[House Report 105-217]
[From the U.S. Government Publishing Office]
105th Congress Report
1st Session HOUSE OF REPRESENTATIVES 105-217
_______________________________________________________________________
BALANCED BUDGET ACT OF 1997
----------
CONFERENCE REPORT
to accompany
H.R. 2015
July 30, (legislative day of July 29), 1997.--Ordered to be printed
105th Congress Report
1st Session HOUSE OF REPRESENTATIVES 105-217
_______________________________________________________________________
BALANCED BUDGET ACT OF 1997
----------
CONFERENCE REPORT
to accompany
H.R. 2015
July 30, (legislative day of July 29), 1997.--Ordered to be printed
105th Congress Report
1st Session HOUSE OF REPRESENTATIVES 105-217
_______________________________________________________________________
BALANCED BUDGET ACT OF 1997
_______
July 30 (legislative day, July 29), 1997.--Ordered to be printed
_______________________________________________________________________
Mr. Kasich, from the committee of conference, submitted the following
CONFERENCE REPORT
[To accompany H.R. 2015]
The committee of conference on the disagreeing votes of
the two Houses on the amendment of the Senate to the bill (H.R.
2015), to provide for reconciliation pursuant to section 104(a)
of the concurrent resolution on the budget for fiscal year
1998, having met, after full and free conference, have agreed
to recommend and do recommend to their respective Houses as
follows:
That the House recede from its disagreement to the
amendment of the Senate and agree to the same with an amendment
as follows:
In lieu of the matter proposed to be inserted by the
Senate amendment, insert the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Balanced Budget Act of
1997''.
SEC. 2. TABLE OF TITLES.
This Act is organized into titles as follows:
Title I--Food Stamp Provisions
Title II--Housing and Related Provisions
Title III--Communications and Spectrum Allocation Provisions
Title IV--Medicare, Medicaid, and Children's Health Provisions
Title V--Welfare and Related Provisions
Title VI--Education and Related Provisions
Title VII--Civil Service Retirement and Related Provisions
Title VIII--Veterans and Related Provisions
Title IX--Asset Sales, User Fees, and Miscellaneous Provisions
Title X--Budget Enforcement and Process Provisions
Title XI--District of Columbia Revitalization
TITLE I--FOOD STAMP PROVISIONS
SEC. 1001. EXEMPTION.
Section 6(o) of the Food Stamp Act of 1977 (7 U.S.C.
2015(o)) is amended--
(1) in paragraph (2)(D), by striking ``or (5)'' and
inserting ``(5), or (6)'';
(2) by redesignating paragraph (6) as paragraph
(7); and
(3) by inserting after paragraph (5) the following:
``(6) 15-percent exemption.--
``(A) Definitions.--In this paragraph:
``(i) Caseload.--The term
`caseload' means the average monthly
number of individuals receiving food
stamps during the 12-month period
ending the preceding June 30.
``(ii) Covered individual.--The
term `covered individual' means a food
stamp recipient, or an individual
denied eligibility for food stamp
benefits solely due to paragraph (2),
who--
``(I) is not eligible for
an exception under paragraph
(3);
``(II) does not reside in
an area covered by a waiver
granted under paragraph (4);
``(III) is not complying
with subparagraph (A), (B), or
(C) of paragraph (2);
``(IV) is not receiving
food stamp benefits during the
3 months of eligibility
provided under paragraph (2);
and
``(V) is not receiving food
stamp benefits under paragraph
(5).
``(B) General rule.--Subject to
subparagraphs (C) through (G), a State agency
may provide an exemption from the requirements
of paragraph (2) for covered individuals.
``(C) Fiscal year 1998.--Subject to
subparagraphs (E) and (G), for fiscal year
1998, a State agency may provide a number of
exemptions such that the average monthly number
of the exemptions in effect during the fiscal
year does not exceed 15 percent of the number
of covered individuals in the State in fiscal
year 1998, as estimated by the Secretary, based
on the survey conducted to carry out section
16(c) for fiscal year 1996 and such other
factors as the Secretary considers appropriate
due to the timing and limitations of the
survey.
``(D) Subsequent fiscal years.--Subject to
subparagraphs (E) through (G), for fiscal year
1999 and each subsequent fiscal year, a State
agency may provide a number of exemptions such
that the average monthly number of the
exemptions in effect during the fiscal year
does not exceed 15 percent of the number of
covered individuals in the State, as estimated
by the Secretary under subparagraph (C),
adjusted by the Secretary to reflect changes in
the State's caseload and the Secretary's
estimate of changes in the proportion of food
stamp recipients covered by waivers granted
under paragraph (4).
``(E) Caseload adjustments.--The Secretary
shall adjust the number of individuals
estimated for a State under subparagraph (C) or
(D) during a fiscal year if the number of food
stamp recipients in the State varies from the
State's caseload by more than 10 percent, as
determined by the Secretary.
``(F) Exemption adjustments.--During fiscal
year 1999 and each subsequent fiscal year, the
Secretary shall increase or decrease the number
of individuals who may be granted an exemption
by a State agency under this paragraph to the
extent that the average monthly number of
exemptions in effect in the State for the
preceding fiscal year under this paragraph is
lesser or greater than the average monthly
number of exemptions estimated for the State
agency for such preceding fiscal year under
this paragraph.
``(G) Reporting requirement.--A State
agency shall submit such reports to the
Secretary as the Secretary determines are
necessary to ensure compliance with this
paragraph.''.
SEC. 1002. ADDITIONAL FUNDING FOR EMPLOYMENT AND TRAINING.
(a) In General.--Section 16(h) of the Food Stamp Act of
1977 (7 U.S.C. 2025(h)) is amended by striking paragraph (1)
and inserting the following:
``(1) In general.--
``(A) Amounts.--To carry out employment and
training programs, the Secretary shall reserve
for allocation to State agencies, to remain
available until expended, from funds made
available for each fiscal year under section
18(a)(1) the amount of--
``(i) for fiscal year 1996,
$75,000,000;
``(ii) for fiscal year 1997,
$79,000,000;
``(iii) for fiscal year 1998--
``(I) $81,000,000; and
``(II) an additional amount
of $131,000,000;
``(iv) for fiscal year 1999--
``(I) $84,000,000; and
``(II) an additional amount
of $131,000,000;
``(v) for fiscal year 2000--
``(I) $86,000,000; and
``(II) an additional amount
of $131,000,000;
``(vi) for fiscal year 2001--
``(I) $88,000,000; and
``(II) an additional amount
of $131,000,000; and
``(vii) for fiscal year 2002--
``(I) $90,000,000; and
``(II) an additional amount
of $75,000,000.
``(B) Allocation.--
``(i) Allocation formula.--The
Secretary shall allocate the amounts
reserved under subparagraph (A) among
the State agencies using a reasonable
formula, as determined and adjusted by
the Secretary each fiscal year, to
reflect--
``(I) changes in each
State's caseload (as defined in
section 6(o)(6)(A));
``(II) for fiscal year
1998, the portion of food stamp
recipients who reside in each
State who are not eligible for
an exception under section
6(o)(3); and
``(III) for each of fiscal
years 1999 through 2002, the
portion of food stamp
recipients who reside in each
State who are not eligible for
an exception under section
6(o)(3) and who--
``(aa) do not
reside in an area
subject to a waiver
granted by the
Secretary under section
6(o)(4); or
``(bb) do reside in
an area subject to a
waiver granted by the
Secretary under section
6(o)(4), if the State
agency provides
employment and training
services in the area to
food stamp recipients
who are not eligible
for an exception under
section 6(o)(3).
``(ii) Estimated factors.--The
Secretary shall estimate the portion of
food stamp recipients who reside in
each State who are not eligible for an
exception under section 6(o)(3) based
on the survey conducted to carry out
subsection (c) for fiscal year 1996 and
such other factors as the Secretary
considers appropriate due to the timing
and limitations of the survey.
``(iii) Reporting requirement.--A
State agency shall submit such reports
to the Secretary as the Secretary
determines are necessary to ensure
compliance with this paragraph.
``(C) Reallocation.--If a State agency will
not expend all of the funds allocated to the
State agency for a fiscal year under
subparagraph (B), the Secretary shall
reallocate the unexpended funds to other States
(during the fiscal year or the subsequent
fiscal year) as the Secretary considers
appropriate and equitable.
``(D) Minimum allocation.--Notwithstanding
subparagraph (B), the Secretary shall ensure
that each State agency operating an employment
and training program shall receive not less
than $50,000 for each fiscal year.
``(E) Use of funds.--Of the amount of funds
a State agency receives under subparagraphs (A)
through (D) for a fiscal year, not less than 80
percent of the funds shall be used by the State
agency during the fiscal year to serve food
stamp recipients who--
``(i) are not eligible for an
exception under section 6(o)(3); and
``(ii) are placed in and comply
with a program described in
subparagraph (B) or (C) of section
6(o)(2).
``(F) Maintenance of effort.--To receive an
allocation of an additional amount made
available under subclause (II) of each of
clauses (iii) through (vii) of subparagraph
(A), a State agency shall maintain the
expenditures of the State agency for employment
and training programs and workfare programs for
any fiscal year under paragraph (2), and
administrative expenses described in section
20(g)(1), at a level that is not less than the
level of the expenditures by the State agency
to carry out the programs and such expenses for
fiscal year 1996.
``(G) Component costs.--The Secretary shall
monitor State agencies' expenditure of funds
for employment and training programs provided
under this paragraph, including the costs of
individual components of State agencies'
programs. The Secretary may determine the
reimbursable costs of employment and training
components, and, if the Secretary makes such a
determination, the Secretary shall determine
that the amounts spent or planned to be spent
on the components reflect the reasonable cost
of efficiently and economically providing
components appropriate to recipient employment
and training needs, taking into account, as the
Secretary deems appropriate, prior expenditures
on the components, the variability of costs
among State agencies' components, the
characteristics of the recipients to be served,
and such other factors as the Secretary
considers necessary.''.
(b) Report to Congress.--Not later than 30 months after the
date of enactment of this Act, the Secretary of Agriculture
shall submit to the Committee on Agriculture of the House of
Representatives and the Committee on Agriculture, Nutrition,
and Forestry of the Senate a report regarding whether the
amounts made available under section 16(h)(1)(A) of the Food
Stamp Act of 1977 (as a result of the amendment made by
subsection (a)) have been used by State agencies to increase
the number of work slots for recipients subject to section 6(o)
of the Food Stamp Act of 1977 (7 U.S.C. 2015(o)) in employment
and training programs and workfare in the most efficient and
effective manner practicable.
SEC. 1003. DENIAL OF FOOD STAMPS FOR PRISONERS.
(a) State Plans.--
(1) In general.--Section 11(e) of the Food Stamp
Act of 1977 (7 U.S.C. 2020(e)) is amended by striking
paragraph (20) and inserting the following:
``(20) that the State agency shall establish a
system and take action on a periodic basis--
``(A) to verify and otherwise ensure that
an individual does not receive coupons in more
than 1 jurisdiction within the State; and
``(B) to verify and otherwise ensure that
an individual who is placed under detention in
a Federal, State, or local penal, correctional,
or other detention facility for more than 30
days shall not be eligible to participate in
the food stamp program as a member of any
household, except that--
``(i) the Secretary may determine
that extraordinary circumstances make
it impracticable for the State agency
to obtain information necessary to
discontinue inclusion of the
individual; and
``(ii) a State agency that obtains
information collected under section
1611(e)(1)(I)(i)(I) of the Social
Security Act (42 U.S.C.
1382(e)(1)(I)(i)(I)) pursuant to
section 1611(e)(1)(I)(ii)(II) of that
Act (42 U.S.C. 1382(e)(1)(I)(ii)(II)),
or under another program determined by
the Secretary to be comparable to the
program carried out under that section,
shall be considered in compliance with
this subparagraph.''.
(2) Limits on disclosure and use of information.--
Section 11(e)(8)(E) of the Food Stamp Act of 1977 (7
U.S.C. 2020(e)(8)(E)) is amended by striking
``paragraph (16)'' and inserting ``paragraph (16) or
(20)(B)''.
(3) Effective date.--
(A) In general.--Except as provided in
subparagraph (B), the amendments made by this
subsection shall take effect on the date that
is 1 year after the date of enactment of this
Act.
(B) Extension.--The Secretary of
Agriculture may grant a State an extension of
time to comply with the amendments made by this
subsection, not to exceed beyond the date that
is 2 years after the date of enactment of this
Act, if the chief executive officer of the
State submits a request for the extension to
the Secretary--
(i) stating the reasons why the
State is not able to comply with the
amendments made by this subsection by
the date that is 1 year after the date
of enactment of this Act;
(ii) providing evidence that the
State is making a good faith effort to
comply with the amendments made by this
subsection as soon as practicable; and
(iii) detailing a plan to bring the
State into compliance with the
amendments made by this subsection as
soon as practicable but not later than
the date of the requested extension.
(b) Information Sharing.--Section 11 of the Food Stamp Act
of 1977 (7 U.S.C. 2020) is amended by adding at the end the
following:
``(q) Denial of Food Stamps for Prisoners.--The Secretary
shall assist States, to the maximum extent practicable, in
implementing a system to conduct computer matches or other
systems to prevent prisoners described in section 11(e)(20)(B)
from participating in the food stamp program as a member of any
household.''.
SEC. 1004. NUTRITION EDUCATION.
Section 11(f) of the Food Stamp Act of 1977 (7 U.S.C.
2020(f)) is amended--
(1) by striking ``(f) To encourage'' and inserting
the following:
``(f) Nutrition Education.--
``(1) In general.--To encourage''; and
(2) by adding at the end the following:
``(2) Grants.--
``(A) In general.--The Secretary shall make
available not more than $600,000 for each of
fiscal years 1998 through 2001 to pay the
Federal share of grants made to eligible
private nonprofit organizations and State
agencies to carry out subparagraph (B).
``(B) Eligibility.--A private nonprofit
organization or State agency shall be eligible
to receive a grant under subparagraph (A) if
the organization or agency agrees--
``(i) to use the funds to direct a
collaborative effort to coordinate and
integrate nutrition education into
health, nutrition, social service, and
food distribution programs for food
stamp participants and other low-income
households; and
``(ii) to design the collaborative
effort to reach large numbers of food
stamp participants and other low-income
households through a network of
organizations, including schools, child
care centers, farmers' markets, health
clinics, and outpatient education
services.
``(C) Preference.--In deciding between 2 or
more private nonprofit organizations or State
agencies that are eligible to receive a grant
under subparagraph (B), the Secretary shall
give a preference to an organization or agency
that conducted a collaborative effort described
in subparagraph (B) and received funding for
the collaborative effort from the Secretary
before the date of enactment of this paragraph.
``(D) Federal share.--
``(i) In general.--Subject to
subparagraph (E), the Federal share of
a grant under this paragraph shall be
50 percent.
``(ii) No in-kind contributions.--
The non-Federal share of a grant under
this paragraph shall be in cash.
``(iii) Private funds.--The non-
Federal share of a grant under this
paragraph may include amounts from
private nongovernmental sources.
``(E) Limit on individual grant.--The
Federal share of a grant under subparagraph (A)
may not exceed $200,000 for a fiscal year.''.
SEC. 1005. REGULATIONS; EFFECTIVE DATE.
(a) Regulations.--Not later than 1 year after the date of
enactment of this Act, the Secretary of Agriculture shall
promulgate such regulations as are necessary to implement the
amendments made by this title.
(b) Effective Date.--The amendments made by sections 1001
and 1002 take effect on October 1, 1997, without regard to
whether regulations have been promulgated to implement the
amendments made by such sections.
TITLE II--HOUSING AND RELATED PROVISIONS
SEC. 2001. TABLE OF CONTENTS.
The table of contents for this title is as follows:
TITLE II--HOUSING AND RELATED PROVISIONS
Sec. 2001. Table of contents.
Sec. 2002. Extension of foreclosure avoidance and borrower assistance
provisions for FHA single family housing mortgage insurance
program.
Sec. 2003. Adjustment of maximum monthly rents for certain dwelling
units in new construction and substantial or moderate
rehabilitation projects assisted under section 8 rental
assistance program.
Sec. 2004. Adjustment of maximum monthly rents for non-turnover dwelling
units assisted under section 8 rental assistance program.
SEC. 2002. EXTENSION OF FORECLOSURE AVOIDANCE AND BORROWER ASSISTANCE
PROVISIONS FOR FHA SINGLE FAMILY HOUSING MORTGAGE
INSURANCE PROGRAM.
Section 407 of The Balanced Budget Downpayment Act, I (12
U.S.C. 1710 note) is amended--
(1) in subsection (c)--
(A) by striking ``only''; and
(B) by inserting ``, on, or after'' after
``before''; and
(2) by striking subsection (e).
SEC. 2003. ADJUSTMENT OF MAXIMUM MONTHLY RENTS FOR CERTAIN DWELLING
UNITS IN NEW CONSTRUCTION AND SUBSTANTIAL OR
MODERATE REHABILITATION PROJECTS ASSISTED UNDER
SECTION 8 RENTAL ASSISTANCE PROGRAM.
The third sentence of section 8(c)(2)(A) of the United
States Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(A)) is
amended by inserting before the period at the end the
following: ``, and during fiscal year 1999 and thereafter''.
SEC. 2004. ADJUSTMENT OF MAXIMUM MONTHLY RENTS FOR NON-TURNOVER
DWELLING UNITS ASSISTED UNDER SECTION 8 RENTAL
ASSISTANCE PROGRAM.
The last sentence of section 8(c)(2)(A) of the United
States Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(A)) is
amended by inserting before the period at the end the
following: ``, and during fiscal year 1999 and thereafter''.
TITLE III--COMMUNICATIONS AND SPECTRUM ALLOCATION PROVISIONS
SEC. 3001. DEFINITIONS.
(a) Common Terminology.--Except as otherwise provided in
this title, the terms used in this title have the meanings
provided in section 3 of the Communications Act of 1934 (47
U.S.C. 153), as amended by this section.
(b) Additional Definitions.--Section 3 of the
Communications Act of 1934 (47 U.S.C. 153) is amended--
(1) by redesignating paragraphs (49) through (51)
as paragraphs (50) through (52), respectively; and
(2) by inserting after paragraph (48) the following
new paragraph:
``(49) Television service.--
``(A) Analog television service.--The term
`analog television service' means television
service provided pursuant to the transmission
standards prescribed by the Commission in
section 73.682(a) of its regulations (47 C.F.R.
73.682(a)).
``(B) Digital television service.--The term
`digital television service' means television
service provided pursuant to the transmission
standards prescribed by the Commission in
section 73.682(d) of its regulations (47 C.F.R.
73.682(d)).''.
SEC. 3002. SPECTRUM AUCTIONS.
(a) Extension and Expansion of Auction Authority.--
(1) In general.--Section 309(j) of the
Communications Act of 1934 (47 U.S.C. 309(j)) is
amended--
(A) by striking paragraphs (1) and (2) and
inserting in lieu thereof the following:
``(1) General authority.--If, consistent with the
obligations described in paragraph (6)(E), mutually
exclusive applications are accepted for any initial
license or construction permit, then, except as
provided in paragraph (2), the Commission shallgrant
the license or permit to a qualified applicant through a system of
competitive bidding that meets the requirements of this subsection.
``(2) Exemptions.--The competitive bidding
authority granted by this subsection shall not apply to
licenses or construction permits issued by the
Commission--
``(A) for public safety radio services,
including private internal radio services used
by State and local governments and non-
government entities and including emergency
road services provided by not-for-profit
organizations, that--
``(i) are used to protect the
safety of life, health, or property;
and
``(ii) are not made commercially
available to the public;
``(B) for initial licenses or construction
permits for digital television service given to
existing terrestrial broadcast licensees to
replace their analog television service
licenses; or
``(C) for stations described in section
397(6) of this Act.'';
(B) in paragraph (3)--
(i) by inserting after the second
sentence the following new sentence:
``The Commission shall, directly or by
contract, provide for the design and
conduct (for purposes of testing) of
competitive bidding using a contingent
combinatorial bidding system that
permits prospective bidders to bid on
combinations or groups of licenses in a
single bid and to enter multiple
alternative bids within a single
bidding round.'';
(ii) by striking ``and'' at the end
of subparagraph (C);
(iii) by striking the period at the
end of subparagraph (D) and inserting
``; and''; and
(iv) by adding at the end the
following new subparagraph:
``(E) ensure that, in the scheduling of any
competitive bidding under this subsection, an
adequate period is allowed--
``(i) before issuance of bidding
rules, to permit notice and comment on
proposed auction procedures; and
``(ii) after issuance of bidding
rules, to ensure that interested
parties have a sufficient time to
develop business plans, assess market
conditions, and evaluate the
availability of equipment for the
relevant services.'';
(C) in paragraph (4)--
(i) by striking ``and'' at the end
of subparagraph (D);
(ii) by striking the period at the
end of subparagraph (E) and inserting
``; and''; and
(iii) by adding at the end the
following new subparagraph:
``(F) prescribe methods by which a
reasonable reserve price will be required, or a
minimum bid will be established, to obtain any
license or permit being assigned pursuant to
the competitive bidding, unless the Commission
determines that such a reserve price or minimum
bid is not in the public interest.'';
(D) in paragraph (8)(B)--
(i) by striking the third sentence;
and
(ii) by adding at the end the
following new sentence: ``No sums may
be retained under this subparagraph
during any fiscal year beginning after
September 30, 1998, if the annual
report of the Commission under section
4(k) for the second preceding fiscal
year fails to include in the itemized
statement required by paragraph (3) of
such section a statement of each
expenditure made for purposes of
conducting competitive bidding under
this subsection during such second
preceding fiscal year.'';
(E) in paragraph (11), by striking ``1998''
and inserting ``2007''; and
(F) in paragraph (13)(F), by striking
``September 30, 1998'' and inserting ``the date
of enactment of the Balanced Budget Act of
1997''.
(2) Termination of lottery authority.--Section
309(i) of the Communications Act of 1934 (47 U.S.C.
309(i)) is amended--
(A) by striking paragraph (1) and inserting
the following:
``(1) General authority.--Except as provided in
paragraph (5), if there is more than one application
for any initial license or construction permit, then
the Commission shall have the authority to grant such
license or permit to a qualified applicant through the
use of a system of random selection.''; and
(B) by adding at the end the following new
paragraph:
``(5) Termination of authority.--(A) Except as
provided in subparagraph (B), the Commission shall not
issue any license or permit using a system of random
selection under this subsection after July 1, 1997.
``(B) Subparagraph (A) of this paragraph shall not
apply with respect to licenses or permits for stations
described in section 397(6) of this Act.''.
(3) Resolution of pending comparative licensing
cases.--Section 309 of the Communications Act of 1934
(47 U.S.C. 309) is further amended by adding at the end
the following new subsection:
``(l) Applicability of Competitive Bidding to Pending
Comparative Licensing Cases.--With respect to competing
applications for initial licenses or construction permits for
commercial radio or television stations that were filed with
the Commission before July 1, 1997, the Commission shall--
``(1) have the authority to conduct a competitive
bidding proceeding pursuant to subsection (j) to assign
such license or permit;
``(2) treat the persons filing such applications as
the only persons eligible to be qualified bidders for
purposes of such proceeding; and
``(3) waive any provisions of its regulations
necessary to permit such persons to enter an agreement
to procure the removal of a conflict between their
applications during the 180-day period beginning on the
date of enactment of the Balanced Budget Act of
1997.''.
(4) Conforming amendment.--Section 6002 of the
Omnibus Budget Reconciliation Act of 1993 is amended by
striking subsection (e).
(5) Effective date.--Except as otherwise provided
therein, the amendments made by this subsection are
effective on July 1, 1997.
(b) Accelerated Availability for Auction of 1,710-1,755
Megahertz From Initial Reallocation Report.--The band of
frequencies located at 1,710-1,755 megahertz identified in the
initial reallocation report under section 113(a) of the
National Telecommunications and Information Administration Act
(47 U.S.C. 923(a)) shall, notwithstanding the timetable
recommended under section 113(e) of such Act and section
115(b)(1) of such Act, be available in accordance with this
subsection for assignment for commercial use. The Commission
shall assign licenses for such use by competitive bidding
commenced after January 1, 2001, pursuant to section 309(j) of
the Communications Act of 1934 (47 U.S.C. 309(j)).
(c) Commission Obligation To Make Additional Spectrum
Available by Auction.--
(1) In general.--The Commission shall complete all
actions necessary to permit the assignment by September
30, 2002, by competitive bidding pursuant to section
309(j) of the Communications Act of 1934 (47 U.S.C.
309(j)), of licenses for the use of bands of
frequencies that--
(A) in the aggregate span not less than 55
megahertz;
(B) are located below 3 gigahertz;
(C) have not, as of the date of enactment
of this Act--
(i) been designated by Commission
regulation for assignment pursuant to
such section;
(ii) been identified by the
Secretary of Commerce pursuant to
section 113 of the National
Telecommunications and Information
Administration Organization Act (47
U.S.C. 923);
(iii) been allocated for Federal
Government use pursuant to section 305
of the Communications Act of 1934 (47
U.S.C. 305);
(iv) been designated for
reallocation under section 337 of the
Communications Act of 1934 (as added by
this Act); or
(v) been allocated or authorized
for unlicensed use pursuant to part 15
of the Commission's regulations (47
C.F.R. Part 15), if the operation of
services licensedpursuant to
competitive bidding would interfere with operation of end-user products
permitted under such regulations;
(D) include frequencies at 2,110-2,150
megahertz; and
(E) include 15 megahertz from within the
bands of frequencies at 1,990-2,110 megahertz.
(2) Criteria for Reassignment.--In making available
bands of frequencies for competitive bidding pursuant
to paragraph (1), the Commission shall--
(A) seek to promote the most efficient use
of the electromagnetic spectrum;
(B) consider the cost of relocating
existing uses to other bands of frequencies or
other means of communication;
(C) consider the needs of existing public
safety radio services (as such services are
described in section 309(j)(2)(A) of the
Communications Act of 1934, as amended by this
Act);
(D) comply with the requirements of
international agreements concerning spectrum
allocations; and
(E) coordinate with the Secretary of
Commerce when there is any impact on Federal
Government spectrum use.
(3) Use of bands at 2,110-2,150 megahertz.--The
Commission shall reallocate spectrum located at 2,110-
2,150 megahertz for assignment by competitive bidding
unless the Commission determines that auction of other
spectrum (A) better serves the public interest,
convenience, and necessity, and (B) can reasonably be
expected to produce greater receipts. If the Commission
makes such a determination, then the Commission shall,
within 2 years after the date of enactment of this Act,
identify an alternative 40 megahertz, and report to the
Congress an identification of such alternative 40
megahertz for assignment by competitive bidding.
(4) Use of 15 megahertz from bands at 1,990-2,110
megahertz.--The Commission shall reallocate 15
megahertz from spectrum located at 1,990-2,110
megahertz for assignment by competitive bidding unless
the President determines such spectrum cannot be
reallocated due to the need to protect incumbent
Federal systems from interference, and that allocation
of other spectrum (A) better serves the public
interest, convenience, and necessity, and (B) can
reasonably be expected to produce comparable receipts.
If the President makes such a determination, then the
President shall, within 2 years after the date of
enactment of this Act, identify alternative bands of
frequencies totalling 15 megahertz, and report to the
Congress an identification of such alternative bands
for assignment by competitive bidding.
(5) Notification to the secretary of commerce.--The
Commission shall attempt to accommodate incumbent
licensees displaced under this section by relocating
them to other frequencies available for allocation by
the Commission. The Commission shall notify the
Secretary of Commerce whenever the Commission is not
able to provide for the effective relocation of an
incumbent licensee to a band of frequencies available
to the Commission for assignment. The notification
shall include--
(A) specific information on the incumbent
licensee;
(B) the bands the Commission considered for
relocation of the licensee;
(C) the reasons the licensee cannot be
accommodated in such bands; and
(D) the bands of frequencies identified by
the Commission that are--
(i) suitable for the relocation of
such licensee; and
(ii) allocated for Federal
Government use, but that could be
reallocated pursuant to part B of the
National Telecommunications and
Information Administration Organization
Act (as amended by this Act).
(d) Identification and Reallocation of Frequencies.--
(1) In general.--Section 113 of the National
Telecommunications and Information Administration
Organization Act (47 U.S.C. 923) is amended by adding
at the end thereof the following:
``(f) Additional Reallocation Report.--If the Secretary
receives a notice from the Commission pursuant to section
3002(c)(5) of the Balanced Budget Act of 1997, the Secretary
shall prepare and submit to the President, the Commission, and
the Congress a report recommending for reallocation for use
other than by Federal Government stations under section 305 of
the 1934 Act (47 U.S.C. 305), bands of frequencies that are
suitable for the licensees identified in the Commission's
notice. The Commission shall, not later than one year after
receipt of such report, prepare, submit to the President and
the Congress, and implement, a plan for the immediate
allocation and assignment of such frequencies under the 1934
Act to incumbent licensees described in the Commission's
notice.
``(g) Relocation of Federal Government Stations.--
``(1) In general.--In order to expedite the
commercial use of the electromagnetic spectrum and
notwithstanding section 3302(b) of title 31, United
States Code, any Federal entity which operates a
Federal Government station may accept from any person
payment of the expenses of relocating the Federal
entity's operations from one or more frequencies to
another frequency or frequencies, including the costs
of any modification, replacement, or reissuance of
equipment, facilities, operating manuals, or
regulations incurred by that entity. Such payments may
be in advance of relocation and may be in cash or in
kind. Any such payment in cash shall be deposited in
the account of such Federal entity in the Treasury of
the United States or in a separate account authorized
by law. Funds deposited according to this paragraph
shall be available, without appropriation or fiscal
year limitation, only for such expenses of the Federal
entity for which such funds were deposited under this
paragraph.
``(2) Process for relocation.--Any person seeking
to relocate a Federal Government station that has been
assigned a frequency within a band that has been
allocated for mixed Federal and non-Federal use, or
that has been scheduled for reallocation to non-Federal
use, may submit a petition for such relocation to NTIA.
The NTIA shall limit or terminate the Federal
Government station's operating license within 6 months
after receiving the petition if the following
requirements are met:
``(A) the person seeking relocation of the
Federal Government station has guaranteed to
pay all relocation costs incurred by the
Federal entity, including all engineering,
equipment, site acquisition and construction,
and regulatory fee costs;
``(B) all activities necessary for
implementing the relocation have been
completed, including construction of
replacement facilities (ifnecessary and
appropriate) and identifying and obtaining new frequencies for use by
the relocated Federal Government station (where such station is not
relocating to spectrum reserved exclusively for Federal use);
``(C) any necessary replacement facilities,
equipment modifications, or other changes have
been implemented and tested to ensure that the
Federal Government station is able to
successfully accomplish its purposes; and
``(D) NTIA has determined that the proposed
use of the spectrum frequency band to which the
Federal entity will relocate its operations
is--
``(i) consistent with obligations
undertaken by the United States in
international agreements and with
United States national security and
public safety interests; and
``(ii) suitable for the technical
characteristics of the band and
consistent with other uses of the band.
In exercising its authority under clause (i) of
this subparagraph, NTIA shall consult with the
Secretary of Defense, the Secretary of State,
or other appropriate officers of the Federal
Government.
``(3) Right to reclaim.--If within one year after
the relocation the Federal entity demonstrates to the
Commission that the new facilities or spectrum are not
comparable to the facilities or spectrum from which the
Federal Government station was relocated, the person
who filed the petition under paragraph (2) for such
relocation shall take reasonable steps to remedy any
defects or pay the Federal entity for the expenses
incurred in returning the Federal Government station to
the spectrum from which such station was relocated.
``(h) Federal Action To Expedite Spectrum Transfer.--Any
Federal Government station which operates on electromagnetic
spectrum that has been identified in any reallocation report
under this section shall, to the maximum extent practicable
through the use of the authority granted under subsection (g)
and any other applicable provision of law, take action to
relocate its spectrum use to other frequencies that are
reserved for Federal use or to consolidate its spectrum use
with other Federal Government stations in a manner that
maximizes the spectrum available for non-Federal use.
``(i) Definition.--For purposes of this section, the term
`Federal entity' means any department, agency, or other
instrumentality of the Federal Government that utilizes a
Government station license obtained under section 305 of the
1934 Act (47 U.S.C. 305).''.
(2) Section 114(a) of such Act (47 U.S.C. 924(a))
is amended--
(A) in paragraph (1), by striking ``(a) or
(d)(1)'' and inserting ``(a), (d)(1), or (f)'';
and
(B) in paragraph (2), by striking
``either'' and inserting ``any''.
(e) Identification and Reallocation of Auctionable
Frequencies.--
(1) Second report required.--Section 113(a) of the
National Telecommunications and Information
Administration Organization Act (47 U.S.C. 923(a)) is
amended by inserting ``and within 6 months after the
date of enactment of the Balanced Budget Act of 1997''
after ``Act of 1993''.
(2) In general.--Section 113(b) of such Act (47
U.S.C. 923(b)) is amended--
(A) by striking the caption of paragraph
(1) and inserting ``Initial reallocation
report.--'';
(B) by inserting ``in the initial report
required by subsection (a)'' after ``recommend
for reallocation'' in paragraph (1);
(C) by inserting ``or (3)'' after
``paragraph (1)'' each place it appears in
paragraph (2); and
(D) by adding at the end thereof the
following:
``(3) Second reallocation report.--In accordance
with the provisions of this section, the Secretary
shall recommend for reallocation in the second report
required by subsection (a), for use other than by
Federal Government stations under section 305 of the
1934 Act (47 U.S.C. 305), a band or bands of
frequencies that--
``(A) in the aggregate span not less than
20 megahertz;
``(B) are located below 3 gigahertz; and
``(C) meet the criteria specified in
paragraphs (1) through (5) of subsection
(a).''.
(3) Conforming amendment.--Section 113(d) of such
Act (47 U.S.C. 923(d)) is amended by striking ``final
report'' and inserting ``initial report''.
(4) Allocation and assignment.--Section 115 of such
Act (47 U.S.C. 925) is amended--
(A) by striking ``the report required by
section 113(a)'' in subsection (b) and
inserting ``the initial reallocation report
required by section 113(a)''; and
(B) by adding at the end thereof the
following:
``(c) Allocation and Assignment of Frequencies Identified
in the Second Reallocation Report.--
``(1) Plan and implementation.--With respect to the
frequencies made available for reallocation pursuant to
section 113(b)(3), the Commission shall, not later than
one year after receipt of the second reallocation
report required by section 113(a), prepare, submit to
the President and the Congress, and implement, a plan
for the immediate allocation and assignment under the
1934 Act of all such frequencies in accordance with
section 309(j) of such Act.
``(2) Contents.--The plan prepared by the
Commission under paragraph (1) shall consist of a
schedule of allocation and assignment of those
frequencies in accordance with section 309(j) of the
1934 Act in time for the assignment of those licenses
or permits by September 30, 2002.''.
SEC. 3003. AUCTION OF RECAPTURED BROADCAST TELEVISION SPECTRUM.
Section 309(j) of the Communications Act of 1934 (47 U.S.C.
309(j)) is amended by adding at the end the following new
paragraph:
``(14) Auction of recaptured broadcast television
spectrum.--
``(A) Limitations on terms of terrestrial
television broadcast licenses.--A television
broadcast license that authorizes analog
television service may not be renewed to
authorize such service for a period that
extends beyond December 31, 2006.
``(B) Extension.--The Commission shall
extend the date described in subparagraph (A)
for any station that requests such extension in
any television market if the Commission finds
that--
``(i) one or more of the stations
in such market that are licensed to or
affiliated with one of the four largest
national television networks are not
broadcasting a digital television
service signal, and the Commission
finds that each such station has
exercised due diligence and satisfies
the conditions for an extension of the
Commission's applicable construction
deadlines for digital television
service in that market;
``(ii) digital-to-analog converter
technology is not generally available
in such market; or
``(iii) in any market in which an
extension is not available under clause
(i) or (ii), 15 percent or more of the
television households in such market--
``(I) do not subscribe to a
multichannel video programming
distributor (as defined in
section 602) that carries one
of the digital television
service programming channels of
each of the television stations
broadcasting such a channel in
such market; and
``(II) do not have either--
``(a) at least one
television receiver
capable of receiving
the digital television
service signals of the
television stations
licensed in such
market; or
``(b) at least one
television receiver of
analog television
service signals
equipped with digital-
to-analog converter
technology capable of
receiving the digital
television service
signals of the
television stations
licensed in such
market.
``(C) Spectrum reversion and resale.--
``(i) The Commission shall--
``(I) ensure that, as
licenses for analog television
service expire pursuant to
subparagraph (A) or (B), each
licensee shall cease using
electromagnetic spectrum
assigned to such service
according to the Commission's
direction; and
``(II) reclaim and organize
the electromagnetic spectrum in
a manner consistent with the
objectives described in
paragraph (3) of this
subsection.
``(ii) Licensees for new services
occupying spectrum reclaimed pursuant
to clause (i) shall be assigned in
accordance with this subsection. The
Commission shall complete the
assignment of such licenses, and report
to the Congress the total revenues from
such competitive bidding, by September
30, 2002.
``(D) Certain limitations on qualified
bidders prohibited.--In prescribing any
regulations relating to the qualification of
bidders for spectrum reclaimed pursuant to
subparagraph (C)(i), the Commission, for any
license that may be used for any digital
television service where the grade A contour of
the station is projected to encompass the
entirety of a city with a population in excess
of 400,000 (as determined using the 1990
decennial census), shall not--
``(i) preclude any party from being
a qualified bidder for such spectrum on
the basis of--
``(I) the Commission's
duopoly rule (47 C.F.R.
73.3555(b)); or
``(II) the Commission's
newspaper cross-ownership rule
(47 C.F.R. 73.3555(d)); or
``(ii) apply either such rule to
preclude such a party that is a winning
bidder in a competitive bidding for
such spectrum from using such spectrum
for digital television service.''.
SEC. 3004. ALLOCATION AND ASSIGNMENT OF NEW PUBLIC SAFETY SERVICES
LICENSES AND COMMERCIAL LICENSES.
Title III of the Communications Act of 1934 is amended by
inserting after section 336 (47 U.S.C. 336) the following new
section:
``SEC. 337. ALLOCATION AND ASSIGNMENT OF NEW PUBLIC SAFETY SERVICES
LICENSES AND COMMERCIAL LICENSES.
``(a) In General.--Not later than January 1, 1998, the
Commission shall allocate the electromagnetic spectrum between
746 megahertz and 806 megahertz, inclusive, as follows:
``(1) 24 megahertz of that spectrum for public
safety services according to the terms and conditions
established by the Commission, in consultation with the
Secretary of Commerce and the Attorney General; and
``(2) 36 megahertz of that spectrum for commercial
use to be assigned by competitive bidding pursuant to
section 309(j).
``(b) Assignment.--The Commission shall--
``(1) commence assignment of the licenses for
public safety services created pursuant to subsection
(a) no later than September 30, 1998; and
``(2) commence competitive bidding for the
commercial licenses created pursuant to subsection (a)
after January 1, 2001.
``(c) Licensing of Unused Frequencies for Public Safety
Services.--
``(1) Use of unused channels for public safety
services.--Upon application by an entity seeking to
provide public safety services, the Commission shall
waive any requirement of this Act or its regulations
implementing this Act (other than its regulations
regarding harmful interference) to the extent necessary
to permit the use of unassigned frequencies for the
provision of public safety services by such entity. An
application shall be granted under this subsection if
the Commission finds that--
``(A) no other spectrum allocated to public
safety services is immediately available to
satisfy the requested public safety service
use;
``(B) the requested use is technically
feasible without causing harmful interference
to other spectrum users entitled to protection
from such interference under the Commission's
regulations;
``(C) the use of the unassigned frequency
for the provision of public safety services is
consistent with other allocations for the
provision of such services in the geographic
area for which the application is made;
``(D) the unassigned frequency was
allocated for its present use not less than 2
years prior to the date on which the
application is granted; and
``(E) granting such application is
consistent with the public interest.
``(2) Applicability.--Paragraph (1) shall apply to
any application to provide public safety services that
is pending or filed on or after the date of enactment
of the Balanced Budget Act of 1997.
``(d) Conditions on Licenses.--In establishing service
rules with respect to licenses granted pursuant to this
section, the Commission--
``(1) shall establish interference limits at the
boundaries of the spectrum block and service area;
``(2) shall establish any additional technical
restrictions necessary to protect full-service analog
television service and digital television service
during a transition to digital television service;
``(3) may permit public safety services licensees
and commercial licensees--
``(A) to aggregate multiple licenses to
create larger spectrum blocks and service
areas; and
``(B) to disaggregate or partition licenses
to create smaller spectrum blocks or service
areas; and
``(4) shall establish rules insuring that public
safety services licensees using spectrum reallocated
pursuant to subsection (a)(1) shall not be subject to
harmful interference from television broadcast
licensees.
``(e) Removal and Relocation of Incumbent Broadcast
Licensees.--
``(1) Channels 60 to 69.--Any person who holds a
television broadcast license to operate between 746 and
806 megahertz may not operate at that frequency after
the date on which the digital television service
transition period terminates, as determined by the
Commission.
``(2) Incumbent qualifying low-power stations.--
After making any allocation or assignment under this
section, the Commission shall seek to assure,
consistent with the Commission's plan for allotments
for digital television service, that each qualifying
low-power television station is assigned a frequency
below 746 megahertz to permit the continued operation
of such station.
``(f) Definitions.--For purposes of this section:
``(1) Public safety services.--The term `public
safety services' means services--
``(A) the sole or principal purpose of
which is to protect the safety of life, health,
or property;
``(B) that are provided--
``(i) by State or local government
entities; or
``(ii) by nongovernmental
organizations that are authorized by a
governmental entity whose primary
mission is the provision of such
services; and
``(C) that are not made commercially
available to the public by the provider.
``(2) Qualifying low-power television stations.--A
station is a qualifying low-power television station
if, during the 90 days preceding the date of enactment
of the Balanced Budget Act of 1997--
``(A) such station broadcast a minimum of
18 hours per day;
``(B) such station broadcast an average of
at least 3 hours per week of programming that
was produced within the market area served by
such station; and
``(C) such station was in compliance with
the requirements applicable to low-power
television stations.''.
SEC. 3005. FLEXIBLE USE OF ELECTROMAGNETIC SPECTRUM.
Section 303 of the Communications Act of 1934 (47 U.S.C.
303) is amended by adding at the end thereof the following:
``(y) Have authority to allocate electromagnetic spectrum
so as to provide flexibility of use, if--
``(1) such use is consistent with international
agreements to which the United States is a party; and
``(2) the Commission finds, after notice and an
opportunity for public comment, that--
``(A) such an allocation would be in the
public interest;
``(B) such use would not deter investment
in communications services and systems, or
technology development; and
``(C) such use would not result in harmful
interference among users.''.
SEC. 3006. UNIVERSAL SERVICE FUND PAYMENT SCHEDULE.
(a) Appropriations to the Universal Service Fund.--
(1) Appropriation.--There is hereby appropriated to
the Commission $3,000,000,000 in fiscal year 2001,
which shall be disbursed on October 1, 2000, to the
Administrator of the Federal universal service support
programs established pursuant to section 254 of the
Communications Act of 1934 (47 U.S.C. 254), and which
may be expended by the Administrator in support of such
programs as provided pursuant to the rules implementing
that section.
(2) Return to treasury.--The Administrator shall
transfer $3,000,000,000 from the funds collected for
such support programs to the General Fund of the
Treasury on October 1, 2001.
(b) Fee Adjustments.--The Commission shall direct the
Administrator to adjust payments by telecommunications carriers
and other providers of interstate telecommunications so that
the $3,000,000,000 of the total payments by such carriers or
providers to the Administrator for fiscal year 2001 shall be
deferred until October 1, 2001.
(c) Preservation of Authority.--Nothing in this section
shall affect the Administrator's authority to determine the
amounts that should be expended for universal service support
programs pursuant to section 254 of the Communications Act of
1934 and the rules implementing that section.
(d) Definition.--For purposes of this section, the term
``Administrator'' means the Administrator designated by the
Federal Communications Commission to administer Federal
universal service support programs pursuant to section 254 of
the Communications Act of 1934.
SEC. 3007. DEADLINE FOR COLLECTION.
The Commission shall conduct the competitive bidding
required under this title or the amendments made by this title
in a manner that ensures that all proceeds of such bidding are
deposited in accordance with section 309(j)(8) of the
Communications Act of 1934 not later than September 30, 2002.
SEC. 3008. ADMINISTRATIVE PROCEDURES FOR SPECTRUM AUCTIONS.
Notwithstanding section 309(b) of the Communications Act of
1934 (47 U.S.C. 309(b)), no application for an instrument of
authorization for frequencies assigned under this title (or
amendments made by this title) shall be granted by the
Commission earlier than 7 days following issuance of public
notice by the Commission of the acceptance for filing of such
application or of any substantial amendment thereto.
Notwithstanding section 309(d)(1) of such Act (47 U.S.C.
309(d)(1)), the Commission may specify a period (no less than 5
days following issuance of such public notice) for the filing
of petitions to deny any application for an instrument of
authorization for such frequencies.
TITLE IV--MEDICARE, MEDICAID, AND CHILDREN'S HEALTH PROVISIONS
SEC. 4000. AMENDMENTS TO SOCIAL SECURITY ACT AND REFERENCES TO OBRA;
TABLE OF CONTENTS OF TITLE.
(a) Amendments to Social Security Act.--Except as
otherwise specifically provided, whenever in this title an
amendment is expressed in terms of an amendment to or repeal of
a section or other provision, the reference shall be considered
to be made to that section or other provision of the Social
Security Act.
(b) References to OBRA.--In this title, the terms ``OBRA-
1986'', ``OBRA-1987'', ``OBRA-1989'', OBRA-1990'', and ``OBRA-
1993'' refer to the Omnibus Budget Reconciliation Act of 1986
(Public Law 99-509), the Omnibus Budget Reconciliation Act of
1987 (Public Law 100-203), the Omnibus Budget Reconciliation
Act of 1989 (Public Law 101-239), the Omnibus Budget
Reconciliation Act of 1990 (Public Law 101-508), and the
Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66),
respectively.
(c) Table of Contents of Title.--The table of contents of
this title is as follows:
Sec. 4000. Amendments to Social Security Act and references to OBRA;
table of contents of title.
Subtitle A--Medicare+Choice Program
Chapter 1--Medicare+Choice Program
Subchapter A--Medicare+Choice Program
Sec. 4001. Establishment of Medicare+Choice Program.
``Part C--Medicare+Choice Program
``Sec. 1851. Eligibility, election, and enrollment.
``Sec. 1852. Benefits and beneficiary protections.
``Sec. 1853. Payments to Medicare+Choice organizations.
``Sec. 1854. Premiums.
``Sec. 1855. Organizational and financial requirements for
Medicare+Choice organizations; provider-sponsored
organizations.
``Sec. 1856. Establishment of standards.
``Sec. 1857. Contracts with Medicare+Choice organizations.
``Sec. 1859. Definitions; miscellaneous provisions.
Sec. 4002. Transitional rules for current medicare HMO program.
Sec. 4003. Conforming changes in medigap program.
Subchapter B--Special Rules for Medicare+Choice Medical Savings
Accounts
Sec. 4006. Medicare+Choice MSA.
Chapter 2--Demonstrations
Subchapter A--Medicare+Choice Competitive Pricing Demonstration
Project
Sec. 4011. Medicare prepaid competitive pricing demonstration project.
Sec. 4012. Administration through the Office of Competition; advisory
committee.
Sec. 4013. Project design based on FEHBP competitive bidding model.
Subchapter B--Social Health Maintenance Organizations
Sec. 4014. Social health maintenance organizations (SHMOs.)
Subchapter C--Medicare Subdivision Demonstration Project for Military
Retirees
Sec. 4015. Medicare subvention demonstration project for military
retirees.
Subchapter D--Other Projects
Sec. 4016. Medicare coordinated care demonstration project.
Sec. 4017. Orderly transition of municipal health service demonstration
projects.
Sec. 4018. Medicare enrollment demonstration project.
Sec. 4019. Extension of certain medicare community nursing organization
demonstration projects.
Chapter 3--Commissions
Sec. 4021. National Bipartisan Commission on the Future of Medicare.
Sec. 4022. Medicare Payment Advisory Commission.
Chapter 4--Medigap Protections
Sec. 4031. Medigap protections.
Sec. 4032. Addition of high deductible medigap policies.
Chapter 5--Tax Treatment of Hospitals Participating in Provider-
Sponsored Organizations
Sec. 4041. Tax treatment of hospitals which participate in provider-
sponsored organizations.
Subtitle B--Prevention Initiatives
Sec. 4101. Screening mammography.
Sec. 4102. Screening pap smear and pelvic exams.
Sec. 4103. Prostate cancer screening tests.
Sec. 4104. Coverage of colorectal screening.
Sec. 4105. Diabetes self-management benefits.
Sec. 4106. Standardization of medicare coverage of bone mass
measurements.
Sec. 4107. Vaccines outreach expansion.
Sec. 4108. Study on preventive and enhanced benefits.
Subtitle C--Rural Initiatives
Sec. 4201. Medicare rural hospital flexibility program.
Sec. 4202. Prohibiting denial of request by rural referral centers for
reclassification on basis of comparability of wages.
Sec. 4203. Hospital geographic reclassification permitted for purposes
of disproportionate share payment adjustments.
Sec. 4204. Medicare-dependent, small rural hospital payment extension.
Sec. 4205. Rural health clinic services.
Sec. 4206. Medicare reimbursement for telehealth services.
Sec. 4207. Informatics, telemedicine, and education demonstration
project.
Subtitle D--Anti-Fraud and Abuse Provisions and Improvements in
Protecting Program Integrity
Chapter 1--Revisions To Sanctions for Fraud and Abuse
Sec. 4301. Permanent exclusion for those convicted of 3 health care
related crimes.
Sec. 4302. Authority to refuse to enter into medicare agreements with
individuals or entities convicted of felonies.
Sec. 4303. Exclusion of entity controlled by family member of a
sanctioned individual.
Sec. 4304. Imposition of civil money penalties.
Chapter 2--Improvements In Protecting Program Integrity
Sec. 4311. Improving information to medicare beneficiaries.
Sec. 4312. Disclosure of information and surety bonds.
Sec. 4313. Provision of certain identification numbers.
Sec. 4314. Advisory opinions regarding certain physician self-referral
provisions.
Sec. 4315. Replacement of reasonable charge methodology by fee
schedules.
Sec. 4316. Application of inherent reasonableness to all part B services
other than physicians' services.
Sec. 4317. Requirement to furnish diagnostic information.
Sec. 4318. Report by GAO on operation of fraud and abuse control
program.
Sec. 4319. Competitive bidding demonstration projects.
Sec. 4320. Prohibiting unnecessary and wasteful medicare payments for
certain items.
Sec. 4321. Nondiscrimination in post-hospital referral to home health
agencies and other entities.
Chapter 3--Clarifications and Technical Changes
Sec. 4331. Other fraud and abuse related provisions.
Subtitle E--Provisions Relating to Part A Only
Chapter 1--Payment of PPS Hospitals
Sec. 4401. PPS hospital payment update.
Sec. 4402. Maintaining savings from temporary reduction in capital
payments for PPS hospitals.
Sec. 4403. Disproportionate share.
Sec. 4404. Medicare capital asset sales price equal to book value.
Sec. 4405. Elimination of IME and DSH payments attributable to outlier
payments.
Sec. 4406. Increase base payment rate to Puerto Rico hospitals.
Sec. 4407. Certain hospital discharges to post acute care.
Sec. 4408. Reclassification of certain counties as large urban areas
under medicare program.
Sec. 4409. Geographic reclassification for certain disproportionately
large hospitals.
Sec. 4410. Floor on area wage index.
Chapter 2--Payment of PPS-Exempt Hospitals
subchapter a--general payment provisions
Sec. 4411. Payment update.
Sec. 4412. Reductions to capital payments for certain PPS-exempt
hospitals and units.
Sec. 4413. Rebasing.
Sec. 4414. Cap on TEFRA limits.
Sec. 4415. Bonus and relief payments.
Sec. 4416. Change in payment and target amount for new providers.
Sec. 4417. Treatment of certain long-term care hospitals.
Sec. 4418. Treatment of certain cancer hospitals.
Sec. 4419. Elimination of exemptions for certain hospitals.
subchapter b--prospective payment system for pps-exempt hospitals
Sec. 4421. Prospective payment for inpatient rehabilitation hospital
services.
Sec. 4422. Development of proposal on payments for long-term care
hospitals.
Chapter 3--Payment for Skilled Nursing Facilities
Sec. 4431. Extension of cost limits.
Sec. 4432. Prospective payment for skilled nursing facility services.
Chapter 4--Provisions Related to Hospice Services
Sec. 4441. Payments for hospice services.
Sec. 4442. Payment for home hospice care based on location where care is
furnished.
Sec. 4443. Hospice care benefits periods.
Sec. 4444. Other items and services included in hospice care.
Sec. 4445. Contracting with independent physicians or physician groups
for hospice care services permitted.
Sec. 4446. Waiver of certain staffing requirements for hospice care
programs in nonurbanized areas.
Sec. 4447. Limitation on liability of beneficiaries for certain hospice
coverage denials.
Sec. 4448. Extending the period for physician certification of an
individual's terminal illness.
Sec. 4449. Effective date.
Chapter 5--Other Payment Provisions
Sec. 4451. Reductions in payments for enrollee bad debt.
Sec. 4452. Permanent extension of hemophilia pass-through payment.
Sec. 4453. Reduction in part A medicare premium for certain public
retirees.
Sec. 4454. Coverage of services in religious nonmedical health care
institutions under the medicare and medicaid programs.
Subtitle F--Provisions Relating to Part B Only
Chapter 1--Services of Health Professionals
subchapter a--physicians' services
Sec. 4501. Establishment of single conversion factor for 1998.
Sec. 4502. Establishing update to conversion factor to match spending
under sustainable growth rate.
Sec. 4503. Replacement of volume performance standard with sustainable
growth rate.
Sec. 4504. Payment rules for anesthesia services.
Sec. 4505. Implementation of resource-based methodologies.
Sec. 4506. Dissemination of information on high per discharge relative
values for in-hospital physicians' services.
Sec. 4507. Use of private contracts by medicare beneficiaries.
SUBCHAPTER B--OTHER HEALTH CARE PROFESSIONALS
Sec. 4511. Increased medicare reimbursement for nurse practitioners and
clinical nurse specialists.
Sec. 4512. Increased medicare reimbursement for physician assistants.
Sec. 4513. No x-ray required for chiropractic services.
Chapter 2--Payment for Hospital Outpatient Department Services
Sec. 4521. Elimination of formula-driven overpayments (FDO) for certain
outpatient hospital services.
Sec. 4522. Extension of reductions in payments for costs of hospital
outpatient services.
Sec. 4523. Prospective payment system for hospital outpatient
department services.
Chapter 3--Ambulance Services
Sec. 4531. Payments for ambulance services.
Sec. 4532. Demonstration of coverage of ambulance services under
medicare through contracts with units of local government.
Chapter 4--Prospective Payment for Outpatient Rehabilitation Services
Sec. 4541. Prospective payment for outpatient rehabilitation services.
Chapter 5--Other Payment Provisions
Sec. 4551. Payments for durable medical equipment.
Sec. 4552. Oxygen and oxygen equipment.
Sec. 4553. Reduction in updates to payment amounts for clinical
diagnostic laboratory tests; study on laboratory tests.
Sec. 4554. Improvements in administration of laboratory tests benefit.
Sec. 4555. Updates for ambulatory surgical services.
Sec. 4556. Reimbursement for drugs and biologicals.
Sec. 4557. Coverage of oral anti-nausea drugs under chemotherapeutic
regimen.
Sec. 4558. Renal dialysis-related services.
Sec. 4559. Temporary coverage restoration for portable
electrocardiogram transportation.
Chapter 6--Part B Premium and Related Provisions
SUBCHAPTER A--DETERMINATION OF PART B PREMIUM AMOUNT
Sec. 4571. Part B premium.
SUBCHAPTER B--OTHER PROVISIONS RELATED TO PART B PREMIUM
Sec. 4581. Protections under the medicare program for disabled workers
who lost benefits under a group health plan.
Sec. 4582. Governmental entities eligible to elect to pay part B
premiums for eligible individuals.
Subtitle G--Provisions Relating to Parts A and B
Chapter 1--Home Health Services and Benefits
SUBCHAPTER A--PAYMENTS FOR HOME HEALTH SERVICES
Sec. 4601. Recapturing savings resulting from temporary freeze on
payment increases for home health services.
Sec. 4602. Interim payments for home health services.
Sec. 4603. Prospective payment for home health services.
Sec. 4604. Payment based on location where home health service is
furnished.
SUBCHAPTER B--HOME HEALTH BENEFITS
Sec. 4611. Modification of part A home health benefit for individuals
enrolled under part B.
Sec. 4612. Clarification of part-time or intermittent nursing care.
Sec. 4613. Study on definition of homebound.
Sec. 4614. Normative standards for home health claims denials.
Sec. 4615. No home health benefits based solely on drawing blood.
Sec. 4616. Reports to Congress regarding home health cost containment.
Chapter 2--Graduate Medical Education
SUBCHAPTER A--INDIRECT MEDICAL EDUCATION
Sec. 4621. Indirect graduate medical education payments.
Sec. 4622. Payment to hospitals of indirect medical education costs
for Medicare+Choice enrollees.
SUBCHAPTER B--DIRECT GRADUATE MEDICAL EDUCATION
Sec. 4623. Limitation on number of residents and rolling average FTE
count.
Sec. 4624. Payments to hospitals for direct costs of graduate medical
education of Medicare+Choice enrollees.
Sec. 4625. Permitting payment to nonhospital providers.
Sec. 4626. Incentive payments under plans for voluntary reduction in
number of residents.
Sec. 4627. Medicare special reimbursement rule for primary care
combined residency programs.
Sec. 4628. Demonstration project on use of consortia.
Sec. 4629. Recommendations on long-term policies regarding teaching
hospitals and graduate medical education.
Sec. 4630. Study of hospital overhead and supervisory physician
components of direct medical education costs.
Chapter 3--Provisions Relating to Medicare Secondary Payer
Sec. 4631. Permanent extension and revision of certain secondary payer
provisions.
Sec. 4632. Clarification of time and filing limitations.
Sec. 4633. Permitting recovery against third party administrators.
Chapter 4--Other Provisions
Sec. 4641. Placement of advance directive in medical record.
Sec. 4642. Increased certification period for certain organ procurement
organizations.
Sec. 4643. Office of the Chief Actuary in the Health Care Financing
Administration.
Sec. 4644. Conforming amendments to comply with congressional review of
agency rulemaking.
Subtitle H--Medicaid
Chapter 1--Managed Care
Sec. 4701. State option of using managed care; change in terminology.
Sec. 4702. Primary care case management services at State option
without need for waiver.
Sec. 4703. Elimination of 75:25 restriction on risk contracts.
Sec. 4704 Increased beneficiary protections.
Sec. 4705. Quality assurance standards.
Sec. 4706. Solvency standards.
Sec. 4707. Protections against fraud and abuse.
Sec. 4708. Improved administration.
Sec. 4709. 6-month guaranteed eligibility for all individuals enrolled
in managed care.
Sec. 4710. Effective dates.
Chapter 2--Flexibility In Payment of Providers
Sec. 4711. Flexibility in payment methods for hospital, nursing
facility, ICF/MR, and home health services.
Sec. 4712. Payment for center and clinic services.
Sec. 4713. Elimination of obstetrical and pediatric payment rate
requirements.
Sec. 4714. Medicaid payment rates for certain medicare cost-sharing.
Sec. 4715. Treatment of veterans' pensions under medicaid.
Chapter 3--Federal Payments to States
Sec. 4721. Reforming disproportionate share payments under State
medicaid programs.
Sec. 4722. Treatment of State taxes imposed on certain hospitals.
Sec. 4723. Additional funding for State emergency health services
furnished to undocumented aliens.
Sec. 4724. Elimination of waste, fraud, and abuse.
Sec. 4725. Increased FMAPs.
Sec. 4726. Increase in payment limitation for territories.
Chapter 4--Eligibility
Sec. 4731. State option of continuous eligibility for 12 months;
clarification of State option to cover children.
Sec. 4732. Payment of part B premiums.
Sec. 4733. State option to permit workers with disabilities to buy into
medicaid.
Sec. 4734. Penalty for fraudulent eligibility.
Sec. 4735. Treatment of certain settlement payments.
Chapter 5--Benefits
Sec. 4741. Elimination of requirement to pay for private insurance.
Sec. 4742. Physician qualification requirements.
Sec. 4743. Elimination of requirement of prior institutionalization
with respect to habilitation services furnished under a waiver
for home or community-based services.
Sec. 4744. Study and report on EPSDT benefit.
Chapter 6--Administration and Miscellaneous
Sec. 4751. Elimination of duplicative inspection of care requirements
for ICFS/MR and mental hospitals.
Sec. 4752. Alternative sanctions for noncompliant ICFS/MR.
Sec. 4753. Modification of MMIS requirements.
Sec. 4754. Facilitating imposition of State alternative remedies on
non-compliant nursing facilities.
Sec. 4755. Removal of name from nurse aide registry.
Sec. 4756. Medically accepted indication.
Sec. 4757. Continuation of State-wide section 1115 medicaid waivers.
Sec. 4758. Extension of moratorium.
Sec. 4759. Extension of effective date for State law amendment.
Subtitle I--Programs of All-Inclusive Care for the Elderly (PACE)
Sec. 4801. Coverage of PACE under the medicare program.
Sec. 4802. Establishment of PACE program as medicaid State option.
Sec. 4803. Effective date; transition.
Sec. 4804. Study and reports.
Subtitle J--State Children's Health Insurance Program
Chapter 1--State Children's Health Insurance Program
Sec. 4901. Establishment of program.
``TITLE XXI--STATE CHILDREN'S HEALTH INSURANCE PROGRAM
``Sec. 2101. Purpose; State child health plans.
``Sec. 2102. General contents of State child health plan; eligibility;
outreach.
``Sec. 2103. Coverage requirements for children's health insurance.
``Sec. 2104. Allotments.
``Sec. 2105. Payments to States.
``Sec. 2106. Process for submission, approval, and amendment of State
child health plans.
``Sec. 2107. Strategic objectives and performance goals; plan
administration.
``Sec. 2108. Annual reports; evaluations.
``Sec. 2109. Miscellaneous provisions.
``Sec. 2110. Definitions.
Chapter 2--Expanded Coverage of Children Under Medicaid
Sec. 4911. Optional use of State child health assistance funds for
enhanced medicaid match for expanded medicaid eligibility.
Sec. 4912. Medicaid presumptive eligibility for low-income children.
Sec. 4913. Continuation of medicaid eligibility for disabled children
who lose SSI benefits.
Chapter 3--Diabetes Grant Programs
Sec. 4921. Special diabetes programs for children with Type I diabetes.
Sec. 4922. Special diabetes programs for Indians.
Sec. 4923. Report on diabetes grant programs.
Subtitle A--Medicare+Choice Program
CHAPTER 1--MEDICARE+CHOICE PROGRAM
Subchapter A--Medicare+Choice Program
SEC. 4001. ESTABLISHMENT OF MEDICARE+CHOICE PROGRAM.
Title XVIII is amended by redesignating part C as part D
and by inserting after part B the following new part:
``Part C--Medicare+Choice Program
``eligibility, election, and enrollment
``Sec. 1851. (a) Choice of Medicare Benefits Through
Medicare+Choice Plans.--
``(1) In general.--Subject to the provisions of
this section, each Medicare+Choice eligible individual
(as defined in paragraph (3)) is entitled to elect to
receive benefits under this title--
``(A) through the original medicare fee-
for-service program under parts A and B, or
``(B) through enrollment in a
Medicare+Choice plan under this part.
``(2) Types of medicare+choice plans that may be
available.--A Medicare+Choice plan may be any of the
following types of plans of health insurance:
``(A) Coordinated care plans.--Coordinated
care plans which provide health care services,
including but not limited to health maintenance
organization plans (with or without point of
service options), plans offered by provider-
sponsored organizations (as defined in section
1855(d)), and preferred provider organization
plans.
``(B) Combination of msa plan and
contributions to medicare+choice msa.--An MSA
plan, as defined in section 1859(b)(3), and a
contribution into a Medicare+Choice medical
savings account (MSA).
``(C) Private fee-for-service plans.--A
Medicare+Choice private fee-for-service plan,
as defined in section 1859(b)(2).
``(3) Medicare+choice eligible individual.--
``(A) In general.--In this title, subject
to subparagraph (B), the term `Medicare+Choice
eligible individual' means an individual who is
entitled to benefits under part A and enrolled
under part B.
``(B) Special rule for end-stage renal
disease.--Such term shall not include an
individual medically determined to have end-
stage renal disease, except that an individual
who develops end-stage renal disease while
enrolled in a Medicare+Choice plan may continue
to be enrolled in that plan.
``(b) Special Rules.--
``(1) Residence requirement.--
``(A) In general.--Except as the Secretary
may otherwise provide, an individual is
eligible to elect a Medicare+Choice plan
offered by a Medicare+Choice organization only
if the plan serves the geographic area in which
the individual resides.
``(B) Continuation of enrollment
permitted.--Pursuant to rules specified by the
Secretary, the Secretary shall provide that a
plan may offer to all individuals residing in a
geographic area the option to continue
enrollment in the plan, notwithstanding that
the individual no longer resides in the service
area of the plan, so long as the plan provides
that individuals exercising this option have,
as part of the basic benefits described in
section 1852(a)(1)(A), reasonable access within
that geographic area to the full range of basic
benefits, subject to reasonable cost sharing
liability in obtaining such benefits.
``(2) Special rule for certain individuals covered
under fehbp or eligible for veterans or military health
benefits, veterans.--
``(A) FEHBP.--An individual who is enrolled
in a health benefit plan under chapter 89 of
title 5, United States Code, is not eligible to
enroll in an MSA plan until such time as the
Director of the Office of Management and Budget
certifies to the Secretary that the Office of
Personnel Management has adopted policies which
will ensure that the enrollment of such
individuals in such plans will not result in
increased expenditures for the Federal
Government for health benefit plans under such
chapter.
``(B) VA and dod.--The Secretary may apply
rules similar to the rules described in
subparagraph (A) in the case of individuals who
are eligible for health care benefits under
chapter 55 of title 10, United States Code, or
under chapter 17 of title 38 of such Code.
``(3) Limitation on eligibility of qualified
medicare beneficiaries and other medicaid beneficiaries
to enroll in an msa plan.--An individual who is a
qualified medicare beneficiary (as defined in section
1905(p)(1)), a qualified disabled and working
individual (described in section 1905(s)), an
individual described in section 1902(a)(10)(E)(iii), or
otherwise entitled to medicare cost-sharing under a
State plan under title XIX is not eligible to enroll in
an MSA plan.
``(4) Coverage under msa plans on a demonstration
basis.--
``(A) In general.--An individual is not
eligible to enroll in an MSA plan under this
part--
``(i) on or after January 1, 2003,
unless the enrollment is the
continuation of such an enrollment in
effect as of such date; or
``(ii) as of any date if the number
of such individuals so enrolled as of
such date has reached 390,000.
Under rules established by the Secretary, an
individual is not eligible to enroll (or
continue enrollment) in an MSA plan for a year
unless the individual provides assurances
satisfactory to the Secretary that the
individual will reside in the United States for
at least 183 days during the year.
``(B) Evaluation.--The Secretary shall
regularly evaluate the impact of permitting
enrollment in MSA plans under this part on
selection (including adverse selection), use of
preventive care, access to care, and the
financial status of the Trust Funds under this
title.
``(C) Reports.--The Secretary shall submit
to Congress periodic reports on the numbers of
individuals enrolled in such plans and on the
evaluation being conducted under subparagraph
(B). The Secretary shall submit such a report,
by not later than March 1, 2002, on whether the
time limitation under subparagraph (A)(i)
should be extended or removed and whether to
change the numerical limitation under
subparagraph (A)(ii).
``(c) Process for Exercising Choice.
``(1) In general.--The Secretary shall establish a
process through which elections described in subsection
(a) are made and changed, including the form and manner
in which such elections are made and changed. Such
elections shall be made or changed only during coverage
election periods specified under subsection (e) and
shall become effective as provided in subsection (f).
``(2) Coordination through medicare+choice
organizations.
-- ``(A) Enrollment.--Such process shall
permit an individual who wishes to elect a
Medicare+Choice plan offered by a
Medicare+Choice organization to make such
election through the filing of an appropriate
election form with the organization.
``(B) Disenrollment.--Such process shall
permit an individual, who has elected a
Medicare+Choice plan offered by a
Medicare+Choice organization and who wishes to
terminate such election, to terminatesuch
election through the filing of an appropriate election form with the
organization.
``(3) Default.--
``(A) Initial election.--
``(i) In general.--Subject to
clause (ii), an individual who fails to
make an election during an initial
election period under subsection (e)(1)
is deemed to have chosen the original
medicare fee-for-service program
option.
``(ii) Seamless continuation of
coverage.--The Secretary may establish
procedures under which an individual
who is enrolled in a health plan (other
than Medicare+Choice plan) offered by a
Medicare+Choice organization at the
time of the initial election period and
who fails to elect to receive coverage
other than through the organization is
deemed to have elected the
Medicare+Choice plan offered by the
organization (or, if the organization
offers more than one such plan, such
plan or plans as the Secretary
identifies under such procedures).
``(B) Continuing periods.--An individual
who has made (or is deemed to have made) an
election under this section is considered to
have continued to make such election until such
time as--
``(i) the individual changes the
election under this section, or
``(ii) the Medicare+Choice plan
with respect to which such election is
in effect is discontinued or, subject
to subsection (b)(1)(B), no longer
serves the area in which the individual
resides.
``(d) Providing Information To Promote Informed Choice.--
``(1) In general.--The Secretary shall provide for
activities under this subsection to broadly disseminate
information to medicare beneficiaries (and prospective
medicare beneficiaries) on the coverage options
provided under this section in order to promote an
active, informed selection among such options.
``(2) Provision of notice.--
``(A) Open season notification.--At least
15 days before the beginning of each annual,
coordinated election period (as defined in
subsection (e)(3)(B)), the Secretary shall mail
to each Medicare+Choice eligible individual
residing in an area the following:
``(i) General information.--The
general information described in
paragraph (3).
``(ii) List of plans and comparison
of plan options.--A list identifying
the Medicare+Choice plans that are (or
will be) available to residents of the
area and information described in
paragraph (4) concerning such plans.
Such information shall be presented in
a comparative form.
``(iii) Additional information.--
Any other information that the
Secretary determines will assist the
individual in making the election under
this section.
The mailing of such information shall be
coordinated, to the extent practicable, with
the mailing of any annual notice under section
1804.
``(B) Notification to newly eligible
medicare+choice eligible individuals.--To the
extent practicable, the Secretary shall, not
later than 30 days before the beginning of the
initial Medicare+Choice enrollment period for
an individual described in subsection (e)(1),
mail to the individual the information
described in subparagraph (A).
``(C) Form.--The information disseminated
under this paragraph shall be written and
formatted using language that is easily
understandable by medicare beneficiaries.
``(D) Periodic updating.--The information
described in subparagraph (A) shall be updated
on atleast an annual basis to reflect changes
in the availability of Medicare+Choice plans and the benefits and
Medicare+Choice monthly basic and supplemental beneficiary premiums for
such plans.
``(3) General information.--General information
under this paragraph, with respect to coverage under
this part during a year, shall include the following:
``(A) Benefits under original medicare fee-
for-service program option.--A general
description of the benefits covered under the
original medicare fee-for-service program under
parts A and B, including--
``(i) covered items and services,
``(ii) beneficiary cost sharing,
such as deductibles, coinsurance, and
copayment amounts, and
``(iii) any beneficiary liability
for balance billing.
``(B) Election procedures.--Information and
instructions on how to exercise election
options under this section.
``(C) Rights.--A general description of
procedural rights (including grievance and
appeals procedures) of beneficiaries under the
original medicare fee-for-service program and
the Medicare+Choice program and the right to be
protected against discrimination based on
health status-related factors under section
1852(b).
``(D) Information on medigap and medicare
select.--A general description of the benefits,
enrollment rights, and other requirements
applicable to medicare supplemental policies
under section 1882 and provisions relating to
medicare select policies described in section
1882(t).
``(E) Potential for contract termination.--
The fact that a Medicare+Choice organization
may terminate its contract, refuse to renew its
contract, or reduce the service area included
in its contract, under this part, and the
effect of such a termination, nonrenewal, or
service area reduction may have on individuals
enrolled with the Medicare+Choice plan under
this part.
``(4) Information comparing plan options.--
Information under this paragraph, with respect to a
Medicare+Choice plan for a year, shall include the
following:
``(A) Benefits.--The benefits covered under
the plan, including the following:
``(i) Covered items and services
beyond those provided under the
original medicare fee-for-service
program.
``(ii) Any beneficiary cost
sharing.
``(iii) Any maximum limitations on
out-of-pocket expenses.
``(iv) In the case of an MSA plan,
differences in cost sharing, premiums,
and balance billing under such a plan
compared to under other Medicare+Choice
plans.
``(v) In the case of a
Medicare+Choice private fee-for-service
plan, differences in cost sharing,
premiums, and balance billing under
such a plan compared to under other
Medicare+Choice plans.
``(vi) The extent to which an
enrollee may obtain benefits through
out-of-network health care providers.
``(vii) The extent to which an
enrollee may select among in-network
providers and the types of providers
participating in the plan's network.
``(viii) The organization's
coverage of emergency and urgently
needed care.
``(B) Premiums.--The Medicare+Choice
monthly basic beneficiary premium and
Medicare+Choice monthly supplemental
beneficiary premium, if any, for the plan or,
in the case of an MSA plan, the Medicare+Choice
monthly MSA premium.
``(C) Service area.--The service area of
the plan.
``(D) Quality and performance.--To the
extent available, plan quality and performance
indicators for the benefits under the plan (and
how they compare to such indicators under the
original medicare fee-for-service program under
parts A and B in the area involved),
including--
``(i) disenrollment rates for
medicare enrollees electing to receive
benefits through the plan for the
previous 2 years (excluding
disenrollment due to death or moving
outside the plan's service area),
``(ii) information on medicare
enrollee satisfaction,
``(iii) information on health
outcomes, and
``(iv) the recent record regarding
compliance of the plan with
requirements of this part (as
determined by the Secretary).
``(E) Supplemental benefits.--Whether the
organization offering the plan includes
mandatory supplemental benefits in its base
benefit package or offers optional supplemental
benefits and the terms and conditions
(including premiums) for such coverage.
``(5) Maintaining a toll-free number and internet
site.--The Secretary shall maintain a toll-free number
for inquiries regarding Medicare+Choice options and the
operation of this part in all areas in which
Medicare+Choice plans are offered and an Internet site
through which individuals may electronically obtain
information on such options and Medicare+Choice plans.
``(6) Use of non-federal entities.--The Secretary
may enter into contracts with non-Federal entities to
carry out activities under this subsection.
``(7) Provision of information.--A Medicare+Choice
organization shall provide the Secretary with such
information on the organization and each
Medicare+Choice plan it offers as may be required for
the preparation of the information referred to in
paragraph (2)(A).
``(e) Coverage Election Periods.--
``(1) Initial choice upon eligibility to make
election if medicare+choice plans available to
individual.--If, at the time an individual first
becomes entitled to benefits under part A and enrolled
under part B, there is one or more Medicare+Choice
plans offered in the area in which the individual
resides, the individual shall make the election under
this section during a period specified by the Secretary
such that if the individual elects a Medicare+Choice
plan during the period, coverage under the plan becomes
effective as of the first date on which the individual
may receive such coverage.
``(2) Open enrollment and disenrollment
opportunities.--Subject to paragraph (5)--
``(A) Continuous open enrollment and
disenrollment through 2001.--At any time during
1998, 1999, 2000, and 2001, a Medicare+Choice
eligible individual may change the election
under subsection (a)(1).
``(B) Continuous open enrollment and
disenrollment for first 6 months during 2002.--
``(i) In general.--Subject to
clause (ii), at any time during the
first 6 months of 2002, or, if the
individual first becomes a
Medicare+Choice eligible individual
during 2002, during the first 6 months
during 2002 in which the individual is
a Medicare+Choice eligible individual,
a Medicare+Choice eligible individual
may change the election under
subsection (a)(1).
``(ii) Limitation of one change.--
An individual may exercise the right
under clause (i) only once. The
limitation under this clause shall not
apply to changes in elections effected
during an annual, coordinated election
period under paragraph(3) or during a
special enrollment period under the first sentence of paragraph (4).
``(C) Continuous open enrollment and
disenrollment for first 3 months in subsequent
years.--
``(i) In general.--Subject to
clause (ii), at any time during the
first 3 months of a year after 2002,
or, if the individual first becomes a
Medicare+Choice eligible individual
during a year after 2002, during the
first 3 months of such year in which
the individual is a Medicare+Choice
eligible individual, a Medicare+Choice
eligible individual may change the
election under subsection (a)(1).
``(ii) Limitation of one change
during open enrollment period each
year.--An individual may exercise the
right under clause (i) only once during
the applicable 3-month period described
in such clause in each year. The
limitation under this clause shall not
apply to changes in elections effected
during an annual, coordinated election
period under paragraph (3) or during a
special enrollment period under
paragraph (4).
``(3) Annual, coordinated election period.--
``(A) In general.--Subject to paragraph
(5), each individual who is eligible to make an
election under this section may change such
election during an annual, coordinated election
period.
``(B) Annual, coordinated election
period.--For purposes of this section, the term
`annual, coordinated election period' means,
with respect to a calendar year (beginning with
2000), the month of November before such year.
``(C) Medicare+choice health information
fairs.--In the month of November of each year
(beginning with 1999), in conjunction with the
annual coordinated election period defined in
subparagraph (B), the Secretary shall provide
for a nationally coordinated educational and
publicity campaign to inform Medicare+Choice
eligible individuals about Medicare+Choice
plans and the election process provided under
this section.
``(D) Special information campaign in
1998.--During November 1998 the Secretary shall
provide for an educational and publicity
campaign to inform Medicare+Choice eligible
individuals about the availability of
Medicare+Choice plans, and eligible
organizations with risk-sharing contracts under
section 1876, offered in different areas and
the election process provided under this
section.
``(4) Special election periods.--Effective as of
January 1, 2002, an individual may discontinue an
election of a Medicare+Choice plan offered by a
Medicare+Choice organization other than during an
annual, coordinated election period and make a new
election under this section if--
``(A) the organization's or plan's
certification under this part has been
terminated or the organization has terminated
or otherwise discontinued providing the plan in
the area in which the individual resides;
``(B) the individual is no longer eligible
to elect the plan because of a change in the
individual's place of residence or other change
in circumstances (specified by the Secretary,
but not including termination of the
individual's enrollment on the basis described
in clause (i) or (ii) of subsection (g)(3)(B));
``(C) the individual demonstrates (in
accordance with guidelines established by the
Secretary) that--
``(i) the organization offering the
plan substantially violated a material
provision of the organization's
contract under this part in relation to
the individual (including the failure
to provide an enrollee on a timely
basis medically necessary care for
which benefits are available under the
plan orthe failure to provide such
covered care in accordance with applicable quality standards); or
``(ii) the organization (or an
agent or other entity acting on the
organization's behalf) materially
misrepresented the plan's provisions in
marketing the plan to the individual;
or
``(D) the individual meets such other
exceptional conditions as the Secretary may
provide.
Effective as of January 1, 2002, an individual who,
upon first becoming eligible for benefits under part A
at age 65, enrolls in a Medicare+Choice plan under this
part, the individual may discontinue the election of
such plan, and elect coverage under the original fee-
for-service plan, at any time during the 12-month
period beginning on the effective date of such
enrollment.
``(5) Special rules for msa plans.--Notwithstanding
the preceding provisions of this subsection, an
individual--
``(A) may elect an MSA plan only during--
``(i) an initial open enrollment
period described in paragraph (1),
``(ii) an annual, coordinated
election period described in paragraph
(3)(B), or
``(iii) the month of November 1998;
``(B) subject to subparagraph (C), may not
discontinue an election of an MSA plan except
during the periods described in clause (ii) or
(iii) of subparagraph (A) and under the first
sentence of paragraph (4); and
``(C) who elects an MSA plan during an
annual, coordinated election period, and who
never previously had elected such a plan, may
revoke such election, in a manner determined by
the Secretary, by not later than December 15
following the date of the election.
``(6) Open enrollment periods.--Subject to
paragraph (5), a Medicare+Choice organization--
``(A) shall accept elections or changes to
elections during the initial enrollment periods
described in paragraph (1), during the month of
November 1998 and each subsequent year (as
provided in paragraph (3)), and during special
election periods described in the first
sentence of paragraph (4); and
``(B) may accept other changes to elections
at such other times as the organization
provides.
``(f) Effectiveness of Elections and Changes of
Elections.--
``(1) During initial coverage election period.--An
election of coverage made during the initial coverage
election period under subsection (e)(1)(A) shall take
effect upon the date the individual becomes entitled to
benefits under part A and enrolled under part B, except
as the Secretary may provide (consistent with section
1838) in order to prevent retroactive coverage.
``(2) During continuous open enrollment periods.--
An election or change of coverage made under subsection
(e)(2) shall take effect with the first day of the
first calendar month following the date on which the
election is made.
``(3) Annual, coordinated election period.--An
election or change of coverage made during an annual,
coordinated election period (as defined in subsection
(e)(3)(B)) in a year shall take effect as of the first
day of the following year.
``(4) Other periods.--An election or change of
coverage made during any other period under subsection
(e)(4) shall take effect in such manner as the
Secretary provides in a manner consistent (to the
extent practicable) with protecting continuity of
health benefit coverage.
``(g) Guaranteed Issue and Renewal.--
``(1) In general.--Except as provided in this
subsection, a Medicare+Choice organization shall
provide that at any time during which elections are
accepted under this section with respect to a
Medicare+Choice plan offered by the organization, the
organization will accept without restrictions
individuals who are eligible to make such election.
``(2) Priority.--If the Secretary determines that a
Medicare+Choice organization, in relation to a
Medicare+Choice plan it offers, has a capacity limit
and the number of Medicare+Choice eligible individuals
who elect the plan under this section exceeds the
capacity limit, the organization may limit the election
of individuals of the plan under this section but only
if priority in election is provided--
``(A) first to such individuals as have
elected the plan at the time of the
determination, and
``(B) then to other such individuals in
such a manner that does not discriminate, on a
basis described in section 1852(b), among the
individuals (who seek to elect the plan).
The preceding sentence shall not apply if it would
result in the enrollment of enrollees substantially
nonrepresentative, as determined in accordance with
regulations of the Secretary, of the medicare
population in the service area of the plan.
``(3) Limitation on termination of election.--
``(A) In general.--Subject to subparagraph
(B), a Medicare+Choice organization may not for
any reason terminate the election of any
individual under this section for a
Medicare+Choice plan it offers.
``(B) Basis for termination of election.--A
Medicare+Choice organization may terminate an
individual's election under this section with
respect to a Medicare+Choice plan it offers
if--
``(i) any Medicare+Choice monthly
basic and supplemental beneficiary
premiums required with respect to such
plan are not paid on a timely basis
(consistent with standards under
section 1856 that provide for a grace
period for late payment of such
premiums),
``(ii) the individual has engaged
in disruptive behavior (as specified in
such standards), or
``(iii) the plan is terminated with
respect to all individuals under this
part in the area in which the
individual resides.
``(C) Consequence of termination.--
``(i) Terminations for cause.--Any
individual whose election is terminated
under clause (i) or (ii) of
subparagraph (B) is deemed to have
elected the original medicare fee-for-
service program option described in
subsection (a)(1)(A).
``(ii) Termination based on plan
termination or service area
reduction.--Any individual whose
election is terminated under
subparagraph (B)(iii) shall have a
special election period under
subsection (e)(4)(A) in which to change
coverage to coverage under another
Medicare+Choice plan. Such an
individual who fails to make an
election during such period is deemed
to have chosen to change coverage to
the original medicare fee-for-service
program option described in subsection
(a)(1)(A).
``(D) Organization obligation with respect
to election forms.--Pursuant to a contract
under section 1857, each Medicare+Choice
organization receiving an election form under
subsection (c)(2) shall transmit to the
Secretary (at such time and in such manner as
the Secretary may specify) a copy of such form
or such other information respecting the
election as the Secretary may specify.
``(h) Approval of Marketing Material and Application
Forms.--
``(1) Submission.--No marketing material or
application form may be distributed by a
Medicare+Choice organization to (or for the use of)
Medicare+Choice eligible individuals unless--
``(A) at least 45 days before the date of
distribution the organization has submitted the
material or form to the Secretary for review,
and
``(B) the Secretary has not disapproved the
distribution of such material or form.
``(2) Review.--The standards established under
section 1856 shall include guidelines for the review of
any material or form submitted and under such
guidelines the Secretary shall disapprove (or later
require the correction of) such material or form if the
material or form is materially inaccurate or misleading
or otherwise makes a material misrepresentation.
``(3) Deemed approval (1-stop shopping).--In the
case of material or form that is submitted under
paragraph (1)(A) to the Secretary or a regional office
of the Department of Health and Human Services and the
Secretary or the office has not disapproved the
distribution of marketing material or form under
paragraph (1)(B) with respect to a Medicare+Choice plan
in an area, the Secretary is deemed not to have
disapproved such distribution in all other areas
covered by the plan and organization except with regard
to that portion of such material or form that is
specific only to an area involved.
``(4) Prohibition of certain marketing practices.--
Each Medicare+Choice organization shall conform to fair
marketing standards, in relation to Medicare+Choice
plans offered under this part, included in the
standards established under section 1856. Such
standards--
``(A) shall not permit a Medicare+Choice
organization to provide for cash or other
monetary rebates as an inducement for
enrollment or otherwise, and
``(B) may include a prohibition against a
Medicare+Choice organization (or agent of such
an organization) completing any portion of any
election form used to carry out elections under
this section on behalf of any individual.
``(i) Effect of Election of Medicare+Choice Plan Option.--
``(1) Payments to organizations.--Subject to
sections 1852(a)(5), 1853(g), 1853(h), 1886(d)(11), and
1886(h)(3)(D), payments under a contract with a
Medicare+Choice organization under section 1853(a) with
respect to an individual electing a Medicare+Choice
plan offered by the organization shall be instead of
the amounts which (in the absence of the contract)
would otherwise be payable under parts A and B for
items and services furnished to the individual.
``(2) Only organization entitled to payment.--
Subject to sections 1853(e), 1853(g), 1853(h),
1857(f)(2), and 1886(d)(11), and 1886(h)(3)(D), only
the Medicare+Choice organization shall be entitled to
receive payments from the Secretary under this title
for services furnished to the individual.
``benefits and beneficiary protections
``Sec. 1852. (a) Basic Benefits.--
``(1) In general.--Except as provided in section
1859(b)(3) for MSA plans, each Medicare+Choice plan
shall provide to members enrolled under this part,
through providers and other persons that meet the
applicable requirements of this title and part A of
title XI--
``(A) those items and services (other than
hospice care) for which benefits are available
under parts A and B to individuals residing in
the area served by the plan, and
``(B) additional benefits required under
section 1854(f)(1)(A).
``(2) Satisfaction of requirement.--
``(A) In general.--A Medicare+Choice plan
(other than an MSA plan) offered by a
Medicare+Choice organization satisfies
paragraph (1)(A), with respect to benefits for
items and services furnished other than through
a provider or other person that has a contract
with the organization offering the plan, if the
plan provides payment in an amount so that--
``(i) the sum of such payment
amount and any cost sharing provided
for under the plan, is equal to at
least
``(ii) the total dollar amount of
payment for such items and services as
would otherwise be authorized under
parts A and B (including any balance
billing permitted under such parts).
``(B) Reference to related provisions.--For
provision relating to--
``(i) limitations on balance
billing against Medicare+Choice
organizations for non-contract
providers, see sections 1852(k) and
1866(a)(1)(O), and
``(ii) limiting actuarial value of
enrollee liability for covered
benefits, see section 1854(e).
``(3) Supplemental benefits.--
``(A) Benefits included subject to
secretary's approval.--Each Medicare+Choice
organization may provide to individuals
enrolled under this part, other than under a
MSA plan, (without affording those individuals
an option to decline the coverage) supplemental
health care benefits that the Secretary may
approve. The Secretary shall approve any such
supplemental benefits unless the Secretary
determines that including such supplemental
benefits would substantially discourage
enrollment by Medicare+Choice eligible
individuals with the organization.
``(B) At enrollees' option.--
``(i) In general.--Subject to
clause (ii), a Medicare+Choice
organization may provide to individuals
enrolled under this part supplemental
health care benefits that the
individuals may elect, at their option,
to have covered.
``(ii) Special rule for msa
plans.--A Medicare+Choice organization
may not provide, under an MSA plan,
supplemental health care benefits that
cover the deductible described in
section 1859(b)(2)(B). In applying the
previous sentence, health benefits
described in section 1882(u)(2)(B)
shall not be treated as covering such
deductible.
``(C) Application to medicare+choice
private fee-for-service plans.--Nothing in this
paragraph shall be construed as preventing a
Medicare+Choice private fee-for-service plan
from offering supplemental benefits that
include payment for some or all of the balance
billing amounts permitted consistent with
section 1852(k) and coverage of additional
services that the plan finds to be medically
necessary.
``(4) Organization as secondary payer.--
Notwithstanding any other provision of law, a
Medicare+Choice organization may (in the case of the
provision of items and services to an individual under
a Medicare+Choice plan under circumstances in which
payment under this title is made secondary pursuant to
section 1862(b)(2)) charge or authorize the provider of
such services to charge, in accordance with the charges
allowed under a law, plan, or policy described in such
section--
``(A) the insurance carrier, employer, or
other entity which under such law, plan, or
policy is to pay for the provision of such
services, or
``(B) such individual to the extent that
the individual has been paid under such law,
plan, or policy for such services.
``(5) National coverage determinations.--If there
is a national coverage determination made in the period
beginning on the date of an announcement under section
1853(b) and ending on the date of the next announcement
under such section and the Secretary projects that the
determination will result in a significant change in
the costs to a Medicare+Choice organization of
providing the benefits that are the subject of such
national coverage determination and that such change in
costs was not incorporated in the determination of the
annualMedicare+Choice capitation rate under section
1853 included in the announcement made at the beginning of such period,
then, unless otherwise required by law--
``(A) such determination shall not apply to
contracts under this part until the first
contract year that begins after the end of such
period, and
``(B) if such coverage determination
provides for coverage of additional benefits or
coverage under additional circumstances,
section 1851(i)(1) shall not apply to payment
for such additional benefits or benefits
provided under such additional circumstances
until the first contract year that begins after
the end of such period.
``(b) Antidiscrimination.--
``(1) Beneficiaries.--
``(A) In general.--A Medicare+Choice
organization may not deny, limit, or condition
the coverage or provision of benefits under
this part, for individuals permitted to be
enrolled with the organization under this part,
based on any health status-related factor
described in section 2702(a)(1) of the Public
Health Service Act.
``(B) Construction.--Subparagraph (A) shall
not be construed as requiring a Medicare+Choice
organization to enroll individuals who are
determined to have end-stage renal disease,
except as provided under section 1851(a)(3)(B).
``(2) Providers.--A Medicare+Choice organization
shall not discriminate with respect to participation,
reimbursement, or indemnification as to any provider
who is acting within the scope of the provider's
license or certification under applicable State law,
solely on the basis of such license or certification.
This paragraph shall not be construed to prohibit a
plan from including providers only to the extent
necessary to meet the needs of the plan's enrollees or
from establishing any measure designed to maintain
quality and control costs consistent with the
responsibilities of the plan.
``(c) Disclosure Requirements.--
``(1) Detailed description of plan provisions.--A
Medicare+Choice organization shall disclose, in clear,
accurate, and standardized form to each enrollee with a
Medicare+Choice plan offered by the organization under
this part at the time of enrollment and at least
annually thereafter, the following information
regarding such plan:
``(A) Service area.--The plan's service
area.
``(B) Benefits.--Benefits offered under the
plan, including information described in
section 1851(d)(3)(A) and exclusions from
coverage and, if it is an MSA plan, a
comparison of benefits under such a plan with
benefits under other Medicare+Choice plans.
``(C) Access.--The number, mix, and
distribution of plan providers, out-of-network
coverage (if any) provided by the plan, and any
point-of-service option (including the
supplemental premium for such option).
``(D) Out-of-area coverage.--Out-of-area
coverage provided by the plan.
``(E) Emergency coverage.--Coverage of
emergency services, including--
``(i) the appropriate use of
emergency services, including use of
the 911 telephone system or its local
equivalent in emergency situations and
an explanation of what constitutes an
emergency situation;
``(ii) the process and procedures
of the plan for obtaining emergency
services; and
``(iii) the locations of (I)
emergency departments, and (II) other
settings, in which plan physicians and
hospitals provide emergency services
and post-stabilization care.
``(F) Supplemental benefits.--Supplemental
benefits available from the organization
offering the plan, including--
``(i) whether the supplemental
benefits are optional,
``(ii) the supplemental benefits
covered, and
``(iii) the Medicare+Choice monthly
supplemental beneficiary premium for
the supplemental benefits.
``(G) Prior authorization rules.--Rules
regarding prior authorization or other review
requirements that could result in nonpayment.
``(H) Plan grievance and appeals
procedures.--All plan appeal or grievance
rights and procedures.
``(I) Quality assurance program.--A
description of the organization's quality
assurance program under subsection (e).
``(2) Disclosure upon request.--Upon request of a
Medicare+Choice eligible individual, a Medicare+Choice
organization must provide the following information to
such individual:
``(A) The general coverage information and
general comparative plan information made
available under clauses (i) and (ii) of section
1851(d)(2)(A).
``(B) Information on procedures used by the
organization to control utilization of services
and expenditures.
``(C) Information on the number of
grievances, redeterminations, and appeals and
on the disposition in the aggregate of such
matters.
``(D) An overall summary description as to
the method of compensation of participating
physicians.
``(d) Access to Services.--
``(1) In general.--A Medicare+Choice organization
offering a Medicare+Choice plan may select the
providers from whom the benefits under the plan are
provided so long as--
``(A) the organization makes such benefits
available and accessible to each individual
electing the plan within the plan service area
with reasonable promptness and in a manner
which assures continuity in the provision of
benefits;
``(B) when medically necessary the
organization makes such benefits available and
accessible 24 hours a day and 7 days a week;
``(C) the plan provides for reimbursement
with respect to services which are covered
under subparagraphs (A) and (B) and which are
provided to such an individual other than
through the organization, if--
``(i) the services were not
emergency services (as defined in
paragraph (3)), but (I) the services
were medically necessary and
immediately required because of an
unforeseen illness, injury, or
condition, and (II) it was not
reasonable given the circumstances to
obtain the services through the
organization,
``(ii) the services were renal
dialysis services and were provided
other than through the organization
because the individual was temporarily
out of the plan's service area, or
``(iii) the services are
maintenance care or post-stabilization
care covered under the guidelines
established under paragraph (2);
``(D) the organization provides access to
appropriate providers, including credentialed
specialists, for medically necessary treatment
and services; and
``(E) coverage is provided for emergency
services (as defined in paragraph (3)) without
regard to prior authorization or the emergency
care provider's contractual relationship with
the organization.
``(2) Guidelines respecting coordination of post-
stabilization care.--A Medicare+Choice planshall comply
with such guidelines as the Secretary may prescribe relating to
promoting efficient and timely coordination of appropriate maintenance
and post-stabilization care of an enrollee after the enrollee has been
determined to be stable under section 1867.
``(3) Definition of emergency services.--In this
subsection--
``(A) In general.--The term `emergency
services' means, with respect to an individual
enrolled with an organization, covered
inpatient and outpatient services that--
``(i) are furnished by a provider
that is qualified to furnish such
services under this title, and
``(ii) are needed to evaluate or
stabilize an emergency medical
condition (as defined in subparagraph
(B)).
``(B) Emergency medical condition based on
prudent layperson.--The term `emergency medical
condition' means a medical condition
manifesting itself by acute symptoms of
sufficient severity (including severe pain)
such that a prudent layperson, who possesses an
average knowledge of health and medicine, could
reasonably expect the absence of immediate
medical attention to result in--
``(i) placing the health of the
individual (or, with respect to a
pregnant woman, the health of the woman
or her unborn child) in serious
jeopardy,
``(ii) serious impairment to bodily
functions, or
``(iii) serious dysfunction of any
bodily organ or part.
``(4) Assuring access to services in
medicare+choice private fee-for-service
plans.--In addition to any other requirements
under this part, in the case of a
Medicare+Choice private fee-for-service plan,
the organization offering the plan must
demonstrate to the Secretary that the
organization has sufficient number and range of
health care professionals and providers willing
to provide services under the terms of the
plan. The Secretary shall find that an
organization has met such requirement with
respect to any category of health care
professional or provider if, with respect to
that category of provider--
``(A) the plan has established
payment rates for covered services
furnished by that category of provider
that are not less than the payment
rates provided for under part A, part
B, or both, for such services, or
``(B) the plan has contracts or
agreements with a sufficient number and
range of providers within such category
to provide covered services under the
terms of the plan,
or a combination of both.
The previous sentence shall not be construed as
restricting the persons from whom enrollees
under such a plan may obtain covered benefits.
``(e) Quality Assurance Program.--
``(1) In general.--Each Medicare+Choice
organization must have arrangements, consistent with
any regulation, for an ongoing quality assurance
program for health care services it provides to
individuals enrolled with Medicare+Choice plans of the
organization.
``(2) Elements of program.--
``(A) In general.--The quality assurance
program of an organization with respect to a
Medicare+Choice plan (other than a
Medicare+Choice private fee-for-service plan or
a non-network MSA plan) it offers shall--
``(i) stress health outcomes and
provide for the collection, analysis,
and reporting of data (in accordance
with a quality measurement system that
the Secretary recognizes) that will
permit measurement of outcomes and
other indices of the quality of
Medicare+Choice plans and
organizations;
``(ii) monitor and evaluate high
volume and high risk services and the
care of acute and chronic conditions;
``(iii) evaluate the continuity and
coordination of care that enrollees
receive;
``(iv) be evaluated on an ongoing
basis as to its effectiveness;
``(v) include measures of consumer
satisfaction;
``(vi) provide the Secretary with
such access to information collected as
may be appropriate to monitor and
ensure the quality of care provided
under this part;
``(vii) provide review by
physicians and other health care
professionals of the process followed
in the provision of such health care
services;
``(viii) provide for the
establishment of written protocols for
utilization review, based on current
standards of medical practice;
``(ix) have mechanisms to detect
both underutilization and
overutilization of services;
``(x) after identifying areas for
improvement, establish or alter
practice parameters;
``(xi) take action to improve
quality and assesses the effectiveness
of such action through systematic
followup; and
``(xii) make available information
on quality and outcomes measures to
facilitate beneficiary comparison and
choice of health coverage options (in
such form and on such quality and
outcomes measures as the Secretary
determines to be appropriate).
``(B) Elements of program for organizations
offering medicare+choice private fee-for-
service plans and non-network msa plans.--The
quality assurance program of an organization
with respect to a Medicare+Choice private fee-
for-service plan or a non-network MSA plan it
offers shall--
``(i) meet the requirements of
clauses (i) through (vi) of
subparagraph (A);
``(ii) insofar as it provides for
the establishment of written protocols
for utilization review, base such
protocols on current standards of
medical practice; and
``(iii) have mechanisms to evaluate
utilization of services and inform
providers and enrollees of the results
of such evaluation.
``(C) Definition of non-network msa plan.--
In this subsection, the term `non-network MSA
plan' means an MSA plan offered by a
Medicare+Choice organization that does not
provide benefits required to be provided by
this part, in whole or in part, through a
defined set of providers under contract, or
under another arrangement, with the
organization.
``(3) External review.--
``(A) In general.--Each Medicare+Choice
organization shall, for each Medicare+Choice
plan it operates, have an agreement with an
independent quality review and improvement
organization approved by the Secretary to
perform functions of the type described in
sections 1154(a)(4)(B) and 1154(a)(14) with
respect to services furnished by
Medicare+Choice plans for which payment is made
under this title. The previous sentence shall
not apply to a Medicare+Choice private fee-for-
service plan or a non-network MSA plan that
does not employ utilization review.
``(B) Nonduplication of accreditation.--
Except in the case of the review of quality
complaints, and consistent with subparagraph
(C), the Secretary shall ensure that the
external review activities conducted under
subparagraph (A) are not duplicative of review
activities conducted as part of the
accreditation process.
``(C) Waiver authority.--The Secretary may
waive the requirement described in subparagraph
(A) in the case of an organization if the
Secretary determines that the organization has
consistently maintained an excellent record of
quality assurance and compliance with other
requirements under this part.
``(4) Treatment of accreditation.--The Secretary
shall provide that a Medicare+Choice organization is
deemed to meet requirements of paragraphs (1) and (2)
of this subsection and subsection (h) (relating to
confidentiality and accuracy of enrollee records) if
the organization is accredited (and periodically
reaccredited) by a private organization under a process
that the Secretary has determined assures that the
organization, as a condition of accreditation, applies
and enforces standards with respect to the requirements
involved that are no less stringent than the standards
established under section 1856 to carry out the
respective requirements.
``(f) Grievance Mechanism.--Each Medicare+Choice
organization must provide meaningful procedures for hearing and
resolving grievances between the organization (including any
entity or individual through which the organization provides
health care services) and enrollees with Medicare+Choice plans
of the organization under this part.
``(g) Coverage Determinations, Reconsiderations, and
Appeals.--
``(1) Determinations by organization.--
``(A) In general.--A Medicare+Choice
organization shall have a procedure for making
determinations regarding whether an individual
enrolled with the plan of the organization
under this part is entitled to receive a health
service under this section and the amount (if
any) that the individual is required to pay
with respect to such service. Subject to
paragraph (3), such procedures shall provide
for such determination to be made on a timely
basis.
``(B) Explanation of determination.--Such a
determination that denies coverage, in whole or
in part, shall be in writing and shall include
a statement in understandable language of the
reasons for the denial and a description of the
reconsideration and appeals processes.
``(2) Reconsiderations.--
``(A) In general.--The organization shall
provide for reconsideration of a determination
described in paragraph (1)(B) upon request by
the enrollee involved. The reconsideration
shall be within a time period specified by the
Secretary, but shall be made, subject to
paragraph (3), not later than 60 days after the
date of the receipt of the request for
reconsideration.
``(B) Physician decision on certain
reconsiderations.--A reconsideration relating
to a determination to deny coverage based on a
lack of medical necessity shall be made only by
a physician with appropriate expertise in the
field of medicine which necessitates treatment
who is other than a physician involved in the
initial determination.
``(3) Expedited determinations and
reconsiderations.--
``(A) Receipt of requests.--
``(i) Enrollee requests.--An
enrollee in a Medicare+Choice plan may
request, either in writing or orally,
an expedited determination under
paragraph (1) or an expedited
reconsideration under paragraph (2) by
the Medicare+Choice organization.
``(ii) Physician requests.--A
physician, regardless whether the
physician is affiliated with the
organization or not, may request,
either in writing or orally, such an
expedited determination or
reconsideration.
``(B) Organization procedures.--
``(i) In general.--The
Medicare+Choice organization shall
maintain procedures for expediting
organization determinations and
reconsiderations when, upon request of
an enrollee, the organization
determines that the application of the
normal time frame for making a
determination (or a reconsideration
involving a determination) could
seriously jeopardize the life or health
of the enrollee or the enrollee's
ability to regain maximum function.
``(ii) Expedition required for
physician requests.--In the case of a
request for an expedited determination
or reconsideration made under
subparagraph (A)(ii), the organization
shall expedite the determination or
reconsideration if the request
indicates that the application of the
normal time frame for making a
determination (or a reconsideration
involving a determination) could
seriously jeopardize the life or health
of the enrollee or the enrollee's
ability to regain maximum function.
``(iii) Timely response.--In cases
described in clauses (i) and (ii), the
organization shall notify the enrollee
(and the physician involved, as
appropriate) of the determination or
reconsideration under time limitations
established by the Secretary, but not
later than 72 hours of the time of
receipt of the request for the
determination or reconsideration (or
receipt of the information necessary to
make the determination or
reconsideration), or such longer period
as the Secretary may permit in
specified cases.
``(4) Independent review of certain coverage
denials.--The Secretary shall contract with an
independent, outside entity to review and resolve in a
timely manner reconsiderations that affirm denial of
coverage, in whole or in part.
``(5) Appeals.--An enrollee with a Medicare+Choice
plan of a Medicare+Choice organization under this part
who is dissatisfied by reason of the enrollee's failure
to receive any health service to which the enrollee
believes the enrollee is entitled and at no greater
charge than the enrollee believes the enrollee is
required to pay is entitled, if the amount in
controversy is $100 or more, to a hearing before the
Secretary to the same extent as is provided in section
205(b), and in any such hearing the Secretary shall
make the organization a party. If the amount in
controversy is $1,000 or more, the individual or
organization shall, upon notifying the other party, be
entitled to judicial review of the Secretary's final
decision as provided in section 205(g), and both the
individual and the organization shall be entitled to be
parties to that judicial review. In applying
subsections (b) and (g) of section 205 as provided in
this paragraph, and in applying section 205(l) thereto,
any reference therein to the Commissioner of Social
Security or the Social Security Administration shall be
considered a reference to the Secretary or the
Department of Health and Human Services, respectively.
