[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2422 Introduced in House (IH)]

  1st Session
                                H. R. 2422

To amend title XVIII of the Social Security Act to provide for security 
                        of the medicare program.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 28, 1995

   Mr. McDermott (for himself, Mr. Ford, Mr. Olver, Mr. Dellums, Mr. 
    Torres, Mr. Moakley, Mrs. Clayton, Mr. Kleczka, Mr. Scott, Ms. 
McKinney, Ms. Pelosi, Mr. Spratt, Mr. Barrett of Wisconsin, Mr. Owens, 
Mr. Faleomavaega, Mr. Yates, Mr. Vento, Mr. Conyers, Mr. Martinez, Miss 
  Collins of Michigan, Mr. Gene Green of Texas, and Mr. Watt of North 
  Carolina) introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committee on 
Commerce, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend title XVIII of the Social Security Act to provide for security 
                        of the medicare program.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Security 
Act of 1995''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                 TITLE I--MEDICARE SECURITY COMMISSION

Sec. 101. Establishment of Medicare Security Commission.
Sec. 102. Duties.
Sec. 103. Membership.
Sec. 104. Staff and consultants.
Sec. 105. Powers.
Sec. 106. Report.
Sec. 107. Termination.
                       TITLE II--MEDICARE SAVINGS

                 Subtitle A--Savings in Medicare Part A

Sec. 201. Reductions in updates for inpatient hospital services subject 
                            to prospective payment system.
Sec. 202. Payment for ancillary costs of skilled nursing facilities 
                            under physician fee schedule.
Sec. 203. Maintaining savings resulting from temporary freeze on 
                            payment increases skilled nursing facility 
                            services.
Sec. 204. Continuation of reduction in payments for capital-related 
                            costs of inpatient hospital services.
                 Subtitle B--Savings in Medicare Part B

Sec. 211. Elimination of formula-driven overpayments for certain 
                            outpatient hospital services.
Sec. 212. Continuing reduction in practice expense relative value units 
                            for certain services.
Sec. 213. Correction of MVPS upward bias.
Sec. 214. Application of competitive acquisition process for durable 
                            medical equipment and clinical diagnostic 
                            laboratory tests.
                  Subtitle C--Savings in Parts A and B

Sec. 221. Extension of secondary payer data match requirements.
Sec. 222. Maintaining savings resulting from temporary freeze on 
                            payment increases for home health services.
Sec. 223. 6 percent reduction in AAPCC paid to medicare health 
                            maintenance organizations.
               Subtitle D--Transfers to Part A Trust Fund

Sec. 231. Transfer of amounts saved to Federal Hospital Insurance Trust 
                            Fund.

                 TITLE I--MEDICARE SECURITY COMMISSION

SEC. 101. ESTABLISHMENT OF MEDICARE SECURITY COMMISSION.

    There is established a commission to be known as the Medicare 
Security Commission (in this Act referred to as the ``Commission'').

SEC. 102. DUTIES.

    The Commission shall make specific recommendations regarding 
revisions to the medicare program and health care financing and 
coverage generally to assure the continuing viability of the program 
during 2010 and thereafter when demographic changes are expected to 
expand medicare's enrollment significantly. Such revisions must be 
designed in a manner that does not increase the number of uninsured or 
reduce access to care by program beneficiaries or patients in general 
and does not increase the financial obligations of current program 
beneficiaries, including revisions to the methodology under which 
payments are made by the medicare program on behalf of beneficiaries 
who are enrolled in private health care plans.

SEC. 103. MEMBERSHIP.

