H. R. 2015—72
who is the beneficial owner of a mortgage, deed of
trust, note, or other interest secured by, and valuing
more than 5 percent of the organization, and, in the
case of a Medicare+Choice organization organized as
a nonprofit corporation, an incorporator or member
of such corporation under applicable State corporation
law;
‘‘(ii) any entity in which a person described in
clause (i)—
‘‘(I) is an officer or director;
‘‘(II) is a partner (if such entity is organized
as a partnership);
‘‘(III) has directly or indirectly a beneficial
interest of more than 5 percent of the equity; or
‘‘(IV) has a mortgage, deed of trust, note, or
other interest valuing more than 5 percent of the
assets of such entity;
‘‘(iii) any person directly or indirectly controlling,
controlled by, or under common control with an
organization; and
‘‘(iv) any spouse, child, or parent of an individual
described in clause (i).
‘‘(C) ACCESS TO INFORMATION.—Each Medicare+Choice
organization shall make the information reported pursuant
to subparagraph (A) available to its enrollees upon reason-
able request.
‘‘(5) LOAN INFORMATION.—The contract shall require the
organization to notify the Secretary of loans and other special
financial arrangements which are made between the organiza-
tion and subcontractors, affiliates, and related parties.
‘‘(e) ADDITIONAL CONTRACT TERMS.—
‘‘(1) IN GENERAL.—The contract shall contain such other
terms and conditions not inconsistent with this part (including
requiring the organization to provide the Secretary with such
information) as the Secretary may find necessary and appro-
priate.
‘‘(2) COST-SHARING IN ENROLLMENT-RELATED COSTS.—
‘‘(A) IN
GENERAL.—A Medicare+Choice organization
shall pay the fee established by the Secretary under
subparagraph (B).
‘‘(B) AUTHORIZATION.—The Secretary is authorized to
charge a fee to each Medicare+Choice organization with
a contract under this part that is equal to the organization’s
pro rata share (as determined by the Secretary) of the
aggregate amount of fees which the Secretary is directed
to collect in a fiscal year. Any amounts collected are author-
ized to be appropriated only for the purpose of carrying
out section 1851 (relating to enrollment and dissemination
of information) and section 4360 of the Omnibus Budget
Reconciliation Act of 1990 (relating to the health insurance
counseling and assistance program).
‘‘(C) CONTINGENCY.—For any fiscal year, the fees
authorized under subparagraph (B) are contingent upon
enactment in an appropriations act of a provision specifying
the aggregate amount of fees the Secretary is directed
to collect in a fiscal year. Fees collected during any fiscal
H. R. 2015—73
year under this paragraph shall be deposited and credited
as offsetting collections.
‘‘(D) LIMITATION.—In any fiscal year the fees collected
by the Secretary under subparagraph (B) shall not exceed
the lesser of—
‘‘(i) the estimated costs to be incurred by the Sec-
retary in the fiscal year in carrying out the activities
described in section 1851 and section 4360 of the Omni-
bus Budget Reconciliation Act of 1990; or
‘‘(ii)(I) $200,000,000 in fiscal year 1998;
‘‘(II) $150,000,000 in fiscal year 1999; and
‘‘(III) $100,000,000 in fiscal year 2000 and each
subsequent fiscal year.
‘‘(f) PROMPT PAYMENT BY MEDICARE+CHOICE ORGANIZATION.—
‘‘(1) REQUIREMENT.—A contract under this part shall
require a Medicare+Choice organization to provide prompt pay-
ment (consistent with the provisions of sections 1816(c)(2) and
1842(c)(2)) of claims submitted for services and supplies fur-
nished to enrollees pursuant to the contract, if the services
or supplies are not furnished under a contract between the
organization and the provider or supplier (or in the case of
a Medicare+Choice private fee-for-service plan, if a claim is
submitted to such organization by an enrollee).
‘‘(2) 
SECRETARY’S
OPTION
TO
BYPASS
NONCOMPLYING
ORGANIZATION.—In the case of a Medicare+Choice eligible
organization which the Secretary determines, after notice and
opportunity for a hearing, has failed to make payments of
amounts in compliance with paragraph (1), the Secretary may
provide for direct payment of the amounts owed to providers
and suppliers (or, in the case of a Medicare+Choice private
fee-for-service plan, amounts owed to the enrollees) for covered
services and supplies furnished to individuals enrolled under
this part under the contract. If the Secretary provides for
the direct payments, the Secretary shall provide for an appro-
priate reduction in the amount of payments otherwise made
to the organization under this part to reflect the amount of
the Secretary’s payments (and the Secretary’s costs in making
the payments).
‘‘(g) INTERMEDIATE SANCTIONS.—
‘‘(1) IN
GENERAL.—If the Secretary determines that a
Medicare+Choice organization with a contract under this sec-
tion—
‘‘(A) fails substantially to provide medically necessary
items and services that are required (under law or under
the contract) to be provided to an individual covered under
the contract, if the failure has adversely affected (or has
substantial likelihood of adversely affecting) the individual;
‘‘(B) imposes premiums on individuals enrolled under
this part in excess of the amount of the Medicare+Choice
monthly basic and supplemental beneficiary premiums per-
mitted under section 1854;
‘‘(C) acts to expel or to refuse to re-enroll an individual
in violation of the provisions of this part;
‘‘(D) engages in any practice that would reasonably
be expected to have the effect of denying or discouraging
enrollment (except as permitted by this part) by eligible
individuals with the organization whose medical condition
H. R. 2015—74
or history indicates a need for substantial future medical
services;
‘‘(E) misrepresents or falsifies information that is fur-
nished—
‘‘(i) to the Secretary under this part, or
‘‘(ii) to an individual or to any other entity under
this part;
‘‘(F) fails to comply with the applicable requirements
of section 1852(j)(3) or 1852(k)(2)(A)(ii); or
‘‘(G) employs or contracts with any individual or entity
that is excluded from participation under this title under
section 1128 or 1128A for the provision of health care,
utilization review, medical social work, or administrative
services or employs or contracts with any entity for the
provision (directly or indirectly) through such an excluded
individual or entity of such services;
the Secretary may provide, in addition to any other remedies
authorized by law, for any of the remedies described in para-
graph (2).
‘‘(2) REMEDIES.—The remedies described in this paragraph
are—
‘‘(A) civil money penalties of not more than $25,000
for each determination under paragraph (1) or, with respect
to a determination under subparagraph (D) or (E)(i) of
such paragraph, of not more than $100,000 for each such
determination, plus, with respect to a determination under
paragraph (1)(B), double the excess amount charged in
violation of such paragraph (and the excess amount charged
shall be deducted from the penalty and returned to the
individual concerned), and plus, with respect to a deter-
mination under paragraph (1)(D), $15,000 for each individ-
ual not enrolled as a result of the practice involved,
‘‘(B) suspension of enrollment of individuals under this
part after the date the Secretary notifies the organization
of a determination under paragraph (1) and until the Sec-
retary is satisfied that the basis for such determination
has been corrected and is not likely to recur, or
‘‘(C) suspension of payment to the organization under
this part for individuals enrolled after the date the Sec-
retary notifies the organization of a determination under
paragraph (1) and until the Secretary is satisfied that
the basis for such determination has been corrected and
is not likely to recur.
‘‘(3) OTHER INTERMEDIATE SANCTIONS.—In the case of a
Medicare+Choice organization for which the Secretary makes
a determination under subsection (c)(2) the basis of which is
not described in paragraph (1), the Secretary may apply the
following intermediate sanctions:
‘‘(A) Civil money penalties of not more than $25,000
for each determination under subsection (c)(2) if the defi-
ciency that is the basis of the determination has directly
adversely affected (or has the substantial likelihood of
adversely affecting) an individual covered under the
organization’s contract.
‘‘(B) Civil money penalties of not more than $10,000
for each week beginning after the initiation of civil money
H. R. 2015—75
penalty procedures by the Secretary during which the defi-
ciency that is the basis of a determination under subsection
(c)(2) exists.
‘‘(C) Suspension of enrollment of individuals under this
part after the date the Secretary notifies the organization
of a determination under subsection (c)(2) and until the
Secretary is satisfied that the deficiency that is the basis
for the determination has been corrected and is not likely
to recur.
‘‘(4) CIVIL
MONEY
PENALTIES.—The provisions of section
1128A (other than subsections (a) and (b)) shall apply to a
civil money penalty under paragraph (2) or (3) in the same
manner as they apply to a civil money penalty or proceeding
under section 1128A(a).
‘‘(h) PROCEDURES FOR TERMINATION.—
‘‘(1) IN GENERAL.—The Secretary may terminate a contract
with a Medicare+Choice organization under this section in
accordance with formal investigation and compliance proce-
dures established by the Secretary under which—
‘‘(A) the Secretary provides the organization with the
reasonable opportunity to develop and implement a correc-
tive action plan to correct the deficiencies that were the
basis of the Secretary’s determination under subsection
(c)(2); and
‘‘(B) the Secretary provides the organization with
reasonable notice and opportunity for hearing (including
the right to appeal an initial decision) before terminating
the contract.
‘‘(2) EXCEPTION
FOR
IMMINENT
AND
SERIOUS
RISK
TO
HEALTH.—Paragraph (1) shall not apply if the Secretary deter-
mines that a delay in termination, resulting from compliance
with the procedures specified in such paragraph prior to termi-
nation, would pose an imminent and serious risk to the health
of individuals enrolled under this part with the organization.
‘‘DEFINITIONS; MISCELLANEOUS PROVISIONS
‘‘SEC. 1859. (a) DEFINITIONS RELATING TO MEDICARE+CHOICE
ORGANIZATIONS.—In this part—
‘‘(1) 
MEDICARE+CHOICE
ORGANIZATION.—The 
term
‘Medicare+Choice organization’ means a public or private entity
that is certified under section 1856 as meeting the requirements
and standards of this part for such an organization.
‘‘(2) PROVIDER-SPONSORED ORGANIZATION.—The term ‘pro-
vider-sponsored organization’ is defined in section 1855(d)(1).
‘‘(b) DEFINITIONS RELATING TO MEDICARE+CHOICE PLANS.—
‘‘(1) MEDICARE+CHOICE PLAN.—The term ‘Medicare+Choice
plan’ means health benefits coverage offered under a policy,
contract, or plan by a Medicare+Choice organization pursuant
to and in accordance with a contract under section 1857.
‘‘(2) MEDICARE+CHOICE PRIVATE FEE-FOR-SERVICE PLAN.—
The term ‘Medicare+Choice private fee-for-service plan’ means
a Medicare+Choice plan that—
‘‘(A) reimburses hospitals, physicians, and other provid-
ers at a rate determined by the plan on a fee-for-service
basis without placing the provider at financial risk;
‘‘(B) does not vary such rates for such a provider based
on utilization relating to such provider; and
H. R. 2015—76
‘‘(C) does not restrict the selection of providers among
those who are lawfully authorized to provide the covered
services and agree to accept the terms and conditions of
payment established by the plan.
‘‘(3) MSA PLAN.—
‘‘(A) IN
GENERAL.—The term ‘MSA plan’ means a
Medicare+Choice plan that—
‘‘(i) provides reimbursement for at least the items
and services described in section 1852(a)(1) in a year
but only after the enrollee incurs countable expenses
(as specified under the plan) equal to the amount of
an annual deductible (described in subparagraph (B));
‘‘(ii) counts as such expenses (for purposes of such
deductible) at least all amounts that would have been
payable under parts A and B, and that would have
been payable by the enrollee as deductibles, coinsur-
ance, or copayments, if the enrollee had elected to
receive benefits through the provisions of such parts;
and
‘‘(iii) provides, after such deductible is met for a
year and for all subsequent expenses for items and
services referred to in clause (i) in the year, for a
level of reimbursement that is not less than—
‘‘(I) 100 percent of such expenses, or
‘‘(II) 100 percent of the amounts that would
have been paid (without regard to any deductibles
or coinsurance) under parts A and B with respect
to such expenses,
whichever is less.
‘‘(B) DEDUCTIBLE.—The amount of annual deductible
under an MSA plan—
‘‘(i) for contract year 1999 shall be not more than
$6,000; and
‘‘(ii) for a subsequent contract year shall be not
more than the maximum amount of such deductible
for the previous contract year under this subparagraph
increased by the national per capita Medicare+Choice
growth percentage under section 1853(c)(6) for the
year.
If the amount of the deductible under clause (ii) is not
a multiple of $50, the amount shall be rounded to the
nearest multiple of $50.
‘‘(c) OTHER REFERENCES TO OTHER TERMS.—
‘‘(1) MEDICARE+CHOICE
ELIGIBLE
INDIVIDUAL.—The term
‘Medicare+Choice eligible individual’ is defined in section
1851(a)(3).
‘‘(2) 
MEDICARE+CHOICE
PAYMENT
AREA.—The 
term
‘Medicare+Choice payment area’ is defined in section 1853(d).
‘‘(3) NATIONAL
PER
CAPITA
MEDICARE+CHOICE
GROWTH
PERCENTAGE.—The 
‘national 
per 
capita 
Medicare+Choice
growth percentage’ is defined in section 1853(c)(6).
‘‘(4) MEDICARE+CHOICE MONTHLY BASIC BENEFICIARY PRE-
MIUM; MEDICARE+CHOICE MONTHLY SUPPLEMENTAL BENEFICIARY
PREMIUM.—The terms ‘Medicare+Choice monthly basic bene-
ficiary premium’ and ‘Medicare+Choice monthly supplemental
beneficiary premium’ are defined in section 1854(a)(2).
H. R. 2015—77
‘‘(d) COORDINATED ACUTE
AND LONG-TERM CARE BENEFITS
UNDER A MEDICARE+CHOICE PLAN.—Nothing in this part shall be
construed as preventing a State from coordinating benefits under
a medicaid plan under title XIX with those provided under a
Medicare+Choice plan in a manner that assures continuity of a
full-range of acute care and long-term care services to poor elderly
or disabled individuals eligible for benefits under this title and
under such plan.
‘‘(e) 
RESTRICTION
ON
ENROLLMENT
FOR
CERTAIN
MEDICARE+CHOICE PLANS.—
‘‘(1) IN GENERAL.—In the case of a Medicare+Choice reli-
gious fraternal benefit society plan described in paragraph (2),
notwithstanding any other provision of this part to the contrary
and in accordance with regulations of the Secretary, the society
offering the plan may restrict the enrollment of individuals
under this part to individuals who are members of the church,
convention, or group described in paragraph (3)(B) with which
the society is affiliated.
‘‘(2) MEDICARE+CHOICE RELIGIOUS FRATERNAL BENEFIT SOCI-
ETY
PLAN
DESCRIBED.—For purposes of this subsection, a
Medicare+Choice religious fraternal benefit society plan
described in this paragraph is a Medicare+Choice plan
described in section 1851(a)(2)(A) that—
‘‘(A) is offered by a religious fraternal benefit society
described in paragraph (3) only to members of the church,
convention, or group described in paragraph (3)(B); and
‘‘(B) permits all such members to enroll under the
plan without regard to health status-related factors.
Nothing in this subsection shall be construed as waiving any
plan requirements relating to financial solvency.
‘‘(3) RELIGIOUS FRATERNAL BENEFIT SOCIETY DEFINED.—For
purposes of paragraph (2)(A), a ‘religious fraternal benefit soci-
ety’ described in this section is an organization that—
‘‘(A) is described in section 501(c)(8) of the Internal
Revenue Code of 1986 and is exempt from taxation under
section 501(a) of such Act;
‘‘(B) is affiliated with, carries out the tenets of, and
shares a religious bond with, a church or convention or
association of churches or an affiliated group of churches;
‘‘(C) offers, in addition to a Medicare+Choice religious
fraternal benefit society plan, health coverage to individ-
uals not entitled to benefits under this title who are mem-
bers of such church, convention, or group; and
‘‘(D) does not impose any limitation on membership
in the society based on any health status-related factor.
‘‘(4) PAYMENT ADJUSTMENT.—Under regulations of the Sec-
retary, in the case of individuals enrolled under this part under
a Medicare+Choice religious fraternal benefit society plan
described in paragraph (2), the Secretary shall provide for
such adjustment to the payment amounts otherwise established
under section 1854 as may be appropriate to assure an appro-
priate payment level, taking into account the actuarial
characteristics and experience of such individuals.’’.
H. R. 2015—78
SEC. 4002. TRANSITIONAL RULES FOR CURRENT MEDICARE HMO PRO-
GRAM.
(a) AUTHORIZING TRANSITIONAL WAIVER OF 50:50 RULE.—Sec-
tion 1876(f) (42 U.S.C. 1395mm(f)) is amended—
(1) in paragraph (1)—
(A) by striking ‘‘Each’’ and inserting ‘‘For contract peri-
ods beginning before January 1, 1999, each’’; and
(B) by striking ‘‘or under a State plan approved under
title XIX’’;
(2) in paragraph (2), by striking ‘‘The Secretary’’ and insert-
ing ‘‘Subject to paragraph (4), the Secretary’’, and
(3) by adding at the end the following:
‘‘(4) Effective for contract periods beginning after December
31, 1996, the Secretary may waive or modify the requirement
imposed by paragraph (1) to the extent the Secretary finds that
it is in the public interest.’’.
(b) TRANSITION.—
(1) RISK-SHARING
CONTRACTS.—Section 1876 (42 U.S.C.
1395mm) is amended by adding at the end the following new
subsections:
‘‘(k)(1) Except as provided in paragraph (2)—
‘‘(A) on or after the date standards for Medicare+Choice
organizations and plans are first established under section
1856(b)(1), the Secretary shall not enter into any risk-sharing
contract under this section with an eligible organization; and
‘‘(B) for any contract year beginning on or after January
1, 1999, the Secretary shall not renew any such contract.
‘‘(2) An individual who is enrolled in part B only and is enrolled
in an eligible organization with a risk-sharing contract under this
section on December 31, 1998, may continue enrollment in such
organization in accordance with regulations described in section
1856(b)(1).
‘‘(3) Notwithstanding subsection (a), the Secretary shall provide
that payment amounts under risk-sharing contracts under this
section for months in a year (beginning with January 1998) shall
be computed—
‘‘(A) with respect to individuals entitled to benefits under
both parts A and B, by substituting payment rates under section
1853(a) for the payment rates otherwise established under sec-
tion 1876(a), and
‘‘(B) with respect to individuals only entitled to benefits
under part B, by substituting an appropriate proportion of
such rates (reflecting the relative proportion of payments under
this title attributable to such part) for the payment rates other-
wise established under subsection (a).
‘‘(4) The following requirements shall apply to eligible organiza-
tions with risk-sharing contracts under this section in the same
manner as they apply to Medicare+Choice organizations under part
C:
‘‘(A) 
Data 
collection 
requirements 
under 
section
1853(a)(3)(B).
‘‘(B) Restrictions on imposition of premium taxes under
section 1854(g) in relating to payments to such organizations
under this section.
‘‘(C) The requirement to accept enrollment of new enrollees
during November 1998 under section 1851(e)(6).
‘‘(D) Payments under section 1857(e)(2).’’.
H. R. 2015—79
(2) REASONABLE COST CONTRACTS.—
(A) PHASE OUT OF CONTRACTS.—Section 1876(h) (42
U.S.C. 1395mm(h)) is amended by adding at the end the
following:
‘‘(5)(A) After the date of the enactment of this paragraph,
the Secretary may not enter into a reasonable cost reimbursement
contract under this subsection (if the contract is not in effect as
of such date), except for a contract with an eligible organization
which, immediately previous to entering into such contract, had
an agreement in effect under section 1833(a)(1)(A).
‘‘(B) The Secretary may not extend or renew a reasonable
cost reimbursement contract under this subsection for any period
beyond December 31, 2002.’’.
(B) REPORT ON IMPACT.—By not later than January
1, 2001, the Secretary of Health and Human Services shall
submit to Congress a report that analyzes the potential
impact of termination of reasonable cost reimbursement
contracts, pursuant to the amendment made by subpara-
graph (A), on medicare beneficiaries enrolled under such
contracts and on the medicare program. The report shall
include such recommendations regarding any extension or
transition with respect to such contracts as the Secretary
deems appropriate.
(c) ENROLLMENT TRANSITION RULE.—An individual who is
enrolled on December 31, 1998, with an eligible organization under
section 1876 of the Social Security Act (42 U.S.C. 1395mm) shall
be considered to be enrolled with that organization on January
1, 1999, under part C of title XVIII of such Act if that organization
has a contract under that part for providing services on January
1, 1999 (unless the individual has disenrolled effective on that
date).
(d) ADVANCE DIRECTIVES.—Section 1866(f) (42 U.S.C. 1395cc(f))
is amended—
(1) in paragraph (1)—
(A) by inserting ‘‘1855(i),’’ after ‘‘1833(s),’’, and
(B) by inserting ‘‘, Medicare+Choice organization,’’ after
‘‘provider of services’’; and
(2) in paragraph (2)(E), by inserting ‘‘or a Medicare+Choice
organization’’ after ‘‘section 1833(a)(1)(A)’’.
(e) 
EXTENSION
OF
PROVIDER
REQUIREMENT.—Section
1866(a)(1)(O) (42 U.S.C. 1395cc(a)(1)(O)) is amended—
(1) by striking ‘‘in the case of hospitals and skilled nursing
facilities,’’;
(2) by striking ‘‘inpatient hospital and extended care’’;
(3) by inserting ‘‘with a Medicare+Choice organization
under part C or’’ after ‘‘any individual enrolled’’;
(4) by striking ‘‘(in the case of hospitals) or limits (in
the case of skilled nursing facilities)’’; and
(5) by inserting ‘‘(less any payments under sections
1886(d)(11) and 1886(h)(3)(D))’’ after ‘‘under this title’’.
(f) ADDITIONAL CONFORMING CHANGES.—
(1) CONFORMING REFERENCES TO PREVIOUS PART C.—Any
reference in law (in effect before the date of the enactment
of this Act) to part C of title XVIII of the Social Security
Act is deemed a reference to part D of such title (as in effect
after such date).
H. R. 2015—80
(2) SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL.—
Not later than 6 months after the date of the enactment of
this Act, the Secretary of Health and Human Services shall
submit to the appropriate committees of Congress a legislative
proposal providing for such technical and conforming amend-
ments in the law as are required by the provisions of this
chapter.
(g) IMMEDIATE EFFECTIVE DATE FOR CERTAIN REQUIREMENTS
FOR DEMONSTRATIONS.—Section 1857(e)(2) of the Social Security
Act (requiring contribution to certain costs related to the enrollment
process comparative materials) applies to demonstrations with
respect to which enrollment is effected or coordinated under section
1851 of such Act.
(h) TRANSITION RULE FOR PSO ENROLLMENT.—In applying sub-
section (g)(1) of section 1876 of the Social Security Act (42 U.S.C.
1395mm) to a risk-sharing contract entered into with an eligible
organization that is a provider-sponsored organization (as defined
in section 1855(d)(1) of such Act, as inserted by section 5001)
for a contract year beginning on or after January 1, 1998, there
shall be substituted for the minimum number of enrollees provided
under such section the minimum number of enrollees permitted
under section 1857(b)(1) of such Act (as so inserted).
(i) PUBLICATION OF NEW CAPITATION RATES.—Not later than
4 weeks after the date of the enactment of this Act, the Secretary
of Health and Human Services shall announce the annual
Medicare+Choice capitation rates for 1998 under section 1853(b)
of the Social Security Act.
(j) ELIMINATION OF HEALTH CARE PREPAYMENT PLAN OPTION
FOR
ENTITIES
ELIGIBLE
TO
PARTICIPATE
AS
MANAGED
CARE
ORGANIZATION.—
(1) ELIMINATION OF OPTION.—
(A) IN
GENERAL.—Section 1833(a)(1)(A) (42 U.S.C.
