[House Report 105-793]
[From the U.S. Government Publishing Office]
105th Congress Rept. 105-793
HOUSE OF REPRESENTATIVES
2d Session Part 1
_______________________________________________________________________
VETERANS MEDICARE ACCESS IMPROVEMENT ACT OF 1998
_______
October 7, 1998.--Ordered to be printed
_______
Mr. Archer, from the Committee on Ways and Means, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 3828]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 3828) to amend title XVIII of the Social Security
Act to improve access to health care services for certain
Medicare-eligible veterans, having considered the same, report
favorably thereon with an amendment and recommend that the bill
as amended do pass.
CONTENTS
Page
I. Introduction....................................................10
A. Purpose and Summary................................... 10
B. Background and Need for Legislation................... 10
C. Legislative History................................... 12
II. Explanation of Provisions.......................................12
A. Section 1--Short Title................................ 12
B. Section 2(a)--Improvement in Veterans' Access to
Services Under Medicare Program...................... 12
C. Section 2(b)--Repeal of Plan Requirement.............. 21
D. Section 2(c)--Effectiveness Contingent Upon Enactment
of Offsetting Outlay Reductions in VA Programs....... 21
E. Section 2(d)--Report to Congress...................... 22
III. Vote of the Committee...........................................22
IV. Budget Effects of the Bill......................................23
A. Committee Estimate of Budgetary Effects............... 23
B. Statement Regarding New Budget Authority and Tax
Expenditures......................................... 23
C. Cost Estimate Prepared by the Congressional Budget
Office............................................... 23
V. Other Matters to be Discussed Under the Rules of the House......32
A. Committee Oversight Findings and Recommendations...... 32
B. Summary of Findings and Recommendations of the
Government Operations Committee...................... 32
C. Constitutional Authority Statement.................... 32
VI. Changes in Existing Law Made by the Bill as Reported............33
VII. Dissenting Views................................................45
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE; PURPOSES.
(a) Short Title.--This Act may be cited as the ``Veterans Medicare
Access Improvement Act of 1998''.
(b) Purposes.--The purposes of this Act are--
(1) to establish a program that permits medicare-eligible
veterans who have a service-connected disability or are
financially needy and for whom access to medical care of the
Department of Veterans Affairs has been historically deficient
because of geographic remoteness or inaccessibility to receive
their medicare benefits through a service network of providers
established by the Department of Veterans Affairs; and
(2) to establish a 3-year demonstration project that permits
other medicare-eligible veterans to receive such benefits
through the Department of Veterans Affairs.
SEC. 2. IMPROVEMENT IN VETERANS' ACCESS TO SERVICES UNDER MEDICARE
PROGRAM.
(a) In General.--Title XVIII of the Social Security Act, as amended
by sections 4603, 4801, and 4015(a) of the Balanced Budget Act of 1997,
is amended by adding at the end the following:
``improving veterans' access to services
``Sec. 1897. (a) Definitions.--In this section:
``(1) Administering secretaries.--The term `administering
Secretaries' means the Secretary of Health and Human Services
and the Secretary of Veterans Affairs acting jointly.
``(2) Program.--The term `program' means the program
established under this section with respect to category A
medicare-eligible veterans.
``(3) Demonstration project; project.--The terms
`demonstration project' and `project' mean the demonstration
project carried out under this section with respect to category
C medicare-eligible veterans.
``(4) Medicare-eligible veterans.--
``(A) Category a medicare-eligible veteran.--The term
`category A medicare-eligible veteran' means an
individual--
``(i) who is a veteran (as defined in section
101(2) of title 38, United States Code) and is
described in paragraph (1) or (2) of section
1710(a) of title 38, United States Code;
``(ii) who is entitled to hospital insurance
benefits under part A of the medicare program
and is enrolled in the supplementary medical
insurance program under part B of the medicare
program; and
``(iii) for whom the medical center of the
Department of Veterans Affairs that is closest
to the individual's place of residence is
geographically remote or inaccessible from such
place.
``(B) Category c medicare-eligible veteran.--The term
`category C medicare-eligible veteran' means an
individual who--
``(i) is a veteran (as defined in section
101(2) of title 38, United States Code) and is
described in section 1710(a)(3) of title 38,
United States Code; and
``(ii) is entitled to hospital insurance
benefits under part A of the medicare program
and is enrolled in the supplementary medical
insurance program under part B of the medicare
program.
``(5) Medicare health care services.--The term `medicare
health care services' means items or services covered under
part A or B of this title.
``(6) Trust funds.--The term `trust funds' means the Federal
Hospital Insurance Trust Fund established in section 1817 and
the Federal Supplementary Medical Insurance Trust Fund
established in section 1841.
``(b) Program and Demonstration Project.--
``(1) In general.--
``(A) Establishment.--The administering Secretaries
are authorized to establish--
``(i) a program (under an agreement entered
into by the administering Secretaries) under
which the Secretary of Health and Human
Services shall reimburse the Secretary of
Veterans Affairs, from the trust funds, for
medicare health care services furnished to
category A medicare-eligible veterans; and
``(ii) a demonstration project (under such an
agreement) under which the Secretary of Health
and Human Services shall reimburse the
Secretary of Veterans Affairs, from the trust
funds, for medicare health care services
furnished to category C medicare-eligible
veterans.
``(B) Agreement.--The agreement entered into under
subparagraph (A) shall include at a minimum--
``(i) a description of the benefits to be
provided to the participants of the program and
the demonstration project established under
this section;
``(ii) a description of the eligibility rules
for participation in the program and
demonstration project, including any cost
sharing requirements;
``(iii) a description of the process for
enrolling veterans for participation in the
program, which process may, to the extent
practicable, be administered in the same or
similar manner to the registration process
established to implement section 1705 of title
38, United States Code;
``(iv) a description of how the program and
the demonstration project will satisfy the
requirements under this title;
``(v) a description of the sites selected
under paragraph (2);
``(vi) a description of how reimbursement
requirements under subsection (g) and
maintenance of effort requirements under
subsection (h) will be implemented in the
program and in the demonstration project;
``(vii) a statement that all data of the
Department of Veterans Affairs and of the
Department of Health and Human Services that
the administering Secretaries determine is
necessary to conduct independent estimates and
audits of the maintenance of effort
requirement, the annual reconciliation, and
related matters required under the program and
the demonstration project shall be available to
the administering Secretaries;
``(viii) a description of any requirement
that the Secretary of Health and Human Services
waives pursuant to subsection (d);
``(ix) a requirement that the Secretary of
Veterans Affairs undertake and maintain
outreach and marketing activities, consistent
with capacity limits under the program, for
category A medicare-eligible veterans;
``(x) a description of how the administering
Secretaries shall conduct the data matching
program under subparagraph (F), including the
frequency of updates to the comparisons
performed under subparagraph (F)(ii); and
``(xi) a statement by the Secretary of
Veterans Affairs that the type or amount of
health care services furnished under chapter 17
of title 38, United States Code, to veterans
who are entitled to benefits under part A or
enrolled under part B, or both, shall not be
reduced by reason of the program or project.
``(C) Cost-sharing under demonstration project.--
Notwithstanding any provision of title 38, United
States Code, in order--
``(i) to maintain and broaden access to
services,
``(ii) to encourage appropriate use of
services, and
``(iii) to control costs,
the Secretary of Veterans Affairs may establish
enrollment fees and copayment requirements under the
demonstration project under this section consistent
with subsection (d)(1). Such fees and requirements may
vary based on income.
``(D) Health care benefits.--The administering
Secretaries shall prescribe the minimum health care
benefits to be provided under the program and
demonstration project to medicare-eligible veterans
enrolled in the program or project. Those benefits
shall include at least all medicare health care
services covered under this title.
``(E) Establishment of service networks.--
``(i) Use of va outpatient clinics.--The
Secretary of Veterans Affairs, to the extent
practicable, shall use outpatient clinics of
the Department of Veterans Affairs in providing
services under the program.
``(ii) Authority to contract for services.--
The Secretary of Veterans Affairs may enter
into contracts and arrangements with entities
(such as private practitioners, providers of
services, preferred provider organizations, and
health care plans) for the provision of
services for which the Secretary of Health and
Human Services is responsible under the program
or project under this section and shall take
into account the existence of qualified
practitioners and providers in the areas in
which the program or project is being
conducted. Under such contracts and
arrangements, such Secretary of Health and
Human Services may require the entities to
furnish such information as such Secretary may
require to carry out this section.
``(F) Data match.--
``(i) Establishment of data matching
program.--The administering Secretaries shall
establish a data matching program under which
there is an exchange of information of the
Department of Veterans Affairs and of the
Department of Health and Human Services as is
necessary to identify veterans who are entitled
to benefits under part A or enrolled under part
B, or both, in order to carry out this section.
The provisions of section 552a of title 5,
United States Code, shall apply with respect to
such matching program only to the extent the
administering Secretaries find it feasible and
appropriate in carrying out this section in a
timely and efficient manner.
``(ii) Performance of data match.--The
administering Secretaries, using the data
matching program established under clause (i),
shall perform a comparison in order to identify
veterans who are entitled to benefits under
part A or enrolled under part B, or both. To
the extent such Secretaries deem appropriate to
carry out this section, the comparison and
identification may distinguish among such
veterans by category of veterans, by
entitlement to benefits under this title, or by
other characteristics.
``(iii) Deadline for first data match.--The
administering Secretaries shall first perform a
comparison under clause (ii) by not later than
October 31, 1998.
``(iv) Certification by inspector general.--
``(I) In general.--The administering
Secretaries may not conduct the program
unless the Inspector General of the
Department of Health and Human Services
certifies to Congress that the
administering Secretaries have
established the data matching program
under clause (i) and have performed a
comparison under clause (ii).
``(II) Deadline for certification.--
Not later than December 15, 1998, the
Inspector General of the Department of
Health and Human Services shall submit
a report to Congress containing the
certification under subclause (I) or
the denial of such certification.
``(2) Number of sites.--The program and demonstration project
shall be conducted in geographic service areas of the
Department of Veterans Affairs, designated jointly by the
administering Secretaries after review of all such areas, as
follows:
``(A) Program sites.--
``(i) In general.--Except as provided in
clause (ii), the program shall be conducted in
not more than 3 such areas with respect to
category A medicare-eligible veterans.
``(ii) Additional program sites.--Subject to
the certification required under subsection
(h)(1)(B)(iii), for a year beginning on or
after January 1, 2003, the program shall be
conducted in such areas as are designated
jointly by the administering Secretaries after
review of all such areas.
``(B) Project sites.--
``(i) In general.--The demonstration project
shall be conducted in not more than 3 such
areas with respect to category C medicare-
eligible veterans.
``(ii) Mandatory site.--At least one of the
areas designated under clause (i) shall
encompass the catchment area of a military
medical facility which was closed pursuant to
either the Defense Base Closure and Realignment
Act of 1990 (part A of title XXIX of Public Law
101-510; 10 U.S.C. 2687 note) or title II of
the Defense Authorization Amendments and Base
Closure and Realignment Act (Public Law 100-
526; 10 U.S.C. 2687 note).
``(3) Restriction.--Funds from the program or demonstration
project shall not be used for--
``(A) the construction of any treatment facility of
the Department of Veterans Affairs; or
``(B) the renovation, expansion, or other
construction at such a facility.
``(4) Duration.--The administering Secretaries shall conduct
and implement the program and the demonstration project as
follows:
``(A) Program.--
``(i) In general.--The program shall begin on
January 1, 2000, in the sites designated under
paragraph (2)(A)(i) and, subject to subsection
(h)(1)(B)(iii)(II), for a year beginning on or
after January 1, 2003, the program may be
conducted in such additional sites designated
under paragraph (2)(A)(ii).
``(ii) Limitation on number of veterans
covered under certain circumstances.--If for a
year beginning on or after January 1, 2003, the
program is conducted only in the sites
designated under paragraph (2)(A)(i), medicare
health care services may not be provided under
the program to a number of category-A medicare-
eligible veterans that exceeds the aggregate
number of such veterans covered under the
program as of December 31, 2002.
``(B) Project.--The demonstration project shall begin
on January 1, 1999, and end on December 31, 2001.
``(C) Implementation.--The administering Secretaries
may implement the program and demonstration project
through the publication of regulations that take effect
on an interim basis, after notice and pending
opportunity for public comment.
``(5) Reports.--
``(A) Program.--By not later than September 1, 1999,
the administering Secretaries shall submit a copy of
the agreement entered into under paragraph (1) with
respect to the program to Congress.
``(B) Project.--By not later than September 1, 1998,
the administering Secretaries shall submit a copy of
the agreement entered into under paragraph (1) with
respect to the project to Congress.
``(6) Report on maintenance of level of health care
services.--
``(A) In general.--The Secretary of Veterans Affairs
may not implement the program at a site designated
under paragraph (2)(A) unless, by not later than 90
days before the date of the implementation, the
Secretary of Veterans Affairs submits to Congress and
to the Comptroller General of the United States a
report that contains the information described in
subparagraph (B). The Secretary of Veterans Affairs
shall periodically update the report under this
paragraph as appropriate.
``(B) Information described.--For purposes of
subparagraph (A), the information described in this
subparagraph is a description of the operation of the
program at the site and of the steps to be taken by the
Secretary of Veterans Affairs to prevent the reduction
of the type or amount of health care services furnished
under chapter 17 of title 38, United States Code, to
veterans who are entitled to benefits under part A or
enrolled under part B, or both, within the geographic
service area of the Department of Veterans Affairs in
which the site is located by reason of the program or
project.
``(c) Crediting of Payments.--A payment received by the Secretary of
Veterans Affairs under the program or demonstration project shall be
credited to the applicable Department of Veterans Affairs medical care
appropriation (and within that appropriation). Any such payment
received during a fiscal year for services provided during a prior
fiscal year may be obligated by the Secretary of Veterans Affairs
during the fiscal year during which the payment is received.
``(d) Application of Certain Medicare Requirements.--
``(1) Authority.--
``(A) In general.--Except as provided under
subparagraph (B), the program and the demonstration
project shall meet all requirements of Medicare+Choice
plans under part C and regulations pertaining thereto,
and other requirements for receiving medicare payments,
except that the prohibition of payments to Federal
providers of services under sections 1814(c) and
1835(d), and paragraphs (2) and (3) of section 1862(a)
shall not apply.
