[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3950 Introduced in House (IH)]







104th CONGRESS
  2d Session
                                H. R. 3950

   To amend title 38, United States Code, to reorganize the veterans 
health system; to improve access to, and the quality and efficiency of, 
care provided to the Nation's veterans; to operate the veterans health 
system based on the principles of managed care, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 2, 1996

 Mr. Longley introduced the following bill; which was referred to the 
                     Committee on Veterans' Affairs

_______________________________________________________________________

                                 A BILL


 
   To amend title 38, United States Code, to reorganize the veterans 
health system; to improve access to, and the quality and efficiency of, 
care provided to the Nation's veterans; to operate the veterans health 
system based on the principles of managed care, and for other purposes.

    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 ``GI Bill of 
Health''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purposes.
Sec. 4. Veterans Health Care Security.
Sec. 5. Technical and conforming amendments to chapter 17 of title 38, 
                            United States Code.
Sec. 6. Technical and conforming amendments to title 38, United States 
                            Code.
Sec. 7. Effective date.

SEC. 2. FINDINGS.

    The Congress finds as follows:
            (1) The Veterans Health Administration of the Department of 
        Veterans Affairs operates one of the Nation's largest hospital 
        and health care systems, consisting of 172 medical centers, 375 
        ambulatory clinics, 133 nursing homes, 39 domicilaries and 202 
        counseling centers.
            (2) The veterans health system is a national resource which 
        must be preserved to ensure that all deserving veterans, 
        including those who have suffered service-connected 
        disabilities, receive the specialized care which only that 
        system provides.
            (3) The costs of operating the veterans health system have 
        increased substantially in recent years, thus jeopardizing the 
        ability of the Veterans Health Administration to provide needed 
        services to eligible veterans under funding levels established 
        by law.
            (4) In response to escalating costs and the limited 
        availability of appropriated funds, the Department of Veterans 
        Affairs has imposed a complex set of restrictions on access to 
        the veterans health system, thereby reducing eligibility for 
        care and discouraging otherwise-eligible veterans from seeking 
        care.
            (5) Restrictions on eligibility for services and access to 
        the veterans health system, imposed as cost-control measures, 
        defeat the purpose for which the system was established an 
        undermine the compact between the United States and those who 
        have served in uniform.
            (6) The Nation's 27,000,000 veterans of military service, 
        having sacrificed to protect their country, now require a 
        veterans health system which provides comprehensive care for 
        themselves and their dependents; one which provides services 
        necessary for the treatment of service-connected disabilities 
        at no charge, and provides other services on a cost-recovery 
        basis where the veteran has health insurance or resources 
        otherwise adequate for payment.
            (7) The veterans health system in order to offer 
        comprehensive services must be reorganized based upon the 
        principles of managed care and have the authority to recover 
        costs, where appropriate, for providing such services.

SEC. 3. PURPOSES.

    The purposes of this Act are as follows:
            (1) To reorganize the veterans health system to improve 
        access to, and the quality and efficiency of, care for the 
        Nation's veterans.
            (2) To operate the veterans health system based upon the 
        principles of managed care.
            (3) To ensure all veterans with service-connected 
        disabilities have access to all services necessary for the 
        treatment of such disabilities at no charge.
            (4) To ensure all special-category veterans, as defined in 
        law, along with indigent veterans and veterans with service-
        connected disabilities, receive a continuum of health care 
        services at no charge or reduced charge.
            (5) To control the cost of operating the veterans health 
        care system by encouraging veterans who do not currently 
        receive care in Department of Veterans Affairs facilities to 
        enroll in Veterans Health Plans.
            (6) To improve the long-term financial health of the 
        veterans health system by attracting resources into the system 
        from other Federal programs, third-party payers, and employers 
        of veterans.
            (7) To permit the veterans health system to retain all 
        payments made to the Department of Veterans Affairs for health 
        care services.
            (8) To eliminate unnecessary, duplicative, or contradictory 
        regulations that hamper the ability of the veterans health 
        system to operate effectively and efficiently.

SEC. 4. VETERANS HEALTH CARE SECURITY.

    Title 38, United States Code, is amended by inserting after chapter 
17 the following new chapter:

                  ``Chapter 18--Veterans Health System

                       ``subchapter i--enrollment

Sec.
``1801. Enrollment of veterans.
``1802. Enrollment of veterans' dependents.
``1803. Enrollment of CHAMPVA eligibles.
``1804. Enrollment process.
                      ``subchapter ii--eligibility

``1805. Eligibility definitions.
``1806. Eligibility for benefits.
                       ``subchapter iii--benefits

``1807. Basic benefits package.
``1808. Comprehensive benefits package.
``1809. Supplemental health benefits packages.
                   ``subchapter iv--payment policies

``1810. Payment policies for entitled veterans.
``1811. Payment policies for certain veterans and veterans' dependents 
                            enrolled in a Veterans Health Plan.
``1812. Payment policies for veterans eligible for federally-
                            administered health care programs.
``1813. Payment policies for eligible veterans and veterans' dependents 
                            with Medicare Supplemental health insurance 
                            coverage.
``1814. Payment policies for fee-for-service benefits.
                       ``subchapter v--financing

``1815. Creation of Department of Veterans Affairs Health Plan Fund.
``1816. Guaranteed funding of Federal Costs.
``1817. Resource allocation.
           ``subchapter vi--delivery of health care services

``1818. Responsibilities of the Secretary of Veterans Affairs.
``1819. Responsibilities of Veterans Health Plans and Veterans Health 
                            Plan Directors.
              ``subchapter vii--state health care systems

``1820. State health care reform.
``1821. Applicability of State law.
``1823. General definitions.
                 ``subchapter viii--general provisions

``1822. Budget reporting requirements.

                       ``SUBCHAPTER I--ENROLLMENT

``Sec. 1801. Enrollment of veterans
    ``The Secretary shall establish a process for the enrollment into 
Veterans Health Plans of entitled and eligible veterans.
``Sec. 1802. Enrollment of veterans' dependents
    ``The Secretary shall establish a process for the enrollment into 
Veterans Health Plans of the dependents of enrolled veterans, as 
defined in section 1805(c) of this title.
``Sec. 1803. Enrollment of CHAMPVA eligibles
    ``The Secretary shall establish a process for the enrollment into 
Veterans Health Plans, in the same manner as a veteran, of individuals 
who are eligible for benefits under section 1713 of this title.
``Sec. 1804. Enrollment process
    ``(a) The Secretary shall provide for a continuous open enrollment 
period of 18 months following implementation of the GI Bill of Health, 
during which period entitled and eligible veterans and their dependents 
may first enroll in a Veterans Health Plan.
    ``(b) For each entitled or eligible veteran, when the veteran first 
becomes eligible to enroll in a Veterans Health Plan, there shall be an 
initial enrollment period of not less than 30 days during which the 
veteran may first enroll in such Veterans Health Plan.
    ``(c) The Secretary shall establish an annual period of not less 
than 30 days during which entitled and eligible veterans may enroll in 
a Veterans Health Plan. Such annual enrollment period shall coincide 
with the annual open season under the Federal Employees Health Benefits 
Program as established under chapter 89 of title 5. All Veterans Health 
Plans shall designate the same annual enrollment period.
    ``(d) If a veteran enrolls in a Veterans Health Plan, such veteran 
may at the same time enroll the veteran's dependents in the Plan as a 
family enrollment.
    ``(e) In the case of a veteran who experiences a change of family 
composition through marriage, divorce, birth or adoption of a child, or 
similar circumstances, the Secretary shall provide for a special 
enrollment period in which the veteran is eligible to change the 
individual or family basis of enrollment in a Veterans Health Plan.
    ``(f) Enrollment of a dependent of an enrolled veteran shall be 
considered timely if a request for enrollment is made within 30 days of 
a marriage or birth or adoption of a child if family coverage is 
available as of such date.
    ``(g) Dependent coverage shall become effective on the date of the 
marriage of a spouse or the date of the birth or adoption of a child.
    ``(h) Coverage of a dependent under a policy under this chapter may 
not be canceled by reason of the death of the veteran, except that 
coverage of a dependent spouse or child of a spouse may be canceled in 
the event that the spouse remarries, unless such remarriage is annulled 
or made void by a court of law.
    ``(i) The Secretary may terminate coverage for nonpayment of 
premiums.
    ``(j) The Secretary shall guarantee that the terms of coverage, 
including the amount of any premiums or other cost-sharing 
requirements, and the availability of benefits shall not be changed for 
a full enrollment period of not less than one year, notwithstanding an 
enrolled veteran's change in income or degree of service-connected 
disability, except that the Secretary shall have the discretion to 
reduce or eliminate the premium and cost-sharing charges for any 
veterans who qualified as entitled under section 1805(a)(8) of this 
title.

