[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2229 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2229

   To amend titles XI and XVIII of the Social Security Act to combat 
            waste, fraud, and abuse in the Medicare Program.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 15, 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 amend titles XI and XVIII of the Social Security Act to combat 
            waste, fraud, and abuse in the Medicare Program.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Fraud and 
Reimbursement Reform Act of 1999''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. No mark-up for drugs, biologicals, or parenteral nutrients.
Sec. 3. Elimination of overpayments for epogen.
Sec. 4. Mental health partial hospitalization services.
Sec. 5. Information requirements.
Sec. 6. Centers of excellence.

SEC. 2. NO MARK-UP FOR DRUGS, BIOLOGICALS, OR PARENTERAL NUTRIENTS.

    (a) In General.--Section 1842(o) of the Social Security Act (42 
U.S.C. 1395u(o)) is amended to read as follows:
    ``(o)(1) If a physician's, supplier's, or any other person's bill 
or request for payment for services includes a charge for a drug, 
biological, or parenteral nutrient for which payment may be made under 
this part and the drug, biological, or parenteral nutrient is not paid 
on a cost or prospective payment basis as otherwise provided in this 
part, the payment amount established in this subsection for the drug, 
biological, or parenteral nutrient shall be the lowest of the 
following:
            ``(A) The actual acquisition cost, as defined in paragraph 
        (2), to the person submitting the claim for payment for the 
        drug, biological, or parenteral nutrient.
            ``(B) 95 percent of the average wholesale price of such 
        drug, biological, or parenteral nutrient, as determined by the 
        Secretary.
            ``(C) For payments for drugs, biologicals, or parenteral 
        nutrients furnished on or after January 1, 2000, the median 
        actual acquisition cost of all claims for payment for such 
        drugs, biologicals, or parenteral nutrients for the 12-month 
        period beginning July 1, 1998 (and adjusted, as the Secretary 
        determines appropriate, to reflect changes in the cost of such 
        drugs, biologicals, or parenteral nutrients due to inflation, 
        and such other factors as the Secretary determines 
        appropriate).
            ``(D) The amount otherwise determined under this part.
    ``(2) For purposes of paragraph (1)(A), the term `actual 
acquisition cost' means, with respect to such drugs, biologicals, or 
parenteral nutrients the cost of the drugs, biologicals, or parenteral 
nutrients based on the most economical case size in inventory on the 
date of dispensing or, if less, the most economical case size purchased 
within six months of the date of dispensing whether or not that 
specific drug, biological, or nutrient was furnished to an individual 
whether or not enrolled under this part. Such term includes appropriate 
adjustments, as determined by the Secretary, for all discounts, 
rebates, or any other benefit in cash or in kind (including travel, 
equipment, or free products). The Secretary shall include an additional 
payment for administrative, storage, and handling costs.
    ``(3)(A) No payment shall be made under this part for drugs, 
biologicals, or parenteral nutrients to a person whose bill or request 
for payment for such drugs, biologicals, or parenteral nutrients does 
not include a statement of the person's actual acquisition cost.
    ``(B) A person may not bill an individual enrolled under this 
part--
            ``(i) any amount other than the payment amount specified in 
        paragraph (1), (4), or (5) (plus any applicable deductible and 
        coinsurance amounts), or
            ``(ii) any amount for such drugs, biologicals, or 
        parenteral nutrients for which payment may not be made pursuant 
        to subparagraph (A).
    ``(C) If a person knowingly and willfully in repeated cases bills 
one or more individuals in violation of subparagraph (B), the Secretary 
may apply sanctions against that person in accordance with subsection 
(j)(2).
    ``(4) The Secretary may pay a reasonable dispensing fee (less the 
applicable deductible and coinsurance amounts) for drugs or biologicals 
to a licensed pharmacy approved to dispense drugs or biologicals under 
this part, if payment for such drugs or biologicals is made to the 
pharmacy.
    ``(5) The Secretary shall pay a reasonable amount (less the 
applicable deductible and coinsurance amounts) for the services 
associated with the furnishing of parenteral nutrients for which 
payment is determined under this subsection.''.
    (b) Effective Date.--The amendments made by subsection (a) apply to 
drugs, biologicals, and parenteral nutrients furnished on or after 
January 1, 2000.
    (c) Elimination of Report on Average Wholesale Price.--Section 4556 
of the Balanced Budget Act of 1997 is amended--
            (1) by striking subsection (c); and
            (2) by redesignating subsection (d) as subsection (c).

