[Congressional Record Volume 143, Number 25 (Monday, March 3, 1997)]
[Senate]
[Pages S1832-S1835]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WYDEN:
  S. 386. A bill to amend title XVIII of the Social Security Act to 
protect and improve the Medicare Program, and for other purposes; to 
the Committee on Finance.


     THE MEDICARE MODERNIZATION AND PATIENT PROTECTION ACT OF 1997

 Mr. WYDEN. Mr. President, as this Congress moves forward to 
strengthen and secure the Medicare Program for future generations, 
three issues are crystal clear.
  First, we must have the political will to modernize Medicare to 
reflect both the quality and the efficiency of private health care 
plans now serving most working Americans, and in particular the Federal 
Employees Health Benefits Program which many Members of Congress, their 
staff and families, and other Federal employees enjoy.
  Second, we must maintain our commitment to current and future 
Medicare beneficiaries by preserving a basic, high-quality portfolio of 
health services for all enrollees, irrespective of their income, where 
they live, or their particular health circumstances.
  Third, we must begin the transformation of Medicare financial 
foundations in a way that is first fair to all beneficiaries, and 
second insures that Medicare will be there for our children and their 
children, and that it will not bust the Federal budget in the bargain.
  I believe that the legislation I introduce, today, The Medicare 
Modernization and Patient Protection Act of 1997, meets all three of 
these primary goals. While fully preserving traditional, fee-for-
service Medicare, this legislation also will create an array of new, 
high-quality, cost-efficient health plans for Medicare beneficiaries, 
and offer those enrollees positive incentives to try them. It will 
provide new protections and consumer rights to Medicare beneficiaries 
in capitated health plans. It will mandate new penalties and 
enforcement mechanisms to eradicate fraud and abuse now stripping 
billions of dollars per year from the program. And it will create new 
support systems for some of Medicare's most desperately ill and poor 
beneficiaries, and their families.
  Finally, through new cost-conscious management systems and a firm 
fiscal control mechanism, this plan will reduce Medicare cost growth by 
approximately $100 billion over the next 5 years, and with financial 
constraints that will continue to control runaway spending growth after 
fiscal year 2002.
  The Medicare Modernization and Patient Protection Act will offer 
seniors more health plan choices by eliminating the huge variability in 
capitated payments to health plans in counties around the nation. At 
the same time, it will raise the minimum payment to 80 percent of the 
national average payment, leveraging higher reimbursements and I 
believe more plan offerings in up to 20 percent of our counties.
  This proposal also establishes an outlier fund, an account fueled by 
withholding up to five percent of payments to Medicare health 
maintenance organizations. Medicare managers would have discretion to 
withhold those payments from plans which are being over-compensated by 
the HMO payment formula, and disburse those funds in the form of extra 
payments to plans which have avoided risk selection in their 
beneficiary recruitment and as a result are providing services to 
sicker enrollees with above-average health care costs. Compared to the 
meat-cleaver approach of reducing all plan payments from the current 95 
percent of local average health care costs, to 90 percent, this is a 
surgical solution to two significant Medicare managed care plan 
problems: (a) plan overpayments and (b) plans which avoid enrolling 
older, frailer beneficiaries because they cut profit margins.
  At the end of the year, any funds remaining in this account would be 
rolled back into the Medicare hospital insurance budget.
  At the same time, this bill reforms current rules for Medicare 
supplemental insurance, or Medigap policies, requiring that such 
policies must be issued to any eligible beneficiary at any time. This 
change will encourage more seniors to try capitated plans, because they 
know the Medigap safety net always will be available to them.
  Seniors would be protected from unfair denial of service decision and 
other health plan abuses through a strengthened and streamlined appeals 
process. Also, seniors would receive more informative and easily 
comparable information on health plans in their communities, and 
through the mail on a regular basis through annual enrollment fairs.
  The legislation also would require the collection of customer service 
and satisfaction data, and performance information to be used in 
qualitative analysis by Medicare to produce published report cards on 
plan performance, and help consumers make kitchen-table assessments of 
their plan options.
  By Federal statute, plans also would be barred from muzzling doctors 
and other health care practitioners in their conversations with 
patients about their medical condition and all treatments appropriate 
to their case.
  New criminal and civil penalties are created for practitioners and 
plans who rip off the system.
  Programs for hospice care, Alzheimer's respite care, and prospective 
payment for both home care and skilled nursing care are added to 
Medicare. The legislation requires Medicare to study and make 
recommendations on the more extensive and appropriate use of community 
pharmacy, telemedicine and so-called social health maintenance 
organization plans for dual eligibles in its portfolio of services to 
beneficiaries.
  The fiscal integrity portion of this bill would set overall part A 
and part B spending limits for each of the next 5 years. These overall 
spending limits would include target spending allotments for each of 
the several major areas of Medicare activity: doctors, hospitals, 
diagnostic services, nursing homes, and the like.
  Typically, Medicare has sought to control costs in these areas in the 
past by rolling back reimbursement rates for goods and services. 
Providers, however, have watered down Medicare's attempts at thrift by 
increasing volume in the face of lower per-service payments. Too often 
this has led to waste and inefficiency, with providers ordering 
procedures and services that beneficiaries really don't need, crippling 
Medicare with unnecessarily high costs.
  With $100 billion in cumulative savings expected in 5 years, my 
proposal would require that Medicare practitioners live within the 
budget's ceiling by mandating reduced reimbursements if cumulative 
billings otherwise would bust an individual service sector's annual 
spending plan.
  Despite these restraints, Medicare fee-for-service providers will 
enjoy generally healthy annual increases under this proposal. 
Beneficiaries should see no change in the level or quality of care they 
receive. Expensive, unnecessary care, however, could be sharply 
curtailed.
  Mr. President, I believe that this Congress should not as a first 
step relinquish Medicare restructuring to a special commission. I think 
most of us have an acute awareness of what is needed to fix the program 
for the long term. Some steps will be harder than others. But as the 
old Chinese proverb reminds us, a trip of a thousand miles begins with 
the first step.
  I hope my colleagues will agree with me that the Medicare 
Modernization and Patient Protection Act is that good first step, and 
join with me in co-sponsoring this legislation.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record.