    (a) Appointment.--
            (1) In general.--The Commission shall be composed of seven 
        members appointed by the President, of whom two shall be 
        appointed from a list of nominees submitted by the President 
        pro tempore of the Senate (after consultation with the minority 
        leader of the Senate) and two shall be appointed from among a 
        list of nominees submitted by the Speaker of the House of 
        Representatives (after consultation with the minority leader of 
        the House of Representatives). Not more than three members of 
        the Commission may be of the same political party.
            (2) Deadline for appointment and terms.--The members of the 
        Commission shall be appointed not later than December 1, 1995, 
        and shall serve for the life of the Commission.
    (b) Chairman and Vice Chairman.--The Commission shall elect a 
chairman and a vice chairman from among its members.
    (c) Vacancies.--Any vacancy in the membership of the Commission 
shall be filled in the manner in which the original appointment was 
made and shall not affect the power of the remaining members to execute 
the duties of the Commission.
    (d) Quorum.--A quorum shall consist of five members of the 
Commission, except that two members may conduct a hearing under section 
105(a).
    (e) Meetings.--The Commission shall meet at the call of its 
chairman or a majority of its members.
    (f) Compensation and Reimbursement of Expenses.--Members of the 
Commission are not entitled to receive compensation for service on the 
Commission. Members may be reimbursed for travel, subsistence, and 
other necessary expenses incurred in carrying out the duties of the 
Commission.

SEC. 104. STAFF AND CONSULTANTS.

    (a) Staff.--The Commission may appoint and determine the 
compensation of such staff as may be necessary to carry out the duties 
of the Commission. Such appointments and compensation may be made 
without regard to the provisions of title 5, United States Code, that 
govern appointments in the competitive services, and the provisions of 
chapter 51 and subchapter III of chapter 53 of such title that relate 
to classifications and the General Schedule pay rates.
    (b) Consultants.--The Commission may procure such temporary and 
intermittent services of consultants under section 3109(b) of title 5, 
United States Code, as the Commission determines to be necessary to 
carry out the duties of the Commission.

SEC. 105. POWERS.

    (a) 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 determines to be necessary to carry 
out its duties.
    (b) Studies by General Accounting Office.--Upon the request of the 
Commission, the Comptroller General shall conduct such studies or 
investigations as the Commission determines to be necessary to carry 
out its duties.
    (c) Cost Estimates by Congressional Budget Office.--
            (1) In general.--Upon the request of the Commission, the 
        Director of the Congressional Budget Office shall provide to 
        the Commission such cost estimates as the Commission determines 
        to be necessary to carry out its duties.
            (2) Reimbursement.--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 additional staff as may be necessary for the Director to 
        comply with requests by the Commission under paragraph (1).
    (d) 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.
    (e) 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.
    (f) 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 considered a commission of 
Congress as described in section 3215 of title 39, United States Code.
    (g) 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 
Commission.
    (h) 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.
    (i) Acceptance of Donations.--The Commission may accept, use, and 
dispose of gifts or donations of services or property.

SEC. 106. REPORT.

    Not later than January 1, 1998, the Commission shall submit to 
Congress a report containing its recommendations under section 102, and 
shall include in the report recommendations for appropriate legislative 
initiatives to carry out its recommendations.

SEC. 107. TERMINATION.

    The Commission shall terminate 30 days after the date of submission 
of the report required in section 106.

                       TITLE II--MEDICARE SAVINGS

                 Subtitle A--Savings in Medicare Part A

SEC. 201. REDUCTIONS IN UPDATES FOR INPATIENT HOSPITAL SERVICES SUBJECT 
              TO PROSPECTIVE PAYMENT SYSTEM.

    Section 1886(b)(3)(B)(i) of the Social Security Act (42 U.S.C. 
1395ww(b)(3)(B)(i)) is amended--
            (1) in subclause (XI), by striking ``fiscal year 1996'' and 
        inserting ``fiscal years 1996 through 1999'', and
            (2) by striking subclauses (XII) and (XIII) and inserting 
        the following:
            ``(XII) for fiscal years 2000 through 2002, the market 
        basket percentage increase minus 1 percentage point for 
        hospitals in all areas, and
            ``(XIII) for fiscal year 2003 and each subsequent fiscal 
        year, the market basket percentage increase for hospitals in 
        all areas.''.

SEC. 202. PAYMENT FOR ANCILLARY COSTS OF SKILLED NURSING FACILITIES 
              UNDER PHYSICIAN FEE SCHEDULE.