``(h) Confidentiality and Accuracy of Enrollee Records.--
Insofar as a Medicare+Choice organization maintains medical
records or other health information regarding enrollees under
this part, the Medicare+Choice organization shall establish
procedures--
``(1) to safeguard the privacy of any individually
identifiable enrollee information;
``(2) to maintain such records and information in a
manner that is accurate and timely, and
``(3) to assure timely access of enrollees to such
records and information.
``(i) Information on Advance Directives.--Each
Medicare+Choice organization shall meet the requirement of
section 1866(f) (relating to maintaining written policies and
procedures respecting advance directives).
``(j) Rules Regarding Provider Participation.--
``(1) Procedures.--Insofar as a Medicare+Choice
organization offers benefits under a Medicare+Choice
planthrough agreements with physicians, the
organization shall establish reasonable procedures relating to the
participation (under an agreement between a physician and the
organization) of physicians under such a plan. Such procedures shall
include--
``(A) providing notice of the rules
regarding participation,
``(B) providing written notice of
participation decisions that are adverse to
physicians, and
``(C) providing a process within the
organization for appealing such adverse
decisions, including the presentation of
information and views of the physician
regarding such decision.
``(2) Consultation in medical policies.--A
Medicare+Choice organization shall consult with
physicians who have entered into participation
agreements with the organization regarding the
organization's medical policy, quality, and medical
management procedures.
``(3) Prohibiting interference with provider advice
to enrollees.--
``(A) In general.--Subject to subparagraphs
(B) and (C), a Medicare+Choice organization (in
relation to an individual enrolled under a
Medicare+Choice plan offered by the
organization under this part) shall not
prohibit or otherwise restrict a covered health
care professional (as defined in subparagraph
(D)) from advising such an individual who is a
patient of the professional about the health
status of the individual or medical care or
treatment for the individual's condition or
disease, regardless of whether benefits for
such care or treatment are provided under the
plan, if the professional is acting within the
lawful scope of practice.
``(B) Conscience protection.--Subparagraph
(A) shall not be construed as requiring a
Medicare+Choice plan to provide, reimburse for,
or provide coverage of a counseling or referral
service if the Medicare+Choice organization
offering the plan--
``(i) objects to the provision of
such service on moral or religious
grounds; and
``(ii) in the manner and through
the written instrumentalities such
Medicare+Choice organization deems
appropriate, makes available
information on its policies regarding
such service to prospective enrollees
before or during enrollment and to
enrollees within 90 days after the date
that the organization or plan adopts a
change in policy regarding such a
counseling or referral service.
``(C) Construction.--Nothing in
subparagraph (B) shall be construed to affect
disclosure requirements under State law or
under the Employee Retirement Income Security
Act of 1974.
``(D) Health care professional defined.--
For purposes of this paragraph, the term
`health care professional' means a physician
(as defined in section 1861(r)) or other health
care professional if coverage for the
professional's services is provided under the
Medicare+Choice plan for the services of the
professional. Such term includes a podiatrist,
optometrist, chiropractor, psychologist,
dentist, physician assistant, physical or
occupational therapist and therapy assistant,
speech-language pathologist, audiologist,
registered or licensed practical nurse
(including nurse practitioner, clinical nurse
specialist, certified registered nurse
anesthetist, and certified nurse-midwife),
licensed certified social worker, registered
respiratory therapist, and certified
respiratory therapy technician.
``(4) Limitations on physician incentive plans.--
``(A) In general.--No Medicare+Choice
organization may operate any physician
incentive plan (as defined in subparagraph (B))
unless the following requirements are met:
``(i) No specific payment is made
directly or indirectly under the plan
to a physician or physician group as an
inducement to reduce or limitmedically
necessary services provided with respect to a specific individual
enrolled with the organization.
``(ii) If the plan places a
physician or physician group at
substantial financial risk (as
determined by the Secretary) for
services not provided by the physician
or physician group, the organization--
``(I) provides stop-loss
protection for the physician or
group that is adequate and
appropriate, based on standards
developed by the Secretary that
take into account the number of
physicians placed at such
substantial financial risk in
the group or under the plan and
the number of individuals
enrolled with the organization
who receive services from the
physician or group, and
``(II) conducts periodic
surveys of both individuals
enrolled and individuals
previously enrolled with the
organization to determine the
degree of access of such
individuals to services
provided by the organization
and satisfaction with the
quality of such services.
``(iii) The organization provides
the Secretary with descriptive
information regarding the plan,
sufficient to permit the Secretary to
determine whether the plan is in
compliance with the requirements of
this subparagraph.
``(B) Physician incentive plan defined.--In
this paragraph, the term `physician incentive
plan' means any compensation arrangement
between a Medicare+Choice organization and a
physician or physician group that may directly
or indirectly have the effect of reducing or
limiting services provided with respect to
individuals enrolled with the organization
under this part.
``(5) Limitation on provider indemnification.--A
Medicare+Choice organization may not provide (directly
or indirectly) for a health care professional, provider
of services, or other entity providing health care
services (or group of such professionals, providers, or
entities) to indemnify the organization against any
liability resulting from a civil action brought for any
damage caused to an enrollee with a Medicare+Choice
plan of the organization under this part by the
organization's denial of medically necessary care.
``(6) Special rules for medicare+choice private
fee-for-service plans.--For purposes of applying this
part (including subsection (k)(1)) and section
1866(a)(1)(O), a hospital (or other provider of
services), a physician or other health care
professional, or other entity furnishing health care
services is treated as having an agreement or contract
in effect with a Medicare+Choice organization (with
respect to an individual enrolled in a Medicare+Choice
private fee-for-service plan it offers), if--
``(A) the provider, professional, or other
entity furnishes services that are covered
under the plan to such an enrollee; and
``(B) before providing such services, the
provider, professional, or other entity--
``(i) has been informed of the
individual's enrollment under the plan,
and
``(ii) either--
``(I) has been informed of
the terms and conditions of
payment for such services under
the plan, or
``(II) is given a
reasonable opportunity to
obtain information concerning
such terms and conditions, in a
manner reasonably designed to
effect informed agreement by a
provider.
The previous sentence shall only apply in the absence
of an explicit agreement between such a provider,
professional, or other entity and the Medicare+Choice
organization.
``(k) Treatment of Services Furnished by Certain
Providers.--
``(1) In general.--Except as provided in paragraph
(2), a physician or other entity (other than a provider
of services) that does not have a contract establishing
payment amounts for services furnished to an individual
enrolled under this part with a Medicare+Choice
organization described in section 1851(a)(2)(A) shall
accept as payment in full for covered services under
this title that are furnished to such an individual the
amounts that the physician or other entity could
collect if the individual were not so enrolled. Any
penalty or other provision of law that applies to such
a payment with respect to an individual entitled to
benefits under this title (but not enrolled with a
Medicare+Choice organization under this part) also
applies with respect to an individual so enrolled.
``(2) Application to medicare+choice private fee-
for-service plans.--
``(A) Balance billing limits under
medicare+choice private fee-for-service plans
in case of contract providers.--
``(i) In general.--In the case of
an individual enrolled in a
Medicare+Choice private fee-for-service
plan under this part, a physician,
provider of services, or other entity
that has a contract (including through
the operation of subsection (j)(6))
establishing a payment rate for
services furnished to the enrollee
shall accept as payment in full for
covered services under this title that
are furnished to such an individual an
amount not to exceed (including any
deductibles, coinsurance, copayments,
or balance billing otherwise permitted
under the plan) an amount equal to 115
percent of such payment rate.
``(ii) Procedures to enforce
limits.--The Medicare+Choice
organization that offers such a plan
shall establish procedures, similar to
the procedures described in section
1848(g)(1)(A), in order to carry out
the previous sentence.
``(iii) Assuring enforcement.--If
the Medicare+Choice organization fails
to establish and enforce procedures
required under clause (ii), the
organization is subject to intermediate
sanctions under section 1857(g).
``(B) Enrollee liability for noncontract
providers.--For provision--
``(i) establishing minimum payment
rate in the case of noncontract
providers under a Medicare+Choice
private fee-for-service plan, see
section 1852(a)(2); or
``(ii) limiting enrollee liability
in the case of covered services
furnished by such providers, see
paragraph (1) and section
1866(a)(1)(O).
``(C) Information on beneficiary
liability.--
``(i) In general.--Each
Medicare+Choice organization that
offers a Medicare+Choice private fee-
for-service plan shall provide that
enrollees under the plan who are
furnished services for which payment is
sought under the plan are provided an
appropriate explanation of benefits
(consistent with that provided under
parts A and B and, if applicable, under
medicare supplemental policies) that
includes a clear statement of the
amount of the enrollee's liability
(including any liability for balance
billing consistent with this
subsection) with respect to payments
for such services.
``(ii) Advance notice before
receipt of inpatient hospital services
and certain other services.--In
addition, such organization shall, in
its terms and conditions of payments to
hospitals for inpatient hospital
services and for other services
identified by the Secretary for which
the amount of the balancing billing
under subparagraph (A) could be
substantial, require the hospital to
provide to the enrollee, before
furnishing such services and if the
hospital imposes balance billing under
subparagraph (A)--
``(I) notice of the fact
that balance billing is
permitted under such
subparagraph for such services,
and
``(II) a good faith
estimate of the likely amount
of such balance billing (if
any), with respect to such
services, based upon the
presenting condition of the
enrollee.
``payments to medicare+choice organizations
``Sec. 1853. (a) Payments to Organizations.--
``(1) Monthly payments.--
``(A) In general.--Under a contract under
section 1857 and subject to subsections (e) and
(f) and section 1859(e)(4), the Secretary shall
make monthly payments under this section in
advance to each Medicare+Choice organization,
with respect to coverage of an individual under
this part in a Medicare+Choice payment area for
a month, in an amount equal to \1/12\ of the
annual Medicare+Choice capitation rate (as
calculated under subsection (c)) with respect
to that individual for that area, adjusted for
such risk factors as age, disability status,
gender, institutional status, and such other
factors as the Secretary determines to be
appropriate, so as to ensure actuarial
equivalence. The Secretary may add to, modify,
or substitute for such factors, if such changes
will improve the determination of actuarial
equivalence.
``(B) Special rule for end-stage renal
disease.--The Secretary shall establish
separate rates of payment to a Medicare+Choice
organization with respect to classes of
individuals determined to have end-stage renal
disease and enrolled in a Medicare+Choiceplan
of the organization. Such rates of payment shall be actuarially
equivalent to rates paid to other enrollees in the Medicare+Choice
payment area (or such other area as specified by the Secretary). In
accordance with regulations, the Secretary shall provide for the
application of the seventh sentence of section 1881(b)(7) to payments
under this section covering the provision of renal dialysis treatment
in the same manner as such sentence applies to composite rate payments
described in such sentence.
``(2) Adjustment to reflect number of enrollees.--
``(A) In general.--The amount of payment
under this subsection may be retroactively
adjusted to take into account any difference
between the actual number of individuals
enrolled with an organization under this part
and the number of such individuals estimated to
be so enrolled in determining the amount of the
advance payment.
``(B) Special rule for certain enrollees.--
``(i) In general.--Subject to
clause (ii), the Secretary may make
retroactive adjustments under
subparagraph (A) to take into account
individuals enrolled during the period
beginning on the date on which the
individual enrolls with a
Medicare+Choice organization under a
plan operated, sponsored, or
contributed to by the individual's
employer or former employer (or the
employer or former employer of the
individual's spouse) and ending on the
date on which the individual is
enrolled in the organization under this
part, except that for purposes of
making such retroactive adjustments
under this subparagraph, such period
may not exceed 90 days.
``(ii) Exception.--No adjustment
may be made under clause (i) with
respect to any individual who does not
certify that the organization provided
the individual with the disclosure
statement described in section 1852(c)
at the time the individual enrolled
with the organization.
``(3) Establishment of risk adjustment factors.--
``(A) Report.--The Secretary shall develop,
and submit to Congress by not later than March
1, 1999, a report on the method of risk
adjustment of payment rates under this section,
to be implemented under subparagraph (C), that
accounts for variations in per capita costs
based on health status. Such report shall
include an evaluation of such method by an
outside, independent actuary of the actuarial
soundness of the proposal.
``(B) Data collection.--In order to carry
out this paragraph, the Secretary shall require
Medicare+Choice organizations (and eligible
organizations with risk-sharing contracts under
section 1876) to submit data regarding
inpatient hospital services for periods
beginning on or after July 1, 1997, and data
regarding other services and other information
as the Secretary deems necessary for periods
beginning on or after July 1, 1998. The
Secretary may not require an organization to
submit such data before January 1, 1998.
``(C) Initial implementation.--The
Secretary shall first provide for
implementation of a risk adjustment methodology
that accounts for variations in per capita
costs based on health status and other
demographic factors for payments by no later
than January 1, 2000.
``(D) Uniform application to all types of
plans.--Subject to section 1859(e)(4), the
methodology shall be applied uniformly without
regard to the type of plan.
``(b) Annual Announcement of Payment Rates.--
``(1) Annual announcement.--The Secretary shall
annually determine, and shall announce (in a manner
intended to provide notice to interested parties) not
later than March 1 before the calendar year concerned--
``(A) the annual Medicare+Choice capitation
rate for each Medicare+Choice payment area for
the year, and
``(B) the risk and other factors to be used
in adjusting such rates under subsection
(a)(1)(A) for payments for months in that year.
``(2) Advance notice of methodological changes.--At
least 45 days before making the announcement under
paragraph (1) for a year, the Secretary shall provide
for notice to Medicare+Choice organizations of proposed
changes to be made in the methodology from the
methodology and assumptions used in the previous
announcement and shall provide such organizations an
opportunity to comment on such proposed changes.
``(3) Explanation of assumptions.--In each
announcement made under paragraph (1), the Secretary
shall include an explanation of the assumptions and
changes in methodology used in the announcement in
sufficient detail so that Medicare+Choice organizations
can compute monthly adjusted Medicare+Choice capitation
rates for individuals in each Medicare+Choice payment
area which is in whole or in part within the service
area of such an organization.
``(c) Calculation of Annual Medicare+Choice Capitation
Rates.--
``(1) In general.--For purposes of this part,
subject to paragraphs (6)(C) and (7), each annual
Medicare+Choice capitation rate, for a Medicare+Choice
payment area for a contract year consisting of a
calendar year, is equal to the largest of the amounts
specified in the following subparagraph (A), (B), or
(C):
``(A) Blended capitation rate.--The sum
of--
``(i) the area-specific percentage
(as specified under paragraph (2) for
the year) of the annual area-specific
Medicare+Choice capitation rate for the
Medicare+Choice payment area, as
determined under paragraph (3) for the
year, and
``(ii) the national percentage (as
specified under paragraph (2) for the
year) of the input-price-adjusted
annual national Medicare+Choice
capitation rate, as determined under
paragraph (4) for the year,
multiplied by the budget neutrality adjustment
factor determined under paragraph (5).
``(B) Minimum amount.--12 multiplied by the
following amount:
``(i) For 1998, $367 (but not to
exceed, in the case of an area outside
the 50 States and the District of
Columbia, 150 percent of the annual per
capita rate of payment for 1997
determined under section 1876(a)(1)(C)
for the area).
``(ii) For a succeeding year, the
minimum amount specified in this clause
(or clause (i)) for the preceding year
increased by the national per capita
Medicare+Choice growth percentage,
described in paragraph (6)(A) for that
succeeding year.
``(C) Minimum percentage increase.--
``(i) For 1998, 102 percent of the
annual per capita rate of payment for
1997 determined under section
1876(a)(1)(C) for the Medicare+Choice
payment area.
``(ii) For a subsequent year, 102
percent of the annual Medicare+Choice
capitation rate under this paragraph
for the area for the previous year.
``(2) Area-specific and national percentages.--For
purposes of paragraph (1)(A)--
``(A) for 1998, the `area-specific
percentage' is 90 percent and the `national
percentage' is 10 percent,
``(B) for 1999, the `area-specific
percentage' is 82 percent and the `national
percentage' is 18 percent,
``(C) for 2000, the `area-specific
percentage' is 74 percent and the `national
percentage' is 26 percent,
``(D) for 2001, the `area-specific
percentage' is 66 percent and the `national
percentage' is 34 percent,
``(E) for 2002, the `area-specific
percentage' is 58 percent and the `national
percentage' is 42 percent, and
``(F) for a year after 2002, the `area-
specific percentage' is 50 percent and the
`national percentage' is 50 percent.
``(3) Annual area-specific medicare+choice
capitation rate.--
``(A) In general.--For purposes of
paragraph (1)(A), subject to subparagraph (B),
the annual area-specific Medicare+Choice
capitation rate for a Medicare+Choice payment
area--
``(i) for 1998 is, subject to
subparagraph (D), the annual per capita
rate of payment for 1997 determined
under section 1876(a)(1)(C) for the
area, increased by the national per
capita Medicare+Choice growth
percentage for 1998 (described in
paragraph (6)(A)); or
``(ii) for a subsequent year is the
annual area-specific Medicare+Choice
capitation rate for the previous year
determined under this paragraph for the
area, increased by the national per
capita Medicare+Choice growth
percentage for such subsequent year.
``(B) Removal of medical education from
calculation of adjusted average per capita
cost.--
``(i) In general.--In determining
the area-specific Medicare+Choice
capitation rate under subparagraph (A)
for a year (beginning with 1998), the
annual per capita rate of payment for
1997 determined under section
1876(a)(1)(C) shall be adjusted to
exclude from the rate the applicable
percent (specified in clause (ii)) of
the payment adjustments described in
subparagraph (C).
``(ii) Applicable percent.--For
purposes of clause (i), the applicable
percent for--
``(I) 1998 is 20 percent,
``(II) 1999 is 40 percent,
``(III) 2000 is 60 percent,
``(IV) 2001 is 80 percent,
and
``(V) a succeeding year is
100 percent.
``(C) Payment adjustment.--
``(i) In general.--Subject to
clause (ii), the payment adjustments
described in this subparagraph are
payment adjustments which the Secretary
estimates were payable during 1997--
``(I) for the indirect
costs of medical education
under section 1886(d)(5)(B),
and
``(II) for direct graduate
medical education costs under
section 1886(h).
``(ii) Treatment of payments
covered under state hospital
reimbursement system.--To the extent
that the Secretary estimates that an
annual per capita rate of payment for
1997 described in clause (i) reflects
payments to hospitals reimbursed under
section 1814(b)(3), the Secretary shall
estimate a payment adjustment that is
comparable to the payment adjustment
that would have been made under clause
(i) if the hospitals had not been
reimbursed under such section.
``(D) Treatment of areas with highly
variable payment rates.--In the case of a
Medicare+Choice payment area for which the
annual per capita rate of payment determined
under section 1876(a)(1)(C) for 1997 varies by
more than 20 percent from such rate for 1996,
for purposes of this subsection the Secretary
may substitute for such rate for1997 a rate
that is more representative of the costs of the enrollees in the area.
``(4) Input-price-adjusted annual national
medicare+choice capitation rate.--
``(A) In general.--For purposes of
paragraph (1)(A), the input-price-adjusted
annual national Medicare+Choice capitation rate
for a Medicare+Choice payment area for a year
is equal to the sum, for all the types of
medicare services (as classified by the
Secretary), of the product (for each such type
of service) of--
``(i) the national standardized
annual Medicare+Choice capitation rate
(determined under subparagraph (B)) for
the year,
``(ii) the proportion of such rate
for the year which is attributable to
such type of services, and
``(iii) an index that reflects (for
that year and that type of services)
the relative input price of such
services in the area compared to the
national average input price of such
services.
In applying clause (iii), the Secretary may,
subject to subparagraph (C), apply those
indices under this title that are used in
applying (or updating) national payment rates
for specific areas and localities.
``(B) National standardized annual
medicare+choice capitation rate.--In
subparagraph (A)(i), the `national standardized
annual Medicare+Choice capitation rate' for a
year is equal to--
``(i) the sum (for all
Medicare+Choice payment areas) of the
product of--
``(I) the annual area-
specific Medicare+Choice
capitation rate for that year
for the area under paragraph
(3), and
``(II) the average number
of medicare beneficiaries
residing in that area in the
year, multiplied by the average
of the risk factor weights used
to adjust payments under
subsection (a)(1)(A) for such
beneficiaries in such area;
divided by
``(ii) the sum of the products
described in clause (i)(II) for all
areas for that year.
``(C) Special rules for 1998.--In applying
this paragraph for 1998--
``(i) medicare services shall be
divided into 2 types of services: part
A services and part B services;
``(ii) the proportions described in
subparagraph (A)(ii)--
``(I) for part A services
shall be the ratio (expressed
as a percentage) of the
national average annual per
capita rate of payment for part
A for 1997 to the total
national average annual per
capita rate of payment for
parts A and B for 1997, and
``(II) for part B services
shall be 100 percent minus the
ratio described in subclause
(I);
``(iii) for part A services, 70
percent of payments attributable to
such services shall be adjusted by the
index used under section 1886(d)(3)(E)
to adjust payment rates for relative
hospital wage levels for hospitals
located in the payment area involved;
``(iv) for part B services--
``(I) 66 percent of
payments attributable to such
services shall be adjusted by
the index of the geographic
area factors under section
1848(e) used to adjust payment
rates for physicians' services
furnished in the payment area,
and
``(II) of the remaining 34
percent of the amount of such
payments, 40 percent shall be
adjusted by the index described
in clause (iii); and
``(v) the index values shall be
computed based only on the beneficiary
population who are 65 years of age or
older and who are not determined to
have end stage renal disease.
The Secretary may continue to apply the rules
described in this subparagraph (or similar
rules) for 1999.
``(5) Payment adjustment budget neutrality
factor.--For purposes of paragraph (1)(A), for each
year, the Secretary shall determine a budget neutrality
adjustment factor so that the aggregate of the payments
under this part shall equal the aggregate payments that
would have been made under this part if payment were
based entirely on area-specific capitation rates.
``(6) National per capita medicare+choice growth
percentage defined.--
``(A) In general.--In this part, the
`national per capita Medicare+Choice growth
percentage' for a year is the percentage
determined by the Secretary, by March 1st
before the beginning of the year involved, to
reflect the Secretary's estimate of the
projected per capita rate of growth in
expenditures under this title for an individual
entitled to benefits under part A and enrolled
under part B, reduced by the number of
percentage points specified in subparagraph (B)
for the year. Separate determinations may be
made for aged enrollees, disabled enrollees,
and enrollees with end-stage renal disease.
``(B) Adjustment.--The number of percentage
points specified in this subparagraph is--
``(i) for 1998, 0.8 percentage
points,
``(ii) for 1999, 0.5 percentage
points,
``(iii) for 2000, 0.5 percentage
points,
``(iv) for 2001, 0.5 percentage
points,
``(v) for 2002, 0.5 percentage
points, and
``(vi) for a year after 2002, 0
percentage points.
``(C) Adjustment for over or under
projection of national per capita
medicare+choice growth percentage.--Beginning
with rates calculated for 1999, before
computing rates for a year as described in
paragraph (1), the Secretary shall adjust all
area-specific and national Medicare+Choice
capitation rates (and beginning in 2000, the
minimum amount) for the previous year for the
differences between the projections of the
national per capita Medicare+Choice growth
percentage for that year and previous years and
the current estimate of such percentage for
such years.
``(7) Adjustment for national coverage
determinations.--If the Secretary makes a determination
with respect to coverage under this title that the
Secretary projects will result in a significant
increase in the costs to Medicare+Choice of providing
benefits under contracts under this part (for periods
after any period described in section 1852(a)(5)), the
Secretary shall adjust appropriately the payments to
such organizations under this part.
``(d) Medicare+Choice Payment Area Defined.--
``(1) In general.--In this part, except as provided
in paragraph (3), the term `Medicare+Choice payment
area' means a county, or equivalent area specified by
the Secretary.
``(2) Rule for esrd beneficiaries.--In the case of
individuals who are determined to have end stage renal
disease, the Medicare+Choice payment area shall be a
State or such other payment area as the Secretary
specifies.
``(3) Geographic adjustment.--
``(A) In general.--Upon written request of
the chief executive officer of a State for a
contract year (beginning after 1998) made by
not later than February 1 of the previous year,
the Secretary shall make a geographic
adjustment to a Medicare+Choice payment area in
the State otherwise determined under paragraph
(1)--
``(i) to a single statewide
Medicare+Choice payment area,
``(ii) to the metropolitan based
system described in subparagraph (C),
or
``(iii) to consolidating into a
single Medicare+Choice payment area
noncontiguous counties (or equivalent
areas described in paragraph (1))
within a State.
Such adjustment shall be effective for payments
for months beginning with January of the year
following the year in which the request is
received.
``(B) Budget neutrality adjustment.--In the
case of a State requesting an adjustment under
this paragraph, the Secretary shall initially
(and annually thereafter) adjust the payment
rates otherwise established under this section
for Medicare+Choice payment areas in the State
in a manner so that the aggregate of the
payments under this section in the State shall
not exceed the aggregate payments that would
have been made under this section for
Medicare+Choice payment areas in the State in
the absence of the adjustment under this
paragraph.
``(C) Metropolitan based system.--The
metropolitan based system described in this
subparagraph is one in which--
``(i) all the portions of each
metropolitan statistical area in the
State or in the case of a consolidated
metropolitan statistical area, all of
the portions of each primary
metropolitan statistical area within
the consolidated area within the State,
are treated as a single Medicare+Choice
payment area, and
``(ii) all areas in the State that
do not fall within a metropolitan
statistical area are treated as a
single Medicare+Choice payment area.
``(D) Areas.--In subparagraph (C), the
terms `metropolitan statistical area',
`consolidated metropolitan statistical area',
and `primary metropolitan statistical area'
mean any area designated as such by the
Secretary of Commerce.
``(e) Special Rules for Individuals Electing MSA Plans.--
``(1) In general.--If the amount of the
Medicare+Choice monthly MSA premium (as defined in
section 1854(b)(2)(C)) for an MSA plan for a year is
less than \1/12\ of the annual Medicare+Choice
capitation rate applied under this section for the area
and year involved, the Secretary shall deposit an
amount equal to 100 percent of such difference in a
Medicare+Choice MSA established (and, if applicable,
designated) by the individual under paragraph (2).
``(2) Establishment and designation of
medicare+choice medical savings account as requirement
for payment of contribution.--In the case of an
individual who has elected coverage under an MSA plan,
no payment shall be made under paragraph (1) on behalf
of an individual for a month unless the individual--
``(A) has established before the beginning
of the month (or by such other deadline as the
Secretary may specify) a Medicare+Choice MSA
(as defined in section 138(b)(2) of the
Internal Revenue Code of 1986), and
``(B) if the individual has established
more than one such Medicare+Choice MSA, has
designated one of such accounts as the
individual's Medicare+Choice MSA for purposes
of this part.
Under rules under this section, such an individual may
change the designation of such account under
subparagraph (B) for purposes of this part.
``(3) Lump-sum deposit of medical savings account
contribution.--In the case of an individual electing an
MSA plan effective beginning with a month in a year,
the amount of the contribution to the Medicare+Choice
MSA on behalf of the individual for that month and all
successive months in the year shall be deposited during
that first month. In the case of a termination of such
an election as of a month before the end of a year, the
Secretary shall provide for a procedure for the
recovery of deposits attributable to the remaining
months in the year.
``(f) Payments From Trust Fund.--The payment to a
Medicare+Choice organization under this section for individuals
enrolled under this part with the organization and payments to
a Medicare+Choice MSA under subsection (e)(1) shall be made
from the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund in such proportion
as the Secretary determines reflects the relative weight that
benefits under part A and under part B represents of the
actuarial value of the total benefits under this title. Monthly
payments otherwise payable under this section for October 2000
shall be paid on the first business day of such month. Monthly
payments otherwise payable under this section for October 2001
shall be paid on the last business day of September 2001.
Monthly payments otherwise payable under this section for
October 2006 shall be paid on the first business day of October
2006.
``(g) Special Rule for Certain Inpatient Hospital Stays.--
In the case of an individual who is receiving inpatient
hospital services from a subsection (d) hospital (as defined in
section 1886(d)(1)(B)) as of the effective date of the
individual's--
``(1) election under this part of a Medicare+Choice
plan offered by a Medicare+Choice organization--
``(A) payment for such services until the
date of the individual's discharge shall be
made under this title through the
Medicare+Choice plan or the original medicare
fee-for-service program option described in
section 1851(a)(1)(A) (as the case may be)
elected before the election with such
organization,
``(B) the elected organization shall not be
financially responsible for payment for such
services until the date after the date of the
individual's discharge, and
``(C) the organization shall nonetheless be
paid the full amount otherwise payable to the
organization under this part; or
``(2) termination of election with respect to a
Medicare+Choice organization under this part--
``(A) the organization shall be financially
responsible for payment for such services after
such date and until the date of the
individual's discharge,
``(B) payment for such services during the
stay shall not be made under section 1886(d) or
by any succeeding Medicare+Choice organization,
and
``(C) the terminated organization shall not
receive any payment with respect to the
individual under this part during the period
the individual is not enrolled.
``(h) Special Rule for Hospice Care.--
``(1) Information.--A contract under this part
shall require the Medicare+Choice organization to
inform each individual enrolled under this part with a
Medicare+Choice plan offered by the organization about
the availability of hospice care if--
``(A) a hospice program participating under
this title is located within the organization's
service area; or
``(B) it is common practice to refer
patients to hospice programs outside such
service area.
``(2) Payment.--If an individual who is enrolled
with a Medicare+Choice organization under this part
makes an election under section 1812(d)(1) to receive
hospice care from a particular hospice program--
``(A) payment for the hospice care
furnished to the individual shall be made to
the hospice program elected by the individual
by the Secretary;
``(B) payment for other services for which
the individual is eligible notwithstanding the
individual's election of hospice care under
section 1812(d)(1), including services not
related to the individual's terminal illness,
shall be made by the Secretary to the
Medicare+Choice organization or the provider or
supplier of the service instead of payments
calculated under subsection (a); and
``(C) the Secretary shall continue to make
monthly payments to the Medicare+Choice
organization in an amount equal to the value of
the additional benefits required under section
1854(f)(1)(A).
``premiums
``Sec. 1854. (a) Submission of Proposed Premiums and
Related Information.--
(1) In general.--Not later than May 1 of each year,
each Medicare+Choice organization shall submit to the
Secretary, in a form and manner specified by the
Secretary and for each Medicare+Choice plan for the
service area in which it intends to be offered in the
following year--
``(A) the information described in
paragraph (2), (3), or (4) for the type of plan
involved; and
``(B) the enrollment capacity (if any) in
relation to the plan and area.
``(2) Information required for coordinated care
plans.--For a Medicare+Choice plan described in section
1851(a)(2)(A), the information described in this
paragraph is as follows:
``(A) Basic (and additional) benefits.--For
benefits described in 1852(a)(1)(A)--
``(i) the adjusted community rate
(as defined in subsection (f)(3));
``(ii) the Medicare+Choice monthly
basic beneficiary premium (as defined
in subsection (b)(2)(A));
``(iii) a description of
deductibles, coinsurance, and
copayments applicable under the plan
and the actuarial value of such
deductibles, coinsurance, and
copayments, described in subsection
(e)(1)(A); and
``(iv) if required under subsection
(f)(1), a description of the additional
benefits to be provided pursuant to
such subsection and the value
determined for such proposed benefits
under such subsection.
``(B) Supplemental benefits.--For benefits
described in 1852(a)(3)--
``(i) the adjusted community rate
(as defined in subsection (f)(3));
``(ii) the Medicare+Choice monthly
supplemental beneficiary premium (as
defined in subsection (b)(2)(B)); and
``(iii) a description of
deductibles, coinsurance, and
copayments applicable under the plan
and the actuarial value of such
deductibles, coinsurance, and
copayments, described in subsection
(e)(2).
``(3) Requirements for msa plans.--For an MSA plan
described, the information described in this paragraph
is as follows:
``(A) Basic (and additional) benefits.--For
benefits described in 1852(a)(1)(A), the amount
of the Medicare+Choice monthly MSA premium.
``(B) Supplemental benefits.--For benefits
described in 1852(a)(3), the amount of the
Medicare+Choice monthly supplementary
beneficiary premium.
``(4) Requirements for private fee-for-service
plans.--For a Medicare+Choice plan described in section
1851(a)(2)(C) for benefits described in 1852(a)(1)(A),
the information described in this paragraph is as
follows:--
``(A) Basic (and additional) benefits.--For
benefits described in 1852(a)(1)(A)--
``(i) the adjusted community rate
(as defined in subsection (f)(3));
``(ii) the amount of the
Medicare+Choice monthly basic
beneficiary premium;
``(iii) a description of the
deductibles, coinsurance, and
copayments applicable under the plan,
and the actuarial value of such
deductibles, coinsurance, and
copayments, as described in subsection
(e)(4)(A); and
``(iv) if required under subsection
(f)(1), a description of the additional
benefits to be provided pursuant to
such subsection and the value
determined for such proposed benefits
under such subsection.
``(B) Supplemental benefits.--For benefits
described in 1852(a)(3), the amount of the
Medicare+Choice monthly supplemental
beneficiary premium (as defined in subsection
(b)(2)(B)).
``(5) Review.--
``(A) In general.--Subject to subparagraph
(B), the Secretary shall review the adjusted
community rates, the amounts of the basic and
supplemental premiums, and values filed under
this subsection and shall approve or disapprove
such rates, amounts, and value so submitted.
``(B) Exception.--The Secretary shall not
review, approve, or disapprove the amounts
submitted under paragraph (3) or subparagraphs
(A)(ii) and (B) of paragraph (4).
``(b) Monthly Premium Charged.--
``(1) In general.--
``(A) Rule for other than msa plans.--The
monthly amount of the premium charged to an
individual enrolled in a Medicare+Choice plan
(other than an MSA plan) offered by a
Medicare+Choice organization shall be equal to
the sum of the Medicare+Choice monthly basic
beneficiary premium and the Medicare+Choice
monthly supplementary beneficiary premium (if
any).
``(B) MSA plans.--The monthly amount of the
premium charged to an individual enrolled in an
MSA plan offered by a Medicare+Choice
organization shall be equal to the
Medicare+Choice monthly supplemental
beneficiary premium (if any).
``(2) Premium terminology defined.--For purposes of
this part:
``(A) The Medicare+Choice monthly basic
beneficiary premium.--The term `Medicare+Choice
monthly basic beneficiary premium' means, with
respect to a Medicare+Choice plan, the amount
authorized to be charged under subsection
(e)(1) for the plan, or, in the case of a
Medicare+Choice private fee-for-service plan,
the amount filed under subsection
(a)(4)(A)(ii).
``(B) Medicare+Choice monthly supplemental
beneficiary premium.--The term `Medicare+Choice
monthly supplemental beneficiary premium'
means, with respect to a Medicare+Choice plan,
the amount authorized to be charged under
subsection (e)(2) for the plan or, in the case
of a MSA plan or Medicare+Choice private fee-
for-service plan, the amount filed under
paragraph (3)(B) or (4)(B) of subsection (a).
``(C) Medicare+Choice monthly MSA
premium.--The term `Medicare+Choice monthly MSA
premium' means, with respect to a
Medicare+Choice plan, the amount of such
premium filed under subsection (a)(3)(A) for
the plan.
``(c) Uniform Premium.--The Medicare+Choice monthly basic
and supplemental beneficiary premium, the Medicare+Choice
monthly MSA premium charged under subsection (b) of a
Medicare+Choice organization under this part may not vary among
individuals enrolled in the plan.
``(d) Terms and Conditions of Imposing Premiums.--Each
Medicare+Choice organization shall permit the payment of
Medicare+Choice monthly basic and supplemental beneficiary
premiums on a monthly basis, may terminate election of
individuals for a Medicare+Choice plan for failure to make
premium payments only in accordance with section
1851(g)(3)(B)(i), and may not provide for cash or other
monetary rebates as an inducement for enrollment or otherwise.
``(e) Limitation on Enrollee Liability.--
``(1) For basic and additional benefits.--In no
event may--
``(A) the Medicare+Choice monthly basic
beneficiary premium (multiplied by 12) and the
actuarial value of the deductibles,
coinsurance, and copayments applicable on
average to individuals enrolled under this part
with a Medicare+Choice plan described in
section 1851(a)(2)(A) of an organization with
respect to required benefits described in
section 1852(a)(1)(A) and additional benefits
(if any) required under subsection (f)(1)(A)
for a year, exceed
``(B) the actuarial value of the
deductibles, coinsurance, and copayments that
would be applicable on average to individuals
entitled to benefits under part A and enrolled
under part B if they were not members of a
Medicare+Choice organization for the year.
``(2) For supplemental benefits.--If the
Medicare+Choice organization provides to its members
enrolled under this part in a Medicare+Choice plan
described in section 1851(a)(2)(A) with respect to
supplemental benefits described in section 1852(a)(3),
the sum of the Medicare+Choice monthly supplemental
beneficiary premium (multiplied by 12) charged and the
actuarial value of its deductibles, coinsurance, and
copayments charged with respect to such benefits may
not exceed the adjusted community rate for such
benefits (as defined in subsection (f)(3)).
``(3) Determination on other basis.--If the
Secretary determines that adequate data are not
available to determine the actuarial value under
paragraph (1)(A) or (2), the Secretary may determine
such amount with respectto all individuals in same
geographic area, the State, or in the United States, eligible to enroll
in the Medicare+Choice plan involved under this part or on the basis of
other appropriate data.
``(4) Special rule for private fee-for-service
plans.--With respect to a Medicare+Choice private fee-
for-service plan (other than a plan that is an MSA
plan), in no event may--
``(A) the actuarial value of the
deductibles, coinsurance, and copayments
applicable on average to individuals enrolled
under this part with such a plan of an
organization with respect to required benefits
described in section 1852(a)(1), exceed
``(B) the actuarial value of the
deductibles, coinsurance, and copayments that
would be applicable on average to individuals
entitled to benefits under part A and enrolled
under part B if they were not members of a
Medicare+Choice organization for the year.
``(f) Requirement for Additional Benefits.--
``(1) Requirement.--
``(A) In general.--Each Medicare+Choice
organization (in relation to a Medicare+Choice
plan, other than an MSA plan, it offers) shall
provide that if there is an excess amount (as
defined in subparagraph (B)) for the plan for a
contract year, subject to the succeeding
provisions of this subsection, the organization
shall provide to individuals such additional
benefits (as the organization may specify) in a
value which the Secretary determines is at
least equal to the adjusted excess amount (as
defined in subparagraph (C)).
``(B) Excess amount.--For purposes of this
paragraph, the `excess amount', for an
organization for a plan, is the amount (if any)
by which--
``(i) the average of the capitation
payments made to the organization under
section 1853 for the plan at the
beginning of contract year, exceeds
``(ii) the actuarial value of the
required benefits described in section
1852(a)(1)(A) under the plan for
individuals under this part, as
determined based upon an adjusted
community rate described in paragraph
(3) (as reduced for the actuarial value
of the coinsurance, copayments, and
deductibles under parts A and B).
``(C) Adjusted excess amount.--For purposes
of this paragraph, the `adjusted excess
amount', for an organization for a plan, is the
excess amount reduced to reflect any amount
withheld and reserved for the organization for
the year under paragraph (2).
``(D) Uniform application.--This paragraph
shall be applied uniformly for all enrollees
for a plan.
``(E) Construction.--Nothing in this
subsection shall be construed as preventing a
Medicare+Choice organization from providing
supplemental benefits (described in section
1852(a)(3)) that are in addition to the health
care benefits otherwise required to be provided
under this paragraph and from imposing a
premium for such supplemental benefits.
``(2) Stabilization fund.--A Medicare+Choice
organization may provide that a part of the value of an
excess amount described in paragraph (1) be withheld
and reserved in the Federal Hospital Insurance Trust
Fund and in the Federal Supplementary Medical Insurance
Trust Fund (in such proportions as the Secretary
determines to be appropriate) by the Secretary for
subsequent annual contract periods, to the extent
required to stabilize and prevent undue fluctuations in
the additional benefits offered in those subsequent
periods by the organization in accordance with such
paragraph. Any of such value of the amount reserved
which is not provided as additional benefits described
in paragraph (1)(A) to individuals electing the
Medicare+Choice plan of the organization in accordance
with such paragraph prior to the end of such periods,
shall revert for the use of such trust funds.
``(3) Adjusted community rate.--For purposes of
this subsection, subject to paragraph (4), the term
`adjusted community rate' for a service or services
means, at the election of a Medicare+Choice
organization, either--
``(A) the rate of payment for that service
or services which the Secretary annually
determines would apply to an individual
electing a Medicare+Choice plan under this part
if the rate of payment were determined under a
`community rating system' (as defined in
section 1302(8) of the Public Health Service
Act, other than subparagraph (C)), or
``(B) such portion of the weighted
aggregate premium, which the Secretary annually
estimates would apply to such an individual, as
the Secretary annually estimates is
attributable to that service or services,
but adjusted for differences between the utilization
characteristics of the individuals electing coverage
under this part and the utilization characteristics of
the other enrollees with the plan (or, if the Secretary
finds that adequate data are not available to adjust
for those differences, the differences between the
utilization characteristics of individuals selecting
other Medicare+Choice coverage, or Medicare+Choice
eligible individuals in the area, in the State, or in
the United States, eligible to elect Medicare+Choice
coverage under this part and the utilization
characteristics of the rest of the population in the
area, in the State, or in the United States,
respectively).
``(4) Determination based on insufficient data.--
For purposes of this subsection, if the Secretary finds
that there is insufficient enrollment experience to
determine an average of the capitation payments to be
made under this part at the beginning of a contract
period or to determine (in the case of a newly operated
provider-sponsored organization or other new
organization) the adjusted community rate for the
organization, the Secretary may determine such an
average based on the enrollment experience of other
contracts entered into under this part and may
determine such a rate using data in the general
commercial marketplace.
``(g) Prohibition of State Imposition of Premium Taxes.--No
State may impose a premium tax or similar tax with respect to
payments to Medicare+Choice organizations under section 1853.
``organizational and financial requirements for medicare+choice
organizations; provider-sponsored organizations
``Sec. 1855. (a) Organized and Licensed Under State Law.--
``(1) In general.--Subject to paragraphs (2) and
(3), a Medicare+Choice organization shall be organized
and licensed under State law as a risk-bearing entity
eligible to offer health insurance or health benefits
coverage in each State in which it offers a
Medicare+Choice plan.
``(2) Special exception for provider-sponsored
organizations.--
``(A) In general.--In the case of a
provider-sponsored organization that seeks to
offer a Medicare+Choice plan in a State, the
Secretary shall waive the requirement of
paragraph (1) that the organization be licensed
in that State if--
``(i) the organization files an
application for such waiver with the
Secretary by not later than November 1,
2002, and
``(ii) the Secretary determines,
based on the application and other
evidence presented to the Secretary,
that any of the grounds for approval of
the application described in
subparagraph (B), (C), or (D) has been
met.
``(B) Failure to act on licensure
application on a timely basis.--The ground for
approval of such a waiver application described
in this subparagraph is that the State has
failed to complete action on a licensing
application of the organization within 90 days
of the date of the State's receipt of a
substantiallycomplete application. No period
before the date of the enactment of this section shall be included in
determining such 90-day period.
``(C) Denial of application based on
discriminatory treatment.--The ground for
approval of such a waiver application described
in this subparagraph is that the State has
denied such a licensing application and--
``(i) the standards or review
process imposed by the State as a
condition of approval of the license
imposes any material requirements,
procedures, or standards (other than
solvency requirements) to such
organizations that are not generally
applicable to other entities engaged in
a substantially similar business, or
``(ii) the State requires the
organization, as a condition of
licensure, to offer any product or plan
other than a Medicare+Choice plan.
``(D) Denial of application based on
application of solvency requirements.--With
respect to waiver applications filed on or
after the date of publication of solvency
standards under section 1856(a), the ground for
approval of such a waiver application described
in this subparagraph is that the State has
denied such a licensing application based (in
whole or in part) on the organization's failure
to meet applicable solvency requirements and--
``(i) such requirements are not the
same as the solvency standards
established under section 1856(a); or
``(ii) the State has imposed as a
condition of approval of the license
documentation or information
requirements relating to solvency or
other material requirements,
procedures, or standards relating to
solvency that are different from the
requirements, procedures, and standards
applied by the Secretary under
subsection (d)(2).
For purposes of this paragraph, the term
`solvency requirements' means requirements
relating to solvency and other matters covered
under the standards established under section
1856(a).
``(E) Treatment of waiver.--In the case of
a waiver granted under this paragraph for a
provider-sponsored organization with respect to
a State--
``(i) Limitation to state.--The
waiver shall be effective only with
respect to that State and does not
apply to any other State.
``(ii) Limitation to 36-month
period.--The waiver shall be effective
only for a 36-month period and may not
be renewed.
``(iii) Conditioned on compliance
with consumer protection and quality
standards.--The continuation of the
waiver is conditioned upon the
organization's compliance with the
requirements described in subparagraph
(G).
``(iv) Preemption of state law.--
Any provisions of law of that State
which relate to the licensing of the
organization and which prohibit the
organization from providing coverage
pursuant to a contract under this part
shall be superseded.
``(F) Prompt action on application.--The
Secretary shall grant or deny such a waiver
application within 60 days after the date the
Secretary determines that a substantially
complete waiver application has been filed.
Nothing in this section shall be construed as
preventing an organization which has had such a
waiver application denied from submitting a
subsequent waiver application.
``(G) Application and enforcement of state
consumer protection and quality standards.--
``(i) In general.--A waiver granted
under this paragraph to an organization
with respect to licensing under State
law is conditioned upon the
organization's compliance with all
consumer protection and quality
standards insofar as such standards--
``(I) would apply in the
State to the organization if it
were licensed under State law;
``(II) are generally
applicable to other
Medicare+Choice organizations
and plans in the State; and
``(III) are consistent with
the standards established under
this part.
Such standards shall not include any
standard preempted under section
1856(b)(3)(B).
``(ii) Incorporation into
contract.--In the case of such a waiver
granted to an organization with respect
to a State, the Secretary shall
incorporate the requirement that the
organization (and Medicare+Choice plans
it offers) comply with standards under
clause (i) as part of the contract
between the Secretary and the
organization under section 1857.
``(iii) Enforcement.--In the case
of such a waiver granted to an
organization with respect to a State,
the Secretary may enter into an
agreement with the State under which
the State agrees to provide for
monitoring and enforcement activities
with respect to compliance of such an
organization and its Medicare+Choice
plans with such standards. Such
monitoring and enforcement shall be
conducted by the State in the same
manner as the State enforces such
standards with respect to other
Medicare+Choice organizations and
plans, without discrimination based on
the type of organization to which the
standards apply. Such an agreement
shall specify or establish mechanisms
by which compliance activities are
undertaken, while not lengthening the
time required to review and process
applications for waivers under this
paragraph.
``(H) Report.--By not later than December
31, 2001, the Secretary shall submit to the
Committee on Ways and Means and the Committee
on Commerce of the House of Representatives and
the Committee on Finance of the Senate a report
regarding whether the waiver process under this
paragraph should be continued after December
31, 2002. In making such recommendation, the
Secretary shall consider, among other factors,
the impact of such process on beneficiaries and
on the long-term solvency of the program under
this title.
``(3) Licensure does not substitute for or
constitute certification.--The fact that an
organization is licensed in accordance with paragraph
(1) does not deem the organization to meet other
requirements imposed under this part.
``(b) Assumption of Full Financial Risk.--The
Medicare+Choice organization shall assume full financial risk
on a prospective basis for the provision of the health care
services for which benefits are required to be provided under
section 1852(a)(1), except that the organization--
``(1) may obtain insurance or make other
arrangements for the cost of providing to any enrolled
member such services the aggregate value of which
exceeds such aggregate level as the Secretary specifies
from time to time,
``(2) may obtain insurance or make other
arrangements for the cost of such services provided to
its enrolled members other than through the
organization because medical necessity required their
provision before they could be secured through the
organization,
``(3) may obtain insurance or make other
arrangements for not more than 90 percent of the amount
by which its costs for any of its fiscal years exceed
115 percent of its income for such fiscal year, and
``(4) may make arrangements with physicians or
other health care professionals, health care
institutions, or any combination of such individuals or
institutions to assume all or part of the financial
risk on a prospective basis for the provision of basic
health services by the physicians or other health
professionals or through the institutions.
``(c) Certification of Provision Against Risk of Insolvency
for Unlicensed PSOs.--
``(1) In general.--Each Medicare+Choice
organization that is a provider-sponsored organization,
that is not licensed by a State under subsection (a),
and for which a waiver application has been approved
under subsection (a)(2), shall meet standards
established under section 1856(a) relating to the
financial solvency and capital adequacy of the
organization.
``(2) Certification process for solvency standards
for psos.--The Secretary shall establish a process for
the receipt and approval of applications of a provider-
sponsored organization described in paragraph (1) for
certification (and periodic recertification) of the
organization as meeting such solvency standards. Under
such process, the Secretary shall act upon such a
certification application not later than 60 days after
the date the application has been received.
``(d) Provider-Sponsored Organization Defined.--
``(1) In general.--In this part, the term
`provider-sponsored organization' means a public or
private entity--
``(A) that is established or organized, and
operated, by a health care provider, or group
of affiliated health care providers,
``(B) that provides a substantial
proportion (as defined by the Secretary in
accordance with paragraph (2)) of the health
care items and services under the contract
under this part directly through the provider
or affiliated group of providers, and
``(C) with respect to which the affiliated
providers share, directly or indirectly,
substantial financial risk with respect to the
provision of such items and services and have
at least a majority financial interest in the
entity.
``(2) Substantial proportion.--In defining what is
a `substantial proportion' for purposes of paragraph
(1)(B), the Secretary--
``(A) shall take into account the need for
such an organization to assume responsibility
for providing--
``(i) significantly more than the
majority of the items and services
under the contract under this section
through its own affiliated providers;
and
``(ii) most of the remainder of the
items and services under the contract
through providers with which the
organization has an agreement to
provide such items and services,
in order to assure financial stability and to
address the practical considerations involved
in integrating the delivery of a wide range of
service providers;
``(B) shall take into account the need for
such an organization to provide a limited
proportion of the items and services under the
contract through providers that are neither
affiliated with nor have an agreement with the
organization; and
``(C) may allow for variation in the
definition of substantial proportion among such
organizations based on relevant differences
among the organizations, such as their location
in an urban or rural area.
``(3) Affiliation.--For purposes of this
subsection, a provider is `affiliated' with another
provider if, through contract, ownership, or
otherwise--
``(A) one provider, directly or indirectly,
controls, is controlled by, or is under common
control with the other,
``(B) both providers are part of a
controlled group of corporations under section
1563 of the Internal Revenue Code of 1986,
``(C) each provider is a participant in a
lawful combination under which each provider
shares substantial financial risk in connection
with the organization's operations, or
``(D) both providers are part of an
affiliated service group under section 414 of
such Code.
``(4) Control.--For purposes of paragraph (3),
control is presumed to exist if one party, directly or
indirectly, owns, controls, or holds the power to vote,
or proxies for, not less than 51 percent of the voting
rights or governance rights of another.
``(5) Health care provider defined.--In this
subsection, the term `health care provider' means--
``(A) any individual who is engaged in the
delivery of health care services in a State and
who is required by State law or regulation to
be licensed or certified by the State to engage
in the delivery of such services in the State,
and
``(B) any entity that is engaged in the
delivery of health care services in a State and
that, if it is required by State law or
regulation to be licensed or certified by the
State to engage in the delivery of such
services in the State, is so licensed.
``(6) Regulations.--The Secretary shall issue
regulations to carry out this subsection.
``establishment of standards
``Sec. 1856. (a) Establishment of Solvency Standards for
Provider-Sponsored Organizations.--
``(1) Establishment.--
``(A) In general.--The Secretary shall
establish, on an expedited basis and using a
negotiated rulemaking process under subchapter
III of chapter 5 of title 5, United States
Code, standards described in section 1855(c)(1)
(relating to the financial solvency and capital
adequacy of the organization) that entities
must meet to qualify as provider-sponsored
organizations under this part.
``(B) Factors to consider for solvency
standards.--In establishing solvency standards
under subparagraph (A) for provider-sponsored
organizations,the Secretary shall consult with
interested parties and shall take into account--
``(i) the delivery system assets of
such an organization and ability of
such an organization to provide
services directly to enrollees through
affiliated providers,
``(ii) alternative means of
protecting against insolvency,
including reinsurance, unrestricted
surplus, letters of credit, guarantees,
organizational insurance coverage,
partnerships with other licensed
entities, and valuation attributable to
the ability of such an organization to
meet its service obligations through
direct delivery of care, and
``(iii) any standards developed by
the National Association of Insurance
Commissioners specifically for risk-
based health care delivery
organizations.
``(C) Enrollee protection against
insolvency.--Such standards shall include
provisions to prevent enrollees from being held
liable to any person or entity for the
Medicare+Choice organization's debts in the
event of the organization's insolvency.
``(2) Publication of notice.--In carrying out the
rulemaking process under this subsection, the
Secretary, after consultation with the National
Association of Insurance Commissioners, the American
Academy of Actuaries, organizations representative of
medicare beneficiaries, and other interested parties,
shall publish the notice provided for under section
564(a) of title 5, United States Code, by not later
than 45 days after the date of the enactment of this
section.
``(3) Target date for publication of rule.--As part
of the notice under paragraph (2), and for purposes of
this subsection, the `target date for publication'
(referred to in section 564(a)(5) of such title) shall
be April 1, 1998.
``(4) Abbreviated period for submission of
comments.--In applying section 564(c) of such title
under this subsection, `15 days' shall be substituted
for `30 days'.
``(5) Appointment of negotiated rulemaking
committee and facilitator.--The Secretary shall provide
for--
``(A) the appointment of a negotiated
rulemaking committee under section 565(a) of
such title by not later than 30 days after the
end of the comment period provided for under
section 564(c) of such title (as shortened
under paragraph (4)), and
``(B) the nomination of a facilitator under
section 566(c) of such title by not later than
10 days after the date of appointment of the
committee.
``(6) Preliminary committee report.--The negotiated
rulemaking committee appointed under paragraph (5)
shall report to the Secretary, by not later than
January 1, 1998, regarding the committee's progress on
achieving a consensus with regard to the rulemaking
proceeding and whether such consensus is likely to
occur before 1 month before the target date for
publication of the rule. If the committee reports that
the committee has failed to make significant progress
towards such consensus or is unlikely to reach such
consensus by the target date, the Secretary may
terminate such process and provide for the publication
of a rule under this subsection through such other
methods as the Secretary may provide.
``(7) Final committee report.--If the committee is
not terminated under paragraph (6), the rulemaking
committee shall submit a report containing a proposed
rule by not later than 1 month before the target date
of publication.
``(8) Interim, final effect.--The Secretary shall
publish a rule under this subsection in the Federal
Register by not later than the target date of
publication. Such rule shall be effective and final
immediately on an interim basis, but is subject to
change and revision after public notice and opportunity
for a period (of not less than 60 days) for public
comment. In connection with such rule, the Secretary
shall specify the process for the timely review and
approval of applications of entities to be certified as
provider-sponsored organizations pursuant to such rules
and consistent with this subsection.
``(9) Publication of rule after public comment.--
The Secretary shall provide for consideration of such
comments and republication of such rule by not later
than 1 year after the target date of publication.
``(b) Establishment of Other Standards.--
``(1) In general.--The Secretary shall establish by
regulation other standards (not described in subsection
(a)) for Medicare+Choice organizations and plans
consistent with, and to carry out, this part. The
Secretary shall publish such regulations by June 1,
1998. In order to carry out this requirement in a
timely manner, the Secretary may promulgate regulations
that take effect on an interim basis, after notice and
pending opportunity for public comment.
``(2) Use of current standards.--Consistent with
the requirements of this part, standards established
under this subsection shall be based on standards
established under section 1876 to carry out analogous
provisions of such section.
``(3) Relation to state laws.--
``(A) In general.--The standards
established under this subsection shall
supersede any State law or regulation
(including standards described in subparagraph
(B)) with respect to Medicare+Choice plans
which are offered by Medicare+Choice
organizations under this part to the extent
such law or regulation is inconsistent with
such standards.
``(B) Standards specifically superseded.--
State standards relating to the following are
superseded under this paragraph:
``(i) Benefit requirements.
``(ii) Requirements relating to
inclusion or treatment of providers.
``(iii) Coverage determinations
(including related appeals and
grievance processes).
``contracts with medicare+choice organizations
``Sec. 1857. (a) In General.--The Secretary shall not
permit the election under section 1851 of a Medicare+Choice
plan offered by a Medicare+Choice organization under this part,
and no payment shall be made under section 1853 to an
organization, unless the Secretary has entered into a contract
under this section with the organization with respect to the
offering of such plan. Such a contract with an organization may
cover more than 1 Medicare+Choice plan. Such contract shall
provide that the organization agrees to comply with the
applicable requirements and standards of this part and the
terms and conditions of payment as provided for in this part.
``(b) Minimum Enrollment Requirements.--
``(1) In general.--Subject to paragraph (2), the
Secretary may not enter into a contract under this
section with a Medicare+Choice organization unless the
organization has--
``(A) at least 5,000 individuals (or 1,500
individuals in the case of an organization that
is a provider-sponsored organization) who are
receiving health benefits through the
organization, or
``(B) at least 1,500 individuals (or 500
individuals in the case of an organization that
is a provider-sponsored organization) who are
receiving health benefits through the
organization if the organization primarily
serves individuals residing outside of
urbanized areas.
``(2) Application to msa plans.--In applying
paragraph (1) in the case of a Medicare+Choice
organization that is offering an MSA plan, paragraph
(1) shall be applied by substituting covered lives for
individuals.
``(3) Allowing transition.--The Secretary may waive
the requirement of paragraph (1) during the first 3
contract years with respect to an organization.
``(c) Contract Period and Effectiveness.--
``(1) Period.--Each contract under this section
shall be for a term of at least 1 year, as determined
by the Secretary, and may be made automatically
renewable from term to term in the absence of notice by
either party of intention to terminate at the end of
the current term.
``(2) Termination authority.--In accordance with
procedures established under subsection (h), the
Secretary may at any time terminate any such contract
if the Secretary determines that the organization--
``(A) has failed substantially to carry out
the contract;
``(B) is carrying out the contract in a
manner inconsistent with the efficient and
effective administration of this part; or
``(C) no longer substantially meets the
applicable conditions of this part.
``(3) Effective date of contracts.--The effective
date of any contract executed pursuant to this section
shall be specified in the contract, except that in no
case shall a contract under this section which provides
for coverage under an MSA plan be effective before
January 1999 with respect to such coverage.
``(4) Previous terminations.--The Secretary may not
enter into a contract with a Medicare+Choice
organization if a previous contract with that
organization under this section was terminated at the
request of the organization within the preceding 5-year
period, except in circumstances which warrant special
consideration, as determined by the Secretary.
``(5) Contracting authority.--The authority vested
in the Secretary by this part may be performed without
regard to such provisions of law or regulations
relating to the making, performance, amendment, or
modification of contracts of the United States as the
Secretary may determine to be inconsistent with the
furtherance of the purpose of this title.
``(d) Protections Against Fraud and Beneficiary
Protections.--
``(1) Periodic auditing.--The Secretary shall
provide for the annual auditing of the financial
records (including data relating to medicare
utilization, costs, and computation of the adjusted
community rate) of at least one-third of the
Medicare+Choice organizations offering Medicare+Choice
plans under this part. The Comptroller General shall
monitor auditing activities conducted under this
subsection.
``(2) Inspection and audit.--Each contract under
this section shall provide that the Secretary, or any
person or organization designated by the Secretary--
``(A) shall have the right to inspect or
otherwise evaluate (i) the quality,
appropriateness, and timeliness of services
performed under the contract, and (ii) the
facilities of the organization when there is
reasonable evidence of some need for such
inspection, and
``(B) shall have the right to audit and
inspect any books and records of the
Medicare+Choice organization that pertain (i)
to the ability of the organization to bear the
risk of potential financial losses, or (ii) to
services performed or determinations of amounts
payable under the contract.
``(3) Enrollee notice at time of termination.--Each
contract under this section shall require the
organization to provide (and pay for) written notice in
advance of the contract's termination, as well as a
description of alternatives for obtaining benefits
under this title, to each individual enrolled with the
organization under this part.
``(4) Disclosure.--
``(A) In general.--Each Medicare+Choice
organization shall, in accordance with
regulations of the Secretary, report to the
Secretary financial information which shall
include the following:
``(i) Such information as the
Secretary may require demonstrating
that the organization has a fiscally
sound operation.
``(ii) A copy of the report, if
any, filed with the Health Care
Financing Administration containingthe
information required to be reported under section 1124 by disclosing
entities.
``(iii) A description of
transactions, as specified by the
Secretary, between the organization and
a party in interest. Such transactions
shall include--
``(I) any sale or exchange,
or leasing of any property
between the organization and a
party in interest;
``(II) any furnishing for
consideration of goods,
services (including management
services), or facilities
between the organization and a
party in interest, but not
including salaries paid to
employees for services provided
in the normal course of their
employment and health services
provided to members by
hospitals and other providers
and by staff, medical group (or
groups), individual practice
association (or associations),
or any combination thereof; and
``(III) any lending of
money or other extension of
credit between an organization
and a party in interest.
The Secretary may require that information
reported respecting an organization which
controls, is controlled by, or is under common
control with, another entity be in the form of
a consolidated financial statement for the
organization and such entity.
``(B) Party in interest defined.--For the
purposes of this paragraph, the term `party in
interest' means--
``(i) any director, officer,
partner, or employee responsible for
management or administration of a
Medicare+Choice organization, any
person who is directly or indirectly
the beneficial owner of more than 5
percent of the equity of the
organization, any person who is the
beneficial owner of a mortgage, deed of
trust, note, or other interest secured
by, and valuing more than 5 percent of
the organization, and, in the case of a
Medicare+Choice organization organized
as a nonprofit corporation, an
incorporator or member of such
corporation under applicable State
corporation law;
``(ii) any entity in which a person
described in clause (i)--
``(I) is an officer or
director;
``(II) is a partner (if
such entity is organized as a
partnership);
``(III) has directly or
indirectly a beneficial
interest of more than 5 percent
of the equity; or
``(IV) has a mortgage, deed
of trust, note, or other
interest valuing more than 5
percent of the assets of such
entity;
``(iii) any person directly or
indirectly controlling, controlled by,
or under common control with an
organization; and
``(iv) any spouse, child, or parent
of an individual described in clause
(i).
``(C) Access to information.--Each
Medicare+Choice organization shall make the
information reported pursuant to subparagraph
(A) available to its enrollees upon reasonable
request.
``(5) Loan information.--The contract shall require
the organization to notify the Secretary of loans and
other special financial arrangements which are made
between the organization and subcontractors,
affiliates, and related parties.
``(e) Additional Contract Terms.--
``(1) In general.--The contract shall contain such
other terms and conditions not inconsistent with this
part (including requiring the organization to provide
the Secretary with such information) as the Secretary
may find necessary and appropriate.
``(2) Cost-sharing in enrollment-related costs.--
``(A) In general.--A Medicare+Choice
organization shall pay the fee established by
the Secretary under subparagraph (B).
``(B) Authorization.--The Secretary is
authorized to charge a fee to each
Medicare+Choice organization with a contract
under this part that is equal to the
organization's pro rata share (as determined by
the Secretary) of the aggregate amount of fees
which the Secretary is directed to collect in a
fiscal year. Any amounts collected are
authorized to be appropriated only for the
purpose of carrying out section 1851 (relating
to enrollment and dissemination of information)
and section 4360 of the Omnibus Budget
Reconciliation Act of 1990 (relating to the
health insurance counseling and assistance
program).
``(C) Contingency.--For any fiscal year,
the fees authorized under subparagraph (B) are
contingent upon enactment in an appropriations
act of a provision specifying the aggregate
amount of fees the Secretary is directed to
collect in a fiscal year. Fees collected during
any fiscal year under this paragraph shall be
deposited and credited as offsetting
collections.
``(D) Limitation.--In any fiscal year the
fees collected by the Secretary under
subparagraph (B) shall not exceed the lesser
of--
``(i) the estimated costs to be
incurred by the Secretary in the fiscal
year in carrying out the activities
described in section 1851 and section
4360 of the Omnibus Budget
Reconciliation Act of 1990; or
``(ii)(I) $200,000,000 in fiscal
year 1998;
``(II) $150,000,000 in fiscal year
1999; and
``(III) $100,000,000 in fiscal year
2000 and each subsequent fiscal year.
``(f) Prompt Payment by Medicare+Choice Organization.--
``(1) Requirement.--A contract under this part
shall require a Medicare+Choice organization to provide
prompt payment (consistent with the provisions of
sections 1816(c)(2) and 1842(c)(2)) of claims submitted
for services and supplies furnished to enrollees
pursuant to the contract, if the services or supplies
are not furnished under a contract between the
organization and the provider or supplier (or in the
case of a Medicare+Choice private fee-for-service plan,
if a claim is submitted to such organization by an
enrollee).
``(2) Secretary's option to bypass noncomplying
organization.--In the case of a Medicare+Choice
eligible organization which the Secretary determines,
after notice and opportunity for a hearing, has failed
to make payments of amounts in compliance with
paragraph (1), the Secretary may provide for direct
payment of the amounts owed to providers and suppliers
(or, in the case of a Medicare+Choice private fee-for-
service plan, amounts owed to the enrollees) for
covered services and supplies furnished to individuals
enrolled under this part under the contract. If the
Secretary provides for the direct payments, the
Secretary shall provide for an appropriate reduction in
the amount of payments otherwise made to the
organization under this part to reflect the amount of
the Secretary's payments (and the Secretary's costs in
making the payments).
``(g) Intermediate Sanctions.--
``(1) In general.--If the Secretary determines that
a Medicare+Choice organization with a contract under
this section--
``(A) fails substantially to provide
medically necessary items and services that are
required (under law or under the contract) to
be provided to an individual covered under the
contract, if the failure has adverselyaffected
(or has substantial likelihood of adversely affecting) the individual;
``(B) imposes premiums on individuals
enrolled under this part in excess of the
amount of the Medicare+Choice monthly basic and
supplemental beneficiary premiums permitted
under section 1854;
``(C) acts to expel or to refuse to re-
enroll an individual in violation of the
provisions of this part;
``(D) engages in any practice that would
reasonably be expected to have the effect of
denying or discouraging enrollment (except as
permitted by this part) by eligible individuals
with the organization whose medical condition
or history indicates a need for substantial
future medical services;
``(E) misrepresents or falsifies
information that is furnished--
``(i) to the Secretary under this
part, or
``(ii) to an individual or to any
other entity under this part;
``(F) fails to comply with the applicable
requirements of section 1852(j)(3) or
1852(k)(2)(A)(ii); or
``(G) employs or contracts with any
individual or entity that is excluded from
participation under this title under section
1128 or 1128A for the provision of health care,
utilization review, medical social work, or
administrative services or employs or contracts
with any entity for the provision (directly or
indirectly) through such an excluded individual
or entity of such services;
the Secretary may provide, in addition to any other
remedies authorized by law, for any of the remedies
described in paragraph (2).
``(2) Remedies.--The remedies described in this
paragraph are--
``(A) civil money penalties of not more
than $25,000 for each determination under
paragraph (1) or, with respect to a
determination under subparagraph (D) or (E)(i)
of such paragraph, of not more than $100,000
for each such determination, plus, with respect
to a determination under paragraph (1)(B),
double the excess amount charged in violation
of such paragraph (and the excess amount
charged shall be deducted from the penalty and
returned to the individual concerned), and
plus, with respect to a determination under
paragraph (1)(D), $15,000 for each individual
not enrolled as a result of the practice
involved,
``(B) suspension of enrollment of
individuals under this part after the date the
Secretary notifies the organization of a
determination under paragraph (1) and until the
Secretary is satisfied that the basis for such
determination has been corrected and is not
likely to recur, or
``(C) suspension of payment to the
organization under this part for individuals
enrolled after the date the Secretary notifies
the organization of a determination under
paragraph (1) and until the Secretary is
satisfied that the basis for such determination
has been corrected and is not likely to recur.
``(3) Other intermediate sanctions.--In the case of
a Medicare+Choice organization for which the Secretary
makes a determination under subsection (c)(2) the basis
of which is not described in paragraph (1), the
Secretary may apply the following intermediate
sanctions:
``(A) Civil money penalties of not more
than $25,000 for each determination under
subsection (c)(2) if the deficiency that is the
basis of the determination has directly
adversely affected (or has the substantial
likelihood of adversely affecting) an
individual covered under the organization's
contract.
``(B) Civil money penalties of not more
than $10,000 for each week beginning after the
initiation of civil money penalty procedures by
the Secretary during which the deficiency that
is the basis of a determination under
subsection (c)(2) exists.
``(C) Suspension of enrollment of
individuals under this part after the date the
Secretary notifies the organization of a
determination under subsection (c)(2) and until
the Secretary is satisfied that the deficiency
that is the basis for the determination has
been corrected and is not likely to recur.
``(4) Civil money penalties.--The provisions of
section 1128A (other than subsections (a) and (b))
shall apply to a civil money penalty under paragraph
(2) or (3) in the same manner as they apply to a civil
money penalty or proceeding under section 1128A(a).
``(h) Procedures for Termination.--
``(1) In general.--The Secretary may terminate a
contract with a Medicare+Choice organization under this
section in accordance with formal investigation and
compliance procedures established by the Secretary
under which--
``(A) the Secretary provides the
organization with the reasonable opportunity to
develop and implement a corrective action plan
to correct the deficiencies that were the basis
of the Secretary's determination under
subsection (c)(2); and
``(B) the Secretary provides the
organization with reasonable notice and
opportunity for hearing (including the right to
appeal an initial decision) before terminating
the contract.
``(2) Exception for imminent and serious risk to
health.--Paragraph (1) shall not apply if the Secretary
determines that a delay in termination, resulting from
compliance with the procedures specified in such
paragraph prior to termination, would pose an imminent
and serious risk to the health of individuals enrolled
under this part with the organization.
``definitions; miscellaneous provisions
``Sec. 1859. (a) Definitions Relating to Medicare+Choice
Organizations.--In this part--
``(1) Medicare+choice organization.--The term
`Medicare+Choice organization' means a public or
private entity that is certified under section 1856 as
meeting the requirements and standards of this part for
such an organization.
``(2) Provider-sponsored organization.--The term
`provider-sponsored organization' is defined in section
1855(d)(1).
``(b) Definitions Relating to Medicare+Choice Plans.--
``(1) Medicare+choice plan.--The term
`Medicare+Choice plan' means health benefits coverage
offered under a policy, contract, or plan by a
Medicare+Choice organization pursuant to and in
accordance with a contract under section 1857.
``(2) Medicare+Choice private fee-for-service
plan.--The term `Medicare+Choice private fee-for-
service plan' means a Medicare+Choice plan that--
``(A) reimburses hospitals, physicians, and
other providers at a rate determined by the
plan on a fee-for-service basis without placing
the provider at financial risk;
``(B) does not vary such rates for such a
provider based on utilization relating to such
provider; and
``(C) does not restrict the selection of
providers among those who are lawfully
authorized to provide the covered services and
agree to accept the terms and conditions of
payment established by the plan.
``(3) MSA plan.--
``(A) In general.--The term `MSA plan'
means a Medicare+Choice plan that--
``(i) provides reimbursement for at
least the items and services described
in section 1852(a)(1) in a year but
only after the enrollee incurs
countable expenses (as specified under
the plan) equal to the amount of an
annual deductible (described in
subparagraph (B));
``(ii) counts as such expenses (for
purposes of such deductible) at least
all amounts that would have been
payable under parts A and B, and that
would have been payable by the enrollee
as deductibles, coinsurance, or
copayments, if the enrollee had elected
to receive benefits through the
provisions of such parts; and
``(iii) provides, after such
deductible is met for a year and for
all subsequent expenses for items and
services referred to in clause (i) in
the year, for a level of reimbursement
that is not less than--
``(I) 100 percent of such
expenses, or
``(II) 100 percent of the
amounts that would have been
paid (without regard to any
deductibles or coinsurance)
under parts A and B with
respect to such expenses,
whichever is less.
``(B) Deductible.--The amount of annual
deductible under an MSA plan--
``(i) for contract year 1999 shall
be not more than $6,000; and
``(ii) for a subsequent contract
year shall be not more than the maximum
amount of such deductible for the
previous contract year under this
subparagraph increased by the national
per capita Medicare+Choice growth
percentage under section 1853(c)(6) for
the year.
If the amount of the deductible under clause
(ii) is not a multiple of $50, the amount shall
be rounded to the nearest multiple of $50.
``(c) Other References to Other Terms.--
``(1) Medicare+choice eligible individual.--The
term `Medicare+Choice eligible individual' is defined
in section 1851(a)(3).
``(2) Medicare+choice payment area.--The term
`Medicare+Choice payment area' is defined in section
1853(d).
``(3) National per capita medicare+choice growth
percentage.--The `national per capita Medicare+Choice
growth percentage' is defined in section 1853(c)(6).
``(4) Medicare+choice monthly basic beneficiary
premium; medicare+choice monthly supplemental
beneficiary premium.--The terms `Medicare+Choice
monthly basic beneficiary premium' and `Medicare+Choice
monthly supplemental beneficiary premium' are defined
in section 1854(a)(2).
``(d) Coordinated Acute and Long-Term Care Benefits Under a
Medicare+Choice Plan.--Nothing in this part shall be construed
as preventing a State from coordinating benefits under a
medicaid plan under title XIX with those provided under a
Medicare+Choice plan in a manner that assures continuity of a
full-range of acute care and long-term care services to poor
elderly or disabled individuals eligible for benefits under
this title and under such plan.
``(e) Restriction on Enrollment for Certain Medicare+Choice
Plans.--
``(1) In general.--In the case of a Medicare+Choice
religious fraternal benefit society plan described in
paragraph (2), notwithstanding any other provision of
this part to the contrary and in accordance with
regulations of the Secretary, the society offering the
plan may restrict the enrollment of individuals under
this part to individuals who are members of thechurch,
convention, or group described in paragraph (3)(B) with which the
society is affiliated.
``(2) Medicare+choice religious fraternal benefit
society plan described.--For purposes of this
subsection, a Medicare+Choice religious fraternal
benefit society plan described in this paragraph is a
Medicare+Choice plan described in section 1851(a)(2)(A)
that--
``(A) is offered by a religious fraternal
benefit society described in paragraph (3) only
to members of the church, convention, or group
described in paragraph (3)(B); and
``(B) permits all such members to enroll
under the plan without regard to health status-
related factors.
Nothing in this subsection shall be construed as
waiving any plan requirements relating to financial
solvency.
``(3) Religious fraternal benefit society
defined.--For purposes of paragraph (2)(A), a
`religious fraternal benefit society' described in this
section is an organization that--
``(A) is described in section 501(c)(8) of
the Internal Revenue Code of 1986 and is exempt
from taxation under section 501(a) of such Act;
``(B) is affiliated with, carries out the
tenets of, and shares a religious bond with, a
church or convention or association of churches
or an affiliated group of churches;
``(C) offers, in addition to a
Medicare+Choice religious fraternal benefit
society plan, health coverage to individuals
not entitled to benefits under this title who
are members of such church, convention, or
group; and
``(D) does not impose any limitation on
membership in the society based on any health
status-related factor.
``(4) Payment adjustment.--Under regulations of the
Secretary, in the case of individuals enrolled under
this part under a Medicare+Choice religious fraternal
benefit society plan described in paragraph (2), the
Secretary shall provide for such adjustment to the
payment amounts otherwise established under section
1854 as may be appropriate to assure an appropriate
payment level, taking into account the actuarial
characteristics and experience of such individuals.''.
SEC. 4002. TRANSITIONAL RULES FOR CURRENT MEDICARE HMO PROGRAM.
(a) Authorizing Transitional Waiver of 50:50 Rule.--Section
1876(f) (42 U.S.C. 1395mm(f)) is amended--
(1) in paragraph (1)--
(A) by striking ``Each'' and inserting
``For contract periods beginning before January
1, 1999, each''; and
(B) by striking ``or under a State plan
approved under title XIX'';
(2) in paragraph (2), by striking ``The Secretary''
and inserting ``Subject to paragraph (4), the
Secretary'', and
(3) by adding at the end the following:
``(4) Effective for contract periods beginning after
December 31, 1996, the Secretary may waive or modify the
requirement imposed by paragraph (1) to the extent the
Secretary finds that it is in the public interest.''.
(b) Transition.--
(1) Risk-sharing contracts.--Section 1876 (42
U.S.C. 1395mm) is amended by adding at the end the
following new subsections:
``(k)(1) Except as provided in paragraph (2)--
``(A) on or after the date standards for
Medicare+Choice organizations and plans are first
established under section 1856(b)(1), the Secretary
shall not enter into any risk-sharing contract under
this section with an eligible organization; and
``(B) for any contract year beginning on or after
January 1, 1999, the Secretary shall not renew any such
contract.
``(2) An individual who is enrolled in part B only and is
enrolled in an eligible organization with a risk-sharing
contract under this section on December 31, 1998, may continue
enrollment in such organization in accordance with regulations
described in section 1856(b)(1).
``(3) Notwithstanding subsection (a), the Secretary shall
provide that payment amounts under risk-sharing contracts under
this section for months in a year (beginning with January 1998)
shall be computed--
``(A) with respect to individuals entitled to
benefits under both parts A and B, by substituting
payment ratesunder section 1853(a) for the payment
rates otherwise established under section 1876(a), and
``(B) with respect to individuals only entitled to
benefits under part B, by substituting an appropriate
proportion of such rates (reflecting the relative
proportion of payments under this title attributable to
such part) for the payment rates otherwise established
under subsection (a).
``(4) The following requirements shall apply to eligible
organizations with risk-sharing contracts under this section in
the same manner as they apply to Medicare+Choice organizations
under part C:
``(A) Data collection requirements under section
1853(a)(3)(B).
``(B) Restrictions on imposition of premium taxes
under section 1854(g) in relating to payments to such
organizations under this section.
``(C) The requirement to accept enrollment of new
enrollees during November 1998 under section
1851(e)(6).
``(D) Payments under section 1857(e)(2).''.
(2) Reasonable cost contracts.--
(A) Phase out of contracts.--Section
1876(h) (42 U.S.C. 1395mm(h)) is amended by
adding at the end the following:
``(5)(A) After the date of the enactment of this paragraph,
the Secretary may not enter into a reasonable cost
reimbursement contract under this subsection (if the contract
is not in effect as of such date), except for a contract with
an eligible organization which, immediately previous to
entering into such contract, had an agreement in effect under
section 1833(a)(1)(A).
``(B) The Secretary may not extend or renew a reasonable
cost reimbursement contract under this subsection for any
period beyond December 31, 2002.''.
(B) Report on impact.--By not later than
January 1, 2001, the Secretary of Health and
Human Services shall submit to Congress a
report that analyzes the potential impact of
termination of reasonable cost reimbursement
contracts, pursuant to the amendment made by
subparagraph (A), on medicare beneficiaries
enrolled under such contracts and on the
medicare program. The report shall include such
recommendations regarding any extension or
transition with respect to such contracts as
the Secretary deems appropriate.
(c) Enrollment Transition Rule.--An individual who is
enrolled on December 31, 1998, with an eligible organization
under section 1876 of the Social Security Act (42 U.S.C.
1395mm) shall be considered to be enrolled with that
organization on January 1, 1999, under part C of title XVIII of
such Act if that organization has a contract under that part
for providing services on January 1, 1999 (unless the
individual has disenrolled effective on that date).
(d) Advance Directives.--Section 1866(f) (42 U.S.C.
1395cc(f)) is amended--
(1) in paragraph (1)--
(A) by inserting ``1855(i),'' after
``1833(s),'', and
(B) by inserting ``, Medicare+Choice
organization,'' after ``provider of services'';
and
(2) in paragraph (2)(E), by inserting ``or a
Medicare+Choice organization'' after ``section
1833(a)(1)(A)''.
(e) Extension of Provider Requirement.--Section
1866(a)(1)(O) (42 U.S.C. 1395cc(a)(1)(O)) is amended--
(1) by striking ``in the case of hospitals and
skilled nursing facilities,'';
(2) by striking ``inpatient hospital and extended
care'';
(3) by inserting ``with a Medicare+Choice
organization under part C or'' after ``any individual
enrolled'';
(4) by striking ``(in the case of hospitals) or
limits (in the case of skilled nursing facilities)'';
and
(5) by inserting ``(less any payments under
sections 1886(d)(11) and 1886(h)(3)(D))'' after ``under
this title''.
(f) Additional Conforming Changes.--
(1) Conforming references to previous part C.--Any
reference in law (in effect before the date of the
enactment of this Act) to part C of title XVIII of the
Social Security Act is deemed a reference to part D of
such title (as in effect after such date).
(2) Secretarial submission of legislative
proposal.--Not later than 6 months after the date of
the enactment of this Act, the Secretary of Health and
Human Services shall submit to the appropriate
committees of Congress a legislative proposal providing
for such technical and conforming amendments in the law
as are required by the provisions of this chapter.
(g) Immediate Effective Date for Certain Requirements for
Demonstrations.--Section 1857(e)(2) of the Social Security Act
(requiring contribution to certain costs related to the
enrollment process comparative materials) applies to
demonstrations with respect to which enrollment is effected or
coordinated under section 1851 of such Act.
(h) Transition Rule for PSO Enrollment.--In applying
subsection (g)(1) of section 1876 of the Social Security Act
(42 U.S.C. 1395mm) to a risk-sharing contract entered into with
an eligible organization that is a provider-sponsored
organization (as defined in section 1855(d)(1) of such Act, as
inserted by section 5001) for a contract year beginning on or
after January 1, 1998, there shall be substituted for the
minimum number of enrollees provided under such section the
minimum number of enrollees permitted under section 1857(b)(1)
of such Act (as so inserted).
(i) Publication of New Capitation Rates.--Not later than 4
weeks after the date of the enactment of this Act, the
Secretary of Health and Human Services shall announce the
annual Medicare+Choice capitation rates for 1998 under section
1853(b) of the Social Security Act.
(j) Elimination of Health Care Prepayment Plan Option for
Entities Eligible to Participate As Managed Care
Organization.--
(1) Elimination of option.--
(A) In general.--Section 1833(a)(1)(A) (42
U.S.C. 1395l(a)(1)(A)) is amended by inserting
``(and either is sponsored by a union or
employer, or does not provide, or arrange for
the provision of, any inpatient hospital
services)'' after ``prepayment basis''.
(B) Effective date.--The amendment made by
subparagraph (A) applies to new contracts
entered into after the date of enactment of
this Act and, with respect to contracts in
effect as of such date, shall apply to payment
for services furnished after December 31, 1998.
(2) Medigap conforming amendment.--Effective
January 1, 1999, section 1882(g)(1) (42 U.S.C.
1395ss(g)(1)) is amended by striking ``, during the
period beginning on the date specified in subsection
(p)(1)(C) and ending on December 31, 1995,''.
SEC. 4003. CONFORMING CHANGES IN MEDIGAP PROGRAM.
(a) Conforming Amendments to Medicare+Choice Changes.--
(1) In general.--Section 1882(d)(3)(A)(i) (42
U.S.C. 1395ss(d)(3)(A)(i)) is amended--
(A) in the matter before subclause (I), by
inserting ``(including an individual electing a
Medicare+Choice plan under section 1851)''
after ``of this title''; and
(B) in subclause (II)--
(i) by inserting ``in the case of
an individual not electing a
Medicare+Choice plan'' after ``(II)'',
and
(ii) by inserting before the comma
at the end the following: ``or in the
case of an individual electing a
Medicare+Choice plan, a medicare
supplemental policy with knowledge that
the policy duplicates health benefits
to which the individual is otherwise
entitled under the Medicare+Choice plan
or under another medicare supplemental
policy''.
(2) Conforming amendments.--Section
1882(d)(3)(B)(i)(I) (42 U.S.C. 1395ss(d)(3)(B)(i)(I))
is amended by inserting ``(including any
Medicare+Choice plan)'' after ``health insurance
policies''.
(3) Medicare+choice plans not treated as medicare
supplementary policies.--Section 1882(g)(1) (42 U.S.C.
1395ss(g)(1)) is amended by inserting ``or a
Medicare+Choice plan or'' after ``does not include''.
(b) Additional Rules Relating to Individuals Enrolled in
MSA Plans and Private Fee-for-Service Plans.--Section 1882 (42
U.S.C. 1395ss) is further amended by adding at the end the
following new subsection:
``(u)(1) It is unlawful for a person to sell or issue a
policy described in paragraph (2) to an individual with
knowledge that the individual has in effect under section 1851
an election of an MSA plan or a Medicare+Choice private fee-
for-service plan.
``(2)(A) A policy described in this subparagraph is a
health insurance policy (other than a policy described in
subparagraph (B)) that provides for coverage of expenses that
are otherwise required to be counted toward meeting the annual
deductible amount provided under the MSA plan.
``(B) A policy described in this subparagraph is any of the
following:
``(i) A policy that provides coverage (whether
through insurance or otherwise) for accidents,
disability, dental care, vision care, or long-term
care.
``(ii) A policy of insurance to which substantially
all of the coverage relates to--
``(I) liabilities incurred under workers'
compensation laws,
``(II) tort liabilities,
``(III) liabilities relating to ownership
or use of property, or
``(IV) such other similar liabilities as
the Secretary may specify by regulations.
``(iii) A policy of insurance that provides
coverage for a specified disease or illness.
``(iv) A policy of insurance that pays a fixed
amount per day (or other period) of hospitalization.''.
Subchapter B--Special Rules for Medicare+Choice Medical Savings
Accounts
SEC. 4006. MEDICARE+CHOICE MSA.
(a) In General.--Part III of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 (relating to amounts
specifically excluded from gross income) is amended by
redesignating section 138 as section 139 and by inserting after
section 137 the following new section:
``SEC. 138. MEDICARE+CHOICE MSA.
``(a) Exclusion.--Gross income shall not include any
payment to the Medicare+Choice MSA of an individual by the
Secretary of Health and Human Services under part C of title
XVIII of the Social Security Act.
``(b) Medicare+Choice MSA.--For purposes of this section,
the term `Medicare+Choice MSA' means a medical savings account
(as defined in section 220(d))--
``(1) which is designated as a Medicare+Choice MSA,
``(2) with respect to which no contribution may be
made other than--
``(A) a contribution made by the Secretary
of Health and Human Services pursuant to part C
of title XVIII of the Social Security Act, or
``(B) a trustee-to-trustee transfer
described in subsection (c)(4),
``(3) the governing instrument of which provides
that trustee-to-trustee transfers described in
subsection (c)(4) may be made to and from such account,
and
``(4) which is established in connection with an
MSA plan described in section 1859(b)(3) of the Social
Security Act.
``(c) Special Rules for Distributions.--
``(1) Distributions for qualified medical
expenses.--In applying section 220 to a Medicare+Choice
MSA--
``(A) qualified medical expenses shall not
include amounts paid for medical care for any
individual other than the account holder, and
``(B) section 220(d)(2)(C) shall not apply.
``(2) Penalty for distributions from
medicare+choice msa not used for qualified medical
expenses if minimum balance not maintained.--
``(A) In general.--The tax imposed by this
chapter for any taxable year in which there is
a payment or distribution from a
Medicare+Choice MSA which is not used
exclusively to pay the qualified medical
expenses of the account holder shall be
increased by 50 percent of the excess (if any)
of--
``(i) the amount of such payment or
distribution, over
``(ii) the excess (if any) of--
``(I) the fair market value
of the assets in such MSA as of
the close of the calendar year
preceding the calendar year in
which the taxable year begins,
over
``(II) an amount equal to
60 percent of the deductible
under the Medicare+Choice MSA
plan covering the account
holder as of January 1 of the
calendar year in which the
taxable year begins.
Section 220(f)(4) shall not apply to any
payment or distribution from a Medicare+Choice
MSA.
``(B) Exceptions.--Subparagraph (A) shall
not apply if the payment or distribution is
made on or after the date the account holder--
``(i) becomes disabled within the
meaning of section 72(m)(7), or
``(ii) dies.
``(C) Special rules.--For purposes of
subparagraph (A)--
``(i) all Medicare+Choice MSAs of
the account holder shall be treated as
1 account,
``(ii) all payments and
distributions not used exclusively to
pay the qualified medical expenses of
the account holder during any taxable
year shall be treated as 1
distribution, and
``(iii) any distribution of
property shall be taken into account at
its fair market value on the date of
the distribution.
``(3) Withdrawal of erroneous contributions.--
Section 220(f)(2) and paragraph (2) of this subsection
shall not apply to any payment or distribution from a
Medicare+Choice MSA to the Secretary of Health and
Human Services of an erroneous contribution to such MSA
and of the net income attributable to such
contribution.
``(4) Trustee-to-trustee transfers.--Section
220(f)(2) and paragraph (2) of this subsection shall
not apply to any trustee-to-trustee transfer from a
Medicare+Choice MSA of an account holder to another
Medicare+Choice MSA of such account holder.
``(d) Special Rules for Treatment of Account After Death of
Account Holder.--In applying section 220(f)(8)(A) to an account
which was a Medicare+Choice MSA of a decedent, the rules of
section 220(f) shall apply in lieu of the rules of subsection
(c) of this section with respect to the spouse as the account
holder of such Medicare+Choice MSA.
``(e) Reports.--In the case of a Medicare+Choice MSA, the
report under section 220(h)--
``(1) shall include the fair market value of the
assets in such Medicare+Choice MSA as of the close of
each calendar year, and
``(2) shall be furnished to the account holder--
``(A) not later than January 31 of the
calendar year following the calendar year to
which such reports relate, and
``(B) in such manner as the Secretary
prescribes in such regulations.
``(f) Coordination With Limitation on Number of Taxpayers
Having Medical Savings Accounts.--Subsection (i) of section 220
shall not apply to an individual with respect to a
Medicare+Choice MSA, and Medicare+Choice MSA's shall not be
taken into account in determining whether the numerical
limitations under section 220(j) are exceeded.''.
(b) Technical Amendments.--
(1) The last sentence of section 4973(d) of such
Code is amended by inserting ``or section 138(c)(3)''
after ``section 220(f)(3)''.
(2) Subsection (b) of section 220 of such Code is
amended by adding at the end the following new
paragraph:
``(7) Medicare eligible individuals.--The
limitation under this subsection for any month with
respect to an individual shall be zero for the first
month such individual is entitled to benefits under
title XVIII of the Social Security Act and for each
month thereafter.''.
(3) The table of sections for part III of
subchapter B of chapter 1 of such Code is amended by
striking the last item and inserting the following:
``Sec. 138. Medicare+Choice MSA.
``Sec. 139. Cross references to other Acts.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 1998.
CHAPTER 2--DEMONSTRATIONS
Subchapter A--Medicare+Choice Competitive Pricing Demonstration Project
SEC. 4011. MEDICARE PREPAID COMPETITIVE PRICING DEMONSTRATION PROJECT.
(a) Establishment of Project.--The Secretary of Health and
Human Services (in this subchapter referred to as the
``Secretary'') shall establish a demonstration project (in this
subchapter referred to as the ``project'') under which payments
to Medicare+Choice organizations in medicare payment areas in
which the project is being conducted are determined in
accordance with a competitive pricing methodology established
under this subchapter.
(b) Designation of 7 Medicare Payment Areas Covered by
Project.--
(1) In general.--The Secretary shall designate, in
accordance with the recommendations of the Competitive
Pricing Advisory Committee under paragraphs (2) and
(3), medicare payment areas as areas in which the
project under this subchapter will be conducted. In
this section, the term ``Competitive Pricing Advisory
Committee'' means the Competitive Pricing Advisory
Committee established under section 4012(a).
(2) Initial designation of 4 areas.--
(A) In general.--The Competitive Pricing
Advisory Committee shall recommend to the
Secretary, consistent with subparagraph (B),
the designation of 4 specific areas as medicare
payment areas to be included in the project.
Such recommendations shall be made in a manner
so as to ensure that payments under the project
in 2 such areas will begin on January 1, 1999,
and in 2 such areas will begin on January 1,
2000.
(B) Location of designation.--Of the 4
areas recommended under subparagraph (A), 3
shall be in urban areas and 1 shall be in a
rural area.
(3) Designation of additional 3 areas.--Not later
than December 31, 2001, the Competitive Pricing
Advisory Committee may recommend to the Secretary the
designation of up to 3 additional, specific medicare
payment areas to be included in the project.
(c) Project Implementation.--
(1) In general.--Subject to paragraph (2), the
Secretary shall for each medicare payment area
designated under subsection (b)--
(A) in accordance with the recommendations
of the Competitive Pricing Advisory Committee--
(i) establish the benefit design
among plans offered in such area, and
(ii) structure the method for
selecting plans offered in such area;
and
(B) in consultation with such Committee--
(i) establish methods for setting
the price to be paid to plans,
including, if the Secretaries
determines appropriate, the rewarding
and penalizing of Medicare+Choice plans
in the area on the basis of the
attainment of, or failure to attain,
applicable quality standards, and
(ii) provide for the collection of
plan information (including information
concerning quality and access to care),
the dissemination of information, and
the methods of evaluating the results
of the project.
(2) Consultation.--The Secretary shall take into
account the recommendations of the area advisory
committee established in section 4012(b), in
implementing a project design for any area, except that
no modifications may be made in the project design
without consultation with the Competitive Pricing
Advisory Committee. In no case may the Secretary change
the designation of an area based on recommendations of
any area advisory committee.
(d) Monitoring and Report.--
(1) Monitoring impact.--Taking into consideration
the recommendations of the Competitive Pricing Advisory
Committee and the area advisory committees, the
Secretary shall closely monitor and measure the impact
of the project in the different areas on the price and
quality of, and access to, medicare covered services,
choice of health plans, changes in enrollment, and
other relevant factors.
(2) Report.--Not later than December 31, 2002, the
Secretary shall submit to Congress a report on the
progress under the project under this subchapter,
including a comparison of the matters monitored under
paragraph (1) among the different designated areas. The
report may include any legislative recommendations for
extending the project to the entire medicare
population.
(e) Waiver Authority.--The Secretary of Health and Human
Services may waive such requirements of title XVIII of the
Social Security Act (as amended by this Act) as may be
necessary for the purposes of carrying out the project.
(f) Relationship to Other Authority.--Except pursuant to
this subchapter, the Secretary of Health and Human Services may
not conduct or continue any medicare demonstration project
relating to payment of health maintenance organizations,
Medicare+Choice organizations, or similar prepaid managed care
entities on the basis of a competitive bidding process or
pricing system described in subsection (a).
(g) No Additional Costs to Medicare Program.--The aggregate
payments to Medicare+Choice organizations under the project for
any designated area for a fiscal year may not exceed the
aggregate payments to such organizations that would have been
made under title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.), as amended by section 4001, if the project had
not been conducted.
(h) Definitions.--Any term used in this subchapter which is
also used in part C of title XVIII of the Social Security Act,
as amended by section 4001, shall have the same meaning as when
used in such part.
SEC. 4012. ADVISORY COMMITTEES.
(a) Competitive Pricing Advisory Committee.--
(1) In general.--Before implementing the project
under this subchapter, the Secretary shall appoint the
Competitive Pricing Advisory Committee, including
independent actuaries, individuals with expertise in
competitive health plan pricing, and an employee of the
Office of Personnel Management with expertise in the
administration of the Federal Employees Health Benefit
Program, to make recommendations to the Secretary
concerning the designation of areas for inclusion in
the project and appropriate research design for
implementing the project.
(2) Initial recommendations.--The Competitive
Pricing Advisory Committee initially shall submit
recommendations regarding the area selection, benefit
design among plans offered, structuring choice among
health plans offered, methods for setting the price to
be paid to plans, collection of plan information
(including information concerning quality and access to
care), information dissemination, and methods of
evaluating the results of the project.
(3) Quality recommendation.--The Competitive
Pricing Advisory Committee shall study and make
recommendations regarding the feasibility of providing
financial incentives and penalties to plans operating
under the project that meet, or fail to meet,
applicable quality standards.
(4) Advice during implementation.--Upon
implementation of the project, the Competitive Pricing
Advisory Committee shall continue to advise the
Secretary on the application of the design in different
areas and changes in the project based on experience
with its operations.
(5) Sunset.--The Competitive Pricing Advisory
Committee shall terminate on December 31, 2004.
(b) Appointment of Area Advisory Committee.--Upon the
designation of an area for inclusion in the project, the
Secretary shall appoint an area advisory committee, composed of
representatives of health plans, providers, and medicare
beneficiaries in the area, to advise the Secretary concerning
how the project will be implemented in the area. Such advice
may include advice concerning the marketing and pricing of
plans in the area and other salient factors. The duration of
such a committee for an area shall be for the duration of the
operation of the project in the area.
(c) Special application.--Notwithstanding section 9(c) of
the Federal Advisory Committee Act (5 U.S.C. App.), the
Competitive Pricing Advisory Commission and any area advisory
committee (described in subsection (b)) may meet as soon as the
members of the commission or committee, respectively, are
appointed.
Subchapter B--Social Health Maintenance Organizations
SEC. 4014. SOCIAL HEALTH MAINTENANCE ORGANIZATIONS (SHMOS).
(a) Extension of Demonstration Project Authorities.--
Section 4018(b) of the Omnibus Budget Reconciliation Act of
1987 is amended--
(1) in paragraph (1), by striking ``1997'' and
inserting ``2000'', and
(2) in paragraph (4), by striking ``1998'' and
inserting ``2001''.
(b) Expansion of Cap.--Section 13567(c) of the Omnibus
Budget Reconciliation Act of 1993 is amended by striking
``12,000'' and inserting ``36,000''.
(c) Report on Integration and Transition.--
(1) In general.--The Secretary of Health and Human
Services shall submit to Congress, by not later than
January 1, 1999, a plan for the integration of health
plans offered by social health maintenance
organizations (including SHMO I and SHMO II sites
developed under section 2355 of the Deficit Reduction
Act of 1984 and under the amendment made by section
4207(b)(3)(B)(i) of OBRA-1990, respectively) and
similar plans as an option under the Medicare+Choice
program under part C of title XVIII of the Social
Security Act.
(2) Provision for transition.--Such plan shall
include a transition for social health maintenance
organizations operating under demonstration project
authority under such section.
(3) Payment policy.--The report shall also include
recommendations on appropriate payment levels for plans
offered by such organizations, including an analysis of
the application of risk adjustment factors appropriate
to the population served by such organizations.
Subchapter C--Medicare Subvention Demonstration Project for Military
Retirees
SEC. 4015. MEDICARE SUBVENTION DEMONSTRATION PROJECT FOR MILITARY
RETIREES.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) (as
amended by sections 4603 and 4801) is amended by adding at the
end the following:
``medicare subvention demonstration project for military retirees
``Sec. 1896. (a) Definitions.--In this section:
``(1) Administering secretaries.--The term
`administering Secretaries' means the Secretary and the
Secretary of Defense acting jointly.
``(2) Demonstration project; project.--The terms
`demonstration project' and `project' mean the
demonstration project carried out under this section.
``(3) Designated provider.--The term `designated
provider' has the meaning given that term in section
721(5) of the National Defense Authorization Act For
Fiscal Year 1997 (Public Law 104-201; 110 Stat. 2593;
10 U.S.C. 1073 note).
``(4) Medicare-eligible military retiree or
dependent.--The term `medicare-eligible military
retiree or dependent' means an individual described in
section 1074(b) or 1076(b) of title 10, United States
Code, who--
``(A) would be eligible for health benefits
under section 1086 of such title by reason of
subsection (c)(1) of such section 1086 but for
the operation of subsection (d) of such section
1086;
``(B)(i) is entitled to benefits under part
A of this title; and
``(ii) if the individual was entitled to
such benefits before July 1, 1997, received
health care items or services from a health
care facility of the uniformed services before
that date, but after becoming entitled to
benefits under part A of this title;
``(C) is enrolled for benefits under part B
of this title; and
``(D) has attained age 65.
``(5) Medicare health care services.--The term
`medicare health care services' means items or services
covered under part A or B of this title.
``(6) Military treatment facility.--The term
`military treatment facility' means a facility referred
to in section 1074(a) of title 10, United States Code.
``(7) TRICARE.--The term `TRICARE' has the same
meaning as the term `TRICARE program' under section 711
of the National Defense Authorization Act for Fiscal
Year 1996 (10 U.S.C. 1073 note).
``(8) Trust funds.--The term `trust funds' means
the Federal Hospital Insurance Trust Fund established
in section 1817 and the Federal Supplementary Medical
Insurance Trust Fund established in section 1841.
``(b) Demonstration Project.--
``(1) In general.--
``(A) Establishment.--The administering
Secretaries are authorized to establish a
demonstration project (under an agreement
entered into by the administering Secretaries)
under which the Secretary shall reimburse the
Secretary of Defense, from the trust funds, for
medicare health care services furnished to
certain medicare-eligible military retirees or
dependents in a military treatment facility or
by a designated provider.
``(B) Agreement.--The agreement entered
into under subparagraph (A) shall include at a
minimum--
``(i) a description of the benefits
to be provided to the participants of
the demonstration project established
under this section;
``(ii) a description of the
eligibility rules for participation in
the demonstration project, including
any cost sharing requirements;
``(iii) a description of how the
demonstration project will satisfy the
requirements under this title;
``(iv) a description of the sites
selected under paragraph (2);
``(v) a description of how
reimbursement requirements under
subsection (i) and maintenance of
effort requirements under subsection
(j) will be implemented in the
demonstration project;
``(vi) a statement that the
Secretary shall have access to all data
of the Department of Defense that the
Secretary determines is necessary to
conduct independent estimates and
audits of the maintenance of effort
requirement, the annual reconciliation,
and related matters required under the
demonstration project;
``(vii) a description of any
requirement that the Secretary waives
pursuant to subsection (d); and
``(viii) a certification, provided
after review by the administering
Secretaries, that any entity that is
receiving payments by reason of the
demonstration project has sufficient--
``(I) resources and
expertise to provide,
consistent with payments under
subsection (i), the full range
of benefits required to be
provided to beneficiaries under
the project; and
``(II) information and
billing systems in place to
ensure the accurate and timely
submission of claims for
benefits and to ensure that
providers of services,
physicians, and other health
care professionals are
reimbursed by the entity in a
timely and accurate manner.
``(2) Number of sites.--The project established
under this section shall be conducted in no more than 6
sites, designated jointly by the administering
Secretaries after review of all TRICARE regions.
``(3) Restriction.--No new military treatment
facilities will be built or expanded with funds from
the demonstration project.
``(4) Duration.--The administering Secretaries
shall conduct the demonstration project during the 3-
year period beginning on January 1, 1998.
``(5) Report.--At least 60 days prior to the
commencement of the demonstration project, the
administering Secretaries shall submit a copy of the
agreement entered into under paragraph (1) to the
committees of jurisdiction under this title.
``(c) Crediting of Payments.--A payment received by the
Secretary of Defense under the demonstration project shall be
credited to the applicable Department of Defense medical
appropriation (and within that appropriation). Any such payment
received during a fiscal year for services provided during a
prior fiscal year may be obligated by the Secretary of Defense
during the fiscal year during which the payment is received.
``(d) Waiver of Certain Medicare Requirements.--
``(1) Authority.--
``(A) In general.--Except as provided under
subparagraph (B), the demonstration project
shall meet all requirements of Medicare+Choice
plans under part C of this title and
regulations pertaining thereto, and other
requirements for receiving medicare payments,
except that the prohibition of payments to
Federal providers of services under sections
1814(c) and 1835(d), and paragraphs (2) and (3)
of section 1862(a) shall not apply.
``(B) Waiver.--Except as provided in
paragraph (2), the Secretary is authorized to
waive any requirement described under
subparagraph (A), or approve equivalent or
alternative ways of meeting such a requirement,
but only if such waiver or approval--
``(i) reflects the unique status of
the Department of Defense as an agency
of the Federal Government; and
``(ii) is necessary to carry out
the demonstration project.
``(2) Beneficiary protections and other matters.--
The demonstration project shall comply with the
requirements of part C of this title that relate to
beneficiary protections and other matters, including
such requirements relating to the following areas:
``(A) Enrollment and disenrollment.
``(B) Nondiscrimination.
``(C) Information provided to
beneficiaries.
``(D) Cost-sharing limitations.
``(E) Appeal and grievance procedures.
``(F) Provider participation.
``(G) Access to services.
``(H) Quality assurance and external
review.
``(I) Advance directives.
``(J) Other areas of beneficiary
protections that the Secretary determines are
applicable to such project.
``(e) Inspector General.--Nothing in the agreement entered
into under subsection (b) shall limit the Inspector General of
the Department of Health and Human Services from investigating
any matters regarding the expenditure of funds under this title
for the demonstration project, including compliance with the
provisions of this title and all other relevant laws.
``(f) Voluntary Participation.--Participation of medicare-
eligible military retirees or dependents in the demonstration
project shall be voluntary.
``(g) TRICARE Health Care Plans.--
``(1) Modification of tricare contracts.--In
carrying out the demonstration project, the Secretary
of Defense is authorized to amend existing TRICARE
contracts (including contracts with designated
providers) in order to provide the medicare health care
services to the medicare-eligible military retirees and
dependents enrolled in the demonstration project
consistent with part C of this title.