SEC. 3. ELIMINATION OF OVERPAYMENTS FOR EPOGEN.

    Section 1881(b)(11)(B)(ii) of the Social Security Act (42 U.S.C. 
1395rr(b)(11)(B)(ii)) is amended--
            (1) in subclause (I)--
                    (A) by striking ``provided during 1994'' and 
                inserting ``provided before fiscal year 2000''; and
                    (B) by striking ``and'' at the end;
            (2) by redesignating subclause (II) as subclause (III);
            (3) by inserting after subclause (I) the following new 
        subclause:
                    ``(II) for erythropoietin provided during fiscal 
                year 2000, in an amount equal to $9 per thousand units 
                (rounded to the nearest 100 units), and''; and
            (4) in subclause (III), as so redesignated, by striking 
        ``year'' each place it occurs and inserting ``fiscal year''.

SEC. 4. MENTAL HEALTH PARTIAL HOSPITALIZATION SERVICES

    (a) Limitation on Location of Provision of Services.--
            (1) In general.--Section 1861(ff)(2) of the Social Security 
        Act (42 U.S.C. 1395x(ff)(2)) is amended in the matter following 
        subparagraph (I)--
                    (A) by striking ``and furnished'' and inserting 
                ``furnished''; and
                    (B) by inserting before the period the following: 
                ``, and furnished other than in a skilled nursing 
                facility, residential treatment facility or other 
                residential setting (as determined by the Secretary)''.
            (2) Effective date.--The amendments made by paragraph (1) 
        apply with respect to partial hospitalization services 
        furnished on or after the first day of the third month 
        beginning after the date of the enactment of this Act.
    (b) Qualifications for Community Mental Health Centers.--
            (1) In general.--Section 1861(ff)(3)(B) of the Social 
        Security Act (42 U.S.C. 1395x(ff)(3)(B)) is amended by striking 
        ``entity'' and all that follows and inserting the following: 
        ``entity that--
            ``(i)(I) provides the mental health services described in 
        section 1913(c)(1) of the Public Health Service Act; or
            ``(II) in the case of an entity operating in a State that 
        by law precludes the entity from providing a service described 
        in such section itself, provides for such service by contract 
        with an approved organization or entity (as determined by the 
        Secretary);
            ``(ii) meets applicable licensing or certification 
        requirements for community mental health centers in the State 
        in which it is located; and
            ``(iii) meets such additional conditions as the Secretary 
        shall specify to ensure (I) the health and safety of 
        individuals being furnished such services, (II) the effective 
        and efficient furnishing of such services, and (III) the 
        compliance of such entity with the criteria described in such 
        section.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies with respect to community mental health centers 
        furnishing services under the medicare program on or after the 
        first day of the third month beginning after the date of the 
        enactment of this Act.
    (c) Guidelines for Items and Services Comprising Partial 
Hospitalization Services.--Not later than 180 days after the date of 
the enactment of this Act, the Secretary shall first adopt national 
coverage and administrative policies for partial hospitalization 
services furnished under title XVIII of the Social Security Act, using 
a negotiated rulemaking process under subchapter III of chapter 5 of 
title 5, United States Code.
    (d) Refinement of Periodicity of Review of Plan for Partial 
Hospitalization Services.--
            (1) In general.--Section 1835(a)(2)(F)(ii) of the Social 
        Security Act (42 U.S.C. 1395n(a)(2)(F)(ii)) is amended by 
        inserting ``at a reasonable rate (as determined by the 
        Secretary)'' after ``is reviewed periodically''.
            (2) Effective date.--The amendment made by paragraph (1) 
        applies with respect to plans for furnishing partial 
        hospitalization services established on or after the first day 
        of the third month beginning after the date of the enactment of 
        this Act.
    (e) Recertification of Providers of Partial Hospitalization 
Services.--
            (1) In general.--With respect to each community mental 
        health center that furnishes partial hospitalization services 
        for which payment is made under title XVIII of the Social 
        Security Act, the Secretary of Health and Human Services shall 
        provide for periodic recertification to ensure that the 
        provision of such services complies with applicable 
        requirements of such title.
            (2) Deadline for first recertification.--The first 
        recertification under paragraph (1) shall be completed not 
        later than one year after the date of the enactment of this 
        Act.
    (f) Civil Monetary Penalties for False Certification of Eligibility 
for Hospice Care or Partial Hospitalization Services.--
            (1) In general.--Section 1128A(b)(3) of the Social Security 
        Act (42 U.S.C. 1320a-7a(b)(3)) is amended--
                    (A) in subparagraph (A)(ii), by inserting ``, 
                hospice care, or partial hospitalization services'' 
                after ``home health services''; and
                    (B) in subparagraph (B), by inserting ``, section 
                1814(a)(7) in the case of hospice care, or section 
                1835(a)(2)(F) in the case of partial hospitalization 
                services'' after ``in the case of home health 
                services''.
            (2) Effective date.--The amendments made by paragraph (1) 
        apply with respect to certifications of eligibility for hospice 
        care or partial hospitalization services under the medicare 
