[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2115 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2115

  To establish a demonstration project to authorize the Secretary of 
Health and Human Services to selectively contract for the provision of 
                medical care to Medicare beneficiaries.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 9, 1999

  Mr. Stark introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committee on 
Commerce, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
  To establish a demonstration project to authorize the Secretary of 
Health and Human Services to selectively contract for the provision of 
                medical care to Medicare beneficiaries.

    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 ``Medicare Purchasing Flexibility Act 
of 1999''.

SEC. 2. AUTHORITY TO SELECTIVELY CONTRACT UNDER THE MEDICARE PROGRAM.

    (a) Demonstration Projects.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall 
        conduct demonstration projects under which the Secretary may 
        use any or all of the additional authorities described in 
        subsection (b) that--
                    (A) improves the quality of items and services 
                furnished under the medicare program; and
                    (B) reduces expenditures under the medicare program 
                for such items and services.
            (2) Duration of projects.--A demonstration project under 
        this section shall be carried out for a period of five years. 
        The Secretary may provide for the project to be carried out for 
        additional five-year periods.
            (3) Publication of notice of demonstration projects.--By 
        not later than 90 days after the date of the enactment of this 
        Act and annually thereafter, the Secretary shall publish notice 
        in the Federal Register of the demonstration projects to be 
        carried out under this section. The Secretary shall specify the 
        process for--
                    (A) the consideration of comments of interested 
                parties and the public;
                    (B) the process for applications by providers of 
                services, physicians, and suppliers of items and 
                services to participate in such a demonstration 
                project;
                    (C) the particular additional authorities under 
                subsection (b) that the Secretary considers the highest 
                priority;
                    (D) determination of priorities for approval of 
                demonstration projects based on the potential of the 
                proposed innovations under the demonstration project to 
                improve health outcomes and be cost effective relative 
                to those services otherwise available under parts A and 
                B of the medicare program.
    (b) Additional Authorities.--For the purposes of carrying out a 
demonstration project under subsection (a), the Secretary may employ 
any of the following new authorities:
            (1) Case management authority.--In order to promote cost 
        effective delivery of items and services under the medicare 
        program, the Secretary may provide for case management with 
        respect to types of conditions or illnesses identified by the 
        Secretary as appropriate for case management. The case 
        management authority under this paragraph may be used alone or 
        in conjunction with the authority under paragraph (2) to bundle 
        payments for items and services furnished under the program.
            (2) Bundled payments.--
                    (A) In general.--Subject to subparagraph (B), in 
                order to promote cost effective delivery of items and 
                services furnished under the medicare program, the 
                Secretary may provide for bundled payments for the 
                treatment of types of conditions or illnesses 
                identified by the Secretary as appropriate for bundled 
                payments.
                    (B) The authority under subparagraph (A) shall not 
                apply if the Secretary determines that the use of that 
                authority with respect to such condition or illness 
                would substantially impair a medicare beneficiary's 
                access to items and services of adequate quality when 
                medically necessary.
            (3) Contracting authority.--
                    (A) Cost effective delivery of services.--
                            (i) In general.--In order to promote the 
                        cost effective delivery of items and services, 
                        the Secretary may enter into contracts with 
                        providers of services, suppliers,  and 
physicians furnishing items or services under the medicare program for 
the provision of certain items and services (identified by the 
Secretary) at a rate of payment that is less than rate otherwise 
applicable to that item or service under the medicare program.
                            (ii) Maintaining quality.--The Secretary 
                        shall take such steps as are necessary to 
                        ensure the standards and conditions of quality 
                        applicable under the medicare program to such 
                        item or service apply under any contract 
                        entered into under clause (i).
                            (iii) Passing on savings to 
                        beneficiaries.--In the case of any savings to 
                        the medicare program by reason of a contract 
                        entered into under clause (i), the Secretary 
                        may provide for such reduction, as the 
                        Secretary determines appropriate, in the amount 
                        of coinsurance payable by medicare 
                        beneficiaries under the medicare program 
                        receiving items and services under such 
                        contract.