``(2) Health care benefits.--The administering
Secretaries shall prescribe the minimum health care
benefits to be provided under such a plan to medicare-
eligible military retirees or dependents enrolled in
the plan. Those benefits shall include at least all
medicare health care services covered under this title.
``(h) Additional Plans.--Notwithstanding any provisions of
title 10, United States Code, the administering Secretaries may
agree to include in the demonstration project any of the
Medicare+Choice plans described in section 1851(a)(2)(A), and
such agreement may include an agreement between the Secretary
of Defense and the Medicare+Choice organization offering such
plan to provide medicare health care services to medicare-
eligible military retirees or dependents and for such Secretary
to receive payments from such organization for the provision of
such services.
``(i) Payments Based on Regular Medicare Payment Rates.--
``(1) In general.--Subject to the succeeding
provisions of this subsection, the Secretary shall
reimburse the Secretary of Defense for services
provided under the demonstration project at a rate
equal to 95 percent of the amount paid to a
Medicare+Choice organization under part C of this title
with respect to such an enrollee. In cases in which a
payment amount may not otherwise be readily computed,
the Secretary shall establish rules for computing
equivalent or comparable payment amounts.
``(2) Exclusion of certain amounts.--In computing
the amount of payment under paragraph (1), the
following shall be excluded:
``(A) Special payments.--Any amount
attributable to an adjustment under
subparagraphs (B) and (F) of section 1886(d)(5)
and subsection (h) of such section.
``(B) Percentage of capital payments.--An
amount determined by the administering
Secretaries for amounts attributable to
payments for capital-related costs under
subsection (g) of such section.
``(3) Periodic payments from medicare trust
funds.--Payments under this subsection shall be made--
``(A) on a periodic basis consistent with
the periodicity of payments under this title;
and
``(B) in appropriate part, as determined by
the Secretary, from the trust funds.
``(4) Cap on amount.--The aggregate amount to be
reimbursed under this subsection pursuant to the
agreement entered into between the administering
Secretaries under subsection (b) shall not exceed a
total of--
``(A) $50,000,000 for calendar year 1998;
``(B) $60,000,000 for calendar year 1999;
and
``(C) $65,000,000 for calendar year 2000.
``(j) Maintenance of Effort.--
``(1) Monitoring effect of demonstration program on
costs to medicare program.--
``(A) In general.--The administering
Secretaries, in consultation with the
Comptroller General, shall closely monitor the
expenditures made under the medicare program
for medicare-eligible military retirees or
dependents during the period of the
demonstration project compared to the
expenditures that would have been made for such
medicare-eligible military retirees or
dependents during that period if the
demonstration project had not been conducted.
The agreement entered into by the administering
Secretaries under subsection (b) shall require
any participating military treatment facility
to maintain the level of effort for space
available care to medicare-eligible military
retirees or dependents.
``(B) Annual report by the comptroller
general.--Not later than December 31 of each
year during which the demonstration project is
conducted, the Comptroller General shall submit
to the administering Secretaries and the
appropriate committees of Congress a report on
the extent, if any, to which the costs of the
Secretary under the medicare program under this
title increased during the preceding fiscal
year as a result of the demonstration project.
``(2) Required response in case of increase in
costs.--
``(A) In general.--If the administering
Secretaries find, based on paragraph (1), that
the expenditures under the medicare program
under this title increased (or are expected to
increase) during a fiscal year because of the
demonstration project, the administering
Secretaries shall take such steps as may be
needed--
``(i) to recoup for the medicare
program the amount of such increase in
expenditures; and
``(ii) to prevent any such increase
in the future.
``(B) Steps.--Such steps--
``(i) under subparagraph (A)(i)
shall include payment of the amount of
such increased expenditures by the
Secretary of Defense from the current
medical care appropriation of the
Department of Defense to the trust
funds; and
``(ii) under subparagraph (A)(ii)
shall include suspending or terminating
the demonstration project (in whole or
in part) or lowering the amount of
payment under subsection (i)(1).
``(k) Evaluation and Reports.--
``(1) Independent evaluation.--The Comptroller
General of the United States shall conduct an
evaluation of the demonstration project, and shall
submit annual reports on the demonstration project to
the administering Secretaries and to the committees of
jurisdiction in the Congress. The first report shall be
submitted not later than 12 months after the date on
which the demonstration project begins operation, and
the final report not later than 3\1/2\ years after that
date. The evaluation and reports shall include an
assessment, based on the agreement entered into under
subsection (b), of the following:
``(A) Any savings or costs to the medicare
program under this title resulting from the
demonstration project.
``(B) The cost to the Department of Defense
of providing care to medicare-eligible military
retirees and dependents under the demonstration
project.
``(C) A description of the effects of the
demonstration project on military treatment
facility readiness and training and the
probable effects of the project on overall
Department of Defense medical readiness and
training.
``(D) Any impact of the demonstration
project on access to care for active duty
military personnel and their dependents.
``(E) An analysis of how the demonstration
project affects the overall accessibility of
the uniformed services treatment system and the
amount of space available for point-of-service
care, and a description of the unintended
effects (if any) upon the normal treatment
priority system.
``(F) Compliance by the Department of
Defense with the requirements under this title.
``(G) The number of medicare-eligible
military retirees and dependents opting to
participate in the demonstration project
instead of receiving health benefits through
another health insurance plan (including
benefits under this title).
``(H) A list of the health insurance plans
and programs that were the primary payers for
medicare-eligible military retirees and
dependents during the year prior to their
participation in the demonstration project and
the distribution of their previous enrollment
in such plans and programs.
``(I) Any impact of the demonstration
project on private health care providers and
beneficiaries under this title that are not
enrolled in the demonstration project.
``(J) An assessment of the access to care
and quality of care for medicare-eligible
military retirees and dependents under the
demonstration project.
``(K) An analysis of whether, and in what
manner, easier access to the uniformed services
treatment system affects the number of
medicare-eligible military retirees and
dependents receiving medicare health care
services.
``(L) Any impact of the demonstration
project on the access to care for medicare-
eligible military retirees and dependents who
did not enroll in the demonstration project and
for other individuals entitled to benefits
under this title.
``(M) A description of the difficulties (if
any) experienced by the Department of Defense
in managing the demonstration project and
TRICARE contracts.
``(N) Any additional elements specified in
the agreement entered into under subsection
(b).
``(O) Any additional elements that the
Comptroller General of the United States
determines is appropriate to assess regarding
the demonstration project.
``(2) Report on extension and expansion of
demonstration project.--Not later than 6 months after
the date of the submission of the final report by the
Comptroller General of the United States under
paragraph (1), the administering Secretaries shall
submit to Congress a report containing their
recommendation as to--
``(A) whether there is a cost to the health
care program under this title in conducting the
demonstration project, and whether the
demonstration project could be expanded without
there being a cost to such health care program
or to the Federal Government;
``(B) whether to extend the demonstration
project or make the project permanent; and
``(C) whether the terms and conditions of
the project should be continued (or modified)
if the project is extended or expanded.''.
(b) Implementation Plan for Veterans Subvention.--Not later
than 12 months after the start of the demonstration project,
the Secretary of Health and Human Services and the Secretary of
Veterans Affairs shall jointly submit to Congress a detailed
implementation plan for a subvention demonstration project
(that follows the model of the demonstration project conducted
under section 1896 of the Social Security Act (as added by
subsection (a)) to begin in 1999 for veterans (as defined in
section 101 of title 38, United States Code) that are eligible
for benefits under title XVIII of the Social Security Act.
Subchapter D--Other Projects
SEC. 4016. MEDICARE COORDINATED CARE DEMONSTRATION PROJECT.
(a) Demonstration Projects.--
(1) In general.--The Secretary of Health and Human
Services (in this section referred to as the
``Secretary'') shall conduct demonstration projects for
the purpose of evaluating methods, such as case
management and other models of coordinated care, that--
(A) improve the quality of items and
services provided to target individuals; and
(B) reduce expenditures under the medicare
program under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.) for items
and services provided to target individuals.
(2) Target individual defined.--In this section,
the term ``target individual'' means an individual that
has a chronic illness, as defined and identified by the
Secretary, and is enrolled under the fee-for-service
program under parts A and B of title XVIII of the
Social Security Act (42 U.S.C. 1395c et seq.; 1395j et
seq.).
(b) Program Design.--
(1) Initial design.--The Secretary shall evaluate
best practices in the private sector of methods of
coordinated care for a period of 1 year and design the
demonstration project based on such evaluation.
(2) Number and project areas.--Not later than 2
years after the date of enactment of this Act, the
Secretary shall implement at least 9 demonstration
projects, including--
(A) 5 projects in urban areas;
(B) 3 projects in rural areas; and
(C) 1 project within the District of
Columbia which is operated by a nonprofit
academic medical center that maintains a
National Cancer Institute certified
comprehensive cancer center.
(3) Expansion of projects; implementation of
demonstration project results.--
(A) Expansion of projects.--If the initial
report under subsection (c) contains an
evaluation that demonstration projects--
(i) reduce expenditures under the
medicare program; or
(ii) do not increase expenditures
under the medicare program and increase
the quality of health care services
provided to target individuals and
satisfaction of beneficiaries and
health care providers;
the Secretary shall continue the existing
demonstration projects and may expand the
number of demonstration projects.
(B) Implementation of demonstration project
results.--If a report under subsection (c)
contains an evaluation as described in
subparagraph (A), the Secretary may issue
regulations to implement, on a permanent basis,
the components of the demonstration project
that are beneficial to the medicare program.
(c) Report to Congress.--
(1) In general.--Not later than 2 years after the
Secretary implements the initial demonstration projects
under this section, and biannually thereafter, the
Secretaryshall submit to Congress a report regarding
the demonstration projects conducted under this section.
(2) Contents of report.--The report in paragraph
(1) shall include the following:
(A) A description of the demonstration
projects conducted under this section.
(B) An evaluation of--
(i) the cost-effectiveness of the
demonstration projects;
(ii) the quality of the health care
services provided to target individuals
under the demonstration projects; and
(iii) beneficiary and health care
provider satisfaction under the
demonstration project.
(C) Any other information regarding the
demonstration projects conducted under this
section that the Secretary determines to be
appropriate.
(d) Waiver Authority.--The Secretary shall waive compliance
with the requirements of title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.) to such extent and for such period as
the Secretary determines is necessary to conduct demonstration
projects.
(e) Funding.--
(1) Demonstration projects.--
(A) In general.--
(i) State projects.--Except as
provided in clause (ii), the Secretary
shall provide for the transfer from the
Federal Hospital Insurance Trust Fund
and the Federal Supplementary Insurance
Trust Fund under title XVIII of the
Social Security Act (42 U.S.C. 1395i,
1395t), in such proportions as the
Secretary determines to be appropriate,
of such funds as are necessary for the
costs of carrying out the demonstration
projects under this section.
(ii) Cancer hospital.--In the case
of the project described in subsection
(b)(2)(C), amounts shall be available
only as provided in any Federal law
making appropriations for the District
of Columbia.
(B) Limitation.--In conducting the
demonstration project under this section, the
Secretary shall ensure that the aggregate
payments made by the Secretary do not exceed
the amount which the Secretary would have paid
if the demonstration projects under this
section were not implemented.
(2) Evaluation and report.--There are authorized to
be appropriated such sums as are necessary for the
purpose of developing and submitting the report to
Congress under subsection (c).
SEC. 4017. ORDERLY TRANSITION OF MUNICIPAL HEALTH SERVICE DEMONSTRATION
PROJECTS.
Section 9215 of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended by section 6135 of OBRA-
1989 and section 13557 of OBRA-1993, is further amended--
(1) by inserting ``(a)'' before ``The Secretary'',
and
(2) by adding at the end the following: ``Subject
to subsection (c), the Secretary may further extend
such demonstration projects through December 31, 2000,
but only with respect to individuals who received at
least one service during the period beginning on
January 1, 1996, and ending on the date of the
enactment of the Balanced Budget Act of 1997.
``(b) The Secretary shall work with each such demonstration
project to develop a plan, to be submitted to the Committee on
Ways and Means and the Committee on Commerce of the House of
Representatives and the Committee on Finance of the Senate by
March 31, 1998, for the orderly transition of demonstration
projects and the project participants to a non-demonstration
project health care delivery system, such as through
integration with a private or public health plan, including a
medicaid managed care or Medicare+Choice plan.
``(c) A demonstration project under subsection (a) which
does not develop and submit a transition plan under subsection
(b) by March 31, 1998, or, if later, 6 months after the date of
the enactment of the Balanced Budget Act of 1997, shall be
discontinued as of December 31, 1998. The Secretary shall
provide appropriate technical assistance to assist in the
transition so that disruption of medical services to project
participants may be minimized.''.
SEC. 4018. MEDICARE ENROLLMENT DEMONSTRATION PROJECT.
(a) Demonstration Project.--
(1) Establishment.--The Secretary shall implement a
demonstration project (in this section referred to as
the ``project'') for the purpose of evaluating the use
of a third-party contractor to conduct the
Medicare+Choice plan enrollment and disenrollment
functions, as described in part C of title XVIII of the
Social Security Act (as added by section 4001 of this
Act), in an area.
(2) Consultation.--Before implementing the project
under this section, the Secretary shall consult with
affected parties on--
(A) the design of the project;
(B) the selection criteria for the third-
party contractor; and
(C) the establishment of performance
standards, as described in paragraph (3).
(3) Performance standards.--
(A) In general.--The Secretary shall
establish performance standards for the
accuracy and timeliness of the Medicare+Choice
plan enrollment and disenrollment functions
performed by the third-party contractor.
(B) Noncompliance.--In the event that the
third-party contractor is not in substantial
compliance with the performance standards
established under subparagraph (A), such
enrollment and disenrollment functions shall be
performed by the Medicare+Choice plan until the
Secretary appoints a new third-party
contractor.
(b) Report to Congress.--The Secretary shall periodically
report to Congress on the progress of the project conducted
pursuant to this section.
(c) Waiver Authority.--The Secretary shall waive compliance
with the requirements of part C of title XVIII of the Social
Security Act (as amended by section 4001 of this Act) to such
extent and for such period as the Secretary determines is
necessary to conduct the project.
(d) Duration.--A demonstration project under this section
shall be conducted for a 3-year period.
(e) Separate From Other Demonstration Projects.--A project
implemented by the Secretary under this section shall not be
conducted in conjunction with any other demonstration project.
SEC. 4019. EXTENSION OF CERTAIN MEDICARE COMMUNITY NURSING ORGANIZATION
DEMONSTRATION PROJECTS.
Notwithstanding any other provision of law, demonstration
projects conducted under section 4079 of the Omnibus Budget
Reconciliation Act of 1987 may be conducted for an additional
period of 2 years, and the deadline for any report required
relating to the results of such projects shall be not later
than 6 months before the end of such additional period.
CHAPTER 3--COMMISSIONS
SEC. 4021. NATIONAL BIPARTISAN COMMISSION ON THE FUTURE OF MEDICARE.
(a) Establishment.--There is established a commission to be
known as the National Bipartisan Commission on the Future of
Medicare (in this section referred to as the ``Commission'').
(b) Duties of the Commission.--The Commission shall--
(1) review and analyze the long-term financial
condition of the medicare program under title XVIII of
the Social Security Act (42 U.S.C. 1395 et seq.);
(2) identify problems that threaten the financial
integrity of the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance Trust
Fund established under that title (42 U.S.C. 1395i,
1395t), including--
(A) the financial impact on the medicare
program of the significant increase in the
number of medicare eligible individuals which
will occur beginning approximately during 2010
and lasting for approximately 25 years, and
(B) the extent to which current medicare
update indexes do not accurately reflect
inflation;
(3) analyze potential solutions to the problems
identified under paragraph (2) that will ensure both
the financial integrity of the medicare program and the
provision of appropriate benefits under such program,
including methods used by other nations to respond to
comparable demographic patterns in eligibility for
health care benefits for elderly and disabled
individuals and trends in employment-related health
care for retirees;
(4) make recommendations to restore the solvency of
the Federal Hospital Insurance Trust Fund and the
financial integrity of the Federal Supplementary
Medical Insurance Trust Fund;
(5) make recommendations for establishing the
appropriate financial structure of the medicare program
as a whole;
(6) make recommendations for establishing the
appropriate balance of benefits covered and beneficiary
contributions to the medicare program;
(7) make recommendations for the time periods
during which the recommendations described in
paragraphs (4), (5), and (6) should be implemented;
(8) make recommendations regarding the financing of
graduate medical education (GME), including
consideration of alternative broad-based sources of
funding for such education and funding for institutions
not currently eligible for such GME support that
conduct approved graduate medical residency programs,
such as children's hospitals;
(9) make recommendations on modifying age-based
eligibility to correspond to changes in age-based
eligibility under the OASDI program and on the
feasibility of allowing individuals between the age of
62 and the medicare eligibility age to buy into the
medicare program;
(10) make recommendations on the impact of chronic
disease and disability trends on future costs and
quality of services under the current benefit,
financing, and delivery system structure of the
medicare program;
(11) make recommendations regarding a comprehensive
approach to preserve the program; and
(12) review and analyze such other matters as the
Commission deems appropriate.
(c) Membership.--
(1) Number and appointment.--The Commission shall
be composed of 17 members, of whom--
(A) four shall be appointed by the
President;
(B) six shall be appointed by the Majority
Leader of the Senate, in consultation with the
Minority Leader of the Senate, of whom not more
than 4 shall be of the same political party;
(C) six shall be appointed by the Speaker
of the House of Representatives, in
consultation with the Minority Leader of the
House of Representatives, of whom not more than
4 shall be of the same political party; and
(D) one, who shall serve as Chairman of the
Commission, appointed jointly by the President,
Majority Leader of the Senate, and the Speaker
of the House of Representatives.
(2) Deadline for appointment.--Members of the
Commission shall be appointed by not later than
December 1, 1997.
(3) Terms of appointment.--The term of any
appointment under paragraph (1) to the Commission shall
be for the life of the Commission.
(4) Meetings.--The Commission shall meet at the
call of its Chairman or a majority of its members.
(5) Quorum.--A quorum shall consist of 8 members of
the Commission, except that 4 members may conduct a
hearing under subsection (e).
(6) Vacancies.--A vacancy on the Commission shall
be filled in the same manner in which the original
appointment was made not later than 30 days after the
Commission is given notice of the vacancy and shall not
affect the power of the remaining members to execute
the duties of the Commission.
(7) Compensation.--Members of the Commission shall
receive no additional pay, allowances, or benefits by
reason of their service on the Commission.
(8) Expenses.--Each member of the Commission shall
receive travel expenses and per diem in lieu of
subsistence in accordance with sections 5702 and 5703
of title 5, United States Code.
(d) Staff and Support Services.--
(1) Executive director.--
(A) Appointment.--The Chairman shall
appoint an executive director of the
Commission.
(B) Compensation.--The executive director
shall be paid the rate of basic pay for level V
of the Executive Schedule.
(2) Staff.--With the approval of the Commission,
the executive director may appoint such personnel as
the executive director considers appropriate.
(3) Applicability of civil service laws.--The staff
of the Commission shall be appointed without regard to
the provisions of title 5, United States Code,
governing appointments in the competitive service, and
shall be paid without regard to the provisions of
chapter 51 and subchapter III of chapter 53 of such
title (relating to classification and General Schedule
pay rates).
(4) Experts and consultants.--With the approval of
the Commission, the executive director may procure
temporary and intermittent services under section
3109(b) of title 5, United States Code.
(5) Physical facilities.--The Administrator of the
General Services Administration shall locate suitable
office space for the operation of the Commission. The
facilities shall serve as the headquarters of the
Commission and shall include all necessary equipment
and incidentals required for the proper functioning of
the Commission.
(e) Powers of Commission.--
(1) Hearings and other activities.--For the purpose
of carrying out its duties, the Commission may hold
such hearings and undertake such other activities as
the Commission determines to be necessary to carry out
its duties.
(2) Studies by gao.--Upon the request of the
Commission, the Comptroller General shall conduct such
studies or investigations as the Commission determines
to be necessary to carry out its duties.
(3) Cost estimates by congressional budget office
and office of the chief actuary of hcfa.--
(A) The Director of the Congressional
Budget Office or the Chief Actuary of the
Health Care Financing Administration, or both,
shall provide to the Commission, upon the
request of the Commission, such cost estimates
as the Commission determines to be necessary to
carry out its duties.
(B) The Commission shall reimburse the
Director of the Congressional Budget Office for
expenses relating to the employment in the
office of the Director of such additional staff
as may be necessary for the Director to comply
with requests by the Commission under
subparagraph (A).
(4) Detail of federal employees.--Upon the request
of the Commission, the head of any Federal agency is
authorized to detail, without reimbursement, any of the
personnel of such agency to the Commission to assist
the Commission in carrying out its duties. Any such
detail shall not interrupt or otherwise affect the
civil service status or privileges of the Federal
employee.
(5) Technical assistance.--Upon the request of the
Commission, the head of a Federal agency shall provide
such technical assistance to the Commission as the
Commission determines to be necessary to carry out its
duties.
(6) Use of mails.--The Commission may use the
United States mails in the same manner and under the
same conditions as Federal agencies and shall, for
purposes of the frank, be considered a commission of
Congress as described in section 3215 of title 39,
United States Code.
(7) Obtaining information.--The Commission may
secure directly from any Federal agency information
necessary to enable it to carry out its duties, if the
information may be disclosed under section 552 of title
5, United States Code. Upon request of the Chairman of
the Commission, the head of such agency shall furnish
such information to the Commission.
(8) Administrative support services.--Upon the
request of the Commission, the Administrator of General
Services shall provide to the Commission on a
reimbursable basis such administrative support services
as the Commission may request.
(9) Printing.--For purposes of costs relating to
printing and binding, including the cost of personnel
detailed from the Government Printing Office, the
Commission shall be deemed to be a committee of the
Congress.
(f) Report.--Not later than March 1, 1999, the Commission
shall submit a report to the President and Congress which shall
contain a detailed statement of only those recommendations,
findings, and conclusions of the Commission that receive the
approval of at least 11 members of the Commission.
(g) Termination.--The Commission shall terminate 30 days
after the date of submission of the report required in
subsection (f).
(h) Authorization of Appropriations.--There are authorized
to be appropriated $1,500,000 to carry out this section. 60
percent of such appropriation shall be payable from the Federal
Hospital Insurance Trust Fund, and 40 percent of such
appropriation shall be payable from the Federal Supplementary
Medical Insurance Trust Fund under title XVIII of the Social
Security Act (42 U.S.C. 1395i, 1395t).
SEC. 4022. MEDICARE PAYMENT ADVISORY COMMISSION.
(a) In General.--Title XVIII is amended by inserting after
section 1804 the following new section:
``medicare payment advisory commission
``Sec. 1805. (a) Establishment.--There is hereby
established the Medicare Payment Advisory Commission (in this
section referred to as the `Commission').
``(b) Duties.--
``(1) Review of payment policies and annual
reports.--The Commission shall--
``(A) review payment policies under this
title, including the topics described in
paragraph (2);
``(B) make recommendations to Congress
concerning such payment policies;
``(C) by not later than March 1 of each
year (beginning with 1998), submit a report to
Congress containing the results of such reviews
and its recommendations concerning such
policies; and
``(D) by not later than June 1 of each year
(beginning with 1998), submit a report to
Congress containing an examination of issues
affecting the medicare program, including the
implications of changes in health care delivery
in the United States and in the market for
health care services on the medicare program.
``(2) Specific topics to be reviewed.--
``(A) Medicare+choice program.--
Specifically, the Commission shall review, with
respect to the Medicare+Choice program under
part C, the following:
``(i) The methodology for making
payment to plans under such program,
including the making of differential
payments and the distribution of
differential updates among different
payment areas.
``(ii) The mechanisms used to
adjust payments for risk and the need
to adjust such mechanisms to take into
account health status of beneficiaries.
``(iii) The implications of risk
selection both among Medicare+Choice
organizations and between the
Medicare+Choice option and the original
medicare fee-for-service option.
``(iv) The development and
implementation of mechanisms to assure
the quality of care for those enrolled
with Medicare+Choice organizations.
``(v) The impact of the
Medicare+Choice program on access to
care for medicare beneficiaries.
``(vi) Other major issues in
implementation and further development
of the Medicare+Choice program.
``(B) Original medicare fee-for-service
system.--Specifically, the Commission shall
review payment policies under parts A and B,
including--
``(i) the factors affecting
expenditures for services in different
sectors, including the process for
updating hospital, skilled nursing
facility, physician, and other fees,
``(ii) payment methodologies, and
``(iii) their relationship to
access and quality of care for medicare
beneficiaries.
``(C) Interaction of medicare payment
policies with health care delivery generally.--
Specifically, the Commission shall review the
effect of payment policies under this title on
the delivery of health care services other than
under this title and assess the implications of
changes in health care delivery in the United
States and in the general market for health
care services on the medicare program.
``(3) Comments on certain secretarial reports.--If
the Secretary submits to Congress (or a committee of
Congress) a report that is required by law and that
relates to payment policies under this title, the
Secretary shall transmit a copy of the report to the
Commission. The Commission shall review the report and,
not later than 6 months after the date of submittal of
the Secretary's report to Congress, shall submit to the
appropriate committees of Congress written comments on
such report. Such comments may include such
recommendations as the Commission deems appropriate.
``(4) Agenda and additional reviews.--The
Commission shall consult periodically with the chairmen
and ranking minority members of the appropriate
committees of Congress regarding the Commission's
agenda and progress towards achieving the agenda. The
Commission may conduct additional reviews, and submit
additional reports to the appropriate committees of
Congress, from time to time on such topics relating to
the program under this title as may be requested by
such chairmen and members and as the Commission deems
appropriate.
``(5) Availability of reports.--The Commission
shall transmit to the Secretary a copy of each report
submitted under this subsection and shall make such
reports available to the public.
``(6) Appropriate committees of congress.--For
purposes of this section, the term `appropriate
committees of Congress' means the Committees on Ways
and Means and Commerce of the House of Representatives
and the Committee on Finance of the Senate.
``(c) Membership.--
``(1) Number and appointment.--The Commission shall
be composed of 15 members appointed by the Comptroller
General.
``(2) Qualifications.--
``(A) In general.--The membership of the
Commission shall include individuals with
national recognition for their expertise in
health finance and economics, actuarial
science, health facility management, health
plans and integrated delivery systems,
reimbursement of health facilities, allopathic
and osteopathic physicians, and other providers
of health services, and other related fields,
who provide a mix of different professionals,
broad geographic representation, and a balance
between urban and rural representatives.
``(B) Inclusion.--The membership of the
Commission shall include (but not be limited
to) physicians and other health professionals,
employers, third-party payers, individuals
skilled in the conduct and interpretation of
biomedical, health services, and health
economics research and expertise in outcomes
and effectiveness research and technology
assessment. Such membership shall also include
representatives of consumers and the elderly.
``(C) Majority nonproviders.--Individuals
who are directly involved in the provision, or
management of the delivery, of items and
services covered under this title shall not
constitute a majority of the membership of the
Commission.
``(D) Ethical disclosure.--The Comptroller
General shall establish a system for public
disclosure by members of the Commission of
financial and other potential conflicts of
interest relating to such members.
``(3) Terms.--
``(A) In general.--The terms of members of
the Commission shall be for 3 years except that
the Comptroller General shall designate
staggered terms for the members first
appointed.
``(B) Vacancies.--Any member appointed to
fill a vacancy occurring before the expiration
of the term for which the member's predecessor
was appointed shall be appointed only for the
remainder of that term. A member may serve
after the expiration of that member's term
until a successor has taken office. A vacancy
in the Commission shall be filled in the manner
in which the original appointment was made.
``(4) Compensation.--While serving on the business
of the Commission (including traveltime), a member of
the Commission shall be entitled to compensation at the
per diem equivalent of the rate provided for level IV
of the Executive Schedule under section 5315 of title
5, United States Code; and while so serving away from
home and the member's regular place of business, a
member may be allowed travel expenses, as authorized by
the Chairman of the Commission. Physicians serving as
personnel of the Commission may be provided a physician
comparability allowance by the Commission in the same
manner as Government physicians may be provided such an
allowance by an agency under section 5948 of title 5,
United States Code, and for such purpose subsection (i)
of such section shall apply to the Commission in the
same manner as it applies to the Tennessee Valley
Authority. For purposes of pay (other than pay of
members of the Commission) and employment benefits,
rights, and privileges, all personnel of the Commission
shall be treated as if they were employees of the
United States Senate.
``(5) Chairman; vice chairman.--The Comptroller
General shall designate a member of the Commission, at
the time of appointment of the member as Chairman and a
member as Vice Chairman for that term of appointment,
except that in the case of vacancy of the Chairmanship
or Vice Chairmanship, the Comptroller General may
designate another member for the remainder of that
member's term.
``(6) Meetings.--The Commission shall meet at the
call of the Chairman.
``(d) Director and Staff; Experts and Consultants.--Subject
to such review as the Comptroller General deems necessary to
assure the efficient administration of the Commission, the
Commission may--
``(1) employ and fix the compensation of an
Executive Director (subject to the approval of the
Comptroller General) and such other personnel as may be
necessary to carry out its duties (without regard to
the provisions of title 5, United States Code,
governing appointments in the competitive service);
``(2) seek such assistance and support as may be
required in the performance of its duties from
appropriate Federal departments and agencies;
``(3) enter into contracts or make other
arrangements, as may be necessary for the conduct of
the work of the Commission (without regard to section
3709 of the Revised Statutes (41 U.S.C. 5));
``(4) make advance, progress, and other payments
which relate to the work of the Commission;
``(5) provide transportation and subsistence for
persons serving without compensation; and
``(6) prescribe such rules and regulations as it
deems necessary with respect to the internal
organization and operation of the Commission.
``(e) Powers.--
``(1) Obtaining official data.--The Commission may
secure directly from any department or agency of the
United States information necessary to enable it to
carry out this section. Upon request of the Chairman,
the head of that department or agency shall furnish
that information to the Commission on an agreed upon
schedule.
``(2) Data collection.--In order to carry out its
functions, the Commission shall--
``(A) utilize existing information, both
published and unpublished, where possible,
collected and assessed either by its own staff
or under other arrangements made in accordance
with this section,
``(B) carry out, or award grants or
contracts for, original research and
experimentation, where existing information is
inadequate, and
``(C) adopt procedures allowing any
interested party to submit information for the
Commission's use in making reports and
recommendations.
``(3) Access of gao to information.--The
Comptroller General shall have unrestricted access to
all deliberations, records, and nonproprietary data of
the Commission, immediately upon request.
``(4) Periodic audit.--The Commission shall be
subject to periodic audit by the Comptroller General.
``(f) Authorization of Appropriations.--
``(1) Request for appropriations.--The Commission
shall submit requests for appropriations in the same
manner as the Comptroller General submits requests for
appropriations, but amounts appropriated for the
Commission shall be separate from amounts appropriated
for the Comptroller General.
``(2) Authorization.--There are authorized to be
appropriated such sums as may be necessary to carry out
the provisions of this section. Sixty percent of such
appropriation shall be payable from the Federal
Hospital Insurance Trust Fund, and 40 percent of such
appropriation shall be payable from the Federal
Supplementary Medical Insurance Trust Fund.''.
(b) Abolition of ProPAC and PPRC.--
(1) ProPAC.--
(A) In general.--Section 1886(e) (42 U.S.C.
1395ww(e)) is amended--
(i) by striking paragraphs (2) and
(6); and
(ii) in paragraph (3), by striking
``(A) The Commission'' and all that
follows through ``(B)''.
(B) Conforming amendment.--Section 1862 (42
U.S.C. 1395y) is amended by striking
``Prospective Payment Assessment Commission''
each place it appears in subsection (a)(1)(D)
and subsection (i) and inserting ``Medicare
Payment Advisory Commission''.
(2) PPRC.--
(A) In general.--Title XVIII is amended by
striking section 1845 (42 U.S.C. 1395w-1).
(B) Elimination of certain reports.--
Section 1848 (42 U.S.C. 1395w-4) is amended--
(i) by striking subparagraph (F) of
subsection (d)(2),
(ii) by striking subparagraph (B)
of subsection (f)(1), and
(iii) in subsection (f)(3), by
striking ``Physician Payment Review
Commission,''.
(C) Conforming amendments.--Section 1848
(42 U.S.C. 1395w-4) is amended by striking
``Physician Payment Review Commission'' and
inserting ``Medicare Payment Advisory
Commission'' each place it appears in
subsections (c)(2)(B)(iii), (g)(6)(C), and
(g)(7)(C).
(c) Effective Date; Transition.--
(1) In general.--The Comptroller General shall
first provide for appointment of members to the
Medicare Payment Advisory Commission (in this
subsection referred to as ``MedPAC'') by not later than
September 30, 1997.
(2) Transition.--As quickly as possible after the
date a majority of members of MedPAC are first
appointed, the Comptroller General, in consultation
with the Prospective Payment Assessment Commission (in
this subsection referred to as ``ProPAC'') and the
Physician Payment Review Commission (in this subsection
referred to as ``PPRC''), shall provide for the
termination of the ProPAC and the PPRC. As of the date
of termination of the respective Commissions, the
amendments made by paragraphs (1) and (2),
respectively, of subsection (b) become effective. The
Comptroller General, to the extent feasible, shall
provide for the transfer to the MedPAC of assets and
staff of the ProPAC and the PPRC, without any loss of
benefitsor seniority by virtue of such transfers. Fund
balances available to the ProPAC or the PPRC for any period shall be
available to the MedPAC for such period for like purposes.
(3) Continuing responsibility for reports.--The
MedPAC shall be responsible for the preparation and
submission of reports required by law to be submitted
(and which have not been submitted by the date of
establishment of the MedPAC) by the ProPAC and the
PPRC, and, for this purpose, any reference in law to
either such Commission is deemed, after the appointment
of the MedPAC, to refer to the MedPAC.
CHAPTER 4--MEDIGAP PROTECTIONS
SEC. 4031. MEDIGAP PROTECTIONS.
(a) Guaranteeing Issue Without Preexisting Conditions for
Continuously Covered Individuals.--Section 1882(s) (42 U.S.C.
1395ss(s)) is amended--
(1) in paragraph (3), by striking ``paragraphs (1)
and (2)'' and inserting ``this subsection'',
(2) by redesignating paragraph (3) as paragraph
(4), and
(3) by inserting after paragraph (2) the following
new paragraph:
``(3)(A) The issuer of a medicare supplemental policy--
``(i) may not deny or condition the issuance or
effectiveness of a medicare supplemental policy
described in subparagraph (C) that is offered and is
available for issuance to new enrollees by such issuer;
``(ii) may not discriminate in the pricing of such
policy, because of health status, claims experience,
receipt of health care, or medical condition; and
``(iii) may not impose an exclusion of benefits
based on a pre-existing condition under such policy,
in the case of an individual described in subparagraph (B) who
seeks to enroll under the policy not later than 63 days after
the date of the termination of enrollment described in such
subparagraph and who submits evidence of the date of
termination or disenrollment along with the application for
such medicare supplemental policy.
``(B) An individual described in this subparagraph is an
individual described in any of the following clauses:
``(i) The individual is enrolled under an employee
welfare benefit plan that provides health benefits that
supplement the benefits under this title and the plan
terminates or ceases to provide all such supplemental
health benefits to the individual.
``(ii) The individual is enrolled with a
Medicare+Choice organization under a Medicare+Choice
plan under part C, and there are circumstances
permitting discontinuance of the individual's election
of the plan under the first sentence of section
1851(e)(4).
``(iii) The individual is enrolled with an eligible
organization under a contract under section 1876, a
similar organization operating under demonstration
project authority, effective for periods before April
1, 1999, with an organization under an agreement under
section 1833(a)(1)(A), or with an organization under a
policy described in subsection (t), and such enrollment
ceases under the same circumstances that would permit
discontinuance of an individual's election of coverage
under the first sentence of section 1851(e)(4) and, in
the case of a policy described in subsection (t), there
is no provision under applicable State law for the
continuation or conversion of coverage under such
policy.
``(iv) The individual is enrolled under a medicare
supplemental policy under this section and such
enrollment ceases because--
``(I) of the bankruptcy or insolvency of
the issuer or because of other involuntary
termination of coverage or enrollment under
such policy and there is no provision under
applicable State law for the continuation or
conversion of such coverage;
``(II) the issuer of the policy
substantially violated a material provision of
the policy; or
``(III) the issuer (or an agent or other
entity acting on the issuer's behalf)
materially misrepresented the policy's
provisions in marketing the policy to the
individual.
``(v) The individual--
``(I) was enrolled under a medicare
supplemental policy under this section,
``(II) subsequently terminates such
enrollment and enrolls, for the first time,
with any Medicare+Choice organization under a
Medicare+Choice plan under part C, any eligible
organization under a contract under section
1876, any similar organization operating under
demonstration project authority, or any policy
described in subsection (t), and
``(III) the subsequent enrollment under
subclause (II) is terminated by the enrollee
during any period within the first 12 months of
such enrollment (during which the enrollee is
permitted to terminate such subsequent
enrollment under section 1851(e)).
``(vi) The individual, upon first becoming eligible
for benefits under part A at age 65, enrolls in a
Medicare+Choice plan under part C, and disenrolls from
such plan by not later than 12 months after the
effective date of such enrollment.
``(C)(i) Subject to clauses (ii) and (iii), a medicare
supplemental policy described in this subparagraph is a
medicare supplemental policy which has a benefit package
classified as `A', `B', `C', or `F' under the standards
established under subsection (p)(2).
``(ii) Only for purposes of an individual described in
subparagraph (B)(v), a medicare supplemental policy described
in this subparagraph is the same medicare supplemental policy
referred to in such subparagraph in which the individual was
most recently previously enrolled, if available from the same
issuer, or, if not so available, a policy described in clause
(i).
``(iii) Only for purposes of an individual described in
subparagraph (B)(vi), a medicare supplemental policy described
in this subparagraph shall include any medicare supplemental
policy.
``(iv) For purposes of applying this paragraph in the case
of a State that provides for offering of benefit packages other
than under the classification referred to in clause (i), the
references to benefit packages in such clause are deemed
references to comparable benefit packages offered in such
State.
``(D) At the time of an event described in subparagraph (B)
because of which an individual ceases enrollment or loses
coverage or benefits under a contract or agreement, policy, or
plan, the organization that offers the contract or agreement,
the insurer offering the policy, or the administrator of the
plan, respectively, shall notify the individual of the rights
of the individual under this paragraph, and obligations of
issuers of medicare supplemental policies, under subparagraph
(A).''.
(b) Limitation on Imposition of Preexisting Condition
Exclusion During Initial Open Enrollment Period.--Section
1882(s)(2) (42 U.S.C. 1395ss(s)(2)) is amended--
(1) in subparagraph (B), by striking ``subparagraph
(C)'' and inserting ``subparagraphs (C) and (D)'', and
(2) by adding at the end the following new
subparagraph:
``(D) In the case of a policy issued during the 6-month
period described in subparagraph (A) to an individual who is 65
years of age or older as of the date of issuance and who as of
the date of the application for enrollment has a continuous
period of creditable coverage (as defined in 2701(c) of the
Public Health Service Act) of--
``(i) at least 6 months, the policy may not exclude
benefits based on a pre-existing condition; or
``(ii) less than 6 months, if the policy excludes
benefits based on a preexisting condition, the policy
shall reduce the period of any preexisting condition
exclusion by the aggregate of the periods of creditable
coverage (if any, as so defined) applicable to the
individual as of the enrollment date.
The Secretary shall specify the manner of the reduction under
clause (ii), based upon the rules used by the Secretary in
carrying out section 2701(a)(3) of such Act.''.
(c) Conforming Amendment.--Section 1882(d)(3)(A)(vi)(III)
(42 U.S.C. 1395ss(d)(2)(A)(vi)(III)) is amended by inserting
``, a policy described in clause (v),'' after ``Medicare
supplemental policy''.
(d) Effective Dates.--
(1) Guaranteed issue.--The amendment made by
subsection (a) shall take effect on July 1, 1998.
(2) Limit on preexisting condition exclusions.--The
amendment made by subsection (b) shall apply to
policies issued on or after July 1, 1998.
(3) Conforming amendment.--The amendment made by
subsection (c) shall be effective as if included in the
enactment of the Health Insurance Portability and
Accountability Act of 1996.
(e) Transition Provisions.--
(1) In general.--If the Secretary of Health and
Human Services identifies a State as requiring a change
to its statutes or regulations to conform its
regulatory program to the changes made by this section,
the State regulatory program shall not be considered to
be out of compliance with the requirements of section
1882 of the Social Security Act due solely to failure
to make such change until the date specified in
paragraph (4).
(2) NAIC standards.--If, within 9 months after the
date of the enactment of this Act, the National
Association of Insurance Commissioners (in this
subsection referred to as the ``NAIC'') modifies its
NAIC Model Regulation relating to section 1882 of the
Social Security Act (referred to in such section as the
1991 NAIC Model Regulation, as modified pursuant to
section 171(m)(2) of the Social Security Act Amendments
of 1994 (Public Law 103-432) and as modified pursuant
to section 1882(d)(3)(A)(vi)(IV) of the Social Security
Act, as added by section 271(a) of the Health Insurance
Portability and Accountability Act of1996 (Public Law
104-191) to conform to the amendments made by this section, such
revised regulation incorporating the modifications shall be considered
to be the applicable NAIC model regulation (including the revised NAIC
model regulation and the 1991 NAIC Model Regulation) for the purposes
of such section.
(3) Secretary standards.--If the NAIC does not make
the modifications described in paragraph (2) within the
period specified in such paragraph, the Secretary of
Health and Human Services shall make the modifications
described in such paragraph and such revised regulation
incorporating the modifications shall be considered to
be the appropriate Regulation for the purposes of such
section.
(4) Date specified.--
(A) In general.--Subject to subparagraph
(B), the date specified in this paragraph for a
State is the earlier of--
(i) the date the State changes its
statutes or regulations to conform its
regulatory program to the changes made
by this section, or
(ii) 1 year after the date the NAIC
or the Secretary first makes the
modifications under paragraph (2) or
(3), respectively.
(B) Additional legislative action
required.--In the case of a State which the
Secretary identifies as--
(i) requiring State legislation
(other than legislation appropriating
funds) to conform its regulatory
program to the changes made in this
section, but
(ii) having a legislature which is
not scheduled to meet in 1999 in a
legislative session in which such
legislation may be considered,
the date specified in this paragraph is the
first day of the first calendar quarter
beginning after the close of the first
legislative session of the State legislature
that begins on or after July 1, 1999. For
purposes of the previous sentence, in the case
of a State that has a 2-year legislative
session, each year of such session shall be
deemed to be a separate regular session of the
State legislature.
(f) Conforming Benefits to Changes in Terminology for
Hospital Outpatient Department Cost Sharing.--For purposes of
applying section 1882 of the Social Security Act (42 U.S.C.
1395ss) and regulations referred to in subsection (e),
copayment amounts provided under section 1833(t)(5) of such Act
with respect to hospital outpatient department services shall
be treated under medicare supplemental policies in the same
manner as coinsurance with respect to such services.
SEC. 4032. ADDITION OF HIGH DEDUCTIBLE MEDIGAP POLICIES.
(a) In General.--Section 1882(p) (42 U.S.C. 1395ss(p)) is
amended--
(1) in paragraph (2)(C), by inserting ``plus the 2
plans described in paragraph (11)(A)'' after ``exceed
10''; and
(2) by adding at the end the following:
``(11)(A) For purposes of paragraph (2), the benefit
packages described in this subparagraph are as follows:
``(i) The benefit package classified as `F' under
the standards established by such paragraph, except
that it has a high deductible feature.
``(ii) The benefit package classified as `J' under
the standards established by such paragraph, except
that it has a high deductible feature.
``(B) For purposes of subparagraph (A), a high deductible
feature is one which--
``(i) requires the beneficiary of the policy to pay
annual out-of-pocket expenses (other than premiums) in
the amount specified in subparagraph (C) before the
policy begins payment of benefits, and
``(ii) covers 100 percent of covered out-of-pocket
expenses once such deductible has been satisfied in a
year.
``(C) The amount specified in this subparagraph--
``(i) for 1998 and 1999 is $1,500, and
``(ii) for a subsequent year, is the amount
specified in this subparagraph for the previous year
increased by the percentage increase in the Consumer
Price Index for all urban consumers (all items; U.S.
city average) for the 12-month period ending with
August of the preceding year.
If any amount determined under clause (ii) is not a multiple of
$10, it shall be rounded to the nearest multiple of $10.''.
(b) Effective Date.--
(1) In general.--The amendments made by subsection
(a) shall take effect the date of the enactment of this
Act.
(2) Transition.--The provisions of section 4031(e)
shall apply with respect to this section in the same
manner as they apply to section 4031.
CHAPTER 5--TAX TREATMENT OF HOSPITALS PARTICIPATING IN PROVIDER-
SPONSORED ORGANIZATIONS
SEC. 4041. TAX TREATMENT OF HOSPITALS WHICH PARTICIPATE IN PROVIDER-
SPONSORED ORGANIZATIONS.
(a) In General.--Section 501 of the Internal Revenue Code
of 1986 (relating to exemption from tax on corporations,
certain trusts, etc.) is amended by redesignating subsection
(o) as subsection (p) and by inserting after subsection (n) the
following new subsection:
``(o) Treatment of Hospitals Participating in Provider-
Sponsored Organizations.--An organization shall not fail to be
treated as organized and operated exclusively for a charitable
purpose for purposes of subsection (c)(3) solely because a
hospital which is owned and operated by such organization
participates in a provider-sponsored organization (as defined
in section 1853(e) of the Social Security Act), whether or not
the provider-sponsored organization is exempt from tax. For
purposes of subsection (c)(3), any person with a material
financial interest in such a provider-sponsored organization
shall be treated as a private shareholder or individual with
respect to the hospital.''
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
Subtitle B--Prevention Initiatives
SEC. 4101. SCREENING MAMMOGRAPHY.
(a) Providing Annual Screening Mammography for Women Over
Age 39.--Section 1834(c)(2)(A) (42 U.S.C. 1395m(c)(2)(A)) is
amended--
(1) in clause (iii), to read as follows:
``(iii) In the case of a woman over
39 years of age, payment may not be
made under this part for screening
mammography performed within 11 months
following the month in which a previous
screening mammography was performed.'';
and
(2) by striking clauses (iv) and (v).
(b) Waiver of Deductible.--The first sentence of section
1833(b) (42 U.S.C. 1395l(b)) is amended--
(1) by striking ``and'' before ``(4)'', and
(2) by inserting before the period at the end the
following: ``, and (5) such deductible shall not apply
with respect to screening mammography (as described in
section 1861(jj))''.
(c) Conforming Amendment.--Section 1834(c)(1)(C) (42 U.S.C.
1395m(c)(1)(C)) is amended by striking ``, subject to the
deductible established under section 1833(b),''.
(d) Effective Date.--The amendments made by this section
shall apply to items and services furnished on or after January
1, 1998.
SEC. 4102. SCREENING PAP SMEAR AND PELVIC EXAMS.
(a) Coverage of Pelvic Exam; Increasing Frequency of
Coverage of Pap Smear.--Section 1861(nn) (42 U.S.C. 1395x(nn))
is amended--
(1) in the heading, by striking ``Smear'' and
inserting ``Smear; Screening Pelvic Exam'';
(2) by inserting ``or vaginal'' after ``cervical''
each place it appears;
(3) by striking ``(nn)'' and inserting ``(nn)(1)'';
(4) by striking ``3 years'' and all that follows
and inserting ``3 years, or during the preceding year
in the case of a woman described in paragraph (3).'';
and
(5) by adding at the end the following new
paragraphs:
``(2) The term `screening pelvic exam' means a pelvic
examination provided to a woman if the woman involved has not
had such an examination during the preceding 3 years, or during
the preceding year in the case of a woman described in
paragraph (3), and includes a clinical breast examination.
``(3) A woman described in this paragraph is a woman who--
``(A) is of childbearing age and has had a test
described in this subsection during any of the
preceding 3 years that indicated the presence of
cervical or vaginal cancer or other abnormality; or
``(B) is at high risk of developing cervical or
vaginal cancer (as determined pursuant to factors
identified by the Secretary).''.
(b) Waiver of Deductible.--The first sentence of section
1833(b) (42 U.S.C. 1395l(b)), as amended by section 4101(b), is
amended--
(1) by striking ``and'' before ``(5)'', and
(2) by inserting before the period at the end the
following: ``, and (6) such deductible shall not apply
with respect to screening pap smear and screening
pelvic exam (as described in section 1861(nn))''.
(c) Conforming Amendments.--Sections 1861(s)(14) and
1862(a)(1)(F) (42 U.S.C. 1395x(s)(14), 1395y(a)(1)(F)) are each
amended by inserting ``and screening pelvic exam'' after
``screening pap smear''.
(d) Payment Under Physician Fee Schedule.--Section
1848(j)(3) (42 U.S.C. 1395w-4(j)(3)) is amended by striking
``and (4)'' and inserting ``(4) and (14) (with respect to
services described in section 1861(nn)(2))''.
(e) Effective Date.--The amendments made by this section
shall apply to items and services furnished on or after January
1, 1998.
SEC. 4103. PROSTATE CANCER SCREENING TESTS.
(a) Coverage.--Section 1861 (42 U.S.C. 1395x) is amended--
(1) in subsection (s)(2)--
(A) by striking ``and'' at the end of
subparagraphs (N) and (O), and
(B) by inserting after subparagraph (O) the
following new subparagraph:
``(P) prostate cancer screening tests (as defined
in subsection (oo)); and''; and
(2) by adding at the end the following new
subsection:
``Prostate Cancer Screening Tests
``(oo)(1) The term `prostate cancer screening test' means a
test that consists of any (or all) of the procedures described
in paragraph (2) provided for the purpose of early detection of
prostate cancer to a man over 50 years of age who has not had
such a test during the preceding year.
``(2) The procedures described in this paragraph are as
follows:
``(A) A digital rectal examination.
``(B) A prostate-specific antigen blood test.
``(C) For years beginning after 2002, such other
procedures as the Secretary finds appropriate for the
purpose of early detection of prostate cancer, taking
into account changes in technology and standards of
medical practice, availability, effectiveness, costs,
and such other factors as the Secretary considers
appropriate.''.
(b) Payment for Prostate-specific Antigen Blood Test Under
Clinical Diagnostic Laboratory Test Fee Schedules.--Section
1833(h)(1)(A) (42 U.S.C. 1395l(h)(1)(A)) is amended by
inserting after ``laboratory tests'' the following:
``(including prostate cancer screening tests under section
1861(oo) consisting of prostate-specific antigen blood
tests)''.
(c) Conforming Amendment.--Section 1862(a) (42 U.S.C.
1395y(a)) is amended--
(1) in paragraph (1)--
(A) in subparagraph (E), by striking
``and'' at the end,
(B) in subparagraph (F), by striking the
semicolon at the end and inserting ``, and'',
and
(C) by adding at the end the following new
subparagraph:
``(G) in the case of prostate cancer screening
tests (as defined in section 1861(oo)), which are
performed more frequently than is covered under such
section;''; and
(2) in paragraph (7), by striking ``paragraph
(1)(B) or under paragraph (1)(F)'' and inserting
``subparagraphs (B), (F), or (G) of paragraph (1)''.
(d) Payment Under Physician Fee Schedule.--Section
1848(j)(3) (42 U.S.C. 1395w-4(j)(3)), as amended by section
4102, is amended by inserting ``, (2)(P) (with respect to
services described in subparagraphs (A) and (C) of section
1861(oo)(2),'' after ``(2)(G)''
(e) Effective Date.--The amendments made by this section
shall apply to items and services furnished on or after January
1, 2000.
SEC. 4104. COVERAGE OF COLORECTAL SCREENING.
(a) Coverage.--
(1) In general.--Section 1861 (42 U.S.C. 1395x), as
amended by section 4103(a), is amended--
(A) in subsection (s)(2)--
(i) by striking ``and'' at the end
of subparagraph (P);
(ii) by adding ``and'' at the end
of subparagraph (Q); and
(iii) by adding at the end the
following new subparagraph:
``(R) colorectal cancer screening tests (as defined
in subsection (pp)); and''; and
(B) by adding at the end the following new
subsection:
``Colorectal Cancer Screening Tests
``(pp)(1) The term `colorectal cancer screening test' means
any of the following procedures furnished to an individual for
the purpose of early detection of colorectal cancer:
``(A) Screening fecal-occult blood test.
``(B) Screening flexible sigmoidoscopy.
``(C) In the case of an individual at high risk for
colorectal cancer, screening colonoscopy.
``(D) Such other tests or procedures, and
modifications to tests and procedures under this
subsection, with such frequency and payment limits, as
the Secretary determines appropriate, in consultation
with appropriate organizations.
``(2) In paragraph (1)(C), an `individual at high risk for
colorectal cancer' is an individual who, because of family
history, prior experience of cancer or precursor neoplastic
polyps, a history of chronic digestive disease condition
(including inflammatory bowel disease, Crohn's Disease, or
ulcerative colitis), the presence of any appropriate recognized
gene markers for colorectal cancer, or other predisposing
factors, faces a high risk for colorectal cancer.''.
(2) Deadline for publication of determination on
coverage of screening barium enema.--Not later than the
earlier of the date that is January 1, 1998, or 90 days
after the date of the enactment of this Act, the
Secretary of Health and Human Services shall publish
notice in the Federal Register with respect to the
determination under paragraph (1)(D) of section
1861(pp) of the Social Security Act (42 U.S.C.
1395x(pp)), as added by paragraph (1), on the coverage
of a screening barium enema as a colorectal cancer
screening test under such section.
(b) Frequency Limits and Payment.--
(1) In general.--Section 1834 (42 U.S.C. 1395m) is
amended by inserting after subsection (c) the following
new subsection:
``(d) Frequency Limits and Payment for Colorectal Cancer
Screening Tests.--
``(1) Screening fecal-occult blood tests.--
``(A) Payment amount.--The payment amount
for colorectal cancer screening tests
consisting of screening fecal-occult blood
tests is equal to the payment amount
established for diagnostic fecal-occult blood
tests under section 1833(h).
``(B) Frequency limit.--No payment may be
made under this part for a colorectal cancer
screening test consisting of a screening fecal-
occult blood test--
``(i) if the individual is under 50
years of age; or
``(ii) if the test is performed
within the 11 months after a previous
screening fecal-occult blood test.
``(2) Screening flexible sigmoidoscopies.--
``(A) Fee schedule.--With respect to
colorectal cancer screening tests consisting of
screening flexible sigmoidoscopies, payment
under section 1848 shall be consistent with
payment under such section for similar or
related services.
``(B) Payment limit.--In the case of
screening flexible sigmoidoscopy services,
payment under this part shall not exceed such
amount as the Secretary specifies, based upon
the rates recognized for diagnostic flexible
sigmoidoscopy services.
``(C) Facility payment limit.--
``(i) In general.--Notwithstanding
subsections (i)(2)(A) and (t) of
section 1833, in the case of screening
flexible sigmoidoscopy services
furnished on or after January 1, 1999,
that--
``(I) in accordance with
regulations, may be performed
in an ambulatory surgical
center and for which the
Secretary permits ambulatory
surgical center payments under
this part, and
``(II) are performed in an
ambulatory surgical center or
hospital outpatient department,
payment under this part shall be based
on the lesser of the amount under the
fee schedule that would apply to such
services if they were performed in a
hospital outpatient department in an
area or the amount under the fee
schedule that would apply to such
services if they were performed in an
ambulatory surgical center in the same
area.
``(ii) Limitation on deductible and
coinsurance.--Notwithstanding any other
provision of this title, in the case of
a beneficiary who receives the services
described in clause (i)--
``(I) in computing the
amount of any applicable
deductible or copayment, the
computation of such deductible
or coinsurance shall be based
upon the fee schedule under
which payment is made for the
services, and
``(II) the amount of such
coinsurance is equal to 25
percent of the payment amount
under the fee schedule
described in subclause (I).
``(D) Special rule for detected lesions.--
If during the course of such screening flexible
sigmoidoscopy, a lesion or growth is detected
which results in a biopsy or removal of the
lesion or growth, payment under this part shall
not be made for the screening flexible
sigmoidoscopy but shall be made for the
procedure classified as a flexible
sigmoidoscopy with such biopsy or removal.
``(E) Frequency limit.--No payment may be
made under this part for a colorectal cancer
screening test consisting of a screening
flexible sigmoidoscopy--
``(i) if the individual is under 50
years of age; or
``(ii) if the procedure is
performed within the 47 months after a
previous screening flexible
sigmoidoscopy.
``(3) Screening colonoscopy for individuals at high
risk for colorectal cancer.--
``(A) Fee schedule.--With respect to
colorectal cancer screening test consisting of
a screening colonoscopy for individuals at high
risk for colorectal cancer (as defined in
section 1861(pp)(2)), payment under section
1848 shall be consistent with payment amounts
under such section for similar or related
services.
``(B) Payment limit.--In the case of
screening colonoscopy services, payment under
this part shall not exceed such amount as the
Secretary specifies, based upon the rates
recognized for diagnostic colonoscopy services.
``(C) Facility payment limit.--
``(i) In general.--Notwithstanding
subsections (i)(2)(A) and (t) of
section 1833, in the case of screening
colonoscopy services furnished on or
after January 1, 1999, that are
performed in an ambulatory surgical
center or a hospital outpatient
department, payment under this part
shall be based on the lesser of the
amount under the fee schedule that
would apply to such services if they
were performed in a hospital outpatient
department in an area or the amount
under the fee schedule that would apply
to such services if they were performed
in an ambulatory surgical center in the
same area.
``(ii) Limitation on deductible and
coinsurance.--Notwithstanding any other
provision of this title, in the case of
a beneficiary who receives the services
described in clause (i)--
``(I) in computing the
amount of any applicable
deductible or coinsurance, the
computation of such deductible
or coinsurance shall be based
upon the fee schedule under
which payment is made for the
services, and
``(II) the amount of such
coinsurance is equal to 25
percent of the payment amount
under the fee schedule
described in subclause (I).
``(D) Special rule for detected lesions.--
If during the course of such screening
colonoscopy, a lesion or growth is detected
which results in a biopsy or removal of the
lesion or growth, payment under this part shall
not be made for the screening colonoscopy but
shall be made for the procedure classified as a
colonoscopy with such biopsy or removal.
``(E) Frequency limit.--No payment may be
made under this part for a colorectal cancer
screening test consisting of a screening
colonoscopy for individuals at high risk for
colorectal cancer if the procedure is performed
within the 23 months after a previous screening
colonoscopy.''.
(c) Conforming Amendments.--(1) Paragraphs (1)(D) and
(2)(D) of section 1833(a) (42 U.S.C. 1395l(a)) are each amended
by inserting ``or section 1834(d)(1)'' after ``subsection
(h)(1)''.
(2) Section 1833(h)(1)(A) (42 U.S.C. 1395l(h)(1)(A)) is
amended by striking ``The Secretary'' and inserting ``Subject
to section 1834(d)(1), the Secretary''.
(3) Section 1862(a) (42 U.S.C. 1395y(a)), as amended by
section 4103(c), is amended--
(A) in paragraph (1)--
(i) in subparagraph (F), by striking
``and'' at the end,
(ii) in subparagraph (G), by striking the
semicolon at the end and inserting ``, and'',
and
(iii) by adding at the end the following
new subparagraph:
``(H) in the case of colorectal cancer screening
tests, which are performed more frequently than is
covered under section 1834(d);''; and
(B) in paragraph (7), by striking ``or (G)'' and
inserting ``(G), or (H)''.
(d) Payment Under Physician Fee Schedule.--Section
1848(j)(3) (42 U.S.C. 1395w-4(j)(3)), as amended by sections
4102 and 4103, is amended by inserting ``(2)(R) (with respect
to services described in subparagraphs (B), (C), and (D) of
section 1861(pp)(1)),'' before ``(3)''.
(e) Effective Date.--The amendments made by this section
shall apply to items and services furnished on or after January
1, 1998.
SEC. 4105. DIABETES SELF-MANAGEMENT BENEFITS.
(a) Coverage of Diabetes Outpatient Self-management
Training Services.--
(1) In general.--Section 1861 (42 U.S.C. 1395x), as
amended by sections 4103(a) and 4104(a), is amended--
(A) in subsection (s)(2)--
(i) by striking ``and'' at the end
of subparagraph (Q);
(ii) by adding ``and'' at the end
of subparagraph (R); and
(iii) by adding at the end the
following new subparagraph:
``(S) diabetes outpatient self-management training
services (as defined in subsection (qq)); and''; and
(B) by adding at the end the following new
subsection:
``Diabetes Outpatient Self-Management Training Services
``(qq)(1) The term `diabetes outpatient self-management
training services' means educational and training services
furnished (at such times as the Secretary determines
appropriate) to an individual with diabetes by a certified
provider (as described in paragraph (2)(A)) in an outpatient
setting by an individual or entity who meets the quality
standards described in paragraph (2)(B), but only if the
physician who is managing the individual's diabetic condition
certifies that such services are needed under a comprehensive
plan of care related to the individual's diabetic condition to
ensure therapy compliance or to provide the individual with
necessary skills and knowledge (including skills related to the
self-administration of injectable drugs) to participate in the
management of the individual's condition.
``(2) In paragraph (1)--
``(A) a `certified provider' is a physician, or
other individual or entity designated by the Secretary,
that, in addition to providing diabetes outpatient
self-management training services, provides other items
or services for which payment may be made under this
title; and
``(B) a physician, or such other individual or
entity, meets the quality standards described in this
paragraph if the physician, or individual or entity,
meets quality standards established by the Secretary,
except that the physician or other individual or entity
shall be deemed to have met such standards if the
physician or other individual or entity meets
applicable standards originally established by the
National Diabetes Advisory Board and subsequently
revised by organizations who participated in the
establishment of standards by such Board, or is
recognized by an organization that represents
individuals (including individuals under this title)
with diabetes as meeting standards for furnishing the
services.''.
(2) Payment Under Physician Fee Schedule.--Section
1848(j)(3) (42 U.S.C. 1395w-4(j)(3)) as amended in
sections 4102, 4103, and 4104, is amended by inserting
``(2)(S),'' before ``(3),''.
(3) Consultation with organizations in establishing
payment amounts for services provided by physicians.--
In establishing payment amounts under section 1848 of
the Social Security Act for physicians' services
consisting of diabetes outpatient self-management
training services, the Secretary of Health and Human
Services shallconsult with appropriate organizations,
including such organizations representing individuals or medicare
beneficiaries with diabetes.
(b) Blood-testing Strips for Individuals With Diabetes.--
(1) Including strips and monitors as durable
medical equipment.--The first sentence of section
1861(n) (42 U.S.C. 1395x(n)) is amended by inserting
before the semicolon the following: ``, and includes
blood-testing strips and blood glucose monitors for
individuals with diabetes without regard to whether the
individual has Type I or Type II diabetes or to the
individual's use of insulin (as determined under
standards established by the Secretary in consultation
with the appropriate organizations)''.
(2) 10 percent reduction in payments for testing
strips.--Section 1834(a)(2)(B)(iv) (42 U.S.C.
1395m(a)(2)(B)(iv)) is amended by adding before the
period the following: ``(reduced by 10 percent, in the
case of a blood glucose testing strip furnished after
1997 for an individual with diabetes)''.
(c) Establishment of Outcome Measures for Beneficiaries
With Diabetes.--
(1) In general.--The Secretary of Health and Human
Services, in consultation with appropriate
organizations, shall establish outcome measures,
including glysolated hemoglobin (past 90-day average
blood sugar levels), for purposes of evaluating the
improvement of the health status of medicare
beneficiaries with diabetes mellitus.
(2) Recommendations for modifications to screening
benefits.--Taking into account information on the
health status of medicare beneficiaries with diabetes
mellitus as measured under the outcome measures
established under paragraph (1), the Secretary shall
from time to time submit recommendations to Congress
regarding modifications to the coverage of services for
such beneficiaries under the medicare program.
(d) Effective Date.--
(1) In general.--Except as provided in paragraph
(2), the amendments made by this section shall apply to
items and services furnished on or after July 1, 1998.
(2) Testing strips.--The amendment made by
subsection (b)(2) shall apply with respect to blood
glucose testing strips furnished on or after January 1,
1998.
SEC. 4106. STANDARDIZATION OF MEDICARE COVERAGE OF BONE MASS
MEASUREMENTS.
(a) In General.--Section 1861 (42 U.S.C. 1395x), as amended
by sections 4103(a), 4104(a), and 4105(a), is amended--
(1) in subsection (s)--
(A) in paragraph (12)(C), by striking
``and'' at the end,
(B) by striking the period at the end of
paragraph (14) and inserting ``; and'',
(C) by redesignating paragraphs (15) and
(16) as paragraphs (16) and (17), respectively,
and
(D) by inserting after paragraph (14) the
following new paragraph:
``(15) bone mass measurement (as defined in
subsection (rr)).''; and
(2) by inserting after subsection (qq) the
following new subsection:
``Bone Mass Measurement
``(rr)(1) The term `bone mass measurement' means a
radiologic or radioisotopic procedure or other procedure
approved by the Food and Drug Administration performed on a
qualified individual (as defined in paragraph (2)) for the
purpose of identifying bone mass or detecting bone loss or
determining bone quality, and includes a physician's
interpretation of the results of the procedure.
``(2) For purposes of this subsection, the term `qualified
individual' means an individual who is (in accordance with
regulations prescribed by the Secretary)--
``(A) an estrogen-deficient woman at clinical risk
for osteoporosis;
``(B) an individual with vertebral abnormalities;
``(C) an individual receiving long-term
glucocorticoid steroid therapy;
``(D) an individual with primary
hyperparathyroidism; or
``(E) an individual being monitored to assess the
response to or efficacy of an approved osteoporosis
drug therapy.
``(3) The Secretary shall establish such standards
regarding the frequency with which a qualified individual shall
be eligible to be provided benefits for bone mass measurement
under this title.''.
(b) Payment under Physician Fee Schedule.--Section
1848(j)(3) (42 U.S.C. 1395w-4(j)(3)), as amended by sections
4102, 4103, 4104 and 4105, is amended--
(1) by striking ``(4) and (14)'' and inserting
``(4), (14)'' and
(2) by inserting ``and (15)'' after
``1861(nn)(2))''.
(c) Conforming Amendments.--Sections 1864(a),
1902(a)(9)(C), and 1915(a)(1)(B)(ii)(I) (42 U.S.C. 1395aa(a),
1396a(a)(9)(C), and 1396n(a)(1)(B)(ii)(I)) are amended by
striking ``paragraphs (15) and (16)'' each place it appears and
inserting ``paragraphs (16) and (17)''.
(d) Effective Date.--The amendments made by this section
shall apply to bone mass measurements performed on or after
July 1, 1998.
SEC. 4107. VACCINES OUTREACH EXPANSION.
(a) Extension of Influenza and Pneumococcal Vaccination
Campaign.--In order to increase utilization of pneumococcal and
influenza vaccines in medicare beneficiaries, the Influenza and
Pneumococcal Vaccination Campaign carried out by the Health
Care Financing Administration in conjunction with the Centers
for Disease Control and Prevention and the National Coalition
for Adult Immunization, is extended until the end of fiscal
year 2002.
(b) Authorization of Appropriation.--There are hereby
authorized to be appropriated for each of fiscal years 1998
through 2002, $8,000,000 for the Campaign described in
subsection (a). Of the amount so authorized to be appropriated
in each fiscal year, 60 percent of the amount so appropriated
shall be payable from the Federal Hospital Insurance Trust
Fund, and 40 percent shall be payable from the Federal
Supplementary Medical Insurance Trust Fund.
SEC. 4108. STUDY ON PREVENTIVE AND ENHANCED BENEFITS.
(a) Study.--The Secretary of Health and Human Services
shall request the National Academy of Sciences, and as
appropriate in conjunction with the United States Preventive
Services Task Force, to analyze the expansion or modification
of preventive or other benefits provided to medicare
beneficiaries under title XVIII of the Social Security Act. The
analysis shall consider both the short term and long term
benefits, and costs to the medicare program, of such expansion
or modification.
(b) Report.--
(1) Initial report.--Not later than 2 years after
the date of the enactment of this Act, the Secretary
shall submit a report on the findings of the analysis
conducted under subsection (a) to the Committee on Ways
and Means and the Committee on Commerce of the House of
Representatives and the Committee on Finance of the
Senate.
(2) Contents.--Such report shall include specific
findings with respect to coverage of at least the
following benefits:
(A) Nutrition therapy services, including
parenteral and enteral nutrition and including
the provision of such services by a registered
dietitian.
(B) Skin cancer screening.
(C) Medically necessary dental care.
(D) Routine patient care costs for
beneficiaries enrolled in approved clinical
trial programs.
(E) Elimination of time limitation for
coverage of immunosuppressive drugs for
transplant patients.
(3) Funding.--From funds appropriated to the
Department of Health and Human Services for fiscal
years 1998 and 1999, the Secretary shall provide for
such funding as the Secretary determines necessary for
the conduct of the study by the National Academy of
Sciences under this section.
Subtitle C--Rural Initiatives
SEC. 4201. MEDICARE RURAL HOSPITAL FLEXIBILITY PROGRAM.
(a) Medicare Rural Hospital Flexibility Program.--Section
1820 (42 U.S.C. 1395i-4) is amended to read as follows:
``medicare rural hospital flexibility program
``Sec. 1820. (a) Establishment.--Any State that submits an
application in accordance with subsection (b) may establish a
medicare rural hospital flexibility program described in
subsection (c).
``(b) Application.--A State may establish a medicare rural
hospital flexibility program described in subsection (c) if the
State submits to the Secretary at such time and in such form as
the Secretary may require an application containing--
``(1) assurances that the State--
``(A) has developed, or is in the process
of developing, a State rural health care plan
that--
``(i) provides for the creation of
1 or more rural health networks (as
defined in subsection (d)) in the
State;
``(ii) promotes regionalization of
rural health services in the State; and
``(iii) improves access to hospital
and other health services for rural
residents of the State; and
``(B) has developed the rural health care
plan described in subparagraph (A) in
consultation with the hospital association of
the State, rural hospitals located in the
State, and the State Office of Rural Health
(or, in the case of a State in the process of
developing such plan, that assures the
Secretary that the State will consult with its
State hospital association, rural hospitals
located in the State, and the State Office of
Rural Health in developing such plan);
``(2) assurances that the State has designated
(consistent with the rural health care plan described
in paragraph (1)(A)), or is in the process of so
designating, rural nonprofit or public hospitals or
facilities located in the State as critical access
hospitals; and
``(3) such other information and assurances as the
Secretary may require.
``(c) Medicare Rural Hospital Flexibility Program
Described.--
``(1) In general.--A State that has submitted an
application in accordance with subsection (b), may
establish a medicare rural hospital flexibility program
that provides that--
``(A) the State shall develop at least 1
rural health network (as defined in subsection
(d)) in the State; and
``(B) at least 1 facility in the State
shall be designated as a critical access
hospital in accordance with paragraph (2).
``(2) State designation of facilities.--
``(A) In general.--A State may designate 1
or more facilities as a critical access
hospital in accordance with subparagraph (B).
``(B) Criteria for designation as critical
access hospital.--A State may designate a
facility as a critical access hospital if the
facility--
``(i) is a nonprofit or public
hospital and is located in a county (or
equivalent unit of local government) in
a rural area (as defined in section
1886(d)(2)(D)) that--
``(I) is located more than
a 35-mile drive (or, in the
case of mountainous terrain or
in areas with only secondary
roads available, a 15-mile
drive) from a hospital, or
another facility described in
this subsection; or
``(II) is certified by the
State as being a necessary
provider of health care
services to residents in the
area;
``(ii) makes available 24-hour
emergency care services that a State
determines are necessary forensuring
access to emergency care services in each area served by a critical
access hospital;
``(iii) provides not more than 15
(or, in the case of a facility under an
agreement described in subsection (f),
25) acute care inpatient beds (meeting
such standards as the Secretary may
establish) for providing inpatient care
for a period not to exceed 96 hours
(unless a longer period is required
because transfer to a hospital is
precluded because of inclement weather
or other emergency conditions), except
that a peer review organization or
equivalent entity may, on request,
waive the 96-hour restriction on a
case-by-case basis;
``(iv) meets such staffing
requirements as would apply under
section 1861(e) to a hospital located
in a rural area, except that--
``(I) the facility need not
meet hospital standards
relating to the number of hours
during a day, or days during a
week, in which the facility
must be open and fully staffed,
except insofar as the facility
is required to make available
emergency care services as
determined under clause (ii)
and must have nursing services
available on a 24-hour basis,
but need not otherwise staff
the facility except when an
inpatient is present;
``(II) the facility may
provide any services otherwise
required to be provided by a
full-time, on site dietitian,
pharmacist, laboratory
technician, medical
technologist, and radiological
technologist on a part-time,
off site basis under
arrangements as defined in
section 1861(w)(1); and
``(III) the inpatient care
described in clause (iii) may
be provided by a physician
assistant, nurse practitioner,
or clinical nurse specialist
subject to the oversight of a
physician who need not be
present in the facility; and
``(v) meets the requirements of
section 1861(aa)(2)(I).
``(d) Definition of Rural Health Network.--
``(1) In general.--In this section, the term `rural
health network' means, with respect to a State, an
organization consisting of--
``(A) at least 1 facility that the State
has designated or plans to designate as a
critical access hospital; and
``(B) at least 1 hospital that furnishes
acute care services.
``(2) Agreements.--
``(A) In general.--Each critical access
hospital that is a member of a rural health
network shall have an agreement with respect to
each item described in subparagraph (B) with at
least 1 hospital that is a member of the
network.
``(B) Items described.--The items described
in this subparagraph are the following:
``(i) Patient referral and
transfer.
``(ii) The development and use of
communications systems including (where
feasible)--
``(I) telemetry systems;
and
``(II) systems for
electronic sharing of patient
data.
``(iii) The provision of emergency
and non-emergency transportation among
the facility and the hospital.
``(C) Credentialing and quality
assurance.--Each critical access hospital that
is a member of a rural health network shall
have an agreement with respect to credentialing
and quality assurance with at least--
``(i) 1 hospital that is a member
of the network;
``(ii) 1 peer review organization
or equivalent entity; or
``(iii) 1 other appropriate and
qualified entity identified in the
State rural health care plan.
``(e) Certification by the Secretary.--The Secretary shall
certify a facility as a critical access hospital if the
facility--
``(1) is located in a State that has established a
medicare rural hospital flexibility program in
accordance with subsection (c);
``(2) is designated as a critical access hospital
by the State in which it is located; and
``(3) meets such other criteria as the Secretary
may require.
``(f) Permitting Maintenance of Swing Beds.--Nothing in
this section shall be construed to prohibit a State from
designating or the Secretary from certifying a facility as a
critical access hospital solely because, at the time the
facility applies to the State for designation as a critical
access hospital, there is in effect an agreement between the
facility and the Secretary under section 1883 under which the
facility's inpatient hospital facilities are used for the
provision of extended care services, so long as the total
number of beds that may be used at any time for the furnishing
of either such services or acute care inpatient services does
not exceed 25 beds and the number of beds used at any time for
acute care inpatient services does not exceed 15 beds. For
purposes of the previous sentence, any bed of a unit of the
facility that is licensed as a distinct-part skilled nursing
facility at the time the facility applies to the State for
designation as a critical access hospital shall not be counted.
``(g) Grants.--
``(1) Medicare rural hospital flexibility
program.--The Secretary may award grants to States that
have submitted applications in accordance with
subsection (b) for--
``(A) engaging in activities relating to
planning and implementing a rural health care
plan;
``(B) engaging in activities relating to
planning and implementing rural health
networks; and
``(C) designating facilities as critical
access hospitals.
``(2) Rural emergency medical services.--
``(A) In general.--The Secretary may award
grants to States that have submitted
applications in accordance with subparagraph
(B) for the establishment or expansion of a
program for the provision of rural emergency
medical services.
``(B) Application.--An application is in
accordance with this subparagraph if the State
submits to the Secretary at such time and in
such form as the Secretary may require an
application containing the assurances described
in subparagraphs (A)(ii), (A)(iii), and (B) of
subsection (b)(1) and paragraph (3) of that
subsection.
``(h) Grandfathering of Certain Facilities.--
``(1) In general.--Any medical assistance facility
operating in Montana and any rural primary care
hospital designated by the Secretary under this section
prior to the date of the enactment of the Balanced
Budget Act of 1997 shall be deemed to have been
certified by the Secretary under subsection (e) as a
critical access hospital if such facility or hospital
is otherwise eligible to be designated by the State as
a critical access hospital under subsection (c).
``(2) Continuation of medical assistance facility
and rural primary care hospital terms.--Notwithstanding
any other provision of this title, with respect to any
medical assistance facility or rural primary care
hospital described in paragraph (1), any reference in
this title to a `critical access hospital' shall be
deemed to be a reference to a `medical assistance
facility' or `rural primary care hospital'.
``(i) Waiver of Conflicting Part A Provisions.--The
Secretary is authorized to waive such provisions of this part
and part D as are necessary to conduct the program established
under this section.
``(j) Authorization of Appropriations.--There are
authorized to be appropriated from the Federal Hospital
Insurance Trust Fund for making grants to all States under
subsection (g), $25,000,000 in each of the fiscal years 1998
through 2002.''.
(b) Report on Alternative to 96-Hour Rule.--Not later than
June 1, 1998, the Secretary of Health and Human Services shall
submit to Congress a report on the feasibility of, and
administrative requirements necessary to establish an
alternative for certain medical diagnoses (as determined by the
Secretary) to the 96-hour limitation for inpatient care in
critical access hospitals required by section
1820(c)(2)(B)(iii) of the Social Security Act (42 U.S.C. 1395i-
4(c)(2)(B)(iii)), as added by subsection (a) of this section.
(c) Conforming Amendments Relating to Rural Primary Care
Hospitals and Critical Access Hospitals.--
(1) In general.--Title XI of the Social Security
Act (42 U.S.C. 1301 et seq.) and title XVIII of that
Act (42 U.S.C. 1395 et seq.) are each amended by
striking ``rural primary care'' each place it appears
and inserting ``critical access''.
(2) Definitions.--Section 1861(mm) of the Social
Security Act (42 U.S.C. 1395x(mm)) is amended to read
as follows:
``critical access hospital; critical access hospital services
``(mm)(1) The term `critical access hospital' means a
facility certified by the Secretary as a critical access
hospital under section 1820(e).
``(2) The term `inpatient critical access hospital
services' means items and services, furnished to an inpatient
of a critical access hospital by such facility, that would be
inpatient hospital services if furnished to an inpatient of a
hospital by a hospital.
``(3) The term `outpatient critical access hospital
services' means medical and other health services furnished by
a critical access hospital on an outpatient basis.''.
(3) Part a payment.--Section 1814 of the Social
Security Act (42 U.S.C. 1395f) is amended--
(A) in subsection (a)(8), by striking
``72'' and inserting ``96''; and
(B) by amending subsection (l) to read as
follows:
``Payment for Inpatient Critical Access Hospital Services
``(l) The amount of payment under this part for inpatient
critical access hospital services is the reasonable costs of
the critical access hospital in providing such services.''.
(4) Payment continued to designated eachs.--Section
1886(d)(5)(D) of the Social Security Act (42 U.S.C.
1395ww(d)(5)(D)) is amended--
(A) in clause (iii)(III), by inserting ``as
in effect on September 30, 1997'' before the
period at the end; and
(B) in clause (v)--
(i) by inserting ``as in effect on
September 30, 1997'' after
``1820(i)(1)''; and
(ii) by striking ``1820(g)'' and
inserting ``1820(d)''.
(5) Part b payment.--Section 1834(g) of the Social
Security Act (42 U.S.C. 1395m(g)) is amended to read as
follows:
``(g) Payment for Outpatient Critical Access Hospital
Services.--The amount of payment under this part for outpatient
critical access hospital services is the reasonable costs of
the critical access hospital in providing such services.''.
(6) Transition for MAF.--
(A) In general.--The Secretary of Health
and Human Services shall provide for an
appropriate transition for a facility that, as
of the date of the enactment of this Act,
operated as a limited service rural hospital
under a demonstration described in section
4008(i)(1) of the Omnibus Budget Reconciliation
Act of 1990 (42 U.S.C. 1395b-1 note) from such
demonstration to the program established under
subsection (a). At the conclusion of the
transition period described in subparagraph
(B), the Secretary shall end such
demonstration.
(B) Transition period described.--
(i) Initial period.--Subject to
clause (ii), the transition period
described in this subparagraph is the
period beginning on the date of the
enactment of this Act and ending on
October 1, 1998.
(ii) Extension.--If the Secretary
determines that the transition is not
complete as of October 1, 1998, the
Secretary shall provide for an
appropriate extension of the transition
period.
(d) Effective Date.--The amendments made by this section
shall apply to services furnished on or after October 1, 1997.
SEC. 4202. PROHIBITING DENIAL OF REQUEST BY RURAL REFERRAL CENTERS FOR
RECLASSIFICATION ON BASIS OF COMPARABILITY OF
WAGES.
(a) In General.--Section 1886(d)(10)(D) (42 U.S.C.
1395ww(d)(10)(D)) is amended--
(1) by redesignating clause (iii) as clause (iv);
and
(2) by inserting after clause (ii) the following
new clause:
``(iii) Under the guidelines published by the Secretary
under clause (i), in the case of a hospital which has ever been
classified by the Secretary as a rural referral center under
paragraph (5)(C), the Board may not reject the application of
the hospital under this paragraph on the basis of any
comparison between the average hourly wage of the hospital and
the average hourly wage of hospitals in the area in which it is
located.''.
(b) Continuing Treatment of Previously Designated
Centers.--
(1) In general.--Any hospital classified as a rural
referral center by the Secretary of Health and Human
Services under section 1886(d)(5)(C) of the Social
Security Act for fiscal year 1991 shall be classified
as such a rural referral center for fiscal year 1998
and each subsequent fiscal year.
(2) Budget neutrality.--The provisions of section
1886(d)(8)(D) of the Social Security Act shall apply to
reclassifications made pursuant to paragraph (1) in the
same manner as such provisions apply to a
reclassification under section 1886(d)(10) of such Act.
SEC. 4203. HOSPITAL GEOGRAPHIC RECLASSIFICATION PERMITTED FOR PURPOSES
OF DISPROPORTIONATE SHARE PAYMENT ADJUSTMENTS.
(a) In General.--For the period described in subsection
(c), the Medicare Geographic Classification Review Board shall
consider the application under section 1886(d)(10)(C)(i) of the
Social Security Act (42 U.S.C. 1395ww(d)(10)(C)(i)) of a
hospital described in 1886(d)(1)(B) of such Act (42 U.S.C.
1395ww(d)(1)(B)) to change the hospital's geographic
classification for purposes of determining for a fiscal year
eligibility for and amount of additional payment amounts under
section 1886(d)(5)(F) of such Act (42 U.S.C. 1395ww(d)(5)(F)).
(b) Applicable Guidelines.--The Medicare Geographic
Classification Review Board shall apply the guidelines
established for reclassification under subclause (I) of section
1886(d)(10)(C)(i) of such Act to reclassification by reason of
subsection (a) until the Secretary of Health and Human Services
promulgates separate guidelines for such reclassification.
(c) Period Described.--The period described in this
subsection is the period beginning on the date of the enactment
of this Act and ending 30 months after such date.
SEC. 4204. MEDICARE-DEPENDENT, SMALL RURAL HOSPITAL PAYMENT EXTENSION.
(a) Special Treatment Extended.--
(1) Payment methodology.--Section 1886(d)(5)(G) (42
U.S.C. 1395ww(d)(5)(G)) is amended--
(A) in clause (i), by striking ``October 1,
1994,'' and inserting ``October 1, 1994, or
beginning on or after October 1, 1997, and
before October 1, 2001,''; and
(B) in clause (ii)(II), by striking
``October 1, 1994,'' and inserting ``October 1,
1994, or beginning on or after October 1, 1997,
and before October 1, 2001,''.
(2) Extension of target amount.--Section
1886(b)(3)(D) (42 U.S.C. 1395ww(b)(3)(D)) is amended--
(A) in the matter preceding clause (i), by
striking ``September 30, 1994,'' and inserting
``September 30, 1994, and for cost reporting
periods beginning on or after October 1, 1997,
and before October 1, 2001,'';
(B) in clause (ii), by striking ``and'' at
the end;
(C) in clause (iii), by striking the period
at the end and inserting ``, and''; and
(D) by adding after clause (iii) the
following new clause:
``(iv) with respect to discharges occurring during
fiscal year 1998 through fiscal year 2000, the target
amount for the preceding year increased by the
applicable percentage increase under subparagraph
(B)(iv).''.
(3) Permitting hospitals to decline
reclassification.--Section 13501(e)(2) of OBRA-93 (42
U.S.C. 1395ww note) is amended by striking ``or fiscal
year 1994'' and inserting ``, fiscal year 1994, fiscal
year 1998, fiscal year 1999, or fiscal year 2000''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply with respect to discharges occurring on or after
October 1, 1997.
SEC. 4205. RURAL HEALTH CLINIC SERVICES.
(a) Per-Visit Payment Limits for Provider-Based Clinics.--
(1) Extension of limit.--
(A) In general.--The matter in section
1833(f) (42 U.S.C. 1395l(f)) preceding
paragraph (1) is amended by striking
``independent rural health clinics'' and
inserting ``rural health clinics (other than
such clinics in rural hospitals with less than
50 beds)''.
(B) Effective date.--The amendment made by
subparagraph (A) applies to services furnished
on or after January 1, 1998.
(2) Technical clarification.--Section 1833(f)(1)
(42 U.S.C. 1395l(f)(1)) is amended by inserting ``per
visit'' after ``$46''.
(b) Assurance of Quality Services.--
(1) In general.--Subparagraph (I) of the first
sentence of section 1861(aa)(2) (42 U.S.C.
1395x(aa)(2)) is amended to read as follows:
``(I) has a quality assessment and
performance improvement program, and
appropriate procedures for review of
utilization of clinic services, as the
Secretary may specify,''.
(2) Effective date.--The amendment made by
paragraph (1) shall take effect on January 1, 1998.
(c) Waiver of Certain Staffing Requirements Limited to
Clinics in Program.--
(1) In general.--Section 1861(aa)(7)(B) (42 U.S.C.
1395x(aa)(7)(B)) is amended by inserting before the
period ``, or if the facility has not yet been
determined to meet the requirements (including
subparagraph (J) of the first sentence of paragraph
(2)) of a rural health clinic''.
(2) Effective date.--The amendment made by
paragraph (1) applies to waiver requests made on or
after January 1, 1998.
(d) Refinement of Shortage Area Requirements.--
(1) Designation reviewed triennially.--Section
1861(aa)(2) (42 U.S.C. 1395x(aa)(2)) is amended in the
second sentence, in the matter in clause (i) preceding
subclause (I)--
(A) by striking ``and that is designated''
and inserting ``and that, within the previous
3-year period, has been designated''; and
(B) by striking ``or that is designated''
and inserting ``or designated''.
(2) Area must have shortage of health care
practitioners.--Section 1861(aa)(2) (42 U.S.C.
1395x(aa)(2)), as amended by paragraph (1), is further
amended in the second sentence, in the matter in clause
(i) preceding subclause (I)--
(A) by striking the comma after ``personal
health services''; and
(B) by inserting ``and in which there are
insufficient numbers of needed health care
practitioners (as determined by the
Secretary),'' after ``Bureau of the Census)''.
(3) Previously qualifying clinics grandfathered
only to prevent shortage.--
(A) In General.--Section 1861(aa)(2) of the
Social Security Act (42 U.S.C. 1395x(aa)(2)) is
amended in the third sentence by inserting
before the period ``if it is determined, in
accordance with criteria established by the
Secretary in regulations, to be essential to
the delivery of primary care services that
would otherwise be unavailable in the
geographic area served by the clinic''.
(B) Payment for certain physician assistant
services.--Section 1842(b)(6)(C) (42 U.S.C.
1395u(b)(6)(C)) is amended to read as follows:
``(C) in the case of services described in
clause (i) of section 1861(s)(2)(K), payment
shall be made to either (i) the employer of the
physician assistant involved, or (ii) with
respect to a physician assistant who was the
owner of a rural health clinic (as described in
section 1861(aa)(2)) for a continuous period
beginning prior to the date of the enactment of
the Balanced Budget Act of 1997 and ending on
the date that the Secretary determines such
rural health clinic no longer meets the
requirements of section 1861(aa)(2), for such
services provided before January 1, 2003,
payment may be made directly to the physician
assistant; and''.
(4) Effective dates; implementing regulations.--
(A) In general.--Except as otherwise
provided, the amendments made by the preceding
paragraphs take effect on the date of the
enactment of this Act.
(B) Current rural health clinics.--The
amendments made by the preceding paragraphs
take effect, with respect to entities that are
rural health clinics under title XVIII of the
Social Security Act (42 U.S.C. 1395 et seq.) on
the date of the enactment of this Act.
(C) Grandfathered clinics.--
(i) In general.--The amendment made
by paragraph (3)(A) shall take effect
on the effective date of regulations
issued by the Secretary under clause
(ii).
(ii) Regulations.--The Secretary
shall issue final regulations
implementing paragraph (3)(A) that
shall take effect no later than January
1, 1999.
SEC. 4206. MEDICARE REIMBURSEMENT FOR TELEHEALTH SERVICES.
(a) In General.--Not later than January 1, 1999, the
Secretary of Health and Human Services shall make payments from
the Federal Supplementary Medical Insurance Trust Fund under
part B of title XVIII of the Social Security Act (42 U.S.C.
1395j et seq.) in accordance with the methodology described in
subsection (b) for professional consultation via
telecommunications systems with a physician (as defined in
section 1861(r) of such Act (42 U.S.C. 1395x(r)) or a
practitioner (described in section 1842(b)(18)(C) of such Act
(42 U.S.C. 1395u(b)(18)(C)) furnishing a service for which
payment may be made under such part to a beneficiary under the
medicareprogram residing in a county in a rural area (as
defined in section 1886(d)(2)(D) of such Act (42 U.S.C.
1395ww(d)(2)(D))) that is designated as a health professional shortage
area under section 332(a)(1)(A) of the Public Health Service Act (42
U.S.C. 254e(a)(1)(A)), notwithstanding that the individual physician or
practitioner providing the professional consultation is not at the same
location as the physician or practitioner furnishing the service to
that beneficiary.
(b) Methodology for Determining Amount of Payments.--Taking
into account the findings of the report required under section
192 of the Health Insurance Portability and Accountability Act
of 1996 (Public Law 104-191; 110 Stat. 1988), the findings of
the report required under paragraph (c), and any other findings
related to the clinical efficacy and cost-effectiveness of
telehealth applications, the Secretary shall establish a
methodology for determining the amount of payments made under
subsection (a) within the following parameters:
(1) The payment shall be shared between the
referring physician or practitioner and the consulting
physician or practitioner. The amount of such payment
shall not be greater than the current fee schedule of
the consulting physician or practitioner for the health
care services provided.
(2) The payment shall not include any reimbursement
for any telephone line charges or any facility fees,
and a beneficiary may not be billed for any such
charges or fees.
(3) The payment shall be made subject to the
coinsurance and deductible requirements under
subsections (a)(1) and (b) of section 1833 of the
Social Security Act (42 U.S.C. 1395l).
(4) The payment differential of section 1848(a)(3)
of such Act (42 U.S.C. 1395w-4(a)(3)) shall apply to
services furnished by non-participating physicians. The
provisions of section 1848(g) of such Act (42 U.S.C.
1395w-4(g)) and section 1842(b)(18) of such Act (42
U.S.C. 1395u(b)(18)) shall apply. Payment for such
service shall be increased annually by the update
factor for physicians' services determined under
section 1848(d) of such Act (42 U.S.C. 1395w-4(d)).
(c) Supplemental Report.--Not later than January 1, 1999,
the Secretary shall submit a report to Congress which shall
contain a detailed analysis of--
(1) how telemedicine and telehealth systems are
expanding access to health care services;
(2) the clinical efficacy and cost-effectiveness of
telemedicine and telehealth applications;
(3) the quality of telemedicine and telehealth
services delivered; and
(4) the reasonable cost of telecommunications
charges incurred in practicing telemedicine and
telehealth in rural, frontier, and underserved areas.
(d) Expansion of Telehealth Services for Certain Medicare
Beneficiaries.--
(1) In general.--Not later than January 1, 1999,
the Secretary shall submit a report to Congress that
examines the possibility of making payments from the
Federal Supplementary Medical Insurance Trust Fund
under part B of title XVIII of the Social Security Act
(42 U.S.C. 1395j et seq.) for professional consultation
via telecommunications systems with such a physician or
practitioner furnishing a service for which payment may
be made under such part to a beneficiary described in
paragraph (2), notwithstanding that the individual
physician or practitioner providing the professional
consultation is not at the same location as the
physician or practitioner furnishing the service to
that beneficiary.
(2) Beneficiary described.--A beneficiary described
in this paragraph is a beneficiary under the medicare
program under title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.) who does not reside in a rural
area (as so defined) that is designated as a health
professional shortage area under section 332(a)(1)(A)
of the Public Health Service Act (42 U.S.C.
254e(a)(1)(A)), who is homebound or nursing homebound,
and for whom beingtransferred for health care services
imposes a serious hardship.
(3) Report.--The report described in paragraph (1)
shall contain a detailed statement of the potential
costs and savings to the medicare program of making the
payments described in that paragraph using various
reimbursement schemes.
SEC. 4207. INFORMATICS, TELEMEDICINE, AND EDUCATION DEMONSTRATION
PROJECT.
(a) Purpose and Authorization.--
(1) In general.--Not later than 9 months after the
date of enactment of this section, the Secretary of
Health and Human Services shall provide for a
demonstration project described in paragraph (2).
(2) Description of project.--
(A) In general.--The demonstration project
described in this paragraph is a single
demonstration project to use eligible health
care provider telemedicine networks to apply
high-capacity computing and advanced networks
to improve primary care (and prevent health
care complications) to medicare beneficiaries
with diabetes mellitus who are residents of
medically underserved rural areas or residents
of medically underserved inner-city areas.
(B) Medically underserved defined.--As used
in this paragraph, the term ``medically
underserved'' has the meaning given such term
in section 330(b)(3) of the Public Health
Service Act (42 U.S.C. 254b(b)(3)).
(3) Waiver.--The Secretary shall waive such
provisions of title XVIII of the Social Security Act as
may be necessary to provide for payment for services
under the project in accordance with subsection (d).
(4) Duration of project.--The project shall be
conducted over a 4-year period.
(b) Objectives of Project.--The objectives of the project
include the following:
(1) Improving patient access to and compliance with
appropriate care guidelines for individuals with
diabetes mellitus through direct telecommunications
link with information networks in order to improve
patient quality-of-life and reduce overall health care
costs.
(2) Developing a curriculum to train health
professionals (particularly primary care health
professionals) in the use of medical informatics and
telecommunications.
(3) Demonstrating the application of advanced
technologies, such as video-conferencing from a
patient's home, remote monitoring of a patient's
medical condition, interventional informatics, and
applying individualized, automated care guidelines, to
assist primary care providers in assisting patients
with diabetes in a home setting.
(4) Application of medical informatics to residents
with limited English language skills.
(5) Developing standards in the application of
telemedicine and medical informatics.
(6) Developing a model for the cost-effective
delivery of primary and related care both in a managed
care environment and in a fee-for-service environment.
(c) Eligible Health Care Provider Telemedicine Network
Defined.--For purposes of this section, the term ``eligible
health care provider telemedicine network'' means a consortium
that includes at least one tertiary care hospital (but no more
than 2 such hospitals), at least one medical school, no more
than 4 facilities in rural or urban areas, and at least one
regional telecommunications provider and that meets the
following requirements:
(1) The consortium is located in an area with a
high concentration of medical schools and tertiary care
facilities in the United States and has appropriate
arrangements (within or outside the consortium) with
such schools and facilities, universities, and
telecommunications providers, in order to conduct the
project.
(2) The consortium submits to the Secretary an
application at such time, in such manner, and
containing suchinformation as the Secretary may
require, including a description of the use to which the consortium
would apply any amounts received under the project and the source and
amount of non-Federal funds used in the project.
(3) The consortium guarantees that it will be
responsible for payment for all costs of the project
that are not paid under this section and that the
maximum amount of payment that may be made to the
consortium under this section shall not exceed the
amount specified in subsection (d)(3).
(d) Coverage as Medicare Part B Services.--
(1) In general.--Subject to the succeeding
provisions of this subsection, services related to the
treatment or management of (including prevention of
complications from) diabetes for medicare beneficiaries
furnished under the project shall be considered to be
services covered under part B of title XVIII of the
Social Security Act.
(2) Payments.--
(A) In general.--Subject to paragraph (3),
payment for such services shall be made at a
rate of 50 percent of the costs that are
reasonable and related to the provision of such
services. In computing such costs, the
Secretary shall include costs described in
subparagraph (B), but may not include costs
described in subparagraph (C).
(B) Costs that may be included.--The costs
described in this subparagraph are the
permissible costs (as recognized by the
Secretary) for the following:
(i) The acquisition of telemedicine
equipment for use in patients' homes
(but only in the case of patients
located in medically underserved
areas).
(ii) Curriculum development and
training of health professionals in
medical informatics and telemedicine.
(iii) Payment of telecommunications
costs (including salaries and
maintenance of equipment), including
costs of telecommunications between
patients' homes and the eligible
network and between the network and
other entities under the arrangements
described in subsection (c)(1).
(iv) Payments to practitioners and
providers under the medicare programs.
(C) Costs not included.--The costs
described in this subparagraph are costs for
any of the following:
(i) The purchase or installation of
transmission equipment (other than such
equipment used by health professionals
to deliver medical informatics services
under the project).
(ii) The establishment or operation
of a telecommunications common carrier
network.
(iii) Construction (except for
minor renovations related to the
installation of reimbursable equipment)
or the acquisition or building of real
property.
(3) Limitation.--The total amount of the payments
that may be made under this section shall not exceed
$30,000,000 for the period of the project (described in
subsection (a)(4)).
(4) Limitation on cost-sharing.--The project may
not impose cost sharing on a medicare beneficiary for
the receipt of services under the project in excess of
20 percent of the costs that are reasonable and related
to the provision of such services.
(e) Reports.--The Secretary shall submit to the Committee
on Ways and Means and the Committee Commerce of the House of
Representatives and the Committee on Finance of the Senate
interim reports on the project and a final report on the
project within 6 months after the conclusion of the project.
The final report shall include an evaluation of the impact of
the use of telemedicine and medical informatics on improving
access of medicare beneficiaries to health care services, on
reducing the costs of such services, and on improving the
quality of life of such beneficiaries.
(f) Definitions.--For purposes of this section:
(1) Interventional informatics.--The term
``interventional informatics'' means using information
technology and virtual reality technology to intervene
in patient care.
(2) Medical informatics.--The term ``medical
informatics'' means the storage, retrieval, and use of
biomedical and related information for problem solving
and decision-making through computing and
communications technologies.
(3) Project.--The term ``project'' means the
demonstration project under this section.
Subtitle D--Anti-Fraud and Abuse Provisions and Improvements in
Protecting Program Integrity
CHAPTER 1--REVISIONS TO SANCTIONS FOR FRAUD AND ABUSE
SEC. 4301. PERMANENT EXCLUSION FOR THOSE CONVICTED OF 3 HEALTH CARE
RELATED CRIMES.
Section 1128(c)(3) (42 U.S.C. 1320a-7(c)(3)) is amended--
(1) in subparagraph (A), by inserting ``or in the
case described in subparagraph (G)'' after ``subsection
(b)(12)'';
(2) in subparagraphs (B) and (D), by striking ``In
the case'' and inserting ``Subject to subparagraph (G),
in the case''; and
(3) by adding at the end the following new
subparagraph:
``(G) In the case of an exclusion of an individual under
subsection (a) based on a conviction occurring on or after the
date of the enactment of this subparagraph, if the individual
has (before, on, or after such date) been convicted--
``(i) on one previous occasion of one or more
offenses for which an exclusion may be effected under
such subsection, the period of the exclusion shall be
not less than 10 years, or
``(ii) on 2 or more previous occasions of one or
more offenses for which an exclusion may be effected
under such subsection, the period of the exclusion
shall be permanent.''.
SEC. 4302. AUTHORITY TO REFUSE TO ENTER INTO MEDICARE AGREEMENTS WITH
INDIVIDUALS OR ENTITIES CONVICTED OF FELONIES.
(a) Medicare Part A.--Section 1866(b)(2) (42 U.S.C.
1395cc(b)(2)) is amended--
(1) in subparagraph (B), by striking ``or'' at the
end;
(2) in subparagraph (C), by striking the period at
the end and inserting ``, or''; and
(3) by adding at the end the following new
subparagraph:
``(D) has ascertained that the provider has
been convicted of a felony under Federal or
State law for an offense which the Secretary
determines is detrimental to the best interests
of the program or program beneficiaries.''.
(b) Medicare Part B.--Section 1842(h) (42 U.S.C. 1395u(h))
is amended by adding at the end the following new paragraph:
``(8) The Secretary may refuse to enter into an agreement
with a physician or supplier under this subsection, or may
terminate or refuse to renew such agreement, in the event that
such physician or supplier has been convicted of a felony under
Federal or State law for an offense which the Secretary
determines is detrimental to the best interests of the program
or program beneficiaries.''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act and
apply to the entry and renewal of contracts on or after such
date.
SEC. 4303. EXCLUSION OF ENTITY CONTROLLED BY FAMILY MEMBER OF A
SANCTIONED INDIVIDUAL.
(a) In General.--Section 1128 (42 U.S.C. 1320a-7) is
amended--
(1) in subsection (b)(8)(A)--
(A) in clause (i), by striking ``or'' at
the end;
(B) in clause (ii), by striking the dash at
the end and inserting ``; or''; and
(C) by inserting after clause (ii) the
following:
``(iii) who was described in clause (i) but
is no longer so described because of a transfer
of ownership or control interest, in
anticipation of (or following) a conviction,
assessment, or exclusion described in
subparagraph (B) against the person, to an
immediate family member (as defined in
subsection (j)(1)) or a member of the household
of the person (as defined in subsection (j)(2))
who continues to maintain an interest described
in such clause--''; and
(2) by adding at the end the following new
subsection:
``(j) Definition of Immediate Family Member and Member of
Household.--For purposes of subsection (b)(8)(A)(iii):
``(1) The term `immediate family member' means,
with respect to a person--
``(A) the husband or wife of the person;
``(B) the natural or adoptive parent,
child, or sibling of the person;
``(C) the stepparent, stepchild,
stepbrother, or stepsister of the person;
``(D) the father-, mother-, daughter-, son-
, brother-, or sister-in-law of the person;
``(E) the grandparent or grandchild of the
person; and
``(F) the spouse of a grandparent or
grandchild of the person.
``(2) The term `member of the household' means,
with respect to any person, any individual sharing a
common abode as part of a single family unit with the
person, including domestic employees and others who
live together as a family unit, but not including a
roomer or boarder.''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date that is 45 days after the date of
the enactment of this Act.
SEC. 4304. IMPOSITION OF CIVIL MONEY PENALTIES.
(a) Civil Money Penalties for Persons That Contract With
Excluded Individuals.--Section 1128A(a) (42 U.S.C. 1320a-7a(a))
is amended--
(1) in paragraph (4), by striking ``or'' at the
end;
(2) in paragraph (5), by adding ``or'' at the end;
and
(3) by inserting after paragraph (5) the following
new paragraph:
``(6) arranges or contracts (by employment or
otherwise) with an individual or entity that the person
knows or should know is excluded from participation in
a Federal health care program (as defined in section
1128B(f)), for the provision of items or services for
which payment may be made under such a program;''.
(b) Civil Money Penalties for Kickbacks.--
(1) Permitting secretary to impose civil money
penalty.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)), as
amended by subsection (a), is amended--
(A) in paragraph (5), by striking ``or'' at
the end;
(B) in paragraph (6), by adding ``or'' at
the end; and
(C) by adding after paragraph (6) the
following new paragraph:
``(7) commits an act described in paragraph (1) or
(2) of section 1128B(b);''.
(2) Description of civil money penalty
applicable.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)),
as amended by paragraph (1), is amended in the matter
following paragraph (7)--
(A) by striking ``occurs).'' and inserting
``occurs; or in cases under paragraph (7),
$50,000 for each such act).''; and
(B) by inserting after ``of such claim''
the following: ``(or, in cases under paragraph
(7), damages of not more than 3 times the total
amount of remuneration offered, paid,
solicited, or received, without regard to
whether a portion of such remuneration was
offered, paid, solicited, or received for a
lawful purpose)''.
(c) Effective Dates.--
(1) Contracts with excluded persons.--The
amendments made by subsection (a) shall apply to
arrangements and contracts entered into after the date
of the enactment of this Act.
(2) Kickbacks.--The amendments made by subsection
(b) shall apply to acts committed after the date of the
enactment of this Act.
CHAPTER 2--IMPROVEMENTS IN PROTECTING PROGRAM INTEGRITY
SEC. 4311. IMPROVING INFORMATION TO MEDICARE BENEFICIARIES.
