[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1928 Placed on Calendar Senate (PCS)]

                                                       Calendar No. 415

106th CONGRESS

  1st Session

                                S. 1928

                          [Report No. 106-222]

_______________________________________________________________________

                                 A BILL

To amend title XVIII of the Social Security Act to establish a medicare 
 subvention demonstration project for veterans, and for other purposes.

_______________________________________________________________________

                           November 16, 1999

                 Read twice and placed on the calendar





                                                       Calendar No. 415
106th CONGRESS
  1st Session
                                S. 1928

                          [Report No. 106-222]

To amend title XVIII of the Social Security Act to establish a medicare 
 subvention demonstration project for veterans, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 16, 1999

    Mr. Roth, from the Committee on Finance, reported the following 
     original bill; which was read twice and placed on the calendar

_______________________________________________________________________

                                 A BILL


 
To amend title XVIII of the Social Security Act to establish a medicare 
 subvention demonstration project for veterans, 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.

    This Act may be cited as the ``Medicare Subvention Demonstration 
for Veterans Act of 1999''.

SEC. 2. ESTABLISHMENT OF MEDICARE SUBVENTION DEMONSTRATION PROJECT FOR 
              VETERANS.

    Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is 
amended by adding at the end the following:

        ``medicare subvention demonstration project 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.--The term `demonstration 
        project' means the demonstration project carried out under this 
        section.
            ``(3) Demonstration site.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                term `demonstration site' means a Veterans Affairs 
                medical facility that provides, alone or in conjunction 
                with other facilities under the jurisdiction of the 
                Secretary of Veterans Affairs and affiliated public or 
                private entities--
                            ``(i) in the case of a coordinated care 
                        health plan, the health care benefits 
                        prescribed in subsection (c)(3) to targeted 
                        medicare-eligible veterans residing within the 
                        service area (as prescribed under regulations 
                        for the Medicare+Choice program under part C); 
                        and
                            ``(ii) in the case of health care benefits 
                        being provided on a fee-for-service basis, the 
                        health care benefits prescribed in subsection 
                        (d)(2) to targeted medicare-eligible veterans.
                    ``(B) Exclusion.--The term `demonstration site' 
                shall not include the entire catchment area of a 
                Veterans Integrated Services Network (VISN).
            ``(4) Medicare health care services.--The term `medicare 
        health care services' means items or services covered under 
        part A or B of this title.
            ``(5) Targeted medicare-eligible veteran.--The term 
        `targeted medicare-eligible veteran' means an individual who--
                    ``(A) is a veteran (as defined in section 101 of 
                title 38, United States Code) who is eligible for care 
                and services under section 1705(a)(7) of title 38, 
                United States Code;
                    ``(B) has attained age 65;
                    ``(C) is entitled to, or enrolled for, benefits 
                under part A of this title; and
                    ``(D) is enrolled for benefits under part B of this 
                title.
            ``(6) 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.
            ``(7) Veterans affairs medical facility.--The term 
        `Veterans Affairs medical facility' means a medical facility as 
        defined in section 8101 of title 38, United States Code.
    ``(b) Demonstration Project.--
            ``(1) In general.--
                    ``(A) Establishment.--The administering Secretaries 
                are authorized to establish a demonstration project 
                (under agreements 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 
                targeted medicare-eligible veterans.
                    ``(B) Agreement.--Any agreement entered into under 
                this paragraph shall include at a minimum--
                            ``(i) a detailed description of the health 
                        care 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 (e), any premiums established 
                        for a coordinated care health plan, and any 
                        cost-sharing arrangements;
                            ``(iii) a description of how the 
                        demonstration project will satisfy the 
                        requirements under this title;
                            ``(iv) a description of the demonstration 
                        sites selected under paragraph (2);
                            ``(v) a description of how reimbursement 
                        requirements under subsection (k), maintenance 
                        of effort requirements under subsection (l), 
                        and the annual reconciliation under subsection 
                        (m) will be implemented in the demonstration 
                        project;
                            ``(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 under subsection (l), the annual 
                        reconciliation under subsection (m), and 
                        related matters required under the 
                        demonstration project;
                            ``(vii) a statement that the Comptroller 
                        General of the United States shall have access 
