[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1865 Introduced in Senate (IS)]

103d CONGRESS
  2d Session
                                S. 1865

To amend title XIX of the Social Security Act to promote demonstrations 
by States of alternative methods of more efficiently delivering health 
          care services through community health authorities.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

            February 24 (legislative day, February 22), 1994

Mr. McCain introduced the following bill; which was read the first time

_______________________________________________________________________

                                 A BILL


 
To amend title XIX of the Social Security Act to promote demonstrations 
by States of alternative methods of more efficiently delivering health 
          care services through community health authorities.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Community Health Improvement Act of 
1994''.

SEC. 2. COMMUNITY HEALTH AUTHORITIES DEMONSTRATION PROJECTS.

    (a) In General.--Title XIX of the Social Security Act, as amended 
by section 13631(b) of the Omnibus Budget Reconciliation Act of 1993, 
is amended--
            (1) by redesignating section 1931 as section 1932; and
            (2) by inserting after section 1930 the following new 
        section:

         ``community health authorities demonstration projects

    ``Sec. 1931. (a) In General.--In order to test the effectiveness of 
various innovative health care delivery approaches through the 
operation of community health authorities, the Secretary shall operate 
a program under which States establish projects to demonstrate the 
effectiveness of such approaches in providing access to cost-effective 
preventive and primary care and related services for various areas and 
populations, including low-income residents of medically underserved 
areas or for medically underserved populations. A State may operate 
more than 1 such project.
    ``(b) Selection of State Projects.--
            ``(1) In general.--A State is eligible to participate in 
        the program, and establish a demonstration project, under this 
        section only if--
                    ``(A) the State submits to the Secretary an 
                application, at such time and in such form as the 
                Secretary may require, for participation in the 
                program; and
                    ``(B) the Secretary finds that--
                            ``(i) the application contains assurances 
                        that the State will support the development of 
                        a community health authority that meets the 
                        requirements of this section,
                            ``(ii) the community health authority will 
                        meet the requirements for such an authority 
                        under subsection (c),
                            ``(iii) the State provides sufficient 
                        assurances that the demonstration project of a 
                        community health authority meets (or, when 
                        operational, will meet) the requirements of 
                        subsection (d), and
                            ``(iv) the State will comply with the 
                        requirements of subsections (g) and (h).
            ``(2) Contents of application.--Each application submitted 
        under paragraph (1) for a demonstration project shall include 
        at least the following:
                    ``(A) A description of the proposed community 
                health authority and of the area or population that the 
                authority will serve.
                    ``(B) A demonstration that the CHA will serve at 
                least 1 geographic area or population group that is 
                designated as medically underserved under section 330 
                of the Public Health Service Act or as having a 
                shortage of health professionals under section 332 of 
                such Act.
                    ``(C) An assessment of the area's or population's 
                need for services and an assurance that the services of 
                the CHA will be responsive to those needs.
                    ``(D) A list of the items and services to be 
                furnished by the CHA under the project, broken down by 
                those items and services that are treated as medical 
                assistance under the State plan under this title and 
                other items and services that will be provided by the 
                CHA (either directly or through coordination with other 
                entities).
                    ``(E) An assurance that the CHA has entered into 
                (or plans to enter into) written participation 
                agreements with a sufficient number of providers to 
                enable the CHA to furnish all of such items and 
                services to enrolled individuals.
                    ``(F) An assurance that the State plan under this 
                title will provide payment to the authority in 
                accordance with subsection (e).
                    ``(G) Evidence of support and assistance from other 
                State agencies with responsibility for providing or 
                supporting the provision of preventive and primary care 
                services to underserved and at-risk populations.
                    ``(H) A proposed budget for the CHA.
            ``(3) Priority.--The Secretary shall give priority to those 
        applications proposing to support a CHA that includes as 
        participating providers all Federally-qualified health centers 
        serving the area or population or (in areas for which there are 
        no Federally-qualified health centers) all entities that would 
        be Federally-qualified health centers but for the failure to 
        meet the requirement described in section 329(f)(2)(G)(i) of 
        the Public Health Service Act or the requirement described in 
        section 330(e)(3)(G)(i) of such Act (relating to the 