``(B) Waiver.--Except as provided in paragraph (2),
the Secretary of Health and Human Services is
authorized to waive any requirement described under
subparagraph (A), or approve equivalent or alternative
ways of meeting such a requirement, but only if such
waiver or approval--
``(i) reflects the unique status of the
Department of Veterans Affairs as an agency of
the Federal Government; and
``(ii) is necessary to carry out the program
or demonstration project.
``(2) Beneficiary protections and other matters.--The program
and the demonstration project shall comply with the
requirements of part C of this title that relate to beneficiary
protections and other matters, including such requirements
relating to the following areas, to the extent not inconsistent
with subsection (b)(1)(B)(iii):
``(A) Enrollment and disenrollment.
``(B) Nondiscrimination.
``(C) Information provided to beneficiaries.
``(D) Cost-sharing limitations.
``(E) Appeal and grievance procedures.
``(F) Provider participation.
``(G) Access to services.
``(H) Quality assurance and external review.
``(I) Advance directives.
``(J) Other areas of beneficiary protections that the
administering Secretaries determine are applicable to
such program or project.
``(e) Inspector General.--Nothing in the agreement entered into under
subsection (b) shall limit the Inspector General of the Department of
Health and Human Services from investigating any matters regarding the
expenditure of funds under this title for the program and demonstration
project, including compliance with the provisions of this title and all
other relevant laws.
``(f) Voluntary Participation.--Participation of a category A
medicare-eligible veteran in the program or category C medicare-
eligible veteran in the demonstration project shall be voluntary.
``(g) Payments Based on Regular Medicare Payment Rates.--
``(1) In general.--Subject to the succeeding provisions of
this subsection, the Secretary of Health and Human Services
shall reimburse the Secretary of Veterans Affairs for services
provided under the program or demonstration project at a rate
equal to 95 percent of the amount paid to a Medicare+Choice
organization under part C of this title with respect to such an
enrollee. In cases in which a payment amount may not otherwise
be readily computed, the Secretary of Health and Human Services
shall establish rules for computing equivalent or comparable
payment amounts.
``(2) Exclusion of certain amounts.--In computing the amount
of payment under paragraph (1), the following shall be
excluded:
``(A) Special payments.--Any amount attributable to
an adjustment under subparagraphs (B) and (F) of
section 1886(d)(5) and subsection (h) of such section.
``(B) Percentage of capital payments.--An amount
determined by the administering Secretaries for amounts
attributable to payments for capital-related costs
under subsection (g) of such section.
``(3) Periodic payments from medicare trust funds.--Payments
under this subsection shall be made--
``(A) on a periodic basis consistent with the
periodicity of payments under this title; and
``(B) in appropriate part, as determined by the
Secretary of Health and Human Services, from the trust
funds.
``(4) Cap on reimbursement amounts.--The aggregate amount to
be reimbursed under this subsection pursuant to the agreement
entered into between the administering Secretaries under
subsection (b) is as follows:
``(A) Program.--With respect to category A medicare-
eligible veterans, such aggregate amount shall not
exceed--
``(i) for 2000, a total of $50,000,000;
``(ii) for 2001, a total of $75,000,000; and
``(iii) subject to subparagraph (B), for 2002
and each succeeding year, a total of
$100,000,000.
``(B) Expansion of program.--If for a year beginning
on or after January 1, 2003, the program is conducted
in sites designated under subsection (b)(2)(A)(ii), the
limitation under subparagraph (A)(iii) shall not apply
to the program for such a year.
``(C) Project.--With respect to category C medicare-
eligible veterans, such aggregate amount shall not
exceed a total of $50,000,000 for each of calendar
years 1999 through 2001.
``(h) Maintenance of Effort.--
``(1) Monitoring effect of program and demonstration project
on costs to medicare program.--
``(A) In general.--The administering Secretaries, in
consultation with the Comptroller General of the United
States, shall closely monitor the expenditures made
under this title for category A and C medicare-eligible
veterans compared to the expenditures that would have
been made for such veterans if the program and
demonstration project had not been conducted. The
agreement entered into by the administering Secretaries
under subsection (b) shall require the Department of
Veterans Affairs to maintain overall the level of
effort for services covered under this title to such
categories of veterans by reference to a base year as
determined by the administering Secretaries.
``(B) Determination of measure of costs of medicare
health care services.--
``(i) Improvement of information management
system.--Not later than October 1, 2001, the
Secretary of Veterans Affairs shall improve its
information management system such that, for a
year beginning on or after January 1, 2002, the
Secretary of Veterans Affairs is able to
identify costs incurred by the Department of
Veterans Affairs in providing medicare health
care services to medicare-eligible veteransfor
purposes of meeting the requirements with respect to maintenance of
effort under an agreement under subsection (b)(1)(A).
``(ii) Identification of medicare health care
services.--The Secretary of Health and Human
Services shall provide such assistance as is
necessary for the Secretary of Veterans Affairs
to determine which health care services
furnished by the Secretary of Veterans Affairs
qualify as medicare health care services.
``(iii) Certification by hhs inspector
general.--
``(I) Request for certification.--The
Secretary of Veterans Affairs may
request the Inspector General of the
Department of Health and Human Services
to make a certification to Congress
that the Secretary of Veterans Affairs
has improved its management system
under clause (i) such that the
Secretary of Veterans Affairs is able
to identify the costs described in such
clause in a reasonably reliable and
accurate manner.
``(II) Requirement for expansion of
program.--The program may be conducted
in the additional sites under paragraph
(2)(A)(ii) and cover such additional
category A medicare eligible veterans
in such additional sites only if the
Inspector General of the Department of
Health and Human Services has made the
certification described in subclause
(I).
``(III) Deadline for certification.--
Not later than the date that is the
earlier of the date that is 60 days
after the Secretary of Veterans Affairs
requests a certification under
subclause (I) or June 1, 2002, the
Inspector General of the Department of
Health and Human Services shall submit
a report to Congress containing the
certification under subclause (I) or
the denial of such certification.
``(C) Maintenance of level of effort.--
``(i) Report by secretary of veterans affairs
on basis for calculation.--Not later than the
date that is 60 days after the date on which
the administering Secretaries enter into an
agreement under subsection (b)(1)(A), the
Secretary of Veterans Affairs shall submit a
report to Congress and the Comptroller General
of the United States explaining the methodology
used and basis for calculating the level of
effort of the Department of Veterans Affairs
under the program and project.
``(ii) Report by comptroller general.--Not
later than the date that is 180 days after the
date described in clause (i), the Comptroller
General of the United States shall submit to
Congress and the administering Secretaries a
report setting forth the Comptroller General's
findings, conclusion, and recommendations with
respect to the report submitted by the
Secretary of Veterans Affairs under clause (i).
``(iii) Response by secretary of veterans
affairs.--The Secretary of Veterans Affairs
shall submit to Congress not later than 60 days
after the date described in clause (ii) a
report setting forth such Secretary's response
to the report submitted by the Comptroller
General under clause (ii).
``(D) Annual report by the comptroller general.--Not
later than December 31 of each year during which the
program and demonstration project is conducted, the
Comptroller General of the United States shall submit
to the administering Secretaries and to Congress a
report on the extent, if any, to which the costs of the
Secretary of Health and Human Services under the
medicare program under this title increased during the
preceding fiscal year as a result of the program or
demonstration project.
``(2) Required response in case of increase in costs.--
``(A) In general.--If the administering Secretaries
find, based on paragraph (1), that the expenditures
under the medicare program under this title increased
(or are expected to increase) during a fiscal year
because of the program or demonstration project, the
administering Secretaries shall take such steps as may
be needed--
``(i) to recoup for the medicare program the
amount of such increase in expenditures; and
``(ii) to prevent any such increase in the
future.
``(B) Steps.--Such steps--
``(i) under subparagraph (A)(i) shall include
payment of the amount of such increased
expenditures by the Secretary of Veterans
Affairs from the current medical care
appropriation for the Department of Veterans
Affairs to the trust funds; and
``(ii) under subparagraph (A)(ii) shall
include lowering the amount of payment under
the program or project under subsection (g)(1),
and may include, in the case of the
demonstration project, suspending or
terminating the project (in whole or in part).
``(i) Evaluation and Reports.--
``(1) Independent evaluation by gao.--
``(A) In general.--The Comptroller General of the
United States shall conduct an evaluation of the
program and an evaluation of the demonstration project,
and shall submit annual reports on the program and
demonstration project to the administering Secretaries
and to Congress.
``(B) First report.--The first report for the program
or demonstration project under subparagraph (A) shall
be submitted not later than 12 months after the date on
which the Secretary of Veterans Affairs first provides
services under the program or project, respectively.
``(C) Final report on demonstration project.--A final
report shall be submitted with respect to the
demonstration project not later than 3\1/2\ years after
the date of the first report on the project under
subparagraph (B).
``(D) Contents.--The evaluation and reports under
this paragraph for the program or demonstration project
shall include an assessment, based on the agreement
entered into under subsection (b), of the following:
``(i) Any savings or costs to the medicare
program under this title resulting from the
program or project.
``(ii) The cost to the Department of Veterans
Affairs of providing care to category A
medicare-eligible veterans under the program or
to category C medicare-eligible veterans under
the demonstration project, respectively.
``(iii) An analysis of how such program or
project affects the overall accessibility of
medical care through the Department of Veterans
Affairs, and a description of the unintended
effects (if any) upon the patient enrollment
system under section 1705 of title 38, United
States Code.
``(iv) Compliance by the Department of
Veterans Affairs with the requirements under
this title.
``(v) The number of category A medicare-
eligible veterans or category C medicare-
eligible veterans, respectively, opting to
participate in the program or project instead
of receiving health benefits through another
health insurance plan (including benefits under
this title).
``(vi) A list of the health insurance plans
and programs that were the primary payers for
medicare-eligible veterans during the year
prior to their participation in the program or
project, respectively, and the distribution of
their previous enrollment in such plans and
programs.
``(vii) Any impact of the program or project,
respectively, on private health care providers
and beneficiaries under this title that are not
enrolled in the program or project.
``(viii) An assessment of the access to care
and quality of care for medicare-eligible
veterans under the program or project,
respectively.
``(ix) An analysis of whether, and in what
manner, easier access to medical centers of the
Department of Veterans Affairs affects the
number of category A medicare-eligible veterans
or C medicare-eligible veterans, respectively,
receiving medicare health care services.
``(x) Any impact of the program or project,
respectively, on the access to care for
category A medicare-eligible veterans or C
medicare-eligible veterans, respectively, who
did not enroll in the program or project and
for other individuals entitled to benefits
under this title.
``(xi) A description of the difficulties (if
any) experienced by the Department of Veterans
Affairs in managing the program or project,
respectively.
``(xii) Any additional elements specified in
the agreement entered into under subsection
(b).
``(xiii) Any additional elements that the
Comptroller General of the United States
determines is appropriate to assess regarding
the program or project, respectively.
``(2) Reports by secretaries on program and demonstration
project with respect to medicare-eligible veterans.--
``(A) Demonstration project.--Not later than 6 months
after the date of the submission of the final report by
the Comptroller General of the United States on the
demonstration project under paragraph (1)(C), the
administering Secretaries shall submit to Congress a
report containing their recommendation as to--
``(i) whether there is a cost to the health
care program under this title in conducting the
demonstration project;
``(ii) whether to extend the demonstration
project or make the project permanent; and
``(iii) whether the terms and conditions of
the project should otherwise be continued (or
modified) with respect to medicare-eligible
veterans.
``(B) Program.--Not later than 6 months after the
date of the submission of the report by the Comptroller
General of the United States on the third year of the
operation of the program, the administering Secretaries
shall submit to Congress a report containing their
recommendation as to--
``(i) whether there is a cost to the health
care program under this title in conducting the
program under this section;
``(ii) whether to discontinue the program
with respect to category A medicare-eligible
veterans; and
``(iii) whether the terms and conditions of
the program should otherwise be continued (or
modified) with respect to medicare-eligible
veterans.''.
(b) Repeal of Plan Requirement.--Subsection (b) of section 4015 of
the Balanced Budget Act of 1997 (relating to an implementation plan for
Veterans subvention) is repealed.
(c) Effectiveness Contingent Upon Enactment of Offsetting Outlay
Reductions in VA Programs through Restriction of Use of Tobacco
Products to Qualify for Service-connected Entitlement.--(1) No payment
may be made from the Federal Hospital Insurance Trust Fund or from the
Federal Supplementary Medical Insurance Trust Fund for items or
services furnished under the program or demonstration project
established under section 1897 of Social Security Act, as added by
subsection (a), before the date that the Director of the Office of
Management and Budget determines that--
(A) legislation described in paragraph (2) has been enacted;
and
(B) the net amount of the reductions in expenditures achieved
by reason of such legislation during the 5-fiscal-year period
beginning with fiscal year 1999, that is available to offset
the net aggregate increase in outlays (if any) under the
medicare program under title XVIII of such Act, is not less
than the estimate of the amount of such net aggregate increase
during such period.
(2) For purposes of paragraph (1), the legislation described in this
paragraph is legislation that restricts entitlement to service-
connected compensation under title 38, United States Code, for a
disability that is the result of a veteran's use of tobacco products.
(3) The estimate described in paragraph (1)(B) shall be the estimate
made by the Congressional Budget Office and contained in the report of
the Committee on Ways and Means of the House of Representatives to
accompany H. R. 3828 of the 105th Congress (the Veterans Medicare
Access Improvement Act of 1998)), except to the extent that the
Director of the Office of Management and Budget finds that the estimate
is materially inaccurate.
(d) Report to Congress on a Method To Include the Costs of Veterans
Affairs and Military Facility Services to Medicare-eligible
Beneficiaries in the Calculation of Medicare+Choice Payment Rates.--The
Secretary of Health and Human Services shall report to the Congress by
not later than January 1, 2001, on a method to phase-in the costs of
military facility services furnished by the Department of Veterans
Affairs or the Department of Defense to medicare-eligible beneficiaries
in the calculation of an area's Medicare+Choice capitation payment.
