[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 2054 Introduced in Senate (IS)]







105th CONGRESS
  2d Session
                                S. 2054

    To amend title XVIII of the Social Security Act to require the 
  Secretary of Veterans Affairs and the Secretary of Health and Human 
  Services to carry out a model project to provide the Department of 
 Veterans Affairs with medicare reimbursement for medicare health-care 
        services provided to certain medicare-eligible veterans.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 8, 1998

Mr. Jeffords (for himself, Mr. Rockefeller, Mr. Specter, Mr. Hollings, 
Mr. Murkowski, Mr. Leahy, and Mr. Hagel) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To amend title XVIII of the Social Security Act to require the 
  Secretary of Veterans Affairs and the Secretary of Health and Human 
  Services to carry out a model project to provide the Department of 
 Veterans Affairs with medicare reimbursement for medicare health-care 
        services provided to certain medicare-eligible veterans.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veterans' Equality for Treatment and 
Services Act of 1998 (VETS)''.

SEC. 2. MEDICARE SUBVENTION FOR VETERANS.

    Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) (as 
amended by section 4015 of the Balanced Budget Act of 1997 (Public Law 
105-33; 111 Stat. 337)) is amended by adding at the end the following:

                   ``medicare subvention for veterans

    ``Sec. 1897. (a) Definitions.--In this section:
            ``(1) Administering secretaries.--The term `administering 
        Secretaries' means the Secretary and the Secretary of Veterans 
        Affairs acting jointly.
            ``(2) Demonstration project; project.--The terms 
        `demonstration project' and `project' mean the demonstration 
        project carried out under this section.
            ``(3) Military retiree.--The term `military retiree' means 
        a member or former member of the Armed Forces who is entitled 
        to retired pay.
            ``(4) Targeted medicare-eligible veteran.--The term 
        `targeted medicare-eligible veteran' means an individual who--
                    ``(A) is a veteran (as defined in section 101(2) of 
                title 38, United States Code) and is described in 
                section 1710(a)(3) of title 38, United States Code; and
                    ``(B) is entitled to benefits under part A of this 
                title and is enrolled under part B of this title.
            ``(5) Trust funds.--The term `trust funds' means the 
        Federal Hospital Insurance Trust Fund established in section 
        1817 and the Federal Supplementary Medical Insurance Trust Fund 
        established in section 1841.
    ``(b) Demonstration Project.--
            ``(1) In general.--
                    ``(A) Establishment.--The administering Secretaries 
                are authorized to establish a demonstration project 
                (under an agreement entered into by the administering 
                Secretaries) under which the Secretary shall reimburse 
                the Secretary of Veterans Affairs, from the trust 
                funds, for medicare health care services furnished to 
                certain targeted medicare-eligible veterans.
                    ``(B) Agreement.--The agreement entered into under 
                subparagraph (A) shall include at a minimum--
                            ``(i) a description of the benefits to be 
                        provided to the participants of the 
                        demonstration project established under this 
                        section;
                            ``(ii) a description of the eligibility 
                        rules for participation in the demonstration 
                        project, including any criteria established 
                        under subsection (c) and any cost sharing under 
                        subsection (d);
                            ``(iii) a description of how the 
                        demonstration project will satisfy the 
                        requirements under this title;
                            ``(iv) a description of the sites selected 
                        under paragraph (2);
                            ``(v) a description of how reimbursement 
                        and maintenance of effort requirements under 
                        subsection (l) will be implemented in the 
                        demonstration project; and
                            ``(vi) a statement that the Secretary shall 
                        have access to all data of the Department of 
                        Veterans Affairs that the Secretary determines 
                        is necessary to conduct independent estimates 
                        and audits of the maintenance of effort 
                        requirement, the annual reconciliation, and 
                        related matters required under the 
                        demonstration project.