(a) Inclusion of Information Regarding Medicare Waste,
Fraud, and Abuse in Annual Notice.--
(1) In General.--Section 1804 (42 U.S.C. 1395b-2)
is amended by adding at the end the following new
subsection:
``(c) The notice provided under subsection (a) shall
include--
``(1) a statement which indicates that because
errors do occur and because medicare fraud, waste, and
abuse is a significant problem, beneficiaries should
carefully check any explanation of benefits or itemized
statement furnished pursuant to section 1806 for
accuracy and report any errors or questionable charges
by calling the toll-free phone number described in
paragraph (4);
``(2) a statement of the beneficiary's right to
request an itemized statement for medicare items and
services (as provided in section 1806(b));
``(3) a description of the program to collect
information on medicare fraud and abuse established
under section 203(b) of the Health Insurance
Portability and Accountability Act of 1996; and
``(4) a toll-free telephone number maintained by
the Inspector General in the Department of Health and
Human Services for the receipt of complaints and
information about waste, fraud, and abuse in the
provision or billing of services under this title.''.
(2) Effective date.--The amendment made by this
subsection shall apply to notices provided on or after
January 1, 1998.
(b) Clarification of Requirement To Provide Explanation of
Medicare Benefits.--
(1) In general.--Title XVIII is amended by
inserting after section 1805 (as added by section 4022)
the following new section:
``explanation of medicare benefits
``Sec. 1806. (a) In General.--The Secretary shall furnish
to each individual for whom payment has been made under this
title (or would be made without regard to any deductible) a
statement which--
``(1) lists the item or service for which payment
has been made and the amount of such payment for each
item or service; and
``(2) includes a notice of the individual's right
to request an itemized statement (as provided in
subsection (b)).
``(b) Request for Itemized Statement for Medicare Items and
Services.--
``(1) In general.--An individual may submit a
written request to any physician, provider, supplier,
or any other person (including an organization, agency,
or other entity) for an itemized statement for any item
or service provided to such individual by such person
with respect to which payment has been made under this
title.
``(2) 30-day period to furnish statement.--
``(A) In general.--Not later than 30 days
after the date on which a request under
paragraph (1) has been made, a person described
in such paragraph shall furnish an itemized
statement describing each item or service
provided to the individual requesting the
itemized statement.
``(B) Penalty.--Whoever knowingly fails to
furnish an itemized statement in accordance
with subparagraph (A) shall be subject to a
civil money penalty of not more than $100 for
each such failure. Such penalty shall be
imposed and collected in the same manner as
civil money penalties under subsection (a) of
section 1128A are imposed and collected under
that section.
``(3) Review of itemized statement.--
``(A) In general.--Not later than 90 days
after the receipt of an itemized statement
furnished under paragraph (1), an individual
may submit a written request for a review of
the itemized statement to the Secretary.
``(B) Specific allegations.--A request for
a review of the itemized statement shall
identify--
``(i) specific items or services
that the individual believes were not
provided as claimed, or
``(ii) any other billing
irregularity (including duplicate
billing).
``(4) Findings of secretary.--The Secretary shall,
with respect to each written request submitted under
paragraph (3), determine whether the itemized statement
identifies specific items or services that were not
provided as claimed or any other billing irregularity
(including duplicate billing) that has resulted in
unnecessary payments under this title.
``(5) Recovery of amounts.--The Secretary shall
take all appropriate measures to recover amounts
unnecessarily paid under this title with respect to a
statement described in paragraph (4).''.
(2) Conforming amendment.--Subsection (a) of
section 203 of the Health Insurance Portability and
Accountability Act of 1996 is repealed.
(3) Effective dates.--
(A) Statement by secretary.--Paragraph (1)
of section 1806(a) of the Social Security Act,
as added by paragraph (1), and the repeal made
by paragraph (2) shall take effect on the date
of the enactment of this Act.
(B) Itemized statement.--Paragraph (2) of
section 1806(a) and section 1806(b) of the
Social Security Act, as so added, shall take
effect not later than January 1, 1999.
SEC. 4312. DISCLOSURE OF INFORMATION AND SURETY BONDS.
(a) Disclosure of Information and Surety Bond Requirement
for Suppliers of Durable Medical Equipment.--Section 1834(a)
(42 U.S.C. 1395m(a)) is amended by inserting after paragraph
(15) the following new paragraph:
``(16) Disclosure of information and surety bond.--
The Secretary shall not provide for the issuance (or
renewal) of a provider number for a supplier of durable
medical equipment, for purposes of payment under this
part for durable medical equipment furnished by the
supplier, unless the supplier provides the Secretary on
a continuing basis--
``(A) with--
``(i) full and complete information
as to the identity of each person with
an ownership or control interest (as
defined in section 1124(a)(3)) in the
supplier or in any subcontractor (as
defined by the Secretary in
regulations) in which the supplier
directly or indirectly has a 5 percent
or more ownership interest; and
``(ii) to the extent determined to
be feasible under regulations of the
Secretary, the name of any disclosing
entity (as defined in section
1124(a)(2)) with respect to which a
person with such an ownership or
control interest in the supplier is a
person with such an ownership or
control interest in the disclosing
entity; and
``(B) with a surety bond in a form
specified by the Secretary and in an amount
that is not less than $50,000.
The Secretary may waive the requirement of a bond under
subparagraph (B) in the case of a supplier that
provides a comparable surety bond under State law.''.
(b) Surety Bond Requirement for Home Health Agencies.--
(1) In general.--Section 1861(o) (42 U.S.C.
1395x(o)) is amended--
(A) in paragraph (6), by striking ``and''
at the end;
(B) by redesignating paragraph (7) as
paragraph (8);
(C) by inserting after paragraph (6) the
following new paragraph:
``(7) provides the Secretary on a continuing basis
with a surety bond in a form specified by the Secretary
and in an amount that is not less than $50,000; and'';
and
(D) by adding at the end the following:
``The Secretary may waive the requirement of a
surety bond under paragraph (7) in the case of
an agency or organization that provides a
comparable surety bond under State law.''.
(2) Conforming amendments.--Section 1861(v)(1)(H)
(42 U.S.C. 1395x(v)(1)(H)) is amended--
(A) in clause (i), by striking ``the
financial security requirement described in
subsection (o)(7)'' and inserting ``the surety
bond requirement described in subsection (o)(7)
and the financial security requirement
described in subsection (o)(8)''; and
(B) in clause (ii), by striking ``the
financial security requirement described in
subsection (o)(7) applies'' and inserting ``the
surety bond requirement described in subsection
(o)(7) and the financial security requirement
described in subsection (o)(8) apply''.
(3) Reference to current disclosure requirement.--
For additional provisions requiring home health
agencies to disclose information on ownership and
control interests, see section 1124 of the Social
Security Act (42 U.S.C. 1320a-3).
(c) Authorizing Application of Disclosure and Surety Bond
Requirements to Other Health Care Providers.--Section
1834(a)(16) (42 U.S.C. 1395m(a)(16)), as added by subsection
(a), is amended by adding at the endthe following: ``The
Secretary, at the Secretary's discretion, may impose the requirements
of the first sentence with respect to some or all providers of items or
services under part A or some or all suppliers or other persons (other
than physicians or other practitioners, as defined in section
1842(b)(18)(C)) who furnish items or services under this part.''.
(d) Application to Comprehensive Outpatient Rehabilitation
Facilities (CORFs).--Section 1861(cc)(2) (42 U.S.C.
1395x(cc)(2)) is amended--
(1) in subparagraph (H), by striking ``and'' at the
end;
(2) by redesignating subparagraph (I) as
subparagraph (J);
(3) by inserting after subparagraph (H) the
following new subparagraph:
``(I) provides the Secretary on a continuing basis
with a surety bond in a form specified by the Secretary
and in an amount that is not less than $50,000; and'';
and
(4) by adding at the end the following flush
sentence:
``The Secretary may waive the requirement of a surety bond
under subparagraph (I) in the case of a facility that provides
a comparable surety bond under State law.''.
(e) Application to Rehabilitation Agencies.--Section
1861(p) (42 U.S.C. 1395x(p)) is amended--
(1) in paragraph (4)(A)(v), by inserting after ``as
the Secretary may find necessary,'' the following:
``and provides the Secretary on a continuing basis with
a surety bond in a form specified by the Secretary and
in an amount that is not less than $50,000,'', and
(2) by adding at the end the following: ``The
Secretary may waive the requirement of a surety bond
under paragraph (4)(A)(v) in the case of a clinic or
agency that provides a comparable surety bond under
State law.''.
(f) Effective Dates.--
(1) Suppliers of durable medical equipment.--The
amendment made by subsection (a) shall apply to
suppliers of durable medical equipment with respect to
such equipment furnished on or after January 1, 1998.
(2) Home health agencies.--The amendments made by
subsection (b) shall apply to home health agencies with
respect to services furnished on or after January 1,
1998. The Secretary of Health and Human Services shall
modify participation agreements under section
1866(a)(1) of the Social Security Act (42 U.S.C.
1395cc(a)(1)) with respect to home health agencies to
provide for implementation of such amendments on a
timely basis.
(3) Other amendments.--The amendments made by
subsections (c) through (e) shall take effect on the
date of the enactment of this Act and may be applied
with respect to items and services furnished on or
after January 1, 1998.
SEC. 4313. PROVISION OF CERTAIN IDENTIFICATION NUMBERS.
(a) Requirements To Disclose Employer Identification
Numbers (EINS) and Social Security Account Numbers (SSNs).--
Section 1124(a)(1) (42 U.S.C. 1320a-3(a)(1)) is amended by
inserting before the period at the end the following: ``and
supply the Secretary with both the employer identification
number (assigned pursuant to section 6109 of the Internal
Revenue Code of 1986) and social security account number
(assigned under section 205(c)(2)(B)) of the disclosing entity,
each person with an ownership or control interest (as defined
in subsection (a)(3)), and any subcontractor in which the
entity directly or indirectly has a 5 percent or more ownership
interest.
(b) Other Medicare Providers.--Section 1124A (42 U.S.C.
1320a-3a) is amended--
(1) in subsection (a)--
(A) in paragraph (1), by striking ``and''
at the end;
(B) in paragraph (2), by striking the
period at the end and inserting ``; and''; and
(C) by adding at the end the following new
paragraph:
``(3) including the employer identification number
(assigned pursuant to section 6109 of the Internal
Revenue Code of 1986) and social security account
number (assigned under section 205(c)(2)(B)) of the
disclosing part B provider and any person, managing
employee, or other entity identified or described under
paragraph (1) or (2).''; and
(2) in subsection (c)(1), by inserting ``(or, for
purposes of subsection (a)(3), any entity receiving
payment)'' after ``on an assignment-related basis''.
(c) Verification by Social Security Administration (SSA).--
Section 1124A (42 U.S.C. 1320a-3a), as amended by subsection
(b), is amended--
(1) by redesignating subsection (c) as subsection
(d); and
(2) by inserting after subsection (b) the following
new subsection:
``(c) Verification.--
``(1) Transmittal by hhs.--The Secretary shall
transmit--
``(A) to the Commissioner of Social
Security information concerning each social
security account number (assigned under section
205(c)(2)(B)), and
``(B) to the Secretary of the Treasury
information concerning each employer
identification number (assigned pursuant to
section 6109 of the Internal Revenue Code of
1986),
supplied to the Secretary pursuant to subsection (a)(3)
or section 1124(c) to the extent necessary for
verification of such information in accordance with
paragraph (2).
``(2) Verification.--The Commissioner of Social
Security and the Secretary of the Treasury shall verify
the accuracy of, or correct, the information supplied
by the Secretary to such official pursuant to paragraph
(1), and shall report such verifications or corrections
to the Secretary.
``(3) Fees for verification.--The Secretary shall
reimburse the Commissioner and Secretary of the
Treasury, at a rate negotiated between the Secretary
and such official, for the costs incurred by such
official in performing the verification and correction
services described in this subsection.''.
(d) Report.--Before the amendments made by this section may
become effective, the Secretary of Health and Human Services
shall submit to Congress a report on steps the Secretary has
taken to assure the confidentiality of social security account
numbers that will be provided to the Secretary under such
amendments.
(e) Effective Dates.--
(1) Disclosure requirements.--The amendment made by
subsection (a) shall apply to the application of
conditions of participation, and entering into and
renewal of contracts and agreements, occurring more
than 90 days after the date of submission of the report
under subsection (d).
(2) Other providers.--The amendments made by
subsection (b) shall apply to payment for items and
services furnished more than 90 days after the date of
submission of such report.
SEC. 4314. ADVISORY OPINIONS REGARDING CERTAIN PHYSICIAN SELF-REFERRAL
PROVISIONS.
Section 1877(g) (42 U.S.C. 1395nn(g)) is amended by adding
at the end the following new paragraph:
``(6) Advisory opinions.--
``(A) In general.--The Secretary shall
issue written advisory opinions concerning
whether a referral relating to designated
health services (other than clinical laboratory
services) is prohibited under this section.
Each advisory opinion issued by the Secretary
shall be binding as to the Secretary and the
party or parties requesting the opinion.
``(B) Application of certain rules.--The
Secretary shall, to the extent practicable,
apply the rules under subsections (b)(3) and
(b)(4) and take into account the regulations
promulgated under subsection (b)(5) of section
1128D in the issuance of advisory opinions
under this paragraph.
``(C) Regulations.--In order to implement
this paragraph in a timely manner, the
Secretary may promulgate regulations that take
effect on an interim basis, after notice and
pending opportunity for public comment.
``(D) Applicability.--This paragraph shall
apply to requests for advisory opinions made
after the date which is 90 days after the date
of the enactment of this paragraph and before
the close of the period described in section
1128D(b)(6).''.
SEC. 4315. REPLACEMENT OF REASONABLE CHARGE METHODOLOGY BY FEE
SCHEDULES.
(a) Application of Fee Schedule.--Section 1842 (42 U.S.C.
1395u) is amended by adding at the end the following new
subsection:
``(s)(1) The Secretary may implement a statewide or other
areawide fee schedule to be used for payment of any item or
service described in paragraph (2) which is paid on a
reasonable charge basis. Any fee schedule established under
this paragraph for such item or service shall be updated each
year by the percentage increase in the consumer price index for
all urban consumers (United States city average) for the 12-
month period ending with June of the preceding year, except
that in no event shall a fee schedule for an item described in
paragraph (2)(D) be updated before 2003.
``(2) The items and services described in this paragraph
are as follows:
``(A) Medical supplies.
``(B) Home dialysis supplies and equipment (as
defined in section 1881(b)(8)).
``(C) Therapeutic shoes.
``(D) Parenteral and enteral nutrients, equipment,
and supplies.
``(E) Electromyogram devices.
``(F) Salivation devices.
``(G) Blood products.
``(H) Transfusion medicine.''.
(b) Conforming Amendment.--Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)) is amended--
(A) by striking ``and (P)'' and inserting
``(P)''; and
(B) by striking the semicolon at the end
and inserting the following: ``, and (Q) with
respect to items or services for which fee
schedules are established pursuant to section
1842(s), the amounts paid shall be 80 percent
of the lesser of the actual charge or the fee
schedule established in such section;''.
(c) Effective Dates.--The amendments made by this section
to the extent such amendments substitute fee schedules for
reasonable charges, shall apply to particular services as of
the date specified by the Secretary of Health and Human
Services.
(d) Initial Budget Neutrality.--The Secretary, in
developing a fee schedule for particular services (under the
amendments made by this section), shall set amounts for the
first year period to which the fee schedule applies at a level
so that the total payments under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.) for those services for
that year period shall be approximately equal to the estimated
total payments if such fee schedule had not been implemented.
SEC. 4316. APPLICATION OF INHERENT REASONABLENESS TO ALL PART B
SERVICES OTHER THAN PHYSICIANS' SERVICES.
(a) In General.--Paragraphs (8) and (9) of section 1842(b)
(42 U.S.C. 1395u(b)) are amended to read as follows:
``(8)(A)(i) The Secretary shall by regulation--
``(I) describe the factors to be used in
determining the cases (of particular items or services)
in which the application of this part (other than to
physicians' services paid under section 1848) results
in the determination of an amount that, because of its
being grossly excessive or grossly deficient, is not
inherently reasonable, and
``(II) provide in those cases for the factors to be
considered in determining an amount that is realistic
and equitable.
``(ii) Notwithstanding the determination made in clause
(i), the Secretary may not apply factors that would increase or
decrease the payment under this part during any year for any
particular item or service by more than 15 percent from such
payment during the preceding year except as provided in
subparagraph (B).
``(B) The Secretary may make a determination under this
subparagraph that would result in an increase or decrease under
subparagraph (A) of more than 15 percent of the payment amount
for a year, but only if--
``(i) the Secretary's determination takes into
account the factors described in subparagraph (C) and
any additional factors the Secretary determines
appropriate,
``(ii) the Secretary's determination takes into
account the potential impacts described in subparagraph
(D), and
``(iii) the Secretary complies with the procedural
requirements of paragraph (9).
``(C) The factors described in this subparagraph are as
follows:
``(i) The programs established under this title and
title XIX are the sole or primary sources of payment
for an item or service.
``(ii) The payment amount does not reflect changing
technology, increased facility with that technology, or
reductions in acquisition or production costs.
``(iii) The payment amount for an item or service
under this part is substantially higher or lower than
the payment made for the item or service by other
purchasers.
``(D) The potential impacts of a determination under
subparagraph (B) on quality, access, and beneficiary liability,
including the likely effects on assignment rates and
participation rates.
``(9)(A) The Secretary shall consult with representatives
of suppliers or other individuals who furnish an item or
service before making a determination under paragraph (8)(B)
with regard to that item or service.
``(B) The Secretary shall publish notice of a proposed
determination under paragraph (8)(B) in the Federal Register--
``(i) specifying the payment amount proposed to be
established with respect to an item or service,
``(ii) explaining the factors and data that the
Secretary took into account in determining the payment
amount so specified, and
``(iii) explaining the potential impacts described
in paragraph (8)(D).
``(C) After publication of the notice required by
subparagraph (B), the Secretary shall allow not less than 60
days for public comment on the proposed determination.
``(D)(i) Taking into consideration the comments made by the
public, the Secretary shall publish in the Federal Register a
final determination under paragraph (8)(B) with respect to the
payment amount to be established with respect to the item or
service.
``(ii) A final determination published pursuant to clause
(i) shall explain the factors and data that the Secretary took
into consideration in making the final determination.''.
(b) Conforming Amendment.--Section 1834(a)(10)(B) (42
U.S.C. 1395m(a)(10)(B)) is amended--
(1) by striking ``For covered items furnished on or
after January 1, 1991, the'' and inserting ``The'';
(2) by striking ``(other than subparagraph (D))'';
and
(3) by striking all that follows ``payments under
this subsection'' and inserting a period.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 4317. REQUIREMENT TO FURNISH DIAGNOSTIC INFORMATION.
(a) Inclusion of Non-Physician Practitioners in Requirement
To Provide Diagnostic Codes for Physician Services.--Paragraphs
(1) and (2) of section 1842(p) (42 U.S.C. 1395u(p)) are each
amended by inserting ``or practitioner specified in subsection
(b)(18)(C)'' after ``by a physician''.
(b) Requirement To Provide Diagnostic Information When
Ordering Certain Items or Services Furnished by Another
Entity.--Section 1842(p) (42 U.S.C. 1395u(p)), is amended by
adding at the end the following new paragraph:
``(4) In the case of an item or service defined in
paragraph (3), (6), (8), or (9) of subsection 1861(s) ordered
by a physician or a practitioner specified in subsection
(b)(18)(C), but furnished by another entity, if the Secretary
(or fiscal agent of the Secretary) requires the entity
furnishing the item or service to provide diagnostic or other
medical information in order for payment to be made to the
entity, the physician or practitioner shall provide that
information to the entity at the time that the item or service
is ordered by the physician or practitioner.''.
(c) Effective Date.--The amendments made by this section
shall apply to items and services furnished on or after January
1, 1998.
SEC. 4318. REPORT BY GAO ON OPERATION OF FRAUD AND ABUSE CONTROL
PROGRAM.
Section 1817(k)(6) (42 U.S.C. 1395i(k)(6)) is amended by
inserting ``June 1, 1998, and'' after ``Not later than''.
SEC. 4319. COMPETITIVE BIDDING DEMONSTRATION PROJECTS.
(a) General Rule.--Part B of title XVIII (42 U.S.C. 1395j
et seq.) is amended by inserting after section 1846 the
following new section:
``SEC. 1847. DEMONSTRATION PROJECTS FOR COMPETITIVE ACQUISITION OF
ITEMS AND SERVICES.
``(a) Establishment of Demonstration Project Bidding
Areas.--
``(1) In general.--The Secretary shall implement
not more than 5 demonstration projects under which
competitive acquisition areas are established for
contract award purposes for the furnishing under this
part of the items and services described in subsection
(d).
``(2) Project requirements.--Each demonstration
project under paragraph (1)--
``(A) shall include such group of items and
services as the Secretary may prescribe,
``(B) shall be conducted in not more than 3
competitive acquisition areas, and
``(C) shall be operated over a 3-year
period.
``(3) Criteria for establishment of competitive
acquisition areas.--Each competitive acquisition area
established under a demonstration project implemented
under paragraph (1)--
``(A) shall be, or shall be within, a
metropolitan statistical area (as defined by
the Secretary of Commerce), and
``(B) shall be chosen based on the
availability and accessibility of entities able
to furnish items and services, and the probable
savings to be realized by the use of
competitive bidding in the furnishing of items
and services in such area.
``(b) Awarding of Contracts in Areas.--
``(1) In general.--The Secretary shall conduct a
competition among individuals and entities supplying
items and services described in subsection (c) for each
competitive acquisition area established under a
demonstration project implemented under subsection (a).
``(2) Conditions for awarding contract.--The
Secretary may not award a contract to any entity under
the competition conducted pursuant to paragraph (1) to
furnish an item or service unless the Secretary finds
that the entity meets quality standards specified by
the Secretary that the total amounts to be paid under
the contract areexpected to be less than the total
amounts that would otherwise be paid.
``(3) Contents of contract.--A contract entered
into with an entity under the competition conducted
pursuant to paragraph (1) is subject to terms and
conditions that the Secretary may specify.
``(4) Limit on number of contractors.--The
Secretary may limit the number of contractors in a
competitive acquisition area to the number needed to
meet projected demand for items and services covered
under the contracts.
``(c) Expansion of Projects.--
``(1) Evaluations.--The Secretary shall evaluate
the impact of the implementation of the demonstration
projects on medicare program payments, access,
diversity of product selection, and quality. The
Secretary shall make annual reports to the Committees
on Ways and Means and Commerce of the House of
Representatives and the Committee on Finance of the
Senate on the results of the evaluation described in
the preceding sentence and a final report not later
than 6 months after the termination date specified in
subsection (e).
``(2) Expansion.--If the Secretary determines from
the evaluations under paragraph (1) that there is clear
evidence that any demonstration project--
``(A) results in a decrease in Federal
expenditures under this title, and
``(B) does not reduce program access,
diversity of product selection, and quality
under this title,
the Secretary may expand the project to additional
competitive acquisition areas.
``(d) Services described.--The items and services to which
this section applies are all items and services covered under
this part (except for physicians' services as defined in
section 1861(s)(1)) that the Secretary may specify. At least
one demonstration project shall include oxygen and oxygen
equipment.
``(e) Termination.--Notwithstanding any other provision of
this section, all projects under this section shall terminate
not later than December 31, 2002.''.
(b) Items and Services To Be Furnished Only Through
Competitive Acquisition.--Section 1862(a) (42 U.S.C. 1395y(a))
is amended--
(1) by striking ``or'' at the end of paragraph
(15),
(2) by striking the period at the end of paragraph
(16) and inserting ``; or'', and
(3) by inserting after paragraph (16) the following
new paragraph:
``(17) where the expenses are for an item or
service furnished in a competitive acquisition area (as
established by the Secretary under section 1847(a)) by
an entity other than an entity with which the Secretary
has entered into a contract under section 1847(b) for
the furnishing of such an item or service in that area,
unless the Secretary finds that the expenses were
incurred in a case of urgent need, or in other
circumstances specified by the Secretary.''.
(c) Study by GAO.--The Comptroller of the United States
shall study the effectiveness of the establishment of
competitive acquisition areas under section 1847(a) of the
Social Security Act, as added by this section.
SEC. 4320. PROHIBITING UNNECESSARY AND WASTEFUL MEDICARE PAYMENTS FOR
CERTAIN ITEMS.
Section 1861(v) (42 U.S.C. 1395x(v)) is amended by adding
at the end the following new paragraph:
``(8) Items unrelated to patient care.--Reasonable
costs do not include costs for the following--
``(i) entertainment, including tickets to
sporting and other entertainment events;
``(ii) gifts or donations;
``(iii) personal use of motor vehicles;
``(iv) costs for fines and penalties
resulting from violations of Federal, State, or
local laws; and
``(iv) education expenses for spouses or
other dependents of providers of services,
their employees or contractors.''.
SEC. 4321. NONDISCRIMINATION IN POST-HOSPITAL REFERRAL TO HOME HEALTH
AGENCIES AND OTHER ENTITIES.
(a) Notification of Availability of Home Health Agencies
and Other Entities As Part of Discharge Planning Process.--
Section 1861(ee)(2) (42 U.S.C. 1395x(ee)(2)) is amended--
(1) in subparagraph (D), by inserting before the
period the following: ``, including the availability of
home health services through individuals and entities
that participate in the program under this title and
that serve the area in which the patient resides and
that request to be listed by the hospital as
available''; and
(2) by adding at the end the following new
subparagraph:
``(H) Consistent with section 1802, the discharge
plan shall--
``(i) not specify or otherwise limit the
qualified provider which may provide post-
hospital home health services, and
``(ii) identify (in a form and manner
specified by the Secretary) any entity to whom
the individual is referred in which the
hospital has a disclosable financial interest
(as specified by the Secretary consistent with
section 1866(a)(1)(S)) or which has such an
interest in the hospital.''.
(b) Maintenance and Disclosure of Information on Post-
Hospital Home Health Agencies and Other Entities.--Section
1866(a)(1) (42 U.S.C. 1395cc(a)(1)) is amended--
(1) by striking ``and'' at the end of subparagraph
(Q),
(2) by striking the period at the end of
subparagraph (R), and
(3) by adding at the end the following new
subparagraph:
``(S) in the case of a hospital that has a
financial interest (as specified by the Secretary in
regulations) in an entity to which individuals are
referred as described in section 1861(ee)(2)(H)(ii), or
in which such an entity has such a financial interest,
or in which another entity has such a financial
interest (directly or indirectly) with such hospital
and such an entity, to maintain and disclose to the
Secretary (in a form and manner specified by the
Secretary) information on--
``(i) the nature of such financial
interest,
``(ii) the number of individuals who were
discharged from the hospital and who were
identified as requiring home health services,
and
``(iii) the percentage of such individuals
who received such services from such provider
(or another such provider).''.
(c) Disclosure of Information to the Public.--Title XI is
amended by inserting after section 1145 the following new
section:
``public disclosure of certain information on hospital financial
interest and referral patterns
``Sec. 1146. The Secretary shall make available to the
public, in a form and manner specified by the Secretary,
information disclosed to the Secretary pursuant to section
1866(a)(1)(S).''.
(d) Effective Dates.--
(1) The amendments made by subsection (a) shall
apply to discharges occurring on or after the date
which is 90 days after the date of the enactment of
this Act.
(2) The Secretary of Health and Human Services
shall issue regulations by not later than the date
which is 1 year after the date of the enactment of this
Act to carry out the amendments made by subsections (b)
and (c) and such amendments shall take effect as of
such date (on or afterthe issuance of such regulations)
as the Secretary specifies in such regulations.
CHAPTER 3--CLARIFICATIONS AND TECHNICAL CHANGES
SEC. 4331. OTHER FRAUD AND ABUSE RELATED PROVISIONS.
(a) Reference Correction.--(1) Section 1128D(b)(2)(D) (42
U.S.C. 1320a-7d(b)(2)(D)), as added by section 205 of the
Health Insurance Portability and Accountability Act of 1996, is
amended by striking ``1128B(b)'' and inserting ``1128A(b)''.
(2) Section 1128E(g)(3)(C) (42 U.S.C. 1320a-7e(g)(3)(C)) is
amended by striking ``Veterans' Administration'' and inserting
``Department of Veterans Affairs''.
(b) Language in Definition of Conviction.--Section
1128E(g)(5) (42 U.S.C. 1320a-7e(g)(5)), as inserted by section
221(a) of the Health Insurance Portability and Accountability
Act of 1996, is amended by striking ``paragraph (4)'' and
inserting ``paragraphs (1) through (4)''.
(c) Implementation of Exclusions.--Section 1128 (42 U.S.C.
1320a-7) is amended--
(1) in subsection (a), by striking ``any program
under title XVIII and shall direct that the following
individuals and entities be excluded from participation
in any State health care program (as defined in
subsection (h))'' and inserting ``any Federal health
care program (as defined in section 1128B(f))''; and
(2) in subsection (b), by striking ``any program
under title XVIII and may direct that the following
individuals and entities be excluded from participation
in any State health care program'' and inserting ``any
Federal health care program (as defined in section
1128B(f))''.
(d) Sanctions for Failure to Report.--Section 1128E(b) (42
U.S.C. 1320a-7e(b)), as inserted by section 221(a) of the
Health Insurance Portability and Accountability Act of 1996, is
amended by adding at the end the following:
``(6) Sanctions for failure to report.--
``(A) Health plans.--Any health plan that
fails to report information on an adverse
action required to be reported under this
subsection shall be subject to a civil money
penalty of not more than $25,000 for each such
adverse action not reported. Such penalty shall
be imposed and collected in the same manner as
civil money penalties under subsection (a) of
section 1128A are imposed and collected under
that section.
``(B) Governmental agencies.--The Secretary
shall provide for a publication of a public
report that identifies those Government
agencies that have failed to report information
on adverse actions as required to be reported
under this subsection.''.
(e) Clarification of Treatment of Certain Waivers and
Payments of Premiums.--Section 1128A(i)(6) (42 U.S.C. 1320a-
7a(i)(6)) is amended--
(1) in subparagraph (A)(iii)--
(A) in subclause (I), by adding ``or'' at
the end;
(B) in subclause (II), by striking ``or''
at the end; and
(C) by striking subclause (III);
(2) by redesignating subparagraphs (B) and (C) as
subparagraphs (C) and (D); and
(3) by inserting after subparagraph (A) the
following:
``(B) any permissible waiver as specified
in section 1128B(b)(3) or in regulations issued
by the Secretary;''.
(f) Effective Dates.--
(1) In general.--Except as provided in this
subsection, the amendments made by this section shall
be effective as if included in the enactment of the
Health Insurance Portability and Accountability Act of
1996.
(2) Federal health program.--The amendments made by
subsection (c) shall take effect on the date of the
enactment of this Act.
(3) Sanction for failure to report.--The amendment
made by subsection (d) shall apply to failures
occurring on or after the date of the enactment of this
Act.
Subtitle E--Provisions Relating to Part A Only
CHAPTER 1--PAYMENT OF PPS HOSPITALS
SEC. 4401. PPS HOSPITAL PAYMENT UPDATE.
(a) In General.--Section 1886(b)(3)(B)(i) (42 U.S.C.
1395ww(b)(3)(B)(i)) is amended--
(1) by striking ``and'' at the end of subclause
(XII), and
(2) by striking subclause (XIII) and inserting the
following:
``(XIII) for fiscal year 1998, 0 percent,
``(XIV) for fiscal year 1999, the market basket
percentage increase minus 1.9 percentage points for
hospitals in all areas,
``(XV) for fiscal year 2000, the market basket
percentage increase minus 1.8 percentage points for
hospitals in all areas,
``(XVI) for each of fiscal years 2001 and 2002, the
market basket percentage increase minus 1.1 percentage
point for hospitals in all areas, and
``(XVII) for fiscal year 2003 and each subsequent
fiscal year, the market basket percentage increase for
hospitals in all areas.''.
(b) Temporary Relief for Certain Non-Teaching, Non-DSH
Hospitals.--
(1) In general.--In the case of a hospital
described in paragraph (2) for its cost reporting
period--
(A) beginning in fiscal year 1998 the
amount of payment made to the hospital under
section 1886(d) of the Social Security Act for
discharges occurring during such fiscal year
only shall be increased as though the
applicable percentage increase (otherwise
applicable to discharges occurring during
fiscal year 1998 under section
1886(b)(3)(B)(i)(XIII) of the Social Security
Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XIII))) had
been increased by 0.5 percentage points; and
(B) beginning in fiscal year 1999 the
amount of payment made to the hospital under
section 1886(d) of the Social Security Act for
discharges occurring during such fiscal year
only shall be increased as though the
applicable percentage increase (otherwise
applicable to discharges occurring during
fiscal year 1999 under section
1886(b)(3)(B)(i)(XIII) of the Social Security
Act (42 U.S.C. 1395ww(b)(3)(B)(i)(XIII))) had
been increased by 0.3 percentage points.
Subparagraph (A) shall not apply in computing the
increase under subparagraph (B) and neither
subparagraph shall affect payment for discharges for
any hospital occurring during a fiscal year after
fiscal year 1999. Payment increases under this
subsection for discharges occurring during a fiscal
year are subject to settlement after the close of the
fiscal year.
(2) Hospitals covered.--A hospital described in
this paragraph for a cost reporting period is a
hospital--
(A) that is described in paragraph (3) for
such period;
(B) that is located in a State in which the
amount of the aggregate payments under section
1886(d) of such Act for hospitals located in
the State and described in paragraph (3) for
their cost reporting periods beginning during
fiscal year 1995 is less than the aggregate
allowable operating costs of inpatient hospital
services (as defined in section 1886(a)(4) of
such Act) for all such hospitals in such State
with respect to such cost reporting periods;
and
(C) with respect to which the payments
under section 1886(d) of such Act (42 U.S.C.
1395ww(d)) for discharges occurring in the cost
reporting period involved, as estimated by the
Secretary, is less than the allowable operating
costs of inpatient hospital services (as
defined in section 1886(a)(4) of such Act (42
U.S.C. 1395ww(a)(4)) for such hospital for such
period, as estimated by the Secretary.
(3) Non-teaching, non-DSH hospitals described.--A
hospital described in this paragraph for a cost
reporting period is a subsection (d) hospital (as
defined in section 1886(d)(1)(B) of such Act (42 U.S.C.
1395ww(d)(1)(B))) that--
(A) is not receiving any additional payment
amount described in section 1886(d)(5)(F) of
such Act (42 U.S.C. 1395ww(d)(5)(F)) for
discharges occurring during the period;
(B) is not receiving any additional payment
under section 1886(d)(5)(B) of such Act (42
U.S.C. 1395ww(d)(5)(B)) or a payment under
section 1886(h) of such Act (42 U.S.C.
1395ww(h)) for discharges occurring during the
period; and
(C) does not qualify for payment under
section 1886(d)(5)(G) of such Act (42 U.S.C.
1395ww(d)(5)(G)) for the period.
SEC. 4402. MAINTAINING SAVINGS FROM TEMPORARY REDUCTION IN CAPITAL
PAYMENTS FOR PPS HOSPITALS.
Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is
amended by adding at the end the following: ``In addition to
the reduction described in the preceding sentence, for
discharges occurring on or after October 1, 1997, the Secretary
shall apply the budget neutrality adjustment factor used to
determine the Federal capital payment rate in effect on
September 30, 1995 (as described in section 412.352 of title 42
of the Code of Federal Regulations), to (i) the unadjusted
standard Federal capital payment rate (as described in section
412.308(c) of that title, as in effect on September 30, 1997),
and (ii) the unadjusted hospital-specific rate (as described in
section 412.328(e)(1) of that title, as in effect on September
30, 1997), and, for discharges occurring on or after October 1,
1997, and before September 30, 2002, reduce the rates described
in clauses (i) and (ii) by 2.1 percent.''.
SEC. 4403. DISPROPORTIONATE SHARE.
(a) In General.--Section 1886(d)(5)(F) (42 U.S.C.
1395ww(d)(5)(F)) is amended--
(1) in clause (i) by inserting ``and before October
1, 1997'' after ``May 1, 1986'';
(2) in clause (ii), by striking ``The amount'' and
inserting ``Subject to clause (ix), the amount''; and
(3) by adding at the end the following new clause:
``(ix) In the case of discharges occurring--
``(I) during fiscal year 1998, the additional
payment amount otherwise determined under clause (ii)
shall be reduced by 1 percent;
``(II) during fiscal year 1999, such additional
payment amount shall be reduced by 2 percent;
``(III) during fiscal year 2000, such additional
payment amount shall be reduced by 3 percent;
``(IV) during fiscal year 2001, such additional
payment amount shall be reduced by 4 percent;
``(V) during fiscal year 2002, such additional
payment amount shall be reduced by 5 percent; and
``(VI) during fiscal year 2003 and each subsequent
fiscal year, such additional payment amount shall be
reduced by 0 percent.''.
(b) Report on New Payment Formula.--
(1) Report.--Not later than 1 year after the date
of the enactment of this Act, the Secretary of Health
and Human Services shall submit to the Committee on
Ways and Means of the House of Representatives and the
Committee on Finance of the Senate a report that
contains a formula for determining additional payment
amounts to hospitals under section 1886(d)(5)(F) of the
Social Security Act (42 U.S.C. 1395ww(d)(5)(F)).
(2) Factors in Determination of Formula.--In
determining such formula the Secretary shall--
(A) establish a single threshold for costs
incurred by hospitals in serving low-income
patients, and
(B) consider the costs described in
paragraph (3).
(3) The costs described in this paragraph are as
follows:
(A) The costs incurred by the hospital
during a period (as determined by the
Secretary) of furnishing hospital services to
individuals who are entitled to benefits under
part A of title XVIII of the Social Security
Act and who receive supplemental security
income benefits under title XVI of such Act
(excluding any supplementation of those
benefits by a State under section 1616 of such
Act (42 U.S.C. 1382e)).
(B) The costs incurred by the hospital
during a period (as so determined) of
furnishing hospital services to individuals who
receive medical assistance under the State plan
under title XIX of such Act and are not
entitled to benefits under part A of title
XVIII of such Act (including individuals
enrolled in a managed care organization (as
defined in section 1903(m)(1)(A) of such Act
(42 U.S.C. 1396b(m)(1)(A)) or any other managed
care plan under such title and individuals who
receive medical assistance under such title
pursuant to a waiver approved by the Secretary
under section 1115 of such Act (42 U.S.C.
1315)).
(c) Data Collection.--In developing the formula described
in subsection (b), the Secretary of Health and Human Services
may require any subsection (d) hospital (as defined in section
1886(d)(1)(B) of the Social Security Act (42 U.S.C.
1395ww(d)(1)(B))) receiving additional payments by reason of
section 1886(d)(5)(F) of such Act (42 U.S.C. 1395ww(d)(5)(F))
to submit to the Secretary any information that the Secretary
determines is necessary to develop such formula.
SEC. 4404. MEDICARE CAPITAL ASSET SALES PRICE EQUAL TO BOOK VALUE.
(a) In General.--Section 1861(v)(1)(O) (42 U.S.C.
1395x(v)(1)(O)) is amended--
(1) in clause (i)--
(A) by striking ``and (if applicable) a
return on equity capital'';
(B) by striking ``hospital or skilled
nursing facility'' and inserting ``provider of
services'';
(C) by striking ``clause (iv)'' and
inserting ``clause (iii)''; and
(D) by striking ``the lesser of the
allowable acquisition cost'' and all that
follows and inserting ``the historical cost of
the asset, as recognized under this title, less
depreciation allowed, to the owner of record as
of the date of enactment of the Balanced Budget
Act of 1997 (or, in the case of an asset not in
existence as of that date, the first owner of
record of the asset after that date).'';
(2) by striking clause (ii); and
(3) by redesignating clauses (iii) and (iv) as
clauses (ii) and (iii), respectively.
(b) Effective Date.--The amendments made by subsection (a)
apply to changes of ownership that occur after the third month
beginning after the date of enactment of this section.
SEC. 4405. ELIMINATION OF IME AND DSH PAYMENTS ATTRIBUTABLE TO OUTLIER
PAYMENTS.
(a) Indirect Medical Education.--Section
1886(d)(5)(B)(i)(I) (42 U.S.C. 1395ww(d)(5)(B)(i)(I)) is
amended by inserting ``, for cases qualifying for additional
payment under subparagraph (A)(i),'' before ``the amount paid
to the hospital under subparagraph (A)''.
(b) Disproportionate Share Adjustments.--Section
1886(d)(5)(F)(ii)(I) (42 U.S.C. 1395ww(d)(5)(F)(ii)(I)) is
amended by inserting ``, for cases qualifying for additional
payment under subparagraph (A)(i),'' before ``the amount paid
to the hospital under subparagraph (A)''.
(c) Cost Outlier Payments.--Section 1886(d)(5)(A)(ii) (42
U.S.C. 1395ww(d)(5)(A)(ii)) is amended by striking ``exceed the
applicable DRG prospective payment rate'' and inserting
``exceed the sum of the applicable DRG prospective payment rate
plus any amounts payable under subparagraphs (B) and (F)''.
(d) Effective Date.--The amendments made by this section
apply to discharges occurring after September 30, 1997.
SEC. 4406. INCREASE BASE PAYMENT RATE TO PUERTO RICO HOSPITALS.
Section 1886(d)(9)(A) (42 U.S.C. 1395ww(d)(9)(A)) is
amended--
(1) in the matter preceding clause (i), by striking
``in a fiscal year beginning on or after October 1,
1987,'',
(2) in clause (i), by striking ``75 percent'' and
inserting, ``for discharges beginning on or after
October 1, 1997, 50 percent (and for discharges between
October 1, 1987, and September 30, 1997, 75 percent)'',
and
(3) in clause (ii), by striking ``25 percent'' and
inserting, ``for discharges beginning in a fiscal year
beginning on or after October 1, 1997, 50 percent (and
for discharges between October 1, 1987 and September
30, 1997, 25 percent)''.
SEC. 4407. CERTAIN HOSPITAL DISCHARGES TO POST ACUTE CARE.
Section 1886(d)(5) (42 U.S.C. 1395ww(d)(5)) is amended--
(1) in subparagraph (I)(ii) by inserting ``not
taking in account the effect of subparagraph (J),''
after ``in a fiscal year, ''; and
(2) by adding at the end the following new
subparagraph:
``(J)(i) The Secretary shall treat the term `transfer case'
(as defined in subparagraph (I)(ii)) as including the case of a
qualified discharge (as defined in clause (ii)), which is
classified within a diagnosis-related group described in clause
(iii), and which occurs on or after October 1, 1998. In the
case of a qualified discharge for which a substantial portion
of the costs of care are incurred in the early days of the
inpatient stay (as defined by the Secretary), in no case may
the payment amountotherwise provided under this subsection
exceed an amount equal to the sum of--
``(I) 50 percent of the amount of payment under
this subsection for transfer cases (as established
under subparagraph (I)(i)), and
``(II) 50 percent of the amount of payment which
would have been made under this subsection with respect
to the qualified discharge if no transfer were
involved.
``(ii) For purposes of clause (i), subject to clause (iii),
the term `qualified discharge' means a discharge classified
with a diagnosis-related group (described in clause (iii)) of
an individual from a subsection (d) hospital, if upon such
discharge the individual--
``(I) is admitted as an inpatient to a hospital or
hospital unit that is not a subsection (d) hospital for
the provision of inpatient hospital services;
``(II) is admitted to a skilled nursing facility;
``(III) is provided home health services from a
home health agency, if such services relate to the
condition or diagnosis for which such individual
received inpatient hospital services from the
subsection (d) hospital, and if such services are
provided within an appropriate period (as determined by
the Secretary); or
``(IV) for discharges occurring on or after October
1, 2000, the individual receives post discharge
services described in clause (iv)(I).
``(iii) Subject to clause (iv), a diagnosis-related group
described in this clause is--
``(I) 1 of 10 diagnosis-related groups selected by
the Secretary based upon a high volume of discharges
classified within such groups and a disproportionate
use of post discharge services described in clause
(ii); and
``(II) a diagnosis-related group specified by the
Secretary under clause (iv)(II).
``(iv) The Secretary shall include in the proposed rule
published under subsection (e)(5)(A) for fiscal year 2001, a
description of the effect of this subparagraph. The Secretary
may include in the proposed rule (and in the final rule
published under paragraph (6)) for fiscal year 2001 or a
subsequent fiscal year, a description of--
``(I) post-discharge services not described in
subclauses (I), (II), and (III) of clause (ii), the
receipt of which results in a qualified discharge; and
``(II) diagnosis-related groups described in clause
(iii)(I) in addition to the 10 selected under such
clause.''.
SEC. 4408. RECLASSIFICATION OF CERTAIN COUNTIES AS LARGE URBAN AREAS
UNDER MEDICARE PROGRAM.
(a) In General.--For purposes of section 1886(d) of the
Social Security Act (42 U.S.C. 1395ww(d)), the large urban area
of Charlotte-Gastonia-Rock Hill-North Carolina-South Carolina
may be deemed to include Stanly County, North Carolina.
(b) Effective Date.--This section shall apply with respect
to discharges occurring on or after October 1, 1997.
SEC. 4409. GEOGRAPHIC RECLASSIFICATION FOR CERTAIN DISPROPORTIONATELY
LARGE HOSPITALS.
(a) New Guidelines for Reclassification.--Notwithstanding
the guidelines published under section 1886(d)(10)(D)(i)(I) of
the Social Security Act (42 U.S.C. 1395ww(d)(10)(D)(i)(I)), the
Secretary of Health and Human Services shall publish and use
alternative guidelines under which a hospital described in
subsection (b) qualifies for geographic reclassification under
such section for a fiscal year beginning with fiscal year 1998.
(b) Hospitals Covered.--A hospital described in this
subsection is a hospital that demonstrates that--
(1) the average hourly wage paid by the hospital is
not less than 108 percent of the average hourly wage
paid by all other hospitals located in the Metropolitan
Statistical Area (or the New England County
Metropolitan Area) in which the hospital is located;
(2) not less than 40 percent of the adjusted
uninflated wages paid by all hospitals located in such
Area is attributable to wages paid by the hospital; and
(3) the hospital submitted an application
requesting reclassification for purposes of wage index
under section 1886(d)(10)(C) of such Act (42 U.S.C.
1395ww(d)(10)(C)) in each of fiscal years 1992 through
1997 and that such request was approved for each of
such fiscal years.
SEC. 4410. FLOOR ON AREA WAGE INDEX.
(a) In General.--For purposes of section 1886(d)(3)(E) of
the Social Security Act (42 U.S.C. 1395ww(d)(3)(E)) for
discharges occurring on or after October 1, 1997, the area wage
index applicable under such section to any hospital which is
not located in a rural area (as defined in section
1886(d)(2)(D) of such Act (42 U.S.C. 1395ww(d)(2)(D)) may not
be less than the area wage index applicable under such section
to hospitals located in rural areas in the State in which the
hospital is located.
(b) Implementation.--The Secretary of Health and Human
Services shall adjust the area wage index referred to in
subsection (a) for hospitals not described in such subsection
in a manner which assures that the aggregate payments made
under section 1886(d) of the Social Security Act (42 U.S.C.
1395ww(d)) in a fiscal year for the operating costs of
inpatient hospital services are not greater or less than those
which would have been made in the year if this section did not
apply.
(c) Exclusion of Certain Wages.--In the case of a hospital
that is owned by a municipality and that was reclassified as an
urban hospital under section 1886(d)(10) of the Social Security
Act for fiscal year 1996, in calculating the hospital's average
hourly wage for purposes of geographic reclassification under
such section for fiscal year 1998, the Secretary of Health and
Human Services shall exclude the general service wages and
hours of personnel associated with a skilled nursing facility
that is owned by the hospital of the same municipality and that
is physically separated from the hospital to the extent that
such wages and hours of such personnel are not sharedwith the
hospital and are separately documented. A hospital that applied for and
was denied reclassification as an urban hospital for fiscal year 1998,
but that would have received reclassification had the exclusion
required by this section been applied to it, shall be reclassified as
an urban hospital for fiscal year 1998.
CHAPTER 2--PAYMENT OF PPS-EXEMPT HOSPITALS
Subchapter A--General Payment Provisions
SEC. 4411. PAYMENT UPDATE.
(a) In General.--Section 1886(b)(3)(B) (42 U.S.C.
1395ww(b)(3)(B)) is amended--
(1) in clause (ii)--
(A) by striking ``and'' at the end of
subclause (V),
(B) by redesignating subclause (VI) as
subclause (VIII); and
(C) by inserting after subclause (V), the
following subclauses:
``(VI) for fiscal year 1998, is 0 percent;
``(VII) for fiscal years 1999 through 2002, is the
applicable update factor specified under clause (vi)
for the fiscal year; and''; and
(2) by adding at the end the following new clause:
``(vi) For purposes of clause (ii)(VII) for a fiscal year,
if a hospital's allowable operating costs of inpatient hospital
services recognized under this title for the most recent cost
reporting period for which information is available--
``(I) is equal to, or exceeds, 110 percent of the
hospital's target amount (as determined under
subparagraph (A)) for such cost reporting period, the
applicable update factor specified under this clause is
the market basket percentage;
``(II) exceeds 100 percent, but is less than 110
percent, of such target amount for the hospital, the
applicable update factor specified under this clause is
0 percent or, if greater, the market basket percentage
minus 0.25 percentage points for each percentage point
by which such allowable operating costs (expressed as a
percentage of such target amount) is less than 110
percent of such target amount;
``(III) is equal to, or less than 100 percent, but
exceeds \2/3\ of such target amount for the hospital,
the applicable update factor specified under this
clause is 0 percent or, if greater, the market basket
percentage minus 2.5 percentage points; or
``(IV) does not exceed \2/3\ of such target amount
for the hospital, the applicable update factor
specified under this clause is 0 percent.''.
(b) No Effect of Payment Reduction on Exceptions and
Adjustments.--Section 1886(b)(4)(A)(ii) (42 U.S.C.
1395ww(b)(4)(A)(ii)) is amended by adding at the end the
following new sentence: ``In making such reductions, the
Secretary shall treat the applicable update factor described in
paragraph (3)(B)(vi) for a fiscal year as being equal to the
market basket percentage for that year.''.
SEC. 4412. REDUCTIONS TO CAPITAL PAYMENTS FOR CERTAIN PPS-EXEMPT
HOSPITALS AND UNITS.
Section 1886(g) (42 U.S.C. 1395ww(g)) is amended by adding
at the end the following new paragraph:
``(4) In determining the amount of the payments that are
attributable to portions of cost reporting periods occurring
during fiscal years 1998 through 2002 and that may be made
under this title with respect to capital-related costs of
inpatient hospital services of a hospital which is described in
clause (i), (ii), or (iv) of subsection (d)(1)(B) or a unit
described in the matter after clause (v) of such subsection,
the Secretary shall reduce the amounts of such payments
otherwise determined under this title by 15 percent.''.
SEC. 4413. REBASING.
(a) Option of Rebasing for Hospitals In Operation Before
1990.--Section 1886(b)(3)(42 U.S.C. 1395ww(b)(3)) is amended--
(1) in subparagraph (A) by striking ``subparagraphs
(C), (D), and (E)'' and inserting ``subparagraph (C)
and succeeding subparagraphs'', and
(2) by adding at the end the following new
subparagraph:
``(F)(i) In the case of a hospital (or unit described in
the matter following clause (v) of subsection (d)(1)(B)) that
received payment under this subsection for inpatient hospital
services furnished during cost reporting periods beginning
before October 1, 1990, that is within a class of hospital
described in clause (iii), and that elects (in a form and
manner determined by the Secretary) this subparagraph to apply
to the hospital, the target amount for the hospital's 12-month
cost reporting period beginning during fiscal year 1998 is
equal to the average described in clause (ii).
``(ii) The average described in this clause for a hospital
or unit shall be determined by the Secretary as follows:
``(I) The Secretary shall determine the allowable
operating costs for inpatient hospital services for the
hospital or unit for each of the 5 cost reporting
periods for which the Secretary has the most recent
settled cost reports as of the date of the enactment of
this subparagraph.
``(II) The Secretary shall increase the amount
determined under subclause (I) for each cost reporting
period by the applicable percentage increase under
subparagraph (B)(ii) for each subsequent cost reporting
period up to the cost reporting period described in
clause (i).
``(III) The Secretary shall identify among such 5
cost reporting periods the cost reporting periods for
which the amount determined under subclause (II) is the
highest, and the lowest.
``(IV) The Secretary shall compute the averages of
the amounts determined under subclause (II) for the 3
cost reporting periods not identified under subclause
(III).
``(iii) For purposes of this subparagraph, each of the
following shall be treated as a separate class of hospital:
``(I) Hospitals described in clause (i) of
subsection (d)(1)(B) and psychiatric units described in
the matter following clause (v) of such subsection.
``(II) Hospitals described in clause (ii) of such
subsection and rehabilitation units described in the
matter following clause (v) of such subsection.
``(III) Hospitals described in clause (iii) of such
subsection.
``(IV) Hospitals described in clause (iv) of such
subsection.
``(V) Hospitals described in clause (v) of such
subsection.''.
(b) Certain Long-Term Care Hospitals.--Section 1886(b)(3)
(42 U.S.C. 1395ww(b)(3)), as amended by subsection (a), is
amended by adding at the end the following new subparagraph:
``(G)(i) In the case of a qualified long-term care hospital
(as defined in clause (ii)) that elects (in a form and manner
determined by the Secretary) this subparagraph to apply to the
hospital, the target amount for the hospital's 12-month cost
reporting period beginning during fiscal year 1998 is equal to
the allowable operating costs of inpatient hospital services
(as defined in subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost reporting period
beginning during fiscal year 1996, increased by the applicable
percentage increase for the cost reporting period beginning
during fiscal year 1997.
``(ii) In clause (i), a `qualified long-term care hospital'
means, with respect to a cost reporting period, a hospital
described in clause (iv) of subsection (d)(1)(B) during each of
the 2 cost reporting periods for which the Secretary has the
most recent settled cost reports as of the date of the
enactment of this subparagraph for each of which--
``(I) the hospital's allowable operating costs of
inpatient hospital services recognized under this title
exceeded 115 percent of the hospital's target amount,
and
``(II) the hospital would have a disproportionate
patient percentage of at least 70 percent (as
determined by the Secretary under subsection
(d)(5)(F)(vi)) if the hospital were a subsection (d)
hospital.''.
SEC. 4414. CAP ON TEFRA LIMITS.
Section 1886(b)(3) (42 U.S.C. 1395ww(b)(3)), as amended by
section 4413, is amended by adding at the end the following new
subparagraph:
``(H)(i) In the case of a hospital or unit that is within a
class of hospital described in clause (iv), the Secretary shall
estimate the 75th percentile of the target amounts for such
hospitals within such class for cost reporting periods ending
during fiscal year 1996.
``(ii) The Secretary shall update the amount determined
under clause (i), for each cost reporting period after the cost
reporting period described in such clause and up to the first
cost reporting period beginning on or after October 1, 1997, by
a factor equal to the market basket percentage increase.
``(iii) For cost reporting periods beginning during each of
fiscal years 1999 through 2002, the Secretary shall update such
amount by a factor equal to the market basket percentage
increase.
``(iv) For purposes of this subparagraph, each of the
following shall be treated as a separate class of hospital:
``(I) Hospitals described in clause (i) of
subsection (d)(1)(B) and psychiatric units described in
the matter following clause (v) of such subsection.
``(II) Hospitals described in clause (ii) of such
subsection and rehabilitation units described in the
matter following clause (v) of such subsection.
``(III) Hospitals described in clause (iv) of such
subsection.''.
SEC. 4415. BONUS AND RELIEF PAYMENTS.
(a) Change in Bonus Payment.--Section 1886(b)(1) (42 U.S.C.
1395ww(b)(1)) is amended in subparagraph (A) by striking all
that follows ``plus--'' and inserting the following:
``(i) 15 percent of the amount by which the
target amount exceeds the amount of the
operating costs, or
``(ii) 2 percent of the target amount,
whichever is less;''.
(b) Continuous Improvement Bonus Payments.--Section 1886(b)
(42 U.S.C. 1395ww(b)) is amended--
(1) in paragraph (1), by inserting ``plus the
amount, if any, provided under paragraph (2)'' before
``except that in no case''; and
(2) by inserting after paragraph (1), the following
new paragraph:
``(2)(A) In addition to the payment computed under
paragraph (1), in the case of an eligible hospital (described
in subparagraph (B)) for a cost reporting period beginning on
or after October 1, 1997, the amount of payment on a per
discharge basis under paragraph (1) shall be increased by the
lesser of--
``(i) 50 percent of the amount by which the
operating costs are less than the expected costs (as
defined in subparagraph (D)) for the period; or
``(ii) 1 percent of the target amount for the
period.
``(B) For purposes of this paragraph, an `eligible
hospital' means with respect to a cost reporting period, a
hospital--
``(i) that has received payments under this
subsection for at least 3 full cost reporting periods
before that cost reporting period, and
``(ii) whose operating costs for the period are
less than the least of its target amount, its trended
costs (as defined in subparagraph (C)), or its expected
costs (as defined in subparagraph (D)) for the period.
``(C) For purposes of subparagraph (B)(ii), the term
`trended costs' means for a hospital cost reporting period
ending in a fiscal year--
``(i) in the case of a hospital for which its cost
reporting period ending in fiscal year 1996 was its
third or subsequent full cost reporting period for
which it receives payments under this subsection, the
lesser of the operatingcosts or target amount for that
hospital for its cost reporting period ending in fiscal year 1996, or
``(ii) in the case of any other hospital, the
operating costs for that hospital for its third full
cost reporting period for which it receives payments
under this subsection,
increased (in a compounded manner) for each succeeding fiscal
year (through the fiscal year involved) by the market basket
percentage increase for the fiscal year.
``(D) For purposes of this paragraph, the term `expected
costs', with respect to the cost reporting period ending in a
fiscal year, means the lesser of the operating costs of
inpatient hospital services or target amount per discharge for
the previous cost reporting period updated by the market basket
percentage increase (as defined in paragraph (3)(B)(iii)) for
the fiscal year.''.
(c) Change in Relief Payments.--Section 1886(b)(1) (42
U.S.C. 1395ww(b)(1)), as amended in subsections (a) and (b), is
further amended--
(1) by redesignating subparagraph (B) as
subparagraph (C)
(2) in subparagraph (C), as so redesignated--
(A) by striking ``greater than the target
amount'' and inserting ``greater than 110
percent of the target amount'', and
(B) by striking ``exceed the target
amount'' and inserting ``exceed 110 percent of
the target amount'', and
(3) by inserting after subparagraph (A), the
following new subparagraph:
``(B) are greater than the target amount but do not
exceed 110 percent of the target amount, the amount of
the payment with respect to those operating costs
payable under part A on a per discharge basis shall
equal the target amount; or''.
(d) Report.--Not later than October 1, 1999, the Secretary
of Health and Human Services shall submit to the Committee on
Ways and Means of the House of Representatives and the
Committee on Finance of the Senate a report that describes the
effect of the amendments to section 1886(b)(1) of the Social
Security Act (42 U.S.C. 1395ww(b)(1)), made under this section,
on psychiatric hospitals (as defined in section
1886(d)(1)(B)(i) of such Act (42 U.S.C. 1395ww(d)(1)(B)(i))
that have approved medical residency training programs under
title XVIII of such Act (42 U.S.C. 1395 et seq.)).
(e) Effective Date.--The amendments made by subsections (a)
and (c) shall apply with respect to cost reporting periods
beginning on or after October 1, 1997.
SEC. 4416. CHANGE IN PAYMENT AND TARGET AMOUNT FOR NEW PROVIDERS.
Section 1886(b) (42 U.S.C. 1395ww(b)) is amended--
(1) by adding at the end the following new
paragraph:
``(7)(A) Notwithstanding paragraph (1), in the case of a
hospital or unit that is within a class of hospital described
in subparagraph (B) which first receives payments under this
section on or after October 1, 1997--
``(i) for each of the first 2 cost reporting
periods for which the hospital has a settled cost
report, the amount of the payment with respect to
operating costs described in paragraph (1) under part A
on a per discharge or per admission basis (as the case
may be) is equal to the lesser of--
``(I) the amount of operating costs for
such respective period, or
``(II) 110 percent of the national median
of the target amount for hospitals in the same
class as the hospital for cost reporting
periods ending during fiscal year 1996, updated
by the hospital market basket increase
percentage to the fiscal year in which the
hospital first received payments under this
section, as adjusted under subparagraph (C);
and
``(ii) for purposes of computing the target amount
for the subsequent cost reporting period, the target
amount for the preceding cost reporting period is equal
to the amount determined under clause (i) for such
preceding period.
``(B) For purposes of this paragraph, each of the following
shall be treated as a separate class of hospital:
``(i) Hospitals described in clause (i) of
subsection (d)(1)(B) and psychiatric units described in
the matter following clause (v) of such subsection.
``(ii) Hospitals described in clause (ii) of such
subsection and rehabilitation units described in the
matter following clause (v) of such subsection.
``(iii) Hospitals described in clause (iv) of such
subsection.
``(C) In applying subparagraph (A)(i)(II) in the case of a
hospital or unit, the Secretary shall provide for an
appropriate adjustment to the labor-related portion of the
amount determined under such subparagraph to take into account
differences between average wage-related costs in the area of
the hospital and the national average of such costs within the
same class of hospital.''; and
(2) in paragraph (3)(A), as amended in sections
4413 and 4414, by inserting ``and in paragraph
(7)(A)(ii),'' before ``for purposes of''.
SEC. 4417. TREATMENT OF CERTAIN LONG-TERM CARE HOSPITALS.
(a) In General.--(1) Section 1886(d)(1)(B) (42 U.S.C.
1395ww(d)(1)(B)) is amended by adding at the end the following
new sentence: ``A hospital that was classified by the Secretary
on or before September 30, 1995, as a hospital described in
clause (iv) shall continue to be so classified notwithstanding
that it is located in the same building as, or on the same
campus as, another hospital.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to discharges occurring on or after October 1,
1995.
(b) Certain Long-Term Care Hospitals That Treat Cancer
Patients.--(1) Section 1886(d)(1)(B)(iv) (42 U.S.C.
1395ww(d)(1)(B)(iv)) is amended--
(A) by inserting ``(I)'' after ``(iv)''; and
(B) by adding at the end the following:
``(II) a hospital that first received payment under
this subsection in 1986 which has an average inpatient
length of stay (as determined by the Secretary) of
greater than 20 days and that has 80 percent or more of
its annual medicare inpatient discharges with a
principal diagnosis that reflects a finding of
neoplastic disease in the 12-month cost reporting
period ending in fiscal year 1997, or''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to cost reporting periods beginning on or after the
date of the enactment of this Act.
SEC. 4418. TREATMENT OF CERTAIN CANCER HOSPITALS.
(a) In General.--Section 1886(d)(1) (42 U.S.C.
1395ww(d)(1)) is amended--
(1) in subparagraph (B)(v)--
(A) by inserting ``(I)'' after ``(v)'';
(B) by striking the semicolon at the end
and inserting ``, or''; and
(C) by adding at the end the following:
``(II) a hospital that was recognized as a
comprehensive cancer center or clinical cancer research
center by the National Cancer Institute of the National
Institutes of Health as of April 20, 1983, that is
located in a State which, as of December 19, 1989, was
not operating a demonstration project under section
1814(b), that applied and was denied, on or before
December 31, 1990, for classification as a hospital
involved extensively in treatment for or research on
cancer under this clause (as in effect on the day
before the date of the enactment of this subclause),
that as of the date of the enactment of this subclause,
is licensed for less than 50 acute care beds, and that
demonstrates for the 4-year period ending on December
31, 1996, that at least 50 percent of its total
discharges have a principal finding of neoplastic
disease, as defined in subparagraph (E);'' and
(2) by adding at the end the following:
``(E) For purposes of subparagraph (B)(v)(II) only, the
term `principal finding of neoplastic disease' means the
condition established after study to be chiefly responsible for
occasioning the admission of a patient to a hospital, except
that only discharges with ICD-9-CM principal diagnosis codes of
140 through 239, V58.0, V58.1, V66.1, V66.2, or 990 will be
considered to reflect such a principal diagnosis.''.
(b) Payment.--
(1) Application to cost reporting periods.--Any
classification by reason of section
1886(d)(1)(B)(v)(II) of the Social Security Act (42
U.S.C. 1395ww(d)(1)(B)(v)(II)) (as added by subsection
(a)) shall apply to all cost reporting periods
beginning on or after January 1, 1991.
(2) Base year.--Notwithstanding the provisions of
section 1886(b)(3)(E) of such Act (42 U.S.C.
1395ww(b)(3)(E)) or other provisions to the contrary,
the base cost reporting period for purposes of
determining the target amount for any hospital
classified by reason of section 1886(d)(1)(B)(v)(II) of
such Act shall be either--
(A) the hospital's cost reporting period
beginning during fiscal year 1990, or
(B) pursuant to an election under
1886(b)(3)(G) of such Act (42 U.S.C.
1395ww(b)(3)(G)), as added in section 4413(b),
the period provided for under such section.
(3) Deadline for payments.--Any payments owed to a
hospital by reason of this subsection shall be made
expeditiously, but in no event later than 1 year after
the date of the enactment of this Act.
SEC. 4419. ELIMINATION OF EXEMPTIONS FOR CERTAIN HOSPITALS.
(a) Reduction of Exemptions.--
(1) In general.--Section 1886(b)(4)(A)(i) (42
U.S.C. 1395ww(b)(4)(A)(i)) is amended in the first
sentence by striking ``The Secretary shall provide for
an exemption from, or an exception and adjustment to,
'' and inserting ``The Secretary shall provide for an
exception and adjustment to (and in the case of a
hospital or unit described in subsection
(d)(1)(B)(iii), may provide an exemption from)''.
(2) Effective date.--The amendment made by
paragraph (1) shall apply to hospitals or units that
first qualify as a hospital or unit described in
section 1886(d)(1)(B) (42 U.S.C. 1395ww(d)(1)(B)) for
cost reporting periods beginning on or after October 1,
1997.
(b) Report on Exceptions.--The Secretary of Health and
Human Services shall publish annually in the Federal Register a
report describing the total amount of payments made to
hospitals by reason of section 1886(b)(4) of the Social
Security Act (42 U.S.C. 1395ww(b)(4)), as amended by subsection
(a), ending during the previous fiscal year.
Subchapter B--Prospective Payment System for PPS-Exempt Hospitals
SEC. 4421. PROSPECTIVE PAYMENT FOR INPATIENT REHABILITATION HOSPITAL
SERVICES.
(a) In General.--Section 1886 (42 U.S.C. 1395ww) is amended
by adding at the end the following new subsection:
``(j) Prospective Payment for Inpatient Rehabilitation
Services.--
``(1) Payment during transition period.--
``(A) In general.--Notwithstanding section
1814(b), but subject to the provisions of
section 1813, the amount of the payment with
respect to the operating and capital costs of
inpatient hospital services of a rehabilitation
hospital or a rehabilitation unit (in this
subsection referred to as a `rehabilitation
facility'), in a cost reporting period
beginning on or after October 1, 2000, and
before October 1, 2002, is equal to the sum
of--
``(i) the TEFRA percentage (as
defined in subparagraph (C)) of the
amount that would have been paid under
part A with respect to such costs if
this subsection did not apply, and
``(ii) the prospective payment
percentage (as defined in subparagraph
(C)) of the product of (I) the per unit
payment rate established under this
subsection for the fiscal year in which
the payment unit of service occurs, and
(II) the number of such payment units
occurring in the cost reporting period.
``(B) Fully implemented system.--
Notwithstanding section 1814(b), but subject to
the provisions of section 1813, the amount of
the payment with respect to the operating and
capital costs of inpatient hospital services of
a rehabilitation facility for a payment unit in
a cost reporting period beginning on or after
October 1, 2002, is equal to the per unit
payment rate established under this subsection
for the fiscal year in which the payment unit
of service occurs.
``(C) TEFRA and prospective payment
percentages specified.--For purposes of
subparagraph (A), for a cost reporting period
beginning--
``(i) on or after October 1, 2000,
and before October 1, 2001, the `TEFRA
percentage' is 66\2/3\ percent and the
`prospective payment percentage' is
33\1/3\ percent; and
``(ii) on or after October 1, 2001,
and before October 1, 2002, the `TEFRA
percentage' is 33\1/3\ percent and the
`prospective payment percentage' is
66\2/3\ percent.
``(D) Payment unit.--For purposes of this
subsection, the term `payment unit' means a
discharge, day of inpatient hospital services,
or other unit of payment defined by the
Secretary.
``(2) Patient case mix groups.--
``(A) Establishment.--The Secretary shall
establish--
``(i) classes of patients of
rehabilitation facilities (each in this
subsection referred to as a `case mix
group'), based on such factors as the
Secretary deems appropriate, which may
include impairment, age, related prior
hospitalization, comorbidities, and
functional capability of the patient;
and
``(ii) a method of classifying
specific patients in rehabilitation
facilities within these groups.
``(B) Weighting factors.--For each case mix
group the Secretary shall assign an appropriate
weighting which reflects the relative facility
resources used with respect to patients
classified within that group compared to
patients classified within other groups.
``(C) Adjustments for case mix.--
``(i) In general.--The Secretary
shall from time to time adjust the
classifications and weighting factors
established under this paragraph as
appropriate to reflect changes in
treatment patterns, technology, case
mix, number of payment units for which
payment is made under this title, and
other factors which may affect the
relative use of resources. Such
adjustments shall be made in a manner
so that changes in aggregate payments
under the classification system are a
result of real changes and are not a
result of changes in coding that are
unrelated to real changes in case mix.
``(ii) Adjustment.--Insofar as the
Secretary determines that such
adjustments for a previous fiscal year
(or estimates that such adjustments for
a future fiscal year) did (or are
likely to) result in a change in
aggregate payments under the
classification system during the fiscal
year that are a result of changes in
the coding or classification of
patients that do not reflect real
changes in case mix, the Secretary
shall adjust the per payment unit
payment rate for subsequent years so as
to eliminate the effect of such coding
or classification changes.
``(D) Data collection.--The Secretary is
authorized to require rehabilitation facilities
that provide inpatient hospital services to
submit such data as the Secretary deems
necessary to establish and administer the
prospective payment system under this
subsection.
``(3) Payment rate.--
``(A) In general.--The Secretary shall
determine a prospective payment rate for each
payment unit for which such rehabilitation
facility is entitled to receive payment under
this title. Subject to subparagraph (B), such
rate for payment units occurring during a
fiscal year shall be based on the average
payment per payment unit under this title for
inpatient operating and capital costs of
rehabilitation facilities using the most recent
data available (as estimated by the Secretary
as of the date of establishment of the system)
adjusted--
``(i) by updating such per-payment-
unit amount to the fiscal year involved
by the weighted average of the
applicable percentage increases
provided under subsection (b)(3)(B)(ii)
(for cost reporting periods beginning
during the fiscal year) covering the
period from the midpoint of the period
for such data through the midpoint of
fiscal year 2000 and by an increase
factor (described in subparagraph (C))
specified by the Secretary for
subsequent fiscal years up to the
fiscal year involved;
``(ii) by reducing such rates by a
factor equal to the proportion of
payments under this subsection (as
estimated by the Secretary) based on
prospective payment amounts which are
additional payments described in
paragraph (4) (relating to outlier and
related payments);
``(iii) for variations among
rehabilitation facilities by area under
paragraph (6);
``(iv) by the weighting factors
established under paragraph (2)(B); and
``(v) by such other factors as the
Secretary determines are necessary to
properly reflect variations in
necessary costs of treatment among
rehabilitation facilities.
``(B) Budget neutral rates.--The Secretary
shall establish the prospective payment amounts
under this subsection for payment units during
fiscal years 2001 and 2002 at levels such that,
in the Secretary's estimation, the amount of
total payments under this subsection for such
fiscal years (including any payment adjustments
pursuant to paragraphs (4) and (6)) shall be
equal to 98 percent of the amount of payments
that would have been made under this title
during the fiscal years for operating and
capital costs of rehabilitation facilities had
this subsection not been enacted. In
establishing such payment amounts, the
Secretary shall consider the effects of the
prospective payment system established under
this subsection on the total number of payment
units from rehabilitation facilities and other
factors described in subparagraph (A).
``(C) Increase factor.--For purposes of
this subsection for payment units in each
fiscal year (beginning with fiscal year 2001),
the Secretary shall establish an increase
factor. Such factor shall be based on an
appropriate percentage increase in a market
basket of goods and services comprising
services for which payment is made under this
subsection, which may be the market basket
percentage increase described in subsection
(b)(3)(B)(iii).
``(4) Outlier and special payments.--
``(A) Outliers.--
``(i) In general.--The Secretary
may provide for an additional payment
to a rehabilitation facility for
patients in a case mix group, based
upon the patient being classified as an
outlier based on an unusual length of
stay, costs, or other factors specified
by the Secretary.
``(ii) Payment based on marginal
cost of care.--The amount of such
additional payment under clause (i)
shall be determined by the Secretary
and shall approximate the marginal cost
of care beyond the cutoff point
applicable under clause (i).
``(iii) Total payments.--The total
amount of the additional payments made
under this subparagraph for payment
units in a fiscal year may not exceed 5
percent of the total payments projected
or estimated to be made based on
prospective payment rates for payment
units in that year.
``(B) Adjustment.--The Secretary may
provide for such adjustments to the payment
amounts under this subsection as the Secretary
deems appropriate to take into account the
unique circumstances of rehabilitation
facilities located in Alaska and Hawaii.
``(5) Publication.--The Secretary shall provide for
publication in the Federal Register, on or before
August 1 before each fiscal year (beginning with fiscal
year 2001), of the classification and weighting factors
for case mix groups under paragraph (2) for such fiscal
year and a description of the methodology and data used
in computing the prospective payment rates under this
subsection for that fiscal year.
``(6) Area wage adjustment.--The Secretary shall
adjust the proportion (as estimated by the Secretary
from time to time) of rehabilitation facilities' costs
which are attributable to wages and wage-related costs,
of the prospective payment rates computed under
paragraph (3) for area differences in wage levels by a
factor (established by the Secretary) reflecting the
relative hospital wage level in the geographic area of
the rehabilitation facility compared to the national
average wage level for such facilities. Not later than
October 1, 2001 (and at least every 36 months
thereafter), the Secretary shall update the factor
under the preceding sentence on the basis of
information available to the Secretary (and updated as
appropriate) of the wages and wage-related costs
incurred in furnishing rehabilitation services. Any
adjustments or updates made under this paragraph for a
fiscal year shall be made in a manner that assures that
the aggregated payments under this subsection in the
fiscal year are not greater or less than those that
would have been made in the year without such
adjustment.
``(7) Limitation on review.--There shall be no
administrative or judicial review under section 1869,
1878, or otherwise of the establishment of--
``(A) case mix groups, of the methodology
for the classification of patients within such
groups, and of the appropriate weighting
factors thereof under paragraph (2),
``(B) the prospective payment rates under
paragraph (3),
``(C) outlier and special payments under
paragraph (4), and
``(D) area wage adjustments under paragraph
(6).''.
(b) Conforming Amendments.--Section 1886(b) (42 U.S.C.
1395ww(b)) is amended--
(1) in paragraph (1), by inserting ``and other than
a rehabilitation facility described in subsection
(j)(1)'' after ``subsection (d)(1)(B)'', and
(2) in paragraph (3)(B)(i), by inserting ``and
subsection (j)'' after ``For purposes of subsection
(d)''.
(c) Effective Date.--The amendments made by this section
shall apply to cost reporting periods beginning on or after
October 1, 2000, except that the Secretary of Health and Human
Services may require the submission of data under section
1886(j)(2)(D) of the Social Security Act (as added by
subsection (a)) on and after the date of the enactment of this
section.
SEC. 4422. DEVELOPMENT OF PROPOSAL ON PAYMENTS FOR LONG-TERM CARE
HOSPITALS.
(a) In General.--
(1) Legislative proposal.--The Secretary of Health
and Human Services shall develop a legislative proposal
for establishing a case-mix adjusted prospective
payment system for payment of long-term care hospitals
described in section 1886(d)(1)(B)(iv) of the Social
Security Act (42 U.S.C. 1395ww(d)(1)(B)(iv)) under the
medicare program. Such system shall include an adequate
patient classification system that reflects the
differences in patient resource use and costs among
such hospitals.
(2) Collection of data and evaluation.--In
developing the legislative proposal described in
paragraph (1), the Secretary--
(A) may require such long-term care
hospitals to submit such information to the
Secretary as the Secretary may require to
develop the proposal; and
(B) shall consider several payment
methodologies, including the feasibility of
expanding the current diagnosis-related groups
and prospective payment system established
under section 1886(d) of the Social Security
Act to apply to payments under the medicare
program to long-term care hospitals.
(b) Report.--Not later than October 1, 1999, the Secretary
shall submit to the appropriate committees of Congress a report
that includes the legislative proposal developed under
subsection (a)(1).
CHAPTER 3--PAYMENT FOR SKILLED NURSING FACILITIES
SEC. 4431. EXTENSION OF COST LIMITS.
The last sentence of section 1888(a) (42 U.S.C. 1395yy(a))
is amended by striking ``subsection'' the last place it appears
and all that follows and inserting ``subsection, except that
the limits effective for cost reporting periods beginning on or
after October 1, 1997, shall be based on the limits effective
for cost reporting periods beginning on or after October 1,
1996.''.
SEC. 4432. PROSPECTIVE PAYMENT FOR SKILLED NURSING FACILITY SERVICES.
(a) In General.--Section 1888 (42 U.S.C. 1395yy) is amended
by adding at the end the following new subsection:
``(e) Prospective Payment.--
``(1) Payment provision.--Notwithstanding any other
provision of this title, subject to paragraph (7), the
amount of the payment for all costs (as defined in
paragraph (2)(B)) of covered skilled nursing facility
services (as defined in paragraph (2)(A)) for each day
of such services furnished--
``(A) in a cost reporting period during the
transition period (as defined in paragraph
(2)(E)), is equal to the sum of--
``(i) the non-Federal percentage of
the facility-specific per diem rate
(computed under paragraph (3)), and
``(ii) the Federal percentage of
the adjusted Federal per diem rate
(determined under paragraph (4))
applicable to the facility; and
``(B) after the transition period is equal
to the adjusted Federal per diem rate
applicable to the facility.
``(2) Definitions.--For purposes of this
subsection:
``(A) Covered skilled nursing facility
services.--
``(i) In general.--The term
`covered skilled nursing facility
services'--
``(I) means post-hospital
extended care services as
defined in section 1861(i) for
which benefits are provided
under part A; and
``(II) includes all items
and services (other than
services described in clause
(ii)) for which payment may be
made under part B and which are
furnished to an individual who
is a resident of a skilled
nursing facility during the
period inwhich the individual
is provided covered post-hospital extended care services.
``(ii) Services excluded.--Services
described in this clause are
physicians' services, services
described by clauses (i) through (iii)
of section 1861(s)(2)(K), certified
nurse-midwife services, qualified
psychologist services, services of a
certified registered nurse anesthetist,
items and services described in
subparagraphs (F) and (O) of section
1861(s)(2), and, only with respect to
services furnished during 1998, the
transportation costs of
electrocardiogram equipment for
electrocardiogram test services (HCPCS
Code R0076). Services described in this
clause do not include any physical,
occupational, or speech-language
therapy services regardless of whether
or not the services are furnished by,
or under the supervision of, a
physician or other health care
professional.
``(B) All costs.--The term `all costs'
means routine service costs, ancillary costs,
and capital-related costs of covered skilled
nursing facility services, but does not include
costs associated with approved educational
activities.
``(C) Non-federal percentage; federal
percentage.--For--
``(i) the first cost reporting
period (as defined in subparagraph (D))
of a facility, the `non-Federal
percentage' is 75 percent and the
`Federal percentage' is 25 percent;
``(ii) the next cost reporting
period of such facility, the `non-
Federal percentage' is 50 percent and
the `Federal percentage' is 50 percent;
and
``(iii) the subsequent cost
reporting period of such facility, the
`non-Federal percentage' is 25 percent
and the `Federal percentage' is 75
percent.
``(D) First cost reporting period.--The
term `first cost reporting period' means, with
respect to a skilled nursing facility, the
first cost reporting period of the facility
beginning on or after July 1, 1998.
``(E) Transition period.--
``(i) In general.--The term
`transition period' means, with respect
to a skilled nursing facility, the 3
cost reporting periods of the facility
beginning with the first cost reporting
period.
``(ii) Treatment of new skilled
nursing facilities.--In the case of a
skilled nursing facility that first
received payment for services under
this title on or after October 1, 1995,
payment for such services shall be made
under this subsection as if all
services were furnished after the
transition period.
``(3) Determination of facility specific per diem
rates.--The Secretary shall determine a facility-
specific per diem rate for each skilled nursing
facility not described in paragraph (2)(E)(ii) for a
cost reporting period as follows:
``(A) Determining base payments.--The
Secretary shall determine, on a per diem basis,
the total of--
``(i) the allowable costs of
extended care services for the facility
for cost reporting periods beginning in
fiscal year 1995, including costs
associated with facilities described in
subsection (d), with appropriate
adjustments (as determined by the
Secretary) to non-settled cost reports,
and
``(ii) an estimate of the amounts
that would be payable under part B
(disregarding any applicable
deductibles, coinsurance, and
copayments) for covered skilled nursing
facility services described in
paragraph (2)(A)(i)(II) furnished
during such period to an individual who
is a resident of the facility,
regardless of whether or not the
payment was made to the facility or to
another entity.
In making appropriate adjustments under clause
(i), the Secretary shall take into account
exceptions and shall take into account
exemptions but, with respect to exemptions,
only to the extent that routine costs do not
exceed 150 percent of the routine cost limits
otherwise applicable but for the exemption.
``(B) Update to first cost reporting
period.--
``(i) In general.--Subject to
clause (ii), the Secretary shall update
the amount determined under
subparagraph (A), for each cost
reporting period after the cost
reporting period described in
subparagraph (A)(i) and up to the first
cost reporting period by a factor equal
to the skilled nursing facility market
basket percentage increase minus 1
percentage point.
``(ii) Certain demonstration
projects.--In the case of a facility
participating in the Nursing Home Case-
Mix and Quality Demonstration (RUGS-
III), there shall be substituted for
the amount described in clause (i) the
RUGS-III rate received by the facility
for 1997.
``(C) Updating to applicable cost reporting
period.--The Secretary shall update the amount
determined under subparagraph (B) for each cost
reporting period beginning with the first cost
reporting period and up to and including the
cost reporting period involved by a factor
equal to the facility-specific update factor.
``(D) Facility-specific update factor.--For
purposes of this paragraph, the `facility-
specific update factor' for cost reporting
periods beginning during--
``(i) during each of fiscal years
1998 and 1999, is equal to the skilled
nursing facility market basket
percentage increase for such fiscal
year minus 1 percentage point, and
``(ii) during each subsequent
fiscal year is equal to the skilled
nursing facility market basket
percentage increase for such fiscal
year.
``(4) Federal per diem rate.--
``(A) Determination of historical per diem
for facilities.--For each skilled nursing
facility that received payments for post-
hospital extended care services during a cost
reporting period beginning in fiscal year 1995
and that was subject to (and not exempted from)
the per diem limits referred to in paragraph
(1) or (2) of subsection (a) (and facilities
described in subsection (d)), the Secretary
shall estimate, on a per diem basis for such
cost reporting period, the total of--
``(i) the allowable costs of
extended care services (excluding
exceptions payments) for the facility
for cost reporting periods beginning in
1995 with appropriate adjustments (as
determined by the Secretary) to non-
settled cost reports, and
``(ii) an estimate of the amounts
that would be payable under part B
(disregarding any applicable
deductibles, coinsurance, and
copayments) for covered skilled nursing
facility services described in
paragraph (2)(A)(i)(II) furnished
during such period to an individual who
is a resident of the facility,
regardless of whether or not the
payment was made to the facility or to
another entity.
``(B) Update to first fiscal year.--The
Secretary shall update the amount determined
under subparagraph (A), for each cost reporting
period after the cost reporting period
described in subparagraph (A)(i) and up to the
first cost reporting period by a factor equal
to the skilled nursing facility market basket
percentage increase reduced (on an annualized
basis) by 1 percentage point.
``(C) Computation of standardized per diem
rate.--The Secretary shall standardize the
amount updated under subparagraph (B) for each
facility by--
``(i) adjusting for variations
among facilities by area in the average
facility wage level per diem, and
``(ii) adjusting for variations in
case mix per diem among facilities.
``(D) Computation of weighted average per
diem rates.--
``(i) All facilities.--The
Secretary shall compute a weighted
average per diem rate for all
facilities by computing an average of
the standardized amounts computed under
subparagraph (C), weighted for each
facility by the number of days of
extended care services furnished during
the cost reporting period referred to
in subparagraph (A).
``(ii) Freestanding facilities.--
The Secretary shall compute a weighted
average per diem rate for freestanding
facilities by computing an average of
the standardized amounts computed under
subparagraph (C) only for such
facilities, weighted for each facility
by the number of days of extended care
services furnished during the cost
reporting period referred to in
subparagraph (A).
``(iii) Separate computation.--The
Secretary may compute and apply such
averages separately for facilities
located in urban and rural areas (as
defined in section 1886(d)(2)(D)).
``(E) Updating.--
``(i) Initial period.--For the
initial period beginning on July 1,
1998, and ending on September 30, 1999,
the Secretary shall compute for skilled
nursing facilities an unadjusted
federal per diem rate equal to the
average of the weighted average per
diem rates computed under clauses (i)
and (ii) of subparagraph (D), increased
by skilled nursing facility market
basket percentage change for such
period minus 1 percentage point.
``(ii) Subsequent fiscal years.--
The Secretary shall compute an
unadjusted federal per diem rate equal
to the federal per diem rate computed
under this subparagraph--
``(I) for fiscal year 2000,
the rate computed for the
initial period described in
clause (i), increased by the
skilled nursing facility market
basket percentage change for
the initial period minus 1
percentage point;
``(II) for each of fiscal
years 2001 and 2002, the rate
computed for the previous
fiscal year increased by the
skilled nursing facility market
basket percentage change for
the fiscal year involved minus
1 percentage point; and
``(III) for each subsequent
fiscal year, the rate computed
for the previous fiscal year
increased by the skilled
nursing facility market basket
percentage change for the
fiscal year involved.
``(F) Adjustment for case mix creep.--
Insofar as the Secretary determines that the
adjustments under subparagraph (G)(i) for a
previous fiscal year (or estimates that such
adjustments for a future fiscal year) did (or
are likely to) result in a change in aggregate
payments under this subsection during the
fiscal year that are a result of changes in the
coding or classification of residents that do
not reflect real changes in case mix, the
Secretary may adjust unadjusted Federal per
diem rates for subsequent fiscal years so as to
eliminate the effect of such coding or
classification changes.
``(G) Determination of federal rate.--The
Secretary shall compute for each skilled
nursing facility for each fiscal year
(beginning with the initial period described in
subparagraph (E)(i)) an adjusted Federal per
diem rate equal to the unadjusted Federal per
diem rate determined under subparagraph (E), as
adjusted under subparagraph (F), and as further
adjusted as follows:
``(i) Adjustment for case mix.--The
Secretary shall provide for an
appropriate adjustment to account for
case mix. Such adjustment shall be
based on a resident classification
system, established by the Secretary,
that accounts for the relative resource
utilization of different patient types.
The case mix adjustment shall be based
on resident assessment data and other
data that the Secretary considers
appropriate.
``(ii) Adjustment for geographic
variations in labor costs.--The
Secretary shall adjust the portion of
such per diem rate attributable to
wages and wage-related costs for the
area in which the facility is located
compared to the national average of
such costs using an appropriate wage
index as determined by the Secretary.
Such adjustment shall be done in a
manner that does not result in
aggregate payments under this
subsection that are greater or less
than those that would otherwise be made
if such adjustment had not been made.
``(H) Publication of information on per
diem rates.--The Secretary shall provide for
publication in the Federal Register, before May
1, 1998 (with respect to fiscal period
described in subparagraph (E)(i)) and before
the August 1 preceding each succeeding fiscal
year (with respect to that succeeding fiscal
year), of--
``(i) the unadjusted Federal per
diem rates to be applied to days of
covered skilled nursing facility
services furnished during the fiscal
year,
``(ii) the case mix classification
system to be applied under subparagraph
(G)(i) with respect to such services
during the fiscal year, and
``(iii) the factors to be applied
in making the area wage adjustment
under subparagraph (G)(ii) with respect
to such services.
``(5) Skilled nursing facility market basket index
and percentage.--For purposes of this subsection:
``(A) Skilled nursing facility market
basket index.--The Secretary shall establish a
skilled nursing facility market basket index
that reflects changes over time in the prices
of an appropriate mix of goods and services
included in covered skilled nursing facility
services.
``(B) Skilled nursing facility market
basket percentage.--The term `skilled nursing
facility market basket percentage' means, for a
fiscal year or other annual period and as
calculated by the Secretary, the percentage
change in the skilled nursing facility market
basket index (established under subparagraph
(A)) from the midpoint of the prior fiscal year
(or period) to the midpoint of the fiscal year
(or other period) involved.
``(6) Submission of resident assessment data.--A
skilled nursing facility, or a facility described in
paragraph (7)(B), shall provide the Secretary, in a
manner and within the timeframes prescribed by the
Secretary, the resident assessment data necessary to
develop and implement the rates under this subsection.
For purposes of meeting such requirement, a skilled
nursing facility, or a facility described in paragraph
(7), may submit the resident assessment data required
under section 1819(b)(3), using the standard instrument
designated by the State under section 1819(e)(5).
``(7) Transition for medicare swing bed
hospitals.--
``(A) In general.--The Secretary shall
determine an appropriate manner in which to
apply this subsection to the facilities
described in subparagraph (B), taking into
account the purposes of this subsection, and
shall provide that at the end of the transition
period (as defined in paragraph (2)(E)) such
facilities shall be paid only under this
subsection. Payment shall not be made under
this subsection to such facilities for cost
reporting periods beginning before such date
(not earlier than July 1, 1999) as the
Secretary specifies.
``(B) Facilities described.--The facilities
described in this subparagraph are facilities
that have in effect an agreement described in
section 1883, for which payment is made for the
furnishing of extended care services on a
reasonable cost basis under section 1814(l) (as
in effect on and after such date).
``(8) Limitation on review.--There shall be no
administrative or judicial review under section 1869,
1878, or otherwise of--
``(A) the establishment of Federal per diem
rates under paragraph (4), including the
computation of the standardized per diem rates
under paragraph (4)(C), adjustments and
corrections for case mix under paragraphs
(4)(F) and (4)(G)(i), and adjustments for
variations in labor-related costs under
paragraph (4)(G)(ii);
``(B) the establishment of facility
specific rates before January 1, 1999, (except
any determination of costs paid under part A of
this title); and
``(C) the establishment of transitional
amounts under paragraph (7).''.
(b) Consolidated Billing.--
(1) For snf services.--Section 1862(a) (42 U.S.C.
1395y(a)), as amended by 4319(b), is amended--
(A) by striking ``or'' at the end of
paragraph (16),
(B) by striking the period at the end of
paragraph (17) and inserting ``; or'', and
(C) by inserting after paragraph (17) the
following new paragraph:
``(18) which are covered skilled nursing facility
services described in section 1888(e)(2)(A)(i) and
which are furnished to an individual who is a resident
of a skilled nursing facility or of a part of a
facility that includes a skilled nursing facility (as
determined under regulations), by an entity other than
the skilled nursing facility, unless the services are
furnished under arrangements (as defined in section
1861(w)(1)) with the entity made by the skilled nursing
facility.''.
(2) Requiring payment for all part b items and
services to be made to facility.--The first sentence of
section 1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended--
(A) by striking ``and (D)'' and inserting
``(D)''; and
(B) by striking the period at the end and
inserting the following: ``, and (E) in the
case of an item or service (other than services
described in section 1888(e)(2)(A)(ii))
furnished to an individual who (at the time the
item or service is furnished) is a resident of
a skilled nursing facility or of a part of a
facility that includes a skilled nursing
facility (as determined under regulations),
payment shall be made to the facility (without
regard to whether or not the item or service
was furnished by the facility, by others under
arrangement with them made by the facility,
under any other contracting or consulting
arrangement, or otherwise).''.
(3) Payment rules.--Section 1888(e) (42 U.S.C.
1395yy(e)), as added by subsection (a), is amended by
adding at the end the following:
``(9) Payment for certain services.--In the case of
an item or service furnished to a resident of a skilled
nursing facility or a part of a facility that includes
a skilled nursing facility (as determined under
regulations) for which payment would (but for this
paragraph) be made under part B in an amount determined
in accordance with section 1833(a)(2)(B), the amount of
the payment under such part shall be the amount
provided under the fee schedule for such item or
service.
``(10) Required coding.--No payment may be made
under part B for items and services (other than
services described in paragraph (2)(A)(ii)) furnished
to an individual who is a resident of a skilled nursing
facility or of a part of a facility that includes a
skilled nursing facility (as determined under
regulations), unless the claim for such payment
includes a code (or codes) under a uniform coding
system specified by the Secretary that identifies the
items or services furnished.''
(4) Facility provider number required on claims
submitted by physicians.--Section 1842 (42 U.S.C.
1395u) is amended by adding at the end the following
new section:
``(t) Each request for payment, or bill submitted, for an
item or service furnished by a physician to an individual who
is a resident of a skilled nursing facility or of a part of a
facility that includes a skilled nursing facility (as
determined under regulations), for which payment may be made
under this part shall include the facility's medicare provider
number.''
(5) Conforming amendments.--
(A) Section 1819(b)(3)(C)(i) (42 U.S.C.
1395i-3(b)(3)(C)(i)) is amended by striking
``Such'' and inserting ``Subject to the
timeframes prescribed by the Secretary under
section 1888(e)(6), such''.
(B) Section 1832(a)(1) (42 U.S.C.
1395k(a)(1)) is amended by striking ``(2);''
and inserting ``(2) and section
1842(b)(6)(E);''.
(C) Section 1833(a)(2)(B) (42 U.S.C.
1395l(a)(2)(B)) is amended by inserting ``or
section 1888(e)(9)'' after ``section 1886''.
(D) Section 1861(h) (42 U.S.C 1395x(h)) is
amended--
(i) in the opening paragraph, by
striking ``paragraphs (3) and (6)'' and
inserting ``paragraphs (3), (6), and
(7)'', and
(ii) in paragraph (7), after
``skilled nursing facilities'', by
inserting ``, or by others under
arrangements with them made by the
facility''.
(E) Section 1861(v)(7)(D) (42 U.S.C.
1395x(v)(7)(D)) is amended by inserting
``subsections (a) through (c) of'' before
``section 1888.''.
(F) Section 1866(a)(1)(H) (42 U.S.C.
1395cc(a)(1)(H)) is amended--
(i) by redesignating clauses (i)
and (ii) as subclauses (I) and (II)
respectively,
(ii) by inserting ``(i)'' after
``(H)'', and
(iii) by adding after clause (i),
as so redesignated, the following new
clause:
``(ii) in the case of skilled nursing facilities
which provide covered skilled nursing facility
services--
``(I) that are furnished to an individual
who is a resident of the skilled nursing
facility, and
``(II) for which the individual is entitled
to have payment made under this title,
to have items and services (other than services
described in section 1888(e)(2)(A)(ii)) furnished by
the skilled nursing facility or otherwise under
arrangements (as defined in section 1861(w)(1)) made by
the skilled nursing facility,''.
(G) Section 1883(a)(2)(B)(ii)(II) (42
U.S.C. 1395tt(a)(2)(B)(ii)(II)) is amended by
inserting ``subsections (a) through (d) of''
before ``section 1888''.
(H) Section 1888(d)(1) (42 U.S.C.
1395yy(d)(1)) is amended by striking ``Any
skilled nursing facility'' and inserting
``Subject to subsection (e), any skilled
nursing facility''.
(c) Medical Review Process.--In order to ensure that
medicare beneficiaries are furnished appropriate services in
skilled nursing facilities, the Secretary of Health and Human
Services shall establish and implement a thorough medical
review process to examine the effects of the amendments made by
this section on the quality of covered skilled nursing facility
services furnished to medicare beneficiaries. In developing
such a medical review process, the Secretary shall place a
particular emphasis on the quality of non-routine covered
services and physicians' services for which payment is made
under title XVIII of the Social Security Act.
(d) Effective Date.--The amendments made by this section
are effective for cost reporting periods beginning on or after
July 1, 1998; except that the amendments made by subsection (b)
shall apply to items and services furnished on or after July 1,
1998.
CHAPTER 4--PROVISIONS RELATED TO HOSPICE SERVICES
SEC. 4441. PAYMENTS FOR HOSPICE SERVICES.
(a) Payment Update.--Section 1814(i)(1)(C)(ii) (42 U.S.C.
1395f(i)(1)(C)(ii)) is amended--
(1) in subclause (V), by striking ``and'' at the
end;
(2) by redesignating subclause (VI) as subclause
(VII); and
(3) by inserting after subclause (V) the following
new subclause:
``(VI) for each of fiscal years 1998 through 2002,
the market basket percentage increase for the fiscal
year involved minus 1.0 percentage points; and''.
(b) Collection of Data.--Section 1814(i) (42 U.S.C.
1395f(i)) is amended by adding at the end the following new
paragraph:
``(3) Hospice programs providing hospice care for which
payment is made under this subsection shall submit to the
Secretary such data with respect to the costs for providing
such care for each fiscal year, beginning with fiscal year
1999, as the Secretary determines necessary.''.
SEC. 4442. PAYMENT FOR HOME HOSPICE CARE BASED ON LOCATION WHERE CARE
IS FURNISHED.
(a) In General.--Section 1814(i)(2) (42 U.S.C. 1395f(i)(2))
is amended by adding at the end the following:
``(D) A hospice program shall submit claims for payment for
hospice care furnished in an individual's home under this title
only on the basis of the geographic location at which the
service is furnished, as determined by the Secretary.''.
(b) Effective Date.--The amendment made by subsection (a)
applies to cost reporting periods beginning on or after October
1, 1997.
SEC. 4443. HOSPICE CARE BENEFIT PERIODS.
(a) Restructuring of Benefit Period.--Section 1812 (42
U.S.C. 1395d) is amended in subsections (a)(4) and (d)(1) by
striking ``, a subsequent period of 30 days, and a subsequent
extension period'' and inserting ``and an unlimited number of
subsequent periods of 60 days each''.
(b) Conforming Amendments.--(1) Section 1812 (42 U.S.C.
1395d) is amended in subsection (d)(2)(B) by striking ``90- or
30-day period or a subsequent extension period'' and inserting
``90-day period or a subsequent 60-day period''.
(2) Section 1814(a)(7)(A) (42 U.S.C. 1395f(a)(7)(A)) is
amended--
(A) in clause (i), by inserting ``and'' at the end;
(B) in clause (ii)--
(i) by striking ``30-day'' and inserting
``60-day''; and
(ii) by striking ``, and'' at the end and
inserting a period; and
(C) by striking clause (iii).
SEC. 4444. OTHER ITEMS AND SERVICES INCLUDED IN HOSPICE CARE.
(a) In General.--Section 1861(dd)(1) (42 U.S.C.
1395x(dd)(1)) is amended--
(1) in subparagraph (G), by striking ``and'' at the
end;
(2) in subparagraph (H), by striking the period at
the end and inserting ``, and''; and
(3) by inserting after subparagraph (H) the
following:
``(I) any other item or service which is specified
in the plan and for which payment may otherwise be made
under this title.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply with respect to items or services furnished on or
after April 1, 1998.
SEC. 4445. CONTRACTING WITH INDEPENDENT PHYSICIANS OR PHYSICIAN GROUPS
FOR HOSPICE CARE SERVICES PERMITTED.
Section 1861(dd)(2) (42 U.S.C. 1395x(dd)(2)) is amended--
(1) in subparagraph (A)(ii)(I), by striking
``(F),''; and
(2) in subparagraph (B)(i), by inserting ``or, in
the case of a physician described in subclause (I),
under contract with'' after ``employed by''.
SEC. 4446. WAIVER OF CERTAIN STAFFING REQUIREMENTS FOR HOSPICE CARE
PROGRAMS IN NONURBANIZED AREAS.
Section 1861(dd)(5) (42 U.S.C. 1395x(dd)(5)) is amended--
(1) in subparagraph (B), by inserting ``or (C)''
after ``subparagraph (A)'' each place it appears; and
(2) by adding at the end the following:
``(C) The Secretary may waive the requirements of paragraph
(2)(A)(i) and (2)(A)(ii) for an agency or organization with
respect to the services described in paragraph (1)(B) and, with
respect to dietary counseling, paragraph (1)(H), if such agency
or organization--
``(i) is located in an area which is not an
urbanized area (as defined by the Bureau of Census),
and
``(ii) demonstrates to the satisfaction of the
Secretary that the agency or organization has been
unable, despite diligent efforts, to recruit
appropriate personnel.''.
SEC. 4447. LIMITATION ON LIABILITY OF BENEFICIARIES FOR CERTAIN HOSPICE
COVERAGE DENIALS.
Section 1879(g) (42 U.S.C. 1395pp(g)) is amended--
(1) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively, and moving
such subparagraphs 2 ems to the right;
(2) by striking ``is,'' and inserting ``is--'';
(3) by making the remaining text of subsection (g),
as amended, that follows ``is--'' a new paragraph (1)
and indenting such paragraph 2 ems to the right;
(4) by striking the period at the end and inserting
``; and''; and
(5) by adding at the end the following new
paragraph:
``(2) with respect to the provision of hospice care
to an individual, a determination that the individual
is not terminally ill.''.
SEC. 4448. EXTENDING THE PERIOD FOR PHYSICIAN CERTIFICATION OF AN
INDIVIDUAL'S TERMINAL ILLNESS.
Section 1814(a)(7)(A)(i) (42 U.S.C. 1395f(a)(7)(A)(i)) is
amended in the matter following subclause (II) by striking ``,
not later than 2 days after hospice care is initiated (or, if
each certify verbally not later than 2 days after hospice care
is initiated, not later than 8 days after such care is
initiated)'' and inserting ``at the beginning of the period''.
SEC. 4449. EFFECTIVE DATE.
Except as otherwise provided in this chapter, the
amendments made by this chapter apply to benefits provided on
or after the date of the enactment of this chapter, regardless
of whether or not an individual has made an election under
section 1812(d) of the Social Security Act (42 U.S.C. 1395d(d))
before such date.
CHAPTER 5--OTHER PAYMENT PROVISIONS
SEC. 4451. REDUCTIONS IN PAYMENTS FOR ENROLLEE BAD DEBT.
Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)) is amended by
adding at the end the following new subparagraph:
``(T) In determining such reasonable costs for hospitals,
no reduction in copayments under section 1833(t)(5)(B) shall be
treated as a bad debt and the amount of bad debts otherwise
treated as allowable costs which are attributable to the
deductibles and coinsurance amounts under this title shall be
reduced--
``(i) for cost reporting periods beginning during
fiscal year 1998, by 25 percent of such amount
otherwise allowable,
``(ii) for cost reporting periods beginning during
fiscal year 1999, by 40 percent of such amount
otherwise allowable, and
``(iii) for cost reporting periods beginning during
a subsequent fiscal year, by 45 percent of such amount
otherwise allowable.''.
SEC. 4452. PERMANENT EXTENSION OF HEMOPHILIA PASS-THROUGH PAYMENT.
Section 6011(d) of OBRA-1989 (as amended by section 13505
of OBRA-1993) is amended by striking ``and shall expire
September 30, 1994.'' and inserting ``and on or before
September 30, 1994, and on or after October 1, 1997.''.
SEC. 4453. REDUCTION IN PART A MEDICARE PREMIUM FOR CERTAIN PUBLIC
RETIREES.
(a) In General.--Section 1818(d) (42 U.S.C. 1395i-2(d)) is
amended--
(1) in paragraph (2), by striking ``paragraph (4)''
and inserting ``paragraphs (4) and (5)''; and
(2) by adding at the end the following new
paragraph:
``(5)(A) The amount of the monthly premium shall be zero in
the case of an individual who is a person described in
subparagraph (B) for a month, if--
``(i) the individual's premium under this section
for the month is not (and will not be) paid for, in
whole or in part, by a State (under title XIX or
otherwise), a political subdivision of a State, or an
agency or instrumentality of one or more States or
political subdivisions thereof; and
``(ii) in each of 84 months before such month, the
individual was enrolled in this part under this section
and the payment of the individual's premium under this
section for the month was not paid for, in whole or in
part, by a State (under title XIX or otherwise), a
political subdivision of a State, or an agency or
instrumentality of one or more States or political
subdivisions thereof.
``(B) A person described in this subparagraph for a month
is a person who establishes to the satisfaction of the
Secretary that, as of the last day of the previous month--
``(i)(I) the person was receiving cash benefits
under a qualified State or local government retirement
system (as defined in subparagraph (C)) on the basis of
the person's employment in one or more positions
covered under any such system, and (II) the person
would have at least 40 quarters of coverage under title
II if remuneration for medicare qualified government
employment (as defined in paragraph (1) of section
210(p), but determined without regard to paragraph (3)
of such section) paid to such person were treated as
wages paid to such person and credited for purposes of
determining quarters of coverage under section 213;
``(ii)(I) the person was married (and had been
married for the previous 1-year period) to an
individual who is described in clause (i), or (II) the
person met the requirement of clause (i)(II) and was
married (and had been married for the previous 1-year
period) to an individual described in clause (i)(I);
``(iii) the person had been married to an
individual for a period of at least 1 year (at the time
of such individual's death) if (I) the individual was
described in clause (i) at the time of the individual's
death, or (II) the person met the requirement of clause
(i)(II) and the individual was described in clause
(i)(I) at the time of the individual's death; or
``(iv) the person is divorced from an individual
and had been married to the individual for a period of
at least 10 years (at the time of the divorce) if (I)
the individual was described in clause (i) at the time
of the divorce, or (II) the person met the requirement
of clause (i)(II) and the individual was described in
clause (i)(I) at the time of the divorce.