        program made on or after the first day of the third month 
        beginning after the date of the enactment of this Act.
    (g) Demonstration for Cost Effective Wrap Around Mental Health 
Services.--
            (1) Establishment.--
            (A) In general.--The Secretary of Health and Human Services 
        shall implement a demonstration project (in this subsection 
        referred to as the ``project'') under part B of title XVIII of 
        the Social Security Act under which community mental health 
        centers may offer wrap around mental health services (as 
        defined in subparagraph (B)(i)) for purposes of providing for a 
        full continuum of ambulatory behavioral health care services.
                    (B) Definitions.--
                            (i) Wrap around mental health services 
                        defined.--The term ``wrap around mental health 
                        services'' means comprehensive outpatient 
                        mental health services furnished to an 
                        individual pursuant to an individualized 
                        treatment plan developed by a mental health 
                        professional, in consultation with the family 
                        of the individual (if available). Such services 
                        are furnished to the individual through a 
                        comprehensive, multidisciplinary health and 
                        social services delivery system that provides 
                        coordinated therapeutic interventions, 
                        including medical services, psychotherapy 
                        services, occupational therapy services, and 
                        social work services.
                            (ii) Licensed mental health professional.--
                        The term ``mental health professional'' means 
                        any of the following individuals who are 
                        licensed by the State in which the individual 
                        furnishes services (as that term is described 
                        in paragraphs (1), (2)(M), and (2)(N) (as the 
                        case may be) of section 1861(s) of the Social 
                        Security Act (42 U.S.C. 1395x(s))) to design 
                        and execute treatment plans described in clause 
                        (i) without the supervision of another health 
                        care practitioner:
                                    (I) A physician, as defined in 
                                section 1861(r)(1) of such Act (42 
                                U.S.C. 1395x(r)(1)).
                                    (II) A clinical psychologist, as 
                                defined by the Secretary pursuant to 
                                section 1861(ii) of such Act (42 U.S.C. 
                                1395x(ii)).
                                    (III) A clinical social worker, as 
                                defined in section 1861(hh) of such Act 
                                (42 U.S.C. 1395x(hh)).
            (2) Selection of centers.--For purposes of implementing 
        such project, the Secretary shall select for participation in 
        the project community mental health centers that serve 
        populations in three different States, one of which 
        predominantly serves rural populations.
            (3) Capitated payment.--The Secretary shall establish and 
        make prospective monthly payments of a capitation amount for 
individuals receiving wrap around mental health services under this 
project.
            (4) Evaluation and report.--
                    (A) Evaluation.--The Secretary shall evaluate the 
                project. Such evaluation shall include an examination 
                of--
                            (i) the project's effect on the health, 
                        well-being, condition, and functional level of 
                        beneficiaries receiving wrap around mental 
                        health services;
                            (ii) any savings to the medicare program by 
                        reason of capitated payments for wrap around 
                        medical services consisting of partial 
                        hospitalization services (as that term is 
                        defined in section 1861(ff) of the Social 
                        Security Act (42 U.S.C. 1395x(ff));
                            (iii) the impact of basing payment for such 
                        services on a capitated basis; and
                            (iv) the project's effect on utilization of 
                        inpatient services (including inpatient mental 
                        health services) and associated costs.
                    (B) Report.--Not later than four years after the 
                date of the enactment of this Act, the Secretary shall 
                submit to Congress a report containing a statement of 
                the findings and conclusions of the Secretary pursuant 
                to the evaluation conducted under subparagraph (A), 
                together with any recommendations for legislation the 
                Secretary considers appropriate with respect to--
                            (i) the provision of additional mental 
                        health services by community mental health 
                        centers under partial hospitalization services; 
                        and
                            (ii) payment for such services on a 
                        capitated basis.
            (5) Duration.--The project shall be conducted for a three 
        year period.
            (6) Funding.--The Secretary shall provide for the transfer 
        from the Federal Hospital Insurance Trust Fund, established 
        under section 1817 of the Social Security Act (42 U.S.C. 
        1395i), of such funds as are necessary for the costs of 
        carrying out the demonstration project under this subsection.