Such report shall include on a county-by- county basis--
(1) the actual or estimated cost of such services to
medicare-eligible beneficiaries;
(2) the change in Medicare+Choice capitation payment rates if
such costs are included in the calculation of payment rates;
(3) one or more proposals for the implementation of payment
adjustments to Medicare+Choice plans in counties where the
payment rate has been affected due to the failure to calculate
the cost of such services to medicare-eligible beneficiaries;
and
(4) a system to ensure that when a Medicare+Choice enrollee
receives covered services through a facility of the Department
of Veterans Affairs or the Department of Defense there is an
appropriate payment recovery to the medicare program.
I. INTRODUCTION
A. Purpose and Summary
Current law generally prohibits other government agencies
from receiving reimbursements for providing Medicare-covered
services to Medicare-eligible veterans. Subvention is the term
given to proposals which would permit the U.S. Department of
Veterans Affairs to receive reimbursement from the Medicare
trust funds for care provided to Medicare-eligible
beneficiaries at VA medical facilities. H.R. 3828 would
establish a subvention program for low-income veterans and a
demonstration project for other veterans so that the Department
of Veterans Affairs may offer certain veterans comprehensive
Medicare health care services.
B. Background and Need for the Legislation
The Department of Veterans Affairs (VA) operates the
nation's largest health care system, encompassing 172
hospitals, 439 outpatient clinics, 131 nursing homes, 206
readjustment counseling centers, and 40 domiciliaries. VA
estimates 3.1 million individual patients were served through
827,000 inpatient admissions and 32 million outpatient visits
during FY1997. About 96% of the services were provided free. VA
employed 186,000 staff in the health care system during the
year, 73% of whom were engaged in direct care of patients.
Congress provided spending authority of $17.6 billion for
FY1998.
All 26 million veterans are potentially eligible for some
VA medical services, but in any given year, only about 10% of
veterans receive such services. Many veterans have other health
insurance, including Medicare, and seek medical services
elsewhere. In FY1997, about 40% of veterans served in VA
facilities had a service-connected condition, although their
treatment may have been for a condition unrelated to military
service. About 54% of all veterans receiving service qualified
for free care because their income and assets were below VA's
income and asset threshold.
During 1996, VA medical care was reorganized into 22
Veterans Integrated Service Networks (VISNs). Each VISN manages
all resources within a region, integrating services to avoid
duplication and increase efficiency. VA's annual efficiency
evaluations guide the allocation of resources among and within
VISNs. Efficiency is measured according to the cost per patient
of services (acute hospital, rehabilitative, psychiatric,
residential, subacute). According to VA's budget, if program
objectives are met, services will be provided more efficiently,
at a savings averaging 30% per patient by FY2002. The budget
also proposed permitting medical facilities to obtain 10% of
their funding from nonappropriated sources, and Congress has
enacted legislation which enables the VA to retain collections
from insurance companies for care furnished insured veterans.
VA claims that more efficient patient delivery and the
additional sources of funds would allow 20% more veterans to be
served without increasing annual appropriations.
Unlike Medicare, under which the services are provided to
beneficiaries based on entitlement eligibility for them, VA
medical benefits are available to veterans on the basis of a
priority system which determines relative access to services at
facilities in which resources may not be sufficient to provide
services to all veterans who apply.
Categories of veterans are referred to as Category A and
Category C, labels which formerly specified a distinction among
veterans in VA law, and which are often still used in
discussions of veterans' access to VA medical services.
Category A Veterans Defined. Veterans seeking treatment for
service-connected conditions have the highest priority,
followed by care for any condition for veterans with severe
service-connected disabilities. Veterans with relatively lower
priority, but still high enough to have a reasonable
expectation of care are veterans with any degree of compensable
service-connected conditions and veterans who have special,
categorical priority, such as former prisoners-of-war.
As much as 60% of VA medical care goes to the largest
remaining category eligible for free VA medical services, those
who qualify for such free care as a result of having incomes
and assets below a means threshold. For calendar year 1998,
that threshold is $50,000 in assets, and $22,064 in income for
single veterans, rising to $26,480 for married veterans, and
with a $1,476 increase in the threshold for each additional
dependent. Veterans report upon their ability to pay when they
apply for care (or for enrollment in a new, regionally-based VA
health care plan), and their reported income and assets are
subject to verification through Internal Revenue Service or
Social Security data.
Veterans presumed to have been exposed to environmental
toxins, such as Agent Orange, nuclear radiation, or unknown
disease elements in the Persian Gulf are also in Category A but
have a priority status below the low-income veterans. Medical
services provided to Category A veterans are often free of
charge, with the exception of a $2 prescription co-payment
requirement for some Category A veterans.
All of the above priority categories fit within the broad
definition of a Category A veteran, as defined by the bill.
Category C Veterans Defined. The veterans who are not
otherwise eligible and whose incomes or assets exceed the
applicable threshold are eligible for VA medical services, if
resources are available, and if they agree to pay applicable
copayments and deductibles. About 3-4% of the veterans VA
serves are in this category, although the incidence of care
provided them is not randomly distributed across the VA medical
care system, but is concentrated in some regions more heavily
than others. Copayments and deductibles are similar to payments
required of persons covered by Medicare.
C. Legislative History
H.R. 3828, the Veterans Medicare Access Improvement Act of
1998 was introduced on May 12, 1998 by the Honorable Bill
Thomas, Chairman of the Subcommittee on Health, along with
seventy other Members of the House. On May 12, 1998, the bill
was ordered favorably reported by the Ways and Means
Subcommittee on Health, as amended, by voice vote. On May 14,
1998, the bill, as amended, was ordered favorably reported by a
rollcall vote of 31 yeas to 1 nay (with a quorum being
present).
II. EXPLANATION OF PROVISIONS
A. Section 1--Short Title
The provision provides that the bill would be cited as the
Veterans Medicare Access Improvement Act of 1998.
B. Section 2(a)--Improvement in Veterans' Access to Services Under
Medicare Program
Current law
In general, Medicare does not pay for services furnished by
a federal provider of services or other federal agency. An
exception is made if the Secretary of Health and Human Services
(HHS) makes a determination that the entity is providing
services to the public generally as a community institution or
agency (for example, a veterans hospitals providing end-stage
renal disease services to non-veterans). An exception is also
made for facilities of the Indian Health Service. The law also
specifies that payments may not be made for services that a
provider or supplier is obligated to furnish at public expense
inaccordance with a law or contract of the United States.
The law has thus generally barred payments for services
provided to military retirees at Department of Defense (DoD)
facilities and for services provided at VA hospitals and
clinics.
The Balanced Budget Act of 1997 (BBA 97, P.L. 105-33)
authorized a 3-year demonstration project at six sites under
which the Secretary of HHS will reimburse the Secretary of DoD
from the Medicare trust funds for services furnished to certain
Medicare-eligible military retirees and dependents. The
demonstration project is to be established through an agreement
entered into by the Secretaries. BBA 97 required the Secretary
of HHS and VA to jointly submit to Congress a detailed
implementation plan for a subvention demonstration project for
veterans.
Explanation of provision
The provision would amend Medicare law by adding a new
Section 1897 to the Social Security Act--``Improving Veterans'
Access to Services.''
New Section 1897(a)--Definitions
The new Section 1897(a) includes definitions for a number
of terms.
``Administering Secretaries'' would be defined as the
Secretaries of HHS and VA acting jointly.
The provision would specify two categories of ``Medicare-
eligible veterans''--Category A and Category C. A ``Category
A'' eligible veteran would meet the following conditions:
(1) A veteran who has been released or discharged from
active duty in the Armed Forces under conditions other than
dishonorable.
(2) A veteran who has priority access to VA health care
because of a service-connected condition, by meeting the
definition for inclusion in one of several special groups (such
as ex prisoners-of-war, or veterans who were exposed to
environmental contaminants), or by qualifying for such priority
access on the basis of inadequate income and assets. The
Category A veteran must also be entitled to Medicare Part A and
enrolled in Part B.
(3) A veteran for whom the VA medical center closest to the
veteran's place of residence is geographically remote or
inaccessible.
The provision would define a ``Category C'' Medicare-
eligible veteran as one who has been released or discharged
from active duty in the Armed Forces under conditions other
than dishonorable, and who is eligible for VA health care only
if resources are available after serving the medical needs of
veterans with a higher priority. Such veterans also must agree
to pay applicable copayments and deductibles. In addition, a
Medicare-eligible Category C veteran must also be entitled to
Medicare Part A and enrolled in Part B.
The provision would specify that ``program'' refers to the
program established for Category A Medicare-eligible veterans
and ``demonstration project'' or ``project'' refers to the
demonstration project established for Category C Medicare-
eligible veterans.
New Section 1897(b)(1)--Program and Demonstration Project--General
Requirements
The new Section 1897(b)(1) would establish the general
requirements for the program and demonstration project.
(a) In General. The new Section 1897(b)(1)(A) would
authorize the administering Secretaries to establish a program
under which the Secretary of HHS would reimburse the Secretary
of VA from the Medicare trust funds for Medicare health
services furnished to Category A Medicare-eligible veterans.
The section would also authorize the administering Secretaries
to establish a demonstration project under which the Secretary
of HHS would reimburse the Secretary of VA for Medicare health
services furnished to Category C Medicare-eligible veterans.
(b) Agreement. The new Section 1897(b)(1)(B) would specify
that the program and project would be established under an
agreement entered into by the Secretaries of HHS and VA. The
agreement would be required to include the following items at a
minimum: (i) a description of the benefits to be provided to
program and project participants; (ii) a description of
eligibility rules and cost-sharing requirements for the program
and project; (iii) a description of the program's enrollment
process (which may to the extent practicable be administered in
the same or similar manner as veterans are enrolled in VA
medical plans according to a priority schedule that accepts
Category A veterans for enrollment before veterans meeting the
definition of Category C; (iv) a description of how the program
and project would satisfy Medicare requirements; (v) a
description of the program and project sites; (vi) a
description of how the reimbursement and maintenance of effort
requirements established under this Act would be implemented in
the program and project; (vii) a statement that all data of
both the VA and HHS that the two Secretaries deem necessary to
conduct independent estimates and audits of the maintenance of
effort, annual reconciliation and other matters required under
the program and project would be available to the Secretaries;
(viii) a description of any Medicare requirements the Secretary
has waived pursuant to the requirements of the Act; (ix) a
requirement that the Secretary of VA undertake outreach and
marketing activities, consistent with the program's capacity
limits, for Category A Medicare-eligible veterans; (x) a
description of how the administering Secretaries would conduct
the required data matching program, including the frequency of
updates to the data match comparisons; (xi) a statement by the
Secretary of VA that the type or amount of services furnished
under VA to veterans who are entitled to Medicare Part A or
enrolled in Part B, or both, would not be reduced as a result
of the program or project.
(c) Cost Sharing Under the Demonstration Project. The new
Section 1897(b)(1)(C) would permit the Secretary of VA to
establish enrollment fees and copayment requirements in order
to maintain and broaden access to services, encourage
appropriate use of services, and control costs. The section
would require that enrollment fees and copayment requirements
be consistent with Medicare+Choice requirements (except as
waived by the Secretary of VA, as provided for under the Act).
The enrollment fees and copayment requirements could vary by
income.
(d) Health Care Benefits. The new Section 1897(b)(1)(D)
would require the Secretaries of HHS and VA to prescribe the
minimum health care benefits to be provided under the program
and demonstration project. The benefits would include at least
all health care services covered under Medicare.
(e) Establishment of Service Networks. The new Section
1897(b)(1)(E) would authorize the Secretary of VA to enter into
contracts with entities (including private practitioners,
preferred provider organizations, and health care plans) to
provide services under the program or project. The Secretary
would be required to take into account the existence of
qualified practitioners and providers in the areas in which the
program or project was conducted. As part of the contract or
arrangement, the Secretary could require the entities to
furnish information needed to carry out the program or project.
This provision requires the VA Secretary, to the extent
possible, to use existing VA outpatient clinics in establishing
service networks.
The providers which VA may contract with include former
Public Health Service (PHS) hospitals that have been recently
privatized. Several of these former PHS hospitalshave a history
of working with the Department of Defense and the Department of
Veterans Affairs in providing care to the military and veterans
families. Since being privatized, many of these former PHS hospitals
continue to contract with the Department of Defense managed care
program (TriCare). The Committee encourages the Administering
Secretaries to consider the benefits that may be realized from
contracting with such an entity in developing a service network under
the program or project.
(f) Data Match. The new Section 1897(b)(1)(F) would provide
for the establishment of a data matching program by the
Secretaries of HHS and VA. The program would provide for an
exchange of information between the two agencies which is
necessary to identify veterans entitled to Part A, enrolled
under Part B, or both.
The provision would require the two Secretaries, using the
data matching program, to perform a comparison in order to
identify veterans entitled to Part A, enrolled under Part B, or
both. The comparison (to the extent deemed appropriate by the
Secretaries) could distinguish among such veterans by category
of veterans, by entitlement to Medicare or by other
characteristics. The first comparison would have to be
performed by October 31, 1998.
The provision would prohibit the Secretaries of HHS and VA
from conducting the program, unless the Inspector General of
HHS certified to the Congress that the Secretaries had
established the data matching program and had performed the
required comparison. The Inspector General would be required to
submit a report to Congress containing the certification, or
denial of certification, by December 15, 1998.
New Section 1897(b)(2)--Program and Demonstration Project--Program and
Project Sites
The new Section 1897(b)(2) would establish the requirements
for program and project sites. The provision would specify that
both the program and project would be conducted in geographic
service areas of VA, designated jointly by the Secretaries of
HHS and VA after review of all the areas.
The provision would specify that the program could not be
conducted in more than three sites with respect to Category A
Medicare-eligible veterans. However, in a year beginning on or
after January 1, 2003, the program could be conducted in
additional areas designated jointly by the Secretaries of HHS
and VA. Designation of additional sites would be permitted only
if the Inspector General of HHS had made a certification to
Congress that the Secretary of VA had improved its information
management system so that the Secretary was able to identify
costs incurred by the VA in providing Medicare health services
to Medicare-eligible veterans.
