SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Disability Insurance Reform Act of 
1994''.

SEC. 2. REFORM OF MONTHLY INSURANCE BENEFITS BASED ON DISABILITY 
              INVOLVING SUBSTANCE ABUSE.

    (a) In General.--Section 225 of the Social Security Act (42 U.S.C. 
425) is amended--
            (1) by striking the heading and inserting the following:

      ``additional rules relating to benefits based on disability

                      ``Suspension of Benefits'';

            (2) by inserting before subsection (b) the following new 
        heading:

       ``Continued Payments During Rehabilitation Program''; and

            (3) by adding at the end the following new subsection:

         ``Nonpayment of Benefits by Reason of Substance Abuse

    ``(c)(1)(A) Notwithstanding any other provision of this title, no 
benefit based on disability under this title shall be paid to any 
individual for any month during any period of consecutive months 
beginning with a month in which such individual is medically determined 
to be a drug addict or an alcoholic and ending with a month as of the 
end of which--
            ``(i) the person, through an outpatient rehabilitation 
        program, has subsequently undergone treatment appropriate for 
        such condition for 3 months at an institution or facility 
        approved by the Secretary for purposes of this subsection, and 
        has complied with the terms, conditions, and requirements of 
        such treatment and with the requirements imposed under 
        paragraph (4); and
            ``(ii) the Secretary determines that--
                    ``(I) the person has made progress towards 
                recovery, or has recovered; or
                    ``(II) if the person has not made progress towards 
                recovery, the person meets such requirements 
                established in regulations as the Secretary deems 
                appropriate to effectuate the purposes of this title.
    ``(B) In any case in which an individual's disability is based in 
whole or in part on a medical determination that the individual is a 
drug addict or alcoholic, such individual's benefits based on 
disability under this title which are otherwise payable for any month 
preceding the month in which application for such benefits is made 
(pursuant to section 202(j)(1) or the last sentence of section 223(b)) 
shall be payable only pursuant to a certification of such payment to a 
representative payee of such individual pursuant to section 205(j).
    ``(2) If, after the 3-month treatment period referred to in 
paragraph (1)(A), the Secretary determines that the person has not 
recovered from the condition treated, then, as a condition of receiving 
benefits based on disability under this title for any month after such 
period, the person must continue to comply with the terms, conditions, 
and requirements of such treatment and with the requirements imposed 
under paragraph (4), until the month in which the Secretary determines 
that the person has recovered from such condition.
    ``(3)(A) Notwithstanding any other provision of this title, in the 
case of a person who fails to continue treatment as required by 
paragraph (2), no benefit based on disability shall be paid under this 
title for any month ending after such failure and before the person has 
completed 2 weeks of such treatment.
    ``(B) In the case of a person to whom a benefit based on disability 
under this title becomes payable for any month after a month for which 
such benefit was not payable under subparagraph (A), and who thereafter 
fails to continue treatment as required by paragraph (2), no benefit 
based on disability shall be paid under this title for any month ending 
after such failure and before the person has completed 2 months of such 
treatment.
    ``(C) In the case of a person to whom a benefit based on disability 
under this title becomes payable for any month after a month for which 
such benefit was not payable under subparagraph (B), and who thereafter 
fails to continue treatment as required by paragraph (2), no benefit 
based on disability shall be paid under this title for any month ending 
after such failure.
    ``(4) For purposes of this subsection, the term `benefit based on 
disability' of an individual means a disability insurance benefit of 
such individual under section 223 or a child's, widow's, or widower's 
insurance benefit of such individual under section 202 based on the 
disability of such individual.
    ``(5) Monthly insurance benefits under this title which would be 
payable to any individual (other than the disabled individual to whom 
benefits are not payable by reason of this subsection) on the basis of 
the wages and self-employment income of such a disabled individual but 
for the provisions of paragraph (1), shall be payable as though such 
disabled individual were receiving such benefits which are not payable 
under this subsection.
    ``(6) The Secretary shall provide for the monitoring and testing of 
all individuals who are receiving benefits under this title and who as 
a condition of such benefits are required to be undergoing treatment 
and complying with the terms, conditions, and requirements thereof as 
described in the preceding provisions of this subsection, in order to 
assure such compliance and to determine the extent to which the 
imposition of such requirements is contributing to the achievement of 
the purposes of this title. The Secretary may retain jurisdiction in 
the case of a hearing before the Secretary under this title to the 
extent the Secretary determines necessary to carry out the preceding 
sentence. The Secretary shall annually submit to the Congress a full 
and complete report on the Secretary's activities under this paragraph.
    ``(7) The Secretary, in consultation with drug and alcohol 
treatment professionals, shall develop standards for drug and alcohol 
treatment programs, and in consultation with States, shall develop 
guidelines to be used to review and evaluate the progress of 
participants in such programs.''.
    (b) Preservation of Medicare Benefits.--Section 226 of such title 
(42 U.S.C. 426) is amended by adding at the end the following:
    ``(i) For purposes of this section, each person to whom a benefit 
for any month is not payable by reason of section 225(c) shall be 
treated as entitled to such benefit for such month if such person would 
be entitled to such benefit for such month in the absence of such 
section.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to benefits payable for months beginning 90 or more days after 
the date of the enactment of this Act.