    (a) Requiring Payment Under Part B To Be Made Under Physician Fee 
Schedule.--
            (1) In general.--Section 1832(a)(2)(C) of the Social 
        Security Act (42 U.S.C. 1395k(a)(2)(C)) is amended by striking 
        the semicolon at the end and inserting the following: ``, other 
        than services furnished by a skilled nursing facility or by 
        others under arrangement with them made by the facility;''.
            (2) Clarification of payment for speech-language pathology 
        services.--The fourth sentence of section 1861(p) of such Act 
        (42 U.S.C. 1395x(p)) is amended by striking ``outpatient,'' and 
        inserting ``outpatient or as an inpatient of an extended care 
        facility,''.
    (b) Conforming Amendment for Services Furnished Under Part A.--
Section 1814 of such Act (42 U.S.C. 1395f) is amended--
            (1) in subsection (b) in the matter preceding paragraph 
        (1)--
                    (A) by striking ``and other than'' and inserting 
                ``other than'', and
                    (B) by striking ``equipment)'' and inserting 
                ``equipment, and other than a skilled nursing facility 
                with respect to extended care services described in 
                section 1861(h)(3))''; and
            (2) by adding at the end the following new subsection:

 ``Payments to Skilled Nursing Facilities for Certain Therapy Services

    ``(m) The amount paid to any skilled nursing facility with respect 
to extended care services described in section 1861(h)(3) for which 
payment may be made under this part shall be the amount determined 
pursuant to section 1833(a)(1)(N).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to services furnished on or after October 1, 1995.

SEC. 203. MAINTAINING SAVINGS RESULTING FROM TEMPORARY FREEZE ON 
              PAYMENT INCREASES SKILLED NURSING FACILITY SERVICES.

    (a) Basing Updates to Per Diem Cost Limits on Limits for Fiscal 
Year 1993.--
            (1) In general.--The last sentence of section 1888(a) of 
        the Social Security Act (42 U.S.C. 1395yy(a)) is amended by 
        adding at the end the following: ``(except that such updates 
        may not take into account any changes in the routine service 
        costs of skilled nursing facilities occurring during cost 
        reporting periods which began during fiscal year 1994 or fiscal 
        year 1995).''.
            (2) No exceptions permitted based on amendment.--The 
        Secretary of Health and Human Services shall not consider the 
        amendment made by paragraph (1) in making any adjustments 
        pursuant to section 1888(c) of the Social Security Act.
    (b) Payments Determined on Prospective Basis.--Any change made by 
the Secretary of Health and Human Services in the amount of any 
prospective payment paid to a skilled nursing facility under section 
1888(d) of the Social Security Act for cost reporting periods beginning 
on or after October 1, 1995, may not take into account any changes in 
the costs of services occurring during cost reporting periods which 
began during fiscal year 1994 or fiscal year 1995.

SEC. 204. CONTINUATION OF REDUCTION IN PAYMENTS FOR CAPITAL-RELATED 
              COSTS OF INPATIENT HOSPITAL SERVICES.

    Section 1886(g)(1)(A) of the Social Security Act (42 U.S.C. 
1395ww(g)(1)(A)) is amended by striking ``through 1995'' and inserting 
``through 2002''.

                 Subtitle B--Savings in Medicare Part B

SEC. 211. ELIMINATION OF FORMULA-DRIVEN OVERPAYMENTS FOR CERTAIN 
              OUTPATIENT HOSPITAL SERVICES.

    (a) Ambulatory Surgical Center Procedures.--Section 
1833(i)(3)(B)(i)(II) of the Social Security Act (42 U.S.C. 
1395l(i)(3)(B)(i)(II)) is amended--
            (1) by striking ``of 80 percent''; and
            (2) by striking the period at the end and inserting the 
        following: ``, less the amount a provider may charge as 
        described in clause (ii) of section 1866(a)(2)(A).''.
    (b) Radiology Services and Diagnostic Procedures.--Section 
1833(n)(1)(B)(i)(II) of such Act (42 U.S.C. 1395l(n)(1)(B)(i)(II)) is 
amended--
            (1) by striking ``of 80 percent''; and
            (2) by striking the period at the end and inserting the 
        following: ``, less the amount a provider may charge as 
        described in clause (ii) of section 1866(a)(2)(A).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to services furnished during portions of cost reporting periods 
occurring on or after January 1, 1996.

