[Congressional Record Volume 147, Number 147 (Tuesday, October 30, 2001)]
[Senate]
[Pages S11206-S11213]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER (for himself, Mr. Wellstone, and Mr. Baucus):
  S. 1589. A bill to amend title XVIII of the Social Security Act to 
expand medicare benefits to prevent, delay, and minimize the 
progression of chronic conditions, establish payment incentives for 
furnishing quality services to people with serious and disabling 
chronic conditions, and develop national policies on effective chronic 
condition care, and for other purposes; to the Committee on Finance.
  Mr. ROCKEFELLER. Madam President, I join several colleagues today to 
introduce the Medicare Chronic Care Improvement Act of 2001. Although 
we in Congress are focused on helping the Nation recover from the 
horrific attacks of September 11, we must also stand tall against the 
terrorists who wish to sabotage our domestic policy agenda and continue 
to work on the issues that affect the everyday health and well being of 
American citizens. With this conviction, I believe it is time to 
address the leading health care problem of the 21st century, chronic 
conditions.
  Chronic conditions account for an astounding 90 percent of morbidity, 
80 percent of deaths, and over 75 percent of direct medical 
expenditures in the United States. Nearly 125 million Americans have 
chronic conditions, and this number is expected to increase to 157 
million, approximately half the population, by 2020.
  Chronic conditions encompass an array of health conditions that are 
persistent, recurring, and cannot be cured. They include severely 
impairing conditions like Alzheimer's disease, congestive heart 
failure, chronic obstructive pulmonary disease, diabetes, depression, 
hypertension, and arthritis. Certainly in West Virginia, many of our 
workers, especially coal miners and steelworkers, suffer from chronic 
conditions.
  Treating serious and disabling chronic conditions is the highest cost 
and fastest growing segment of health care. Direct medical costs for 
chronic conditions reached $510 billion in 2000 and are projected to 
reach $1.07 trillion by 2020.
  An estimated 80 percent of Medicare beneficiaries suffer from at 
least one chronic condition and those beneficiaries account for an 
astounding 95 percent of Medicare spending. But Medicare does not 
provide many of the health care services that people with chronic 
conditions need. For example, current Medicare data show that, on 
average, people with chronic conditions see eight different physicians. 
Medicare does not compensate these physicians for communicating with 
one another, nor are they paid for care coordination, monitoring 
medications, early detection, or for educating or counseling patients 
and caregivers. As a result, few of these services, which are critical 
to people with chronic conditions, are provided.
  To meet the needs of these individuals, our health care system must 
embrace a person-centered, system-oriented approach to care. Payers and 
providers who serve the same person

[[Page S11207]]

must be empowered to work together to help people with chronic 
conditions prevent, delay, or minimize disease and disability 
progression and maximize their health and well being.
  Over 10 years ago, I served as Chairman of the Pepper Commission. Our 
final report recognized that people with chronic conditions have 
special needs requiring multidisciplinary health care or social 
services to compliment or augment their health care. The Commission 
further recognized that medical care cannot be fully accessible or 
effective for this segment of the population unless it is accompanied 
by education, outreach, and systems to coordinate a broad range of 
services. The Commission identified these needed changes over ten years 
ago. And, as I stand before you today, not a single one of these 
recommendations has been made.
  I am here to propose a long overdue and much needed solution, The 
Medicare Chronic Care Improvement Act of 2001. This bill establishes a 
comprehensive plan to update and streamline the Medicare healthcare 
delivery system to better meet the needs of people with chronic health 
conditions.
  First, the Medicare Chronic Care Improvement Act of 2001 helps 
prevent, delay, and minimize the progression of chronic conditions by 
authorizing the Secretary of Health and Human Services to expand 
coverage of preventive health benefits. The bill permits providers to 
waive deductibles and co-payments for preventive and wellness services 
and streamlines the process of approving preventive benefits.
  Second, this bill provides a person-centered, system-oriented 
approach to care for this extremely vulnerable segment of our 
population by expanding Medicare coverage to include assessment, care-
coordination, self-management services, and patient and family 
caregiver education and counseling.
  Third, this legislation improves Medicare fee-for-service and managed 
care financing for plans that serve beneficiaries with multiple, 
complex chronic conditions. The Secretary is directed to develop a plan 
to refine payment incentives to ensure appropriate payment for serving 
these high-cost individuals.
  And finally, the Medicare Chronic Care Improvement Act of 2001 
requires the Secretary of HHS to report to Congress on chronic 
condition trends and costs as a foundation for establishing national 
chronic care policies.
  For more detail, I am also entering a section-by-section bill summary 
into the Congressional Record following this statement.
  This legislation has been endorsed by a variety of health 
organizations representing consumers and providers including:
  Chronic Care Coalition, comprising the American Association of Homes 
and Services for the Aging, American Geriatrics Society, Catholic 
Health Association of the United States, Elderplan Social HMO, National 
Chronic Care Consortium, National Council on the Aging, and National 
Family Caregivers Association;
  National Depressive and Manic-Depressive Association;
  Association for Ambulatory Behavioral Healthcare; American Lung 
Association; American Academy of Neurology; American Neurological 
Association; and United Seniors Health Cooperative.
  The Medicare Chronic Care Improvement Act of 2001 provides a 
comprehensive solution to improving the quality of life and health for 
millions of Americans who are struggling with serious and disabling 
chronic conditions. It improves benefits for people with chronic 
conditions, it empowers providers to better care for these people, and 
it provides us with the research we need to better address chronic 
conditions in the future.
  And last, but not least, this legislation has the potential to save 
the Medicare program money, by better managing and treating chronic 
conditions before costly complications result. That is good for seniors 
and good for Medicare, a win-win situation. It is time to step up to 
the plate and fulfill our obligation to our Nation's most vulnerable 
citizens. This bill should stimulate the debate, and when Congress 
returns to business not related to the September 11th attacks, I intend 
to advance this legislation in the Finance Committee.
  I ask unanimous consent that the text of the bill and the summary be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1589

       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 
     Chronic Care Improvement Act of 2001''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.

  TITLE I--EXPANSION OF BENEFITS TO PREVENT, DELAY, AND MINIMIZE THE 
                   PROGRESSION OF CHRONIC CONDITIONS.

          Subtitle A--Improving Access to Preventive Services

Sec. 101. Definitions.
Sec. 102. Elimination of deductibles and coinsurance for existing 
              preventive health benefits.
Sec. 103. Institute of Medicine medicare prevention benefit study and 
              report.
Sec. 104. Authority to administratively provide for coverage of 
              additional preventive benefits.
Sec. 105. Fast-track consideration of prevention benefit legislation.

      Subtitle B--Expansion of Access to Health Promotion Services

Sec. 111. Disease self-management demonstration projects.
Sec. 112. Medicare health education and risk appraisal program.

  Subtitle C--Medicare Coverage for Care Coordination and Assessment 
                                Services

Sec. 121. Care coordination and assessment services.

  TITLE II--PAYMENT INCENTIVES FOR QUALITY CARE FOR INDIVIDUALS WITH 
                SERIOUS AND DISABLING CHRONIC CONDITIONS

Sec. 201. Adjustments to fee-for-service payment systems.
Sec. 202. Medicare+Choice.

   TITLE III--DEVELOPMENT OF NATIONAL POLICIES ON EFFECTIVE CHRONIC 
                             CONDITION CARE

Sec. 301. Study and report on effective chronic condition care.
Sec. 302. Institute of Medicine medicare chronic condition care 
              improvement study and report.

     SEC. 2. DEFINITIONS.

