[Senate Report 106-152]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 272
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-152

======================================================================



 
 AMENDING THE INDIAN HEALTH CARE IMPROVEMENT ACT TO MAKE PERMANENT THE 
   DEMONSTRATION PROGRAM THAT ALLOWS FOR DIRECT BILLING OF MEDICARE, 
 MEDICAID, AND OTHER THIRD PARTY PAYORS, AND TO EXPAND THE ELIGIBILITY 
      UNDER SUCH PROGRAM TO OTHER TRIBES AND TRIBAL ORGANIZATIONS

                                _______
                                

               September 8, 1999.--Ordered to be printed

_______________________________________________________________________


   Mr. Campbell, from the Committee on Indian Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 406]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 406) to amend the Indian Health Care Improvement Act 
to make permanent the demonstration program that allows for 
direct billing of medicare, medicaid, and other third party 
payors, and to expand the eligibility under such program to 
other tribes and tribal organizations, having considered the 
same, reports favorably thereon with an amendment in the nature 
of a substitute, and recommends that the bill (as amended) to 
pass.

                                Purpose

    The purpose of S. 406 is to make permanent a direct billing 
demonstration program authorized by the Indian Health Care 
Improvement Act Amendments of 1988, Pub. L. 100-713. The bill 
makes the program permanent for the four demonstration programs 
and expands the eligibility to other tribes and tribal 
organizations which operate IHS hospitals and clinics. It 
provides that all funds received through the program be used 
specifically to maintain accreditation or, if that has been 
secured, to address the lack of health resources available to 
that tribe. The bill recognizes the success of the 
demonstration program, and that the program enhances and 
reinforces the ideas contained in the Indian Self-Determination 
and Assistance Act (Pub. L. 93-638, 25 U.S.C. 450 et seq.) to 
strengthen the government-to-government relationship between 
tribes and the Federal government.

                               Background

    In exchange for the cession of millions of acres of land to 
which Indian tribes held aboriginal title, the United States 
entered into treaties with Indian nations. Many of the treaties 
provided that health care services would be guaranteed to the 
citizens of Indian country in perpetuity.
    The Federal obligation for the provision of health care 
services in Indian country also arises out of the special trust 
relationship between the United States and Indian tribes, as 
reflected in Article I, Section 8, Clause 3 of the U.S. 
Constitution, which has been given form and substance by 
numerous treaties, laws, Supreme Court decisions, and Executive 
Orders.
    The first Federal statute authorizing the appropriation of 
Federal funds to carry out the United States' trust and treaty 
responsibilities was the Snyder Act of 1921, 25 U.S.C. 13. In 
1976, the Indian Health Care Improvement Act (``IHCIA'') became 
law. The IHCIA was the first comprehensive statute specifically 
addressing the provision of health care in Indian country and 
the Federal administration of health care of Native Americans. 
In 1988, amendments to the IHCIA provided for the creation of a 
Medicare and Medicaid direct billing demonstration program 
which is made permanent by this legislation.

                    a. the IHS and billing practices

    Prior to 1988, tribes who operated IHS hospitals and 
clinics submitted their requests for reimbursement for Medicare 
and Medicaid outlays or expenditures to the Indian Health 
Service. The submission of that request began a complex, 
arduous process which did not always result in payment.
    Once a patient was seen by the IHS facility, a claim was 
generated and sent to the Indian Health Service Area Office. 
The Area Office, in turn, made a claim to the Fiscal 
Intermediary (the agent responsible for processing Medicare and 
Medicaid claims (oftentimes a state) responsible for payment of 
the claim.
    Once the Fiscal Intermediary paid the IHS Area Office, the 
funds were deposited in the Federal reserve and sent to the 
Department of the Treasury, where payment was apportioned back 
to the IHS Headquarters. The Area Office would then request 
funds from IHS Headquarters, and once the amount an Area Office 
would receive was determined, the Area Office would modify the 
Tribe's ``638'' contract to reflect the actual amount received 
from IHS Headquarters and which was to be paid to the tribe.
    When the payment was received by the tribe operating IHS 
facility, it was always difficult, if not impossible, for the 
tribe to determine which of the submitted claims had been paid 
and which had been denied, as there was no list provided which 
identified claim numbers to the tribe. Oftentimes, according to 
tribal officials, if a payment register was received, it would 
not be for months or years after the original claim was made 
and no attempt could be made to resubmit the claim. Officials 
reported periods as long as two years between submission of a 
claim and reimbursement or denial of the claim.
    Tribal officials also claimed that for a period of time the 
problems with a claim resulted from incorrect submissions made 
by the IHS, whose computer system had malfunctioned. A Medicare 
audit later uncovered the errors, and tribes were made to repay 
the overpayment claimed by the IHS system, along with 
penalties, even though they had no control over the submission 
to the Fiscal Intermediary, nor any way of determining that 
they had in fact received an overpayment.\1\
---------------------------------------------------------------------------
      \1\ See Department of Health and Human Services, Report to 
Congress on the Tribal Demonstration Program on Direct Billing for 
Medicare, Medicaid and Other Third Party Payors, Appendix D, December 
15, 1998.
---------------------------------------------------------------------------