        composition of the entity's governing board).
            ``(4) Period of approval.--Each project approved under this 
        section shall be approved for a period of not less than 5 
        years, subject to renewal for subsequent periods unless such 
        approval is withdrawn for cause by the Secretary or at the 
        request of the State.
    ``(c) Community Health Authority (CHA) Defined.--In this section, 
the terms `community health authority' and `CHA' mean a nonprofit 
entity that meets the following requirements:
            ``(1) The entity serves (or will serve at the time it 
        becomes operational under a project) a geographic area or 
        population group that includes those designated--
                    ``(A) under section 330 of the Public Health 
                Service Act as medically underserved, or
                    ``(B) under section 332 of such Act as a health 
                professions shortage area.
            ``(2) The entity enrolls--
                    ``(A) individuals and families who are medicaid-
                eligible;
                    ``(B) within the limits of its available resources 
                and capacity, other individuals who have incomes below 
                200 percent of the Federal official poverty level; and
                    ``(C) within the limits of its available resources 
                and capacity, other individuals and families who are 
                able to pay the costs of enrollment.
            ``(3) Through its participating providers, the entity 
        provides or, through contracts, arranges for the provision of 
        (or, by the time it becomes operational, will so provide or 
        arrange for the provision of) at least preventive services, 
        primary care services, inpatient and outpatient hospital 
        services, and any other service provided by a participating 
        provider for which payment may be made under the State plan 
        under this title to enrolled individuals.
            ``(4) The entity must include (to the maximum extent 
        practicable) as participating providers any of the following 
        providers that furnish services provided by (or arranged by) 
        the entity that are located in or serve the area or population 
        to be covered:
                    ``(A) Federally-qualified health centers.
                    ``(B) Rural health clinics.
                    ``(C) Local public health agencies that furnish 
                such services.
                    ``(D) A hospital (or other provider of inpatient or 
                outpatient hospital services) which has a participation 
                agreement in effect with the State under its plan under 
                this title, which is located in or serving the area or 
                population to be served.
            ``(5) The entity may include as participating providers 
        other providers (which may include private physicians or group 
        practice offices, other community clinics, limited service 
        providers (such as prenatal clinics), and health professionals 
        teaching programs (such as area health educational centers)) 
        and take other appropriate steps, to the extent needed to 
        assure that the network is reasonable in size and able to 
        provide (or arrange for the provision of) the services it 
        proposes to furnish to its enrollees.
            ``(6) The entity must maintain written agreements with each 
        participating provider under which the provider agrees to 
        participate in the CHA and agrees to accept payment from the 
        CHA as payment in full for services furnished to individuals 
        enrolled with the CHA (subject to the requirements of 
        subsection (g)(4), in the case of services furnished by a 
        provider that are described in subparagraph (B) or (C) of 
        section 1905(a)(2)).
            ``(7) Under the written agreements described in paragraph 
        (6), if a majority of the board of directors of the entity has 
        determined that a participating provider is failing to meet any 
        of the requirements of the participation agreement, the board 
        may terminate the provider's participation agreement in 
        accordance with the following requirements:
                    ``(A) Subject to subparagraph (B), prior to any 
                termination of a provider's participation agreement, 
                the provider shall be entitled to 30 days prior notice, 
                a reasonable opportunity to correct any deficiencies, 
                and an opportunity for a full and fair hearing 
                conducted by the entity to dispute the reasons for 
                termination. The provider shall be entitled to appeal 
                the board of directors' decision directly to a 
                committee consisting of representatives of all of the 
                entity's participating providers.
                    ``(B) If a majority of the board of directors of 
                the entity determines that the continued participation 
                of a provider presents an immediate threat to the 
                health and safety of patients or a substantial risk of 
                improper diversion of funds, the board may suspend the 
                provider's participation agreement (including the 
                receipt of funds under the agreement) for a period of 
                up to 60 days. During this period, the entity shall 
                take steps to ensure that patients who were assigned to 
                or cared for by the suspended provider are 
                appropriately assigned or referred to alternative 
                participating providers. The suspended provider shall 
                be entitled to a hearing within the period of the 
                suspension to show cause why the suspension should be 
                lifted and its participation agreement restored. If 
                dissatisfied with the board's decision, the provider 