       In this Act:
       (1) Secretary.--Unless otherwise specifically provided, the 
     term ``Secretary'' means the Secretary of Health and Human 
     Services.
       (2) Serious and disabling chronic condition.--The term 
     ``serious and disabling chronic condition'' means, with 
     respect to an individual, that the individual has at least 
     one physical or mental condition and a licensed health care 
     practitioner has certified within the preceding 12-month 
     period that--
       (A) the individual has a level of disability such that the 
     individual is unable to perform (without substantial 
     assistance from another individual) for a period of at least 
     90 days due to a loss of functional capacity--
       (i) at least 2 activities of daily living; or
       (ii) such number of instrumental activities of daily living 
     that is equivalent (as determined by the Secretary) to the 
     level of disability described in clause (i);
       (B) the individual has a level of disability equivalent (as 
     determined by the Secretary) to the level of disability 
     described in subparagraph (A); or
       (C) the individual requires substantial supervision to 
     protect the individual from threats to health and safety due 
     to severe cognitive impairment.
       (3) Activities of daily living.--The term ``activities of 
     daily living'' means each of the following:
       (A) Eating.
       (B) Toileting.
       (C) Transferring.
       (D) Bathing.
       (E) Dressing.
       (F) Continence.
       (4) Instrumental activities of daily living.--The term 
     ``instrumental activities of daily living'' means each of the 
     following:
       (A) Medication management.
       (B) Meal preparation.
       (C) Shopping.
       (D) Housekeeping.
       (E) Laundry.
       (F) Money management.
       (G) Telephone use.
       (H) Transportation use.

  TITLE I--EXPANSION OF BENEFITS TO PREVENT, DELAY, AND MINIMIZE THE 
                   PROGRESSION OF CHRONIC CONDITIONS.

          Subtitle A--Improving Access to Preventive Services

     SEC. 101. DEFINITIONS.

       In this title:
       (1) Cost-effective benefit.--The term ``cost-effective 
     benefit'' means a benefit or technique that has--
       (A) been subject to peer review;
       (B) been described in scientific journals; and
       (C) demonstrated value as measured by unit costs relative 
     to health outcomes achieved.

[[Page S11208]]

       (2) Cost-saving benefit.--The term ``cost-saving benefit'' 
     means a benefit or technique that has--
       (A) been subject to peer review;
       (B) been described in scientific journals; and
       (C) caused a net reduction in health care costs for 
     medicare beneficiaries.
       (3) Medically effective.--The term ``medically effective'' 
     means, with respect to a benefit or technique, that the 
     benefit or technique has been--
       (A) subject to peer review;
       (B) described in scientific journals; and
       (C) determined to achieve an intended goal under normal 
     programmatic conditions.
       (4) Medically efficacious.--The term ``medically 
     efficacious'' means, with respect to a benefit or technique, 
     that the benefit or technique has been--
       (A) subject to peer review;
       (B) described in scientific journals; and
       (C) determined to achieve an intended goal under controlled 
     conditions.

     SEC. 102. ELIMINATION OF DEDUCTIBLES AND COINSURANCE FOR 
                   EXISTING PREVENTIVE HEALTH BENEFITS.

       (a) In General.--Section 1833 of the Social Security Act 
     (42 U.S.C. 1395l) is amended by inserting after subsection 
     (o) the following new subsection:
       ``(p) Deductibles and Coinsurance Waived for Preventive 
     Health Items and Services.--The Secretary shall not require 
     the payment of any deductible or coinsurance under subsection 
     (a) or (b), respectively, of any individual enrolled for 
     coverage under this part for any of the following preventive 
     health items and services:
       ``(1) Blood-testing strips, lancets, and blood glucose 
     monitors for individuals with diabetes described in section 
     1861(n).
       ``(2) Diabetes outpatient self-management training services 
     (as defined in section 1861(qq)(1)).
       ``(3) Pneumococcal, influenza, and hepatitis B vaccines and 
     administration described in section 1861(s)(10).
       ``(4) Screening mammography (as defined in section 
     1861(jj)).
       ``(5) Screening pap smear and screening pelvic exam (as 
     defined in paragraphs (1) and (2) of section 1861(nn), 
     respectively).
       ``(6) Bone mass measurement (as defined in section 
     1861(rr)(1)).
       ``(7) Prostate cancer screening test (as defined in section 
     1861(oo)(1)).
       ``(8) Colorectal cancer screening test (as defined in 
     section 1861(pp)(1)).
       ``(9) Screening for glaucoma (as defined in section 
     1861(uu)).
       ``(10) Medical nutrition therapy services (as defined in 
     section 1861(vv)(1)).''.
       (b) Waiver of Coinsurance.--
       (1) In general.--Section 1833(a)(1)(B) of the Social 
     Security Act (42 U.S.C. 1395l(a)(1)(B)) is amended to read as 
     follows: ``(B) with respect to preventive health items and 
     services described in subsection (p), the amounts paid shall 
     be 100 percent of the fee schedule or other basis of payment 
     under this title for the particular item or service,''.
       (2) Elimination of coinsurance in outpatient hospital 
     settings.--The third sentence of section 1866(a)(2)(A) of the 
     Social Security Act (42 U.S.C. 1395cc(a)(2)(A)) is amended by 
     inserting after ``1861(s)(10)(A)'' the following: ``, 
     preventive health items and services described in section 
     1833(p),''.
       (c) Waiver of Application of Deductible.--Section 
     1833(b)(1) of the Social Security Act (42 U.S.C. 1395l(b)(1)) 
     is amended to read as follows: ``(1) such deductible shall 
     not apply with respect to preventive health items and 
     services described in subsection (p),''.
       (d) Adding ``Lancet'' to Definition of DME.--Section 
     1861(n) of the Social Security Act (42 U.S.C. 1395x(n)) is 
     amended by striking ``blood-testing strips and blood glucose 
     monitors'' and inserting ``blood-testing strips, lancets, and 
     blood glucose monitors''.
       (e) Conforming Amendments.--
       (1) Elimination of coinsurance for clinical diagnostic 
     laboratory tests.--Paragraphs (1)(D)(i) and (2)(D)(i) of 
     section 1833(a) of the Social Security Act (42 U.S.C. 
     1395l(a)), as amended by section 201(b)(1) of the Medicare, 
     Medicaid, and SCHIP Benefits Improvement and Protection Act 
     of 2000 (114 Stat. 2763A-481), as enacted into law by section 
     1(a)(6) of Public Law 106-554, are each amended by inserting 
     ``or which are described in subsection (p)'' after 
     ``assignment-related basis''.
       (2) Elimination of coinsurance for certain dme.--Section 
     1834(a)(1)(A) of the Social Security Act (42 U.S.C. 
     1395m(a)(1)(A)) is amended by inserting ``(or 100 percent, in 
     the case of such an item described in section 1833(p))'' 
     after ``80 percent''.
       (3) Elimination of deductibles and coinsurance for 
     colorectal cancer screening tests.--Section 1834(d) of the 
     Social Security Act (42 U.S.C. 1395m(d)) is amended--
       (A) in paragraph (2)(C)--
       (i) by striking ``(C) Facility payment limit.--'' and all 
     that follows through ``Notwithstanding subsections'' and 
     inserting the following:
       ``(C) Facility payment limit.--Notwithstanding 
     subsections'';
       (ii) by striking ``(I) in accordance'' and inserting the 
     following:
       ``(i) in accordance'';
       (iii) by striking ``(II) are performed'' and all that 
     follows through ``payment under'' and inserting the 
     following:
       ``(ii) are performed in an ambulatory surgical center or 
     hospital outpatient department,
     payment under''; and
       (iv) by striking clause (ii); and
       (B) in paragraph (3)(C)--
       (i) by striking ``(C) Facility payment limit.--'' and all 
     that follows through ``Notwithstanding subsections'' and 
     inserting the following:
       ``(C) Facility payment limit.--Notwithstanding 
     subsections''; and
       (ii) by striking clause (ii).
       (f) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after the day that is 
     1 year after the date of enactment of this Act.

     SEC. 103. INSTITUTE OF MEDICINE MEDICARE PREVENTION BENEFIT 
                   STUDY AND REPORT.

