Health Security Act: Analysis of Veterans' Health Care Provisions (Fact
Sheet, 07/15/94, GAO/HEHS-94-205FS).

Reform of the nation's health care system to reduce the number of
Americans who lack coverage of basic acute health care services could
significantly reduce demand for such services in facilities administered
by the Department of Veterans Affairs (VA). GAO reported in 1992 that if
changes were not made in the VA health care system as part of health
reform, VA hospitals could lose about 50 percent of their acute hospital
workload and 44 percent of their outpatient workload. To assist the
Congressional Veterans' Affairs Committees, which will be considering
legislation to fundamentally reform the VA health care system and
veterans' health benefits, GAO prepared this fact sheet which analyzes
the veterans affairs provisions of the administration's proposed Health
Security Act.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-94-205FS
     TITLE:  Health Security Act: Analysis of Veterans' Health Care 
             Provisions
      DATE:  07/15/94
   SUBJECT:  Health care services
             Health services administration
             Community health services
             Veterans benefits
             Veterans hospitals
             Hospital care services
             Health insurance cost control
             Health resources utilization
             Health care planning
             Proposed legislation
IDENTIFIER:  Health Security Act
             Clinton Health Care Plan
             National Health Care Reform Initiative
             Medicare Program
             VA Health Care Transition Fund
             
**************************************************************************
* This file contains an ASCII representation of the text of a GAO        *
* report.  Delineations within the text indicating chapter titles,       *
* headings, and bullets are preserved.  Major divisions and subdivisions *
* of the text, such as Chapters, Sections, and Appendixes, are           *
* identified by double and single lines.  The numbers on the right end   *
* of these lines indicate the position of each of the subsections in the *
* document outline.  These numbers do NOT correspond with the page       *
* numbers of the printed product.                                        *
*                                                                        *
* No attempt has been made to display graphic images, although figure    *
* captions are reproduced. Tables are included, but may not resemble     *
* those in the printed version.                                          *
*                                                                        *
* A printed copy of this report may be obtained from the GAO Document    *
* Distribution Facility by calling (202) 512-6000, by faxing your        *
* request to (301) 258-4066, or by writing to P.O. Box 6015,             *
* Gaithersburg, MD 20884-6015. We are unable to accept electronic orders *
* for printed documents at this time.                                    *
**************************************************************************


Cover
================================================================ COVER


Fact Sheet for Congressional Committees

July 1994

HEALTH SECURITY ACT - ANALYSIS OF
VETERANS' HEALTH CARE PROVISIONS

GAO/HEHS-94-205FS

VA Under the Health Security Act


Abbreviations
=============================================================== ABBREV

  CHAMPUS - Civilian Health and Medical Program of the Uniformed
     Services
  CHAMPVA - Civilian Health and Medical Program of the Department of
     Veterans Affairs
  HMO - Health Maintenance Organization
  VA - Department of Veterans Affairs

Letter
=============================================================== LETTER


B-257871

July 15, 1994

The Honorable John D.  Rockefeller IV
Chairman
The Honorable Frank H.  Murkowski
Ranking Minority Member
Committee on Veterans' Affairs
United States Senate

The Honorable G.V.  (Sonny) Montgomery
Chairman
The Honorable Bob Stump
Ranking Minority Member
Committee on Veterans' Affairs
House of Representatives

Reform of the nation's health care system to reduce the number of
Americans who lack coverage of basic acute health care services could
significantly reduce demand for VA acute health care services.  We
first reported in June 1992 that, if changes were not made in the VA
health care system as part of health reform, VA hospitals could lose
about 50 percent of their acute hospital workload and 40 percent of
their outpatient workload.\1

The Veterans' Affairs Committees will be considering legislation to
fundamentally reform the Department of Veterans Affairs (VA) health
care system and veterans' health benefits.  We prepared this fact
sheet to help the Committees in their deliberations on this important
legislation.  In summary, it contains the following: 

  Our section-by-section analysis of the veterans' health care
     provisions of the administration's Health Security Act (title
     VIII, subtitle B of H.R.  3600/S.  1757), including the
     amendments approved by the Subcommittee on Hospitals and Health
     Care, House Committee on Veterans' Affairs on May 11, 1994. 
     (See section 1.)

  A list of 19 GAO reports, testimonies, and correspondence issued
     during the past 2-1/2 years on different aspects of VA's role
     under health reform.  Summaries for selected products are
     included.  (See section 2.)


--------------------
\1 VA Health Care:  Alternative Health Insurance Reduces Demand for
VA Care (GAO/HRD-92-79, June 30, 1992). 


   BACKGROUND
------------------------------------------------------------ Letter :1

Our December 1992 Transition Series report, Veterans Affairs Issues,
identified several options for preserving veterans' health care
benefits under a reformed health care system.  These options include

  maintaining a smaller direct delivery system strictly for veterans
     but focusing on those services, such as treatment of spinal cord
     injuries and service-connected disabilities, that may not be
     adequately covered under a reformed national health care system;

  maintaining the current direct delivery system but opening the
     system to other federal beneficiaries to maintain work loads;

  converting some existing facilities to other uses, such as
     long-term psychiatric care, nursing home care, housing for
     homeless veterans, or AIDS treatment facilities;

  merging the VA system with one or more of the other federal health
     care delivery systems, such as the Department of Defense health
     care system; or

  eliminating the separate VA health care system and meeting the
     nation's commitment to veterans by supplementing the coverage
     available under a national health care reform initiative. 

Since then, many legislative proposals have been introduced in both
the House and Senate to reform the nation's health care system.  Only
one, however, the administration's Health Security Act, contains
specific proposals for restructuring the veterans' health care
system. 


   HEALTH SECURITY ACT WOULD
   AUTHORIZE VA TO ESTABLISH
   MANAGED CARE PLANS
------------------------------------------------------------ Letter :2

The proposed Health Security Act would make fundamental changes both
in how VA operates and in the benefits to which veterans using VA are
entitled.  In this regard, the act would (1) transform VA facilities
into a series of managed care plans to compete with private-sector
plans and (2) expand entitlement to free comprehensive health care
services for veterans choosing to enroll in a VA health plan.  In
addition, the act would provide the following: 

  VA health plans could impose no cost sharing of any kind, including
     premiums, copayments, deductibles, and coinsurance for "core
     group" veterans (that is, veterans with service-connected
     disabilities or low incomes, former prisoners of war, and
     veterans of World War I or the Mexican Border Period) who enroll
     in VA health plans.  (See pp.  23-25.)

  VA services not covered under the comprehensive benefit package
     would continue to be offered to all veterans under existing
     eligibility and entitlement provisions.  In most cases, the
     provision of such services would be subject to the availability
     of resources and facilities.  (See p.  14.)

  VA would be given the authority to provide services to the
     dependents of veterans.  (See p.  12.)

  VA would be authorized to establish supplemental benefits and
     cost-sharing policies.  (See p.  16.)

  VA health care facilities would be deemed Medicare providers and VA
     health plans deemed Medicare health maintenance organizations
     (HMOs).  (See p.  27.)

  VA health plans would be allowed to contract for services without
     regard to laws requiring competitive procedures.  (See p.  39.)

  Requirements would be eliminated that the VA notify the Congress
     before administrative reorganizations.  (See p.  40.)

  VA would be authorized to establish its own personnel system
     tailored to individual health plan needs and thus would be
     exempt from most federal personnel requirements.  (See p.  41.)

  VA would be authorized to market its health plans but would be
     restricted to use of nonappropriated funds for marketing
     activities.  (See p.  42.)

The Health Security Act also contains several new financing
mechanisms to help offset the costs of VA health plans: 

  VA would be authorized to recover from Medicare for services
     provided to higher income nonservice-connected Medicare-eligible
     veterans.  VA would be allowed to retain funds recovered from
     Medicare.  (See p.  28.)

  VA would be authorized to retain premiums (both the employer and
     employee shares), copayments, and deductibles for veterans
     enrolling in VA health plans.  (See p.  28.)

  Revenues received by VA health plans, including premiums,
     copayments and coinsurance, deductibles, and amounts received as
     reimbursements from other health plans for services provided to
     its enrollees, would be deposited in a revolving fund.  The
     funds would be available without fiscal year limitations and
     could be distributed among VA health plans.  (See p.  29.)

  A sum of $3.3 billion would be appropriated to a VA Health Care
     Transition Fund over a 3-year period to cover construction of
     additional outpatient clinics and other start-up costs for the
     health plans.  (See p.  42.)


   SUBCOMMITTEE ON HOSPITALS AND
   HEALTH CARE APPROVES AMENDMENTS
   TO THE HEALTH SECURITY ACT
------------------------------------------------------------ Letter :3

On May 11, 1994, the Subcommittee on Hospitals and Health Care
approved amendments to the Health Security Act offered by Chairman
Rowland and Congressmen Smith (N.J.), Kennedy (Mass.), and Gutierrez
(Ill.).  Major changes approved by the Subcommittee include the
following: 

  VA would be required to maintain the capacity to provide for the
     specialized treatment and rehabilitative needs of disabled
     veterans.  VA would be required to ensure that its overall
     capacity to provide such services not be reduced below capacity
     when the Health Security Act is enacted.  (See p.  15.)

  VA health plans would not be allowed to sell a supplemental policy
     to a veteran that provides coverage for services that VA is
     required to provide to that veteran.  (See p.  17.)

  VA would not be allowed to impose or collect a cost share from a
     service-connected veteran enrolled in a non-VA health plan for
     specialized treatment provided by a VA facility.  (See p.  21.)

  VA health plans would not be allowed to provide or pay for
     abortions except when the danger of death to the mother exists
     or the pregnancy is the result of a forcible rape or incest. 
     (See p.  22.)

  The prohibition on imposing cost sharing for core group veterans
     enrolling in VA health plans would be limited to services
     covered under the comprehensive benefit package.  (See p.  23.)

  VA health plans would be required to set their premiums and other
     cost sharing on the basis of rules established by the health
     alliances under which they operate.  (See p.  26.)

  Provisions would be established to provide guaranteed funding of VA
     health plans.  The Secretary of the Treasury would be required
     to make quarterly deposits into the revolving fund from amounts
     not otherwise appropriated on the basis of amounts certified by
     VA.  (See p.  31.)

  VA's exemption from contracting requirements would be broadened. 
     Health plans would be exempt from virtually all federal
     contracting laws and regulations in obtaining a health care
     resource.  (See pp.  39 and 41.)

  VA health plans would be allowed to use both appropriated and
     nonappropriated funds for marketing activities.  (See p.  42.)

  The initial appropriation authorization for the Health Care
     Transition Fund would be increased from $3.3 billion to $4.05
     billion, and the funds would be made available without fiscal
     year limitation.  (See p.  42.)

  A new entitlement to nursing home care would be created for
     veterans with service-connected disabilities rated at 50 percent
     or more and veterans who require nursing home care for a
     service-connected disability.  (See p.  45.)

  Core group veterans enrolling in VA health plans would be entitled
     to any outpatient services offered by VA that are not in the
     comprehensive benefit package without restrictions or cost
     sharing.  (See p.  45.)

  Veterans enrolling in non-VA health plans and higher income
     nonservice-connected veterans enrolled in VA health plans could
     obtain outpatient services not covered under the comprehensive
     benefit package or not fully covered without regard to whether
     such service would obviate the need for hospital care or whether
     the service is reasonably necessary in preparation for hospital
     admission.  (See p.  46.)

  Veterans exposed to toxic substances or ionizing radiation would be
     authorized free care for conditions possibly related to such
     exposures, consistent with current law.  (See p.  47.)

  Notwithstanding any other provisions of the Health Security Act,
     the provisions relating to free comprehensive care to core group
     veterans would take effect on October 1, 1995.  (See p.  50.)


---------------------------------------------------------- Letter :3.1

We did not obtain formal comments on this fact sheet; however, we did
discuss the information presented in this fact sheet with responsible
agency officials.  We considered their comments. 

We are providing copies of this fact sheet to each Member of the
House and Senate Veterans' Affairs Committees, to the Chairmen and
Ranking Minority Members of other Committees having jurisdiction over
the Health Security Act, the Secretary of Veterans Affairs, and other
interested parties.  Copies will be available to others upon request. 

This report was prepared under the direction of James R.  Linz,
Assistant Director, Federal Health Care Delivery Issues.  Please call
Mr.  Linz or me at (202) 512-7101 if you or your staff have any
questions.  Susan Poling, Assistant General Counsel, also contributed
to this report and can be reached at (202) 512-5881. 

David P.  Baine
Director, Federal Health
 Care Delivery Issues


ANALYSIS OF THE VETERANS HEALTH
CARE PROVISIONS OF THE HEALTH
SECURITY ACT AS AMENDED
============================================================ Chapter 1

This table contains the original language of the Health Security Act
(H.R.  3600) as introduced and the amendments to the act as approved
by the Subcommittee on Hospitals and Health Care, House Committee on
Veterans' Affairs.  Language from the original bill deleted during
markup on May 11, 1994, is enclosed in brackets.  Language added
during markup is in boldface type.  Additional GAO analyses are also
in boldface type. 

Section                    Provision                  GAO Analysis
-------------------------  -------------------------  --------------------------
Health Security Act
--------------------------------------------------------------------------------
Title VIII: Subtitle B--   Title 38, United States    Establishes a new chapter
Department of Veterans     Code, is amended by        18 under title 38 U.S.C.
Affairs                    inserting after chapter    that outlines VA's role as
                           17 the following new       a participant in health
8101. Benefits and         chapter:                   reform.
Eligibility Through
Department of Veterans     "Chapter 18--Eligibility   Adds a new section 1835 to
Affairs Medical System     and Benefits Under Health  title 38 U.S.C.
                           Security Act
(a) DVA as a Participant   Subchapter [1]I--
in Health Care Reform.     General
                           1801. Definitions
(1) In General.            Subchapter [2]II--
                           Enrollment
                           1811. Enrollment:
                           veterans.
                           1812. Enrollment: CHAMPVA
                           eligibles.
                           1813. Enrollment: family
                           members.
                           Subchapter [3]III--
                           Benefits
                           1821. Benefits for VA
                           enrollees.
                           1822. Chapter 17
                           benefits.
                           1823. Supplemental
                           benefits packages and
                           policies.
                           1824. Limitation
                           regarding veterans
                           enrolled with health
                           plans outside
                           Department.
                           Subchapter [4]IV--
                           Financial Matters
                           1831. Premiums,
                           copayments, etc.
                           1832. Medicare coverage
                           and reimbursement.
                           1833. Recovery of cost of
                           certain care and
                           services.
                           1834. Health Plan
                           Fund[s].
                           1835. Guaranteed funding
                           of Government costs


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
                           For purposes of this       Provides definitions of
Subchapter                chapter:                   "health plan," "VA health
1--General                                            plan," and "VA enrollee."
                           (1) The term "health       Because, under the
1801. Definitions          plan" means an entity      proposed 38 U.S.C.
                           that has been certified    1832(b), a VA health plan
                           under the Health Security  would be considered a
                           Act as a health plan.      Medicare health
                                                      maintenance organization
                           (2) The term "VA health    (HMO), the term "VA
                           plan" means a health plan  enrollee" refers to
                           that is operated by the    individuals enrolled in a
                           Secretary under section    VA health plan functioning
                           7341 of this title.        as either a regional
                                                      alliance health plan or a
                           (3) The term "VA           Medicare HMO.
                           enrollee" means an
                           individual enrolled under  (1) Revises the definition
                           the Health Security Act    of "VA enrollee" to make
                           and subchapter II of this  it clear that it applies
                           chapter in a VA health     to an individual enrolled
                           plan.                      under subchapter II of the
                                                      proposed chapter 18, title
                           (4) The term               38 U.S.C. The proposed
                           "comprehensive benefit     section 1811 under
                           package" means the         subchapter II is amended
                           package of benefits        to specifically authorize
                           required to be provided    Medicare-eligible veterans
                           by a health plan under     to enroll in VA health
                           the Health Security Act.   plans.