                        to all data of the Department of Veterans 
                        Affairs that the Comptroller General determines 
                        is necessary to carry out the reporting 
                        requirements under subsections (m) or (n).
                            ``(viii) a description of any requirement 
                        that the Secretary waives pursuant to 
                        subsection (c)(4) or (d)(4); and
                            ``(ix) a certification, provided after 
                        review by the administering Secretaries, that 
                        any facility or entity described in subsection 
                        (a)(3)(A) that is receiving payments by reason 
                        of the demonstration project has sufficient--
                                    ``(I) resources and expertise to 
                                provide, consistent with payment 
                                requirements under subsection (k), the 
                                health care benefits required to be 
                                provided to beneficiaries under the 
                                demonstration project (as established 
                                under subsections (c)(3) and (d)(2)); 
                                and
                                    ``(II) information and billing 
                                systems in place to ensure--
                                            ``(aa) accurate and timely 
                                        submission of claims for health 
                                        care benefits to the Secretary; 
                                        and
                                            ``(bb) that providers of 
                                        health care services that are 
                                        not affiliated with the 
                                        Department of Veterans Affairs 
                                        are reimbursed by the Secretary 
                                        of Veterans Affairs in a timely 
                                        and accurate manner.
                    ``(C) Separate agreements for coordinated care and 
                fee-for-service.--The administering Secretaries shall 
                enter into separate agreements with regard to 
                demonstration sites operating under a coordinated care 
                health plan model and a fee-for-service model, and 
                shall include in each agreement only such information 
                that is applicable to that model.
            ``(2) Number of demonstration sites.--
                    ``(A) In general.--Subject to the succeeding 
                provisions of this paragraph, the demonstration project 
                established under this section shall be conducted in 
                not more than 8 demonstration sites, designated jointly 
                by the administering Secretaries.
                    ``(B) Equal number of coordinated care and fee-for-
                service sites.--The administrating Secretaries shall--
                            ``(i) ensure that the number of 
                        demonstration sites operated under a 
                        coordinated care health plan model equals the 
                        number of demonstration sites operated under a 
                        fee-for-service model; and
                            ``(ii) attempt to ensure that the volume of 
                        medicare health care services provided under 
                        the demonstration project at demonstration 
                        sites operated under a coordinated care health 
                        plan model is the same as the volume of such 
                        services provided at demonstration sites 
                        operated under a fee-for-service model.
                    ``(C) Restriction.--A demonstration site may not 
                operate under both a coordinated care health plan model 
                and a fee-for-service model.
                    ``(D) Demonstration sites in rural areas.--At least 
                1 of each of the following demonstration sites shall be 
                selected for inclusion in the demonstration project:
                            ``(i) A demonstration site that is operated 
                        under a coordinated care health plan model and 
                        that serves a predominantly rural area.
                            ``(ii) A demonstration site that is 
                        operated under a fee-for-service model and that 
                        serves a predominantly rural area.
            ``(3) Restriction on new or expanded facilities.--No new 
        Veterans Affairs medical facilities may be built or expanded 
        with funds from the demonstration project.
            ``(4) Duration.--
                    ``(A) Coordinated care health plan model.--The 
                authority of the administering Secretaries to conduct 
                the demonstration project under a coordinated care 
                health plan model shall--
                            ``(i) begin on January 1, 2000; and
                            ``(ii) terminate on the earlier of--
                                    ``(I) the date which is 3 years 
                                after the date enrollment in a 
                                coordinated care health plan begins at 
                                any demonstration site using such a 
                                model; or
                                    ``(II) December 31, 2003.
                    ``(B) Fee-for-service model.--The authority of the 
                administering Secretaries to conduct the demonstration 
                under a fee-for-service model shall--
                            ``(i) begin on January 1, 2001; and
                            ``(ii) terminate on the earlier of--
                                    ``(I) the date which is 3 years 
                                after the date that health care 
                                benefits begin to be provided at any 
                                demonstration site using such a model; 
                                or