       (a) Study.--
       (1) In general.--The Secretary shall contract with the 
     Institute of Medicine of the National Academy of Sciences 
     to--
       (A) conduct a comprehensive study of current literature and 
     best practices in the field of health promotion and disease 
     prevention among medicare beneficiaries, including the issues 
     described in paragraph (2); and
       (B) submit the report described in subsection (b).
       (2) Issues studied.--The study required under paragraph (1) 
     shall include an assessment of--
       (A) whether each health promotion and disease prevention 
     benefit covered under the medicare program is--
       (i) medically effective (as defined in section 101(3)); or
       (ii) a cost-effective benefit (as defined in section 
     101(1)) or a cost-saving benefit (as defined in section 
     101(2));
       (B) utilization by medicare beneficiaries of such benefits 
     (including any barriers to or incentives to increase 
     utilization);
       (C) quality of life issues associated with such benefits; 
     and
       (D) whether health promotion and disease prevention 
     benefits that are not covered under the medicare program that 
     would affect all medicare beneficiaries are--
       (i) likely to be medically effective (as defined in section 
     101(3)); or
       (ii) likely to be a cost-effective benefit (as defined in 
     section 101(1)) or a cost-saving benefit (as defined in 
     section 101(2));
       (b) Reports.--
       (1) Three-year report.--On the date that is 3 years after 
     the date of enactment of this Act, and each successive 3-year 
     anniversary thereafter, the Institute of Medicine of the 
     National Academy of Sciences shall submit to the President a 
     report that contains--
       (A) a detailed statement of the findings and conclusions of 
     the study conducted under subsection (a); and
       (B) the recommendations for legislation described in 
     paragraph (3).
       (2) Interim report based on new guidelines.--If the United 
     States Preventive Services Task Force or the Task Force on 
     Community Preventive Services establishes new guidelines 
     regarding preventive health benefits for medicare 
     beneficiaries more than 1 year prior to the date that a 
     report described in paragraph (1) is due to be submitted to 
     the President, then not later than 6 months after the date 
     such new guidelines are established, the Institute of 
     Medicine of the National Academy of Sciences shall submit to 
     the President a report that contains a detailed description 
     of such new guidelines. Such report may also contain 
     recommendations for legislation described in paragraph (3).
       (3) Recommendations for legislation.--The Institute of 
     Medicine of the National Academy of Sciences, in consultation 
     with the United States Preventive Services Task Force and the 
     Task Force on Community Preventive Services, shall develop 
     recommendations in legislative form that--
       (A) prioritize the preventive health benefits under the 
     medicare program; and
       (B) modify such benefits, including adding new benefits 
     under such program, based on the study conducted under 
     subsection (a).
       (c) Transmission to Congress.--
       (1) In general.--Subject to paragraph (2), on the day that 
     is 6 months after the date on which the report described in 
     paragraph (1) of subsection (b) (or paragraph (2) of such 
     subsection if the report contains recommendations in 
     legislative form described in subsection (b)(3)) is submitted 
     to the President, the President shall transmit the report and 
     recommendations to Congress.
       (2) Regulatory action by the secretary of health and human 
     services.--If the Secretary of Health and Human Services has 
     exercised the authority under section 104(a) to adopt by 
     regulation one or more of the recommendations under 
     subsection (b)(3), the President shall only submit to 
     Congress those recommendations under subsection (b)(3) that 
     have not been adopted by the Secretary.
       (3) Delivery.--Copies of the report and recommendations in 
     legislative form required to be transmitted to Congress under 
     paragraph (1) shall be delivered--
       (A) to both Houses of Congress on the same day;
       (B) to the Clerk of the House of Representatives if the 
     House is not in session; and
       (C) to the Secretary of the Senate if the Senate is not in 
     session.

     SEC. 104. AUTHORITY TO ADMINISTRATIVELY PROVIDE FOR COVERAGE 
                   OF ADDITIONAL PREVENTIVE BENEFITS.

       (a) In General.--The Secretary of Health and Human Services 
     may by regulation adopt any or all of the legislative 
     recommendations developed by the Institute of Medicine of the 
     National Academy of Sciences, in consultation with the United

[[Page S11209]]

     States Preventive Services Task Force and the Task Force on 
     Community Preventive Services in a report under section 
     103(b)(3) (relating to prioritizing and modifying preventive 
     health benefits under the medicare program and the addition 
     of new preventive benefits), consistent with subsection (b).
       (b) Elimination of Cost-Sharing.--With respect to items and 
     services furnished under the medicare program that the 
     Secretary has incorporated by regulation under subsection 
     (a), the provisions of section 1833(p) of the Social Security 
     Act (relating to elimination of cost-sharing for preventive 
     benefits), as added by section 102(a), shall apply to those 
     items and services in the same manner as such section applies 
     to the items and services described in paragraphs (1) through 
     (10) of such section.
       (c) Deadline.--The Secretary must publish a notice of 
     rulemaking with respect to the adoption by regulation under 
     subsection (a) of any such recommendation within 6 months of 
     the date on which a report described in section 103(b) is 
     submitted to the President.

     SEC. 105. FAST-TRACK CONSIDERATION OF PREVENTION BENEFIT 
                   LEGISLATION.

       (a) Rules of House of Representatives and Senate.--This 
     section is enacted by Congress--
       (1) as an exercise of the rulemaking power of the House of 
     Representatives and the Senate, respectively, and is deemed a 
     part of the rules of each House of Congress, but--
       (A) is applicable only with respect to the procedure to be 
     followed in that House of Congress in the case of an 
     implementing bill (as defined in subsection (d)); and
       (B) supersedes other rules only to the extent that such 
     rules are inconsistent with this section; and
       (2) with full recognition of the constitutional right of 
     either House of Congress to change the rules (so far as 
     relating to the procedure of that House of Congress) at any 
     time, in the same manner and to the same extent as in the 
     case of any other rule of that House of Congress.
       (b) Introduction and Referral.--
       (1) Introduction.--
       (A) In general.--Subject to paragraph (2), on the day on 
     which the President transmits the report pursuant to section 
     103(c) to the House of Representatives and the Senate, the 
     recommendations in legislative form transmitted by the 
     President with respect to such report shall be introduced as 
     a bill (by request) in the following manner:
       (i) House of representatives.--In the House of 
     Representatives, by the Majority Leader, for himself and the 
     Minority Leader, or by Members of the House of 
     Representatives designated by the Majority Leader and 
     Minority Leader.
       (ii) Senate.--In the Senate, by the Majority Leader, for 
     himself and the Minority Leader, or by Members of the Senate 
     designated by the Majority Leader and Minority Leader.
       (B) Special rule.--If either House of Congress is not in 
     session on the day on which such recommendations in 
     legislative form are transmitted, the recommendations in 
     legislative form shall be introduced as a bill in that House 
     of Congress, as provided in subparagraph (A), on the first 
     day thereafter on which that House of Congress is in session.
       (2) Referral.--Such bills shall be referred by the 
     presiding officers of the respective Houses to the 
     appropriate committee, or, in the case of a bill containing 
     provisions within the jurisdiction of 2 or more committees, 
     jointly to such committees for consideration of those 
     provisions within their respective jurisdictions.
       (c) Consideration.--After the recommendations in 
     legislative form have been introduced as a bill and referred 
     under subsection (b), such implementing bill shall be 
     considered in the same manner as an implementing bill is 
     considered under subsections (d), (e), (f), and (g) of 
     section 151 of the Trade Act of 1974 (19 U.S.C. 2191).
       (d) Implementing Bill Defined.--In this section, the term 
     ``implementing bill'' means only the recommendations in 
     legislative form of the Institute of Medicine of the National 
     Academy of Sciences described in section 103(b)(3), 
     transmitted by the President to the House of Representatives 
     and the Senate under subsection 103(c), and introduced and 
     referred as provided in subsection (b) as a bill of either 
     House of Congress.
       (e) Counting of Days.--For purposes of this section, any 
     period of days referred to in section 151 of the Trade Act of 
     1974 shall be computed by excluding--
       (1) the days on which either House of Congress is not in 
     session because of an adjournment of more than 3 days to a 
     day certain or an adjournment of Congress sine die; and
       (2) any Saturday and Sunday, not excluded under paragraph 
     (1), when either House is not in session.