[[Page S1833]]

The Medicare Modernization and Patient Protection Act of 1997--Section-
                          by-Section Analysis


  title i: promoting competition, quality, and beneficiary choice in 
                                medicare

     Section 1: Short title; table of contents, definitions.
     Section 2: Findings
     Section 101: Establishment of Plan Inprovement and 
         Competition Office
       Subsection (a), establishes an office within Health Care 
     Financing Administration to carry out several of the pro-
     quality, pro-consumer mandates of the legislation.
       Subsection (b), defines duties.
     Subsection 102: HMO and Competitive Pricing Demonstration 
         Projects
       Subsection (a), directs the Secretary to conduct 
     demonstration projects for competitive bidding between HMO 
     contractors in counties in which the AAPCC rate is 120 
     percent of the national average AAPCC rate, or higher.
       Subsection (b), directs reports to Congress.
       Subsection (c), waives certain requirements under the 
     Social Security Act.
       Subsection (d), requires that the projects be conducted 
     within existing department funding.
     Subsection 103: Medigap amendments
       Subsection (a), guarantees issues of Medicare supplemental 
     insurance regardless of preexisting health conditions.
       Subsection also requires community rating of Medigap 
     policies. Further, this subsection guarantees offer of 
     Medigap coverage to persons who leave Medicare risk plans for 
     any one of several reasons, including voluntary disenrollment 
     at any time during the first 12 months of enrollment in a 
     risk plan (and had not been in a risk plan, earlier).
       Subsection (b), limits exclusion from coverage due to pre-
     existing health conditions.
       Subsection (c), clarifies non-discrimination requirements 
     during initial enrollment periods.
       Subsection (d), extends the six-month initial enrollment 
     period to non-elderly Medicare beneficiaries.
       Subsection (e), sets effective dates.
       Subsection (f), defines transition rules including a 
     directive that the National Association of Insurance 
     Commissioners amend its Model Regulation to reflect Medicare 
     supplemental insurance policy changes required by the 
     section.