                                    ``(II) December 31, 2004.
    ``(c) Coordinated Care Health Plan Model.--
            ``(1) In general.--The Secretary of Veterans Affairs shall 
        establish and operate coordinated care health plans in order to 
        provide the health care benefits prescribed in paragraph (3) to 
        targeted medicare-eligible veterans enrolled in the 
        demonstration project consistent with part C of this title.
            ``(2) Operation by or through a demonstration site.--Any 
        coordinated care health plan established in accordance with 
        paragraph (1) shall be operated by or through a demonstration 
        site.
            ``(3) Health care benefits.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary of Veterans Affairs shall prescribe the 
                health care benefits to be provided to a targeted 
                medicare-eligible veteran enrolled in a coordinated 
                care health plan under the demonstration project.
                    ``(B) Minimum benefits.--The benefits prescribed by 
                the Secretary of Veterans Affairs pursuant to 
                subparagraph (A) shall include at least all medicare 
                health care services that are required to be provided 
                by a Medicare+Choice organization under part C.
            ``(4) Medicare requirements.--
                    ``(A) In general.--
                            ``(i) Requirements.--Except as provided 
                        under clause (ii), a coordinated care health 
                        plan operating under the demonstration project 
                        shall meet all requirements applicable to a 
                        Medicare+Choice plan under part C of this title 
                        and regulations pertaining thereto, and any 
                        other requirements for receiving payments under 
                        this title, except that the prohibition of 
                        payments to Federal providers of services under 
                        sections 1814(c) and 1835(d), and paragraphs 
                        (2) and (3) of section 1862(a), shall not 
                        apply.
                            ``(ii) Waiver.--Except with respect to any 
                        requirement described in subparagraph (B), the 
                        Secretary is authorized to waive any 
                        requirement described in clause (i), or approve 
                        equivalent or alternative ways of meeting such 
                        a requirement, but only if such waiver or 
                        approval--
                                    ``(I) reflects the unique status of 
                                the Department of Veterans Affairs as 
                                an agency of the Federal Government; 
                                and
                                    ``(II) is necessary to carry out, 
                                or improve the efficiency of, the 
                                demonstration project.
                    ``(B) Beneficiary protections and other matters.--A 
                coordinated care health plan shall comply with the 
                requirements of part C of this title that relate to 
                beneficiary protections and other related matters, 
                including such requirements relating to the following 
                areas:
                            ``(i) Enrollment and disenrollment.
                            ``(ii) Nondiscrimination.
                            ``(iii) Information provided to 
                        beneficiaries.
                            ``(iv) Cost-sharing limitations.
                            ``(v) Appeal and grievance procedures.
                            ``(vi) Provider participation.
                            ``(vii) Access to services.
                            ``(viii) Quality assurance and external 
                        review.
                            ``(ix) Advance directives.
                            ``(x) Other areas of beneficiary 
                        protections that the Secretary determines are 
                        applicable to a coordinated health care plan 
                        operating under the demonstration project.
    ``(d) Fee-For-Service Model.--
            ``(1) In general.--The Secretary of Veterans Affairs shall 
        establish and operate a demonstration site in order to provide, 
        on a fee-for-service basis, the medicare health care services 
        prescribed in paragraph (2) to targeted medicare-eligible 
        veterans under the demonstration project in a manner consistent 
        with this title.
            ``(2) Health care benefits.--The administering Secretaries 
        shall prescribe the medicare health care services available to 
        a targeted medicare-eligible veteran at a demonstration site 
        operating under a fee-for-service model.
            ``(3) Cost-sharing.--The Secretary of Veterans Affairs 
        shall establish cost-sharing requirements for targeted 
        medicare-eligible veterans that receive medicare health care 
        services under a fee-for-service model at a demonstration site. 
        Such cost-sharing requirements shall be the same as those 
        required under this title.
            ``(4) Medicare requirements.--
                    ``(A) In general.--Except as provided under 
                subparagraph (B), any entity or health care provider 
                that provides medicare health care services under the 
                demonstration project on a fee-for-service basis shall 
                meet all of the requirements under this title, except 
                that the prohibition of payments to Federal providers 
                of services under sections 1814(c) and 1835(d), and 
                paragraphs (2) and (3) of section 1862(a), shall not 
                apply.
                    ``(B) Waiver.--The Secretary is authorized to waive 
                any requirement described under subparagraph (A), or 
                approve equivalent or alternative ways of meeting such 
                a requirement, but only if such waiver or approval--
                            ``(i) reflects the unique status of the 