SEC. 212. CONTINUING REDUCTION IN PRACTICE EXPENSE RELATIVE VALUE UNITS 
              FOR CERTAIN SERVICES.

    (a) In General.--Section 1848(c)(2)(E)(i) of the Social Security 
Act (42 U.S.C. 1395w@4(c)(2)(E)(i)) is amended--
            (1) by striking ``and'' at the end of subclause (II);
            (2) by striking the period at the end of subclause (III); 
        and
            (3) by adding at the end the following new subclause:
                                    ``(IV) 1997, by an additional 25 
                                percent of such excess.''.
    (b) Lowering Floor on Reductions.--Section 1848(c)(2)(E)(ii) of 
such Act (42 U.S.C. 1395w@4(c)(2)(E)(ii)) is amended by striking ``128 
percent'' and inserting ``120 percent''.
    (c) Effective Date.--The amendments made by this section shall 
apply to physicians' services furnished on or after January 1, 1997.

SEC. 213. CORRECTION OF MVPS UPWARD BIAS.

    (a) In General.--Section 1848(f)(2)(A)(iv) of the Social Security 
Act (42 U.S.C. 1395w-4(f)(2)(A)(iv)) is amended by striking ``including 
changes in law and regulations affecting the percentage increase 
described in clause (i)'' and inserting ``excluding anticipated 
responses to such changes''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to performance standard rates of increase determined 
for fiscal year 1996 and succeeding fiscal years.

SEC. 214. APPLICATION OF COMPETITIVE ACQUISITION PROCESS FOR DURABLE 
              MEDICAL EQUIPMENT AND CLINICAL DIAGNOSTIC LABORATORY 
              TESTS.

    (a) In General.--Part B of title XVIII of the Social Security Act 
is amended by inserting after section 1846 the following:

        ``competition acquisition for certain items and services

    ``Sec. 1847. (a) Establishment of Bidding Areas.--
            ``(1) In general.--The Secretary shall establish 
        competitive acquisition areas for the purpose of awarding a 
        contract or contracts for the furnishing under this part of the 
        items and services described in subsection (c) on or after 
        January 1, 1997. The Secretary may establish different 
        competitive acquisition areas under this subsection for 
        different classes of items and services under this part.
            ``(2) Criteria for establishment.--The competitive 
        acquisition areas established under paragraph (1) shall--
                    ``(A) initially be, or be within, metropolitan 
                statistical areas; and
                    ``(B) be chosen based on the availability and 
                accessibility of suppliers and the probable savings to 
                be realized by the use of competitive bidding in the 
                furnishing of items and services in the area.
    ``(b) Awarding of Contracts in Areas.--
            ``(1) In general.--The Secretary shall conduct a 
        competition among individuals and entities supplying items and 
        services under this part for each competitive acquisition area 
        established under subsection (a) for each class of items and 
        services.
            ``(2) Conditions for awarding contract.--The Secretary may 
        not award a contract to any individual or entity under the 
        competition conducted pursuant to paragraph (1) to furnish an 
        item or service under this part unless the Secretary finds that 
        the individual or entity--
                    ``(A) meets quality standards specified by the 
                Secretary for the furnishing of such item or service; 
                and
                    ``(B) offers to furnish a total quantity of such 
                item or service that is sufficient to meet the expected 
                need within the competitive acquisition area.
            ``(3) Contents of contract.--A contract entered into with 
        an individual or entity under the competition conducted 
        pursuant to paragraph (1) shall specify (for all of the items 
        and services within a class)--
                    ``(A) the quantity of items and services the entity 
                shall provide; and
                    ``(B) such other terms and conditions as the 
                Secretary may require.
    ``(c) Services Described.--The items and services to which the 
provisions of this section shall apply are as follows:
            ``(1) Covered items under section 1834(a).
            ``(2) Clinical diagnostic laboratory tests.
            ``(3) Such other items and services for which the Secretary 
        determines that the use of competitive acquisition under this 
        section is appropriate and cost-effective.''.
    (b) Items and Services To Be Furnished Only Through Competitive 
Acquisition.--Section 1862(a) of such Act (42 U.S.C. 1395y(a)) is 
amended--
            (1) by striking ``or'' at the end of paragraph (14);
            (2) by striking the period at the end of paragraph (15) and 
        inserting ``; or''; and
            (3) by inserting after paragraph (15) the following new 
        paragraph:
            ``(16) where such expenses are for an item or service 
        furnished in a competitive acquisition area (as established by 
        the Secretary under section 1847(a)) by an individual or entity 
        other than the supplier with whom the Secretary has entered 
        into a contract under section 1847(b) for the furnishing of 
        such item or service in that area, unless the Secretary finds 
        that such expenses were incurred in a case of urgent need.''.
    (c) Reduction in Payment Amounts if Competitive Acquisition Fails 
to Achieve Minimum Reduction in Payments.--Notwithstanding any other 
provision of title XVIII of the Social Security Act, if the 
establishment of competitive acquisition areas under section 1847 of 
such Act (as added by subsection (a)) and the limitation of coverage 
for items and services under part B of such title to items and services 
furnished by providers with competitive acquisition contracts under 
such section does not result in a reduction of at least 10 percent in 
the projected payment amount that would have applied to the item or 
service under part B if the item or service had not been furnished 
through competitive acquisition under such section, the Secretary shall 
reduce the payment amount by such percentage as the Secretary 
determines necessary to result in such a reduction.
    (d) Effective Date.--The amendments made by this section shall 
apply to items and services furnished on or after January 1, 1997.