``(C) For purposes of subparagraph (B)(i)(I), the term
`qualified State or local government retirement system' means a
retirement system that--
``(i) is established or maintained by a State or
political subdivision thereof, or an agency or
instrumentality of one or more States or political
subdivisions thereof;
``(ii) covers positions of some or all employees of
such a State, subdivision, agency, or instrumentality;
and
``(iii) does not adjust cash retirement benefits
based on eligibility for a reduction in premium under
this paragraph.''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to premiums for months beginning with January 1998,
and months before such month may be taken into account for
purposes of meeting the requirement of section
1818(d)(5)(B)(iii) of the Social Security Act, as added by
subsection (a).
SEC. 4454. COVERAGE OF SERVICES IN RELIGIOUS NONMEDICAL HEALTH CARE
INSTITUTIONS UNDER THE MEDICARE AND MEDICAID
PROGRAMS.
(a) Medicare Coverage.--
(1) In general.--Section 1861 (42 U.S.C. 1395x) (as
amended by sections 4103 and 4106) is amended--
(A) in the sixth sentence of subsection
(e)--
(i) by striking ``includes'' and
all that follows up to ``but only'' and
inserting ``includes a religious
nonmedical health care institution (as
defined in subsection (ss)(1)),'', and
(ii) by inserting ``consistent with
section 1821'' before the period;
(B) in subsection (y)--
(i) by amending the heading to read
as follows:
``Extended Care in Religious Nonmedical Health Care Institutions'',
(ii) in paragraph (1), by striking
``includes'' and all that follows up to
``but only'' and inserting ``includes a
religious nonmedical health care
institution (as defined in subsection
(ss)(1)),'', and
(iii) by inserting ``consistent
with section 1821'' before the period;
and
(C) by adding at the end the following:
``Religious Nonmedical Health Care Institution
``(ss)(1) The term `religious nonmedical health care
institution' means an institution that--
``(A) is described in subsection (c)(3) of
section 501 of the Internal Revenue Code of
1986 and is exempt from taxes under subsection
(a) of such section;
``(B) is lawfully operated under all
applicable Federal, State, and local laws and
regulations;
``(C) provides only nonmedical nursing
items and services exclusively to patients who
choose to rely solely upon a religious method
of healing and for whom the acceptance of
medical health services would be inconsistent
with their religious beliefs;
``(D) provides such nonmedical items and
services exclusively through nonmedical nursing
personnel who are experienced in caring for the
physical needs of such patients;
``(E) provides such nonmedical items and
services to inpatients on a 24-hour basis;
``(F) on the basis of its religious
beliefs, does not provide through its personnel
or otherwise medical items and services
(including any medical screening, examination,
diagnosis, prognosis, treatment, or the
administration of drugs) for its patients;
``(G)(i) is not owed by, under common
ownership with, or has an ownership interest
in, a provider of medical treatment of
services;
``(ii) is not affiliated with--
``(I) a provider of medical
treatment or services, or
``(II) an individual who has an
ownership interest in a provider of
medical treatment or services;
``(H) has in effect a utilization review
plan which--
``(i) provides for the review of
admissions to the institution, of the
duration of stays therein, of cases of
continuous extended duration, and of
the items and services furnished by the
institution,
``(ii) requires that such reviews
be made by an appropriate committee of
the institution that includes the
individuals responsible for overall
administration and for supervision of
nursing personnel at the institution,
``(iii) provides that records be
maintained of the meetings, decisions,
and actions of such committee, and
``(iv) meets such other
requirements as the Secretary finds
necessary to establish an effective
utilization review plan;
``(I) provides the Secretary with such
information as the Secretary may require to
implement section 1821, including information
relating to quality of care and coverage
determinations; and
``(J) meets such other requirements as the
Secretary finds necessary in the interest of
the health and safety of individuals who are
furnished services in the institution.
``(2) To the extent that the Secretary finds that the
accreditation of an institution by a State, regional, or
national agency or association provides reasonable assurances
that any or all of the requirements of paragraph (1) are met or
exceeded, the Secretary may treat such institution as meeting
the condition or conditions with respect to which the Secretary
made such finding.
``(3)(A)(i) In administering this subsection and section
1821, the Secretary shall not require any patient of a
religious nonmedical health care institution to undergo medical
screening, examination, diagnosis, prognosis, or treatment or
to accept any other medical health care service, if such
patient (or legal representative of the patient) objects
thereto on religious grounds.
``(ii) Clause (i) shall not be construed as preventing the
Secretary from requiring under section 1821(a)(2) the provision
of sufficient information regarding an individual's condition
as a condition for receipt of benefits under part A for
services provided in such an institution.
``(B)(i) In administering this subsection and section 1821,
the Secretary shall not subject a religious nonmedical health
care institution or its personnel to any medical supervision,
regulation, or control, insofar as such supervision,
regulation, or control would be contrary to the religious
beliefs observed by the institution or such personnel.
``(ii) Clause (i) shall not be construed as preventing the
Secretary from reviewing items and services billed by the
institution to the extent the Secretary determines such review
to be necessary to determine whether such items and services
were not covered under part A, are excessive, or are
fraudulent.
``(4)(A) For purposes of paragraph (1)(G)(i), an ownership
interest of less than 5 percent shall not be taken into
account.
``(B) For purposes of paragraph (1)(G)(ii), none of the
following shall be considered to create an affiliation:
``(i) An individual serving as an uncompensated
director, trustee, officer, or other member of the
governing body of a religious nonmedical health care
institution.
``(ii) An individual who is a director, trustee,
officer, employee, or staff member of a religious
nonmedical health care institution having a family
relationship with an individual who is affiliated with
(or has an ownership interest in) a provider of medical
treatment or services.
``(iii) An individual or entity furnishing goods or
services as a vendor to both providers of medical
treatment or services and religious nonmedical health
care institutions.''.
(2) Conditions of coverage.--Part A of title XVIII
is amended by adding at the end the following new
section:
``conditions for coverage of religious nonmedical health care
institutional services
``Sec. 1821. (a) In General.--Subject to subsections (c)
and (d), payment under this part may be made for inpatient
hospital services or post-hospital extended care services
furnished an individual in a religious nonmedical health care
institution only if--
``(1) the individual has an election in effect for
such benefits under subsection (b); and
``(2) the individual has a condition such that the
individual would qualify for benefits under this part
for inpatient hospital services or extended care
services, respectively, if the individual were an
inpatient or resident in a hospital or skilled nursing
facility that was not such an institution.
``(b) Election.--
``(1) In general.--An individual may make an
election under this subsection in a form and manner
specified by the Secretary consistent with this
subsection. Unless otherwise provided, such an election
shall take effect immediately upon its execution. Such
an election, once made, shall continue in effect until
revoked.
``(2) Form.--The election form under this
subsection shall include the following:
``(A) A written statement, signed by the
individual (or such individual's legal
representative), that--
``(i) the individual is
conscientiously opposed to acceptance
of nonexcepted medical treatment; and
``(ii) the individual's acceptance
of nonexcepted medical treatment would
be inconsistent with the individual's
sincere religious beliefs.
``(B) A statement that the receipt of
nonexcepted medical services shall constitute a
revocation of the election and may limit
further receipt of services described in
subsection (a).
``(3) Revocation.--An election under this
subsection by an individual may be revoked by
voluntarily notifying the Secretary in writing of such
revocation and shall be deemed to be revoked if the
individual receives nonexcepted medical treatment for
which reimbursement is made under this title.
``(4) Limitation on subsequent elections.--Once an
individual's election under this subsection has been
made and revoked twice--
``(A) the next election may not become
effective until the date that is 1 year after
the date of most recent previous revocation,
and
``(B) any succeeding election may not
become effective until the date that is 5 years
after the date of the most recent previous
revocation.
``(5) Excepted medical treatment.--For purposes of
this subsection:
``(A) Excepted medical treatment.--The term
`excepted medical treatment' means medical care
or treatment (including medical and other
health services)--
``(i) received involuntarily, or
``(ii) required under Federal or
State law or law of a political
subdivision of a State.
``(B) Nonexcepted medical treatment.--The
term `nonexcepted medical treatment' means
medical care or treatment (including medical
and other health services) other than excepted
medical treatment.
``(c) Monitoring and Safeguard Against Excessive
Expenditures.--
``(1) Estimate of expenditures.--Before the
beginning of each fiscal year (beginning with fiscal
year 2000), the Secretary shall estimate the level of
expenditures under this part for services described in
subsection (a) for that fiscal year.
``(2) Adjustment in payments.--
``(A) Proportional adjustment.--If the
Secretary determines that the level estimated
under paragraph (1) for a fiscal year will
exceed the trigger level (as defined in
subparagraph (C)) for that fiscal year, the
Secretary shall, subject to subparagraph (B),
provide for such a proportional reduction in
payment amounts under this part for services
described in subsection (a) for the fiscal year
involved as will assure that such level (taking
into account any adjustment under subparagraph
(B)) does not exceed the trigger level for that
fiscal year.
``(B) Alternative adjustments.--The
Secretary may, instead of making some or all of
the reduction described in subparagraph (A),
impose such other conditions or limitations
with respect to the coverage of covered
services (including limitations on new
elections of coverage and new facilities) as
may be appropriate to reduce the level of
expenditures described in paragraph (1) to the
trigger level.
``(C) Trigger level.--For purposes of this
subsection--
``(i) In general.--Subject to
adjustment under paragraph (3)(B), the
`trigger level' for a year is the
unadjusted trigger level described in
clause (ii).
``(ii) Unadjusted trigger level.--
The `unadjusted trigger level' for--
``(I) fiscal year 1998, is
$20,000,000, or
``(II) a succeeding fiscal
year is the amount specified
under this clause for the
previous fiscal year increased
by the percentage increase in
the consumer price index for
all urban consumers (all items;
United States cityaverage) for
the 12-month period ending with July preceding the beginning of the
fiscal year.
``(D) Prohibition of administrative and
judicial review.--There shall be no
administrative or judicial review under section
1869, 1878, or otherwise of the estimation of
expenditures under subparagraph (A) or the
application of reduction amounts under
subparagraph (B).
``(E) Effect on billing.--Notwithstanding
any other provision of this title, in the case
of a reduction in payment provided under this
subsection for services of a religious
nonmedical health care institution provided to
an individual, the amount that the institution
is otherwise permitted to charge the individual
for such services is increased by the amount of
such reduction.
``(3) Monitoring expenditure level.--
``(A) In general.--The Secretary shall
monitor the expenditure level described in
paragraph (2)(A) for each fiscal year
(beginning with fiscal year 1999).
``(B) Adjustment in trigger level.--
``(i) In general.--If the Secretary
determines that such level for a fiscal
year exceeded, or was less than, the
trigger level for that fiscal year,
then, subject to clause (ii), the
trigger level for the succeeding fiscal
year shall be reduced, or increased,
respectively, by the amount of such
excess or deficit.
``(ii) Limitation on
carryforward.--In no case may the
increase effected under clause (i) for
a fiscal year exceed $50,000,000.
``(d) Sunset.--If the Secretary determines that the level
of expenditures described in subsection (c)(1) for 3
consecutive fiscal years (with the first such year being not
earlier than fiscal year 2002) exceeds the trigger level for
such expenditures for such years (as determined under
subsection (c)(2)), benefits shall be paid under this part for
services described in subsection (a) and furnished on or after
the first January 1 that occurs after such 3 consecutive years
only with respect to an individual who has an election in
effect under subsection (b) as of such January 1 and only
during the duration of such election.
``(e) Annual Report.--At the beginning of each fiscal year
(beginning with fiscal year 1999), the Secretary shall submit
to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate an
annual report on coverage and expenditures for services
described in subsection (a) under this part and under State
plans under title XIX. Such report shall include--
``(1) level of expenditures described in subsection
(c)(1) for the previous fiscal year and estimated for
the fiscal year involved;
``(2) trends in such level; and
``(3) facts and circumstances of any significant
change in such level from the level in previous fiscal
years.''.
(b) Medicaid.--
(1) The third sentence of section 1902(a) (42
U.S.C. 1396a(a)) is amended by striking all that
follows ``shall not apply'' and inserting ``to a
religious nonmedical health care institution (as
defined in section 1861(ss)(1)).''.
(2) Section 1908(e)(1) (42 U.S.C. 1396g-1(e)(1)) is
amended by striking all that follows ``does not
include'' and inserting ``a religious nonmedical health
care institution (as defined in section
1861(ss)(1)).''.
(c) Conforming Amendments.--
(1) Section 1122(h) (42 U.S.C. 1320a-1(h)) is
amended by striking all that follows ``shall not apply
to'' and inserting ``a religious nonmedical health care
institution (as defined in section 1861(ss)(1)).''.
(2) Section 1162 (42 U.S.C. 1320c-11) is amended--
(A) by amending the heading to read as
follows:
``exemptions for religious nonmedical health care institutions''; and
(B) by striking all that follows ``shall
not apply with respect to a'' and inserting
``religious nonmedical health care institution
(as defined in section 1861(ss)(1)).''.
(d) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act and
shall apply to items and services furnished on or after such
date. By not later than July 1, 1998, the Secretary of Health
and Human Services shall first issue regulations to carry out
such amendments. Such regulations may be issued so they are
effective on an interim basis pending notice and opportunity
for public comment. For periods before the effective date of
such regulations, such regulations shall recognize elections
entered into in good faith in order to comply with the
requirements of section 1821(b) of the Social Security Act.
Subtitle F--Provisions Relating to Part B Only
CHAPTER 1--SERVICES OF HEALTH PROFESSIONALS
Subchapter A--Physicians' Services
SEC. 4501. ESTABLISHMENT OF SINGLE CONVERSION FACTOR FOR 1998.
(a) In General.--Section 1848(d)(1) (42 U.S.C. 1395w-
4(d)(1)) is amended--
(1) by redesignating subparagraph (C) as
subparagraph (D), and
(2) by inserting after subparagraph (B) the
following:
``(C) Special rules for 1998.--The single
conversion factor for 1998 under this
subsection shall be the conversion factor for
primary care services for 1997, increased by
the Secretary's estimate of the weighted
average of the three separate updates that
would otherwise occur were it not for the
enactment of chapter 1 of subtitle F of title
IV of the Balanced Budget Act of 1997.''.
(b) Conforming Amendments.--Section 1848 (42 U.S.C. 1395w-
4) is amended--
(1) by striking ``(or factors)'' each place it
appears in subsection (d)(1)(A) and (d)(1)(D)(ii) (as
redesignated by subsection (a)(1)),
(2) in subsection (d)(1)(A), by striking ``or
updates'',
(3) in subsection (d)(1)(D) (as redesignated by
subsection (a)(1)), by striking ``(or updates)'' each
place it appears, and
(4) in subsection (j)(1), by striking ``The term''
and inserting ``For services furnished before January
1, 1998, the term''..
SEC. 4502. ESTABLISHING UPDATE TO CONVERSION FACTOR TO MATCH SPENDING
UNDER SUSTAINABLE GROWTH RATE.
(a) Update.--
(1) In general.--Section 1848(d)(3) (42 U.S.C.
1395w-4(d)(3)) is amended to read as follows:
``(3) Update.--
``(A) In general.--Unless otherwise
provided by law, subject to subparagraph (D)
and the budget-neutrality factor determined by
the Secretary under subsection (c)(2)(B)(ii),
the update to the single conversion factor
established in paragraph (1)(C) for a year
beginning with 1999 is equal to the product
of--
``(i) 1 plus the Secretary's
estimate of the percentage increase in
the MEI (as defined in section
1842(i)(3)) for the year (divided by
100), and
``(ii) 1 plus the Secretary's
estimate of the update adjustment
factor for the year (divided by 100),
minus 1 and multiplied by 100.
``(B) Update adjustment factor.--For
purposes of subparagraph (A)(ii), the `update
adjustment factor' for a year is equal (as
estimated by the Secretary) to--
``(i) the difference between (I)
the sum of the allowed expenditures for
physicians' services (as determined
under subparagraph (C)) for the period
beginning April 1, 1997, and ending on
March 31 of the year involved, and (II)
the amount of actual expenditures for
physicians' services furnished during
the period beginning April 1, 1997, and
ending on March 31 of the preceding
year; divided by
``(ii) the actual expenditures for
physicians' services for the 12-month
period ending on March 31 of the
preceding year, increased by the
sustainable growth rate under
subsection (f) for the fiscal year
which begins during such 12-month
period.
``(C) Determination of allowed
expenditures.--For purposes of this paragraph,
the allowed expenditures for physicians'
services for the 12-month period ending with
March 31 of--
``(i) 1997 is equal to the actual
expenditures for physicians' services
furnished during such 12-month period,
as estimated by the Secretary; or
``(ii) a subsequent year is equal
to the allowed expenditures for
physicians' services for the previous
year, increased by the sustainable
growth rate under subsection (f) for
the fiscal year which begins during
such 12-month period.
``(D) Restriction on variation from
medicare economic index.--Notwithstanding the
amount of the update adjustment factor
determined under subparagraph (B) for a year,
the update in the conversion factor under this
paragraph for the year may not be--
``(i) greater than 100 times the
following amount: (1.03 + (MEI
percentage/100)) -1; or
``(ii) less than 100 times the
following amount: (0.93 + (MEI
percentage/100)) -1,
where `MEI percentage' means the Secretary's
estimate of the percentage increase in the MEI
(as defined in section 1842(i)(3)) for the year
involved.''.
(2) Effective date.--The amendment made by this
subsection shall apply to the update for years
beginning with 1999.
(b) Elimination of Report.--Section 1848(d) (42 U.S.C.
1395w-4(d)) is amended by striking paragraph (2).
SEC. 4503. REPLACEMENT OF VOLUME PERFORMANCE STANDARD WITH SUSTAINABLE
GROWTH RATE.
(a) In General.--Section 1848(f) (42 U.S.C. 1395w-4(f)) is
amended by striking paragraphs (2) through (5) and inserting
the following:
``(2) Specification of growth rate.--The
sustainable growth rate for all physicians' services
for a fiscal year (beginning with fiscal year 1998)
shall be equal to the product of--
``(A) 1 plus the Secretary's estimate of
the weighted average percentage increase
(divided by 100) in the fees for all
physicians' services in the fiscal year
involved,
``(B) 1 plus the Secretary's estimate of
the percentage change (divided by 100) in the
average number of individuals enrolled under
this part (other than Medicare+Choice plan
enrollees) from the previous fiscal year to the
fiscal year involved,
``(C) 1 plus the Secretary's estimate of
the projected percentage growth in real gross
domestic product per capita (divided by 100)
from the previous fiscal year to the fiscal
year involved, and
``(D) 1 plus the Secretary's estimate of
the percentage change (divided by 100) in
expenditures for all physicians' services in
the fiscal year (compared with the previous
fiscal year) which will result from changes in
law and regulations, determined without taking
into account estimated changes in expenditures
resulting from the update adjustment factor
determined under subsection (d)(3)(B),
minus 1 and multiplied by 100.
``(3) Definitions.--In this subsection:
``(A) Services included in physicians'
services.--The term `physicians' services'
includes other items and services (such as
clinical diagnostic laboratory tests and
radiology services), specified by the
Secretary, that are commonly performed or
furnished by a physician or in a physician's
office, but does not include services furnished
to a Medicare+Choice plan enrollee.
``(B) Medicare+choice plan enrollee.--The
term `Medicare+Choice plan enrollee' means,
with respect to a fiscal year, an individual
enrolled under this part who has elected to
receive benefits under this title for the
fiscal year through a Medicare+Choice plan
offered under part C, and also includes an
individual who is receiving benefits under this
part through enrollmentwith an eligible
organization with a risk-sharing contract under section 1876.''.
(b) Conforming Amendment.--So much of section 1848(f) (42
U.S.C. 1395w-4(f)) as precedes paragraph (2) is amended to read
as follows:
``(f) Sustainable Growth Rate.--
``(1) Publication.--The Secretary shall cause to
have published in the Federal Register the sustainable
growth rate for each fiscal year beginning with fiscal
year 1998. Such publication shall occur by not later
than August 1 before each fiscal year, except that such
rate for fiscal year 1998 shall be published not later
than November 1, 1997.''.
SEC. 4504. PAYMENT RULES FOR ANESTHESIA SERVICES.
(a) In General.--Section 1848(d)(1) (42 U.S.C. 1395w-
4(d)(1)), as amended by section 4501(a), is amended--
(1) in subparagraph (C), by striking ``The single''
and inserting ``Except as provided in subparagraph (D),
the single'';
(2) by redesignating subparagraph (D) as
subparagraph (E); and
(3) by inserting after subparagraph (C) the
following new subparagraph:
``(D) Special rules for anesthesia
services.--The separate conversion factor for
anesthesia services for a year shall be equal
to 46 percent of the single conversion factor
established for other physicians' services,
except as adjusted for changes in work,
practice expense, or malpractice relative value
units.''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to services furnished on or after January 1, 1998.
SEC. 4505. IMPLEMENTATION OF RESOURCE-BASED METHODOLOGIES.
(a) 1-Year Delay in Implementation.--Section 1848(c) (42
U.S.C. 1395w-4(c)) is amended--
(1) in paragraph (2)(C)(ii), in the matter before
subclause (I) and after subclause (II), by striking
``1998'' and inserting ``1999'' each place it appears;
and
(2) in paragraph (3)(C)(ii), by striking ``1998''
and inserting ``1999''.
(b) Phased-in Implementation.--
(1) In general.--Section 1848(c)(2)(C)(ii) (42
U.S.C. 1395w-4(c)(2)(C)(ii)) is further amended--
(A) by striking the comma at the end of
clause (ii) and inserting a period and the
following:
``For 1999, such number of units shall
be determined based 75 percent on such
product and based 25 percent on the
relative practice expense resources
involved in furnishing the service. For
2000, such number of units shall be
determined based 50 percent on such
product and based 50 percent on such
relative practice expense resources.
For 2001, such number of units shall be
determined based 25 percent on such
product and based 75 percent on such
relative practice expense resources.
For a subsequent year, such number of
units shall be determined based
entirely on such relative practice
expense resources.''.
(2) Conforming amendment.--Section
1848(c)(3)(C)(ii) (42 U.S.C. 1395w-4(c)(3)(C)(ii)), as
amended by subsection (a)(2), is amended by striking
``1999'' and inserting ``2002''.
(c) Review by Comptroller General.--The Comptroller General
of the United States shall review and evaluate the proposed
rule on resource-based methodology for practice expenses issued
by the Secretary of Health and Human Services. The Comptroller
General shall, within 6 months of the date of the enactment of
this Act, report to the Committees on Commerce and Ways and
Means of the House of Representatives and the Committee on
Finance of the Senate the results of its evaluation, including
an analysis of--
(1) the adequacy of the data used in preparing the
rule,
(2) categories of allowable costs,
(3) methods for allocating direct and indirect
expenses,
(4) the potential impact of the rule on beneficiary
access to services, and
(5) any other matters related to the
appropriateness of resource-based methodology for
practice expenses.
The Comptroller General shall consult with representatives of
physicians' organizations with respect to matters of both data
and methodology.
(d) Requirements for Developing New Resource-Based Practice
Expense Relative Value Units.--
(1) Development.--For purposes of section
1848(c)(2)(C)(ii) of the Social Security Act, the
Secretary of Health and Human Services shall develop
new resource-based relative value units. In developing
such units the Secretary shall--
(A) utilize, to the maximum extent
practicable, generally accepted cost accounting
principles which (i) recognize all staff,
equipment, supplies, and expenses, not just
those which can be tied to specific procedures,
and (ii) use actual data on equipment
utilization and other key assumptions;
(B) consult with organizations representing
physicians regarding methodology and data to be
used; and
(C) develop a refinement process to be used
during each of the 4 years of the transition
period.
(2) Report.--The Secretary shall transmit a report
by March 1, 1998, on the development of resource-based
relative value units under paragraph (1) to the
Committee on Ways and Means and the Committee on
Commerce of the House of Representatives and the
Committee on Finance of the Senate. The report shall
include a presentation of data to be used in developing
the value units and an explanation of the methodology.
(3) Notice of proposed rulemaking.--The Secretary
shall publish a notice of proposed rulemaking with the
new resource-based relative value units on or before
May 1, 1998, and shall allow for a 90-day public
comment period.
(4) Items included.--The new proposed rule shall
consider the following:
(A) Impact projections which compare new
proposed payment amounts on data on actual
physician practice expenses.
(B) Impact projections for hospital-based
and other specialties, geographic payment
localities, and urban versus rural localities.
(e) Adjustments to Relative Value Units for 1998.--Section
1848(c)(2) (42 U.S.C. 1395w-4(c)(2)) is amended by adding at
the end the following new subparagraph:
``(G) Adjustments in relative value units
for 1998.--
``(i) In general.--The Secretary
shall--
``(I) subject to clauses
(iv) and (v), reduce the
practice expense relative value
units applied to any services
described in clause (ii)
furnished in 1998 to a number
equal to 110 percent of the
number of work relative value
units, and
``(II) increase the
practice expense relative value
units for office visit
procedure codes during 1998 by
a uniform percentage which the
Secretary estimates will result
in an aggregate increase in
payments for such services
equal to the aggregate decrease
in payments by reason of
subclause (I).
``(ii) Services covered.--For
purposes of clause (i), the services
described in this clause are
physicians' services that are not
described in clause (iii) and for
which--
``(I) there are work
relative value units, and
``(II) the number of
practice expense relative value
units (determined for 1998)
exceeds 110 percent of the
number of work relative value
units (determined for such
year).
``(iii) Excluded services.--For
purposes of clause (ii), the services
described in this clause are services
which the Secretary determines at least
75 percent of which are provided under
this title in an office setting.
``(iv) Limitation on aggregate
reallocation.--If the application of
clause (i)(I) would result in an
aggregate amount of reductions under
such clause in excess of $390,000,000,
such clause shall be applied by
substituting for 110 percent such
greater percentage as the Secretary
estimates will result in the aggregate
amount of such reductions equaling
$390,000,000.
``(v) No reduction for certain
services.--Practice expense relative
value units for a procedure performed
in an office or in a setting out of an
office shall not be reduced under
clause (i) if the in-office or out-of-
office practice expense relative value,
respectively, for the procedure would
increase under the proposed rule on
resource-based practice expenses issued
by the Secretary on June 18, 1997 (62
Federal Register 33158 et seq.).''.
(f) Application of Resource-Based Methodology to
Malpractice Relative Value Units.--
(1) In general.--Section 1848(c)(2)(C)(iii) (42
U.S.C. 1395w-4(c)(2)(C)(iii)) is amended--
(A) in paragraph (2)(C)(iii)--
(i) by inserting ``for the service
for years before 2000'' before
``equal'', and
(ii) by striking the period at the
end and inserting a comma and by adding
at the end the following flush matter:
``and for years beginning with 2000
based on the malpractice expense
resources involved in furnishing the
service.''; and
(B) in paragraph (3)(C)(iii), by striking
``The malpractice'' and inserting ``For years
before 1999, the malpractice''.
(2) Application of certain budget neutrality
provisions.--In implementing the amendment made by
paragraph (1)(A)(ii), the provisions of clauses
(ii)(II) and (iii) of section 1848(c)(2)(B) of the
Social Security Act (42 U.S.C. 1395w-4(c)(2)(B)) shall
apply in the same manner as they apply to adjustments
under clause (ii)(I) of such section.
SEC. 4506. DISSEMINATION OF INFORMATION ON HIGH PER DISCHARGE RELATIVE
VALUES FOR IN-HOSPITAL PHYSICIANS' SERVICES.
(a) Determination and Notice Concerning Hospital-Specific
Per Discharge Relative Values.--
(1) In general.--For 1999 and 2001 the Secretary of
Health and Human Services shall determine for each
hospital--
(A) the hospital-specific per discharge
relative value under subsection (b); and
(B) whether the hospital-specific relative
value is projected to be excessive (as
determined based on such value represented as a
percentage of the median of hospital-specific
per discharge relative values determined under
subsection (b)).
(2) Notice to subset of medical staffs; evaluation
of responses.--The Secretary shall notify the medical
executive committee of a subset of the hospitals
identified under paragraph (1)(B) as having an
excessive hospital-specific relative value, of the
determinations made with respect to the medical staff
under paragraph (1). TheSecretary shall evaluate the
responses of the hospitals so notified with the responses of other
hospitals so identified that were not so notified.
(b) Determination of Hospital-Specific Per Discharge
Relative Values.--
(1) In general.--For purposes of this section, the
hospital-specific per discharge relative value for the
medical staff of a hospital (other than a teaching
hospital) for a year shall be equal to the average per
discharge relative value (as determined under section
1848(c)(2) of the Social Security Act (42 U.S.C. 1395w-
4(c)(2)) for physicians' services furnished to
inpatients of the hospital by the hospital's medical
staff (excluding interns and residents) during the
second year preceding that calendar year, adjusted for
variations in case-mix among hospitals and
disproportionate share status and teaching status among
hospitals (as determined by the Secretary under
paragraph (3)).
(2) Special rule for teaching hospitals.--The
hospital-specific relative value projected for a
teaching hospital in a year shall be equal to the sum
of--
(A) the average per discharge relative
value (as determined under section 1848(c)(2)
of such Act) for physicians' services furnished
to inpatients of the hospital by the hospital's
medical staff (excluding interns and residents)
during the second year preceding that calendar
year, and
(B) the equivalent per discharge relative
value (as determined under such section) for
physicians' services furnished to inpatients of
the hospital by interns and residents of the
hospital during the second year preceding that
calendar year, adjusted for variations in case-
mix among hospitals, and in disproportionate
share status and teaching status among
hospitals (as determined by the Secretary under
paragraph (3)).
The Secretary shall determine the equivalent relative
value unit per discharge for interns and residents
based on the best available data and may make such
adjustment in the aggregate.
(3) Adjustment for teaching and disproportionate
share hospitals.--The Secretary shall adjust the
allowable per discharge relative values otherwise
determined under this subsection to take into account
the needs of teaching hospitals and hospitals receiving
additional payments under subparagraphs (F) and (G) of
section 1886(d)(5) of the Social Security Act (42
U.S.C. 1395ww(d)(5)). The adjustment for teaching
status or disproportionate share shall not be less than
zero.
(c) Definitions.--For purposes of this section:
(1) Hospital.--The term ``hospital'' means a
subsection (d) hospital as defined in section 1886(d)
of the Social Security Act (42 U.S.C. 1395ww(d)) .
(2) Medical staff.--An individual furnishing a
physician's service is considered to be on the medical
staff of a hospital--
(A) if (in accordance with requirements for
hospitals established by the Joint Commission
on Accreditation of Health Organizations)--
(i) the individual is subject to
bylaws, rules, and regulations
established by the hospital to provide
a framework for the self-governance of
medical staff activities,
(ii) subject to the bylaws, rules,
and regulations, the individual has
clinical privileges granted by the
hospital's governing body, and
(iii) under the clinical
privileges, the individual may provide
physicians' services independently
within the scope of the individual's
clinical privileges, or
(B) if the physician provides at least one
service to an individual entitled to benefits
under this title in that hospital.
(3) Physicians' services.--The term ``physicians'
services'' means the services described in section
1848(j)(3) of the Social Security Act (42 U.S.C. 1395w-
4(j)(3)).
(4) Rural area; urban area.--The terms ``rural
area'' and ``urban area'' have the meaning given those
terms under section 1886(d)(2)(D) of such Act (42
U.S.C. 1395ww(d)(2)(D)).
(5) Secretary.--The term ``Secretary'' means the
Secretary of Health and Human Services.
(6) Teaching hospital.--The term ``teaching
hospital'' means a hospital which has a teaching
program approved as specified in section 1861(b)(6) of
the Social Security Act (42 U.S.C. 1395x(b)(6)).
SEC. 4507. USE OF PRIVATE CONTRACTS BY MEDICARE BENEFICIARIES.
(a) Items or Services Provided Through Private Contracts.--
(1) In general.--Section 1802 (42 U.S.C. 1395a) is
amended by adding at the end the following new
subsection:
``(b) Use of Private Contracts by Medicare Beneficiaries.--
``(1) In general.--Subject to the provisions of
this subsection, nothing in this title shall prohibit a
physician or practitioner from entering into a private
contract with a medicare beneficiary for any item or
service--
``(A) for which no claim for payment is to
be submitted under this title, and
``(B) for which the physician or
practitioner receives--
``(i) no reimbursement under this
title directly or on a capitated basis,
and
``(ii) receives no amount for such
item or service from an organization
which receives reimbursement for such
item or service under this title
directly or on a capitated basis.
``(2) Beneficiary protections.--
``(A) In general.--Paragraph (1) shall not
apply to any contract unless--
``(i) the contract is in writing
and is signed by the medicare
beneficiary before any item or service
is provided pursuant to the contract;
``(ii) the contract contains the
items described in subparagraph (B);
and
``(iii) the contract is not entered
into at a time when the medicare
beneficiary is facing an emergency or
urgent health care situation.
``(B) Items required to be included in
contract.--Any contract to provide items and
services to which paragraph (1) applies shall
clearly indicate to the medicare beneficiary
that by signing such contract the beneficiary--
``(i) agrees not to submit a claim
(or to request that the physician or
practitioner submit a claim) under this
title for such items or services even
if such items or services are otherwise
covered by this title;
``(ii) agrees to be responsible,
whether through insurance or otherwise,
for payment of such items or services
and understands that no reimbursement
will be provided under this title for
such items or services;
``(iii) acknowledges that no limits
under this title (including the limits
under section 1848(g)) apply to amounts
that may be charged for such items or
services;
``(iv) acknowledges that Medigap
plans under section 1882 do not, and
other supplemental insurance plans may
elect not to, make payments for such
items and services because payment is
not made under this title; and
``(v) acknowledges that the
medicare beneficiary has the right to
have such items or servicesprovided by
other physicians or practitioners for whom payment would be made under
this title.
Such contract shall also clearly indicate
whether the physician or practitioner is
excluded from participation under the Medicare
Program under section 1128.
``(3) Physician or practitioner requirements.--
``(A) In general.--Paragraph (1) shall not
apply to any contract entered into by a
physician or practitioner unless an affidavit
described in subparagraph (B) is in effect
during the period any item or service is to be
provided pursuant to the contract.
``(B) Affidavit.--An affidavit is described
in this subparagraph if--
``(i) the affidavit identifies the
physician or practitioner and is in
writing and is signed by the physician
or practitioner;
``(ii) the affidavit provides that
the physician or practitioner will not
submit any claim under this title for
any item or service provided to any
Medicare beneficiary (and will not
receive any reimbursement or amount
described in paragraph (1)(B) for any
such item or service) during the 2-year
period beginning on the date the
affidavit is signed; and
``(iii) a copy of the affidavit is
filed with the Secretary no later than
10 days after the first contract to
which such affidavit applies is entered
into.
``(C) Enforcement.--If a physician or
practitioner signing an affidavit under
subparagraph (B) knowingly and willfully
submits a claim under this title for any item
or service provided during the 2-year period
described in subparagraph (B)(ii) (or receives
any reimbursement or amount described in
paragraph (1)(B) for any such item or service)
with respect to such affidavit--
``(i) this subsection shall not
apply with respect to any items and
services provided by the physician or
practitioner pursuant to any contract
on and after the date of such
submission and before the end of such
period; and
``(ii) no payment shall be made
under this title for any item or
service furnished by the physician or
practitioner during the period
described in clause (i) (and no
reimbursement or payment of any amount
described in paragraph (1)(B) shall be
made for any such item or service).
``(4) Limitation on actual charge and claim
submission requirement not applicable.--Section 1848(g)
shall not apply with respect to any item or service
provided to a Medicare beneficiary under a contract
described in paragraph (1).
``(5) Definitions.--In this subsection:
``(A) Medicare beneficiary.--The term
`medicare beneficiary' means an individual who
is entitled to benefits under part A or
enrolled under part B.
``(B) Physician.--The term `physician' has
the meaning given such term by section
1861(r)(1).
``(C) Practitioner.--The term
`practitioner' has the meaning given such term
by section 1842(b)(18)(C).''
(2) Conforming amendments.--
(A) Section 1802 (42 U.S.C. 1395a) is
amended by striking ``Any'' and inserting ``(a)
Basic Freedom of Choice.--Any''.
(B) Section 1862(a) (42 U.S.C. 1395y(a)),
as amended by sections 4319(b) and 4432, is
amended by striking ``or'' at the end of
paragraph (17), by striking the period at the
end of paragraph (18) and inserting ``; or'',
and by adding after paragraph (18) the
following new paragraph:
``(19) which are for items or services which are
furnished pursuant to a private contract described in
section 1802(b).''
(b) Report.--Not later than October 1, 2001, the Secretary
of Health and Human Services shall submit a report to Congress
on the effect on the program under this title of private
contracts entered into under the amendment made by subsection
(a). Such report shall include--
(1) analyses regarding--
(A) the fiscal impact of such contracts on
total Federal expenditures under title XVIII of
the Social Security Act and on out-of-pocket
expenditures by Medicare beneficiaries for
health services under such title; and
(B) the quality of the health services
provided under such contracts; and
(2) recommendations as to whether Medicare
beneficiaries should continue to be able to enter
private contracts under section 1802(b) of such Act (as
added by subsection (a)) and if so, what legislative
changes, if any should be made to improve such
contracts.
(c) Effective Date.--The amendment made by subsection (a)
shall apply with respect to contracts entered into on and after
January 1, 1998.
Subchapter B--Other Health Care Professionals
SEC. 4511. INCREASED MEDICARE REIMBURSEMENT FOR NURSE PRACTITIONERS AND
CLINICAL NURSE SPECIALISTS.
(a) Removal of Restrictions on Settings.--
(1) In general.--Clause (ii) of section
1861(s)(2)(K) (42 U.S.C. 1395x(s)(2)(K)) is amended to
read as follows:
``(ii) services which would be physicians' services
if furnished by a physician (as defined in subsection
(r)(1)) and which are performed by a nurse practitioner
or clinical nurse specialist (as defined in subsection
(aa)(5)) working in collaboration (as defined in
subsection (aa)(6)) with a physician (as defined in
subsection (r)(1)) which the nurse practitioner or
clinical nurse specialist is legally authorized to
perform by the State in which the services are
performed, and such services and supplies furnished as
an incident to such services as would be covered under
subparagraph (A) if furnished incident to a physician's
professional service, but only if no facility or other
provider charges or is paid any amounts with respect to
the furnishing of such services;''.
(2) Conforming amendments.--(A) Section
1861(s)(2)(K) (42 U.S.C. 1395x(s)(2)(K)) is further
amended--
(i) in clause (i), by inserting ``and such
services and supplies furnished as incident to
such services as would be covered under
subparagraph (A) if furnished incident to a
physician's professional service; and'' after
``are performed,''; and
(ii) by striking clauses (iii) and (iv).
(B) Section 1861(b)(4) (42 U.S.C. 1395x(b)(4)) is
amended by striking ``clauses (i) or (iii) of
subsection (s)(2)(K)'' and inserting ``subsection
(s)(2)(K)''.
(C) Section 1862(a)(14) (42 U.S.C. 1395y(a)(14)) is
amended by striking ``section 1861(s)(2)(K)(i) or
1861(s)(2)(K)(iii)'' and inserting ``section
1861(s)(2)(K)''.
(D) Section 1866(a)(1)(H) (42 U.S.C.
1395cc(a)(1)(H)) is amended by striking ``section
1861(s)(2)(K)(i) or 1861(s)(2)(K)(iii)'' and inserting
``section 1861(s)(2)(K)''.
(E) Section 1888(e)(2)(A)(ii) (42 U.S.C.
1395yy(e)(2)(A)(ii)), as added by section 4432(a)
(relating to prospective payment system for
rehabilitation hospitals), is amended by striking
``through (iii)'' and inserting ``and (ii)''.
(b) Increased Payment.--
(1) Fee schedule amount.--Subparagraph (O) of
section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) is amended
to read as follows: ``(O) with respect to services
described in section 1861(s)(2)(K)(ii) (relating to
nurse practitioner or clinical nurse specialist
services), the amounts paid shall be equal to 80
percent of (i) the lesser of the actual charge or 85
percent of the fee schedule amount provided
undersection 1848, or (ii) in the case of services as an assistant at
surgery, the lesser of the actual charge or 85 percent of the amount
that would otherwise be recognized if performed by a physician who is
serving as an assistant at surgery; and''.
(2) Conforming amendments.--Section 1833(r) (42
U.S.C. 1395l(r)) is amended--
(A) in paragraph (1), by striking ``section
1861(s)(2)(K)(iii) (relating to nurse
practitioner or clinical nurse specialist
services provided in a rural area)'' and
inserting ``section 1861(s)(2)(K)(ii) (relating
to nurse practitioner or clinical nurse
specialist services)'';
(B) by striking paragraph (2);
(C) in paragraph (3), by striking ``section
1861(s)(2)(K)(iii)'' and inserting ``section
1861(s)(2)(K)(ii)''; and
(D) by redesignating paragraph (3) as
paragraph (2).
(c) Direct Payment for Nurse Practitioners and Clinical
Nurse Specialists.--Section 1832(a)(2)(B)(iv) (42 U.S.C.
1395k(a)(2)(B)(iv)) is amended by striking ``provided in a
rural area (as defined in section 1886(d)(2)(D))'' and
inserting ``but only if no facility or other provider charges
or is paid any amounts with respect to the furnishing of such
services''.
(d) Definition of Clinical Nurse Specialist Clarified.--
Section 1861(aa)(5) (42 U.S.C. 1395x(aa)(5)) is amended--
(1) by inserting ``(A)'' after ``(5)'';
(2) by striking ``The term `physician assistant' ''
and all that follows through ``who performs'' and
inserting ``The term `physician assistant' and the term
`nurse practitioner' mean, for purposes of this title,
a physician assistant or nurse practitioner who
performs''; and
(3) by adding at the end the following new
subparagraph:
``(B) The term `clinical nurse specialist' means, for
purposes of this title, an individual who--
``(i) is a registered nurse and is licensed to
practice nursing in the State in which the clinical
nurse specialist services are performed; and
``(ii) holds a master's degree in a defined
clinical area of nursing from an accredited educational
institution.''.
(e) Effective Date.--The amendments made by this section
shall apply with respect to services furnished and supplies
provided on and after January 1, 1998.
SEC. 4512. INCREASED MEDICARE REIMBURSEMENT FOR PHYSICIAN ASSISTANTS.
(a) Removal of Restriction on Settings.--Section
1861(s)(2)(K)(i) (42 U.S.C. 1395x(s)(2)(K)(i)), as amended by
section 4511, is amended--
(1) by striking ``(I) in a hospital'' and all that
follows through ``shortage area,'', and
(2) by adding at the end the following: ``but only
if no facility or other provider charges or is paid any
amounts with respect to the furnishing of such
services,''.
(b) Increased Payment.--
(1) Fee schedule amount.--Section 1833(a)(1)(O) (42
U.S.C. 1395l(a)(1)(O)), as amended by section 4511, is
further amended--
(A) by striking ``section
1861(s)(2)(K)(ii)'' and inserting
``1861(s)(2)(K)'', and
(B) by striking ``nurse practitioner or
clinical nurse specialist services'' and
inserting ``services furnished by physician
assistants, nurse practitioners, or clinic
nurse specialists''.
(2) Conforming amendment.--Paragraph (12) of
section 1842(b) (42 U.S.C. 1395u(b)) is repealed.
(c) Removal of Restriction on Employment Relationship.--
Section 1842(b)(6) (42 U.S.C. 1395u(b)(6)), as amended by
section 4205, is amended by adding at the end the following new
sentence: ``For purposes of subparagraph (C) of the first
sentence of this paragraph, an employment relationship may
include any independent contractor arrangement, and employer
status shall be determined in accordance with the law of the
State in which the services described in such clause are
performed.''.
(d) Effective Date.--The amendments made by this section
shall apply with respect to services furnished and supplies
provided on and after January 1, 1998.
SEC. 4513. NO X-RAY REQUIRED FOR CHIROPRACTIC SERVICES.
(a) In General.--Section 1861(r)(5) (42 U.S.C. 1395x(r)(5))
is amended by striking ``demonstrated by X-ray to exist''.
(b) Effective Date.--The amendment made by subsection (a)
applies to services furnished on or after January 1, 2000.
(c) Utilization Guidelines.--The Secretary of Health and
Human Services shall develop and implement utilization
guidelines relating to the coverage of chiropractic services
under part B of title XVIII of the Social Security Act in cases
in which a subluxation has not been demonstrated by X-ray to
exist.
CHAPTER 2--PAYMENT FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES
SEC. 4521. ELIMINATION OF FORMULA-DRIVEN OVERPAYMENTS (FDO) FOR CERTAIN
OUTPATIENT HOSPITAL SERVICES.
(a) Elimination of FDO for Ambulatory Surgical Center
Procedures.--Section 1833(i)(3)(B)(i)(II) (42 U.S.C.
1395l(i)(3)(B)(i)(II)) is amended--
(1) by striking ``of 80 percent''; and
(2) by striking the period at the end and inserting
the following: ``, less the amount a provider may
charge as described in clause (ii) of section
1866(a)(2)(A).''.
(b) Elimination of FDO for Radiology Services and
Diagnostic Procedures.--Section 1833(n)(1)(B)(i) (42 U.S.C.
1395l(n)(1)(B)(i)) is amended--
(1) by striking ``of 80 percent'', and
(2) by inserting before the period at the end the
following: ``, less the amount a provider may charge as
described in clause (ii) of section 1866(a)(2)(A)''.
(c) Effective Date.--The amendments made by this section
shall apply to services furnished during portions of cost
reporting periods occurring on or after October 1, 1997.
SEC. 4522. EXTENSION OF REDUCTIONS IN PAYMENTS FOR COSTS OF HOSPITAL
OUTPATIENT SERVICES.
(a) Reduction in Payments for Capital-Related Costs.--
Section 1861(v)(1)(S)(ii)(I) (42 U.S.C. 1395x(v)(1)(S)(ii)(I))
is amended by striking ``through 1998'' and inserting ``through
1999 and during fiscal year 2000 before January 1, 2000''.
(b) Reduction in Payments for Other Costs.--Section
1861(v)(1)(S)(ii)(II) (42 U.S.C. 1395x(v)(1)(S)(ii)(II)) is
amended by striking ``through 1998'' and inserting ``through
1999 and during fiscal year 2000 before January 1, 2000''.
SEC. 4523. PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES.
(a) In General.--Section 1833 (42 U.S.C. 1395l) is amended
by adding at the end the following:
``(t) Prospective Payment System for Hospital Outpatient
Department Services.--
``(1) Amount of payment.--
``(A) In general.--With respect to covered
OPD services (as defined in subparagraph (B))
furnished during a year beginning with 1999,
the amount of payment under this part shall be
determined under a prospective payment system
established by the Secretary in accordance with
this subsection.
``(B) Definition of covered opd services.--
For purposes of this subsection, the term
`covered OPD services'--
``(i) means hospital outpatient
services designated by the Secretary;
``(ii) subject to clause (iii),
includes inpatient hospital services
designated by the Secretary that are
covered under this part and furnished
to a hospital inpatient who (I) is
entitled to benefits under part A but
has exhausted benefits for inpatient
hospital services during a spell of
illness, or (II) is not so entitled;
but
``(iii) does not include any
therapy services described in
subsection (a)(8) or ambulance
services, for which payment is made
under a fee schedule described in
section 1834(k) or section 1834(l).
``(2) System requirements.--Under the payment
system--
``(A) the Secretary shall develop a
classification system for covered OPD services;
``(B) the Secretary may establish groups of
covered OPD services, within the classification
system described in subparagraph (A), so that
services classified within each group are
comparable clinically and with respect to the
use of resources;
``(C) the Secretary shall, using data on
claims from 1996 and using data from the most
recent available cost reports, establish
relative payment weights for covered OPD
services (and any groups of such services
described in subparagraph (B)) based on median
hospital costs and shall determine projections
of the frequency of utilization of each such
service (or group of services) in 1999;
``(D) the Secretary shall determine a wage
adjustment factor to adjust the portion of
payment and coinsurance attributable to labor-
related costs for relative differences in labor
and labor-related costs across geographic
regions in a budget neutral manner;
``(E) the Secretary shall establish other
adjustments, in a budget neutral manner, as
determined to be necessary to ensure equitable
payments, such asoutlier adjustments or
adjustments for certain classes of hospitals; and
``(F) the Secretary shall develop a method
for controlling unnecessary increases in the
volume of covered OPD services.
``(3) Calculation of base amounts.--
``(A) Aggregate amounts that would be
payable if deductibles were disregarded.--The
Secretary shall estimate the sum of--
``(i) the total amounts that would
be payable from the Trust Fund under
this part for covered OPD services in
1999, determined without regard to this
subsection, as though the deductible
under section 1833(b) did not apply,
and
``(ii) the total amounts of
copayments estimated to be paid under
this subsection by beneficiaries to
hospitals for covered OPD services in
1999, as though the deductible under
section 1833(b) did not apply.
``(B) Unadjusted copayment amount.--
``(i) In general.--For purposes of
this subsection, subject to clause
(ii), the `unadjusted copayment amount'
applicable to a covered OPD service (or
group of such services) is 20 percent
of the national median of the charges
for the service (or services within the
group) furnished during 1996, updated
to 1999 using the Secretary's estimate
of charge growth during the period.
``(ii) Adjusted to be 20 percent
when fully phased in.--If the pre-
deductible payment percentage for a
covered OPD service (or group of such
services) furnished in a year would be
equal to or exceed 80 percent, then the
unadjusted copayment amount shall be 20
percent of amount determined under
subparagraph (D).
``(iii) Rules for new services.--
The Secretary shall establish rules for
establishment of an unadjusted
copayment amount for a covered OPD
service not furnished during 1996,
based upon its classification within a
group of such services.
``(C) Calculation of conversion factors.--
``(i) For 1999.--
``(I) In general.--The
Secretary shall establish a
1999 conversion factor for
determining the Medicare OPD
fee schedule amounts for each
covered OPD service (or group
of such services) furnished in
1999. Such conversion factor
shall be established on the
basis of the weights and
frequencies described in
paragraph (2)(C) and in such a
manner that the sum for all
services and groups of the
products (described in
subclause (II) for each such
service or group) equals the
total projected amount
described in subparagraph (A).
``(II) Product described.--
The Secretary shall determine
for each service or group the
product of the Medicare OPD fee
schedule amounts (taking into
account appropriate adjustments
described in paragraphs (2)(D)
and (2)(E)) and the estimated
frequencies for such service or
group.
``(ii) Subsequent years.--Subject
to paragraph (8)(B), the Secretary
shall establish a conversion factor for
covered OPD services furnished in
subsequent years in an amount equal to
the conversion factor established under
this subparagraph and applicable to
such services furnished in the previous
year increased by the OPD fee schedule
increase factor specified under clause
(iii) for the year involved.
``(iii) OPD fee schedule increase
factor.--For purposes of this
subparagraph, the `OPD fee schedule
increase factor' for services furnished
in a year is equal to the market basket
percentage increase applicable under
section 1886(b)(3)(B)(iii) to hospital
discharges occurring during the fiscal
year ending in such year, reduced by 1
percentage point for such factor for
services furnished in each of 2000,
2001, and 2002. In applying the
previous sentence for years beginning
with 2000, the Secretary may substitute
for the market basket percentage
increase an annual percentage increase
that is computed and applied with
respect to covered OPD services
furnished in a year in the same manner
as the market basket percentage
increase is determined and applied to
inpatient hospital services for
discharges occurring in a fiscal year.
``(D) Calculation of Medicare opd fee
schedule amounts.--The Secretary shall compute
a Medicare OPD fee schedule amount for each
covered OPD service (or group of such services)
furnished in a year, in an amount equal to the
product of--
``(i) the conversion factor
computed under subparagraph (C) for the
year, and
``(ii) the relative payment weight
(determined under paragraph (2)(C)) for
the service or group.
``(E) Pre-deductible payment percentage.--
The pre-deductible payment percentage for a
covered OPD service (or group of such services)
furnished in a year is equal to the ratio of--
``(i) the Medicare OPD fee schedule
amount established under subparagraph
(D) for the year, minus the unadjusted
copayment amount determined under
subparagraph (B) for the service or
group, to
``(ii) the Medicare OPD fee
schedule amount determined under
subparagraph (D) for the year for such
service or group.
``(4) Medicare payment amount.--The amount of
payment made from the Trust Fund under this part for
acovered OPD service (and such services classified within a group)
furnished in a year is determined as follows:
``(A) Fee schedule adjustments.--The
medicare OPD fee schedule amount (computed
under paragraph (3)(D)) for the service or
group and year is adjusted for relative
differences in the cost of labor and other
factors determined by the Secretary, as
computed under paragraphs (2)(D) and (2)(E).
``(B) Subtract applicable deductible.--
Reduce the adjusted amount determined under
subparagraph (A) by the amount of the
deductible under section 1833(b), to the extent
applicable.
``(C) Apply payment proportion to
remainder.--The amount of payment is the amount
so determined under subparagraph (B) multiplied
by the pre-deductible payment percentage (as
determined under paragraph (3)(E)) for the
service or group and year involved.
``(5) Copayment amount.--
``(A) In general.--Except as provided in
subparagraph (B), the copayment amount under
this subsection is the amount by which the
amount described in paragraph (4)(B) exceeds
the amount of payment determined under
paragraph (4)(C).
``(B) Election to offer reduced copayment
amount.--The Secretary shall establish a
procedure under which a hospital, before the
beginning of a year (beginning with 1999), may
elect to reduce the copayment amount otherwise
established under subparagraph (A) for some or
all covered OPD services to an amount that is
not less than 20 percent of the medicare OPD
fee schedule amount (computed under paragraph
(3)(D)) for the service involved. Under such
procedures, such reduced copayment amount may
not be further reduced or increased during the
year involved and the hospital may disseminate
information on the reduction of copayment
amount effected under this subparagraph.
``(C) No impact on deductibles.--Nothing in
this paragraph shall be construed as affecting
a hospital's authority to waive the charging of
a deductible under section 1833(b).
``(6) Periodic review and adjustments components of
prospective payment system.--
``(A) Periodic review.--The Secretary may
periodically review and revise the groups, the
relative payment weights, and the wage and
other adjustments described in paragraph (2) to
take into account changes in medical practice,
changes in technology, the addition of new
services, new cost data, and other relevant
information and factors.
``(B) Budget neutrality adjustment.--If the
Secretary makes adjustments under subparagraph
(A), then the adjustments for a year may not
cause the estimated amount of expenditures
under this part for the year to increase or
decrease from the estimated amount of
expenditures under this part that would have
been made if the adjustments had not been made.
``(C) Update factor.--If the Secretary
determines under methodologies described in
paragraph (2)(F) that the volume of services
paid for under this subsection increased beyond
amounts established through those
methodologies, the Secretary may appropriately
adjust the update to the conversion factor
otherwise applicable in a subsequent year.
``(7) Special rule for ambulance services.--The
Secretary shall pay for hospital outpatient services
that are ambulance services on the basis described in
the matter in subsection (a)(1) preceding subparagraph
(A), or, if applicable, the fee schedule established
under section 1834(l).
``(8) Special rules for certain hospitals.--In the
case of hospitals described in section
1886(d)(1)(B)(v)--
``(A) the system under this subsection
shall not apply to covered OPD services
furnished before January 1, 2000; and
``(B) the Secretary may establish a
separate conversion factor for such services in
a manner that specifically takes into account
the unique costs incurred by such hospitals by
virtue of their patient population and service
intensity.
``(9) Limitation on review.--There shall be no
administrative or judicial review under section 1869,
1878, or otherwise of--
``(A) the development of the classification
system under paragraph (2), including the
establishment of groups and relative payment
weights for covered OPD services, of wage
adjustment factors, other adjustments, and
methods described in paragraph (2)(F);
``(B) the calculation of base amounts under
paragraph (3);
``(C) periodic adjustments made under
paragraph (6); and
``(D) the establishment of a separate
conversion factor under paragraph (8)(B).''.
(b) Coinsurance.--Section 1866(a)(2)(A)(ii) (42 U.S.C.
1395cc(a)(2)(A)(ii)) is amended by adding at the end the
following: ``In the case of items and services for which
payment is made under part B under the prospective payment
system established under section 1833(t), clause (ii) of the
first sentence shall be applied by substituting for 20 percent
of the reasonable charge, the applicable copayment amount
established under section 1833(t)(5).''.
(c) Treatment of Reduction in Copayment Amount.--Section
1128A(i)(6) (42 U.S.C. 1320a-7a(i)(6)) is amended--
(1) by striking ``or'' at the end of subparagraph
(B),
(2) by striking the period at the end of
subparagraph (C) and inserting ``; or'', and
(3) by adding at the end the following new
subparagraph:
``(D) a reduction in the copayment amount
for covered OPD services under section
1833(t)(5)(B).''.
(d) Conforming Amendments.--
(1) Approved asc procedures performed in hospital
outpatient departments.--
(A)(i) Section 1833(i)(3)(A) (42 U.S.C.
1395l(i)(3)(A)) is amended--
(I) by inserting ``before January
1, 1999,'' after ``furnished'', and
(II) by striking ``in a cost
reporting period''.
(ii) The amendment made by clause (i) shall
apply to services furnished on or after January
1, 1999.
(B) Section 1833(a)(4) (42 U.S.C.
1395l(a)(4)) is amended by inserting ``or
subsection (t)'' before the semicolon.
(2) Radiology and other diagnostic procedures.--
(A) Section 1833(n)(1)(A) (42 U.S.C.
1395l(n)(1)(A)) is amended by inserting ``and
before January 1, 1999,'' after ``October 1,
1988,'' and after ``October 1, 1989,''.
(B) Section 1833(a)(2)(E) (42 U.S.C.
1395l(a)(2)(E)) is amended by inserting ``or,
for services or procedures performed on or
after January 1, 1999, subsection (t)'' before
the semicolon.
(3) Other hospital outpatient services.--Section
1833(a)(2)(B) (42 U.S.C. 1395l(a)(2)(B)) is amended--
(A) in clause (i), by inserting ``furnished
before January 1, 1999,'' after ``(i)'',
(B) in clause (ii), by inserting ``before
January 1, 1999,'' after ``furnished'',
(C) by redesignating clause (iii) as clause
(iv), and
(D) by inserting after clause (ii), the
following new clause:
``(iii) if such services are
furnished on or after January 1, 1999,
the amount determined under subsection
(t), or''.
CHAPTER 3--AMBULANCE SERVICES
SEC. 4531. PAYMENTS FOR AMBULANCE SERVICES.
(a) Interim Reductions.--
(1) Payments determined on reasonable cost basis.--
Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)), as amended
by section 4451, is amended by adding at the end the
following new subparagraph:
``(U) In determining the reasonable cost of
ambulance services (as described in subsection
(s)(7)) provided during fiscal year 1998,
during fiscal year 1999, and during so much of
fiscal year 2000 as precedes January 1, 2000,
the Secretary shall not recognize the costs per
trip in excess of costs recognized as
reasonable for ambulance services provided on a
per trip basis during the previous fiscal year
(after application of this subparagraph),
increased by the percentage increase in the
consumer price index for all urban consumers
(U.S. city average) as estimated by the
Secretary for the 12-month period ending with
the midpoint of the fiscal year involved
reduced by 1.0 percentage point. For ambulance
services provided after June 30, 1998, the
Secretary may provide that claims for such
services must include a code (or codes) under a
uniform coding system specified by the
Secretary that identifies the services
furnished.''.
(2) Payments determined on reasonable charge
basis.--Section 1842(b) (42 U.S.C. 1395u(b)) is amended
by adding at the end the following new paragraph:
``(19) For purposes of section 1833(a)(1), the reasonable
charge for ambulance services (as described in section
1861(s)(7)) provided during calendar year 1998 and calendar
year 1999 may not exceed the reasonable charge for such
services provided during the previous calendar year (after
application of this paragraph), increased by the percentage
increase in the consumer price index for all urban consumers
(U.S. city average) as estimated by the Secretary for the 12-
month period ending with the midpoint of the year involved
reduced by 1.0 percentage point.''.
(b) Establishment of Prospective Fee Schedule.--
(1) Payment in accordance with fee schedule.--
Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)), as amended
by section 4315(b), is amended--
(A) by striking ``and (Q)'' and inserting
``(Q)''; and
(B) by striking the semicolon at the end
and inserting the following: ``, and (R) with
respect to ambulance service, the amounts paid
shall be 80 percent of the lesser of the actual
charge for the services or the amount
determined by a fee schedule established by the
Secretary under section 1834(l);''.
(2) Establishment of schedule.--Section 1834 (42
U.S.C. 1395m), as amended by section 4541, is amended
by adding at the end the following new subsection:
``(l) Establishment of Fee Schedule for Ambulance
Services.--
``(1) In general.--The Secretary shall establish a
fee schedule for payment for ambulance services whether
provided directly by a supplier or provider or under
arrangement with a provider under this part through a
negotiated rulemaking process described in title 5,
United States Code, and in accordance with the
requirements of this subsection.
``(2) Considerations.--In establishing such fee
schedule, the Secretary shall--
``(A) establish mechanisms to control
increases in expenditures for ambulance
services under this part;
``(B) establish definitions for ambulance
services which link payments to the type of
services provided;
``(C) consider appropriate regional and
operational differences;
``(D) consider adjustments to payment rates
to account for inflation and other relevant
factors; and
``(E) phase in the application of the
payment rates under the fee schedule in an
efficient and fair manner.
``(3) Savings.--In establishing such fee schedule,
the Secretary shall--
``(A) ensure that the aggregate amount of
payments made for ambulance services under this
part during 2000 does not exceed the aggregate
amount of payments which would have been made
for such services under this part during such
year if the amendments made by section 4531(a)
of the Balanced Budget Act of 1997 continued in
effect, except that in making such
determination the Secretary shall assume an
update in such payments for 2002 equal to
percentage increase in the consumer price index
for all urban consumers (U.S. city average) for
the 12-month period ending with June of the
previous year reduced in the case of 2001 and
2002 by 1.0 percentage points; and
``(B) set the payment amounts provided
under the fee schedule for services furnished
in 2001 and each subsequent year at amounts
equal to the payment amounts under the fee
schedule for services furnished during the
previous year, increased by the percentage
increase in the consumer price index for all
urban consumers (U.S. city average) for the 12-
month period ending with June of the previous
year reduced in the case of 2001 and 2002 by
1.0 percentage points.
``(4) Consultation.--In establishing the fee
schedule for ambulance services under this subsection,
the Secretary shall consult with various national
organizations representing individuals and entities who
furnish and regulate ambulance services and share with
such organizations relevant data in establishing such
schedule.
``(5) Limitation on review.--There shall be no
administrative or judicial review under section 1869 or
otherwise of the amounts established under the fee
schedule for ambulance services under this subsection,
including matters described in paragraph (2).
``(6) Restraint on billing.--The provisions of
subparagraphs (A) and (B) of section 1842(b)(18) shall
apply to ambulance services for which payment is made
under this subsection in the same manner as they apply
to services provided by a practitioner described in
section 1842(b)(18)(C).
``(7) Coding system.--The Secretary may require the
claim for any services for which the amount of payment
is determined under this subsection to include a code
(or codes) under a uniform coding system specified by
the Secretary that identifies the services furnished.''
(3) Effective date.--The amendments made by this
subsection shall apply to services furnished on or
after January 1, 2000.
(c) Authorizing Payment for Paramedic Intercept Service
Providers in Rural Communities.--In promulgating regulations to
carry out section 1861(s)(7) of the Social Security Act (42
U.S.C. 1395x(s)(7)) with respect to the coverage of ambulance
service, the Secretary of Health and Human Services may include
coverage of advanced life support services (in this subsection
referred to as ``ALS intercept services'') provided by a
paramedic intercept service provider in a rural area if the
following conditions are met:
(1) The ALS intercept services are provided under a
contract with one or more volunteer ambulance services
and are medically necessary based on the health
condition of the individual being transported.
(2) The volunteer ambulance service involved--
(A) is certified as qualified to provide
ambulance service for purposes of such section,
(B) provides only basic life support
services at the time of the intercept, and
(C) is prohibited by State law from billing
for any services.
(3) The entity supplying the ALS intercept
services--
(A) is certified as qualified to provide
such services under the medicare program under
title XVIII of the Social Security Act, and
(B) bills all recipients who receive ALS
intercept services from the entity, regardless
of whether or not such recipients are medicare
beneficiaries.
SEC. 4532. DEMONSTRATION OF COVERAGE OF AMBULANCE SERVICES UNDER
MEDICARE THROUGH CONTRACTS WITH UNITS OF LOCAL
GOVERNMENT.
(a) Demonstration Project Contracts with Local
Governments.--The Secretary of Health and Human Services shall
establish up to 3 demonstration projects under which, at the
request of a unit of local government, the Secretary enters
into a contract with the unit of local government under which--
(1) the unit of local government furnishes (or
arranges for the furnishing of) ambulance services for
which payment may be made under part B of title XVIII
of the Social Security Act for individuals residing in
the unit of local government who are enrolled under
such part, except that the unit of local government may
not enter into the contract unless the contract covers
at least 80 percent of the individuals residing in the
unit of local government who are enrolled under such
part but not in a Medicare+Choice plan;
(2) any individual or entity furnishing ambulance
services under the contract meets the requirements
otherwise applicable to individuals and entities
furnishing such services under such part; and
(3) for each month during which the contract is in
effect, the Secretary makes a capitated payment to the
unit of local government in accordance with subsection
(b).
The projects may extend over a period of not to exceed 3 years
each.
(b) Amount of Payment.--
(1) In general.--The amount of the monthly payment
made for months occurring during a calendar year to a
unit of local government under a demonstration project
contract under subsection (a) shall be equal to the
product of--
(A) the Secretary's estimate of the number
of individuals covered under the contract for
the month; and
(B) \1/12\ of the capitated payment rate
for the year established under paragraph (2).
(2) Capitated payment rate defined.--In this
subsection, the ``capitated payment rate'' applicable
to a contract under this subsection for a calendar year
is equal to 95 percent of--
(A) for the first calendar year for which
the contract is in effect, the average annual
per capita payment made under part B of title
XVIII of the Social Security Act with respect
to ambulance services furnished to such
individuals during the 3 most recent calendar
years for which data on the amount of such
payment is available; and
(B) for a subsequent year, the amount
provided under this paragraph for the previous
year increased by the percentage increase in
the consumer price index for all urban
consumers (U.S. city average) for the 12-month
period ending with June of the previous year.
(c) Other Terms of Contract.--The Secretary and the unit of
local government may include in a contract under this section
such other terms as the parties consider appropriate,
including--
(1) covering individuals residing in additional
units of local government (under arrangements entered
into between such units and the unit of local
government involved);
(2) permitting the unit of local government to
transport individuals to non-hospital providers if such
providers are able to furnish quality services at a
lower cost than hospital providers; or
(3) implementing such other innovations as the unit
of local government may propose to improve the quality
of ambulance services and control the costs of such
services.
(d) Contract Payments in Lieu of Other Benefits.--Payments
under a contract to a unit of local government under this
section shall be instead of the amounts which (in the absence
of the contract) would otherwise be payable under part B of
title XVIII of the Social Security Act for the services covered
under the contract which are furnished to individuals who
reside in the unit of local government.
(e) Report on Effects of Capitated Contracts.--
(1) Study.--The Secretary shall evaluate the
demonstration projects conducted under this section.
Such evaluation shall include an analysis of the
quality and cost-effectiveness of ambulance services
furnished under the projects.
(2) Report.--Not later than January 1, 2000, the
Secretary shall submit a report to Congress on the
study conducted under paragraph (1), and shall include
in the report such recommendations as the Secretary
considers appropriate, including recommendations
regarding modifications to the methodology used to
determine the amount of payments made under such
contracts and extending or expanding such projects.
CHAPTER 4--PROSPECTIVE PAYMENT FOR OUTPATIENT REHABILITATION SERVICES
SEC. 4541. PROSPECTIVE PAYMENT FOR OUTPATIENT REHABILITATION SERVICES.
(a) Payment Based on Fee Schedule.--
(1) Special payment rules.--Section 1833(a) (42
U.S.C. 1395l(a)) is amended--
(A) in paragraph (2) in the matter before
subparagraph (A), by inserting ``(C),'' before
``(D)'';
(B) in paragraph (3), by striking
``subparagraphs (D) and (E) of section
1832(a)(2)'' and inserting ``section
1832(a)(2)(D)'';
(C) in paragraph (6), by striking ``and''
at the end;
(D) in paragraph (7), by striking the
period at the end and inserting a semicolon;
and
(E) by adding at the end the following new
paragraphs:
``(8) in the case of--
``(A) outpatient physical therapy services
(which includes outpatient speech-language
pathology services) and outpatient occupational
therapy services furnished--
``(i) by a rehabilitation agency,
public health agency, clinic,
comprehensive outpatient rehabilitation
facility, or skilled nursing facility,
``(ii) by a home health agency to
an individual who is not homebound, or
``(iii) by another entity under an
arrangement with an entity described in
clause (i) or (ii); and
``(B) outpatient physical therapy services
(which includes outpatient speech-language
pathology services) and outpatient occupational
therapy services furnished--
``(i) by a hospital to an
outpatient or to a hospital inpatient
who is entitled to benefits under part
A but has exhausted benefits for
inpatient hospital services during a
spell of illness or is not so entitled
to benefits under part A, or
``(ii) by another entity under an
arrangement with a hospital described
in clause (i),
the amounts described in section 1834(k); and
``(9) in the case of services described in section
1832(a)(2)(E) that are not described in paragraph (8),
the amounts described in section 1834(k).''.
(2) Payment rates.--Section 1834 (42 U.S.C. 1395m)
is amended by adding at the end the following new
subsection:
``(k) Payment for Outpatient Therapy Services and
Comprehensive Outpatient Rehabilitation Services.--
``(1) In general.--With respect to services
described in section 1833(a)(8) or 1833(a)(9) for which
payment is determined under this subsection, the
payment basis shall be--
``(A) for services furnished during 1998,
the amount determined under paragraph (2); or
``(B) for services furnished during a
subsequent year, 80 percent of the lesser of--
``(i) the actual charge for the
services, or
``(ii) the applicable fee schedule
amount (as defined in paragraph (3))
for the services.
``(2) Payment in 1998 based upon adjusted
reasonable costs.--The amount under this paragraph for
services is the lesser of--
``(A) the charges imposed for the services,
or
``(B) the adjusted reasonable costs (as
defined in paragraph (4)) for the services,
less 20 percent of the amount of the charges imposed
for such services.
``(3) Applicable fee schedule amount.--In this
subsection, the term `applicable fee schedule amount'
means, with respect to services furnished in a year,
the amount determined under the fee schedule
established under section 1848 for such services
furnished during the year or, if there is no such fee
schedule established for such services, the amount
determined under the fee schedule established for such
comparable services as the Secretary specifies.
``(4) Adjusted reasonable costs.--In paragraph (2),
the term `adjusted reasonable costs' means, with
respect to any services, reasonable costs determined
for such services, reduced by 10 percent. The 10-
percent reduction shall not apply to services described
in section 1833(a)(8)(B) (relating to services provided
by hospitals).
``(5) Uniform coding.--For claims for services
submitted on or after April 1, 1998, for which the
amount of payment is determined under this subsection,
the claim shall include a code (or codes) under a
uniform coding system specified by the Secretary that
identifies the services furnished.
``(6) Restraint on billing.--The provisions of
subparagraphs (A) and (B) of section 1842(b)(18) shall
apply to therapy services for which payment is made
under this subsection in the same manner as they apply
to services provided by a practitioner described in
section 1842(b)(18)(C).''.
(3) Conforming change in billing.--Section
1866(a)(2)(A)(ii) (42 U.S.C. 1395cc(a)(2)(A)(ii)) is
amended by adding at the end the following: ``In the
case of services described in section 1833(a)(8) or
section 1833(a)(9) for which payment is made under part
B under section 1834(k), clause (ii) of the first
sentence shall be applied by substituting for 20
percent of the reasonable charge for such services 20
percent of the lesser of the actual charge or the
applicable fee schedule amount (as defined in such
section) for such services.''.
(b) Application of Standards to Outpatient Occupational and
Physical Therapy Services Provided as an Incident to a
Physician's Professional Services.--Section 1862(a), as amended
by sections 4319(b), 4432(b), and 4507(a)(2)(B), (42 U.S.C.
1395y(a)) is amended--
(1) by striking ``or'' at the end of paragraph
(18);
(2) by striking the period at the end of paragraph
(19) and inserting ``; or''; and
(3) by inserting after paragraph (19) the
following:
``(20) in the case of outpatient occupational
therapy services or outpatient physical therapy
services furnished as an incident to a physician's
professional services (as described in section
1861(s)(2)(A)), that do not meet the standards and
conditions (other than any licensing requirement
specified by the Secretary) under the second sentenceof
section 1861(p) (or under such sentence through the operation of
section 1861(g)) as such standards and conditions would apply to such
therapy services if furnished by a therapist.''.
(c) Applying Financial Limitation to All Rehabilitation
Services.--Section 1833(g) (42 U.S.C. 1395l(g)) is amended--
(1) in the first sentence, by striking ``services
described in the second sentence of section 1861(p)''
and inserting ``physical therapy services of the type
described in section 1861(p), but not described in
section 1833(a)(8)(B), and physical therapy services of
such type which are furnished by a physician or as
incident to physicians' services'', and
(2) in the second sentence, by striking
``outpatient occupational therapy services which are
described in the second sentence of section 1861(p)
through the operation of section 1861(g)'' and
inserting ``occupational therapy services (of the type
that are described in section 1861(p) (but not
described in section 1833(a)(8)(B)) through the
operation of section 1861(g) and of such type which are
furnished by a physician or as incident to physicians'
services)''.
(d) Indexing Limitation.--
(1) In general.--Section 1833(g) (42 U.S.C.
1395l(g)), as amended by subsection (c), is further
amended--
(A) by striking ``$900'' each place it
appears and inserting ``the amount specified in
paragraph (2) for the year'',
(B) by inserting ``(1)'' after ``(g)'',
(C) by designating the last sentence as a
paragraph (3), and
(D) by inserting before paragraph (3), as
so designated, the following:
``(2) The amount specified in this paragraph--
``(A) for 1999, 2000, and 2001, is $1,500, and
``(B) for a subsequent year is the amount specified
in this paragraph for the preceding year increased by
the percentage increase in the MEI (as defined in
section 1842(i)(3)) for such subsequent year;
except that if an increase under subparagraph (B) for a year is
not a multiple of $10, it shall be rounded to the nearest
multiple of $10.''.
(2) Report.--By not later than January 1, 2001, the
Secretary of Health and Human Services shall submit to
Congress a report that includes recommendations on the
establishment of a revised coverage policy of
outpatient physical therapy services and outpatient
occupational therapy services under the Social Security
Act based on classification of individuals by
diagnostic category and prior use of services, in both
inpatient and outpatient settings, in place of the
uniform dollar limitations specified in section 1833(g)
of such Act, as amended by paragraph (1). The
recommendations shall include how such a system of
durational limits by diagnostic category might be
implemented in a budget-neutral manner.
(e) Effective Dates.--
(1) The amendments made by subsections (a)(1),
(a)(2), and (b) apply to services furnished on or after
January 1, 1998, including portions of cost reporting
periods occurring on or after such date, except that
section 1834(k) of the Social Security Act (as added by
subsection (a)(2)) shall not apply to services
described in section 1833(a)(8)(B) of such Act (as
added by subsection (a)(1)) that are furnished during
1998.
(2) The amendments made by subsections (a)(3) and
(c) apply to services furnished on or after January 1,
1999.
(3) The amendments made by subsection (d)(1) apply
to expenses incurred on or after January 1, 1999.
CHAPTER 5--OTHER PAYMENT PROVISIONS
SEC. 4551. PAYMENTS FOR DURABLE MEDICAL EQUIPMENT.
(a) Reduction in Payment Amounts for Items of Durable
Medical Equipment.--
(1) Freeze in update for covered items.--Section
1834(a)(14) (42 U.S.C. 1395m(a)(14)) is amended--
(A) in subparagraph (A), by striking
``and'' at the end;
(B) in subparagraph (B)--
(i) by striking ``a subsequent
year'' and inserting ``1993, 1994,
1995, 1996, and 1997'', and
(ii) by striking the period at the
end and inserting a semicolon; and
(C) by adding at the end the following new
subparagraphs:
``(C) for each of the years 1998 through
2002, 0 percentage points; and
``(D) for a subsequent year, the percentage
increase in the consumer price index for all
urban consumers (U.S. urban average) for the
12-month period ending with June of the
previous year.''.
(2) Update for orthotics and prosthetics.--Section
1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is amended--
(A) in clause (iii), by striking ``, and''
at the end and inserting a semicolon;
(B) in clause (iv), by striking ``a
subsequent year'' and inserting ``1996 and
1997''; and
(C) by adding at the end the following new
clauses:
``(v) for each of the years 1998
through 2002, 1 percent, and
``(vi) for a subsequent year, the
percentage increase in the consumer
price index for all urban consumers
(United States city average) for the
12-month period ending with June of the
previous year;''.
(b) Payment Freeze for Parenteral and Enteral Nutrients,
Supplies, and Equipment.--In determining the amount of payment
under part B of title XVIII of the Social Security Act with
respect to parenteral and enteral nutrients, supplies, and
equipment during each of the years 1998 through 2002, the
charges determined to be reasonable with respect to such
nutrients, supplies, and equipment may not exceed the charges
determined to be reasonable with respect to such nutrients,
supplies, and equipment during 1995.
(c) Upgraded Durable Medical Equipment.--
(1) In general.--Section 1834(a) (42 U.S.C.
1395m(a)), as amended by section 4312(a), is amended by
inserting after paragraph (16) the following new
paragraph:
``(17) Certain upgraded items.--
``(A) Individual's right to choose upgraded
item.--Notwithstanding any other provision of
this title, the Secretary may issue regulations
under which an individual may purchase or rent
from a supplier an item of upgraded durable
medical equipment for which payment would be
made under this subsection if the item were a
standard item.
``(B) Payments to supplier.--In the case of
the purchase or rental of an upgraded item
under subparagraph (A)--
``(i) the supplier shall receive
payment under this subsection with
respect to such item as if such item
were a standard item; and
``(ii) the individual purchasing or
renting the item shall pay the supplier
an amount equal to the difference
between the supplier's charge and the
amount under clause (i).
In no event may the supplier's charge for an
upgraded item exceed the applicable fee
schedule amount (if any) for such item.
``(C) Consumer protection safeguards.--Any
regulations under subparagraph (A) shall
provide for consumer protection standards with
respect to the furnishing of upgraded equipment
under subparagraph (A). Such regulations shall
provide for--
``(i) determination of fair market
prices with respect to an upgraded
item;
``(ii) full disclosure of the
availability and price of standard
items and proof of receipt of such
disclosure information by the
beneficiary before the furnishing of
the upgraded item;
``(iii) conditions of participation
for suppliers in the billing
arrangement;
``(iv) sanctions of suppliers who
are determined to engage in coercive or
abusive practices, including exclusion;
and
``(v) such other safeguards as the
Secretary determines are necessary.''.
(2) Effective date.--The amendment made by
paragraph (1) shall apply to purchases or rentals after
the effective date of any regulations issued pursuant
to such amendment.
SEC. 4552. OXYGEN AND OXYGEN EQUIPMENT.
(a) In General.--Section 1834(a)(9)(B) (42 U.S.C.
1395m(a)(9)(B)) is amended--
(1) in clause (iii), by striking ``and'' at the
end;
(2) in clause (iv)--
(A) by striking ``each subsequent year''
and inserting ``1995, 1996, and 1997'', and
(B) by striking the period at the end and
inserting a semicolon; and
(3) by adding at the end the following new clauses:
``(v) for 1998, 75 percent of the
amount determined under this
subparagraph for 1997; and
``(vi) for 1999 and each subsequent
year, 70 percent of the amount
determined under this subparagraph for
1997.''.
(b) Establishment of Classes for Payment.--Section
1848(a)(9) (42 U.S.C. 1395m(a)(9)) is amended by adding at the
end the following new subparagraph:
``(D) Authority to create classes.--
``(i) In general.--Subject to
clause (ii), the Secretary may
establish separate classes for any item
of oxygen and oxygen equipment and
separate national limited monthly
payment rates for each of such classes.
``(ii) Budget neutrality.--The
Secretary may take actions under clause
(i) only to the extent such actions do
not result in expenditures for any year
to be more or less than the
expenditures which would have been made
if such actions had not been taken.''.
(c) Standards.--The Secretary shall as soon as practicable
establish service standards for persons seeking payment under
part B of title XVIII of the Social Security Act for the
providing of oxygen and oxygen equipment to beneficiaries
within their homes.
(d) Access to Home Oxygen Equipment.--
(1) Study.--The Comptroller General of the United
States shall study issues relating to access to home
oxygen equipment and shall, within 18 months after the
date of the enactment of this Act, report to the
Committees on Commerce and Ways and Means of the House
of Representatives and the Committee on Finance of the
Senate the results of the study, including
recommendations (if any) for legislation.
(2) Peer review evaluation.--The Secretary of
Health and Human Services shall arrange for peer review
organizations established under section 1154 of the
Social Security Act to evaluate access to, and quality
of, home oxygen equipment.
(e) Effective Date.--
(1) Oxygen.--The amendments made by subsection (a)
shall apply to items furnished on and after January 1,
1998.
(2) Other provisions.--The amendments made by this
section other than subsection (a) shall take effect on
the date of the enactment of this Act.
SEC. 4553. REDUCTION IN UPDATES TO PAYMENT AMOUNTS FOR CLINICAL
DIAGNOSTIC LABORATORY TESTS; STUDY ON LABORATORY
TESTS.
(a) Change in Update.--Section 1833(h)(2)(A)(ii)(IV) (42
U.S.C. 1395l(h)(2)(A)(ii)(IV)) is amended by inserting ``and
1998 through 2002'' after ``1995''.
(b) Lowering Cap on Payment Amounts.--Section 1833(h)(4)(B)
(42 U.S.C. 1395l(h)(4)(B)) is amended--
(1) in clause (vi), by striking ``and'' at the end;
(2) in clause (vii)--
(A) by inserting ``and before January 1,
1998,'' after ``1995,'', and
(B) by striking the period at the end and
inserting ``, and''; and
(3) by adding at the end the following new clause:
``(viii) after December 31, 1997, is equal to 74
percent of such median.''.
(c) Study and Report on Clinical Laboratory Tests.--
(1) In general.--The Secretary shall request the
Institute of Medicine of the National Academy of
Sciences to conduct a study of payments under part B of
title XVIII of the Social Security Act for clinical
laboratory tests. The study shall include a review of
the adequacy of the current methodology and
recommendations regarding alternative payment systems.
The study shall also analyze and discuss the
relationship between such payment systems and access to
high quality laboratory tests for medicare
beneficiaries, including availability and access to new
testing methodologies.
(2) Report to congress.--The Secretary shall, not
later than 2 years after the date of enactment of this
section, report to the Committees on Ways and Means and
Commerce of the House of Representatives and the
Committee on Finance of the Senate the results of the
study described in paragraph (1), including any
recommendations for legislation.
SEC. 4554. IMPROVEMENTS IN ADMINISTRATION OF LABORATORY TESTS BENEFIT.
(a) Selection of Regional Carriers.--
(1) In general.--The Secretary of Health and Human
Services (in this section referred to as the
``Secretary'') shall--
(A) divide the United States into no more
than 5 regions, and
(B) designate a single carrier for each
such region, for the purpose of payment of
claims under part B of title XVIII of the
Social Security Act with respect to clinical
diagnostic laboratory tests furnished on or
after such date (not later than July 1, 1999)
as the Secretary specifies.
(2) Designation.--In designating such carriers, the
Secretary shall consider, among other criteria--
(A) a carrier's timeliness, quality, and
experience in claims processing, and
(B) a carrier's capacity to conduct
electronic data interchange with laboratories
and data matches with other carriers.
(3) Single data resource.--The Secretary shall
select one of the designated carriers to serve as a
central statistical resource for all claims information
relating to such clinical diagnostic laboratory tests
handled by all the designated carriers under such part.
(4) Allocation of claims.--The allocation of claims
for clinical diagnostic laboratory tests to particular
designated carriers shall be based on whether a carrier
serves the geographic area where the laboratory
specimen was collected or other method specified by the
Secretary.
(5) Secretarial exclusion.--Paragraph (1) shall not
apply with respect to clinical diagnostic laboratory
tests furnished by physician office laboratories if the
Secretary determines that such offices would be unduly
burdened by the application of billing responsibilities
with respect to more than one carrier.
(b) Adoption of National Policies for Clinical Laboratory
Tests Benefit.--
(1) In general.--Not later than January 1, 1999,
the Secretary shall first adopt, consistent with
paragraph (2), national coverage and administrative
policies for clinical diagnostic laboratory tests under
part B of title XVIII of the Social Security Act, using
a negotiated rulemaking process under subchapter III of
chapter 5 of title 5, United States Code.
(2) Considerations in design of national
policies.--The policies under paragraph (1) shall be
designed to promote program integrity and national
uniformity and simplify administrative requirements
with respect to clinical diagnostic laboratory tests
payable under such part in connection with the
following:
(A) Beneficiary information required to be
submitted with each claim or order for
laboratory tests.
(B) The medical conditions for which a
laboratory test is reasonable and necessary
(within the meaning of section 1862(a)(1)(A) of
the Social Security Act).
(C) The appropriate use of procedure codes
in billing for a laboratory test, including the
unbundling of laboratory services.
(D) The medical documentation that is
required by a medicare contractor at the time a
claim is submitted for a laboratory test in
accordance with section 1833(e) of the Social
Security Act.
(E) Recordkeeping requirements in addition
to any information required to be submitted
with a claim, including physicians' obligations
regarding such requirements.
(F) Procedures for filing claims and for
providing remittances by electronic media.
(G) Limitation on frequency of coverage for
the same tests performed on the same
individual.
(3) Changes in laboratory policies pending adoption
of national policy.--During the period that begins on
the date of the enactment of this Act and ends on the
date the Secretary first implements national policies
pursuant to regulations promulgated under this
subsection, a carrier under such part may implement
changes relating to requirements for the submission of
a claim for clinical diagnostic laboratory tests.
(4) Use of interim policies.--After the date the
Secretary first implements such national policies, the
Secretary shall permit any carrier to develop and
implement interim policies of the type described in
paragraph (1), in accordance with guidelines
established by the Secretary, in cases in which a
uniform national policy has not been established under
this subsection and there is a demonstrated need for a
policy to respond to aberrant utilization or provision
of unnecessary tests. Except as the Secretary
specifically permits, no policy shall be implemented
under this paragraph for a period of longer than 2
years.
(5) Interim national policies.--After the date the
Secretary first designates regional carriers under
subsection (a), the Secretary shall establish a process
under which designated carriers can collectively
develop and implement interim national policies of the
type described in paragraph (1). No such policy shall
be implemented under this paragraph for a period of
longer than 2 years.
(6) Biennial review process.--Not less often than
once every 2 years, the Secretary shall solicit and
review comments regarding changes in the national
policies established under this subsection. As part of
such biennial review process, the Secretary shall
specifically review and consider whether to incorporate
or supersede interim policies developed under paragraph
(4) or (5). Based uponsuch review, the Secretary may
provide for appropriate changes in the national policies previously
adopted under this subsection.
(7) Requirement and notice.--The Secretary shall
ensure that any policies adopted under paragraph (3),
(4), or (5) shall apply to all laboratory claims
payable under part B of title XVIII of the Social
Security Act, and shall provide for advance notice to
interested parties and a 45-day period in which such
parties may submit comments on the proposed change.
(c) Inclusion of Laboratory Representative on Carrier
Advisory Committees.--The Secretary shall direct that any
advisory committee established by a carrier to advise such
carrier with respect to coverage and administrative policies
under part B of title XVIII of the Social Security Act shall
include an individual to represent the independent clinical
laboratories and such other laboratories as the Secretary deems
appropriate. The Secretary shall consider recommendations from
national and local organizations that represent independent
clinical laboratories in such selection.
SEC. 4555. UPDATES FOR AMBULATORY SURGICAL SERVICES.
Section 1833(i)(2)(C) (42 U.S.C. 1395l(i)(2)(C)) is amended
by inserting at the end the following new sentence: ``In each
of the fiscal years 1998 through 2002, the increase under this
subparagraph shall be reduced (but not below zero) by 2.0
percentage points.''.
SEC. 4556. REIMBURSEMENT FOR DRUGS AND BIOLOGICALS.
(a) In General.--Section 1842 (42 U.S.C. 1395u) is amended
by inserting after subsection (n) the following new subsection:
``(o)(1) If a physician's, supplier's, or any other
person's bill or request for payment for services includes a
charge for a drug or biological for which payment may be made
under this part and the drug or biological is not paid on a
cost or prospective payment basis as otherwise provided in this
part, the amount payable for the drug or biological is equal to
95 percent of the average wholesale price.
``(2) If payment for a drug or biological is made to a
licensed pharmacy approved to dispense drugs or biologicals
under this part, the Secretary may pay a dispensing fee (less
the applicable deductible and coinsurance amounts) to the
pharmacy.''.
(b) Conforming Amendment.--Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)), as amended by sections 4315(b) and 4531(b)(1), is
amended--
(1) by striking ``and (R)'' and inserting ``(R)'';
and
(2) by striking the semicolon at the end and
inserting the following: ``, and (S) with respect to
drugs and biologicals not paid on a cost or prospective
payment basis as otherwise provided in this part (other
than items and services described in subparagraph (B)),
the amounts paid shall be 80 percent of the lesser of
the actual charge or the payment amount established in
section 1842(o);''.
(c) Study and Report.--The Secretary of Health and Human
Services shall study the effect on the average wholesale price
of drugs and biologicals of the amendments made by subsection
(a) and shall report to the Committees on Ways and Means and
Commerce of the House of Representatives and the Committee on
Finance of the Senate the result of such study not later than
July 1, 1999.
(d) Effective Date.--The amendments made by subsections (a)
and (b) shall apply to drugs and biologicals furnished on or
after January 1, 1998.
SEC. 4557. COVERAGE OF ORAL ANTI-NAUSEA DRUGS UNDER CHEMOTHERAPEUTIC
REGIMEN.
(a) In General.--Section 1861(s)(2) (42 U.S.C.
1395x(s)(2)), as amended by sections 4104 and 4105, is
amended--
(1) by striking ``and'' at the end of subparagraph
(R); and
(2) by inserting after subparagraph (S) the
following new subparagraph:
``(T) an oral drug (which is approved by the
Federal Food and Drug Administration) prescribed for
use as an acute anti-emetic used as part of an
anticancer chemotherapeutic regimen if the drug is
administered by a physician (or as prescribed by a
physician)--
``(i) for use immediately before, at, or
within 48 hours after the time of the
administration of the anticancer
chemotherapeutic agent; and
``(ii) as a full replacement for the anti-
emetic therapy which would otherwise be
administered intravenously.''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to items and services furnished on or after January
1, 1998.
SEC. 4558. RENAL DIALYSIS-RELATED SERVICES.
(a) Auditing of Cost Reports.--Beginning with cost reports
for 1996, the Secretary shall audit cost reports of each renal
dialysis provider at least once every 3 years.
(b) Implementation of Quality Standards.--The Secretary of
Health and Human Services shall develop, by not later than
January 1, 1999, and implement, by not later than January 1,
2000, a method to measure and report quality of renal dialysis
services provided under the medicare program under title XVIII
of the Social Security Act.
SEC. 4559. TEMPORARY COVERAGE RESTORATION FOR PORTABLE
ELECTROCARDIOGRAM TRANSPORTATION.
(a) In General.--Effective only for electrocardiogram tests
furnished during 1998, the Secretary of Health and Human
Services shall restore separate payment, under part B of title
XVIII of the Social Security Act, for the transportation of
electrocardiogram equipment (HCPCS code R0076) based upon
payment methods in effect for such service as of December 31,
1996.
(b) Determination.--By not later than July 1, 1998, the
Secretary of Health and Human Services shall make a
recommendation to the Committees on Commerce and Ways and Means
of the House of Representatives and the Committee on Finance of
the Senate as to whether coverage of portable electrocardiogram
transportation should be provided under part B of title XVIII
of the Social Security Act. In making such recommendation, the
Secretary shall take into account the study of coverage of
portable electrocardiogram transportation conducted by the
Comptroller General of the United States and other relevant
information, including information submitted by interested
parties.
CHAPTER 6--PART B PREMIUM AND RELATED PROVISIONS
Subchapter A--Determination of Part B Premium Amount
SEC. 4571. PART B PREMIUM.
(a) In General.--Section 1839(a)(3) (42 U.S.C. 1395r(a)(3))
is amended by striking the first 3 sentences and inserting the
following: ``The Secretary, during September of each year,
shall determine and promulgate a monthly premium rate for the
succeeding calendar year that is equal to 50 percent of the
monthly actuarial rate for enrollees age 65 and over,
determined according to paragraph (1), for that succeeding
calendar year.''.
(b) Conforming and Technical Amendments.--
(1) Section 1839.--Section 1839 (42 U.S.C. 1395r)
is amended--
(A) in subsection (a)(2), by striking ``(b)
and (e)'' and inserting ``(b), (c), and (f)'';
(B) in the last sentence of subsection
(a)(3)--
(i) by inserting ``rate'' after
``premium'', and
(ii) by striking ``and the
derivation of the dollar amounts
specified in this paragraph'';
(C) in the first sentence of subsection
(b), by striking ``or (e)'';
(D) by striking subsection (e); and
(E) by redesignating subsection (g) as
subsection (e) and inserting that subsection
after subsection (d).
(2) Section 1844.--Subparagraphs (A)(i) and (B)(i)
of section 1844(a)(1) (42 U.S.C. 1395w(a)(1)) are each
amended by striking ``or 1839(e), as the case may be''.
Subchapter B--Other Provisions Related to Part B Premium
SEC. 4581. PROTECTIONS UNDER THE MEDICARE PROGRAM FOR DISABLED WORKERS
WHO LOSE BENEFITS UNDER A GROUP HEALTH PLAN.
(a) No Premium Penalty for Late Enrollment.--The first
sentence of section 1839(b) (42 U.S.C. 1395r(b)) is amended by
inserting ``and not pursuant to a special enrollment period
under section 1837(i)(4)'' after ``section 1837)''.
(b) Special Medicare Enrollment Period.--
(1) In general.--Section 1837(i) (42 U.S.C.
1395p(i)) is amended by adding at the end the following
new paragraph:
``(4)(A) In the case of an individual who is entitled to
benefits under part A pursuant to section 226(b) and--
``(i) who at the time the individual first
satisfies paragraph (1) of section 1836--
``(I) is enrolled in a group health plan
described in section 1862(b)(1)(A)(v) by reason
of the individual's current or former
employment or by reason of the current or
former employment status of a member of the
individual's family, and
``(II) has elected not to enroll (or to be
deemed enrolled) under this section during the
individual's initial enrollment period; and
``(ii) whose continuous enrollment under such group
health plan is involuntarily terminated at a time when
the enrollment under the plan is not by reason of the
individual's current employment or by reason of the
current employment of a member of the individual's
family,
there shall be a special enrollment period described in
subparagraph (B).
``(B) The special enrollment period referred to in
subparagraph (A) is the 6-month period beginning on the first
day of the month which includes the date of the enrollment
termination described in subparagraph (A)(ii).''.
(2) Coverage period.--Section 1838(e) (42 U.S.C.
1395q(e)) is amended--
(A) by inserting ``or 1837(i)(4)(B)'' after
``1837(i)(3)'' the first place it appears, and
(B) by inserting ``or specified in section
1837(i)(4)(A)(i)'' after ``1837(i)(3)'' the
second place it appears.
(c) Effective Date.--The amendments made by this section
shall apply to involuntary terminations of coverage under a
group health plan occurring on or after the date of the
enactment of this Act.
SEC. 4582. GOVERNMENTAL ENTITIES ELIGIBLE TO ELECT TO PAY PART B
PREMIUMS FOR ELIGIBLE INDIVIDUALS.
Section 1839(e)(1) (as amended by section 4571(b)) is
amended--
(1) by inserting ``(or any appropriate State or
local governmental entity specified by the Secretary)''
after ``State'' the first place it appears, and
(2) by inserting ``(or such entity)'' after
``State'' the second and third place it appears.
Subtitle G--Provisions Relating to Parts A and B
CHAPTER 1--HOME HEALTH SERVICES AND BENEFITS
Subchapter A--Payments For Home Health Services
SEC. 4601. RECAPTURING SAVINGS RESULTING FROM TEMPORARY FREEZE ON
PAYMENT INCREASES FOR HOME HEALTH SERVICES.
(a) Basing Updates to Per Visit Cost Limits on Limits for
Fiscal Year 1993.--Section 1861(v)(1)(L) (42 U.S.C.
1395x(v)(1)(L)) is amended by adding at the end the following:
``(iv) In establishing limits under this subparagraph for
cost reporting periods beginning after September 30, 1997, the
Secretary shall not take into account any changes in the home
health market basket, as determined by the Secretary, with
respect to cost reporting periods which began on or after July
1, 1994, and before July 1, 1996.''.
(b) No Exceptions Permitted Based on Amendment.--The
Secretary of Health and Human Services shall not consider the
amendment made by subsection (a) in making any exemptions and
exceptions pursuant to section 1861(v)(1)(L)(ii) of the Social
Security Act (42 U.S.C. 1395x(v)(1)(L)(ii)).
SEC. 4602. INTERIM PAYMENTS FOR HOME HEALTH SERVICES.
(a) Reductions in Cost Limits.--Section 1861(v)(1)(L)(i)
(42 U.S.C. 1395x(v)(1)(L)(i)) is amended--
(1) by moving the indentation of subclauses (I)
through (III) 2-ems to the left;
(2) in subclause (I), by inserting ``of the mean of
the labor-related and nonlabor per visit costs for
freestanding home health agencies'' before the comma at
the end;
(3) in subclause (II), by striking ``, or'' and
inserting ``of such mean,'';
(4) in subclause (III)--
(A) by inserting ``and before October 1,
1997,'' after ``July 1, 1987,'', and
(B) by striking the comma at the end and
inserting ``of such mean, or''; and
(5) by striking the matter following subclause
(III) and inserting the following:
``(IV) October 1, 1997, 105 percent of the median
of the labor-related and nonlabor per visit costs for
freestanding home health agencies.''.
(b) Delay in Updates.--Section 1861(v)(1)(L)(iii) (42
U.S.C. 1395x(v)(1)(L)(iii)) is amended by inserting ``, or on
or after July 1, 1997, and before October 1, 1997'' after
``July 1, 1996''.
(c) Additions to Cost Limits.--Section 1861(v)(1)(L) (42
U.S.C. 1395x(v)(1)(L)) (as amended by section 4601(a)) is
amended by adding at the end the following new clauses:
``(v) For services furnished by home health agencies for
cost reporting periods beginning on or after October 1, 1997,
the Secretary shall provide for an interim system of limits.
Payment shall not exceed the costs determined under the
preceding provisions of this subparagraph or, if lower, the
product of--
``(I) an agency-specific per beneficiary annual
limitation calculated based 75 percent on 98 percent of
the reasonable costs (including nonroutine medical
supplies) for the agency's 12-month cost reporting
period ending during fiscal year 1994, and based 25
percent on 98 percent of the standardized regional
average of such costs for the agency's census division,
as applied to such agency, for cost reporting periods
ending during fiscal year 1994, such costs updated by
the home health market basket index; and
``(II) the agency's unduplicated census count of
patients (entitled to benefits under this title) for
the cost reporting period subject to the limitation.
``(vi) For services furnished by home health agencies for
cost reporting periods beginning on or after October 1, 1997,
the following rules apply:
``(I) For new providers and those providers without
a 12-month cost reporting period ending in fiscal year
1994, the per beneficiary limitation shall be equal to
the median of these limits (or the Secretary's best
estimates thereof) applied to other home health
agencies as determined by the Secretary. A home health
agency that has altered its corporate structure or name
shall not be considered a new provider for this
purpose.
``(II) For beneficiaries who use services furnished
by more than one home health agency, the per
beneficiary limitations shall be prorated among the
agencies.
``(vii)(I) Not later than January 1, 1998, the Secretary
shall establish per visit limits applicable for fiscal year
1998, and not later than April 1, 1998, the Secretary shall
establish per beneficiary limits under clause (v)(I) for fiscal
year 1998.
``(II) Not later than August 1 of each year (beginning in
1998) the Secretary shall establish the limits applicable under
this subparagraph for services furnished during the fiscal year
beginning October 1 of the year.''.
(d) Development of Case Mix System.--The Secretary of
Health and Human Services shall expand research on a
prospective payment system for home health agencies under the
medicare program that ties prospective payments to a unit of
service, including an intensive effort to develop a reliable
case mix adjuster that explains a significant amount of the
variances in costs.
(e) Submission of Data for Case Mix System.--Effective for
cost reporting periods beginning on or after October 1, 1997,
the Secretary of Health and Human Services may require all home
health agencies to submit additional information that the
Secretary considers necessary for the development of a reliable
case mix system.
SEC. 4603. PROSPECTIVE PAYMENT FOR HOME HEALTH SERVICES.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) (as
amended by section 4801) is amended by adding at the end the
following:
``prospective payment for home health services
``Sec. 1895. (a) In General.--Notwithstanding section
1861(v), the Secretary shall provide, for cost reporting
periods beginning on or after October 1, 1999, for payments for
home health services in accordance with a prospective payment
system established by the Secretary under this section.
``(b) System of Prospective Payment for Home Health
Services.--
``(1) In general.--The Secretary shall establish
under this subsection a prospective payment system for
payment for all costs of home health services. Under
the system under this subsection all services covered
and paid on a reasonable cost basis under the medicare
home health benefit as of the date of the enactment of
this section, including medical supplies, shall be paid
for on the basis of a prospective payment amount
determined under this subsection and applicable to the
services involved. In implementing the system, the
Secretary may provide for a transition (of not longer
than 4 years) during which a portion of such payment is
based on agency-specific costs, but only if such
transition does not result in aggregate payments under
this title that exceed the aggregate payments that
would be made if such a transition did not occur.
``(2) Unit of payment.--In defining a prospective
payment amount under the system under this subsection,
the Secretary shall consider an appropriate unit of
service and the number, type, and duration of visits
provided within that unit, potential changes in the mix
of services provided within that unit and their cost,
and a general system design that provides for continued
access to quality services.
``(3) Payment basis.--
``(A) Initial basis.--
``(i) In general.--Under such
system the Secretary shall provide for
computation of a standard prospective
payment amount (or amounts). Such
amount (or amounts) shall initially be
basedon the most current audited cost
report data available to the Secretary and shall be computed in a
manner so that the total amounts payable under the system for fiscal
year 2000 shall be equal to the total amount that would have been made
if the system had not been in effect but if the reduction in limits
described in clause (ii) had been in effect. Such amount shall be
standardized in a manner that eliminates the effect of variations in
relative case mix and wage levels among different home health agencies
in a budget neutral manner consistent with the case mix and wage level
adjustments provided under paragraph (4)(A). Under the system, the
Secretary may recognize regional differences or differences based upon
whether or not the services or agency are in an urbanized area.
``(ii) Reduction.--The reduction
described in this clause is a reduction
by 15 percent in the cost limits and
per beneficiary limits described in
section 1861(v)(1)(L), as those limits
are in effect on September 30, 1999.
``(B) Annual update.--
``(i) In general.--The standard
prospective payment amount (or amounts)
shall be adjusted for each fiscal year
(beginning with fiscal year 2001) in a
prospective manner specified by the
Secretary by the home health market
basket percentage increase applicable
to the fiscal year involved.
``(ii) Home health market basket
percentage increase.--For purposes of
this subsection, the term `home health
market basket percentage increase'
means, with respect to a fiscal year, a
percentage (estimated by the Secretary
before the beginning of the fiscal
year) determined and applied with
respect to the mix of goods and
services included in home health
services in the same manner as the
market basket percentage increase under
section 1886(b)(3)(B)(iii) is
determined and applied to the mix of
goods and services comprising inpatient
hospital services for the fiscal year.
``(C) Adjustment for outliers.--The
Secretary shall reduce the standard prospective
payment amount (or amounts) under this
paragraph applicable to home health services
furnished during a period by such proportion as
will result in an aggregate reduction in
payments for the period equal to the aggregate
increase in payments resulting from the
application of paragraph (5) (relating to
outliers).
``(4) Payment computation.--
``(A) In general.--The payment amount for a
unit of home health services shall be the
applicable standard prospective payment amount
adjusted as follows:
``(i) Case mix adjustment.--The
amount shall be adjusted by an
appropriate case mix adjustment factor
(established under subparagraph (B)).
``(ii) Area wage adjustment.--The
portion of such amount that the
Secretary estimates to be attributable
to wages and wage-related costs shall
be adjusted for geographic differences
in such costs by an area wage
adjustment factor (established under
subparagraph (C)) for the area in which
the services are furnished or such
other area as the Secretary may
specify.