                      ``SUBCHAPTER II--ELIGIBILITY

``Sec. 1805. Eligibility definitions
    ``(a) An `entitled' veteran under this chapter includes the 
following categories of veterans:
            ``(1) Any veteran with a service-connected disability.
            ``(2) Any veteran whose discharge or release from the 
        active military, naval or air service was for a disability 
        incurred or aggravated in the line of duty.
            ``(3) Any veteran who is in receipt of, or who, but for a 
        suspension pursuant to section 1151 of this title (or both such 
        a suspension and the receipt of retired pay), would be entitled 
        to disability compensation, but only to the extent that such a 
        veteran's continuing eligibility for such care is provided for 
        in the judgment or settlement provided for in such section.
            ``(4) Any veteran who is a former prisoner of war.
            ``(5) Any veteran of the Mexican border period or World War 
        I.
            ``(6) Any veteran who is unable to defray the expenses of 
        necessary care as determined under section 1722(a) of this 
        title.
            ``(7) Any veteran who served on active duty in the Republic 
        of Vietnam during the Vietnam era and who the Secretary finds 
        may have been exposed during such service to dioxin or was 
        exposed during such service to a toxic substance found in a 
        herbicide or defoliant used in connection with military 
        purposes during that era, notwithstanding that there may be 
        insufficient medical evidence to conclude that such illness or 
        disability may be associated with such exposure.
            ``(B) Any veteran who the Secretary finds was exposed to 
        ionizing radiation from the detonation of a nuclear device in 
        connection with such veteran's participation in the test of 
        such a device or with the American occupation of Hiroshima and 
        Nagasaki, Japan, during the period beginning on September 11, 
        1945, and ending on July 1, 1946, notwithstanding that there 
        may be insufficient medical evidence to conclude that such 
        illness or disability may be associated with such exposure.
            ``(C) Any veteran who served on active duty in the 
        Southwest Asia theater of operations during the Persian Gulf 
        War and who the Secretary finds has an illness or disability 
        which may be associated with exposure to a toxic substance or 
        environmental hazard, notwithstanding that there may be 
        insufficient medical evidence to conclude that such illness or 
        disability may be associated with such exposure.
            ``(D) Any veteran who while on active duty was exposed to 
        mustard gas while participating in full-body, field, or chamber 
        experiments to test protective clothing or equipment during 
        World War II and who the Secretary finds has an illness or 
        disability which may be associated with such exposure, 
        notwithstanding that there may be insufficient medical evidence 
        to conclude that such illness or disability may be associated 
        with such exposure.
            ``(8) Any veteran who suffers a catastrophic illness or 
        injury, payment for which would render such veteran destitute 
        as determined under criteria established by the Secretary.
            ``(9) Any veteran proven to be uninsurable in the private 
        health insurance market, as determined under criteria 
        established by the Secretary.
    ``(b) An `eligible' veteran under this chapter shall include all 
veterans who do not qualify under subsection (a) as `entitled'.
    ``(c) A `dependent of a veteran' under this chapter shall include, 
for any veteran enrolled in a Veterans Health Plan--
            ``(1) a spouse;
            ``(2) a widow or widower who has not remarried, unless such 
        remarriage has been annulled or made void by a court of law; 
        and
            ``(3) an unmarried child, spouse's child or adopted child 
        who--
                    ``(A) has not attained the age of 21;
                    ``(B) has not attained the age of 23, is enrolled 
                in a full-time course of study at an institution of 
                higher learning, and is in fact dependent on the 
                veteran for one half of the child's support; or
                    ``(C) is incapable of self-support due to a mental 
                or physical incapacity that occurs while a dependent of 
                a veteran under subparagraph (A) or (B), and is in fact 
                dependent on the veteran for one half of the child's 
                support.
Sec. 1806. Eligibility for benefits
    ``(a) Upon enrollment in a Veterans Health Plan, a veteran who 
qualifies as entitled under section 1805(a)(1) of this title shall 
receive--
            ``(1) any medically necessary and appropriate care and 
        services associated with such service-connected disability or 
        illness; and
            ``(2) any medically necessary and appropriate care and 
        services for an established disability or illness determined to 
        be proximately due to or the result of such service-connected 
        disability or illness, in the same manner and to the same 
        extent as if such disability or illness is service-connected.
    ``(b)(1) Upon enrollment in a Veterans Health Plan, a veteran who 
qualifies as entitled under section 1805(a)(1) of this title and has a 
service-connected disability rated 50 percent or greater shall receive 
the medically necessary and appropriate care and services included in 
the comprehensive benefits package, as defined in section 1808 of this 
title, and the specialized services supplemental health benefits 
package, as defined in section 1809(a) of this title, and any care and 
services otherwise provided under the terms and conditions of chapter 
17 of this title.
    ``(2) Upon enrollment in a Veterans Health Plan, a veteran who 
qualifies as entitled under section 1805(a)(1) of this title and has a 
comprehensive service-connected disability rated less than 50 percent 
shall--
            ``(A) receive the medically necessary and appropriate care 
        and services in the basic benefits package as defined in 
        section 1807 of this title; or
            ``(B) be eligible to purchase the comprehensive benefits 
        package, as defined in section 1808 of this title, at a premium 
        discount, as set forth in subsection (f).
The care and services provided in this subsection shall be in addition 
to care and services provided under subsection (a).
    ``(3) Upon enrollment in a Veterans Health Plan, a veteran who 
qualifies as entitled under sections 1805(a)(2)-(a)(9) of this title 
shall receive the medically necessary and appropriate care and services 
included in the basic benefits package as defined in section 1807 of 
this title. When determined by a health care provider employed by or 
under contract with the Department under guidelines established by the 
Secretary, such veteran may also receive additional, specific and 
medically-appropriate care and services included in chapters 17 and 18 
of this title when such care is deemed related to the circumstances of 
such veteran's entitlement.
    ``(c)(1) A veteran who qualifies as eligible under section 1805(b) 
of this title may enroll in a Veterans Health Plan to receive the 
medically necessary and appropriate care and services included in the 
basic, comprehensive, or supplemental health benefits packages, as 
defined in sections 1807, 1808, and 1809 of this title, respectively.
    ``(2) A veteran who qualifies as entitled under section 1805(a)(1) 
of this title and has a non-compensable service-connected disability 
shall be eligible to enroll in a Veterans Health Plan on the same basis 
as a veteran who qualifies as eligible under subsection 1805(b) of this 
title. The care and services provided under this paragraph shall be in 
addition to care and services provided under subsection (a).
    ``(d) A dependent of an enrolled veteran may enroll in a Veterans 
Health Plan to receive the medically necessary and appropriate services 
included in the basic, comprehensive, or supplemental health benefits 
package as defined in sections 1807, 1808, and 1809(c) of this title, 
respectively. A dependent of a veteran may not receive the specialized 
services supplemental health benefits package defined in section 
1809(a) and (b) of this title.
    ``(e) A veteran may receive the medically necessary and appropriate 
care and services contained in the comprehensive benefits package, 
defined in section 1808 of this title, or a supplemental health 
benefits package, defined in section 1809 of this title, with the 
exception of the long term care benefits provided under subsection (b) 
of such section, on a fee-for-service basis.
    ``(f) A veteran who qualifies as entitled under section 1805(a)(1) 
of this title and has a compensable service-connected disability rated 
at less than 50 percent and enrolls in a Veterans Health Plan to 
receive the care and services included in the comprehensive health 
benefits package, as defined in section 1808 of this title, in 
accordance with subsection (b), shall be eligible to receive from the 
Secretary a premium discount equal to--
            ``(1) 80 percent of the individual premium, for a veteran 
        with a service-connected disability rated at 40 percent;
            ``(2) 60 percent of the individual premium, for a veteran 
        with a service-connected disability rated at 30 percent;
            ``(3) 40 percent of the individual premium, for a veteran 
        with a service-connected disability rated at 20 percent; and
            ``(4) 20 percent of the individual premium, for a veteran 
        with a service-connected disability rated at 10 percent.
    ``(g) The Secretary shall guarantee that the terms of coverage 
under a Veterans Health Plan benefits package, including the amount of 
any premium or other cost-sharing requirement, and the availability of 
benefits under a Veterans Health Plan benefits package, shall not be 
changed for a full enrollment period of not less than one year, 
notwithstanding an enrolled veteran's change in income or degree of 
service-connected disability, except that the Secretary shall have the 
discretion to reduce or eliminate the premium and cost-sharing charges 
for any veteran who qualifies under section 1805(a)(8) of this title.