1395l(a)(1)(A)) is amended by inserting ‘‘(and either is spon-
sored by a union or employer, or does not provide, or
arrange for the provision of, any inpatient hospital serv-
ices)’’ after ‘‘prepayment basis’’.
(B) EFFECTIVE
DATE.—The amendment made by
subparagraph (A) applies to new contracts entered into
after the date of enactment of this Act and, with respect
to contracts in effect as of such date, shall apply to payment
for services furnished after December 31, 1998.
(2) MEDIGAP CONFORMING AMENDMENT.—Effective January
1, 1999, section 1882(g)(1) (42 U.S.C. 1395ss(g)(1)) is amended
by striking ‘‘, during the period beginning on the date specified
in subsection (p)(1)(C) and ending on December 31, 1995,’’.
SEC. 4003. CONFORMING CHANGES IN MEDIGAP PROGRAM.
(a) 
CONFORMING
AMENDMENTS
TO
MEDICARE+CHOICE
CHANGES.—
(1) IN
GENERAL.—Section 1882(d)(3)(A)(i) (42 U.S.C.
1395ss(d)(3)(A)(i)) is amended—
(A) in the matter before subclause (I), by inserting
‘‘(including an individual electing a Medicare+Choice plan
under section 1851)’’ after ‘‘of this title’’; and
(B) in subclause (II)—
(i) by inserting ‘‘in the case of an individual not
electing a Medicare+Choice plan’’ after ‘‘(II)’’, and
H. R. 2015—81
(ii) by inserting before the comma at the end the
following: ‘‘or in the case of an individual electing
a Medicare+Choice plan, a medicare supplemental pol-
icy with knowledge that the policy duplicates health
benefits to which the individual is otherwise entitled
under the Medicare+Choice plan or under another
medicare supplemental policy’’.
(2) CONFORMING AMENDMENTS.—Section 1882(d)(3)(B)(i)(I)
(42 U.S.C. 1395ss(d)(3)(B)(i)(I)) is amended by inserting
‘‘(including any Medicare+Choice plan)’’ after ‘‘health insurance
policies’’.
(3) MEDICARE+CHOICE PLANS NOT TREATED AS MEDICARE
SUPPLEMENTARY
POLICIES.—Section 
1882(g)(1) 
(42 
U.S.C.
1395ss(g)(1)) is amended by inserting ‘‘or a Medicare+Choice
plan or’’ after ‘‘does not include’’.
(b) ADDITIONAL RULES RELATING TO INDIVIDUALS ENROLLED
IN MSA PLANS AND PRIVATE FEE-FOR-SERVICE PLANS.—Section 1882
(42 U.S.C. 1395ss) is further amended by adding at the end the
following new subsection:
‘‘(u)(1) It is unlawful for a person to sell or issue a policy
described in paragraph (2) to an individual with knowledge that
the individual has in effect under section 1851 an election of an
MSA plan or a Medicare+Choice private fee-for-service plan.
‘‘(2)(A) A policy described in this subparagraph is a health
insurance policy (other than a policy described in subparagraph
(B)) that provides for coverage of expenses that are otherwise
required to be counted toward meeting the annual deductible
amount provided under the MSA plan.
‘‘(B) A policy described in this subparagraph is any of the
following:
‘‘(i) A policy that provides coverage (whether through insur-
ance or otherwise) for accidents, disability, dental care, vision
care, or long-term care.
‘‘(ii) A policy of insurance to which substantially all of
the coverage relates to—
‘‘(I) liabilities incurred under workers’ compensation
laws,
‘‘(II) tort liabilities,
‘‘(III) liabilities relating to ownership or use of property,
or
‘‘(IV) such other similar liabilities as the Secretary
may specify by regulations.
‘‘(iii) A policy of insurance that provides coverage for a
specified disease or illness.
‘‘(iv) A policy of insurance that pays a fixed amount per
day (or other period) of hospitalization.’’.
Subchapter B—Special Rules for Medicare+Choice Medical
Savings Accounts
SEC. 4006. MEDICARE+CHOICE MSA.
(a) IN GENERAL.—Part III of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 (relating to amounts specifically
excluded from gross income) is amended by redesignating section
138 as section 139 and by inserting after section 137 the following
new section:
H. R. 2015—82
‘‘SEC. 138. MEDICARE+CHOICE MSA.
‘‘(a) EXCLUSION.—Gross income shall not include any payment
to the Medicare+Choice MSA of an individual by the Secretary
of Health and Human Services under part C of title XVIII of
the Social Security Act.
‘‘(b) MEDICARE+CHOICE MSA.—For purposes of this section,
the term ‘Medicare+Choice MSA’ means a medical savings account
(as defined in section 220(d))—
‘‘(1) which is designated as a Medicare+Choice MSA,
‘‘(2) with respect to which no contribution may be made
other than—
‘‘(A) a contribution made by the Secretary of Health
and Human Services pursuant to part C of title XVIII
of the Social Security Act, or
‘‘(B) a trustee-to-trustee transfer described in sub-
section (c)(4),
‘‘(3) the governing instrument of which provides that
trustee-to-trustee transfers described in subsection (c)(4) may
be made to and from such account, and
‘‘(4) which is established in connection with an MSA plan
described in section 1859(b)(3) of the Social Security Act.
‘‘(c) SPECIAL RULES FOR DISTRIBUTIONS.—
‘‘(1) DISTRIBUTIONS FOR QUALIFIED MEDICAL EXPENSES.—
In applying section 220 to a Medicare+Choice MSA—
‘‘(A) qualified medical expenses shall not include
amounts paid for medical care for any individual other
than the account holder, and
‘‘(B) section 220(d)(2)(C) shall not apply.
‘‘(2) PENALTY FOR DISTRIBUTIONS FROM MEDICARE+CHOICE
MSA NOT USED FOR QUALIFIED MEDICAL EXPENSES IF MINIMUM
BALANCE NOT MAINTAINED.—
‘‘(A) IN GENERAL.—The tax imposed by this chapter
for any taxable year in which there is a payment or dis-
tribution from a Medicare+Choice MSA which is not used
exclusively to pay the qualified medical expenses of the
account holder shall be increased by 50 percent of the
excess (if any) of—
‘‘(i) the amount of such payment or distribution,
over
‘‘(ii) the excess (if any) of—
‘‘(I) the fair market value of the assets in
such MSA as of the close of the calendar year
preceding the calendar year in which the taxable
year begins, over
‘‘(II) an amount equal to 60 percent of the
deductible under the Medicare+Choice MSA plan
covering the account holder as of January 1 of
the calendar year in which the taxable year begins.
Section 220(f)(4) shall not apply to any payment or distribu-
tion from a Medicare+Choice MSA.
‘‘(B) EXCEPTIONS.—Subparagraph (A) shall not apply
if the payment or distribution is made on or after the
date the account holder—
‘‘(i) becomes disabled within the meaning of section
72(m)(7), or
‘‘(ii) dies.
H. R. 2015—83
‘‘(C) SPECIAL RULES.—For purposes of subparagraph
(A)—
‘‘(i) all Medicare+Choice MSAs of the account
holder shall be treated as 1 account,
‘‘(ii) all payments and distributions not used exclu-
sively to pay the qualified medical expenses of the
account holder during any taxable year shall be treated
as 1 distribution, and
‘‘(iii) any distribution of property shall be taken
into account at its fair market value on the date of
the distribution.
‘‘(3) WITHDRAWAL OF ERRONEOUS CONTRIBUTIONS.—Section
220(f)(2) and paragraph (2) of this subsection shall not apply
to any payment or distribution from a Medicare+Choice MSA
to the Secretary of Health and Human Services of an erroneous
contribution to such MSA and of the net income attributable
to such contribution.
‘‘(4) TRUSTEE-TO-TRUSTEE
TRANSFERS.—Section 220(f)(2)
and paragraph (2) of this subsection shall not apply to any
trustee-to-trustee transfer from a Medicare+Choice MSA of an
account holder to another Medicare+Choice MSA of such
account holder.
‘‘(d) SPECIAL RULES FOR TREATMENT OF ACCOUNT AFTER DEATH
OF
ACCOUNT
HOLDER.—In applying section 220(f)(8)(A) to an
account which was a Medicare+Choice MSA of a decedent, the
rules of section 220(f) shall apply in lieu of the rules of subsection
(c) of this section with respect to the spouse as the account holder
of such Medicare+Choice MSA.
‘‘(e) REPORTS.—In the case of a Medicare+Choice MSA, the
report under section 220(h)—
‘‘(1) shall include the fair market value of the assets in
such Medicare+Choice MSA as of the close of each calendar
year, and
‘‘(2) shall be furnished to the account holder—
‘‘(A) not later than January 31 of the calendar year
following the calendar year to which such reports relate,
and
‘‘(B) in such manner as the Secretary prescribes in
such regulations.
‘‘(f) COORDINATION WITH LIMITATION ON NUMBER OF TAXPAYERS
HAVING MEDICAL SAVINGS ACCOUNTS.—Subsection (i) of section 220
shall not apply to an individual with respect to a Medicare+Choice
MSA, and Medicare+Choice MSA’s shall not be taken into account
in determining whether the numerical limitations under section
220(j) are exceeded.’’.
(b) TECHNICAL AMENDMENTS.—
(1) The last sentence of section 4973(d) of such Code is
amended by inserting ‘‘or section 138(c)(3)’’ after ‘‘section
220(f)(3)’’.
(2) Subsection (b) of section 220 of such Code is amended
by adding at the end the following new paragraph:
‘‘(7) MEDICARE
ELIGIBLE
INDIVIDUALS.—The limitation
under this subsection for any month with respect to an individ-
ual shall be zero for the first month such individual is entitled
to benefits under title XVIII of the Social Security Act and
for each month thereafter.’’.
H. R. 2015—84
(3) The table of sections for part III of subchapter B of
chapter 1 of such Code is amended by striking the last item
and inserting the following:
‘‘Sec. 138. Medicare+Choice MSA.
‘‘Sec. 139. Cross references to other Acts.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 1998.
CHAPTER 2—DEMONSTRATIONS
Subchapter A—Medicare+Choice Competitive Pricing
Demonstration Project
SEC. 4011. MEDICARE PREPAID COMPETITIVE PRICING DEMONSTRA-
TION PROJECT.
(a) ESTABLISHMENT OF PROJECT.—The Secretary of Health and
Human Services (in this subchapter referred to as the ‘‘Secretary’’)
shall establish a demonstration project (in this subchapter referred
to as the ‘‘project’’) under which payments to Medicare+Choice
organizations in medicare payment areas in which the project is
being conducted are determined in accordance with a competitive
pricing methodology established under this subchapter.
(b) DESIGNATION
OF
7 MEDICARE PAYMENT AREAS COVERED
BY PROJECT.—
(1) IN GENERAL.—The Secretary shall designate, in accord-
ance with the recommendations of the Competitive Pricing
Advisory Committee under paragraphs (2) and (3), medicare
payment areas as areas in which the project under this sub-
chapter will be conducted. In this section, the term ‘‘Competitive
Pricing Advisory Committee’’ means the Competitive Pricing
Advisory Committee established under section 4012(a).
(2) INITIAL DESIGNATION OF 4 AREAS.—
(A) IN
GENERAL.—The Competitive Pricing Advisory
Committee shall recommend to the Secretary, consistent
with subparagraph (B), the designation of 4 specific areas
as medicare payment areas to be included in the project.
Such recommendations shall be made in a manner so as
to ensure that payments under the project in 2 such areas
will begin on January 1, 1999, and in 2 such areas will
begin on January 1, 2000.
(B) LOCATION OF DESIGNATION.—Of the 4 areas rec-
ommended under subparagraph (A), 3 shall be in urban
areas and 1 shall be in a rural area.
(3) DESIGNATION OF ADDITIONAL 3 AREAS.—Not later than
December 31, 2001, the Competitive Pricing Advisory Commit-
tee may recommend to the Secretary the designation of up
to 3 additional, specific medicare payment areas to be included
in the project.
(c) PROJECT IMPLEMENTATION.—
(1) IN GENERAL.—Subject to paragraph (2), the Secretary
shall for each medicare payment area designated under sub-
section (b)—
(A) in accordance with the recommendations of the
Competitive Pricing Advisory Committee—
(i) establish the benefit design among plans offered
in such area, and
H. R. 2015—85
(ii) structure the method for selecting plans offered
in such area; and
(B) in consultation with such Committee—
(i) establish methods for setting the price to be
paid to plans, including, if the Secretaries determines
appropriate, 
the 
rewarding 
and 
penalizing 
of
Medicare+Choice plans in the area on the basis of
the attainment of, or failure to attain, applicable qual-
ity standards, and
(ii) provide for the collection of plan information
(including information concerning quality and access
to care), the dissemination of information, and the
methods of evaluating the results of the project.
(2) CONSULTATION.—The Secretary shall take into account
the recommendations of the area advisory committee estab-
lished in section 4012(b), in implementing a project design
for any area, except that no modifications may be made in
the project design without consultation with the Competitive
Pricing Advisory Committee. In no case may the Secretary
change the designation of an area based on recommendations
of any area advisory committee.
(d) MONITORING AND REPORT.—
(1) MONITORING
IMPACT.—Taking into consideration the
recommendations of the Competitive Pricing Advisory Commit-
tee and the area advisory committees, the Secretary shall
closely monitor and measure the impact of the project in the
different areas on the price and quality of, and access to,
medicare covered services, choice of health plans, changes in
enrollment, and other relevant factors.
(2) REPORT.—Not later than December 31, 2002, the Sec-
retary shall submit to Congress a report on the progress under
the project under this subchapter, including a comparison of
the matters monitored under paragraph (1) among the different
designated areas. The report may include any legislative rec-
ommendations for extending the project to the entire medicare
population.
(e) WAIVER AUTHORITY.—The Secretary of Health and Human
Services may waive such requirements of title XVIII of the Social
Security Act (as amended by this Act) as may be necessary for
the purposes of carrying out the project.
(f) RELATIONSHIP TO OTHER AUTHORITY.—Except pursuant to
this subchapter, the Secretary of Health and Human Services may
not conduct or continue any medicare demonstration project relating
to payment of health maintenance organizations, Medicare+Choice
organizations, or similar prepaid managed care entities on the
basis of a competitive bidding process or pricing system described
in subsection (a).
(g) NO ADDITIONAL COSTS TO MEDICARE PROGRAM.—The aggre-
gate payments to Medicare+Choice organizations under the project
for any designated area for a fiscal year may not exceed the aggre-
gate payments to such organizations that would have been made
under title XVIII of the Social Security Act (42 U.S.C. 1395 et
seq.), as amended by section 4001, if the project had not been
conducted.
(h) DEFINITIONS.—Any term used in this subchapter which
is also used in part C of title XVIII of the Social Security Act,
H. R. 2015—86
as amended by section 4001, shall have the same meaning as
when used in such part.
SEC. 4012. ADVISORY COMMITTEES.
(a) COMPETITIVE PRICING ADVISORY COMMITTEE.—
(1) IN GENERAL.—Before implementing the project under
this subchapter, the Secretary shall appoint the Competitive
Pricing Advisory Committee, including independent actuaries,
individuals with expertise in competitive health plan pricing,
and an employee of the Office of Personnel Management with
expertise in the administration of the Federal Employees
Health Benefit Program, to make recommendations to the Sec-
retary concerning the designation of areas for inclusion in the
project and appropriate research design for implementing the
project.
(2) INITIAL RECOMMENDATIONS.—The Competitive Pricing
Advisory Committee initially shall submit recommendations
regarding the area selection, benefit design among plans
offered, structuring choice among health plans offered, methods
for setting the price to be paid to plans, collection of plan
information (including information concerning quality and
access to care), information dissemination, and methods of
evaluating the results of the project.
(3) QUALITY RECOMMENDATION.—The Competitive Pricing
Advisory Committee shall study and make recommendations
regarding the feasibility of providing financial incentives and
penalties to plans operating under the project that meet, or
fail to meet, applicable quality standards.
(4) ADVICE DURING IMPLEMENTATION.—Upon implementa-
tion of the project, the Competitive Pricing Advisory Committee
shall continue to advise the Secretary on the application of
the design in different areas and changes in the project based
on experience with its operations.
(5) SUNSET.—The Competitive Pricing Advisory Committee
shall terminate on December 31, 2004.
(b) APPOINTMENT OF AREA ADVISORY COMMITTEE.—Upon the
designation of an area for inclusion in the project, the Secretary
shall appoint an area advisory committee, composed of representa-
tives of health plans, providers, and medicare beneficiaries in the
area, to advise the Secretary concerning how the project will be
implemented in the area. Such advice may include advice concerning
the marketing and pricing of plans in the area and other salient
factors. The duration of such a committee for an area shall be
for the duration of the operation of the project in the area.
(c) SPECIAL APPLICATION.—Notwithstanding section 9(c) of the
Federal Advisory Committee Act (5 U.S.C. App.), the Competitive
Pricing Advisory Commission and any area advisory committee
(described in subsection (b)) may meet as soon as the members
of the commission or committee, respectively, are appointed.
Subchapter B—Social Health Maintenance Organizations
SEC. 4014. SOCIAL HEALTH MAINTENANCE ORGANIZATIONS (SHMOS).
(a) EXTENSION
OF DEMONSTRATION PROJECT AUTHORITIES.—
Section 4018(b) of the Omnibus Budget Reconciliation Act of 1987
is amended—
H. R. 2015—87
(1) in paragraph (1), by striking ‘‘1997’’ and inserting
‘‘2000’’, and
(2) in paragraph (4), by striking ‘‘1998’’ and inserting
‘‘2001’’.
(b) EXPANSION
OF CAP.—Section 13567(c) of the Omnibus
Budget Reconciliation Act of 1993 is amended by striking ‘‘12,000’’
and inserting ‘‘36,000’’.
(c) REPORT ON INTEGRATION AND TRANSITION.—
(1) IN
GENERAL.—The Secretary of Health and Human
Services shall submit to Congress, by not later than January
1, 1999, a plan for the integration of health plans offered
by social health maintenance organizations (including SHMO
I and SHMO II sites developed under section 2355 of the
Deficit Reduction Act of 1984 and under the amendment made
by section 4207(b)(3)(B)(i) of OBRA–1990, respectively) and
similar plans as an option under the Medicare+Choice program
under part C of title XVIII of the Social Security Act.
(2) PROVISION FOR TRANSITION.—Such plan shall include
a transition for social health maintenance organizations operat-
ing under demonstration project authority under such section.
(3) PAYMENT POLICY.—The report shall also include rec-
ommendations on appropriate payment levels for plans offered
by such organizations, including an analysis of the application
of risk adjustment factors appropriate to the population served
by such organizations.
Subchapter C—Medicare Subvention Demonstration Project
for Military Retirees
SEC. 4015. MEDICARE SUBVENTION DEMONSTRATION PROJECT FOR
MILITARY RETIREES.
(a) IN GENERAL.—Title XVIII (42 U.S.C. 1395 et seq.) (as
amended by sections 4603 and 4801) is amended by adding at
the end the following:
‘‘MEDICARE SUBVENTION DEMONSTRATION PROJECT FOR MILITARY
RETIREES
‘‘SEC. 1896. (a) DEFINITIONS.—In this section:
‘‘(1) ADMINISTERING SECRETARIES.—The term ‘administer-
ing Secretaries’ means the Secretary and the Secretary of
Defense acting jointly.
‘‘(2) DEMONSTRATION PROJECT; PROJECT.—The terms ‘dem-
onstration project’ and ‘project’ mean the demonstration project
carried out under this section.
‘‘(3) DESIGNATED PROVIDER.—The term ‘designated provider’
has the meaning given that term in section 721(5) of the
National Defense Authorization Act For Fiscal Year 1997 (Pub-
lic Law 104–201; 110 Stat. 2593; 10 U.S.C. 1073 note).
‘‘(4) MEDICARE-ELIGIBLE
MILITARY
RETIREE
OR
DEPEND-
ENT.—The term ‘medicare-eligible military retiree or dependent’
means an individual described in section 1074(b) or 1076(b)
of title 10, United States Code, who—
‘‘(A) would be eligible for health benefits under section
1086 of such title by reason of subsection (c)(1) of such
section 1086 but for the operation of subsection (d) of
such section 1086;
H. R. 2015—88
‘‘(B)(i) is entitled to benefits under part A of this title;
and
‘‘(ii) if the individual was entitled to such benefits
before July 1, 1997, received health care items or services
from a health care facility of the uniformed services before
that date, but after becoming entitled to benefits under
part A of this title;
‘‘(C) is enrolled for benefits under part B of this title;
and
‘‘(D) has attained age 65.
‘‘(5) MEDICARE HEALTH CARE SERVICES.—The term ‘medi-
care health care services’ means items or services covered under
part A or B of this title.
‘‘(6) MILITARY
TREATMENT
FACILITY.—The term ‘military
treatment facility’ means a facility referred to in section 1074(a)
of title 10, United States Code.
‘‘(7) TRICARE.—The term ‘TRICARE’ has the same mean-
ing as the term ‘TRICARE program’ under section 711 of the
National Defense Authorization Act for Fiscal Year 1996 (10
U.S.C. 1073 note).
‘‘(8) TRUST FUNDS.—The term ‘trust funds’ means the Fed-
eral Hospital Insurance Trust Fund established in section 1817
and the Federal Supplementary Medical Insurance Trust Fund
established in section 1841.
‘‘(b) DEMONSTRATION PROJECT.—
‘‘(1) IN GENERAL.—
‘‘(A) ESTABLISHMENT.—The administering Secretaries
are authorized to establish a demonstration project (under
an agreement entered into by the administering Secretar-
ies) under which the Secretary shall reimburse the Sec-
retary of Defense, from the trust funds, for medicare health
care services furnished to certain medicare-eligible military
retirees or dependents in a military treatment facility or
by a designated provider.
‘‘(B) AGREEMENT.—The agreement entered into under
subparagraph (A) shall include at a minimum—
‘‘(i) a description of the benefits to be provided
to the participants of the demonstration project estab-
lished under this section;
‘‘(ii) a description of the eligibility rules for partici-
pation in the demonstration project, including any cost
sharing requirements;
‘‘(iii) a description of how the demonstration project
will satisfy the requirements under this title;
‘‘(iv) a description of the sites selected under para-
graph (2);
‘‘(v) a description of how reimbursement require-
ments under subsection (i) and maintenance of effort
requirements under subsection (j) will be implemented
in the demonstration project;
‘‘(vi) a statement that the Secretary shall have
access to all data of the Department of Defense that
the Secretary determines is necessary to conduct
independent estimates and audits of the maintenance
of effort requirement, the annual reconciliation, and
related matters required under the demonstration
project;
H. R. 2015—89
‘‘(vii) a description of any requirement that the
Secretary waives pursuant to subsection (d); and
‘‘(viii) a certification, provided after review by the
administering Secretaries, that any entity that is
receiving payments by reason of the demonstration
project has sufficient—
‘‘(I) resources and expertise to provide, consist-
ent with payments under subsection (i), the full
range of benefits required to be provided to bene-
ficiaries under the project; and
‘‘(II) information and billing systems in place
to ensure the accurate and timely submission of
claims for benefits and to ensure that providers
of services, physicians, and other health care
professionals are reimbursed by the entity in a
timely and accurate manner.
‘‘(2) NUMBER OF SITES.—The project established under this
section shall be conducted in no more than 6 sites, designated
jointly by the administering Secretaries after review of all
TRICARE regions.
‘‘(3) RESTRICTION.—No new military treatment facilities will
be built or expanded with funds from the demonstration project.
‘‘(4) DURATION.—The administering Secretaries shall con-
duct the demonstration project during the 3-year period begin-
ning on January 1, 1998.
‘‘(5) REPORT.—At least 60 days prior to the commencement
of the demonstration project, the administering Secretaries
shall submit a copy of the agreement entered into under para-
graph (1) to the committees of jurisdiction under this title.