SEC. 3. RESTRICTION OF FUTURE REPRESENTATIVE PAYEES TO GOVERNMENT 
              AGENCIES, STATE-LICENCED OR CERTIFIED FACILITIES, OR 
              STATE-BONDED OR LICENSED COMMUNITY-BASED NONPROFIT SOCIAL 
              SERVICE AGENCIES.

    (a) Restriction to Qualified Organizations.--Section 205(j) of the 
Social Security Act (42 U.S.C. 405(j)) is amended--
            (1) in paragraph (1), by striking ``another individual, or 
        an organization,'' and inserting ``a qualified organization'';
            (2) in paragraph (2)(A)(i), by striking ``the person'' and 
        inserting ``the qualified organization'', and by striking 
        ``such person'' and inserting ``representatives of such 
        qualified organization'';
            (3) in paragraph (2)(B)(i), by striking ``person'' each 
        place it appears in subclause (I) and inserting ``qualified 
        organization'', by striking ``person's social security account 
        number (or employer identification number)'' in subclause (II) 
        and inserting ``qualified organization's employer 
        identification number'', by striking ``such person'' in 
        subclause (III) and inserting ``such qualified organization'', 
        and by striking ``such person'' each place it appears in 
        subclause (IV) and inserting ``such qualified organization''; 
        and
            (4) by striking paragraph (2)(B)(ii), by redesignating 
        paragraph (2)(B)(i) (as amended by paragraph (3)) as paragraph 
        (2)(B), and by redesignating subclauses (I), (II), (III), and 
        (IV) of paragraph (2)(B) (as redesignated) as clauses (i), 
        (ii), (iii), and (iv), respectively.
    (b) Qualified Organization Defined.--
            (1) In general.--Section 205(j)(2)(C)(i) of such Act (42 
        U.S.C. 405(j)(2)(C)(i)) is amended by striking ``Benefits of an 
        individual may not be certified for payment to any other person 
        pursuant to this subsection if--'' and inserting ``For purposes 
        of this subsection, the term `qualified organization' means an 
        agency or instrumentality of a State or a political subdivision 
        of a State, a nonprofit facility that is licensed or certified 
        as a care facility under the law of a State or a political 
        subdivision of a State, and, in connection with services 
        provided as a representative payee under this subsection in any 
        State, a community-based nonprofit social service agency which 
        is bonded or licensed in such State. Except as otherwise 
        provided in this subsection, such term does not include any 
        person if--''.
            (2) Conforming amendments.--Section 205(j)(2)(C) of such 
        Act is further amended--
                    (A) by striking ``subparagraph (B)(i)(III)'' in 
                clause (i)(I) and inserting ``subparagraph (B)(iii)'', 
                and by striking ``subparagraph (B)(i)(IV)'' in clause 
                (i)(II) and inserting ``subparagraph (B)(iv)'';
                    (B) in clause (iii), by striking subclauses (I) and 
                (IV), by redesignating subclauses (II), (III), and (V) 
                as subclauses (I), (II), and (III), respectively, and 
                by striking ``an individual'' in subclause (III) (as 
                redesignated) and inserting ``a person''; and
                    (C) in clause (iv), by striking ``individual'' each 
                place it appears and inserting ``person''.
    (c) Authorization for Fees.--Section 205(j)(4) of such Act (42 
U.S.C. 405(j)(4)) is amended--
            (1) by striking subparagraph (A) and inserting the 
        following:
    ``(4)(A) A qualified organization may collect from an individual a 
monthly fee for expenses (including overhead) incurred by such 
organization in providing services performed as such individual's 
representative payee pursuant to this subsection if such fee does not 
exceed 10 percent of the monthly benefit involved. Any agreement 
providing for a fee in excess of the amount permitted under this 
subparagraph shall be void and shall be treated as misuse by such 
organization of such individual's benefits.'';
            (2) by striking subparagraph (B);
            (3) by redesignating subparagraph (C) as subparagraph (B) 
        and, in subparagraph (B) (as so redesignated), by striking 
        ``qualified organization'' and inserting ``person''; and
            (4) by striking subparagraph (D).
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to certifications of payments to representative 
payees made on or after the date of the enactment of this Act. Section 
205(j) of the Social Security Act (42 U.S.C. 405(j)) as in effect 
immediately before the date of the enactment of this Act shall continue 
to apply, in the case of any person who is then a representative payee 
under such section with respect to benefits for which certification of 
payment to such person under such section is then in effect, until such 
certification ceases to be effective under such section as then in 
effect.
Output: Disability Insurance Reform Act of 1994 - Amends title II (Old Age, Survivors and Disability Insurance) of the Social Security Act to prohibit the payment of benefits based on disability to any individual who is a drug addict or alcoholic until such individual:  (1) undergoes appropriate substance abuse treatment at an approved facility; (2) has complied with the terms of such treatment; and (3) either recovers or makes progress towards recovery, with benefits terminated if the individual fails to continue treatment. 
Requires lump sum disability payments to be made only through a qualified governmental or nonprofit care facility or community-based social service agency representative payees.  Makes other changes with regard to representative payees, including allowing them to collect monthly fees for expenses in providing service. 
Requires the Secretary of Health and Human Services to provide for a monitoring and testing program to ensure individual compliance with treatment requirements.