                       ``SUBCHAPTER III--BENEFITS

``Sec. 1807. Basic benefits package
    ``(a) The Secretary shall have the authority to establish a basic 
benefits package consisting of the following items, care, and services:
            ``(1) Hospital services.
            ``(2) Services of health professionals.
            ``(3) Women's health services.
            ``(4) Medical and surgical services.
            ``(5) Outpatient services.
            ``(6) 24-hour emergency services.
            ``(7) Preventive health care services, including those 
        services defined in section 1701(9) of this title.
            ``(8) Diagnostic services.
    ``(b) The Secretary shall establish an individual and family 
schedule of premiums, deductibles, copayments, and coinsurance charges 
for the basic benefits package created under this section, based upon 
the fully-allocated cost to provide the items, care, and services set 
forth in this section. The annual deductible under the basic benefits 
package shall be set a rate equivalent to two times the deductible 
established under section 1808(b) of this title for the comprehensive 
benefits package.
    ``(c) The Secretary shall not be required to provide any care or 
service listed in the basic benefits package created under this section 
within a Department facility, so long as such service is provided 
through a provider contract, medical resource-sharing agreement, or 
similar arrangement.
``Sec. 1808. Comprehensive benefits package
    ``(a) The Secretary shall have the authority to establish a 
comprehensive benefits package consisting of the following items, care, 
and services:
            ``(1) Hospital services, including psychiatric hospital 
        care.
            ``(2) Services of health professionals.
            ``(3) Medical and surgical services.
            ``(4) Outpatient services.
            ``(5) 24-hour emergency services.
            ``(6) Preventive care services, including those services 
        defined in section 1701(9) of this title.
            ``(7) Diagnostic services.
            ``(8) Women's health services.
            ``(9) Pediatric services.
            ``(10) Mental health and substance abuse prevention and 
        treatment.
            ``(11) Hospice care.
            ``(12) Home health care.
            ``(13) Extended care services.
            ``(14) Authorized transportation services.
            ``(15) Durable medical equipment.
            ``(16) Outpatient prescription drugs and biologicals.
            ``(17) Investigational devices and treatments.
            ``(18) Routine vision testing and eye care services.
    ``(b) The Secretary shall establish an individual and family 
schedule of premiums, deductibles, copayments, and coinsurance charges 
for the comprehensive benefits package created under this section, 
based upon the fully-allocated cost to provide the items, care, and 
services set forth in this section.
    ``(c) The Secretary shall have the discretion to add benefits to 
the comprehensive benefits package created under this section upon a 
finding that such additional benefits are necessary to provide 
effective and cost-efficient health care to veterans.
    ``(d) The Secretary shall not be required to provide any care or 
service listed in the comprehensive benefits package created under this 
section within a Department facility, so long as such care or service 
provided through a provider contract, medical resource-sharing 
agreement, or similar arrangement.
``Sec. 1809. Supplemental health benefits packages
    ``(a)(1) The Secretary shall provide to veterans the care and 
services authorized under chapter 17 of this title in accordance with 
the terms and conditions applicable to such care and services under 
such chapter, notwithstanding whether such care and services are 
included in the basic or comprehensive benefits packages established 
under sections 1807 and 1808 of this title, respectively. Care and 
services provided under this subsection shall be administered by 
Veterans Health Plans as a specialized services supplemental health 
benefits package and shall include prosthetic and orthotic services, 
blind rehabilitation services, services necessary for the 
rehabilitation of veterans with spinal cord dysfunction, and treatment 
for chronic psychiatric illnesses such as Post Traumatic Stress 
Disorder (PTSD). The specialized services supplemental health care 
benefits package may include long-term care services only to the extent 
provided under subsection (b).
    ``(2)(A) In order to meet the special needs of veterans, the 
Secretary may offer to veterans described in subparagraph (B) one or 
more supplemental health benefits packages for care and services 
provided under chapter 17 of this title but not otherwise included in 
the basic or comprehensive benefits packages established under sections 
1807 and 1808 of this title, respectively, and not otherwise provided 
under subsection (b).
    ``(B) A veteran may be offered a specialized services supplemental 
health benefits package under this subsection only if such veteran does 
not otherwise qualify to receive such care and services under paragraph 
(1).
    ``(C) The Secretary shall establish premiums, deductibles, 
copayments, and coinsurance charges for a specialized services 
supplemental health benefits package based upon the fully-allocated 
cost to provide such services.
    ``(b) The Secretary shall have the discretion to provide long-term 
care services (including nursing home care, domiciliary care, respite 
care, adult day care, home health care, and community residential care) 
to veterans under the authority provided in chapter 17 of this title in 
accordance with the terms and conditions to such care under such 
chapter.
    ``(c)(1) The Secretary may establish and offer to veterans and 
veterans' dependents supplemental health benefits packages for care and 
services, not otherwise provided in the basic, comprehensive or 
specialized services supplemental health benefits packages established 
in sections 1807, 1808, and 1809(a) of this title, respectively.
    ``(2) The Secretary shall establish a schedule of premiums, 
deductibles, copayments, and coinsurance charges for supplemental 
health benefits packages established under this subsection, based upon 
the fully-allocated cost to provide such care and services. For the 
purposes of paragraph (1), such schedule shall include both an 
individual and a family rate.

                   ``SUBCHAPTER IV--PAYMENT POLICIES

``Sec. 1810. Payment policies for entitled veterans
    ``(a) The Secretary may not impose any charge (whether a premium, 
deductible, copayment, coinsurance, or other amount)--
            ``(1) for any medically necessary and appropriate care or 
        services provided under section 1806(a) of this title to a 
        veteran who qualifies as entitled under section 1805(a)(1) of 
        this title;
            ``(2) for any medically necessary and appropriate care or 
        services provided under section 1806(b)(1) of this title to a 
        veteran who qualifies as entitled under section 1805(a)(1) of 
        this title and has a service-connected disability rated at 50 
        percent or greater;
            ``(3) for any medically necessary and appropriate care or 
        services provided under section 1806(b)(2)(A) of this title to 
        a veteran who qualifies as entitled under section 1805(a)(1) of 
        this title and has a compensable service connected disability 
        rated at less than 50 percent and does not choose to purchase 
        the comprehensive benefits package under section 1806(b)(2)(B) 
        of this title; or
            ``(4) for any medically necessary and appropriate care or 
        services provided under section 1806(b)(3) of this title to a 
        veteran who qualifies as entitled under sections 1805(a)(2)-
        (a)(9) of this title.
    ``(b) The Secretary shall grant a premium discount for the purchase 
of the comprehensive benefits package established in section 1808 of 
this title in accordance with the provisions of section 1806(f) of this 
title for any medically necessary and appropriate care and services 
provided under section 1806(b)(2)(B) of this title. Such premium 
discount shall be based upon the individual premiums established under 
section 1808(b) of this title.
``Sec. 1811. Payment policies for certain veterans and veterans' 
              dependents enrolled in a Veterans Health Plan
    ``The Secretary shall establish premiums, copayments, deductibles, 
and coinsurance charges for care and services provided under sections 
1807, 1808 and 1809 of this title to veterans and veterans' dependents 
who enroll in a Veterans Health Plan to receive such care and services 
under sections 1806(c), 1806(d), 1809(a)(2) and 1809(c) of this title. 
The Secretary shall set such rates based upon the fully-allocated cost 
to provide care. The cost to provide care shall not take into account 
costs otherwise recovered by the Secretary under section 1816 of this 
title.
``Sec. 1812. Payment policies for veterans eligible for federally-
              administered health care programs
    ``(a) For purposes of this section, the term `federally-
administered health care program' shall include Medicare and Medicaid, 
as established in the Social Security Act; the Civilian Health and 
Medical Program of the Uniformed Services (CHAMPUS), as established 
under chapter 55 of title 10 or its successor; the Federal Employees 
Health Benefits Program (FEHBP), as established under chapter 89 of 
title 5; and the Indian Health Service (IHS), as established under the 
Indian Health Care Improvement Act (25 U.S.C. 1601 et seq.).
    ``(b) For purposes of any federally-administered health care 
program, a Veterans Health Plan or Department facility shall be deemed 
to be a qualified provider or carrier, notwithstanding any other 
provision of law.
    ``(c) The Secretary of health and Human Services, the Director of 
the Office of Personnel Management, the Secretary of the Interior, the 
Secretary of Defense, and any other administrator of a federal health 
care program shall enter into an agreement with the Secretary to treat 
the Veterans Health Plan as a qualified provider or carrier, including 
treatment as a qualified Medicare Health Maintenance Organization as 
defined in section 1876 of the Social Security Act, for veterans 
covered by this chapter, in any case in which the Secretary seeks to 
enter into such an agreement.
    ``(d) In the case of care provided under this chapter to a veteran 
who is eligible for benefits under a federally-administered health care 
program, the federally-administered health care program shall reimburse 
the Veterans Health Plan or facility providing services as a qualified 
provider on the same basis as that program reimburses other qualified 
providers.
    ``(e) When the Secretary provides care--
            ``(1) under section 1806(a) of this title to a veteran who 
        qualifies as entitled under section 1805(a)(1) of this title;
            ``(2) under section 1806(b)(1) of this title to a veteran 
        who qualifies as entitled section 1805(a)(1) of this title and 
        has a service-connected disability rated at 50 percent or 
        greater;
            ``(3) under section 1806(b)(2)(a) of this title to a 
        veteran who qualifies as entitled under section 1805(a)(1) of 
        this title and has a compensable service-connected disability 
        rated at less than 50 percent and does not choose under section 
        1806(b)(2)(B) of this title to purchase the comprehensive 
        benefits package established in section 1808 of this title; or
            ``(4) under section 1806(b)(3) of this title to a veteran 
        who qualifies as entitled under sections 1805(a)(2)-(a)(9) of 
        this title;
the veteran shall not be required to pay any otherwise applicable 
deductible or copayment that is not covered by the federally-
administered health program, notwithstanding any other provision of 
law.
    ``(f) When the Secretary provides care to any veteran not described 
in subsection (e), the Secretary shall require such veteran to pay to 
the Veterans Health Plan any otherwise applicable deductible or 
copayment that is not covered by the federally-administered health 
program.
``Sec. 1813. Payment policies for eligible veterans and veterans' 
              dependents with Medicare Supplemental health insurance 
              coverage
    ``When the Secretary provides care on an enrolled or fee-for-
service basis to--
            ``(1) a veteran described in section 1806(c) of this title 
        who has coverage under a Medicare Supplemental health insurance 
        plan as established under the Social Security Act; or
            ``(2) a veteran's dependent who has coverage under a 
        Medicare Supplemental health insurance plan as established 
        under the Social Security Act; the Secretary has the authority 
        to establish, charge, recover and collect payment for such care 
        or services from the Medicare Supplemental health insurance 
        plan to the extent that the veteran or veteran's dependent (or 
        the provider of the care or services) would be eligible to 
        receive payment for such care or services from such party if 
        the care or services had not been furnished by the Secretary.
``Sec. 1814. Payment policies for fee-for-service benefits
    ``The Secretary shall establish and charge rates for care and 
services provided to veterans who elect to obtain services in a 
Veterans Health Plan on a fee-for-service basis without enrolling in a 
Veterans Health Plan. Such rates shall be based upon the fully-
allocated cost to provide the care and services received.