                                                      (2) Adds a definition of
                                                      "comprehensive benefit
                                                      package." "Comprehensive
                                                      benefit package" means the
                                                      package of benefits a
                                                      health plan is required to
                                                      provide under the Health
                                                      Security Act.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
Subchapter II--            Each veteran who is an     This section states that
Enrollment                 eligible individual        veterans who are
                           within the meaning of      "eligible" individuals
1811. Enrollment:          section 1001 of the        under section 1001 of the
Veterans                   Health Security Act        Health Security Act may
                           (including a veteran who   enroll in a VA health
                           is a medicare-eligible     plan. Section 1001
                           individual as defined in   provides an entitlement to
                           section 1902 of that Act)  the comprehensive benefit
                           may enroll with a VA       package through enrollment
                           health plan. A veteran     in an applicable health
                           who wants to receive the   plan.
                           comprehensive benefit
                           package through the        Section 1001(d) states
                           Department shall enroll    that Medicare
                           with a VA health plan.     beneficiaries will
                                                      generally not be entitled
                                                      to the comprehensive
                                                      benefit package through
                                                      enrollment in regional
                                                      alliance health plans. The
                                                      exceptions are those
                                                      states where the state has
                                                      chosen to integrate
                                                      Medicare beneficiaries
                                                      into the regional alliance
                                                      plans (section 4001) and
                                                      those Medicare
                                                      beneficiaries who are
                                                      still employed or have a
                                                      spouse still employed
                                                      (section 1012(a)). These
                                                      restrictions on enrollment
                                                      in regional alliance
                                                      health plans would, on the
                                                      surface, appear to prevent
                                                      Medicare-eligible
                                                      veterans, other than those
                                                      described above, from
                                                      enrolling in a VA health
                                                      plan.

                                                      Other Health Security Act
                                                      provisions, however, that
                                                      would deem VA health plans
                                                      Medicare HMOs (section
                                                      1832 of the proposed new
                                                      chapter 18, title 38
                                                      U.S.C.) would allow
                                                      Medicare-eligible veterans
                                                      to enroll in VA health
                                                      plans regardless of
                                                      whether states chose to
                                                      bring Medicare into the
                                                      alliances. In addition,
                                                      section 1004(b) of the
                                                      Health Security Act
                                                      designates the VA health
                                                      plan as the applicable
                                                      health plan for veterans
                                                      who choose to enroll in a
                                                      VA health plan.

                                                      Revised to clearly specify
                                                      that Medicare-eligible
                                                      veterans are eligible to
                                                      enroll in VA health plans.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1812. Enrollment:          (a) Eligibility. An        Civilian Health and
CHAMPVA-Eligibles          individual described in    Medical Program of the
                           subsection (b) [who is     Department of Veterans
                           eligible for benefits      Affairs (CHAMPVA)-
                           under section 1713 of      eligible individuals can
                           this title and] who is     enroll in a VA health plan
                           eligible to enroll in a    in the same manner as a
                           health plan pursuant to    veteran.
                           section 1001 of the
                           Health Security Act may    Adds clarifying language
                           enroll under that Act      to limit enrollment in VA
                           with a VA health plan [in  health plans to those
                           the same manner as a       CHAMPVA eligibles not
                           veteran].                  otherwise eligible for
                                                      CHAMPUS. Specifically, it
                           (b) Applicability. This    applies to
                           section applies to the
                           following individuals who  --the surviving spouse or
                           are not otherwise          child of a veteran who
                           eligible for medical care  died as a result of a
                           under chapter 55 of title  service-connected
                           10 (CHAMPUS):              disability or was
                                                      permanently and totally
                           (1) The surviving spouse   disabled at the time of
                           or child of a veteran who  death, resulting from a
                           (A) died as a result of a  service-connected
                           service-connected          disability and
                           disability, or (B) at the
                           time of death had a total  --the surviving spouse or
                           disability permanent in    child of a person who died
                           nature, resulting from a   in the line of duty.
                           service-connected
                           disability.                "Child" has the meaning
                                                      given the term under the
                           (2) The surviving spouse   Health Security Act.
                           or child of a person who
                           died in the active
                           military, naval, or air
                           service in the line of
                           duty and not due to such
                           person's own misconduct.

                           (c) Definition of Child.
                           For purposes of this
                           section, the term "child"
                           has the meaning given the
                           term in section 1011 of
                           the Health Security Act.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1813. Enrollment: Family   (a) Eligibility. The       The Secretary would be
Members                    Secretary shall [may]      given the discretion to
                           authorize a VA health      enroll family members of
                           plan to enroll members of  veterans and CHAMPVA
                           the family of an enrollee  beneficiaries in VA health
                           under section 1811 or      plans. Family members'
                           1812 of this title.[,      enrollment would be
                           subject to payment of      subject to payment of
                           premiums, deductibles,     premiums, deductibles,
                           copayments, and            copayments, and
                           coinsurance as required    coinsurance as required
                           under the Health Security  under the Health Security
                           Act.]The enrollee shall    Act. Under section 1011(b)
                           have the option of         of the Health Security
                           enrolling in the VA        Act, the term "family"
                           health plan as an          includes the veteran's
                           individual or with family  spouse if the spouse is an
                           members. If the enrollee   eligible individual and
                           chooses to enroll in the   the veteran's (and his/
                           VA health plan with        her spouse's) children if
                           family members, all such   they are eligible
                           family members must be so  individuals.
                           enrolled.
                                                      Changes from discretionary
                                                      to mandatory the
                                                      Secretary's authorization
                                                      of dependent coverage by
                                                      VA health plans. Provides
                                                      that if a veteran decides
                                                      to enroll in a VA health
                                                      plan with family members,
                                                      then all family members
                                                      must enroll.

                                                      Moves reference to cost-
                                                      sharing requirements in
                                                      subsection (a) to new
                                                      subsection (b) (see
                                                      below).


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1813. (continued)                                     Family members (other than
                           (b) Required Payments.     a spouse or child of a
                           Any family member          veteran who has a total
                           enrolled in a VA health    disability, permanent in
                           plan shall (except as      nature, resulting from a
                           provided in section        service-connected
                           1831(c)(2)(B) of this      disability) must pay
                           title) be subject to       premiums, deductibles,
                           payment of premiums,       copayments, and
                           deductibles, copayments,   coinsurance as required
                           and coinsurance as         under the Health Security
                           required under the Health  Act.
                           Security Act.
                           (c) Enrollment             It is not clear how
                           Eligibility To Survive     premium payments would be
                           Death of Veteran. An       determined for family
                           individual who is          members of core group
                           enrolled with a VA health  veterans opting to enroll
                           plan pursuant to           in VA health plans with
                           subsection (a) as a        family members. In other
                           member of the family of a  words, one premium would
                           veteran enrolled under     be established for the
                           section 1811 of this       family enrollment, but the
                           title shall not lose       "core" group veteran could
                           eligibility to be          not be charged a premium,
                           enrolled with VA health    while family members
                           plans by reason of the     could.
                           death of that veteran.
                           (d) Members of Family.     Provides that enrollment
                           [(b)] For purposes of      eligibility survives the
                           this section, the members  death of the veteran for
                           of the family of an        those family members
                           enrollee are [subsection   enrolled in a VA health
                           (a), an enrollee's family  plan. It appears that
                           is] those individuals      survivors of veterans
                           (other than the enrollee)  enrolled in non-VA health
                           included within the term   plans and those survivors
                           "family" as defined in     who enroll in non-VA
                           section 1011(b) of the     health plans after the
                           Health Security Act.       death of the "sponsoring"
                                                      veteran would no longer be
                                                      eligible to enroll in a VA
                                                      health plan, unless
                                                      eligible under section
                                                      1812 under CHAMPVA.

Subchapter III--           The Secretary shall        This section provides that
Benefits                   ensure that each VA        a VA health plan must
                           health plan provides to    provide to each individual
1821. Benefits for VA      each individual enrolled   enrolled in the plan the
Enrollees                  with it the items and      same comprehensive benefit
                           services in the            package that other
                           comprehensive benefit      competing health plans
                           package under the Health   must provide.
                           Security Act.
                                                      The Health Security Act
                                                      requirements for the
                                                      comprehensive benefit
                                                      package would extend to
                                                      veterans enrolling in a VA
                                                      health plan functioning as
                                                      a Medicare HMO.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1822. Chapter 17 Benefits  (a) Care and Services Not  Chapter 17 benefits not
                           Included In Comprehensive  covered under the
                           Benefit Package. In the    comprehensive benefit
                           case of care and services  package would continue to
                           that may be provided       be available to veterans
                           under chapter 17 of this   enrolled in either a VA or
                           title that are not         other health plan under
                           included in the            the same terms and
                           comprehensive benefit      conditions that currently
                           package, the Secretary     apply to that veteran
                           shall provide to any       under chapter 17 of title
                           veteran (whether or not    38 of the U.S.C. Among the
                           enrolled with the health   terms and conditions that
                           plan) the care and         apply under chapter 17 are
                           services authorized under  requirements that (1)
                           this chapter in            nonservice-connected
                           accordance with the terms  veterans be admitted to a
                           and conditions applicable  VA hospital before they
                           to that veteran and that   can be admitted to
                           care under that chapter.   community nursing homes
                           [The Secretary shall       under VA sponsorship and
                           provide to veterans the    (2) dental treatment must
                           care and services that     have begun while they were
                           are authorized to be       hospitalized in a VA
                           provided under chapter 17  hospital for most veterans
                           of this title in           to be eligible to receive
                           accordance with the terms  outpatient dental care.
                           and conditions applicable  While these terms and
                           to that veteran and that   conditions would apply
                           care under such chapter,   both to veterans enrolling
                           notwithstanding that such  in VA and non-VA health
                           care and services are not  plans, they would appear
                           included in the            to have greater effect on
                           comprehensive benefit      veterans enrolling in non-
                           package.]                  VA plans because they
                                                      would be unable to meet
                           (b) Veterans Who Are Not   the requirements relating
                           Eligible to Enroll Under   to treatment in VA
                           Health Security Act. In    hospitals unless their
                           the case of a veteran who  health plans contracted
                           is not an eligible         with VA health plans to
                           individual within the      allow hospitalization in a
                           meaning of section 1001    VA hospital.
                           of the Health Security
                           Act, the Secretary shall   Adds a new provision
                           provide to the veteran     covering veterans living
                           the care and services      overseas who are not
                           that may be provided       eligible to enroll under
                           under chapter 17 of this   the Health Security Act.
                           title through any          They will be provided the
                           facility of the            care and services that may
                           department, whether or     be provided under chapter
                           not the facility is        17 of 38 U.S.C. through
                           operating as or within a   any VA facility whether or
                           VA health plan.            not the facility is
                                                      operating as or within a
                                                      VA health plan.



Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1822. Chapter 17 Benefits  (c) Preservation of        Requires that the
(continued)                Specialized DVA Treatment  Secretary of Veterans
                           Capacities. In carrying    Affairs maintain the
                           out subsection (a), the    capacity to provide for
                           Secretary shall ensure     the specialized treatment
                           that the Department        and rehabilitative needs
                           maintains the capacity to  of disabled veterans
                           provide for the            (including spinal cord
                           specialized treatment and  injury, blind
                           rehabilitative needs of    rehabilitation, and mental
                           disabled veterans          illness) within distinct
                           (including veterans with   VA programs or facilities.
                           spinal cord dysfunction,
                           blindness, and mental      The Secretary of Veterans
                           illness) within distinct   Affairs shall ensure that
                           programs or facilities of  VA's overall capacity to
                           the Department that are    provide such specialized
                           dedicated to the           services is not reduced
                           specialized needs of       below VA's capacity to
                           those veterans in a        provide the services at
                           manner that affords those  the time of enactment. The
                           veterans reasonable        section also makes it
                           access to care and         clear that it is not
                           services for those         intended to prevent VA
                           specialized needs. The     from expanding the number
                           Secretary shall ensure     or types of facilities
                           that overall capacity of   providing specialized
                           the Department to provide  medical treatments.
                           such specialized services
                           is not reduced below the   Maintaining current
                           capacity of the            capacity to provide
                           Department, nationwide,    specialized care could,
                           to provide those           over time, result in a
                           services, as of the date   degradation in the ability
                           of the enactment of this   to meet the special care
                           chapter. Nothing in this   needs of veterans, as
                           subsection precludes the   those needs change,
                           Secretary from expanding   particularly with respect
                           the number or type of      to long-term care. In
                           facilities or programs     addition, the eligibility
                           that provide treatment     expansions added under
                           and rehabilitation         section 8103 of the Health
                           services for the           Security Act could
                           specialized needs of such  increase demand for
                           veterans, including        chapter 17 benefits.
                           provision of specialized
                           services on an outpatient
                           basis.