      Subtitle B--Expansion of Access to Health Promotion Services

     SEC. 111. DISEASE SELF-MANAGEMENT DEMONSTRATION PROJECTS.

       (a) Demonstration Projects.--
       (1) In general.--The Secretary shall conduct demonstration 
     projects for the purpose of promoting disease self-management 
     for conditions identified, and appropriately prioritized, by 
     the Secretary for target individuals (as defined in paragraph 
     (2)).
       (2) Target individual defined.--In this section, the term 
     ``target individual'' means an individual who--
       (A) is at risk for, or has, 1 or more of the conditions 
     identified by the Secretary as being appropriate for disease 
     self-management; and
       (B) is entitled to benefits under part A of title XVIII of 
     the Social Security Act (42 U.S.C. 1395c et seq.), or 
     enrolled under part B of such title ( 42 U.S.C. 1395j et 
     seq.) or is enrolled under the Medicare+Choice program under 
     part C of such title (42 U.S.C. 1395w-21 et seq.).
       (b) Number; Project Areas; Duration.--
       (1) Number.--Not later than 2 years after the date of 
     enactment of this Act, the Secretary shall implement a series 
     of demonstration projects to carry out the purpose described 
     in subsection (a)(1).
       (2) Project areas.--The Secretary shall implement the 
     demonstration projects described in paragraph (1) in urban, 
     suburban, and rural areas.
       (3) Duration.--The demonstration projects under this 
     section shall be conducted during the 3-year period beginning 
     on the date on which the initial demonstration project is 
     implemented.
       (c) Report to Congress.--
       (1) In general.--Not later than 18 months after the 
     conclusion of the demonstration projects under this section, 
     the Secretary shall submit a report to Congress on such 
     projects.
       (2) Contents of report.--The report required under 
     paragraph (1) shall include the following:
       (A) A description of the demonstration projects.
       (B) An evaluation of--
       (i) whether each benefit provided under the demonstration 
     projects is--

       (I) medically effective;
       (II) medically efficacious;
       (III) cost-effective; or
       (IV) cost-saving;

       (ii) the level of the disease self-management attained by 
     target individuals under the demonstration projects; and
       (iii) the satisfaction of target individuals under the 
     demonstration projects.
       (C) Recommendations of the Secretary regarding whether to 
     conduct the demonstration projects on a permanent basis.
       (D) Such recommendations for legislation and administrative 
     action as the Secretary determines to be appropriate.
       (E) Any other information regarding the demonstration 
     projects that the Secretary determines to be appropriate.
       (d) Funding.--The Secretary shall provide for the transfer 
     from the Federal Hospital Insurance Trust Fund under section 
     1817 of the Social Security Act (42 U.S.C. 1395i) an amount 
     not to exceed $30,000,000 for the costs of carrying out this 
     section.

     SEC. 112. MEDICARE HEALTH EDUCATION AND RISK APPRAISAL 
                   PROGRAM.

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


         ``medicare health education and risk appraisal program

       ``Sec. 1897. (a) Establishment.--Not later than 18 months 
     after the date of the conclusion of the demonstration 
     projects conducted under subsection (b)(1), the Secretary 
     shall establish a comprehensive and systematic model for 
     delivering health promotion and disease prevention services 
     that--
       ``(1) through self-assessment identifies--
       ``(A) behavioral risk factors, such as tobacco use, 
     physical inactivity, alcohol use, depression, lack of proper 
     nutrition, and risk of falling, among target individuals;
       ``(B) needed medicare clinical preventive and screening 
     health benefits among target individuals; and
       ``(C) functional and self-management information the 
     Secretary determines to be appropriate;
       ``(2) provides ongoing followup to reduce risk factors and 
     promote the appropriate use of preventive and screening 
     health benefits;
       ``(3) improves clinical outcomes, satisfaction, quality of 
     life, and appropriate use by target individuals of items and 
     services covered under the medicare program; and
       ``(4) provides target individuals with information 
     regarding the adoption of healthy behaviors.
       ``(b) Demonstration Projects.--
       ``(1) Establishment.--Not later than 1 year after the date 
     of enactment of this section, the Secretary, in consultation 
     with the Director of the Centers for Disease Control and 
     Prevention, and the Director of the Agency for Healthcare 
     Research and Quality, shall conduct demonstration projects 
     for the purpose of developing a comprehensive and systematic 
     model for delivering health promotion and disease prevention 
     services described in subsection (a).
       ``(2) Self-assessment and provision of information.--The 
     Secretary shall conduct the demonstration projects 
     established under paragraph (1) in the following manner:
       ``(A) Self-assessment.--
       ``(i) In general.--The Secretary shall test different--

       ``(I) methods of making self-assessments available to each 
     target individual;
       ``(II) methods of encouraging each target individual to 
     participate in the self-assessment; and
       ``(III) methods for processing responses to the self-
     assessment.

       ``(ii) Contents.--A self-assessment made available under 
     clause (i) shall include--

       ``(I) questions regarding behavioral risk factors;
       ``(II) questions regarding needed preventive screening 
     health services;
       ``(III) questions regarding the target individual's 
     preferences for receiving follow-up information; and

[[Page S11210]]

       ``(IV) other information that the Secretary determines 
     appropriate.

       ``(B) Provision of information.--After each target 
     individual completes the self-assessment, the Secretary shall 
     ensure that the target individual is provided with such 
     information as the Secretary determines appropriate, which 
     may include--
       ``(i) information regarding the results of the self-
     assessment;
       ``(ii) recommendations regarding any appropriate behavior 
     modification based on the self-assessment;
       ``(iii) information regarding how to access behavior 
     modification assistance that promotes healthy behavior, 
     including information on nurse hotlines, counseling services, 
     provider services, and case-management services;
       ``(iv) information, feedback, support, and recommendations 
     regarding any need for clinical preventive and screening 
     health services or treatment; and
       ``(v) referrals to available community resources in order 
     to assist the target individual in reducing health risks.
       ``(3) Project areas and duration.--
       ``(A) Project areas.--The Secretary shall implement the 
     demonstration projects in geographic areas that include 
     urban, suburban, and rural areas.
       ``(B) Duration.--The Secretary shall conduct the 
     demonstration projects during the 3-year period beginning on 
     the date on which the first demonstration project is 
     implemented.
       ``(c) Report to Congress.--
       ``(1) In general.--Not later than 1 year after the date on 
     which the demonstration projects conclude, the Secretary 
     shall submit to Congress a report on such projects.
       ``(2) Contents of report.--The report submitted under 
     paragraph (1) shall--
       ``(A) describe the demonstration projects conducted under 
     this section;
       ``(B) identify the demonstration project that is the most 
     effective; and
       ``(C) contain such other information regarding the 
     demonstration projects as the Secretary determines 
     appropriate.
       ``(3) Measurement of effectiveness.--For purposes of 
     paragraph (2)(B), in identifying the demonstration project 
     that is the most effective, the Secretary shall consider--
       ``(A) how successful the project was at--
       ``(i) reaching target individuals and engaging them in an 
     assessment of the risk factors of such individuals;
       ``(ii) educating target individuals on healthy behaviors 
     and getting such individuals to modify their behaviors in 
     order to diminish the risk of chronic disease; and
       ``(iii) ensuring that target individuals were provided with 
     necessary information;
       ``(B) the cost-effectiveness of the demonstration project; 
     and
       ``(C) the degree of beneficiary satisfaction under the 
     demonstration projects.
       ``(d) Waiver Authority.--The Secretary may waive such 
     requirements under this title as the Secretary determines 
     necessary to carry out the demonstration projects under this 
     section.
       ``(e) Funding.--There are authorized to be appropriated 
     $25,000,000 to the Secretary for carrying out the 
     demonstration projects under this section.
       ``(f) Definition of Target Individual.--The term `target 
     individual' means each individual who is--
       ``(1) entitled to benefits under part A or enrolled under 
     part B, including an individual enrolled under the 
     Medicare+Choice program under part C; or
       ``(2) between the ages of 50 and 64 and who is not 
     described in paragraph (1).''.