The provision would limit the number of project sites to
three with respect to Category C Medicare-eligible veterans. At
least one of these would encompass the catchment area of a
military medical facility which was closed pursuant to either
the Defense Base Closure and Realignment Act of 1990 or Title
II of the Defense Authorization and Base Closure and
Realignment Act.
New Section 1897(b)(3)--Program and Demonstration Project--Restriction
The new Section 1897(b)(3) would specify that funds from
the program or project could not be used for the construction
of any VA treatment facility or the renovation, expansion, or
other construction at such facility.
New Section 1897(b)(4)--Program and Demonstration Project--Duration
The new Section 1897(b)(4) would specify the durational
requirements for the program and project. The program would
begin on January 1, 2000 at the designated sites. If the
required certification had been made by the HHS Inspector
General, the program could be conducted at additional sites in
years beginning on or after January 1, 2003. If in a year
beginning on or after January 1, 2003, the program was
conducted only at the original three sites, the aggregate
number of Category A Medicare-eligible veterans provided
services under the program could not exceed the number of
veterans covered under the program on December 31, 2002.
The provision would specify that the demonstration project
would begin on January 1, 1999 and end on December 31, 2001.
The provision would permit the Secretaries of VA and HHS to
implement the program and project through the publication of
regulations that take effect on an interim basis after notice
and opportunity for public comment have been provided.
New Sections 1897(b) (5) and (6)--Program and Demonstration Project--
Reports
The new Section 1897(b)(5) would require the Secretaries of
HHS and VA to submit to Congress, by September 1, 1998, a copy
of the agreement establishing the program and project entered
into by the two Secretaries. The Secretaries are to submit to
Congress by September 1, 1999, a copy of the agreement
establishing the program.
The new Section 1897(b)(6) would prohibit the Secretary of
VA from implementing the program at a designated site unless
the Secretary had submitted a report to the Congress and the
Comptroller General containing certain information. The
required information would be a description of the operation of
the program at the site as well as steps taken by the Secretary
of VA to prevent a reduction in the type or amount of health
services furnished in the geographic service area by VA to
veterans entitled to Part A, enrolled under Part B, or both.
The report would be required at least 90 days before the
implementation date and would be periodically updated.
New Section 1897(c)--Crediting of Payments
The new Section 1897(c) would specify that payments
received by the Secretary of VA under the program or project
would be credited to the applicable VA medical care
appropriation (and within that appropriation). Any payment
received during a fiscal year for services provided during a
prior fiscal year could be obligated by the Secretary of VA
during the year the payment was received.
New Section 1897(d)--Application of Medicare Requirements
The new Section 1897(d) would specify that the program and
demonstration project would be required to meet all
requirements applicable to Medicare+Choice plans and related
regulations and other requirements relating to Medicare
payments. However, the prohibition on payments to federal
providers of services would not apply.
The provision would authorize the Secretary of HHS to waive
any of these Medicare requirements or approve equivalent or
alternative ways of meeting a requirement, but only if the
waiver or approval reflected the unique status of VA as a
federal agency and was necessary to carry out the program or
project.
The provision would require the program and demonstration
project to comply with Medicare+Choice requirements relating to
beneficiary protections and other matters to the extent not
inconsistent with the program's enrollment process established
under the agreement between the two Secretaries. The
requirements include those relating to: enrollment and
disenrollment, nondiscrimination, information provided to
beneficiaries, cost-sharing limitations, appeal and grievance
procedures, provider participation, access to services, quality
assurance and external review, advance directives, and other
areas of beneficiary protections that the two Secretaries
determine were applicable to the program or project.
New Section 1897(e)--Inspector General
The new Section 1897(e) would specify that nothing in the
agreement between the two Secretaries could limit the HHS
Inspector General from investigating any matters regarding the
expenditure of Medicare funds for the program and project,
including compliance with Medicare requirements and all other
relevant laws.
New Section 1897(f)--Voluntary Participation
The new Section 1897(f) would state that participation of
either a Category A or Category C Medicare-eligible veteran in
the program or project would be voluntary.
New Section 1897(g)--Payments Based on Regular Medicare Payment Rates
The new section 1897(g) would provide that the Secretary
would reimburse the Secretary of VA for services provided under
the program or project at a rate equal to 95% of the amount
paid to a Medicare+Choice organization with respect to that
enrollee. The Secretary would establish rules for computing
equivalent or comparable payment amounts in cases where payment
amounts could not otherwise be readily computed. The payment
would exclude adjustments for direct and indirect medical
education and disproportionate share payments. Also excluded
would be a percentage of hospital capital payments as
determined by the two Secretaries.
The provision would provide that payments would be made on
a periodic basis, consistent with the periodicity of Medicare
payments. They would be made in appropriate part, as determined
by the Secretary of HHS, from the Medicare trust funds.
The provision would place an aggregate limit on the
reimbursement amounts. With respect to Category A Medicare-
eligible veterans, the amount would be $50 million in 2000, $75
million in 2001, and $100 million in subsequent years. However,
if new sites were added in any year beginning January 1, 2003
or later, the cap would not apply in that year. The aggregate
limit under the reimbursement project with respect to Category
C Medicare-eligible veterans would be $50 million a year in
1999, 2000, and 2001.
New Section 1897(h)--Maintenance of Effort
The new Section 1897(h) would include maintenance of effort
provisions. The provision would require the Secretaries of HHS
and VA, in consultation with the Comptroller General, to
closely monitor the expenditures made under Medicare overall
for Category A and C Medicare-eligible veterans over the 3 year
period beginning January 1, 1999. The monitoring requirement
would continue to apply for Category A Medicare-eligible
veterans in each subsequent year the program was conducted. The
monitoring would compare expenditures for such veterans to
those which would have been made if the program and project had
not been conducted.
As specified under the general requirements for the
agreement under new section 1897(b)(1), the Secretaries are to
describe how the maintenance of effort requirement would be
implemented in the program and project. The Act's maintenance
of effort requirement reflects a recognition that the VA
currently provides health care services to many Medicare-
eligible veterans. To the extent that VA provides such
individuals with Medicare-covered services, it subsidizes the
Medicare Trust Funds. Projecting that level of effort involves
estimating the amount by which Medicare spending would increase
if the VA ceased to provide health care services to Medicare-
eligible veterans. It is recognized that this calculation
involves uncertainty associated with predicting future demand
and accounting for well documented factors such as continued VA
productivity improvements (including the ongoing trend of
declining hospital admissions and increased number of
outpatient visits) associated with outyear budget projections
and the provisions of title I of Public Law 104-262, under
which Congress revised VA law governing eligibility for care,
and established an annual veteran-enrollment (and enrollment-
prioritization) system to govern access to VA care. At the same
time, the calculation must take account of the central concern
underlying a maintenance of effort requirement--that the
Medicare trust funds not subsidize the VA.
The Secretary of VA would be required to improve its
information management system by October 1, 2001. The improved
system would allow the Secretary of VA, for any year beginning
on or after January 1, 2002, to identify costs incurred by VA
in providing Medicare health care services to Medicare-eligible
veterans for purposes of meeting the maintenance of effort
requirement under the agreement between the two Secretaries.
The Secretary of HHS would provide such assistance as needed
for the Secretary of VA to determine which health care services
furnished by VA qualify as Medicare health care services.
The provision would permit the Secretary of VA to request
the Inspector General of HHS to make a certification to
Congress that the Secretary has improved its management
information system so that the Secretary is able to identify
costs attributable to providing Medicare health care services
in a reasonably reliable and accurate manner.
The provision would permit the program for Category A
Medicare-eligible veterans to be conducted in additional sites
and cover additional Category A Medicare-eligible veterans only
if the Inspector General made the certification. The Inspector
General would be required to submit a report to Congress
containing the certification (or denial of certification)
within 60 days after requested by the Secretary of VA or June
1, 2002, whichever was earlier.
The provision would require the Secretary of VA, within 60
days of entering the agreement with the Secretary of HHS, to
submit a report to Congress and the Comptroller General
explaining the methodology used and the basis for calculating
the VA level of effort under the program and project. Not later
than 180 days after submission of this report, the Comptroller
General would be required to submit to Congress and the
Secretaries of HHS and VA a report on the Comptroller General's
findings, conclusion, and recommendations with respect to the
report. The Secretary would be required to submit a response to
Congress within 60 days.
The provision would also require the Comptroller General to
submit an annual report during each year the program and
demonstration project were in operation. The report, to be
submitted by December 31 of each year, would be submitted to
the Congress and the Secretaries of HHS and VA. The report
would specify the extent, if any, to which costs under Medicare
increased during the preceding fiscal year as a result of the
program or demonstration project.
The provision would require the Secretaries of HHS and VA
to take certain steps if they found, based on the information
obtained above, that Medicare expenditures increased, or were
expected to increase, during a fiscal year because of the
program or project. They would be required to take such steps
as needed to recoup for Medicare the amount of the increase in
expenditures and to prevent future increases. This would
include payment of the amount of the increase by the Secretary
of the VA from the current VA medical care appropriation to the
Medicare trust funds. It would also include lowering the amount
of payments made under the program or project. Further, the
demonstration project could be suspended in whole or in part.
New Section 1897(i)--Evaluation and Reports
New Section 1897(i) would require the Comptroller General
to conduct an evaluation of the program and an evaluation of
the demonstration project. The Comptroller General would be
required to submit annual reports on each to the Secretaries of
HHS and VA and to the Congress. The first report for the
program orproject would be submitted within 12 months after the
date on which the Secretary of VA first provided services under the
program or project, respectively. A final report on the demonstration
project would be submitted not later than 3\1/2\ years after the date
of the first report on the project.
The provision would provide that the required evaluation
and reports would include an assessment of a number of items,
based on the agreement between the Secretaries of HHS and VA.
An assessment would be made of: (i) savings or costs to
Medicare resulting from the program or demonstration project;
(ii) the cost to VA of providing care to Category A Medicare-
eligible veterans under the program or Category C Medicare-
eligible veterans under the demonstration project,
respectively; (iii) an analysis of how the program or project
affects the overall accessibility of medical care through VA
and a description of unintended effects (if any) on the patient
enrollment system under VA; (iv) compliance by VA with Medicare
requirements; (v) the number of Category A Medicare-eligible
veterans or Category C Medicare-eligible veterans,
respectively, opting to participate in the program or project
instead of receiving benefits through another health insurance
plan (including Medicare); (vi) a list of health insurance
plans and programs that were primary payers for Medicare-
eligible veterans during the year prior to their participation
in the program or project and the distribution of their
previous enrollment in such plans and programs; (vii) any
impact of the program or project on private health care
providers and Medicare beneficiaries not enrolled in the
program or project; (viii) an assessment of the access to care
and quality of care for Medicare-eligible veterans under the
program or project; (ix) an analysis of whether, and in what
manner, easier access to VA medical centers affects the number
of Category A Medicare-eligible veterans or Category C
Medicare-eligible veterans receiving Medicare health services;
(x) any impact of the program or project on access to care for
Category A or Category C Medicare-eligible veterans who did not
enroll in the program or project and for other individuals
entitled to Medicare; (xi) a description of the difficulties
(if any) experienced by VA in managing the program or project;
(xii) any additional elements specified in the agreement
entered into between the two Secretaries; and (xiii) any
additional elements that the Comptroller General determined
appropriate regarding the program or project.
The provision would require the Secretaries of HHS and VA
to submit a report to Congress, within 6 months of submission
of the final report by the Comptroller General on the
demonstration project. The report would contain their
recommendations as to whether there is a cost to Medicare in
conducting the demonstration project; whether to extend the
project or make it permanent; and whether the terms and
conditions should otherwise be continued (or modified) with
respect to Medicare-eligible veterans. When the report was
submitted on the demonstration project, the Secretaries would
also be required to submit a report to Congress on the program.
The report would contain their recommendations as to whether
there was a cost to Medicare in conducting the program, whether
to discontinue the program with respect to Category A Medicare-
eligible veterans; and whether the terms and conditions of the
program should otherwise be continued or modified with respect
to Medicare-eligible veterans.
Reason for change
To provide Medicare-eligible veterans an option to receive
coordinated Medicare-covered services through VA medical
facilities.
C. Section 2(b)--Repeal of Plan Requirement
Current law
Section 4015(b) of BBA 97 required the Secretaries of HHS
and VA to submit to Congress a detailed plan for the
implementation of a Medicare subvention demonstration project
for veterans.
Explanation of provision
The provision would repeal Section 4015(b) of BBA 97.
Reason for change
Implementation of H.R. 3828 would make the detailed plan
unnecessary.
D. Section 2(c)--Effectiveness Contingent Upon Enactment of Offsetting
Outlay Reductions in VA Programs
Current law
No provision.
Explanation of provision
This provision would specify that the effectiveness of the
Act would be contingent upon enactment of offsetting reductions
in VA programs. Specifically, no payment could be made from
Medicare trust funds for items and services furnished under the
program or demonstration project before the date the Director
of the Office of Management and Budget made a determination
that federal legislation had been enacted that restricts
entitlement to service-connected compensation for a disability
that is the result of a veteran's use of tobacco products. The
net amount of the reduction in outlays for VA programs for
fiscal years 1999-2003 could not be less than the estimate of
the aggregate increase in Medicare outlays attributable to the
program and project.
The determination by the Director of the Office of
Management and Budget would be based on estimates made by the
Congressional Budget Office (CBO), except to the extent the
Director found them materially inaccurate. The estimate of the
aggregate increase in outlays would be determined by the CBO
and included in the report by the House Committee on Ways and
Means on this Act.
As part of its FY99 budget request, the Administration
submitted a legislative proposal to reverse an internal VA
decision which extended VA compensation for tobacco-related
illnesses. As a result of a 1997 decision by the VA General
Counsel, VA began paying service-connected disability
compensation for tobacco-related illnesses. The General
Counsel's decision held that, if a disease or death can be
shown to be a result of nicotine addiction acquired in military
service, service-connected compensation is warranted. OMB
estimated that the reversal of the VA General Counsel's
decision would save $16.9 billion over the next five years. The
Congressional Budget Office estimates savings from enacting
such legislation to be only $10 billion over five years.