                shall be entitled to appeal the decision directly to a 
                committee consisting of representatives of all of the 
                entity's participating providers.
                    ``(C) For all other disputes between the entity and 
                its participating providers (including disputes over 
                the amounts due or interim rates to be paid to a 
                provider), the entity shall provide an opportunity for 
                a full and fair hearing.
            ``(8) The entity must be governed by a board of directors 
        that includes representatives of the participating providers 
        and, as appropriate, other health professionals, civic or 
        business leaders, elected officials, and residents of the area 
        or population served. Not less than 51 percent of such board 
        shall be composed of individuals who are enrolled in the CHA 
        and who are representatives of the community served.
    ``(d) Demonstration Project Requirements.--The requirements of this 
subsection, with respect to a demonstration project of a CHA under this 
section, are as follows:
            ``(1)(A) All services furnished by the CHA under the 
        project shall be available and accessible to all enrolled 
        individuals and, except as provided in subparagraph (B), must 
        be available without regard to an individual's ability to pay 
        for such services.
            ``(B) A CHA shall prepare a schedule of discounts to be 
        applied to the payment of premiums by individuals who are not 
        medicaid-eligible individuals which shall be adjusted on the 
        basis of the individual's ability to pay.
            ``(2) The CHA shall take appropriate steps to emphasize the 
        provision of preventive and primary care services, and shall 
        ensure that each enrolled individual is assigned to a primary 
        care physician (to the greatest extent appropriate and 
        feasible), except that the CHA shall establish a process 
        through which an enrolled individual may be assigned to another 
        primary care physician for good cause shown.
            ``(3) The CHA must make reasonable efforts to reduce the 
        unnecessary or inappropriate use of hospital or other high-cost 
        services through an emphasis on preventive and primary care 
        services, the implementation of utilization review or other 
        appropriate methods.
            ``(4) The State must regularly provide the CHA with 
        information on other medical, health, and related benefits that 
        may be available to individuals enrolled with the CHA under 
        programs other than the State plan under this title, and the 
        CHA must provide its enrolled individuals with enrollment 
        information and other assistance to assist such individuals in 
        obtaining such benefits.
            ``(5) The State and the CHA must meet such financial 
        standards and requirements and reporting requirements as the 
        Secretary specifies and must prepare and submit to the 
        Secretary an annual independent financial audit conducted in 
        accordance with requirements specified by the Secretary.
            ``(6) In collaboration with the State, the CHA must adopt 
        and use community-oriented, patient-responsive quality 
        assurance and control systems in accordance with requirements 
        specified by the Secretary. Such systems must include at least 
        an ongoing quality assurance program that measures consumer 
        satisfaction with the care provided under the network, stresses 
        improved health outcomes, and operates a community health 
        status improvement process that identifies and investigates 
        community health problems and implements measures designed to 
        remedy such problems.
    ``(e) Capitation Payments.--
            ``(1) In general.--Under a demonstration project under this 
        section, the State shall enter into an annual contract with the 
        CHA under which the State shall make monthly payments to the 
        CHA for covered services furnished through the CHA to 
        individuals entitled to medical assistance under this title in 
        the amount specified in paragraph (2). Payment shall be made at 
        the beginning of each month on the basis of estimates of the 
        amounts payable and amounts subsequently paid are subject to 
        adjustment to reflect the amounts by which previous payments 
        were greater or less than the amount of payments that should 
        have been made.
            ``(2) Amount of capitation payment.--The amount of a 
        monthly payment under paragraph (1) during a contract year, 
        shall be equal to \1/12\ of the product of--
                    ``(A)(i) the average per capita amounts expended 
                under this title under the State plan for covered 
                services to be furnished under the demonstration 
                project for similar medicaid-eligible individuals for 
                the most recent 12-month period ending before the date 
                of the enactment of this section, increased by (ii) the 
                percentage change in the consumer price index for all 
                urban consumers (all items; U.S. city average) during 
                the period that begins upon the expiration of such 12-
                month period and ends upon the expiration of the most 
                recent 12-month period ending before the first month of 
                the contract year for which complete financial data on 
                such index is available, and
                    ``(B) the number of medicaid-eligible individuals 
                enrolled under the project as of the 15th day of the 
                month prior to the first month of the contract year 
                (or, in the case of the first year for which a contract 
                is in effect under this subsection, the CHA's 
                reasonable estimate of the number of such individuals 
                who will be enrolled in the project as of the 15th day 