‘‘(c) CREDITING OF PAYMENTS.—A payment received by the Sec-
retary of Defense under the demonstration project shall be credited
to the applicable Department of Defense medical appropriation
(and within that appropriation). Any such payment received during
a fiscal year for services provided during a prior fiscal year may
be obligated by the Secretary of Defense during the fiscal year
during which the payment is received.
‘‘(d) WAIVER OF CERTAIN MEDICARE REQUIREMENTS.—
‘‘(1) AUTHORITY.—
‘‘(A) IN GENERAL.—Except as provided under subpara-
graph (B), the demonstration project shall meet all require-
ments of Medicare+Choice plans under part C of this title
and regulations pertaining thereto, and other requirements
for receiving medicare payments, except that the prohibi-
tion of payments to Federal providers of services under
sections 1814(c) and 1835(d), and paragraphs (2) and (3)
of section 1862(a) shall not apply.
‘‘(B) WAIVER.—Except as provided in paragraph (2),
the Secretary is authorized to waive any requirement
described under subparagraph (A), or approve equivalent
or alternative ways of meeting such a requirement, but
only if such waiver or approval—
‘‘(i) reflects the unique status of the Department
of Defense as an agency of the Federal Government;
and
‘‘(ii) is necessary to carry out the demonstration
project.
H. R. 2015—90
‘‘(2) BENEFICIARY PROTECTIONS AND OTHER MATTERS.—The
demonstration project shall comply with the requirements of
part C of this title that relate to beneficiary protections and
other matters, including such requirements relating to the fol-
lowing areas:
‘‘(A) Enrollment and disenrollment.
‘‘(B) Nondiscrimination.
‘‘(C) Information provided to beneficiaries.
‘‘(D) Cost-sharing limitations.
‘‘(E) Appeal and grievance procedures.
‘‘(F) Provider participation.
‘‘(G) Access to services.
‘‘(H) Quality assurance and external review.
‘‘(I) Advance directives.
‘‘(J) Other areas of beneficiary protections that the
Secretary determines are applicable to such project.
‘‘(e) INSPECTOR GENERAL.—Nothing in the agreement entered
into under subsection (b) shall limit the Inspector General of the
Department of Health and Human Services from investigating any
matters regarding the expenditure of funds under this title for
the demonstration project, including compliance with the provisions
of this title and all other relevant laws.
‘‘(f) VOLUNTARY
PARTICIPATION.—Participation of medicare-
eligible military retirees or dependents in the demonstration project
shall be voluntary.
‘‘(g) TRICARE HEALTH CARE PLANS.—
‘‘(1) MODIFICATION
OF
TRICARE
CONTRACTS.—In carrying
out the demonstration project, the Secretary of Defense is
authorized to amend existing TRICARE contracts (including
contracts with designated providers) in order to provide the
medicare health care services to the medicare-eligible military
retirees and dependents enrolled in the demonstration project
consistent with part C of this title.
‘‘(2) HEALTH CARE BENEFITS.—The administering Secretar-
ies shall prescribe the minimum health care benefits to be
provided under such a plan to medicare-eligible military retirees
or dependents enrolled in the plan. Those benefits shall include
at least all medicare health care services covered under this
title.
‘‘(h) ADDITIONAL PLANS.—Notwithstanding any provisions of
title 10, United States Code, the administering Secretaries may
agree to include in the demonstration project any of the
Medicare+Choice plans described in section 1851(a)(2)(A), and such
agreement may include an agreement between the Secretary of
Defense and the Medicare+Choice organization offering such plan
to provide medicare health care services to medicare-eligible mili-
tary retirees or dependents and for such Secretary to receive pay-
ments from such organization for the provision of such services.
‘‘(i) PAYMENTS
BASED
ON
REGULAR
MEDICARE
PAYMENT
RATES.—
‘‘(1) IN GENERAL.—Subject to the succeeding provisions of
this subsection, the Secretary shall reimburse the Secretary
of Defense for services provided under the demonstration project
at a rate equal to 95 percent of the amount paid to a
Medicare+Choice organization under part C of this title with
respect to such an enrollee. In cases in which a payment amount
may not otherwise be readily computed, the Secretary shall
H. R. 2015—91
establish rules for computing equivalent or comparable payment
amounts.
‘‘(2) EXCLUSION OF CERTAIN AMOUNTS.—In computing the
amount of payment under paragraph (1), the following shall
be excluded:
‘‘(A) SPECIAL PAYMENTS.—Any amount attributable to
an adjustment under subparagraphs (B) and (F) of section
1886(d)(5) and subsection (h) of such section.
‘‘(B) PERCENTAGE OF CAPITAL PAYMENTS.—An amount
determined by the administering Secretaries for amounts
attributable to payments for capital-related costs under
subsection (g) of such section.
‘‘(3) PERIODIC PAYMENTS FROM MEDICARE TRUST FUNDS.—
Payments under this subsection shall be made—
‘‘(A) on a periodic basis consistent with the periodicity
of payments under this title; and
‘‘(B) in appropriate part, as determined by the Sec-
retary, from the trust funds.
‘‘(4) CAP
ON
AMOUNT.—The aggregate amount to be
reimbursed under this subsection pursuant to the agreement
entered into between the administering Secretaries under sub-
section (b) shall not exceed a total of—
‘‘(A) $50,000,000 for calendar year 1998;
‘‘(B) $60,000,000 for calendar year 1999; and
‘‘(C) $65,000,000 for calendar year 2000.
‘‘(j) MAINTENANCE OF EFFORT.—
‘‘(1) MONITORING EFFECT OF DEMONSTRATION PROGRAM ON
COSTS TO MEDICARE PROGRAM.—
‘‘(A) IN GENERAL.—The administering Secretaries, in
consultation with the Comptroller General, shall closely
monitor the expenditures made under the medicare pro-
gram for medicare-eligible military retirees or dependents
during the period of the demonstration project compared
to the expenditures that would have been made for such
medicare-eligible military retirees or dependents during
that period if the demonstration project had not been con-
ducted. The agreement entered into by the administering
Secretaries under subsection (b) shall require any partici-
pating military treatment facility to maintain the level
of effort for space available care to medicare-eligible mili-
tary retirees or dependents.
‘‘(B) ANNUAL REPORT BY THE COMPTROLLER GENERAL.—
Not later than December 31 of each year during which
the demonstration project is conducted, the Comptroller
General shall submit to the administering Secretaries and
the appropriate committees of Congress a report on the
extent, if any, to which the costs of the Secretary under
the medicare program under this title increased during
the preceding fiscal year as a result of the demonstration
project.
‘‘(2) REQUIRED RESPONSE IN CASE OF INCREASE IN COSTS.—
‘‘(A) IN
GENERAL.—If the administering Secretaries
find, based on paragraph (1), that the expenditures under
the medicare program under this title increased (or are
expected to increase) during a fiscal year because of the
demonstration project, the administering Secretaries shall
take such steps as may be needed—
H. R. 2015—92
‘‘(i) to recoup for the medicare program the amount
of such increase in expenditures; and
‘‘(ii) to prevent any such increase in the future.
‘‘(B) STEPS.—Such steps—
‘‘(i) under subparagraph (A)(i) shall include pay-
ment of the amount of such increased expenditures
by the Secretary of Defense from the current medical
care appropriation of the Department of Defense to
the trust funds; and
‘‘(ii) under subparagraph (A)(ii) shall include
suspending or terminating the demonstration project
(in whole or in part) or lowering the amount of payment
under subsection (i)(1).
‘‘(k) EVALUATION AND REPORTS.—
‘‘(1) INDEPENDENT EVALUATION.—The Comptroller General
of the United States shall conduct an evaluation of the dem-
onstration project, and shall submit annual reports on the
demonstration project to the administering Secretaries and to
the committees of jurisdiction in the Congress. The first report
shall be submitted not later than 12 months after the date
on which the demonstration project begins operation, and the
final report not later than 31⁄2 years after that date. The evalua-
tion and reports shall include an assessment, based on the
agreement entered into under subsection (b), of the following:
‘‘(A) Any savings or costs to the medicare program
under this title resulting from the demonstration project.
‘‘(B) The cost to the Department of Defense of providing
care to medicare-eligible military retirees and dependents
under the demonstration project.
‘‘(C) A description of the effects of the demonstration
project on military treatment facility readiness and training
and the probable effects of the project on overall Depart-
ment of Defense medical readiness and training.
‘‘(D) Any impact of the demonstration project on access
to care for active duty military personnel and their depend-
ents.
‘‘(E) An analysis of how the demonstration project
affects the overall accessibility of the uniformed services
treatment system and the amount of space available for
point-of-service care, and a description of the unintended
effects (if any) upon the normal treatment priority system.
‘‘(F) Compliance by the Department of Defense with
the requirements under this title.
‘‘(G) The number of medicare-eligible military retirees
and dependents opting to participate in the demonstration
project instead of receiving health benefits through another
health insurance plan (including benefits under this title).
‘‘(H) A list of the health insurance plans and programs
that were the primary payers for medicare-eligible military
retirees and dependents during the year prior to their
participation in the demonstration project and the distribu-
tion of their previous enrollment in such plans and pro-
grams.
‘‘(I) Any impact of the demonstration project on private
health care providers and beneficiaries under this title
that are not enrolled in the demonstration project.
H. R. 2015—93
‘‘(J) An assessment of the access to care and quality
of care for medicare-eligible military retirees and depend-
ents under the demonstration project.
‘‘(K) An analysis of whether, and in what manner,
easier access to the uniformed services treatment system
affects the number of medicare-eligible military retirees
and dependents receiving medicare health care services.
‘‘(L) Any impact of the demonstration project on the
access to care for medicare-eligible military retirees and
dependents who did not enroll in the demonstration project
and for other individuals entitled to benefits under this
title.
‘‘(M) A description of the difficulties (if any) experi-
enced by the Department of Defense in managing the dem-
onstration project and TRICARE contracts.
‘‘(N) Any additional elements specified in the agree-
ment entered into under subsection (b).
‘‘(O) Any additional elements that the Comptroller Gen-
eral of the United States determines is appropriate to
assess regarding the demonstration project.
‘‘(2) REPORT ON EXTENSION AND EXPANSION OF DEMONSTRA-
TION
PROJECT.—Not later than 6 months after the date of
the submission of the final report by the Comptroller General
of the United States under paragraph (1), the administering
Secretaries shall submit to Congress a report containing their
recommendation as to—
‘‘(A) whether there is a cost to the health care program
under this title in conducting the demonstration project,
and whether the demonstration project could be expanded
without there being a cost to such health care program
or to the Federal Government;
‘‘(B) whether to extend the demonstration project or
make the project permanent; and
‘‘(C) whether the terms and conditions of the project
should be continued (or modified) if the project is extended
or expanded.’’.
(b) IMPLEMENTATION PLAN FOR VETERANS SUBVENTION.—Not
later than 12 months after the start of the demonstration project,
the Secretary of Health and Human Services and the Secretary
of Veterans Affairs shall jointly submit to Congress a detailed
implementation plan for a subvention demonstration project (that
follows the model of the demonstration project conducted under
section 1896 of the Social Security Act (as added by subsection
(a)) to begin in 1999 for veterans (as defined in section 101 of
title 38, United States Code) that are eligible for benefits under
title XVIII of the Social Security Act.
Subchapter D—Other Projects
SEC. 
4016. 
MEDICARE 
COORDINATED 
CARE 
DEMONSTRATION
PROJECT.
(a) DEMONSTRATION PROJECTS.—
(1) IN
GENERAL.—The Secretary of Health and Human
Services (in this section referred to as the ‘‘Secretary’’) shall
conduct demonstration projects for the purpose of evaluating
methods, such as case management and other models of coordi-
nated care, that—
H. R. 2015—94
(A) improve the quality of items and services provided
to target individuals; and
(B) reduce expenditures under the medicare program
under title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.) for items and services provided to target
individuals.
(2) TARGET INDIVIDUAL DEFINED.—In this section, the term
‘‘target individual’’ means an individual that has a chronic
illness, as defined and identified by the Secretary, and is
enrolled under the fee-for-service program under parts A and
B of title XVIII of the Social Security Act (42 U.S.C. 1395c
et seq.; 1395j et seq.).
(b) PROGRAM DESIGN.—
(1) INITIAL DESIGN.—The Secretary shall evaluate best prac-
tices in the private sector of methods of coordinated care for
a period of 1 year and design the demonstration project based
on such evaluation.
(2) NUMBER AND PROJECT AREAS.—Not later than 2 years
after the date of enactment of this Act, the Secretary shall
implement at least 9 demonstration projects, including—
(A) 5 projects in urban areas;
(B) 3 projects in rural areas; and
(C) 1 project within the District of Columbia which
is operated by a nonprofit academic medical center that
maintains a National Cancer Institute certified comprehen-
sive cancer center.
(3) EXPANSION
OF
PROJECTS; IMPLEMENTATION
OF
DEM-
ONSTRATION PROJECT RESULTS.—
(A) EXPANSION
OF
PROJECTS.—If the initial report
under subsection (c) contains an evaluation that demonstra-
tion projects—
(i) reduce expenditures under the medicare pro-
gram; or
(ii) do not increase expenditures under the medi-
care program and increase the quality of health care
services provided to target individuals and satisfaction
of beneficiaries and health care providers;
the Secretary shall continue the existing demonstration
projects and may expand the number of demonstration
projects.
(B) IMPLEMENTATION
OF
DEMONSTRATION
PROJECT
RESULTS.—If a report under subsection (c) contains an
evaluation as described in subparagraph (A), the Secretary
may issue regulations to implement, on a permanent basis,
the components of the demonstration project that are bene-
ficial to the medicare program.
(c) REPORT TO CONGRESS.—
(1) IN GENERAL.—Not later than 2 years after the Secretary
implements the initial demonstration projects under this sec-
tion, and biannually thereafter, the Secretary shall submit
to Congress a report regarding the demonstration projects con-
ducted under this section.
(2) CONTENTS OF REPORT.—The report in paragraph (1)
shall include the following:
(A) A description of the demonstration projects con-
ducted under this section.
(B) An evaluation of—
H. R. 2015—95
(i) the cost-effectiveness of the demonstration
projects;
(ii) the quality of the health care services provided
to target individuals under the demonstration projects;
and
(iii) beneficiary and health care provider satisfac-
tion under the demonstration project.
(C) Any other information regarding the demonstration
projects conducted under this section that the Secretary
determines to be appropriate.
(d) WAIVER AUTHORITY.—The Secretary shall waive compliance
with the requirements of title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.) to such extent and for such period as
the Secretary determines is necessary to conduct demonstration
projects.
(e) FUNDING.—
(1) DEMONSTRATION PROJECTS.—
(A) IN GENERAL.—
(i) STATE PROJECTS.—Except as provided in clause
(ii), the Secretary shall provide for the transfer from
the Federal Hospital Insurance Trust Fund and the
Federal Supplementary Insurance Trust Fund under
title XVIII of the Social Security Act (42 U.S.C. 1395i,
1395t), in such proportions as the Secretary determines
to be appropriate, of such funds as are necessary for
the costs of carrying out the demonstration projects
under this section.
(ii) CANCER HOSPITAL.—In the case of the project
described in subsection (b)(2)(C), amounts shall be
available only as provided in any Federal law making
appropriations for the District of Columbia.
(B) LIMITATION.—In conducting the demonstration
project under this section, the Secretary shall ensure that
the aggregate payments made by the Secretary do not
exceed the amount which the Secretary would have paid
if the demonstration projects under this section were not
implemented.
(2) EVALUATION AND REPORT.—There are authorized to be
appropriated such sums as are necessary for the purpose of
developing and submitting the report to Congress under sub-
section (c).
SEC. 4017. ORDERLY TRANSITION OF MUNICIPAL HEALTH SERVICE
DEMONSTRATION PROJECTS.
Section 9215 of the Consolidated Omnibus Budget Reconcili-
ation Act of 1985, as amended by section 6135 of OBRA–1989
and section 13557 of OBRA–1993, is further amended—
(1) by inserting ‘‘(a)’’ before ‘‘The Secretary’’, and
(2) by adding at the end the following: ‘‘Subject to sub-
section (c), the Secretary may further extend such demonstra-
tion projects through December 31, 2000, but only with respect
to individuals who received at least one service during the
period beginning on January 1, 1996, and ending on the date
of the enactment of the Balanced Budget Act of 1997.
‘‘(b) The Secretary shall work with each such demonstration
project to develop a plan, to be submitted to the Committee on
Ways and Means and the Committee on Commerce of the House
H. R. 2015—96
of Representatives and the Committee on Finance of the Senate
by March 31, 1998, for the orderly transition of demonstration
projects and the project participants to a non-demonstration project
health care delivery system, such as through integration with a
private or public health plan, including a medicaid managed care
or Medicare+Choice plan.
‘‘(c) A demonstration project under subsection (a) which does
not develop and submit a transition plan under subsection (b)
by March 31, 1998, or, if later, 6 months after the date of the
enactment of the Balanced Budget Act of 1997, shall be discontinued
as of December 31, 1998. The Secretary shall provide appropriate
technical assistance to assist in the transition so that disruption
of medical services to project participants may be minimized.’’.
SEC. 4018. MEDICARE ENROLLMENT DEMONSTRATION PROJECT.
(a) DEMONSTRATION PROJECT.—
(1) ESTABLISHMENT.—The Secretary shall implement a
demonstration project (in this section referred to as the
‘‘project’’) for the purpose of evaluating the use of a third-
party contractor to conduct the Medicare+Choice plan enroll-
ment and disenrollment functions, as described in part C of
title XVIII of the Social Security Act (as added by section
4001 of this Act), in an area.
(2) CONSULTATION.—Before implementing the project under
this section, the Secretary shall consult with affected parties
on—
(A) the design of the project;
(B) the selection criteria for the third-party contractor;
and
(C) the establishment of performance standards, as
described in paragraph (3).
(3) PERFORMANCE STANDARDS.—
(A) IN
GENERAL.—The Secretary shall establish
performance standards for the accuracy and timeliness of
the Medicare+Choice plan enrollment and disenrollment
functions performed by the third-party contractor.
(B) NONCOMPLIANCE.—In the event that the third-party
contractor is not in substantial compliance with the
performance standards established under subparagraph
(A), such enrollment and disenrollment functions shall be
performed by the Medicare+Choice plan until the Secretary
appoints a new third-party contractor.
(b) REPORT
TO CONGRESS.—The Secretary shall periodically
report to Congress on the progress of the project conducted pursuant
to this section.
(c) WAIVER AUTHORITY.—The Secretary shall waive compliance
with the requirements of part C of title XVIII of the Social Security
Act (as amended by section 4001 of this Act) to such extent and
for such period as the Secretary determines is necessary to conduct
the project.
(d) DURATION.—A demonstration project under this section shall
be conducted for a 3-year period.
(e) SEPARATE
FROM
OTHER
DEMONSTRATION
PROJECTS.—A
project implemented by the Secretary under this section shall not
be conducted in conjunction with any other demonstration project.
H. R. 2015—97
SEC. 4019. EXTENSION OF CERTAIN MEDICARE COMMUNITY NURSING
ORGANIZATION DEMONSTRATION PROJECTS.
Notwithstanding any other provision of law, demonstration
projects conducted under section 4079 of the Omnibus Budget Rec-
onciliation Act of 1987 may be conducted for an additional period
of 2 years, and the deadline for any report required relating to
the results of such projects shall be not later than 6 months before
the end of such additional period.
CHAPTER 3—COMMISSIONS
SEC. 4021. NATIONAL BIPARTISAN COMMISSION ON THE FUTURE OF
MEDICARE.
(a) ESTABLISHMENT.—There is established a commission to be
known as the National Bipartisan Commission on the Future of
Medicare (in this section referred to as the ‘‘Commission’’).
(b) DUTIES OF THE COMMISSION.—The Commission shall—
(1) review and analyze the long-term financial condition
of the medicare program under title XVIII of the Social Security
Act (42 U.S.C. 1395 et seq.);
(2) identify problems that threaten the financial integrity
of the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund established
under that title (42 U.S.C. 1395i, 1395t), including—
(A) the financial impact on the medicare program of
the significant increase in the number of medicare eligible
individuals which will occur beginning approximately dur-
ing 2010 and lasting for approximately 25 years, and
(B) the extent to which current medicare update
indexes do not accurately reflect inflation;
(3) analyze potential solutions to the problems identified
under paragraph (2) that will ensure both the financial integrity
of the medicare program and the provision of appropriate bene-
fits under such program, including methods used by other
nations to respond to comparable demographic patterns in eligi-
bility for health care benefits for elderly and disabled individ-
uals and trends in employment-related health care for retirees;
(4) make recommendations to restore the solvency of the
Federal Hospital Insurance Trust Fund and the financial integ-
rity of the Federal Supplementary Medical Insurance Trust
Fund;
(5) make recommendations for establishing the appropriate
financial structure of the medicare program as a whole;
(6) make recommendations for establishing the appropriate
balance of benefits covered and beneficiary contributions to
the medicare program;
(7) make recommendations for the time periods during
which the recommendations described in paragraphs (4), (5),
and (6) should be implemented;
(8) make recommendations regarding the financing of grad-
uate medical education (GME), including consideration of alter-
native broad-based sources of funding for such education and
funding for institutions not currently eligible for such GME
support that conduct approved graduate medical residency pro-
grams, such as children’s hospitals;
(9) make recommendations on modifying age-based eligi-
bility to correspond to changes in age-based eligibility under
H. R. 2015—98
the OASDI program and on the feasibility of allowing individ-
uals between the age of 62 and the medicare eligibility age
to buy into the medicare program;
(10) make recommendations on the impact of chronic dis-
ease and disability trends on future costs and quality of services
under the current benefit, financing, and delivery system struc-
ture of the medicare program;
(11) make recommendations regarding a comprehensive
approach to preserve the program; and
(12) review and analyze such other matters as the Commis-
sion deems appropriate.
(c) MEMBERSHIP.—
(1) NUMBER AND APPOINTMENT.—The Commission shall be
composed of 17 members, of whom—
(A) four shall be appointed by the President;
(B) six shall be appointed by the Majority 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;
(C) six shall be appointed by the Speaker of the House
of Representatives, in consultation with the Minority
Leader of the House of Representatives, of whom not more
than 4 shall be of the same political party; and
(D) one, who shall serve as Chairman of the Commis-
sion, appointed jointly by the President, Majority Leader
of the Senate, and the Speaker of the House of Representa-
tives.
(2) DEADLINE FOR APPOINTMENT.—Members of the Commis-
sion shall be appointed by not later than December 1, 1997.
(3) TERMS OF APPOINTMENT.—The term of any appointment
under paragraph (1) to the Commission 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 members.
(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 original 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 Commis-
sion.
(7) COMPENSATION.—Members of the Commission shall
receive no additional pay, allowances, or benefits by reason
of their service on the Commission.
(8) EXPENSES.—Each member of the Commission 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.—
(A) APPOINTMENT.—The Chairman shall appoint an
executive director of the Commission.
(B) COMPENSATION.—The executive director shall be
paid the rate of basic pay for level V of the Executive
Schedule.
H. R. 2015—99
(2) STAFF.—With the approval of the Commission, the
executive director may appoint such personnel as the executive
director considers appropriate.
(3) APPLICABILITY OF CIVIL SERVICE LAWS.—The staff of
the Commission shall be appointed without regard to the provi-
sions of title 5, United States Code, governing appointments
in the competitive service, and shall be paid without regard
to the provisions of chapter 51 and subchapter III of chapter
53 of such title (relating to classification and General Schedule
pay rates).
(4) EXPERTS AND CONSULTANTS.—With the approval of the
Commission, the executive director may procure temporary and
intermittent services under section 3109(b) of title 5, United
States Code.