                        Department of Veterans Affairs as an agency of 
                        the Federal Government; and
                            ``(ii) is necessary to carry out, or 
                        improve the efficiency of, the demonstration 
                        project.
            ``(5) Verification of eligibility.--
                    ``(A) In general.--The Secretary of Veterans 
                Affairs shall establish procedures for determining 
                whether an individual is eligible to receive medicare 
                health care services on a fee-for-service basis under 
                the demonstration project.
                    ``(B) Restriction.--No payments shall be made under 
                this section for any medicare health care service 
                provided to an individual on a fee-for-service basis 
                under the demonstration project unless the individual 
                has been determined to be eligible for the service 
                pursuant to the procedures established under 
                subparagraph (A).
    ``(e) Demonstration Site Requirements.--The Secretary of Veterans 
Affairs may operate a coordinated care health plan at a demonstration 
site, may provide medicare health care services using the fee-for-
service model at a demonstration site, and may authorize a 
demonstration site to submit claims for payment under the demonstration 
project only after the Secretary of Veterans Affairs submits to the 
committees of jurisdiction of Congress a report setting forth a plan 
for the establishment of such demonstration site and for the oversight 
by the Secretary of Veterans Affairs of the demonstration project 
conducted at such demonstration site. The administering Secretaries may 
not implement the plan until the Secretary of Veterans Affairs has 
received from the Inspector General of the Department of Health and 
Human Services, and has forwarded to Congress, certification that--
            ``(1) the--
                    ``(A) cost accounting and related transaction 
                systems of the Veterans Health Administration provide 
                cost information and encounter data regarding health 
                care delivered at each demonstration site (or delivered 
                by any entity or health care provider with which the 
                Secretary of Veterans Affairs has a contract or sharing 
                agreement) on an inpatient and outpatient basis; and
                    ``(B) cost information and encounter data provided 
                by such systems is accurate, reliable, and consistent 
                across all the demonstration sites;
            ``(2) the Secretary of Veterans Affairs has minimized the 
        risk that any amount appropriated to the Department of Veterans 
        Affairs will be required to meet any obligation of the 
        demonstration sites under the demonstration project to a 
        targeted medicare-eligible veteran by developing a credible 
        plan--
                    ``(A) based on market surveys, data from the 
                Decision Support System, actuarial analysis, and other 
                appropriate methods; and
                    ``(B) taking into account the level of payment 
                under subsection (k) and the costs of health care 
                benefits provided at the demonstration sites with 
                regard to each demonstration site;
            ``(3) each demonstration site has the capacity to provide 
        to a sufficient number of targeted medicare-eligible veterans, 
        at a minimum--
                    ``(A) under the coordinated care health plan model, 
                the health care benefits prescribed in subsection 
                (c)(3); or
                    ``(B) under the fee-for-service model, the health 
                care benefits prescribed in subsection (d)(2); and
            ``(4) the Veterans Affairs medical facility administering 
        the demonstration site has sufficient systems and safeguards in 
        place to minimize any risk that instituting the coordinated 
        care health plan model or the fee-for-service model will result 
        in reducing--
                    ``(A) the quality of care delivered to participants 
                in the demonstration project; or
                    ``(B) the quality of, or the access to, care to 
                veterans not participating in the demonstration 
                project.
    ``(f) Voluntary Participation.--Participation of a targeted 
medicare-eligible veteran in the demonstration project shall be 
voluntary, subject to the capacity of participating demonstration sites 
and the annual limitations on medicare payments specified in subsection 
(k)(4), and shall be subject to such terms and conditions as the 
administering Secretaries may establish.
    ``(g) 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 
unless the Secretary of Veterans Affairs has a compelling reason to do 
otherwise. 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.
    ``(h) Waiver of Certain VA Requirements.--Notwithstanding any other 
provision of law, the Secretary of Veterans Affairs shall furnish 
medicare health care services to targeted medicare-eligible veterans 
pursuant to the demonstration project.
    ``(i) Inspector General.--Nothing in any 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.
    ``(j) Report.--
            ``(1) In general.--At least 30 days prior to the 
        commencement of the demonstration project (for both the 
        coordinated care health plan model and the fee-for-service 
model), the administering Secretaries shall submit a copy of any 
agreement entered into under subsection (b) to the committees of 
jurisdiction of Congress.
            ``(2) Subsequent waiver of medicare requirements.--If the 
        Secretary waives any requirement under subsection (c)(4) or 
        (d)(4) that was not described in any agreement submitted to 
        Congress under paragraph (1), the Secretary shall submit a 
        report to the committees of jurisdiction of Congress describing 
        such waiver.
    ``(k) Payments Based on Regular Medicare Payment Rates.--
            ``(1) Amount.--Subject to the succeeding provisions of this 
        subsection and subsection (m), the Secretary shall reimburse 