                of such month).
    ``(f) Additional State Assistance for Planning, Development, and 
Operations.--
            ``(1) In general.--Subject to paragraph (2), in addition to 
        the payments under subsection (e), demonstration projects 
        approved under this section are eligible to have approved 
        expenditures described in paragraph (3) treated, for purposes 
        of section 1903(a)(7), as expenditures found necessary by the 
        Secretary for the proper and efficient administration of the 
        State plan under this title.
            ``(2) Special rules.--
                    ``(A) Limitation with respect to any community 
                health authority.--The total amount of expenditures 
                with respect to any CHA that may be treated as 
                expenditures for administration under paragraph (1) for 
                any 12-month period shall not exceed $250,000.
                    ``(B) Limitation on number of years.--The number of 
                12-month periods for which expenditures are treated as 
                expenditures for administration under paragraph (1) for 
                a CHA shall not exceed--
                            ``(i) 2 for expenditures for planning and 
                        development assistance, described in paragraph 
                        (3)(A), and
                            ``(ii) 2 for expenditures for operational 
                        assistance, described in paragraph (3)(B).
                    ``(C) No resulting reduction in amounts provided 
                under phsa grants.--No grant to a CHA or 1 of its 
                participating providers under the Public Health Service 
                Act or this Act may be reduced on the ground that 
                activities of the CHA that are considered approved 
                expenditures under paragraph (3) are activities for 
                which the CHA or the participating providers received 
                funds under such Act.
            ``(3) Approved expenditures.--The approved expenditures 
        described in this paragraph are as follows:
                    ``(A) Planning and development.--Expenditures for 
                planning and development with respect to a CHA, 
                including--
                            ``(i) developing internal management, legal 
                        and financial and clinical, information, and 
                        reporting systems for the CHA, and carrying out 
                        other operating activities of the CHA;
                            ``(ii) recruiting, training and 
                        compensating management staff of the CHA and, 
                        as appropriate and necessary, management and 
                        clinical staff of any participating provider;
                            ``(iii) purchasing essential equipment and 
                        acquiring, modernizing, expanding, or (if cost-
                        effective) constructing facilities for the CHA 
                        and for participating providers (including 
                        amortization costs and payment of interest on 
                        loans); and
                            ``(iv) entering into arrangements to obtain 
                        or participate in emerging medical 
                        technologies, including telemedicine.
                    ``(B) Operations.--Expenditures in support of the 
                operations of a CHA, including--
                            ``(i) the ongoing management of the CHA, 
                        including daily program administration, 
                        recordkeeping and reporting, assurance of 
                        proper financial management (including billings 
                        and collections) and oversight of program 
                        quality;
                            ``(ii) developing and operating systems to 
                        enroll eligible individuals in the CHA;
                            ``(iii) data collection, in collaboration 
                        with the State medicaid agency and the State 
                        health department, designed to measure changes 
                        in patient access to care, the quality of care 
                        furnished, and patient health status, and 
                        health care outcomes;
                            ``(iv) ongoing community outreach and 
                        community education to all residents of the 
                        area or population served, to promote the 
                        enrollment of eligible individuals and the 
                        appropriate utilization of health services by 
                        such individuals;
                            ``(v) the establishment of necessary 
                        reserves or purchase of stop-loss coverage; and
                            ``(vi) activities relating to health 
                        professions training, including residency 
                        training at participating provider sites.
    ``(g) Additional Requirements.--
            ``(1) Mandatory enrollment of medicaid-eligible 
        individuals.--Notwithstanding any provision of section 1903(m), 
        a State participating in a demonstration project under this 
        section may require that each medicaid-eligible resident in the 
        service area of a CHA operating under the project is not 
        eligible to receive any medical assistance under the State plan 
        that may be obtained through enrollment with the CHA unless the 
        individual receives such assistance through enrollment with the 
        CHA.
            ``(2) Continued entitlement to additional benefits.--In the 
        case of a medicaid-eligible individual enrolled with a CHA 
        under a demonstration project under this section, the 
        individual shall remain entitled to medical assistance for 
        services which are not covered services under the project.