                b. history of the demonstration program

    In 1988, the Indian Health Care Improvement Act was 
amended. In the course of gathering information regarding the 
IHCIA, several tribal leaders submitted comments regarding the 
desire of tribes to streamline the process for billing Medicare 
and Medicaid reimbursements.
    Specifically, Indian tribes and tribal organizations who 
contracted the operation and administration of IHS facilities 
stated that,

          . . . should they be allowed to retain all of the 
        funds they collect from Medicaid and Medicare 
        reimbursements and third party insurers, they could 
        better control their own cost accounting systems and 
        accounts receivable, and that they could thereby 
        maximize and increase the amounts collected from such 
        sources. Tribes and tribal organizations believe that 
        the policy of self-determination dictates this step 
        toward a degree of financial autonomy that will better 
        equip them to one day assume the full range of 
        responsibilities that are associated with the provision 
        of health care. Evidence submitted by tribalcontractors 
in Alaska would indicate that because of certain legal impediments that 
exist to the collection of third party resources by the Indian Health 
Service, tribal contractors can in fact collect amounts from third 
party sources far in excess of the amounts that Indian Health Service 
is able to collect.--S. Rep. 100-508, 100th Cong., 2nd Sess. 1988, 1988 
U.S.C.C.A.N. 6183, 1988 WL 169927.
    The Committee, in its report to the Senate, stated its 
intention to review the effectiveness of the demonstration 
program after several years in order to make an informed 
decision as to whether to continue the program and offer it to 
additional participants. S. Rep. 100-508, 100th Cong., 2nd 
Sess. 1988, 1988 U.S.C.C.A.N. 6183, 1988 WL 169927.
    In 1996, Congress, based on evidence presented to it 
regarding the success of the Demonstration Program, extended 
the Demonstration Program for two more years to allow time for 
the DHHS to make its report to Congress. The program was 
extended again in 1998, based upon a favorable report made to 
Congress by DHHS.