1822. Chapter 17 Benefits  (d) Annual Report. Not     Adds a new requirement
(continued)                later than March 1 of      that the Secretary of
                           each year, the Secretary   Veterans Affairs submit an
                           shall submit to the        annual report to the House
                           Committees on Veterans'    and Senate Veterans'
                           Affairs of the Senate and  Affairs Committees
                           House of Representatives   describing the actions
                           a report describing the    taken in carrying out the
                           actions the Secretary has  provisions relating to
                           taken to carry out         VA's specialized treatment
                           subsection (c) during the  and rehabilitative
                           preceding year. Each such  programs. The report must
                           report shall include a     include the number of
                           statement of the number    veterans provided
                           of veterans to whom the    specialized services, the
                           Department provided        alternatives available in
                           specialized services that  the private sector for
                           are covered by the report  provision of the
                           and the expense of         specialized services, and
                           providing those services,  the cost of providing
                           and a description of the   those services.
                           alternatives available in
                           the private sector for
                           the provision of those
                           services to veterans.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
                           A VA health plan may       The section would
1823. Supplemental         offer supplemental health  authorize VA to market two
Benefits Packages and      benefits policies and      types of supplemental
Policies                   supplemental cost sharing  insurance: (1)
                           policies consistent [for   supplemental health
                           health care services not   benefits policies and (2)
                           provided under chapter 17  cost-sharing policies.
                           of this title and cost     Generally, section
                           sharing policies           1421(b)(1) of the Health
                           consistent] with the       Security Act defines
                           requirements of part 2 of  supplemental benefits
                           subtitle E of title I of   policies to be health
                           the Health Security Act.   benefit plans or health
                                                      insurance policies that
                                                      provide (1) coverage for
                                                      services and items not
                                                      included in the
                                                      comprehensive benefit
                                                      package and/or (2)
                                                      coverage for items and
                                                      services included in such
                                                      package but not covered
                                                      because of a limitation in
                                                      amount, duration, or
                                                      scope. Section 1421(b)(2)
                                                      of the Health Security Act
                                                      defines cost-sharing
                                                      policies to be health
                                                      insurance policies or
                                                      health benefits plans that
                                                      provide coverage for
                                                      deductibles, coinsurance,
                                                      and copayments imposed as
                                                      part of the comprehensive
                                                      benefit package, whether
                                                      imposed under a higher
                                                      cost-sharing plan or with
                                                      respect to nonnetwork
                                                      providers.

                                                      It is not clear what the
                                                      phrase "not provided under
                                                      chapter 17" means. If "not
                                                      provided under chapter 17"
                                                      refers to services
                                                      authorized by but not
                                                      provided to a veteran
                                                      under chapter 17 because
                                                      of restrictions on
                                                      resources or eligibility,
                                                      then the Secretary of
                                                      Veterans Affairs would, at
                                                      his or her discretion, be
                                                      able to sell supplemental
                                                      policies covering such
                                                      services as nursing home
                                                      care. The Secretary would
                                                      appear to also have wide
                                                      discretion to discontinue
                                                      sale of such policies.
                                                      Amended to delete the
                                                      reference to "not provided
                                                      under chapter 17."


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1823 (continued)           However, a VA health plan  It is also unclear which
                           may not offer a            individuals could purchase
                           supplemental health        VA supplemental health
                           benefits package to a      benefits policies. Section
                           veteran that provides      1422(b)(1) generally
                           coverage for services      provides that an entity
                           that the Department is     offering a supplemental
                           required to provide to     health benefits policy
                           that veteran under         must accept for enrollment
                           chapter 17 of this title.  every individual who seeks
                                                      such enrollment, subject
                                                      to capacity and financial
                                                      limits. Thus, it appears
                                                      the supplemental policies
                                                      would have to be made
                                                      available to veterans and
                                                      their dependents and
                                                      perhaps to others in the
                                                      health alliance. VA
                                                      officials agreed that the
                                                      language of section
                                                      1422(b)(1) is ambiguous
                                                      but pointed out that other
                                                      provisions of the Health
                                                      Security Act would prevent
                                                      most nonveterans from
                                                      enrolling in VA health
                                                      plans. VA could limit the
                                                      availability of
                                                      supplemental benefits
                                                      policies based on its
                                                      capacity to provide the
                                                      covered services, but
                                                      would be required to offer
                                                      the policies on a first-
                                                      come, first-served basis
                                                      as long as capacity holds
                                                      out.

                                                      Amended to provide that VA
                                                      health plans may not offer
                                                      a supplemental benefit
                                                      package to a veteran that
                                                      provides coverage for
                                                      services that VA is
                                                      required to provide to
                                                      that veteran under chapter
                                                      17 of 38 U.S.C. Many of
                                                      the services that might be
                                                      offered through
                                                      supplemental benefits
                                                      policies, including
                                                      nursing home care for
                                                      service-connected
                                                      veterans, would be made
                                                      entitlements, funded
                                                      entirely through
                                                      appropriations, by other
                                                      new provisions (section
                                                      8103). Core group
                                                      veterans' entitlement to
                                                      such services would be
                                                      subject to the
                                                      availability of space and
                                                      resources.



Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1823 (continued)                                      If space or resources are
                                                      limited, veterans
                                                      purchasing supplemental
                                                      policies would have the
                                                      highest priority for care.
                                                      Availability of nursing
                                                      home care could be further
                                                      restricted for low-income
                                                      nonservice-connected
                                                      veterans, former prisoners
                                                      of war, and World War I
                                                      veterans through the sale
                                                      of supplemental benefits
                                                      policies. This is because
                                                      provision of nursing home
                                                      care would continue to be
                                                      optional. In effect, such
                                                      veterans could obtain
                                                      nursing home care only to
                                                      the extent that space and
                                                      resources remain after the
                                                      needs of higher income
                                                      veterans purchasing
                                                      supplemental policies are
                                                      met.

                                                      The effect of the proposed
                                                      new section 1831(a) of
                                                      title 38 U.S.C. on sale of
                                                      supplemental policies is
                                                      unclear. It might prevent
                                                      VA from charging premiums
                                                      or other cost sharing for
                                                      supplemental policies, at
                                                      least for those policies
                                                      covering items and
                                                      services covered under
                                                      chapter 17 of 38 U.S.C.,
                                                      purchased by veterans
                                                      described under 38 U.S.C.
                                                      1831(b) who enroll in the
                                                      VA health plan. VA
                                                      officials told us that, in
                                                      their opinion, the
                                                      proposed section 1831(a)
                                                      of title 38 U.S.C. would
                                                      apply only to the
                                                      comprehensive benefit
                                                      package. Service-
                                                      connected and low-income
                                                      veterans would, in their
                                                      opinion, be required to
                                                      pay the same premiums for
                                                      supplemental policies that
                                                      apply to other veterans.

                                                      Section 1831(a) was
                                                      amended to indicate that
                                                      it applies only to
                                                      services covered under the
                                                      comprehensive benefit
                                                      package. Service-
                                                      connected and low-income
                                                      veterans enrolling in VA
                                                      health plans, however,
                                                      would, under the new
                                                      section 8103(b) of the
                                                      Health Security Act, be
                                                      provided any outpatient
                                                      service, whether or not it
                                                      is included in the
                                                      comprehensive benefit
                                                      package, free of charge
                                                      based on their eligibility
                                                      for free care under
                                                      chapter 17 of 38 U.S.C.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1823 (continued)           I                          n addition, it is unclear
                                                      whether VA must recover
                                                      the full cost of such
                                                      policies from those
                                                      required to pay a
                                                      premium.

                                                      Cost-sharing policies
                                                      would appear to be
                                                      available only to those
                                                      veterans and other VA
                                                      health plan enrollees not
                                                      entitled to free care.
                                                      Under section 1423 of the
                                                      Health Security Act, cost-
                                                      sharing policies must be
                                                      offered to all individuals
                                                      enrolled in the plan. This
                                                      means that CHAMPVA
                                                      beneficiaries and
                                                      veterans' dependents would
                                                      be eligible to purchase
                                                      cost-sharing policies. The
                                                      policies would be required
                                                      to have loss ratios not
                                                      lower than 90 percent.



Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1824. Limitation           (a) Reimbursement          A veteran enrolling in a
Regarding Veterans         Required. A veteran who    non-VA health plan could
Enrolled With Health       is residing in a regional  obtain items and services
Plans Outside Department   alliance area in which     covered under the
                           the Department operates a  comprehensive benefit
                           health plan and who is     package from a VA health
                           enrolled in a health plan  plan only if his or her
                           that is not operated by    health plan reimbursed VA
                           the Department may be      the full cost of the care
                           provided the items and     provided. This section
                           services in the            shifts responsibility for
                           comprehensive benefit      treatment of service-
                           package by a VA health     connected disabilities
                           plan operating in that     from the government to
                           regional alliance area     individual health plans to
                           only if the plan is        the extent that the
                           reimbursed in accordance   treatments are covered
                           with the Health Security   under the comprehensive
                           Act for [the actual and    benefit package. In other
                           full] cost of the care     words, service-connected
                           provided.                  veterans in non-VA health
                                                      plans could use VA for
                                                      treatment of their
                                                      service-connected
                                                      disabilities only if (1)
                                                      their health plan agreed
                                                      to reimburse VA for the
                                                      costs of such care or (2)
                                                      the needed services are
                                                      covered under chapter 17,
                                                      title 38 U.S.C. but not
                                                      under the comprehensive
                                                      benefit package.

                                                      Amended to substitute the
                                                      requirement that VA be
                                                      reimbursed "in accordance
                                                      with the Health Security
                                                      Act" for the prior
                                                      requirement that VA be
                                                      reimbursed "the full and
                                                      actual cost" of services
                                                      included in the
                                                      comprehensive benefit plan
                                                      provided to veterans
                                                      enrolled in non-VA health
                                                      plans. This would enable
                                                      health plans to reimburse
                                                      VA at out-of-plan rates
                                                      and require veterans to
                                                      pay higher copayments and
                                                      deductibles to obtain care
                                                      from VA than they would
                                                      pay for care provided by
                                                      their health plan.




Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1824 (continued)           (b) Exception. The         Amended to provide that a
                           Secretary may not impose   veteran who is treated for
                           on or collect from a       a service-connected
                           veteran described in       disability requiring
                           subsection (a) a cost-     specialized treatment
                           share charge of any kind   capacity for which the VA
                           in the case of treatment   has a particular expertise
                           for a service-connected    be exempt from any cost-
                           disability requiring a     sharing obligations the
                           specialized treatment      veteran has under the
                           capacity for which the     veteran's non-VA health
                           Department has particular  plan.
                           expertise.
                                                      This provision could
                                                      unintentionally discourage
                                                      VA health plans from
                                                      providing out-of-plan
                                                      treatment to service-
                                                      connected veterans because
                                                      the health plans would
                                                      have to absorb the
                                                      veterans' cost shares;
                                                      they would be allowed to
                                                      collect and retain
                                                      veterans' cost shares for
                                                      nonservice-connected care.
                                                      VA officials believe VA
                                                      health plans would always
                                                      provide care to service-
                                                      connected veterans even if
                                                      they have to absorb the
                                                      costs.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1825. Abortions Through    (a) Prohibition--          Amended to prohibit VA
VA Health Plans:           Notwithstanding the        health plans from
Prohibition                provisions of the          providing or paying for
                           comprehensive benefit      abortions except when the
                           package, a VA health plan  pregnancy (1) would
                           may not provide abortions  threaten the life of the
                           (either by the             mother if carried to full
                           performance of an          term or (2) resulted from
                           abortion in a Department   forcible rape or incest.
                           facility or by payment
                           for the performance of an  If the comprehensive
                           abortion outside a         benefit package includes
                           Department facility)       broader coverage of
                           except in a case in        abortions than is
                           which--                    authorized for VA health
                                                      plans under this
                           (1) a woman suffers from   amendment, women veterans
                           a physical disorder,       with service-connected
                           illness, or injury that    disabilities or low
                           would, as certified by a   incomes would need to
                           physician, place the       choose between their VA
                           woman in danger of death   health care benefits and a
                           if the fetus were carried  health plan offering
                           to term; or                broader coverage of
                                                      abortions. To obtain the
                           (2) the pregnancy is the   abortion coverage, women
                           result of a forcible rape  veterans with service-
                           or incest.                 connected disabilities or
                                                      low incomes would have to
                           (b) Construction of        enroll in non-VA health
                           Abortion Exclusion--       plans, thus forgoing the
                           Subsection (a) shall not   free comprehensive health
                           be construed to remove or  care benefits they would
                           diminish coverage of any   otherwise be entitled to
                           reproductive health        by enrolling in a VA
                           service, family planning   health plan.
                           service, or service for
                           pregnant women otherwise   VA health plans could also
                           provided for under this    be placed at a competitive
                           title, except abortions.   disadvantage in enrolling
                                                      veterans with spouses or
                                                      dependents of child-
                                                      bearing age if other
                                                      health plans are required
                                                      to offer broader coverage
                                                      of abortions than the VA
                                                      plans. If, on the other
                                                      hand, the comprehensive
                                                      benefit package does not
                                                      require broader abortion
                                                      coverage than that
                                                      authorized for VA health
                                                      plans, then VA health
                                                      plans would not be placed
                                                      at a competitive
                                                      disadvantage.




Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1825. (continued)          (c) No Authority to Alter  Amended to prohibit the
                           Abortion Exclusion--       National Health Board from
                           Notwithstanding any        expanding the
                           provision of the Health    comprehensive benefit
                           Security Act, the          package to include, for
                           National Health Board may  any health plan, any
                           not expand the             abortion that is excluded
                           comprehensive benefit      with respect to a VA
                           package to include (for    health plan. This
                           any health plan) any       provision would prevent
                           abortion that is excluded  the National Health Board
                           under subsection (a) with  from expanding coverage of
                           respect to a VA health     abortions beyond what is
                           plan.                      specifically authorized
                                                      under the comprehensive
                                                      benefit package.

Subchapter IV--Financial   In the case of a veteran   This section would waive
Matters                    described in subsection    all premiums and other
                           (b) who is a VA enrollee,  cost sharing for certain
1831. Premiums,            there may not be imposed   veterans. The provision
Copayments, etc.           or collected [the          applies equally to
                           Secretary may not impose   veterans enrolling in a VA
(a) Exception of Certain   or collect] from the       health plan under a
Veterans                   veteran a cost-share       regional alliance and a
                           charge of any kind         veteran enrolling in a VA
                           (whether a premium,        health plan functioning as
                           copayment, deductible,     a Medicare HMO. The
                           coinsurance charge, or     Secretary of Veterans
                           other charge) for items    Affairs is to make
                           and services in the        arrangements with health
                           comprehensive benefit      alliances to carry out
                           package that are provided  this provision.
                           to the veteran by the
                           Secretary. The Secretary   The relationship between
                           shall make such            this section and section
                           arrangements as necessary  1823 is unclear. Section
                           with health alliances in   1831 applies to "VA
                           order to carry out this    enrollees" and would limit
                           subsection.                the provision of free care
                                                      to veterans enrolling in a
                                                      VA health plan but says
                                                      nothing about whether it
                                                      applies only to the
                                                      comprehensive benefit
                                                      package or to any
                                                      supplemental benefits
                                                      policies. In our opinion,
                                                      this section could be
                                                      interpreted to make any
                                                      supplemental benefits
                                                      policies offered under
                                                      section 1823 free for
                                                      those veterans enrolling
                                                      in VA health plans who
                                                      meet the criteria
                                                      established under section
                                                      1831(b).