Reason for change
Funding for subvention is subject to OBRA90 ``pay-as-you-
go'' procedures (also known as ``Pay-Go'') which require that
increases in mandatory spending (such as subvention funding)
must be paid for by equal reductions in other mandatory
programs or by increases in receipts.
E. Section 2(d)--Report to Congress
Current law
No requirement.
Explanation of provision
The Secretary of Health and Human Services shall report to
Congress by not later than January 1, 2001, on a method to
phase-in the costs of military facility services furnished by
the Department of Veterans Affairs or the Department of Defense
to Medicare-eligible beneficiaries in the calculation of an
area's Medicare+Choice capitation payment rates.
Reason for change
The report is necessary to assess the impact of these
facilities on Medicare+Choice payment rates.
III. VOTE OF THE COMMITTEE
In compliance with clause 2(l)(2)(B) of rule XI of the
Rules of the House of Representatives, the following statements
are made concerning the votes of the Committee on Ways and
Means in its consideration of the bill H.R. 3828.
motion to report the bill
The bill, H.R. 3828, as amended, was ordered favorably
reported by a rollcall vote of 31 yeas to 1 nay (with a quorum
being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Archer..................... X ........ ......... Mr. Rangel....... X ........ .........
Mr. Crane...................... X ........ ......... Mr. Stark........ ........ X .........
Mr. Thomas..................... X ........ ......... Mr. Matsui....... X ........ .........
Mr. Shaw....................... X ........ ......... Mrs. Kennelly.... ........ ........ .........
Mrs. Johnson................... X ........ ......... Mr. Coyne........ X ........ .........
Mr. Bunning.................... X ........ ......... Mr. Levin........ ........ ........ .........
Mr. Houghton................... X ........ ......... Mr. Cardin....... X ........ .........
Mr. Herger..................... X ........ ......... Mr. McDermott.... X ........ .........
Mr. McCrery.................... X ........ ......... Mr. Kleczka...... X ........ .........
Mr. Camp....................... X ........ ......... Mr. Lewis........ ........ ........ .........
Mr. Ramstad.................... X ........ ......... Mr. Neal......... X ........ .........
Mr. Nussle..................... X ........ ......... Mr. McNulty...... X ........ .........
Mr. Johnson.................... ........ ........ ......... Mr. Jefferson.... ........ ........ .........
Ms. Dunn....................... X ........ ......... Mr. Tanner....... X ........ .........
Mr. Collins.................... X ........ ......... Mr. Becerra...... ........ ........ .........
Mr. Portman.................... X ........ ......... Mrs. Thurman..... X ........ .........
Mr. English.................... X ........ .........
Mr. Ensign..................... X ........ .........
Mr. Christensen................ X ........ .........
Mr. Watkins.................... X ........ .........
Mr. Hayworth................... X ........ .........
Mr. Weller..................... X ........ .........
Mr. Hulshof.................... X ........ .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 7(a) of rule XIII of the Rules of
the House of Representatives, the following statement is made:
The Committee agrees with the estimate prepared by the
Congressional Budget Office (CBO) which is included below.
B. Statement Regarding New Budget Authority and Tax Expenditures
In compliance with clause 2(l)(3)(B) of rule XI of the
Rules of the House of Representatives, the Committee states
that the provisions in the Committee bill, if enacted, would
increase Medicare spending by approximately $470 million over
the budget period Fiscal Years 1999-2003.
C. Cost Estimate Prepared by the Congressional Budget Office
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 29, 1998.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3828, the Veterans
Medicare Access Improvement Act of 1998.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Tom Bradley.
Sincerely,
June E. O'Neill, Director.
Enclosure.
H.R. 3828--Veterans Medicare Access Improvement Act of 1998
Summary: H.R. 3828 would require the Secretaries of Health
and Human Services (HHS) and Veterans Affairs (VA) to establish
two systems--a program and a demonstration project--in which
Medicare pays the VA on a capitated basis for Medicare-covered
services furnished to certain veterans who are entitled to
Medicare. The program would involve veterans who are entitled
to certain types of free health care from the VA (Category A
veterans), and the Demonstration project would involve veterans
who are not entitled to free health care from VA (Category C
veterans).
CBO estimates that H.R. 3528 would increase Medicare
spending by about $20 million in fiscal year 1999 and by about
$500 million during the 1999-2003 period. Because the proposal
would affect direct spending, pay-as-you-go procedures would
apply. The bill does not contain any intergovernmental or
private-sector mandates as defined in the Unfunded Mandates
Reform Act.
Demonstration project and program
Both the demonstration project and program would operate in
up to three geographic areas for a period of three years. The
demonstration project would begin on January 1, 1999, and the
program would begin on January 1, 2000. During these three-year
periods, Medicare payments to VA would be subject to annual
caps, with a cumulative limit of $150 million for the
demonstration project and $225 million for the program.
The demonstration project for Category C veterans would be
discontinued after 2001. The program for Category a veterans
may be continued after 2002, with Medicare payments to VA
capped at $100 million a year. However, the program may be
expanded to additional sites, without caps on payments to VA,
if the HHS Inspector General certifies that VA has established
and is using a data system that can reliably and accurately
measure the costs incurred by VA in providing Medicare-covered
services to Medicare-eligible veterans
Participating sites
The bill defines a site as a geographic service area of the
Department of Veterans Affairs, which CBO interprets to mean a
Veterans Integrated Services Network (VISN). The Secretaries
would jointly designate three sites to participate in the
program and three sites to participate in the project. The same
or different VISNs may be selected for the program and the
project. At least one of the VISNs selected as a project site
must include the catchment area of a military medical facility
that was closed pursuant to a base closure and realignment act.
In general, VA sites participating in the program or
demonstration project would be required to qualify as
Medicare+Choice plans. However, the Secretary of HHS would be
allowed to waive such requirements if the waiver reflects the
unique status of VA and is necessary to carry out the program
or demonstration project.
Eligibility and enrollment rules
Veterans must be enrolled in both Part A and Part B of
Medicare to be eligible for either the program or the
demonstration project. To participate in the program, a
Category A veteran must live in an area that is geographically
remote from the closest VA hospital.
Enrollment in either the program or the demonstration
project would be voluntary. As with other Medicare+Choice
plans, CBO assumes that veterans who enroll in the program or
demonstration project would give up the ability to have
Medicare pay for services furnished by providers outside the
network established by VA.
Basis of payments
Medicare's payments to VA would equal 95 percent of the
applicable payment to a Medicare+Choice plan, less amounts
related to Medicare's medical education payments,
disproportionate share payments, and part of capital-related
payments to hospitals for inpatient services.
Maintenance of effort
The proposal is intended to have no net effect on Medicare
spending. It would require the Secretaries to specify how VA's
health care efforts for Medicare-eligible veterans would be
monitored. The proposal would also require several analyses of
VA's level of effort and the effect of the program and
demonstration project on Medicare spending. If the Secretaries
conclude that the program or demonstration project has caused
Medicare spending to increase, the proposal would require VA to
pay Medicare for increased spending already incurred by
Medicare, and would require adjustment of the capitation rates
paid to VA to avoid future increases in Medicare spending.
The proposal would require VA to develop data systems to
measure the Medicare-covered services that VA furnishes to
Medicare-eligible veterans. The first step would be the
identification by October 31, 1998, of veterans who are
eligible for Medicare. By October 1, 2001, VA would be required
to develop a data system that would be able to identify the
costs VA incurs in furnishing Medicare-covered services to
Medicare-eligible veterans. The caps on the number of program
sites and on annual Medicare payments to VA would be eliminated
if the HHS Inspector General certified by June 1, 2002, that VA
is able to identify those costs in a reasonably reliable and
accurate manner.
Relation to compensation for use of tobacco
The bill makes implementation of the program and
demonstration project contingent on enactment of legislation
that restricts entitlement to VA service-related compensation
for a disability that is the result a veteran's use of tobacco
products and on a determination by the Director of the Office
of Management and Budget that available savings from that
legislation are sufficient to offset the increase in Medicare
spending.
The restriction on entitlement to VA service-related
compensation that is necessary to permit implementation of H.R.
3828 is included in H.R. 2400, the Transportation Equity Act
for the 21st Century, which has been passed by both the House
and Senate.
Estimated budgetary impact: CBO estimates that the proposal
would increase Medicare spending through two mechanisms:
Favorable selection--that is, Medicare capitation
payment rates for enrollees in the VA program or
demonstration project that would be higher than what
Medicare would spend if the participants received all
of their care from non-VA providers; and
Changes in VA's level of health care efforts for
Medicare-eligible veterans that result in higher
Medicare spending for services furnished by providers
eligible for Medicare payment.
The combined effect of favorable selection and changes in
VA's level of effort would increase Medicare spending by about
$10 million in fiscal year 1999, $500 million during the 1999-
2003 period, and $1.8 billion over ten years. Changes in VA's
level of effort would contribute more to higher Medicare
spending than would favorable selection. (See Table 1.)
The estimate of the increase in Medicare spending due to
favorable selection is based on the assumption that, compared
to Medicare payments for enrollees in the fee-for-service
sector, selection in VA plans would be at least as favorable as
selection in Medicare+Choice plans.
The conclusion that Medicare spending would rise due to
erosion of VA's level of effort is based on the inherent
tension between VA's mission and satisfaction of the
maintenance of effort requirement, the inability to establish a
reliable measure of effort during the base period, the lack of
an effective mechanism to monitor and enforce compliance with
that requirement. Because measured effort is likely to exceed
the level-of-effort target, the proposal would permit a
substantial increase in Medicare spending while enabling the
Secretaries to find that the level of effort criteria have been
met. Erosion of VA's level of effort would be slowed, however,
following implementation of a new data system to measure the
costs VA incurs in furnishing Medicare-covered services to
Medicare-eligible veterans.
Va has been unable to provide relevant data on the cost to
VA of the Medicare-covered services furnished to Medicare-
eligible veterans in the base year. CBO's estimate assumes that
the base-period cost was $8 billion, or about half of the VA's
health appropriation, and that, under current law, this cost
would remain constant throughout the projection period. The
estimate also assumes that VA initially would reallocate from
its core mission nearly all (90 percent) of the incremental
resources necessary to maintain its level of effort in the
preceding year but that this proportion would decline in
subsequent years. The estimate assumes that the proportion of
incremental resources allocated to maintenance of the previous
year's level of effort would return to 90 percent following
implementation of the new data system.
TABLE 1.--INCREASES IN MEDICARE SPENDING DUE TO FAVORABLE SELECTION AND EROSION OF VA LEVEL OF EFFORT
--------------------------------------------------------------------------------------------------------------------------------------------------------
By calendar years, in millions of dollars--
-------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1999-2003 1999-2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increase in Medicare Spending due to:
Favorable Selection..................................... ( \1\
) 10 10 10 10 20 30 50 70 110 40 320
Erosion of Level of Effort.............................. 20 60 100 150 190 200 210 210 220 220 510 1,580
Total:
By Calendar Year........................................ 20 60 110 160 200 220 240 260 290 330 550 1,890
By Fiscal Year.......................................... 10 50 100 130 190 210 250 230 280 320 480 1,780
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Less than $5 million.
Note.--Numbers may not add to totals because of rounding.
The cost of this legislation fall within budget function
570 (Medicare).
Basis of estimate: The following sections elaborate on
CBO's analysis of the effect of this proposal on Medicare
spending. This analysis uses calendar years.
Costs of favorable selection
The estimate assumes that Medicare+Choice payment rates
would be adjusted to remove half of the capital-related
component, and that the resulting payment rates would average
92 percent of rates normally paid to Medicare+Choice plans.
Average capitation payment rates for participating veterans
would grow from about $5,500 in 1998 to $9,200 in 2008. (See
Table 2.)
TABLE 2.--SUMMARY OF PROJECTED ENROLLMENT AND MEDICARE SPENDING IN PROPOSED VA PROGRAM AND DEMONSTRATION PROJECT
----------------------------------------------------------------------------------------------------------------
By calendar years, in millions of dollars--
-------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
----------------------------------------------------------------------------------------------------------------
Spending Cap:
Category A Program.......... 0 50 75 100 (\2\) (\2\) (\2\) (\2\) (\2\) (\2\)
Category C Demonstration
Project.................... 50 50 50 0 0 0 0 0 0 0
Average Capitation Rate
(Dollars)...................... 5,500 5,700 6,000 6,300 6,700 7,200 7,700 8,200 8,700 9,200
Enrollment (Thousands):
Category A Program.......... 0 9 13 16 23 33 50 80 110 160
Category C Demonstration
Project.................... 5 8 8 0 0 0 0 0 0 0
-------------------------------------------------------------------------------
Total Enrollment.......... 5 17 20 16 23 33 50 80 110 160
Total Capitated Payments to VA.. 30 95 122 100 150 240 390 640 970 1,450
Change in Medicare Spending due
to Favorable Selection......... (\1\) 10 10 10 10 20 30 50 70 110
----------------------------------------------------------------------------------------------------------------
\1\ Less than $5 million.
\2\ The $100 million cap on annual Medicare payments to VA would be removed if the HHS Inspector General
certifies that VA can reliably and accurately calculate cost of Medicare-covered services furnished to
Medicare-eligible veterans.
Note.--Details may not add to totals due to rounding.
CBO assumes that VA would establish a separate
Medicare+Choice plan in each region. Because of the caps on
total capitated payments to VA, CBO also assumes that Medicare
would waive the minimum enrollment requirement (5,000 enrollees
for Medicare+Choice plans in urban areas) for at least the
first four years of operation. CBO assumes that enrollment in
the program for Category A veterans would grow from about 9,000
in 1999 to about 160,000 in 2008. CBO assumes that enrollment
in the Category C project would rise from about 5,000 in 1999
to about 8,000 in 2001. CBO assumes that enrollment of Category
C veterans would not be impeded by the prospect of the
demonstration ending, because VA and many Category C veterans
would act on the expectation that the project would be
continued and expanded after 2001.
CBO assumes that selection of enrollees would be at least
as favorable as selection in other Medicare+Choice plans under
current law.\1\ The increase in Medicare spending due to
favorable selection would increase from less than $5 million in
1999 to about $110 million in 2008.