        the Secretary of Veterans Affairs for health care benefits 
        provided under the demonstration project at the following 
        rates:
                    ``(A) Coordinated care health plans.--In the case 
                of health care benefits provided under the 
                demonstration project to a targeted medicare-eligible 
                veteran enrolled in a coordinated care health plan, at 
                a rate equal to 95 percent of the amount paid to a 
                Medicare+Choice organization under part C for an 
                enrollee in a Medicare+Choice plan offered by such 
                organization (as risk adjusted under section 
                1853(a)(1)(B)).
                    ``(B) Fee-for-service model.--In the case of a 
                medicare health care service prescribed in subsection 
                (d)(2) that is provided at a demonstration site 
                operating under a fee-for-service model, at a rate 
                equal to 95 percent of the amounts that otherwise would 
                be payable under this title on a noncapitated basis for 
                such service if the demonstration site was not part of 
                this demonstration project, was participating in the 
                medicare program, and imposed charges for such service.
            ``(2) Exclusion of certain amounts.--In computing the 
        amount of payment under paragraph (1), the following amounts 
        shall be excluded:
                    ``(A) Disproportionate share hospital adjustment.--
                Any amount attributable to an adjustment under section 
                1886(d)(5)(F).
                    ``(B) Direct graduate medical education payments.--
                Any amount attributable to a payment under section 
                1886(h).
                    ``(C) Indirect medical education adjustment.--Any 
                amount attributable to the adjustment under section 
                1886(d)(5)(B).
                    ``(D) Percentage of capital payments.--67 percent 
                of any amounts attributable to payments for capital-
                related costs under medicare payment policies under 
                section 1886(g).
            ``(3) Periodic payments from medicare trust funds.--
        Payments under this subsection shall be made--
                    ``(A) on a periodic basis consistent with the 
                periodicity of payments under this title; and
                    ``(B) in appropriate part, as determined by the 
                Secretary, from the trust funds.
            ``(4) Annual limit on medicare payments.--
                    ``(A) Coordinated care health plan model.--Subject 
                to subparagraphs (C) and (D), the total amount paid to 
                the Department of Veterans Affairs under this 
                subsection for enrollees in coordinated care health 
                plans for any of the 3 consecutive 12-month periods 
                (the first of which begins on the date that enrollment 
                in such a plan begins at any demonstration site) shall 
                be equal to an amount determined appropriate by the 
                administering Secretaries.
                    ``(B) Fee-for-service model.--Subject to 
                subparagraphs (C) and (D), the total amount paid to the 
                Department of Veterans Affairs under this subsection 
                for health care benefits provided on a fee-for-service 
                basis at a demonstration site for any of the 3 
                consecutive 12-month periods (the first of which begins 
                on the date that benefits begin to be provided at any 
                demonstration site using the fee-for-service model) 
                shall be equal to an amount determined appropriate by 
                the administering Secretaries.
                    ``(C) No payments for benefits provided after 
                termination date.--No amounts shall be paid to the 
                Department of Veterans Affairs under this section for 
                health care benefits provided under the demonstration 
                project after the date that the project terminates 
                pursuant to subparagraph (A)(ii) or (B)(ii) of 
                subsection (b)(4).
                    ``(D) Cap.--The sum of the amounts paid to the 
                Department of Veterans Affairs under this section--
                            ``(i) during the first 12-month periods 
                        described in subparagraphs (A) and (B) shall 
                        not exceed $50,000,000;
                            ``(ii) during the second 12-month periods 
                        so described shall not exceed $50,000,000; and
                            ``(iii) during the third 12-month periods 
                        so described shall not exceed $50,000,000.
    ``(l) Maintenance of Effort.--The Secretary may not reimburse the 
Secretary of Veterans Affairs, from the trust funds, for medicare 
health care services furnished under the demonstration project to 
targeted medicare-eligible veterans at a demonstration site in a year 
until the expenditures during that year by the Department of Veterans 
Affairs for such services provided at that site to individuals that 
meet the definition of a targeted medicare-eligible veteran under 
subsection (a)(4) (without regard to subparagraph (D) of such section) 
exceeds such expenditures at the site for such services provided to 
such individuals during a baseline period determined by the 
administering Secretaries.
    ``(m) Annual Reconciliation To Assure No Increase in Costs to 
Medicare Program.--
            ``(1) Monitoring effect of demonstration program on costs 
        to medicare program.--
                    ``(A) In general.--The administering Secretaries, 
                in consultation with the Comptroller General of the 
                United States, shall closely monitor the expenditures 
                made under the medicare program under this title for 
                targeted medicare-eligible veterans at each 
                demonstration site 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.
                    ``(B) Annual reports by the comptroller general.--