Proposed chapter 18 of title 38 U.S.C. (cont.)
--------------------------------------------------------------------------------
1831(a) (continued)                                   VA officials, on the other
                                                      hand, interpret section
                                                      1831 as applying only to
                                                      the comprehensive benefit
                                                      package and not to any
                                                      supplemental benefits
                                                      policies. We believe this
                                                      is also a reasonable
                                                      interpretation that could
                                                      significantly limit the
                                                      availability of chapter 17
                                                      benefits for those low-
                                                      income and service-
                                                      connected veterans unable
                                                      or unwilling to pay the
                                                      premiums to purchase
                                                      supplemental policies. VA
                                                      would have a contractual
                                                      obligation to provide
                                                      services to those higher
                                                      income veterans purchasing
                                                      supplemental policies,
                                                      while those low-income and
                                                      service-connected veterans
                                                      without supplemental
                                                      policies would be limited
                                                      to use of whatever space
                                                      and resources were
                                                      available after VA meets
                                                      its contractual
                                                      obligations.

                                                      Under either
                                                      interpretation, veterans
                                                      enrolling in non-VA health
                                                      plans who subsequently
                                                      enroll in a VA
                                                      supplemental benefits
                                                      policy offered by a VA
                                                      health plan would not
                                                      appear to be entitled to
                                                      free supplemental benefits
                                                      unless the term "VA
                                                      enrollee" is interpreted
                                                      broadly to mean a veteran
                                                      who enrolls in a VA health
                                                      plan for either
                                                      comprehensive benefits or
                                                      supplemental benefits.

                                                      Amended to clarify that
                                                      the restriction on
                                                      imposing cost-sharing
                                                      charges applies only to
                                                      items and services
                                                      provided under the
                                                      comprehensive benefit
                                                      package. This would
                                                      clarify that supplemental
                                                      benefits policies would
                                                      not be free to core group
                                                      veterans. It would also
                                                      allow VA health plans to
                                                      impose cost sharing for
                                                      out-of-plan services
                                                      provided to VA health plan
                                                      enrollees.




Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1831(b) Veterans Exempt    The veterans referred to   This section lists the
From Charges               in subsection (a) are the  categories of veterans
                           following:                 entitled to free
                                                      comprehensive health
                           (1) Any veteran with a     benefits if they enroll in
                           service-connected          a VA health plan. It
                           disability.                generally covers the same
                                                      groups of veterans cited
                           (2) Any veteran whose      under 38 U.S.C. 1710,
                           discharge or release from  which establishes
                           the active military,       eligibility for VA
                           naval or air service was   hospital, nursing home,
                           for a disability incurred  and domiciliary care,
                           or aggravated in the line  except that it excludes
                           of duty.                   those veterans seeking
                                                      care for conditions that
                           (3) Any veteran who is in  may be related to exposure
                           receipt of, or who, but    to toxic substances or
                           for a suspension pursuant  ionizing radiation.
                           to section [1511]1151 of   Currently, the cited group
                           this title (or both such   is entitled to free VA
                           a suspension and the       hospital care to the
                           receipt of retired pay),   extent that space and
                           would be entitled to       resources are available,
                           disability compensation,   but eligibility and
                           but only to the extent     entitlement to other
                           that such a veteran's      services are more complex.
                           continuing eligibility     (A new section 1831(c)(3)
                           for such care is provided  would be added to title 38
                           for in the judgment or     U.S.C. to exempt veterans
                           settlement provided for    receiving care for
                           in such section.           conditions that may be
                                                      related to exposure to
                           (4) Any veteran who is a   toxic substances or
                           former prisoner of war.    ionizing radiation from
                                                      copayments, deductibles,
                           (5) Any veteran of the     and coinsurance.)
                           Mexican border period or
                           World War I.               Only those veterans with
                                                      service-
                           (6) Any veteran who is     connected disabilities
                           unable to defray the       rated at 50 percent or
                           expenses of necessary      higher (about 450,000
                           care as determined under   veterans) are currently
                           section 1722(a) of this    entitled to free
                           title.                     comprehensive health care
                                                      benefits within available
                                                      resources (not including
                                                      nursing home care, which
                                                      is optional for all
                                                      veterans). The new section
                                                      would essentially expand
                                                      the number of veterans
                                                      entitled to free
                                                      comprehensive care,
                                                      including 100 days a year
                                                      of post-hospital extended
                                                      care in rehabilitation or
                                                      skilled nursing
                                                      facilities, to about 9
                                                      million veterans.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1831(c) Other Enrollees    (1) In the case of a VA    Those VA enrollees not
                           enrollee who is not        described above would be
                           described in subsection    charged premiums,
                           (b), the Secretary shall   copayments, deductibles,
                           (except as provided in     and coinsurance. VA would
                           paragraph (2)) charge      be required to establish
                           premiums and [shall]       the premium rate and the
                           establish copayments,      rates for deductibles and
                           deductibles, and           copayments based on rules
                           coinsurance amounts.       established by the health
                                                      alliance under which it is
                           (2) The Secretary may not  operating.
                           charge a premium in the
                           case of                    This section would not
                                                      appear to apply to
                           (A) an individual who is   Medicare-eligible veterans
                           enrolled in a VA health    enrolling in the VA health
                           plan by reason of          plan, except in those
                           eligibility under section  states that bring Medicare
                           1812 of this title; or     under their health
                                                      alliances.
                           (B) an individual who is
                           enrolled in a VA health    Amended to exempt from
                           plan by reason of          payment of premiums those
                           eligibility under section  VA health plan enrollees
                           1813 of this title and     who are CHAMPVA eligible
                           who is described in        under section 1812 or
                           paragraph (1) of section   eligible under paragraph
                           1713(a) of this title.     (1) of 38 U.S.C. 1713(a)
                                                      (a spouse or child of a
                           (3) The Secretary may not  veteran who has a total
                           charge a copayment,        permanent disability
                           deductible, or other       resulting from a service-
                           coinsurance amount in the  connected disability).
                           case of care for any
                           disease covered under      Amended to exempt from
                           section 1710(e)(1) of      copayments, deductibles,
                           this title.                and coinsurance those
                                                      veterans receiving care
                                                      for any disease covered
                                                      under section 1710(e)(1)
                                                      of title 38 U.S.C.--
                                                      veterans exposed to toxic
                                                      substances or ionizing
                                                      radiation.


(d) Establishment of       The premium rate, and the  This section requires the
Rates                      rates for deductibles and  Secretary of Veterans
                           copayments, for each VA    Affairs to set the
                           health plan shall be       premiums and copayments
                           established by that        and deductibles for a VA
                           health plan based on       health plan on the basis
                           rules established by the   of rules established by
                           health alliance under      the health alliance under
                           which it is operating.     which the health plan is
                                                      operating.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1831[(d)]e                 In the case of a veteran   This section requires the
Self-Employed Service-     with a service-connected   Secretary of Veterans
Connected Veterans         disability who is          Affairs to reduce employer
                           enrolled in a VA health    premiums owed by a self-
                           plan and who has net       employed service-
                           earnings from self-        connected veteran,
                           employment, the Secretary  provided the veteran
                           shall, under regulations   enrolls in a VA health
                           prescribed by the          plan. In other words,
                           Secretary, provide for [a  self-employed service-
                           reduction in any] the      connected veterans would
                           waiver of any premium      be required to pay all or
                           payment (or alliance       a portion of their health
                           credit repayment) owed by  insurance premiums if they
                           the veteran under section  enroll in a health plan
                           6126 or 6111 of the        other than one operated by
                           Health Security Act by     VA. If, however, they
                           virtue of the veteran's    enroll in a VA health
                           net earnings from self-    plan, individual cost
                           employment.                sharing and, to the extent
                                                      determined by the
                                                      Secretary, their employer
                                                      premiums, will be
                                                      reduced.

                                                      Amended to (1) require the
                                                      Secretary of Veterans
                                                      Affairs to waive any
                                                      premiums for self-
                                                      employed service-
                                                      connected veterans rather
                                                      than allowing the
                                                      Secretary the discretion
                                                      to waive just a portion of
                                                      the premium and (2)
                                                      specify that the waiver is
                                                      based on "net" earnings.

1832 Medicare Coverage     For purposes of any        This section deems VA
and Reimbursement.         program administered by    facilities to be Medicare
(a) Medicare Provider      the Secretary of Health    providers, essentially
Status                     and Human Services under   exempting them from
                           title XVIII of the Social  Medicare requirements. In
                           Security Act, a            effect, this would enable
                           Department facility shall  VA facilities to provide
                           be deemed to be a          the full range of Medicare
                           Medicare provider.         benefits to Medicare-
                                                      eligible veterans,
                                                      regardless of their
                                                      eligibility/entitlement
                                                      under chapter 17, title 38
                                                      U.S.C.

(b) Medicare               (1) A VA health plan       This section would deem VA
HMO Status                 shall be considered to be  health plans to be
                           a Medicare HMO.            Medicare HMOs, essentially
                                                      exempting VA from the
                           (2) For purposes of this   requirements under section
                           section, the term          1876 of the Social
                           "Medicare HMO" means an    Security Act that apply to
                           eligible organization      other eligible
                           under section 1876 of the  organizations. Among the
                           Social Security Act.       provisions that VA health
                                                      plans would be exempt from
                                                      are requirements related
                                                      to (1) related-party
                                                      transactions, (2)
                                                      ownership and control
                                                      arrangements, (3)
                                                      financial solvency, (4)
                                                      quality assurance, (5)
                                                      operating experience, (6)
                                                      enrollment, and (7)
                                                      organization and
                                                      management.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1832(c) Payments from HHS  In the case of care        Would authorize VA to
                           provided to a veteran      recover from Medicare the
                           other than a veteran       costs of services provided
                           described in section       to certain Medicare-
                           1831(b) of this title who  eligible veterans.
                           is eligible for benefits   Recoveries would be
                           under the Medicare         limited to services
                           program under title XVIII  provided to those
                           of the Social Security     Medicare-eligible veterans
                           Act, the Secretary of      not entitled to free care
                           Health and Human Services  under section 1831 of the
                           shall reimburse a VA       Health Security Act.
                           health plan or Department
                           health care facility       It is not clear what would
                           providing services as a    happen in the case of a
                           Medicare provider or       Medicare-eligible
                           Medicare HMO in the same   dependent. Medicare
                           amounts and under the      eligibility and enrollment
                           same terms and conditions  is by individual, not
                           as that Secretary          family. Thus it is not
                           reimburses other Medicare  clear whether the
                           providers or Medicare      dependents of Medicare-
                           HMOs, respectively. The    eligible veterans would be
                           Secretary of Health and    able to enroll in a VA
                           Human Services shall       health plan functioning as
                           include with each such     an HMO except in states
                           reimbursement a Medicare   that have integrated
                           explanation of benefits.   Medicare into their
                                                      alliances.

1832(d) Deductibles and    When the Secretary [of     Would authorize VA to
Copayments                 Veterans Affairs]          charge Medicare-eligible
                           provides care to a         veterans, other than those
                           veteran for which the      entitled to free
                           Secretary receives[d]      comprehensive benefits,
                           reimbursement under this   the same copayments and
                           section, the Secretary     deductibles they would be
                           shall require the veteran  required to pay to other
                           to pay to the Department   Medicare providers.
                           any applicable deductible
                           or copayment that is not
                           covered by Medicare.

1833. Recovery of Cost of  In the case of an          Authorizes VA to recover
Certain Care and           individual provided care   from supplemental
Services                   or services through a VA   insurance policies, such
                           health plan who has        as Medicare supplemental
(a) Recovery From Third    coverage under a           (Medigap) policies and
Parties                    supplemental health        CHAMPUS supplemental
                           insurance policy pursuant  benefits policies. VA
                           to part 2 of subtitle E    would not be authorized to
                           of title I of the Health   recover for care or
                           Security Act or under any  services for a service-
                           other provision of law,    connected disability.
                           or who has coverage under
                           a Medicare supplemental
                           health insurance plan (as
                           defined in the Health
                           Security Act) or under
                           any other provision of
                           law, the Secretary has
                           the right to recover or
                           collect charges for care
                           or services (as
                           determined by the
                           Secretary, but not
                           including care or
                           services for a service-
                           connected disability)
                           from the party providing
                           that coverage to the
                           extent that the
                           individual or the
                           provider of the care or
                           services) would be
                           eligible to receive
                           payment for such care or
                           services from such party
                           if the care or services
                           had not been furnished by
                           a department or agency of
                           the United States.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1833(b) Procedures         The provisions of          Provides that the third-
                           subsections (b) through    party recovery provisions
                           (f) of section 1729 of     of current law remain in
                           this title shall apply     effect.
                           with respect to claims by
                           the United States under
                           subsection (a) in the
                           same manner as they apply
                           to claims under
                           subsection (a) of that
                           section.

1834. Health Plan Fund     There is hereby            Would establish in the
                           established in the         Treasury a revolving fund
(a) Establishment of Fund  Treasury a revolving fund  for VA health plans.
                           to be known as the
                           "Department of Veterans
                           Affairs Health Plan
                           Fund".

(b) Crediting of Amounts   There shall be credited    Revenues received by VA
to Fund                    to the revolving fund      health plans, whether
                           [A]any amount received by  related to the furnishing
                           the Department by reason   of care to non-VA health
                           of the furnishing of       plan enrollees or the
                           health care by a VA        enrollment of individuals
                           health plan and any        in the VA health plan,
                           amount received by the     must be credited to the
                           Department by reason of    revolving fund. Amounts to
                           [or] the enrollment of an  be credited to the
                           individual with a VA       revolving fund include
                           health plan (including     those received as
                           amounts received as        premiums, premium discount
                           premiums, premium          payments, copayments or
                           discount payments,         coinsurance, and
                           copayments or              deductibles, and those
                           coinsurance, and           received as reimbursements
                           deductibles, amounts       from another health plan
                           received as third-party    for care furnished to one
                           reimbursements, and        of its enrollees.
                           amounts received as        Recoveries from Medicare
                           reimbursements from        would also be credited to
                           another health plan for    the revolving fund. Funds
                           care furnished to one of   appropriated to pay the VA
                           its enrollees) [shall be   portion of health plan
                           credited to the revolving  enrollees' premiums would
                           fund].                     not be credited to the
                                                      revolving fund.