SEC. 5. INFORMATION REQUIREMENTS.

    (a) Information From Group Health Plans.--Section 1862(b) of the 
Social Security Act (42 U.S.C. 1395y(b)) is amended by adding at the 
end the following:
            ``(7) Information from group health plans.--
                    ``(A) Provision of information by group health 
                plans.--The administrator of a group health plan 
                subject to the requirements of paragraph (1) shall 
                provide to the Secretary such of the information 
                elements described in subparagraph (C) as the Secretary 
                specifies, and in such manner and at such times as the 
                Secretary may specify (but not more frequently than 
                four times per year), with respect to each individual 
                covered under the plan who is entitled to any benefits 
                under this title.
                    ``(B) Provision of information by employers and 
                employee organizations.--An employer (or employee 
                organization) that maintains or participates in a group 
                health plan subject to the requirements of paragraph 
                (1) shall provide to the administrator of the plan such 
                of the information elements required to be provided 
                under subparagraph (A), and in such manner and at such 
                times as the Secretary may specify, at a frequency 
                consistent with that required under subparagraph (A) 
                with respect to each individual described in 
                subparagraph (A) who is covered under the plan by 
                reason of employment with that employer or membership 
                in the organization.
                    ``(C) Information elements.--The information 
                elements described in this subparagraph are the 
                following:
                            ``(i) Elements concerning the individual.--
                                    ``(I) The individual's name.
                                    ``(II) The individual's date of 
                                birth.
                                    ``(III) The individual's sex.
                                    ``(IV) The individual's social 
                                security insurance number.
                                    ``(V) The number assigned by the 
                                Secretary to the individual for claims 
                                under this title.
                                    ``(VI) The family relationship of 
                                the individual to the person who has or 
                                had current or employment status with 
                                the employer.
                            ``(ii) Elements concerning the family 
                        member with current or former employment 
                        status.--
                                    ``(I) The name of the person in the 
                                individual's family who has current or 
                                former employment status with the 
                                employer.
                                    ``(II) That person's social 
                                security insurance number.
                                    ``(III) The number or other 
                                identifier assigned by the plan to that 
                                person.
                                    ``(IV) The periods of coverage for 
                                that person under the plan.
                                    ``(V) The employment status of that 
                                person (current or former) during those 
                                periods of coverage.
                                    ``(VI) The classes (of that 
                                person's family members) covered under 
                                the plan.
                            ``(iii) Plan elements.--
                                    ``(I) The items and services 
                                covered under the plan.
                                    ``(II) The name and address to 
                                which claims under the plan are to be 
                                sent.
                            ``(iv) Elements concerning the employer.--
                                    ``(I) The employer's name.
                                    ``(II) The employer's address.
                                    ``(III) The employer identification 
                                number of the employer.
                    ``(D) Use of identifiers.--The administrator of a 
                group health plan shall utilize a unique identifier for 
                the plan in providing information under subparagraph 
                (A) and in other transactions, as may be specified by 
                the Secretary, related to the provisions of this 
                subsection. The Secretary may provide to the 
                administrator the unique identifier described in the 
                preceding sentence.
                    ``(E) Penalty for noncompliance.--Any entity that 
                knowingly and willfully fails to comply with a 
                requirement imposed by the previous subparagraphs shall 
                be subject to a civil money penalty not to exceed 
                $1,000 for each incident of such failure. The 
                provisions of section 1128A (other than subsections (a) 
                and (b)) shall apply to a civil money penalty under the 
                previous sentence in the same manner as those 
                provisions apply to a penalty or proceeding under 
                section 1128A(a).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect 180 days after the date of enactment of this Act.