                    c. Demonstration Program Results

    Four facilities were chosen to participate in the 
Demonstration Program: the Southeast Alaska Regional Health 
Consortium (``SEARHC''), Sitka, Alaska; the Bristol Bay Area 
Health Corporation, Dillingham, Alaska; the Choctaw Nation of 
Oklahoma, Durant Oklahoma; and the Mississippi Band of Choctaw 
Indians, Philadelphia, Mississippi.
    Under the terms of the Demonstration Program, the 
participants were authorized to make claims directly to the 
Fiscal Intermediary for reimbursement. In order to become a 
participant, the tribe's facility had to meet IHS requirements 
for operation of its own programs and the facility needed to be 
accredited by an accrediting body designated by the Secretary--
the Joint Commission on Accreditation of Healthcare 
Organizations (``JCAHO'').
    All funds reimbursed were required to be used for specific 
purposes. The first priority for the funds received was to make 
improvements within the facility which would allow it to 
maintain compliance with the conditions and requirements 
applicable generally to all facilities under Medicare and 
Medicaid programs (to continue to be accredited by the 
accrediting body). If funds remained after compliance was 
maintained, the excess was to be used only to improve the 
health resources available to the Indian tribe. All funds were 
to be expended in accordance with IHS regulations applicable to 
funds provided by the IHS under a contract entered into under 
the Indian Self-Determination Act (25 U.S.C. 450f et seq.).
    The Medicare and Medicaid Direct Billing Demonstration 
Program was, by all accounts, a success. The Department of 
Health and Human Services, in a report delivered to Congress in 
December of 1998, stated that the ``demonstration project has 
been a success as it has simplified, streamlined, and increased 
collections.'' The DHHS reported that the direct billing 
process had four positive effects for the four participating 
tribes.
    Medicare and Medicaid collections increased dramatically at 
all four facilities. The increase in collections for both 
Medicaid and Medicare combined ranged from 152% at the SEARHC 
facility to 364% at the Bristol Bay facility.
    The increased collections were used by all four tribes to 
address compliance issues at their facilities. The body 
designated by the Secretary as responsible for accreditation 
was the Joint Commission on Accreditation of Healthcare 
Organizations (JCAHO), and all programs were required to meet 
JCAHO standards for accreditation before participating in the 
Demonstration Project.
    During the term of the Demonstration Project, all four 
facilities reported increases in their status and ratings with 
the JCAHO and three of the projects reported significant 
increases in their standing with the JCAHO. SEARHC reported 
receiving the highest score possible. The SEARHC facility also 
received the highest ranking possible for the years 1996 and 
1997.
    Three of the four participants also reported that they 
expended excess funds to improve the health resources available 
to the tribe. Most of these funds were used to improve 
facilities, to acquire additional medical equipment, and to 
hire additional staff. The Mississippi Band of Choctaw Indians 
reported that additional funds were used to open three new 
clinics, geared toward tuberculosis, diabetes and Women's 
Wellness. The Choctaw Nation of Oklahoma reported program 
expansions at three locations, the opening of a diabetes 
treatment center and the use of an improved information system. 
The remaining participants reported that the increased 
collections were used to hire new staff and implement projects 
that both improved their JCAHO rating and improved the health 
resources offered by the tribe.
    Finally, all projects reported a large decrease in the 
amount of time between billing and collection. Each tribe 
reported saving at least two months time, and one tribe 
reported saving up to eight months time between billing and 
collection. This was largely due to increased, direct contact 
with the Fiscal Intermediary. The participants reported that 
the direct contact with the Fiscal Intermediary allowed them to 
``improve billings and collection practices, improve management 
of accounts receivable, reduce the time between billing and 
collection, and improve management planning on use of 
collections.'' \2\
---------------------------------------------------------------------------
    \2\ See Department of Health and Human Services, Report to Congress 
on the Tribal Demonstration Program on Direct Billing for Medicare, 
Medicaid and Other Third Party Payors, page 9, December 15, 1998.
---------------------------------------------------------------------------
    The Department went on to recommend that the Demonstration 
Program be made permanent and that the program be open to an 
expanded number of participants.\3\
---------------------------------------------------------------------------
    \3\ Department of Health and Human Services, Report to Congress on 
the Tribal Demonstration Program on Direct Billing for Medicare, 
Medicaid and Other Third Party Payors, page 10, December 15, 1998.
---------------------------------------------------------------------------
    On August 4, 1999, the Committee held a hearing to discuss 
the provisions of S. 406. Witnesses attending the hearing 
included a representative of the DHHS/IHS, Mr. Michel E. 
Lincoln, a participant in the pilot project, the Honorable 
Gregory Pyle, Chief of the Choctaw Nation of Oklahoma, Dr. 
Buford Rolin of the National Indian Health Board and W. Ron 
Allen of the National Congress of American Indians.
    Every witness stated their support for the provision of S. 
406. The Honorable Gregory Pyle summed it up this way, 
``Without question Senate Bill 406 is a win win situation for 
the tribes and the Indian Health Service * * * ''
    S. 406 creates a more efficient and effective means for the 
Medicare and Medicaid reimbursement to tribes. But more 
importantly, it is a recognition of the government to 
government relationship that exists between the federal 
government and Indian tribes, and furthers the policy of tribal 
self-determination by allowing tribes to best determine the 
allocation and use of funds received.

                          Legislative History

    S. 406 was introduced on February 10, 1999, by Senator 
Murkowski for himself, and Senators Lott, Campbell, Inouye, 
Inhofe, Baucus and Cochran. Senator Hatch was added as a 
cosponsor on September 8, 1999. S. 406 was referred to the 
Committee on Indian Affairs. The bill was the subject of a 
hearing held by the Senate Committee on Indian Affairs on 
August 4, 1999. S. 406 was ordered to be reported to the full 
Senate on August 4, 1999.

                      Section-by-Section Analysis


Section 1. Short title

    This section contains the title of the Act as the ``Alaska 
Native and American Indian Direct Reimbursement Act of 1999.''

Section 2. Findings

    This section authorizes the permanent establishment of the 
direct billing program; states the benefits of the program; 
states the expiration and extension dates; and gives the 
benefit of providing permanent status to the demonstration 
program.