            ``(3) HMO-related requirements.--A CHA under this section 
        shall be deemed to meet the requirements of section 1903(m) 
        (subject to paragraph (1)) in the same manner as an entity 
        listed under section 1903(m)(2)(G).
            ``(4) Treatment of federally-qualified health centers and 
        rural health clinics.--Payments under a demonstration project 
        under this section to a Federally qualified health center or 
        rural health clinic which is a participating provider shall be 
        made consistent with section 1902(a)(13)(E) for all services 
        offered by the CHA which are provided by such a center or 
        clinic.
            ``(5) Outstationing eligibility workers.--Under the 
        project, the State may (in addition to meeting the requirements 
        of section 1902(a)(55)) provide for, or pay the reasonable 
        costs of, stationing eligibility workers at appropriate service 
        sites under the project, and may permit medicaid-eligible 
        individuals to be enrolled under the State plan at such a CHA 
        or at such a site.
            ``(6) Purchase of stop-loss coverage.--The State shall 
        ensure that the CHA has purchased stop-loss coverage to protect 
        against default on its obligations under the project. If an 
        entity otherwise qualified to serve as a CHA is prohibited 
        under State law from purchasing such coverage, the State shall 
        waive the application of such law to the extent necessary to 
        permit the entity to purchase such coverage.
    ``(h) Evaluation and Reporting.--
            ``(1) CHA.--Each CHA in a State with a demonstration 
        project approved under this section shall prepare and submit to 
        the State an annual report on its activities during the 
        previous year.
            ``(2) State.--Taking into account the reports submitted 
        pursuant to paragraph (1), each State with a demonstration 
        project approved under this section shall prepare and submit to 
        the Secretary an annual evaluation of its activities and 
        services under this section. Such evaluation shall include an 
        analysis of the effectiveness of the project in providing cost-
        effective health care to enrolled individuals.
            ``(3) Report to congress.--Not later than 3 years after the 
        date of the enactment of this section, the Secretary shall 
        submit to Congress a report on the demonstration projects 
        conducted under this section. Such report shall include an 
        analysis of the effectiveness of such projects in providing 
        cost-effective health care for the areas or populations served.
    ``(i) Collaboration in Administration.--In carrying out this 
section, the Secretary shall assure the highest possible level of 
collaboration between the Health Care Financing Administration and the 
Public Health Service. Such collaboration may include (if appropriate 
and feasible) any of the following:
            ``(1) The provision by the Public Health Service of new or 
        increased grant support to eligible entities participating in a 
        CHA, in order to expand the availability of services 
        (particularly preventive and primary care services).
            ``(2) The placement of health professionals at eligible 
        locations and collaboration with Federally-assisted health 
        professions training programs located in or near the areas 
        served by community health authorities.
            ``(3) The provision of technical and other nonfinancial 
        assistance.
    ``(j) Definitions.--In this section:
            ``(1) Medicaid-eligible individual.--The term `medicaid-
        eligible individual' means an individual described in section 
        1902(a)(10)(A) and entitled to medical assistance under the 
        State plan.
            ``(2) Participating provider.--The term `participating 
        provider' means, with respect to a CHA, a provider that has 
        entered into an agreement with the CHA for the provision of 
        covered services under a project under this section.
            ``(3) Preventive and primary care services.--`Preventive' 
        and `primary' services include those services described in 
        section 1905(l)(2)(A) and included as Federally-qualified 
        health center services.''.
    (b) Continued Medicaid Eligibility for up to 1 Year.--Section 
1902(e)(2) of such Act (42 U.S.C. 1396a(e)(2)) is amended--
            (1) in subparagraph (A)--
                    (A) by inserting ``or with a community health 
                authority under a demonstration project under section 
                1931'' after ``section 1876'', and
                    (B) by striking ``such organization or entity'' and 
                inserting ``such organization, entity, or authority''; 
                and
            (2) in subparagraph (B), by striking ``effective.'' and 
        inserting the following: ``effective (or, in the case of an 
        individual enrolled with a community health authority under a 
        demonstration project under section 1931, of not more than 1 
        year beginning on the date the individual's enrollment with the 
        authority becomes effective).''.
    (c) Exception to Anti-Kickback Law.--Section 1128B(b)(3) of such 
Act (42 U.S.C. 1320a-7b(b)(3)) is amended--
            (1) by striking ``and'' at the end of subparagraph (D),
            (2) by striking the period at the end of subparagraph (E) 
        and inserting ``; and'', and
            (3) by adding at the end the following new subparagraph:
            ``(F) any remuneration paid, or received, by a Federally 
        qualified health center, rural health clinic, or other entity 
        which is a participating provider under a demonstration project 
        under section 1931 as part of an arrangement for the 
        procurement of goods or services or the referral of patients or 
        the lease or purchase of space or equipment.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to calendar quarters beginning on or after October 1, 1994.

