Partial Hospitalization Services Integrity Act of 1997

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Partial Hospitalization Services 
Integrity Act of 1997''.

SEC. 2. LIMITATION ON LOCATION OF PROVISION OF SERVICES.

    (a) In General.--Section 1861(ff)(2) of the Social Security Act (42 
U.S.C. 1395x(ff)(2)) is amended in the matter following subparagraph 
(I)--
            (1) by striking ``and furnished'' and inserting 
        ``furnished''; and
            (2) by inserting before the period the following: ``, and 
        furnished other than in a skilled nursing facility or in an 
        individual's personal residence''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to partial hospitalization services furnished on or after the 
first day of the third month beginning after the date of the enactment 
of this Act.

SEC. 3. QUALIFICATIONS FOR COMMUNITY MENTAL HEALTH CENTERS.

    Section 1861(ff)(3)(B) of the Social Security Act (42 U.S.C. 
1395x(ff)(3)(B)) is amended by striking ``entity'' and all that follows 
and inserting the following: ``entity that--
            ``(i) provides the mental health services described in 
        paragraph (1) of section 1913(c) of the Public Health Service 
        Act;
            ``(ii) meets applicable licensing or certification 
        requirements for community mental health centers in the State 
        in which it is located; and
            ``(iii) meets such additional conditions as the Secretary 
        may specify to ensure (I) the health and safety of individuals 
        being furnished such services, (II) the effective or efficient 
        furnishing of such services, and (III) the compliance of such 
        entity with the criteria described in such section.''.

SEC. 4. RE-ENROLLMENT OF PROVIDERS OF CMHC PARTIAL HOSPITALIZATION 
              SERVICES.

    (a) In General.--With respect to each community mental health 
center that furnishes partial hospitalization services for which 
payment is made under title XVIII of the Social Security Act, the 
Secretary of Health and Human Services shall provide for periodic re-
certification to ensure that the provision of such services complies 
with section 1913(c) of the Public Health Service Act.
    (b) Deadline for First Re-certification.--The first re-
certification under subsection (a) shall be completed not later than 1 
year after the date of the enactment of this Act.

SEC. 5. PROSPECTIVE PAYMENT SYSTEM FOR PARTIAL HOSPITALIZATION 
              SERVICES.

    (a) Establishment of System.--Section 1833 of the Social Security 
Act (42 U.S.C. 1395l) is amended by inserting after subsection (o) the 
following:
    ``(p)(1) The Secretary may establish by regulation a prospective 
payment system for partial hospitalization services provided by a 
community mental health center or by a hospital to its outpatients. The 
system shall provide for appropriate payment levels for efficient 
centers and take into account payment levels for similar services 
furnished by other efficient entities.
    ``(2) A prospective payment system established pursuant to 
paragraph (1) shall provide for payment amounts for--
            ``(A) the first year in which such system applies, at a 
        level so that, as estimated by the Secretary, the total 
        aggregate payments under this part (including payments 
        attributable to deductibles and coinsurance) are equal to the 
        total aggregate payments that would have otherwise been made 
        under this part if such system had not been implemented; and
            ``(B) each subsequent year, in an amount equal to the 
        payment amount provided for under this paragraph for the 
        preceding year updated by the percentage increase in the 
        consumer price index for all urban consumers (all items; United 
        States city average) for the 12-month period ending with 
        September of that preceding year.''.
    (b) Coinsurance.--Section 1866(a)(2)(A) of such Act (42 U.S.C. 
1395cc(a)(2)(A)) is amended by adding at the end the following: ``In 
the case of services described in section 1832(a)(2)(J), clause (ii) of 
the first sentence of this subparagraph shall be applied by 
substituting the payment basis established under section 1833(p) for 
the reasonable charges.''.
    (c) Conforming Amendments.--(1) Section 1832(a)(2) of such Act (42 
U.S.C. 1395k(a)(2)) is amended--
            (A) in subparagraph (B), by striking ``or subparagraph 
        (I)'' and inserting ``, (I), or (J)''; and
            (B) in subparagraph (J), by striking ``provided by a 
        community mental health center (as described in section 
        1861(ff)(2)(B))''.
    (2) Section 1833(a) of such Act (42 U.S.C. 1395l(a)) is amended--
            (A) in paragraph (2) preceding subparagraph (A), by 
        striking ``(H), and (I)'' and inserting ``(H), (I), and (J)'';
            (B) by striking ``and'' at the end of paragraph (8);
            (C) by striking the period at the end of paragraph (9) and 
        inserting ``; and''; and
            (D) by adding at the end the following new paragraph:
            ``(10) in the case of partial hospitalization services, 80 
        percent of the payment basis under the prospective payment 
        system established under section 1833(p).''.
    (d) Effective Date.--The amendments made by subsections (b) and (c) 
apply to services furnished on or after January 1 of the first year 
that begins at least 6 months after the date on which regulations are 
issued under section 1833(p) of such Act (42 U.S.C. 1395l(p)) as 
inserted by subsection (a).