             title ii: increasing medicare coverage options

                   Subtitle A: Risk Plan Improvements

     Section 201: Changes in medicare managed care program
       Subsection (a), HMO payments, amends the current formula 
     for determining local HCFA annual reimbursement rate 
     increases for persons insured by risk-sharing plans providing 
     both Part A and Part B benefits (Medicare Risk plans). The 
     reformulation would, beginning in 1998, set a new minimum 
     payment ``floor'' requiring that HCFA pay no plan less than 
     80 percent of the national average for payments to all plans 
     in 1997. For each community, payment increases in subsequent 
     years would be determined by selecting the highest figure 
     from three alternative formulas; (1) 102 percent of the 
     previous year's rate, (2) in 1999, 80 percent of the 1998 
     national average, and in 2000 and in subsequent years 
     increasing the rate by the previous year's national average 
     growth rate for Medicare managed care plan reimbursements, or 
     (3) an increase determined by a ``melded'' rate of local and 
     national managed care average reimbursements, according to 
     the following formula:
       1998: area specific percentage of increase is determined by 
     the sum of 80 percent of the local average increase in the 
     average adjusted per capita cost (AAPCC) in previous year, 
     and 20 percent of the national AAPCC increase.
       1999: area specific percentage determined by the sum of 75 
     percent of the local AAPCC increase in the previous year, and 
     25 percent of the national AAPCC increase.
       2000: area specific percentage determined by the sum of 70 
     percent of local AAPCC increase in previous year, and 30 
     percent of the national AAPCC increase.
       2001: area specific percentage determined by the sum of 65 
     percent of the local AAPCC increase in previous year, and 35 
     percent of the national AAPCC increase.
       2002: area specific percentage determined by the sum of 60 
     percent of the local AAPCC increase in previous year, and 40 
     percent of the national AAPCC increase.
       2003, and in each subsequent year: area specific percentage 
     determined by the sum of 60 percent of the local AAPCC 
     increase in previous year, and 40 percent of the national 
     AAPCC increase.
       This section also contains certain budgetary protections 
     for beneficiaries receiving treatment for end-stage renal 
     disease, and for high-cost-growth metropolitan counties.
       Subsection (b) creates additional quality standards for 
     section 1876(c)(6) of the Act, requiring Medicare managed 
     care plans to meet new standards established by the Secretary 
     of HHS in consultation with private accreditation 
     organizations, and addressing such issues as ongoing quality 
     assurance programs stressing (1) health outcomes, and (2) 
     providing review by physicians and other certified health 
     professionals.
       Plans meeting these additional standards may waive the 
     requirement of at least 50 percent non-Medicare beneficiary 
     enrollment for participation as a Medicare Risk contractor.
       Subsection (c) requires coordinated enrollment and 
     disenrollment periods for Medicare managed care plans, 
     similar to so-called ``open season'' periods for Federal 
     Employee Health Benefit Program plans.
       Subsection (d) sets service area requirements for 
     participating plans, including requirements that plans 
     provide enrollment within all of a metropolitan statistical 
     area if such organization provides enrollment in any part of 
     the metropolitan area. Some limited exclusions may be 
     allowed.
       Subsection (e) provides other enhanced enrollee protections 
     involving provision of emergency room care and services, 
     renal dialysis, and reimbursement of services outside the 
     plan's services area (specific to renal disease).
       Subsection (f) allows the Secretary in certain instances to 
     make additional payments to plans insuring certain 
     individuals, for reasonable costs related to anomalies in 
     specific service areas.
       Subsection (g) provides for intermediate sanctions against 
     plans for program violations, short of termination. These 
     intermediate sanctions may include civil penalties of not 