                            ``(i) Coordinated care health plan model.--
                        Not later than 6 months after the end of each 
                        of the 3 consecutive 12-month periods (the 
                        first of which begins on the date that 
                        enrollment in a coordinated care health plan 
                        begins at any demonstration site), the 
                        Comptroller General of the United States shall 
                        submit to the administering 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 for each demonstration site operating 
                        under such a model increased as a result of the 
                        demonstration project during the 12-month 
                        period to which the report applies.
                            ``(ii) Fee-for-service model.--Not later 
                        than 6 months after the end of each of the 3 
                        consecutive 12-month periods (the first of 
                        which begins on the date that medicare health 
                        care services begin to be provided at any 
                        demonstration site using such a fee-for-service 
                        model), the Comptroller General of the United 
                        States shall submit to the administering 
                        Secretaries and the appropriate committees of 
                        jurisdiction of Congress a report described in 
                        clause (i) with respect to such a model.
            ``(2) Required response in case of increase in costs.--
                    ``(A) In general.--If the administering Secretaries 
                find, based on paragraph (1), that the expenditures 
                under the medicare program under this title for each 
                demonstration site 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 any 
                        succeeding fiscal year.
                    ``(B) Steps.--Such steps--
                            ``(i) under subparagraph (A)(i), shall 
                        include payment of an amount equal to 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 subparagraph (A)(ii), shall 
                        include suspending or terminating the 
                        demonstration project (in whole or in part) or 
                        reducing the amount of payment under subsection 
                        (k).
    ``(n) Evaluation and Reports.--
            ``(1) Independent evaluation.--
                    ``(A) In general.--The Comptroller General of the 
                United States shall conduct an evaluation of the 
                demonstration project, including--
                            ``(i) an evaluation of demonstration sites 
                        operating under a coordinated care health plan 
                        model and under a fee-for-service model; and
                            ``(ii) where appropriate, a comparison of 
                        such models.
                    ``(B) Contents.--Any evaluation conducted under 
                subparagraph (A) shall include an assessment, based on 
                the agreement entered into under subsection (b), of the 
                following:
                            ``(i) Any savings or costs to the medicare 
                        program under this title resulting from the 
                        demonstration project.
                            ``(ii) Compliance of participating 
                        demonstration sites with applicable measures of 
                        quality of care, compared to such compliance by 
                        other entities that participate in medicare and 
                        are not Veterans Affairs medical facilities.
                            ``(iii) Compliance by the Department of 
                        Veterans Affairs with the requirements under 
                        this title.
                            ``(iv) The number of targeted medicare-
                        eligible veterans opting to receive health care 
                        benefits under the demonstration project 
                        instead of receiving such benefits through 
                        another health insurance plan (including health 
                        care benefits under this title).
                            ``(v) A comparison of the costs of 
                        participation of the demonstration sites in the 
                        program with the reimbursements for health care 
                        services provided by such sites.
                            ``(vi) Any impact the demonstration project 
                        has on the access to health care services, or 
                        the quality of such services, for--
                                    ``(I) targeted medicare-eligible 
                                veterans receiving health care benefits 
                                under the demonstration project; and
                                    ``(II) veterans (including targeted 
                                medicare-eligible veterans) that are 
                                not receiving health care benefits 
                                under the demonstration project.
                            ``(vii) Any impact the demonstration 
                        project has on private health care providers 
                        and on beneficiaries under this title that are 
                        not receiving health care benefits under the 
                        demonstration project.
                            ``(viii) Any effect that the demonstration 
                        project has on the enrollment in 
                        Medicare+Choice plans offered by 
                        Medicare+Choice organizations under part C of 
                        this title in the established demonstration 
                        site areas.
                            ``(ix) Any impact that the exclusion of the 
                        amounts described in subsection (k)(2) from the 
                        reimbursement amounts under the demonstration 
                        has on the Department of Veterans Affairs or on 
                        targeted medicare-eligible veterans.