                    (B) Improving coordination of services.--In order 
                to promote better coordination of services available, 
                the Secretary may contract with any of the following:
                            (i) Medicaid.--The Secretary may enter into 
                        contracts for the provision of items and 
                        services under the medicare program with a 
                        State or local government, or with a person who 
                        is not a governmental entity, to coordinate the 
                        provision of such items and services by such 
                        governments or persons with the provision of 
                        items and services furnished under the medicare 
                        program. In determining whether to enter into a 
                        contract under this clause, the Secretary shall 
                        give priority to coordination of items and 
                        services for individuals who are entitled to 
                        benefits both under the medicare program and 
                        under a State plan under title XIX of such Act.
                            (ii) Local markets.--In order to promote 
                        better coordination of utilization of items and 
                        services furnished under the medicare program, 
                        the Secretary may enter into contracts, 
                        directly or through a third party, for the 
                        provision of items and services furnished 
                        within a local market.
                    (C) Improving beneficiary health education.--In 
                order to improve knowledge of medicare beneficiaries 
                with respect to health care and to provide for 
                increased control of health care utilization by such 
                beneficiaries, the Secretary may contract with entities 
                or organizations to provide prevention services and 
                management of demand for particular conditions and 
                illnesses identified by the Secretary as appropriate 
                for such purpose.
                    (D) Quality and cost effective care.--In order to 
                promote access to high quality, cost effective care, 
                the Secretary may do the following:
                            (i) Incentives to beneficiaries.--The 
                        Secretary may provide incentives to medicare 
                        beneficiaries who utilize providers that 
                        demonstrate quality medical outcomes while 
                        maintaining cost effectiveness, and who have 
                        entered into a contract with the Secretary to 
                        provide items and services under the medicare 
                        program to medicare beneficiaries.
                            (ii) Sharing of patient outcomes 
                        information.--The Secretary may establish a 
                        mechanism by which information on patient 
                        outcomes and patient unitization of services is 
                        made available as appropriate, in a manner that 
                        protects patient privacy, to all providers of 
                        services, physicians, and suppliers of items 
                        and services under the medicare program.
    (c) Provision of Additional Items and Services.--To the extent that 
a demonstration project carried out under this section utilizing the 
additional authorities described in subsection (b) results in the 
provision of items or services not otherwise provided for under the 
medicare program, such items and services shall be deemed to be covered 
under such program for purposes of the demonstration project if the 
provision of such items and services conforms with the standards and 
requirements under such program.
    (d) Limitations on Demonstration Projects.--
            (1) No reduction in current medicare benefits.--No 
        demonstration project may be established under this section if 
        the establishment of the demonstration project would result in 
        a reduction in the type or amount of items and services 
        provided for under the medicare program.
            (2) Freedom of choice of providers.--
                    (A) In general.--No demonstration project may be 
                established under this section if the establishment of 
                the demonstration project mandates a greater limitation 
                on the ability of a medicare beneficiary to choose a 
                provider of services, physician, or supplier than those 
                in effect under the medicare program.
                    (B) Beneficiary election.--Notwithstanding 
                subparagraph (A), the Secretary may provide for 
                limitation on the ability of a medicare beneficiary if 
                the beneficiary makes an election to participate in a 
                demonstration project under such greater limitations, 
                under such conditions established prescribed the 
                Secretary in regulations.
            (3) Limitation on quantity of providers.--Notwithstanding 
        paragraph (2), the Secretary  may establish a demonstration 
project under this section under which the Secretary, in a limited 
geographic area (as determined by the Secretary), limits the quantity 
of providers or services, physicians, or suppliers of items and 
services furnishing items and services to medicare beneficiaries under 
a contract. In establishing such a demonstration project, the Secretary 
shall consider the following factors:
                    (A) The need to maintain medicare beneficiaries' 
                access to a broad range of providers of services, 
                physicians, and suppliers.
                    (B) The need to maintain enough viable providers of 
                services, physicians, and suppliers in the geographic 
                area to assure an effective procurement process.