     more than $25,000 per offense, and suspension of new 
     enrollment. The section also provides for reasonable notice 
     to the organization and a right of appeal.
       Subsection (h) requires that Medicare managed care plans 
     must submit to standardized quality review through 
     independent organizations to determine and demonstrate that 
     they have maintained the new, higher quality performance 
     levels required under this legislation. The section also 
     requires a review of plans' quality performance by the U.S. 
     General Accounting Office, no later than July 1998.
       Subsection (i) sets an effective date for Section 101 as 
     the contract years beginning with 1998.
     Section 202: Quality report cards and comparative reports
       Subsection (a) requires that beginning in calendar year 
     1998, the Secretary will begin distribution of quality report 
     cards to beneficiaries on eligible managed care plans and on 
     Medicare supplemental policies, including a comparison of 
     benefits, costs and quality indicators developed under this 
     section.
       Subsection (b) directs the Secretary to develop quality 
     indicators on (1) disenrollents statistics, (2) care 
     outcomes, (3) population health status, (4) appropriateness 
     of care, (5) consumer satisfaction, (6) access to care, 
     including waiting time for scheduled appointments and access 
     to emergency room care, and (7) preventative care programs.
       Subsection (c) directs the Secretary to develop 
     standardized reports comparing plans on the basis of (1) 
     monthly premiums, (2) choice of doctors, (3) choice of 
     hospitals, (4) service area, (5) emergency room care 
     coverage, (6) hospital charges, (7) physician charges, (8) 
     prescription drug coverage, (9) ambulance coverage, (10) 
     coverage of routine eye exams and eyeglasses, (11) coverage 
     of skilled nursing facilities and home health care, (12) 
     coverage of hearing exams and hearing aids, (13) coverage of 
     mental health therapy, (14) the number of beneficiaries in 
     the plan, and several other indicators of plan coverage.
       Subsection (d) requires that plans divulge to the Secretary 
     information required to complete this comparative analysis. 
     The Secretary also is empowered to collect, on a pro rata 
     basis, costs from plans to carry out the requirements of this 
     section.
       Subsection (e), definitions.
     Section 203: Preemption of state laws restricting managed 
         care
       Subsection (a) preempts states from establishing care 
     mandates for health insurance coverage in Medicare.
       Subsection (b) preempts state laws restricting managed care 
     arrangements. This preemption would lift state laws which (1) 
     prohibit or limit carriers from offering incentives to 
     enrollees to use services of participating providers, (2) 
     prohibit or limit carriers from limiting services to 
     participating providers, and other state restrictions on 
     managed care plans.
       This subsection also includes a number of definitions.
       Subsection (c) preempts state laws restricting utilization 
     review programs. However, the section specifies that this 
     preemption exempts laws preventing denial of lifesaving 
     medical treatment pending transfer of enrollees to another 
     health care provider.
       Subsection (d), effective date, January 1, 1998.
     Section 204: Appeals
       Subsection (a) requires all Medicare Risk contractors to 
     designate an independent ombudsman to assist enrollees in 
     exercising rights to dispute plan decisions, and in other 
     grievances.
       This section also directs the Secretary to establish no 
     later than January 1, 1998, an office for the collection of 
     data one each plan pertaining to decisions on the 
     disallowance of services to beneficiaries, in full or in 
     part.
       Subsection (b) requires that plans provide enrollees with 
     clear and understandable description of grievance and appeal 
     procedures.
       Subsection (c) creates an expedited HCFA grievance and 
     appeals procedure.
     Section 205: Medicare HMO Enrollment Fair
       Subsection (a), mandates that the Secretary require and 
     coordinate annual enrollment fairs in each Medicare payment 
     area to inform beneficiaries of plans offered by health care 
     organizations.