Section 3. Direct billing of Medicare, and other third party payors

    Subsection (a) amends Section 405 of 25 U.S.C. 1645 to 
provide for the permanent authorization and establishment of 
the direct billing program. Subsection (a) also provides for 
the amendments of Section 405 of IHCIA as follows.
    Subsection (a)(1) authorizes tribes to directly bill for 
payment to be made under the Medicare program (Title XVIII of 
the Social Security Act (42 U.S.C. 1395 et seq.)), State plans 
for medical assistance approved under Title XIX of the Social 
Security Act, and third party payors.
    Subsection (a)(2) provides for direct billing from the 
Medicaid program (section 1905(b) of the Social Security Act, 
42 U.S.C. 1396(b)).
    Subsection (b)(1) describes that the funds reimbursed will 
first be used by the hospital or clinic for the purposes of 
making any improvements in the hospital or clinic that may be 
necessary to achieve or maintain compliance with the conditions 
and requirements applicable to facilities of such type under 
the Medicare or Medicaid programs.
    Subsection (b)(2) states that all tribal hospitals and 
clinics participating in the program shall be subject to all 
auditing requirements applicable to programs administered 
directly by the Service.
    Subsection (b)(3) provides for Secretarial oversight of the 
program by requiring the submission of annual reports by 
participants of the program.
    Subsection (b)(4) ensures that no payments will be made out 
of the special funds described in Section 1880(c) of the Social 
Security Act (42 U.S.C. 1395qq(c)) or section 402(a) of the 
IHCIA.
    Subsection (c)(1) establishes the eligibility requirements 
for participation in the program.
    Subsection (c)(2) sets forth the required contents of the 
tribal application for participation in the program; the 
timeline for approval by the Secretary or the submitted 
applications; allows for the continued, uninterrupted 
participation of the demonstration program participants; and 
states the duration of the approved application.
    Subsection (d)(1) gives the authority to the Secretary for 
the examination of any administrative changes that may be 
necessary to facilitate direct billing and reimbursement.
    Subsection (d)(2) sets out the reporting requirements for 
accounting information that a participant will have to submit 
to the Secretary, and provides for periodic changes in the 
required information.
    Subsection (e) allows for a participant to withdraw from 
the program in the same manner that a tribe retrocedes a 
contracted program to the Secretary under authority of the 
Indian Self-Determination Act (25 U.S.C. 450 et seq.)
    Subsection (b) provides for conforming amendments of this 
Act.
    Subsection (c) states the effective date of this Act as 
October 1, 2000.

                   Cost and Budgetary Considerations

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 27, 1999.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 406, the Alaska 
Native and American Indian Direct Reimbursement Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Dorothy 
Rosenbaum.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               congressional budget office cost estimate

S. 406--Alaska Native and American Indian Direct Reimbursement Act of 
        1999

    Summary: S.406 would extend indefinitely an Indian Health 
Services (IHS) demonstration project that allows four tribally-
operated IHS facilities to bill the Medicare and Medicaid 
programs directly, rather than submitting their claims through 
the IHS. The bill also would allow all other tribally-operated 
IHS facilities to bill Medicare and Medicaid directly. CBO 
estimates that the bill would raise federal outlays by $9 to 
$10 million in each of fiscal years 2001 to 2004. Federal 
Medicare outlays would be higher by about $3 million a year, 
and federal Medicaid outlays would be higher by about $7 
million a year. Because the bill would affect direct spending, 
pay-as-you-go procedures would apply.
    S. 406 contains no private-sector or intergovernmental 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
Participation in the direct billing program could improve the 
cash-flow of health facilities operated by tribal governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 406 is shown in the following table. The 
costs of this legislation fall within budget functions 550 
(health) and 570 (Medicare).

----------------------------------------------------------------------------------------------------------------
                                                             Outlays, by fiscal years, in million of dollars--
                                                        -----------------------------------------------------------
                                                                       1999    2000    2001    2002    2003   2004
------------------------------------------------------------------------------------------------------------ ------
                                           CHANGES IN DIRECT SPENDING

Medicare...............................................          O         0       3       3       3       3
Medicaid...............................................          O         0       7       7       6       6
                                                        --------------------------------------------------------
Total..................................................          O         0      10      10       9       9
----------------------------------------------------------------------------------------------------------------
Note.--Components may not sum to totals because of rounding.