            ``(2) Number of sites.--Subject to paragraphs (3) and (4), 
        the administering Secretaries shall establish a plan for the 
        selection of up to 12 medical centers under the jurisdiction of 
        the Secretary of Veterans Affairs and located in geographically 
        dispersed locations to participate in the project.
            ``(3) General criteria.--The selection plan shall favor 
        selection of those medical centers that are suited to serve 
        targeted medicare-eligible individuals because--
                    ``(A) there is a high potential demand by targeted 
                medicare-eligible veterans for their services;
                    ``(B) they have sufficient capability in billing 
                and accounting to participate;
                    ``(C) they have favorable indicators of quality of 
                care, including patient satisfaction;
                    ``(D) they deliver a range of services required by 
                targeted medicare-eligible veterans; and
                    ``(E) they meet other relevant factors identified 
                in the plan.
            ``(4) Required sites.--At least 1 of each of the following 
        medical centers shall be selected for inclusion in the 
        demonstration project:
                    ``(A) Medical center near closed base.--A medical 
                center that is in the same catchment area as a military 
                medical facility which was closed pursuant to either of 
                the following laws:
                            ``(i) The Defense Base Closure and 
                        Realignment Act of 1990.
                            ``(ii) Title II of the Defense 
                        Authorization Amendments and Base Closure and 
                        Realignment Act.
                    ``(B) Medical center in a rural area.--A medical 
                center that is located in a rural area that does not 
                have reasonably available and accessible private health 
                care providers.
            ``(5) Restriction.--No new facilities will be built or 
        expanded with funds from the demonstration project.
            ``(6) Duration.--The administering Secretaries shall 
        conduct the demonstration project during the 3-year period 
        beginning on January 1, 1999.
    ``(c) Voluntary Participation.--Participation of targeted medicare-
eligible veterans in the demonstration project shall be voluntary, 
subject to the capacity of participating medical centers and the 
funding limitations specified in subsection (l), and shall be subject 
to such terms and conditions as the administering Secretaries may 
establish. In the case of a demonstration project at a medical center 
described in subsection (b)(3), targeted medicare-eligible veterans who 
are military retirees shall be given preference in participating in the 
project.
    ``(d) Cost Sharing.--The Secretary of Veterans Affairs may 
establish cost-sharing requirements for veterans participating in the 
demonstration project. If such cost sharing requirements are 
established, those requirements shall be the same as the requirements 
that apply to targeted medicare-eligible patients at nongovernmental 
facilities.
    ``(e) Crediting of Payments.--A payment received by the Secretary 
of Veterans Affairs under the demonstration project shall be credited 
to the applicable Department of Veterans Affairs medical appropriation 
and (within that appropriation) to funds that have been allotted to the 
medical center that furnished the services for which the payment is 
made. Any such payment received during a fiscal year for services 
provided during a prior fiscal year may be obligated by the Secretary 
of Veterans Affairs during the fiscal year during which the payment is 
received.
    ``(f) Authority To Waive Certain Medicare Requirements.--The 
Secretary may, to the extent necessary to carry out the demonstration 
project, waive any requirement under this title. If the Secretary 
waives any such requirement, the Secretary shall include a 
description of such waiver in the agreement described in subsection 
(b)(1)(B).
    ``(g) Inspector General.--Nothing in the agreement entered into 
under subsection (b) shall limit the Inspector General of the 
Department of Health and Human Services from investigating any matters 
regarding the expenditure of funds under this title for the 
demonstration project, including compliance with the provisions of this 
title and all other relevant laws.
    ``(h) Report.--At least 30 days prior to the commencement of the 
demonstration project, the administering Secretaries shall submit a 
copy of the agreement entered into under subsection (b) to the 
committees of jurisdiction in Congress.
    ``(i) Managed Health Care Plans.--
            ``(1) In general.--In carrying out the demonstration 
        project, the Secretary of Veterans Affairs may establish and 
        operate managed health care plans.