                                                      Amended language appears
                                                      to make no substantive
                                                      change.

1834(c) Crediting to       [Notwithstanding           Requires VA to return to
Treasury                   subsection (b), the        the General Fund of the
                           Department may not retain  Treasury any funds
                           amounts received for care  recovered for care
                           furnished to a VA          provided to veterans if
                           enrollee in a case in      the costs of such care
                           which the costs of such    were covered by
                           care have been covered by  appropriations.
                           appropriations. Such
                           amounts shall be
                           deposited in the General
                           Fund of the Treasury.]
                           Any amounts deposited to
                           the revolving fund that
                           are attributable to
                           amounts received by the
                           Department as a premium
                           by reason of the
                           enrollment with a VA
                           health plan of a veteran
                           described in section
                           1831(b) of this title
                           shall be covered into the
                           General Fund of the
                           Treasury.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1834(d) Availability of    Amounts in the revolving   Would make the amounts in
Funds                      fund are hereby made       the revolving fund
                           available for [the] all    available to VA health
                           expenses, both direct and  plans, without regard to
                           indirect, related to [of]  the sources of the funds,
                           the delivery by a VA       for payments for items and
                           health plan of the items   services covered under the
                           and services in the        comprehensive benefit
                           comprehensive benefit      package and any
                           package and any            supplemental benefits
                           supplemental benefits      package or policy offered
                           package or policy offered  by the VA health plan.
                           by that health plan.
                                                      VA would be free to
                                                      allocate funds to any VA
                                                      health plan or to pay for
                                                      comprehensive benefits and
                                                      supplemental benefits,
                                                      regardless of funding
                                                      source.




Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1835. Guaranteed Funding   The Secretary of the       Would require the
of Government Costs        Treasury shall deposit     Secretary of the Treasury
                           into the Department of     to make quarterly deposits
(a) Required Deposits      Veterans Affairs Health    into the Health Plan Fund
From Treasury              Plan Fund on the first     from amounts not otherwise
                           day of each fiscal year    appropriated those amounts
                           quarter, from amounts not  certified by the Secretary
                           otherwise appropriated,    of Veterans Affairs as
                           the amount certified to    described below.
                           the Secretary under
                           subsection (b) with        This section would
                           respect to the fiscal      transfer responsibility
                           year quarter beginning on  for determining funding
                           that date. The first such  levels for VA health plans
                           deposit shall be made      from the Congress to the
                           with respect to the first  Secretary of Veterans
                           fiscal year quarter        Affairs. It would give the
                           during which the           Secretary--and the
                           Secretary operates a VA    Director of the Office of
                           health plan under the      Management and Budget--
                           Health Security Act.       wide discretion in
                                                      determining the capacity
                                                      of VA health plans. The
                                                      Secretary, or OMB, could
                                                      increase or decrease the
                                                      capacity of VA health
                                                      plans and therefore VA
                                                      appropriations by changing
                                                      the projected number of
                                                      enrollees.

                                                      This section does not
                                                      provide funding for the
                                                      additional chapter 17
                                                      outpatient services VA
                                                      health plans would be
                                                      required to provide to
                                                      core group enrollees under
                                                      the amended section
                                                      8103(b) of the Health
                                                      Security Act. Such
                                                      services would be paid for
                                                      entirely through
                                                      appropriations. VA
                                                      officials agreed that
                                                      funds deposited in the
                                                      revolving fund could not
                                                      be used to pay for such
                                                      services. Proposed section
                                                      1834(d) of 38 U.S.C.
                                                      limits the use of amounts
                                                      in the revolving fund to
                                                      payment of expenses for
                                                      items in the comprehensive
                                                      benefit package and any
                                                      supplemental benefits
                                                      policies.

(b) Certification of       Not later than 30 days     The Secretary of Veterans
Amount.                    before the beginning of    Affairs would be required
                           each fiscal year quarter,  to provide the above
                           the Secretary of Veterans  certifications not later
                           Affairs shall certify to   than 30 days before the
                           the Secretary of the       beginning of each fiscal
                           Treasury the amount        year quarter.
                           determined for that
                           quarter under subsection   It is not clear how this
                           (c).                       funding mechanism would
                                                      correspond to the funding
                                                      and enrollment cycles for
                                                      regional alliance health
                                                      plans.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1835(c) Determination of   (1) The amount to be       The amount to be certified
Amount                     certified to the           to the Secretary of the
                           Secretary of the Treasury  Treasury is the product of
                           under subsection (b) for   (1) the projected number
                           any fiscal year quarter    of core group veteran
                           is the product of          enrollees and (2) the
                                                      "capitated enrollment
                           (A) the projected number   amount" for that fiscal
                           of VA enrollees described  year.
                           in section 1831(b) of
                           this title as of the
                           beginning of that fiscal
                           year quarter, and

                           (B) the capitated
                           enrollment amount for
                           that fiscal year
                           determined under
                           subsection (d).            The Secretary of Veterans
                                                      Affairs would be required
                                                      to adjust future
                           (2) The Secretary shall    certifications to account
                           adjust future              for (1) differences
                           certifications under this  between actual and
                           subsection to take         anticipated enrollments
                           account of                 and (2) any information
                                                      the Secretary finds that
                           (A) differences between    would produce a more
                           the actual number of       accurate capitated
                           veterans described in      enrollment amount.
                           section 1831(b) of this
                           title enrolled for a
                           fiscal year quarter and
                           the projected number used
                           in the certification for
                           that quarter pursuant to
                           paragraph (1); and

                           (B) any information that
                           the Secretary finds would
                           produce a more accurate
                           capitated enrollment
                           amount by enabling the
                           Secretary to estimate
                           more accurately the costs
                           that the Department will
                           incur during the period
                           covered by any such
                           certification in
                           providing those services
                           that are specified to be
                           included in the
                           comprehensive benefit
                           package.


Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1835(d) Capitated          (1) The Secretary shall    The initial capitated
Enrollment Amount          determine the capitated    enrollment amount is to be
                           enrollment amount for      determined by dividing (1)
                           purposes of subsection     the annual full cost
                           (c). The initial           incurred by VA in
                           capitated enrollment       providing those services
                           amount shall be            specified to be included
                           determined as the amount   in the comprehensive
                           equal to                   benefit package (based on
                                                      the most recent cost data
                           (A) the annual full cost   available) and adjusted
                           (as defined in OMB         for inflation based on the
                           Circular A-25, issued on   Bureau of Labor
                           July 8, 1993) that has     Statistics' medical care
                           been incurred by the       consumer price index by
                           Department in providing    (2) the total number of
                           those services that are    core veterans who received
                           specified to be included   those services.
                           in the comprehensive
                           benefit package, based     The capitated enrollment
                           upon the most recent cost  amount would have little
                           data available as of the   relationship to potential
                           time of the                VA costs of providing the
                           determination, adjusted    comprehensive benefit
                           for inflation to the date  package and could
                           of the determination       overstate or understate
                           based upon the medical     actual VA costs. First, VA
                           care consumer price index  cost data do not allow it
                           calculated by the Bureau   to accurately determine
                           of Labor Statistics,       the cost of providing
                           divided by,                individual services.
                                                      Second, dividing the total
                           (B) the total number of    cost of providing
                           veterans described in      comprehensive benefits to
                           section 1831(b) of this    both core group and other
                           title who received those   veterans by only the
                           services.                  number of core group
                                                      veterans using the
                                                      services could overstate
                                                      the cost of providing
                                                      comprehensive benefits to
                                                      core group veterans.

                                                      Third, relying on data
                                                      only for those who
                                                      actually used VA services
                                                      during the year may
                                                      underestimate potential
                                                      utilization since most
                                                      veterans do not now rely
                                                      exclusively on the VA.

                                                      To the extent that the
                                                      method results in Treasury
                                                      payments to the revolving
                                                      fund that exceed VA's
                                                      actual costs of providing
                                                      services to core group
                                                      veterans, the funds would
                                                      remain in the revolving
                                                      fund indefinitely. In
                                                      effect, they could be used
                                                      to subsidize the costs of
                                                      providing services to
                                                      other veterans and
                                                      dependents.




Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1835(d)                    (2) The Secretary shall    In tabulating VA's total
(continued)                include in the total       annual cost, the Secretary
                           annual cost for purposes   of Veterans Affairs will
                           of paragraph (1)(A) the    include the amount
                           amount appropriated for    appropriated for fiscal
                           fiscal year 1994 for the   year 1994 for VA medical
                           medical and prosthetic     and prosthetic research.
                           research functions of the
                           Veterans Health            It is not clear why the
                           Administration.            total appropriation for
                                                      medical and prosthetic
                                                      research is being added to
                                                      the cost of providing
                                                      services included in the
                                                      comprehensive benefit
                                                      package. Such costs,
                                                      particularly prosthetic
                                                      research and geriatric
                                                      research, apply more to
                                                      those chapter 17 benefits
                                                      not included in the
                                                      comprehensive benefit
                                                      package than to those
                                                      included in the package.

                           (3) The Secretary shall    Requires the Secretary of
                           develop the methodology    Veterans Affairs to
                           for determining the        develop the methodology
                           initial capitated          for determining the
                           enrollment amount under    initial capitated
                           paragraph (1) in           enrollment amount in
                           consultation with the      consultation with GAO. If
                           Comptroller General of     GAO disagrees with the
                           the United States. If the  methods proposed by VA,
                           Comptroller General        GAO is required to
                           disagrees with the         promptly notify the
                           methodology proposed to    Veterans' Affairs
                           be used by the Secretary,  committees.
                           the Comptroller General
                           shall promptly notify the  VA currently lacks
                           Committees on Veterans'    adequate data on the cost
                           Affairs of the Senate and  of services it provides.
                           House of Representatives.  Accordingly, without
                           The determination of that  significant improvements
                           amount shall be made not   in VA cost data, GAO would
                           later than June 1, 1995.   find it difficult to
                                                      accept any method VA might
                                                      develop for determining
                                                      the initial capitated
                                                      enrollment amount.

                           (4) The initial capitated  The initial capitated
                           enrollment amount, as      enrollment amount, as
                           adjusted annually for      adjusted for the rate of
                           inflation based upon the   medical inflation, will
                           medical care consumer      apply for the first 5
                           price index calculated by  fiscal years during which
                           the Bureau of Labor        VA operates VA health
                           Statistics, shall apply    plans.
                           for the first five fiscal
                           years during which the
                           Secretary operates a VA
                           health plan.



Proposed chapter 18 of title 38 U.S.C.
--------------------------------------------------------------------------------
1835(d)                    (5)(A) Not later than the  VA would be required to
(continued)                end of the third fiscal    report to the Congress no
                           year during which the      later than the end of the
                           Secretary operates a VA    third year of operation of
                           health plan, the           VA health plans on actions
                           Secretary shall submit to  needed to change the
                           the Committees on          annual capitated
                           Veterans' Affairs of the   enrollment amount by the
                           Senate and House of        end of the fifth year to
                           Representatives a report   the method described below
                           on what actions, if any,   or to some other
                           would be necessary in      methodology.
                           order for the Department
                           to change the annual       The proposed method for
                           capitated enrollment       determining the annual
                           amount by the end of the   capitated enrollment
                           fifth such year from the   amount after the initial
                           initial amount determined  5-year period is to use
                           under paragraph (1) to an  the average premium that
                           amount determined using    would be payable under the
                           the method described in    Health Security Act for
                           subparagraph (B), or to    individuals enrolled in
                           amounts determined by      health plans other than VA
                           some other methodology,    health plans that have
                           without a reduction in     enrollment populations
                           quality of care.           with disproportionate
                                                      numbers of people in
                                                      similar demographic and
                           (5)(B) The method for      patient-risk
                           determining the annual     characteristics to the
                           capitated enrollment       population of VA
                           amount for purposes of     enrollees.
                           the study under this
                           paragraph is to determine
                           the average premium that
                           would be payable under
                           the Health Security Act
                           for individuals enrolled
                           in health plans other
                           than VA health plan which
                           have enrollment
                           populations with
                           disproportionate numbers
                           of persons with similar
                           demographic and patient-
                           risk characteristics to
                           the population of VA
                           enrollees.



Health Security Act
--------------------------------------------------------------------------------
8101(a)(2).                The table of chapters at   Adds chapter 18 to the
Clerical Amendment         the beginning of part II   table of chapters at the
                           of title 38, United        beginning of part II,
                           States Code, is amended    title 38 U.S.C.
                           by inserting after the
                           item relating to chapter
                           17 the following new
                           item:

                           "18. Benefits and
                           Eligibility Under Health
                           Security Act.....1801".

(b) Preservation of        (1) Chapter 17 of title    Would add a new section
Existing Benefits for      38, United States Code,    1705 to title 38 U.S.C.
Facilities not Operating   is amended by inserting    and add section 1705 to
as Health Plans            after section 1704 the     the table of sections at
                           following new section:     the beginning of chapter
                                                      17, title 38 U.S.C.
                           [Text omitted]

                           (2) The table of sections
                           at the beginning of such
                           chapter is amended by
                           inserting after the item
                           relating to section 1704
                           the following new item:

                           "1705. Facilities not
                           operating within health
                           plans; veterans not
                           eligible to enroll in
                           health plans."


Proposed new section of title 38 U.S.C.
--------------------------------------------------------------------------------
1705. Facilities Not       The provisions of this     Provides that the
Operating Within Health    chapter shall apply with   provisions of chapter 17,
Plans: Veterans Not        respect to the furnishing  title 38 U.S.C., apply
Eligible to Enroll in      of care and services--     with respect to the
Health Plans                                          furnishing of care and
                           (1) by any facility of     services (1) by a VA
                           the Department that is     facility not operating as
                           not operating as or        or within a VA health plan
                           within a health plan       or (2) to a veteran who is
                           certified as a health      not an eligible individual
                           plan under the Health      under the meaning of
                           Security Act; and          section 1001 of the Health
                                                      Security Act.
                           (2) by any facility of
                           the Department (whether
                           or not operating as or
                           within a health plan
                           certified as a health
                           plan under the Health
                           Security Act) in the case
                           of a veteran who is not
                           an eligible individual
                           within the meaning of
                           section 1001 of the
                           Health Security Act.




Health Security Act
--------------------------------------------------------------------------------
8102. Organization of      (a) In General.            Adds a new subchapter IV
Department of Veterans                                to chapter 73, title 38
Affairs Facilities as      Chapter 73 of title 38,    U.S.C., and redesignates
Health Plans               United States Code, is     the existing subchapter IV
                           amended--                  as subchapter V.