                       ``SUBCHAPTER V--FINANCING

``Sec. 1815. Creation of Department of Veterans Affairs Health Plan 
              Fund
    ``(a)(1) There is hereby established in the Treasury a revolving 
fund to be known as Department of Veterans Affairs Health Plan Fund 
(Veterans Health Plan Fund).
    ``(2) The Secretary of the Treasury shall deposit into the Veterans 
Health Plan Fund the balance of funds remaining in the Medical-Care 
Cost Recovery Fund as of the date of the enactment of this chapter. If 
the balance in the Medical-Care Cost Recovery Fund on that date is less 
than $0, $0 shall be credited to the Veterans Health Plan Fund.
    ``(b) Any amount received by the Department by reason of the 
furnishing of health care services to a veteran or veteran's dependent, 
including amounts received as premiums, copayments, coinsurance, 
deductibles, reimbursements from private health insurance or federally-
administered health plans and from other out-of-pocket payments made by 
veterans, shall be credited to the Veterans Health Plan Fund.
    ``(c) Amounts in the Veterans Health Plan Fund shall be available 
until expended by the Secretary for the delivery of health care 
services under chapters 17 and 18 of this title.
``Sec. 1816. Guaranteed funding of Federal costs
    ``(a) The Secretary of the Treasury shall deposit into the Veterans 
Health Plan Fund on the first day of each fiscal-year quarter, from 
amounts not otherwise appropriated, the amount certified to the 
Secretary of the Treasury under subsection (b) with respect to that 
quarter.
    ``(b) Not later than 30 days before the beginning of each fiscal-
year quarter, the Secretary of Veterans Affairs shall certify to the 
Secretary of the Treasury the amount determined for that quarter under 
this subsection.
            ``(1) The amount to be certified to the Secretary of the 
        Treasury for any fiscal-year quarter shall be the amount equal 
        to--
                    ``(A) the product of--
                            ``(i) the projected number of veterans who 
                        qualify as entitled under section 1805(a)(1) of 
                        this title and have a service-connected 
                        disability rated at 50 percent plus the 
                        projected number of veterans who qualify as 
                        entitled under section 1805(a)(2)-(a)(9) of 
                        this chapter; and
                            ``(ii) the capitated enrollment amount for 
                        such categories of veterans; plus
                    ``(B) the product of--
                            ``(i) the projected number of veterans who 
                        qualify as entitled under section 1805(a)(1) of 
                        this title and have a compensable service-
                        connected disability rated at less than 50 
                        percent; and
                            ``(ii) the capitated enrollment amount for 
                        such category of veterans; plus
                    ``(C) the product of--
                            ``(i) the projected number of other 
                        veterans who will receive care and services 
                        under the provisions of chapters 17 and 18 of 
                        this title at no charge to the individual or to 
                        a provider other than the Department; and
                            ``(ii) the capitated enrollment amount for 
                        such categories of veterans; plus
                    ``(D) the product of--
                            ``(i) the projected number of veterans' 
                        dependents who qualify for care under section 
                        1803 of this title; and
                            ``(ii) the capitated enrollment amount for 
                        such category of veterans' dependents.
            ``(2) In setting the capitated enrollment amounts described 
        in paragraph (1), the Secretary shall deduct any amount 
        collected for such care from any party, including amounts 
        recovered from other agencies of the Federal Government.
            ``(3) The Secretary shall adjust future certifications 
        under this subsection to take account of differences between 
        actual and projected numbers of qualified veterans and 
        veterans' dependents.
    ``(c) The initial capitated enrollment amounts described in 
subsection (b) shall be determined by the Secretary using the most 
recent cost data available as of the time of the determination, 
adjusted for inflation to the date of the determination based upon the 
medical care consumer price index calculated by the Bureau of Labor 
statistics, and taking into account--
            ``(1) the annual, fully-allocated cost incurred under prior 
        law in providing care and services at no charge to veterans and 
        veterans' dependents;
            ``(2) an estimate of the annual, fully-allocated cost to 
        provide the care and services required by this chapter to be 
        furnished at no charge to veterans and veterans' dependents, 
        including an estimate of projected utilization; and
            ``(3) an estimate of the annual, fully-allocated cost to 
        provide a premium discount to veterans who qualify as entitled 
        under section 1805(a)(1) of this title and who choose under 
        section 1806(b)(2)(B) of this title to purchase the 
        comprehensive benefits package established in section 1808 of 
        this title, including an estimate of projected utilization.
    ``(d) For each fiscal year after the initial capitated enrollment 
amounts are established, the capitated enrollment amounts described in 
subsection (b) shall be determined by the Secretary using the most 
recent cost data available as of the time of the determination, 
adjusted for inflation to the date of the determination based upon the 
medical care consumer price index calculated by the Bureau of Labor 
statistics, and taking into account--
            ``(1) the annual, fully-allocated cost to provide the care 
        and services required by (this chapter) to be furnished at no 
        charge to veterans and veterans' dependents, including an 
        estimate of projected utilization; and
            ``(2) for purposes of calculating the capitated enrollment 
        amount in subsection (b)(1)(B), the annual, fully-allocated 
        cost to provide a premium discount under the terms set forth in 
        section 1806(f) of this title to veterans who qualify as 
        entitled under section 1805(a)(1) of this title and who choose 
        under section 1806(b)(2)(B) of this title to purchase the 
        comprehensive benefits package established in section 1808 of 
        this title, including an estimate of projected utilization.
    ``(e) The Secretary shall include in the calculation of the 
capitated annual enrollment amounts the cost of carrying out the 
prosthetic and other medical research functions of the Department.
``Sec. 1817. Resource allocation
    ``(a) The Secretary shall allocate at least 75 percent of amounts 
deposited in the Veterans Health Plan Fund to the Veterans Health Plan 
or Department facility that provided the care or services for which 
payment was made. In carrying out this subsection, the Secretary is 
authorized to create regional revolving health plan funds for each 
Veterans Health Plan or Department facility.
    ``(b) The Secretary shall establish procedures for utilizing not 
more than 25 percent of the amounts deposited in the Veterans Health 
Plan Fund to operate and maintain the veterans health system and to 
ensure that Department resources and health care services are allocated 
in a reasonable, efficient, and equitable manner throughout the United 
States.
    ``(c) A Veterans Health Plan may retain 100 percent of the proceeds 
of any contract with non-Department entities for the use of or access 
to Department health care facilities, equipment, or personnel under a 
medical resource-sharing agreement. This subsection does not apply to 
contracts for services rendered to veterans under the provisions of 
this chapter.