``(B) Establishment of case mix adjustment
factors.--The Secretary shall establish
appropriate case mix adjustment factors for
home health services in a manner that explains
a significant amount of the variation in cost
among different units of services.
``(C) Establishment of area wage adjustment
factors.--The Secretary shall establish area
wage adjustment factors that reflect the
relative levelof wages and wage-related costs
applicable to the furnishing of home health services in a geographic
area compared to the national average applicable level. Such factors
may be the factors used by the Secretary for purposes of section
1886(d)(3)(E).
``(5) Outliers.--The Secretary may provide for an
addition or adjustment to the payment amount otherwise
made in the case of outliers because of unusual
variations in the type or amount of medically necessary
care. The total amount of the additional payments or
payment adjustments made under this paragraph with
respect to a fiscal year may not exceed 5 percent of
the total payments projected or estimated to be made
based on the prospective payment system under this
subsection in that year.
``(6) Proration of prospective payment amounts.--If
a beneficiary elects to transfer to, or receive
services from, another home health agency within the
period covered by the prospective payment amount, the
payment shall be prorated between the home health
agencies involved.
``(c) Requirements for Payment Information.--With respect
to home health services furnished on or after October 1, 1998,
no claim for such a service may be paid under this title
unless--
``(1) the claim has the unique identifier (provided
under section 1842(r)) for the physician who prescribed
the services or made the certification described in
section 1814(a)(2) or 1835(a)(2)(A); and
``(2) in the case of a service visit described in
paragraph (1), (2), (3), or (4) of section 1861(m), the
claim contains a code (or codes) specified by the
Secretary that identifies the length of time of the
service visit, as measured in 15 minute increments.
``(d) Limitation on Review.--There shall be no
administrative or judicial review under section 1869, 1878, or
otherwise of--
``(1) the establishment of a transition period
under subsection (b)(1);
``(2) the definition and application of payment
units under subsection (b)(2);
``(3) the computation of initial standard
prospective payment amounts under subsection (b)(3)(A)
(including the reduction described in clause (ii) of
such subsection);
``(4) the establishment of the adjustment for
outliers under subsection (b)(3)(C);
``(5) the establishment of case mix and area wage
adjustments under subsection (b)(4); and
``(6) the establishment of any adjustments for
outliers under subsection (b)(5).''.
(b) Elimination of Periodic Interim Payments for Home
Health Agencies.--Section 1815(e)(2) (42 U.S.C. 1395g(e)(2)) is
amended--
(1) by inserting ``and'' at the end of subparagraph
(C),
(2) by striking subparagraph (D), and
(3) by redesignating subparagraph (E) as
subparagraph (D).
(c) Conforming Amendments.--
(1) Payments under part a.--Section 1814(b) (42
U.S.C. 1395f(b)) is amended in the matter preceding
paragraph (1) by striking ``and 1886'' and inserting
``1886, and 1895''.
(2) Treatment of items and services paid under part
b.--
(A) Payments under part b.--Section
1833(a)(2) (42 U.S.C. 1395l(a)(2)) is amended--
(i) by amending subparagraph (A) to
read as follows:
``(A) with respect to home health services
(other than a covered osteoporosis drug) (as
defined in section 1861(kk)), the amount
determined under the prospective payment system
under section 1895;'';
(ii) by striking ``and'' at the end
of subparagraph (E);
(iii) by adding ``and'' at the end
of subparagraph (F); and
(iv) by adding at the end the
following new subparagraph:
``(G) with respect to items and services
described in section 1861(s)(10)(A), the lesser
of--
``(i) the reasonable cost of such
services, as determined under section
1861(v), or
``(ii) the customary charges with
respect to such services,
or, if such services are furnished by a public
provider of services, or by another provider
which demonstrates to the satisfaction of the
Secretary that a significant portion of its
patients are low-income (and requests that
payment be made under this provision), free of
charge or at nominal charges to the public, the
amount determined in accordance with section
1814(b)(2);''.
(B) Requiring payment for all items and
services to be made to agency.--
(i) In general.--The first sentence
of section 1842(b)(6) (42 U.S.C.
1395u(b)(6)) (as amended by section
4432(b)(2)) is amended--
(I) by striking ``and (E)''
and inserting ``(E)''; and
(II) by striking the period
at the end and inserting the
following: ``, and (F) in the
case of home health services
furnished to an individual who
(at the time the item or
service is furnished) is under
a plan of care of a home health
agency, payment shall be made
to the agency (without regard
to whether or not the item or
service was furnished by the
agency, by others under
arrangement with them made by
the agency, or when any other
contracting or consulting
arrangement, or otherwise).''.
(ii) Conforming amendment.--Section
1832(a)(1) (42 U.S.C. 1395k(a)(1)) (as
amended by section 4432(b)(5)(B)) is
amended by striking ``section
1842(b)(6)(E);'' and inserting
``subparagraphs (E) and (F) of section
1842(b)(6);''.
(C) Exclusions from coverage.--Section
1862(a) (42 U.S.C. 1395y(a)) (as amended by
sections 4319(b), 4432(b), 4507(a)(2)(B) and
4541(b)) is amended--
(i) by striking ``or'' at the end
of paragraph (19);
(ii) by striking the period at the
end of paragraph (20) and inserting ``;
or''; and
(iii) by inserting after paragraph
(20) the following:
``(21) where such expenses are for home health
services furnished to an individual who is under a plan
of care of the home health agency if the claim for
payment for such services is not submitted by the
agency.''.
(d) Effective Date.--Except as otherwise provided, the
amendments made by this section shall apply to cost reporting
periods beginning on or after October 1, 1999.
(e) Contingency.--If the Secretary of Health and Human
Services for any reason does not establish and implement the
prospective payment system for home health services described
in section 1895(b) of the Social Security Act (as added by
subsection (a)) for cost reporting periods described in
subsection (d), for such cost reporting periods the Secretary
shall provide for a reduction by 15 percent in the cost limits
and per beneficiary limits described in section 1861(v)(1)(L)
of such Act, as those limits would otherwise be in effect on
September 30, 1999.
SEC. 4604. PAYMENT BASED ON LOCATION WHERE HOME HEALTH SERVICE IS
FURNISHED.
(a) Conditions of Participation.--Section 1891 (42 U.S.C.
1395bbb) is amended by adding at the end the following:
``(g) Payment on Basis of Location of Service.--A home
health agency shall submit claims for payment for home health
services under this title only on the basis of the geographic
location at which the service is furnished, as determined by
the Secretary.''.
(b) Wage Adjustment.--Section 1861(v)(1)(L)(iii) (42 U.S.C.
1395x(v)(1)(L)(iii)) is amended by striking ``agency is
located'' and inserting ``service is furnished''.
(c) Effective Date.--The amendments made by this section
apply to cost reporting periods beginning on or after October
1, 1997.
Subchapter B--Home Health Benefits
SEC. 4611. MODIFICATION OF PART A HOME HEALTH BENEFIT FOR INDIVIDUALS
ENROLLED UNDER PART B.
(a) In General.--Section 1812 (42 U.S.C. 1395d) is
amended--
(1) in subsection (a)(3), by striking ``home health
services'' and inserting ``for individuals not enrolled
in part B, home health services, and for individuals so
enrolled, post-institutional home health services
furnished during a home health spell of illness for up
to 100 visits during such spell of illness''; and
(2) in subsection (b), by adding after and below
paragraph (3) the following:
``Payment under this part for post-institutional home health
services furnished an individual during a home health spell of
illness may not be made for such services beginning after such
services have been furnished for a total of 100 visits such
spell.''.
(b) Post-Institutional Home Health Services Defined.--
Section 1861 (42 U.S.C. 1395x), as amended by sections 4103(a),
4104(a), 4105(a), 4106(a), and 4454, is amended by adding at
the end the following:
``Post-Institutional Home Health Services; Home Health Spell of Illness
``(tt)(1) The term `post-institutional home health
services' means home health services furnished to an
individual--
``(A) after discharge from a hospital or rural
primary care hospital in which the individual was an
inpatient for not less than 3 consecutive days before
such discharge if such home health services were
initiated within 14 days after the date of such
discharge; or
``(B) after discharge from a skilled nursing
facility in which the individual was provided post-
hospital extended care services if such home health
services were initiated within 14 days after the date
of such discharge.
``(2) The term `home health spell of illness' with respect
to any individual means a period of consecutive days--
``(A) beginning with the first day (not included in
a previous home health spell of illness) (i) on which
such individual is furnished post-institutional home
health services, and (ii) which occurs in a month for
which the individual is entitled to benefits under part
A, and
``(B) ending with the close of the first period of
60 consecutive days thereafter on each of which the
individual is neither an inpatient of a hospital or
rural primary care hospital nor an inpatient of a
facility described in section 1819(a)(1) or subsection
(y)(1) nor provided home health services.''.
(c) Maintaining Appeal Rights for Home Health Services.--
Section 1869(b)(2)(B) (42 U.S.C. 1395ff(b)(2)(B)) is amended by
inserting ``(or $100 in the case of home health services)''
after ``$500''.
(d) Maintaining Seamless Administration Through Fiscal
Intermediaries.--Section 1842(b)(2) (42 U.S.C. 1395u(b)(2)) is
amended by adding at the end the following:
``(E) With respect to the payment of claims for home health
services under this part that, but for the amendments made by
section 4611 of the Balanced Budget Act of 1997, would be
payable under part A instead of under this part, the Secretary
shall continue administration of such claims through fiscal
intermediaries under section 1816.''.
(e) Transition.--
(1) In general.--Notwithstanding any provision of
title XVIII of the Social Security Act, the Secretary
of Health and Human Services shall establish a
transition for the aggregate amount of expenditures
that are transferred from part A, to part B, of title
XVIII of the Social Security Act, as a result of the
amendments made by this section, during each of the
years during the period beginning with 1998 and ending
with 2002 according to this subsection. Under the
transition for each such year, the Secretary shall
effect such transfer, between the trust funds under
such parts, as will result in only the proportion
(specified in paragraph (2)) of such aggregate
expenditures for the year being transferred from such
part A to such part B.
(2) Proportion specified.--The proportion specified
in this paragraph for--
(A) 1998 is \1/6\,
(B) 1999 is \1/3\,
(C) 2000 is \1/2\,
(D) 2001 is \2/3\, and
(E) 2002 is \5/6\.
(3) Application in establishing monthly premiums
for 1998 through 2003.--
(A) In general.--For purposes only of
computing the monthly premium under section
1839 of the Social Security Act (42 U.S.C.
1395r), the monthly actuarial rate for
enrollees age 65 and over shall be computed as
though any reference in paragraph (1) of this
subsection to 2002 were a reference to 2003 and
as if the following proportions were
substituted for the proportions specified in
paragraph (2):
(i) For 1998, \1/7\.
(ii) For 1999, \2/7\.
(iii) For 2000, \3/7\.
(iv) For 2001, \4/7\.
(v) For 2002, \5/7\.
(vi) For 2003, \6/7\.
(B) No impact on government contribution.--
Subparagraph (A) does not apply in determining
the amount of the Government contribution under
section 1844 of the Social Security Act (42
U.S.C. 1395w).
(f) Effective Date.--The amendments made by this section
apply to services furnished on or after January 1, 1998. For
purpose of applying such amendments, any home health spell of
illness that began, but did not end, before such date shall be
considered to have begun as of such date.
SEC. 4612. CLARIFICATION OF PART-TIME OR INTERMITTENT NURSING CARE.
(a) In General.--Section 1861(m) (42 U.S.C. 1395x(m)) is
amended by adding at the end the following: ``For purposes of
paragraphs (1) and (4), the term `part-time or intermittent
services' means skilled nursing and home health aide services
furnished any number of days per week as long as they are
furnished (combined) less than 8 hours each day and 28 or fewer
hours each week (or, subject to review on a case-by-case basis
as to the need for care, less than 8 hours each day and 35 or
fewer hours per week). For purposes of sections 1814(a)(2)(C)
and 1835(a)(2)(A), `intermittent' means skilled nursing care
that is either provided or needed on fewer than 7 days each
week, or less than 8 hours of each day for periods of 21 days
or less (with extensions in exceptional circumstances when the
need for additional care is finite and predictable).''.
(b) Effective Date.--The amendment made by subsection (a)
applies to services furnished on or after October 1, 1997.
SEC. 4613. STUDY ON DEFINITION OF HOMEBOUND.
(a) Study.--The Secretary of Health and Human Services
shall conduct a study of the criteria that should be applied,
and the method of applying such criteria, in the determination
of whether an individual is homebound for purposes of
qualifying for receipt of benefits for home health services
under the medicare program. Such criteria shall include the
extent and circumstances under which a person may be absent
from the home but nonetheless qualify.
(b) Report.--Not later than October 1, 1998, the Secretary
shall submit a report to Congress on the study conducted under
subsection (a). The report shall include specific
recommendations on such criteria and methods.
SEC. 4614. NORMATIVE STANDARDS FOR HOME HEALTH CLAIMS DENIALS.
(a) In General.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1))
(as amended by section 4104(c)) is amended--
(1) by striking ``and'' at the end of subparagraph
(G),
(2) by striking the semicolon at the end of
subparagraph (H) and inserting ``, and'', and
(3) by inserting after subparagraph (H) the
following new subparagraph:
``(I) the frequency and duration of home health
services which are in excess of normative guidelines
that the Secretary shall establish by regulation;''.
(b) Notification.--The Secretary of Health and Human
Services may establish a process for notifying a physician in
cases in which the number of home health visits, furnished
under title XVIII of the Social Security Act pursuant to a
prescription or certification of the physician, significantly
exceeds such threshold (or thresholds) as the Secretary
specifies. The Secretary may adjust such threshold to reflect
demonstrated differences in the need for home health services
among different beneficiaries.
(c) Effective Date.--The amendments made by this section
apply to services furnished on or after October 1, 1997.
SEC. 4615. NO HOME HEALTH BENEFITS BASED SOLELY ON DRAWING BLOOD.
(a) In General.--Sections 1814(a)(2)(C) and 1835(a)(2)(A)
(42 U.S.C. 1395f(a)(2)(C), 1395n(a)(2)(A)) are each amended by
inserting ``(other than solely venipuncture forthe purpose of
obtaining a blood sample)'' after ``skilled nursing care''.
(b) Effective Date.--The amendments made by subsection (a)
apply to home health services furnished after the 6-month
period beginning after the date of enactment of this Act.
SEC. 4616. REPORTS TO CONGRESS REGARDING HOME HEALTH COST CONTAINMENT.
(a) Estimate.--Not later than October 1, 1997, the
Secretary of Health and Human Services shall submit to the
Committees on Commerce and Ways and Means of the House of
Representatives and the Committee on Finance of the Senate a
report that includes an estimate of the outlays that will be
made under parts A and B of title XVIII of the Social Security
Act for the provision of home health services during each of
fiscal years 1998 through 2002.
(b) Annual Report.--Not later than the end of each of years
1999 through 2002, the Secretary shall submit to such
Committees a report that compares the actual outlays under such
parts for such services during the fiscal year ending in the
year, to the outlays estimated under subsection (a) for such
fiscal year. If the Secretary finds that such actual outlays
were greater than such estimated outlays for the fiscal year,
the Secretary shall include in the report recommendations
regarding beneficiary copayments for home health services
provided under the medicare program or such other methods as
will reduce the growth in outlays for home health services
under the medicare program.
CHAPTER 2--GRADUATE MEDICAL EDUCATION
Subchapter A--Indirect Medical Education
SEC. 4621. INDIRECT GRADUATE MEDICAL EDUCATION PAYMENTS.
(a) Multiyear Transition Regarding Percentages.--
(1) In general.--Section 1886(d)(5)(B)(ii) (42
U.S.C. 1395ww(d)(5)(B)(ii)) is amended to read as
follows:
``(ii) For purposes of clause (i)(II), the
indirect teaching adjustment factor is equal to
c (((1+r) to the nth power) - 1),
where `r' is the ratio of the hospital's full-
time equivalent interns and residents to beds
and `n' equals .405. For discharges occurring--
``(I) on or after October 1, 1988,
and before October 1, 1997, `c' is
equal to 1.89;
``(II) during fiscal year 1998, `c'
is equal to 1.72;
``(III) during fiscal year 1999,
`c' is equal to 1.6;
``(IV) during fiscal year 2000, `c'
is equal to 1.47; and
``(V) on or after October 1, 2000,
`c' is equal to 1.35.''.
(2) Conforming amendment relating to determination
of standardized amount.--Section 1886(d)(2)(C)(i) (42
U.S.C. 1395ww(d)(2)(C)(i)) is amended by adding at the
end the following: ``except that the Secretary shall
not take into account any reduction in the amount of
additional payments under paragraph (5)(B)(ii)
resulting from the amendment made by section 4621(a)(1)
of the Balanced Budget Act of 1997,''.
(b) Limitation on Number of Residents for Certain Fiscal
Years.--
(1) In general.--Section 1886(d)(5)(B) (42 U.S.C.
1395ww(d)(5)(B)) is amended by adding after clause (iv)
the following:
``(v) In determining the adjustment with
respect to a hospital for discharges occurring
on or after October 1, 1997, the total number
of full-time equivalent interns and residents
in the fields of allopathic and osteopathic
medicine in either a hospital or nonhospital
setting may not exceed the number of such full-
time equivalent interns and residents in the
hospital with respect to the hospital's most
recent cost reporting period ending on or
before December 31, 1996.
``(vi) For purposes of clause (ii)--
``(I) `r' may not exceed the ratio
of the number of interns and residents,
subject to the limit under clause (v),
with respect to the hospital for its
most recent cost reporting period to
the hospital's available beds (as
defined by the Secretary) during that
cost reporting period, and
``(II) for the hospital's cost
reporting periods beginning on or after
October 1, 1997, subject to the limits
described in clauses (iv) and (v), the
total number of full-time equivalent
residents for payment purposes shall
equal the average of the actual full-
time equivalent resident count for the
cost reporting period and the preceding
two cost reporting periods.
In the case of the first cost reporting period
beginning on or after October 1, 1997,
subclause (II) shall be applied by using the
average for such period and the preceding cost
reporting period.
``(vii) If any cost reporting period beginning on
or after October 1, 1997, is not equal to twelve
months, the Secretary shall make appropriate
modifications to ensure that the average full-time
equivalent residency count pursuant to subclause (II)
of clause (vi) is based on the equivalent of full
twelve-month cost reporting periods.
``(viii) Rules similar to the rules of subsection
(h)(4)(H) shall apply for purposes of clauses (v) and
(vi).''.
(2) Payment for interns and residents providing
off-site services.--Section 1886(d)(5)(B)(iv) (42
U.S.C. 1395ww(d)(5)(B)(iv)) is amended to read as
follows:
``(iv) Effective for discharges occurring on or
after October 1, 1997, all the time spent by an intern
or resident in patient care activities under an
approved medical residency training program at an
entity in a nonhospital setting shall be counted
towards the determination of full-time equivalency if
the hospital incurs all, or substantially all, of the
costs for the training program in that setting.''.
SEC. 4622. PAYMENT TO HOSPITALS OF INDIRECT MEDICAL EDUCATION COSTS FOR
MEDICARE+CHOICE ENROLLEES.
Section 1886(d) (42 U.S.C. 1395ww(d)) is amended by adding
at the end the following:
``(11) Additional payments for managed care
enrollees.--
``(A) In general.--For portions of cost
reporting periods occurring on or after January
1, 1998, the Secretary shall provide for an
additional payment amount for each applicable
discharge of any subsection (d) hospital that
has an approved medical residency training
program.
``(B) Applicable discharge.--For purposes
of this paragraph, the term `applicable
discharge' means the discharge of any
individual who is enrolled under a risk-sharing
contract with an eligible organization under
section 1876 and who is entitled to benefits
under part A or any individual who is enrolled
with a Medicare+Choice organization under part
C.
``(C) Determination of amount.--The amount
of the payment under this paragraph with
respect to any applicable discharge shall be
equal to the applicable percentage (as defined
in subsection (h)(3)(D)(ii)) of the estimated
average per discharge amount that would
otherwise have been paid under paragraph (5)(B)
if the individuals had not been enrolled as
described in subparagraph (B).
``(D) Special rule for hospitals under
reimbursement system.--The Secretary shall
establish rules for the application of this
paragraph to a hospital reimbursed under a
reimbursement system authorized under section
1814(b)(3) in the same manner as it would apply
to the hospital if it were not reimbursed under
such section.''.
Subchapter B--Direct Graduate Medical Education
SEC. 4623. LIMITATION ON NUMBER OF RESIDENTS AND ROLLING AVERAGE FTE
COUNT.
Section 1886(h)(4) (42 U.S.C. 1395ww(h)(4)) is amended by
adding after subparagraph (E) the following:
``(F) Limitation on number of residents in
allopathic and osteopathic medicine.--Such
rules shall provide that for purposes of a cost
reporting period beginning on or after October
1, 1997, the total number of full-time
equivalent residents before application of
weighting factors (as determined under this
paragraph) with respect to a hospital's
approved medical residency training program in
the fields of allopathic medicine and
osteopathic medicine may not exceed the number
of such full-time equivalent residents for the
hospital's most recent cost reporting period
ending on or before December 31, 1996.
``(G) Counting interns and residents for fy
1998 and subsequent years.--
``(i) In general.--For cost
reporting periods beginning during
fiscal years beginning on or after
October 1, 1997, subject to the limit
described in subparagraph (F), the
total number of full-time equivalent
residents for determining a hospital's
graduate medical education payment
shall equal the average of the actual
full-time equivalent resident counts
for the cost reporting period and the
preceding two cost reporting periods.
``(ii) Adjustment for short
periods.--If any cost reporting period
beginning on or after October 1, 1997,
is not equal to twelve months, the
Secretary shall make appropriate
modifications to ensure that the
average full-time equivalent resident
counts pursuant to clause (i) are based
on the equivalent of full twelve-month
cost reporting periods.
``(iii) Transition rule for 1998.--
In the case of a hospital's first cost
reporting period beginning on or after
October 1, 1997, clause (i) shall be
applied by using the average for such
period and the preceding cost reporting
period.
``(H) Special rules for application of
subparagraphs (f) and (g).--
``(i) New facilities.--The
Secretary shall, consistent with the
principles of subparagraphs (F) and
(G), prescribe rules for the
application of such subparagraphs in
the case of medical residency training
programs established on or after
January 1, 1995. In promulgating such
rules for purposes of subparagraph (F),
the Secretary shall give special
consideration to facilities that meet
the needs of underserved rural areas.
``(ii) Aggregation.--The Secretary
may prescribe rules which allow
institutions which are members of the
same affiliated group (as defined by
the Secretary) to elect to apply the
limitation of subparagraph (F) on an
aggregate basis.
``(iii) Data collection.--The
Secretary may require any entity that
operates a medical residency training
program and to which subparagraphs (F)
and (G) apply to submit to the
Secretary such additional information
as the Secretary considers necessary to
carry out such subparagraphs.''
SEC. 4624. PAYMENTS TO HOSPITALS FOR DIRECT COSTS OF GRADUATE MEDICAL
EDUCATION OF MEDICARE+CHOICE ENROLLEES.
Section 1886(h)(3) (42 U.S.C. 1395ww(h)(3)) is amended by
adding after subparagraph (C) the following:
``(D) Payment for managed care enrollees.--
``(i) In general.--For portions of
cost reporting periods occurring on or
after January 1, 1998, the Secretary
shall provide for an additionalpayment
amount under this subsection for services furnished to individuals who
are enrolled under a risk-sharing contract with an eligible
organization under section 1876 and who are entitled to part A or with
a Medicare+Choice organization under part C. The amount of such a
payment shall equal the applicable percentage of the product of--
``(I) the aggregate
approved amount (as defined in
subparagraph (B)) for that
period; and
``(II) the fraction of the
total number of inpatient-bed
days (as established by the
Secretary) during the period
which are attributable to such
enrolled individuals.
``(ii) Applicable percentage.--For
purposes of clause (i), the applicable
percentage is--
``(I) 20 percent in 1998,
``(II) 40 percent in 1999,
``(III) 60 percent in 2000,
``(IV) 80 percent in 2001,
and
``(V) 100 percent in 2002
and subsequent years.
``(iii) Special rule for hospitals
under reimbursement system.--The
Secretary shall establish rules for the
application of this subparagraph to a
hospital reimbursed under a
reimbursement system authorized under
section 1814(b)(3) in the same manner
as it would apply to the hospital if it
were not reimbursed under such
section.''.
SEC. 4625. PERMITTING PAYMENT TO NONHOSPITAL PROVIDERS.
(a) In General.--Section 1886 (42 U.S.C. 1395ww), as
amended by section 4421(a), is amended by adding at the end the
following:
``(k) Payment to Nonhospital Providers.--
``(1) In general.--For cost reporting periods
beginning on or after October 1, 1997, the Secretary
may establish rules for payment to qualified
nonhospital providers for their direct costs of medical
education, if those costs are incurred in the operation
of an approved medical residency training program
described in subsection (h). Such rules shall specify
the amounts, form, and manner in which such payments
will be made and the portion of such payments that will
be made from each of the trust funds under this title.
``(2) Qualified nonhospital providers.--For
purposes of this subsection, the term `qualified
nonhospital providers' means--
``(A) a Federally qualified health center,
as defined in section 1861(aa)(4);
``(B) a rural health clinic, as defined in
section 1861(aa)(2);
``(C) Medicare+Choice organizations; and
``(D) such other providers (other than
hospitals) as the Secretary determines to be
appropriate.''.
(b) Prohibition on Double Payments.--Section 1886(h)(3)(B)
(42 U.S.C. 1395ww(h)(3)(B)) is amended by adding at the end the
following:
``The Secretary shall reduce the aggregate approved
amount to the extent payment is made under subsection
(k) for residents included in the hospital's count of
full-time equivalent residents.''.
SEC. 4626. INCENTIVE PAYMENTS UNDER PLANS FOR VOLUNTARY REDUCTION IN
NUMBER OF RESIDENTS.
(a) In General.--Section 1886(h) (42 U.S.C. 1395ww(h)) is
amended by adding at the end the following new paragraph:
``(6) Incentive payment under plans for voluntary
reduction in number of residents.--
``(A) In general.--In the case of a
voluntary residency reduction plan for which an
application is approved under subparagraph (B),
subject to subparagraph (F), each hospital
which is part of the qualifying entity
submitting the plan shall be paid an applicable
hold harmless percentage (as specified in
subparagraph (E)) of the sum of--
``(i) the amount (if any) by
which--
``(I) the amount of payment
which would have been made
under this subsection if there
had been a 5-percent reduction
in the number of full-time
equivalent residents in the
approved medical education
training programs of the
hospital as of June 30, 1997,
exceeds
``(II) the amount of
payment which is made under
this subsection, taking into
account the reduction in such
number effected under the
reduction plan; and
``(ii) the amount of the reduction
in payment under subsection (d)(5)(B)
for the hospital that is attributable
to the reduction in number of residents
effected under the plan below 95
percent of the number of full-time
equivalent residents in such programs
of the hospital as of June 30, 1997.
The determination of the amounts under clauses
(i) and (ii) for any year shall be made on the
basis of the provisions of this title in effect
on the application deadline date for the first
calendar year to which the reduction plan
applies.
``(B) Approval of plan applications.--The
Secretary may not approve the application of an
qualifying entity unless--
``(i) the application is submitted
in a form and manner specified by the
Secretary and by not later than
November 1, 1999,
``(ii) the application provides for
the operation of a plan for the
reduction in the number of full-time
equivalent residents in the approved
medicalresidency training programs of
the entity consistent with the requirements of subparagraph (D);
``(iii) the entity elects in the
application the period of residency
training years (not greater than 5)
over which the reduction will occur;
``(iv) the entity will not reduce
the proportion of its residents in
primary care (to the total number of
residents) below such proportion as in
effect as of the applicable time
described in subparagraph (D)(v); and
``(v) the Secretary determines that
the application and the entity and such
plan meet such other requirements as
the Secretary specifies in regulations.
``(C) Qualifying entity.--For purposes of
this paragraph, any of the following may be a
qualifying entity:
``(i) Individual hospitals
operating one or more approved medical
residency training programs.
``(ii) Two or more hospitals that
operate such programs and apply for
treatment under this paragraph as a
single qualifying entity.
``(iii) A qualifying consortium (as
described in section 4628 of the
Balanced Budget Act of 1997).
``(D) Residency reduction requirements.--
``(i) Individual hospital
applicants.--In the case of a
qualifying entity described in
subparagraph (C)(i), the number of
full-time equivalent residents in all
the approved medical residency training
programs operated by or through the
entity shall be reduced as follows:
``(I) If the base number of
residents exceeds 750
residents, by a number equal to
at least 20 percent of such
base number.
``(II) Subject to subclause
(IV), if the base number of
residents exceeds 600 but is
less than 750 residents, by 150
residents.
``(III) Subject to
subclause (IV), if the base
number of residents does not
exceed 600 residents, by a
number equal to at least 25
percent of such base number.
``(IV) In the case of a
qualifying entity which is
described in clause (v) and
which elects treatment under
this subclause, by a number
equal to at least 20 percent of
the base number.
``(ii) Joint applicants.--In the
case of a qualifying entity described
in subparagraph (C)(ii), the number of
full-time equivalent residents in the
aggregate for all the approved medical
residency training programs operated by
or through the entity shall be reduced
as follows:
``(I) Subject to subclause
(II), by a number equal to at
least 25 percent of the base
number.
``(II) In the case of such
a qualifying entity which is
described in clause (v) and
which elects treatment under
this subclause, by a number
equal to at least 20 percent of
the base number.
``(iii) Consortia.--In the case of
a qualifying entity described in
subparagraph (C)(iii), the number of
full-time equivalent residents in the
aggregate for all the approved medical
residency training programs operated by
or through the entity shall be reduced
by a number equal to at least 20
percent of the base number.
``(iv) Manner of reduction.--The
reductions specified under the
preceding provisions of this
subparagraph for a qualifying entity
shall be below the base number of
residents for that entity and shall be
fully effective not later than the 5th
residency training year in which the
application under subparagraph (B) is
effective.
``(v) Entities providing assurance
of increase in primary care
residents.--An entity is described in
this clause if--
``(I) the base number of
residents for the entity is
less than 750 or the entity is
described in subparagraph
(C)(ii); and
``(II) the entity
represents in its application
under subparagraph (B) that it
will increase the number of
full-time equivalent residents
in primary care by at least 20
percent (from such number
included in the base number of
residents) by not later than
the 5th residency training year
in which the application under
subparagraph (B) is effective.
If a qualifying entity fails to comply
with the representation described in
subclause (II) by the end of such 5th
residency training year, the entity
shall be subject to repayment of all
amounts paid under this paragraph, in
accordance with procedures established
to carry out subparagraph (F).
``(vi) Base number of residents
defined.--For purposes of this
paragraph, the term `base number of
residents' means, with respect to a
qualifying entity (or its participating
hospitals) operating approved medical
residency training programs, the number
of full-time equivalent residents in
such programs (before application of
weighting factors) of the entity as of
the most recent residency training year
ending before June 30, 1997, or, if
less, for any subsequent residency
training year that ends before the date
the entity makes application under this
paragraph.
``(E) Applicable hold harmless
percentage.--For purposes of subparagraph (A),
the `applicable hold harmless percentage' for
the--
``(i) first and second residency
training years in which the reduction
plan is in effect, 100 percent,
``(ii) third such year, 75 percent,
``(iii) fourth such year, 50
percent, and
``(iv) fifth such year, 25 percent.
``(F) Penalty for noncompliance.--
``(i) In general.--No payment may
be made under this paragraph to a
hospital for a residency training year
if the hospital has failed to reduce
the number of full-time equivalent
residents (in the manner required under
subparagraph (D)) to the number agreed
to by the Secretary and the qualifying
entity in approving the application
under this paragraph with respect to
such year.
``(ii) Increase in number of
residents in subsequent years.--If
payments are made under this paragraph
to a hospital, and if the hospital
increases the number of full-time
equivalent residents above the number
of such residents permitted under the
reduction plan as of the completion of
the plan, then, as specified by the
Secretary, the entity is liable for
repayment to the Secretary of the total
amounts paid under this paragraph to
the entity.
``(G) Treatment of rotating residents.--In
applying this paragraph, the Secretary shall
establish rules regarding the counting of
residents who are assigned to institutions the
medical residency training programs in which
are not covered under approved applications
under this paragraph.''.
(b) Relation to Demonstration Projects and Authority.--
(1) Section 1886(h)(6) of the Social Security Act,
added by subsection (a), other than subparagraph
(F)(ii) thereof, shall not apply to any residency
training program with respect to which a demonstration
project described inparagraph (3) has been approved by
the Health Care Financing Administration as of May 27, 1997.
(2) Effective May 27, 1997, the Secretary of Health
and Human Services is not authorized to approve any
demonstration project described in paragraph (3) for
any residency training year beginning before July 1,
2006.
(3) A demonstration project described in this
paragraph is a project that primarily provides for
additional payments under title XVIII of the Social
Security Act in connection with a reduction in the
number of residents in a medical residency training
program.
(c) Interim, Final Regulations.--In order to carry out the
amendment made by subsection (a) in a timely manner, the
Secretary of Health and Human Services may first promulgate
regulations that take effect on an interim basis, after notice
and pending opportunity for public comment, by not later than 6
months after the date of the enactment of this Act.
SEC. 4627. MEDICARE SPECIAL REIMBURSEMENT RULE FOR PRIMARY CARE
COMBINED RESIDENCY PROGRAMS.
(a) In General.--Section 1886(h)(5)(G) of the Social
Security Act (42 U.S.C. 1395ww(h)(5)(G)) is amended--
(1) in clause (i), by striking ``and (iii)'' and
inserting ``, (iii), and (iv)''; and
(2) by adding at the end the following:
``(iv) Special rule for certain
primary care combined residency
programs.--(I) In the case of a
resident enrolled in a combined medical
residency training program in which all
of the individual programs (that are
combined) are for training a primary
care resident (as defined in
subparagraph (H)), the period of board
eligibility shall be the minimum number
of years of formal training required to
satisfy the requirements for initial
board eligibility in the longest of the
individual programs plus one additional
year.
``(II) A resident enrolled in a
combined medical residency training
program that includes an obstetrics and
gynecology program shall qualify for
the period of board eligibility under
subclause (I) if the other programs
such resident combines with such
obstetrics and gynecology program are
for training a primary care
resident.''.
(b) Effective Date.--The amendments made by subsection (a)
apply to combined medical residency training programs in effect
for residency years beginning on or after July 1, 1997.
SEC. 4628. DEMONSTRATION PROJECT ON USE OF CONSORTIA.
(a) In General.--The Secretary of Health and Human Services
(in this section referred to as the ``Secretary'') shall
establish a demonstration project under which, instead of
making payments to teaching hospitals pursuant to section
1886(h) of the Social Security Act, the Secretary shall make
payments under this section to each consortium that meets the
requirements of subsection (b) and that applies to be included
under the project.
(b) Qualifying Consortia.--For purposes of subsection (a),
a consortium meets the requirements of this subsection if the
consortium is in compliance with the following:
(1) The consortium consists of a teaching hospital
with one or more approved medical residency training
programs and one or more of the following entities:
(A) A school of allopathic medicine or
osteopathic medicine.
(B) Another teaching hospital, which may be
a children's hospital.
(C) A Federally qualified health center.
(D) A medical group practice.
(E) A managed care entity.
(F) An entity furnishing outpatient
services.
(G) Such other entity as the Secretary
determines to be appropriate.
(2) The members of the consortium have agreed to
participate in the programs of graduate medical
education that are operated by the entities in the
consortium.
(3) With respect to the receipt by the consortium
of payments made pursuant to this section, the members
of the consortium have agreed on a method for
allocating the payments among the members.
(4) The consortium meets such additional
requirements as the Secretary may establish.
(c) Amount and Source of Payment.--The total of payments to
a qualifying consortium for a fiscal year pursuant to
subsection (a) shall not exceed the amount that would have been
paid under section 1886 (h) or (k) of the Social Security Act
for the teaching hospital (or hospitals) in the consortium.
Such payments shall be made in such proportion from each of the
trust funds established under title XVIII of such Act as the
Secretary specifies.
SEC. 4629. RECOMMENDATIONS ON LONG-TERM POLICIES REGARDING TEACHING
HOSPITALS AND GRADUATE MEDICAL EDUCATION.
(a) In General.--The Medicare Payment Advisory Commission
(established under section 1805 of the Social Security Act and
in this section referred to as the ``Commission'') shall
examine and develop recommendations on whether and to what
extent medicare payment policies and other Federal policies
regarding teaching hospitals and graduate medical education
should be changed. Such recommendations shall include
recommendations regarding each of the following:
(1) Possible methodologies for making payments for
graduate medical education and the selection of
entities to receive such payments. Matters considered
under this paragraph shall include--
(A) issues regarding children's hospitals
and approved medical residency training
programs in pediatrics, and
(B) whether and to what extent payments are
being made (or should be made) for training in
the nursing and other allied health
professions.
(2) Federal policies regarding international
medical graduates.
(3) The dependence of schools of medicine on
service-generated income.
(4) Whether and to what extent the needs of the
United States regarding the supply of physicians, in
the aggregate and in different specialties, will change
during the 10-year period beginning on October 1, 1997,
and whether and to what extent any such changes will
have significant financial effects on teaching
hospitals.
(5) Methods for promoting an appropriate number,
mix, and geographical distribution of health
professionals.
(b) Consultation.--In conducting the study under subsection
(a), the Commission shall consult with the Council on Graduate
Medical Education and individuals with expertise in the area of
graduate medical education, including--
(1) deans from allopathic and osteopathic schools
of medicine;
(2) chief executive officers (or equivalent
administrative heads) from academic health centers,
integrated health care systems, approved medical
residency training programs, and teaching hospitals
that sponsor approved medical residency training
programs;
(3) chairs of departments or divisions from
allopathic and osteopathic schools of medicine, schools
of dentistry, and approved medical residency training
programs in oral surgery;
(4) individuals with leadership experience from
representative fields of non-physician health
professionals;
(5) individuals with substantial experience in the
study of issues regarding the composition of the health
care workforce of the United States; and
(6) individuals with expertise in health care
payment policies.
(c) Report.--Not later than 2 years after the date of the
enactment of this Act, the Commission shall submit to the
Congress a report providing its recommendations under this
section and the reasons and justifications for such
recommendations.
SEC. 4630. STUDY OF HOSPITAL OVERHEAD AND SUPERVISORY PHYSICIAN
COMPONENTS OF DIRECT MEDICAL EDUCATION COSTS.
(a) In General.--The Secretary of Health and Human Services
shall conduct a study with respect to--
(1) variations among hospitals in the hospital
overhead and supervisory physician components of their
direct medical education costs taken into account under
section 1886(h) of the Social Security Act, and
(2) the reasons for such variations.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Secretary shall report the results
of the study conducted under subsection (a) to the appropriate
committees of Congress, including recommendations for
legislation reducing variations described in subsection (a)
that the Secretary finds inappropriate.
CHAPTER 3--PROVISIONS RELATING TO MEDICARE SECONDARY PAYER
SEC. 4631. PERMANENT EXTENSION AND REVISION OF CERTAIN SECONDARY PAYER
PROVISIONS.
(a) Application to Disabled Individuals in Large Group
Health Plans.--
(1) In general.--Section 1862(b)(1)(B) (42 U.S.C.
1395y(b)(1)(B)) is amended--
(A) in clause (i), by striking ``clause
(iv)'' and inserting ``clause (iii)'';
(B) by striking clause (iii); and
(C) by redesignating clause (iv) as clause
(iii).
(2) Conforming amendments.--Paragraphs (1) through
(3) of section 1837(i) (42 U.S.C. 1395p(i)) and the
second sentence of section 1839(b) (42 U.S.C. 1395r(b))
are each amended by striking ``1862(b)(1)(B)(iv)'' each
place it appears and inserting ``1862(b)(1)(B)(iii)''.
(b) Individuals With End Stage Renal Disease.--Section
1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)) is amended--
(1) in the last sentence by striking ``October 1,
1998'' and inserting ``the date of enactment of the
Balanced Budget Act of 1997''; and
(2) by adding at the end the following: ``Effective
for items and services furnished on or after the date
of enactment of the Balanced Budget Act of 1997, (with
respect to periods beginning on or after the date that
is 18 months prior to such date), clauses (i) and (ii)
shall be applied by substituting `30-month' for `12-
month' each place it appears.''.
(c) IRS-SSA-HCFA Data Match.--
(1) Social security act.--Section 1862(b)(5)(C) (42
U.S.C. 1395y(b)(5)(C)) is amended by striking clause
(iii).
(2) Internal revenue code.--Section 6103(l)(12) of
the Internal Revenue Code of 1986 is amended by
striking subparagraph (F).
SEC. 4632. CLARIFICATION OF TIME AND FILING LIMITATIONS.
(a) Extension of Claims Filing Period.--Section
1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)) is amended by adding
at the end the following new clause:
``(v) Claims-filing period.--
Notwithstanding any other time limits
that may exist for filing a claim under
an employer group health plan, the
United States may seek to recover
conditional payments in accordance with
this subparagraph where the request for
payment is submitted to the entity
required or responsible under this
subsection to pay with respect to the
item or service (or any portion
thereof) under a primary plan within
the 3-year period beginning on the date
on which the item or service was
furnished.''.
(b) Effective Date.--The amendments made by this section
apply to items and services furnished on or after the date of
the enactment of this Act.
SEC. 4633. PERMITTING RECOVERY AGAINST THIRD PARTY ADMINISTRATORS.
(a) Permitting Recovery Against Third Party Administrators
of Primary Plans.-- Section 1862(b)(2)(B)(ii) (42 U.S.C.
1395y(b)(2)(B)(ii)) is amended--
(1) by striking ``under this subsection to pay''
and inserting ``(directly, as a third-party
administrator, or otherwise) to make payment''; and
(2) by adding at the end the following: ``The
United States may not recover from a third-party
administrator under this clause in cases where the
third-party administrator would not be able to recover
the amount at issue from the employer or group health
plan and is not employed by or under contract with the
employer or group health plan at the time the action
for recovery is initiated by the United States or for
whom it provides administrative services due to the
insolvency or bankruptcy of the employer or plan.''.
(b) Clarification of Beneficiary Liability.--Section
1862(b)(1) (42 U.S.C. 1395y(b)(1)) is amended by adding at the
end the following new subparagraph:
``(F) Limitation on beneficiary
liability.--An individual who is entitled to
benefits under this title and is furnished an
item or service for which such benefits are
incorrectly paid is not liable for repayment of
such benefits under this paragraph unless
payment of such benefits was made to the
individual.''.
(c) Effective Date.--The amendments made by this section
apply to items and services furnished on or after the date of
the enactment of this Act.
CHAPTER 4--OTHER PROVISIONS
SEC. 4641. PLACEMENT OF ADVANCE DIRECTIVE IN MEDICAL RECORD.
(a) In General.--Section 1866(f)(1)(B) (42 U.S.C.
1395cc(f)(1)(B)) is amended by striking ``in the individual's
medical record'' and inserting ``in a prominent part of the
individual's current medical record''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to provider agreements entered into, renewed, or
extended on or after such date (not later than 1 year after the
date of the enactment of this Act) as the Secretary of Health
and Human Services specifies.
SEC. 4642. INCREASED CERTIFICATION PERIOD FOR CERTAIN ORGAN PROCUREMENT
ORGANIZATIONS.
Section 1138(b)(1)(A)(ii) (42 U.S.C. 1320b-8(b)(1)(A)(ii))
is amended by striking ``two years'' and inserting ``2 years (4
years if the Secretary determines appropriate for an
organization on the basis of its past practices)''.
SEC. 4643. OFFICE OF THE CHIEF ACTUARY IN THE HEALTH CARE FINANCING
ADMINISTRATION.
Section 1117 (42 U.S.C. 1317) is amended--
(1) in the heading, by inserting ``and chief
actuary'' after ``the administrator'';
(2) by inserting ``(a)'' before ``The
Administrator''; and
(3) by adding at the end the following:
``(b)(1) There is established in the Health Care Financing
Administration the position of Chief Actuary. The Chief Actuary
shall be appointed by, and in direct line of authority to, the
Administrator of such Administration. The Chief Actuary shall
be appointed from among individuals who have demonstrated, by
their education and experience, superior expertise in the
actuarial sciences. The Chief Actuary shall exercise such
duties as are appropriate for the office of the Chief Actuary
and in accordance with professional standards of actuarial
independence. The Chief Actuary may be removed only for cause.
``(2) The Chief Actuary shall be compensated at the highest
rate of basic pay for the Senior Executive Service under
section 5382(b) of title 5, United States Code.''.
SEC. 4644. CONFORMING AMENDMENTS TO COMPLY WITH CONGRESSIONAL REVIEW OF
AGENCY RULEMAKING.
(a) DRG Prospective Payment Rate Methodology.--
(1) In general.--Section 1886(d)(6) (42 U.S.C.
1395ww(d)(6)) is amended by striking ``September 1''
and inserting ``August 1''.
(2) Transition rule for fiscal year 1998.--With
respect to the publication in the Federal Register of
the DRG prospective payment rate methodology under such
section for fiscal year 1998, the term ``60 days'' in
section 801(a)(3)(A) and section 802(a) of title 5,
United States Code, is deemed to be a reference to ``30
days''.
(b) Hospital Payment Updates.--
(1) In general.--Section 1886(e) (42 U.S.C.
1395ww(e) is amended--
(A) in paragraph (5)(A) by striking ``May
1'' and inserting ``April 1''; and
(B) in paragraph (5)(B) by striking
``September 1'' and inserting ``August 1''.
(2) Transition rule for fiscal year 1998.--With
respect to the publication in the Federal Register of
the appropriate change factor for inpatient hospital
services for discharges in fiscal year 1998 under
section 1886(e)(5)(B) (42 U.S.C. 1395ww(e)(5)(B)), the
term ``60 days'' in section 801(a)(3)(A) and section
802(a) of title 5, United States Code, is deemed to be
a reference to ``30 days''.
(c) Applications for Geographic Reclassification.--
(1) In general.--Section 1886(d)(10)(C) (42 U.S.C.
1395ww(d)(10)(C)) is amended in clause (ii), by
striking ``the first day of the preceding fiscal
year.'' and inserting ``the first day of the 13-month
period ending on September 30 of the preceding fiscal
year.''
(2) Special rule for applications received in
fiscal year 1997.--In the case of an application for a
change in geographic classification under such section
for fiscal year 1999, the Secretary of Health and Human
Services shall shorten the deadlines under such section
so as to permit completion of a final decision by the
Secretary by June 15, 1998.
(d) Physician Fee Schedule.--Section 1848(b)(1) (42 U.S.C.
1395w-4(b)(1)) is amended by striking ``Before January 1 of
each year beginning with 1992'' and inserting ``Before November
1 of the preceding year, for each year beginning with 1998''.
Subtitle H--Medicaid
CHAPTER 1--MANAGED CARE
SEC. 4701. STATE OPTION OF USING MANAGED CARE; CHANGE IN TERMINOLOGY.
(a) Use of Managed Care Generally.--Title XIX is amended by
redesignating section 1932 as section 1933 and by inserting
after section 1931 the following new section:
``provisions relating to managed care
``Sec. 1932. (a) State Option To Use Managed Care.--
``(1) Use of medicaid managed care organizations
and primary care case managers.--
``(A) In general.--Subject to the
succeeding provisions of this section, and
notwithstanding paragraph (1), (10)(B), or
(23)(A) of section 1902(a), a State--
``(i) may require an individual who
is eligible for medical assistance
under the State plan under this title
to enroll with a managed care entity as
a condition of receiving such
assistance (and, with respect to
assistance furnished by or under
arrangements with such entity, to
receive such assistance through the
entity), if--
``(I) the entity and the
contract with the State meet
the applicable requirements of
this section and section
1903(m) or section 1905(t), and
``(II) the requirements
described in the succeeding
paragraphs of this subsection
are met; and
``(ii) may restrict the number of
provider agreements with managed care
entities under the State plan if such
restriction does not substantially
impair access to services.
``(B) Definition of managed care entity.--
In this section, the term `managed care entity'
means--
``(i) a medicaid managed care
organization, as defined in section
1903(m)(1)(A), that provides or
arranges for services for enrollees
under a contract pursuant to section
1903(m); and
``(ii) a primary care case manager,
as defined in section 1905(t)(2).
``(2) Special rules.--
``(A) Exemption of certain children with
special needs.--A State may not require under
paragraph (1) the enrollment in a managed care
entity of an individual under 19 years of age
who--
``(i) is eligible for supplemental
security income under title XVI;
``(ii) is described in section
501(a)(1)(D);
``(iii) is described in section
1902(e)(3);
``(iv) is receiving foster care or
adoption assistance under part E of
title IV; or
``(v) is in foster care or
otherwise in an out-of-home placement.
``(B) Exemption of medicare
beneficiaries.--A State may not require under
paragraph (1) the enrollment in a managed care
entity of an individual who is a qualified
medicare beneficiary (as defined in section
1905(p)(1)) or an individual otherwise eligible
for benefits under title XVIII.
``(C) Indian enrollment.--A State may not
require under paragraph (1) the enrollment in a
managed care entity of an individual who is an
Indian (as defined in section 4(c) of the
Indian Health Care Improvement Act of 1976 (25
U.S.C. 1603(c)) unless the entity is one of the
following (and only if such entity is
participating under the plan):
``(i) The Indian Health Service.
``(ii) An Indian health program
operated by an Indian tribe or tribal
organization pursuant to a contract,
grant, cooperative agreement, or
compact with the Indian Health Service
pursuant to the Indian Self-
Determination Act (25 U.S.C. 450 et
seq.).
``(iii) An urban Indian health
program operated by an urban Indian
organization pursuant to a grant or
contract with the Indian Health Service
pursuant to title V of the Indian
Health Care Improvement Act (25 U.S.C.
1601 et seq.).
``(3) Choice of coverage.--
``(A) In general.--A State must permit an
individual to choose a managed care entity from
not less than two such entities that meet the
applicable requirements of this section, and of
section 1903(m) or section 1905(t).
``(B) State option.--At the option of the
State, a State shall be considered to meet the
requirements of subparagraph (A) in the case of
an individual residing in a rural area, if the
State requires the individual to enroll with a
managed care entity if such entity--
``(i) permits the individual to
receive such assistance through not
less than two physicians or case
managers (to the extent that at least
two physicians or case managers are
available to provide such assistance in
the area), and
``(ii) permits the individual to
obtain such assistance from any other
provider in appropriate circumstances
(as established by the State under
regulations of the Secretary).
``(C) Treatment of certain county-operated
health insuring organizations.--A State shall
be considered to meet the requirement of
subparagraph (A) if--
``(i) the managed care entity in
which the individual is enrolled is a
health-insuring organization which--
``(I) first became
operational prior to January 1,
1986, or
``(II) is described in
section 9517(c)(3) of the
Omnibus Budget Reconciliation
Act of 1985 (as added by
section 4734(2) of the Omnibus
Budget Reconciliation Act of
1990), and
``(ii) the individual is given a
choice between at least two providers
within such entity.
``(4) Process for enrollment and termination and
change of enrollment.--As conditions under paragraph
(1)(A)--
``(A) In general.--The State, enrollment
broker (if any), and managed care entity shall
permit an individual eligible for medical
assistance under the State plan under this
title who is enrolled with the entity under
this title to terminate (or change) such
enrollment--
``(i) for cause at any time
(consistent with section
1903(m)(2)(A)(vi)), and
``(ii) without cause--
``(I) during the 90-day
period beginning on the date
the individual receives notice
of such enrollment, and
``(II) at least every 12
months thereafter.
``(B) Notice of termination rights.--The
State shall provide for notice to each such
individual of the opportunity to terminate (or
change) enrollment under such conditions. Such
notice shall be provided at least 60 days
before each annual enrollment opportunity
described in subparagraph (A)(ii)(II).
``(C) Enrollment priorities.--In carrying
out paragraph (1)(A), the State shall establish
a method for establishing enrollment priorities
in the case of a managed care entity that does
not have sufficient capacity to enroll all such
individuals seeking enrollment under which
individuals already enrolled with the entity
are given priority in continuing enrollment
with the entity.
``(D) Default enrollment process.--In
carrying out paragraph (1)(A), the State shall
establish a default enrollment process--
``(i) under which any such
individual who does not enroll with a
managed care entity during the
enrollment period specified by the
State shall be enrolled by the State
with such an entity which has not been
found to be out of substantial
compliance with the applicable
requirements of this section and of
section 1903(m) or section 1905(t); and
``(ii) that takes into
consideration--
``(I) maintaining existing
provider-individual
relationships or relationships
with providers that have
traditionally served
beneficiaries under this title;
and
``(II) if maintaining such
provider relationships is not
possible, the equitable
distribution of such
individuals among qualified
managed care entities available
to enroll such individuals,
consistent with the enrollment
capacities of the entities.
``(5) Provision of information.--
``(A) Information in easily understood
form.--Each State, enrollment broker, or
managed care entity shall provide all
enrollment notices and informational and
instructional materials relating to such an
entity under this title in a manner and form
which may be easily understood by enrollees and
potential enrollees of the entity who are
eligible for medical assistance under the State
plan under this title.
``(B) Information to enrollees and
potential enrollees.--Each managed care entity
that is a medicaid managed care organization
shall, upon request, make available to
enrollees and potential enrollees in the
organization's service area information
concerning the following:
``(i) Providers.--The identity,
locations, qualifications, and
availability of health care providers
that participate with the organization.
``(ii) Enrollee rights and
responsibilities.--The rights and
responsibilities of enrollees.
``(iii) Grievance and appeal
procedures.--The procedures available
to an enrollee and a health care
provider to challenge or appeal the
failure of the organization to cover a
service.
``(iv) Information on covered items
and services.--All items and services
that are available to enrollees under
the contract between the State and the
organization that are covered either
directly or through a method of
referral and prior authorization. Each
managed care entity that is a primary
care case manager shall, upon request,
make available to enrollees and
potential enrollees in the
organization's service area the
information described in clause (iii).
``(C) Comparative information.--A State
that requires individuals to enroll with
managed care entities under paragraph (1)(A)
shall annually (and upon request) provide,
directly or through the managed care entity, to
such individuals a list identifying the managed
care entities that are (or will be) available
and information (presented in a comparative,
chart-like form) relating to the following for
each such entity offered:
``(i) Benefits and cost-sharing.--
The benefits covered and cost-sharing
imposed by the entity.
``(ii) Service area.--The service
area of the entity.
``(iii) Quality and performance.--
To the extent available, quality and
performance indicators for the benefits
under the entity.
``(D) Information on benefits not covered
under managed care arrangement.--A State,
directly or through managed care entities,
shall, on or before an individual enrolls with
such an entity under this title, inform the
enrollee in a written and prominentmanner of
any benefits to which the enrollee may be entitled to under this title
but which are not made available to the enrollee through the entity.
Such information shall include information on where and how such
enrollees may access benefits not made available to the enrollee
through the entity.''.
(b) Change in Terminology.--
(1) In general.--Section 1903(m)(1)(A) (42 U.S.C.
1396b(m)) is amended--
(A) by striking ``The term'' and all that
follows through ``and--'' and inserting ``The
term `medicaid managed care organization' means
a health maintenance organization, an eligible
organization with a contract under section 1876
or a Medicare+Choice organization with a
contract under part C of title XVIII, a
provider sponsored organization, or any other
public or private organization, which meets the
requirement of section 1902(w) and--''; and
(B) by adding after and below clause (ii)
the following:
``An organization that is a qualified health maintenance
organization (as defined in section 1310(d) of the Public
Health Service Act) is deemed to meet the requirements of
clauses (i) and (ii).''.
(2) Conforming changes in terminology.--(A) Each of
the following provisions is amended by striking
``health maintenance organization'' and inserting
``medicaid managed care organization'':
(i) Section 1902(a)(23) (42 U.S.C.
1396a(a)(23)).
(ii) Section 1902(a)(57) (42 U.S.C.
1396a(a)(57)).
(iii) Section 1902(p)(2) (42 U.S.C.
1396a(p)(2)).
(iv) Section 1902(w)(2)(E) (42 U.S.C.
1396a(w)(2)(E)).
(v) Section 1903(k) (42 U.S.C. 1396b(k)).
(vi) In section 1903(m)(1)(B).
(vii) In subparagraphs (A)(i) and (H)(i) of
section 1903(m)(2) (42 U.S.C. 1396b(m)(2)).
(viii) Section 1903(m)(4)(A) (42 U.S.C.
1396b(m)(4)(A)), the first place it appears.
(ix) Section 1925(b)(4)(D)(iv) (42 U.S.C.
1396r-6(b)(4)(D)(iv)).
(x) Section 1927(j)(1) (42 U.S.C. 1396r-
8(j)(1)) is amended by striking ``***Health
Maintenance Organizations, including those
organizations'' and inserting ``health
maintenance organizations, including medicaid
managed care organizations''.
(B) Section 1903(m)(2)(H) (42 U.S.C.
1396b(m)(2)(H)) is amended, in the matter following
clause (iii), by striking ``health maintenance''.
(C) Clause (viii) of section 1903(w)(7)(A) (42
U.S.C. 1396b(w)(7)(A)) is amended to read as follows:
``(viii) Services of a medicaid
managed care organization with a
contract under section 1903(m).''.
(D) Section 1925(b)(4)(D)(iv) (42 U.S.C. 1396r-
6(b)(4)(D)(iv)) is amended--
(i) in the heading, by striking ``hmo'' and
inserting ``medicaid managed care
organization''; and
(ii) by inserting ``and the applicable
requirements of section 1932'' before the
period at the end.
(c) Compliance of Contract With New Requirements.--Section
1903(m)(2)(A) (42 U.S.C. 1396b(m)(2)(A)) is amended--
(1) by striking ``and'' at the end of clause (x),
(2) by striking the period at the end of clause
(xi) and inserting ``; and''; and
(3) by adding at the end the following:
``(xi) such contract, and the entity complies with
the applicable requirements of section 1932.''.
(d) Conforming Amendments to Freedom-of-Choice and
Termination of Enrollment Requirements.--
(1) Section 1902(a)(23) (42 U.S.C. 1396a(a)(23)),
as amended by section 4724(d), is amended by striking
``and in section 1915'' and inserting ``, in section
1915, and in section 1932(a)''.
(2) Section 1903(m)(2) (42 U.S.C. 1396b(m)(2)) is
amended--
(A) in paragraph (A)(vi)--
(i) by striking ``except as
provided under subparagraph (F),'',
(ii) by striking ``without cause''
and all that follows through ``for such
termination'' and inserting ``in
accordance with section 1932(a)(4);'',
(iii) by inserting ``in accordance
with such section'' after ``provides
for notification''; and
(B) by striking subparagraph (F).
SEC. 4702. PRIMARY CARE CASE MANAGEMENT SERVICES AS STATE OPTION
WITHOUT NEED FOR WAIVER.
(a) In General.--Section 1905 (42 U.S.C. 1396d) is
amended--
(1) in subsection (a)--
(A) by striking ``and'' at the end of
paragraph (24);
(B) by redesignating paragraph (25) as
paragraph (26) and by striking the period at
the end of such paragraph and inserting a
comma; and
(C) by inserting after paragraph (24) the
following new paragraph:
``(25) primary care case management services (as
defined in subsection (t)); and''; and
(2) by adding at the end the following new
subsection:
``(t)(1) The term `primary care case management services'
means case-management related services (including locating,
coordinating, and monitoring of health care services) provided
by a primary care case manager under a primary care case
management contract.
``(2) The term `primary care case manager' means any of the
following that provides services of the type described in
paragraph (1) under a contract referred to in such paragraph:
``(A) A physician, a physician group practice, or
an entity employing or having other arrangements with
physicians to provide such services.
``(B) At State option--
``(i) a nurse practitioner (as described in
section 1905(a)(21));
``(ii) a certified nurse-midwife (as
defined in section 1861(gg)); or
``(iii) a physician assistant (as defined
in section 1861(aa)(5)).
``(3) The term `primary care case management contract'
means a contract between a primary care case manager and a
State under which the manager undertakes to locate, coordinate,
and monitor covered primary care (and such other covered
services as may be specified under the contract) to all
individuals enrolled with the manager, and which--
``(A) provides for reasonable and adequate hours of
operation, including 24-hour availability of
information, referral, and treatment with respect to
medical emergencies;
``(B) restricts enrollment to individuals residing
sufficiently near a service delivery site of the
manager to be able to reach that site within a
reasonable time using available and affordable modes of
transportation;
``(C) provides for arrangements with, or referrals
to, sufficient numbers of physicians and other
appropriate health care professionals to ensure that
services under the contract can be furnished to
enrollees promptly and without compromise to quality of
care;
``(D) prohibits discrimination on the basis of
health status or requirements for health care services
in enrollment, disenrollment, or reenrollment of
individuals eligible for medical assistance under this
title;
``(E) provides for a right for an enrollee to
terminate enrollment in accordance with section
1932(a)(4); and
``(F) complies with the other applicable provisions
of section 1932.
``(4) For purposes of this subsection, the term `primary
care' includes all health care services customarily provided in
accordance with State licensure and certification laws and
regulations, and all laboratory services customarily provided
by or through, a general practitioner, family medicine
physician, internal medicine physician, obstetrician/
gynecologist, or pediatrician.''.
(b) Conforming Amendments.--
(1) Application of reenrollment provisions to
pccms.--Section 1903(m)(2)(H) (42 U.S.C.
1396b(m)(2)(H)) is amended--
(A) in clause (i), by inserting before the
comma the following: ``or with a primary care
case manager with a contract described in
section 1905(t)(3)''; and
(B) by inserting before the period at the
end the following: ``or with the manager
described in such clause if the manager
continues to have a contract described in
section 1905(t)(3) with the State''.
(2) Conforming cross-reference.--Section 1902(j)
(42 U.S.C. 1396a(j)) is amended by striking
``paragraphs (1) through (25)'' and inserting ``a
numbered paragraph of''.
SEC. 4703. ELIMINATION OF 75:25 RESTRICTION ON RISK CONTRACTS.
(a) In General.--Section 1903(m)(2)(A) (42 U.S.C.
1396b(m)(2)(A)) is amended by striking clause (ii).
(b) Conforming Amendments.--
(1) Section 1903(m)(2) (42 U.S.C. 1396b(m)(2)) is
amended--
(A) by striking subparagraphs (C), (D), and
(E); and
(B) in subparagraph (G), by striking
``clauses (i) and (ii)'' and inserting ``clause
(i)''.
(2) Section 1925(b)(4)(D)(iv) (42 U.S.C. 1396r-
6(b)(4)(D)(iv)) is amended by striking ``less than 50
percent'' and all that follows up to the period at the
end.
SEC. 4704. INCREASED BENEFICIARY PROTECTIONS.
(a) In General.--Section 1932, as added by section 4701(a),
is amended by adding at the end the following:
``(b) Beneficiary Protections.--
``(1) Specification of benefits.--Each contract
with a managed care entity under section 1903(m) or
under section 1905(t)(3) shall specify the benefits the
provision (or arrangement) for which the entity is
responsible.
``(2) Assuring coverage to emergency services.--
``(A) In general.--Each contract with a
medicaid managed care organization under
section 1903(m) and each contract with a
primary care case manager under section
1905(t)(3) shall require the organization or
manager--
``(i) to provide coverage for
emergency services (as defined in
subparagraph (B)) without regard to
prior authorization or the emergency
care provider's contractual
relationship with the organization or
manager, and
``(ii) to comply with guidelines
established under section 1852(d)(2)
(respecting coordination of post-
stabilization care) in the same manner
as such guidelines apply to
Medicare+Choice plans offered under
part C of title XVIII.
The requirement under clause (ii) shall first
apply 30 days after the date of promulgation of
the guidelines referred to in such clause.
``(B) Emergency services defined.--In
subparagraph (A)(i), the term `emergency
services' means, with respect to an individual
enrolled with an organization, covered
inpatient and outpatient services that--
``(i) are furnished by a provider
that is qualified to furnish such
services under this title, and
``(ii) are needed to evaluate or
stabilize an emergency medical
condition (as defined in subparagraph
(C)).
``(C) Emergency medical condition
defined.--In subparagraph (B)(ii), the term
`emergency medical condition' means a medical
condition manifesting itself by acute symptoms
of sufficient severity (including severe pain)
such that a prudent layperson, who possesses an
average knowledge of health and medicine, could
reasonably expect the absence of immediate
medical attention to result in--
``(i) placing the health of the
individual (or, with respect to a
pregnant woman, the health of the woman
or her unborn child) in serious
jeopardy,
``(ii) serious impairment to bodily
functions, or
``(iii) serious dysfunction of any
bodily organ or part.
``(3) Protection of enrollee-provider
communications.--
``(A) In general.--Subject to subparagraphs
(B) and (C), under a contract under section
1903(m) a medicaid managed care organization
(in relation to an individual enrolled under
the contract) shall not prohibit or otherwise
restrict a covered health care professional (as
defined in subparagraph (D)) from advising such
an individual who is a patient of the
professional about the health status of the
individual or medical care or treatment for the
individual's condition or disease, regardless
of whether benefits for such care or treatment
are provided under the contract, if the
professional is acting within the lawful scope
of practice.
``(B) Construction.--Subparagraph (A) shall
not be construed as requiring a medicaid
managed care organization to provide, reimburse
for, or provide coverage of, a counseling or
referral service if the organization--
``(i) objects to the provision of
such service on moral or religious
grounds; and
``(ii) in the manner and through
the written instrumentalities such
organization deems appropriate, makes
available information on its policies
regarding such service to prospective
enrollees before or during enrollment
and to enrollees within 90 days after
the date that the organization adopts a
change in policy regarding such a
counseling or referral service.
Nothing in this subparagraph shall be construed
to affect disclosure requirements under State
law or under the Employee Retirement Income
Security Act of 1974.
``(C) Health care professional defined.--
For purposes of this paragraph, the term
`health care professional' means a physician
(as defined in section 1861(r)) or other health
care professional if coverage for the
professional's services is provided under the
contract referred to in subparagraph (A) for
the services of the professional. Such term
includes a podiatrist, optometrist,
chiropractor, psychologist, dentist, physician
assistant, physical or occupational therapist
and therapy assistant, speech-language
pathologist, audiologist, registered or
licensed practical nurse (including nurse
practitioner, clinical nurse specialist,
certified registered nurse anesthetist, and
certified nurse-midwife), licensed certified
social worker, registered respiratory
therapist, and certified respiratory therapy
technician.
``(4) Grievance procedures.--Each medicaid managed
care organization shall establish an internal grievance
procedure under which an enrollee who is eligible for
medical assistance under the State plan under this
title, or a provider on behalf of such an enrollee, may
challenge the denial of coverage of or payment for such
assistance.
``(5) Demonstration of adequate capacity and
services.--Each medicaid managed care organizationshall
provide the State and the Secretary with adequate assurances (in a time
and manner determined by the Secretary) that the organization, with
respect to a service area, has the capacity to serve the expected
enrollment in such service area, including assurances that the
organization--
``(A) offers an appropriate range of
services and access to preventive and primary
care services for the population expected to be
enrolled in such service area, and
``(B) maintains a sufficient number, mix,
and geographic distribution of providers of
services.
``(6) Protecting enrollees against liability for
payment.--Each medicaid managed care organization shall
provide that an individual eligible for medical
assistance under the State plan under this title who is
enrolled with the organization may not be held liable--
``(A) for the debts of the organization, in
the event of the organization's insolvency,
``(B) for services provided to the
individual--
``(i) in the event of the
organization failing to receive payment
from the State for such services; or
``(ii) in the event of a health
care provider with a contractual,
referral, or other arrangement with the
organization failing to receive payment
from the State or the organization for
such services, or
``(C) for payments to a provider that
furnishes covered services under a contractual,
referral, or other arrangement with the
organization in excess of the amount that would
be owed by the individual if the organization
had directly provided the services.
``(7) Antidiscrimination.--A medicaid managed care
organization shall not discriminate with respect to
participation, reimbursement, or indemnification as to
any provider who is acting within the scope of the
provider's license or certification under applicable
State law, solely on the basis of such license or
certification. This paragraph shall not be construed to
prohibit an organization from including providers only
to the extent necessary to meet the needs of the
organization's enrollees or from establishing any
measure designed to maintain quality and control costs
consistent with the responsibilities of the
organization.
``(8) Compliance with certain maternity and mental
health requirements.--Each medicaid managed care
organization shall comply with the requirements of
subpart 2 of part A of title XXVII of the Public Health
Service Act insofar as such requirements apply and are
effective with respect to a health insurance issuer
that offers group health insurance coverage.''.
(b) Protection of Enrollees Against Balance Billing Through
Subcontractors.--Section 1128B(d)(1) (42 U.S.C. 1320a-7b(d)(1))
is amended by inserting ``(or, in the case of services provided
to an individual enrolled with a medicaid managed care
organization under title XIX under a contract under section
1903(m) or under a contractual, referral, or other arrangement
under such contract, at a rate in excess of the rate permitted
under such contract)'' before the comma at the end.
SEC. 4705. QUALITY ASSURANCE STANDARDS.
(a) In General.--Section 1932 is further amended by adding
at the end the following:
``(c) Quality Assurance Standards.--
``(1) Quality assessment and improvement
strategy.--
``(A) In general.--If a State provides for
contracts with medicaid managed care
organizations under section 1903(m), the State
shall develop and implement a quality
assessment and improvement strategy consistent
with this paragraph. Such strategy shall
include the following:
``(i) Access standards.--Standards
for access to care so that covered
services are availablewithin reasonable
timeframes and in a manner that ensures continuity of care and adequate
primary care and specialized services capacity.
``(ii) Other measures.--Examination
of other aspects of care and service
directly related to the improvement of
quality of care (including grievance
procedures and marketing and
information standards).
``(iii) Monitoring procedures.--
Procedures for monitoring and
evaluating the quality and
appropriateness of care and services to
enrollees that reflect the full
spectrum of populations enrolled under
the contract and that includes
requirements for provision of quality
assurance data to the State using the
data and information set that the
Secretary has specified for use under
part C of title XVIII or such
alternative data as the Secretary
approves, in consultation with the
State.
``(iv) Periodic review.--Regular,
periodic examinations of the scope and
content of the strategy.
``(B) Standards.--The strategy developed
under subparagraph (A) shall be consistent with
standards that the Secretary first establishes
within 1 year after the date of the enactment
of this section. Such standards shall not
preempt any State standards that are more
stringent than such standards. Guidelines
relating to quality assurance that are applied
under section 1915(b)(1) shall apply under this
subsection until the effective date of
standards for quality assurance established
under this subparagraph.
``(C) Monitoring.--The Secretary shall
monitor the development and implementation of
strategies under subparagraph (A).
``(D) Consultation.--The Secretary shall
conduct activities under subparagraphs (B) and
(C) in consultation with the States.
``(2) External independent review of managed care
activities.--
``(A) Review of contracts.--
``(i) In general.--Each contract
under section 1903(m) with a medicaid
managed care organization shall provide
for an annual (as appropriate) external
independent review conducted by a
qualified independent entity of the
quality outcomes and timeliness of, and
access to, the items and services for
which the organization is responsible
under the contract. The requirement for
such a review shall not apply until
after the date that the Secretary
establishes the identification method
described in clause (ii).
``(ii) Qualifications of
reviewer.--The Secretary, in
consultation with the States, shall
establish a method for the
identification of entities that are
qualified to conduct reviews under
clause (i).
``(iii) Use of protocols.--The
Secretary, in coordination with the
National Governors' Association, shall
contract with an independent quality
review organization (such as the
National Committee for Quality
Assurance) to develop the protocols to
be used in external independent reviews
conducted under this paragraph on and
after January 1, 1999.
``(iv) Availability of results.--
The results of each external
independent review conducted under this
subparagraph shall be available to
participating health care providers,
enrollees, and potential enrollees of
the organization, except that the
results may not be made available in a
manner that discloses the identity of
any individual patient.
``(B) Nonduplication of accreditation.--A
State may provide that, in the case of a
medicaid managed care organization that is
accredited by a privateindependent entity (such
as those described in section 1852(e)(4)) or that has an external
review conducted under section 1852(e)(3), the external review
activities conducted under subparagraph (A) with respect to the
organization shall not be duplicative of review activities conducted as
part of the accreditation process or the external review conducted
under such section.
``(C) Deemed compliance for medicare
managed care organizations.--At the option of a
State, the requirements of subparagraph (A)
shall not apply with respect to a medicaid
managed care organization if the organization
is an eligible organization with a contract in
effect under section 1876 or a Medicare+Choice
organization with a contract in effect under C
of title XVIII and the organization has had a
contract in effect under section 1903(m) at
least during the previous 2-year period.
(b) Increased FFP for External Quality Review
Organizations.--Section 1903(a)(3)(C) (42 U.S.C.
1396b(a)(3)(C)) is amended--
(1) by inserting ``(i)'' after ``(C)'', and
(2) by adding at the end the following new clause:
``(ii) 75 percent of the sums expended with
respect to costs incurred during such quarter
(as found necessary by the Secretary for the
proper and efficient administration of the
State plan) as are attributable to the
performance of independent external reviews
conducted under section 1932(c)(2); and''.
(c) Studies and Reports.--
(1) GAO study and report on quality assurance and
accreditation standards.--
(A) Study.--The Comptroller General of the
United States shall conduct a study and
analysis of the quality assurance programs and
accreditation standards applicable to managed
care entities operating in the private sector,
or to such entities that operate under
contracts under the medicare program under
title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.). Such study shall
determine--
(i) if such programs and standards
include consideration of the
accessibility and quality of the health
care items and services delivered under
such contracts to low-income
individuals; and
(ii) the appropriateness of
applying such programs and standards to
medicaid managed care organizations
under section 1932(c) of such Act.
(B) Report.--The Comptroller General shall
submit a report to the Committee on Commerce of
the House of Representatives and the Committee
on Finance of the Senate on the study conducted
under subparagraph (A).
(2) Study and report on services provided to
individuals with special health care needs.--
(A) Study.--The Secretary of Health and
Human Services, in consultation with States,
managed care organizations, the National
Academy of State Health Policy, representatives
of beneficiaries with special health care
needs, experts in specialized health care, and
others, shall conduct a study concerning
safeguards (if any) that may be needed to
ensure that the health care needs of
individuals with special health care needs and
chronic conditions who are enrolled with
medicaid managed care organizations are
adequately met.
(B) Report.--Not later than 2 years after
the date of the enactment of this Act, the
Secretary shall submit to Committees described
in paragraph (1)(B) a report on such study.
SEC. 4706. SOLVENCY STANDARDS.
Section 1903(m)(1) (42 U.S.C. 1396b(m)(1)) is amended--
(1) in subparagraph (A)(ii), by inserting ``, meets
the requirements of subparagraph (C)(i) (if
applicable),'' after ``provision is satisfactory to the
State'', and
(2) by adding at the end the following:
``(C)(i) Subject to clause (ii), a provision meets the
requirements of this subparagraph for an organization if the
organization meets solvency standards established by the State
for private health maintenance organizations or is licensed or
certified by the State as a risk-bearing entity.
``(ii) Clause (i) shall not apply to an organization if--
``(I) the organization is not responsible for the
provision (directly or through arrangements with
providers of services) of inpatient hospital services
and physicians' services;
``(II) the organization is a public entity;
``(III) the solvency of the organization is
guaranteed by the State; or
``(IV) the organization is (or is controlled by)
one or more Federally-qualified health centers and
meets solvency standards established by the State for
such an organization.
For purposes of subclause (IV), the term `control' means the
possession, whether direct or indirect, of the power to direct
or cause the direction of the management and policies of the
organization through membership, board representation, or an
ownership interest equal to or greater than 50.1 percent.''.
SEC. 4707. PROTECTIONS AGAINST FRAUD AND ABUSE.
(a) In General.--Section 1932 (42 U.S.C. 1396v) is further
amended by adding at the end the following:
``(d) Protections Against Fraud and Abuse.--
``(1) Prohibiting affiliations with individuals
debarred by Federal agencies.--
``(A) In general.--A managed care entity
may not knowingly--
``(i) have a person described in
subparagraph (C) as a director,
officer, partner, or person with
beneficial ownership of more than 5
percent of the entity's equity, or
``(ii) have an employment,
consulting, or other agreement with a
person described in such subparagraph
for the provision of items and services
that are significant and material to
the entity's obligations under its
contract with the State.
``(B) Effect of noncompliance.--If a State
finds that a managed care entity is not in
compliance with clause (i) or (ii) of
subparagraph (A), the State--
``(i) shall notify the Secretary of
such noncompliance;
``(ii) may continue an existing
agreement with the entity unless the
Secretary (in consultation with the
Inspector General of the Department of
Health and Human Services) directs
otherwise; and
``(iii) may not renew or otherwise
extend the duration of an existing
agreement with the entity unless the
Secretary (in consultation with the
Inspector General of the Department of
Health and Human Services) provides to
the State and to Congress a written
statement describing compelling reasons
that exist for renewing or extending
the agreement.
``(C) Persons described.--A person is
described in this subparagraph if such person--
``(i) is debarred, suspended, or
otherwise excluded from participating
in procurement activities under the
Federal Acquisition Regulation or from
participating in nonprocurement
activities under regulations issued
pursuant to Executive Order No. 12549
or under guidelines implementing such
order; or
``(ii) is an affiliate (as defined
in such Act) of a person described in
clause (i).
``(2) Restrictions on marketing.--
``(A) Distribution of materials.--
``(i) In general.--A managed care
entity, with respect to activities
under this title, may not distribute
directly or through any agent or
independent contractor marketing
materials within any State--
``(I) without the prior
approval of the State, and
``(II) that contain false
or materially misleading
information.
The requirement of subclause (I) shall
not apply with respect to a State until
such date as the Secretary specifies in
consultation with such State.
``(ii) Consultation in review of
market materials.--In the process of
reviewing and approving such materials,
the State shall provide for
consultation with a medical care
advisory committee.
``(B) Service market.--A managed care
entity shall distribute marketing materials to
the entire service area of such entity covered
under the contract under section 1903(m) or
section 1903(t)(3).
``(C) Prohibition of tie-ins.--A managed
care entity, or any agency of such entity, may
not seek to influence an individual's
enrollment with the entity in conjunction with
the sale of any other insurance.
``(D) Prohibiting marketing fraud.--Each
managed care entity shall comply with such
procedures and conditions as the Secretary
prescribes in order to ensure that, before an
individual is enrolled with the entity, the
individual is provided accurate oral and
written information sufficient to make an
informed decision whether or not to enroll.
``(E) Prohibition of `cold-call'
marketing.--Each managed care entity shall not,
directly or indirectly, conduct door-to-door,
telephonic, or other `cold-call' marketing of
enrollment under this title.
``(3) State conflict-of-interest safeguards in
medicaid risk contracting.--A medicaid managed care
organization may not enter into a contract with any
State under section 1903(m) unless the State has in
effect conflict-of-interest safeguards with respect to
officers and employees of the State with
responsibilities relating to contracts with such
organizations or to the default enrollment process
described in subsection (a)(4)(C)(ii) that are at least
as effective as the Federal safeguards provided under
section 27 of the Office of Federal Procurement Policy
Act (41 U.S.C. 423), against conflicts of interest that
apply with respect to Federal procurement officials
with comparable responsibilities with respect to such
contracts.
``(4) Use of unique physician identifier for
participating physicians.--Each medicaid managed care
organization shall require each physician providing
services to enrollees eligible for medical assistance
under the State plan under this title to have a unique
identifier in accordance with the system established
under section 1173(b).
``(e) Sanctions for Noncompliance.--
``(1) Use of intermediate sanctions by the state to
enforce requirements.--
``(A) In general.--A State may not enter
into or renew a contract under section 1903(m)
unless the State has established intermediate
sanctions, which may include any of the types
described in paragraph (2), other than the
termination of a contract with a medicaid
managed care organization, which the State may
impose against a medicaid managed care
organization with such a contract, if the
organization--
``(i) fails substantially to
provide medically necessary items and
services that are required (under law
or under such organization's contract
with the State) to be provided to an
enrollee covered under the contract;
``(ii) imposes premiums or charges
on enrollees in excess of the premiums
or charges permitted under this title;
``(iii) acts to discriminate among
enrollees on the basis of their health
status or requirements for health care
services, including expulsion or
refusal to reenroll an individual,
except as permitted by this title, or
engaging in any practice that
wouldreasonably be expected to have the effect of denying or
discouraging enrollment with the organization by eligible individuals
whose medical condition or history indicates a need for substantial
future medical services;
``(iv) misrepresents or falsifies
information that is furnished--
``(I) to the Secretary or
the State under this title; or
``(II) to an enrollee,
potential enrollee, or a health
care provider under such title;
or
``(v) fails to comply with the
applicable requirements of section
1903(m)(2)(A)(x).
The State may also impose such intermediate
sanction against a managed care entity if the
State determines that the entity distributed
directly or through any agent or independent
contractor marketing materials in violation of
subsection (d)(2)(A)(i)(II).
``(B) Rule of construction.--Clause (i) of
subparagraph (A) shall not apply to the
provision of abortion services, except that a
State may impose a sanction on any medicaid
managed care organization that has a contract
to provide abortion services if the
organization does not provide such services as
provided for under the contract.
``(2) Intermediate sanctions.--The sanctions
described in this paragraph are as follows:
``(A) Civil money penalties as follows:
``(i) Except as provided in clause
(ii), (iii), or (iv), not more than
$25,000 for each determination under
paragraph (1)(A).
``(ii) With respect to a
determination under clause (iii) or
(iv)(I) of paragraph (1)(A), not more
than $100,000 for each such
determination.
``(iii) With respect to a
determination under paragraph
(1)(A)(ii), double the excess amount
charged in violation of such subsection
(and the excess amount charged shall be
deducted from the penalty and returned
to the individual concerned).
``(iv) Subject to clause (ii), with
respect to a determination under
paragraph (1)(A)(iii), $15,000 for each
individual not enrolled as a result of
a practice described in such
subsection.
``(B) The appointment of temporary
management--
``(i) to oversee the operation of
the medicaid managed care organization
upon a finding by the State that there
is continued egregious behavior by the
organization or there is a substantial
risk to the health of enrollees; or
``(ii) to assure the health of the
organization's enrollees, if there is a
need for temporary management while--
``(I) there is an orderly
termination or reorganization
of the organization; or
``(II) improvements are
made to remedy the violations
found under paragraph (1),
except that temporary management under
this subparagraph may not be terminated
until the State has determined that the
medicaid managed care organization has
the capability to ensure that the
violations shall not recur.
``(C) Permitting individuals enrolled with
the managed care entity to terminate enrollment
without cause, and notifying such individuals
of such right to terminate enrollment.
``(D) Suspension or default of all
enrollment of individuals under this title
after the date the Secretary or the State
notifies the entity of a determination of a
violation of any requirement of section 1903(m)
or this section.
``(E) Suspension of payment to the entity
under this title for individuals enrolled after
the date the Secretary or State notifies the
entity of such a determination and until the
Secretary or State is satisfied that the basis
for such determination has been corrected and
is not likely to recur.
``(3) Treatment of chronic substandard entities.--
In the case of a medicaid managed care organization
which has repeatedly failed to meet the requirements of
section 1903(m) and this section, the State shall
(regardless of what other sanctions are provided)
impose the sanctions described in subparagraphs (B) and
(C) of paragraph (2).
``(4) Authority to terminate contract.--
``(A) In general.--In the case of a managed
care entity which has failed to meet the
requirements of this part or a contract under
section 1903(m) or 1905(t)(3), the State shall
have the authority to terminate such contract
with the entity and to enroll such entity's
enrollees with other managed care entities (or
to permit such enrollees to receive medical
assistance under the State plan under this
title other than through a managed care
entity).
``(B) Availability of hearing prior to
termination of contract.--A State may not
terminate a contract with a managed care entity
under subparagraph (A) unless the entity is
provided with a hearing prior to the
termination.
``(C) Notice and right to disenroll in
cases of termination hearing.--A State may--
``(i) notify individuals enrolled
with a managed care entity which is the
subject of a hearing to terminate the
entity's contract with the State of the
hearing, and
``(ii) in the case of such an
entity, permit such enrollees to
disenroll immediately with the entity
without cause.
``(5) Other protections for managed care entities
against sanctions imposed by state.--Before imposing
any sanction against a managed care entity otherthan
termination of the entity's contract, the State shall provide the
entity with notice and such other due process protections as the State
may provide, except that a State may not provide a managed care entity
with a pre-termination hearing before imposing the sanction described
in paragraph (2)(B).''.
(b) Limitation on Availability of FFP for Use of Enrollment
Brokers.--Section 1903(b) (42 U.S.C. 1396b(b)) is amended by
adding at the end the following:
``(4) Amounts expended by a State for the use an enrollment
broker in marketing medicaid managed care organizations and
other managed care entities to eligible individuals under this
title shall be considered, for purposes of subsection (a)(7),
to be necessary for the proper and efficient administration of
the State plan but only if the following conditions are met
with respect to the broker:
``(A) The broker is independent of any such entity
and of any health care providers (whether or not any
such provider participates in the State plan under this
title) that provide coverage of services in the same
State in which the broker is conducting enrollment
activities.
``(B) No person who is an owner, employee,
consultant, or has a contract with the broker either
has any direct or indirect financial interest with such
an entity or health care provider or has been excluded
from participation in the program under this title or
title XVIII or debarred by any Federal agency, or
subject to a civil money penalty under this Act.''.
(c) Application of Disclosure Requirements to Managed Care
Entities.--Section 1124(a)(2)(A) (42 U.S.C. 1320a-3(a)(2)(A))
is amended by inserting ``a managed care entity, as defined in
section 1932(a)(1)(B),'' after ``renal disease facility,''.
SEC. 4708. IMPROVED ADMINISTRATION.
(a) Change in Threshold Amount for Contracts Requiring
Secretary's Prior Approval.--Section 1903(m)(2)(A)(iii) (42
U.S.C. 1396b(m)(2)(A)(iii)) is amended by striking ``$100,000''
and inserting ``$1,000,000 for 1998 and, for a subsequent year,
the amount established under this clause for the previous year
increased by the percentage increase in the consumer price
index for all urban consumers over the previous year''.
(b) Permitting Same Copayments in Health Maintenance
Organizations as in Fee-for-Service.--Section 1916 (42 U.S.C.
1396o) is amended--
(1) in subsection (a)(2)(D), by striking ``or
services furnished'' and all that follows through
``enrolled,''; and
(2) in subsection (b)(2)(D), by striking ``or (at
the option'' and all that follows through
``enrolled,''.
(c) Assuring Timeliness of Provider Payments.--Section 1932
is further amended by adding at the end the following:
``(f) Timeliness of Payment.--A contract under section
1903(m) with a medicaid managed care organization shall provide
that the organization shall make payment to health care
providers for items and services which are subject to the
contract and that are furnished to individuals eligible for
medical assistance under the State plan under this title who
are enrolled with the organization on a timely basis consistent
with the claims payment procedures described in section
1902(a)(37)(A), unless the health care provider and the
organization agree to an alternate payment schedule.''.
(d) Clarification of Application of FFP Denial Rules to
Payments Made Pursuant to Managed Care Entities.--Section
1903(i) (42 U.S.C. 1396b(i)) is amended by adding at the end
the following new sentence: ``Paragraphs (1), (2), (16), (17),
and (18) shall apply with respect to items or services
furnished and amounts expended by or through a managed care
entity (as defined in section 1932(a)(1)(B)) in the same manner
as such paragraphs apply to items or services furnished and
amounts expended directly by the State.''.
SEC. 4709. 6-MONTH GUARANTEED ELIGIBILITY FOR ALL INDIVIDUALS ENROLLED
IN MANAGED CARE.
Section 1902(e)(2) (42 U.S.C. 1396a(e)(2)) is amended--
(1) by striking ``who is enrolled'' and all that
follows through ``section 1903(m)(2)(A)'' and inserting
``who is enrolled with a medicaid managed care
organization (as defined in section 1903(m)(1)(A)),
with a primary care case manager (as defined in section
1905(t)),''; and
(2) by inserting before the period ``or by or
through the case manager''.
SEC. 4710. EFFECTIVE DATES.
(a) General Effective Date.--Except as otherwise provided
in this chapter and section 4759, the amendments made by this
chapter shall take effect on the date of the enactment of this
Act and shall apply to contracts entered into or renewed on or
after October 1, 1997.
(b) Specific Effective Dates.--Subject to subsection (c)
and section 4759--
(1) PCCM option.--The amendments made by section
4702 shall apply to primary care case management
services furnished on or after October 1, 1997.
(2) 75:25 rule.--The amendments made by section
4703 apply to contracts under section 1903(m) of the
Social Security Act (42 U.S.C. 1396b(m)) on and after
June 20, 1997.
(3) Quality standards.--Section 1932(c)(1) of the
Social Security Act, as added by section 4705(a), shall
take effect on January 1, 1999.
(4) Solvency standards.--
(A) In general.--The amendments made by
section 4706 shall apply to contracts entered
into or renewed on or after October 1, 1998.
(B) Transition rule.--In the case of an
organization that as of the date of the
enactment of this Act has entered into a
contract under section 1903(m) of the Social
Security Act with a State for the provision of
medical assistance under title XIX of such Act
under which the organization assumes full
financial risk and is receiving capitation
payments, the amendment made by section 4706
shall not apply to such organization until 3
years after the date of the enactment of this
Act.
(5) Sanctions for noncompliance.--Section 1932(e)
of the Social Security Act, as added by section
4707(a), shall apply to contracts entered into or
renewed on or after April 1, 1998.
(6) Limitation on ffp for enrollment brokers.--The
amendment made by section 4707(b) shall apply to
amounts expended on or after October 1, 1997.
(7) 6-month guaranteed eligibility.--The amendments
made by section 4709 shall take effect on October 1,
1997.
(c) Nonapplication to Waivers.--Nothing in this chapter (or
the amendments made by this chapter) shall be construed as
affecting the terms and conditions of any waiver, or the
authority of the Secretary of Health and Human Services with
respect to any such waiver, under section 1115 or 1915 of the
Social Security Act (42 U.S.C. 1315, 1396n).
CHAPTER 2--FLEXIBILITY IN PAYMENT OF PROVIDERS
SEC. 4711. FLEXIBILITY IN PAYMENT METHODS FOR HOSPITAL, NURSING
FACILITY, ICF/MR, AND HOME HEALTH SERVICES.
(a) Repeal of Boren Requirements.--Section 1902(a)(13) (42
U.S.C. 1396a(a)(13)) is amended--
(1) by striking all that precedes subparagraph (D)
and inserting the following:
``(13) provide--
``(A) for a public process for
determination of rates of payment under the
plan for hospital services, nursing facility
services, and services of intermediate care
facilities for the mentally retarded under
which--
``(i) proposed rates, the
methodologies underlying the
establishment of such rates, and
justifications for the proposed rates
are published,
``(ii) providers, beneficiaries and
their representatives, and other
concerned State residentsare given a
reasonable opportunity for review and comment on the proposed rates,
methodologies, and justifications,
``(iii) final rates, the
methodologies underlying the
establishment of such rates, and
justifications for such final rates are
published, and
``(iv) in the case of hospitals,
such rates take into account (in a
manner consistent with section 1923)
the situation of hospitals which serve
a disproportionate number of low-income
patients with special needs;'';
(2) by redesignating subparagraphs (D) and (E) as
subparagraphs (B) and (C), respectively;
(3) in subparagraph (B), as so redesignated, by
adding ``and'' at the end;
(4) in subparagraph (C), as so redesignated, by
striking ``and'' at the end; and
(5) by striking subparagraph (F).
(b) Study and Report.--
(1) Study.--The Secretary of Health and Human
Services shall study the effect on access to, and the
quality of, services provided to beneficiaries of the
rate-setting methods used by States pursuant to section
1902(a)(13)(A) of the Social Security Act (42 U.S.C.
1396a(a)(13)(A)), as amended by subsection (a).
(2) Report.--Not later than 4 years after the date
of the enactment of this Act, the Secretary of Health
and Human Services shall submit a report to the
appropriate committees of Congress on the conclusions
of the study conducted under paragraph (1), together
with any recommendations for legislation as a result of
such conclusions.
(c) Conforming Amendments.--
(1) Section 1905(o)(3) (42 U.S.C. 1396d(o)(3)) is
amended by striking ``amount described in section
1902(a)(13)(D)'' and inserting ``amount determined in
section 1902(a)(13)(B)''.
(2) Section 1923 (42 U.S.C. 1396r-4) is amended, in
subsections (a)(1) and (e)(1), by striking
``1902(a)(13)(A)'' each place it appears and inserting
``1902(a)(13)(A)(iv)''.
(d) Effective Date.--This section shall take effect on the
date of the enactment of this Act and the amendments made by
subsections (a) and (c) shall apply to payment for items and
services furnished on or after October 1, 1997.
SEC. 4712. PAYMENT FOR CENTER AND CLINIC SERVICES.
(a) Phase-Out of Payment Based on Reasonable Costs.--
Section 1902(a)(13)(C) (42 U.S.C. 1396a(a)(13)(C)), as
redesignated by section 4711(a)(2), is amended by inserting
``(or 95 percent for services furnished during fiscal year
2000, 90 percent for services furnished during fiscal year
2001, 85 percent for services furnished during fiscal year
2002, or 70 percent for services furnished during fiscal year
2003)'' after ``100 percent''.
(b) Transitional Supplemental Payment for Services
Furnished Under Certain Managed Care Contracts.--
(1) In general.--Section 1902(a)(13)(C) (42 U.S.C.
1396a(a)(13)(C)), as so redesignated, is further
amended--
(A) by inserting ``(i)'' after ``(C)'', and
(B) by inserting before the semicolon at
the end the following: ``and (ii) in carrying
out clause (i) in the case of services
furnished by a Federally-qualified health
center or a rural health clinic pursuant to a
contract between the center and an organization
under section 1903(m), for payment to the
center or clinic at least quarterly by the
State of a supplemental payment equal to the
amount (if any) by which the amount determined
under clause (i) exceeds the amount of the
payments provided under such contract''.
(2) Conforming amendment to managed care contract
requirement.--Clause (ix) of section 1903(m)(2)(A) (42
U.S.C. 1396b(m)(2)(A)) is amended to read as follows:
``(ix) such contract provides, in the case of an
entity that has entered into a contract for the
provision of services with a Federally-qualified health
center or a rural health clinic, that the entity shall
provide payment that is not less than the level and
amount of payment which the entity would make for the
services if the services were furnished by a provider
which is not a Federally-qualified health center or a
rural health clinic;''.
(3) Effective date.--The amendments made by this
subsection shall apply to services furnished on or
after October 1, 1997.
(c) End of Transitional Payment Rules.--Effective for
services furnished on or after October 1, 2003--
(1) subparagraph (C) of section 1902(a)(13) (42
U.S.C. 1396a(a)(13)), as so redesignated, is repealed,
and
(2) clause (ix) of section 1903(m)(2)(A) (42 U.S.C.
1396b(m)(2)(A)) is repealed.
(d) Flexibility in Coverage of Non-Freestanding Look-
Alikes.--
(1) In general.--Section 1905(l)(2)(B)(iii) (42
U.S.C. 1396d(l)(2)(B)(iii)) is amended by inserting
``including requirements of the Secretary that an
entity may not be owned, controlled, or operated by
another entity,'' after ``such a grant,''.
(2) Effective date.--The amendment made by
paragraph (1) shall apply to services furnished on or
after the date of the enactment of this Act.
SEC. 4713. ELIMINATION OF OBSTETRICAL AND PEDIATRIC PAYMENT RATE
REQUIREMENTS.
(a) In General.--Section 1926 (42 U.S.C. 1396r-7) is
repealed.
(b) Effective Date.--The repeal made by subsection (a)
shall apply to services furnished on or after October 1, 1997.
SEC. 4714. MEDICAID PAYMENT RATES FOR CERTAIN MEDICARE COST-SHARING.
(a) Clarification Regarding State Liability for Medicare
Cost-Sharing.--
(1) In general.--Section 1902(n) (42 U.S.C.
1396a(n)) is amended--
(A) by inserting ``(1)'' after ``(n)'', and
(B) by adding at the end the following:
``(2) In carrying out paragraph (1), a State is not
required to provide any payment for any expenses incurred
relating to payment for deductibles, coinsurance, or copayments
for medicare cost-sharing to the extent that payment under
title XVIII for the service would exceed the payment amount
that otherwise would be made under the State plan under this
title for such service if provided to an eligible recipient
other than a medicare beneficiary.
``(3) In the case in which a State's payment for medicare
cost-sharing for a qualified medicare beneficiary with respect
to an item or service is reduced or eliminated through the
application of paragraph (2)--
``(A) for purposes of applying any limitation under
title XVIII on the amount that the beneficiary may be
billed or charged for the service, the amount of
payment made under title XVIII plus the amount of
payment (if any) under the State plan shall be
considered to be payment in full for the service;
``(B) the beneficiary shall not have any legal
liability to make payment to a provider or to an
organization described in section 1903(m)(1)(A) for the
service; and
``(C) any lawful sanction that may be imposed upon
a provider or such an organization for excess charges
under this title or title XVIII shall apply to the
imposition of any charge imposed upon the individual in
such case.
This paragraph shall not be construed as preventing payment of
any medicare cost-sharing by a medicare supplemental policy or
an employer retiree health plan on behalf of an individual.''.
(2) Conforming clarification.--Section 1905(p)(3)
(42 U.S.C. 1396d(p)(3)) is amended by inserting
``(subject to section 1902(n)(2))'' after ``means''.
(b) Limitation on Medicare Providers.--
(1) Provider agreements.--Section 1866(a)(1)(A) (42
U.S.C. 1395cc(a)(1)(A)) is amended--
(A) by inserting ``(i)'' after ``(A)'', and
(B) by inserting before the comma at the
end the following: ``, and (ii) not to impose
any charge that is prohibited under section
1902(n)(3)''.
(2) Nonparticipating providers.--Section
1848(g)(3)(A) (42 U.S.C. 1395w-4(g)(3)(A)) is amended
by inserting before the period at the end the
following: ``and the provisions of section
1902(n)(3)(A) apply to further limit permissible
charges under this section''.
(c) Effective Date.--The amendments made by this section
shall apply to payment for (and with respect to provider
agreements with respect to) items and services furnished on or
after the date of the enactment of this Act. The amendments
made by subsection (a) shall also apply to payment by a State
for items and services furnished before such date if such
payment is the subject of a law suit that is based on the
provisions of sections 1902(n) and 1905(p) of the Social
Security Act and that is pending as of, or is initiated after,
the date of the enactment of this Act.
SEC. 4715. TREATMENT OF VETERANS' PENSIONS UNDER MEDICAID.
(a) Post-Eligibility Treatment.--Section 1902(r)(1) (42
U.S.C. 1396a(r)(1)) is amended--
(1) by inserting ``(A)'' after ``(r)(1)'',
(2) by inserting ``, the treatment described in
subparagraph (B) shall apply,'' after ``under such a
waiver'';
(3) by striking ``and,'' and inserting ``, and'';
and
(4) by adding at the end the following:
``(B)(i) In the case of a veteran who does not have a
spouse or a child, if the veteran--
``(I) receives, after the veteran has been
determined to be eligible for medical assistance under
the State plan under this title, a veteran's pension in
excess of $90 per month, and
``(II) resides in a State veterans home with
respect to which the Secretary of Veterans Affairs
makes per diem payments for nursing home care pursuant
to section 1741(a) of title 38, United States Code,
any such pension payment, including any payment made due to the
need for aid and attendance, or for unreimbursed medical
expenses, that is in excess of $90 per month shall be counted
as income only for the purpose of applying such excess payment
to the State veterans home's cost of providing nursing home
care to the veteran.
``(ii) The provisions of clause (i) shall apply with
respect to a surviving spouse of a veteran who does not have a
child in the same manner as they apply to a veteran described
in such clause.''.
(b) Effective Date.--The amendments made by this section
shall apply on and after October 1, 1997.
CHAPTER 3--FEDERAL PAYMENTS TO STATES
SEC. 4721. REFORMING DISPROPORTIONATE SHARE PAYMENTS UNDER STATE
MEDICAID PROGRAMS.
(a) Adjustment of State DSH Allotments.--
(1) In general.--Section 1923(f) (42 U.S.C. 1396r-
4(f)) is amended to read as follows:
``(f) Limitation on Federal Financial Participation.--
``(1) In general.--Payment under section 1903(a)
shall not be made to a State with respect to any
payment adjustment made under this section for
hospitals in a State for quarters in a fiscal year in
excess of the disproportionate share hospital (in this
subsection referred to as `DSH') allotment for the
State for the fiscal year, as specified in paragraphs
(2) and (3).
``(2) State dsh allotments for fiscal years 1998
through 2002.--The DSH allotment for a State for each
fiscal year during the period beginning with fiscal
year 1998 and ending with fiscal year 2002 is
determined in accordance with the following table:
----------------------------------------------------------------------------------------------------------------
DSH Allotment (in millions of dollars)
State or District -------------------------------------------------
FY 98 FY 99 FY 00 FY 01 FY 02
----------------------------------------------------------------------------------------------------------------
Alabama 293 269 248 246 246
Alaska 10 10 10 9 9
Arizona 81 81 81 81 81
Arkansas 2 2 2 2 2
California 1,085 1,068 986 931 877
Colorado 93 85 79 74 74
Connecticut 200 194 164 160 160
Delaware 4 4 4 4 4
District of
Columbia 23 23 23 23 23
Florida 207 203 197 188 160
Georgia 253 248 241 228 215
Hawaii 0 0 0 0 0
Idaho 1 1 1 1 1
Illinois 203 199 193 182 172
Indiana 201 197 191 181 171
Iowa 8 8 8 8 8
Kansas 51 49 42 36 33
Kentucky 137 134 130 123 116
Louisiana 880 795 713 658 631
Maine 103 99 84 84 84
Maryland 72 70 68 64 61
Massachusetts 288 282 273 259 244
Michigan 249 244 237 224 212
Minnesota 16 16 16 16 16
Mississippi 143 141 136 129 122
Missouri 436 423 379 379 379
Montana 0.2 0.2 0.2 0.2 0.2
Nebraska 5 5 5 5 5
Nevada 37 37 37 37 37
New Hampshire 140 136 130 130 130
New Jersey 600 582 515 515 515
New Mexico 5 5 5 5 5
New York 1,512 1,482 1,436 1,361 1,285
North Carolina 278 272 264 250 236
North Dakota 1 1 1 1 1
Ohio 382 374 363 344 325
Oklahoma 16 16 16 16 16
Oregon 20 20 20 20 20
Pennsylvania 529 518 502 476 449
Rhode Island 62 60 58 55 52
South Carolina 313 303 262 262 262
South Dakota 1 1 1 1 1
Tennessee 0 0 0 0 0
Texas 979 950 806 765 765
Utah 3 3 3 3 3
Vermont 18 18 18 18 18
Virginia 70 68 66 63 59
Washington 174 171 166 157 148
West Virginia 64 63 61 58 54
Wisconsin 7 7 7 7 7
Wyoming 0 0 0 0 0.
----------------------------------------------------------------------------------------------------------------
``(3) State dsh allotments for fiscal year 2003 and
thereafter.--
``(A) In general.--The DSH allotment for
any State for fiscal year 2003 and each
succeeding fiscal year is equal to the DSH
allotment for the State for the preceding
fiscal year under paragraph (2) or this
paragraph, increased, subject to subparagraph
(B), by the percentage change in the consumer
price index for all urban consumers (all items;
U.S. city average), for the previous fiscal
year.
``(B) Limitation.--The DSH allotment for a
State shall not be increased under subparagraph
(A) for a fiscal year to the extent that such
an increase would result in the DSH allotment
for the year exceeding the greater of--
``(i) the DSH allotment for the
previous year, or
``(ii) 12 percent of the total
amount of expenditures under the State
plan for medical assistance during the
fiscal year.
``(4) Definition of state.-- In this subsection,
the term `State' means the 50 States and the District
of Columbia.''.
(2) Effective date.--The amendment made by
paragraph (1) shall apply to payment adjustments
attributable to DSH allotments for fiscal years
beginning with fiscal year 1998.
(b) Limitation on Payments to Institutions For Mental
Diseases.--Section 1923 of the Social Security Act (42 U.S.C.
1396r-4) is amended by adding at the end the following:
``(h) Limitation on Certain State DSH Expenditures.--
``(1) In general.--Payment under section 1903(a)
shall not be made to a State with respect to any
payment adjustments made under this section for
quarters in a fiscal year (beginning with fiscal year
1998) to institutions for mental diseases or other
mental health facilities, to the extent the aggregate
of such adjustments in the fiscal year exceeds the
lesser of the following:
``(A) 1995 imd dsh payment adjustments.--
The total State DSH expenditures that are
attributable to fiscal year 1995 for payments
to institutions formental diseases and other
mental health facilities (based on reporting data specified by the
State on HCFA Form 64 as mental health DSH, and as approved by the
Secretary).
``(B) Applicable percentage of 1995 total
dsh payment allotment.--The amount of such
payment adjustments which are equal to the
applicable percentage of the Federal share of
payment adjustments made to hospitals in the
State under subsection (c) that are
attributable to the 1995 DSH allotment for the
State for payments to institutions for mental
diseases and other mental health facilities
(based on reporting data specified by the State
on HCFA Form 64 as mental health DSH, and as
approved by the Secretary).