(5) PHYSICAL FACILITIES.—The Administrator of the Gen-
eral Services Administration shall locate suitable office space
for the operation of the Commission. The facilities shall serve
as the headquarters 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 Commission may hold such hearings
and undertake such other activities as the Commission deter-
mines 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 investiga-
tions as the Commission determines to be necessary to carry
out its duties.
(3) COST ESTIMATES BY CONGRESSIONAL BUDGET OFFICE AND
OFFICE OF THE CHIEF ACTUARY OF HCFA.—
(A) The Director of the Congressional Budget Office
or the Chief Actuary of the Health Care Financing Adminis-
tration, or both, shall provide to the Commission, upon
the request 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 office of the Director of such addi-
tional staff as may be necessary for the Director to comply
with requests by the Commission under subparagraph (A).
(4) DETAIL OF FEDERAL EMPLOYEES.—Upon the request of
the Commission, the head of any Federal agency is authorized
to detail, without reimbursement, any of the personnel of such
agency to the Commission to assist the Commission in carrying
out its duties. Any such detail shall not interrupt or otherwise
affect the civil service status or privileges of the Federal
employee.
(5) TECHNICAL
ASSISTANCE.—Upon the request 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
H. R. 2015—100
considered a commission of Congress as described in section
3215 of title 39, United States Code.
(7) OBTAINING INFORMATION.—The Commission 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 request of the Chairman of the Commission, the head
of such agency shall furnish such information to the Commis-
sion.
(8) ADMINISTRATIVE SUPPORT SERVICES.—Upon the request
of the Commission, the Administrator of General Services shall
provide to the Commission 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 personnel detailed from the
Government Printing Office, the Commission shall be deemed
to be a committee of the Congress.
(f) REPORT.—Not later than March 1, 1999, the Commission
shall submit a report to the President and Congress which shall
contain a detailed statement of only those recommendations, find-
ings, and conclusions of the Commission that receive the approval
of at least 11 members of the Commission.
(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 payable 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. 4022. MEDICARE PAYMENT ADVISORY COMMISSION.
(a) IN GENERAL.—Title XVIII is amended by inserting after
section 1804 the following new section:
‘‘MEDICARE PAYMENT ADVISORY COMMISSION
‘‘SEC. 1805. (a) ESTABLISHMENT.—There is hereby established
the Medicare Payment Advisory Commission (in this section
referred to as the ‘Commission’).
‘‘(b) DUTIES.—
‘‘(1) REVIEW OF PAYMENT POLICIES AND ANNUAL REPORTS.—
The Commission shall—
‘‘(A) review payment policies under this title, including
the topics described in paragraph (2);
‘‘(B) make recommendations to Congress concerning
such payment policies;
‘‘(C) by not later than March 1 of each year (beginning
with 1998), submit a report to Congress containing the
results of such reviews and its recommendations concerning
such policies; and
‘‘(D) by not later than June 1 of each year (beginning
with 1998), submit a report to Congress containing an
examination of issues affecting the medicare program,
H. R. 2015—101
including the implications of changes in health care deliv-
ery in the United States and in the market for health
care services on the medicare program.
‘‘(2) SPECIFIC TOPICS TO BE REVIEWED.—
‘‘(A) MEDICARE+CHOICE
PROGRAM.—Specifically, the
Commission 
shall 
review, 
with 
respect 
to 
the
Medicare+Choice program under part C, the following:
‘‘(i) The methodology for making payment to plans
under such program, including the making of differen-
tial payments and the distribution of differential
updates among different payment areas.
‘‘(ii) The mechanisms used to adjust payments for
risk and the need to adjust such mechanisms to take
into account health status of beneficiaries.
‘‘(iii) The implications of risk selection both among
Medicare+Choice 
organizations 
and 
between 
the
Medicare+Choice option and the original medicare fee-
for-service option.
‘‘(iv) The development and implementation of
mechanisms to assure the quality of care for those
enrolled with Medicare+Choice organizations.
‘‘(v) The impact of the Medicare+Choice program
on access to care for medicare beneficiaries.
‘‘(vi) Other major issues in implementation and
further development of the Medicare+Choice program.
‘‘(B) ORIGINAL
MEDICARE
FEE-FOR-SERVICE
SYSTEM.—
Specifically, the Commission shall review payment policies
under parts A and B, including—
‘‘(i) the factors affecting expenditures for services
in different sectors, including the process for updating
hospital, skilled nursing facility, physician, and other
fees,
‘‘(ii) payment methodologies, and
‘‘(iii) their relationship to access and quality of
care for medicare beneficiaries.
‘‘(C) INTERACTION OF MEDICARE PAYMENT POLICIES WITH
HEALTH
CARE
DELIVERY
GENERALLY.—Specifically, the
Commission shall review the effect of payment policies
under this title on the delivery of health care services
other than under this title and assess the implications
of changes in health care delivery in the United States
and in the general market for health care services on
the medicare program.
‘‘(3) COMMENTS ON CERTAIN SECRETARIAL REPORTS.—If the
Secretary submits to Congress (or a committee of Congress)
a report that is required by law and that relates to payment
policies under this title, the Secretary shall transmit a copy
of the report to the Commission. The Commission shall review
the report and, not later than 6 months after the date of
submittal of the Secretary’s report to Congress, shall submit
to the appropriate committees of Congress written comments
on such report. Such comments may include such recommenda-
tions as the Commission deems appropriate.
‘‘(4) AGENDA AND ADDITIONAL REVIEWS.—The Commission
shall consult periodically with the chairmen and ranking minor-
ity members of the appropriate committees of Congress regard-
ing the Commission’s agenda and progress towards achieving
H. R. 2015—102
the agenda. The Commission may conduct additional reviews,
and submit additional reports to the appropriate committees
of Congress, from time to time on such topics relating to the
program under this title as may be requested by such chairmen
and members and as the Commission deems appropriate.
‘‘(5) AVAILABILITY
OF
REPORTS.—The Commission shall
transmit to the Secretary a copy of each report submitted
under this subsection and shall make such reports available
to the public.
‘‘(6) APPROPRIATE COMMITTEES OF CONGRESS.—For purposes
of this section, the term ‘appropriate committees of Congress’
means the Committees on Ways and Means and Commerce
of the House of Representatives and the Committee on Finance
of the Senate.
‘‘(c) MEMBERSHIP.—
‘‘(1) NUMBER AND APPOINTMENT.—The Commission shall
be composed of 15 members appointed by the Comptroller Gen-
eral.
‘‘(2) QUALIFICATIONS.—
‘‘(A) IN GENERAL.—The membership of the Commission
shall include individuals with national recognition for their
expertise in health finance and economics, actuarial
science, health facility management, health plans and
integrated delivery systems, reimbursement of health facili-
ties, allopathic and osteopathic physicians, and other
providers of health services, and other related fields, who
provide a mix of different professionals, broad geographic
representation, and a balance between urban and rural
representatives.
‘‘(B) INCLUSION.—The membership of the Commission
shall include (but not be limited to) physicians and other
health professionals, employers, third-party payers, individ-
uals skilled in the conduct and interpretation of biomedical,
health services, and health economics research and exper-
tise in outcomes and effectiveness research and technology
assessment. Such membership shall also include represent-
atives of consumers and the elderly.
‘‘(C) MAJORITY
NONPROVIDERS.—Individuals who are
directly involved in the provision, or management of the
delivery, of items and services covered under this title
shall not constitute a majority of the membership of the
Commission.
‘‘(D) ETHICAL DISCLOSURE.—The Comptroller General
shall establish a system for public disclosure by members
of the Commission of financial and other potential conflicts
of interest relating to such members.
‘‘(3) TERMS.—
‘‘(A) IN
GENERAL.—The terms of members of the
Commission shall be for 3 years except that the Comptroller
General shall designate staggered terms for the members
first appointed.
‘‘(B) VACANCIES.—Any member appointed to fill a
vacancy occurring before the expiration of the term for
which the member’s predecessor was appointed shall be
appointed only for the remainder of that term. A member
may serve after the expiration of that member’s term until
a successor has taken office. A vacancy in the Commission
H. R. 2015—103
shall be filled in the manner in which the original appoint-
ment was made.
‘‘(4) COMPENSATION.—While serving on the business of the
Commission (including traveltime), a member of the Commis-
sion shall be entitled to compensation at the per diem equiva-
lent of the rate provided for level IV of the Executive Schedule
under section 5315 of title 5, United States Code; and while
so serving away from home and the member’s regular place
of business, a member may be allowed travel expenses, as
authorized by the Chairman of the Commission. Physicians
serving as personnel of the Commission may be provided a
physician comparability allowance by the Commission in the
same manner as Government physicians may be provided such
an allowance by an agency under section 5948 of title 5, United
States Code, and for such purpose subsection (i) of such section
shall apply to the Commission in the same manner as it applies
to the Tennessee Valley Authority. For purposes of pay (other
than pay of members of the Commission) and employment
benefits, rights, and privileges, all personnel of the Commission
shall be treated as if they were employees of the United States
Senate.
‘‘(5) CHAIRMAN; VICE CHAIRMAN.—The Comptroller General
shall designate a member of the Commission, at the time of
appointment of the member as Chairman and a member as
Vice Chairman for that term of appointment, except that in
the case of vacancy of the Chairmanship or Vice Chairmanship,
the Comptroller General may designate another member for
the remainder of that member’s term.
‘‘(6) MEETINGS.—The Commission shall meet at the call
of the Chairman.
‘‘(d) DIRECTOR AND STAFF; EXPERTS AND CONSULTANTS.—Sub-
ject to such review as the Comptroller General deems necessary
to assure the efficient administration of the Commission, the
Commission may—
‘‘(1) employ and fix the compensation of an Executive Direc-
tor (subject to the approval of the Comptroller General) and
such other personnel as may be necessary to carry out its
duties (without regard to the provisions of title 5, United States
Code, governing appointments in the competitive service);
‘‘(2) seek such assistance and support as may be required
in the performance of its duties from appropriate Federal
departments and agencies;
‘‘(3) enter into contracts or make other arrangements, as
may be necessary for the conduct of the work of the Commission
(without regard to section 3709 of the Revised Statutes (41
U.S.C. 5));
‘‘(4) make advance, progress, and other payments which
relate to the work of the Commission;
‘‘(5) provide transportation and subsistence for persons
serving without compensation; and
‘‘(6) prescribe such rules and regulations as it deems nec-
essary with respect to the internal organization and operation
of the Commission.
‘‘(e) POWERS.—
‘‘(1) OBTAINING
OFFICIAL
DATA.—The Commission may
secure directly from any department or agency of the United
States information necessary to enable it to carry out this
H. R. 2015—104
section. Upon request of the Chairman, the head of that depart-
ment or agency shall furnish that information to the Commis-
sion on an agreed upon schedule.
‘‘(2) DATA COLLECTION.—In order to carry out its functions,
the Commission shall—
‘‘(A) utilize existing information, both published and
unpublished, where possible, collected and assessed either
by its own staff or under other arrangements made in
accordance with this section,
‘‘(B) carry out, or award grants or contracts for, original
research and experimentation, where existing information
is inadequate, and
‘‘(C) adopt procedures allowing any interested party
to submit information for the Commission’s use in making
reports and recommendations.
‘‘(3) ACCESS
OF
GAO
TO
INFORMATION.—The Comptroller
General shall have unrestricted access to all deliberations,
records, and nonproprietary data of the Commission, imme-
diately upon request.
‘‘(4) PERIODIC
AUDIT.—The Commission shall be subject
to periodic audit by the Comptroller General.
‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) REQUEST FOR APPROPRIATIONS.—The Commission shall
submit requests for appropriations in the same manner as
the Comptroller General submits requests for appropriations,
but amounts appropriated for the Commission shall be separate
from amounts appropriated for the Comptroller General.
‘‘(2) AUTHORIZATION.—There are authorized to be appro-
priated such sums as may be necessary to carry out the provi-
sions of this section. Sixty percent of such appropriation shall
be payable from the Federal Hospital Insurance Trust Fund,
and 40 percent of such appropriation shall be payable from
the Federal Supplementary Medical Insurance Trust Fund.’’.
(b) ABOLITION OF PROPAC AND PPRC.—
(1) PROPAC.—
(A) 
IN
GENERAL.—Section 
1886(e) 
(42 
U.S.C.
1395ww(e)) is amended—
(i) by striking paragraphs (2) and (6); and
(ii) in paragraph (3), by striking ‘‘(A) The Commis-
sion’’ and all that follows through ‘‘(B)’’.
(B) CONFORMING
AMENDMENT.—Section 1862 (42
U.S.C. 1395y) is amended by striking ‘‘Prospective Payment
Assessment Commission’’ each place it appears in sub-
section (a)(1)(D) and subsection (i) and inserting ‘‘Medicare
Payment Advisory Commission’’.
(2) PPRC.—
(A) IN GENERAL.—Title XVIII is amended by striking
section 1845 (42 U.S.C. 1395w–1).
(B) ELIMINATION OF CERTAIN REPORTS.—Section 1848
(42 U.S.C. 1395w–4) is amended—
(i) by striking subparagraph (F) of subsection
(d)(2),
(ii) by striking subparagraph (B) of subsection
(f)(1), and
(iii) in subsection (f)(3), by striking ‘‘Physician Pay-
ment Review Commission,’’.
H. R. 2015—105
(C) CONFORMING
AMENDMENTS.—Section 1848 (42
U.S.C. 1395w–4) is amended by striking ‘‘Physician Pay-
ment Review Commission’’ and inserting ‘‘Medicare Pay-
ment Advisory Commission’’ each place it appears in sub-
sections (c)(2)(B)(iii), (g)(6)(C), and (g)(7)(C).
(c) EFFECTIVE DATE; TRANSITION.—
(1) IN GENERAL.—The Comptroller General shall first pro-
vide for appointment of members to the Medicare Payment
Advisory Commission (in this subsection referred to as
‘‘MedPAC’’) by not later than September 30, 1997.
(2) TRANSITION.—As quickly as possible after the date a
majority of members of MedPAC are first appointed, the
Comptroller General, in consultation with the Prospective Pay-
ment Assessment Commission (in this subsection referred to
as ‘‘ProPAC’’) and the Physician Payment Review Commission
(in this subsection referred to as ‘‘PPRC’’), shall provide for
the termination of the ProPAC and the PPRC. As of the date
of termination of the respective Commissions, the amendments
made by paragraphs (1) and (2), respectively, of subsection
(b) become effective. The Comptroller General, to the extent
feasible, shall provide for the transfer to the MedPAC of assets
and staff of the ProPAC and the PPRC, without any loss
of benefits or seniority by virtue of such transfers. Fund bal-
ances available to the ProPAC or the PPRC for any period
shall be available to the MedPAC for such period for like
purposes.
(3) 
CONTINUING
RESPONSIBILITY
FOR
REPORTS.—The
MedPAC shall be responsible for the preparation and submis-
sion of reports required by law to be submitted (and which
have not been submitted by the date of establishment of the
MedPAC) by the ProPAC and the PPRC, and, for this purpose,
any reference in law to either such Commission is deemed,
after the appointment of the MedPAC, to refer to the MedPAC.
CHAPTER 4—MEDIGAP PROTECTIONS
SEC. 4031. MEDIGAP PROTECTIONS.
(a) GUARANTEEING ISSUE WITHOUT PREEXISTING CONDITIONS
FOR CONTINUOUSLY COVERED INDIVIDUALS.—Section 1882(s) (42
U.S.C. 1395ss(s)) is amended—
(1) in paragraph (3), by striking ‘‘paragraphs (1) and (2)’’
and inserting ‘‘this subsection’’,
(2) by redesignating paragraph (3) as paragraph (4), and
(3) by inserting after paragraph (2) the following new para-
graph:
‘‘(3)(A) The issuer of a medicare supplemental policy—
‘‘(i) may not deny or condition the issuance or effectiveness
of a medicare supplemental policy described in subparagraph
(C) that is offered and is available for issuance to new enrollees
by such issuer;
‘‘(ii) may not discriminate in the pricing of such policy,
because of health status, claims experience, receipt of health
care, or medical condition; and
‘‘(iii) may not impose an exclusion of benefits based on
a pre-existing condition under such policy,
in the case of an individual described in subparagraph (B) who
seeks to enroll under the policy not later than 63 days after the
H. R. 2015—106
date of the termination of enrollment described in such subpara-
graph and who submits evidence of the date of termination or
disenrollment along with the application for such medicare supple-
mental policy.
‘‘(B) An individual described in this subparagraph is an individ-
ual described in any of the following clauses:
‘‘(i) The individual is enrolled under an employee welfare
benefit plan that provides health benefits that supplement the
benefits under this title and the plan terminates or ceases
to provide all such supplemental health benefits to the individ-
ual.
‘‘(ii) The individual is enrolled with a Medicare+Choice
organization under a Medicare+Choice plan under part C, and
there are circumstances permitting discontinuance of the
individual’s election of the plan under the first sentence of
section 1851(e)(4).
‘‘(iii) The individual is enrolled with an eligible organization
under a contract under section 1876, a similar organization
operating under demonstration project authority, effective for
periods before April 1, 1999, with an organization under an
agreement under section 1833(a)(1)(A), or with an organization
under a policy described in subsection (t), and such enrollment
ceases under the same circumstances that would permit dis-
continuance of an individual’s election of coverage under the
first sentence of section 1851(e)(4) and, in the case of a policy
described in subsection (t), there is no provision under
applicable State law for the continuation or conversion of cov-
erage under such policy.
‘‘(iv) The individual is enrolled under a medicare supple-
mental policy under this section and such enrollment ceases
because—
‘‘(I) of the bankruptcy or insolvency of the issuer or
because of other involuntary termination of coverage or
enrollment under such policy and there is no provision
under applicable State law for the continuation or conver-
sion of such coverage;
‘‘(II) the issuer of the policy substantially violated a
material provision of the policy; or
‘‘(III) the issuer (or an agent or other entity acting
on the issuer’s behalf) materially misrepresented the pol-
icy’s provisions in marketing the policy to the individual.
‘‘(v) The individual—
‘‘(I) was enrolled under a medicare supplemental policy
under this section,
‘‘(II) subsequently terminates such enrollment and
enrolls, for the first time, with any Medicare+Choice
organization under a Medicare+Choice plan under part
C, any eligible organization under a contract under section
1876, any similar organization operating under demonstra-
tion project authority, or any policy described in subsection
(t), and
‘‘(III) the subsequent enrollment under subclause (II)
is terminated by the enrollee during any period within
the first 12 months of such enrollment (during which the
enrollee is permitted to terminate such subsequent enroll-
ment under section 1851(e)).
H. R. 2015—107
‘‘(vi) The individual, upon first becoming eligible for benefits
under part A at age 65, enrolls in a Medicare+Choice plan
under part C, and disenrolls from such plan by not later than
12 months after the effective date of such enrollment.
‘‘(C)(i) Subject to clauses (ii) and (iii), a medicare supplemental
policy described in this subparagraph is a medicare supplemental
policy which has a benefit package classified as ‘A’, ‘B’, ‘C’, or
‘F’ under the standards established under subsection (p)(2).
‘‘(ii) Only for purposes of an individual described in subpara-
graph (B)(v), a medicare supplemental policy described in this
subparagraph is the same medicare supplemental policy referred
to in such subparagraph in which the individual was most recently
previously enrolled, if available from the same issuer, or, if not
so available, a policy described in clause (i).
‘‘(iii) Only for purposes of an individual described in subpara-
graph (B)(vi), a medicare supplemental policy described in this
subparagraph shall include any medicare supplemental policy.
‘‘(iv) For purposes of applying this paragraph in the case of
a State that provides for offering of benefit packages other than
under the classification referred to in clause (i), the references
to benefit packages in such clause are deemed references to com-
parable benefit packages offered in such State.
‘‘(D) At the time of an event described in subparagraph (B)
because of which an individual ceases enrollment or loses coverage
or benefits under a contract or agreement, policy, or plan, the
organization that offers the contract or agreement, the insurer
offering the policy, or the administrator of the plan, respectively,
shall notify the individual of the rights of the individual under
this paragraph, and obligations of issuers of medicare supplemental
policies, under subparagraph (A).’’.
(b) LIMITATION
ON IMPOSITION
OF PREEXISTING CONDITION
EXCLUSION DURING INITIAL OPEN ENROLLMENT PERIOD.—Section
1882(s)(2) (42 U.S.C. 1395ss(s)(2)) is amended—
(1) in subparagraph (B), by striking ‘‘subparagraph (C)’’
and inserting ‘‘subparagraphs (C) and (D)’’, and
(2) by adding at the end the following new subparagraph:
‘‘(D) In the case of a policy issued during the 6-month period
described in subparagraph (A) to an individual who is 65 years
of age or older as of the date of issuance and who as of the
date of the application for enrollment has a continuous period
of creditable coverage (as defined in 2701(c) of the Public Health
Service Act) of—
‘‘(i) at least 6 months, the policy may not exclude benefits
based on a pre-existing condition; or
‘‘(ii) less than 6 months, if the policy excludes benefits
based on a preexisting condition, the policy shall reduce the
period of any preexisting condition exclusion by the aggregate
of the periods of creditable coverage (if any, as so defined)
applicable to the individual as of the enrollment date.
The Secretary shall specify the manner of the reduction under
clause (ii), based upon the rules used by the Secretary in carrying
out section 2701(a)(3) of such Act.’’.
(c) CONFORMING AMENDMENT.—Section 1882(d)(3)(A)(vi)(III) (42
U.S.C. 1395ss(d)(2)(A)(vi)(III)) is amended by inserting ‘‘, a policy
described in clause (v),’’ after ‘‘Medicare supplemental policy’’.
(d) EFFECTIVE DATES.—
H. R. 2015—108
(1) GUARANTEED
ISSUE.—The amendment made by sub-
section (a) shall take effect on July 1, 1998.
(2) LIMIT
ON
PREEXISTING
CONDITION
EXCLUSIONS.—The
amendment made by subsection (b) shall apply to policies issued
on or after July 1, 1998.
(3) CONFORMING AMENDMENT.—The amendment made by
subsection (c) shall be effective as if included in the enactment
of the Health Insurance Portability and Accountability Act of
1996.
(e) TRANSITION PROVISIONS.—
(1) IN GENERAL.—If the Secretary of Health and Human
Services identifies a State as requiring a change to its statutes
or regulations to conform its regulatory program to the changes
made by this section, the State regulatory program shall not
be considered to be out of compliance with the requirements
of section 1882 of the Social Security Act due solely to failure
to make such change until the date specified in paragraph
(4).
(2) NAIC STANDARDS.—If, within 9 months after the date
of the enactment of this Act, the National Association of Insur-
ance Commissioners (in this subsection referred to as the
‘‘NAIC’’) modifies its NAIC Model Regulation relating to section
1882 of the Social Security Act (referred to in such section
as the 1991 NAIC Model Regulation, as modified pursuant
to section 171(m)(2) of the Social Security Act Amendments
of 1994 (Public Law 103–432) and as modified pursuant to
section 1882(d)(3)(A)(vi)(IV) of the Social Security Act, as added
by section 271(a) of the Health Insurance Portability and
Accountability Act of 1996 (Public Law 104–191) to conform
to the amendments made by this section, such revised regula-
tion incorporating the modifications shall be considered to be
the applicable NAIC model regulation (including the revised
NAIC model regulation and the 1991 NAIC Model Regulation)
for the purposes of such section.
(3) SECRETARY STANDARDS.—If the NAIC does not make
the modifications described in paragraph (2) within the period
specified in such paragraph, the Secretary of Health and
Human Services shall make the modifications described in such
paragraph and such revised regulation incorporating the modi-
fications shall be considered to be the appropriate Regulation
for the purposes of such section.
(4) DATE SPECIFIED.—
(A) IN GENERAL.—Subject to subparagraph (B), the date
specified in this paragraph for a State is the earlier of—
(i) the date the State changes its statutes or regu-
lations to conform its regulatory program to the
changes made by this section, or
(ii) 1 year after the date the NAIC or the Secretary
first makes the modifications under paragraph (2) or
(3), respectively.