            ``(2) Requirements.--Any managed health care plan 
        established in accordance with paragraph (1) shall be operated 
        by or through a Department of Veterans Affairs medical center 
        or group of medical centers and may include the provision of 
        health care services through other facilities under the 
        jurisdiction of the Secretary of Veterans Affairs as well as 
        public and private entities under arrangements made between the 
        Department and the other public or private entity concerned. 
        Any such managed health care plan shall be established and 
        operated in conformance with standards prescribed by the 
        administering Secretaries.
            ``(3) Minimum benefits.--The administering Secretaries 
        shall prescribe the minimum health care benefits to be provided 
        under a managed health care plan to veterans enrolled in the 
        plan that shall include at least all health care services 
        covered under the medicare program under this title.
            ``(4) Inclusion in number of sites.--The establishment of a 
        managed health care plan under this section shall be counted as 
        the selection of a medical center for purposes of applying the 
        numerical limitation under subsection (b)(1).
    ``(j) Medical Center Requirements.--The Secretary of Veterans 
Affairs may establish a managed health care plan using 1 or more 
medical centers and other facilities only after the Secretary of 
Veterans Affairs submits to Congress a report setting forth a plan for 
the use of such centers and facilities. The plan may not be implemented 
until the Secretary of Veterans Affairs has received from the Inspector 
General of the Department of Veterans Affairs, and has forwarded to 
Congress, certification of each of the following:
            ``(1) The cost accounting system of the Veterans Health 
        Administration (known as the Decision Support System) is 
        operational and is providing reliable cost information on care 
        delivered on an inpatient and outpatient basis at such centers 
        and facilities.
            ``(2) The centers and facilities have operated in 
        conformity with the eligibility reform amendments made by title 
        I of the Veterans Health Care Act of 1996 for not less than 3 
        months.
            ``(3) The centers and facilities have developed a credible 
        plan (on the basis of market surveys, data from the Decision 
        Support System, actuarial analysis, and other appropriate 
        methods and taking into account the level of payment under 
        subsection (l) and the costs of providing covered services at 
        the centers and facilities) to minimize, to the extent 
        feasible, the risk that appropriated funds allocated to the 
        centers and facilities will be required to meet the centers' 
        and facilities' obligation to targeted medicare-eligible 
        veterans under the demonstration project.
            ``(4) The centers and facilities collectively have 
        available capacity to provide the contracted benefits package 
        to a sufficient number of targeted medicare-eligible veterans.
            ``(5) The entity administering the health plan has 
        sufficient systems and safeguards in place to minimize any risk 
        that instituting the managed care model will result in reducing 
        the quality of care delivered to enrollees in the demonstration 
        project or to other veterans receiving care under paragraphs 
        subsection (1) or (2) of section 1710(a) of title 38, United 
        States Code.
    ``(k) Reserves.--The Secretary of Veterans Affairs shall maintain 
such reserves as may be necessary to ensure against the risk that 
appropriated funds, allocated to medical centers and facilities 
participating in the demonstration project through a managed health 
care plan under this section, will be required to meet the obligations 
of those medical centers and facilities to targeted medicare-eligible 
veterans.
    ``(l) Payments Based on Regular Medicare Payment Rates.--
            ``(1) Payments.--
                    ``(A) In general.--Subject to the succeeding 
                provisions of this subsection, the Secretary shall 
                reimburse the Secretary of Veterans Affairs for 
                services provided under the demonstration project at 
                the following rates:
                            ``(i) Noncapitation.--Except as provided in 
                        clause (ii) and subject to subparagraphs (B) 
                        and (D), at a rate equal to 95 percent of the 
                        amounts that otherwise would be payable under 
                        this title on a noncapitated basis for such 
                        services if the medical center were not a 
                        Federal medical center, were participating in 
                        the program, and imposed charges for such 
                        services.
                            ``(ii) Capitation.--Subject to 
                        subparagraphs (B) and (D), in the case of 
                        services provided to an enrollee under a 
                        managed health care plan established under 
                        subsection (i), at a rate equal to 95 percent 
                        of the amount paid to a Medicare+Choice 
                        organization under part C with respect to such 
                        an enrollee.