    Basis of estimate: Under current law, four tribally-
operated Indian Health Service demonstration sites are 
authorized to bill the Medicare and Medicaid programs directly 
rather than submitting their claims through the IHS. The 
demonstration authority expires September 30, 2000. S. 406 
would allow all tribally-operated IHS facilities to bill 
Medicare and Medicaid directly.
    According to IHS, seven hospitals are tribally-operated and 
would likely choose to bill Medicare and Medicaid directly. In 
1997, Medicare and Medicaid collections totaled $55 million in 
these facilities. In addition, more than 150 health stations, 
health centers, and clinics would be eligible to bill directly 
under the legislation. CBO assumes that all of the hospitals 
would choose to bill directly over the next several years but 
that only a few of the largest of the other facilities would 
develop the infrastructure necessary to adopt direct billing. 
CBO further assumes that a few additional hospitals would 
become tribally-operated and begin to bill directly.
    Based on information from the IHS on the experiences in the 
demonstration sites, CBO assumes that direct billing would 
increase Medicare and Medicaid payments for two reasons. First, 
the demonstration sites report a reduction in the amount of 
time between filing reimbursement claims and receiving payment. 
CBO therefore assumes that in the first year a facility 
participated in direct billing, it would receive one to two 
extra months worth of Medicare and Medicaid payments. The 
legislation would also increase federal costs in the four 
existing demonstration sites because under current law they are 
required to return to billing Medicare and Medicaid through IHS 
and will therefore experience a one- to two-month slow-down in 
Medicare and Medicaid collections. Of the $37 million in 
estimated Medicare and Medicaid costs over the 2000-2004 
period, $11 million is attributable to the one-time 
acceleration of payments.
    Second, demonstration sites reported increased Medicare and 
Medicaid payments under direct billing because of improved 
claims processing. The sites reported that they were better 
able to track their claims and to correct errors under direct 
billing than when they filed their claims through the IHS. 
Medicare and Medicaid payments have grown dramatically in both 
demonstration sites and nondemonstration IHS facilities in the 
ten years since the demonstration was authorized. Much of the 
growth stems from higher Medicare and Medicaid reimbursement 
rates for IHS facilities, efforts by IHS to improve its 
Medicare and Medicaid collections, and general growth in 
medical costs and enrollment, rather than from direct billing. 
Nonetheless, based on the experience in the demonstration 
sites, CBO assumes that the improved claims processing 
procedures that direct billing enables would increase Medicare 
and Medicaid payments by about 10 percent in the facilities 
that choose to undertake it.
    In addition, direct billing may slightly reduce IHS 
administrative costs, which are subject to annual 
appropriations.
    Pay-as-you-go considerations: Section 252 of the Balanced 
Budget and Emergency Deficit Control Act sets up pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts. The net changes in outlays and governmental receipts 
that are subject to pay-as-you-go procedures are shown in the 
following table. For the purpose of enforcing pay-as-you-go 
procedures, only the effects in the current year, the budget 
year, and the succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
                                                      By fiscal years, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................      0      0     10      9      9      9      9     10     11     11     12
Changes in receipts................                                 Not applicable
----------------------------------------------------------------------------------------------------------------

    Estimated impact on state, local, and tribal governments: 
S. 406 contains no intergovernmental mandates as defined in 
UMRA. By allowing all tribally-operated IHS facilities to bill 
Medicare and Medicaid directly, the bill would shorten the 
period of time for receiving reimbursements and improve 
processing procedures. Medicare and Medicaid amounts supporting 
trial health facilities are 100-percent federally funded. The 
direct billing would increase the cash-flow position of 
facilities that chose to participate.
    Estimated impact on the private sector: The bill contains 
no private-sector mandates as defined in UMRA.
    Previous CBO estimates: In July 1998, in a letter to 
Senator Frank H. Murkowski, CBO estimated that extending the 
direct billing authority would increase Medicare and Medicaid 
costs by about $5 million a year. CBO relied on a similar 
methodology in this estimate, but the estimate now is higher 
for two reasons. First, in January 1999 the Department of 
Health and Human Services increased the rates paid to IHS 
facilities by an estimated 15 percent. The higher rates 
increase the cost of the legislation because there would be 
larger amounts paid to the facilities that implement direct 
billing. Second, a very large hospital, Alaska Native Medical 
Center (ANMC), whose Medicare and Medicaid collections are 
almost as large as the total for the other tribally-operated 
hospitals that do not participate in the demonstration project, 
has become tribally-operated since CBO completed the July 1998 
estimate. In the earlier estimate CBO assumed that ANMC would 
become tribally-operated and participate in direct billing late 
in the projection period. Now CBO assumes ANMC would 
participate shortly after the bill becomes effective.
    Estimate prepared by: Federal Costs: Dorothy Rosenbaum. 
Impact on State, Local, and Tribal Governments: Leo Lex. Impact 
on the Private Sector: Stuart Hagen.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

               Regulatory and Paperwork Impact Statement

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires that each report accompanying a bill to 
evaluate the regulatory and paperwork impact that would be 
incurred in carrying out the bill. The Committee believes that 
S. 1770 will have minimal regulatory or paperwork impact.