(B) ADDITIONAL LEGISLATIVE ACTION REQUIRED.—In the
case of a State which the Secretary identifies as—
(i) requiring State legislation (other than legisla-
tion appropriating funds) to conform its regulatory pro-
gram to the changes made in this section, but
H. R. 2015—109
(ii) having a legislature which is not scheduled
to meet in 1999 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 July 1, 1999. For purposes of the previous
sentence, 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.
(f) CONFORMING BENEFITS TO CHANGES IN TERMINOLOGY FOR
HOSPITAL OUTPATIENT DEPARTMENT COST SHARING.—For purposes
of apply section 1882 of the Social Security Act (42 U.S.C. 1395ss)
and regulations referred to in subsection (e), copayment amounts
provided under section 1833(t)(5) of such Act with respect to hospital
outpatient department services shall be treated under medicare
supplemental policies in the same manner as coinsurance with
respect to such services.
SEC. 4032. ADDITION OF HIGH DEDUCTIBLE MEDIGAP POLICIES.
(a) IN GENERAL.—Section 1882(p) (42 U.S.C. 1395ss(p)) is
amended—
(1) in paragraph (2)(C), by inserting ‘‘plus the 2 plans
described in paragraph (11)(A)’’ after ‘‘exceed 10’’; and
(2) by adding at the end the following:
‘‘(11)(A) For purposes of paragraph (2), the benefit packages
described in this subparagraph are as follows:
‘‘(i) The benefit package classified as ‘F’ under the stand-
ards established by such paragraph, except that it has a high
deductible feature.
‘‘(ii) The benefit package classified as ‘J’ under the stand-
ards established by such paragraph, except that it has a high
deductible feature.
‘‘(B) For purposes of subparagraph (A), a high deductible feature
is one which—
‘‘(i) requires the beneficiary of the policy to pay annual
out-of-pocket expenses (other than premiums) in the amount
specified in subparagraph (C) before the policy begins payment
of benefits, and
‘‘(ii) covers 100 percent of covered out-of-pocket expenses
once such deductible has been satisfied in a year.
‘‘(C) The amount specified in this subparagraph—
‘‘(i) for 1998 and 1999 is $1,500, and
‘‘(ii) for a subsequent year, is the amount specified in
this subparagraph for the previous year increased by the
percentage increase in the Consumer Price Index for all urban
consumers (all items; U.S. city average) for the 12-month period
ending with August of the preceding year.
If any amount determined under clause (ii) is not a multiple of
$10, it shall be rounded to the nearest multiple of $10.’’.
(b) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by subsection
(a) shall take effect the date of the enactment of this Act.
(2) TRANSITION.—The provisions of section 4031(e) shall
apply with respect to this section in the same manner as
they apply to section 4031.
H. R. 2015—110
CHAPTER 5—TAX TREATMENT OF HOSPITALS PARTICI-
PATING IN PROVIDER-SPONSORED ORGANIZATIONS
SEC. 4041. TAX TREATMENT OF HOSPITALS WHICH PARTICIPATE IN
PROVIDER-SPONSORED ORGANIZATIONS.
(a) IN GENERAL.—Section 501 of the Internal Revenue Code
of 1986 (relating to exemption from tax on corporations, certain
trusts, etc.) is amended by redesignating subsection (o) as subsection
(p) and by inserting after subsection (n) the following new sub-
section:
‘‘(o) TREATMENT
OF HOSPITALS PARTICIPATING
IN PROVIDER-
SPONSORED ORGANIZATIONS.—An organization shall not fail to be
treated as organized and operated exclusively for a charitable pur-
pose for purposes of subsection (c)(3) solely because a hospital
which is owned and operated by such organization participates
in a provider-sponsored organization (as defined in section 1853(e)
of the Social Security Act), whether or not the provider-sponsored
organization is exempt from tax. For purposes of subsection (c)(3),
any person with a material financial interest in such a provider-
sponsored organization shall be treated as a private shareholder
or individual with respect to the hospital.’’
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
Subtitle B—Prevention Initiatives
SEC. 4101. SCREENING MAMMOGRAPHY.
(a) PROVIDING ANNUAL SCREENING MAMMOGRAPHY FOR WOMEN
OVER AGE 39.—Section 1834(c)(2)(A) (42 U.S.C. 1395m(c)(2)(A)) is
amended—
(1) in clause (iii), to read as follows:
‘‘(iii) In the case of a woman over 39 years of
age, payment may not be made under this part for
screening mammography performed within 11 months
following the month in which a previous screening
mammography was performed.’’; and
(2) by striking clauses (iv) and (v).
(b) WAIVER
OF DEDUCTIBLE.—The first sentence of section
1833(b) (42 U.S.C. 1395l(b)) is amended—
(1) by striking ‘‘and’’ before ‘‘(4)’’, and
(2) by inserting before the period at the end the following:
‘‘, and (5) such deductible shall not apply with respect to screen-
ing mammography (as described in section 1861(jj))’’.
(c) CONFORMING AMENDMENT.—Section 1834(c)(1)(C) (42 U.S.C.
1395m(c)(1)(C)) is amended by striking ‘‘, subject to the deductible
established under section 1833(b),’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to items and services furnished on or after January
1, 1998.
SEC. 4102. SCREENING PAP SMEAR AND PELVIC EXAMS.
(a) COVERAGE OF PELVIC EXAM; INCREASING FREQUENCY OF
COVERAGE OF PAP SMEAR.—Section 1861(nn) (42 U.S.C. 1395x(nn))
is amended—
(1) in the heading, by striking ‘‘Smear’’ and inserting
‘‘Smear; Screening Pelvic Exam’’;
H. R. 2015—111
(2) by inserting ‘‘or vaginal’’ after ‘‘cervical’’ each place
it appears;
(3) by striking ‘‘(nn)’’ and inserting ‘‘(nn)(1)’’;
(4) by striking ‘‘3 years’’ and all that follows and inserting
‘‘3 years, or during the preceding year in the case of a woman
described in paragraph (3).’’; and
(5) by adding at the end the following new paragraphs:
‘‘(2) The term ‘screening pelvic exam’ means a pelvic examina-
tion provided to a woman if the woman involved has not had
such an examination during the preceding 3 years, or during the
preceding year in the case of a woman described in paragraph
(3), and includes a clinical breast examination.
‘‘(3) A woman described in this paragraph is a woman who—
‘‘(A) is of childbearing age and has had a test described
in this subsection during any of the preceding 3 years that
indicated the presence of cervical or vaginal cancer or other
abnormality; or
‘‘(B) is at high risk of developing cervical or vaginal cancer
(as determined pursuant to factors identified by the Sec-
retary).’’.
(b) WAIVER
OF DEDUCTIBLE.—The first sentence of section
1833(b) (42 U.S.C. 1395l(b)), as amended by section 4101(b), is
amended—
(1) by striking ‘‘and’’ before ‘‘(5)’’, and
(2) by inserting before the period at the end the following:
‘‘, and (6) such deductible shall not apply with respect to screen-
ing pap smear and screening pelvic exam (as described in
section 1861(nn))’’.
(c) CONFORMING
AMENDMENTS.—Sections 1861(s)(14) and
1862(a)(1)(F) (42 U.S.C. 1395x(s)(14), 1395y(a)(1)(F)) are each
amended by inserting ‘‘and screening pelvic exam’’ after ‘‘screening
pap smear’’.
(d) PAYMENT
UNDER
PHYSICIAN
FEE
SCHEDULE.—Section
1848(j)(3) (42 U.S.C. 1395w–4(j)(3)) is amended by striking ‘‘and
(4)’’ and inserting ‘‘(4) and (14) (with respect to services described
in section 1861(nn)(2))’’.
(e) EFFECTIVE DATE.—The amendments made by this section
shall apply to items and services furnished on or after January
1, 1998.
SEC. 4103. PROSTATE CANCER SCREENING TESTS.
(a) COVERAGE.—Section 1861 (42 U.S.C. 1395x) is amended—
(1) in subsection (s)(2)—
(A) by striking ‘‘and’’ at the end of subparagraphs
(N) and (O), and
(B) by inserting after subparagraph (O) the following
new subparagraph:
‘‘(P) prostate cancer screening tests (as defined in sub-
section (oo)); and’’; and
(2) by adding at the end the following new subsection:
‘‘Prostate Cancer Screening Tests
‘‘(oo)(1) The term ‘prostate cancer screening test’ means a test
that consists of any (or all) of the procedures described in paragraph
(2) provided for the purpose of early detection of prostate cancer
to a man over 50 years of age who has not had such a test
during the preceding year.
H. R. 2015—112
‘‘(2) The procedures described in this paragraph are as follows:
‘‘(A) A digital rectal examination.
‘‘(B) A prostate-specific antigen blood test.
‘‘(C) For years beginning after 2002, such other procedures
as the Secretary finds appropriate for the purpose of early
detection of prostate cancer, taking into account changes in
technology and standards of medical practice, availability,
effectiveness, costs, and such other factors as the Secretary
considers appropriate.’’.
(b) PAYMENT
FOR PROSTATE-SPECIFIC ANTIGEN BLOOD TEST
UNDER CLINICAL DIAGNOSTIC LABORATORY TEST FEE SCHEDULES.—
Section 1833(h)(1)(A) (42 U.S.C. 1395l(h)(1)(A)) is amended by
inserting after ‘‘laboratory tests’’ the following: ‘‘(including prostate
cancer screening tests under section 1861(oo) consisting of prostate-
specific antigen blood tests)’’.
(c) CONFORMING
AMENDMENT.—Section 1862(a) (42 U.S.C.
1395y(a)) is amended—
(1) in paragraph (1)—
(A) in subparagraph (E), by striking ‘‘and’’ at the end,
(B) in subparagraph (F), by striking the semicolon
at the end and inserting ‘‘, and’’, and
(C) by adding at the end the following new subpara-
graph:
‘‘(G) in the case of prostate cancer screening tests (as
defined in section 1861(oo)), which are performed more fre-
quently than is covered under such section;’’; and
(2) in paragraph (7), by striking ‘‘paragraph (1)(B) or under
paragraph (1)(F)’’ and inserting ‘‘subparagraphs (B), (F), or
(G) of paragraph (1)’’.
(d) PAYMENT
UNDER
PHYSICIAN
FEE
SCHEDULE.—Section
1848(j)(3) (42 U.S.C. 1395w–4(j)(3)), as amended by section 4102,
is amended by inserting ‘‘, (2)(P) (with respect to services described
in subparagraphs (A) and (C) of section 1861(oo)(2),’’ after ‘‘(2)(G)’’
(e) EFFECTIVE DATE.—The amendments made by this section
shall apply to items and services furnished on or after January
1, 2000.
SEC. 4104. COVERAGE OF COLORECTAL SCREENING.
(a) COVERAGE.—
(1) IN GENERAL.—Section 1861 (42 U.S.C. 1395x), as amend-
ed by section 4103(a), is amended—
(A) in subsection (s)(2)—
(i) by striking ‘‘and’’ at the end of subparagraph
(P);
(ii) by adding ‘‘and’’ at the end of subparagraph
(Q); and
(iii) by adding at the end the following new
subparagraph:
‘‘(R) colorectal cancer screening tests (as defined in sub-
section (pp)); and’’; and
(B) by adding at the end the following new subsection:
‘‘Colorectal Cancer Screening Tests
‘‘(pp)(1) The term ‘colorectal cancer screening test’ means any
of the following procedures furnished to an individual for the pur-
pose of early detection of colorectal cancer:
‘‘(A) Screening fecal-occult blood test.
H. R. 2015—113
‘‘(B) Screening flexible sigmoidoscopy.
‘‘(C) In the case of an individual at high risk for colorectal
cancer, screening colonoscopy.
‘‘(D) Such other tests or procedures, and modifications to
tests and procedures under this subsection, with such frequency
and payment limits, as the Secretary determines appropriate,
in consultation with appropriate organizations.
‘‘(2) In paragraph (1)(C), an ‘individual at high risk for colorectal
cancer’ is an individual who, because of family history, prior experi-
ence of cancer or precursor neoplastic polyps, a history of chronic
digestive disease condition (including inflammatory bowel disease,
Crohn’s Disease, or ulcerative colitis), the presence of any appro-
priate recognized gene markers for colorectal cancer, or other pre-
disposing factors, faces a high risk for colorectal cancer.’’.
(2) DEADLINE FOR PUBLICATION OF DETERMINATION ON COV-
ERAGE OF SCREENING BARIUM ENEMA.—Not later than the ear-
lier of the date that is January 1, 1998, or 90 days after
the date of the enactment of this Act, the Secretary of Health
and Human Services shall publish notice in the Federal Reg-
ister with respect to the determination under paragraph (1)(D)
of section 1861(pp) of the Social Security Act (42 U.S.C.
1395x(pp)), as added by paragraph (1), on the coverage of
a screening barium enema as a colorectal cancer screening
test under such section.
(b) FREQUENCY LIMITS AND PAYMENT.—
(1) IN GENERAL.—Section 1834 (42 U.S.C. 1395m) is amend-
ed by inserting after subsection (c) the following new subsection:
‘‘(d) FREQUENCY LIMITS AND PAYMENT FOR COLORECTAL CANCER
SCREENING TESTS.—
‘‘(1) SCREENING FECAL-OCCULT BLOOD TESTS.—
‘‘(A) PAYMENT
AMOUNT.—The payment amount for
colorectal cancer screening tests consisting of screening
fecal-occult blood tests is equal to the payment amount
established for diagnostic fecal-occult blood tests under sec-
tion 1833(h).
‘‘(B) FREQUENCY
LIMIT.—No payment may be made
under this part for a colorectal cancer screening test
consisting of a screening fecal-occult blood test—
‘‘(i) if the individual is under 50 years of age;
or
‘‘(ii) if the test is performed within the 11 months
after a previous screening fecal-occult blood test.
‘‘(2) SCREENING FLEXIBLE SIGMOIDOSCOPIES.—
‘‘(A) FEE SCHEDULE.—With respect to colorectal cancer
screening 
tests 
consisting 
of 
screening 
flexible
sigmoidoscopies, payment under section 1848 shall be
consistent with payment under such section for similar
or related services.
‘‘(B) PAYMENT LIMIT.—In the case of screening flexible
sigmoidoscopy services, payment under this part shall not
exceed such amount as the Secretary specifies, based upon
the rates recognized for diagnostic flexible sigmoidoscopy
services.
‘‘(C) FACILITY PAYMENT LIMIT.—
‘‘(i) IN
GENERAL.—Notwithstanding subsections
(i)(2)(A) and (t) of section 1833, in the case of screening
H. R. 2015—114
flexible sigmoidoscopy services furnished on or after
January 1, 1999, that—
‘‘(I) in accordance with regulations, may be
performed in an ambulatory surgical center and
for which the Secretary permits ambulatory sur-
gical center payments under this part, and
‘‘(II) are performed in an ambulatory surgical
center or hospital outpatient department,
payment under this part shall be based on the lesser
of the amount under the fee schedule that would apply
to such services if they were performed in a hospital
outpatient department in an area or the amount under
the fee schedule that would apply to such services
if they were performed in an ambulatory surgical cen-
ter in the same area.
‘‘(ii) LIMITATION
ON
DEDUCTIBLE
AND
COINSUR-
ANCE.—Notwithstanding any other provision of this
title, in the case of a beneficiary who receives the
services described in clause (i)—
‘‘(I) in computing the amount of any applicable
deductible or copayment, the computation of such
deductible or coinsurance shall be based upon the
fee schedule under which payment is made for
the services, and
‘‘(II) the amount of such coinsurance is equal
to 25 percent of the payment amount under the
fee schedule described in subclause (I).
‘‘(D) SPECIAL RULE FOR DETECTED LESIONS.—If during
the course of such screening flexible sigmoidoscopy, a lesion
or growth is detected which results in a biopsy or removal
of the lesion or growth, payment under this part shall
not be made for the screening flexible sigmoidoscopy but
shall be made for the procedure classified as a flexible
sigmoidoscopy with such biopsy or removal.
‘‘(E) FREQUENCY
LIMIT.—No payment may be made
under this part for a colorectal cancer screening test
consisting of a screening flexible sigmoidoscopy—
‘‘(i) if the individual is under 50 years of age;
or
‘‘(ii) if the procedure is performed within the 47
months 
after 
a 
previous 
screening 
flexible
sigmoidoscopy.
‘‘(3) SCREENING COLONOSCOPY FOR INDIVIDUALS AT HIGH
RISK FOR COLORECTAL CANCER.—
‘‘(A) FEE SCHEDULE.—With respect to colorectal cancer
screening test consisting of a screening colonoscopy for
individuals at high risk for colorectal cancer (as defined
in section 1861(pp)(2)), payment under section 1848 shall
be consistent with payment amounts under such section
for similar or related services.
‘‘(B) PAYMENT
LIMIT.—In the case of screening
colonoscopy services, payment under this part shall not
exceed such amount as the Secretary specifies, based upon
the rates recognized for diagnostic colonoscopy services.
‘‘(C) FACILITY PAYMENT LIMIT.—
‘‘(i) IN
GENERAL.—Notwithstanding subsections
(i)(2)(A) and (t) of section 1833, in the case of screening
H. R. 2015—115
colonoscopy services furnished on or after January 1,
1999, that are performed in an ambulatory surgical
center or a hospital outpatient department, payment
under this part shall be based on the lesser of the
amount under the fee schedule that would apply to
such services if they were performed in a hospital
outpatient department in an area or the amount under
the fee schedule that would apply to such services
if they were performed in an ambulatory surgical cen-
ter in the same area.
‘‘(ii) LIMITATION
ON
DEDUCTIBLE
AND
COINSUR-
ANCE.—Notwithstanding any other provision of this
title, in the case of a beneficiary who receives the
services described in clause (i)—
‘‘(I) in computing the amount of any applicable
deductible or coinsurance, the computation of such
deductible or coinsurance shall be based upon the
fee schedule under which payment is made for
the services, and
‘‘(II) the amount of such coinsurance is equal
to 25 percent of the payment amount under the
fee schedule described in subclause (I).
‘‘(D) SPECIAL RULE FOR DETECTED LESIONS.—If during
the course of such screening colonoscopy, a lesion or growth
is detected which results in a biopsy or removal of the
lesion or growth, payment under this part shall not be
made for the screening colonoscopy but shall be made for
the procedure classified as a colonoscopy with such biopsy
or removal.
‘‘(E) FREQUENCY
LIMIT.—No payment may be made
under this part for a colorectal cancer screening test
consisting of a screening colonoscopy for individuals at
high risk for colorectal cancer if the procedure is performed
within 
the 
months 
after 
a 
previous 
screening
colonoscopy.’’.
(c) CONFORMING AMENDMENTS.—(1) Paragraphs (1)(D) and
(2)(D) of section 1833(a) (42 U.S.C. 1395l(a)) are each amended
by inserting ‘‘or section 1834(d)(1)’’ after ‘‘subsection (h)(1)’’.
(2) Section 1833(h)(1)(A) (42 U.S.C. 1395l(h)(1)(A)) is amended
by striking ‘‘The Secretary’’ and inserting ‘‘Subject to section
1834(d)(1), the Secretary’’.
(3) Section 1862(a) (42 U.S.C. 1395y(a)), as amended by section
4103(c), is amended—
(A) in paragraph (1)—
(i) in subparagraph (F), by striking ‘‘and’’ at the end,
(ii) in subparagraph (G), by striking the semicolon
at the end and inserting ‘‘, and’’, and
(iii) by adding at the end the following new subpara-
graph:
‘‘(H) in the case of colorectal cancer screening tests, which
are performed more frequently than is covered under section
1834(d);’’; and
(B) in paragraph (7), by striking ‘‘or (G)’’ and inserting
‘‘(G), or (H)’’.
(d) PAYMENT
UNDER
PHYSICIAN
FEE
SCHEDULE.—Section
1848(j)(3) (42 U.S.C. 1395w–4(j)(3)), as amended by sections 4102
and 4103, is amended by inserting ‘‘(2)(R) (with respect to services
H. R. 2015—116
described in subparagraphs (B) , (C), and (D) of section
1861(pp)(1)),’’ before ‘‘(3)’’.
(e) EFFECTIVE DATE.—The amendments made by this section
shall apply to items and services furnished on or after January
1, 1998.
SEC. 4105. DIABETES SELF-MANAGEMENT BENEFITS.
(a) COVERAGE
OF DIABETES OUTPATIENT SELF-MANAGEMENT
TRAINING SERVICES.—
(1) IN GENERAL.—Section 1861 (42 U.S.C. 1395x), as amend-
ed by sections 4103(a) and 4104(a), is amended—
(A) in subsection (s)(2)—
(i) by striking ‘‘and’’ at the end of subparagraph
(Q);
(ii) by adding ‘‘and’’ at the end of subparagraph
(R); and
(iii) by adding at the end the following new
subparagraph:
‘‘(S) diabetes outpatient self-management training services
(as defined in subsection (qq)); and’’; and
(B) by adding at the end the following new subsection:
‘‘Diabetes Outpatient Self-Management Training Services
‘‘(qq)(1) The term ‘diabetes outpatient self-management training
services’ means educational and training services furnished (at
such times as the Secretary determines appropriate) to an individ-
ual with diabetes by a certified provider (as described in paragraph
(2)(A)) in an outpatient setting by an individual or entity who
meets the quality standards described in paragraph (2)(B), but
only if the physician who is managing the individual’s diabetic
condition certifies that such services are needed under a comprehen-
sive plan of care related to the individual’s diabetic condition to
ensure therapy compliance or to provide the individual with nec-
essary skills and knowledge (including skills related to the self-
administration of injectable drugs) to participate in the manage-
ment of the individual’s condition.
‘‘(2) In paragraph (1)—
‘‘(A) a ‘certified provider’ is a physician, or other individual
or entity designated by the Secretary, that, in addition to
providing diabetes outpatient self-management training serv-
ices, provides other items or services for which payment may
be made under this title; and
‘‘(B) a physician, or such other individual or entity, meets
the quality standards described in this paragraph if the physi-
cian, or individual or entity, meets quality standards estab-
lished by the Secretary, except that the physician or other
individual or entity shall be deemed to have met such standards
if the physician or other individual or entity meets applicable
standards originally established by the National Diabetes
Advisory Board and subsequently revised by organizations who
participated in the establishment of standards by such Board,
or is recognized by an organization that represents individuals
(including individuals under this title) with diabetes as meeting
standards for furnishing the services.’’.
(2) PAYMENT UNDER PHYSICIAN FEE SCHEDULE.—Section
1848(j)(3) (42 U.S.C. 1395w–4(j)(3)) as amended in sections
H. R. 2015—117
4102, 4103, and 4104, is amended by inserting ‘‘(2)(S),’’ before
‘‘(3),’’.
(3) CONSULTATION WITH ORGANIZATIONS IN ESTABLISHING
PAYMENT AMOUNTS FOR SERVICES PROVIDED BY PHYSICIANS.—
In establishing payment amounts under section 1848 of the
Social Security Act for physicians’ services consisting of diabetes
outpatient self-management training services, the Secretary of
Health and Human Services shall consult with appropriate
organizations, 
including 
such 
organizations 
representing
individuals or medicare beneficiaries with diabetes.
(b) BLOOD-TESTING STRIPS FOR INDIVIDUALS WITH DIABETES.—
(1) INCLUDING STRIPS AND MONITORS AS DURABLE MEDICAL
EQUIPMENT.—The first sentence of section 1861(n) (42 U.S.C.
1395x(n)) is amended by inserting before the semicolon the
following: ‘‘, and includes blood-testing strips and blood glucose
monitors for individuals with diabetes without regard to
whether the individual has Type I or Type II diabetes or
to the individual’s use of insulin (as determined under stand-
ards established by the Secretary in consultation with the
appropriate organizations)’’.