``(2) Applicable percentage.--
``(A) In general.--For purposes of
paragraph (1), the applicable percentage with
respect to--
``(i) each of fiscal years 1998,
1999, and 2000, is the percentage
determined under subparagraph (B); or
``(ii) a succeeding fiscal year is
the lesser of the percentage determined
under subparagraph (B) or the following
percentage:
``(I) For fiscal year 2001,
50 percent.
``(II) For fiscal year
2002, 40 percent.
``(III) For each succeeding
fiscal year, 33 percent.
``(B) 1995 percentage.--The percentage
determined under this subparagraph is the ratio
(determined as a percentage) of--
``(i) the Federal share of payment
adjustments made to hospitals in the
State under subsection (c) that are
attributable to the 1995 DSH allotment
for the State (as reported by the State
not later than January 1, 1997, on HCFA
Form 64, and as approved by the
Secretary) for payments to institutions
for mental diseases and other mental
health facilities, to
``(ii) the State 1995 DSH spending
amount.
``(C) State 1995 dsh spending amount.--For
purposes of subparagraph (B)(ii), the `State
1995 DSH spending amount', with respect to a
State, is the Federal medical assistance
percentage (for fiscal year 1995) of the
payment adjustments made under subsection (c)
under the State plan that are attributable to
the fiscal year 1995 DSH allotment for the
State (as reported by the State not later than
January 1, 1997, on HCFA Form 64, and as
approved by the Secretary).''.
(c) Description of Targeting Payments.--Section 1923(a)(2)
(42 U.S.C. 1396r-4(a)(2)) is amended by adding at the end the
following:
``(D) A State plan under this title shall not be
considered to meet the requirements of section
1902(a)(13)(A)(iv) (insofar as it requires payments to
hospitals to take into account the situation of
hospitals that serve a disproportionate number of low-
income patients with special needs), as of October 1,
1998, unless the State has submitted to the Secretary
by such date a description of the methodology used by
the State to identify and to make payments to
disproportionate share hospitals, including children's
hospitals, on the basis of the proportion of low-income
and medicaid patients served by such hospitals. The
State shall provide an annual report to the Secretary
describing the disproportionate share payments to each
such disproportionate share hospital.''.
(d) Direct Payment by State for Managed Care Enrollees.--
Section 1923 (42 U.S.C. 1396r-4) is amended by adding at the
end the following:
``(i) Requirement for Direct Payment.--
``(1) In general.--No payment may be made under
section 1903(a)(1) with respect to a payment adjustment
made under this section, for services furnished by a
hospitalon or after October 1, 1997, with respect to
individuals eligible for medical assistance under the State plan who
are enrolled with a managed care entity (as defined in section
1932(a)(1)(B)) or under any other managed care arrangement unless a
payment, equal to the amount of the payment adjustment--
``(A) is made directly to the hospital by
the State; and
``(B) is not used to determine the amount
of a prepaid capitation payment under the State
plan to the entity or arrangement with respect
to such individuals.
``(2) Exception for current arrangements.--
Paragraph (1) shall not apply to a payment adjustment
provided pursuant to a payment arrangement in effect on
July 1, 1997.''.
(e) Transition Rule.--Effective July 1, 1997, section
1923(g)(2)(A) of the Social Security Act (42 U.S.C. 1396r-
4(g)(2)(A)) shall be applied to the State of California as
though--
(1) ``(or that begins on or after July 1, 1997, and
before July 1, 1999)'' were inserted in such section
after ``January 1, 1995,''; and
(2) ``(or 175 percent in the case of a State fiscal
year that begins on or after July 1, 1997, and before
July 1, 1999)'' were inserted in such section after
``200 percent''.
SEC. 4722. TREATMENT OF STATE TAXES IMPOSED ON CERTAIN HOSPITALS.
(a) Exception From Tax Does Not Disqualify as Broad-Based
Tax.--Section 1903(w)(3) (42 U.S.C. 1396b(w)(3)) is amended--
(1) in subparagraph (B), by striking ``and (E)''
and inserting ``(E), and (F)''; and
(2) by adding at the end the following:
``(F) In no case shall a tax not qualify as a broad-based
health care related tax under this paragraph because it does
not apply to a hospital that is described in section 501(c)(3)
of the Internal Revenue Code of 1986 and exempt from taxation
under section 501(a) of such Code and that does not accept
payment under the State plan under this title or under title
XVIII.''.
(b) Reduction in Federal Financial Participation in Case of
Imposition of Tax.--Section 1903(b) (42 U.S.C. 1396b(b)), as
amended by section 4707(b), is amended by adding at the end the
following:
``(5) Notwithstanding the preceding provisions of this
section, the amount determined under subsection (a)(1) for any
State shall be decreased in a quarter by the amount of any
health care related taxes (described in section 1902(w)(3)(A))
that are imposed on a hospital described in subsection
(w)(3)(F) in that quarter.''.
(c) Waiver of Certain Provider Tax Provisions.--
Notwithstanding any other provision of law, taxes, fees, or
assessments, as defined in section 1903(w)(3)(A) of the Social
Security Act (42 U.S.C. 1396b(w)(3)(A)), that were collected by
the State of New York from a health care provider before June
1, 1997, and for which a waiver of the provisions of
subparagraph (B) or (C) of section 1903(w)(3) of such Act has
been applied for, or that would, but for this subsection
require that such a waiver be applied for, in accordance with
subparagraph (E) of such section, and (if so applied for) upon
which action by the Secretary of Health and Human Services
(including any judicial review of any such proceeding) has not
been completed as of July 23, 1997, are deemed to be
permissible health care related taxes and in compliance with
the requirements of subparagraphs (B) and (C) of section
1903(w)(3) of such Act.
(d) Effective Date.--The amendments made by subsection (a)
shall apply to taxes imposed before, on, or after the date of
the enactment of this Act and the amendment made by subsection
(b) shall apply to taxes imposed on or after such date.
SEC. 4723. ADDITIONAL FUNDING FOR STATE EMERGENCY HEALTH SERVICES
FURNISHED TO UNDOCUMENTED ALIENS.
(a) Total Amount Available for Allotment.--There are
available for allotments under this section for each of the 4
consecutive fiscal years (beginning with fiscal year 1998)
$25,000,000 for payments to certain States under this section.
(b) State Allotment Amount.--
(1) In general.--The Secretary of Health and Human
Services shall compute an allotment for each fiscal
year beginning with fiscal year 1998 and ending with
fiscal year 2001 for each of the 12 States with the
highest number of undocumented aliens. The amount of
such allotment for each such State for a fiscal year
shall bear the same ratio to the total amount available
for allotments under subsection (a) for the fiscal year
as the ratio of the number of undocumented aliens in
the State in the fiscal year bears to the total of such
numbers for all such States for such fiscal year. The
amount of allotment to a State provided under this
paragraph for a fiscal year that is not paid out under
subsection (c) shall be available for payment during
the subsequent fiscal year.
(2) Determination.--For purposes of paragraph (1),
the number of undocumented aliens in a State under this
section shall be determined based on estimates of the
resident illegal alien population residing in each
State prepared by the Statistics Division of the
Immigration and Naturalization Service as of October
1992 (or as of such later date if such date is at least
1 year before the beginning of the fiscal year
involved).
(c) Use of Funds.--From the allotments made under
subsection (b), the Secretary shall pay to each State amounts
the State demonstrates were paid by the State (or by a
political subdivision of the State) for emergency health
services furnished to undocumented aliens.
(d) State Defined.--For purposes of this section, the term
``State'' includes the District of Columbia.
(e) State Entitlement.--This section constitutes budget
authority in advance of appropriations Acts and represents the
obligation of the Federal Government to provide for the payment
to States of amounts provided under this section.
SEC. 4724. ELIMINATION OF WASTE, FRAUD, AND ABUSE.
(a) Ban on Spending for Nonhealth Related Items.--Section
1903(i) (42 U.S.C. 1396b(i)) is amended--
(1) in paragraphs (2) and (16), by striking the
period at the end and inserting ``; or'';
(2) in paragraphs (10)(B), (11), and (13), by
adding ``or'' at the end; and
(3) by inserting after paragraph (16), the
following:
``(17) with respect to any amount expended for
roads, bridges, stadiums, or any other item or service
not covered under a State plan under this title.''.
(b) Surety Bond Requirement for Home Health Agencies.--
(1) In general.--Section 1903(i) (42 U.S.C.
1396b(i)), as amended by subsection (a), is amended--
(1) in paragraph (17), by striking the period at
the end and inserting ``; or''; and
(2) by inserting after paragraph (17), the
following:
``(18) with respect to any amount expended for home
health care services provided by an agency or
organization unless the agency or organization provides
the State agency on a continuing basis a surety bond in
a form specified by the Secretary under paragraph (7)
of section 1861(o) and in an amount that is not less
than $50,000 or such comparable surety bond as the
Secretary may permit under the last sentence of such
section.''.
(2) Effective date.--The amendments made by
paragraph (1) shall apply to home health care services
furnished on or after January 1, 1998.
(c) Conflict of Interest Safeguards.--
(1) In general.--Section 1902(a)(4)(C) (42 U.S.C.
1396a(a)(4)(C)) is amended--
(A) by striking ``and (C)'' and inserting
``(C)'';
(B) by striking ``local officer or
employee'' and inserting ``local officer,
employee, or independent contractor'';
(C) by striking ``such an officer or
employee'' the first 2 places it appears and
inserting ``such an officer, employee, or
contractor''; and
(D) by inserting before the semicolon the
following: ``, and (D) that each State or local
officer, employee, or independent contractor
who is responsible for selecting, awarding, or
otherwise obtaining items and services under
the State plan shall be subject to safeguards
against conflicts of interest that are at least
as stringent as the safeguards that apply under
section 27 of the Office of Federal Procurement
Policy Act (41 U.S.C. 423) to persons described
in subsection (a)(2) of such section of that
Act''.
(2) Effective date.--The amendments made by
paragraph (1) shall take effect on January 1, 1998.
(d) Authority To Refuse To Enter Into Medicaid Agreements
With Individuals or Entities Convicted of Felonies.--Section
1902(a)(23) (42 U.S.C. 1396(a)) is amended--
(1) by striking ``except as provided in subsection
(g) and in section 1915 and except in the case of
Puerto Rico, the Virgin Islands, and Guam,''; and
(2) by inserting before the semicolon at the end
the following: ``, except as provided in subsection (g)
and in section 1915, except that this paragraph shall
not apply in the case of Puerto Rico, the Virgin
Islands, and Guam, and except that nothing in this
paragraph shall be construed as requiring a State to
provide medical assistance for such services furnished
by a person or entity convicted of a felony under
Federal or State law for an offense which the State
agency determines is inconsistent with the best
interests of beneficiaries under the State plan''.
(e) Monitoring Payments for Dual Eligibles.--The
Administrator of the Health Care Financing Administration shall
develop mechanisms to improve the monitoring of, and to
prevent, inappropriate payments under the medicaid program
under title XIX of the Social Security Act (42 U.S.C. 1396 et
seq.) in the case of individuals who are dually eligible for
benefits under such program and under the medicare program
under title XVIII of such Act (42 U.S.C. 1395 et seq.).
(f) Beneficiary and Program Protection Against Waste,
Fraud, and Abuse.--Section 1902(a) (42 U.S.C. 1396a(a)) is
amended--
(1) by striking ``and'' at the end of paragraph
(62);
(2) by striking the period at the end of paragraph
(63) and inserting ``; and''; and
(3) by inserting after paragraph (63) the
following:
``(64) provide, not later than 1 year after the
date of the enactment of this paragraph, a mechanism to
receive reports from beneficiaries and others and
compile data concerning alleged instances of waste,
fraud, and abuse relating to the operation of this
title;''.
(g) Disclosure of Information and Surety Bond Requirement
for Suppliers of Durable Medical Equipment.--
(1) Requirement.--Section 1902(a) (42 U.S.C.
1396a(a)), as amended by subsection (f), is amended--
(A) by striking ``and'' at the end of
paragraph (63);
(B) by striking the period at the end of
paragraph (64) and inserting ``; and''; and
(C) by inserting after paragraph (64) the
following:
``(65) provide that the State shall issue provider
numbers for all suppliers of medical assistance
consisting of durable medical equipment, as defined in
section 1861(n), and the State shall not issue or renew
such a supplier number for any such supplier unless--
``(A)(i) full and complete information as
to the identity of each person with an
ownership or control interest (as defined in
section 1124(a)(3)) in the supplieror in any
subcontractor (as defined by the Secretary in regulations) in which the
supplier directly or indirectly has a 5 percent or more ownership
interest; and
``(ii) to the extent determined to be
feasible under regulations of the Secretary,
the name of any disclosing entity (as defined
in section 1124(a)(2)) with respect to which a
person with such an ownership or control
interest in the supplier is a person with such
an ownership or control interest in the
disclosing entity; and
``(B) a surety bond in a form specified by
the Secretary under section 1834(a)(16)(B) and
in an amount that is not less than $50,000 or
such comparable surety bond as the Secretary
may permit under the second sentence of such
section.''.
(2) Effective date.--The amendments made by
paragraph (1) shall apply to suppliers of medical
assistance consisting of durable medical equipment
furnished on or after January 1, 1998.
SEC. 4725. INCREASED FMAPS.
(a) Alaska.--Notwithstanding the first sentence of section
1905(b) of the Social Security Act (42 U.S.C. 1396d(b)), the
Federal medical assistance percentage determined under such
sentence for Alaska shall be 59.8 percent but only with respect
to--
(1) items and services furnished under a State plan
under title XIX or under a State child health plan
under title XXI of such Act during fiscal years 1998,
1999, and 2000;
(2) payments made on a capitation or other risk-
basis under such titles for coverage occurring during
such period; and
(3) payments under title XIX of such Act
attributable to DSH allotments for such State
determined under section 1923(f) of such Act (42 U.S.C.
1396r-4(f)) for such fiscal years.
(b) District of Columbia.--
(1) In general.--The first sentence of section
1905(b) (42 U.S.C. 1396d(b)) is amended--
(A) by striking ``and (2)'' and inserting
``, (2)'', and
(B) by inserting before the period at the
end the following: ``, and (3) for purposes of
this title and title XXI, the Federal medical
assistance percentage for the District of
Columbia shall be 70 percent''.
(2) Effective date.--The amendments made by
paragraph (1) shall apply to--
(A) items and services furnished on or
after October 1, 1997;
(B) payments made on a capitation or other
risk-basis for coverage occurring on or after
such date; and
(C) payments attributable to DSH allotments
for such States determined under section
1923(f) of such Act (42 U.S.C. 1396r-4(f)) for
fiscal years beginning with fiscal year 1998.
SEC. 4726. INCREASE IN PAYMENT LIMITATION FOR TERRITORIES.
Section 1108 (42 U.S.C. 1308) is amended--
(1) in subsection (f), by striking ``The'' and
inserting ``Subject to subsection (g), the''; and
(2) by adding at the end the following:
``(g) Medicaid Payments to Territories for Fiscal Year 1998
and Thereafter.--
``(1) Fiscal year 1998.--With respect to fiscal
year 1998, the amounts otherwise determined for Puerto
Rico, the Virgin Islands, Guam, the Northern Mariana
Islands, and American Samoa under subsection (f) for
such fiscal year shall be increased by the following
amounts:
``(A) For Puerto Rico, $30,000,000.
``(B) For the Virgin Islands, $750,000.
``(C) For Guam, $750,000.
``(D) For the Northern Mariana Islands,
$500,000.
``(E) For American Samoa, $500,000.
``(2) Fiscal year 1999 and thereafter.--
Notwithstanding subsection (f), with respect to fiscal
year 1999 and any fiscal year thereafter, the total
amount certified by the Secretary under title XIX for
payment to--
``(A) Puerto Rico shall not exceed the sum
of the amount provided in this subsection for
the preceding fiscal year increased by the
percentage increase in the medical care
component of the Consumer Price Index for all
urban consumers (as published by the Bureau of
Labor Statistics) for the 12-month period
ending in March preceding the beginning of the
fiscal year, rounded to the nearest $100,000;
``(B) the Virgin Islands shall not exceed
the sum of the amount provided in this
subsection for the preceding fiscal year
increased by the percentage increase referred
to in subparagraph (A), rounded to the nearest
$10,000;
``(C) Guam shall not exceed the sum of the
amount provided in this subsection for the
preceding fiscal year increased by the
percentage increase referred to in subparagraph
(A), rounded to the nearest $10,000;
``(D) the Northern Mariana Islands shall
not exceed the sum of the amount provided in
this subsection for the preceding fiscal year
increased by the percentage increase referred
to in subparagraph (A), rounded to the nearest
$10,000; and
``(E) American Samoa shall not exceed the
sum of the amount provided in this subsection
for the preceding fiscal year increased by the
percentage increase referred to in subparagraph
(A), rounded to the nearest $10,000.''.
CHAPTER 4--ELIGIBILITY
SEC. 4731. STATE OPTION OF CONTINUOUS ELIGIBILITY FOR 12 MONTHS;
CLARIFICATION OF STATE OPTION TO COVER CHILDREN.
(a) Continuous Eligibility Option.--Section 1902(e) (42
U.S.C. 1396a(e)) is amended by adding at the end the following
new paragraph:
``(12) At the option of the State, the plan may provide
that an individual who is under an age specified by the State
(not to exceed 19 years of age) and who is determined to be
eligible for benefits under a State plan approved under this
title under subsection (a)(10)(A) shall remain eligible for
those benefits until the earlier of--
``(A) the end of a period (not to exceed 12 months)
following the determination; or
``(B) the time that the individual exceeds that
age.''.
(b) Clarification of State Option To Cover All Children
Under 19 Years of Age.--Section 1902(l)(1)(D) (42 U.S.C.
1396a(l)(1)(D)) is amended by inserting ``(or, at the option of
a State, after any earlier date)'' after ``children born after
September 30, 1983''.
(c) Effective Date.--The amendments made by this section
shall apply to medical assistance for items and services
furnished on or after October 1, 1997.
SEC. 4732. PAYMENT OF PART B PREMIUMS.
(a) Eligibility.--Section 1902(a)(10)(E) (42 U.S.C.
1396a(a)(10)(E)) is amended--
(1) by striking ``and'' at the end of clause (ii);
and
(2) by inserting after clause (iii) the following:
``(iv) subject to sections 1933 and
1905(p)(4), for making medical assistance
available (but only for premiums payable with
respect to months during the period beginning
with January 1998, and ending with December
2002)--
``(I) for medicare cost-sharing
described in section 1905(p)(3)(A)(ii)
for individuals who would be qualified
medicare beneficiaries described in
section 1905(p)(1) but for the fact
that their income exceeds the income
level established by the State under
section 1905(p)(2) and is at least 120
percent, but less than 135 percent, of
the official poverty line (referred to
in such section) for a family of the
size involved and who are not otherwise
eligible for medical assistance under
the State plan, and
``(II) for the portion of medicare
cost-sharing described in section
1905(p)(3)(A)(ii) that is attributable
to the operation of the amendments made
by (and subsection (e)(3) of) section
4611 of the Balanced Budget Act of 1997
for individuals who would be described
in subclause (I) if `135 percent' and
`175 percent' were substituted for `120
percent' and `135 percent'
respectively; and''.
(b) Conforming Amendment.--Section 1905(b) (42 U.S.C.
1396d(b)) is amended by striking ``The term'' and inserting
``Subject to section 1933(d), the term''.
(c) Terms and Conditions of Coverage.--Title XIX (42 U.S.C.
1395 et seq.), as amended by section 4701(a), is amended by
redesignating section 1933 as section 1934 and by inserting
after section 1932 the following new section:
``state coverage of medicare cost-sharing for additional low-income
medicare beneficiaries
``Sec. 1933. (a) In General.--A State plan under this title
shall provide, under section 1902(a)(10)(E)(iv) and subject to
the succeeding provisions of this section and through a plan
amendment, for medical assistance for payment of the cost of
medicare cost-sharing described in such section on behalf of
all individuals described in such section (in this section
referred to as `qualifying individuals') who are selected to
receive such assistance under subsection (b).
``(b) Selection of Qualifying Individuals.--A State shall
select qualifying individuals, and provide such individuals
with assistance, under this section consistent with the
following:
``(1) All qualifying individuals may apply.--The
State shall permit all qualifying individuals to apply
for assistance during a calendar year.
``(2) Selection on first-come, first-served
basis.--
``(A) In general.--For each calendar year
(beginning with 1998), from (and to the extent
of) the amount of the allocation under
subsection (c) for the State for the fiscal
year ending in such calendar year, the State
shall select qualifying individuals who apply
for the assistance in the order in which they
apply.
``(B) Carryover.--For calendar years after
1998, the State shall give preference to
individuals who were provided such assistance
(or other assistance described in section
1902(a)(10)(E)) in the last month of the
previous year and who continue to be (or
become) qualifying individuals.
``(3) Limit on number of individuals based on
allocation.--The State shall limit the number of
qualifying individuals selected with respect to
assistance in a calendar year so that the aggregate
amount of such assistance provided to such individuals
in such year is estimated to be equal to (but not
exceed) the State's allocation under subsection (c) for
the fiscal year ending in such calendar year.
``(4) Receipt of assistance during duration of
year.--If a qualifying individual is selected to
receive assistance under this section for a month in
year, the individual is entitled to receive such
assistance for the remainder of the year if the
individual continues to be a qualifying individual. The
fact that an individual is selected to receive
assistance under this section at any time during a year
does not entitle the individual to continued assistance
for any succeeding year.
``(c) Allocation.--
``(1) Total allocation.--The total amount available
for allocation under this section for--
``(A) fiscal year 1998 is $200,000,000;
``(B) fiscal year 1999 is $250,000,000;
``(C) fiscal year 2000 is $300,000,000;
``(D) fiscal year 2001 is $350,000,000; and
``(E) fiscal year 2002 is $400,000,000.
``(2) Allocation to states.--The Secretary shall
provide for the allocation of the total amount
described in paragraph (1) for a fiscal year, among the
States that executed a plan amendment in accordance
with subsection (a), based upon the Secretary's
estimate of the ratio of--
``(A) an amount equal to the sum of--
``(i) twice the total number of
individuals described in section
1902(a)(10)(E)(iv)(I) in the State, and
``(ii) the total number of
individuals described in section
1902(a)(10)(E)(iv)(II) in the State; to
``(B) the sum of the amounts computed under
subparagraph (A) for all eligible States.
``(d) Applicable FMAP.--With respect to assistance
described in section 1902(a)(10)(E)(iv) furnished in a State
for calendar quarters in a calendar year --
``(1) to the extent that such assistance does not
exceed the State's allocation under subsection (c) for
the fiscal year ending in the calendar year, the
Federal medical assistance percentage shall be equal to
100 percent; and
``(2) to the extent that such assistance exceeds
such allocation, the Federal medical assistance
percentage is 0 percent.
``(e) Limitation on Entitlement.--Except as specifically
provided under this section, nothing in this title shall be
construed as establishing any entitlement of individuals
described in section 1902(a)(10)(E)(iv) to assistance described
in such section.
``(f) Coverage of Costs Through Part B of the Medicare
Program.--For each fiscal year, the Secretary shall provide for
the transfer from the Federal Supplementary Medical Insurance
Trust Fund under section 1841 to the appropriate account in the
Treasury that provides for paymentsunder section 1903(a) with
respect to medical assistance provided under this section, of an amount
equivalent to the total of the amount of payments made under such
section that is attributable to this section and such transfer shall be
treated as an expenditure from such Trust Fund for purposes of section
1839.''.
SEC. 4733. STATE OPTION TO PERMIT WORKERS WITH DISABILITIES TO BUY INTO
MEDICAID.
Section 1902(a)(10)(A)(ii) (42 U.S.C. 1396a(a)(10)(A)(ii))
is amended--
(1) in subclause (XI), by striking ``or'' at the
end;
(2) in subclause (XII), by adding ``or'' at the
end; and
(3) by adding at the end the following:
``(XIII) who are in
families whose income is less
than 250 percent of the income
official poverty line (as
defined by the Office of
Management and Budget, and
revised annually in accordance
with section 673(2) of the
Omnibus Budget Reconciliation
Act of 1981) applicable to a
family of the size involved,
and who but for earnings in
excess of the limit established
under section 1905(q)(2)(B),
would be considered to be
receiving supplemental security
income (subject,
notwithstanding section 1916,
to payment of premiums or other
cost-sharing charges (set on a
sliding scale based on income)
that the State may
determine);''.
SEC. 4734. PENALTY FOR FRAUDULENT ELIGIBILITY.
Section 1128B(a) (42 U.S.C. 1320a-7b(a)), as amended by
section 217 of the Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-191; 110 Stat.
2008), is amended--
(1) by striking paragraph (6) and inserting the
following:
``(6) for a fee knowingly and willfully counsels or
assists an individual to dispose of assets (including
by any transfer in trust) in order for the individual
to become eligible for medical assistance under a State
plan under title XIX, if disposing of the assets
results in the imposition of a period of ineligibility
for such assistance under section 1917(c),''; and
(2) in clause (ii) of the matter following such
paragraph, by striking ``failure, or conversion by any
other person'' and inserting ``failure, conversion, or
provision of counsel or assistance by any other
person''.
SEC. 4735. TREATMENT OF CERTAIN SETTLEMENT PAYMENTS.
(a) In General.--Notwithstanding any other provision of
law, the payments described in subsection (b) shall not be
considered income or resources in determining eligibility for,
or the amount of benefits under, a State plan of medical
assistance approved under title XIX of the Social Security Act.
(b) Payments Described.--The payments described in this
subsection are--
(1) payments made from any fund established
pursuant to a class settlement in the case of Susan
Walker v. Bayer Corporation, et al., 96-C-5024 (N.D.
Ill.); and
(2) payments made pursuant to a release of all
claims in a case--
(A) that is entered into in lieu of the
class settlement referred to in paragraph (1);
and
(B) that is signed by all affected parties
in such case on or before the later of--
(i) December 31, 1997, or
(ii) the date that is 270 days
after the date on which such release is
first sent to the persons (or the legal
representative of such persons) to whom
the payment is to be made.
CHAPTER 5--BENEFITS
SEC. 4741. ELIMINATION OF REQUIREMENT TO PAY FOR PRIVATE INSURANCE.
(a) Repeal of State Plan Provision.--Section 1902(a)(25)
(42 U.S.C. 1396a(a)(25)) is amended--
(1) by striking subparagraph (G); and
(2) by redesignating subparagraphs (H) and (I) as
subparagraphs (G) and (H), respectively.
(b) Making Provision Optional.--Section 1906 (42 U.S.C.
1396e) is amended--
(1) in subsection (a)--
(A) by striking ``For purposes of section
1902(a)(25)(G) and subject to subsection (d),
each'' and inserting ``Each'';
(B) in paragraph (1), by striking ``shall''
and inserting ``may''; and
(C) in paragraph (2), by striking ``shall''
and inserting ``may''; and
(2) by striking subsection (d).
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 4742. PHYSICIAN QUALIFICATION REQUIREMENTS.
(a) In General.--Section 1903(i) (42 U.S.C. 1396b(i)) is
amended by striking paragraph (12).
(b) Effective Date.--The amendment made by subsection (a)
shall apply to services furnished on or after the date of the
enactment of this Act.
SEC. 4743. ELIMINATION OF REQUIREMENT OF PRIOR INSTITUTIONALIZATION
WITH RESPECT TO HABILITATION SERVICES FURNISHED
UNDER A WAIVER FOR HOME OR COMMUNITY-BASED
SERVICES.
(a) In General.--Section 1915(c)(5) (42 U.S.C. 1396n(c)(5))
is amended, in the matter preceding subparagraph (A), by
striking ``, with respect to individuals who receive such
services after discharge from a nursing facility or
intermediate care facility for the mentally retarded''.
(b) Effective Date.--The amendment made by subsection (a)
apply to services furnished on or after October 1, 1997.
SEC. 4744. STUDY AND REPORT ON EPSDT BENEFIT.
(a) Study.--
(1) In general.--The Secretary of Health and Human
Services, in consultation with Governors, directors of
State medicaid programs, the American Academy of
Actuaries, and representatives of appropriate provider
and beneficiary organizations, shall conduct a study of
the provision of early and periodic screening,
diagnostic, and treatment services under the medicaid
program under title XIX of the Social Security Act in
accordance with the requirements of section 1905(r) of
such Act (42 U.S.C. 1396d(r)).
(2) Required contents.--The study conducted under
paragraph (1) shall include examination of the
actuarial value of the provision of such services under
the medicaid program and an examination of the portions
of such actuarial value that are attributable to
paragraph (5) of section 1905(r) of such Act and to the
second sentence of such section.
(b) Report.--Not later than 12 months after the date of the
enactment of this Act, the Secretary of Health and Human
Services shall submit a report to Congress on the results of
the study conducted under subsection (a).
CHAPTER 6--ADMINISTRATION AND MISCELLANEOUS
SEC. 4751. ELIMINATION OF DUPLICATIVE INSPECTION OF CARE REQUIREMENTS
FOR ICFS/MR AND MENTAL HOSPITALS.
(a) Mental Hospitals.--Section 1902(a)(26) (42 U.S.C.
1396a(a)(26)) is amended--
(1) by striking ``provide--
``(A) with respect to each patient'' and
inserting ``provide, with respect to each
patient''; and
(2) by striking subparagraphs (B) and (C).
(b) ICFS/MR.--Section 1902(a)(31) (42 U.S.C. 1396a(a)(31))
is amended--
(1) by striking ``provide--
``(A) with respect to each patient'' and
inserting ``provide, with respect to each
patient''; and
(2) by striking subparagraphs (B) and (C).
(c) Effective Date.--The amendments made by this section
take effect on the date of the enactment of this Act.
SEC. 4752. ALTERNATIVE SANCTIONS FOR NONCOMPLIANT ICFS/MR.
(a) In General.--Section 1902(i)(1)(B) (42 U.S.C.
1396a(i)(1)(B)) is amended by striking ``provide'' and
inserting ``establish alternative remedies if the State
demonstrates to the Secretary's satisfaction that the
alternative remedies are effective in deterring noncompliance
and correcting deficiencies, and may provide''.
(b) Effective Date.--The amendment made by subsection (a)
takes effect on the date of the enactment of this Act.
SEC. 4753. MODIFICATION OF MMIS REQUIREMENTS.
(a) In General.--Section 1903(r) (42 U.S.C. 1396b(r)) is
amended--
(1) by striking all that precedes paragraph (5) and
inserting the following:
``(r)(1) In order to receive payments under subsection (a)
for use of automated data systems in administration of the
State plan under this title, a State must have in operation
mechanized claims processing and information retrieval systems
that meet the requirements of this subsection and that the
Secretary has found--
``(A) are adequate to provide efficient,
economical, and effective administration of such State
plan;
``(B) are compatible with the claims processing and
information retrieval systems used in the
administration of title XVIII, and for this purpose--
``(i) have a uniform identification
coding system for providers, other
payees, and beneficiaries under this
title or title XVIII;
``(ii) provide liaison between
States and carriers and intermediaries
with agreements under title XVIII to
facilitate timely exchange of
appropriate data; and
``(iii) provide for exchange of
data between the States and the
Secretary with respect to persons
sanctioned under this title or title
XVIII;
``(C) are capable of providing accurate and timely
data;
``(D) are complying with the applicable provisions
of part C of title XI;
``(E) are designed to receive provider claims in
standard formats to the extent specified by the
Secretary; and
``(F) effective for claims filed on or after
January 1, 1999, provide for electronic transmission of
claims data in the format specified by the Secretary
and consistent with the Medicaid Statistical
Information System (MSIS) (including detailed
individual enrollee encounter data and other
information that the Secretary may find necessary).'';
(2) in paragraph (5)--
(A) by striking subparagraph (B);
(B) by striking all that precedes clause
(i) and inserting the following:
``(2) In order to meet the requirements of this paragraph,
mechanized claims processing and information retrieval systems
must meet the following requirements:'';
(C) in clause (iii), by striking ``under
paragraph (6)''; and
(D) by redesignating clauses (i) through
(iii) as paragraphs (A) through (C); and
(3) by striking paragraphs (6), (7), and (8).
(b) Conforming Amendments.--Section 1902(a)(25)(A)(ii) (42
U.S.C. 1396a(a)(25)(A)(ii)) is amended by striking all that
follows ``shall'' and inserting the following: ``be integrated
with, and be monitored as a part of the Secretary's review of,
the State's mechanized claims processing and information
retrieval systems required under section 1903(r);''.
(c) Effective Date.--Except as otherwise specifically
provided, the amendments made by this section shall take effect
on January 1, 1998.
SEC. 4754. FACILITATING IMPOSITION OF STATE ALTERNATIVE REMEDIES ON
NONCOMPLIANT NURSING FACILITIES.
(a) In General.--Section 1919(h)(3)(D) (42 U.S.C.
1396r(h)(3)(D)) is amended--
(1) by inserting ``and'' at the end of clause (i);
(2) by striking ``, and'' at the end of clause (ii)
and inserting a period; and
(3) by striking clause (iii).
(b) Effective Date.--The amendments made by subsection (a)
take effect on the date of the enactment of this Act.
SEC. 4755. REMOVAL OF NAME FROM NURSE AIDE REGISTRY.
(a) Medicare.--Section 1819(g)(1) (42 U.S.C. 1395i-3(g)(1))
is amended--
(1) by redesignating subparagraph (D) as
subparagraph (E), and
(2) by inserting after subparagraph (C) the
following:
``(D) Removal of name from nurse aide
registry.--
``(i) In general.--In the case of a
finding of neglect under subparagraph
(C), the State shall establish a
procedure to permit a nurse aide to
petition the State to have his or her
name removed from the registry upon a
determination by the State that--
``(I) the employment and
personal history of the nurse
aide does not reflect a pattern
of abusive behavior or neglect;
and
``(II) the neglect involved
in the original finding was a
singular occurrence.
``(ii) Timing of determination.--In
no case shall a determination on a
petition submitted under clause (i) be
made prior to the expiration of the 1-
year period beginning on the date on
which the name of the petitioner was
added to the registry under
subparagraph (C).''.
(b) Medicaid.--Section 1919(g)(1) (42 U.S.C. 1396r(g)(1))
is amended--
(1) by redesignating subparagraph (D) as
subparagraph (E), and
(2) by inserting after subparagraph (C) the
following:
``(D) Removal of name from nurse aide
registry.--
``(i) In general.--In the case of a
finding of neglect under subparagraph
(C), the State shall establish a
procedure to permit a nurse aide to
petition the State to have his or her
name removed from the registry upon a
determination by the State that--
``(I) the employment and
personal history of the nurse
aide does not reflect a pattern
of abusive behavior or neglect;
and
``(II) the neglect involved
in the original finding was a
singular occurrence.
``(ii) Timing of determination.--In
no case shall a determination on a
petition submitted under clause (i) be
made prior to the expiration of the 1-
year period beginning on the date on
which the name of the petitioner was
added to the registry under
subparagraph (C).''.
(c) Retroactive Review.--The procedures developed by a
State under the amendments made by subsection (a) and (b) shall
permit an individual to petition for a review of any finding
made by a State under section 1819(g)(1)(C) or 1919(g)(1)(C) of
the Social Security Act (42 U.S.C. 1395i-3(g)(1)(C) or
1396r(g)(1)(C)) after January 1, 1995.
SEC. 4756. MEDICALLY ACCEPTED INDICATION.
Section 1927(g)(1)(B)(i) (42 U.S.C. 1396r-8(g)(1)(B)(i)) is
amended--
(1) by striking ``and'' at the end of subclause
(II),
(2) by redesignating subclause (III) as subclause
(IV), and
(3) by inserting after subclause (II) the
following:
``(III) the DRUGDEX
Information System; and''.
SEC. 4757. CONTINUATION OF STATE-WIDE SECTION 1115 MEDICAID WAIVERS.
(a) In General.--Section 1115 (42 U.S.C. 1315) is amended
by adding at the end the following new subsection:
``(e)(1) The provisions of this subsection shall apply to
the extension of any State-wide comprehensive demonstration
project (in this subsection referred to as `waiver project')
for which a waiver of compliance with requirements of title XIX
is granted under subsection (a).
``(2) During the 6-month period ending 1 year before the
date the waiver under subsection (a) with respect to a waiver
project would otherwise expire, the chief executive officer of
the State which is operating the project may submit to the
Secretary a written request for an extension, of up to 3 years,
of the project.
``(3) If the Secretary fails to respond to the request
within 6 months after the date it is submitted, the request is
deemed to have been granted.
``(4) If such a request is granted, the deadline for
submittal of a final report under the waiver project is deemed
to have been extended until the date that is 1 year after the
date the waiver project would otherwise have expired.
``(5) The Secretary shall release an evaluation of each
such project not later than 1 year after the date of receipt of
the final report.
``(6) Subject to paragraphs (4) and (7), the extension of a
waiver project under this subsection shall be on the same terms
and conditions (including applicable terms and conditions
relating to quality and access of services, budget neutrality,
data and reporting requirements, and special population
protections) that applied to the project before its extension
under this subsection.
``(7) If an original condition of approval of a waiver
project was that Federal expenditures under the project not
exceed the Federal expenditures that would otherwise have been
made, the Secretary shall take such steps as may be necessary
to ensure that, in the extension of the project under this
subsection, such condition continues to be met. In applying the
previous sentence, the Secretary shall take into account the
Secretary's best estimate of rates of change in expenditures at
the time of the extension.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to demonstration projects initially approved
before, on, or after the date of the enactment of this Act.
SEC. 4758. EXTENSION OF MORATORIUM.
Section 6408(a)(3) of the Omnibus Budget Reconciliation Act
of 1989, as amended by section 13642 of the Omnibus Budget
Reconciliation Act of 1993, is amended by striking ``December
31, 1995'' and inserting ``December 31, 2002''.
SEC. 4759. EXTENSION OF EFFECTIVE DATE FOR STATE LAW AMENDMENT.
In the case of a State plan under title XIX of the Social
Security Act which the Secretary of Health and Human Services
determines requires State legislation in order for the plan to
meet the additional requirements imposed by the amendments made
by a provision of this subtitle, the State plan shall not be
regarded as failing to comply with the requirements of such
title solely on the basis of its failure to meet these
additional requirements before the first day of the first
calendar quarter beginning after the close of the first regular
session of the State legislature that begins after the date of
the enactment of this Act. For purposes of the previous
sentence, in the case of a State that has a 2-year legislative
session, each year of the session is considered to be a
separate regular session of the State legislature.
Subtitle I--Programs of All-Inclusive Care for the Elderly (PACE)
SEC. 4801. COVERAGE OF PACE UNDER THE MEDICARE PROGRAM.
Title XVIII of the Social Security Act (42 U.S.C. 1395 et
seq.) is amended by adding at the end the following new
section:
``payments to, and coverage of benefits under, programs of all-
inclusive care for the elderly (pace)
``Sec. 1894. (a) Receipt of Benefits Through Enrollment in
PACE Program; Definitions for PACE Program Related Terms.--
``(1) Benefits through enrollment in a pace
program.--In accordance with this section, in the case
of an individual who is entitled to benefits under part
A or enrolled under part B and who is a PACE program
eligible individual (as defined in paragraph (5)) with
respect to a PACE program offered by a PACE provider
under a PACE program agreement--
``(A) the individual may enroll in the
program under this section; and
``(B) so long as the individual is so
enrolled and in accordance with regulations--
``(i) the individual shall receive
benefits under this title solely
through such program; and
``(ii) the PACE provider is
entitled to payment under and in
accordance with this section and such
agreement for provision of such
benefits.
``(2) PACE program defined.--For purposes of this
section, the term `PACE program' means a program of
all-inclusive care for the elderly that meets the
following requirements:
``(A) Operation.--The entity operating the
program is a PACE provider (as defined in
paragraph (3)).
``(B) Comprehensive benefits.--The program
provides comprehensive health care services to
PACE program eligible individuals in accordance
with the PACE program agreement and regulations
under this section.
``(C) Transition.--In the case of an
individual who is enrolled under the program
under this section and whose enrollment ceases
for any reason (including that the individual
no longer qualifies as a PACE program eligible
individual, the termination of a PACE program
agreement, or otherwise), the program provides
assistance to the individual in obtaining
necessary transitional care through appropriate
referrals and making the individual's medical
records available to new providers.
``(3) PACE provider defined.--
``(A) In general.--For purposes of this
section, the term `PACE provider' means an
entity that--
``(i) subject to subparagraph (B),
is (or is a distinct part of) a public
entity or a private, nonprofit entity
organized for charitable purposes under
section 501(c)(3) of the Internal
Revenue Code of 1986; and
``(ii) has entered into a PACE
program agreement with respect to its
operation of a PACE program.
``(B) Treatment of private, for-profit
providers.--Clause (i) of subparagraph (A)
shall not apply--
``(i) to entities subject to a
demonstration project waiver under
subsection (h); and
``(ii) after the date the report
under section 4804(b) of the Balanced
Budget Act of 1997 is submitted, unless
the Secretary determines that any of
the findings described in subparagraph
(A), (B), (C), or (D) of paragraph (2)
of such section are true.
``(4) PACE program agreement defined.--For purposes
of this section, the term `PACE program agreement'
means, with respect to a PACE provider, an agreement,
consistent with this section, section 1934 (if
applicable), and regulations promulgated to carry out
such sections, between the PACE provider and the
Secretary, or an agreement between the PACE provider
and a State administering agency for the operation of a
PACE program by the provider under such sections.
``(5) PACE program eligible individual defined.--
For purposes of this section, the term `PACE program
eligible individual' means, with respect to a PACE
program, an individual who--
``(A) is 55 years of age or older;
``(B) subject to subsection (c)(4), is
determined under subsection (c) to require the
level of care required under the State medicaid
plan for coverage of nursing facility services;
``(C) resides in the service area of the
PACE program; and
``(D) meets such other eligibility
conditions as may be imposed under the PACE
program agreement for the program under
subsection (e)(2)(A)(ii).
``(6) PACE protocol.--For purposes of this section,
the term `PACE protocol' means the Protocol for the
Program of All-inclusive Care for the Elderly (PACE),
as published by On Lok, Inc., as of April 14, 1995, or
any successor protocol that may be agreed upon between
the Secretary and On Lok, Inc.
``(7) PACE demonstration waiver program defined.--
For purposes of this section, the term `PACE
demonstration waiver program' means a demonstration
program under either of the following sections (as in
effect before the date of their repeal):
``(A) Section 603(c) of the Social Security
Amendments of 1983 (Public Law 98-21), as
extended by section 9220 of the Consolidated
Omnibus Budget Reconciliation Act of 1985
(Public Law 99-272).
``(B) Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 (Public Law 99-509).
``(8) State administering agency defined.--For
purposes of this section, the term `State administering
agency' means, with respect to the operation of a PACE
program in a State, the agency of that State (which may
be the single agency responsible for administration of
the State plan under title XIX in the State)
responsible for administering PACE program agreements
under this section and section 1934 in the State.
``(9) Trial period defined.--
``(A) In general.--For purposes of this
section, the term `trial period' means, with
respect to a PACE program operated by a PACE
provider under a PACE program agreement, the
first 3 contract years under such agreement
with respect to such program.
``(B) Treatment of entities previously
operating pace demonstration waiver programs.--
Each contract year (including a year occurring
before the effective date of this section)
during which an entity has operated a PACE
demonstration waiver program shall be counted
under subparagraph (A) as a contract year
during which the entity operated a PACE program
as a PACE provider under a PACE program
agreement.
``(10) Regulations.--For purposes of this section,
the term `regulations' refers to interim final or final
regulations promulgated under subsection (f) to carry
out this section and section 1934.
``(b) Scope of Benefits; Beneficiary Safeguards.--
``(1) In general.--Under a PACE program agreement,
a PACE provider shall--
``(A) provide to PACE program eligible
individuals enrolled with the provider,
regardless of source of payment and directly or
under contracts with other entities, at a
minimum--
``(i) all items and services
covered under this title (for
individuals enrolled under this
section) and all items and services
covered under title XIX, but without
any limitation or condition as to
amount, duration, or scope and without
application of deductibles, copayments,
coinsurance, or other cost-sharing that
would otherwise apply under this title
or such title, respectively; and
``(ii) all additional items and
services specified in regulations,
based upon those required under the
PACE protocol;
``(B) provide such enrollees access to
necessary covered items and services 24 hours
per day, every day of the year;
``(C) provide services to such enrollees
through a comprehensive, multidisciplinary
health and social services delivery system
which integrates acute and long-term care
services pursuant to regulations; and
``(D) specify the covered items and
services that will not be provided directly by
the entity, and to arrange for delivery of
those items and services through contracts
meeting the requirements of regulations.
``(2) Quality assurance; patient safeguards.--The
PACE program agreement shall require the PACE provider
to have in effect at a minimum--
``(A) a written plan of quality assurance
and improvement, and procedures implementing
such plan, in accordance with regulations; and
``(B) written safeguards of the rights of
enrolled participants (including a patient bill
of rights and procedures for grievances and
appeals) in accordance with regulations and
with other requirements of this title and
Federal and State law that are designed for the
protection of patients.
``(c) Eligibility Determinations.--
``(1) In general.--The determination of whether an
individual is a PACE program eligible individual--
``(A) shall be made under and in accordance
with the PACE program agreement; and
``(B) who is entitled to medical assistance
under title XIX, shall be made (or who is not
so entitled, may be made) by the State
administering agency.
``(2) Condition.--An individual is not a PACE
program eligible individual (with respect to payment
under this section) unless the individual's health
status has been determined by the Secretary or the
State administering agency, in accordance with
regulations, to be comparable to the health status of
individuals who have participated in the PACE
demonstration waiver programs. Such determination shall
be based upon information on health status and related
indicators (such as medical diagnoses and measures of
activities of daily living, instrumental activities of
daily living, and cognitive impairment) that are part
of a uniform minimum data set collected by PACE
providers on potential PACE program eligible
individuals.
``(3) Annual eligibility recertifications.--
``(A) In general.--Subject to subparagraph
(B), the determination described in subsection
(a)(5)(B) for an individual shall be
reevaluated at least annually.
``(B) Exception.--The requirement of annual
reevaluation under subparagraph (A) may be
waived during a period in accordance with
regulations in those cases where the State
administering agency determines that there is
no reasonable expectation of improvement or
significant change in an individual's condition
during the period because of the severity of
chronic condition, or degree of impairment of
functional capacity of the individual involved.
``(4) Continuation of eligibility.--An individual
who is a PACE program eligible individual may be deemed
to continue to be such an individual notwithstanding a
determination that the individual no longer meets the
requirement of subsection (a)(5)(B) if, in accordance
with regulations, in the absence of continued coverage
under a PACE program the individual reasonably would be
expected to meet such requirement within the succeeding
6-month period.
``(5) Enrollment; disenrollment.--
``(A) Voluntary disenrollment at any
time.--The enrollment and disenrollment of PACE
program eligible individuals in a PACE program
shall be pursuant to regulations and the PACE
program agreement and shall permit enrollees to
voluntarily disenroll without cause at any
time.
``(B) Limitations on disenrollment.--
``(i) In general.--Regulations
promulgated by the Secretary under this
section and section 1934, and the PACE
program agreement, shall provide that
the PACE program may not disenroll a
PACE program eligible individual
except--
``(I) for nonpayment of
premiums (if applicable) on a
timely basis; or
``(II) for engaging in
disruptive or threatening
behavior, as defined in such
regulations (developed in close
consultation with State
administering agencies).
``(ii) No disenrollment for
noncompliant behavior.--Except as
allowed under regulations promulgated
to carry out clause (i)(II), a PACE
program may not disenroll a PACE
program eligible individual on the
ground that the individual has engaged
in noncompliant behavior if such
behavior is related to a mental or
physical condition of the individual.
For purposes of the preceding sentence,
the term `noncompliant behavior'
includes repeated noncompliance with
medical advice and repeated failure to
appear for appointments.
``(iii) Timely review of proposed
nonvoluntary disenrollment.--A proposed
disenrollment, other than a
voluntarydisenrollment, shall be subject to timely review and final
determination by the Secretary or by the State administering agency (as
applicable), prior to the proposed disenrollment becoming effective.
``(d) Payments to PACE Providers on a Capitated Basis.--
``(1) In general.--In the case of a PACE provider
with a PACE program agreement under this section,
except as provided in this subsection or by
regulations, the Secretary shall make prospective
monthly payments of a capitation amount for each PACE
program eligible individual enrolled under the
agreement under this section in the same manner and
from the same sources as payments are made to a
Medicare+Choice organization under section 1853 (or,
for periods beginning before January 1, 1999, to an
eligible organization under a risk-sharing contract
under section 1876). Such payments shall be subject to
adjustment in the manner described in section
1853(a)(2) or section 1876(a)(1)(E), as the case may
be.
``(2) Capitation amount.--The capitation amount to
be applied under this subsection for a provider for a
contract year shall be an amount specified in the PACE
program agreement for the year. Such amount shall be
based upon payment rates established for purposes of
payment under section 1853 (or, for periods before
January 1, 1999, for purposes of risk-sharing contracts
under section 1876) and shall be adjusted to take into
account the comparative frailty of PACE enrollees and
such other factors as the Secretary determines to be
appropriate. Such amount under such an agreement shall
be computed in a manner so that the total payment level
for all PACE program eligible individuals enrolled
under a program is less than the projected payment
under this title for a comparable population not
enrolled under a PACE program.
``(e) PACE Program Agreement.--
``(1) Requirement.--
``(A) In general.--The Secretary, in close
cooperation with the State administering
agency, shall establish procedures for entering
into, extending, and terminating PACE program
agreements for the operation of PACE programs
by entities that meet the requirements for a
PACE provider under this section, section 1934,
and regulations.
``(B) Numerical limitation.--
``(i) In general.--The Secretary
shall not permit the number of PACE
providers with which agreements are in
effect under this section or under
section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 to exceed--
``(I) 40 as of the date of
the enactment of this section;
or
``(II) as of each
succeeding anniversary of such
date, the numerical limitation
under this subparagraph for the
preceding year plus 20.
Subclause (II) shall apply without
regard to the actual number of
agreements in effect as of a previous
anniversary date.
``(ii) Treatment of certain
private, for-profit providers.--The
numerical limitation in clause (i)
shall not apply to a PACE provider
that--
``(I) is operating under a
demonstration project waiver
under subsection (h); or
``(II) was operating under
such a waiver and subsequently
qualifies for PACE provider
status pursuant to subsection
(a)(3)(B)(ii).
``(2) Service area and eligibility.--
``(A) In general.--A PACE program agreement
for a PACE program--
``(i) shall designate the service
area of the program;
``(ii) may provide additional
requirements for individuals to qualify
as PACE program eligible individuals
with respect to the program;
``(iii) shall be effective for a
contract year, but may be extended for
additional contract years in the
absence of a notice by a party to
terminate and is subject to termination
by the Secretary and the State
administering agency at any time for
cause (as provided under the
agreement);
``(iv) shall require a PACE
provider to meet all applicable State
and local laws and requirements; and
``(v) shall contain such additional
terms and conditions as the parties may
agree to, so long as such terms and
conditions are consistent with this
section and regulations.
``(B) Service area overlap.--In designating
a service area under a PACE program agreement
under subparagraph (A)(i), the Secretary (in
consultation with the State administering
agency) may exclude from designation an area
that is already covered under another PACE
program agreement, in order to avoid
unnecessary duplication of services and avoid
impairing the financial and service viability
of an existing program.
``(3) Data collection; development of outcome
measures.--
``(A) Data collection.--
``(i) In general.--Under a PACE
program agreement, the PACE provider
shall--
``(I) collect data;
``(II) maintain, and afford
the Secretary and the State
administering agency access to,
the records relating to the
program, including pertinent
financial, medical, and
personnel records; and
``(III) make available to
the Secretary and the State
administering agency reports
that the Secretary finds (in
consultation with State
administering agencies)
necessary to monitor the
operation, cost, and
effectiveness of the PACE
program under this section and
section 1934 .
``(ii) Requirements during trial
period.--During the first 3 years of
operation of a PACE program (either
under this section or under a PACE
demonstration waiver program), the PACE
provider shall provide such additional
data as the Secretary specifies in
regulations in order to perform the
oversight required under paragraph
(4)(A).
``(B) Development of outcome measures.--
Under a PACE program agreement, the PACE
provider, the Secretary, and the State
administering agency shall jointly cooperate in
the development and implementation of health
status and quality of life outcome measures
with respect to PACE program eligible
individuals.
``(4) Oversight.--
``(A) Annual, close oversight during trial
period.--During the trial period (as defined in
subsection (a)(9)) with respect to a PACE
program operated by a PACE provider, the
Secretary (in cooperation with the State
administering agency) shall conduct a
comprehensive annual review of the operation of
the PACE program by the provider in order to
assure compliance with the requirements of this
section and regulations. Such a review shall
include--
``(i) an on-site visit to the
program site;
``(ii) comprehensive assessment of
a provider's fiscal soundness;
``(iii) comprehensive assessment of
the provider's capacity to provide all
PACE services to all enrolled
participants;
``(iv) detailed analysis of the
entity's substantial compliance with
all significant requirements of this
section and regulations; and
``(v) any other elements the
Secretary or State administering agency
considers necessary or appropriate.
``(B) Continuing oversight.--After the
trial period, the Secretary (in cooperation
with the State administering agency) shall
continue to conduct such review of the
operation of PACE providers and PACE programs
as may be appropriate, taking into account the
performance level of a provider and compliance
of a provider with all significant requirements
of this section and regulations.
``(C) Disclosure.--The results of reviews
under this paragraph shall be reported promptly
to the PACE provider, along with any
recommendations for changes to the provider's
program, and shall be made available to the
public upon request.
``(5) Termination of pace provider agreements.--
``(A) In general.--Under regulations--
``(i) the Secretary or a State
administering agency may terminate a
PACE program agreement for cause; and
``(ii) a PACE provider may
terminate an agreement after
appropriate notice to the Secretary,
the State agency, and enrollees.
``(B) Causes for termination.--In
accordance with regulations establishing
procedures for termination of PACE program
agreements, the Secretary or a State
administering agency may terminate a PACE
program agreement with a PACE provider for,
among other reasons, the fact that--
``(i) the Secretary or State
administering agency determines that--
``(I) there are significant
deficiencies in the quality of
care provided to enrolled
participants; or
``(II) the provider has
failed to comply substantially
with conditions for a program
or provider under this section
or section 1934; and
``(ii) the entity has failed to
develop and successfully initiate,
within 30 days of the date of the
receipt of written notice of such a
determination, a plan to correct the
deficiencies, or has failed to continue
implementation of such a plan.
``(C) Termination and transition
procedures.--An entity whose PACE provider
agreement is terminated under this paragraph
shall implement the transition procedures
required under subsection (a)(2)(C).
``(6) Secretary's oversight; enforcement
authority.--
``(A) In general.--Under regulations, if
the Secretary determines (after consultation
with the State administering agency) that a
PACE provider is failing substantially to
comply with the requirements of this section
and regulations, the Secretary (and the State
administering agency) may take any or all of
the following actions:
``(i) Condition the continuation of
the PACE program agreement upon timely
execution of a corrective action plan.
``(ii) Withhold some or all further
payments under the PACE program
agreement under this section or section
1934 with respect to PACE program
services furnished by such provider
until the deficiencies have been
corrected.
``(iii) Terminate such agreement.
``(B) Application of intermediate
sanctions.--Under regulations, the Secretary
may providefor the application against a PACE
provider of remedies described in section 1857(g)(2) (or, for periods
before January 1, 1999, section 1876(i)(6)(B)) or 1903(m)(5)(B) in the
case of violations by the provider of the type described in section
1857(g)(1) (or section 1876(i)(6)(A) for such periods) or
1903(m)(5)(A), respectively (in relation to agreements, enrollees, and
requirements under this section or section 1934, respectively).
``(7) Procedures for termination or imposition of
sanctions.--Under regulations, the provisions of
section 1857(h) (or for periods before January 1, 1999,
section 1876(i)(9)) shall apply to termination and
sanctions respecting a PACE program agreement and PACE
provider under this subsection in the same manner as
they apply to a termination and sanctions with respect
to a contract and a Medicare+Choice organization under
part C (or for such periods an eligible organization
under section 1876).
``(8) Timely consideration of applications for pace
program provider status.--In considering an application
for PACE provider program status, the application shall
be deemed approved unless the Secretary, within 90 days
after the date of the submission of the application to
the Secretary, either denies such request in writing or
informs the applicant in writing with respect to any
additional information that is needed in order to make
a final determination with respect to the application.
After the date the Secretary receives such additional
information, the application shall be deemed approved
unless the Secretary, within 90 days of such date,
denies such request.
``(f) Regulations.--
``(1) In general.--The Secretary shall issue
interim final or final regulations to carry out this
section and section 1934.
``(2) Use of pace protocol.--
``(A) In general.--In issuing such
regulations, the Secretary shall, to the extent
consistent with the provisions of this section,
incorporate the requirements applied to PACE
demonstration waiver programs under the PACE
protocol.
``(B) Flexibility.--In order to provide for
reasonable flexibility in adapting the PACE
service delivery model to the needs of
particular organizations (such as those in
rural areas or those that may determine it
appropriate to use nonstaff physicians
according to State licensing law requirements)
under this section and section 1934, the
Secretary (in close consultation with State
administering agencies) may modify or waive
provisions of the PACE protocol so long as any
such modification or waiver is not inconsistent
with and would not impair the essential
elements, objectives, and requirements of this
section, but may not modify or waive any of the
following provisions:
``(i) The focus on frail elderly
qualifying individuals who require the
level of care provided in a nursing
facility.
``(ii) The delivery of
comprehensive, integrated acute and
long-term care services.
``(iii) The interdisciplinary team
approach to care management and service
delivery.
``(iv) Capitated, integrated
financing that allows the provider to
pool payments received from public and
private programs and individuals.
``(v) The assumption by the
provider of full financial risk.
``(3) Application of certain additional beneficiary
and program protections.--
``(A) In general.--In issuing such
regulations and subject to subparagraph (B),
the Secretary may apply with respect to PACE
programs, providers, and agreements such
requirements of part C (or, for periods before
January 1, 1999, section 1876) and
sections1903(m) and 1932 relating to protection of beneficiaries and
program integrity as would apply to Medicare+Choice organizations under
part C (or for such periods eligible organizations under risk-sharing
contracts under section 1876) and to medicaid managed care
organizations under prepaid capitation agreements under section
1903(m).
``(B) Considerations.--In issuing such
regulations, the Secretary shall--
``(i) take into account the
differences between populations served
and benefits provided under this
section and under part C (or, for
periods before January 1, 1999, section
1876) and section 1903(m);
``(ii) not include any requirement
that conflicts with carrying out PACE
programs under this section; and
``(iii) not include any requirement
restricting the proportion of enrollees
who are eligible for benefits under
this title or title XIX.
``(4) Construction.--Nothing in this subsection
shall be construed as preventing the Secretary from
including in regulations provisions to ensure the
health and safety of individuals enrolled in a PACE
program under this section that are in addition to
those otherwise provided under paragraphs (2) and (3).
``(g) Waivers of Requirements.--With respect to carrying
out a PACE program under this section, the following
requirements of this title (and regulations relating to such
requirements) are waived and shall not apply:
``(1) Section 1812, insofar as it limits coverage
of institutional services.
``(2) Sections 1813, 1814, 1833, and 1886, insofar
as such sections relate to rules for payment for
benefits.
``(3) Sections 1814(a)(2)(B), 1814(a)(2)(C), and
1835(a)(2)(A), insofar as they limit coverage of
extended care services or home health services.
``(4) Section 1861(i), insofar as it imposes a 3-
day prior hospitalization requirement for coverage of
extended care services.
``(5) Paragraphs (1) and (9) of section 1862(a),
insofar as they may prevent payment for PACE program
services to individuals enrolled under PACE programs.
``(h) Demonstration Project for For-Profit Entities.--
``(1) In general.--In order to demonstrate the
operation of a PACE program by a private, for-profit
entity, the Secretary (in close consultation with State
administering agencies) shall grant waivers from the
requirement under subsection (a)(3) that a PACE
provider may not be a for-profit, private entity.
``(2) Similar terms and conditions.--
``(A) In general.--Except as provided under
subparagraph (B), and paragraph (1), the terms
and conditions for operation of a PACE program
by a provider under this subsection shall be
the same as those for PACE providers that are
nonprofit, private organizations.
``(B) Numerical limitation.--The number of
programs for which waivers are granted under
this subsection shall not exceed 10. Programs
with waivers granted under this subsection
shall not be counted against the numerical
limitation specified in subsection (e)(1)(B).
``(i) Miscellaneous Provisions.--Nothing in this section or
section 1934 shall be construed as preventing a PACE provider
from entering into contracts with other governmental or
nongovernmental payers for the care of PACE program eligible
individuals who are not eligible for benefits under part A, or
enrolled under part B, or eligible for medical assistance under
title XIX.''.
SEC. 4802. ESTABLISHMENT OF PACE PROGRAM AS MEDICAID STATE OPTION.
(a) In General.--Title XIX is amended--
(1) in section 1905(a) (42 U.S.C. 1396d(a)), as
amended by section 4702(a)(1)--
(A) by striking ``and'' at the end of
paragraph (25);
(B) by redesignating paragraph (26) as
paragraph (27); and
(C) by inserting after paragraph (25) the
following new paragraph:
``(26) services furnished under a PACE program
under section 1934 to PACE program eligible individuals
enrolled under the program under such section; and'';
(2) by redesignating section 1934, as redesignated
by section 4732, as section 1935; and
(3) by inserting after section 1933, as added by
such section, the following new section:
``program of all-inclusive care for the elderly (pace)
``Sec. 1934. (a) State Option.--
``(1) In general.--A State may elect to provide
medical assistance under this section with respect to
PACE program services to PACE program eligible
individuals who are eligible for medical assistance
under the State plan and who are enrolled in a PACE
program under a PACE program agreement. Such
individuals need not be eligible for benefits under
part A, or enrolled under part B, of title XVIII to be
eligible to enroll under this section. In the case of
an individual enrolled with a PACE program pursuant to
such an election--
``(A) the individual shall receive benefits
under the plan solely through such program, and
``(B) the PACE provider shall receive
payment in accordance with the PACE program
agreement for provision of such benefits.
A State may establish a numerical limit on the number
of individuals who may be enrolled in a PACE program
under a PACE program agreement.
``(2) PACE program defined.--For purposes of this
section, the term `PACE program' means a program of
all-inclusive care for the elderly that meets the
following requirements:
``(A) Operation.--The entity operating the
program is a PACE provider (as defined in
paragraph (3)).
``(B) Comprehensive benefits.--The program
provides comprehensive health care services to
PACE program eligible individuals in accordance
with the PACE program agreement and regulations
under this section.
``(C) Transition.--In the case of an
individual who is enrolled under the program
under this section and whose enrollment ceases
for any reason (including that the individual
no longer qualifies as a PACE program eligible
individual, the termination of a PACE program
agreement, or otherwise), the program provides
assistance to the individual in obtaining
necessary transitional care through appropriate
referrals and making the individual's medical
records available to new providers.
``(3) PACE provider defined.--
``(A) In general.--For purposes of this
section, the term `PACE provider' means an
entity that--
``(i) subject to subparagraph (B),
is (or is a distinct part of) a public
entity or a private, nonprofit entity
organized for charitable purposes under
section 501(c)(3) of the Internal
Revenue Code of 1986, and
``(ii) has entered into a PACE
program agreement with respect to its
operation of a PACE program.
``(B) Treatment of private, for-profit
providers.--Clause (i) of subparagraph (A)
shall not apply--
``(i) to entities subject to a
demonstration project waiver under
subsection (h); and
``(ii) after the date the report
under section 4804(b) of the Balanced
Budget Act of 1997 is submitted, unless
the Secretary determines that any of
the findings described in subparagraph
(A), (B), (C), or (D) of paragraph (2)
of such section are true.
``(4) PACE program agreement defined.--For purposes
of this section, the term `PACE program agreement'
means, with respect to a PACE provider, an agreement,
consistent with this section, section 1894 (if
applicable), and regulations promulgated to carry out
such sections, among the PACE provider, the Secretary,
and a State administering agency for the operation of a
PACE program by the provider under such sections.
``(5) PACE program eligible individual defined.--
For purposes of this section, the term `PACE program
eligible individual' means, with respect to a PACE
program, an individual who--
``(A) is 55 years of age or older;
``(B) subject to subsection (c)(4), is
determined under subsection (c) to require the
level of care required under the State medicaid
plan for coverage of nursing facility services;
``(C) resides in the service area of the
PACE program; and
``(D) meets such other eligibility
conditions as may be imposed under the PACE
program agreement for the program under
subsection (e)(2)(A)(ii).
``(6) PACE protocol.--For purposes of this section,
the term `PACE protocol' means the Protocol for the
Program of All-inclusive Care for the Elderly (PACE),
as published by On Lok, Inc., as of April 14, 1995, or
any successor protocol that may be agreed upon between
the Secretary and On Lok, Inc.
``(7) PACE demonstration waiver program defined.--
For purposes of this section, the term `PACE
demonstration waiver program' means a demonstration
program under either of the following sections (as in
effect before the date of their repeal):
``(A) Section 603(c) of the Social Security
Amendments of 1983 (Public Law 98-21), as
extended by section 9220 of the Consolidated
Omnibus Budget Reconciliation Act of 1985
(Public Law 99-272).
``(B) Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 (Public Law 99-509).
``(8) State administering agency defined.--For
purposes of this section, the term `State administering
agency' means, with respect to the operation of a PACE
program in a State, the agency of that State (which may
be the single agency responsible for administration of
the State plan under this title in the State)
responsible for administering PACE program agreements
under this section and section 1894 in the State.
``(9) Trial period defined.--
``(A) In general.--For purposes of this
section, the term `trial period' means, with
respect to a PACE program operated by a PACE
provider under a PACE program agreement, the
first 3 contract years under such agreement
with respect to such program.
``(B) Treatment of entities previously
operating pace demonstration waiver programs.--
Each contract year (including a year occurring
before the effective date of this section)
during which an entity has operated a PACE
demonstration waiver program shall be counted
under subparagraph (A) as a contract year
during which the entity operated a PACE program
as a PACE provider under a PACE program
agreement.
``(10) Regulations.--For purposes of this section,
the term `regulations' refers to interim final or final
regulations promulgated under subsection (f) to carry
out this section and section 1894.
``(b) Scope of Benefits; Beneficiary Safeguards.--
``(1) In general.--Under a PACE program agreement,
a PACE provider shall--
``(A) provide to PACE program eligible
individuals, regardless of source of payment
and directly or under contracts with other
entities, at a minimum--
``(i) all items and services
covered under title XVIII (for
individuals enrolled under section
1894) and all items and services
covered under this title, but without
any limitation or condition as to
amount, duration, or scope and without
application of deductibles, copayments,
coinsurance, or other cost-sharing that
would otherwise apply under such title
or this title, respectively; and
``(ii) all additional items and
services specified in regulations,
based upon those required under the
PACE protocol;
``(B) provide such enrollees access to
necessary covered items and services 24 hours
per day, every day of the year;
``(C) provide services to such enrollees
through a comprehensive, multidisciplinary
health and social services delivery system
which integrates acute and long-term care
services pursuant to regulations; and
``(D) specify the covered items and
services that will not be provided directly by
the entity, and to arrange for delivery of
those items and services through contracts
meeting the requirements of regulations.
``(2) Quality assurance; patient safeguards.--The
PACE program agreement shall require the PACE provider
to have in effect at a minimum--
``(A) a written plan of quality assurance
and improvement, and procedures implementing
such plan, in accordance with regulations, and
``(B) written safeguards of the rights of
enrolled participants (including a patient bill
of rights and procedures for grievances and
appeals) in accordance with regulations and
with other requirements of this title and
Federal and State law designed for the
protection of patients.
``(c) Eligibility Determinations.--
``(1) In general.--The determination of--
``(A) whether an individual is a PACE
program eligible individual shall be made under
and in accordance with the PACE program
agreement, and
``(B) who is entitled to medical assistance
under this title shall be made (or who is not
so entitled, may be made) by the State
administering agency.
``(2) Condition.--An individual is not a PACE
program eligible individual (with respect to payment
under this section) unless the individual's health
status has been determined by the Secretary or the
State administering agency, in accordance with
regulations, to be comparable to the health status of
individuals who have participated in the PACE
demonstration waiver programs. Such determination shall
be based upon information on health status and related
indicators (such as medical diagnoses and measures of
activities of daily living, instrumental activities of
daily living, and cognitive impairment) that are part
of a uniform minimum data set collected by PACE
providers on potential eligible individuals.
``(3) Annual eligibility recertifications.--
``(A) In general.--Subject to subparagraph
(B), the determination described in subsection
(a)(5)(B) for an individual shall be
reevaluated at least annually.
``(B) Exception.--The requirement of annual
reevaluation under subparagraph (A) may be
waived during a period in accordance with
regulations in those cases in which the State
administering agency determines that there is
no reasonable expectation of improvement or
significant change in an individual's condition
during the period because of the severity of
chronic condition, or degree of impairment of
functional capacity of the individual involved.
``(4) Continuation of eligibility.--An individual
who is a PACE program eligible individual may be deemed
to continue to be such an individual notwithstanding a
determination that the individual no longer meets the
requirement of subsection (a)(5)(B) if, in accordance
with regulations, in the absence of continued coverage
under a PACE program the individual reasonably would be
expected to meet such requirement within the succeeding
6-month period.
``(5) Enrollment; disenrollment.--
``(A) Voluntary disenrollment at any
time.--The enrollment and disenrollment of PACE
program eligible individuals in a PACE program
shall be pursuant to regulations and the PACE
program agreement and shall permit enrollees to
voluntarily disenroll without cause at any
time.
``(B) Limitations on disenrollment.--
``(i) In general.--Regulations
promulgated by the Secretary under this
section and section 1894, and the PACE
program agreement, shall provide that
the PACE program may not disenroll a
PACE program eligible individual
except--
``(I) for nonpayment of
premiums (if applicable) on a
timely basis; or
``(II) for engaging in
disruptive or threatening
behavior, as defined in such
regulations (developed in close
consultation with State
administering agencies).
``(ii) No disenrollment for
noncompliant behavior.--Except as
allowed under regulations promulgated
to carry out clause (i)(II), a PACE
program may not disenroll a PACE
program eligible individual on the
ground that the individual has engaged
in noncompliant behavior if such
behavior is related to a mental or
physical condition of the individual.
For purposes of the preceding sentence,
the term `noncompliant behavior'
includes repeated noncompliance with
medical advice and repeated failure to
appear for appointments.
``(iii) Timely review of proposed
nonvoluntary disenrollment.--A proposed
disenrollment, other than a voluntary
disenrollment, shall be subject to
timely review and final determination
by the Secretary or by the State
administering agency (as applicable),
prior to the proposed disenrollment
becoming effective.
``(d) Payments to PACE Providers on a Capitated Basis.--
``(1) In general.--In the case of a PACE provider
with a PACE program agreement under this section,
except as provided in this subsection or by
regulations, the State shall make prospective monthly
payments of a capitation amount for each PACE program
eligible individual enrolled under the agreement under
this section.
``(2) Capitation amount.--The capitation amount to
be applied under this subsection for a provider for a
contract year shall be an amount specified in the PACE
program agreement for the year. Such amount shall be an
amount, specified under the PACE agreement, which is
less than the amount that would otherwise have been
made under the State plan if the individuals were not
so enrolled and shall be adjusted to take into account
the comparative frailty of PACE enrollees and such
other factors as the Secretary determines to be
appropriate. The payment under this section shall be in
addition to any payment made under section 1894 for
individuals who are enrolled in a PACE program under
such section.
``(e) PACE Program Agreement.--
``(1) Requirement.--
``(A) In general.--The Secretary, in close
cooperation with the State administering
agency, shall establish procedures for entering
into, extending, and terminating PACE program
agreements for the operationof PACE programs by
entities that meet the requirements for a PACE provider under this
section, section 1894, and regulations.
``(B) Numerical limitation.--
``(i) In general.--The Secretary
shall not permit the number of PACE
providers with which agreements are in
effect under this section or under
section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 to exceed--
``(I) 40 as of the date of
the enactment of this section,
or
``(II) as of each
succeeding anniversary of such
date, the numerical limitation
under this subparagraph for the
preceding year plus 20.
Subclause (II) shall apply without
regard to the actual number of
agreements in effect as of a previous
anniversary date.
``(ii) Treatment of certain
private, for-profit providers.--The
numerical limitation in clause (i)
shall not apply to a PACE provider
that--
``(I) is operating under a
demonstration project waiver
under subsection (h), or
``(II) was operating under
such a waiver and subsequently
qualifies for PACE provider
status pursuant to subsection
(a)(3)(B)(ii).
``(2) Service area and eligibility.--
``(A) In general.--A PACE program agreement
for a PACE program--
``(i) shall designate the service
area of the program;
``(ii) may provide additional
requirements for individuals to qualify
as PACE program eligible individuals
with respect to the program;
``(iii) shall be effective for a
contract year, but may be extended for
additional contract years in the
absence of a notice by a party to
terminate, and is subject to
termination by the Secretary and the
State administering agency at any time
for cause (as provided under the
agreement);
``(iv) shall require a PACE
provider to meet all applicable State
and local laws and requirements; and
``(v) shall contain such additional
terms and conditions as the parties may
agree to, so long as such terms and
conditions are consistent with this
section and regulations.
``(B) Service area overlap.--In designating
a service area under a PACE program agreement
under subparagraph (A)(i), the Secretary (in
consultation with the State administering
agency) may exclude from designation an area
that is already covered under another PACE
program agreement, in order to avoid
unnecessary duplication of services and avoid
impairing the financial and service viability
of an existing program.
``(3) Data collection; development of outcome
measures.--
``(A) Data collection.--
``(i) In general.--Under a PACE
program agreement, the PACE provider
shall--
``(I) collect data;
``(II) maintain, and afford
the Secretary and the State
administering agency access to,
the records relating to the
program, including pertinent
financial, medical, and
personnel records; and
``(III) submit to the
Secretary and the State
administering agency such
reports as the Secretary finds
(in consultation with State
administering agencies)
necessary to monitor the
operation, cost, and
effectiveness of the PACE
program.
``(ii) Requirements during trial
period.--During the first 3 years of
operation of a PACE program (either
under this section or under a PACE
demonstration waiver program), the PACE
provider shall provide such additional
data as the Secretary specifies in
regulations in order to perform the
oversight required under paragraph
(4)(A).
``(B) Development of outcome measures.--
Under a PACE program agreement, the PACE
provider, the Secretary, and the State
administering agency shall jointly cooperate in
the development and implementation of health
status and quality of life outcome measures
with respect to PACE program eligible
individuals.
``(4) Oversight.--
``(A) Annual, close oversight during trial
period.--During the trial period (as defined in
subsection (a)(9)) with respect to a PACE
program operated by a PACE provider, the
Secretary (in cooperation with the State
administering agency) shall conduct a
comprehensive annual review of the operation of
the PACE program by the provider in order to
assure compliance with the requirements of this
section and regulations. Such a review shall
include--
``(i) an onsite visit to the
program site;
``(ii) comprehensive assessment of
a provider's fiscal soundness;
``(iii) comprehensive assessment of
the provider's capacity to provide all
PACE services to all enrolled
participants;
``(iv) detailed analysis of the
entity's substantial compliance with
all significant requirements of this
section and regulations; and
``(v) any other elements the
Secretary or the State administering
agency considers necessary or
appropriate.
``(B) Continuing oversight.--After the
trial period, the Secretary (in cooperation
with the State administering agency) shall
continue to conduct such review of the
operation of PACE providers and PACE programs
as may be appropriate, taking into account the
performance level of a provider and compliance
of a provider with all significant requirements
of this section and regulations.
``(C) Disclosure.--The results of reviews
under this paragraph shall be reported promptly
to the PACE provider, along with any
recommendations for changes to the provider's
program, and shall be made available to the
public upon request.
``(5) Termination of pace provider agreements.--
``(A) In general.--Under regulations--
``(i) the Secretary or a State
administering agency may terminate a
PACE program agreement for cause, and
``(ii) a PACE provider may
terminate such an agreement after
appropriate notice to the Secretary,
the State administering agency, and
enrollees.
``(B) Causes for termination.--In
accordance with regulations establishing
procedures for termination of PACE program
agreements, the Secretary or a State
administering agency may terminate a PACE
program agreement with a PACE provider for,
among other reasons, the fact that--
``(i) the Secretary or State
administering agency determines that--
``(I) there are significant
deficiencies in the quality of
care provided to enrolled
participants; or
``(II) the provider has
failed to comply substantially
with conditions for a program
orprovider under this section
or section 1894; and
``(ii) the entity has failed to
develop and successfully initiate,
within 30 days of the date of the
receipt of written notice of such a
determination, a plan to correct the
deficiencies, or has failed to continue
implementation of such a plan.
``(C) Termination and transition
procedures.--An entity whose PACE provider
agreement is terminated under this paragraph
shall implement the transition procedures
required under subsection (a)(2)(C).
``(6) Secretary's oversight; enforcement
authority.--
``(A) In general.--Under regulations, if
the Secretary determines (after consultation
with the State administering agency) that a
PACE provider is failing substantially to
comply with the requirements of this section
and regulations, the Secretary (and the State
administering agency) may take any or all of
the following actions:
``(i) Condition the continuation of
the PACE program agreement upon timely
execution of a corrective action plan.
``(ii) Withhold some or all further
payments under the PACE program
agreement under this section or section
1894 with respect to PACE program
services furnished by such provider
until the deficiencies have been
corrected.
``(iii) Terminate such agreement.
``(B) Application of intermediate
sanctions.--Under regulations, the Secretary
may provide for the application against a PACE
provider of remedies described in section
1857(g)(2) (or, for periods before January 1,
1999, section 1876(i)(6)(B)) or 1903(m)(5)(B)
in the case of violations by the provider of
the type described in section 1857(g)(1) (or
1876(i)(6)(A) for such periods) or
1903(m)(5)(A), respectively (in relation to
agreements, enrollees, and requirements under
section 1894 or this section, respectively).
``(7) Procedures for termination or imposition of
sanctions.--Under regulations, the provisions of
section 1857(h) (or for periods before January 1, 1999,
section 1876(i)(9)) shall apply to termination and
sanctions respecting a PACE program agreement and PACE
provider under this subsection in the same manner as
they apply to a termination and sanctions with respect
to a contract and a Medicare+Choice organization under
part C of title XVIII (or for such periods an eligible
organization under section 1876).
``(8) Timely consideration of applications for pace
program provider status.--In considering an application
for PACE provider program status, the application shall
be deemed approved unless the Secretary, within 90 days
after the date of the submission of the application to
the Secretary, either denies such request in writing or
informs the applicant in writing with respect to any
additional information that is needed in order to make
a final determination with respect to the application.
After the date the Secretary receives such additional
information, the application shall be deemed approved
unless the Secretary, within 90 days of such date,
denies such request.
``(f) Regulations.--
``(1) In general.--The Secretary shall issue
interim final or final regulations to carry out this
section and section 1894.
``(2) Use of pace protocol.--
``(A) In general.--In issuing such
regulations, the Secretary shall, to the extent
consistent with the provisions of this section,
incorporate the requirements applied to PACE
demonstration waiver programs under the PACE
protocol.
``(B) Flexibility.--In order to provide for
reasonable flexibility in adapting the PACE
service delivery model to the needs of
particular organizations (such as those in
rural areas or those that may determine it
appropriate to use nonstaff physicians
according to State licensing law requirements)
under this section and section 1894, the
Secretary (in close consultation with State
administering agencies) may modify or waive
provisions of the PACE protocol so long as any
such modification or waiver is not inconsistent
with and would not impair the essential
elements, objectives, and requirements of this
section, but may not modify or waive any of the
following provisions:
``(i) The focus on frail elderly
qualifying individuals who require the
level of care provided in a nursing
facility.
``(ii) The delivery of
comprehensive, integrated acute and
long-term care services.
``(iii) The interdisciplinary team
approach to care management and service
delivery.
``(iv) Capitated, integrated
financing that allows the provider to
pool payments received from public and
private programs and individuals.
``(v) The assumption by the
provider of full financial risk.
``(3) Application of certain additional beneficiary
and program protections.--
``(A) In general.--In issuing such
regulations and subject to subparagraph (B),
the Secretary may apply with respect to PACE
programs, providers, and agreements such
requirements of part C of title XVIII (or, for
periods before January 1, 1999, section 1876)
and sections 1903(m) and 1932 relating to
protection of beneficiaries and program
integrity as would apply to Medicare+Choice
organizations under such part C (or for such
periods eligible organizations under risk-
sharing contracts under section 1876) and to
medicaid managed care organizations under
prepaid capitation agreements under section
1903(m).
``(B) Considerations.--In issuing such
regulations, the Secretary shall--
``(i) take into account the
differences between populations served
and benefits provided under this
section and under part C of title XVIII
(or, for periods before January 1,
1999, section 1876) and section
1903(m);
``(ii) not include any requirement
that conflicts with carrying out PACE
programs under this section; and
``(iii) not include any requirement
restricting the proportion of enrollees
who are eligible for benefits under
this title or title XVIII.
``(4) Construction.--Nothing in this subsection
shall be construed as preventing the Secretary from
including in regulations provisions to ensure the
health and safety of individuals enrolled in a PACE
program under this section that are in addition to
those otherwise provided under paragraphs (2) and (3).
``(g) Waivers of Requirements.--With respect to carrying
out a PACE program under this section, the following
requirements of this title (and regulations relating to such
requirements) shall not apply:
``(1) Section 1902(a)(1), relating to any
requirement that PACE programs or PACE program services
be provided in all areas of a State.
``(2) Section 1902(a)(10), insofar as such section
relates to comparability of services among different
population groups.
``(3) Sections 1902(a)(23) and 1915(b)(4), relating
to freedom of choice of providers under a PACE program.
``(4) Section 1903(m)(2)(A), insofar as it
restricts a PACE provider from receiving prepaid
capitation payments.
``(5) Such other provisions of this title that, as
added or amended by the Balanced Budget Act of 1997,
the Secretary determines are inapplicable to carrying
out a PACE program under this section.
``(h) Demonstration Project for For-Profit Entities.--
``(1) In general.--In order to demonstrate the
operation of a PACE program by a private, for-profit
entity, the Secretary (in close consultation with State
administering agencies) shall grant waivers from the
requirement under subsection (a)(3) that a PACE
provider may not be a for-profit, private entity.
``(2) Similar terms and conditions.--
``(A) In general.--Except as provided under
subparagraph (B), and paragraph (1), the terms
and conditions for operation of a PACE program
by a provider under this subsection shall be
the same as those for PACE providers that are
nonprofit, private organizations.
``(B) Numerical limitation.--The number of
programs for which waivers are granted under
this subsection shall not exceed 10. Programs
with waivers granted under this subsection
shall not be counted against the numerical
limitation specified in subsection (e)(1)(B).
``(i) Post-Eligibility Treatment of Income.--A State may
provide for post-eligibility treatment of income for
individuals enrolled in PACE programs under this section in the
same manner as a State treats post-eligibility income for
individuals receiving services under a waiver under section
1915(c).
``(j) Miscellaneous Provisions.--Nothing in this section or
section 1894 shall be construed as preventing a PACE provider
from entering into contracts with other governmental or
nongovernmental payers for the care of PACE program eligible
individuals who are not eligible for benefits under part A, or
enrolled under part B, of title XVIII or eligible for medical
assistance under this title.''.
(b) Conforming Amendments.--
(1) Section 1924(a)(5) (42 U.S.C. 1396r-5(a)(5)) is
amended--
(A) in the heading, by striking ``from
organizations receiving certain waivers'' and
inserting ``under pace programs''; and
(B) by striking ``from any organization''
and all that follows and inserting ``under a
PACE demonstration waiver program (as defined
in section 1934(a)(7)) or under a PACE program
under section 1934 or 1894.''.
(2) Section 1903(f)(4)(C) (42 U.S.C.
1396b(f)(4)(C)) is amended by inserting ``or who is a
PACE program eligible individual enrolled in a PACE
program under section 1934,'' after ``section
1902(a)(10)(A),''.
SEC. 4803. EFFECTIVE DATE; TRANSITION.
(a) Timely Issuance of Regulations; Effective Date.--The
Secretary of Health and Human Services shall promulgate
regulations to carry out this subtitle in a timely manner. Such
regulations shall be designed so that entities may establish
and operate PACE programs under sections 1894 and 1934 of the
Social Security Act (as added by sections 4801 and 4802 of this
subtitle) for periods beginning not later than 1 year after the
date of the enactment of this Act.
(b) Expansion and Transition for PACE Demonstration Project
Waivers.--
(1) Expansion in current number and extension of
demonstration projects.--Section 9412(b) of the Omnibus
Budget Reconciliation Act of 1986, as amended by
section 4118(g) of the Omnibus Budget Reconciliation
Act of 1987, is amended--
(A) in paragraph (1), by inserting before
the period at the end the following: ``, except
that the Secretary shall grant waivers of such
requirements to up to the applicable numerical
limitation specified in sections 1894(e)(1)(B)
and 1934(e)(1)(B) of the Social Security Act'';
and
(B) in paragraph (2)--
(i) in subparagraph (A), by
striking ``, including permitting the
organization to assume progressively
(over the initial 3-year period of the
waiver) the full financial risk''; and
(ii) in subparagraph (C), by adding
at the end the following: ``In granting
further extensions, an organization
shall not be required to provide for
reporting of information which is only
required because of the demonstration
nature of the project.''.
(2) Elimination of replication requirement.--
Section 9412(b)(2)(B) of such Act, as so amended, shall
not apply to waivers granted under such section after
the date of the enactment of this Act.
(3) Timely consideration of applications.--In
considering an application for waivers under such
section before the effective date of the repeals under
subsection (d), subject to the numerical limitation
under the amendment made by paragraph (1), the
application shall be deemed approved unless the
Secretary of Health and Human Services, within 90 days
after the date of its submission to the Secretary,
either denies such request in writing or informs the
applicant in writing with respect to any additional
information which is needed in order to make a final
determination with respect to the application. After
the date the Secretary receives such additional
information, the application shall be deemed approved
unless the Secretary, within 90 days of such date,
denies such request.
(c) Priority and Special Consideration in Application.--
During the 3-year period beginning on the date of the enactment
of this Act:
(1) Provider status.--The Secretary of Health and
Human Services shall give priority in processing
applications of entities to qualify as PACE programs
under section 1894 or 1934 of the Social Security Act--
(A) first, to entities that are operating a
PACE demonstration waiver program (as defined
in sections 1894(a)(7) and 1934(a)(7) of such
Act); and
(B) then to entities that have applied to
operate such a program as of May 1, 1997.
(2) New waivers.--The Secretary shall give
priority, in the awarding of additional waivers under
section 9412(b) of the Omnibus Budget Reconciliation
Act of 1986--
(A) to any entities that have applied for
such waivers under such section as of May 1,
1997; and
(B) to any entity that, as of May 1, 1997,
has formally contracted with a State to provide
services for which payment is made on a
capitated basis with an understanding that the
entity was seeking to become a PACE provider.
(3) Special consideration.--The Secretary shall
give special consideration, in the processing of
applications described in paragraph (1) and the
awarding of waivers described in paragraph (2), to an
entity which as of May 1, 1997, through formal
activities (such as entering into contracts for
feasibility studies) has indicated a specific intent to
become a PACE provider.
(d) Repeal of Current PACE Demonstration Project Waiver
Authority.--
(1) In general.--Subject to paragraph (2), the
following provisions of law are repealed:
(A) Section 603(c) of the Social Security
Amendments of 1983 (Public Law 98-21).
(B) Section 9220 of the Consolidated
Omnibus Budget Reconciliation Act of 1985
(Public Law 99-272).
(C) Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986 (Public Law 99-509).
(2) Delay in application to current waivers.--
(A) In general.--Subject to subparagraph
(B), in the case of waivers granted with
respect to a PACE program before the initial
effective date of regulations described in
subsection (a), the repeals made by paragraph
(1) shall not apply until the end of a
transition period (of up to 24 months) that
begins on the initial effective date of such
regulations, and that allows sufficient time
for an orderly transition from demonstration
project authority to general authority provided
under the amendments made by this subtitle.
(B) State option to seek extension of
current period.--A State may elect to maintain
the PACE programs which (as of the date of the
enactment of this Act) were operating in the
State under the authority described in
paragraph (1) until a date (specified by the
State) that is not later than 3 years after the
initial effective date of regulations described
in subsection (a). If a State makes such an
election, the repeals made by paragraph (1)
shall not apply to the programs until the date
so specified, but only so long as such programs
continue to operate under the same terms and
conditions as apply to such programs as of the
date of the enactment of this Act, and
subparagraph (A) shall not apply to such
programs.
SEC. 4804. STUDY AND REPORTS.
(a) Study.--
(1) In general.--The Secretary of Health and Human
Services (in close consultation with State
administering agencies, as defined in sections
1894(a)(8) and 1934(a)(8) of the Social Security Act)
shall conduct a study of the quality and cost of
providing PACE program services under the medicare and
medicaid programs under the amendments made by this
subtitle.
(2) Study of private, for-profit providers.--Such
study shall specifically compare the costs, quality,
and access to services by entities that are private,
for-profit entities operating under demonstration
projects waivers granted under sections 1894(h) and
1934(h) of the Social Security Act with the costs,
quality, and access to services of other PACE
providers.
(b) Report.--
(1) In general.--Not later than 4 years after the
date of the enactment of this Act, the Secretary shall
provide for a report to Congress on the impact of such
amendments on quality and cost of services. The
Secretary shall include in such report such
recommendations for changes in the operation of such
amendments as the Secretary deems appropriate.
(2) Treatment of private, for-profit providers.--
The report shall include specific findings on whether
any of the following findings is true:
(A) The number of covered lives enrolled
with entities operating under demonstration
project waivers under sections 1894(h) and
1934(h) of the Social Security Act is fewer
than 800 (or such lesser number as the
Secretary may find statistically sufficient to
make determinations respecting findings
described in the succeeding subparagraphs).
(B) The population enrolled with such
entities is less frail than the population
enrolled with other PACE providers.
(C) Access to or quality of care for
individuals enrolled with such entities is
lower than such access or quality for
individuals enrolled with other PACE providers.
(D) The application of such section has
resulted in an increase in expenditures under
the medicare or medicaid programs above the
expenditures that would have been made if such
section did not apply.
(c) Information Included in Annual Recommendations.--The
Medicare Payment Advisory Commission shall include in its
annual report under section 1805(b)(1)(B) of the Social
Security Act recommendations on the methodology and level of
payments made to PACE providers under sections 1894(d) and
1934(d) of such Act and on the treatment of private, for-profit
entities as PACE providers.
Subtitle J--State Children's Health Insurance Program
CHAPTER 1--STATE CHILDREN'S HEALTH INSURANCE PROGRAM
SEC. 4901. ESTABLISHMENT OF PROGRAM.
(a) Establishment.--The Social Security Act is amended by
adding at the end the following new title:
``TITLE XXI--STATE CHILDREN'S HEALTH INSURANCE PROGRAM
``SEC. 2101. PURPOSE; STATE CHILD HEALTH PLANS.
``(a) Purpose.--The purpose of this title is to provide
funds to States to enable them to initiate and expand the
provision of child health assistance to uninsured, low-income
children in an effective and efficient manner that is
coordinated with other sources of health benefits coverage for
children. Such assistance shall be provided primarily for
obtaining health benefits coverage through--
``(1) obtaining coverage that meets the
requirements of section 2103, or
``(2) providing benefits under the State's medicaid
plan under title XIX,
or a combination of both.
``(b) State Child Health Plan Required.--A State is not
eligible for payment under section 2105 unless the State has
submitted to the Secretary under section 2106 a plan that--
``(1) sets forth how the State intends to use the
funds provided under this title to provide child health
assistance to needy children consistent with the
provisions of this title, and
``(2) has been approved under section 2106.
``(c) State Entitlement.--This title constitutes budget
authority in advance of appropriations Acts and represents the
obligation of the Federal Government to provide for the payment
to States of amounts provided under section 2104.
``(d) Effective Date.--No State is eligible for payments
under section 2105 for child health assistance for coverage
provided for periods beginning before October 1, 1997.
``SEC. 2102. GENERAL CONTENTS OF STATE CHILD HEALTH PLAN; ELIGIBILITY;
OUTREACH.
``(a) General Background and Description.--A State child
health plan shall include a description, consistent with the
requirements of this title, of--
``(1) the extent to which, and manner in which,
children in the State, including targeted low-income
children and other classes of children classified by
income and other relevant factors, currently have
creditable health coverage (as defined in section
2110(c)(2));
``(2) current State efforts to provide or obtain
creditable health coverage for uncovered children,
including the steps the State is taking to identify and
enroll all uncovered children who are eligible to
participate in public health insurance programs and
health insurance programs that involve public-private
partnerships;
``(3) how the plan is designed to be coordinated
with such efforts to increase coverage of children
under creditable health coverage;
``(4) the child health assistance provided under
the plan for targeted low-income children, including
the proposed methods of delivery, and utilization
control systems;
``(5) eligibility standards consistent with
subsection (b);
``(6) outreach activities consistent with
subsection (c); and
``(7) methods (including monitoring) used--
``(A) to assure the quality and
appropriateness of care, particularly with
respect to well-baby care, well-child care, and
immunizations provided under the plan, and
``(B) to assure access to covered services,
including emergency services.
``(b) General Description of Eligibility Standards and
Methodology.--
``(1) Eligibility standards.--
``(A) In general.--The plan shall include a
description of the standards used to determine
the eligibility of targeted low-income children
for child health assistance under the plan.
Such standards may include (to the extent
consistent with this title) those relating to
the geographic areas to be served by the plan,
age, income and resources (including any
standards relating to spenddowns and
disposition of resources), residency,
disability status (so long as any standard
relating to such status does not restrict
eligibility), access to or coverage under other
health coverage, and duration of eligibility.
Such standards may not discriminate on the
basis of diagnosis.
``(B) Limitations on eligibility
standards.--Such eligibility standards--
``(i) shall, within any defined
group of covered targeted low-income
children, not cover such children with
higher family income without covering
children with a lower family income,
and
``(ii) may not deny eligibility
based on a child having a preexisting
medical condition.
``(2) Methodology.--The plan shall include a
description of methods of establishing and continuing
eligibility and enrollment.
``(3) Eligibility screening; coordination with
other health coverage programs.--The plan shall include
a description of procedures to be used to ensure--
``(A) through both intake and followup
screening, that only targeted low-income
children are furnished child health assistance
under the State child health plan;
``(B) that children found through the
screening to be eligible for medical assistance
under the State medicaid plan under title XIX
are enrolled for such assistance under such
plan;
``(C) that the insurance provided under the
State child health plan does not substitute for
coverage under group health plans;
``(D) the provision of child health
assistance to targeted low-income children in
the State who are Indians (as defined in
section 4(c) of the Indian Health Care
Improvement Act, 25 U.S.C. 1603(c)); and
``(E) coordination with other public and
private programs providing creditable coverage
for low-income children.
``(4) Nonentitlement.--Nothing in this title shall
be construed as providing an individual with an
entitlement to child health assistance under a State
child health plan.
``(c) Outreach and Coordination.--A State child health plan
shall include a description of the procedures to be used by the
State to accomplish the following:
``(1) Outreach.--Outreach to families of children
likely to be eligible for child health assistance under
the plan or under other public or private health
coverage programs to inform these families of the
availability of, and to assist them in enrolling their
children in, such a program.
``(2) Coordination with other health insurance
programs.--Coordination of the administration of the
State program under this title with other public and
private health insurance programs.
``SEC. 2103. COVERAGE REQUIREMENTS FOR CHILDREN'S HEALTH INSURANCE.
``(a) Required Scope of Health Insurance Coverage.--The
child health assistance provided to a targeted low-income child
under the plan in the form described in paragraph (1) of
section 2101(a) shall consist, consistent with subsection
(c)(5), of any of the following:
``(1) Benchmark coverage.--Health benefits coverage
that is equivalent to the benefits coverage in a
benchmark benefit package described in subsection (b).
``(2) Benchmark-equivalent coverage.--Health
benefits coverage that meets the following
requirements:
``(A) Inclusion of basic services.--The
coverage includes benefits for items and
services within each of the categories of basic
services described in subsection (c)(1).
``(B) Aggregate actuarial value equivalent
to benchmark package.--The coverage has an
aggregate actuarial value that is at least
actuarially equivalent to one of the benchmark
benefit packages.
``(C) Substantial actuarial value for
additional services included in benchmark
package.--With respect to each of the
categories of additional services described in
subsection (c)(2) for which coverage is
provided under the benchmark benefit package
used under subparagraph (B), the coverage has
an actuarial value that is equal to at least 75
percent of the actuarial value of the coverage
of that category of services in such package.
``(3) Existing comprehensive state-based
coverage.--Health benefits coverage under an existing
comprehensive State-based program, described in
subsection (d)(1).
``(4) Secretary-approved coverage.--Any other
health benefits coverage that the Secretary determines,
upon application by a State, provides appropriate
coverage for the population of targeted low-income
children proposed to be provided such coverage.
``(b) Benchmark Benefit Packages.--The benchmark benefit
packages are as follows:
``(1) FEHBP-equivalent children's health insurance
coverage.--The standard Blue Cross/Blue Shield
preferred provider option service benefit plan,
described in and offered under section 8903(1) of title
5, United States Code.
``(2) State employee coverage.--A health benefits
coverage plan that is offered and generally available
to State employees in the State involved.
``(3) Coverage offered through hmo.--The health
insurance coverage plan that--
``(A) is offered by a health maintenance
organization (as defined in section 2791(b)(3)
of the Public Health Service Act), and
``(B) has the largest insured commercial,
non-medicaid enrollment of covered lives of
such coverage plans offered by such a health
maintenance organization in the State involved.
``(c) Categories of Services; Determination of Actuarial
Value of Coverage.--
``(1) Categories of basic services.--For purposes
of this section, the categories of basic services
described in this paragraph are as follows:
``(A) Inpatient and outpatient hospital
services.
``(B) Physicians' surgical and medical
services.
``(C) Laboratory and x-ray services.
``(D) Well-baby and well-child care,
including age-appropriate immunizations.
``(2) Categories of additional services.--For
purposes of this section, the categories of additional
services described in this paragraph are as follows:
``(A) Coverage of prescription drugs.
``(B) Mental health services.
``(C) Vision services.
``(D) Hearing services.
``(3) Treatment of other categories.--Nothing in
this subsection shall be construed as preventing a
State child health plan from providing coverage of
benefits that are not within a category of services
described in paragraph (1) or (2).
``(4) Determination of actuarial value.--The
actuarial value of coverage of benchmark benefit
packages, coverage offered under the State child health
plan, and coverage of any categories of additional
services under benchmark benefit packages and under
coverage offered by such a plan, shall be set forth in
an actuarial opinion in an actuarial report that has
been prepared--
``(A) by an individual who is a member of
the American Academy of Actuaries;
``(B) using generally accepted actuarial
principles and methodologies;
``(C) using a standardized set of
utilization and price factors;
``(D) using a standardized population that
is representative of privately insured children
of the age of children who are expected to be
covered under the State child health plan;
``(E) applying the same principles and
factors in comparing the value of different
coverage (or categories of services);
``(F) without taking into account any
differences in coverage based on the method of
delivery or means of cost control or
utilization used; and
``(G) taking into account the ability of a
State to reduce benefits by taking into account
the increase in actuarial value of benefits
coverage offered under the State child health
plan that results from the limitations on cost
sharing under such coverage.
The actuary preparing the opinion shall select and
specify in the memorandum the standardized set and
population to be used under subparagraphs (C) and (D).
``(5) Construction on prohibited coverage.--Nothing
in this section shall be construed as requiring any
health benefits coverage offered under the plan to
provide coverage for items or services for which
payment is prohibited under this title, notwithstanding
that any benchmark benefit package includes coverage
for such an item or service.
``(d) Description of Existing Comprehensive State-Based
Coverage.--
``(1) In general.--A program described in this
paragraph is a child health coverage program that--
``(A) includes coverage of a range of
benefits;
``(B) is administered or overseen by the
State and receives funds from the State;
``(C) is offered in New York, Florida, or
Pennsylvania; and
``(D) was offered as of the date of the
enactment of this title.
``(2) Modifications.--A State may modify a program
described in paragraph (1) from time to time so long as
it continues to meet the requirement of subparagraph
(A) and does not reduce the actuarial value of the
coverage under the program below the lower of--
``(A) the actuarial value of the coverage
under the program as of the date of the
enactment of this title, or
``(B) the actuarial value described in
subsection (a)(2)(B),
evaluated as of the time of the modification.
``(e) Cost-Sharing.--
``(1) Description; general conditions.--
``(A) Description.--A State child health
plan shall include a description, consistent
with this subsection, of the amount (if any) of
premiums, deductibles, coinsurance, and other
cost sharing imposed. Any such charges shall be
imposed pursuant to a public schedule.
``(B) Protection for lower income
children.--The State child health plan may only
vary premiums, deductibles, coinsurance, and
other cost sharing based on the family income
of targeted low-income children in a manner
that does not favor children fromfamilies with
higher income over children from families with lower income.
``(2) No cost sharing on benefits for preventive
services.--The State child health plan may not impose
deductibles, coinsurance, or other cost sharing with
respect to benefits for services within the category of
services described in subsection (c)(1)(D).
``(3) Limitations on premiums and cost-sharing.--
``(A) Children in families with income
below 150 percent of poverty line.--In the case
of a targeted low-income child whose family
income is at or below 150 percent of the
poverty line, the State child health plan may
not impose--
``(i) an enrollment fee, premium,
or similar charge that exceeds the
maximum monthly charge permitted
consistent with standards established
to carry out section 1916(b)(1) (with
respect to individuals described in
such section); and
``(ii) a deductible, cost sharing,
or similar charge that exceeds an
amount that is nominal (as determined
consistent with regulations referred to
in section 1916(a)(3), with such
appropriate adjustment for inflation or
other reasons as the Secretary
determines to be reasonable).
``(B) Other children.--For children not
described in subparagraph (A), subject to
paragraphs (1)(B) and (2), any premiums,
deductibles, cost sharing or similar charges
imposed under the State child health plan may
be imposed on a sliding scale related to
income, except that the total annual aggregate
cost-sharing with respect to all targeted low-
income children in a family under this title
may not exceed 5 percent of such family's
income for the year involved.
``(4) Relation to medicaid requirements.--Nothing
in this subsection shall be construed as affecting the
rules relating to the use of enrollment fees, premiums,
deductions, cost sharing, and similar charges in the
case of targeted low-income children who are provided
child health assistance in the form of coverage under a
medicaid program under section 2101(a)(2).
``(f) Application of Certain Requirements.--
``(1) Restriction on application of preexisting
condition exclusions.--
``(A) In general.--Subject to subparagraph
(B), the State child health plan shall not
permit the imposition of any preexisting
condition exclusion for covered benefits under
the plan.
``(B) Group health plans and group health
insurance coverage.--If the State child health
plan provides for benefits through payment for,
or a contract with, a group health plan or
group health insurance coverage, the plan may
permit the imposition of a preexisting
condition exclusion but only insofar as it is
permitted under the applicable provisions of
part 7 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 and
title XXVII of the Public Health Service Act.
``(2) Compliance with other requirements.--Coverage
offered under this section shall comply with the
requirements of subpart 2 of part A of title XXVII of
the Public Health Service Act insofar as such
requirements apply with respect to a health insurance
issuer that offers group health insurance coverage.
``SEC. 2104. ALLOTMENTS.
``(a) Appropriation; Total Allotment.--For the purpose of
providing allotments to States under this section, there is
appropriated, out of any money in the Treasury not otherwise
appropriated--
``(1) for fiscal year 1998, $4,275,000,000;
``(2) for fiscal year 1999, $4,275,000,000;
``(3) for fiscal year 2000, $4,275,000,000;
``(4) for fiscal year 2001, $4,275,000,000;
``(5) for fiscal year 2002, $3,150,000,000;
``(6) for fiscal year 2003, $3,150,000,000;
``(7) for fiscal year 2004, $3,150,000,000;
``(8) for fiscal year 2005, $4,050,000,000;
``(9) for fiscal year 2006, $4,050,000,000; and
``(10) for fiscal year 2007, $5,000,000,000.
``(b) Allotments to 50 States and District of Columbia.--
``(1) In general.--Subject to paragraph (4) and
subsection (d), of the amount available for allotment
under subsection (a) for a fiscal year, reduced by the
amount of allotments made under subsection (c) for the
fiscal year, the Secretary shall allot to each State
(other than a State described in such subsection) with
a State child health plan approved under this title the
same proportion as the ratio of--
``(A) the product of (i) the number of
children described in paragraph (2) for the
State for the fiscal year and (ii) the State
cost factor for that State (established under
paragraph (3)); to
``(B) the sum of the products computed
under subparagraph (A).
``(2) Number of children.--
``(A) In general.--The number of children
described in this paragraph for a State for--
``(i) each of fiscal years 1998
through 2000 is equal to the number of
low-income children in the State with
no health insurance coverage for the
fiscal year;
``(ii) fiscal year 2001 is equal
to--
``(I) 75 percent of the
number of low-income children
in the State for the fiscal
year with no health insurance
coverage, plus
``(II) 25 percent of the
number of low-income children
in the State for the fiscal
year; and
``(iii) each succeeding fiscal year
is equal to--
``(I) 50 percent of the
number of low-income children
in the State for the fiscal
year with no health insurance
coverage, plus
``(II) 50 percent of the
number of low-income children
in the State for the fiscal
year.