---------------------------------------------------------------------------
\1\ Enrollees in Medicare risk plans have been estimated to cost 10
percent to 12.4 percent less than Medicare enrollees with similar
demographic characteristics who remain in the fee-for-service sector.
See R.S. Brown, et al., The Medicare Risk Program for HMOs--Final
Summary Report on Findings from the Evaluation, Princeton, N.J.:
Mathematica Policy Research, Inc., February 1993; and G. Riley, et al.,
``Health Status of Medicare Enrollees in HMOs and the Fee-for-Service
Sector in 1994'', Health Care Financing Review, 17(4), Summer 1996.
Selection tends to be substantially more favorable for new enrollees in
Medicare risk plans. In the six months before joining an HMO, new HMO
enrollees have been estimated to cost Medicare only 63 percent as much
as beneficiaries who remained in the fee-for-service sector. See
``Geographic Adjustment of Medicare Payments'', Annual Report to
Congress, Physician Payment Review Commission, 1996.
---------------------------------------------------------------------------
Erosion of level of effort
Three factors contribute to CBO's conclusion that Medicare
spending would rise due to erosion of VA's level of effort: an
inherent tension between VA's mission and satisfaction of the
maintenance of effort requirement, the inability to establish a
reliable measure of effort during the base period, and the lack
of an effective mechanism to monitor and enforce compliance
with that requirement. Despite these impediments, CBO assumes
that VA will allocate substantial resources to maintain its
level of effort. In addition, the estimate assumes that erosion
of VA's level of effort would be slowed substantially following
implementation of a new data system.
Tension Between VA's Mission and Satisfaction of the
Maintenance of Effort Requirement. According to VA, ``The
mission of the veterans healthcare system is to serve the needs
of America's veterans. It does this by providing specialized
care for service-connected veterans, primary care and related
medical and social support services. To accomplish this
mission, VHA (Veterans Health Administration) needs to be a
comprehensive, integrated healthcare system that provides
excellence in healthcare value, excellence in service as
defined by its customers, and excellence in education and
research, and needs to be an organization characterized by
exceptional accountability and by being an employer of
choice.''
VA does not have sufficient resources to satisfy the health
care demands of all eligible veterans. To carry out its mission
within the resources available, the Congress and VA have
established seven priority groups to specify the order in which
veterans may stake a claim to VA health care services. The VA
also allocates care by determining which services it offers,
where it offer them, and the quantity it offers. Only by
managing the set of services VA provides, and by managing the
distribution of those services across the veteran population
can VA best serve the needs of America's veterans within the
constraint's imposed by limited resources.
The VA provides a full spectrum of medical care. However,
some veterans have medical needs that are not well served by
community providers. To satisfy these needs, the VA has
developed special expertise in certain areas, including
provision of low-cost pharmaceuticals and, for patients with
chronic disabilities, rehabilitation and substance abuse/mental
health service.\2\
---------------------------------------------------------------------------
\2\ In general, the services in which the VA has developed
expertise are not covered by Medicare. Medicare does cover some
services in which VA has developed special expertise, and Medicare does
not cover some services in which VA has not developed such expertise.
The estimate refers to services in which VA has developed special
expertise as Medicare-noncovered services.
---------------------------------------------------------------------------
To improve the VA's ability to carry out its mission, the
Veterans Health Administration is pursing a ``30-20-10''
strategy: to increase efficiency by 30 percent, to increase the
number of veterans served by 20 percent, and to generate 10
percent of funding from non-appropriated sources.
One method by which VA intends to carry out its mission is
by allocating more resources to those services in which it has
special expertise. If the proposal did not require that VA
maintain a level of effort out of nonMedicare funds, Medicare
payments for Medicare-covered services would enable VA to
redistribute some appropriated funds to provide more of the
services in which VA has special expertise. Medicare spending
would increase as Medicare pays VA or community providers for
the Medicare-covered services that would no longer be funded
out of VA appropriations.
By contrast, implementation of an effective mechanism to
enforce maintenance of a level of effort out of nonMedicare
funds would require that VA shift resources away from the
services in which VA has special expertise to pay for providing
additional Medicare-covered services to Medicare-eligible
veterans who do not participate in the program or project.
Because of the resulting tension between carrying out VA's
mission and satisfaction of the maintenance-of-effort
requirement, CBO believes it is unlikely that a fully effective
maintenance of effort mechanism could be implemented.
Level of Effort during the Base Period and in Baseline. The
level of VA outlays for Medicare-covered services furnished to
Medicare-eligible veterans is currently unknown. VA staff have
guessed that it is in the range of one-third to two-thirds of
VA health outlays. CBO used the midpoint of this range as the
basis for estimating that VA outlays for Medicare-covered
services finished to Medicare-eligible veterans were about one-
half of the $17 billion in VA health outlays in 1997, or about
$8 billion. Under current law, CBO assumes that these outlays
will be constant during the 1998 through 2008 period.
On a per-person basis, CBO assumes that VA will shift more
of its appropriated resources to pay for the services in which
VA has special expertise. However, this change in the
allocation of VA's effort between Medicare-covered and
noncovered services will be offset by growth in the share of
veterans eligible for Medicare. The proportion of veterans who
are at least 65 is projected to increase from 36 percent in
1997 to 41 percent in 2008.
Although CBO assumes that VA will spend $8 billion on
Medicare-covered services furnished to Medicare-eligible
veterans in 1998, the estimate assumes that Medicare would
spend less than $8 billion if those veterans were to receive
all Medicare-covered services from nonfederal providers
eligible for payment by Medicare. CBO estimates that the value
to Medicare of each dollar of VA outlays for Medicare-covered
services furnished to Medicare-eligible veterans is about 85
cents in 1998. This assumption is based on research findings
that VA delivers a substantial amount of nonacute care in
relatively high-cost acute care settings.\3\ CBO assumes that
the gap between VA outlays and the value of Medicare of those
outlays will close over six years, as VA implements its
strategy to increase efficiency by 30 percent. Thus, CBO
projects that the value to Medicare of VA outlays will increase
from $6.8 billion in 1998 to $8 billion per year in 2004
through 2008.
---------------------------------------------------------------------------
\3\ A recent VA study found that 38 percent of admissions to acute
medical and surgical services were nonacute, and that 32 percent of
inpatient days of care in these acute settings were for nonacute
patients. (Smith, et al., ``Overutilization of Acute-Care Beds in
Veterans Affairs Hospitals'', Medicare Care, 34(1), 1996, pp. 85-96.)
These findings are consistent with the results of earlier studies. See,
for example: Booth, et al., ``Nonacute Inpatient Admissions to
Department of Veterans Affairs Medical Centers'', Medical Care, 28 (8
supp.), 1991, pp. AS40-AS50; and General Accounting Office, Better
Patient Care Practices Could Reduce Length of Stay in VA Hospitals,
GAO/HRD-85-92, 1985.
---------------------------------------------------------------------------
Measuring, Monitoring and Enforcing Level of Effort. The
proposal attempts to avoid increasing Medicare's costs by
establishing a requirement that VA maintain a level of effort
for Medicare-covered services furnished to Medicare-eligible
veterans. The mechanism intended to achieve budget neutrality
for Medicare requires that VA compensate Medicare for any
change in Medicare spending for veterans compared to the amount
of Medicare would have spent for such veterans if the program
and demonstration project had not been conducted. However, this
change in Medicare spending cannot be measured.
CBO assumes that the agreement between the Secretaries
would establish a mechanism for approximating VA's level-of-
effort during the 1999 though 2003 period. CBO also assumes
that the VA would develop a data system that would be able to
identify the costs VA incurs in furnishing Medicare-covered
services to Medicare-eligible veterans, and that this data
system would be used to recalculate the base level of effort
during 2002 and to monitor compliance with the level of effort
requirement in 2003 and subsequent years.
Until the new data system is implemented, attempts to
measure level of effort would be hampered by weakeness in VA
data systems. In addition, using existing VA data systems for
monitoring compliance with the level of effort requirement--a
purpose for which they were not initially designed--would
produce substantial ``measurement creep,'' that is, a tendency
for measured effort to grow faster than real effort.
Weaknesses in VA Data System. Based on extensive
discussions with staff from VA, HHS, and the General Accounting
Office, CBO has concluded that VA does not have and could not
quickly develop and implement data systems that would permit
reliable measurement and monitoring of VA's level of effort.
Without reliable measures of VA's effort, budget neutrality for
Medicare cannot be enforced.
VA is only beginning to convert to industry-standard
systems of categorizing many of the services and procedures it
furnishes. Thus, VA cannot reliably distinguish the services
that would be covered by Medicare from those that would not be
covered. In many situations, VA would use the setting in which
a service is furnished as a proxy for whether the service is
Medicare-covered. In some settings, the costs of services are
estimated using methods designed to allocate budgets. This
cost-estimating methodology, in conjunction with VA's inability
to categorize services adequately, prevents VA from measuring
the costs of those services reliably.
Measurement Creep. Until the new data system is
implemented, the Secretaries would use existing data systems as
the basis for measuring, monitoring, and enforcing VA's level
of effort, and for generating and justifying Medicare payments
to VA. Data that are not required to generate payments are
reported less completely than data that are audited and used
for payment. When those data begin to be used for payment, the
elements that qualify for higher payment will be reported more
completely than when the data system was developed. Thus, the
reported output will grow more rapidly than actual output.
Based on Medicare's experience with ``DRG creep'' following
introduction of the prospective payment system for hospital
inpatient services in fiscal year 1984, CBO assumes that
measurement creep would inflate VA's level of effort by 3
percent in 1999 but that the rate of inflation would gradually
decline to 0.5 percent in subsequent years. This measurement
creep would permit VA to satisfy level of effort requirements
with little or no need to reallocate appropriated resources
away from the Medicare noncovered services central to its
mission.
Despite the inherent tension between carrying out VA's
mission and satisfying the maintenance of effort requirement,
and despite the contribution of measurements creep to reducing
or eliminating the apparent need for VA to satisfy that
requirement by reallocating appropriated resources away from
services not covered by Medicare, CBO assumes that VA would
reallocate substantial resources from its core mission to
provide Medicare-covered services to Medicare-eligible veterans
who do not participate in the program or demonstration project.
Initially, VA would reallocate from its core mission 90 percent
of the resources necessary to maintain the level of effort. In
subsequent years, however, measuredeffort would substantially
exceed the level-of-effort target, and VA would gradually reduce to 50
percent the reallocation of resources necessary to maintain the
previous year's level of effort. After implementation of the new data
system, VA would again reallocate from its core mission 90 percent of
the resources necessary to maintain the level of effort. How erosion of
VA's level of effort would affect Medicare spending is summarized in
Table 3.
TABLE 3.--CHANGES IN VA LEVEL OF EFFORT AND MEDICARE SPENDING
----------------------------------------------------------------------------------------------------------------
By calendar years, in billions of dollars--
-------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
----------------------------------------------------------------------------------------------------------------
VA Level of Effort, Baseline:
Cost to VA.................. 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0
Value to Medicare........... 6.8 7.0 7.2 7.4 7.6 7.8 8.0 8.0 8.0 8.0
Relative Value of VA Effort to
Medicare (Percent)............. 85.0 87.5 90.0 92.5 95.0 97.5 100.0 100.0 100.0 100.0
Measurement Creep (Percent)..... 3.0 2.5 2.0 1.5 1.0 1.0 0.8 0.6 0.5 0.5
Proportion of Increment in
Measured Effort Used to
Maintain Effort (Percent)...... 90 80 70 60 50 90 90 90 90 90
VA Level of Effort, Proposed
Law:
Cost to VA.................. 8.2 8.4 8.5 8.6 8.6 8.7 8.8 8.8 8.8 8.9
Value to Medicare........... 7.0 7.1 7.3 7.5 7.6 7.8 7.8 7.8 7.8 7.8
Increase in Medicare Spending
due to Erosion of VA Effort.... (\1\) 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2
----------------------------------------------------------------------------------------------------------------
\1\ Less than $50 million.
Note.--Details may not add to totals due to rounding.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act establishes pay-as-you-go
procedures for legislation affecting direct spending or
receipts. The projected changes in direct spending under H.R.
2912 are shown in the table below for fiscal years 1999-2008.
For purposes of enforcing pay-as-you-go procedures, however,
only the effects in the current year, budget year, and the
succeeding four years are counted.
SUMMARY OF PAY-AS-YOU-GO EFFECTS
----------------------------------------------------------------------------------------------------------------
By fiscal years, in millions of dollars--
---------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
----------------------------------------------------------------------------------------------------------------
Change in outlays......................... 10 50 100 130 190 210 250 230 280 320
Change in receipts........................ Not applicable
----------------------------------------------------------------------------------------------------------------
Intergovernmental and private-sector impact: H.R. 3828 does
not contain any intergovernmental or private-sector mandates as
defined in the Unfunded Mandates Reform Act and would impose no
costs on state, local, or tribal governments.
Estimate prepared by: Federal Cost: Tom Bradley. Impact on
State, Local, and Tribal Governments: Marc Nicole. Impact on
the Private Sector: Pete Welch.
Estimate approved by: Paul N. Van de Water, Assistant
Director for Budget Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 2(l)(3)(A) of rule XI of the Rules
of the House of Representatives, the Committee states that the
Committee believed this action is necessary due to its
oversight of the Medicare program. The Subcommittee on Health
held a number of general hearings on health care options for
seniors, including: a hearing on February 13, 1997 regarding
Medicare Provisions in the President's Budget; a hearing on
February 25, 1997 regarding Medicare HMO Payment Policies; a
hearing on April 29, 1997 regarding Coordinated Care Options
for Seniors; a hearing on January 29, 1998 regarding Preparing
the Health Care Financing Administration for the 21st Century;
a hearing on February 26, 1998 regarding Assessing Health Care
Quality; and finally a hearing on March 3, 1998 regarding
Medicare Payment Policies.
B. Summary of Findings and Recommendations of the Government Operations
Committee
With respect to clause 2(l)(3)(D) of rule XI of the Rules
of the House of Representatives, the Committee states that no
oversight findings or recommendations have been submitted by
the Committee on Government Reform and Oversight regarding the
subject of the bill.