           ``SUBCHAPTER VI--DELIVERY OF HEALTH CARE SERVICES

``Sec. 1818. Responsibilities of the Secretary of Veterans Affairs
    ``(a)(1) The Secretary shall administer the veterans health system 
through use of the model of medical practice known as `managed care'. 
In implementing a managed care system, the Secretary shall, to the 
extent possible--
            ``(A) shift the focus of health care provided by the 
        veterans health system to primary care;
            ``(B) established enhanced quality assurance mechanisms; 
        and
            ``(C) establish utilization review procedures to prevent 
        inefficient practices.
    ``(2) The Secretary shall organize veterans hospitals and other 
veterans health care facilities and services into Veterans Health 
Plans. Each Veterans Health Plan may cross State lines and more than 
one Veterans Health Plan may exist within a State. The Secretary shall 
establish procedures to ensure portability of coverage throughout the 
veterans health system.
    ``(3) The Secretary shall establish standards for the operation of 
Veterans Health Plans. Such standards shall--
            ``(A) require the directors of Veterans Health Plans to 
        provide to veterans access to the full range of basic, 
        comprehensive, and supplemental health care services set forth 
        in sections 1807, 1808, and 1809 of this title under the terms 
        and conditions established in this chapter; and
            ``(B) require the directors of Veterans Health Plans to 
        establish quality control procedures, including--
                    ``(i) the establishment of procedures to assure 
                that the care and services provided to enrollees shall 
                be rendered under reasonable standards of quality of 
                care, consistent with prevailing professionally 
                recognized standards of medical practice;
                    ``(ii) the establishment of an ongoing internal 
                quality assurance program to monitor and evaluate 
                health care services, including primary and specialist 
                physician services, and ancillary and preventive health 
                care services across all institutional and non-
                institutional settings; such program shall include, at 
                a minimum, a written statement of goals and objectives 
                that emphasize improved health status in evaluating the 
                quality of care rendered to enrollees, a written 
                quality assurance plan describing the structure and 
                process of quality assurance activities, 
                confidentiality policies and procedures, a system of 
                evaluation activities, a system for credentialing 
                providers and performing peer review activities, and a 
                statement of the duties and responsibilities of 
                physicians responsible for quality assurance 
                activities;
                    ``(iii) the establishment of procedures for 
                recording the proceedings of formal quality assurance 
                program activities and maintaining documentation in a 
                confidential manner; and
                    ``(iv) the use and maintenance of an adequate 
                patient record system that will facilitate 
                documentation and retrieval of clinical information for 
                evaluating continuity and coordination of patient care 
                and assessing the quality of health and medical care 
                provided to enrollees.
    ``(4) The Secretary shall ensure that the payment schedules 
established under this chapter, including schedules for premiums, 
copayments, deductibles, and coinsurance, are uniform throughout the 
veterans health system, except that differences among payment schedules 
shall be permitted at the Secretary's discretion based upon (1) the 
type of benefits package, whether basic, comprehensive, or 
supplemental, as established in sections 1807, 1808, and 1809 of this 
title; (2) the status of the veteran or veteran's dependent receiving 
the care and services provided under this chapter; and (3) the type of 
coverage, whether individual or family.
    ``(5) The Secretary may not wholly merge a Veterans Health Plan 
with any non-Department health care provider, network, plan; or system.
    ``(b) In order to carry out the provisions of the chapter and 
notwithstanding any other provision of law, the Secretary may--
            ``(1) plan and implement administrative reorganization, 
        consolidation, elimination or redistribution of offices, 
        facilities, functions, or activities of the Department, 
        including the veterans health system and Department 
        facilities--
                    ``(A) without regard to section 501 of this title; 
                and
                    ``(B) upon a determination by the Secretary that 
                such reorganization, consolidation, elimination, or 
                redistribution is cost-effective, is in the best 
                interests of veterans served by the veterans health 
                system, and is necessary for the provision of care and 
                services under this chapter in a timely and efficient 
                manner; and
            ``(2)(A) without regard to laws or regulations pertaining 
        to competitive procedures or personnel preferences or 
        priorities, establish alternative personnel systems or 
        procedures for personnel at facilities operating as or with a 
        Veterans Health Plan; and
            ``(B) without regard to section 8110(c) of this title, 
        enter into agreements for direct patient care services, such as 
        nursing or other services, regardless of whether such services 
        were previously performed by Federal employees.
    ``(c)(1) Notwithstanding any law or regulation pertaining to 
competitive procedures, acquisition procedures or policies, source 
preferences or priorities, or bid protests, the Secretary shall have 
the authority to enter into agreements with non-Department health care 
plans, insurers, health care providers, health care professionals, 
health care facilities, medical equipment suppliers, and related 
entities, to furnish or obtain the health care and medical resources 
needed to ensure that the full range of basic, comprehensive, and 
supplemental benefits set forth in sections 1807, 1808, and 1809 of 
this title is available in each Veterans Health Plan.
    ``(2) The Secretary shall establish procedures and guidance for 
Veterans Health Plans regarding such agreements, including procedures 
and guidance for determining and periodically adjusting the amount paid 
to each provider of services with respect to the services provided by 
it.
    ``(3) The Secretary shall maintain full legal and ethical 
responsibility for treatment outcomes and quality of contracted care.
    ``(d) The Secretary and the directors of the Veterans Health Plans 
may contract with outside employers to provide health care services to 
employees who are otherwise eligible for care and services under this 
chapter in accordance with the terms and conditions set forth in this 
chapter. In carrying out this subsection, the secretary shall establish 
procedures to ensure that employers make payments to Veterans Health 
Plans on behalf of eligible veteran employees in the same manner as 
such employers make payments to other health care providers and 
insurers on behalf of other employees.
    ``(e)(1) The Secretary shall assist Veterans Health Plans in 
establishing billing offices and related administrative resources 
necessary to collect payment from enrollees, third-party payers, 
including federally-administered health programs, individuals obtaining 
fee-for-service care in a Veterans Health Plan, and others.
    ``(2) In order to provide for the administration of benefits under 
this chapter with maximum efficiency and convenience for individuals 
receiving benefits under this chapter and for providers of services, 
the Secretary may enter into agreements for the provision of 
administrative services to Veterans Health Plan. Such administrative 
services may include (A) determination of the rates and payments to be 
made to providers of services and other persons; (B) receipt, 
disbursement, and accounting for funds in making such payments; and (C) 
conducting such audits of the records of providers of services as may 
be necessary to assure that proper payments are made.
    ``(f) The Secretary shall establish criteria and application 
procedures for qualification of veterans as entitled under section 
1805(a)(8) of this title. The Secretary shall consider the relationship 
of the cost of the catastrophic illness or injury to the veteran's 
income. A veteran whose annual income, after payment for the 
catastrophic illness or injury, is, or would be, at or below the 
applicable levels specified for provision of care at no cost to 
veterans under chapter 17 of this title, shall be qualified as entitled 
under this subsection. The Secretary shall establish guidelines for 
evaluating on an annual basis the continuing need for an individual's 
entitled status under this subsection. The Secretary may use the 
authority provided under section 6103 of the Internal Revenue Code to 
verify the income of any veteran making an application under this 
subsection.
    ``(g) The Secretary may carry out promotional, advertising, and 
marketing activities to inform veterans, veterans' dependents, and 
others of the care and services available in Veterans Health Plans and 
facilities of the Department operating as or within the veterans health 
system.
    ``(h) The Secretary may delegate to a director of a Veterans Health 
Plan the authority provided to the Secretary under subsections (c), 
(d), (e), and (g).
``Sec. 1819. Responsibilities of Veterans Health Plans and Veterans 
              Health Plan Directors
    ``(a) Veterans Health Plan directors must enroll all veterans and 
veterans' dependents in accordance with the provisions of this 
chapter--
            ``(1) without engaging in practices that have the effect of 
        attracting or limiting enrollees on the basis of personal 
        characteristics such as preexisting health conditions, health 
        status, anticipated needs for health care, age, occupation, 
        race, national origin, sex, language, socioeconomic status, or 
        disability;
            ``(2) without imposing waiting periods before coverage 
        begins;
            ``(3) without denying or delaying coverage based upon pre-
        existing conditions.
    ``(b) For the purpose of carrying out the provisions of this 
chapter, Veterans Health Plan directors may, subject to procedures 
established by the Secretary and without regard to laws or regulations 
pertaining to competitive procedures, acquisition procedures or 
policies, source preferences or priorities, or bid protests--
            ``(1) enter into agreements with health care plans, 
        insurers, health care providers, health care facilities, and 
        medical equipment suppliers to furnish or obtain any health 
        care or medical resource; and
            ``(2) enter into contracts for the procurement of any item 
        commercially available at a cost of less than $300,000.
    ``(c) Whenever necessary to carry out the provisions of this 
chapter, Veterans Health Plan directors may--
            ``(1) without regard to laws or regulations pertaining to 
        competitive procedures or personnel preferences or priorities, 
        establish alternative personnel systems or procedures for 
        personnel at facilities operating as or with a Veterans Health 
        Plan; and
            ``(2) without regard to section 8110(c) of this title, 
        enter into contracts for direct patient care services, such as 
        nursing or other services, regardless of whether such services 
        were previously performed by Federal employees.

              ``SUBCHAPTER VII--STATE HEALTH CARE SYSTEMS

``Sec. 1820. State health care reform
    ``A Veterans Health Plan shall be considered a qualified provider 
or carrier under any State health care reform plan, law, or regulation.
``Sec. 1821. Applicability of State law
    ``(a) The provisions of this chapter and the provisions of any 
contract entered into under this chapter, relating to the nature or 
extent of coverage or benefits, including payments with respect to 
benefits, shall supersede and preempt any State law or local law, or 
any regulation issued thereunder, that relates to health insurance or 
health plans to the extent that such law or regulations is inconsistent 
with such provisions of this chapter.
    ``(b) The Secretary may require Veterans Health Plans to follow any 
State or local law or regulation as described in subsection (a) upon a 
finding that application of such law or regulation is in the best 
interests of individuals enrolled in the Veterans Health Plan, or will 
assist the Veterans Health Plan in achieving or maintaining a 
competitive position within the State or locality.