[[Page S1834]]

            Subtitle B: Maintaining Fee-for-Service Program

     Section 211: Failsafe budget mechanism
       Subsection (a) requires payment adjustments to achieve 
     specified Medicare targets. Sets annualized, five-year 
     spending targets for Medicare, Parts A and B, according to 
     budget estimated under Clinton Administration plan.
       Includes a ``fail-safe'' budget mechanism allowing the 
     Secretary to undertake proportional reductions in provider 
     reimbursements if spending targets otherwise would be 
     exceeded by billing volume.
     Section 212: Maintenance of part B premium at current 
         percentage of part B program costs
       Subsection (a) maintains monthly premium setting formula at 
     the current percentage of actual Part B program costs.
       Subsection (b) sets effective date, applying to premiums 
     paid for months beginning with January 1997.


title iii--promotion of programs of all-inclusive care for the elderly 
     (pace) and of social health maintenance organizations (shmos)

     Section 301: Definitions
     Section 302: Expanding the availability of qualified 
         organizations for frail elderly community projects 
         (program of all-inclusive care for the elderly (pace))
       Subsection (a) directs the Secretary to establish PACE 
     provider status for public or nonprofit organizations to 
     provide comprehensive health care services, on a capitated 
     basis, to frail elderly patients who are at risk of 
     institutionalization in skilled nursing facilities, and who 
     would qualify for benefits under both Medicare and Medicaid. 
     Such organizations would qualify for three-year periods, with 
     re-qualification procedures. Requirements for assuming 
     financial risk are specified.
       The subsection, the Secretary would be required to act on 
     applications within 90 days.
       Subsection (b) provides for terms and conditions of 
     approval, equivalent to those contained in conditions of 
     approval for an On Lok waiver, section 603C of the Social 
     Security Amendments of 1983, as extended by OBRA 1985. The 
     section also defines other entry requirements, and certain 
     responsibilities of the Secretary to assure quality and 
     feasibility of the plan.
       Subsection (c) defines eligibility for participation by 
     PACE plans.
       Subsection (d) sets reimbursement to the organization 
     through a capitation basis.
       Subsection (e) applies Section 302 statutes to plans 
     currently operating under an On Lok waiver.
       Subsection (f) applies current Social Security Act statutes 
     relating to income and resources of institutionalized spouses 
     to any individual receiving services from an organization 
     operating as a PACE provider.
       Subsection (g) allows participating plans to also offer 
     services to frail populations other than the elderly, except 
     where the Secretary finds provision of such services may 
     impair the ability of the organization's performance as a 
     SHMO.
     Section 303: Application of spousal impoverishment rules
       Applies protections against spousal impoverishment to 
     couples receiving services through PACE organizations.
     Section 304: Permitting expansion and making permanent SHMO 
         waivers
       The section lifts limitations on how many SHMOs may be 
     approved by the Secretary, as well as limitations on how many 
     individuals may be enrolled in any such project.
     Section 305: Repeals; effective date; and application to 
         existing waivers
       Subsection (a) repeals certain federal statues which are 
     non-conforming to the intent and purpose of this legislation.
       Subsection (b) requires that the Secretary within nine 
     months of enactment make effective interim final regulations 
     on the provisions of this title. Until then, all existing 
     PACE providers and OnLok waivers will remain in effect. After 
     implementation of new regulations, SHMOs which at that point 
     have completed three years of activity will attain PACE 
     provider status without need for reapplication.
       Demonstration sites operating less than three years will be 
     accorded PACE provider status, but will be required to 
     undergo annual review for three years.