C. Constitutional Authority Statement
With respect to clause 2(l)(4) of rule XI of the Rules of
the House of Representatives, relating to Constitutional
Authority, the Committee states that the Committee's action in
reporting the bill is derived from Article I of the
Constitution, Section 8 (``The Congress shall have power to lay
and collect taxes, duties, imposts and excises, to pay the
debts and provide for the common defense and general welfare of
the United States. * * * '').
VI. CHANGES IN EXISTING LAW MADE BY THE BILL AS REPORTED
In compliance with clause 3 of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SECTION 1897 OF THE SOCIAL SECURITY ACT
improving veterans' access to services
Sec. 1897. (a) Definitions.--In this section:
(1) Administering secretaries.--The term
``administering Secretaries'' means the Secretary of
Health and Human Services and the Secretary of Veterans
Affairs acting jointly.
(2) Program.--The term ``program'' means the program
established under this section with respect to category
A medicare-eligible veterans.
(3) Demonstration project; project.--The terms
``demonstration project'' and ``project'' mean the
demonstration project carried out under this section
with respect to category C medicare-eligible veterans.
(4) Medicare-eligible veterans.--
(A) Category a medicare-eligible veteran.--
The term ``category A medicare-eligible
veteran'' means an individual--
(i) who is a veteran (as defined in
section 101(2) of title 38, United
States Code) and is described in
paragraph (1) or (2) of section 1710(a)
of title 38, United States Code;
(ii) who is entitled to hospital
insurance benefits under part A of the
medicare program and is enrolled in the
supplementary medical insurance program
under part B of the medicare program;
and
(iii) for whom the medical center of
the Department of Veterans Affairs that
is closest to the individual's place of
residence is geographically remote or
inaccessible from such place.
(B) Category c medicare-eligible veteran.--
The term ``category C medicare-eligible
veteran'' means an individual who--
(i) is a veteran (as defined in
section 101(2) of title 38, United
States Code) and is described in
section 1710(a)(3) of title 38, United
States Code; and
(ii) is entitled to hospital
insurance benefits under part A of the
medicare program and is enrolled in the
supplementary medical insurance program
under part B of the medicare program.
(5) Medicare health care services.--The term
``medicare health care services'' means items or
services covered under part A or B of this title.
(6) Trust funds.--The term ``trust funds'' means the
Federal Hospital Insurance Trust Fund established in
section 1817 and the Federal Supplementary Medical
Insurance Trust Fund established in section 1841.
(b) Program and Demonstration Project.--
(1) In general.--
(A) Establishment.--The administering
Secretaries are authorized to establish--
(i) a program (under an agreement
entered into by the administering
Secretaries) under which the Secretary
of Health and Human Services shall
reimburse the Secretary of Veterans
Affairs, from the trust funds, for
medicare health care services furnished
to category A medicare-eligible
veterans; and
(ii) a demonstration project (under
such an agreement) under which the
Secretary of Health and Human Services
shall reimburse the Secretary of
Veterans Affairs, from the trust funds,
for medicare health care services
furnished to category C medicare-
eligible veterans.
(B) Agreement.--The agreement entered into
under subparagraph (A) shall include at a
minimum--
(i) a description of the benefits to
be provided to the participants of the
program and the demonstration project
established under this section;
(ii) a description of the eligibility
rules for participation in the program
and demonstration project, including
any cost sharing requirements;
(iii) a description of the process
for enrolling veterans for
participation in the program, which
process may, to the extent practicable,
be administered in the same or similar
manner to the registration process
established to implement section 1705
of title 38, United States Code;
(iv) a description of how the program
and the demonstration project will
satisfy the requirements under this
title;
(v) a description of the sites
selected under paragraph (2);
(vi) a description of how
reimbursement requirements under
subsection (g) and maintenance of
effort requirements under subsection
(h) will be implemented in the program
and in the demonstration project;
(vii) a statement that all data of
the Department of Veterans Affairs and
of the Department of Health and Human
Services that the administering
Secretaries determine is necessary to
conduct independent estimates and
audits of the maintenance of effort
requirement, the annual reconciliation,
and related matters required under the
program and the demonstration project
shall be available to the administering
Secretaries;
(viii) a description of any
requirement that the Secretary of
Health and Human Services waives
pursuant to subsection (d);
(ix) a requirement that the Secretary
of Veterans Affairs undertake and
maintain outreach and marketing
activities, consistent with capacity
limits under the program, for category
A medicare-eligible veterans;
(x) a description of how the
administering Secretaries shall conduct
the data matching program under
subparagraph (F), including the
frequency of updates to the comparisons
performed under subparagraph (F)(ii);
and
(xi) a statement by the Secretary of
Veterans Affairs that the type or
amount of health care services
furnished under chapter 17 of title 38,
United States Code, to veterans who are
entitled to benefits under part A or
enrolled under part B, or both, shall
not be reduced by reason of the program
or project.
(C) Cost-sharing under demonstration
project.--Notwithstanding any provision of
title 38, United States Code, in order--
(i) to maintain and broaden access to
services,
(ii) to encourage appropriate use of
services, and
(iii) to control costs,
the Secretary of Veterans Affairs may establish
enrollment fees and copayment requirements
under the demonstration project under this
section consistent with subsection (d)(1). Such
fees and requirements may vary based on income.
(D) Health care benefits.--The administering
Secretaries shall prescribe the minimum health
care benefits to be provided under the program
and demonstration project to medicare-eligible
veterans enrolled in the program or project.
Those benefits shall include at least all
medicare health care services covered under
this title.
(E) Establishment of service networks.--
(i) Use of va outpatient clinics.--
The Secretary of Veterans Affairs, to
the extent practicable, shall use
outpatient clinics of the Department of
Veterans Affairs in providing services
under the program.
(ii) Authority to contract for
services.--The Secretary of Veterans
Affairs may enter into contracts and
arrangements with entities (such as
private practitioners, providers of
services, preferred provider
organizations, and health care plans)
for the provision of services for which
the Secretary of Health and Human
Services is responsible under the
program or project under this section
and shall take into account the
existence of qualified practitioners
and providers in the areas in which the
program or project is being conducted.
Under such contracts and arrangements,
such Secretary of Health and Human
Services may require the entities to
furnish such information as such
Secretary may require to carry out this
section.
(F) Data match.--
(i) Establishment of data matching
program.--The administering Secretaries
shall establish a data matching program
under which there is an exchange of
information of the Department of
Veterans Affairs and of the Department
of Health and Human Services as is
necessary to identify veterans who are
entitled to benefits under part A or
enrolled under part B, or both, in
order to carry out this section. The
provisions of section 552a of title 5,
United States Code, shall apply with
respect to such matching program only
to the extent the administering
Secretaries find it feasible and
appropriate in carrying out this
section in a timely and efficient
manner.
(ii) Performance of data match.--The
administering Secretaries, using the
data matching program established under
clause (i), shall perform a comparison
in order to identify veterans who are
entitled to benefits under part A or
enrolled under part B, or both. To the
extent such Secretaries deem
appropriate to carry out this section,
the comparison and identification may
distinguish among such veterans by
category of veterans, by entitlement to
benefits under this title, or by other
characteristics.
(iii) Deadline for first data
match.--The administering Secretaries
shall first perform a comparison under
clause (ii) by not later than October
31, 1998.
(iv) Certification by inspector
general.--
(I) In general.--The
administering Secretaries may
not conduct the program unless
the Inspector General of the
Department of Health and Human
Services certifies to Congress
that the administering
Secretaries have established
the data matching program under
clause (i) and have performed a
comparison under clause (ii).
(II) Deadline for
certification.--Not later than
December 15, 1998, the
Inspector General of the
Department of Health and Human
Services shall submit a report
to Congress containing the
certification under subclause
(I) or the denial of such
certification.
(2) Number of sites.--The program and demonstration
project shall be conducted in geographic service areas
of the Department of Veterans Affairs, designated
jointly by the administering Secretaries after review
of all such areas, as follows:
(A) Program sites.--
(i) In general.--Except as provided
in clause (ii), the program shall be
conducted in not more than 3 such areas
with respect to category A medicare-
eligible veterans.
(ii) Additional program sites.--
Subject to the certification required
under subsection (h)(1)(B)(iii), for a
year beginning on or after January 1,
2003, the program shall be conducted in
such areas as are designated jointly by
the administering Secretaries after
review of all such areas.
(B) Project sites.--
(i) In general.--The demonstration
project shall be conducted in not more
than 3 such areas with respect to
category C medicare-eligible veterans.
(ii) Mandatory site.--At least one of
the areas designated under clause (i)
shall encompass the catchment area of a
military medical facility which was
closed pursuant to either the Defense
Base Closure and Realignment Act of
1990 (part A of title XXIX of Public
Law 101-510; 10 U.S.C. 2687 note) or
title II of the Defense Authorization
Amendments and Base Closure and
Realignment Act (Public Law 100-526; 10
U.S.C. 2687 note).
(3) Restriction.--Funds from the program or
demonstration project shall not be used for--
(A) the construction of any treatment
facility of the Department of Veterans Affairs;
or
(B) the renovation, expansion, or other
construction at such a facility.
(4) Duration.--The administering Secretaries shall
conduct and implement the program and the demonstration
project as follows:
(A) Program.--
(i) In general.--The program shall
begin on January 1, 2000, in the sites
designated under paragraph (2)(A)(i)
and, subject to subsection
(h)(1)(B)(iii)(II), for a year
beginning on or after January 1, 2003,
the program may be conducted in such
additional sites designated under
paragraph (2)(A)(ii).
(ii) Limitation on number of veterans
covered under certain circumstances.--
If for a year beginning on or after
January 1, 2003, the program is
conducted only in the sites designated
under paragraph (2)(A)(i), medicare
health care services may not be
provided under the program to a number
of category-A medicare-eligible
veterans that exceeds the aggregate
number of such veterans covered under
the program as of December 31, 2002.
(B) Project.--The demonstration project shall
begin on January 1, 1999, and end on December
31, 2001.
(C) Implementation.--The administering
Secretaries may implement the program and
demonstration project through the publication
of regulations that take effect on an interim
basis, after notice and pending opportunity for
public comment.
(5) Reports.--
(A) Program.--By not later than September 1,
1999, the administering Secretaries shall
submit a copy of the agreement entered into
under paragraph (1) with respect to the program
to Congress.
(B) Project.--By not later than September 1,
1998, the administering Secretaries shall
submit a copy of the agreement entered into
under paragraph (1) with respect to the project
to Congress.
(6) Report on maintenance of level of health care
services.--
(A) In general.--The Secretary of Veterans
Affairs may not implement the program at a site
designated under paragraph (2)(A) unless, by
not later than 90 days before the date of the
implementation, the Secretary of Veterans
Affairs submits to Congress and to the
Comptroller General of the United States a
report that contains the information described
in subparagraph (B). The Secretary of Veterans
Affairs shall periodically update the report
under this paragraph as appropriate.
(B) Information described.--For purposes of
subparagraph (A), the information described in
this subparagraph is a description of the
operation of the program at the site and of the
steps to be taken by the Secretary of Veterans
Affairs to prevent the reduction of the type or
amount of health care services furnished under
chapter 17 of title 38, United States Code, to
veterans who are entitled to benefits under
part A or enrolled under part B, or both,
within the geographic service area of the
Department of Veterans Affairs in which the
site is located by reason of the program or
project.
(c) Crediting of Payments.--A payment received by the
Secretary of Veterans Affairs under the program or
demonstration project shall be credited to the applicable
Department of Veterans Affairs medical care appropriation (and
within that appropriation). Any such payment received during a
fiscal year for services provided during a prior fiscal year
may be obligated by the Secretary of Veterans Affairs during
the fiscal year during which the payment is received.
(d) Application of Certain Medicare Requirements.--
(1) Authority.--
(A) In general.--Except as provided under
subparagraph (B), the program and the
demonstration project shall meet all
requirements of Medicare+Choice plans under
part C and regulations pertaining thereto, and
other requirements for receiving medicare
payments, except that the prohibition of
payments to Federal providers of services under
sections 1814(c) and 1835(d), and paragraphs
(2) and (3) of section 1862(a) shall not apply.
(B) Waiver.--Except as provided in paragraph
(2), the Secretary of Health and Human Services
is authorized to waive any requirement
described under subparagraph (A), or approve
equivalent or alternative ways of meeting such
a requirement, but only if such waiver or
approval--
(i) reflects the unique status of the
Department of Veterans Affairs as an
agency of the Federal Government; and
(ii) is necessary to carry out the
program or demonstration project.
(2) Beneficiary protections and other matters.--The
program and the demonstration project shall comply with
the requirements of part C of this title that relate to
beneficiary protections and other matters, including
such requirements relating to the following areas, to
the extent not inconsistent with subsection
(b)(1)(B)(iii):
(A) Enrollment and disenrollment.
(B) Nondiscrimination.
(C) Information provided to beneficiaries.
(D) Cost-sharing limitations.
(E) Appeal and grievance procedures.
(F) Provider participation.
(G) Access to services.
(H) Quality assurance and external review.
(I) Advance directives.
(J) Other areas of beneficiary protections
that the administering Secretaries determine
are applicable to such program or project.
(e) Inspector General.--Nothing in the agreement entered into
under subsection (b) shall limit the Inspector General of the
Department of Health and Human Services from investigating any
matters regarding the expenditure of funds under this title for
the program and demonstration project, including compliance
with the provisions of this title and all other relevant laws.
(f) Voluntary Participation.--Participation of a category A
medicare-eligible veteran in the program or category C
medicare-eligible veteran in the demonstration project shall be
voluntary.
(g) Payments Based on Regular Medicare Payment Rates.--
(1) In general.--Subject to the succeeding provisions
of this subsection, the Secretary of Health and Human
Services shall reimburse the Secretary of Veterans
Affairs for services provided under the program or
demonstration project at a rate equal to 95 percent of
the amount paid to a Medicare+Choice organization under
part C of this title with respect to such an enrollee.
In cases in which a payment amount may not otherwise be
readily computed, the Secretary of Health and Human
Services shall establish rules for computing equivalent
or comparable payment amounts.