                 ``SUBCHAPTER VIII--GENERAL PROVISIONS

``Sec. 1822. Budget reporting requirements
    ``The Secretary shall submit to Congress within one year of the 
effective date of this chapter and annually thereafter, a report on--
            ``(1) total expenditures under this chapter;
            ``(2) the fully-allocated cost to the Government to provide 
        care and services at no charge to entitled veterans;
            ``(3) the fully-allocated cost to the Government to provide 
        care and services at no charge to eligible veterans;
            ``(4) the fully-allocated cost to the Government to provide 
        care and services at no charge to veterans' dependents;
            ``(5) the amount of--
                    ``(A) premiums, cost-sharing payments and other 
                payments received from individuals provided services 
                under this chapter;
                    ``(B) payments from federally-administered health 
                programs and other Federal agencies or departments;
                    ``(C) payments from third-party insurance plans;
                    ``(D) payments from medical resource-sharing 
                arrangements; and
                    ``(E) any other payments made to the Department for 
                services rendered under Veterans Health Plans and the 
                veterans health system.
``Sec. 1823. General Definitions
    ``For the purposes of chapters 17 and 18 of this title--
            ``(1) The term fully-allocated cost means that level of 
        expenses which represents the sum of variable costs incurred in 
        providing health care services plus an appropriate allocation 
        of fixed expenses incurred in administering and maintaining the 
        veterans health system.
            ``(2) The term medical resource sharing agreement means 
        medical resources (whether equipment, space, or personnel) 
        which, because of cost, limited availability, or unusual 
        nature, are either unique in the medical community or are 
        subject to maximum utilization only through mutual use.
            ``(3) The term Veterans Health Plan means a plan that 
        provides the health care benefits contained in the basic, 
        comprehensive, and supplemental benefits packages established 
        in sections 1807, 1808, and 1809 of this title, respectively, 
        subject to the terms and conditions set forth in chapters 17 
        and 18 of this title.
            ``(4) The term veterans health system includes all medical 
        and health care facilities, personnel, and operations under the 
        jurisdiction of the Secretary or under contract with the 
        Department to provide medical and health care services to 
        veterans and veterans dependents under the provisions of 
        chapters 17 and 18 of this title.''.

SEC. 5. TECHNICAL AND CONFORMING AMENDMENTS TO CHAPTER 17 OF TITLE 38, 
              UNITED STATES CODE.