SEC. 6. CENTERS OF EXCELLENCE.

    (a) In General.--Title XVIII of the Social Security Act is amended 
by inserting after section 1896 the following new section:

                        ``centers of excellence

    ``Sec. 1897. (a) In General.--The Secretary shall use a competitive 
process to contract with specific hospitals or other entities for 
furnishing services related to surgical procedures, and for furnished 
services (unrelated to surgical procedures) to hospital inpatients that 
the Secretary determines to be appropriate. Such services may include 
any services covered under this title that the Secretary determines to 
be appropriate, including post-hospital services.
    ``(b) Quality Standards.--Only entities that meet quality standards 
established by the Secretary shall be eligible to contract under this 
section. In considering quality, the Secretary shall take into account 
the quality, experience, and quantity of services of physicians who 
provide services in more than one entity. Contracting entities shall 
implement a quality improvement plan approved by the Secretary.
    ``(c) Payment.--Payment under this section shall be made on the 
basis of negotiated all-inclusive rates. The amount of payment made by 
the Secretary to an entity under this title for services covered under 
a contract shall be less than the aggregate amount of the payments that 
the Secretary would have otherwise made for the services.
    ``(d) Contract Period.--A contract period shall be 3 years (subject 
to renewal), as long as the entity continues to meet quality and other 
contractual standards.
    ``(e) Incentives for Use of Centers.--The Secretary may permit 
entities under a contract under this section to furnish additional 
services or waive beneficiary cost-sharing, subject to the approval of 
the Secretary.
    ``(f) Limit on Number of Centers.--The Secretary shall limit the 
number of centers in a geographic area to the number needed to meet 
projected demand for contracted services.''.
    (b) Effective Dates.--
            (1) The amendment made by subsection (a) applies to 
        services furnished on or after October 1, 2001.
            (2) By October 1, 2001, the Secretary shall enter into 
        contracts under the amendment made by subsection (a) for 
        coronary artery by-pass surgery and other heart procedures, 
        knee replacement surgery, and hip replacement surgery, in 
        geographic areas nationwide such that at least 20 percent of 
        the projected number of those procedures can be provided under 
        such contracts.
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