I
105TH CONGRESS
1ST SESSION
H. R. 1362
To establish a demonstration project to provide for Medicare reimbursement
for health care services provided to certain Medicare-eligible veterans
in selected facilities of the Department of Veterans Affairs.
IN THE HOUSE OF REPRESENTATIVES
Mr. STUMP (for himself, Mr. EVANS, Mr. STEARNS, Mr. GUTIERREZ, Mr.
SMITH of New Jersey, Mr. KENNEDY of Massachusetts, Mr. EVERETT,
Mr. FILNER, Mr. QUINN, Mr. CLYBURN, Mr. DAN SCHAEFER of Colo-
rado, Ms. BROWN of Florida, Mr. MORAN of Kansas, Mr. DOYLE, Mr.
COOKSEY, Mr. MASCARA, Mr. HUTCHINSON, Mr. PETERSON of Min-
nesota, Mrs. CHENOWETH, Ms. CARSON, Mr. LAHOOD, Mr. REYES, Mr.
HAYWORTH, Mr. SNYDER, and Mr. BARRETT of Nebraska) introduced
the following bill; which was referred to the Committee on Ways and
Means, and in addition to the Committee on Commerce, and Veterans’
Affairs, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned
A BILL
To establish a demonstration project to provide for Medicare
reimbursement for health care services provided to cer-
tain Medicare-eligible veterans in selected facilities of
the Department of Veterans Affairs.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Veterans Medicare Re-
imbursement Demonstration Act of 1997’’.
SEC. 2. ESTABLISHMENT OF DEMONSTRATION PROJECT.
(a) AUTHORITY.—
(1) IN GENERAL.—The Secretary of Veterans
Affairs and the Secretary of Health and Human
Services shall jointly carry out a demonstration
project under which the Secretary of Health and
Human Services provides the Department of Veter-
ans Affairs with reimbursement, determined in ac-
cordance with section 3, from the medicare program
for health care services provided to targeted medi-
care-eligible veterans in or through facilities of the
Department of Veterans Affairs selected under sub-
section (b).
(2) DURATION.—The Secretaries shall conduct
the demonstration project during the three-year pe-
riod beginning on January 1, 1998.
(3) WAIVER OF CERTAIN MEDICARE REQUIRE-
MENTS.—To the extent necessary to carry out the
demonstration project, the Secretary of Health and
Human Services may waive any requirement of part
B of title XI of the Social Security Act, title XVIII
of that Act, or a related provision of law.
(b) SELECTION OF PARTICIPATING FACILITIES.—
(1) DESIGNATION
OF
SERVICE
AREAS
COV-
ERED.—The Secretary of Veterans Affairs shall des-
ignate up to three geographic service areas from
which facilities are selected to participate in the
demonstration project.
(2) FACILITY SELECTION.—
(A) IN GENERAL.—The Secretary, in con-
sultation with the Secretary of Health and
Human Services, shall establish a plan for the
selection of facilities under the jurisdiction of
the Secretary and located within a geographic
service area designated under paragraph (1) to
participate in the project.
(B) GENERAL
CRITERIA.—The selection
plan shall favor selection of those facilities that
are suited to serve targeted medicare-eligible in-
dividuals because—
(i) there is a high potential demand
by targeted medicare-eligible veterans for
their services;
(ii) they have sufficient capability in
billing and accounting to participate;
(iii) they have favorable indicators of
quality of care, including patient satisfac-
tion; and
(iv) they meet other relevant factors
identified in the plan.
(C) FACILITY NEAR CLOSED BASE.—There
shall be at least one facility selected that is in
the same catchment area as a military medical
facility which was closed pursuant to either of
the following laws:
(i) The Defense Base Closure and Re-
alignment Act of 1990 (part A of title
XXIX of Public Law 101–510; 10 U.S.C.
2687 note).
(ii) Title II of the Defense Authoriza-
tion Amendments and Base Closure and
Realignment Act (Public Law 100–526; 10
U.S.C. 2687 note).
(c) VOLUNTARY PARTICIPATION.—Participation of
targeted medicare-eligible veterans in the demonstration
project shall be voluntary, subject to the capacity of par-
ticipating facilities and the funding limitations specified
in section 3.
(d) COST SHARING.—The Secretary shall establish
cost-sharing requirements for veterans participating in the
demonstration project. Those requirements shall be the
same as the requirements that apply to targeted medicare-
eligible patients at nongovernmental facilities.
(e) CREDITING OF PAYMENTS.—Payments received
by the Secretary under the demonstration project shall be
credited to the applicable Department of Veterans Affairs
medical appropriation.
SEC. 3. DETERMINATION OF REIMBURSEMENT AMOUNTS.