    (e) Authority To Collect Data.--The Secretary may require providers 
of services, physicians, and suppliers of items and services furnishing 
services to medicare beneficiaries under a demonstration project under 
this section to submit such information that the Secretary considers 
necessary for--
            (1) the evaluation of demonstration projects carried out 
        under this section;
            (2) the improvement of such demonstration projects;
            (3) the establishment of additional demonstration projects 
        under this section; and
            (4) the feasibility of integrating components of such 
        demonstration projects into the medicare program.
    (f) Implementation of Demonstration Project Results.--The Secretary 
may issue regulations to implement, on a permanent basis, the 
components of a demonstration project that is beneficial to the 
medicare program if a report under subsection (g)(2)(F) contains an 
evaluation that a demonstration project under this section--
            (1) reduces expenditures under the medicare program; or
            (2) does not increase expenditures under the medicare 
        program and increases the quality of health care services 
        furnished to medicare beneficiaries and satisfaction of 
        beneficiaries and health care providers.
    (g) Report to Congress.--
            (1) In general.--Not less frequently than annually after 
        the Secretary implements demonstration projects under this 
        section, the Secretary shall submit to Congress a report 
        regarding the demonstration projects conducted under this 
        section.
            (2) Contents of report.--The report in paragraph (1) shall 
        include the following:
                    (A) A description of the demonstration projects 
                conducted under this section.
                    (B) A description of any demonstration project 
                under consideration by the Secretary for approval.
                    (C) A description of the methods by which any 
                demonstration project meets the applicable standards 
                for additional authority under subsection (b).
                    (D) A description of the measures implemented under 
                the demonstration project to protect the health and 
                welfare of medicare beneficiaries participating in or 
                to whom items and services are furnished under the 
                demonstration project. Such description shall include 
                information with respect to standards for participation 
                of providers or services, physicians, and suppliers of 
                items and services applicable under the demonstration 
                project.
                    (E) A description of the methods by which the 
                Secretary shall assure the financial accountability of 
                funds expended under the demonstration projects with 
                respect to items and services furnished under the 
                project.
                    (F) An evaluation of--
                            (i) the cost-effectiveness of the 
                        demonstration projects;
                            (ii) the quality of the health care 
                        services provided to target individuals under 
                        the demonstration projects; and
                            (iii) beneficiary and health care provider 
                        satisfaction under the demonstration project.
                    (G) Any other information regarding the 
                demonstration projects conducted under this section 
                that the Secretary determines to be appropriate.
            (3) MedPAC review.--The Medicare Payment Advisory 
        Commission shall review such report and submit to Congress its 
        comments on such report not later than 60 days after the date 
        of the report is submitted to Congress. Such comments shall 
        include the effectiveness and appropriateness of the approved 
        and proposed demonstration projects, and recommendations to 
        Congress with respect to modifications to the authority under 
        this section that the commission determines appropriate.
    (h) Waiver Authority.--The Secretary shall waive compliance with 
the requirements of the medicare program to such extent and for such 
period as the Secretary determines is necessary to conduct 
demonstration projects.
    (i) Funding.--
            (1) In general.--The Secretary shall provide for the 
        transfer from the Federal Hospital Insurance Trust Fund and the 
        Federal Supplementary Insurance Trust Fund under title XVIII of 
        the Social Security Act (42 U.S.C. 1395i, 1395t), in such 
        proportions as the Secretary determines to be appropriate, of 
        such funds as are necessary for the costs of carrying out the 
        demonstration projects under this section.
            (2) Limitation.--In conducting demonstration projects under 
        this section, the Secretary shall ensure that the aggregate 
        payments made by the Secretary do not exceed the amount which 
        the Secretary would have paid if the demonstration projects 
        under this section were not implemented.
    (j) Definitions.--In this section:
            (1) Medicare beneficiary.--The term ``medicare 
        beneficiary'' means an individual entitled to benefits under 
        part A of the medicare program, and enrolled under part B of 
such program, or a person enrolled only under part B of such program.
            (2) Medicare program.--The term ``medicare program'' means 
        the program established under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.).
            (3) Provider of services.--The term ``provider of 
        services'' has the meaning given that term under section 
        1861(u) of the Social Security Act (42 U.S.C. 1395x(u)).
            (4) Physician.--The term ``physician'' has the meaning 
        given that term under section 1861(r) of such Act (42 U.S.C. 
        1395x(r)).