                           (1) by redesignating
                           subchapter IV as
                           subchapter V; and

                           (2) by inserting after
                           subchapter III the
                           following new
                           subchapter:

                           SUBCHAPTER IV--
                           PARTICIPATION AS PART OF
                           NATIONAL HEALTH CARE
                           REFORM


Proposed new section of chapter 73, title 38 U.S.C.
--------------------------------------------------------------------------------
7341(a) Organization of    The Secretary shall        Directs the Secretary of
Health Care Facilities as  organize health plans and  Veterans Affairs to
Health Plans               operate Department         organize health plans
                           facilities as or within    under the Health Security
                           health plans under the     Act and to prescribe
                           Health Security Act. The   regulations establishing
                           Secretary shall prescribe  standards for the
                           regulations establishing   operation of those health
                           standards for the          plans. The regulations are
                           operation of Department    to conform, to the extent
                           health care facilities as  practicable, to the same
                           or within health plans     requirements established
                           under that Act. In         for other health plans
                           prescribing those          under the Health Security
                           standards, the Secretary   Act.
                           shall assure that they
                           conform, to the maximum
                           extent practicable, to
                           the requirements for
                           health plans generally
                           set forth in part 1 of
                           subtitle E of title I of
                           the Health Security Act.

7341(b)                    Within a geographic area   Gives the Secretary the
                           or region, health care     discretion to organize VA
                           facilities of the          facilities into a single
                           Department located within  health plan within a
                           that area or region may    geographic area or region
                           be organized to operate    or to operate as several
                           as a single health plan    health plans. A VA
                           encompassing all           facility could be a part
                           Department facilities      of more than one VA health
                           within that area or        plan.
                           region or may be
                           organized to operate as
                           several health plans.

(c)                        In carrying out            States would not be
                           responsibilities under     allowed to (1) impose any
                           the Health Security Act,   requirement on a VA health
                           a State (or a State-       plan that is inconsistent
                           established entity)--      with this section or other
                                                      federal laws and (2) deny
                           (1) may not impose any     certification of a VA
                           standard or requirement    health plan on the basis
                           on a VA plan that is       of a conflict between a
                           inconsistent with this     rule of a state or health
                           section or any regulation  alliance and this section
                           prescribed under this      or regulations prescribed
                           section or other Federal   under this section. This
                           laws regarding the         would appear to give wide
                           operation of this          discretion to the
                           section; and               Secretary to determine the
                                                      extent to which it is
                           (2) may not deny           practicable for VA to
                           certification of a VA      conform to state or
                           health plan under the      regional alliance
                           Health Security Act on     requirements.
                           the basis of a conflict
                           between a rule of a state
                           or health alliance and
                           this section or
                           regulations prescribed
                           under this section or
                           other Federal laws
                           regarding the operation
                           of this section.


Proposed new section of chapter 73, title 38 U.S.C.
--------------------------------------------------------------------------------
7342. [Contract Authority  [The Secretary may enter   Would authorize the
for Facilities Operating   into a contract (without   Secretary to enter into
as or Within Health        regard to provisions of    contracts for the
Plans]Health Care          law requiring the use of   provision of services by
Resource Agreements        competitive procedures)    VA health plans without
                           for the provision of       regard to provisions of
                           services by a VA health    law requiring the use of
                           plan in any area in which  competitive bidding. This
                           the Secretary determines   waiver of competitive
                           that such contracting is   procurement requirements
                           more cost-effective than   would apply whenever the
                           providing such services    Secretary determines that
                           directly through           such contracting would be
                           Department facilities or   more cost-effective than
                           when such contracting is   providing such services
                           necessary because of       directly through VA
                           geographic                 facilities or when such
                           inaccessibility.]          contracting is necessary
                                                      because of geographic
                           (a) A VA health plan or    inaccessibility.
                           the director of a
                           Department of Veterans     Amended to broaden the
                           Affairs health care        exemption of VA health
                           facility that is           plans from contracting
                           operating as or within a   procedures. In addition to
                           VA health plan may,        being exempted from laws
                           without regard to section  requiring the use of
                           1703 of this title or any  competitive procedures, VA
                           other law or regulation    health plans and directors
                           pertaining to competitive  of VA facilities operating
                           procedures, acquisition    within VA health plans
                           procedures or policies     would be allowed to
                           (other than contract       contract without regard to
                           dispute settlement         contracting requirements
                           procedures), or bid        in current VA law or any
                           protests, enter into       other law or regulation
                           agreements with health     pertaining to competitive
                           care plans, insurers, and  procedures, acquisition
                           health care providers,     procedures or policies, or
                           and with any entity or     bid protests.
                           individual, to furnish or
                           obtain any health-care     These amendments would
                           resource, as that term is  essentially eliminate
                           defined in section 8152    current provisions of law
                           of this title.             governing the contracting
                                                      process, including
                                                      internal controls intended
                                                      to prevent fraud and
                                                      abuse. In addition, they
                                                      would establish incentives
                                                      for VA health plans and
                                                      facilities to place higher
                                                      priority on providing
                                                      services to nonveterans
                                                      under contracts or
                                                      resource sharing
                                                      agreements than to
                                                      veterans because the
                                                      facility would be allowed
                                                      to retain the full
                                                      proceeds from the
                                                      transaction; the VA health
                                                      plan would not necessarily
                                                      receive the same payment
                                                      for care provided to
                                                      veterans.


Proposed new section of chapter 73, title 38 U.S.C.
--------------------------------------------------------------------------------
7342 (continued)           (b) Any proceeds to the    Amended to provide that
                           Government received from   any proceeds to the
                           an agreement under         government from such
                           subsection (a) shall be    contracts or resource
                           credited to the            agreements will be
                           Department of Veterans     credited to VA's Health
                           Affairs Health Plan Fund   Care Fund and to funds
                           established under section  allocated to the facility
                           1834 of this title and to  that furnished the
                           funds that have been       resource.
                           allotted to the facility
                           that furnished the
                           resource involved.

[7343. Resource Sharing    [The Secretary may enter   Would expand the
Authority: Facilities      into agreements under      Secretary's authority
Operating as or Within     section 8153 of this       under 38 U.S.C. 8153 to
Health Plans]              title with other health    enter into sharing
                           care plans, with other     agreements for specialized
                           health care providers,     medical resources with
                           and with other health      other health plans, health
                           industry organizations,    care providers, health
                           and with individuals, for  industry organizations,
                           the sharing of resources   and individuals.
                           of the Department through  Currently, section 8153
                           facilities of the          only permits agreements
                           Department operating as    with other health care
                           or within health plans.]   facilities, research
                                                      centers, medical schools,
                                                      and state veterans' home
                                                      facilities.

734[4]3(a) Administrative  In order to carry out      Would allow the Secretary
and Personnel Flexibility  this subchapter, the       to carry out
                           Secretary may--            administrative
                                                      reorganizations without
                           (1) subject to section     regard to 38 U.S.C. 510,
                           1822(c) of this title,     which requires
                           carry out administrative   notification of
                           reorganizations of the     appropriate congressional
                           Department without regard  committees if the
                           to those provisions under  reorganization reduces the
                           section 510 of this title  full-time staff at a
                           following subsection (a)   facility by 15 percent or
                           of [the] that section;     more over 1 year or 25
                           and                        percent or more over 2
                                                      fiscal years.

                                                      Amended to limit the
                                                      Secretary of Veterans
                                                      Affairs' authorization to
                                                      conduct administrative
                                                      reorganizations that would
                                                      affect VA's capacity to
                                                      provide specialized
                                                      services by making the
                                                      authorization subject to
                                                      the new section 1822(c)
                                                      provision relating to
                                                      preservation of
                                                      specialized treatment
                                                      capabilities.


Proposed new section of chapter 73, title 38 U.S.C.
--------------------------------------------------------------------------------
734[4]3(a) (continued)     (2) when the Secretary     Would allow the Secretary
                           finds it is cost-          to contract for services
                           effective or necessary in  currently performed by VA
                           order to provide health    employees without regard
                           care services in a timely  to 38 U.S.C. 8110(c),
                           manner--                   which, in general, limits
                                                      the Secretary's ability to
                           (A) enter into contracts   convert an activity
                           for procurement of any     performed by federal
                           commercially available     employees at a health care
                           item at a cost of under    facility to an activity
                           $100,000 without regard    performed by a
                           to any provision of law    contractor.
                           or regulation (i)
                           requiring competitive      Amended to authorize the
                           procedures; (ii)           Secretary to enter into
                           mandating or giving        contracts for any
                           priority to any source of  commercially available
                           supply; or (iii)           item at a cost of under
                           pertaining to protests;    $100,000 without regard to
                           and                        current laws and
                                                      regulations requiring
                           (B) enter into contracts   competitive bidding,
                           without regard to section  mandating or giving
                           8110(c) of this title for  priority to any source of
                           the performance of         supply, or pertaining to
                           services previously        bid protests.
                           performed by employees of
                           the Department.[without    This provision essentially
                           regard to section 8110(c)  eliminates the existing
                           of this title.]            internal controls over
                                                      contracts to purchase
                                                      items under $100,000 as
                                                      well as such provisions as
                                                      priorities given to
                                                      minority contractors and
                                                      small businesses.

                                                      Revisions are pending to
                                                      procurement laws that
                                                      would encourage and
                                                      simplify purchase of
                                                      "commercial items" and
                                                      simplify acquisition
                                                      procedures for purchases
                                                      under $100,000.

(b)                        The Secretary may          Would give the Secretary
                           establish alternative      wide discretion to
                           personnel systems or       establish new personnel
                           procedures for personnel   systems or procedures at
                           at facilities operated as  facilities operated as or
                           or with[in] health plans   within health plans under
                           under the Health Security  the Health Security Act.
                           Act whenever the           The sole exception to this
                           Secretary considers such   discretion is that
                           action necessary in order  veterans' preference will
                           to carry out the terms of  continue in a manner
                           that Act, except that the  comparable to current law.
                           Secretary shall provide
                           for preference eligibles
                           (as defined in section
                           2108 of title 5[, United
                           States Code]) in a manner
                           comparable to the
                           preference for such
                           eligibles under
                           subchapter I of chapter
                           33, and subchapter I of
                           chapter 35, of such
                           title.


Proposed new section of chapter 73, title 38 U.S.C.
--------------------------------------------------------------------------------
734[4]3(c)                 Subject to the provisions  Would allow VA to carry
                           of section 1404 of the     out promotional,
                           Health Security Act, the   advertising, and marketing
                           Secretary may carry out    activities to inform
                           appropriate promotional,   individuals of the
                           advertising, and           availability of facilities
                           marketing activities to    of the Department
                           inform individuals of the  operating as or within
                           availability of            health plans.
                           facilities of the
                           Department operating as    VA would be limited to
                           or within health plans.    using nonappropriated
                           [Such activities may only  funds for its marketing
                           be carried out using       activities. The proposed
                           nonappropriated funds.]    new section 8102(c) of the
                                                      Health Security Act would
                                                      allow the use of
                                                      appropriated funds for
                                                      marketing activities
                                                      during fiscal year 1994.

                                                      Amended to eliminate the
                                                      requirement that only
                                                      nonappropriated funds be
                                                      used for marketing
                                                      activities.


734[5]4. Veterans Health   [(a) There is hereby       Would authorize the
Care [Investment]          authorized to be           appropriation of $3.3
Transition Fund            appropriated to the        billion over 3 fiscal
                           Department, in addition    years to a Veterans Health
                           to amounts otherwise       Care Investment Fund.
                           authorized to be
                           appropriated to the        Amended to increase the
                           Department for VA health   amount to be appropriated
                           plans, such amounts as     from $3.3 billion to $4.05
                           are necessary for the      billion and change the
                           Secretary of the Treasury  name of such fund to the
                           to fulfill the             Veterans Health Care
                           requirement of subsection  Transition Fund.
                           (b).]

                           [(b)] (a) For each of
                           fiscal years 1995, 1996,
                           and 1997, the Secretary
                           of the Treasury shall [,
                           subject to subsection
                           (a),] credit to a special
                           fund (in this section
                           referred to as the
                           "Fund") of the Treasury
                           an amount equal to--

                           (1)[$1,000,000,000]
                           $1,250,000,000 for fiscal
                           year 1995;

                           (2)
                           [$600,000,000]$850,000,00
                           0 for fiscal year 1996;
                           and

                           (3) [$1,700,000,000]
                           $1,950,000,000 for fiscal
                           year 1997.

                           [(c)(1) Subject to         Provides that amounts in
                           paragraph (2),             the Veterans Health Care
                           a](b)Amounts in the Fund   Investment Fund are
                           shall be available to the  available only for VA
                           Secretary only for VA      health plans.
                           health plans authorized
                           under this chapter. Such   Amended to make the funds
                           amounts are available      in the Health Care
                           without fiscal year        Transition Fund available
                           limitation for costs of    without fiscal year
                           commencing operation of    limitation and to specify
                           VA health plans,           that the funds could be
                           including consulting       used for start-up costs,
                           services, equipment,       including consulting
                           marketing, and other       services, equipment,
                           costs, minor               marketing, and certain
                           construction, and          construction.
                           (subject to section 8104
                           of this title) major
                           construction.


Proposed new section of chapter 73, title 38 U.S.C.
--------------------------------------------------------------------------------
734[5]4 (continued)        [(c)(2) For fiscal year    The funds credited to the
                           1995, 1996, or 1997, the   Veterans Health Care
                           amount credited to the     Investment Fund would be
                           Fund for the fiscal year   available for use by VA
                           shall be available for     only if appropriations
                           use by the Secretary       acts for the appropriate
                           under paragraph (1) only   fiscal year provide new
                           if appropriations Acts     budget authority for the
                           for that fiscal year,      medical care account equal
                           without addition of        to or greater than the
                           amounts provided under     amount proposed by the
                           subsection (a) for the     President in his budget
                           Fund, provide new budget   submission.
                           authority for the
                           Department of Veterans     Provision deleted.
                           Affairs Medical Care
                           account, for that fiscal
                           year, of no less than the
                           amount for that account
                           proposed in the budget of
                           the president for that
                           fiscal year under section
                           1105 of title 31.]