                  Subtitle C--Savings in Parts A and B

SEC. 221. EXTENSION OF SECONDARY PAYER DATA MATCH REQUIREMENTS.

    (a) In General.--Section 1862(b)(5)(C)(iii) of the Social Security 
Act (42 U.S.C. 1395y(b)(5)(C)(iii)) is amended by striking ``1998'' and 
inserting ``2002''.
    (b) Conforming Amendment.--Section 6103(l)(12) of the Internal 
Revenue Code of 1986 is amended by striking ``1998'' and inserting 
``2002''.

SEC. 222. MAINTAINING SAVINGS RESULTING FROM TEMPORARY FREEZE ON 
              PAYMENT INCREASES FOR HOME HEALTH SERVICES.

    (a) Basing Updates to Per Visit Cost Limits on Limits for Fiscal 
Year 1993.--Section 1861(v)(1)(L)(iii) of the Social Security Act (42 
U.S.C. 1395x(v)(1)(L)(iii)) is amended by adding at the end the 
following sentence: ``In establishing limits under this subparagraph, 
the Secretary may not take into account any changes in the costs of the 
provision of services furnished by home health agencies with respect to 
cost reporting periods which began on or after July 1, 1994, and before 
July 1, 1996.''.
    (b) No Exceptions Permitted Based on Amendment.--The Secretary of 
Health and Human Services shall not consider the amendment made by 
subsection (a) in making any exemptions and exceptions pursuant to 
section 1861(v)(1)(L)(ii) of the Social Security Act.

SEC. 223. 6 PERCENT REDUCTION IN AAPCC PAID TO MEDICARE HEALTH 
              MAINTENANCE ORGANIZATIONS.

    (a) In General.--Section 1876(a)(1)(C) of the Social Security Act 
(42 U.S.C. 1395mm(a)(1)(C)) is amended by striking ``95 percent'' and 
inserting ``89 percent''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to contracts entered into or renewed under section 
1876 of the Social Security Act on or after the date of the enactment 
of this Act.

               Subtitle D--Transfers to Part A Trust Fund

SEC. 231. TRANSFER OF AMOUNTS SAVED TO FEDERAL HOSPITAL INSURANCE TRUST 
              FUND.

    (a) In General.--For each fiscal year, the Secretary of the 
Treasury shall transfer to the Federal Hospital Insurance Trust Fund 
under section 1817 of the Social Security Act amounts equivalent to the 
Secretary of the Treasury's estimate of the amount which would have 
been expended from the Federal Supplementary Medical Insurance Trust 
Fund under section 1841 of such Act during such fiscal year but for the 
provisions of this title.
    (b) Transfer Rules, Etc..--The provisions of section 9602 of the 
Internal Revenue Code of 1986 shall apply to transfers under this 
section.
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HR 2422 IH----2