(a) PAYMENTS BASED ON 95 PERCENT OF REGULAR
MEDICARE PAYMENT RATES.—
(1) IN
GENERAL.—Subject to the succeeding
provisions of this section, the Secretary of Health
and Human Services shall reimburse the Secretary
of Veterans Affairs for services provided under the
demonstration project at a rate equal to 95 percent
of the amounts that otherwise would be payable
under the medicare program on a non-capitated
basis for such services if the facility were not a Fed-
eral facility, were participating in the program, and
imposed charges for such services. In cases in which
a payment amount may not otherwise be readily
computed, the Secretaries shall establish rules for
computing 
equivalent 
or 
comparable 
payment
amounts.
(2) PERIODIC
PAYMENTS
FROM
MEDICARE
TRUST FUNDS.—Payments under this section shall
be made—
(A) on a periodic basis consistent with the
periodicity of payments under the medicare pro-
gram; and
(B) in appropriate part, as determined by
the Secretary of Health and Human Services,
from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical
Insurance Trust Fund.
(3) ANNUAL LIMIT ON MEDICARE PAYMENTS.—
The amount paid to the Department of Veterans Af-
fairs under this section for any year for the dem-
onstration project may not exceed $50,000,000.
(b) REDUCTION
IN PAYMENT
FOR FAILURE
TO
MAINTAIN VA EFFORT.—
(1) IN GENERAL.—In order to avoid shifting
onto the medicare program the costs of the Depart-
ment of Veterans Affairs for hospital care and medi-
cal services for targeted medicare-eligible veterans,
the payment amounts under this section for the
project for a year shall be reduced by the amount (if
any) by which—
(A) the amount of the actual VA medical
expenditures for targeted veterans (as defined
in paragraph (3)) for the fiscal year ending in
such year, is less than
(B) the amount of the maintenance of ef-
fort level for such fiscal year, as determined
under paragraph (2).
(2) MAINTENANCE OF EFFORT LEVELS.—The
maintenance of effort level for any fiscal year is the
amount equal to the maintenance of effort level for
the preceding fiscal year or, in the case of fiscal year
1998, the amount of VA medical expenditures for
targeted veterans (as defined in paragraph (3)) for
fiscal year 1997—
(A) increased or decreased by the same
percentage as the percentage by which the
amount of the medical care appropriation for
the Department of Veterans Affairs for that fis-
cal year exceeds (or is less than, respectively)
the amount of such appropriation for the pre-
ceding fiscal year; and
(B) decreased by the amount of the de-
crease (if any) in VA medical expenditures for
targeted veterans for that fiscal year (relative
to the preceding fiscal year) that, as estimated
by the Secretaries, results from—
(i) a rate of increase in the level of
medical care appropriations for the De-
partment of Veterans Affairs described in
subparagraph (A) that is less than the
general rate of increase in health care
costs; and
(ii) the reduction in priority in deliv-
ery of services to targeted medicare-eligible
veterans attributable to the amendments
made by title I of the Veterans’ Health
Care Eligibility Reform Act of 1996 (Pub-
lic Law 104–262; 110 Stat. 3177) and to
implementation of the plan developed pur-
suant to section 429 of Public Law 104–
204 (110 Stat. 2929).
(3) VA MEDICAL
EXPENDITURES
FOR
TAR-
GETED VETERANS DEFINED.—For purposes of this
subsection, the term ‘‘VA medical expenditures for
targeted veterans’’ means, with respect to a fiscal
year, the amount expended by the Department of
Veterans Affairs during the fiscal year for providing
hospital care and medical services under chapter 17
of title 38, United States Code to targeted medicare-
eligible veterans. Such amount does not include—
(A) expenditures for the conduct of medi-
cal examinations to adjudicate claims under
such title, or
(B) expenditures attributable to services
for which reimbursement is made under the
demonstration project.
(c) ASSURING NO INCREASE IN COST TO MEDICARE
PROGRAM.—
(1) MONITORING IMPACT ON COSTS TO MEDI-
CARE PROGRAM.—
(A) IN
GENERAL.—The Secretaries, in
consultation with the Comptroller General, shall
closely monitor the expenditures made under
the medicare program for targeted medicare-eli-
gible veterans during the period of the dem-
onstration project compared to the expenditures
that would have been made for such veterans
during that period if the demonstration project
had not been conducted.
(B) AUDITING
BY
THE
COMPTROLLER
GENERAL.—Not later than December 31 of
each year during which the demonstration
project is conducted, the Comptroller General
shall determine and submit to the Secretaries
and the appropriate committees of Congress a
report on the extent, if any, to which the costs
of the Secretary of Health and Human Services
under the medicare program increased during
the preceding fiscal year as a result of the dem-
onstration project.