SEC. 3. LEGISLATIVE PROPOSALS TO CHANGE PAYMENT METHODOLOGY FOR CERTAIN 
              SERVICES.

    (a) Proposal To Impose Sustainable Growth Rate Limitations on 
Payment for Certain Medicare Items and Services.--In the case of 
unusual increases in costs to the medicare program (as determined by 
the Secretary of Health and Human Services) attributable to unjustified 
increases in the amount or intensity of items and services furnished 
under the program, the Secretary shall modify the payment update and/or 
methodology with respect to such items and services from the update 
and/or methodology which resulted in such unusual increases in costs to 
an update and/or methodology that imposes a sustainable growth rate for 
such items and services similar to the sustainable growth rate applied 
with respect to payment for physicians services under section 1848(f) 
of the Social Security Act (42 U.S.C. 1395w-4(f)).
    (b) Authority To Vary by Region.--Any sustainable growth rate 
recommended by the Secretary may provide for the determination of such 
rate on a uniform national basis, by Metropolitan Statistical Area, by 
State, or by any other region that the Secretary determines 
appropriate.

SECTION 4. AUTHORITY TO NEGOTIATE PAYMENT RATES IN CERTAIN AREAS.

    (a) Authority To Negotiate.--In the case of a service area (as 
determined by the Secretary of Health and Human Services) in which 
payments made by the Secretary to a health care provider during a 
fiscal year for items and services furnished under the medicare program 
represent the largest single source of payment to the health care 
provider for such items and services in that area, the Secretary may 
negotiate a preferred customer rate with such health care provider for 
such items and services under the medicare program.
    (b) Mandate To Negotiate.--In the case of a service area described 
in subsection (a) where payment rates under the medicare program for 
items and services furnished exceed the rates charged by such health 
care provider for such items and services for which payment is made 
other than under the medicare program, the Secretary shall negotiate a 
preferred customer rate with such health care provider for such items 
and services under the medicare program.
    (c) Adjustment.--In negotiating a preferred customer rate under 
subsection (a), the Secretary shall take into account costs uniquely 
associated with the provision of items and services under the medicare 
program.
    (d) Waiver Authority.--The Secretary may waive such requirements of 
title XVIII of the Social Security Act as may be necessary for the 
purposes of carrying out this Act.
    (e) Definitions.--In this section:
            (1) Medicare program.--The term ``medicare program'' means 
        the program established under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.).
            (2) Preferred customer rate.--The term ``preferred customer 
        rate'' means, with respect to payment to a provider of 
        services, physician, or supplier for an item or service 
        furnished under the medicare program, a rate lower than the 
        rate generally charged in the service area for such item or 
        service.
            (3) Health care provider.--The term ``health care 
        provider'' means a provider of services, a physician, or a 
        supplier who furnishes items or services for which payment is 
        made under the medicare program.
            (4) Provider of services.--The term ``provider of 
        services'' has the meaning given that term under section 
        1861(u) of the Social Security Act (42 U.S.C. 1395x(u)).
            (5) Physician.--The term ``physician'' has the meaning 
        given that term under section 1861(r) of such Act (42 U.S.C. 
        1395x(r)).
    (f) Section 1842(b)(8) is amended to strike ``15 percent'' each 
place it appears and substitute ``30 percent''.