                    title IV--Other Medicare Changes

     Section 401: Application of competitive acquisition process 
         for part B Items and services
       Subsection (a) authorizes the Secretary to describe 
     appropriate competitive acquisition procedures for awarding 
     contracts for items or services. Selected areas of 
     acquisition to be governed by competitive bidding will be 
     left to the Secretary's discretion. The section applies to 
     the acquisition of durable medical equipment, clinical lab 
     services, prosthetic devices, diagnostic tests, surgical 
     dressings, and other items and services which may be 
     identified by the Secretary.
       Section 401 sets a number of requirements to assure the 
     health and safety of Medicare beneficiaries.
       Subsection (b) sets limitations and requirements with 
     respect to exclusive and non-exclusive competitions.
       Subsection (c) sets an effective date of January 1, 1997.
     Section 402: Simpler procedure for inherent reasonableness 
         determinations
       Subsection (a) and Subsection (b) revise, strike or extend 
     existing status to reform Medicare acquisitions procedures 
     for both goods and services, and improve efficiency within 
     those activities.
       Subsection (c) makes those changes effective on January 1, 
     1997.
     Section 403: Promoting advanced directives
       Subsection (a) requires that persons who have executed 
     advanced directives are ensured that such documents are 
     included in hospital medical charts.
       Subsection (b) would require development and dissemination 
     of standard national forms by the Secretary.
       Subsection (c) encourages health plans in Medicare to 
     encourage use of advanced directive forms through education 
     and dissemination of promotional material.
       Subsection(d) directs the Secretary to develop and 
     implement a promotional campaign with respect to advanced 
     directives.
     Section 404: Antifraud efforts
       Subsection (a) increases penalties for Medicare fraud, and 
     includes definitions.
       Subsection (b) establishes new definitions of punishable 
     offenses.
       Subsection (c) requires a study on standardization of 
     claims administration focused on determining the feasibility 
     and desirability of establishing a standardized Medicare 
     claims administration process, implementing other measures to 
     improve record keeping, and taking other appropriate steps to 
     reduce waste, fraud and abuse in making payments in the 
     Medicare program.
       Subsection (d) directs the Commission on Reinventing 
     Government to report to Congress on the effectiveness of 
     current efforts to combat waste, fraud and abuse in Medicare, 
     and whether these efforts would be enhanced by establishing a 
     coordinated, all-payer, multijurisdiction antifraud program.
     Section 405: Hospice benefits
       Subsection (a) restrucutes the benefit period for hospice 
     care, extending such benefits to an unlimited number of 60-
     day periods. This section includes a number of conforming 
     amendments.
       Subsection (b) provides new language for reimbursement of 
     related services including ambulance, diagnostic tests, 
     chemotherapy and radiation therapy within the hospice 
     environment.
       Subsection (c) allows for contracting with independent 
     physicians and physician groups for hospice care services.
       Subsection (d) waives certain staffing requirements.
       Subsection (e) limits liability of beneficiaries and 
     providers with regard to certain hospice coverage denials.
       Subsection (f) extends the period for a physician to 
     medically certify an individual's terminal illness.
       Subsection (g) sets effective date.
     Section 406: Study providing pharmacy services to medicare 
         beneficiaries
       Subsection (a), directs the Secretary to identify cost 
     savings which may be achieved through expanding the role of 
     pharmacy services under the program.
       Subsection (b) describes services which should be analyzed 
     in the study.
       Subsection (c) and (d), require development of 
     recommendations and a report to Congress.
     Section 407: Respite Benefit
       Subsection (a) describes entitlement structure for service 
     not exceeding 32 each year.
       Subsection (b) further describes conditions and limitations 
     on payment.
       Subsection (c) definitions.
       Subsection (d) defines payments from supplementary 
     insurance trust fund for individuals with only hospital 
     insurance coverage.
       Subsection (e) effective date.


         Title v--prospective payment for home health services

     Section 501. Payment for home health services
       Subsection (a) amends the Social Security Act to mandate 
     that home health services be reimbursed through a prospective 
     payment system. This provision describes discrete areas of 
     services.
       (b) directs establishment of a per visit rate for home care 
     services.
       (c) sets aggregate limits for services and for patients.
       (d) sets a medical review process for the system of 
     payments described in the act, and supervision to insure that 
     individuals receive appropriate care.
       (e) provides for adjustments to payments and for the 
     tracking of patients who may switch home health agencies. 
     This section also provides for monitoring features that 
     determine changes in the quality and level of health care. 
     The provision also requires that the Secretary report 
     annually to Congress regarding recommendations for ensuring 
     access to appropriate home health services.
       (f) provides for payment to Christian Science providers.
       (g) requires an annual report to Congress during the first 
     three years of this payment plan by the Medicare Prospective 
     Payment Review Commission on the effectiveness of the payment 
     methodology.
       (h) mandates development of an ``episodic'' prospective 
     payment system for home health care.
       (i) requires the Secretary to develop a data base upon 
     which managers may develop a fair and accurate case mix 
     adjustor as required elsewhere in this act for the 
     determination of prospective payment.
       Subsection (b) appeals process.
       Subsection (c) sunsets reasonable cost limitation.