(2) REQUIRED
RESPONSE
IN
CASE
OF
IN-
CREASE IN COSTS.—
(A) IN GENERAL.—If the Secretaries find,
based on paragraph (1), that the expenditures
under the medicare program increased (or are
expected to increase) during a fiscal year be-
cause of the demonstration project, the Sec-
retaries shall take such steps as may be need-
ed—
(i) to recoup for the medicare pro-
gram the amount of such increase in ex-
penditures; and
(ii) to prevent any such increase in
the future.
(B) STEPS.—Such steps—
(i) under subparagraph (A)(i) shall in-
clude payment of the amount of such in-
creased expenditures by the Secretary from
the current medical care appropriation of
the Department of Veterans Affairs to the
trust funds under the medicare trust pro-
gram; and
(ii) under subparagraph (A)(ii) shall
include suspending or terminating the
demonstration project (in whole or in part)
or substitution of a lower percentage for
95 percent under subsection (a)(1).
SEC. 4. EVALUATION AND REPORTS.
(a) ANNUAL REPORT BY INDEPENDENT ENTITY.—
(1) IN
GENERAL.—The Secretaries shall ar-
range for an independent entity with expertise in the
evaluation of health services to conduct an ongoing
evaluation of the demonstration project.
(2) ANNUAL REPORTS.—The entity shall sub-
mit a report on the project jointly to the Secretaries
and to the appropriate committees of the Congress
not later than March 1 following each year during
which the project is conducted.
(3) ASSESSMENT.—Each such report shall in-
clude the results of the evaluation under subsection
(a), including an assessment of each of the following:
(A) The cost to the Department of Veter-
ans Affairs of providing care to veterans under
the project.
(B) Compliance of participating facilities
with applicable measures of quality of care,
compared to such compliance for other medi-
care-participating facilities.
(C) A comparison of the costs of facilities’
participation in the program with the reim-
bursements provided for services of such facili-
ties.
(D) Any savings or costs to the medicare
programs from the project.
(E) Any change in access to care or quality
of care for targeted medicare-eligible veterans
participating in the project.
(F) Any effect of the project on the access
to care of veterans who did not participate in
the project and of targeted medicare-eligible
veterans.
(b) REPORT
ON EXTENSION
AND EXPANSION
OF
DEMONSTRATION PROJECT.—Not later than six months
after the date of the submission of the final report under
subsection (a), the Secretaries shall submit to the Con-
gress a report containing their recommendation as to—
(1) whether to extend the demonstration project
or make it permanent;
(2) whether to expand the project to cover addi-
tional sites and areas and to increase the maximum
amount of reimbursement under the project in any
year; and
(3) whether the terms and conditions of the
project should be continued (or modified) if the
project is extended or expanded.
(c) RECOMMENDATION CONCERNING NEW DEM-
ONSTRATION
PROJECT
FOR
PAYMENT
TO
MANAGED
HEALTH-CARE PLANS.—Not later than March 1, 1999,
the Secretaries shall submit to the appropriate committees
of the Congress a report on the feasibility and advisability
of establishing a new demonstration project to reimburse
the Secretary of Veterans Affairs under section 1876(a)
of the Social Security Act for health care services fur-
nished to targeted medicare-eligible veterans enrolled in
managed health-care plans established by the Secretary.
SEC. 5. DEFINITIONS.
For the purpose of this Act:
(1) DEMONSTRATION PROJECT; PROJECT.—The
terms ‘‘demonstration project’’ and ‘‘project’’ mean
the demonstration project carried out under section
2(a).
(2) GEOGRAPHIC
SERVICE
AREA.—The term
‘‘geographic service area’’ means a field component
of the Veterans Health Administration that—
(A) is based on a geographic area which
encompasses a population of veteran bene-
ficiaries and is defined on the basis of natural
patient referral patterns; and
(B) provides health care through strategic
alliances among Department of Veterans Af-
fairs medical centers, clinics, and other sites.
(3) MEDICARE PROGRAM.—The term ‘‘medicare
program’’ means the programs of health benefits
provided under title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.).
(4) SECRETARY; SECRETARIES.—Unless other-
wise provided, the term ‘‘Secretary’’ means the Sec-
retary of Veterans Affairs and the term ‘‘Secretar-
ies’’ means the Secretary of Veterans Affairs and
the Secretary of Health and Human Services acting
jointly.
(5) 
TARGETED
MEDICARE-ELIGIBLE
VET-
ERAN.—The term ‘‘targeted medicare-eligible vet-
eran’’ means an individual—
(A) who is a veteran (as defined in section
101(2) of title 38, United States Code) de-
scribed in section 1710(a)(3) of title 38, United
States Code;
(B) who is entitled to hospital insurance
benefits under part A of the medicare program
and enrolled in the supplementary medical in-
surance program under part B of the medicare
program; and
(C) whose annual income is an amount be-
tween the applicable income threshold under
section 1722(b) of title 38, United States Code,
and the amount equal to three times the
amount of such applicable income threshold.
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