                In cases in which a payment amount may not otherwise be 
                readily computed, the Secretaries shall establish rules 
                for computing equivalent or comparable payment amounts.
                    ``(B) Exclusion of certain amounts.--In computing 
                the amount of payment under subparagraph (A), the 
                following shall be excluded:
                            ``(i) Disproportionate share hospital 
                        adjustment.--Any amount attributable to an 
                        adjustment under subsection (d)(5)(F) of 
                        section 1886 of the Social Security Act (42 
                        U.S.C. 1395ww).
                            ``(ii) Direct graduate medical education 
                        payments.--Any amount attributable to a payment 
                        under subsection (h) of such section.
                            ``(iii) Percentage of indirect medical 
                        education adjustment.--40 percent of any amount 
                        attributable to the adjustment under subsection 
                        (d)(5)(B) of such section.
                            ``(iv) Percentage of capital payments.--67 
                        percent of any amounts attributable to payments 
                        for capital-related costs under subsection (g) 
                        of such section.
                    ``(C) Periodic payments from medicare trust 
                funds.--Payments under this subsection shall be made--
                            ``(i) on a periodic basis consistent with 
                        the periodicity of payments under this title; 
                        and
                            ``(ii) in appropriate part, as determined 
                        by the Secretary, from the trust funds.
                    ``(D) Annual limit on medicare payments.--The 
                amount paid to the Department of Veterans Affairs under 
                this subsection for any year for the demonstration 
                project may not exceed $50,000,000.
            ``(2) Reduction in payment for va failure to maintain 
        effort.--
                    ``(A) In general.--In order to avoid shifting onto 
                the medicare program under this title costs previously 
                assumed by the Department of Veterans Affairs for the 
                provision of medicare-covered services to targeted 
                medicare-eligible veterans, the payment amount under 
                this subsection for the project for a fiscal year shall 
                be reduced by the amount (if any) by which--
                            ``(i) the amount of the VA effort level for 
                        targeted veterans (as defined in subparagraph 
                        (B)) for the fiscal year ending in such year, 
                        is less than
                            ``(ii) the amount of the VA effort level 
                        for targeted veterans for fiscal year 1998.
                    ``(B) VA effort level for targeted veterans 
                defined.--For purposes of subparagraph (A), the term 
                `VA effort level for targeted veterans' means, for a 
                fiscal year, the amount, as estimated by the 
                administering Secretaries, that would have been 
                expended under the medicare program under this title 
                for VA-provided medicare-covered services for targeted 
                veterans (as defined in subparagraph (C)) for that 
                fiscal year if benefits were available under the 
                medicare program for those services. Such amount does 
                not include expenditures attributable to services for 
                which reimbursement is made under the demonstration 
                project.
                    ``(C) VA-provided medicare-covered services for 
                targeted veterans.--For purposes of subparagraph (B), 
                the term `VA-provided medicare-covered services for 
                targeted veterans' means, for a fiscal year, items and 
                services--
                            ``(i) that are provided during the fiscal 
                        year by the Department of Veterans Affairs to 
                        targeted medicare-eligible veterans;
                            ``(ii) that constitute hospital care and 
                        medical services under chapter 17 of title 38, 
                        United States Code; and
                            ``(iii) for which benefits would be 
                        available under the medicare program under this 
                        title if they were provided other than by a 
                        Federal provider of services that does not 
                        charge for those services.
            ``(3) Assuring no increase in cost to medicare program.--
                    ``(A) Monitoring effect of demonstration program on 
                costs to medicare program.--
                            ``(i) In general.--The Secretaries, in 
                        consultation with the Comptroller General, 
                        shall closely monitor the expenditures made 
                        under the medicare program for targeted 
                        medicare-eligible veterans during the period of 
                        the demonstration project compared to the 
                        expenditures that would have been made for such 
                        veterans during that period if the 
demonstration project had not been conducted.