[[Page S1835]]

       Subsection (d) effective date.
     Section 502. Review by peer review organization of home 
         health services
       Subsection (a) requires utilization and quality review of 
     home health services by an appropriate peer review 
     organization. These reviews would occur under conditions 
     including a health agency's determination that a patient did 
     not meet conditions for care, that the patient no longer 
     requires care, that the patient's level of care is 
     inconsistent with the prescription of the attending 
     physician.
       This provision also requires written notification to the 
     patient by the agency and the peer review organization.
       Subsection (b) describes hearing rights.
     Section 503. Retroactive reinstatement of presumptive waiver 
         of liability.
       Reconciles OBRA 1986 and other statutes to allow 
     implementation of prospective payment for home health 
     services.


      title vi: prospective payment system for nursing facilities

       Section 601: Definitions for acuity payment, aggregated 
     resident invoice, allowable costs, case mix weight and other 
     items to be cited in the determination of prospective 
     payment.
       Section 602: Sets payment objectives, including maintaining 
     a fair and equitable balance between cost containment and 
     quality of care.
       Section 603: Defines powers and duties of the Secretary.
       Section 604: Reconciles provisions of this title with the 
     Social Security Act.
       Section 605: Establishes a resident classification system 
     to be used to adjust payment rates to practical care 
     requirements.
       Section 606: Establishes a ``cost-center'' system for 
     establishing appropriate reimbursement to facilities based on 
     overhead expenses and general operating costs.
       Section 607: Resident assessment. Requires facilities to 
     assess needs of each resident in accordance with the 
     reimbursement requirements of the title.
       Section 608: Establishes a system for formulating per diem 
     rates of reimbursement for enrolled residents.
       Section 609: Establishes a per diem reimbursement system 
     for compensating facility administrative and general costs.
       Section 610: Establishes payment system for fee-for-service 
     ancillary costs.
       Section 611: Provides for reimbursement of selected 
     ancillary services and other costs.
       Section 612: Establishes per diem payment for property 
     costs related to rentals required by facilities.
       Section 613: Creates a procedure for mid-year rate 
     adjustments.
       Section 614: Creates payment rate exceptions for new and 
     low-volume nursing facilities.
       Section 615: Creates a process for appealing decisions by 
     HCFA regarding payments in the amount of $10,000 or more.
       Section 616: Phases in prospective payment for skilled 
     nursing facilities over a three-year period. First year would 
     have payments based on 25 percent of new system, 75 percent 
     of old system. Second year goes to a 50-50 split. Third year 
     is 75 percent new system, 25 percent old system. Fourth year 
     fully exercises all payment requirements under the title.


                        title vii: telemedicine

     Section 701: Internet access for health care providers for 
         rural areas.
       Subsection (a) amends the Communications Act of 1934 by 
     adding minimum requirements for Internet access for health 
     care providers for rural areas. Requires carriers to provide 
     access ``necessary for the provision of health care 
     services'' and at rates described in the title. Sets 
     threshold requirements for infrastructure and bandwidth, to 
     be determined by ``commission.''
       Subsection (b) definitions.
       Subsection (c) conforming amendments.
     Section 702: Establishes a congressional Commission on 
         Telemedicine to undertake requirements of the title.
       Subsection (a) defines membership, term of office, payment.
       Subsection (b) describe duties, including ``a thorough 
     study and develop(ment) of recommendations on all matters 
     relating to which Telemedicine service should be covered 
     under Medicare.''
       Title also requires a report on these issues not later than 
     one year following enactment.
       Subsection (c) through (f) describe powers, personnel, 
     termination and appropriations for the commission.
                                 ______