(2) Exclusion of certain amounts.--In computing the
amount of payment under paragraph (1), the following
shall be excluded:
(A) Special payments.--Any amount
attributable to an adjustment under
subparagraphs (B) and (F) of section 1886(d)(5)
and subsection (h) of such section.
(B) Percentage of capital payments.--An
amount determined by the administering
Secretaries for amounts attributable to
payments for capital-related costs under
subsection (g) of such section.
(3) Periodic payments from medicare trust funds.--
Payments under this subsection shall be made--
(A) on a periodic basis consistent with the
periodicity of payments under this title; and
(B) in appropriate part, as determined by the
Secretary of Health and Human Services, from
the trust funds.
(4) Cap on reimbursement amounts.--The aggregate
amount to be reimbursed under this subsection pursuant
to theagreement entered into between the administering
Secretaries under subsection (b) is as follows:
(A) Program.--With respect to category A
medicare-eligible veterans, such aggregate
amount shall not exceed--
(i) for 2000, a total of $50,000,000;
(ii) for 2001, a total of
$75,000,000; and
(iii) subject to subparagraph (B),
for 2002 and each succeeding year, a
total of $100,000,000.
(B) Expansion of program.--If for a year
beginning on or after January 1, 2003, the
program is conducted in sites designated under
subsection (b)(2)(A)(ii), the limitation under
subparagraph (A)(iii) shall not apply to the
program for such a year.
(C) Project.--With respect to category C
medicare-eligible veterans, such aggregate
amount shall not exceed a total of $50,000,000
for each of calendar years 1999 through 2001.
(h) Maintenance of Effort.--
(1) Monitoring effect of program and demonstration
project on costs to medicare program.--
(A) In general.--The administering
Secretaries, in consultation with the
Comptroller General of the United States, shall
closely monitor the expenditures made under
this title for category A and C medicare-
eligible veterans compared to the expenditures
that would have been made for such veterans if
the program and demonstration project had not
been conducted. The agreement entered into by
the administering Secretaries under subsection
(b) shall require the Department of Veterans
Affairs to maintain overall the level of effort
for services covered under this title to such
categories of veterans by reference to a base
year as determined by the administering
Secretaries.
(B) Determination of measure of costs of
medicare health care services.--
(i) Improvement of information
management system.--Not later than
October 1, 2001, the Secretary of
Veterans Affairs shall improve its
information management system such
that, for a year beginning on or after
January 1, 2002, the Secretary of
Veterans Affairs is able to identify
costs incurred by the Department of
Veterans Affairs in providing medicare
health care services to medicare-
eligible veterans for purposes of
meeting the requirements with respect
to maintenance of effort under an
agreement under subsection (b)(1)(A).
(ii) Identification of medicare
health care services.--The Secretary of
Health and Human Services shall provide
such assistance as is necessary for the
Secretary of Veterans Affairs to
determine which health care services
furnished by the Secretary of Veterans
Affairs qualify as medicare health care
services.
(iii) Certification by hhs inspector
general.--
(I) Request for
certification.--The Secretary
of Veterans Affairs may request
the Inspector General of the
Department of Health and Human
Services to make a
certification to Congress that
the Secretary of Veterans
Affairs has improved its
management system under clause
(i) such that the Secretary of
Veterans Affairs is able to
identify the costs described in
such clause in a reasonably
reliable and accurate manner.
(II) Requirement for
expansion of program.--The
program may be conducted in the
additional sites under
paragraph (2)(A)(ii) and cover
such additional category A
medicare eligible veterans in
such additional sites only if
the Inspector General of the
Department of Health and Human
Services has made the
certification described in
subclause (I).
(III) Deadline for
certification.--Not later than
the date that is the earlier of
the date that is 60 days after
the Secretary of Veterans
Affairs requests a
certification under subclause
(I) or June 1, 2002, the
Inspector General of the
Department of Health and Human
Services shall submit a report
to Congress containing the
certification under subclause
(I) or the denial of such
certification.
(C) Maintenance of level of effort.--
(i) Report by secretary of veterans
affairs on basis for calculation.--Not
later than the date that is 60 days
after the date on which the
administering Secretaries enter into an
agreement under subsection (b)(1)(A),
the Secretary of Veterans Affairs shall
submit a report to Congress and the
Comptroller General of the United
States explaining the methodology used
and basis for calculating the level of
effort of the Department of Veterans
Affairs under the program and project.
(ii) Report by comptroller general.--
Not later than the date that is 180
days after the date described in clause
(i), the Comptroller General of the
United States shall submit to Congress
and the administering Secretaries a
report setting forth the Comptroller
General's findings, conclusion, and
recommendations with respect to the
report submitted by the Secretary of
Veterans Affairs under clause (i).
(iii) Response by secretary of
veterans affairs.--The Secretary of
Veterans Affairs shall submit to
Congress not later than 60 days after
the date described in clause (ii) a
report setting forth such Secretary's
response to the report submitted by the
Comptroller General under clause (ii).
(D) Annual report by the comptroller
general.--Not later than December 31 of each
year during which the program and demonstration
project is conducted, the Comptroller General
of the United States shall submit to the
administering Secretaries and to Congress a
report on the extent, if any, to which the
costs of the Secretary of Health and Human
Services under the medicare programunder this
title increased during the preceding fiscal year as a result of the
program or demonstration project.
(2) Required response in case of increase in costs.--
(A) In general.--If the administering
Secretaries find, based on paragraph (1), that
the expenditures under the medicare program
under this title increased (or are expected to
increase) during a fiscal year because of the
program or demonstration project, the
administering Secretaries shall take such steps
as may be needed--
(i) to recoup for the medicare
program the amount of such increase in
expenditures; and
(ii) to prevent any such increase in
the future.
(B) Steps.--Such steps--
(i) under subparagraph (A)(i) shall
include payment of the amount of such
increased expenditures by the Secretary
of Veterans Affairs from the current
medical care appropriation for the
Department of Veterans Affairs to the
trust funds; and
(ii) under subparagraph (A)(ii) shall
include lowering the amount of payment
under the program or project under
subsection (g)(1), and may include, in
the case of the demonstration project,
suspending or terminating the project
(in whole or in part).
(i) Evaluation and Reports.--
(1) Independent evaluation by gao.--
(A) In general.--The Comptroller General of
the United States shall conduct an evaluation
of the program and an evaluation of the
demonstration project, and shall submit annual
reports on the program and demonstration
project to the administering Secretaries and to
Congress.
(B) First report.--The first report for the
program or demonstration project under
subparagraph (A) shall be submitted not later
than 12 months after the date on which the
Secretary of Veterans Affairs first provides
services under the program or project,
respectively.
(C) Final report on demonstration project.--A
final report shall be submitted with respect to
the demonstration project not later than 3\1/2\
years after the date of the first report on the
project under subparagraph (B).
(D) Contents.--The evaluation and reports
under this paragraph for the program or
demonstration project shall include an
assessment, based on the agreement entered into
under subsection (b), of the following:
(i) Any savings or costs to the
medicare program under this title
resulting from the program or project.
(ii) The cost to the Department of
Veterans Affairs of providing care to
category A medicare-eligible veterans
under the program or to category C
medicare-eligible veterans under the
demonstration project, respectively.
(iii) An analysis of how such program
or project affects the overall
accessibility of medical care through
the Department of Veterans Affairs, and
a description of the unintended effects
(if any) upon the patient enrollment
system under section 1705 of title 38,
United States Code.
(iv) Compliance by the Department of
Veterans Affairs with the requirements
under this title.
(v) The number of category A
medicare-eligible veterans or category
C medicare-eligible veterans,
respectively, opting to participate in
the program or project instead of
receiving health benefits through
another health insurance plan
(including benefits under this title).
(vi) A list of the health insurance
plans and programs that were the
primary payers for medicare-eligible
veterans during the year prior to their
participation in the program or
project, respectively, and the
distribution of their previous
enrollment in such plans and programs.
(vii) Any impact of the program or
project, respectively, on private
health care providers and beneficiaries
under this title that are not enrolled
in the program or project.
(viii) An assessment of the access to
care and quality of care for medicare-
eligible veterans under the program or
project, respectively.
(ix) An analysis of whether, and in
what manner, easier access to medical
centers of the Department of Veterans
Affairs affects the number of category
A medicare-eligible veterans or C
medicare-eligible veterans,
respectively, receiving medicare health
care services.
(x) Any impact of the program or
project, respectively, on the access to
care for category A medicare-eligible
veterans or C medicare-eligible
veterans, respectively, who did not
enroll in the program or project and
for other individuals entitled to
benefits under this title.
(xi) A description of the
difficulties (if any) experienced by
the Department of Veterans Affairs in
managing the program or project,
respectively.
(xii) Any additional elements
specified in the agreement entered into
under subsection (b).
(xiii) Any additional elements that
the Comptroller General of the United
States determines is appropriate to
assess regarding the program or
project, respectively.
(2) Reports by secretaries on program and
demonstration project with respect to medicare-eligible
veterans.--
(A) Demonstration project.--Not later than 6
months after the date of the submission of the
final report by the Comptroller General of the
United States on the demonstration project
under paragraph (1)(C), the administering
Secretaries shall submit to Congress a report
containing their recommendation as to--
(i) whether there is a cost to the
health care program under this title in
conducting the demonstration project;
(ii) whether to extend the
demonstration project or make the
project permanent; and
(iii) whether the terms and
conditions of the project should
otherwise be continued (or modified)
with respect to medicare-eligible
veterans.
(B) Program.--Not later than 6 months after
the date of the submission of the report by the
Comptroller General of the United States on the
third year of the operation of the program, the
administering Secretaries shall submit to
Congress a report containing their
recommendation as to--
(i) whether there is a cost to the
health care program under this title in
conducting the program under this
section;
(ii) whether to discontinue the
program with respect to category A
medicare-eligible veterans; and
(iii) whether the terms and
conditions of the program should
otherwise be continued (or modified)
with respect to medicare-eligible
veterans.
----------
SECTION 4015 OF THE BALANCED BUDGET ACT OF 1997
SEC. 4015. MEDICARE SUBVENTION DEMONSTRATION PROJECT FOR MILITARY
RETIREES.
(a) * * *
[(b) Implementation Plan for Veterans Subvention.--Not later
than 12 months after the start of the demonstration project,
the Secretary of Health and Human Services and the Secretary of
Veterans Affairs shall jointly submit to Congress a detailed
implementation plan for a subvention demonstration project
(that follows the model of the demonstration project conducted
under section 1896 of the Social Security Act (as added by
subsection (a)) to begin in 1999 for veterans (as defined in
section 101 of title 38, United States Code) that are eligible
for benefits under title XVIII of the Social Security Act.]
VII. DISSENTING VIEWS
Of course I want to provide the best care for our nation's
disabled and low-income Veterans.
I also want to preserve the Medicare Trust Fund.
This bill does not provide the best care for Veterans in a
cost effective manner, and it does drain the Medicare Trust
Fund.
Basically, the Category A program sets up Veterans
Department HMOs (mostly in rural areas), and Medicare will pay
the providers who see these Veterans less than Medicare would
normally pay. You get what you pay for, and if you pay less
than what Medicare pays, you are likely to get less good care.
The bill basically would put disabled and ill Veterans in
an HMO. Starting in 2002, Veterans will be locked into these
plans for half a year, and in 2003 and thereafter, locked in
for nine months of the year. Yet there is data that civilian
HMOs don't always do a good job with the chronically and
seriously ill--that they are underserved compared to fee-for-
service Medicare. What makes the Members think that a
government-run HMO under budget pressure will be any better
than the rest of the HMOs--and that it may be hard for a
Veteran to get a referral from a VA hospital to a private
sector Center of Excellence?
The argument is made that the Veterans Department HMO will
be able to offer more comprehensive benefits for little or no
cost to the Veteran--just like many Medicare HMOs currently
offer Medicare beneficiaries.
Good! I certainly want full coverage for our low-income and
disabled Veterans, but is this the most efficient way? Look at
the Congressional Budget Office analysis printed in this
report. CBO notes that over ten years we will be paying about
$330 million extra to the VA from Medicare, because the people
who are likely to sign up for this program will be healthier
than the average Medicare patient. The CBO also does not
believe that the DVA will maintain its level of effort,\1\ and
thus Medicare Trust Fund money will be used to offset
Appropriated funds. Under this bill, Medicare will be spending
about $6,000 extra per enrollee. [For the exact amount in a
particular year, use the CBO table, and divide the change in
Medicare spending by the number of enrollees.] But Medicare is
already covering these Veterans with the basic Medicare
package. What does the Veteran get for all this extra Medicare
expenditure besides being locked into an HMO? For the services
that Medicare does not provide, we could buy a private
comprehensive medigap policy for about $1,500 a year that would
provide pharmaceuticals, copays, deductibles, etc., and the
Veteran would be completely free to seek care anywhere they
wanted, not just from a VA's HMO facility.
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\1\ To the extent the DVA does maintain effort, yet under the bill
is providing care to thousands of new Medicare patients, its ability to
serve its existing patient base will be stretched and compromised. For
current DVA beneficiaries, this is not a good bill.
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In sum, there are much cheaper ways to provide the
additional coverage that the VA HMOs will provide.
The bill does drain the Medicare Trust Fund of about $1.8
billion over the next ten years. It is ``funded'' with a pure
budget gimmick (which by the way, has already been ``spent'' by
others in other ways). The bill is contingent on legislation
undoing a new entitlement to DVA care for smoking-related
diseases. Undoing that entitlement ``saves'' the DVA from
future mandatory obligations, but it does nothing to restore
money to the Medicare Trust Funds.
As Members know, I have been the author of legislation to
expand Medicare-type coverage to every American. I am the House
lead sponsor of the Medicare Early Access Act (which would let
people buy into Medicare at age 55). I would be happy to extend
Medicare protection to all Veterans of all ages. But this bill
is a wasteful inefficient way to improve health care coverage.
Instead of building on the vast, under-utilized capacity of the
private sector, it subjects Veterans to HMOs of questionable
quality.
This bill is just a way to help the DVA bureaucracy grow.
There are better ways to help and honor our nation's Veterans.
Pete Stark.