                            ``(x) A description of the difficulties (if 
                        any) experienced by--
                                    ``(I) the Department of Veterans 
                                Affairs in managing the demonstration 
                                project; or
                                    ``(II) the Department of Health and 
                                Human Services in overseeing the 
                                demonstration project.
                            ``(xi) Any additional elements specified in 
                        the agreement entered into under subsection 
                        (b).
                            ``(xii) Any additional elements that the 
                        Comptroller General of the United States 
                        determines are appropriate to assess regarding 
                        the demonstration project.
                    ``(C) Periodic reports.--
                            ``(i) Coordinated care health plan model.--
                        With respect to the portion of the 
                        demonstration project that is operating under a 
                        coordinated care health plan model, the 
                        Comptroller General of the United States shall 
                        submit reports on the evaluation conducted 
                        under subparagraph (A) to the administering 
                        Secretaries and to the committees of 
                        jurisdiction of Congress as follows:
                                    ``(I) Initial report.--An initial 
                                report shall be submitted not later 
                                than 12 months after the date that 
                                enrollment in a coordinated care health 
                                plan begins at any demonstration site.
                                    ``(II) Second report.--A second 
                                report shall be submitted not later 
                                than 30 months after such date.
                                    ``(III) Final report.--A final 
                                report shall be submitted not later 
                                than 3\1/2\ years after such date.
                            ``(ii) Fee-for-service model.--With respect 
                        to the portion of the demonstration project 
                        that is operating under a fee-for-service 
                        model, the Comptroller General of the United 
                        States shall submit reports on the evaluation 
                        conducted under subparagraph (A) to the 
                        administering Secretaries and to the committees 
                        of jurisdiction of Congress as follows:
                                    ``(I) Initial report.--An initial 
                                report shall be submitted not later 
                                than 12 months after the date that 
                                medicare health care services begin to 
                                be provided at any demonstration site 
                                using such a model.
                                    ``(II) Second report.--A second 
                                report shall be submitted not later 
                                than 30 months after such date.
                                    ``(III) Final report.--A final 
                                report shall be submitted not later 
                                than 3\1/2\ years after such date.
            ``(2) Reports on extension and expansion of the 
        demonstration project.--
                    ``(A) Coordinated care health plan model.--With 
                respect to the demonstration project that is operating 
                under a coordinated care health plan model, not later 
                than 3 months after the date of the submission of the 
                final report by the Comptroller General of the United 
                States under paragraph (1)(C)(i)(III), the 
                administering Secretaries shall submit to the 
                committees of jurisdiction of Congress a report 
                containing the final recommendations of such 
                Secretaries as to--
                            ``(i) whether expenditures for targeted 
                        medicare-eligible veterans under the 
                        demonstration project exceed the expenditures 
                        that would have been incurred under the 
                        medicare program under this title with regard 
                        to such veterans had this section not been 
                        enacted;
                            ``(ii) whether the demonstration project 
                        could be expanded or extended without 
                        increasing the cost to the medicare program 
                        under this title or to the Federal Government;
                            ``(iii) whether to extend the duration of 
                        the demonstration project;
                            ``(iv) whether to increase the number of 
                        demonstration sites operating under such a 
                        model;
                            ``(v) whether to increase the maximum 
                        amount of reimbursement under the demonstration 
                        project in any year; and
                            ``(vi) whether the terms and conditions of 
                        the demonstration project should be altered if 
                        the project is extended or expanded.
                    ``(B) Fee-for-service model.--With respect to the 
                demonstration project that is operating under a fee-
                for-service model, not later than 3 months after the 
                date of the submission of the final report by the 
                Comptroller General of the United States under 
                paragraph (1)(C)(ii)(III), the administering 
                Secretaries shall submit to the committees of 
                jurisdiction of Congress a report described in 
                subparagraph (A) with respect to such model.''.