                           [(d)] (c)The Secretary     VA would be required to
                           shall submit to Congress,  report to the Congress by
                           no later than March 1,     March 1, 1997, on its
                           1997, a report concerning  preparations for and
                           the operation of the       operations under the
                           Department of Veterans     Health Security Act during
                           Affairs health care        fiscal years 1995 and
                           system in preparing for,   1996. VA would be required
                           and operating under,       to discuss (1) the
                           national health care       adequacy of the amounts in
                           reform under the Health    the Veterans Health Care
                           Security Act during        Investment Fund, (2)
                           fiscal years 1995 and      quality of care, (3) the
                           1996. The report shall     plans' ability to attract
                           include a discussion of-   patients, and (4) the need
                           -                          for additional amounts for
                                                      the Veterans Health Care
                           (1) the adequacy of        Investment Fund for fiscal
                           amounts in the Fund for    years after 1997.
                           the operation of VA
                           health plans;

                           (2) the quality of care
                           provided by such plans;

                           (3) the ability of such
                           plans to attract
                           patients; and

                           (4) the need (if any) for
                           additional funds for the
                           Fund in fiscal years
                           after fiscal year 1997.


Proposed new section of chapter 73, title 38 U.S.C.
--------------------------------------------------------------------------------
734[6]5. Funding           The Secretary may apply    VA would be authorized to
Provisions: Grants and     for and accept, if         apply for and accept
Other Sources of           awarded, any grant or      grants or other sources of
Assistance                 other source of funding    funding intended to meet
                           that is intended to meet   the needs of special
                           the needs of special       populations. For example,
                           populations and that but   VA could apply for grants
                           for this section is        from the National
                           unavailable to facilities  Institutes of Health, the
                           of the Department or to    Robert Wood Johnson
                           health plans operated by   Foundation, or other
                           the Government if funds    organizations. The grants
                           obtained through the       or other sources of
                           grant or other source of   funding could be for
                           funding will be used       research, the delivery of
                           through a facility of the  health care services, or
                           Department operating as    both.
                           or within a health plan.


Health Security Act
--------------------------------------------------------------------------------
8102(b)                    Clerical Amendment.--The   Clerical amendment
                           table of sections at the   creating a new table of
                           beginning of chapter 73    sections at the beginning
                           is amended by striking     of chapter 73, title 38
                           out the item relating to   U.S.C.
                           the heading for
                           subchapter IV and          Revised to reflect
                           inserting in lieu thereof  amendments to chapter 73,
                           the following:             title 38 U.S.C.

                           "SUBCHAPTER IV--
                           PARTICIPATION AS PART OF
                           NATIONAL HEALTH CARE
                           REFORM"

                           7341. Organization of
                           health care facilities as
                           health plans.
                           7342. [Contract authority
                           for facilities operating
                           as or within health
                           plans.]Health Care
                           Resource Agreements.
                           7343.[Resource sharing
                           authority: facilities
                           operating as or within
                           health plans.
                           7344.]Administrative and
                           personnel flexibility.
                           734[5]4. Veterans Health
                           Care [Investment]
                           Transition Fund.
                           734[6]5. Funding
                           provisions; grants and
                           other sources of
                           assistance.

                           Subchapter 5--Research
                           Corporations

[(c)]                      [Transition Provision--    VA would be permitted to
                           The limitation in the      use appropriated funds for
                           second sentence of         marketing, promotional,
                           section 7344(c) of title   and advertising purposes
                           38, United States Code,    during fiscal year 1994.
                           as added by subsection
                           (a), shall not apply       Amended to delete this
                           during fiscal year 1994.]  provision.


Health Security Act
--------------------------------------------------------------------------------
8103. Eligibility for      Section 1710(a)(1) of      Would create a new
Chapter 17 Care            title 38, United States    entitlement to nursing
                           Code, is amended by        home care for veterans
(a) Nursing Home Care      inserting "(or, in the     with service-connected
                           case of a veteran          disabilities rated at 50
                           described in subparagraph  percent or more and
                           (A) or (D) below, shall    veterans who require
                           furnish nursing home       nursing home care for a
                           care)" after "may furnish  service-connected
                           nursing home care".        disability. Currently,
                                                      nursing home care is a
                                                      discretionary benefit for
                                                      all veterans.


(b) Outpatient Care For    Paragraph (1) of section   Provides that VA will
Enrolled Veterans          1712(a) of such title is   provide any veteran in the
                           amended--                  core group who enrolls in
                                                      a VA health plan with any
                           (1) by striking out "and"  needed outpatient services
                           at the end of              (other than dental care)
                           subparagraph (B);          that are not covered or
                                                      not fully covered under
                           (2) by striking out the    the comprehensive benefit
                           period at the end of       package.
                           subparagraph (C) and
                           inserting in lieu thereof  This provision would
                           "; and"; and               essentially require VA to
                                                      provide to service-
                           (3) by adding at the end   connected, low-income, and
                           the following:             other core group veterans
                                                      enrolling in VA health
                           "(D) to any veteran        plans any outpatient
                           described in section       services, including
                           1831(b) of this title who  prescription drugs and
                           is enrolled under section  vision care, not covered
                           1811 of this title and     or not fully covered under
                           the Health Security Act    the comprehensive benefit
                           with a VA health plan (as  package. It is not clear
                           defined in section 1801    whether this becomes a
                           of this title), for any    contractual right to the
                           disability to the extent   services or whether the
                           that care and treatment    services would still be
                           of that disability is not  subject to space and
                           included within the        resource limits. The
                           comprehensive benefit      provisions would, however,
                           package (as defined in     eliminate conditions for
                           section 1801 of this       eligibility such as
                           title)."                   limiting services to those
                                                      that obviate the need for
                                                      hospitalization and prior
                                                      hospitalization
                                                      requirements that
                                                      otherwise might have
                                                      limited access to
                                                      benefits.

                                                      VA officials interpret the
                                                      provision of care under
                                                      this section as being
                                                      subject to the
                                                      availability of space and
                                                      resources. They also
                                                      believe, however, that
                                                      they have always had
                                                      adequate resources to meet
                                                      the needs of all veterans
                                                      in the mandatory care
                                                      category.


Health Security Act
--------------------------------------------------------------------------------
8103(c) Obviate-the-Need   (1) Paragraph (2) of such  For veterans who do not
Outpatient Care            section is amended by      enroll with VA health
                           striking out "The          plans, VA may provide
                           Secretary" and all that    outpatient services (other
                           follows through "this      than dental care) that are
                           subsection..." and         not covered or not fully
                           inserting in lieu thereof  covered under the
                           "Except as provided in     comprehensive benefit
                           subsection(b) of this      package without regard to
                           section, the Secretary     whether such service would
                           shall furnish on an        obviate the need for
                           ambulatory or outpatient   hospital care or whether
                           basis such medical         the service is reasonably
                           services as the Secretary  necessary in preparation
                           determines are             for hospital admission.
                           needed..."

                           (2) Paragraph (4) of such
                           section is amended by
                           striking out "medical
                           services for a purpose
                           described in paragraph
                           (5) of this subsection"
                           and inserting in lieu
                           thereof ", to the extent
                           that facilities are
                           available, such medical
                           services as the Secretary
                           determines are needed".

                           (3) Such section is
                           further amended by
                           striking out paragraph
                           (5) and redesignating
                           paragraph (6) as
                           paragraph (5).

8103(d) Conforming         (1) Section 1701(6) of     Conforming amendments.
Amendments                 such title is amended by
                           striking out "(except
                           under the circumstances
                           described in section
                           1712(a)(5)(A)".

                           (2) Section
                           1701(6)(B)(i)(II) of such
                           title is amended by
                           striking "section
                           1712(a)(5)(B)" and
                           inserting in lieu thereof
                           "section 1712".

                           (3) Section 1703(a)(2)(B)
                           of such title is amended
                           by striking out "for a
                           purpose described in
                           section 1712(a)(5)(B) of
                           this title" and inserting
                           in lieu thereof "to
                           complete treatment
                           incident to hospital,
                           nursing home, or
                           domiciliary care that has
                           been provided by the
                           Department".

                           (4) Section 1712(A)(b)(1)
                           of such title is amended
                           by striking out "section
                           1712(a)(5)(B)" and
                           inserting in lieu thereof
                           "section 1703(a)(2)(B)".



Health Security Act
--------------------------------------------------------------------------------
8104. Authority to         Section 1710(e) of title   Veterans who served in
Provide Health Care for    38, United States Code,    Vietnam during the Vietnam
Herbicide and Radiation    is amended to read as      era whom VA finds may have
Exposure                   follows:                   been exposed to an
                                                      herbicide agent are
(a) Authorized Inpatient   "(e)(1)(A) Subject to      eligible for hospital care
Care                       paragraph (2), a           and nursing home care for
                           herbicide-exposed veteran  the diseases specified
                           is eligible for hospital   below.
                           care and nursing home
                           care under subsection
                           (a)(1)(G) for any disease
                           specified in subparagraph
                           (B).


8104(a) (continued)        "Section 1703(e)(1)(B)     Covered diseases are those
                           The diseases referred to   that the National Academy
                           in subparagraph (A) are    of Sciences has found or
                           those for which the        subsequently finds either
                           National Academy of        some evidence of, or
                           Sciences, in a report      insufficient evidence to
                           issued in accordance with  permit a conclusion on the
                           section 2 of the Agent     presence or absence of, an
                           Orange Act of 1991, has    association between
                           determined--               diseases in humans and
                                                      exposure to an herbicide.
                           "(i) that there is
                           sufficient evidence to
                           conclude that there is a
                           positive association
                           between occurrence of the
                           disease in humans and
                           exposure to a herbicide
                           agent;

                           "(ii) that there is
                           evidence which is
                           suggestive of an
                           association between
                           occurrence of the disease
                           in humans and exposure to
                           a herbicide agent, but
                           such evidence is limited
                           in nature; or

                           "(iii) that available
                           studies are insufficient
                           to permit a conclusion
                           about the presence or
                           absence of an association
                           between occurrence of the
                           disease in humans and
                           exposure to a herbicide
                           agent.




Health Security Act
--------------------------------------------------------------------------------
================================================================================
8104(a) (continued)        (C) A radiation-exposed    Veterans who have been
                           veteran is eligible for    exposed to radiation are
                           hospital care and nursing  eligible for hospital and
                           home care under            nursing home care for any
                           subsection (a)(1)(G) for-  disease for which the
                           -                          Secretary of Veterans
                                                      Affairs determines there
                           "(i) any disease listed    is credible evidence of an
                           in section 1112(c)(2) of   association between
                           this title; and            diseases in humans and
                                                      exposure to ionizing
                           "(ii) any other disease    radiation.
                           for which the Secretary,
                           based on the advice of
                           the Advisory Committee on
                           Environmental Hazards,
                           determines that there is
                           credible evidence of a
                           positive association
                           between occurrence of the
                           disease in humans and
                           exposure to ionizing
                           radiation.


Proposed change to title 38 U.S.C.
--------------------------------------------------------------------------------
1710(e)(2)                 Hospital and nursing home  Provides that hospital and
                           care may not be provided   nursing home care cannot
                           under or by virtue of      be provided to veterans
                           paragraph (1)(A) after     exposed to toxic
                           September 30, 1996.        herbicides under the above
                                                      provisions after September
                                                      30, 1996.

1710(e)(3)                 For purposes of this       Provides definitions of
                           subsection and section     "herbicide-
                           1712 of this title--       exposed veteran,"
                                                      "herbicide agent," and
                           (A) the term "herbicide-   "radiation-exposed
                           exposed veteran" means a   veteran."
                           veteran (i) who served on
                           active duty in the
                           Republic of Vietnam
                           during the Vietnam era,
                           and (ii) who the
                           Secretary finds may have
                           been exposed during such
                           service to a herbicide
                           agent;

                           (B) the term "herbicide
                           agent" has the meaning
                           given the term in section
                           1116(a)(4) of this title;
                           and

                           (C) the term "radiation-
                           exposed veteran" has the
                           meaning given that term
                           in section 1112(c)(4) of
                           this title.



Health Security Act
--------------------------------------------------------------------------------
8104(b) Authorized         Section 1712 of such       Herbicide-exposed veterans
Outpatient Care            title is amended--         and radiation-exposed
                           (1) in subsection (a)(1)-  veterans would also be
                           -                          eligible for outpatient
                                                      treatment for any disease
                           (A) by striking out "and"  that may be related to
                           at the end of              their exposures as
                           subparagraph (B);          discussed above. This
                                                      provision would remain in
                           (B) by striking out the    effect until October 1,
                           period at the end of       1996, for herbicide-
                           subparagraph (C) and       exposed veterans but would
                           inserting in lieu thereof  continue after that time
                           a semicolon; and           for radiation-exposed
                                                      veterans.
                           (C) by adding at the end
                           the following:

                           "(D) during the period
                           before October 1, 1996,
                           to any herbicide-exposed
                           veteran for any disease
                           listed in section
                           1710(e)(1)(B) of this
                           title; and

                           "(E) to any radiation-
                           exposed veteran for any
                           disease covered under
                           section 1710(e)(1)(C) of
                           this title."; and

                           (2) in subsection (i)(3)-
                           -

                           (A) by striking out
                           "(A)"; and

                           (B) by striking out ", or
                           (B)" and all that follows
                           through "title".

8104(c) Savings Provision  The provisions of          Current provisions with
                           sections 1710(e) and       respect to the provision
                           1712(a) of title 38,       of hospital, nursing home
                           United States Code, as in  care, and medical services
                           effect on the day before   would continue in effect
                           the date of the enactment  for any veteran furnished
                           of this Act, shall apply   care on the basis of
                           with respect to hospital   presumed exposure to toxic
                           care, nursing home care,   herbicides or radiation
                           and medical services in    before the enactment of
                           the case of any veteran    the Health Security Act.
                           furnished care or
                           services before such date
                           of enactment on the basis
                           of presumed exposure to a
                           substance or radiation
                           under the authority of
                           those provisions.


Health Security Act
--------------------------------------------------------------------------------
8105. Extension of         Section 1710(e) of title   Authority to provide
Authority to Provide       38, United States Code,    priority health care to
Priority Health Care for   is amended--               veterans who may have been
Exposure to Environmental                             exposed to toxic
Hazards                    (1) in paragraph (1)(C),   substances or
                           by inserting "which        environmental hazards
(a) Authorized Inpatient   becomes manifest before    while serving on active
Care                       October 1, 1996" after     duty in the Persian Gulf
                           "for any disability";      War would be extended for
                           and                        hospital and nursing home
                                                      care and medical services
                           (2) in paragraph (3), by   through September 30,
                           striking out "December     1996, notwithstanding that
                           31, 1994." and inserting   insufficient medical
                           in lieu thereof            evidence exists to
                           "September 30, 1998."      conclude that such
                                                      disability may be
                                                      associated with such
                                                      exposure. The provisions
                                                      relating to care of
                                                      veterans of the Persian
                                                      Gulf War expire September
                                                      30, 1998.