(2) 10 PERCENT
REDUCTION
IN
PAYMENTS
FOR
TESTING
STRIPS.—Section 1834(a)(2)(B)(iv) (42 U.S.C. 1395m(a)(2)(B)(iv))
is amended by adding before the period the following: ‘‘(reduced
by 10 percent, in the case of a blood glucose testing strip
furnished after 1997 for an individual with diabetes)’’.
(c) ESTABLISHMENT OF OUTCOME MEASURES FOR BENEFICIARIES
WITH DIABETES.—
(1) IN
GENERAL.—The Secretary of Health and Human
Services, in consultation with appropriate organizations, shall
establish outcome measures, including glysolated hemoglobin
(past 90-day average blood sugar levels), for purposes of
evaluating the improvement of the health status of medicare
beneficiaries with diabetes mellitus.
(2) RECOMMENDATIONS FOR MODIFICATIONS TO SCREENING
BENEFITS.—Taking into account information on the health sta-
tus of medicare beneficiaries with diabetes mellitus as meas-
ured under the outcome measures established under paragraph
(1), the Secretary shall from time to time submit recommenda-
tions to Congress regarding modifications to the coverage of
services for such beneficiaries under the medicare program.
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to items and
services furnished on or after July 1, 1998.
(2) TESTING STRIPS.—The amendment made by subsection
(b)(2) shall apply with respect to blood glucose testing strips
furnished on or after January 1, 1998.
SEC. 4106. STANDARDIZATION OF MEDICARE COVERAGE OF BONE
MASS MEASUREMENTS.
(a) IN GENERAL.—Section 1861 (42 U.S.C. 1395x), as amended
by sections 4103(a), 4104(a), and 4105(a), is amended—
(1) in subsection (s)—
(A) in paragraph (12)(C), by striking ‘‘and’’ at the end,
(B) by striking the period at the end of paragraph
(14) and inserting ‘‘; and’’,
H. R. 2015—118
(C) by redesignating paragraphs (15) and (16) as para-
graphs (16) and (17), respectively, and
(D) by inserting after paragraph (14) the following
new paragraph:
‘‘(15) bone mass measurement (as defined in subsection
(rr)).’’; and
(2) by inserting after subsection (qq) the following new
subsection:
‘‘Bone Mass Measurement
‘‘(rr)(1) The term ‘bone mass measurement’ means a radiologic
or radioisotopic procedure or other procedure approved by the Food
and Drug Administration performed on a qualified individual (as
defined in paragraph (2)) for the purpose of identifying bone mass
or detecting bone loss or determining bone quality, and includes
a physician’s interpretation of the results of the procedure.
‘‘(2) For purposes of this subsection, the term ‘qualified individ-
ual’ means an individual who is (in accordance with regulations
prescribed by the Secretary)—
‘‘(A) an estrogen-deficient woman at clinical risk for
osteoporosis;
‘‘(B) an individual with vertebral abnormalities;
‘‘(C) an individual receiving long-term glucocorticoid steroid
therapy;
‘‘(D) an individual with primary hyperparathyroidism; or
‘‘(E) an individual being monitored to assess the response
to or efficacy of an approved osteoporosis drug therapy.
‘‘(3) The Secretary shall establish such standards regarding
the frequency with which a qualified individual shall be eligible
to be provided benefits for bone mass measurement under this
title.’’.
(b) PAYMENT
UNDER
PHYSICIAN
FEE
SCHEDULE.—Section
1848(j)(3) (42 U.S.C. 1395w–4(j)(3)), as amended by sections 4102,
4103, 4104 and 4105, is amended—
(1) by striking ‘‘(4) and (14)’’ and inserting ‘‘(4), (14)’’ and
(2) by inserting ‘‘and (15)’’ after ‘‘1861(nn)(2))’’.
(c) 
CONFORMING
AMENDMENTS.—Sections 
1864(a),
1902(a)(9)(C), 
and 
1915(a)(1)(B)(ii)(I) 
(42 
U.S.C. 
1395aa(a),
1396a(a)(9)(C), and 1396n(a)(1)(B)(ii)(I)) are amended by striking
‘‘paragraphs (15) and (16)’’ each place it appears and inserting
‘‘paragraphs (16) and (17)’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to bone mass measurements performed on or after
July 1, 1998.
SEC. 4107. VACCINES OUTREACH EXPANSION.
(a) EXTENSION OF INFLUENZA AND PNEUMOCOCCAL VACCINATION
CAMPAIGN.—In order to increase utilization of pneumococcal and
influenza vaccines in medicare beneficiaries, the Influenza and
Pneumococcal Vaccination Campaign carried out by the Health
Care Financing Administration in conjunction with the Centers
for Disease Control and Prevention and the National Coalition
for Adult Immunization, is extended until the end of fiscal year
2002.
(b) AUTHORIZATION
OF
APPROPRIATION.—There are hereby
authorized to be appropriated for each of fiscal years 1998 through
2002, $8,000,000 for the Campaign described in subsection (a).
H. R. 2015—119
Of the amount so authorized to be appropriated in each fiscal
year, 60 percent of the amount so appropriated shall be payable
from the Federal Hospital Insurance Trust Fund, and 40 percent
shall be payable from the Federal Supplementary Medical Insurance
Trust Fund.
SEC. 4108. STUDY ON PREVENTIVE AND ENHANCED BENEFITS.
(a) STUDY.—The Secretary of Health and Human Services shall
request the National Academy of Sciences, and as appropriate in
conjunction with the United States Preventive Services Task Force,
to analyze the expansion or modification of preventive or other
benefits provided to medicare beneficiaries under title XVIII of
the Social Security Act. The analysis shall consider both the short
term and long term benefits, and costs to the medicare program,
of such expansion or modification.
(b) REPORT.—
(1) INITIAL REPORT.—Not later than 2 years after the date
of the enactment of this Act, the Secretary shall submit a
report on the findings of the analysis conducted under sub-
section (a) to the Committee on Ways and Means and the
Committee on Commerce of the House of Representatives and
the Committee on Finance of the Senate.
(2) CONTENTS.—Such report shall include specific findings
with respect to coverage of at least the following benefits:
(A) Nutrition therapy services, including parenteral
and enteral nutrition and including the provision of such
services by a registered dietitian.
(B) Skin cancer screening.
(C) Medically necessary dental care.
(D) Routine patient care costs for beneficiaries enrolled
in approved clinical trial programs.
(E) Elimination of time limitation for coverage of
immunosuppressive drugs for transplant patients.
(3) FUNDING.—From funds appropriated to the Department
of Health and Human Services for fiscal years 1998 and 1999,
the Secretary shall provide for such funding as the Secretary
determines necessary for the conduct of the study by the
National Academy of Sciences under this section.
Subtitle C—Rural Initiatives
SEC. 4201. MEDICARE RURAL HOSPITAL FLEXIBILITY PROGRAM.
(a) MEDICARE RURAL HOSPITAL FLEXIBILITY PROGRAM.—Section
1820 (42 U.S.C. 1395i–4) is amended to read as follows:
‘‘MEDICARE RURAL HOSPITAL FLEXIBILITY PROGRAM
‘‘SEC. 1820. (a) ESTABLISHMENT.—Any State that submits an
application in accordance with subsection (b) may establish a medi-
care rural hospital flexibility program described in subsection (c).
‘‘(b) APPLICATION.—A State may establish a medicare rural
hospital flexibility program described in subsection (c) if the State
submits to the Secretary at such time and in such form as the
Secretary may require an application containing—
‘‘(1) assurances that the State—
‘‘(A) has developed, or is in the process of developing,
a State rural health care plan that—
H. R. 2015—120
‘‘(i) provides for the creation of 1 or more rural
health networks (as defined in subsection (d)) in the
State;
‘‘(ii) promotes regionalization of rural health serv-
ices in the State; and
‘‘(iii) improves access to hospital and other health
services for rural residents of the State; and
‘‘(B) has developed the rural health care plan described
in subparagraph (A) in consultation with the hospital
association of the State, rural hospitals located in the State,
and the State Office of Rural Health (or, in the case of
a State in the process of developing such plan, that assures
the Secretary that the State will consult with its State
hospital association, rural hospitals located in the State,
and the State Office of Rural Health in developing such
plan);
‘‘(2) assurances that the State has designated (consistent
with the rural health care plan described in paragraph (1)(A)),
or is in the process of so designating, rural nonprofit or public
hospitals or facilities located in the State as critical access
hospitals; and
‘‘(3) such other information and assurances as the Secretary
may require.
‘‘(c) 
MEDICARE
RURAL
HOSPITAL
FLEXIBILITY
PROGRAM
DESCRIBED.—
‘‘(1) IN GENERAL.—A State that has submitted an applica-
tion in accordance with subsection (b), may establish a medicare
rural hospital flexibility program that provides that—
‘‘(A) the State shall develop at least 1 rural health
network (as defined in subsection (d)) in the State; and
‘‘(B) at least 1 facility in the State shall be designated
as a critical access hospital in accordance with paragraph
(2).
‘‘(2) STATE DESIGNATION OF FACILITIES.—
‘‘(A) IN GENERAL.—A State may designate 1 or more
facilities as a critical access hospital in accordance with
subparagraph (B).
‘‘(B) CRITERIA FOR DESIGNATION AS CRITICAL ACCESS
HOSPITAL.—A State may designate a facility as a critical
access hospital if the facility—
‘‘(i) is a nonprofit or public hospital and is located
in a county (or equivalent unit of local government)
in a rural area (as defined in section 1886(d)(2)(D))
that—
‘‘(I) is located more than a 35-mile drive (or,
in the case of mountainous terrain or in areas
with only secondary roads available, a 15-mile
drive) from a hospital, or another facility described
in this subsection; or
‘‘(II) is certified by the State as being a nec-
essary provider of health care services to residents
in the area;
‘‘(ii) makes available 24-hour emergency care serv-
ices that a State determines are necessary for ensuring
access to emergency care services in each area served
by a critical access hospital;
H. R. 2015—121
‘‘(iii) provides not more than 15 (or, in the case
of a facility under an agreement described in subsection
(f), 25) acute care inpatient beds (meeting such stand-
ards as the Secretary may establish) for providing
inpatient care for a period not to exceed 96 hours
(unless a longer period is required because transfer
to a hospital is precluded because of inclement weather
or other emergency conditions), except that a peer
review organization or equivalent entity may, on
request, waive the 96-hour restriction on a case-by-
case basis;
‘‘(iv) meets such staffing requirements as would
apply under section 1861(e) to a hospital located in
a rural area, except that—
‘‘(I) the facility need not meet hospital stand-
ards relating to the number of hours during a
day, or days during a week, in which the facility
must be open and fully staffed, except insofar as
the facility is required to make available emer-
gency care services as determined under clause
(ii) and must have nursing services available on
a 24-hour basis, but need not otherwise staff the
facility except when an inpatient is present;
‘‘(II) the facility may provide any services
otherwise required to be provided by a full-time,
on site dietitian, pharmacist, laboratory technician,
medical technologist, and radiological technologist
on a part-time, off site basis under arrangements
as defined in section 1861(w)(1); and
‘‘(III) the inpatient care described in clause
(iii) may be provided by a physician assistant,
nurse practitioner, or clinical nurse specialist sub-
ject to the oversight of a physician who need not
be present in the facility; and
‘‘(v) 
meets 
the 
requirements 
of 
section
1861(aa)(2)(I).
‘‘(d) DEFINITION OF RURAL HEALTH NETWORK.—
‘‘(1) IN GENERAL.—In this section, the term ‘rural health
network’ means, with respect to a State, an organization
consisting of—
‘‘(A) at least 1 facility that the State has designated
or plans to designate as a critical access hospital; and
‘‘(B) at least 1 hospital that furnishes acute care serv-
ices.
‘‘(2) AGREEMENTS.—
‘‘(A) IN GENERAL.—Each critical access hospital that
is a member of a rural health network shall have an
agreement with respect to each item described in subpara-
graph (B) with at least 1 hospital that is a member of
the network.
‘‘(B) ITEMS DESCRIBED.—The items described in this
subparagraph are the following:
‘‘(i) Patient referral and transfer.
‘‘(ii) The development and use of communications
systems including (where feasible)—
‘‘(I) telemetry systems; and
H. R. 2015—122
‘‘(II) systems for electronic sharing of patient
data.
‘‘(iii) The provision of emergency and non-emer-
gency transportation among the facility and the hos-
pital.
‘‘(C) CREDENTIALING AND QUALITY ASSURANCE.—Each
critical access hospital that is a member of a rural health
network shall have an agreement with respect to
credentialing and quality assurance with at least—
‘‘(i) 1 hospital that is a member of the network;
‘‘(ii) 1 peer review organization or equivalent
entity; or
‘‘(iii) 1 other appropriate and qualified entity
identified in the State rural health care plan.
‘‘(e) CERTIFICATION BY THE SECRETARY.—The Secretary shall
certify a facility as a critical access hospital if the facility—
‘‘(1) is located in a State that has established a medicare
rural hospital flexibility program in accordance with subsection
(c);
‘‘(2) is designated as a critical access hospital by the State
in which it is located; and
‘‘(3) meets such other criteria as the Secretary may require.
‘‘(f) PERMITTING MAINTENANCE OF SWING BEDS.—Nothing in
this section shall be construed to prohibit a State from designating
or the Secretary from certifying a facility as a critical access hospital
solely because, at the time the facility applies to the State for
designation as a critical access hospital, there is in effect an agree-
ment between the facility and the Secretary under section 1883
under which the facility’s inpatient hospital facilities are used for
the provision of extended care services, so long as the total number
of beds that may be used at any time for the furnishing of either
such services or acute care inpatient services does not exceed 25
beds and the number of beds used at any time for acute care
inpatient services does not exceed 15 beds. For purposes of the
previous sentence, any bed of a unit of the facility that is licensed
as a distinct-part skilled nursing facility at the time the facility
applies to the State for designation as a critical access hospital
shall not be counted.
‘‘(g) GRANTS.—
‘‘(1) MEDICARE
RURAL
HOSPITAL
FLEXIBILITY
PROGRAM.—
The Secretary may award grants to States that have submitted
applications in accordance with subsection (b) for—
‘‘(A) engaging in activities relating to planning and
implementing a rural health care plan;
‘‘(B) engaging in activities relating to planning and
implementing rural health networks; and
‘‘(C) designating facilities as critical access hospitals.
‘‘(2) RURAL EMERGENCY MEDICAL SERVICES.—
‘‘(A) IN GENERAL.—The Secretary may award grants
to States that have submitted applications in accordance
with subparagraph (B) for the establishment or expansion
of a program for the provision of rural emergency medical
services.
‘‘(B) APPLICATION.—An application is in accordance
with this subparagraph if the State submits to the Sec-
retary at such time and in such form as the Secretary
may require an application containing the assurances
H. R. 2015—123
described in subparagraphs (A)(ii), (A)(iii), and (B) of sub-
section (b)(1) and paragraph (3) of that subsection.
‘‘(h) GRANDFATHERING OF CERTAIN FACILITIES.—
‘‘(1) IN GENERAL.—Any medical assistance facility operating
in Montana and any rural primary care hospital designated
by the Secretary under this section prior to the date of the
enactment of the Balanced Budget Act of 1997 shall be deemed
to have been certified by the Secretary under subsection (e)
as a critical access hospital if such facility or hospital is other-
wise eligible to be designated by the State as a critical access
hospital under subsection (c).
‘‘(2) CONTINUATION OF MEDICAL ASSISTANCE FACILITY AND
RURAL PRIMARY CARE HOSPITAL TERMS.—Notwithstanding any
other provision of this title, with respect to any medical assist-
ance facility or rural primary care hospital described in para-
graph (1), any reference in this title to a ‘critical access hospital’
shall be deemed to be a reference to a ‘medical assistance
facility’ or ‘rural primary care hospital’.
‘‘(i) WAIVER OF CONFLICTING PART A PROVISIONS.—The Sec-
retary is authorized to waive such provisions of this part and
part D as are necessary to conduct the program established under
this section.
‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There are authorized
to be appropriated from the Federal Hospital Insurance Trust Fund
for making grants to all States under subsection (g), $25,000,000
in each of the fiscal years 1998 through 2002.’’.
(b) REPORT
ON ALTERNATIVE
TO 96-HOUR RULE.—Not later
than June 1, 1998, the Secretary of Health and Human Services
shall submit to Congress a report on the feasibility of, and adminis-
trative requirements necessary to establish an alternative for cer-
tain medical diagnoses (as determined by the Secretary) to the
96-hour limitation for inpatient care in critical access hospitals
required by section 1820(c)(2)(B)(iii) of the Social Security Act (42
U.S.C. 1395i–4(c)(2)(B)(iii)), as added by subsection (a) of this sec-
tion.
(c) CONFORMING AMENDMENTS RELATING TO RURAL PRIMARY
CARE HOSPITALS AND CRITICAL ACCESS HOSPITALS.—
(1) IN GENERAL.—Title XI of the Social Security Act (42
U.S.C. 1301 et seq.) and title XVIII of that Act (42 U.S.C.
1395 et seq.) are each amended by striking ‘‘rural primary
care’’ each place it appears and inserting ‘‘critical access’’.
(2) DEFINITIONS.—Section 1861(mm) of the Social Security
Act (42 U.S.C. 1395x(mm)) is amended to read as follows:
‘‘CRITICAL ACCESS HOSPITAL; CRITICAL ACCESS HOSPITAL SERVICES
‘‘(mm)(1) The term ‘critical access hospital’ means a facility
certified by the Secretary as a critical access hospital under section
1820(e).
‘‘(2) The term ‘inpatient critical access hospital services’ means
items and services, furnished to an inpatient of a critical access
hospital by such facility, that would be inpatient hospital services
if furnished to an inpatient of a hospital by a hospital.
‘‘(3) The term ‘outpatient critical access hospital services’ means
medical and other health services furnished by a critical access
hospital on an outpatient basis.’’.
(3) PART A PAYMENT.—Section 1814 of the Social Security
Act (42 U.S.C. 1395f) is amended—
H. R. 2015—124
(A) in subsection (a)(8), by striking ‘‘72’’ and inserting
‘‘96’’; and
(B) by amending subsection (l) to read as follows:
‘‘Payment for Inpatient Critical Access Hospital Services
‘‘(l) The amount of payment under this part for inpatient critical
access hospital services is the reasonable costs of the critical access
hospital in providing such services.’’.
(4) PAYMENT CONTINUED TO DESIGNATED EACHS.—Section
1886(d)(5)(D) 
of 
the 
Social 
Security 
Act 
(42 
U.S.C.
1395ww(d)(5)(D)) is amended—
(A) in clause (iii)(III), by inserting ‘‘as in effect on
September 30, 1997’’ before the period at the end; and
(B) in clause (v)—
(i) by inserting ‘‘as in effect on September 30,
1997’’ after ‘‘1820(i)(1)’’; and
(ii) by striking ‘‘1820(g)’’ and inserting ‘‘1820(d)’’.
(5) PART B PAYMENT.—Section 1834(g) of the Social Security
Act (42 U.S.C. 1395m(g)) is amended to read as follows:
‘‘(g) PAYMENT
FOR OUTPATIENT CRITICAL ACCESS HOSPITAL
SERVICES.—The amount of payment under this part for outpatient
critical access hospital services is the reasonable costs of the critical
access hospital in providing such services.’’.
(6) TRANSITION FOR MAF.—
(A) IN GENERAL.—The Secretary of Health and Human
Services shall provide for an appropriate transition for
a facility that, as of the date of the enactment of this
Act, operated as a limited service rural hospital under
a demonstration described in section 4008(i)(1) of the Omni-
bus Budget Reconciliation Act of 1990 (42 U.S.C. 1395b–
1 note) from such demonstration to the program established
under subsection (a). At the conclusion of the transition
period described in subparagraph (B), the Secretary shall
end such demonstration.
(B) TRANSITION PERIOD DESCRIBED.—
(i) INITIAL
PERIOD.—Subject to clause (ii), the
transition period described in this subparagraph is the
period beginning on the date of the enactment of this
Act and ending on October 1, 1998.
(ii) EXTENSION.—If the Secretary determines that
the transition is not complete as of October 1, 1998,
the Secretary shall provide for an appropriate exten-
sion of the transition period.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to services furnished on or after October 1, 1997.
SEC. 4202. PROHIBITING DENIAL OF REQUEST BY RURAL REFERRAL
CENTERS FOR RECLASSIFICATION ON BASIS OF COM-
PARABILITY OF WAGES.
(a) 
IN
GENERAL.—Section 
1886(d)(10)(D) 
(42 
U.S.C.
1395ww(d)(10)(D)) is amended—
(1) by redesignating clause (iii) as clause (iv); and
(2) by inserting after clause (ii) the following new clause:
‘‘(iii) Under the guidelines published by the Secretary under
clause (i), in the case of a hospital which has ever been classified
by the Secretary as a rural referral center under paragraph (5)(C),
the Board may not reject the application of the hospital under
H. R. 2015—125
this paragraph on the basis of any comparison between the average
hourly wage of the hospital and the average hourly wage of hospitals
in the area in which it is located.’’.
(b) CONTINUING TREATMENT OF PREVIOUSLY DESIGNATED CEN-
TERS.—
(1) IN GENERAL.—Any hospital classified as a rural referral
center by the Secretary of Health and Human Services under
section 1886(d)(5)(C) of the Social Security Act for fiscal year
1991 shall be classified as such a rural referral center for
fiscal year 1998 and each subsequent fiscal year.
(2) 
BUDGET
NEUTRALITY.—The 
provisions 
of 
section
1886(d)(8)(D) of the Social Security Act shall apply to reclassi-
fications made pursuant to paragraph (1) in the same manner
as such provisions apply to a reclassification under section
1886(d)(10) of such Act.
SEC. 4203. HOSPITAL GEOGRAPHIC RECLASSIFICATION PERMITTED
FOR PURPOSES OF DISPROPORTIONATE SHARE PAY-
MENT ADJUSTMENTS.
(a) IN GENERAL.—For the period described in subsection (c),
the Medicare Geographic Classification Review Board shall consider
the application under section 1886(d)(10)(C)(i) of the Social Security
Act (42 U.S.C. 1395ww(d)(10)(C)(i)) of a hospital described in
1886(d)(1)(B) of such Act (42 U.S.C. 1395ww(d)(1)(B)) to change
the hospital’s geographic classification for purposes of determining
for a fiscal year eligibility for and amount of additional payment
amounts under section 1886(d)(5)(F) of such Act (42 U.S.C.
1395ww(d)(5)(F)).
(b) APPLICABLE GUIDELINES.—The Medicare Geographic Classi-
fication Review Board shall apply the guidelines established for
reclassification under subclause (I) of section 1886(d)(10)(C)(i) of
such Act to reclassification by reason of subsection (a) until the
Secretary of Health and Human Services promulgates separate
guidelines for such reclassification.
(c) PERIOD DESCRIBED.—The period described in this subsection
is the period beginning on the date of the enactment of this Act
and ending 30 months after such date.
SEC. 4204. MEDICARE-DEPENDENT, SMALL RURAL HOSPITAL PAYMENT
EXTENSION.
(a) SPECIAL TREATMENT EXTENDED.—
(1) PAYMENT
METHODOLOGY.—Section 1886(d)(5)(G) (42
U.S.C. 1395ww(d)(5)(G)) is amended—
(A) in clause (i), by striking ‘‘October 1, 1994,’’ and
inserting ‘‘October 1, 1994, or beginning on or after October
1, 1997, and before October 1, 2001,’’; and
(B) in clause (ii)(II), by striking ‘‘October 1, 1994,’’
and inserting ‘‘October 1, 1994, or beginning on or after
October 1, 1997, and before October 1, 2001,’’.