SEC. 3. HEALTH CENTER PROGRAM AMENDMENTS.

    (a) Authorization of Grants for Network Development.--
            (1) Migrant health centers.--Section 329 of the Public 
        Health Service Act (42 U.S.C. 254b) is amended by adding at the 
        end the following:
    ``(j)(1) The Secretary may make a grant, to an entity receiving a 
grant under this section or to a group of such entities, to support the 
planning and development of health service networks (as defined in 
paragraph (3)) which will serve high impact areas, medically 
underserved areas, or medically underserved populations within the area 
they serve (or propose to serve).
    ``(2) A grant under this subsection for the planning and 
development of a health service network may be used for the following 
costs:
            ``(A) The costs of developing the network corporate entity, 
        including planning and needs assessment.
            ``(B) The costs of developing internal management for the 
        network, as well as costs of developing legal, financial, 
        clinical, information, billing, and reporting systems, and 
        other costs necessary to achieve operational status.
            ``(C) The costs of recruitment, training, and compensation 
        of management staff of the network and, as appropriate and 
        necessary, the management and clinical staff of any 
        participating provider.
            ``(D) The costs of developing additional primary health and 
        related service sites, including costs related to purchase of 
        essential equipment, acquisition, modernization, expansion, or, 
        if cost-effective, construction of facilities.
    ``(3) In this subsection, the term `health service network' means a 
nonprofit private entity that--
            ``(A) through its participating providers (which may 
        provide services directly or through contract) assures the 
        provision of primary health and related services and, as 
        appropriate, supplemental health services to residents of the 
        high impact area or medically underserved area or members of 
        the medically underserved population covered by the network,
            ``(B) includes, as participating providers, at least all 
        recipients of grants under this section or section 330, 340, or 
        340A that provide primary health and related services to the 
        residents of the area it serves (or proposes to serve), and 
        that may include, at the entity's option, any other providers 
        of primary health or supplemental health services to residents 
        of the high impact area or medically underserved area or 
        members of the medically underserved population covered by the 
        network, but only if such participating providers agree to 
        provide services without regard to an individual's ability to 
        pay, and
            ``(C) is governed by individuals a majority of whom are 
        patients, employees, or board members of its participating 
        providers that receive grants under this section or section 
        330, 340, or 340A.''.
            (2) Community health centers.--Section 330 of such Act (42 
        U.S.C. 254c) is amended by adding at the end the following:
    ``(l)(1) The Secretary may make a grant, to an entity receiving a 
grant under this section or to a group of such entities, to support the 
planning and development of health service networks (as defined in 
section 329(j)(3)) which will serve high impact areas, medically 
underserved areas, or medically underserved populations within the area 
they serve (or propose to serve).
    ``(2) A grant under this subsection for the planning and 
development of a health service network may be used for the costs 
described in section 329(j)(2).''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on the date of the enactment of this Act.
    (b) Extension of Authorization of Appropriations.--
            (1) Migrant health centers.--Section 329(h)(1)(A) of such 
        Act (42 U.S.C. 254b(h)(1)(A)) is amended--
                    (A) by inserting ``and subsection (j)'' after 
                ``through (e)'', and
                    (B) by striking ``1994'' and inserting ``1999''.
            (2) Community health centers.--Section 330(g)(1)(A) of such 
        Act (42 U.S.C. 254c(g)(1)(A)) is amended by striking ``1994'' 
        and inserting ``1999''.

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