    (a) Dependents Receiving Medical Services.--Section 1701 of title 
38, United Stats Code, is amended in subsection (6)(B)--
            (1) by striking, in the last sentence, ``the last section 
        of''; and
            (2) by striking, in the last sentence, ``(b)'' after 
        ``1713''.
    (b) Extension of Contracting Authority.--Section 1703 of title 38, 
United States Code, is amended--
            (1) in subsection (a)--
                    (A) by striking ``When Department facilities are 
                not capable of furnishing economical hospital care or 
                medical services because of geographical 
                inaccessibility or are not capable of furnishing the 
                care or services required,'' and beginning the sentence 
                with ``The Secretary'';
                    (B) by striking ``following'' and inserting 
                ``health care services provided under chapters 17 and 
                18 of this title''; and
                    (C) by striking paragraphs (1) through (8);
            (2) in subsection (b)--
                    (A) by striking ``In the case of any veteran for 
                whom'' and inserting ``Where''; and
                    (B) by striking ``a provision of''; and
            (3) in subsection (c), by striking ``this section, sections 
        1712A, 1720, 1720A, and 1732'' and inserting ``chapters 17 and 
        18''.
    (c) Deletion of Conflicting Hospital Care, Dental Care and 
Reimbursement Provisions.--Section 1710 of title 38, United States 
Code, is amended--
            (1) by striking, in the catchline, ``hospital,'' and the 
        comma after ``nursing home'';
            (2) in subsection (a)(1), by striking ``shall furnish 
        hospital care, and'';
            (3) in subsection (a)(2), by striking ``hospital care 
        and'';
            (4) in subsection (a)(3)--
                    (A) by striking ``hospital care and''; and
                    (B) by striking ``may furnish such hospital care in 
                accordance with section 1703 of this title and'';
            (5) in subsection (c)--
                    (A) by striking, in the first sentence, ``hospital 
                care or'', ``facilities'', and ``in addition to 
                treatment incident to the disability for which such 
                veteran is hospitalized,'';
                    (B) by striking ``The Secretary may furnish dental 
                services'' and all that follows:
            (6) in the last sentence of subsection (e)(1)(A)(ii), by 
        striking ``hospital care and'';
            (7) in subsection (e)(1)(B), by striking ``hospital care 
        and'';
            (8) in subsection (e)(1)(C), by striking ``hospital care 
        and'';
            (9) in subsection (e)(2), by striking ``Hospital and'';
            (10) in subsection (e)(3)--
                    (A) by striking ``Hospital and''; and
                    (B) by striking ``and medical services'';
            (11) in subsection (f)(1), by striking ``hospital care 
        or'';
            (12) in the first sentence of subsection (f)(2), by 
        striking ``hospital care or'';
            (13) in subsection (f)(2)(A)(i), by inserting ``under 
        chapters 17 and 18'' before the semicolon;
            (14) in subsection (f)(2)(B), by striking ``$10 for every 
        day the veteran receives hospital care and'';
            (15) by striking all of subsection (f)(3)(A) and 
        redesignating subparagraph (B) as subparagraph (A);
            (16) in subsection (f)(3)(C), by redesignating subsection 
        (C) and (B);
            (17) in subsection (f)(3)(B)(i) (as redesignated by 
        paragraph (16) of this section)--
                    (A) by striking ``inpatient Medicare''; and
                    (B) by striking ``this subsection and'' and 
                inserting ``section 1811(a) or section 1812(f) of this 
                title, or'';
            (18) in subsection (f)(3)(B)(ii) (as redesignated by 
        paragraph (16) of this section)--
                    (A) by striking ``subparagraph (A)(ii) of this 
                paragraph'' and inserting ``section 1811(a) or section 
                1812(f) of this title''; and
                    (B) by striking ``inpatient Medicare'' and 
                inserting ``required'';
            (19) in subsection (f)(3)(D)--
                    (A) by redesignating subparagraph (D) as 
                subparagraph (C);
                    (B) by striking, in the first sentence, ``this 
                section'' and inserting ``chapter 18 of this title'';
            (20) in subsection (f)(3)(E)--
                    (A) by redesignating subparagraph (E) as 
                subparagraph (D);
                    (B) by inserting ``section 1811(a) or section 
                1812(f) for hospital care furnished under chapter 18 or 
                under'' before ``this subsection for'';
                    (C) by striking ``hospital care or'' before 
                ``nursing home care furnished under this section'';
                    (D) by striking ``under section 1712(a) of this 
                title'';
                    (E) by striking ``this subsection'' after ``total 
                amount paid by the veteran under'' and inserting 
                ``section 1811(a) or section 1812(f) of this title'';
                    (F) by inserting ``under this subsection for'' 
                before ``nursing home care furnished during that 
                period''; and
                    (G) by striking ``under section 1712(f) of this 
                title'';
            (21) in subsection (f)(3)(F)--
                    (A) by redesignating subparagraph (F) as 
                subparagraph (E);
                    (B) by inserting ``section 1811(a) or section 
                1812(f) of this title or under'' before ``this 
                subsection''; and
                    (C) by striking ``or section 1712(f) of this 
                title''; and
            (22) by striking all of subsection (f)(4) and redesignating 
        paragraph (5) as paragraph (4).
    (d) Deletion of Conflicting Eligibility and Reimbursement 
Provisions; Clarification of Certain Specialized Medical Services.--
Section 1712 of title 38, United States Code, is amended--
            (1) by striking, in the catchline, ``outpatient'' and 
        inserting ``certain medical and dental'' before ``services'';
            (2) in subsection (a)(1)--
                    (A) by striking ``Except as provided in subsection 
                (b) of this section,'' and beginning the sentence with 
                ``The Secretary shall'';
                    (B) by striking ``on an ambulatory basis such'' and 
                inserting ``the'' before ``medical services''; and
                    (C) by inserting ``set forth in subsection (4) of 
                this paragraph,'' before ``as the Secretary 
                determines'';
            (3) in subsection (a)(2)--
                    (A) by striking ``on an ambulatory or outpatient 
                basis''; and
                    (B) by inserting ``set forth in subsection (4) of 
                this paragraph,'' before ``for a purpose described'';
            (4) in subsection (a)(3)--
                    (A) by striking ``on an ambulatory or outpatient 
                basis''; and
                    (B) by inserting ``set forth in subsection (4) of 
                this paragraph,'' before ``which the Secretary 
                determines'';
            (5) by striking the first sentence of subsection (a)(4), 
        and inserting the following: ``For purposes of this paragraph, 
        medical services means prosthetic and orthotic services and 
        appliances, including--
                    ``(A) wheelchairs;
                    ``(B) artificial limbs;
                    ``(C) trusses;
                    ``(D) special clothing made necessary by the 
                wearing of prosthetic or orthotic appliances; and
                    ``(E) such similar appliances and related supplies 
                or services as the Secretary determines to be 
                reasonable and necessary.'';
            (6) by striking subsections (a)(5)(A) and (a)(5)(B); and 
        redesignating subsections (a)(6) and (a)(7) as (a)(5) and 
        (a)(6), respectively; and
            (7) by striking subsections (f) and (i).
    (e) Extension of Contracting Authority; Conformance of Eligibility 
and Notification Requirements; Elimination of Limitations on Facility 
Reorganization and Closure.--Section 1712A of title 38, United States 
Code, is amended--
            (1) in subsection (a)(1), by striking ``, within the limits 
        of Department facilities,'';
            (2) in subsection (b)(1)--
                    (A) by striking, in the first sentence, ``, within 
                the limits of Department facilities,'';
                    (B) by striking, in the first sentence, ``on an 
                outpatient basis under the conditions specified in 
                section 1712(a)(5)(B)'' and inserting ``in accordance 
                with the criteria established in chapter 18'';
                    (C) by striking, in the second sentence, ``For the 
                purposes of furnishing such mental health services, the 
                counseling'' and inserting ``Any hospital care and 
                other medical services considered necessary on the 
                basis of the assessment'';
                    (D) by striking, in the second and third sentences, 
                ``considered to have been furnished by the Department 
                as a part of hospital care. Any hospital care and other 
                medical services considered necessary on the basis of 
                the assessment furnished under subsection (a) of this 
                section shall be'';
                    (E) by striking ``this chapter'' and inserting 
                ``chapter 18'' after ``eligibility criteria otherwise 
                set forth in; and
                    (F) by striking ``(including the eligibility 
                criteria set forth in section 1711(b) of this title)''.
            (3) in subsection (c)(1), by striking ``and'' at the end of 
        the paragraph;
            (4) in subsection (c)(2), by striking ``and'' at the end of 
        the paragraph;
            (5) by inserting after subsection (c)(2) the following 
        paragraph:
            ``(3) advise such individual of such individual's 
        eligibility to obtain services pursuant to the provisions of 
        chapter 18.'';
            (6) in subsection (e)(1)--
                    (A) by inserting ``otherwise'' before ``available 
                to the Secretary''; and
                    (B) by striking ``(under sections 1712(a)(1)(B) and 
                1703(a)(2) of this title) in furnishing medical 
                services to veterans suffering from total service-
                connected disabilities'' and inserting ``under chapters 
                17 and 18'';
            (7) by striking subsection (e)(3);
            (8) in subsection (g)--
                    (A) by striking paragraph (1) and redesignating 
                paragraph (2) as paragraph (1); and
                    (B) in paragraph (1)(B)(i)(II) (as redesignated by 
                this paragraph), by striking ``and'' at the end of the 
                paragraph;
                    (C) in paragraph (1)(B)(ii) (as redesignated by 
                this paragraph), by striking the period at the end of 
                the paragraph and inserting ``; and;
                    (D) in paragraph (1)(B) (as redesignated by this 
                paragraph), by inserting a new paragraph (1)(B)(iii) as 
                follows:
                            ``(iii) a national plan for ensuring the 
                        continued availability and effective furnishing 
                        of readjustment counseling services to eligible 
                        veterans needing such services.'';
                    (E) by striking paragraphs (3)(A) and (3)(B);
                    (F) by redesignating paragraph (3)(c) as paragraph 
                (2);
                    (G) in paragraph (2) (as redesignated by this 
                paragraph)--
                            (i) by striking ``(B) after 
                        ```subparagraph'' and inserting ``(iii)'';
                            (ii) by striking ``center'' and inserting 
                        ``region''; and
                            (iii) by redesignating clause ``(i)'' as 
                        paragraph ``(2)(A)'';
                    (H) in paragraph (2)(A) (as redesignated by this 
                paragraph)--
                            (i) by striking ``area served by the 
                        center'' and inserting ``region'';
                            (ii) by striking ``relationships'' and 
                        inserting ``relationship'';
                            (iii) by striking ``such center and the 
                        general Department facility'' and inserting 
                        ``Department and contract facilities'';
                            (iv) by striking clause (ii); and
                            (v) by redesignating clause (iii) as 
                        paragraph (2)(B);
                    (I) in paragraph (2)(B) (as redesignated by this 
                paragraph)--
                            (i) by striking ``area served by the 
                        center'' and inserting ``region''; and
                            (ii) by redesignating clause (iv) as 
                        paragraph (2)(C);
                    (J) in paragraph (2)(C) (as redesignated by this 
                paragraph)--
                            (i) by striking ``, the center and''; and
                            (ii) by striking clauses (v), (vi), (vii), 
                        and (viii);
                    (K) by inserting paragraph (2)(D) as follows:
                    ``(D) Such other factors as the Secretary 
                determines to be relevant to the evaluation described 
                in subparagraph (B) of this paragraph.''; and
                    (L) by deleting paragraphs (4) and (5); and
            (9) by deleting subsection (i).
    (f) Use of Contract Providers.--Section 1712B of title 38, Untied 
States Code, is amended by striking ``facilities'' and inserting 
``resources''.
    (g) Conformance of Benefits for Certain Veterans' Dependents.--
Section 1713 of title 38, United States Code, is amended--
            (1) in subsection (a), by striking ``subsection (b) of this 
        section'' and inserting ``chapter 18'' after ``the provisions 
        of''; and
            (2) by striking subsection (b).
    (h) Conformance of Hospital Care by Other Federal Agencies With 
Chapter 18.--Section 1716 of title 38, United States Code, is amended 
by striking ``this chapter'' and inserting ``chapters 17 and 18'' after 
`'entitled to hospitalization from the Department under''.
    (i) Conformance of Eligibility Requirements for Home Health 
Services.--Section 1717 of title 38, United States Code, is amended in 
subsection (a)--
            (1) in paragraph (1), by striking ``As part of medical 
        services furnished to a veteran under section 1712(a) of this 
        title,'' and beginning the sentence with ``The Secretary may 
        furnish'';
            (2) in paragraph (2)(A), by striking ``in the case of 
        medical services furnished under paragraph (1) of section 
        1712(a)'' and inserting ``for (i) a veteran for a service 
        connected disability (including a disability that was incurred 
        or aggravated in line of duty and for which the veteran was 
        discharged or released from the active military, naval, or air 
        service), (ii) a veteran who qualifies as entitled under 
        section 1805(a)(1) of this title and has a service-connected 
        disability rated at fifty (50) percent or greater, and (iii) a 
        veteran who qualifies as entitled under section 1805(a)(5)''; 
        and
            (3) in paragraph (2)(B), by striking ``in the case of 
        medical services furnished under any other provision of section 
        1712'' and inserting ``for a veteran who qualifies as eligible 
        under section 1805(b)''.
    (j) Conformance of Eligibility Requirements for Therapeutic and 
Rehabilitative Activities.--Section 1718 of title 38, United States 
Code, is amended by striking subsection (e).
    (k) Conformance of Nursing Home and Adult Day Care With Chapter 18 
Criteria.--Section 1720 of title 38, United States Code, is amended--
            (1) in subsection (a)(4), by inserting ``or who is 
        furnished hospital or domiciliary care by the Secretary under 
        the provisions of chapter 18,'' after ``Alaska of Hawaii''; and
            (2) in subsection (f)(1)(A)(ii), by striking ``is eligible 
        for medical services under section 1712(a)(1)(B) of this 
        title'' and inserting ``qualifies as entitled under section 
        1805(a)(1) of this title and has a service-connected disability 
        rated at fifty (50) percent or greater'' after ``a veteran 
        who''.
    (l) Conformance of Eligibility and Notification Requirements for 
Substance Abuse Treatment; Elimination of Contracting Limitations.--
Section 1720A of title 38, United States Code, is amended--
            (1) in subsection (a)(1), by striking out ``this chapter'' 
        and inserting ``chapters 17 and 18'' after ``medical and 
        rehabilitative services under'';
            (2) in subsection (c)--
                    (A) in paragraph (1), by striking out ``and'' at 
                the end of the paragraph;
                    (B) in paragraph (2), by inserting ``; and'' at the 
                end of the paragraph; and
                    (C) by inserting the following new paragraph (3):
            ``(3) advise such individual of such individual's 
        eligibility to obtain services pursuant to the provisions of 
        chapter 18 of this title.''; and
            (3) by striking subsections (e) and (g).
    (m) Conformance With Chapter 18 Benefits; Elimination of 
Contracting Limitations.--Section 1720B of title 38, United States 
Code, is amended--
            (1) in subsection (a), by striking ``1710'' and inserting 
        ``1806'' after ``to receive care under section''; and
            (2) in subsection (b)(2), by striking ``in a Department 
        facility''.
    (n) Elimination of Contracting Limitations; Conformance With 
Chapter 18 Benefits.--Section 1720D of title 38, United States Code, is 
amended--
            (1) in subsection (a)(1)(3), by inserting a period after 
        ``a qualified mental health professional'' and striking out all 
        that follows; and
            (2) in subsection (b)(2)(C), by inserting ``or chapter 18'' 
        after ``under this chapter''.
    (o) Extension of Rulemaking Authority to Chapter 18.--Section 1721 
of title 38, United States Code, is amended by inserting ``or under a 
Veterans Health Plan as set forth in chapter 18 of this title'' 
immediately before the end of the first sentence.
    (p) Conformance With Chapter 18 Eligibility Criteria.--Section 1722 
of title 38, United States Code, is amended--
            (1) in subsection (a), by inserting ``and 1805(a)(6)'' 
        after ``section 1710(a)(1)(I); and
            (2) in subsection(f)(3)--
                    (A) by striking out ``section 1710(a) or 1712(f)'' 
                and inserting ``chapter 17'' after ``case or services 
                under''; and
                    (B) by inserting ``or the year in which the veteran 
                enrolls in a Veterans Health Plan under chapter 18 of 
                this title'' immediately before the end of the 
                sentence.
    (q) Conformance of Copayment Requirement; Retention of Proceeds by 
the Department of Veterans Affairs.--Section 1722A of title 38, United 
States Code, is amended--
            (1) in subsection (a)(1)--
                    (A) by striking, in the first sentence, ``shall'' 
                and inserting ``may'';
                    (B) by striking ``$2'' and inserting ``a 
                copayment'' after ``United States''; and
                    (C) by striking the second sentence.
            (2) in subsection (a)(2), by inserting ``fully-allocated'' 
        before ``cost to the Secretary''; and
            (3) in subsection (b), by striking ``Medical-Care Cost 
        Recovery Fund'' and inserting ``Health Plan Fund established 
        under section 1815 of this title''.
    (r) Chapter 18 Clothing Benefit.--Section 1723 of title 38, United 
States Code, is amended by inserting ``or otherwise receiving care 
under chapters 17 and 18 of this title,'' after the first comma.
    (s) Extension of Reimbursement for Personal Loss to Contract 
Facilities.--Section 1726 of title 38, United States Code, is amended 
by inserting the following sentence at the end: ``The Secretary shall 
include in any contract with a non-Department facility a provision for 
reimbursement of veterans and their dependents in contracted health 
care facilities for any loss of personal effects sustained by fire, 
earthquake, or other natural disaster while such effects were stored in 
designated locations in such facilities.''.
    (t) Conformance With Chapter 18 Benefits.--Section 1727 of title 
38, United States Code, is amended--
            (1) by striking out ``this chapter'' and inserting 
        ``chapters 17 and 18'' after ``provided for in''; and
            (2) by striking out ``in this chapter'' and inserting 
        ``therein'' after ``the service requirements contained''.
    (u) Clarification of Veteran Reimbursement Policy.--Section 1728 of 
title 38, United States Code, is amended in subsection (a)--
            (1) by striking ``entitled to hospital care or medical 
        services under this chapter'' and ``reimburse veterans'';
            (2) by striking out ``such'' after ``reasonable value of'' 
        and inserting ``hospital'';
            (3) by inserting ``medical'' before ``services (including 
        travel'';
            (4) by striking ``from sources other than the Department'' 
        and inserting ``beyond payment otherwise required under 
        chapters 17 and 18 of this title'' after ``have made 
        payment,''; and
            (5) in paragraph (3), by inserting '', contracted,'' before 
        ``or other Federal facilities''.
    (v) Extension of Third-party Recovery to Chapter 18 Services; 
Replacement of Medical-care Cost Recovery Fund With Veterans Health 
Plan Fund; Retention of Third-Party Payments by the Department of 
Veterans Affairs.--Section 1729 of title 38, United States Code, is 
amended--
            (1) in subsection (a)(1)--
                    (A) by inserting ``or a veteran's dependent'' 
                before ``is furnished care''; and
                    (B) by striking ``this chapter'' and inserting 
                ``chapters 17 and 18'' before ``for a non-service-
                connected disability'';
            (2) in subsection (g)--
                    (A) by striking paragraph (1) and redesignating 
                paragraph (2) as paragraph (1); and
                    (B) in paragraph (1) (as redesignated under this 
                paragraph), by striking ``Fund'' and inserting 
                ``Department of Veterans Affairs Health Plan Fund 
                established under section 1815 of this title''; and
                    (C) by striking paragraphs (3) and (4).
    (w) Conformance With Chapter 18 Criteria and Benefits.--Section 
1741 of title 38, United States Code, is amended--
            (1) in subsection (a)(2), by striking in the last sentence 
        ``in a Department facility'' and inserting ``under sections 
        1710, 1720 and 1809(b) of this title''; and
            (2) in subsection (c)--
                    (A) by striking ``and'' and inserting a comma after 
                ``sections 1710''; and
                    (B) by inserting ``and 1809(b)'' after ``1720''.
    (x) Extension of Sickle Cell Anemia Services to Chapter 18.--
Section 1751 of title 38, United States Code, is amended by striking 
``chapter'' and inserting ``title'' after ``under the provisions of 
this''.