  Subtitle C--Medicare Coverage for Care Coordination and Assessment 
                                Services

     SEC. 121. CARE COORDINATION AND ASSESSMENT SERVICES.

       (a) Services Authorized.--Title XVIII of the Social 
     Security Act (42 U.S.C. 1395 et seq.), as amended by section 
     112, is further amended by adding at the end the following 
     new section:


              ``care coordination and assessment services

       ``Sec. 1898. (a) Purpose.--The purpose of this section is 
     to provide assistance to a beneficiary with a serious and 
     disabling chronic condition (as defined in subsection (f)(1)) 
     to obtain the appropriate level and mix of follow-up care.
       ``(b) Election of Care Coordination and Assessment 
     Services.--
       ``(1) In general.--On or after January 1, 2003, a 
     beneficiary with a serious and disabling chronic condition 
     may elect to receive care coordination services in accordance 
     with the provisions of this section under which, in 
     appropriate circumstances, the eligible beneficiary has 
     health care services covered under this title managed and 
     coordinated by a care coordinator who is qualified under 
     subsection (e) to furnish care coordination services under 
     this section.
       ``(2) Revocation of election.--An eligible beneficiary who 
     has made an election under paragraph (1) may revoke that 
     election at any time.
       ``(c) Outreach.--The Secretary shall provide for the wide 
     dissemination of information to beneficiaries and providers 
     of services, physicians, practitioners, and suppliers with 
     respect to the availability of and requirements for care 
     coordination services under this section.
       ``(d) Care Coordination and Assessment Services 
     Described.--Care coordination services under this section 
     shall include the following:
       ``(1) Basic care coordination and assessment services.--
       ``(A) In general.--Except as otherwise provided in this 
     section, eligible beneficiaries who have made an election 
     under this section shall receive the following services:
       ``(i)(I) An initial assessment of an individual's medical 
     condition, functional and cognitive capacity, and 
     environmental and psychosocial needs.
       ``(II) Annual assessments after the initial assessment 
     performed under subclause (I), unless the physician or care 
     coordinator of the individual determines that additional 
     assessments are required due to sentinel health events or 
     changes in the health status of the individual that may 
     require changes in plans of care developed for the 
     individual.
       ``(ii) The development of an initial plan of care, and 
     subsequent appropriate revisions to that plan of care.
       ``(iii) The management of, and referral for, medical and 
     other health services, including multidisciplinary care 
     conferences and coordination with other providers.
       ``(iv) The monitoring and management of medications.
       ``(v) Patient education and counseling services.
       ``(vi) Family caregiver education and counseling services.
       ``(vii) Self-management services, including health 
     education and risk appraisal to identify behavioral risk 
     factors through self-assessment.
       ``(viii) Providing access for consultations by telephone 
     with physicians and other appropriate health care 
     professionals, including 24-hour availability of such 
     professionals for emergency consultations.
       ``(ix) Coordination with the principal nonprofessional 
     caregiver in the home.
       ``(x) Managing and facilitating transitions among health 
     care professionals and across settings of care, including the 
     following:

       ``(I) Pursuing the treatment option elected by the 
     individual.
       ``(II) Including any advance directive executed by the 
     individual in the medical file of the individual.

       ``(xi) Activities that facilitate continuity of care and 
     patient adherence to plans of care.
       ``(xii) Information about, and referral to, hospice 
     services, including patient and family caregiver education 
     and counseling about hospice, and facilitating transition to 
     hospice when elected.
       ``(xiii) Such other medical and health care services for 
     which payment would not otherwise be made under this title as 
     the Secretary determines to be appropriate for effective care 
     coordination, including the additional items and services as 
     described in subparagraph (B).
       ``(B) Additional benefits.--The Secretary may specify 
     additional benefits for which payment would not otherwise be 
     made under this title that may be available to eligible 
     beneficiaries who have made an election under this section 
     (subject to an assessment by the care coordinator of an 
     individual beneficiary's circumstances and need for such 
     benefits) in order to encourage the receipt of, or to improve 
     the effectiveness of, care coordination services.
       ``(2) Care coordination and assessment requirement.--
     Notwithstanding any other provision of this title, with 
     respect to items and services for which payment is made under 
     this title furnished to a beneficiary for the diagnosis and 
     treatment of the beneficiary's serious and disabling chronic 
     condition, if the beneficiary has made an election to receive 
     care coordination and assessment services under this section, 
     the Secretary may require that payment may only be made under 
     this title for such items and services relating to such 
     condition if the items and services have been furnished by or 
     coordinated through the care coordinator. Under such 
     provision, the Secretary shall prescribe exceptions for 
     emergency medical services (as described in section 
     1852(d)(3), but without regard to enrollment with a 
     Medicare+Choice organization), and other exceptions 
     determined by the Secretary for the delivery of timely and 
     needed care.
       ``(e) Care Coordinators.--
       ``(1) Conditions of participation.--In order to be 
     qualified to furnish care coordination and assessment 
     services under this section, an individual or entity shall--
       ``(A) be a health care professional or entity (which may 
     include physicians, physician group practices, or other 
     health care professionals or entities the Secretary may find 
     appropriate) meeting such conditions as the Secretary may 
     specify;
       ``(B) enter into a care coordination agreement under 
     paragraph (2); and
       ``(C) meet such criteria as the Secretary may establish 
     (which may include experience in the provision of care 
     coordination or primary care physician's services).
       ``(2) Agreement term; payment.--
       ``(A) Duration and renewal.--A care coordination agreement 
     under this subsection shall--
       ``(i) be entered into for a period of 1 year and may be 
     renewed if the Secretary is satisfied that the care 
     coordinator continues to meet the conditions of participation 
     specified in paragraph (1);
       ``(ii) assure the compliance of the care coordinator with 
     such data collection and reporting requirements as the 
     Secretary determines necessary to assess the effect of care 
     coordination on health outcomes; and

[[Page S11211]]