(b) Authorized Outpatient  Section 1712(a)(1) of      Authority to provide
Care                       such title is amended by   outpatient care to
                           striking out "December     veterans who served on
                           31, 1994, for any          active duty in the Persian
                           disability" and inserting  Gulf War who may have been
                           in lieu thereof "October   exposed to toxic
                           1, 1998, for any           substances or
                           disability which becomes   environmental hazards
                           manifest before October    would be extended to
                           1, 1996."                  September 30, 1998, for
                                                      any disability that
                                                      becomes manifest before
                                                      October 1, 1996.

8106. Effective Date of    Notwithstanding any other  Provides that
Coverage for High-         provision of this Act,     notwithstanding any other
Priority Veterans          the provisions of the      provisions of the Health
                           amendments made by this    Security Act, the
                           subtitle shall take        provisions relating to
                           effect with respect to     high-priority veterans
                           veterans described in      will take effect on
                           section 1831(b) of title   October 1, 1995.
                           38, United States Code,
                           as added by section 8101,
                           on October 1, 1995. The
                           Secretary of Veterans
                           Affairs shall take such
                           steps as necessary to
                           implement those
                           provisions with respect
                           to those veterans by that
                           date.


Health Security Act
--------------------------------------------------------------------------------
8107. Report on Waiving    (a) Report.--The           The Secretary of Veterans
Cost-Sharing for Certain   Secretary of Veterans      Affairs would be required
Medical Care for           Affairs shall submit to    to submit a report to the
Dependents of Persian      Congress a report on the   Congress within 60 days
Gulf Veterans Who May      desirability and the       after enactment of the
Have Been Exposed to       feasibility of waiving     Health Security Act on the
Environmental Hazards      any requirement for cost-  desirability and
                           sharing in the case of     feasibility of waiving
                           medical care described in  cost sharing for certain
                           subsection (b) that is     medical care provided to
                           provided by a VA health    dependents of Persian Gulf
                           plan under chapter 18 of   war veterans who may have
                           title 38, United States    been exposed to
                           Code (as added by section  environmental hazards.
                           8101), to an individual
                           who is a VA enrollee
                           enrolled under family-
                           member eligibility under
                           section 1813 of that
                           chapter.

                           (b) Persian Gulf War
                           Illness.--Medical care
                           referred to in subsection
                           (a) is medical care
                           provided to a family
                           member of a veteran
                           described in subparagraph
                           (C) of section 1710(e)(1)
                           of title 38, United
                           States Code, for any
                           disease or disability
                           occurring in that family
                           member which the
                           Secretary finds may be
                           related to the service of
                           the veteran in the
                           Southwest Asia theater of
                           operations during the
                           Persian Gulf War.

                           (c) Matters to be
                           Considered.--In preparing
                           the report under
                           subsection (a), the
                           Secretary shall consider
                           relevant studies,
                           including those that have
                           been (or that are being)
                           conducted by the
                           Department of Veterans
                           Affairs, the Department
                           of Defense, the National
                           Institutes of Health, the
                           National Academy of
                           Sciences, and private
                           health care providers.

                           (d) Submission of
                           Report.--The report under
                           subsection (a) shall be
                           submitted not later than
                           60 days after the date of
                           enactment of this Act.
--------------------------------------------------------------------------------

GAO PRODUCTS RELATED TO VA'S ROLE
UNDER HEALTH CARE REFORM
============================================================ Chapter 2


   SUMMARIES OF PRINCIPAL PRODUCTS
---------------------------------------------------------- Chapter 2:1


      VETERANS' HEALTH CARE: 
      EFFORTS TO MAKE VA
      COMPETITIVE MAY CREATE
      SIGNIFICANT RISKS
      (TESTIMONY, JUNE 29, 1994,
      GAO/T-HEHS-94-197)
-------------------------------------------------------- Chapter 2:1.1

VA faces many challenges as it tries to restructure its health care
system to compete in a managed care environment.  Most legal barriers
that might limit VA's ability to compete with private-sector managed
care plans would be addressed through the Health Security Act.  The
act would overcome many barriers by expanding entitlement to VA
health care or by exempting VA from federal and state requirements
developed to prevent fraud and abuse and ensure quality of and access
to health care services.  In addition, many of the structural
barriers, such as VA's lack of adequate cost and utilization data,
will likely inhibit its efforts to establish competitive health
plans.  As a result, significant risks are associated with efforts to
transform the VA direct delivery system into a series of managed care
plans.  The expanded entitlement to free comprehensive care, for
example, could add billions of dollars to VA appropriations if all
veterans entitled to free care seek to enroll in VA health plans. 


      VA HEALTH CARE:  VA AND THE
      HEALTH SECURITY ACT (LETTER,
      MAY 9, 1994,
      GAO/HEHS-94-159R)
-------------------------------------------------------- Chapter 2:1.2

GAO provides a detailed analysis of the Health Security Act as
submitted by the Administration.  It consists of

  a discussion of the veterans' health care provisions contained
     under title VIII of H.R.  3600 that pertain directly to VA;

  a discussion of other provisions of the Health Security Act that
     mention VA; and

  a comparison of the health care services that would be covered
     under the comprehensive benefits package under the Health
     Security Act with the health care services currently covered
     under chapter 17 of title 38 of the United States Code. 


      VA HEALTH CARE REFORM: 
      FINANCIAL IMPLICATIONS OF
      THE PROPOSED HEALTH SECURITY
      ACT (TESTIMONY, MAY 5, 1994,
      GAO/T-HEHS-94-148)
-------------------------------------------------------- Chapter 2:1.3

The veterans' health care provisions of the Health Security Act
address many of the issues discussed in our reports.  GAO believes
that eligibility reforms that enable VA to shift the focus of its
health care system from inpatient to ambulatory and primary care and
its collateral plans to become an increasingly managed care system
are long overdue steps.  Several financial and policy implications,
however, need to be considered by the Congress.  For example, the
expanded entitlement to free comprehensive health care benefits could
add billions of dollars to Department of Veterans Affairs (VA)
appropriations if all veterans entitled to free care seek to enroll
in VA health plans.  Authorizing the Secretary of Veterans Affairs to
offer supplemental benefit policies covering such services as
long-term nursing care could add tens of billions of dollars to VA
appropriations. 


      VETERANS' HEALTH CARE:  MOST
      CARE PROVIDED THROUGH NON-VA
      PROGRAMS (REPORT, APRIL 25,
      1994, GAO/HEHS-94-104BR)
-------------------------------------------------------- Chapter 2:1.4

Nine out of 10 veterans have non-VA health care coverage.  Veterans
with Medicare coverage are unlikely to use VA services.  Seven out of
10 federal dollars spent on veterans' health care come from non-VA
programs.  Expenditures on veterans' health care through private
health insurance likely exceed those under VA health care.  Veterans
using VA services tend to have lower incomes and less private health
insurance coverage than nonusers.  Health reform could reduce VA's
role as a safety net for acute-care services.  President Clinton's
proposed Health Security Act is the only major health reform proposal
that would change the role of the VA health care system.  The report
points out several other options that exist for restructuring the VA
health care system. 


      VETERANS' HEALTH CARE: 
      VETERANS' PERCEPTIONS OF VA
      SERVICES AND ITS ROLE IN
      HEALTH CARE REFORM
      (TESTIMONY, APRIL 20, 1994,
      GAO/T-HEHS-94-150)
-------------------------------------------------------- Chapter 2:1.5

GAO presented the views obtained from discussions with small groups
of veterans on the current veterans health care system and the future
role of VA.  Several themes emerged:  (1) veterans, other than those
without health insurance, seemed to use VA only for certain services,
such as treatment of service-connected disabilities; (2) veterans'
satisfaction with VA health care varied by location, but focused
mainly on poor customer service; (3) veterans perceive that the care
offered by VA can be erratic and some questioned the quality of care
offered by facilities at other locations; (4) veterans expressed
concern that changes could diminish or eliminate veterans' health
benefits; (5) some veterans did not see a need to maintain separate
veterans' health care facilities, as long as veterans were given a
viable alternative; and (6) veterans frequently indicated the needs
of veterans with service-connected disabilities should receive the
highest priority. 


      VA HEALTH CARE:  A PROFILE
      OF VETERANS USING VA MEDICAL
      CENTERS IN 1991 (REPORT,
      MAR.  29, 1994,
      GAO/HEHS-94-113FS)
-------------------------------------------------------- Chapter 2:1.6

Of the 2.2 million veterans who used VA medical centers in 1991,
two-thirds had family incomes under $20,000; in contrast, about 10
percent had family incomes over $40,000.  Lower incomes tended to
prevail among nonservice-connected, unmarried, and younger veterans. 
About 45 percent of the veterans were employed and 45 percent were
retired.  About 46 percent of the veterans were married and 16
percent had dependents other than a spouse.  About 25 percent of the
veterans used VA for inpatient services; almost all used VA for
outpatient services. 


      VA HEALTH CARE:  COMPARISON
      OF VA BENEFITS WITH OTHER
      PUBLIC AND PRIVATE PROGRAMS
      (REPORT, JULY 29, 1993,
      GAO/HRD-93-94)
-------------------------------------------------------- Chapter 2:1.7

The complex eligibility and entitlement provisions of the Department
of Veterans Affairs (VA) place more restrictions on the availability
of services than do other programs.  About two-thirds of veterans
eligible for VA care can obtain medical services only to the extent
that space and resources are available after other veterans with
higher priorities for care are served.  Other public and private
health care programs essentially guarantee payment for covered
services to all eligible participants.  Once in the VA system,
veterans are generally offered a more extensive array of services,
fewer limitations in terms of the duration and number of visits or
services covered, and less cost sharing than are available under most
public and private health benefit programs. 


      VA HEALTH CARE:  POTENTIAL
      FOR OFFSETTING LONG-TERM
      CARE COSTS THROUGH ESTATE
      RECOVERY (REPORT, JULY 27,
      1993, GAO/HRD-93-68)
-------------------------------------------------------- Chapter 2:1.8

VA could potentially offset a significant portion of its nursing home
and domiciliary care costs if it had the same authority states have
to operate estate recovery programs under Medicaid.  The potential
for recovering nursing home and domiciliary costs may be greater for
veterans than for Medicaid recipients because (1) home ownership is
significantly higher among elderly VA hospital users than among
Medicaid nursing home recipients, and (2) veterans living in VA
facilities generally contribute much less of their incomes toward the
cost of their care than do Medicaid recipients.  Oregon's successful
Medicaid estate recovery program could serve as a model for a VA
program. 


      VA HEALTH CARE: 
      VARIABILITIES IN OUTPATIENT
      CARE ELIGIBILITY AND
      RATIONING DECISIONS (REPORT,
      JULY 16, 1993,
      GAO/HRD-93-106)
-------------------------------------------------------- Chapter 2:1.9

Veterans' access to outpatient care at VA medical centers varies
widely for two reasons:  (1) medical centers interpret VA outpatient
eligibility criteria differently, and (2) medical centers' rationing
decisions vary, including whether to ration and what rationing method
to use.  This variation results in veterans with similar medical
conditions or income status receiving outpatient care at some medical
centers but not at others. 


      VA HEALTH CARE:  VETERANS'
      EFFORTS TO OBTAIN OUTPATIENT
      CARE FROM ALTERNATIVE
      SOURCES (REPORT, JULY 14,
      1993, GAO/HRD-93-123)
------------------------------------------------------- Chapter 2:1.10

Of 198 veterans surveyed, 168 (85 percent) obtained needed care after
VA medical centers turned them away.  These veterans received
diagnostic evaluations or needed treatment, including medication, for
the same conditions for which they had initially sought treatment at
the VA centers.  The remaining 30 veterans did not obtain further
medical care, primarily because they could not afford it. 


      VA HEALTH CARE:  OFFSETTING
      LONG-TERM CARE COSTS BY
      ADOPTING STATE COPAYMENT
      PRACTICES (REPORT, AUG.  12,
      1992, GAO/HRD-92-96)
------------------------------------------------------- Chapter 2:1.11

VA could offset a larger portion of its nursing home and domiciliary
costs if the Congress authorized it to adopt charging policies
similar to those that most states GAO visited use to offset the costs
of operating their state veterans' homes.  In fiscal year 1990, VA
offset less than 1 percent of its costs to provide nursing home and
domiciliary care in VA and community facilities through copayments. 
In comparison, the eight states GAO visited that charged for care
offset from 4 to 43 percent of state home operating costs through
copayments.  If VA had offset similar percentages, its yearly
recoveries would have been between $43 million and $464 million. 


      VA HEALTH CARE:  ALTERNATIVE
      HEALTH INSURANCE REDUCES
      DEMAND FOR VA CARE (REPORT,
      JUNE 30, 1992,
      GAO/HRD-92-79)
------------------------------------------------------- Chapter 2:1.12

Demand for VA inpatient services, as measured by days-of-care
provided to veterans, could drop by about 47 percent if the United
States establishes a universal health care program that does not
include changes in the VA health care system.  Similarly, demand for
outpatient services could drop by about 41 percent.  The actual
decreases, including the impact on nursing home usage, could vary
significantly depending on the type of universal coverage program
adopted.  Although many veterans would continue to seek VA treatment,
the magnitude of the likely decrease in demand for VA-sponsored
health care suggests that the VA health care system should be
included in any debate about reform of the American health care
system. 


   OTHER RELATED PRODUCTS
---------------------------------------------------------- Chapter 2:2

Veterans' Health Care:  Potential Effects of Health Care Reforms on
VA's Major Construction Program (Testimony, May 6, 1993,
GAO/T-HRD-93-19). 

Veterans' Health Care:  Potential Effects of Health Financing Reforms
on Demand for VA Services (Testimony, Mar.  31, 1993,
GAO/T-HRD-93-12). 

Veterans' Health Care:  Potential Effects of Health Reforms on VA
Construction (Testimony, Mar.  3, 1993, GAO/T-HRD-93-7). 

VA Health Care:  Actions Needed to Control Major Construction Costs
(Report, Feb.  26, 1993, GAO/HRD-93-75). 

Veterans' Affairs Issues (Report, Dec.  1992, GAO/OCG-93-21TR). 

VA Health Care:  Demonstration Project Concerning Future Structure of
Veterans' Health Program (Testimony, Aug.  11, 1992,
GAO/T-HRD-92-53). 

Veterans Affairs:  Accessibility of Outpatient Care at VA Medical
Centers (Testimony, July 21, 1993, GAO/T-HRD-93-29). 