SEC. 5. BASING MEDICARE PAYMENT FOR HOSPITAL OUTPATIENT DEPARTMENT 
              SERVICES ON PAYMENT RATES FOR SIMILAR SERVICES PROVIDED 
              OUTSIDE THE HOSPITAL SETTING.

    (a) In General.--Section 1833(t)(1) of the Social Security Act (42 
U.S.C. 1395l(t)(1)) is amended--
                    (1) in subparagraph (A), by inserting ``subject to 
                subparagraph (C),'' after ``1999,'', and
                    (2) by adding at the end the following new 
                subparagraph:
                    ``(C) Use of rates in non-hospital settings.--With 
                respect to covered OPD services furnished on or after 
                January 1, 2001, if payment may be made under this part 
                for similar services (such as physicians' services) 
                furnished outside the hospital setting, in accordance 
                with regulations of the Secretary, the total amount of 
                payment under this part for such covered OPD services 
                (including any facility-related component to such 
                services) shall be determined on the same basis on 
                which payment may be made for such similar services 
                furnished outside the hospital setting.''.
    (b) Conforming Amendment.--The fifth sentence of section 
1866(a)(2)(A) of such Act (42 U.S.C. 1395cc(a)(2)(A)) is amended by 
inserting ``, or in the case described in section 1833(t)(1)(C), the 
coinsurance amount that would otherwise apply with respect to the 
provision of the similar services referred to in such section'' before 
the period at the end.

SEC. 6. MEDICARE PAYMENTS FOR INPATIENT HOSPITAL SERVICES INVOLVING 
              EMERGENCY CARE.

    (a) MedPAC Report on DRG Weighting Factors.--The Medicare Payment 
Advisory Commission shall submit a report to Congress and the Secretary 
of Health and Human Services, by January 1, 2000, on whether the DRG 
weighting factors under section 1886(d)(4)(B) of the Social Security 
Act for diagnosis-related groups associated with emergency care are 
adequate to cover the costs of emergency room use within discharges 
classified within such groups.
    (b) Adjustment of Weighting Factors.--Taking into account the 
report submitted under subsection (a), the Secretary of Health and 
Human Services shall make appropriate adjustments in the DRG weighting 
factors described in subsection (a) for discharges occurring on or 
after January 1, 2001, as may be appropriate to ensure that hospital 
emergency room costs attributable to medicare patients are 
appropriately covered.

SEC. 7. PROMOTING THE USE OF COST EFFECTIVE MEDICARE NONINSTITUTIONAL 
              SERVICES THROUGH WAIVER OF BENEFIT LIMITATIONS.

    (a) In General.--If the Secretary of Health and Human Services 
estimates that treatment in a non-hospital or non-institutional setting 
under the medicare program under title XVIII of the Social Security Act 
is likely to provide similar or better quality care and outcomes at a 
lower cost to the program, the Secretary of Health and Human Services 
may waive requirements described in subsection (b) which discourage or 
prevent treatment in such a setting.
    (b) Requirements Waivable.--
            (1) In general.--Subject to paragraph (2), the requirements 
        that may be waived include the following:
                    (A) The requirement, for the receipt of benefits 
                for extended care services, that the services be post-
                hospital extended care services.
                    (B) Cost sharing (including deductibles, 
                coinsurance, and copayments) that may be applicable.
            (2) Nonwaivable provisions.--The Secretary of Health and 
        Human Services may not under this section provide for coverage 
        of services for which no payment is otherwise provided under 
        the medicare program.
    (c) Limitation.--The Secretary may not provide for such a waiver in 
the case of an individual unless there are satisfactory assurances that 
the medicare beneficiary has not received (and is not likely to 
receive) medicare benefits for hospital services for the treatment with 
respect to which the waiver applies.
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