op-
portunity to enroll in a private health insurance
plan.
SEC. 6005. OPTIONAL INTERIM ENROLLMENT OF MEDICARE
BENEFICIARIES IN PRIVATE HEALTH PLANS.
(a) INTERIM ENROLLMENT
OF MEDICARE BENE-
FICIARIES IN QUALIFIED HEALTH PLANS.—
(1) IN GENERAL.—Notwithstanding title XVIII
of the Social Security Act, the Secretary shall pro-
vide for a monthly payment as provided under sub-
section (b)(1) to a private health insurance plan on
behalf of enrolled medicare beneficiaries who choose
to enroll in such a plan.
(2) MEDICARE BENEFICIARY.—For purposes of
this section, the term ‘‘medicare beneficiary’’ means
an individual who is eligible for benefits under part
A of title XVIII of the Social Security Act and is en-
rolled under part B of such title.
(b) PAYMENT SPECIFIED.—
(1) FEDERAL PAYMENT.—
(A) IN
GENERAL.—The amount of pay-
ment specified in this paragraph for an individ-
ual who is enrolled in a private health insurance
plan is the lesser of—
287
Title VI, Subtitle A
tion with respect to a beneficiary for a year may not
exceed the amount of payment that would have been
made under title XVIII of the Social Security Act
during the year if the beneficiary did not choose to
enroll in a private health insurance plan during the
year.
(c) PAYMENTS UNDER THIS SECTION AS SOLE MED-
ICARE BENEFITS.—Payments made under this section
shall be instead of the amounts that would otherwise be
payable, pursuant to sections 1814(b) and 1833(a) of the
Social Security Act, for services furnished to medicare
beneficiaries.
(d) INCLUSION
IN ANNUAL NOTICE
TO BENE-
FICIARIES.—Section 1804 of the Social Security Act (42
U.S.C. 1395b–2), as amended by section 6003, is amend-
ed—
(1) by striking ‘‘and’’ at the end of paragraph
(3);
(2) by striking the period at the end of para-
graph (4) and inserting ‘‘, and’’; and
(3) by inserting after paragraph (4) the follow-
ing new paragraph:
‘‘(5) a description of the option provided pursu-
ant to section 6005 of the Health Care Improvement
Act of 1995 for payment to be made by the Sec-
288
Title VI, Subtitle A
retary on the individual’s behalf for enrollment in a
private health insurance plan.’’.
PART 2—IMPROVED PROGRAM EFFICIENCY
SEC. 6011. IMPROVED EFFICIENCY THROUGH CONSOLIDA-
TION OF ADMINISTRATION OF PARTS A AND
B.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall take such steps as may be necessary
to consolidate the administration (including processing
systems) of parts A and B of the medicare program (under
title XVIII of the Social Security Act) over a 4-year pe-
riod.
(b) COMBINATION OF INTERMEDIARY AND CARRIER
FUNCTIONS.—In taking such steps, the Secretary shall
contract with a single entity that combines the fiscal
intermediary and carrier functions in each area except
where the Secretary finds that special regional or national
contracts are appropriate.
(c) SUPERSEDING CONFLICTING REQUIREMENTS.—
The provisions of sections 1816 and 1842 of the Social
Security Act (including provider nominating provisions in
such section 1816) are superseded to the extent required
to carry out this section.
289
Title VI, Subtitle A
PART 3—NOTICE OF ADVANCE DIRECTIVE
RIGHTS
SEC. 6021. PROVIDING NOTICE OF RIGHTS REGARDING
MEDICAL CARE TO INDIVIDUALS ENTERING
MEDICARE.
(a) IN GENERAL.—Section 1804 of the Social Secu-
rity Act (42 U.S.C. 1395b–2) is amended—
(1) in paragraph (2), by striking ‘‘and’’ at the
end;
(2) in paragraph (3), by striking the period at
the end and inserting ‘‘, and’’; and
(3) by inserting after paragraph (3) the follow-
ing new paragraph:
‘‘(4) a description of an individual’s rights
under State law to make decisions concerning medi-
cal care, including the right to accept or refuse med-
ical or surgical treatment and the right to formulate
advance 
directives 
(as 
defined 
in 
section
1866(f)(3)).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to notices provided under section
1804 of the Social Security Act on or after January 1
of the first year beginning after the date of the enactment
of this Act.
290
Title VI, Subtitle B
Subtitle B—Savings
SEC. 6101. REDUCTION IN CONVERSION FACTOR FOR PHY-
SICIAN FEE SCHEDULE FOR NON-PRIMARY
CARE SERVICES.
Section 1848(d)(3)(A) of the Social Security Act (42
U.S.C. 1395w–4(d)(3)(A)) is amended—
(1) in clause (i), by striking ‘‘through (v)’’ and
inserting ‘‘through (vi)’’;
(2) in clause (vi), by striking ‘‘(iv) and (v)’’ and
inserting ‘‘(iv), (v), and (vi)’’;
(3) by redesignating clause (vi) as clause (vii);
and
(4) by inserting after clause (v) the following
new clause:
‘‘(vi) ADJUSTMENT
IN
PERCENTAGE
INCREASE
FOR
YEARS
FROM
1998
THROUGH 2001.—In applying clause (i) for
services furnished during the period begin-
ning January 1, 1998, and ending Decem-
ber 31, 2001, the percentage increase in
the appropriate update index shall be re-
duced by such percent as the Secretary de-
termines will result in a reduction in ag-
gregate payments for physicians’ services
under this part during such period of at
291
Title VI, Subtitle B
least $6,300,000,000 from the amount of
aggregate payments for such services that
would otherwise have been made during
the period.’’.