       ``(iii) contain such other terms and conditions as the 
     Secretary may require.
       ``(B) Payment for services.--The Secretary shall establish 
     payment terms and conditions and payment rates for basic care 
     coordination and assessment services described in subsection 
     (d)(1). The Secretary may establish new billing codes to 
     carry out the provisions of this subparagraph.
       ``(f) Definitions.--In this section:
       ``(1) Serious and disabling chronic condition.--The term 
     `serious and disabling chronic condition' means, with respect 
     to an individual, that the individual has at least one 
     physical or mental condition and a licensed health care 
     practitioner has certified within the preceding 12-month 
     period that--
       ``(A) the individual has a level of disability such that 
     the individual is unable to perform (without substantial 
     assistance from another individual) for a period of at least 
     90 days due to a loss of functional capacity--
       ``(i) at least 2 activities of daily living; or
       ``(ii) such number of instrumental activities of daily 
     living that is equivalent (as determined by the Secretary) to 
     the level of disability described in clause (i);
       ``(B) the individual has a level of disability equivalent 
     (as determined by the Secretary) to the level of disability 
     described in subparagraph (A); or
       ``(C) the individual requires substantial supervision to 
     protect the individual from threats to health and safety due 
     to severe cognitive impairment.
       ``(2) Activities of daily living.--The term `activities of 
     daily living' means each of the following:
       ``(A) Eating.
       ``(B) Toileting.
       ``(C) Transferring.
       ``(D) Bathing.
       ``(E) Dressing.
       ``(F) Continence.
       ``(3) Instrumental activities of daily living.--The term 
     `instrumental activities of daily living' means each of the 
     following:
       ``(A) Medication management.
       ``(B) Meal preparation.
       ``(C) Shopping.
       ``(D) Housekeeping.
       ``(E) Laundry.
       ``(F) Money management.
       ``(G) Telephone use.
       ``(H) Transportation use.
       ``(4) Beneficiary.--The term `beneficiary' means an 
     individual entitled to benefits under part A, or enrolled 
     under part B, including an individual enrolled under the 
     Medicare+Choice program under part C.''.
       (b) Coverage of Care Coordination and Assessment Services 
     as a Part B Medical Service.--
       (1) In general.--Section 1861(s) of the Social Security Act 
     (42 U.S.C. 1395x(s)) is amended--
       (A) in the second sentence, by redesignating paragraphs 
     (16) and (17) as clauses (i) and (ii); and
       (B) in the first sentence--
       (i) by striking ``and'' at the end of paragraph (14);
       (ii) by striking the period at the end of paragraph (15) 
     and inserting ``; and''; and
       (iii) by adding after paragraph (15) the following new 
     paragraph:
       ``(16) care coordination and assessment services furnished 
     by a care coordinator in accordance with section 1866C.''.
       (2) Conforming amendments.--Sections 1864(a) 1902(a)(9)(C), 
     and 1915(a)(1)(B)(ii)(I) of such Act (42 U.S.C. 1395aa(a), 
     1396a(a)(9)(C), and 1396n(a)(1)(B)(ii)(I)) are each amended 
     by striking ``paragraphs (16) and (17)'' each place it 
     appears and inserting ``clauses (i) and (ii) of the second 
     sentence''.
       (3) Part b coinsurance and deductible not applicable to 
     care coordination and assessment services.--
       (A) Coinsurance.--Section 1833(a)(1) of the Social Security 
     Act (42 U.S.C. 1395l(a)(1)), as amended by sections 105 and 
     223 of the Medicare, Medicaid, and SCHIP Benefits Improvement 
     and Protection Act of 2000, as enacted into law by section 
     1(a)(6) of Public Law 106-554, is amended--
       (i) by striking ``and'' at the end of subparagraph (T); and
       (ii) by inserting before the final semicolon ``, and (V) 
     with respect to care coordination and assessment services 
     described in section 1861(s)(16) that are furnished by, or 
     coordinated through, a care coordinator, the amounts paid 
     shall be 100 percent of the payment amount established under 
     section 1866C''.
       (B) Deductible.--Section 1833(b) of such Act (42 U.S.C. 
     1395l(b)) is amended--
       (i) by striking ``and'' at the end of paragraph (5); and
       (ii) by inserting before the final period ``, and (7) such 
     deductible shall not apply with respect to care coordination 
     and assessment services (as described in section 
     1861(s)(16))''.
       (C) Elimination of coinsurance in outpatient hospital 
     settings.--The third sentence of section 1866(a)(2)(A) of 
     such Act (42 U.S.C. 1395cc(a)(2)(A)), as amended by section 
     102(b)(2), is further amended by inserting after ``section 
     1833(p),'' the following: ``with respect to care coordination 
     and assessment services (as described in section 
     1861(s)(16)),''.

  TITLE II--PAYMENT INCENTIVES FOR QUALITY CARE FOR INDIVIDUALS WITH 
                SERIOUS AND DISABLING CHRONIC CONDITIONS

     SEC. 201. ADJUSTMENTS TO FEE-FOR-SERVICE PAYMENT SYSTEMS.

       (a) In General.--The Secretary of Health and Human Services 
     shall provide for appropriate adjustments to each of the 
     payment systems described in subsection (b) to take into 
     account the additional costs incurred in providing items and 
     services under the medicare program to medicare beneficiaries 
     who suffer from serious and disabling chronic conditions, 
     including the consideration of the patient classification 
     system (or other methodology) under subsection (d). The 
     Secretary shall implement such adjustments for items and 
     services furnished on or after October 1, 2005.
       (b) Payment Systems Described.--The payment systems 
     referred to in subsection (a) are the following:
       (1) The prospective payment system for covered skilled 
     nursing facility services under section 1888(e) of such Act 
     (42 U.S.C. 1395yy(e)).
       (2) The prospective payment system for home health services 
     under section 1895 of such Act (42 U.S.C. 1395fff).
       (3) The prospective payment system for outpatient hospital 
     services under section 1833(t) of such Act (42 U.S.C. 
     1395l(t)).
       (4) The physician fee schedule under section 1848 of such 
     Act (42 U.S.C. 1395w-4).
       (5) The composite rate of payment for dialysis services 
     under section 1881(b)(7) of such Act (42 U.S.C. 
     1395rr(b)(7)).
       (6) The payment rate for outpatient therapy services and 
     comprehensive outpatient rehabilitation services under 
     section 1834(k) of such Act (42 U.S.C. 1395m(k)).
       (7) The payment rate for partial hospitalization services 
     established by the Secretary in regulations under title XVIII 
     of such Act.
       (8) The payment rate for hospice services under section 
     1814(i) of such Act (42 U.S.C. 1395f(i)).
       (c) Interim Report.--Not later than 18 months after the 
     date of enactment of this Act, the Secretary shall submit to 
     Congress a report on the proposed adjustments required under 
     subsection (a) to the payment systems described in subsection 
     (b), the methodology employed by the Secretary in providing 
     for such proposed adjustments, and an assessment of the 
     impact of such adjustments on access to effective care for 
     medicare beneficiaries.
       (d) Patient Classification System.--The Secretary shall 
     develop a patient classification system or other methodology 
     to predict costs within and across postacute care settings 
     attributable to furnishing items and services to medicare 
     beneficiaries who suffer from serious and disabling chronic 
     conditions. The Secretary shall develop such system by not 
     later than October 1, 2004, and shall consult with 
     representatives of providers of services and individuals with 
     expertise in health care financing and risk adjustment 
     methodology in developing such system.

     SEC. 202. MEDICARE+CHOICE.

       (a) Revisions to Risk Adjustment Methodology.--
       (1) In general.--The Secretary shall revise the risk 
     adjustment methodology under section 1853(a)(3) of the Social 
     Security Act (42 U.S.C. 1395w-23(a)(3)) applicable to 
     payments to Medicare+Choice organizations offering 
     specialized programs for frail elderly and at-risk 
     beneficiaries to take into account variations in costs 
     incurred by such organizations.
       (2) Methods considered.--In revising the risk adjustment 
     methodology under paragraph (1), the Secretary shall 
     consider--
       (A) hybrid risk adjustment payment systems, such as partial 
     capitation;
       (B) new diagnostic and service markers that more accurately 
     predict high risk;
       (C) improving the structural components of the applicable 
     method of payment, such as reducing payment lag, using 
     multiple site diagnostic data, and using several years of 
     data;
       (D) providing for adjustments to payment amounts for 
     beneficiaries with comorbidities;
       (E) testing concurrent risk adjustment methodologies; and
       (F) testing payment methods using data from specialized 
     programs for frail elderly and at-risk beneficiaries.
       (3) Implementation.--The Secretary shall implement such 
     revisions to the risk adjustment methodology for items and 
     services furnished on or after January 1, 2005.
       (4) Interim report.--Not later than January 1, 2004, the 
     Secretary shall submit to Congress a report on revision of 
     the risk adjustment methodology required under paragraph (1), 
     including a description of the methods considered and 
     employed by the Secretary in providing for such revision and 
     an assessment of the impacts of such methods on access to 
     effective care for medicare beneficiaries.
       (b) Interim Continuation of Blended Rate for Specialized 
     Programs for Frail Elderly and At-Risk Medicare Beneficiaries 
     Residing in Institutions.--
       (1) In general.--In the case of a Medicare+Choice 
     organization that complies with the requirements under 
     paragraph (2) and that offers a Medicare+Choice plan that 
     provides for a specialized program for frail elderly and at-
     risk beneficiaries that exclusively serves beneficiaries in 
     institutions or beneficiaries that are entitled to medical 
     assistance under a State plan under title XIX, 
     notwithstanding section 1853(a)(3)(C)(ii) of the Social 
     Security Act (42 U.S.C. 1395w-23(a)(3)(C)(ii)), such 
     organization shall be paid according to the method described 
     in section 1853(a)(3)(C)(ii)(I) until such time as