SEC. 6. TECHNICAL AND CONFORMING AMENDMENTS TO TITLE 38, UNITED STATES 
              CODE.

    (a) Conformance With Chapter 18 Eligibility Criteria.--Section 106 
of title 38, United States Code, is amended, in subsection (b), by 
striking ``chapter 17'' and inserting ``chapters 17 and 18'' after 
``for purposes of determining service-connection of a disability 
under''.
    (b) Extension of Recovery Exemption to Chapter 18 Benefits.--
Section 2651 of title 38, United States Code, is amended, in subsection 
(c), by inserting ``or 18'' after ``under the provisions of chapter 
17''.
    (c) Extension of Chapter 18 Benefits to Veterans Eligible for 
Training and Rehabilitation.--Section 3104 of title 38, United States 
Code, is amended, in subsection (a)(9), by striking ``chapter 17'' and 
inserting ``chapters 17 and 18'' after ``services described in''.
    (d) Conforming Reference to Chapter 18 Benefits.--Section 3485 of 
title 38, United States Code, is amended, in subsection (a)(1), by 
striking ``chapter 17'' and inserting ``chapters 17 and 18'' after 
``(C) the provision of hospital and domiciliary care and medical 
treatment under''.
    (3) False Claims Under Chapter 18.--Section 3803 of title 38, 
United States Code, is amended, in subsection (c)(2)(C)(viii), by 
inserting ``18'' after ``under chapters 11, 13, 15, 17'' and before 
``and 21''.
    (f) Conforming Reference to Chapter 18.--Section 3903 of title 38, 
United States Code, is amended in subsection (e)(1) by inserting ``or 
18'' after ``eligible for care under chapter 17''.
    (g) Recovery of Interest and Other Costs Under Chapter 18.--Section 
5315 of title 38, United States Code, is amended in subsection (a)(2) 
by striking ``chapter 17'' and inserting ``chapters 17 and 18'' after 
``from the provision of care or services under''.
    (h) Suspension of Pension Reduction for Veterans Receiving 
Rehabilitative Services Under Chapter 18.--Section 5503 of title 38, 
United States Code, is amended in subsection (a)(1)(D) by inserting 
``or 18'' after ``rehabilitation services, under chapter 17''.
    (i) Extension of Non-Discrimination Rule to Chapter 18.--Section 
7333 of title 38, United States Code, is amended by inserting in 
subsection (a) ``or 18'' after ``under chapter 17''.
    (j) Extension of Contracting Authority.--Section 8102 of title 38, 
United States Code, is amended by inserting in subsection (a) ``or 
contract for'' after ``The Secretary shall provide''.
    (k) Elimination of Acquisition Restrictions.--Section 8103 of title 
38, United States Code, is amended by striking in subsection (d)(1) 
``of not more than three'' after ``for the acquisition of''.
    (l) Elimination of Inefficient Operating Requirements.--Section 
8110 of title 38, United States Code, is amended--
            (1) by striking all of subsection (a)(1) and inserting the 
        following:
    ``(a)(1) The Secretary shall establish the total number of hospital 
beds and nursing home beds in medical facilities over which the 
Secretary has direct jurisdiction for the care and treatment of 
Veterans Health Plan enrollees. The Secretary shall establish the total 
number of such beds so as to maintain a contingency capacity to assist 
the Department of Defense in time of war or national emergency to care 
for the casualties of such war or national emergency. The Secretary 
shall provide, in such a manner as to ensure the immediate acceptance 
and timely and complete care of patients, for sufficient beds and other 
treatment capacities to accommodate, and provide care to, Veterans 
Health Plan enrollees applying for admission and found to be in need of 
hospital care or medical services under chapter 17 or 18 of this 
title.'';
            (2) in subsection (a)(2)--
                    (A) by striking ``maintain the'' and inserting 
                ``provide'' after ``The Secretary shall'';
                    (B) by striking ``of all Department medical 
                facilities'' after ``and treatment capacities''; and
                    (C) by striking ``section 1712 of'' after 
                ``furnished pursuant to''; and
            (3) by striking paragraph (5).
    (m) Elimination of Inefficient Operating Restrictions.--Section 
8111 of title 38, United States Code, is amended by striking in 
subsection (a) from ``result (1) in a permanent reduction'' through 
``to be operated and maintained or'' after ``enter into an agreement 
that would'' and before ``in any way subordinate or transfer''.
    (n) Elimination of Restrictions on Contracting Authority; Chapter 
18 Hospital Services.--Section 8111A of title 38, United States Code, 
is amended--
            (1) in subsection (b)(2)(A), by striking ``at a department 
        facility under subsection (f) of section 1712 of this title'' 
        after ``is receiving medical services''; and
            (2) in subsection (b)(2)(B)--
                    (A) by striking in clause (i) ``section 1710 of'' 
                after ``hospital care under''; and
                    (B) by striking in clause (ii) ``such section'' and 
                inserting ``this title'' after ``for hospital care 
                under''.
    (o) Elimination of Restrictions on Contracting Authority; Payment 
Provisions for Chapter 18 Benefits.--Section 8153 of title 38, United 
States Code, is amended--
            (1) by striking subsection (c); and
            (2) by inserting in subsection (d) ``or 18'' after ``not 
        eligible for such care or services under chapter 17''.

SEC. 7. EFFECTIVE DATE.

    The provisions of this Act shall take effect two years after the 
date of the enactment of this Act.
                                 <all>