(2) EXTENSION OF TARGET AMOUNT.—Section 1886(b)(3)(D)
(42 U.S.C. 1395ww(b)(3)(D)) is amended—
(A) in the matter preceding clause (i), by striking
‘‘September 30, 1994,’’ and inserting ‘‘September 30, 1994,
and for cost reporting periods beginning on or after October
1, 1997, and before October 1, 2001,’’;
(B) in clause (ii), by striking ‘‘and’’ at the end;
(C) in clause (iii), by striking the period at the end
and inserting ‘‘, and’’; and
H. R. 2015—126
(D) by adding after clause (iii) the following new clause:
‘‘(iv) with respect to discharges occurring during fiscal year
1998 through fiscal year 2000, the target amount for the preced-
ing year increased by the applicable percentage increase under
subparagraph (B)(iv).’’.
(3) PERMITTING HOSPITALS TO DECLINE RECLASSIFICATION.—
Section 13501(e)(2) of OBRA–93 (42 U.S.C. 1395ww note) is
amended by striking ‘‘or fiscal year 1994’’ and inserting ‘‘,
fiscal year 1994, fiscal year 1998, fiscal year 1999, or fiscal
year 2000’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) shall apply with respect to discharges occurring on or after
October 1, 1997.
SEC. 4205. RURAL HEALTH CLINIC SERVICES.
(a) PER-VISIT PAYMENT LIMITS FOR PROVIDER-BASED CLINICS.—
(1) EXTENSION OF LIMIT.—
(A) IN GENERAL.—The matter in section 1833(f) (42
U.S.C. 1395l(f)) preceding paragraph (1) is amended by
striking ‘‘independent rural health clinics’’ and inserting
‘‘rural health clinics (other than such clinics in rural hos-
pitals with less than 50 beds)’’.
(B) EFFECTIVE
DATE.—The amendment made by
subparagraph (A) applies to services furnished on or after
January 1, 1998.
(2) TECHNICAL
CLARIFICATION.—Section 1833(f)(1) (42
U.S.C. 1395l(f)(1)) is amended by inserting ‘‘per visit’’ after
‘‘$46’’.
(b) ASSURANCE OF QUALITY SERVICES.—
(1) IN GENERAL.—Subparagraph (I) of the first sentence
of section 1861(aa)(2) (42 U.S.C. 1395x(aa)(2)) is amended to
read as follows:
‘‘(I) has a quality assessment and performance improve-
ment program, and appropriate procedures for review of
utilization of clinic services, as the Secretary may specify,’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall take effect on January 1, 1998.
(c) WAIVER OF CERTAIN STAFFING REQUIREMENTS LIMITED TO
CLINICS IN PROGRAM.—
(1) 
IN
GENERAL.—Section 
1861(aa)(7)(B) 
(42 
U.S.C.
1395x(aa)(7)(B)) is amended by inserting before the period ‘‘,
or if the facility has not yet been determined to meet the
requirements (including subparagraph (J) of the first sentence
of paragraph (2)) of a rural health clinic’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) applies to waiver requests made on or after January 1,
1998.
(d) REFINEMENT OF SHORTAGE AREA REQUIREMENTS.—
(1) 
DESIGNATION
REVIEWED
TRIENNIALLY.—Section
1861(aa)(2) (42 U.S.C. 1395x(aa)(2)) is amended in the second
sentence, in the matter in clause (i) preceding subclause (I)—
(A) by striking ‘‘and that is designated’’ and inserting
‘‘and that, within the previous 3-year period, has been
designated’’; and
(B) by striking ‘‘or that is designated’’ and inserting
‘‘or designated’’.
H. R. 2015—127
(2) 
AREA
MUST
HAVE
SHORTAGE
OF
HEALTH
CARE
PRACTITIONERS.—Section 1861(aa)(2) (42 U.S.C. 1395x(aa)(2)),
as amended by paragraph (1), is further amended in the second
sentence, in the matter in clause (i) preceding subclause (I)—
(A) by striking the comma after ‘‘personal health serv-
ices’’; and
(B) by inserting ‘‘and in which there are insufficient
numbers of needed health care practitioners (as determined
by the Secretary),’’ after ‘‘Bureau of the Census)’’.
(3) PREVIOUSLY QUALIFYING CLINICS GRANDFATHERED ONLY
TO PREVENT SHORTAGE.—
(A) IN GENERAL.—Section 1861(aa)(2) of the Social
Security Act (42 U.S.C. 1395x(aa)(2)) is amended in the
third sentence by inserting before the period ‘‘if it is deter-
mined, in accordance with criteria established by the Sec-
retary in regulations, to be essential to the delivery of
primary care services that would otherwise be unavailable
in the geographic area served by the clinic’’.
(B) PAYMENT FOR CERTAIN PHYSICIAN ASSISTANT SERV-
ICES.—Section 1842(b)(6)(C) (42 U.S.C. 1395u(b)(6)(C)) is
amended to read as follows: ‘‘(C) in the case of services
described in clause (i) of section 1861(s)(2)(K), payment
shall be made to either (i) the employer of the physician
assistant involved, or (ii) with respect to a physician assist-
ant who was the owner of a rural health clinic (as described
in section 1861(aa)(2)) for a continuous period beginning
prior to the date of the enactment of the Balanced Budget
Act of 1997 and ending on the date that the Secretary
determines such rural health clinic no longer meets the
requirements of section 1861(aa)(2), for such services pro-
vided before January 1, 2003, payment may be made
directly to the physician assistant; and’’.
(4) EFFECTIVE DATES; IMPLEMENTING REGULATIONS.—
(A) IN GENERAL.—Except as otherwise provided, the
amendments made by the preceding paragraphs take effect
on the date of the enactment of this Act.
(B) CURRENT
RURAL
HEALTH
CLINICS.—The amend-
ments made by the preceding paragraphs take effect, with
respect to entities that are rural health clinics under title
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.)
on the date of enactment of this Act, on the date of the
enactment of this Act.
(C) GRANDFATHERED CLINICS.—
(i) IN GENERAL.—The amendment made by para-
graph (3)(A) shall take effect on the effective date
of regulations issued by the Secretary under clause
(ii).
(ii) REGULATIONS.—The Secretary shall issue final
regulations implementing paragraph (3)(A) that shall
take effect no later than January 1, 1999.
SEC. 4206. MEDICARE REIMBURSEMENT FOR TELEHEALTH SERVICES.
(a) IN GENERAL.—Not later than January 1, 1999, the Secretary
of Health and Human Services shall make payments from the
Federal Supplementary Medical Insurance Trust Fund under part
B of title XVIII of the Social Security Act (42 U.S.C. 1395j et
seq.) in accordance with the methodology described in subsection
H. R. 2015—128
(b) for professional consultation via telecommunications systems
with a physician (as defined in section 1861(r) of such Act (42
U.S.C. 
1395x(r)) 
or 
a 
practitioner 
(described 
in 
section
1842(b)(18)(C) of such Act (42 U.S.C. 1395u(b)(18)(C)) furnishing
a service for which payment may be made under such part to
a beneficiary under the medicare program residing in a county
in a rural area (as defined in section 1886(d)(2)(D) of such Act
(42 U.S.C. 1395ww(d)(2)(D))) that is designated as a health profes-
sional shortage area under section 332(a)(1)(A) of the Public Health
Service Act (42 U.S.C. 254e(a)(1)(A)), notwithstanding that the
individual physician or practitioner providing the professional con-
sultation is not at the same location as the physician or practitioner
furnishing the service to that beneficiary.
(b) METHODOLOGY FOR DETERMINING AMOUNT OF PAYMENTS.—
Taking into account the findings of the report required under section
192 of the Health Insurance Portability and Accountability Act
of 1996 (Public Law 104–191; 110 Stat. 1988), the findings of
the report required under paragraph (c), and any other findings
related to the clinical efficacy and cost-effectiveness of telehealth
applications, the Secretary shall establish a methodology for deter-
mining the amount of payments made under subsection (a) within
the following parameters:
(1) The payment shall shared between the referring physi-
cian or practitioner and the consulting physician or practitioner.
The amount of such payment shall not be greater than the
current fee schedule of the consulting physician or practitioner
for the health care services provided.
(2) The payment shall not include any reimbursement for
any telephone line charges or any facility fees, and a beneficiary
may not be billed for any such charges or fees.
(3) The payment shall be made subject to the coinsurance
and deductible requirements under subsections (a)(1) and (b)
of section 1833 of the Social Security Act (42 U.S.C. 1395l).
(4) The payment differential of section 1848(a)(3) of such
Act (42 U.S.C. 1395w–4(a)(3)) shall apply to services furnished
by non-participating physicians. The provisions of section
1848(g) of such Act (42 U.S.C. 1395w–4(g)) and section
1842(b)(18) of such Act (42 U.S.C. 1395u(b)(18)) shall apply.
Payment for such service shall be increased annually by the
update factor for physicians’ services determined under section
1848(d) of such Act (42 U.S.C. 1395w–4(d)).
(c) SUPPLEMENTAL REPORT.—Not later than January 1, 1999,
the Secretary shall submit a report to Congress which shall contain
a detailed analysis of—
(1) how telemedicine and telehealth systems are expanding
access to health care services;
(2) the clinical efficacy and cost-effectiveness of telemedi-
cine and telehealth applications;
(3) the quality of telemedicine and telehealth services deliv-
ered; and
(4) the reasonable cost of telecommunications charges
incurred in practicing telemedicine and telehealth in rural,
frontier, and underserved areas.
(d) EXPANSION OF TELEHEALTH SERVICES FOR CERTAIN MEDI-
CARE BENEFICIARIES.—
(1) IN GENERAL.—Not later than January 1, 1999, the Sec-
retary shall submit a report to Congress that examines the
H. R. 2015—129
possibility of making payments from the Federal Supple-
mentary Medical Insurance Trust Fund under part B of title
XVIII of the Social Security Act (42 U.S.C. 1395j et seq.) for
professional consultation via telecommunications systems with
such a physician or practitioner furnishing a service for which
payment may be made under such part to a beneficiary
described in paragraph (2), notwithstanding that the individual
physician or practitioner providing the professional consultation
is not at the same location as the physician or practitioner
furnishing the service to that beneficiary.
(2) BENEFICIARY
DESCRIBED.—A beneficiary described in
this paragraph is a beneficiary under the medicare program
under title XVIII of the Social Security Act (42 U.S.C. 1395
et seq.) who does not reside in a rural area (as so defined)
that is designated as a health professional shortage area under
section 332(a)(1)(A) of the Public Health Service Act (42 U.S.C.
254e(a)(1)(A)), who is homebound or nursing homebound, and
for whom being transferred for health care services imposes
a serious hardship.
(3) REPORT.—The report described in paragraph (1) shall
contain a detailed statement of the potential costs and savings
to the medicare program of making the payments described
in that paragraph using various reimbursement schemes.
SEC. 4207. INFORMATICS, TELEMEDICINE, AND EDUCATION DEM-
ONSTRATION PROJECT.
(a) PURPOSE AND AUTHORIZATION.—
(1) IN GENERAL.—Not later than 9 months after the date
of enactment of this section, the Secretary of Health and Human
Services shall provide for a demonstration project described
in paragraph (2).
(2) DESCRIPTION OF PROJECT.—
(A) IN GENERAL.—The demonstration project described
in this paragraph is a single demonstration project to use
eligible health care provider telemedicine networks to apply
high-capacity computing and advanced networks to improve
primary care (and prevent health care complications) to
medicare beneficiaries with diabetes mellitus who are resi-
dents of medically underserved rural areas or residents
of medically underserved inner-city areas.
(B) MEDICALLY
UNDERSERVED
DEFINED.—As used in
this paragraph, the term ‘‘medically underserved’’ has the
meaning given such term in section 330(b)(3) of the Public
Health Service Act (42 U.S.C. 254b(b)(3)).
(3) WAIVER.—The Secretary shall waive such provisions
of title XVIII of the Social Security Act as may be necessary
to provide for payment for services under the project in accord-
ance with subsection (d).
(4) DURATION OF PROJECT.—The project shall be conducted
over a 4-year period.
(b) OBJECTIVES
OF PROJECT.—The objectives of the project
include the following:
(1) Improving patient access to and compliance with appro-
priate care guidelines for individuals with diabetes mellitus
through direct telecommunications link with information net-
works in order to improve patient quality-of-life and reduce
overall health care costs.
H. R. 2015—130
(2) Developing a curriculum to train health professionals
(particularly primary care health professionals) in the use of
medical informatics and telecommunications.
(3) Demonstrating the application of advanced technologies,
such as video-conferencing from a patient’s home, remote mon-
itoring 
of 
a 
patient’s 
medical 
condition, 
interventional
informatics, and applying individualized, automated care guide-
lines, to assist primary care providers in assisting patients
with diabetes in a home setting.
(4) Application of medical informatics to residents with
limited English language skills.
(5) Developing standards in the application of telemedicine
and medical informatics.
(6) Developing a model for the cost-effective delivery of
primary and related care both in a managed care environment
and in a fee-for-service environment.
(c) ELIGIBLE HEALTH CARE PROVIDER TELEMEDICINE NETWORK
DEFINED.—For purposes of this section, the term ‘‘eligible health
care provider telemedicine network’’ means a consortium that
includes at least one tertiary care hospital (but no more than
2 such hospitals), at least one medical school, no more than 4
facilities in rural or urban areas, and at least one regional tele-
communications provider and that meets the following require-
ments:
(1) The consortium is located in an area with a high con-
centration of medical schools and tertiary care facilities in
the United States and has appropriate arrangements (within
or outside the consortium) with such schools and facilities,
universities, and telecommunications providers, in order to con-
duct the project.
(2) The consortium submits to the Secretary an application
at such time, in such manner, and containing such information
as the Secretary may require, including a description of the
use to which the consortium would apply any amounts received
under the project and the source and amount of non-Federal
funds used in the project.
(3) The consortium guarantees that it will be responsible
for payment for all costs of the project that are not paid under
this section and that the maximum amount of payment that
may be made to the consortium under this section shall not
exceed the amount specified in subsection (d)(3).
(d) COVERAGE AS MEDICARE PART B SERVICES.—
(1) IN GENERAL.—Subject to the succeeding provisions of
this subsection, services related to the treatment or manage-
ment of (including prevention of complications from) diabetes
for medicare beneficiaries furnished under the project shall
be considered to be services covered under part B of title
XVIII of the Social Security Act.
(2) PAYMENTS.—
(A) IN GENERAL.—Subject to paragraph (3), payment
for such services shall be made at a rate of 50 percent
of the costs that are reasonable and related to the provision
of such services. In computing such costs, the Secretary
shall include costs described in subparagraph (B), but may
not include costs described in subparagraph (C).
H. R. 2015—131
(B) COSTS
THAT
MAY
BE
INCLUDED.—The costs
described in this subparagraph are the permissible costs
(as recognized by the Secretary) for the following:
(i) The acquisition of telemedicine equipment for
use in patients’ homes (but only in the case of patients
located in medically underserved areas).
(ii) Curriculum development and training of health
professionals in medical informatics and telemedicine.
(iii) Payment of telecommunications costs (includ-
ing salaries and maintenance of equipment), including
costs of telecommunications between patients’ homes
and the eligible network and between the network
and other entities under the arrangements described
in subsection (c)(1).
(iv) Payments to practitioners and providers under
the medicare programs.
(C) COSTS NOT INCLUDED.—The costs described in this
subparagraph are costs for any of the following:
(i) The purchase or installation of transmission
equipment (other than such equipment used by health
professionals to deliver medical informatics services
under the project).
(ii) The establishment or operation of a tele-
communications common carrier network.
(iii) Construction (except for minor renovations
related to the installation of reimbursable equipment)
or the acquisition or building of real property.
(3) LIMITATION.—The total amount of the payments that
may be made under this section shall not exceed $30,000,000
for the period of the project (described in subsection (a)(4)).
(4) LIMITATION
ON
COST-SHARING.—The project may not
impose cost sharing on a medicare beneficiary for the receipt
of services under the project in excess of 20 percent of the
costs that are reasonable and related to the provision of such
services.
(e) REPORTS.—The Secretary shall submit to the Committee
on Ways and Means and the Committee Commerce of the House
of Representatives and the Committee on Finance of the Senate
interim reports on the project and a final report on the project
within 6 months after the conclusion of the project. The final
report shall include an evaluation of the impact of the use of
telemedicine and medical informatics on improving access of medi-
care beneficiaries to health care services, on reducing the costs
of such services, and on improving the quality of life of such bene-
ficiaries.
(f) DEFINITIONS.—For purposes of this section:
(1) 
INTERVENTIONAL
INFORMATICS.—The 
term 
‘‘inter-
ventional informatics’’ means using information technology and
virtual reality technology to intervene in patient care.
(2) MEDICAL INFORMATICS.—The term ‘‘medical informatics’’
means the storage, retrieval, and use of biomedical and related
information for problem solving and decision-making through
computing and communications technologies.
(3) PROJECT.—The term ‘‘project’’ means the demonstration
project under this section.
H. R. 2015—132
Subtitle D—Anti-Fraud and Abuse Provi-
sions and Improvements in Protecting
Program Integrity
CHAPTER 1—REVISIONS TO SANCTIONS FOR FRAUD
AND ABUSE
SEC. 4301. PERMANENT EXCLUSION FOR THOSE CONVICTED OF 3
HEALTH CARE RELATED CRIMES.
Section 1128(c)(3) (42 U.S.C. 1320a–7(c)(3)) is amended—
(1) in subparagraph (A), by inserting ‘‘or in the case
described in subparagraph (G)’’ after ‘‘subsection (b)(12)’’;
(2) in subparagraphs (B) and (D), by striking ‘‘In the case’’
and inserting ‘‘Subject to subparagraph (G), in the case’’; and
(3) by adding at the end the following new subparagraph:
‘‘(G) In the case of an exclusion of an individual under sub-
section (a) based on a conviction occurring on or after the date
of the enactment of this subparagraph, if the individual has (before,
on, or after such date) been convicted—
‘‘(i) on one previous occasion of one or more offenses for
which an exclusion may be effected under such subsection,
the period of the exclusion shall be not less than 10 years,
or
‘‘(ii) on 2 or more previous occasions of one or more offenses
for which an exclusion may be effected under such subsection,
the period of the exclusion shall be permanent.’’.
SEC. 4302. AUTHORITY TO REFUSE TO ENTER INTO MEDICARE AGREE-
MENTS WITH INDIVIDUALS OR ENTITIES CONVICTED OF
FELONIES.
(a) 
MEDICARE
PART
A.—Section 
1866(b)(2) 
(42 
U.S.C.
1395cc(b)(2)) is amended—
(1) in subparagraph (B), by striking ‘‘or’’ at the end;
(2) in subparagraph (C), by striking the period at the
end and inserting ‘‘, or’’; and
(3) by adding at the end the following new subparagraph:
‘‘(D) has ascertained that the provider has been con-
victed of a felony under Federal or State law for an offense
which the Secretary determines is detrimental to the best
interests of the program or program beneficiaries.’’.
(b) MEDICARE PART B.—Section 1842(h) (42 U.S.C. 1395u(h))
is amended by adding at the end the following new paragraph:
‘‘(8) The Secretary may refuse to enter into an agreement
with a physician or supplier under this subsection, or may terminate
or refuse to renew such agreement, in the event that such physician
or supplier has been convicted of a felony under Federal or State
law for an offense which the Secretary determines is detrimental
to the best interests of the program or program beneficiaries.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the date of the enactment of this Act and
apply to the entry and renewal of contracts on or after such date.
SEC. 4303. EXCLUSION OF ENTITY CONTROLLED BY FAMILY MEMBER
OF A SANCTIONED INDIVIDUAL.
(a) IN GENERAL.—Section 1128 (42 U.S.C. 1320a–7) is amend-
ed—
H. R. 2015—133
(1) in subsection (b)(8)(A)—
(A) in clause (i), by striking ‘‘or’’ at the end;
(B) in clause (ii), by striking the dash at the end
and inserting ‘‘; or’’; and
(C) by inserting after clause (ii) the following:
‘‘(iii) who was described in clause (i) but is no longer
so described because of a transfer of ownership or control
interest, in anticipation of (or following) a conviction,
assessment, or exclusion described in subparagraph (B)
against the person, to an immediate family member (as
defined in subsection (j)(1)) or a member of the household
of the person (as defined in subsection (j)(2)) who continues
to maintain an interest described in such clause—’’; and
(2) by adding at the end the following new subsection:
‘‘(j) DEFINITION OF IMMEDIATE FAMILY MEMBER AND MEMBER
OF HOUSEHOLD.—For purposes of subsection (b)(8)(A)(iii):
‘‘(1) The term ‘immediate family member’ means, with
respect to a person—
‘‘(A) the husband or wife of the person;
‘‘(B) the natural or adoptive parent, child, or sibling
of the person;
‘‘(C) the stepparent, stepchild, stepbrother, or stepsister
of the person;
‘‘(D) the father-, mother-, daughter-, son-, brother-, or
sister-in-law of the person;
‘‘(E) the grandparent or grandchild of the person; and
‘‘(F) the spouse of a grandparent or grandchild of the
person.
‘‘(2) The term ‘member of the household’ means, with
respect to any person, any individual sharing a common abode
as part of a single family unit with the person, including
domestic employees and others who live together as a family
unit, but not including a roomer or boarder.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the date that is 45 days after the date of
the enactment of this Act.
SEC. 4304. IMPOSITION OF CIVIL MONEY PENALTIES.
(a) CIVIL MONEY PENALTIES FOR PERSONS THAT CONTRACT WITH
EXCLUDED INDIVIDUALS.—Section 1128A(a) (42 U.S.C. 1320a–7a(a))
is amended—
(1) in paragraph (4), by striking ‘‘or’’ at the end;
(2) in paragraph (5), by adding ‘‘or’’ at the end; and
(3) by inserting after paragraph (5) the following new para-
graph:
‘‘(6) arranges or contracts (by employment or otherwise)
with an individual or entity that the person knows or should
know is excluded from participation in a Federal health care
program (as defined in section 1128B(f)), for the provision of
items or services for which payment may be made under such
a program;’’.
(b) CIVIL MONEY PENALTIES FOR KICKBACKS.—
(1) PERMITTING SECRETARY TO IMPOSE CIVIL MONEY PEN-
ALTY.—Section 1128A(a) (42 U.S.C. 1320a–7a(a)), as amended
by subsection (a), is amended—
(A) in paragraph (5), by striking ‘‘or’’ at the end;
(B) in paragraph (6), by adding ‘‘or’’ at the end; and
H. R. 2015—134
(C) by adding after paragraph (6) the following new
paragraph:
‘‘(7) commits an act described in paragraph (1) or (2) of
section 1128B(b);’’.
(2) DESCRIPTION OF CIVIL MONEY PENALTY APPLICABLE.—
Section 1128A(a) (42 U.S.C. 1320a–7a(a)), as amended by para-
graph (1), is amended in the matter following paragraph (7)—
(A) by striking ‘‘occurs).’’ and inserting ‘‘occurs; or in
cases under paragraph (7), $50,000 for each such act).’’;
and
(B) by inserting after ‘‘of such claim’’ the following:
‘‘(or, in cases under paragraph (7), damages of not more
than 3 times the total amount of remuneration offered,
paid, solicited, or received, without regard to whether a
portion of such remuneration was offered, paid, solicited,
or received for a lawful purpose)’’.
(c) EFFECTIVE DATES.—
(1) CONTRACTS
WITH
EXCLUDED
PERSONS.—The amend-
ments made by subsection (a) shall apply to arrangements
and contracts entered into after the date of the enactment
of this Act.
(2) KICKBACKS.—The amendments made by subsection (b)
shall apply to acts committed after the date of the enactment
of this Act.
CHAPTER 2—IMPROVEMENTS IN PROTECTING
PROGRAM INTEGRITY
SEC. 4311. IMPROVING INFORMATION TO MEDICARE BENEFICIARIES.