                        Changes in Existing Law

    In compliance with subsection 12 of the XXVI of the 
Standing Rules of the Senate, the Committee states that 
enactment of S. 406, as amended, will result in the following 
changes in the following statutes as noted below. Deletions are 
in brackets; new material is in italic.
    1. Section 405 of the Indian Health Care Improvement Act 
(25 U.S.C. 1645) is amended as follows:
    [(a) Establishment.--The Secretary shall establish a 
demonstration program under which Indian tribes, tribal 
organizations, and Alaska Native health organizations, which 
are contracting the entire operation of an entire hospital or 
clinic of the Service under the authority of the Indian Self-
Determination Act (25 U.S.C. 450f et seq.), shall directly bill 
for, and receive payment for, health care services provided by 
such hospital or clinic for which payment is made under title 
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) 
(medicare), under a State plan for medical assistance approved 
under title XIX of the Social Security Act (42 U.S.C. 1396 et 
seq.) (medicaid), or from any other third-party payor. The last 
sentence of section 1905(b) of the Social Security Act (42 
U.S.C. 1396d(b)) shall apply for purposes of the demonstration 
program.
    [(b) Direct Reimbursement.--
          [(1) Each hospital or clinic participating in the 
        demonstration program described in subsection (a) of 
        this section shall be reimbursed directly under the 
        medicare and medicaid programs for services furnished, 
        without regard to the provisions of section 1880(c) of 
        the Social Security Act (42 U.S.C. 1395qq(c)) and 
        sections 1642(a) and 1680c(b)(2)(A) of this title, but 
        all funds so reimbursed shall first be used by the 
        hospital or clinic for the purpose of making any 
        improvements in the hospital or clinic that may be 
        necessary to achieve or maintain compliance with the 
        conditions and requirements applicable generally to 
        facilities of such type under the medicare or medicaid 
        program. Any funds so reimbursed which are in excess of 
        the amount necessary to achieve or maintain such 
        conditions or requirements shall be used--
                  [(A) solely for improving the health 
                resources deficiency level of the Indian tribe, 
                and
                  [(B) in accordance with the regulations of 
                the Service applicable to funds provided by the 
                Service under any contract entered into under 
                the Indian Self-Determination Act (25 U.S.C. 
                450f et seq.).
          [(2) The amounts paid to the hospitals and clinics 
        participating in the demonstration program described in 
        subsection (a) of this section shall be subject to all 
        auditing requirements applicable to programs 
        administered directly by the Service and to facilities 
        participating in the medicare and medicaid programs.
          [(3) The Secretary shall monitor the performance of 
        hospitals and clinics participating in the 
        demonstration program described in subsection (a) of 
        this section, and shall require such hospitals and 
        clinics to submit reports on the program to the 
        Secretary on a quarterly basis (or more frequently if 
        the Secretary deems it to be necessary).
          [(4) Notwithstanding section 1880(c) of the Social 
        Security Act (42 U.S.C. 1395qq(c)) or section 1642(a) 
        of this title, no payment may be made out of the 
        special fund described in section 1880(c) of the Social 
        Security Act, or section 1642(a) of this title, for the 
        benefit of any hospital or clinic participating in the 
        demonstration program described in subsection (a) of 
        this section during the period of such participation.
    [(c) Requirement for Participation.--
          [(1--In order to be considered for participation in 
        the demonstration program described in subsection (a) 
        of this section, a hospital or clinic must submit an 
        application to the Secretary which establishes to the 
        satisfaction of the Secretary that--
                  [(A) the Indian tribe, tribal organization, 
                or Alaska Native health organization contracts 
                the entire operation of the Service facility.
                  [(B) the facility is eligible to participate 
                in the medicare and medicaid programs under 
                sections 1880 and 1911 of the Social Security 
                Act (42 U.S.C. 1395qq, 1396j);
                  [(C) the facility meets any requirements 
                which apply to programs operated directly by 
                the Service; and
                  [(D) the facility is accredited by the Joint 
                Commission on Accreditation of Hospitals, or 
                has submitted a plan, which has been approved 
                by the Secretary, for achieving such 
                accreditation prior to October 1, 1990.
          [(2) From among the qualified applicants, the 
        Secretary shall, prior to October 1, 1989, select no 
        more than 4 facilities to participate in the 
        demonstration program described in subsection (a) of 
        this section. The demonstration program described in 
        subsection (a) of this section shall begin by no later 
        than October 1, 1991, and end on September 30, 1998.
      [(d) Examination and Implementation Changes.--
          [(1) On November 23, 1998, the Secretary, acting 
        through the Service, shall commence an examination of--
                  [(A) any administrative changes which may be 
                necessary to allow direct billing and 
                reimbursement under the demonstration program 
                described in subsection (a) of this section, 