SEC. 6102. REDUCTION IN HOSPITAL OUTPATIENT SERV-
ICES THROUGH ESTABLISHMENT OF PRO-
SPECTIVE PAYMENT SYSTEM.
(a) IN GENERAL.—Section 1833(a)(2)(B) of the So-
cial Security Act (42 U.S.C. 1395l(a)(2)(B)) is amended
by striking ‘‘section 1886)—’’ and all that follows and in-
serting the following: ‘‘section 1886), an amount equal to
a prospectively determined payment rate established by
the Secretary that provides for payments for such items
and services to be based upon a national rate adjusted
to take into account the relative costs of furnishing such
items and services in various geographic areas, except that
for items and services furnished during cost reporting pe-
riods (or portions thereof) in years beginning with 1997,
such amount shall be equal to 90 percent of the amount
that would otherwise have been determined;’’.
(b) ESTABLISHMENT
OF PROSPECTIVE PAYMENT
SYSTEM.—Not later than July 1, 1996, the Secretary of
Health and Human Services shall establish the prospective
payment system for hospital outpatient services necessary
292
Title VI, Subtitle B
to carry out section 1833(a)(2)(B) of the Social Security
Act (as amended by subsection (a)).
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to items and services furnished
on or after January 1, 1997.
SEC. 6103. INCREASE IN MEDICARE PART B PREMIUM FOR
INDIVIDUALS WITH HIGH INCOME.
(a) IN GENERAL.—Subchapter A of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at
the end thereof the following new part:
‘‘PART VIII—MEDICARE PART B PREMIUMS FOR
HIGH-INCOME INDIVIDUALS
‘‘Sec. 49B. Medicare part B premium tax.
‘‘SEC. 59B. MEDICARE PART B PREMIUM TAX.
‘‘(a) IMPOSITION OF TAX.—In the case of an individ-
ual to whom this section applies for the taxable year, there
is hereby imposed (in addition to any other tax imposed
by this subtitle) a tax for such taxable year equal to the
aggregate of the Medicare part B premium taxes for each
of the months during such year that such individual is
covered by Medicare part B.
‘‘(b) INDIVIDUALS TO WHOM SECTION APPLIES.—
This section shall apply to any individual for any taxable
year if—
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‘‘(B) at least $25,000, but less than
$50,000, the applicable percentage under this
paragraph is 66 percent,
‘‘(C) at least $50,000, but less than
$75,000, the applicable percentage under this
paragraph is 75 percent, or
‘‘(D) at least $75,000, the applicable per-
centage under this paragraph is 100 percent.
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
‘‘(1) THRESHOLD AMOUNT.—The term ‘thresh-
old amount’ means—
‘‘(A) except as otherwise provided in this
paragraph, $75,000,
‘‘(B) $100,000 in the case of a joint re-
turn, and
‘‘(C) zero in the case of a taxpayer who—
‘‘(i) is married at the close of the tax-
able year but does not file a joint return
for such year, and
‘‘(ii) does not live apart from his
spouse at all times during the taxable year.
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.—
The term ‘modified adjusted gross income’ means
adjusted gross income—
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‘‘(A) determined without regard to sections
135, 911, 931, and 933, and
‘‘(B) increased by the amount of interest
received or accrued by the taxpayer during the
taxable year which is exempt from tax.
‘‘(3) MEDICARE PART B COVERAGE.—An indi-
vidual shall be treated as covered under Medicare
part B for any month if a premium is paid under
part B of title XVIII of the Social Security Act for
the coverage of the individual under such part for
the month.
‘‘(4) MARRIED
INDIVIDUAL.—The determina-
tion of whether an individual is married shall be
made in accordance with section 7703.’’.
(b) CLERICAL AMENDMENT.—The table of parts for
subchapter A of chapter 1 of such Code is amended by
adding at the end thereof the following new item:
‘‘Part VIII. Medicare Part B Premiums For High-Income Individ-
uals.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to months after December 1995
in taxable years ending after December 31, 1995.
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SEC. 6104. PHASED-IN ELIMINATION OF MEDICARE HOS-
PITAL DISPROPORTIONATE SHARE ADJUST-
MENT PAYMENTS.
Section 1886(d)(5)(F) of the Social Security Act (42
U.S.C. 1395ww(d)(5)(F)) is amended—
(1) in clause (i), by inserting ‘‘and before Sep-
tember 30, 2000,’’ after ‘‘1986,’’;
(2) in clause (ii), by striking ‘‘The amount of
such payment’’ and inserting ‘‘Subject to clause (ix),
the amount of such payment’’; and
(3) by adding at the end the following new
clause:
‘‘(ix) The amount of the additional payment made
under this paragraph for a discharge shall be equal to—
‘‘(I) for discharges occurring during fiscal year
1997, 80 percent of the amount otherwise deter-
mined for the discharge under clause (ii);
‘‘(II) for discharges occurring during fiscal year
1998, 60 percent of the amount otherwise deter-
mined for the discharge under clause (ii);
‘‘(III) for discharges occurring during fiscal
year 1999, 40 percent of the amount otherwise de-
termined for the discharge under clause (ii); and
‘‘(IV) for discharges occurring during fiscal
year 2000, 20 percent of the amount otherwise de-
termined for the discharge under clause (ii).’’.
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SEC. 6105. IMPOSITION OF COINSURANCE ON LABORATORY
SERVICES.
(a) IN GENERAL.—Paragraphs (1)(D) and (2)(D) of
section 1833(a) of the Social Security Act (42 U.S.C.
1395l(a)) are each amended—
(1) by striking ‘‘(or 100 percent’’ and all that
follows through ‘‘the first opinion))’’; and
(2) by striking ‘‘100 percent of such negotiated
rate’’ and inserting ‘‘80 percent of such negotiated
rate’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to tests furnished on or after
January 1, 1996.
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