SEC. 3. EXTENSION AND EXPANSION OF MEDICARE SUBVENTION DEMONSTRATION 
              PROJECT FOR MILITARY RETIREES.

    (a) One-Year Extension of Project.--Section 1896 of the Social 
Security Act (42 U.S.C. 1395ggg) is amended--
            (1) in subsection (b)(4), by striking ``3-year'' and 
        inserting ``4-year'';
            (2) in subsection (i)(4)--
                    (A) in subparagraph (B), by striking ``and'' at the 
                end;
                    (B) in subparagraph (C), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by adding at the end the following:
                    ``(D) $65,000,000 for calendar year 2001.''; and
            (3) in subsection (k)(1), in the matter preceding 
        subparagraph (A), by striking ``3\1/2\ years'' and inserting 
        ``4\1/2\ years''.
    (b) Permitting Payment on a Fee-for-Service Basis.--
            (1) In general.--Section 1896 of the Social Security Act 
        (42 U.S.C. 1395ggg) (as amended by subsection (a)) is amended--
                    (A) by redesignating subsection (k) as subsection 
                (l); and
                    (B) by inserting after subsection (j) the 
                following:
    ``(k) Reimbursement on Fee-for-Service Basis for Services Provided 
to Unenrolled Individuals.--
            ``(1) In general.--In the case of medicare-eligible 
        military retirees or dependents who are not enrolled in the 
        demonstration project under this section, the Secretary, if the 
        administering Secretaries determine it to be appropriate, may 
        reimburse the Secretary of Defense for medicare health care 
        services provided to such retirees or dependents at a military 
        treatment facility under the demonstration project. Such 
        reimbursement shall only be made for services provided at 
        demonstration project sites that receive reimbursement under 
        subsection (i)(1)(A).
            ``(2) Agreement.--If the administering Secretaries 
        determine that reimbursement on a fee-for-service basis 
        pursuant to paragraph (1) is appropriate, at least 60 days 
        prior to providing such reimbursement, the administering 
        Secretaries shall enter into an agreement described in 
        subsection (b) regarding the fee-for-service model and shall 
        submit a copy of the agreement to the committees of 
        jurisdiction under this title.''.
            (2) Conforming amendments.--
                    (A) Sites.--Section 1896(b)(2) of the Social 
                Security Act (42 U.S.C. 1395ggg(b)(2)) is amended by 
                adding at the end the following: ``If feasible, 
                reimbursement shall be made using the fee-for-service 
                model pursuant to subsection (k) at at least 1 of the 
                demonstration project sites receiving reimbursement 
                under subsection (i)(1)(A).''.
                    (B) Medicare requirements.--Section 1896(d) of the 
                Social Security Act (42 U.S.C. 1395ggg(d)) is amended--
                            (i) in paragraph (1)(A)--
                                    (I) by inserting ``(insofar as it 
                                provides for the enrollment of 
                                individuals and payment on the basis 
                                described in subsection (i)(1)(A))'' 
                                before ``shall meet''; and
                                    (II) by inserting ``and the project 
                                (insofar as it provides for payment for 
                                medicare health care services provided 
                                at a military treatment facility on the 
                                basis described in subsection 
                                (i)(1)(B)) shall meet all requirements 
                                that are applicable to facilities and 
                                health care providers that provide such 
                                services under this title'' after 
                                ``medicare payments''; and
                            (ii) in paragraph (2), by inserting ``, 
                        insofar as it provides for the enrollment of 
                        individuals and payment on the basis described 
                        in subsection (i)(1)(A),'' before ``shall 
                        comply''.
                    (C) TRICARE.--Section 1896(g)(1) of the Social 
                Security Act (42 U.S.C. 1395ggg(g)(1)) is amended by 
                inserting ``insofar as it provides for the enrollment 
                of individuals and payment on the basis described in 
                subsection (i)(1)(A),'' before ``the Secretary of 
                Defense''.
                    (D) Payment amounts.--Section 1896(i)(1) of the 
                Social Security Act (42 U.S.C. 1395ggg(i)(1)) is 
                amended to read as follows:
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, the Secretary shall reimburse the Secretary of 
        Defense for services provided under the demonstration project 
        at the following rates:
                    ``(A) Managed care.--In the case of services 
                provided under the demonstration project to a medicare-
                eligible military retiree or dependent enrolled in a 
                managed care plan offered under such project, at a rate 
                equal to 95 percent of the amount paid to a 
                Medicare+Choice organization under part C of this title 
                with respect to such an enrollee.
                    ``(B) Fee-for-service model.--In the case of a 
                medicare health care service that is provided to a 
                medicare-eligible military retiree or dependent at a 
                military treatment facility pursuant to subsection (k), 
                at a rate equal to 95 percent of the amounts that 
                otherwise would be payable under this title on a 
                noncapitated basis for such service if the military 
                treatment facility was not part of this demonstration 
                project, was participating in the medicare program, and 
                imposed charges for such service.
                    ``(C) Other cases.--In cases in which a payment 
                amount may not otherwise be readily computed under 
                subparagraphs (A) or (B), the Secretary shall establish 
                rules for computing equivalent or comparable payment 
                amounts.''.
                    (E) Evaluation and reports.--Section 1896(l)(1) of 
                the Social Security Act (42 U.S.C. 1395ggg(l)(1)) (as 
                redesignated by paragraph (1)(A)) is amended by 
                inserting ``(with respect to the managed care portion 
                of the project and, if applicable, the fee-for-service 
                portion of the project)'' after ``evaluation of the 
                demonstration project''.
            (3) Effective date.--The amendments made by this subsection 
        shall take effect on the date of enactment of this Act, and 
        shall apply to items and services furnished on or after January 
        1, 2000.

SEC. 4. REDUCTION IN PAYMENTS FOR ENROLLEE BAD DEBT.

    (a) In General.--Section 1861(v)(1)(T)(iii) of the Social Security 
Act (42 U.S.C. 1395x(v)(1)(T)(iii)) is amended by striking ``45 
percent'' and inserting ``51 percent''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to cost reporting periods beginning during a fiscal year 
beginning after September 30, 1999.