                including any agreements with States which may be 
                necessary to provide for such direct billing 
                under the medicaid program; and
                  [(B) any changes which may be necessary to 
                enable participants in such demonstration 
                program to provide to the Service medical 
                records information on patients served under 
                such demonstration program which is consistent 
                with the medical records information system of 
                the Service.
          [(2) Prior to the commencement of the demonstration 
        program described in subsection (a) of this section, 
        the Secretary shall implement all changes required as a 
        result of the examinations conducted under paragraph 
        (1).
          [(3) Prior to October 1, 1990, the Secretary shall 
        determine any accounting information which a 
        participant in the demonstration program described in 
        subsection (a) of this section would be required to 
        report.
    [(e) Report.--The Secretary shall submit a final report at 
the end of fiscal year 1996, on the activities carried out 
under the demonstration program described in subsection (a) of 
this section which shall include an evaluation of whether such 
activities have fulfilled the objectives of such program. In 
such report the Secretary shall provide a recommendation, based 
upon the results of such demonstration program, as to whether 
direct billing of, and reimbursement by, the medicare and 
medicaid programs and other third-party payors should be 
authorized for all Indian tribes and Alaska Native health 
organizations which are contracting the entire operation of a 
facility of the Service.
    [(f) Retrocession of Contract.--The Secretary shall provide 
for the retrocession of any contract entered into between a 
participant in the demonstration program described in 
subsection (a) of this section and the Service under the 
authority of the Indian Self-Determination Act (25 U.S.C. 450f 
et seq.). All cost accounting and billing authority shall be 
retroceded to the Secretary upon the Secretary's acceptance of 
a retroceded contract.]
    (a) Establishment of Direct Billing Program.--
          (1) In general.--The Secretary shall establish a 
        program under which Indian tribes, tribal 
        organizations, and Alaska Native health organizations 
        that contract or compact for the operation of a 
        hospital or clinic of the Service under the Indian 
        Self-Determination and Education Assistance Act may 
        elect to directly bill for, and receive payment for, 
        health care services provided by such hospital or 
        clinic for which payment is made under title XVIII of 
        the Social Security Act (42 U.S.C. 1395 et seq.) (in 
        this section referred to as the ``medicare program''), 
        under a State plan for medical assistance approved 
        under title XIX of the Social Security Act (42 U.S.C. 
        1396 et seq.) (in this section referred to as the 
        ``medical program''), or from any other third party 
        payor.
          (2) Application of 100 percent fmap.--The third 
        sentence of section 1905(b) of the Social Security Act 
        (42 U.S.C. 1396d(b)) shall apply for purposes of 
        reimbursement under the medicaid program for health 
        care services directly billed under the program 
        established under this section.
    (b) Direct Reimbursement.--
          (1) Use of funds.--Each hospital or clinic 
        participating in the program described in subsection 
        (a) of this section shall be reimbursed directly under 
        the medicare and medicaid programs for services 
        furnished, without regard to the provisions of section 
        1880(c) of the Social Security Act (42 U.S.C. 
        1395qq(c)) and sections 402(a) and 813(b)(2)(A), but 
        all funds so reimbursed shall first be used by the 
        hospital or clinic for the purpose of making any 
        improvements in the hospital or clinic that may be 
        necessary to achieve or maintain compliance with the 
        conditions and requirements applicable generally to 
        facilities of such type under the medicare or medicaid 
        programs. Any funds so reimbursed which are in excess 
        of the amount necessary to achieve or maintain such 
        conditions shall be used--
                  (A) solely for improving the health resources 
                deficiency level of the Indian tribe; and
                  (B) in accordance with the regulations of the 
                Service applicable to funds provided by the 
                Service under any contract entered into under 
                the Indian Self-Determination Act (25 U.S.C. 
                450f et seq.).
          (2) Audits.--The amounts paid to the hospitals and 
        clinics participating in the program established under 
        this section shall be subject to all auditing 
        requirements applicable to programs administered 
        directly by the Service and to facilities participating 
        in the medicare and medicaid programs.
          (3) Secretarial oversight.--Any participant in the 
        demonstration program authorized under this section as 
        in effect on the day before the date of enactment of 
        the Alaska Native and American Indian Direct 
        Reimbursement Act of 1999 shall only be required to 
        submit annual reports under this paragraph.
          (4) No payments from special funds.--Notwithstanding 
        section 1880(c) of the Social Security Act (42 U.S.C. 
        1395qq(c)) or section 402(a), no payment may be made 
        out of the special funds described in such sections for 
        the benefit of any hospital or clinic during the period 
        that the hospital or clinic participates in the program 
        established under this section.