[[Page S11212]]

     the Secretary has implemented the revised risk adjustment 
     methodology required in subsection (a).
       (2) Requirements.--A Medicare+Choice organization may not 
     qualify for the payment methodology under paragraph (1) 
     unless the organization collects such data (and in such 
     format) as the Secretary requires to monitor quality of 
     services provided, outcomes, and costs, including functional 
     and diagnostic data and information collected through the 
     Health Outcomes Survey.
       (c) Interim Continuation of Payment Methodologies for 
     Demonstration Programs.--
       (1) In general.--Notwithstanding any other provision of 
     law, payment methodologies for medicare demonstration 
     programs for specialized programs for frail elderly and at-
     risk beneficiaries that comply with the requirements under 
     paragraph (2) shall continue under the terms and conditions 
     of the demonstration authority, including the risk adjustment 
     factors and formula used for paying such demonstration 
     programs, until such time as the Secretary has implemented 
     the revised risk adjustment methodology required in 
     subsection (a).
       (2) Requirements.--A medicare demonstration program may not 
     qualify for the payment methodology under paragraph (1) 
     unless the program collects such data (and in such format) as 
     the Secretary requires to monitor quality of services 
     provided, outcomes, and costs, including functional and 
     diagnostic data and information collected through the Health 
     Outcomes Survey.
       (d) Interim Demonstration Program for Additional Payments 
     for Specialized Programs.--
       (1) In general.--The Secretary shall establish a 
     demonstration program under which additional payments (in 
     such manner and amount as the Secretary determines 
     appropriate) may be made to a Medicare+Choice organization 
     that complies with the requirements under paragraph (2) and 
     that offers a Medicare+Choice plan that--
       (A) provides, directly or through contract, for a 
     specialized program of care for enrollees with serious and 
     disabling chronic conditions; and
       (B) exclusively serves enrollees with serious and disabling 
     chronic conditions or serves a disproportionate share of such 
     enrollees.
       (2) Requirements.--A Medicare+Choice organization may not 
     qualify for additional payments under paragraph (1) unless 
     the organization and the specialized program of care meet the 
     following requirements:
       (A) Under the specialized program of care, a clinical 
     delivery system is established that meets the needs of such 
     enrollees, including--
       (i) methods to prevent, delay, or minimize the progression 
     of disabilities;
       (ii) disease management protocols, such as high risk 
     screening to identify risk of hospitalization, nursing home 
     placement, functional decline, death, and other factors that 
     increase the costs of care provided;
       (iii) appropriate specially trained health care staff, such 
     as nurse practitioners, geriatric care managers, or mental 
     health professionals; and
       (iv) methods for promoting integration of care, financing, 
     and administrative functions across health care settings.
       (B) The organization collects such data (and in such 
     format) as the Secretary requires to monitor quality of 
     services provided, outcomes, and costs, including functional 
     and diagnostic data and information collected through the 
     Health Outcomes Survey.
       (C) The organization employs quality standards and tracks 
     quality indicators specified by the Secretary that are 
     relevant to the special needs of enrollees with serious and 
     disabling chronic conditions.
       (D) The organization does not receive payments, or 
     adjustment to payments, with respect to any enrollee by 
     reason of subsection (b) or (c).
       (3) Waiver authority.--The Secretary may waive such 
     requirements of title XVIII of the Social Security Act as may 
     be necessary to carry out this demonstration program.
       (4) Termination.--The demonstration program under this 
     subsection shall terminate 1 year after such time as the 
     Secretary has implemented the revised risk adjustment 
     methodology required in subsection (a).
       (5) Funding.--There are authorized to be appropriated to 
     the Secretary $25,000,000 for carrying out the demonstration 
     program under this subsection.
       (e) Definition.--In this section, the term ``specialized 
     programs for frail elderly and at-risk beneficiaries'' 
     means--
       (1) demonstrations approved by the Secretary for purposes 
     of testing the integration of acute and expanded care 
     services under prepaid financing which include prescription 
     drugs and other noncovered ancillary services, care 
     coordination, and home and community-based services, such as 
     the social health maintenance organization demonstration 
     project authorized under section 2355 of the Deficit 
     Reduction Act of 1984 and expanded under section 
     4207(b)(4)(B)(i) of the Omnibus Reconciliation Act of 1990;
       (2) demonstrations approved by the Secretary for purposes 
     of improving quality of care and preventing hospitalizations 
     for nursing home residents, such as the EverCare 
     demonstration project;
       (3) demonstrations approved by the Secretary for purposes 
     of testing methods for integrating medicare and medicaid 
     benefits for the dually eligible, such as the Minnesota 
     Senior Health Options program, the Wisconsin Partnership 
     program, the Massachusetts Senior Care Organization program, 
     and the Rochester Community Care Network program;
       (4) demonstrations approved by the Secretary under 
     subsection (d); and
       (5) such other demonstrations or programs approved by the 
     Secretary for similar purposes, as determined by the 
     Secretary.

   TITLE III--DEVELOPMENT OF NATIONAL POLICIES ON EFFECTIVE CHRONIC 
                             CONDITION CARE

     SEC. 301. STUDY AND REPORT ON EFFECTIVE CHRONIC CONDITION 
                   CARE.

       (a) Study.--For purposes of improving chronic condition 
     care furnished to medicare beneficiaries under the medicare 
     program, the Secretary of Health and Human Services shall 
     conduct a comprehensive study of chronic condition trends of 
     medicare beneficiaries and associated service utilization, 
     quality indicators, and cumulative costs.
       (b) Specific Matters Studied.--The study conducted under 
     subsection (a) shall include an assessment of the following:
       (1) Chronic condition prevalence rates.
       (2) Demographic, medical, and functional information about 
     medicare beneficiaries with chronic conditions.
       (3) Utilization, cost, and quality data across settings, 
     including--
       (A) expenditures under a State plan under title XIX of the 
     Social Security Act for individuals dually eligible for 
     benefits under the medicare and medicaid programs,
       (B) data on out-of-pocket expenses paid by medicare 
     beneficiaries,
       (C) data on payments made by non-Federal health insurance 
     programs,
       (D) amounts and percentages of overall payments made to 
     medicare providers of services and suppliers for medicare 
     beneficiaries with chronic conditions, and
       (E) current and future cost-shifting for treatment of such 
     beneficiaries between the medicare and medicaid programs.
       (c) Information.--
       (1) In general.--The Secretary may collect such data from 
     providers of services, suppliers, fiscal intermediaries, and 
     carriers. Such providers, suppliers, fiscal intermediaries, 
     and carriers shall furnish to the Secretary the data the 
     Secretary requires to conduct the study under subsection (a).
       (2) Requirement to consider data previously collected.--To 
     the maximum extent practicable, in conducting the study, the 
     Secretary shall analyze existing data and utilize existing 
     data collection methodologies.
       (3) Consultation.--The Secretary shall consult with 
     representatives of providers of services, suppliers, fiscal 
     intermediaries, and carriers with respect to data collection 
     requirements to conduct the study with respect to the 
     specific matters described in subsection (b).
       (d) Report.--
       (1) In general.--Not later than 3 years after the date of 
     enactment of this Act, and triennially thereafter, the 
     Secretary shall submit to Congress a report on the study 
     conducted under subsection (a) and the specific matters 
     studied under subsection (b).
       (2) Recommendations.--Each report shall also include 
     specific recommendations with respect to appropriate care for 
     medicare beneficiaries with chronic conditions, including the 
     establishment, and refinement, of goals for reducing chronic 
     condition prevalence rates and related medical expenses.
       (e) Definition.--In this section, the term ``chronic 
     condition'' means one or more physical or mental conditions 
     which are likely to last for an unspecified period of time, 
     or for the duration of an individual's life, for which there 
     is no known cure, and which may affect an individual's 
     ability to carry out basic activities of daily living, 
     instrumental activities of daily living, or both.
       (f) Reduction of Paperwork; Assistance With Development of 
     Computer-Assisted Paperwork Reduction Technology.--
       (1) Reduction of paperwork.--Not later than one year after 
     the date of enactment of this Act, the Secretary shall, in 
     consultation with providers of services and suppliers under 
     the medicare program, patient advocacy groups, and State and 
     local health care administration experts, implement a program 
     to eliminate or simplify those paperwork requirements that 
     are not required by law, and do not contribute to the quality 
     of care furnished to medicare beneficiaries or the integrity 
     of the medicare program.
       (2) Development of best practices software.--
       (A) In general.--The Secretary, through the Office of 
     Research and Development of the Center for Medicare and 
     Medicaid Services, shall develop and disseminate to providers 
     of services and suppliers participating in the medicare 
     program best practices electronic software and medical 
     technology information systems designed to reduce the 
     duplicative recording of information, to reduce the need for 
     handwritten entries, and to reduce the risk of medical and 
     pharmaceutical errors in data entry.
       (B) Technical assistance.--The Secretary shall provide for 
     technical assistance in the use of the electronic software 
     developed under subparagraph (A).
       (C) Authorization of appropriations.--For each of fiscal 
     years 2002, 2003, and 2004, there are authorized to be 
     appropriated to the Secretary $10,000,000 to carry out this 
     paragraph.