                            ``(ii) Annual report by the comptroller 
                        general.--Not later than December 31 of each 
                        year during which the demonstration project is 
                        conducted, the Comptroller General shall submit 
                        to the Secretaries and the appropriate 
                        committees of Congress a report on the extent, 
                        if any, to which the costs of the Secretary 
                        under the medicare program under this title 
                        increased during the preceding fiscal year as a 
                        result of the demonstration project.
                    ``(B) Required response in case of increase in 
                costs.--
                            ``(i) In general.--If the administering 
                        Secretaries find, based on subparagraph (A), 
                        that the expenditures under the medicare 
                        program under this title increased (or are 
                        expected to increase) during a fiscal year 
                        because of the demonstration project, the 
                        administering Secretaries shall take such steps 
                        as may be needed--
                                    ``(I) to recoup for the medicare 
                                program the amount of such increase in 
                                expenditures; and
                                    ``(II) to prevent any such increase 
                                in the future.
                            ``(ii) Steps.--Such steps--
                                    ``(I) under clause (i)(I) shall 
                                include payment of the amount of such 
                                increased expenditures by the Secretary 
                                of Veterans Affairs from the current 
                                medical care appropriation of the 
                                Department of Veterans Affairs to the 
                                trust funds; and
                                    ``(II) under clause (i)(II) shall 
                                include suspending or terminating the 
                                demonstration project (in whole or in 
                                part) or lowering the amount of payment 
                                under paragraph (1)(A).
    ``(m) Evaluation and Reports.--
            ``(1) Independent evaluation.--The administering 
        Secretaries shall arrange for an independent entity with 
        expertise in the evaluation of health services to conduct an 
        evaluation of the demonstration project. The entity shall 
        submit annual reports on the demonstration project to the 
        administering Secretaries and to the committees of jurisdiction 
        in the Congress. The first report shall be submitted not later 
        than 12 months after the date on which the demonstration 
        project begins operation, and the final report not later than 
        3\1/2\ years after that date. The evaluation and reports shall 
        include an assessment, based on the agreement entered into 
        under subsection (b), of the following:
                    ``(A) The cost to the Department of Veterans 
                Affairs of providing care to veterans under the 
                project.
                    ``(B) Compliance of participating medical centers 
                with applicable measures of quality of care, compared 
                to such compliance for other medicare-participating 
                medical centers.
                    ``(C) A comparison of the costs of medical centers' 
                participation in the program with the reimbursements 
                provided for services of such medical centers.
                    ``(D) Any savings or costs to the medicare program 
                under this title from the project.
                    ``(E) Any change in access to care or quality of 
                care for targeted medicare-eligible veterans 
                participating in the project.
                    ``(F) Any effect of the project on the access to 
                care and quality of care for targeted medicare-eligible 
                veterans not participating in the project and other 
                veterans not participating in the project.
                    ``(G) The provision of services under managed 
                health care plans under subsection (l), including the 
                circumstances (if any) under which the Secretary of 
                Veterans Affairs uses reserves described in subsection 
                (k) and the Secretary of Veterans Affairs' response to 
                such circumstances (including the termination of 
                managed health care plans requiring the use of such 
                reserves).
                    ``(H) Any effect that the demonstration project has 
                on the enrollment in Medicare+Choice organizations 
                under part C of this title in the established site 
                areas.
            ``(2) Report on extension and expansion of demonstration 
        project.--Not later than six months after the date of the 
        submission of the penultimate report under paragraph (1), the 
        administering Secretaries shall submit to Congress a report 
        containing their recommendation as to--
                    ``(A) whether to extend the demonstration project 
                or make the project permanent;
                    ``(B) whether to expand the project to cover 
                additional sites and areas and to increase the maximum 
                amount of reimbursement (or the maximum amount of 
                reimbursement permitted for managed health care plans 
                under this section) under the project in any year; and
                    ``(C) whether the terms and conditions of the 
                project should be continued (or modified) if the 
                project is extended or expanded.''.
                                 <all>