SEC. 6. DEMONSTRATION FOR IMPROVED PARTIAL HOSPITALIZATION SERVICES.

    (a) Establishment.--
            (1) In general.--The Secretary of Health and Human Services 
        shall implement a demonstration project (in this section 
        referred to as the ``project'') under part B of title XVIII of 
        the Social Security Act under which community mental health 
        centers may offer expanded partial hospitalization services 
        (described in paragraph (2)) for purposes of providing for a 
        full continuum of ambulatory behavioral health care services.
            (2) Additional mental health services described.--For 
        purposes of paragraph (1), the expanded partial hospitalization 
        services are outpatient mental health services and such other 
        mental health services as the Secretary determines appropriate 
        which are not partial hospitalization services as defined in 
        section 1861(ff)(1) of such Act (42 U.S.C. 1395x(ff)(1)).
    (b) Selection of Centers.--For purposes of implementing such 
project, the Secretary shall select for participation in the project 
community mental health centers that serve populations in 3 different 
States, 1 of which predominantly serves rural populations.
    (c) Capitated Payment.--Under this project, payment for expanded 
partial hospitalization services shall be made on a capitated basis.
    (d) Waiver Authority.--The Secretary may waive such provisions of 
title XVIII of the Social Security Act as the Secretary deems necessary 
to conduct the project established under this section.
    (e) Evaluation and Report.--
            (1) Evaluation.--The Secretary shall evaluate the project. 
        Such evaluation shall include an examination of--
                    (A) the project's effect on the health and well-
                being of beneficiaries;
                    (B) any savings to the medicare program by reason 
                of capitated payments for partial hospitalization 
                services;
                    (C) the impact of basing payment for such services 
                on a capitated basis; and
                    (D) the project's effect on utilization of 
                inpatient services (including inpatient mental health 
                services) and associated costs.
            (2) Report.--Not later than 4 years after the date of the 
        enactment of this Act, the Secretary shall submit to Congress a 
        report containing a statement of the findings and conclusions 
        of the Secretary pursuant to the evaluation conducted under 
        paragraph (1), together with any recommendations for 
        legislation the Secretary considers appropriate with respect 
        to--
                    (A) the provision of additional mental health 
                services by community mental health centers under 
                partial hospitalization services; and
                    (B) payment for such services on a capitated basis.
    (f) Duration.--The project shall be conducted for a 3 year period.

Summary: Partial Hospitalization Services Integrity Act of 1997 - Amends title XVIII (Medicare) of the Social Security Act to:  (1) deny coverage of partial hospitalization services in home and skilled nursing home settings; (2) provide for new qualifications for community mental health centers as the Secretary of Health and Human Services may specify to ensure the health and safety of individuals being furnished mental health services and the effective or efficient furnishing of such services; and (3) authorize the Secretary to establish by regulation a prospective payment system for partial hospitalization services provided by a community mental health center or hospital to its outpatients. 
Directs the Secretary to:  (1) provide for periodic re-certification to ensure that the provision of such services complies with appropriate criteria under the Public Health Service Act; and (2) implement a demonstration project under Medicare part B (Supplementary Medical Insurance) under which community mental health centers may offer expanded partial hospitalization services which are not currently covered as such under Medicare for purposes of providing for a full continuum of ambulatory behavioral health care services.