     SEC. 302. INSTITUTE OF MEDICINE MEDICARE CHRONIC CONDITION 
                   CARE IMPROVEMENT STUDY AND REPORT.

       (a) Study.--

[[Page S11213]]

       (1) In general.--The Secretary shall contract with the 
     Institute of Medicine of the National Academy of Sciences 
     to--
       (A) conduct a comprehensive study of the medicare program 
     to identify--
       (i) factors that facilitate access to effective care 
     (including, where appropriate, hospice care) for medicare 
     beneficiaries with chronic conditions; and
       (ii) factors that impede access to such care for such 
     beneficiaries,
     including the issues studied under paragraph (2); and
       (B) submit the report described in subsection (b).
       (2) Issues studied.--The study required under paragraph (1) 
     shall--
       (A) identify inconsistent clinical, financial, or 
     administrative requirements across provider and supplier 
     settings or professional services with respect to medicare 
     beneficiaries;
       (B) identify requirements under the program imposed by law 
     or regulation that--
       (i) promote costshifting across providers and suppliers;
       (ii) impede access to effective chronic condition care by 
     requiring the demonstration of continuing clinical 
     improvement of the condition as a prerequisite to coverage of 
     certain benefits;
       (iii) impose unnecessary burdens on such beneficiaries and 
     their family caregivers;
       (iv) impede coverage for services that prevent, delay, or 
     minimize the progression of chronic conditions;
       (v) impede the establishment of administrative information 
     systems to track health status, utilization, cost, and 
     quality data across providers and suppliers and provider 
     settings;
       (vi) impede the establishment of clinical information 
     systems that support continuity of care across settings and 
     over time;
       (vii) impede the alignment of financial incentives among 
     the medicare program, the medicaid program, and group health 
     plans and providers and suppliers that furnish services to 
     the same beneficiary; or
       (viii) impede payment methods that encourage the enrollment 
     of high-risk populations, support innovation, or encourage 
     providers and suppliers to maintain or improve health status 
     for such medicare beneficiaries.
       (b) Report.--On the date that is 18 months after the date 
     of enactment of this Act, the Institute of Medicine of the 
     National Academy of Sciences shall submit to Congress and the 
     Secretary of Health and Human Services a report that 
     contains--
       (1) a detailed statement of the findings and conclusions of 
     the study conducted under subsection (a); and
       (2) recommendations to improve access to effective care for 
     medicare beneficiaries with chronic conditions.
                                  ____


      Summary of the Medicare Chronic Care Improvement Act of 2001


  title I--expansion of benefits to prevent, delay, and minimize the 
                   progression of chronic conditions

                 Improve access to preventive services

       Eliminate deductibles and co-insurance for Medicare covered 
     preventive services.
       Streamline process of approving preventive benefits by 
     directing the Secretary of Health and Human Services to 
     contract with the Institute of Medicine (IOM) to investigate 
     and recommend new preventive benefits every 3 years. Grant 
     the Secretary the authority to implement these 
     recommendations, and fast-track the recommendations through 
     Congress if the Secretary chooses not to act upon this 
     authority.

               Expand access to health promotion services

       Establish demonstration projects to promote disease self-
     management.
       Implement a Medicare health education and risk appraisal 
     program no later than 18 months after a series of 
     demonstration projects conclude.

     Expand coverage for care coordination and assessment services

       Create a new benefit that covers assessment, care 
     coordination, counseling, and education assistance for 
     individuals with serious and disabling chronic conditions. 
     Services could be provided by health care professionals, 
     including physicians, social workers, and nurses.
       Examples of items and services to be covered include: 
     initial and periodic health screening and assessments; 
     management and referral for medical and other health 
     services; medication management; and patient and family 
     caregiver education and counseling.


title ii--establish payment incentives for furnishing quality services 
      to individuals with serious and disabling chronic conditions

                   Improve medicare financing methods

       Direct the Secretary to refine Medicare prospective payment 
     systems for skilled nursing facility (SNF), home health, 
     therapy, partial hospitalization, end stage renal dialysis 
     (ESRD), and outpatient hospital services and refine resource-
     based relative value scale (RBRVS) payment methods for 
     physicians to ensure appropriate payment for serving 
     individuals with serious and disabling chronic conditions.
       Direct the Secretary to refine Medicare+Choice risk 
     adjustment methodology to provide adequate payment for plans 
     with specialized programs for frail elderly and at-risk 
     beneficiaries.
       Until the refined risk adjustment methodology is 
     implemented, direct the Secretary to continue current payment 
     methodologies for existing specialized programs for frail 
     elderly and at-risk beneficiaries.
       Create a demonstration program to provide additional 
     payments to Medicare+Choice plans that provide a specialized 
     program of care for beneficiaries with serious and disabling 
     chronic conditions. These plans must exclusively serve such 
     beneficiaries or serve a disproportionate share of such 
     beneficiaries. The demonstration program would expire one 
     year after the refund risk adjustment methodology is 
     implemented.


    Title III--Study and Report on Effective Chronic Condition Care

      Evaluate Medicare policies regarding chronic condition care

       Direct the Secretary to study chronic condition trends and 
     associated service utilization, cumulative costs, and quality 
     indicators in Medicare.
       Direct the Secretary to report the study results to 
     Congress every 3 years. The report must include 
     recommendations on improving care for Medicare beneficiaries 
     with chronic conditions, reducing chronic conditions, and 
     reducing related medical expenses.

Identify improvements in Medicare to ensure effective chronic condition 
                                  care

       Direct the Secretary to contract with the IOM to 
     investigate and identify barriers and facilitators to 
     effective care for Medicare beneficiaries with chronic 
     conditions, including inconsistent clinical, financial, or 
     administrative requirements across care settings. The IOM's 
     report must include recommendations to improve access to 
     effective care.

                              Definitions

       ``Chronic condition'' means one or more physical or mental 
     conditions which are likely to last for an unspecified period 
     of time, or for the duration of an individual's life, for 
     which there is no known cure, and which may affect an 
     individual's ability to carry out basic activities of daily 
     living (ADLs), instrumental activities of daily living 
     (IADLs), or both.
       ``Serious and disabling chronic condition(s)'' means the 
     individual has one or more physical or mental conditions and 
     has been certified by a licensed health care practitioner 
     within the preceding 12 months as having a level of 
     disability such that the individual, for at least 90 days, is 
     unable to perform at least 2 ADLs or a number of IADLs or 
     other measure indicating an equivalent level of disability or 
     requiring substantial supervision due to severe cognitive 
     impairment.
                                 ______