(a) INCLUSION OF INFORMATION REGARDING MEDICARE WASTE,
FRAUD, AND ABUSE IN ANNUAL NOTICE.—
(1) IN GENERAL.—Section 1804 (42 U.S.C. 1395b–2) is
amended by adding at the end the following new subsection:
‘‘(c) The notice provided under subsection (a) shall include—
‘‘(1) a statement which indicates that because errors do
occur and because medicare fraud, waste, and abuse is a signifi-
cant problem, beneficiaries should carefully check any expla-
nation of benefits or itemized statement furnished pursuant
to section 1806 for accuracy and report any errors or question-
able charges by calling the toll-free phone number described
in paragraph (4);
‘‘(2) a statement of the beneficiary’s right to request an
itemized statement for medicare items and services (as provided
in section 1806(b));
‘‘(3) a description of the program to collect information
on medicare fraud and abuse established under section 203(b)
of the Health Insurance Portability and Accountability Act of
1996; and
‘‘(4) a toll-free telephone number maintained by the Inspec-
tor General in the Department of Health and Human Services
for the receipt of complaints and information about waste,
fraud, and abuse in the provision or billing of services under
this title.’’.
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to notices provided on or after January
1, 1998.
H. R. 2015—135
(b) CLARIFICATION OF REQUIREMENT TO PROVIDE EXPLANATION
OF MEDICARE BENEFITS.—
(1) IN GENERAL.—Title XVIII is amended by inserting after
section 1805 (as added by section 4022) the following new
section:
‘‘EXPLANATION OF MEDICARE BENEFITS
‘‘SEC. 1806. (a) IN GENERAL.—The Secretary shall furnish to
each individual for whom payment has been made under this title
(or would be made without regard to any deductible) a statement
which—
‘‘(1) lists the item or service for which payment has been
made and the amount of such payment for each item or service;
and
‘‘(2) includes a notice of the individual’s right to request
an itemized statement (as provided in subsection (b)).
‘‘(b) REQUEST FOR ITEMIZED STATEMENT FOR MEDICARE ITEMS
AND SERVICES.—
‘‘(1) IN
GENERAL.—An individual may submit a written
request to any physician, provider, supplier, or any other person
(including an organization, agency, or other entity) for an item-
ized statement for any item or service provided to such individ-
ual by such person with respect to which payment has been
made under this title.
‘‘(2) 30-DAY PERIOD TO FURNISH STATEMENT.—
‘‘(A) IN GENERAL.—Not later than 30 days after the
date on which a request under paragraph (1) has been
made, a person described in such paragraph shall furnish
an itemized statement describing each item or service pro-
vided to the individual requesting the itemized statement.
‘‘(B) PENALTY.—Whoever knowingly fails to furnish an
itemized statement in accordance with subparagraph (A)
shall be subject to a civil money penalty of not more than
$100 for each such failure. Such penalty shall be imposed
and collected in the same manner as civil money penalties
under subsection (a) of section 1128A are imposed and
collected under that section.
‘‘(3) REVIEW OF ITEMIZED STATEMENT.—
‘‘(A) IN GENERAL.—Not later than 90 days after the
receipt of an itemized statement furnished under paragraph
(1), an individual may submit a written request for a
review of the itemized statement to the Secretary.
‘‘(B) SPECIFIC ALLEGATIONS.—A request for a review
of the itemized statement shall identify—
‘‘(i) specific items or services that the individual
believes were not provided as claimed, or
‘‘(ii) any other billing irregularity (including dupli-
cate billing).
‘‘(4) FINDINGS OF SECRETARY.—The Secretary shall, with
respect to each written request submitted under paragraph
(3), determine whether the itemized statement identifies spe-
cific items or services that were not provided as claimed or
any other billing irregularity (including duplicate billing) that
has resulted in unnecessary payments under this title.
‘‘(5) RECOVERY OF AMOUNTS.—The Secretary shall take all
appropriate measures to recover amounts unnecessarily paid
H. R. 2015—136
under this title with respect to a statement described in para-
graph (4).’’.
(2) CONFORMING
AMENDMENT.—Subsection (a) of section
203 of the Health Insurance Portability and Accountability
Act of 1996 is repealed.
(3) EFFECTIVE DATES.—
(A) STATEMENT BY SECRETARY.—Paragraph (1) of sec-
tion 1806(a) of the Social Security Act, as added by para-
graph (1), and the repeal made by paragraph (2) shall
take effect on the date of the enactment of this Act.
(B) ITEMIZED
STATEMENT.—Paragraph (2) of section
1806(a) and section 1806(b) of the Social Security Act,
as so added, shall take effect not later than January 1,
1999.
SEC. 4312. DISCLOSURE OF INFORMATION AND SURETY BONDS.
(a) DISCLOSURE OF INFORMATION AND SURETY BOND REQUIRE-
MENT FOR SUPPLIERS OF DURABLE MEDICAL EQUIPMENT.—Section
1834(a) (42 U.S.C. 1395m(a)) is amended by inserting after para-
graph (15) the following new paragraph:
‘‘(16) DISCLOSURE OF INFORMATION AND SURETY BOND.—
The Secretary shall not provide for the issuance (or renewal)
of a provider number for a supplier of durable medical equip-
ment, for purposes of payment under this part for durable
medical equipment furnished by the supplier, unless the sup-
plier provides the Secretary on a continuing basis—
‘‘(A) with—
‘‘(i) full and complete information as to the identity
of each person with an ownership or control interest
(as defined in section 1124(a)(3)) in the supplier or
in any subcontractor (as defined by the Secretary in
regulations) in which the supplier directly or indirectly
has a 5 percent or more ownership interest; and
‘‘(ii) to the extent determined to be feasible under
regulations of the Secretary, the name of any disclosing
entity (as defined in section 1124(a)(2)) with respect
to which a person with such an ownership or control
interest in the supplier is a person with such an owner-
ship or control interest in the disclosing entity; and
‘‘(B) with a surety bond in a form specified by the
Secretary and in an amount that is not less than $50,000.
The Secretary may waive the requirement of a bond under
subparagraph (B) in the case of a supplier that provides a
comparable surety bond under State law.’’.
(b) SURETY BOND REQUIREMENT
FOR HOME HEALTH AGEN-
CIES.—
(1) IN GENERAL.—Section 1861(o) (42 U.S.C. 1395x(o)) is
amended—
(A) in paragraph (6), by striking ‘‘and’’ at the end;
(B) by redesignating paragraph (7) as paragraph (8);
(C) by inserting after paragraph (6) the following new
paragraph:
‘‘(7) provides the Secretary on a continuing basis with
a surety bond in a form specified by the Secretary and in
an amount that is not less than $50,000; and’’; and
H. R. 2015—137
(D) by adding at the end the following: ‘‘The Secretary
may waive the requirement of a surety bond under para-
graph (7) in the case of an agency or organization that
provides a comparable surety bond under State law.’’.
(2) CONFORMING AMENDMENTS.—Section 1861(v)(1)(H) (42
U.S.C. 1395x(v)(1)(H)) is amended—
(A) in clause (i), by striking ‘‘the financial security
requirement described in subsection (o)(7)’’ and inserting
‘‘the surety bond requirement described in subsection (o)(7)
and the financial security requirement described in sub-
section (o)(8)’’; and
(B) in clause (ii), by striking ‘‘the financial security
requirement described in subsection (o)(7) applies’’ and
inserting ‘‘the surety bond requirement described in sub-
section (o)(7) and the financial security requirement
described in subsection (o)(8) apply’’.
(3) REFERENCE TO CURRENT DISCLOSURE REQUIREMENT.—
For additional provisions requiring home health agencies to
disclose information on ownership and control interests, see
section 1124 of the Social Security Act (42 U.S.C. 1320a–3).
(c) AUTHORIZING APPLICATION
OF DISCLOSURE
AND SURETY
BOND REQUIREMENTS TO OTHER HEALTH CARE PROVIDERS.—Section
1834(a)(16) (42 U.S.C. 1395m(a)(16)), as added by subsection (a),
is amended by adding at the end the following: ‘‘The Secretary,
at the Secretary’s discretion, may impose the requirements of the
first sentence with respect to some or all providers of items or
services under part A or some or all suppliers or other persons
(other than physicians or other practitioners, as defined in section
1842(b)(18)(C)) who furnish items or services under this part.’’.
(d) APPLICATION TO COMPREHENSIVE OUTPATIENT REHABILITA-
TION
FACILITIES
(CORFS).—Section 
1861(cc)(2) 
(42 
U.S.C.
1395x(cc)(2)) is amended—
(1) in subparagraph (H), by striking ‘‘and’’ at the end;
(2) by redesignating subparagraph (I) as subparagraph (J);
(3) by inserting after subparagraph (H) the following new
subparagraph:
‘‘(I) provides the Secretary on a continuing basis with a
surety bond in a form specified by the Secretary and in an
amount that is not less than $50,000; and’’; and
(4) by adding at the end the following flush sentence:
‘‘The Secretary may waive the requirement of a surety bond under
subparagraph (I) in the case of a facility that provides a comparable
surety bond under State law.’’.
(e) 
APPLICATION
TO
REHABILITATION
AGENCIES.—Section
1861(p) (42 U.S.C. 1395x(p)) is amended—
(1) in paragraph (4)(A)(v), by inserting after ‘‘as the Sec-
retary may find necessary,’’ the following: ‘‘and provides the
Secretary on a continuing basis with a surety bond in a form
specified by the Secretary and in an amount that is not less
than $50,000,’’, and
(2) by adding at the end the following: ‘‘The Secretary
may waive the requirement of a surety bond under paragraph
(4)(A)(v) in the case of a clinic or agency that provides a
comparable surety bond under State law.’’.
(f) EFFECTIVE DATES.—
(1) SUPPLIERS
OF
DURABLE
MEDICAL
EQUIPMENT.—The
amendment made by subsection (a) shall apply to suppliers
H. R. 2015—156
SEC. 4415. BONUS AND RELIEF PAYMENTS.
(a) CHANGE IN BONUS PAYMENT.—Section 1886(b)(1) (42 U.S.C.
1395ww(b)(1)) is amended in subparagraph (A) by striking all that
follows ‘‘plus—’’ and inserting the following:
‘‘(i) 15 percent of the amount by which the target
amount exceeds the amount of the operating costs, or
‘‘(ii) 2 percent of the target amount,
whichever is less;’’.
(b) CONTINUOUS
IMPROVEMENT
BONUS
PAYMENTS.—Section
1886(b) (42 U.S.C. 1395ww(b)) is amended—
(1) in paragraph (1), by inserting ‘‘plus the amount, if
any, provided under paragraph (2)’’ before ‘‘except that in no
case’’; and
(2) by inserting after paragraph (1), the following new
paragraph:
‘‘(2)(A) In addition to the payment computed under paragraph
(1), in the case of an eligible hospital (described in subparagraph
(B)) for a cost reporting period beginning on or after October 1,
1997, the amount of payment on a per discharge basis under para-
graph (1) shall be increased by the lesser of—
‘‘(i) 50 percent of the amount by which the operating costs
are less than the expected costs (as defined in subparagraph
(D)) for the period; or
‘‘(ii) 1 percent of the target amount for the period.
‘‘(B) For purposes of this paragraph, an ‘eligible hospital’ means
with respect to a cost reporting period, a hospital—
‘‘(i) that has received payments under this subsection for
at least 3 full cost reporting periods before that cost reporting
period, and
‘‘(ii) whose operating costs for the period are less than
the least of its target amount, its trended costs (as defined
in subparagraph (C)), or its expected costs (as defined in
subparagraph (D)) for the period.
‘‘(C) For purposes of subparagraph (B)(ii), the term ‘trended
costs’ means for a hospital cost reporting period ending in a fiscal
year—
‘‘(i) in the case of a hospital for which its cost reporting
period ending in fiscal year 1996 was its third or subsequent
full cost reporting period for which it receives payments under
this subsection, the lesser of the operating costs or target
amount for that hospital for its cost reporting period ending
in fiscal year 1996, or
‘‘(ii) in the case of any other hospital, the operating costs
for that hospital for its third full cost reporting period for
which it receives payments under this subsection,
increased (in a compounded manner) for each succeeding fiscal
year (through the fiscal year involved) by the market basket
percentage increase for the fiscal year.
‘‘(D) For purposes of this paragraph, the term ‘expected costs’,
with respect to the cost reporting period ending in a fiscal year,
means the lesser of the operating costs of inpatient hospital services
or target amount per discharge for the previous cost reporting
period updated by the market basket percentage increase (as
defined in paragraph (3)(B)(iii)) for the fiscal year.’’.
(c) CHANGE IN RELIEF PAYMENTS.—Section 1886(b)(1) (42 U.S.C.
1395ww(b)(1)), as amended in subsections (a) and (b), is further
amended—
H. R. 2015—190
‘‘(i) the contract is in writing and is signed by
the medicare beneficiary before any item or service
is provided pursuant to the contract;
‘‘(ii) the contract contains the items described in
subparagraph (B); and
‘‘(iii) the contract is not entered into at a time
when the medicare beneficiary is facing an emergency
or urgent health care situation.
‘‘(B) ITEMS REQUIRED TO BE INCLUDED IN CONTRACT.—
Any contract to provide items and services to which para-
graph (1) applies shall clearly indicate to the medicare
beneficiary that by signing such contract the beneficiary—
‘‘(i) agrees not to submit a claim (or to request
that the physician or practitioner submit a claim)
under this title for such items or services even if such
items or services are otherwise covered by this title;
‘‘(ii) agrees to be responsible, whether through
insurance or otherwise, for payment of such items or
services and understands that no reimbursement will
be provided under this title for such items or services;
‘‘(iii) acknowledges that no limits under this title
(including the limits under section 1848(g)) apply to
amounts that may be charged for such items or serv-
ices;
‘‘(iv) acknowledges that Medigap plans under sec-
tion 1882 do not, and other supplemental insurance
plans may elect not to, make payments for such items
and services because payment is not made under this
title; and
‘‘(v) acknowledges that the medicare beneficiary
has the right to have such items or services provided
by other physicians or practitioners for whom payment
would be made under this title.
Such contract shall also clearly indicate whether the physi-
cian or practitioner is excluded from participation under
the medicare program under section 1128.
‘‘(3) PHYSICIAN OR PRACTITIONER REQUIREMENTS.—
‘‘(A) IN GENERAL.—Paragraph (1) shall not apply to
any contract entered into by a physician or practitioner
unless an affidavit described in subparagraph (B) is in
effect during the period any item or service is to be provided
pursuant to the contract.
‘‘(B) AFFIDAVIT.—An affidavit is described in this
subparagraph if—
‘‘(i) the affidavit identifies the physician or practi-
tioner and is in writing and is signed by the physician
or practitioner;
‘‘(ii) the affidavit provides that the physician or
practitioner will not submit any claim under this title
for any item or service provided to any medicare bene-
ficiary (and will not receive any reimbursement or
amount described in paragraph (1)(B) for any such
item or service) during the 2-year period beginning
on the date the affidavit is signed; and
‘‘(iii) a copy of the affidavit is filed with the Sec-
retary no later than 10 days after the first contract
to which such affidavit applies is entered into.
H. R. 2015—200
(B) Section 1833(a)(2)(E) (42 U.S.C. 1395l(a)(2)(E)) is
amended by inserting ‘‘or, for services or procedures per-
formed on or after January 1, 1999, subsection (t)’’ before
the semicolon.
(3) 
OTHER
HOSPITAL
OUTPATIENT
SERVICES.—Section
1833(a)(2)(B) (42 U.S.C. 1395l(a)(2)(B)) is amended—
(A) in clause (i), by inserting ‘‘furnished before January
1, 1999,’’ after ‘‘(i)’’,
(B) in clause (ii), by inserting ‘‘before January 1, 1999,’’
after ‘‘furnished’’,
(C) by redesignating clause (iii) as clause (iv), and
(D) by inserting after clause (ii), the following new
clause:
‘‘(iii) if such services are furnished on or after
January 1, 1999, the amount determined under sub-
section (t), or’’.
CHAPTER 3—AMBULANCE SERVICES
SEC. 4531. PAYMENTS FOR AMBULANCE SERVICES.
(a) INTERIM REDUCTIONS.—
(1) PAYMENTS DETERMINED ON REASONABLE COST BASIS.—
Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)), as amended by sec-
tion 4451, is amended by adding at the end the following
new subparagraph:
‘‘(U) In determining the reasonable cost of ambulance
services (as described in subsection (s)(7)) provided during
fiscal year 1998, during fiscal year 1999, and during so
much of fiscal year 2000 as precedes January 1, 2000,
the Secretary shall not recognize the costs per trip in
excess of costs recognized as reasonable for ambulance
services provided on a per trip basis during the previous
fiscal year (after application of this subparagraph),
increased by the percentage increase in the consumer price
index for all urban consumers (U.S. city average) as esti-
mated by the Secretary for the 12-month period ending
with the midpoint of the fiscal year involved reduced by
1.0 percentage point. For ambulance services provided after
June 30, 1998, the Secretary may provide that claims for
such services must include a code (or codes) under a uni-
form coding system specified by the Secretary that identi-
fies the services furnished.’’.
(2) PAYMENTS
DETERMINED
ON
REASONABLE
CHARGE
BASIS.—Section 1842(b) (42 U.S.C. 1395u(b)) is amended by
adding at the end the following new paragraph:
‘‘(19) For purposes of section 1833(a)(1), the reasonable charge
for ambulance services (as described in section 1861(s)(7)) provided
during calendar year 1998 and calendar year 1999 may not exceed
the reasonable charge for such services provided during the previous
calendar year (after application of this paragraph), increased by
the percentage increase in the consumer price index for all urban
consumers (U.S. city average) as estimated by the Secretary for
the 12-month period ending with the midpoint of the year involved
reduced by 1.0 percentage point.’’.
(b) ESTABLISHMENT OF PROSPECTIVE FEE SCHEDULE.—
H. R. 2015—243
or any other public or private organization, which meets
the requirement of section 1902(w) and—’’; and
(B) by adding after and below clause (ii) the following:
‘‘An organization that is a qualified health maintenance organiza-
tion (as defined in section 1310(d) of the Public Health Service
Act) is deemed to meet the requirements of clauses (i) and (ii).’’.
(2) CONFORMING CHANGES IN TERMINOLOGY.—(A) Each of the
following provisions is amended by striking ‘‘health mainte-
nance organization’’ and inserting ‘‘medicaid managed care
organization’’:
(i) Section 1902(a)(23) (42 U.S.C. 1396a(a)(23)).
(ii) Section 1902(a)(57) (42 U.S.C. 1396a(a)(57)).
(iii) Section 1902(p)(2) (42 U.S.C. 1396a(p)(2)).
(iv) Section 1902(w)(2)(E) (42 U.S.C. 1396a(w)(2)(E)).
(v) Section 1903(k) (42 U.S.C. 1396b(k)).
(vi) In section 1903(m)(1)(B).
(vii) In subparagraphs (A)(i) and (H)(i) of section
1903(m)(2) (42 U.S.C. 1396b(m)(2)).
(viii) Section 1903(m)(4)(A) (42 U.S.C. 1396b(m)(4)(A)),
the first place it appears.
(ix) 
Section 
1925(b)(4)(D)(iv) 
(42 
U.S.C. 
1396r–
6(b)(4)(D)(iv)).
(x) Section 1927(j)(1) (42 U.S.C. 1396r–8(j)(1)) is
amended by striking ‘‘***Health Maintenance Organiza-
tions, including those organizations’’ and inserting ‘‘health
maintenance organizations, including medicaid managed
care organizations’’.
(B) Section 1903(m)(2)(H) (42 U.S.C. 1396b(m)(2)(H)) is
amended, in the matter following clause (iii), by striking ‘‘health
maintenance’’.
(C) Clause (viii) of section 1903(w)(7)(A) (42 U.S.C.
1396b(w)(7)(A)) is amended to read as follows:
‘‘(viii) Services of a medicaid managed care
organization with a contract under section 1903(m).’’.
(D) Section 1925(b)(4)(D)(iv) (42 U.S.C. 1396r–6(b)(4)(D)(iv))
is amended—
(i) in the heading, by striking ‘‘HMO’’ and inserting
‘‘MEDICAID MANAGED CARE ORGANIZATION’’; and
(ii) by inserting ‘‘and the applicable requirements of
section 1932’’ before the period at the end.
(c) COMPLIANCE
OF CONTRACT WITH NEW REQUIREMENTS.—
Section 1903(m)(2)(A) (42 U.S.C. 1396b(m)(2)(A)) is amended—
(1) by striking ‘‘and’’ at the end of clause (x),
(2) by striking the period at the end of clause (xi) and
inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(xi) such contract, and the entity complies with the
applicable requirements of section 1932.’’.
(d) CONFORMING AMENDMENTS
TO FREEDOM-OF-CHOICE
AND
TERMINATION OF ENROLLMENT REQUIREMENTS.—
(1) Section 1902(a)(23) (42 U.S.C. 1396a(a)(23)), as amend-
ed by section 4724(d), is amended by striking ‘‘and in section
1915’’ and inserting ‘‘, in section 1915, and in section 1932(a)’’.
(2) Section 1903(m)(2) (42 U.S.C. 1396b(m)(2)) is amend-
ed—
(A) in paragraph (A)(vi)—
H. R. 2015—276
monitored as a part of the Secretary’s review of, the State’s mecha-
nized claims processing and information retrieval systems required
under section 1903(r);’’.
(c) EFFECTIVE DATE.—Except as otherwise specifically provided,
the amendments made by this section shall take effect on January
1, 1998.
SEC. 4754. FACILITATING IMPOSITION OF STATE ALTERNATIVE REM-
EDIES ON NONCOMPLIANT NURSING FACILITIES.
(a) 
IN
GENERAL.—Section 
1919(h)(3)(D) 
(42 
U.S.C.
1396r(h)(3)(D)) is amended—
(1) by inserting ‘‘and’’ at the end of clause (i);
(2) by striking ‘‘, and’’ at the end of clause (ii) and inserting
a period; and
(3) by striking clause (iii).
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) take effect on the date of the enactment of this Act.
SEC. 4755. REMOVAL OF NAME FROM NURSE AIDE REGISTRY.
(a) MEDICARE.—Section 1819(g)(1) (42 U.S.C. 1395i-3(g)(1)) is
amended—
(1) by redesignating subparagraph (D) as subparagraph
(E), and
(2) by inserting after subparagraph (C) the following:
‘‘(D) REMOVAL OF NAME FROM NURSE AIDE REGISTRY.—
‘‘(i) IN GENERAL.—In the case of a finding of neglect
under subparagraph (C), the State shall establish a
procedure to permit a nurse aide to petition the State
to have his or her name removed from the registry
upon a determination by the State that—
‘‘(I) the employment and personal history of
the nurse aide does not reflect a pattern of abusive
behavior or neglect; and
‘‘(II) the neglect involved in the original find-
ing was a singular occurrence.
‘‘(ii) TIMING OF DETERMINATION.—In no case shall
a determination on a petition submitted under clause
(i) be made prior to the expiration of the 1-year period
beginning on the date on which the name of the peti-
tioner was added to the registry under subparagraph
(C).’’.
(b) MEDICAID.—Section 1919(g)(1) (42 U.S.C. 1396r(g)(1)) is
amended—
(1) by redesignating subparagraph (D) as subparagraph
(E), and
(2) by inserting after subparagraph (C) the following:
‘‘(D) REMOVAL OF NAME FROM NURSE AIDE REGISTRY.—
‘‘(i) IN GENERAL.—In the case of a finding of neglect
under subparagraph (C), the State shall establish a
procedure to permit a nurse aide to petition the State
to have his or her name removed from the registry
upon a determination by the State that—
‘‘(I) the employment and personal history of
the nurse aide does not reflect a pattern of abusive
behavior or neglect; and
‘‘(II) the neglect involved in the original find-
ing was a singular occurrence.