    (c) Requirements for Participation.--
          (1) Application.--Except as provided in paragraph 
        (2)(B), in order to be eligible for participation in 
        the program established under this section, an Indian 
        tribe, tribal organization, or Alaska Native health 
        organization shall submit an application to the 
        Secretary that establishes to the satisfaction of the 
        Secretary that--
                  (A) the Indian tribe, tribal organization, or 
                Alaska Native health organization contracts or 
                compacts for the operation of a facility of the 
                Service;
          (B) the facility is eligible to participate in the 
        medicare or medicaid programs under section 1880 or 
        1911 of the Social Security Act (42 U.S.C. 1395qq; 
        1396j);
          (C) the facility meets the requirements that apply to 
        programs operated directly by the Service; and
          (D) the facility is accredited by an accrediting body 
        designated by the Secretary or has submitted a plan, 
        which has been approved by the Secretary, for achieving 
        such accreditation.
          (2) Approval.--
                  (A) In general.--The Secretary shall review 
                and approve a qualified application not later 
                than 90 days after the date the application is 
                submitted to the Secretary unless the Secretary 
                determines that any of the criteria set forth 
                in paragraph (1) are not met.
                  (B) Grandfather of demonstration program 
                participants.--Any participant in the 
                demonstration program authorized under this 
                section as in effect on the day before the date 
                of enactment of the Alaska Native and American 
                Indian Direct Reimbursement Act of 1999 shall 
                be deemed approved for participation in the 
                program established under this section and 
                shall not be required to submit an application 
                in order to participate in the program.
                  (C) Duration.--an approval by the Secretary 
                of a qualified application under subparagraph 
                (A), or a deemed approval of a demonstration 
                program under subparagraph (B), shall continue 
                in effect as long as the approved applicant or 
                the deemed approved demonstration program meets 
                the requirements of this section.
    (d) Examination and Implementation of Changes.--
          (1) In general.--The Secretary, acting through the 
        Service, and with the assistance of the Administrator 
        of the Health Care Financing Administration, shall 
        examine on an ongoing basis and implement--
                  (A) any administrative changes that may be 
                necessary to facilitate direct billing and 
                reimbursement under the program established 
                under this section, including any agreements 
                with States that may be necessary to provide 
                for direct billing under the medicaid program; 
                and
                  (B) any changes that may be necessary to 
                enable participants in the program established 
                under this section to provide to the Service 
                medical records information on patients served 
                under the program that is consistent with the 
                medical records information system of the 
                Service.
          (2) Accounting information.--The accounting 
        information that a participant in the program 
        established under this section shall be required 
        toreport shall be the same as the information required 
        to be reported by participants in the demonstration 
        program authorized under this section as in effect on 
        the day before the date of enactment of the Alaska 
        Native and American Indian Direct Reimbursement Act of 
        1999. The Secretary may from time to time, after 
        consultation with the program participants, change the 
        accounting information submission requirements.
    (e) Withdrawl From Program.--A participant in the program 
established under this section may withdraw from participation 
in the same manner and under the same conditions that a tribe 
or tribal organization may retrocede a contracted program to 
the Secretary under authority of the Indian Self-Determination 
Act (25 U.S.C. 450 et seq.). All cost accounting and billing 
authority under the program established under this section 
shall be returned to the Secretary upon the Secretary's 
acceptance of the withdrawal of participation in this program.
    2. Section 1880 of the Social Security Act (42 U.S.C. 
1395qq) is amended by adding at the end the following:
    (e) For provisions relating to the authority of certain 
Indian tribes, tribal organizations, and Alaska Native health 
organizations to elect to directly bill for, and receive 
payment for, health care services provided by a hospital or 
clinic of such tribes or organizations and for which payment 
may be made under this title, see section 405 of the Indian 
Health Care Improvement Act (25 U.S.C. 1645).
    3. Section 1911 of the Social Security Act (42 U.S.C. 
1396j) is amended by adding at the end the following:
    (d) For provisions relating to the authority of certain 
Indian tribes, tribal organizations, and Alaska Native health 
organizations to elect to directly bill for, and receive 
payment for, health care services provided by a hospital or 
clinic of such tribes or organizations and for which payment 
may be made under this title, see section 405 of the Indian 
Health Care Improvement Act (25 U.S.c. 1645).

                                  
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