``(B) Determination of number of
children.--For purposes of subparagraph (A), a
determination of the number of low-income
children (and of such children who have no
health insurance coverage) for a State for a
fiscal year shall be made on the basis of the
arithmetic average of the number of such
children, as reported and defined in the 3 most
recent March supplements to the Current
Population Survey of the Bureau of the Census
before the beginning of the fiscal year.
``(3) Adjustment for geographic variations in
health costs.--
``(A) In general.--For purposes of
paragraph (1)(A)(ii), the `State cost factor'
for a State for a fiscal year equal to the sum
of--
``(i) 0.15, and
``(ii) 0.85 multiplied by the ratio
of--
``(I) the annual average
wages per employee for the
State for such year (as
determined under subparagraph
(B)), to
``(II) the annual average
wages per employee for the 50
States and the District of
Columbia.
``(B) Annual average wages per employee.--
For purposes of subparagraph (A), the `annual
average wages per employee' for a State, or for
all the States. for a fiscal year is equal to
the average of the annual wages per employee
for the State or for the 50 States and the
District of Columbia for employees in the
health services industry (SIC code 8000), as
reported by the Bureau of Labor Statistics of
the Departmentof Labor for each of the most
recent 3 years before the beginning of the fiscal year involved.
``(4) Floor for states.--Subject to paragraph (5),
in no case shall the amount of the allotment under this
subsection for one of the 50 States or the District of
Columbia for a year be less than $2,000,000. To the
extent that the application of the previous sentence
results in an increase in the allotment to a State
above the amount otherwise provided, the allotments for
the other States and the District of Columbia under
this subsection shall be reduced in a pro rata manner
(but not below $2,000,000) so that the total of such
allotments in a fiscal year does not exceed the amount
otherwise provided for allotment under paragraph (1)
for that fiscal year.
``(c) Allotments to Territories.--
``(1) In general.--Of the amount available for
allotment under subsection (a) for a fiscal year,
subject to subsection (d), the Secretary shall allot
0.25 percent among each of the commonwealths and
territories described in paragraph (3) in the same
proportion as the percentage specified in paragraph (2)
for such commonwealth or territory bears to the sum of
such percentages for all such commonwealths or
territories so described.
``(2) Percentage.--The percentage specified in this
paragraph for--
``(A) Puerto Rico is 91.6 percent,
``(B) Guam is 3.5 percent,
``(C) Virgin Islands is 2.6 percent,
``(D) American Samoa is 1.2 percent, and
``(E) the Northern Mariana Islands is 1.1
percent.
``(3) Commonwealths and territories.--A
commonwealth or territory described in this paragraph
is any of the following if it has a State child health
plan approved under this title:
``(A) Puerto Rico.
``(B) Guam.
``(C) the Virgin Islands.
``(D) American Samoa.
``(E) the Northern Mariana Islands.
``(d) Certain Medicaid Expenditures Counted Against
Individual State Allotments.--The amount of the allotment
otherwise provided to a State under subsection (b) or (c) for a
fiscal year shall be reduced by the sum of--
``(1) the amount (if any) of the payments made to
that State under section 1903(a) for calendar quarters
during such fiscal year that is attributable to the
provision of medical assistance to a child during a
presumptive eligibility period under section 1920A, and
``(2) the amount of payments under such section
during such period that is attributable to the
provision of medical assistance to a child for which
payment is made under section 1903(a)(1) on the basis
of an enhanced FMAP under section 1905(b).
``(e) 3-Year Availability of Amounts Allotted.--Amounts
allotted to a State pursuant to this section for a fiscal year
shall remain available for expenditure by the State through the
end of the second succeeding fiscal year; except that amounts
reallotted to a State under subsection (f) shall be available
for expenditure by the State through the end of the fiscal year
in which they are reallotted.
``(f) Procedure for Redistribution of Unused Allotments.--
The Secretary shall determine an appropriate procedure for
redistribution of allotments from States that were provided
allotments under this section for a fiscal year but that do not
expend all of the amount of such allotments during the period
in which such allotments are available for expenditure under
subsection (e), to States that have fully expended the amount
of their allotments under this section.
``SEC. 2105. PAYMENTS TO STATES.
``(a) In General.--Subject to the succeeding provisions of
this section, the Secretary shall pay to each State with a plan
approved under this title, from its allotment under section
2104 (taking into account any adjustment under section2104(d)),
an amount for each quarter equal to the enhanced FMAP of expenditures
in the quarter--
``(1) for child health assistance under the plan
for targeted low-income children in the form of
providing health benefits coverage that meets the
requirements of section 2103; and
``(2) only to the extent permitted consistent with
subsection (c)--
``(A) for payment for other child health
assistance for targeted low-income children;
``(B) for expenditures for health services
initiatives under the plan for improving the
health of children (including targeted low-
income children and other low-income children);
``(C) for expenditures for outreach
activities as provided in section 2102(c)(1)
under the plan; and
``(D) for other reasonable costs incurred
by the State to administer the plan.
``(b) Enhanced FMAP.--For purposes of subsection (a), the
`enhanced FMAP', for a State for a fiscal year, is equal to the
Federal medical assistance percentage (as defined in the first
sentence of section 1905(b)) for the State increased by a
number of percentage points equal to 30 percent of the number
of percentage points by which (1) such Federal medical
assistance percentage for the State, is less than (2) 100
percent; but in no case shall the enhanced FMAP for a State
exceed 85 percent.
``(c) Limitation on Certain Payments for Certain
Expenditures.--
``(1) General limitations.--Funds provided to a
State under this title shall only be used to carry out
the purposes of this title (as described in section
2101), and any health insurance coverage provided with
such funds may include coverage of abortion only if
necessary to save the life of the mother or if the
pregnancy is the result of an act of rape or incest.
``(2) Limitation on expenditures not used for
medicaid or health insurance assistance.--
``(A) In general.--Except as provided in
this paragraph, payment shall not be made under
subsection (a) for expenditures for items
described in subsection (a) (other than
paragraph (1)) for a quarter in a fiscal year
to the extent the total of such expenditures
exceeds 10 percent of the sum of--
``(i) the total Federal payments
made under subsection (a) for such
quarter in the fiscal year, and
``(ii) the total Federal payments
made under section 1903(a)(1) based on
an enhanced FMAP described in section
1905(u)(2) for such quarter.
``(B) Waiver authorized for cost-effective
alternative.--The limitation under subparagraph
(A) on expenditures for items described in
subsection (a)(2) shall not apply to the extent
that a State establishes to the satisfaction of
the Secretary that--
``(i) coverage provided to targeted
low-income children through such
expenditures meets the requirements of
section 2103;
``(ii) the cost of such coverage is
not greater, on an average per child
basis, than the cost of coverage that
would otherwise be provided under
section 2103; and
``(iii) such coverage is provided
through the use of a community-based
health delivery system, such as through
contracts with health centers receiving
funds under section 330 of the Public
Health Service Act or with hospitals
such as those that receive
disproportionate share payment
adjustments under section 1886(d)(5)(F)
or 1923.
``(3) Waiver for purchase of family coverage.--
Payment may be made to a State under subsection (a)(1)
for the purchase of family coverage under a group
health plan or health insurance coverage that includes
coverage of targeted low-income children only if the
State establishes to the satisfaction of the Secretary
that--
``(A) purchase of such coverage is cost-
effective relative to the amounts that the
State would have paid to obtain comparable
coverage only of the targeted low-income
children involved, and
``(B) such coverage shall not be provided
if it would otherwise substitute for health
insurance coverage that would be provided to
such children but for the purchase of family
coverage.
``(4) Use of non-federal funds for state matching
requirement.--Amounts provided by the Federal
Government, or services assisted or subsidized to any
significant extent by the Federal Government, may not
be included in determining the amount of non-Federal
contributions required under subsection (a).
``(5) Offset of receipts attributable to premiums
and other cost-sharing.--For purposes of subsection
(a), the amount of the expenditures under the plan
shall be reduced by the amount of any premiums and
other cost-sharing received by the State.
``(6) Prevention of duplicative payments.--
``(A) Other health plans.--No payment shall
be made to a State under this section for
expenditures for child health assistance
provided for a targeted low-income child under
its plan to the extent that a private insurer
(as defined by the Secretary by regulation and
including a group health plan (as defined in
section 607(1) of the Employee Retirement
Income Security Act of 1974), a service benefit
plan, and a health maintenance organization)
would have been obligated to provide such
assistance but for a provision of its insurance
contract which has the effect of limiting or
excluding such obligation because the
individual is eligible for or is provided child
health assistance under the plan.
``(B) Other federal governmental
programs.--Except as otherwise provided by law,
no payment shall be made to a State under this
section for expenditures for child health
assistance provided for a targeted low-income
child under its plan to the extent that payment
has been made or can reasonably be expected to
be made promptly (as determined in accordance
with regulations) under any other federally
operated or financed health care insurance
program, other than an insurance program
operated or financed by the Indian Health
Service, as identified by the Secretary. For
purposes of this paragraph, rules similar to
the rules for overpayments under section
1903(d)(2) shall apply.
``(7) Limitation on payment for abortions.--
``(A) In general.--Payment shall not be
made to a State under this section for any
amount expended under the State plan to pay for
any abortion or to assist in the purchase, in
whole or in part, of health benefit coverage
that includes coverage of abortion.
``(B) Exception.--Subparagraph (A) shall
not apply to an abortion only if necessary to
save the life of the mother or if the pregnancy
is the result of an act of rape or incest.
``(C) Rule of construction.--Nothing in
this section shall be construed as affecting
the expenditure by a State, locality, or
private person or entity of State, local, or
private funds (other than funds expended under
the State plan) for any abortion or for health
benefits coverage that includes coverage of
abortion.
``(d) Maintenance of Effort.--
``(1) In medicaid eligibility standards.--No
payment may be made under subsection (a) with respect
to child health assistance provided under a State child
health plan if the State adopts income and resource
standards and methodologies for purposes of determining
a child's eligibility for medical assistance under the
State plan under title XIX that are more restrictive
than those applied as of June 1, 1997.
``(2) In amounts of payment expended for certain
state-funded health insurance programs for children.--
``(A) In general.--The amount of the
allotment for a State in a fiscal year
(beginning with fiscal year 1999) shall be
reduced by the amount by which--
``(i) the total of the State
children's health insurance
expenditures in the preceding fiscal
year, is less than
``(ii) the total of such
expenditures in fiscal year 1996.
``(B) State children's health insurance
expenditures.--The term `State children's
health insurance expenditures' means the
following:
``(i) The State share of
expenditures under this title.
``(ii) The State share of
expenditures under title XIX that are
attributable to an enhanced FMAP under
section 1905(u).
``(iii) State expenditures under
health benefits coverage under an
existing comprehensive State-based
program, described section 2103(d).
``(e) Advance Payment; Retrospective Adjustment.--The
Secretary may make payments under this section for each quarter
on the basis of advance estimates of expenditures submitted by
the State and such other investigation as the Secretary may
find necessary, and may reduce or increase the payments as
necessary to adjust for any overpayment or underpayment for
prior quarters.
``SEC. 2106. PROCESS FOR SUBMISSION, APPROVAL, AND AMENDMENT OF STATE
CHILD HEALTH PLANS.
``(a) Initial Plan.--
``(1) In general.--As a condition of receiving
payment under section 2105, a State shall submit to the
Secretary a State child health plan that meets the
applicable requirements of this title.
``(2) Approval.--Except as the Secretary may
provide under subsection (e), a State plan submitted
under paragraph (1)--
``(A) shall be approved for purposes of
this title, and
``(B) shall be effective beginning with a
calendar quarter that is specified in the plan,
but in no case earlier than October 1, 1997.
``(b) Plan Amendments.--
``(1) In general.--A State may amend, in whole or
in part, its State child health plan at any time
through transmittal of a plan amendment.
``(2) Approval.--Except as the Secretary may
provide under subsection (e), an amendment to a State
plan submitted under paragraph (1)--
``(A) shall be approved for purposes of
this title, and
``(B) shall be effective as provided in
paragraph (3).
``(3) Effective dates for amendments.--
``(A) In general.--Subject to the
succeeding provisions of this paragraph, an
amendment to a State plan shall take effect on
one or more effective dates specified in the
amendment.
``(B) Amendments relating to eligibility or
benefits.--
``(i) Notice requirement.--Any plan
amendment that eliminates or restricts
eligibility or benefits under the plan
may not take effect unless the State
certifies that it has provided prior
public notice of the change, in a form
and manner provided under applicable
State law.
``(ii) Timely transmittal.--Any
plan amendment that eliminates or
restricts eligibility or benefits under
the plan shall not be effective for
longer than a 60-day period unless the
amendmenthas been transmitted to the
Secretary before the end of such period.
``(C) Other amendments.--Any plan amendment
that is not described in subparagraph (B) and
that becomes effective in a State fiscal year
may not remain in effect after the end of such
fiscal year (or, if later, the end of the 90-
day period on which it becomes effective)
unless the amendment has been transmitted to
the Secretary.
``(c) Disapproval of Plans and Plan Amendments.--
``(1) Prompt review of plan submittals.--The
Secretary shall promptly review State plans and plan
amendments submitted under this section to determine if
they substantially comply with the requirements of this
title.
``(2) 90-day approval deadlines.--A State plan or
plan amendment is considered approved unless the
Secretary notifies the State in writing, within 90 days
after receipt of the plan or amendment, that the plan
or amendment is disapproved (and the reasons for
disapproval) or that specified additional information
is needed.
``(3) Correction.--In the case of a disapproval of
a plan or plan amendment, the Secretary shall provide a
State with a reasonable opportunity for correction
before taking financial sanctions against the State on
the basis of such disapproval.
``(d) Program Operation.--
``(1) In general.--The State shall conduct the
program in accordance with the plan (and any
amendments) approved under subsection (c) and with the
requirements of this title.
``(2) Violations.--The Secretary shall establish a
process for enforcing requirements under this title.
Such process shall provide for the withholding of funds
in the case of substantial noncompliance with such
requirements. In the case of an enforcement action
against a State under this paragraph, the Secretary
shall provide a State with a reasonable opportunity for
correction before taking financial sanctions against
the State on the basis of such an action.
``(e) Continued Approval.--An approved State child health
plan shall continue in effect unless and until the State amends
the plan under subsection (b) or the Secretary finds, under
subsection (d), substantial noncompliance of the plan with the
requirements of this title.
``SEC. 2107. STRATEGIC OBJECTIVES AND PERFORMANCE GOALS; PLAN
ADMINISTRATION.
``(a) Strategic Objectives and Performance Goals.--
``(1) Description.--A State child health plan shall
include a description of--
``(A) the strategic objectives,
``(B) the performance goals, and
``(C) the performance measures,
the State has established for providing child health
assistance to targeted low-income children under the
plan and otherwise for maximizing health benefits
coverage for other low-income children and children
generally in the State.
``(2) Strategic objectives.--Such plan shall
identify specific strategic objectives relating to
increasing the extent of creditable health coverage
among targeted low-income children and other low-income
children.
``(3) Performance goals.--Such plan shall specify
one or more performance goals for each such strategic
objective so identified.
``(4) Performance measures.--Such plan shall
describe how performance under the plan will be--
``(A) measured through objective,
independently verifiable means, and
``(B) compared against performance goals,
in order to determine the State's performance
under this title.
``(b) Records, Reports, Audits, and Evaluation.--
``(1) Data collection, records, and reports.--A
State child health plan shall include an assurance that
the State will collect the data, maintain the records,
and furnish the reports to the Secretary, at the times
and in the standardized format the Secretary may
require in order to enable the Secretary to monitor
State program administration and compliance and to
evaluate and compare the effectiveness of State plans
under this title.
``(2) State assessment and study.--A State child
health plan shall include a description of the State's
plan for the annual assessments and reports under
section 2108(a) and the evaluation required by section
2108(b).
``(3) Audits.--A State child health plan shall
include an assurance that the State will afford the
Secretary access to any records or information relating
to the plan for the purposes of review or audit.
``(c) Program Development Process.--A State child health
plan shall include a description of the process used to involve
the public in the design and implementation of the plan and the
method for ensuring ongoing public involvement.
``(d) Program Budget.--A State child health plan shall
include a description of the budget for the plan. The
description shall be updated periodically as necessary and
shall include details on the planned use of funds and the
sources of the non-Federal share of plan expenditures,
including any requirements for cost-sharing by beneficiaries.
``(e) Application of Certain General Provisions.--The
following sections of this Act shall apply to States under this
title in the same manner as they apply to a State under title
XIX:
``(1) Title xix provisions.--
``(A) Section 1902(a)(4)(C) (relating to
conflict of interest standards).
``(B) Paragraphs (2), (16), and (17) of
section 1903(i) (relating to limitations on
payment).
``(C) Section 1903(w) (relating to
limitations on provider taxes and donations).
``(2) Title xi provisions.--
``(A) Section 1115 (relating to waiver
authority).
``(B) Section 1116 (relating to
administrative and judicial review), but only
insofar as consistent with this title.
``(C) Section 1124 (relating to disclosure
of ownership and related information).
``(D) Section 1126 (relating to disclosure
of information about certain convicted
individuals).
``(E) Section 1128A (relating to civil
monetary penalties).
``(F) Section 1128B(d) (relating to
criminal penalties for certain additional
charges).
``(G) Section 1132 (relating to periods
within which claims must be filed).
``SEC. 2108. ANNUAL REPORTS; EVALUATIONS.
``(a) Annual Report.--The State shall--
``(1) assess the operation of the State plan under
this title in each fiscal year, including the progress
made in reducing the number of uncovered low-income
children; and
``(2) report to the Secretary, by January 1
following the end of the fiscal year, on the result of
the assessment.
``(b) State Evaluations.--
``(1) In general.--By March 31, 2000, each State
that has a State child health plan shall submit to the
Secretary an evaluation that includes each of the
following:
``(A) An assessment of the effectiveness of
the State plan in increasing the number of
children with creditable health coverage.
``(B) A description and analysis of the
effectiveness of elements of the State plan,
including--
``(i) the characteristics of the
children and families assisted under
the State plan including age of the
children, family income, and the
assisted child's access to or coverage
by other health insurance prior to the
State plan and after eligibility for
the State plan ends,
``(ii) the quality of health
coverage provided including the types
of benefits provided,
``(iii) the amount and level
(including payment of part or all of
any premium) of assistance provided by
the State,
``(iv) the service area of the
State plan,
``(v) the time limits for coverage
of a child under the State plan,
``(vi) the State's choice of health
benefits coverage and other methods
used for providing child health
assistance, and
``(vii) the sources of non-Federal
funding used in the State plan.
``(C) An assessment of the effectiveness of
other public and private programs in the State
in increasing the availability of affordable
quality individual and family health insurance
for children.
``(D) A review and assessment of State
activities to coordinate the plan under this
title with other public and private programs
providing health care and health care
financing, including medicaid and maternal and
child health services.
``(E) An analysis of changes and trends in
the State that affect the provision of
accessible, affordable, quality health
insurance and health care to children.
``(F) A description of any plans the State
has for improving the availability of health
insurance and health care for children.
``(G) Recommendations for improving the
program under this title.
``(H) Any other matters the State and the
Secretary consider appropriate.
``(2) Report of the secretary.--The Secretary shall
submit to Congress and make available to the public by
December 31, 2001, a report based on the evaluations
submitted by States under paragraph (1), containing any
conclusions and recommendations the Secretary considers
appropriate.
``SEC. 2109. MISCELLANEOUS PROVISIONS.
``(a) Relation to Other Laws.--
``(1) HIPAA.--Health benefits coverage provided
under section 2101(a)(1) (and coverage provided under a
waiver under section 2105(c)(2)(B)) shall be treated as
creditable coverage for purposes of part 7 of subtitle
B of title II of the Employee Retirement Income
Security Act of 1974, title XXVII of the Public Health
Service Act, and subtitle K of the Internal Revenue
Code of 1986.
``(2) ERISA.--Nothing in this title shall be
construed as affecting or modifying section 514 of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1144) with respect to a group health plan (as
defined in section 2791(a)(1) of the Public Health
Service Act (42 U.S.C. 300gg-91(a)(1)).
``SEC. 2110. DEFINITIONS.
``(a) Child Health Assistance.--For purposes of this title,
the term `child health assistance' means payment for part or
all of the cost of health benefits coverage for targeted low-
income children that includes any of the following (and
includes, in the case described in section 2105(a)(2)(A),
payment for part or all of the cost of providing any of the
following), as specified under the State plan:
``(1) Inpatient hospital services.
``(2) Outpatient hospital services.
``(3) Physician services.
``(4) Surgical services.
``(5) Clinic services (including health center
services) and other ambulatory health care services.
``(6) Prescription drugs and biologicals and the
administration of such drugs and biologicals, only if
such drugs and biologicals are not furnished for the
purpose of causing, or assisting in causing, the death,
suicide, euthanasia, or mercy killing of a person.
``(7) Over-the-counter medications.
``(8) Laboratory and radiological services.
``(9) Prenatal care and prepregnancy family
planning services and supplies.
``(10) Inpatient mental health services, other than
services described in paragraph (18) but including
services furnished in a State-operated mental hospital
and including residential or other 24-hour
therapeutically planned structured services.
``(11) Outpatient mental health services, other
than services described in paragraph (19) but including
services furnished in a State-operated mental hospital
and including community-based services.
``(12) Durable medical equipment and other
medically-related or remedial devices (such as
prosthetic devices, implants, eyeglasses, hearing aids,
dental devices, and adaptive devices).
``(13) Disposable medical supplies.
``(14) Home and community-based health care
services and related supportive services (such as home
health nursing services, home health aide services,
personal care, assistance with activities of daily
living, chore services, day care services, respite care
services, training for family members, and minor
modifications to the home).
``(15) Nursing care services (such as nurse
practitioner services, nurse midwife services, advanced
practice nurse services, private duty nursing care,
pediatric nurse services, and respiratory care
services) in a home, school, or other setting.
``(16) Abortion only if necessary to save the life
of the mother or if the pregnancy is the result of an
act of rape or incest.
``(17) Dental services.
``(18) Inpatient substance abuse treatment services
and residential substance abuse treatment services.
``(19) Outpatient substance abuse treatment
services.
``(20) Case management services.
``(21) Care coordination services.
``(22) Physical therapy, occupational therapy, and
services for individuals with speech, hearing, and
language disorders.
``(23) Hospice care.
``(24) Any other medical, diagnostic, screening,
preventive, restorative, remedial, therapeutic, or
rehabilitative services (whether in a facility, home,
school, or other setting) if recognized by State law
and only if the service is--
``(A) prescribed by or furnished by a
physician or other licensed or registered
practitioner within the scope of practice as
defined by State law,
``(B) performed under the general
supervision or at the direction of a physician,
or
``(C) furnished by a health care facility
that is operated by a State or local government
or is licensed under State law and operating
within the scope of the license.
``(25) Premiums for private health care insurance
coverage.
``(26) Medical transportation.
``(27) Enabling services (such as transportation,
translation, and outreach services) only if designed to
increase the accessibility of primary and preventive
health care services for eligible low-income
individuals.
``(28) Any other health care services or items
specified by the Secretary and not excluded under this
section.
``(b) Targeted Low-Income Child Defined.--For purposes of
this title--
``(1) In general.--Subject to paragraph (2), the
term `targeted low-income child' means a child--
``(A) who has been determined eligible by
the State for child health assistance under the
State plan;
``(B)(i) who is a low-income child, or
``(ii) is a child whose family income (as
determined under the State child health plan)
exceeds the medicaid applicable income level
(as defined in paragraph (4)),but does not
exceed 50 percentage points above the medicaid applicable income level;
and
``(C) who is not found to be eligible for
medical assistance under title XIX or covered
under a group health plan or under health
insurance coverage (as such terms are defined
in section 2791 of the Public Health Service
Act).
``(2) Children excluded.--Such term does not
include--
``(A) a child who is an inmate of a public
institution or a patient in an institution for
mental diseases; or
``(B) a child who is a member of a family
that is eligible for health benefits coverage
under a State health benefits plan on the basis
of a family member's employment with a public
agency in the State.
``(3) Special rule.--A child shall not be
considered to be described in paragraph (1)(C)
notwithstanding that the child is covered under a
health insurance coverage program that has been in
operation since before July 1, 1997, and that is
offered by a State which receives no Federal funds for
the program's operation.
``(4) Medicaid applicable income level.--The term
`medicaid applicable income level' means, with respect
to a child, the effective income level (expressed as a
percent of the poverty line) that has been specified
under the State plan under title XIX (including under a
waiver authorized by the Secretary or under section
1902(r)(2)), as of June 1, 1997, for the child to be
eligible for medical assistance under section
1902(l)(2) for the age of such child.
``(c) Additional Definitions.--For purposes of this title:
``(1) Child.--The term `child' means an individual
under 19 years of age.
``(2) Creditable health coverage.--The term
`creditable health coverage' has the meaning given the
term `creditable coverage' under section 2701(c) of the
Public Health Service Act (42 U.S.C. 300gg(c)) and
includes coverage that meets the requirements of
section 2103 provided to a targeted low-income child
under this title or under a waiver approved under
section 2105(c)(2)(B) (relating to a direct service
waiver).
``(3) Group health plan; health insurance coverage;
etc.--The terms `group health plan', `group health
insurance coverage', and `health insurance coverage'
have the meanings given such terms in section 2191 of
the Public Health Service Act.
``(4) Low-income.--The term `low-income child'
means a child whose family income is at or below 200
percent of the poverty line for a family of the size
involved.
``(5) Poverty line defined.--The term `poverty
line' has the meaning given such term in section 673(2)
of the Community Services Block Grant Act (42 U.S.C.
9902(2)), including any revision required by such
section.
``(6) Preexisting condition exclusion.--The term
`preexisting condition exclusion' has the meaning given
such term in section 2701(b)(1)(A) of the Public Health
Service Act (42 U.S.C. 300gg(b)(1)(A)).
``(7) State child health plan; plan.--Unless the
context otherwise requires, the terms `State child
health plan' and `plan' mean a State child health plan
approved under section 2106.
``(8) Uncovered child.--The term `uncovered child'
means a child that does not have creditable health
coverage.''.
(b) Conforming Amendments.--
(1) Definition of state.--Section 1101(a)(1) is
amended--
(A) by striking ``and XIX'' and inserting
``XIX, and XXI'', and
(B) by striking ``title XIX'' and inserting
``titles XIX and XXI''.
(2) Treatment as state health care program.--
Section 1128(h) (42 U.S.C. 1320a-7(h)) is amended by--
(A) in paragraph (2), by striking ``or'' at
the end;
(B) in paragraph (3), by striking the
period and inserting ``, or''; and
(C) by adding at the end the following:
``(4) a State child health plan approved under
title XXI.''.
CHAPTER 2--EXPANDED COVERAGE OF CHILDREN UNDER MEDICAID
SEC. 4911. OPTIONAL USE OF STATE CHILD HEALTH ASSISTANCE FUNDS FOR
ENHANCED MEDICAID MATCH FOR EXPANDED MEDICAID
ELIGIBILITY.
(a) Increased FMAP for Medical Assistance for Expanded
Coverage of Targeted Low-Income Children.--Section 1905 of the
Social Security Act (42 U.S.C. 1396d), as amended by section
4702(a)(2), is amended--
(1) in subsection (b), by adding at the end the
following new sentence: ``Notwithstanding the first
sentence of this subsection, in the case of a State
plan that meets the condition described in subsection
(u)(1), with respect to expenditures described in
subsection (u)(2)(A) or subsection (u)(3) the Federal
medical assistance percentage is equal to the enhanced
FMAP described in section 2105(b).''; and
(2) by adding at the end the following new
subsection:
``(u)(1) The conditions described in this paragraph for a
State plan are as follows:
``(A) The State is complying with the requirement
of section 2105(d)(1).
``(B) The plan provides for such reporting of
information about expenditures and payments
attributable to the operation of this subsection as the
Secretary deems necessary in order to carry out
paragraph (2) and section 2104(d).
``(2)(A) For purposes of subsection (b), the expenditures
described in this subparagraph are expenditures for medical
assistance for optional targeted low-income children described
in subparagraph (C), but not in excess, for a State for a
fiscal year, of the amount described in subparagraph (B) for
the State and fiscal year.
``(B) The amount described in this subparagraph, for a
State for a fiscal year, is the amount of the State's allotment
under section 2104 (not taking into account reductions under
section 2104(d)(2)) for the fiscal year reduced by the amount
of any payments made under section 2105 to the State from such
allotment for such fiscal year.
``(C) For purposes of this paragraph, the term `optional
targeted low-income child' means a targeted low-income child as
defined in section 2110(b)(1) who would not qualify for medical
assistance under the State plan under this title based on such
plan as in effect on April 15, 1997 (but taking into account
the expansion of age of eligibility effected through the
operation of section 1902(l)(2)(D)).
``(3) For purposes of subsection (b), the expenditures
described in this subparagraph are expenditures for medical
assistance for children who are born before October 1, 1983,
and who would be described in section 1902(l)(1)(D) if they had
been born on or after such date, and who are not eligible for
such assistance under the State plan under this title based on
such State plan as in effect as of April 15, 1997.''.
(b) Establishment of Optional Eligibility Category.--
Section 1902(a)(10)(A)(ii) (42 U.S.C. 1396a(a)(10)(A)(ii)), as
amended by section 4733, is amended--
(1) in subclause (XII), by striking ``or'' at the
end;
(2) in subclause (XIII), by adding ``or'' at the
end; and
(3) by adding at the end the following:
``(XIV) who are optional
targeted low-income children
described in section
1905(u)(2)(C);''.
(c) Effective Date.--The amendments made by this section
shall apply to medical assistance for items and services
furnished on or after October 1, 1997.
SEC. 4912. MEDICAID PRESUMPTIVE ELIGIBILITY FOR LOW-INCOME CHILDREN.
(a) In General.--Title XIX of the Social Security Act is
amended by inserting after section 1920 the following new
section:
``presumptive eligibility for children
``Sec. 1920A. (a) A State plan approved under section 1902
may provide for making medical assistance with respect to
health care items and services covered under the State plan
available to a child during a presumptive eligibility period.
``(b) For purposes of this section:
``(1) The term `child' means an individual under 19
years of age.
``(2) The term `presumptive eligibility period'
means, with respect to a child, the period that--
``(A) begins with the date on which a
qualified entity determines, on the basis of
preliminary information, that the family income
of the child does not exceed the applicable
income level of eligibility under the State
plan, and
``(B) ends with (and includes) the earlier
of--
``(i) the day on which a
determination is made with respect to
the eligibility of the child for
medical assistance under the State
plan, or
``(ii) in the case of a child on
whose behalf an application is not
filed by the last day of the month
following the month during which the
entity makes the determination referred
to in subparagraph (A), such last day.
``(3)(A) Subject to subparagraph (B), the term
`qualified entity' means any entity that--
``(i)(I) is eligible for payments under a
State plan approved under this title and
provides items and services described in
subsection (a) or (II) is authorized to
determine eligibility of a child to participate
in a Head Start program under the Head Start
Act (42 U.S.C. 9821 et seq.), eligibility of a
child to receive child care services for which
financial assistance is provided under the
Child Care and Development Block Grant Act of
1990 (42 U.S.C. 9858 et seq.), eligibility of
an infant or child to receive assistance under
the special supplemental nutrition program for
women, infants, and children (WIC) under
section 17 of the Child Nutrition Act of 1966
(42 U.S.C. 1786); and
``(ii) is determined by the State agency to
be capable of making determinations of the type
described in paragraph (1)(A).
``(B) The Secretary may issue regulations further
limiting those entities that may become qualified
entities in order to prevent fraud and abuse and for
other reasons.
``(C) Nothing in this section shall be construed as
preventing a State from limiting the classes of
entities that may become qualified entities, consistent
with any limitations imposed under subparagraph (B).
``(c)(1) The State agency shall provide qualified entities
with--
``(A) such forms as are necessary for an
application to be made on behalf of a child for medical
assistance under the State plan, and
``(B) information on how to assist parents,
guardians, and other persons in completing and filing
such forms.
``(2) A qualified entity that determines under subsection
(b)(1)(A) that a child is presumptively eligible for medical
assistance under a State plan shall--
``(A) notify the State agency of the determination
within 5 working days after the date on which
determination is made, and
``(B) inform the parent or custodian of the child
at the time the determination is made that an
application for medical assistance under the State plan
is required to be made by not later than the last day
of the month following the month during which the
determination is made.
``(3) In the case of a child who is determined by a
qualified entity to be presumptively eligible for medical
assistanceunder a State plan, the parent, guardian, or other
person shall make application on behalf of the child for medical
assistance under such plan by not later than the last day of the month
following the month during which the determination is made, which
application may be the application used for the receipt of medical
assistance by individuals described in section 1902(l)(1).
``(d) Notwithstanding any other provision of this title,
medical assistance for items and services described in
subsection (a) that--
``(1) are furnished to a child--
``(A) during a presumptive eligibility
period,
``(B) by a entity that is eligible for
payments under the State plan; and
``(2) are included in the care and services covered
by a State plan;
shall be treated as medical assistance provided by such plan
for purposes of section 1903.''.
(b) Conforming Amendments.--
(1) Section 1902(a)(47) (42 U.S.C. 1396a(a)(47)) is
amended by inserting before the semicolon at the end
the following: ``and provide for making medical
assistance for items and services described in
subsection (a) of section 1920A available to children
during a presumptive eligibility period in accordance
with such section''.
(2) Section 1903(u)(1)(D)(v) (42 U.S.C.
1396b(u)(1)(D)(v)) is amended by inserting before the
period at the end the following: ``or for items and
services described in subsection (a) of section 1920A
provided to a child during a presumptive eligibility
period under such section''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 4913. CONTINUATION OF MEDICAID ELIGIBILITY FOR DISABLED CHILDREN
WHO LOSE SSI BENEFITS.
(a) In General.--Section 1902(a)(10)(A)(i)(II) (42 U.S.C.
1396a(a)(10)(A)(i)(II)) is amended by inserting ``(or were
being paid as of the date of the enactment of section 211(a) of
the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 (P.L. 104-193)) and would continue to be paid but
for the enactment of that section'' after ``title XVI''.
(b) Effective Date.--The amendment made by subsection (a)
applies to medical assistance furnished on or after July 1,
1997.
CHAPTER 3--DIABETES GRANT PROGRAMS
SEC. 4921. SPECIAL DIABETES PROGRAMS FOR CHILDREN WITH TYPE I DIABETES.
Subpart I of part D of title III of the Public Health
Service Act (42 U.S.C. 254b et seq.) is amended by adding at
the end the following section:
``SEC. 330B. SPECIAL DIABETES PROGRAMS FOR CHILDREN WITH TYPE I
DIABETES.
``(a) Type I Diabetes in Children.--The Secretary shall
make grants for services for the prevention and treatment of
type I diabetes in children, and for research in innovative
approaches to such services. Such grants may be made to
children's hospitals; grantees under section 330 and other
federally qualified health centers; State and local health
departments; and other appropriate public or nonprofit private
entities.
``(b) Funding.--Notwithstanding section 2104(a) of the
Social Security Act, from the amounts appropriated in such
section for each of fiscal years 1998 through 2002, $30,000,000
is hereby transferred and made available in such fiscal year
for grants under this section.''.
SEC. 4922. SPECIAL DIABETES PROGRAMS FOR INDIANS.
Subpart I of part D of title III of the Public Health
Service Act (42 U.S.C. 254b et seq.), as amended by section
4921, is further amended by adding at the end the following
section:
``SEC. 330C. SPECIAL DIABETES PROGRAMS FOR INDIANS.
``(a) In General.--The Secretary shall make grants for
providing services for the prevention and treatment of diabetes
in accordance with subsection (b).
``(b) Services Through Indian Health Facilities.--For
purposes of subsection (a), services under such subsection are
provided in accordance with this subsection if the services are
provided through any of the following entities:
``(1) The Indian Health Service.
``(2) An Indian health program operated by an
Indian tribe or tribal organization pursuant to a
contract, grant, cooperative agreement, or compact with
the Indian Health Service pursuant to the Indian Self-
Determination Act.
``(3) An urban Indian health program operated by an
urban Indian organization pursuant to a grant or
contract with the Indian Health Service pursuant to
title V of the Indian Health Care Improvement Act.
``(c) Funding.--Notwithstanding section 2104(a) of the
Social Security Act, from the amounts appropriated in such
section for each of fiscal years 1998 through 2002, $30,000,000
is hereby transferred and made available in such fiscal year
for grants under this section.''.
SEC. 4923. REPORT ON DIABETES GRANT PROGRAMS.
(a) Evaluation.--The Secretary of Health and Human Services
shall conduct an evaluation of the diabetes grant programs
established under the amendments made by this chapter.
(b) Reports.--The Secretary shall submit to the appropriate
committees of Congress--
(1) an interim report on the evaluation conducted
under subsection (a) not later than January 1, 2000,
and
(2) a final report on such evaluation not later
than January 1, 2002.
TITLE V--WELFARE AND RELATED PROVISIONS
SEC. 5000. TABLE OF CONTENTS; REFERENCES.
(a) Table of Contents.--The table of contents of this title
is as follows:
Sec. 5000. Table of contents; references.
Subtitle A--TANF Block Grant
Sec. 5001. Welfare-to-work grants.
Sec. 5002. Limitation on amount of Federal funds transferable to title
XX programs.
Sec. 5003. Limitation on number of persons who may be treated as engaged
in work by reason of participation in educational activities.
Sec. 5004. Penalty for failure of State to reduce assistance for
recipients refusing without good cause to work.
Subtitle B--Supplemental Security Income
Sec. 5101. Extension of deadline to perform childhood disability
redeterminations.
Sec. 5102. Fees for Federal administration of State supplementary
payments.
Subtitle C--Child Support Enforcement
Sec. 5201. Clarification of authority to permit certain redisclosures of
wage and claim information.
Subtitle D--Restricting Welfare and Public Benefits for Aliens
Sec. 5301. SSI eligibility for aliens receiving SSI on August 22, 1996,
and disabled aliens lawfully residing in the United States on
August 22, 1996.
Sec. 5302. Extension of eligibility period for refugees and certain
other qualified aliens from 5 to 7 years for SSI and medicaid;
status of Cuban and Haitian entrants.
Sec. 5303. Exceptions for certain Indians from limitation on eligibility
for supplemental security income and medicaid benefits.
Sec. 5304. Exemption from restriction on supplemental security income
program participation by certain recipients eligible on the
basis of very old applications.
Sec. 5305. Reinstatement of eligibility for benefits.
Sec. 5306. Treatment of certain Amerasian immigrants as refugees.
Sec. 5307. Verification of eligibility for State and local public
benefits.
Sec. 5308. Effective date.
Subtitle E--Unemployment Compensation
Sec. 5401. Clarifying provision relating to base periods.
Sec. 5402. Increase in Federal unemployment account ceiling.
Sec. 5403. Special distribution to States from Unemployment Trust Fund.
Sec. 5404. Interest-free advances to State accounts in Unemployment
Trust Fund restricted to States which meet funding goals.
Sec. 5405. Exemption of service performed by election workers from the
Federal unemployment tax.
Sec. 5406. Treatment of certain services performed by inmates.
Sec. 5407. Exemption of service performed for an elementary or secondary
school operated primarily for religious purposes from the
Federal unemployment tax.
Sec. 5408. State program integrity activities for unemployment
compensation.
Subtitle F--Welfare Reform Technical Corrections
Chapter 1--Block Grants for Temporary Assistance to Needy Families
Sec. 5501. Eligible States; State plan.
Sec. 5502. Grants to States.
Sec. 5503. Use of grants.
Sec. 5504. Mandatory work requirements.
Sec. 5505. Prohibitions; requirements.
Sec. 5506. Penalties.
Sec. 5507. Data collection and reporting.
Sec. 5508. Direct funding and administration by Indian Tribes.
Sec. 5509. Research, evaluations, and national studies.
Sec. 5510. Report on data processing.
Sec. 5511. Study on alternative outcomes measures.
Sec. 5512. Limitation on payments to the territories.
Sec. 5513. Conforming amendments to the Social Security Act.
Sec. 5514. Other conforming amendments.
Sec. 5515. Modifications to the job opportunities for certain low-income
individuals program.
Sec. 5516. Denial of assistance and benefits for drug-related
convictions.
Sec. 5517. Transition rule.
Sec. 5518. Effective dates.
Chapter 2--Supplemental Security Income
Sec. 5521. Conforming and technical amendments relating to eligibility
restrictions.
Sec. 5522. Conforming and technical amendments relating to benefits for
disabled children.
Sec. 5523. Additional technical amendments to title XVI.
Sec. 5524. Additional technical amendments relating to title XVI.
Sec. 5525. Technical amendments relating to drug addicts and alcoholics.
Sec. 5526. Advisory board personnel.
Sec. 5527. Timing of delivery of October 1, 2000, SSI benefit payments.
Sec. 5528. Effective dates.
Chapter 3--Child Support
Sec. 5531. State obligation to provide child support enforcement
services.
Sec. 5532. Distribution of collected support.
Sec. 5533. Civil penalties relating to State Directory of New Hires.
Sec. 5534. Federal Parent Locator Service.
Sec. 5535. Access to registry data for research purposes.
Sec. 5536. Collection and use of social security numbers for use in
child support enforcement.
Sec. 5537. Adoption of uniform State laws.
Sec. 5538. State laws providing expedited procedures.
Sec. 5539. Voluntary paternity acknowledgement.
Sec. 5540. Calculation of paternity establishment percentage.
Sec. 5541. Means available for provision of technical assistance and
operation of Federal Parent Locator Service.
Sec. 5542. Authority to collect support from Federal employees.
Sec. 5543. Definition of support order.
Sec. 5544. State law authorizing suspension of licenses.
Sec. 5545. International support enforcement.
Sec. 5546. Child support enforcement for Indian tribes.
Sec. 5547. Continuation of rules for distribution of support in the case
of a title IV-E child.
Sec. 5548. Good cause in foster care and food stamp cases.
Sec. 5549. Date of collection of support.
Sec. 5550. Administrative enforcement in interstate cases.
Sec. 5551. Work orders for arrearages.
Sec. 5552. Additional technical State plan amendments.
Sec. 5553. Federal Case Registry of Child Support Orders.
Sec. 5554. Full faith and credit for child support orders.
Sec. 5555. Development costs of automated systems.
Sec. 5556. Additional technical amendments.
Sec. 5557. Effective date.
Chapter 4--Restricting Welfare and Public Benefits for Aliens
SUBCHAPTER A--ELIGIBILITY FOR FEDERAL BENEFITS
Sec. 5561. Alien eligibility for Federal benefits: limited application
to medicare and benefits under the Railroad Retirement Act.
Sec. 5562. Exceptions to benefit limitations: corrections to reference
concerning aliens whose deportation is withheld.
Sec. 5563. Veterans exception: application of minimum active duty
service requirement; extension to unremarried surviving
spouse; expanded definition of veteran.
Sec. 5564. Notification concerning aliens not lawfully present:
correction of terminology.
Sec. 5565. Freely associated States: contracts and licenses.
Sec. 5566. Congressional statement regarding benefits for Hmong and
other Highland Lao veterans.
SUBCHAPTER B--GENERAL PROVISIONS
Sec. 5571. Determination of treatment of battered aliens as qualified
aliens; inclusion of alien child of battered parent as
qualified alien.
Sec. 5572. Verification of eligibility for benefits.
Sec. 5573. Qualifying quarters: disclosure of quarters of coverage
information; correction to assure that crediting applies to
all quarters earned by parents before child is 18.
Sec. 5574. Statutory construction: benefit eligibility limitations
applicable only with respect to aliens present in the United
States.
SUBCHAPTER C--MISCELLANEOUS CLERICAL AND TECHNICAL AMENDMENTS;
EFFECTIVE DATE
Sec. 5581. Correcting miscellaneous clerical and technical errors.
Sec. 5582. Effective date.
Chapter 5--Child Protection
Sec. 5591. Conforming and technical amendments relating to child
protection.
Sec. 5592. Additional technical amendments relating to child protection.
Sec. 5593. Effective date.
Chapter 6--Child Care
Sec. 5601. Conforming and technical amendments relating to child care.
Sec. 5602. Additional conforming and technical amendments.
Sec. 5603. Effective dates.
Chapter 7--ERISA Amendments Relating to Medical Child Support Orders
Sec. 5611. Amendments relating to section 303 of the Personal
Responsibility and Work Opportunity Reconciliation Act of
1996.
Sec. 5612. Amendment relating to section 381 of the Personal
Responsibility and Work Opportunity Reconciliation Act of
1996.
Sec. 5613. Amendments relating to section 382 of the Personal
Responsibility and Work Opportunity Reconciliation Act of
1996.
Subtitle G--Miscellaneous
Sec. 5701. Increase in public debt limit.
Sec. 5702. Authorization of appropriations for enforcement initiatives
related to the earned income tax credit.
(b) References.--Except as otherwise expressly provided,
wherever in this title an amendment or repeal is expressed in
terms of an amendment to, or repeal of a section or other
provision, the reference shall be considered to be made to a
section or other provision of the Social Security Act.
Subtitle A--TANF Block Grant
SEC. 5001. WELFARE-TO-WORK GRANTS.
(a) Grants to States.--
(1) In general.--Section 403(a) (42 U.S.C. 603(a))
is amended by adding at the end the following:
``(5) Welfare-to-work grants.--
``(A) Formula grants.--
``(i) Entitlement.--A State shall
be entitled to receive from the
Secretary of Labor a grant for each
fiscal year specified in subparagraph
(I) of this paragraph for which the
State is a welfare-to-work State, in an
amount that does not exceed the lesser
of--
``(I) 2 times the total of
the expenditures by the State
(excluding qualified State
expenditures (as defined in
section 409(a)(7)(B)(i)) and
any expenditure described in
subclause (I), (II), or (IV) of
section 409(a)(7)(B)(iv))
during the fiscal year for
activities described in
subparagraph (C)(i) of this
paragraph; or
``(II) the allotment of the
State under clause (iii) of
this subparagraph for the
fiscal year.
``(ii) Welfare-to-work state.--A
State shall be considered a welfare-to-
work State for a fiscal year for
purposes of this paragraph if the
Secretary of Labor determines that the
State meets the following requirements:
``(I) The State has
submitted to the Secretary of
Labor and the Secretary of
Health and Human Services (in
the form of an addendum to the
State plan submitted under
section 402) a plan which--
``(aa) describes
how, consistent with
this subparagraph, the
State will use any
funds provided under
this subparagraph
during the fiscal year;
``(bb) specifies
the formula to be used
pursuant to clause (vi)
to distribute funds in
the State, and
describes the process
by which the formula
was developed;
``(cc) contains
evidence that the plan
was developed in
consultation and
coordination with
appropriate entitites
in sub-State areas;
``(dd) contains
assurances by the
Governor of the State
that the private
industry council (and
any alternate agency
designated by the
Governor under item
(ee)) for a service
delivery area in the
State will coordinate
the expenditure of any
funds provided under
this subparagraph for
the benefit of the
service delivery area
with the expenditure of
the funds provided to
the State under section
403(a)(1); and
``(ee) if the
Governor of the State
desires to have an
agency other than a
private industry
council administer the
funds provided under
this subparagraph for
the benefit of 1 or
more service delivery
areas in the State,
contains an application
to the Secretary of
Labor for a waiver of
clause (vii)(I) with
respect to the area or
areas in order to
permit an alternate
agency designated by
the Governor to so
administer the funds.
``(II) The State has
provided to the Secretary of
Labor an estimate of the amount
that the State intends to
expend during the fiscal year
(excluding expenditures
described in section
409(a)(7)(B)(iv) (other than
subclause (III) thereof))
pursuant to this paragraph.
``(III) The State has
agreed to negotiate in good
faith with the Secretary of
Health and Human Services with
respect to the substance and
funding of any evaluation under
section 413(j), and to
cooperate with the conduct of
any such evaluation.
``(IV) The State is an
eligible State for the fiscal
year.
``(V) The State certifies
that qualified State
expenditures (within the
meaning of section 409(a)(7))
for the fiscal year will be not
less than the applicable
percentage of historic State
expenditures (within the
meaning of section 409(a)(7))
with respect to the fiscal
year.
``(iii) Allotments to welfare-to-
work states.--
``(I) In general.--Subject
to this clause, the allotment
of a welfare-to-work State for
a fiscal year shall be the
available amount for the fiscal
year, multiplied by the State
percentage for the fiscal year.
``(II) Minimum allotment.--
The allotment of a welfare-to-
work State (other than Guam,
the Virgin Islands, or American
Samoa) for a fiscal year shall
not be less than 0.25 percent
of the available amount for the
fiscal year.
``(III) Pro rata
reduction.--Subject to
subclause (II), the Secretary
of Labor shall make pro rata
reductions in the allotments to
States under this clause for a
fiscal year as necessary to
ensure that the total of the
allotments does not exceed the
available amount for the fiscal
year.
``(iv) Available amount.--As used
in this subparagraph, the term
`available amount' means, for a fiscal
year, the sum of--
``(I) 75 percent of the sum
of--
``(aa) the amount
specified in
subparagraph (I) for
the fiscal year, minus
the total of the
amounts reserved
pursuant to
subparagraphs (E), (F),
(G), and (H) for the
fiscal year; and
``(bb) any amount
reserved pursuant to
subparagraph (F) for
the immediately
preceding fiscal year
that has not been
obligated; and
``(II) any available amount
for the immediately preceding
fiscal year that has not been
obligated by a State or sub-
State entity.
``(v) State percentage.--As used in
clause (iii), the term `State
percentage' means, with respect to a
fiscal year, \1/2\ of the sum of--
``(I) the percentage
represented by the number of
individuals in the State whose
income is less than the poverty
line divided bythe number of
such individuals in the United States; and
``(II) the percentage
represented by the number of
adults who are recipients of
assistance under the State
program funded under this part
divided by the number of adults
in the United States who are
recipients of assistance under
any State program funded under
this part.
``(vi) Procedure for distribution
of funds within states.--
``(I) Allocation formula.--
A State to which a grant is
made under this subparagraph
shall devise a formula for
allocating not less than 85
percent of the amount of the
grant among the service
delivery areas in the State,
which--
``(aa) determines
the amount to be
allocated for the
benefit of a service
delivery area in
proportion to the
number (if any) by
which the population of
the area with an income
that is less than the
poverty line exceeds
7.5 percent of the
total population of the
area, relative to such
number for all such
areas in the State with
such an excess, and
accords a weight of not
less than 50 percent to
this factor;
``(bb) may
determine the amount to
be allocated for the
benefit of such an area
in proportion to the
number of adults
residing in the area
who have been
recipients of
assistance under the
State program funded
under this part
(whether in effect
before or after the
amendments made by
section 103(a) of the
Personal Responsibility
and Work Opportunity
Reconciliation Act of
1996 first applied to
the State) for at least
30 months (whether or
not consecutive)
relative to the number
of such adults residing
in the State; and
``(cc) may
determine the amount to
be allocated for the
benefit of such an area
in proportion to the
number of unemployed
individuals residing in
the area relative to
the number of such
individuals residing in
the State.
``(II) Distribution of
funds.--
``(aa) In
general.--If the amount
allocated by the
formula to a service
delivery area is at
least $100,000, the
State shall distribute
the amount to the
entity administering
the grant in the area.
``(bb) Special
rule.--If the amount
allocated by the
formula to a service
delivery area is less
than $100,000, the sum
shall be available for
distribution in the
State under subclause
(III) during the fiscal
year.
``(III) Projects to help
long-term recipients of
assistance enter unsubsidized
jobs.--The Governor of a State
to which a grant is made under
this subparagraph may
distribute not more than 15
percent of the grant funds
(plus any amount required to be
distributed under this
subclause by reason of
subclause (II)(bb)) to projects
that appear likely to help
long-term recipients of
assistance under the State
program funded under this part
(whether in effect before or
after the amendments made by
section 103(a) of the Personal
Responsibility and Work
Opportunity Reconciliation Act
of 1996 firstapplied to the
State) enter unsubsidized employment.
``(vii) Administration.--
``(I) Private industry
councils.--The private industry
council for a service delivery
area in a State shall have sole
authority, in coordination with
the chief elected official (as
described in section 103(c) of
the Job Training Partnership
Act) of the area, to expend the
amounts distributed under
clause (vi)(II)(aa) for the
benefit of the service delivery
area, in accordance with the
assurances described in clause
(ii)(I)(dd) provided by the
Governor of the State.
``(II) Enforcement of
coordination of expenditures
with other expenditures under
this part.--Notwithstanding
subclause (I) of this clause,
on a determination by the
Governor of a State that a
private industry council (or an
alternate agency described in
clause (ii)(I)(dd)) has used
funds provided under this
subparagraph in a manner
inconsistent with the
assurances described in clause
(ii)(I)(dd)--
``(aa) the private
industry council (or
such alternate agency)
shall remit the funds
to the Governor; and
``(bb) the Governor
shall apply to the
Secretary of Labor for
a waiver of subclause
(I) of this clause with
respect to the service
delivery area or areas
involved in order to
permit an alternate
agency designated by
the Governor to
administer the funds in
accordance with the
assurances.
``(III) Authority to permit
use of alternate administering
agency.--The Secretary of Labor
shall approve an application
submitted under clause
(ii)(I)(ee) or subclause
(II)(bb) of this clause to
waive subclause (I) of this
clause with respect to 1 or
more service delivery areas if
the Secretary determines that
the alternate agency designated
in the application would
improve the effectiveness or
efficiency of the
administration of amounts
distributed under clause
(vi)(II)(aa) for the benefit of
the area or areas.
``(viii) Data to be used in
determining the number of adult tanf
recipients.--For purposes of this
subparagraph, the number of adult
recipients of assistance under a State
program funded under this part for a
fiscal year shall be determined using
data for the most recent 12-month
period for which such data is available
before the beginning of the fiscal
year.
``(B) Competitive grants.--
``(i) In general.--The Secretary of
Labor shall award grants in accordance
with this subparagraph, in fiscal years
1998 and 1999, for projects proposed by
eligible applicants, based on the
following:
``(I) The effectiveness of
the proposal in--
``(aa) expanding
the base of knowledge
about programs aimed at
moving recipients of
assistance under State
programs funded under
this part who are least
job ready into
unsubsidized
employment.
``(bb) moving
recipients of
assistance under State
programs funded under
this part who are least
job ready into
unsubsidized
employment; and
``(cc) moving
recipients of
assistance under State
programs funded under
thispart who are least
job ready into unsubsidized employment, even in labor markets that have
a shortage of low-skill jobs.
``(II) At the discretion of
the Secretary of Labor, any of
the following:
``(aa) The history
of success of the
applicant in moving
individuals with
multiple barriers into
work.
``(bb) Evidence of
the applicant's ability
to leverage private,
State, and local
resources.
``(cc) Use by the
applicant of State and
local resources beyond
those required by
subparagraph (A).
``(dd) Plans of the
applicant to coordinate
with other
organizations at the
local and State level.
``(ee) Use by the
applicant of current or
former recipients of
assistance under a
State program funded
under this part as
mentors, case managers,
or service providers.
``(ii) Eligible applicants.--As
used in clause (i), the term `eligible
applicant' means a private industry
council for a service delivery area in
a State, a political subdivision of a
State, or a private entity applying in
conjunction with the private industry
council for such a service delivery
area or with such a political
subdivision, that submits a proposal
developed in consultation with the
Governor of the State.
``(iii) Determination of grant
amount.--In determining the amount of a
grant to be made under this
subparagraph for a project proposed by
an applicant, the Secretary of Labor
shall provide the applicant with an
amount sufficient to ensure that the
project has a reasonable opportunity to
be successful, taking into account the
number of long-term recipients of
assistance under a State program funded
under this part, the level of
unemployment, the job opportunities and
job growth, the poverty rate, and such
other factors as the Secretary of Labor
deems appropriate, in the area to be
served by the project.
``(iv) Consideration of needs of
rural areas and cities with large
concentrations of poverty.--In making
grants under this subparagraph, the
Secretary of Labor shall consider the
needs of rural areas and cities with
large concentrations of residents with
an income that is less than the poverty
line.
``(v) Funding.--For grants under
this subparagraph for each fiscal year
specified in subparagraph (I), there
shall be available to the Secretary of
Labor an amount equal to the sum of--
``(I) 25 percent of the sum
of--
``(aa) the amount
specified in
subparagraph (I) for
the fiscal year, minus
the total of the
amounts reserved
pursuant to
subparagraphs (E), (F),
(G), and (H) for the
fiscal year; and
``(bb) any amount
reserved pursuant to
subparagraph (F) for
the immediately
preceding fiscal year
that has not been
obligated; and
``(II) any amount available
for grants under this
subparagraph for the
immediately preceding fiscal
year that has not been
obligated.
``(C) Limitations on use of funds.--
``(i) Allowable activities.--An
entity to which funds are provided
under this paragraph shall use the
funds to move individuals into and keep
individuals in lasting unsubsidized
employment by means of any of the
following:
``(I) The conduct and
administration of community
service or work experience
programs.
``(II) Job creation through
public or private sector
employment wage subsidies.
``(III) On-the-job
training.
``(IV) Contracts with
public or private providers of
readiness, placement, and post-
employment services.
``(V) Job vouchers for
placement, readiness, and
postemployment services.
``(VI) Job retention or
support services if such
services are not otherwise
available.
Contracts or vouchers for job placement
services supported by such funds must
require that at least \1/2\ of the
payment occur after an eligible
individual placed into the workforce
has been in the workforce for 6 months.
``(ii) Required beneficiaries.--An
entity that operates a project with
funds provided under this paragraph
shall expend at least 70 percent of all
funds provided to the project for the
benefit of recipients of assistance
under the program funded under this
part of the State in which the entity
is located, or for the benefit of
noncustodial parents of minors whose
custodial parent is such a recipient,
who meet the requirements of each of
the following subclauses:
``(I) At least 2 of the
following apply to the
recipient:
``(aa) The
individual has not
completed secondary
school or obtained a
certificate of general
equivalency, and has
low skills in reading
or mathematics.
``(bb) The
individual requires
substance abuse
treatment for
employment.
``(cc) The
individual has a poor
work history.
``(II) The individual--
``(aa) has received
assistance under the
State program funded
under this part
(whether in effect
before or after the
amendments made by
section 103 of the
Personal Responsibility
and Work Opportunity
Reconciliation Act of
1996 first apply to the
State) for at least 30
months (whether or not
consecutive); or
``(bb) within 12
months, will become
ineligible for
assistance under the
State program funded
under this part by
reason of a durational
limit on such
assistance, without
regard to any exemption
provided pursuant to
section 408(a)(7)(C)
that may apply to the
individual.
``(iii) Targeting of individuals
with characteristics associated with
long-term welfare dependence.--An
entity that operates a project with
funds provided under this paragraph may
expend not more than 30 percent of all
funds provided to the project for
programs that provide assistance in a
form described in clause (i)--
``(I) to recipients of
assistance under the program
funded under this part of the
State in which the entity is
located who have
characteristics associated with
long-term welfare dependence
(such as school dropout, teen
pregnancy,or poor work
history), including, at the option of the State, by providing
assistance in such form as a condition of receiving assistance under
the State program funded under this part; or
``(II) to individuals--
``(aa) who are
noncustodial parents of
minors whose custodial
parent is such a
recipient; and
``(bb) who have
such characteristics.
To the extent that the entity does not
expend such funds in accordance with
the preceding sentence, the entity
shall expend such funds in accordance
with clause (ii).
``(iv) Authority to provide work-
related services to individuals who
have reached the 5 year limit.--An
entity that operates a project with
funds provided under this paragraph may
use the funds to provide assistance in
a form described in clause (i) of this
subparagraph to, or for the benefit of,
individuals who (but for section
408(a)(7)) would be eligible for
assistance under the program funded
under this part of the State in which
the entity is located.
``(v) Relationship to other
provisions of this part.--
``(I) Rules governing use
of funds.--The rules of section
404, other than subsections
(b), (f), and (h) of section
404, shall not apply to a grant
made under this paragraph.
``(II) Rules governing
payments to states.--The
Secretary of Labor shall carry
out the functions otherwise
assigned by section 405 to the
Secretary of Health and Human
Services with respect to the
grants payable under this
paragraph.
``(III) Administration.--
Section 416 shall not apply to
the programs under this
paragraph.
``(vi) Prohibition against use of
grant funds for any other fund matching
requirement.--An entity to which funds
are provided under this paragraph shall
not use any part of the funds, nor any
part of State expenditures made to
match the funds, to fulfill any
obligation of any State, political
subdivision, or private industry
council to contribute funds under
section 403(b) or 418 or any other
provision of this Act or other Federal
law.
``(vii) Deadline for expenditure.--
An entity to which funds are provided
under this paragraph shall remit to the
Secretary of Labor any part of the
funds that are not expended within 3
years after the date the funds are so
provided.
``(viii) Regulations.--Within 90
days after the date of the enactment of
this paragraph, the Secretary of Labor,
after consultation with the Secretary
of Health and Human Services and the
Secretary of Housing and Urban
Development, shall prescribe such
regulations as may be necessary to
implement this paragraph.
``(D) Definitions.--
``(i) Individuals with income less
than the poverty line.--For purposes of
this paragraph, the number of
individuals with an income that is less
than the poverty line shall be
determined for a fiscal year--
``(I) based on the
methodology used by the Bureau
of the Census to produce and
publish intercensal poverty
data for States and
counties(or, in the case of Puerto Rico, the Virgin Islands, Guam, and
American Samoa, other poverty data selected by the Secretary of Labor);
and
``(II) using data for the
most recent year for which such
data is available before the
beginning of the fiscal year.
``(ii) Private industry council.--
As used in this paragraph, the term
`private industry council' means, with
respect to a service delivery area, the
private industry council (or successor
entity) established for the service
delivery area pursuant to the Job
Training Partnership Act.
``(iii) Service delivery area.--As
used in this paragraph, the term
`service delivery area' shall have the
meaning given such term (or the
successor to such term) for purposes of
the Job Training Partnership Act.
``(E) Set-aside for successful performance
bonus.--
``(i) In general.--The Secretary of
Labor shall make a grant in accordance
with this subparagraph to each
successful performance State in fiscal
year 2000.
``(ii) Amount of grant.--The
Secretary of Labor shall determine the
amount of the grant payable under this
subparagraph to a successful
performance State, which shall be based
on the score assigned to the State
under clause (iv)(I)(aa) for such prior
period as the Secretary of Labor deems
appropriate.
``(iii) Formula for measuring state
performance.--Not later than 1 year
after the date of the enactment of this
paragraph, the Secretary of Labor, in
consultation with the Secretary of
Health and Human Services, the National
Governors' Association, and the
American Public Welfare Association,
shall develop a formula for measuring--
``(I) the success of States
in placing individuals in
private sector employment or in
any kind of employment, through
programs operated with funds
provided under subparagraph
(A);
``(II) the duration of such
placements;
``(III) any increase in the
earnings of such individuals;
and
``(IV) such other factors
as the Secretary of Labor deems
appropriate concerning the
activities of the States with
respect to such individuals.
The formula may take into account
general economic conditions on a State-
by-State basis.
``(iv) Scoring of state
performance; setting of performance
thresholds.--
``(I) In general.--The
Secretary of Labor shall--
``(aa) use the
formula developed under
clause (iii) to assign
a score to each State
that was a welfare-to-
work State for fiscal
years 1998 and 1999;
and
``(bb) prescribe a
performance threshold
in such a manner so as
to ensure that the
total amount of grants
to be made under this
paragraph equals
$100,000,000.
``(II) Availability of
welfare-to-work data submitted
to the secretary of hhs.--The
Secretary of Health and Human
Services shall provide the
Secretary of Labor with the
data reported by States under
this part with respect to
programs operated with funds
provided under subparagraph
(A).
``(v) Successful performance state
defined.--As used in this subparagraph,
the term `successful performance State'
means a State whose score assigned
pursuant to clause (iv)(I)(aa) equals
or exceeds the performance threshold
prescribed under clause (iv)(I)(bb).
``(vi) Set-aside.--$100,000,000 of
the amount specified in subparagraph
(I) for fiscal year 1999 shall be
reserved for grants under this
subparagraph.
``(F) Funding for indian tribes.--1 percent
of the amount specified in subparagraph (I) for
fiscal year 1998 and of the amount so specified
for fiscal year 1999 shall be reserved for
grants to Indian tribes under section
412(a)(3).
``(G) Funding for evaluations of welfare-
to-work programs.--0.6 percent of the amount
specified in subparagraph (I) for fiscal year
1998 and of the amount so specified for fiscal
year 1999 shall be reserved for use by the
Secretary to carry out section 413(j).
``(H) Funding for evaluation of abstinence
education programs.--
``(i) In general.--0.2 percent of
the amount specified in subparagraph
(I) for fiscal year 1998 and of the
amount so specified for fiscal year
1999 shall be reserved for use by the
Secretary to evaluate programs under
section 510, directly or through
grants, contracts, or interagency
agreements.
``(ii) Authority to use funds for
evaluations of welfare-to-work
programs.--Any such amount not required
for such evaluations shall be available
for use by the Secretary to carry out
section 413(j).
``(iii) Deadline for outlays.--
Outlays from funds used pursuant to
clause (i) for evaluation of programs
under section 510 shall not be made
after fiscal year 2001.
``(I) Appropriations.--
``(i) In general.--Out of any money
in the Treasury of the United States
not otherwise appropriated, there are
appropriated $1,500,000,000 for each of
fiscal years 1998 and 1999 for grants
under this paragraph.
``(ii) Availability.--The amounts
made available pursuant to clause (i)
shall remain available for such period
as is necessary to make the grants
provided for in this paragraph.
``(J) Worker protections.--
``(i) Nondisplacement in work
activities.--
``(I) General
prohibition.--Subject to this
clause, an adult in a family
receiving assistance
attributable to funds provided
under this paragraph may fill a
vacant employment position in
order to engage in a work
activity.
``(II) Prohibition against
violation of contracts.--A work
activity engaged in under a
program operated with funds
provided under this paragraph
shall not violate an existing
contract for services or a
collective bargaining
agreement, and such a work
activity that would violate a
collective bargaining agreement
shall not be undertaken without
the written concurrence of the
labor organization and employer
concerned.
``(III) Other
prohibitions.--An adult
participant in a work activity
engaged in under a program
operated with funds provided
underthis paragraph shall not
be employed or assigned--
``(aa) when any
other individual is on
layoff from the same or
any substantially
equivalent job;
``(bb) if the
employer has terminated
the employment of any
regular employee or
otherwise caused an
involuntary reduction
in its workforce with
the intention of
filling the vacancy so
created with the
participant; or
``(cc) if the
employer has caused an
involuntary reduction
to less than full time
in hours of any
employee in the same or
a substantially
equivalent job.
``(ii) Health and safety.--Health
and safety standards established under
Federal and State law otherwise
applicable to working conditions of
employees shall be equally applicable
to working conditions of other
participants engaged in a work activity
under a program operated with funds
provided under this paragraph.
``(iii) Nondiscrimination.--In
addition to the protections provided
under the provisions of law specified
in section 408(c), an individual may
not be discriminated against by reason
of gender with respect to participation
in work activities engaged in under a
program operated with funds provided
under this paragraph.
``(iv) Grievance procedure.--
``(I) In general.--Each
State to which a grant is made
under this paragraph shall
establish and maintain a
procedure for grievances or
complaints from employees
alleging violations of clause
(i) and participants in work
activities alleging violations
of clause (i), (ii), or (iii).
``(II) Hearing.--The
procedure shall include an
opportunity for a hearing.
``(III) Remedies.--The
procedure shall include
remedies for violation of
clause (i), (ii), or (iii),
which may continue during the
pendency of the procedure, and
which may include--
``(aa) suspension
or termination of
payments from funds
provided under this
paragraph;
``(bb) prohibition
of placement of a
participant with an
employer that has
violated clause (i),
(ii), or (iii);
``(cc) where
applicable,
reinstatement of an
employee, payment of
lost wages and
benefits, and
reestablishment of
other relevant terms,
conditions and
privileges of
employment; and
``(dd) where
appropriate, other
equitable relief.
``(IV) Appeals.--
``(aa) Filing.--Not
later than 30 days
after a grievant or
complainant receives an
adverse decision under
the procedure
established pursuant to
subclause (I), the
grievant or complainant
may appeal the decision
to a State agency
designated by the State
which shall be
independent of the
State or local agency
that is administering
the programs operated
with funds provided
under this paragraph
and the State agency
administering, or
supervising the
administration of, the
State program funded
under this part.
``(bb) Final
determination.--Not
later than 120 days
after the State agency
designated under item
(aa) receives a
grievance or complaint
made under the
procedure established
by a State pursuant to
subclause (I), the
State agency shall make
a final determination
on the appeal.
``(v) Rule of interpretation.--This
subparagraph shall not be construed to
affect the authority of a State to
provide or require workers'
compensation.
``(vi) Nonpreemption of state
law.--The provisions of this
subparagraph shall not be construed to
preempt any provision of State law that
affords greater protections to
employees or to other participants
engaged in work activities under a
program funded under this part than is
afforded by such provisions of this
subparagraph.''.
(2) Conforming amendment.--Section 409(a)(7)(B)(iv)
of such Act (42 U.S.C. 609(a)(7)(B)(iv)) is amended to
read as follows:
``(iv) Expenditures by the state.--
The term `expenditures by the State'
does not include--
``(I) any expenditure from
amounts made available by the
Federal Government;
``(II) any State funds
expended for the medicaid
program under title XIX;
``(III) any State funds
which are used to match Federal
funds provided under section
403(a)(5); or
``(IV) any State funds
which are expended as a
condition of receiving Federal
funds other than under this
part.
Notwithstanding subclause (IV) of the
preceding sentence, such term includes
expenditures by a State for child care
in a fiscal year to the extent that the
total amount of the expenditures does
not exceed the amount of State
expenditures in fiscal year 1994 or
1995 (whichever is the greater) that
equal the non-Federal share for the
programs described in section
418(a)(1)(A).''.
(b) Grants to Outlying Areas.--Section 1108(a)(2) (42
U.S.C. 1308(a)(2)), as amended by section 5512(a) of this Act,
is amended by inserting ``403(a)(5),'' after ``403(a)(4),''.
(c) Grants to Indian Tribes.--Section 412(a) (42 U.S.C.
612(a)) is amended by adding at the end the following:
``(3) Welfare-to-work grants.--
``(A) In general.--The Secretary of Labor
shall award a grant in accordance with this
paragraph to an Indian tribe for each fiscal
year specified in section 403(a)(5)(I) for
which the Indian tribe is a welfare-to-work
tribe, in such amount as the Secretary of Labor
deems appropriate, subject to subparagraph (B)
of this paragraph.
``(B) Welfare-to-work tribe.--An Indian
tribe shall be considered a welfare-to-work
tribe for a fiscal year for purposes of this
paragraph if the Indian tribe meets the
following requirements:
``(i) The Indian tribe has
submitted to the Secretary of Labor a
plan which describes how, consistent
with section 403(a)(5), the Indian
tribe will use any funds provided under
this paragraph during the fiscal year.
If the Indian tribe has a tribal family
assistance plan, the plan referred to
in the preceding sentence shall be in
the form of an addendum to the tribal
family assistance plan.
``(ii) The Indian tribe is
operating a program under a tribal
family assistance plan approved by the
Secretary of Health and Human Services,
a program described in paragraph
(2)(C), or an employment program funded
through other sources under which
substantial services are provided
torecipients of assistance under a program funded under this part.
``(iii) The Indian tribe has
provided the Secretary of Labor with an
estimate of the amount that the Indian
tribe intends to expend during the
fiscal year (excluding tribal
expenditures described in section
409(a)(7)(B)(iv) (other than subclause
(III) thereof)) pursuant to this
paragraph.
``(iv) The Indian tribe has agreed
to negotiate in good faith with the
Secretary of Health and Human Services
with respect to the substance and
funding of any evaluation under section
413(j), and to cooperate with the
conduct of any such evaluation.
``(C) Limitations on use of funds.--
``(i) In general.--Section
403(a)(5)(C) shall apply to funds
provided to Indian tribes under this
paragraph in the same manner in which
such section applies to funds provided
under section 403(a)(5).
``(ii) Waiver authority.--The
Secretary of Labor may waive or modify
the application of a provision of
section 403(a)(5)(C) (other than clause
(vii) thereof) with respect to an
Indian tribe to the extent necessary to
enable the Indian tribe to operate a
more efficient or effective program
with the funds provided under this
paragraph.
``(iii) Regulations.--Within 90
days after the date of the enactment of
this paragraph, the Secretary of Labor,
after consultation with the Secretary
of Health and Human Services and the
Secretary of Housing and Urban
Development, shall prescribe such
regulations as may be necessary to
implement this paragraph.''.
(d) Funds Received From Grants to be Disregarded in
Applying Durational Limit on Assistance.--Section 408(a)(7) (42
U.S.C. 608(a)(7)) is amended by adding at the end the
following:
``(G) Inapplicability to welfare-to-work
grants and assistance.--For purposes of
subparagraph (A) of this paragraph, a grant
made under section 403(a)(5) shall not be
considered a grant made under section 403, and
noncash assistance from funds provided under
section 403(a)(5) shall not be considered
assistance.''.
(e) Data Collection and Reporting.--Section 411(a) (42
U.S.C. 611(a)(1)(A)), as amended by section 5507 of this Act,
is amended--
(1) in paragraph (1)(A), by adding at the end the
following:
``(xviii) With respect to families
participating in a program operated
with funds provided under section
403(a)(5)--
``(I) any activity
described in section
403(a)(5)(C)(i) engaged in by a
family member;
``(II) the total amount
expended during the month on
the family member for each such
activity;
``(III) if the family
member is engaged in subsidized
employment or on-the-job
training under the program, the
wage paid to the family member
and the amount of any wage
subsidy provided to the family
member from Federal or State
funds; and
``(IV) if the participation
of a family member in the
program was ended during a
month due to the family member
obtaining employment, the wage
of the family member in the
employment and whether the
participation was ended due to
the family member obtaining
unsubsidized employment,
obtaining subsidizedemployment,
receiving an increased wage, engaging in a work training activity
funded under a program funded other than under section 403(a)(5), or
for other reasons.'';
(2) in paragraph (2), by inserting ``, with a
separate statement of the percentage of such funds that
are used to cover administrative costs or overhead
incurred for programs operated with funds provided
under section 403(a)(5)'' before the period;
(3) in paragraph (3), by inserting ``, with a
separate statement of the total amount expended by the
State during the quarter on programs operated with
funds provided under section 403(a)(5)'' before the
period;
(4) in paragraph (4), by inserting ``, with a
separate statement of the number of such parents who
participated in programs operated with funds provided
under section 403(a)(5)'' before the period;
(5) in paragraph (6)--
(A) by striking ``and'' at the end of
subparagraph (A);
(B) by striking the period at the end of
subparagraph (B) and inserting ``; and''; and
(C) by adding at the end the following:
``(C) with respect to families and
individuals participating in a program operated
with funds provided under section 403(a)(5)--
``(i) the total number of such
families and individuals; and
``(ii) the number of such families
and individuals whose participation in
such a program was terminated during a
month.'' and
(6) in paragraph (7), by inserting ``, and shall
consult with the Secretary of Labor in defining the
data elements with respect to programs operated with
funds provided under section 403(a)(5)'' before the
period.
(f) Evaluations.--Section 413 (42 U.S.C. 613) is amended by
adding at the end the following:
``(j) Evaluation of Welfare-To-Work Programs.--
``(1) Evaluation.--The Secretary, in consultation
with the Secretary of Labor and the Secretary of
Housing and Urban Development--
``(A) shall develop a plan to evaluate how
grants made under sections 403(a)(5) and
412(a)(3) have been used;
``(B) may evaluate the use of such grants
by such grantees as the Secretary deems
appropriate, in accordance with an agreement
entered into with the grantees after good-faith
negotiations; and
``(C) is urged to include the following
outcome measures in the plan developed under
subparagraph (A):
``(i) Placements in unsubsidized
employment, and placements in
unsubsidized employment that last for
at least 6 months.
``(ii) Placements in the private
and public sectors.
``(iii) Earnings of individuals who
obtain employment.
``(iv) Average expenditures per
placement.
``(2) Reports to the congress.--
``(A) In general.--Subject to subparagraphs
(B) and (C), the Secretary, in consultation
with the Secretary of Labor and the Secretary
of Housing and Urban Development, shall submit
to the Congress reports on the projects funded
under section 403(a)(5) and 412(a)(3) and on
the evaluations of the projects.
``(B) Interim report.--Not later than
January 1, 1999, the Secretary shall submit an
interim report on the matter described in
subparagraph (A).
``(C) Final report.--Not later than January
1, 2001, (or at a later date, if the Secretary
informs theCommittees of the Congress with
jurisdiction over the subject matter of the report) the Secretary shall
submit a final report on the matter described in subparagraph (A).''.
(g) Penalties.--
(1) Penalty for failure of state to maintain
historic effort during year in which welfare-to-work
grant is received.--
(A) In general.--Section 409(a) (42 U.S.C.
609(a)) is amended by adding at the end the
following:
``(13) Penalty for failure of state to maintain
historic effort during year in which welfare-to-work
grant is received.--If a grant is made to a State under
section 403(a)(5)(A) for a fiscal year and paragraph
(7) of this subsection requires the grant payable to
the State under section 403(a)(1) to be reduced for the
immediately succeeding fiscal year, then the Secretary
shall reduce the grant payable to the State under
section 403(a)(1) for such succeeding fiscal year by
the amount of the grant made to the State under section
403(a)(5)(A) for the fiscal year.''.
(B) Inapplicability of good cause
exception.--Section 409(b)(2) of such Act (42
U.S.C. 609(b)(2)), as amended by section
5506(k) of this Act, is amended by striking
``or (12)'' and inserting ``(12), or (13)''.
(C) Inapplicability of corrective
compliance plan.--Section 409(c)(4) of such Act
(42 U.S.C. 609(c)(4)), as amended by section
5506(m) of this Act, is amended by striking
``or (12)'' and inserting ``(12), or (13)''.
(2) Penalty for misuse of competitive welfare-to-
work funds.--Section 409(a)(1) of such Act (42 U.S.C.
609(a)(1)) is amended by adding at the end the
following:
``(C) Penalty for misuse of competitive
welfare-to-work funds.--If the Secretary of
Labor finds that an amount paid to an entity
under section 403(a)(5)(B) has been used in
violation of subparagraph (B) or (C) of section
403(a)(5), the entity shall remit to the
Secretary of Labor an amount equal to the
amount so used.''.
(h) Clarification That Sanctions Against Recipients Under
TANF Program are not Wage Reductions.--
(1) In general.--Section 408 (42 U.S.C. 608) is
amended--
(A) by redesignating subsections (c) and
(d) as subsections (d) and (e), respectively;
and
(B) by inserting after subsection (b) the
following:
``(c) Sanctions Against Recipients Not Considered Wage
Reductions.--A penalty imposed by a State against the family of
an individual by reason of the failure of the individual to
comply with a requirement under the State program funded under
this part shall not be construed to be a reduction in any wage
paid to the individual.''.
(2) Retroactivity.--The amendments made by
paragraph (1) shall take effect as if included in the
enactment of section 103(a) of the Personal
Responsibility and Work Opportunity Reconciliation Act
of 1996.
(i) GAO Study of Effect of Family Violence on Need for
Public Assistance.--
(1) Study.--The Comptroller General shall conduct a
study of the effect of family violence on the use of
public assistance programs, and in particular the
extent to which family violence prolongs or increases
the need for public assistance.
(2) Report.--Within 1 year after the date of the
enactment of this Act, the Comptroller General shall
submit to the Committees on Ways and Means and
Education and the Workforce of the House of
Representatives and theCommittee on Finance of the
Senate a report that contains the findings of the study required by
paragraph (1).
SEC. 5002. LIMITATION ON AMOUNT OF FEDERAL FUNDS TRANSFERABLE TO TITLE
XX PROGRAMS.
(a) In General.--Section 404(d) (42 U.S.C. 604(d)) is
amended--
(1) in paragraph (1), by striking ``A State may''
and inserting ``Subject to paragraph (2), a State
may''; and
(2) by amending paragraph (2) to read as follows:
``(2) Limitation on amount transferable to title xx
programs.--A State may use not more than 10 percent of
the amount of any grant made to the State under section
403(a) for a fiscal year to carry out State programs
pursuant to title XX.''.
(b) Retroactivity.--The amendments made by subsection (a)
of this section shall take effect as if included in the
enactment of section 103(a) of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996.
SEC. 5003. LIMITATION ON NUMBER OF PERSONS WHO MAY BE TREATED AS
ENGAGED IN WORK BY REASON OF PARTICIPATION IN
EDUCATIONAL ACTIVITIES.
(a) In General.--Section 407(c)(2)(D) (42 U.S.C.
607(c)(2)(D)) is amended to read as follows:
``(D) Limitation on number of persons who
may be treated as engaged in work by reason of
participation in educational activities.--For
purposes of determining monthly participation
rates under paragraphs (1)(B)(i) and (2)(B) of
subsection (b), not more than 30 percent of the
number of individuals in all families and in 2-
parent families, respectively, in a State who
are treated as engaged in work for a month may
consist of individuals who are determined to be
engaged in work for the month by reason of
participation in vocational educational
training, or (if the month is in fiscal year
2000 or thereafter) deemed to be engaged in
work for the month by reason of subparagraph
(C) of this paragraph.''.
(b) Retroactivity.--The amendment made by subsection (a) of
this section shall take effect as if included in the enactment
of section 103(a) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996.
SEC. 5004. PENALTY FOR FAILURE OF STATE TO REDUCE ASSISTANCE FOR
RECIPIENTS REFUSING WITHOUT GOOD CAUSE TO WORK.
(a) In General.--Section 409(a) (42 U.S.C. 609(a)), as
amended by section 5001(f)(1)(A) of this Act, is amended by
adding at the end the following:
``(14) Penalty for failure to reduce assistance for
recipients refusing without good cause to work.--
``(A) In general.--If the Secretary
determines that a State to which a grant is
made under section 403 in a fiscal year has
violated section 407(e) during the fiscal year,
the Secretary shall reduce the grant payable to
the State under section 403(a)(1) for the
immediately succeeding fiscal year by an amount
equal to not less than 1 percent and not more
than 5 percent of the State family assistance
grant.
``(B) Penalty based on severity of
failure.--The Secretary shall impose reductions
under subparagraph (A) with respect to a fiscal
year based on the degree of noncompliance.''.
(b) Retroactivity.--The amendment made by subsection (a) of
this section shall take effect as if included in the enactment
of section 103(a) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996.
Subtitle B--Supplemental Security Income
SEC. 5101. EXTENSION OF DEADLINE TO PERFORM CHILDHOOD DISABILITY
REDETERMINATIONS.
Section 211(d)(2) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Public Law 104-193; 110
Stat. 2190) is amended--
(1) in subparagraph (A)--
(A) in the 1st sentence, by striking ``1
year'' and inserting ``18 months''; and
(B) by inserting after the 1st sentence the
following: ``Any redetermination required by
the preceding sentence that is not performed
before the end of the period described in the
preceding sentence shall be performed as soon
as is practicable thereafter.''; and
(2) in subparagraph (C), by adding at the end the
following: ``Before commencing a redetermination under
the 2nd sentence of subparagraph (A), in any case in
which the individual involved has not already been
notified of the provisions of this paragraph, the
Commissioner of Social Security shall notify the
individual involved of the provisions of this
paragraph.''.
SEC. 5102. FEES FOR FEDERAL ADMINISTRATION OF STATE SUPPLEMENTARY
PAYMENTS.
(a) Fee Schedule.--
(1) Optional state supplementary payments.--
(A) In general.--Section 1616(d)(2)(B) (42
U.S.C. 1382e(d)(2)(B)) is amended--
(i) by striking ``and'' at the end
of clause (iii); and
(ii) by striking clause (iv) and
inserting the following:
``(iv) for fiscal year 1997, $5.00;
``(v) for fiscal year 1998, $6.20;
``(vi) for fiscal year 1999, $7.60;
``(vii) for fiscal year 2000, $7.80;
``(viii) for fiscal year 2001, $8.10;
``(ix) for fiscal year 2002, $8.50; and
``(x) for fiscal year 2003 and each succeeding
fiscal year--
``(I) the applicable rate in the preceding
fiscal year, increased by the percentage, if
any, by which the Consumer Price Index for the
month of June of the calendar year of the
increase exceeds the Consumer Price Index for
the month of June of the calendar year
preceding the calendar year of the increase,
and rounded to the nearest whole cent; or
``(II) such different rate as the
Commissioner determines is appropriate for the
State.''.
(B) Conforming amendment.--Section
1616(d)(2)(C) of such Act (42 U.S.C.
1382e(d)(2)(C)) is amended by striking
``(B)(iv)'' and inserting ``(B)(x)(II)''.
(2) Mandatory state supplementary payments.--
(A) In general.--Section 212(b)(3)(B)(ii)
of Public Law 93-66 (42 U.S.C. 1382 note) is
amended--
(i) by striking ``and'' at the end
of subclause (III); and
(ii) by striking subclause (IV) and
inserting the following:
``(IV) for fiscal year 1997, $5.00;
``(V) for fiscal year 1998, $6.20;
``(VI) for fiscal year 1999, $7.60;
``(VII) for fiscal year 2000, $7.80;
``(VIII) for fiscal year 2001, $8.10;
``(IX) for fiscal year 2002, $8.50; and
``(X) for fiscal year 2003 and each succeeding
fiscal year--
``(aa) the applicable rate in the preceding
fiscal year, increased by the percentage, if
any, by which the Consumer Price Index for the
month of June of the calendar year of the
increase exceeds the Consumer Price Index for
the month of June of the calendar year
preceding the calendar year of the increase,
and rounded to the nearest whole cent; or
``(bb) such different rate as the
Commissioner determines is appropriate for the
State.''.
(B) Conforming amendment.--Section
212(b)(3)(B)(iii) of such Act (42 U.S.C. 1382
note) is amended by striking ``(ii)(IV)'' and
inserting ``(ii)(X)(bb)''.
(b) Use of New Fees To Defray the Social Security
Administration's Administrative Expenses.--
(1) Credit to special fund for fiscal year 1998 and
subsequent years.--
(A) Optional state supplementary payment
fees.--Section 1616(d)(4) (42 U.S.C.
1382e(d)(4)) is amended to read as follows:
``(4)(A) The first $5 of each administration fee assessed
pursuant to paragraph (2), upon collection, shall be deposited
in the general fund of the Treasury of the United States as
miscellaneous receipts.
``(B) That portion of each administration fee in excess of
$5, and 100 percent of each additional services fee charged
pursuant to paragraph (3), upon collection for fiscal year 1998
and each subsequent fiscal year, shall be credited to a special
fund established in the Treasury of the United States for State
supplementary payment fees. The amounts so credited, to the
extent and in the amounts provided in advance in appropriations
Acts, shall be available to defray expenses incurred in
carrying out this title and related laws. The amounts so
credited shall not be scored as receipts under section 252 of
the Balanced Budget and Emergency Deficit Control Act of 1985,
and the amounts so credited shall be credited as a
discretionary offset to discretionary spending to the extent
that the amounts so credited are made available for expenditure
in appropriations Acts.''.
(B) Mandatory state supplementary payment
fees.--Section 212(b)(3)(D) of Public Law 93-66
(42 U.S.C. 1382 note) is amended to read as
follows:
``(D)(i) The first $5 of each administration fee assessed
pursuant to subparagraph (B), upon collection, shall be
deposited in the general fund of the Treasury of the United
States as miscellaneous receipts.
``(ii) The portion of each administration fee in excess of
$5, and 100 percent of each additional services fee charged
pursuant to subparagraph (C), upon collection for fiscal year
1998 and each subsequent fiscal year, shall be credited to a
special fund established in the Treasury of the United States
for State supplementary payment fees. The amounts so credited,
to the extent and in the amounts provided in advance in
appropriations Acts, shall be available to defray expenses
incurred in carrying out this section and title XVI of the
Social Security Act and related laws. The amounts so credited
shall not be scored as receipts under section 252 of the
Balanced Budget and Emergency Deficit Control Act of 1985, and
the amounts so credited shall be credited as a discretionary
offset to discretionary spending to the extent that the amounts
so credited are made available for expenditure in
appropriations Acts.''.
(2) Limitations on authorization of
appropriations.--From amounts credited pursuant to
section 1616(d)(4)(B) of the Social Security Act and
section 212(b)(3)(D)(ii) of Public Law 93-66 to the
special fund established in the Treasury of the United
States for State supplementary payment fees, there is
authorized to be appropriated an amount not to exceed
$35,000,000 for fiscal year 1998, and such sums as may
be necessary for each fiscal year thereafter.
Subtitle C--Child Support Enforcement
SEC. 5201. CLARIFICATION OF AUTHORITY TO PERMIT CERTAIN REDISCLOSURES
OF WAGE AND CLAIM INFORMATION.
Section 303(h)(1)(C) (42 U.S.C. 503(h)(1)(C)) is amended by
striking ``section 453(i)(1) in carrying out the child support
enforcement program under title IV'' and inserting
``subsections (i)(1), (i)(3), and (j) of section 453''.
Subtitle D--Restricting Welfare and Public Benefits for Aliens
SEC. 5301. SSI ELIGIBILITY FOR ALIENS RECEIVING SSI ON AUGUST 22, 1996
AND DISABLED ALIENS LAWFULLY RESIDING IN THE UNITED
STATES ON AUGUST 22, 1996.
(a) SSI Eligibility for Aliens Receiving SSI on August 22,
1996.--Section 402(a)(2) of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (8 U.S.C.
1612(a)(2)) is amended by adding after subparagraph (D) the
following new subparagraph:
``(E) Aliens receiving ssi on august 22,
1996.--With respect to eligibility for benefits
for the program defined in paragraph (3)(A)
(relating to the supplemental security income
program), paragraph (1) shall not apply to an
alien who is lawfully residing in the United
States and who was receiving such benefits on
August 22, 1996.''.
(b) SSI Eligibility for Disabled Aliens Lawfully Residing
in the United States on August 22, 1996.--Section 402(a)(2) of
the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 (8 U.S.C. 1612(a)(2)) is amended by adding at the
end the following:
``(F) Disabled aliens lawfully residing in
the united states on august 22, 1996.--With
respect to eligibility for benefits for the
program defined in paragraph (3)(A) (relating
to the supplemental security income program),
paragraph (1) shall not apply to an alien who--
``(i) was lawfully residing in the
United States on August 22, 1996; and
``(ii) is blind or disabled, as
defined in section 1614(a)(2) or
1614(a)(3) of the Social Security Act
(42 U.S.C. 1382c(a)(3)).''.
(c) Extension of Grandfather Provision Relating to SSI
Eligibility.--Section 402(a)(2)(D)(i) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(8 U.S.C. 1612(a)(2)(D)(i)) is amended--
(1) in subclause (I), by striking ``September 30,
1997,'' and inserting ``September 30, 1998,''; and
(2) in subclause (III), by striking ``September 30,
1997,'' and inserting ``September 30, 1998''.
SEC. 5302. EXTENSION OF ELIGIBILITY PERIOD FOR REFUGEES AND CERTAIN
OTHER QUALIFIED ALIENS FROM 5 TO 7 YEARS FOR SSI
AND MEDICAID; STATUS OF CUBAN AND HAITIAN ENTRANTS.
(a) SSI.--Section 402(a)(2)(A) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(8 U.S.C. 1612(a)(2)(A)) is amended to read as follows:
``(A) Time-limited exception for refugees
and asylees.--
``(i) SSI.--With respect to the
specified Federal program described in
paragraph (3)(A), paragraph (1) shall
not apply to an alien until 7 years
after the date--
``(I) an alien is admitted
to the United States as a
refugee under section 207 of
the Immigration and Nationality
Act;
``(II) an alien is granted
asylum under section 208 of
such Act;
``(III) an alien's
deportation is withheld under
section 243(h) of such Act; or
``(IV) an alien is granted
status as a Cuban and Haitian
entrant (as defined in section
501(e) of the Refugee Education
Assistance Act of 1980).
``(ii) Food stamps.--With respect
to the specified Federal program
described in paragraph (3)(B),
paragraph (1) shall not apply to an
alien until 5 years after the date--
``(I) an alien is admitted
to the United States as a
refugee under section 207 of
the Immigration and Nationality
Act;
``(II) an alien is granted
asylum under section 208 of
such Act;
``(III) an alien's
deportation is withheld under
section 243(h) of such Act; or
``(IV) an alien is granted
status as a Cuban and Haitian
entrant (as defined in section
501(e) of the Refugee Education
Assistance Act of 1980).''.
(b) Medicaid.--Section 402(b)(2)(A) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(8 U.S.C. 1612(b)(2)(A)) is amended to read as follows:
``(A) Time-limited exception for refugees
and asylees.--
``(i) Medicaid.--With respect to
the designated Federal program
described in paragraph (3)(C),
paragraph (1) shall not apply to an
alien until 7 years after the date--
``(I) an alien is admitted
to the United States as a
refugee under section 207 of
the Immigration and Nationality
Act;
``(II) an alien is granted
asylum under section 208 of
such Act;
``(III) an alien's
deportation is withheld under
section 243(h) of such Act; or
``(IV) an alien is granted
status as a Cuban and Haitian
entrant (as defined in section
501(e) of the Refugee Education
Assistance Act of 1980).
``(ii) Other designated federal
programs.--With respect to the
designated Federal programs under
paragraph (3) (other than subparagraph
(C)), paragraph (1) shall not apply to
an alien until 5 years after the date--
``(I) an alien is admitted
to the United States as a
refugee under section 207 of
the Immigration and Nationality
Act;
``(II) an alien is granted
asylum under section 208 of
such Act;
``(III) an alien's
deportation is withheld under
section 243(h) of such Act; or
``(IV) an alien is granted
status as a Cuban and Haitian
entrant (as defined in section
501(e) of the Refugee Education
Assistance Act of 1980).''.
(c) Status of Cuban and Haitian Entrants.--
(1) Federal means-tested public benefits.--
(A) Section 403(b)(1) of the Personal
Responsibility and Work Opportunity
Reconciliation Act of 1996 (8 U.S.C.
1613(b)(1)) is amended by adding at the end the
following new subparagraph:
``(D) An alien who is a Cuban and Haitian
entrant as defined in section 501(e) of the
Refugee Education Assistance Act of 1980.''.
(B) Section 403 of the Personal
Responsibility and Work Opportunity
Reconciliation Act of 1996 (8 U.S.C. 1613) is
amended by striking subsection (d).
(2) State public benefits.--Section 412(b)(1) of
the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (8 U.S.C. 1622(b)(1)) is
amended by adding at the end the following new
subparagraph:
``(D) An alien who is a Cuban and Haitian
entrant as defined in section 501(e) of the
Refugee Education Assistance Act of 1980 until
5 years after the alien is granted such
status.''.
(3) Qualified alien defined.--Section 431(b) of the
Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (8 U.S.C. 1641(b)) is
amended--
(A) in paragraph (5) by striking ``or'';
(B) in paragraph (6) by striking the period
and inserting ``; or''; and
(C) by adding at the end the following new
paragraph:
``(7) an alien who is a Cuban and Haitian entrant
(as defined in section 501(e) of the Refugee Education
Assistance Act of 1980).''.
SEC. 5303. EXCEPTIONS FOR CERTAIN INDIANS FROM LIMITATION ON
ELIGIBILITY FOR SUPPLEMENTAL SECURITY INCOME AND
MEDICAID BENEFITS.
(a) Exception from Limitation on SSI Eligibility.--Section
402(a)(2) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (8 U.S.C. 1612(a)(2)) is amended by
adding at the end the following:
``(G) SSI exception for certain indians.--
With respect to eligibility for benefits for
the program defined in paragraph (3)(A)
(relating to the supplemental security income
program), section 401(a) and paragraph (1)
shall not apply to any individual--
``(i) who is an American Indian
born in Canada to whom the provisions
of section 289 of the Immigration and
Nationality Act (8 U.S.C. 1359) apply;
or
``(ii) who is a member of an Indian
tribe (as defined in section 4(e) of
the Indian Self-Determination and
Education Assistance Act (25 U.S.C.
450b(e))).''.
(b) Exception from Limitation on Medicaid Eligibility.--
Section 402(b)(2) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (8 U.S.C. 1612(b)(2)) is
amended by inserting at the end the following:
``(E) Medicaid exception for certain
indians.--With respect to eligibility for
benefits for the program defined in paragraph
(3)(C) (relating to the medicaid program),
section 401(a) and paragraph (1) shall not
apply to any individual described in subsection
(a)(2)(G).''.
(c) SSI and Medicaid Exceptions from Limitation on
Eligibility of New Entrants.--Section 403 of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(8 U.S.C. 1613) is amended by adding after subsection (c) the
following new subsection:
``(d) SSI and Medicaid Benefits for Certain Indians.--
Notwithstanding any other provision of law, the limitations
under section 401(a) and subsection (a) shall not apply to an
individual described in section 402(a)(2)(G), but only with
respect to the programs specified in subsections (a)(3)(A) and
(b)(3)(C) of section 402.''.
SEC. 5304. EXEMPTION FROM RESTRICTION ON SUPPLEMENTAL SECURITY INCOME
PROGRAM PARTICIPATION BY CERTAIN RECIPIENTS
ELIGIBLE ON THE BASIS OF VERY OLD APPLICATIONS.
Section 402(a)(2) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (8 U.S.C. 1612(a)(2)) is
amended by adding at the end the following:
``(H) SSI exception for certain recipients
on the basis of very old applications.--With
respect to eligibility for benefits for the
program defined in paragraph (3)(A) (relating
to the supplemental security income program),
paragraph (1) shall not apply to any
individual--
``(i) who is receiving benefits
under such program for months after
July 1996 on the basis of an
application filed before January 1,
1979; and
``(ii) with respect to whom the
Commissioner of Social Security lacks
clear and convincing evidence that such
individual is an alien ineligible for
such benefits as a result of the
application of this section.''.
SEC. 5305. REINSTATEMENT OF ELIGIBILITY FOR BENEFITS.
(a) Food Stamps.--The Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 is amended by adding
after section 435 the following new section:
``SEC. 436. DERIVATIVE ELIGIBILITY FOR BENEFITS.
``Notwithstanding any other provision of law, an alien who
under the provisions of this title is ineligible for benefits
under the food stamp program (as defined in section
402(a)(3)(B)) shall not be eligible for such benefits because
the alien receives benefits under the supplemental security
income program (as defined in section 402(a)(3)(A)).''.
(b) Medicaid.--Section 402(b)(2) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(8 U.S.C. 1612(b)(2)) is amended by adding at the end the
following:
``(F) Medicaid exception for aliens
receiving ssi.--An alien who is receiving
benefits under the program defined in
subsection (a)(3)(A) (relating to the
supplemental security income program) shall be
eligible for medical assistance under a State
plan under title XIX of the Social Security Act
(42 U.S.C. 1396 et seq.) under the same terms
and conditions that apply to other recipients
of benefits under the program defined in such
subsection.''.
(c) Clerical Amendment.--The table of sections as contained
in section 2 of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 is amended by adding
after the item relating to section 435 the following:
``Sec. 436. Derivative eligibility for benefits.''.
SEC. 5306. TREATMENT OF CERTAIN AMERASIAN IMMIGRANTS AS REFUGEES.
(a) For Purposes of SSI and Food Stamps.--Section
402(a)(2)(A) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (8 U.S.C. 1612(a)(2)(A))
as amended by section 5302 is amended--
(1) in clause (i)--
(A) by striking ``or'' at the end of
subclause (III);
(B) by striking the period at the end of
subclause (IV) and inserting ``; or''; and
(C) by adding at the end the following:
``(V) an alien is admitted
to the United States as an
Amerasian immigrant pursuant to
section 584 of the Foreign
Operations, Export Financing,
and Related Programs
Appropriations Act, 1988 (as
contained in section 101(e) of
Public Law 100-202 and amended
by the 9th proviso under
migration and refugee
assistance in title II of the
Foreign Operations, Export
Financing, and Related Programs
Appropriations Act, 1989,
Public Law 100-461, as
amended).''; and
(2) in clause (ii)--
(A) by striking ``or'' at the end of
subclause (III);
(B) by striking the period at the end of
subclause (IV) and inserting ``; or''; and
(C) by adding at the end the following:
``(V) an alien is admitted
to the United States as an
Amerasian immigrant as
described in clause (i)(V).''.
(b) For Purposes of TANF, SSBG, and Medicaid.--Section
402(b)(2)(A) of the Personal Responsibility and WorkOpportunity
Reconciliation Act of 1996 (8 U.S.C. 1612(b)(2)(A)) as amended by
section 5302 is amended--
(1) in clause (i)--
(A) by striking ``or'' at the end of
subclause (III);
(B) by striking the period at the end of
subclause (IV) and inserting ``; or''; and
(C) by adding at the end the following:
``(V) an alien admitted to the
United States as an Amerasian immigrant
as described in subsection
(a)(2)(A)(i)(V) until 5 years after the
date of such alien's entry into the
United States.''; and
(2) in clause (ii)--
(A) by striking ``or'' at the end of
subclause (III);
(B) by striking the period at the end of
subclause (IV) and inserting ``; or''; and
(C) by adding at the end the following:
``(V) an alien admitted to the
United States as an Amerasian immigrant
as described in subsection
(a)(2)(A)(i)(V) until 5 years after the
date of such alien's entry into the
United States.''.
(c) For Purposes of Exception from 5-Year Limited
Eligibility of Qualified Aliens.--Section 403(b)(1) of the
Personal Responsibility and Work Opportunity Reconciliation Act
of 1996 (8 U.S.C. 1613(b)(1)) is amended by adding at the end
the following:
``(E) An alien admitted to the United
States as an Amerasian immigrant as described
in section 402(a)(2)(A)(i)(V).''.
(d) For Purposes of Certain State Programs.--Section
412(b)(1) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (8 U.S.C. 1622(b)(1)) is amended by
adding at the end the following new subparagraph:
``(E) An alien admitted to the United
States as an Amerasian immigrant as described
in section 402(a)(2)(A)(i)(V).''.
SEC. 5307. VERIFICATION OF ELIGIBILITY FOR STATE AND LOCAL PUBLIC
BENEFITS.
(a) In General.--The Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 is amended by adding
after section 412 the following new section:
``SEC. 413. AUTHORIZATION FOR VERIFICATION OF ELIGIBILITY FOR STATE AND
LOCAL PUBLIC BENEFITS.
``A State or political subdivision of a State is authorized
to require an applicant for State and local public benefits (as
defined in section 411(c)) to provide proof of eligibility.''.
(b) Clerical Amendment.--The table of sections as contained
in section 2 of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 is amended by adding
after the item relating to section 412 the following:
``Sec. 413. Authorization for verification of eligibility for state and
local public benefits.''.
SEC. 5308. EFFECTIVE DATE.
Except as otherwise provided, the amendments made by this
subtitle shall be effective as if included in the enactment of
title IV of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996.
Subtitle E--Unemployment Compensation
SEC. 5401. CLARIFYING PROVISION RELATING TO BASE PERIODS.
(a) In General.--No provision of a State law under which
the base period for such State is defined or otherwise
determined shall, for purposes of section 303(a)(1) of the
Social Security Act (42 U.S.C. 503(a)(1)), be considered a
provision for a method of administration.
(b) Definitions.--For purposes of this section, the terms
``State law'', ``base period'', and ``State'' shall have the
meanings given them under section 205 of the Federal-State
Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304
note).
(c) Effective Date.--This section shall apply for purposes
of any period beginning before, on, or after the date of the
enactment of this Act.
SEC. 5402. INCREASE IN FEDERAL UNEMPLOYMENT ACCOUNT CEILING.
(a) In General.--Section 902(a)(2) (42 U.S.C. 1102(a)(2))
is amended by striking ``0.25 percent'' and inserting ``0.5
percent''.
(b) Effective Date.--This section and the amendment made by
this section--
(1) shall take effect on October 1, 2001, and
(2) shall apply to fiscal years beginning on or
after that date.
SEC. 5403. SPECIAL DISTRIBUTION TO STATES FROM UNEMPLOYMENT TRUST FUND.
(a) In General.--Subsection (a) of section 903 (42 U.S.C.
1103(a)) is amended by adding at the end the following new
paragraph:
``(3)(A) Notwithstanding any other provision of this
section, for purposes of carrying out this subsection with
respect to any excess amount (referred to in paragraph (1))
remaining in the employment security administration account as
of the close of fiscal year 1999, 2000, or 2001, such amount
shall--
``(i) to the extent of any amounts not in excess of
$100,000,000, be subject to subparagraph (B), and
``(ii) to the extent of any amounts in excess of
$100,000,000, be subject to subparagraph (C).
``(B) Paragraphs (1) and (2) shall apply with respect to
any amounts described in subparagraph (A)(i), except that--
``(i) in carrying out the provisions of paragraph
(2)(B) with respect to such amounts (to determine the
portion of such amounts which is to be allocated to a
State for a succeeding fiscal year), the ratio to be
applied under such provisions shall be the same as the
ratio that--
``(I) the amount of funds to be allocated
to such State for such fiscal year pursuant to
the base allocation formula under title III,
bears to
``(II) the total amount of funds to be
allocated to all States for such fiscal year
pursuant to the base allocation formula under
title III,
as determined by the Secretary of Labor, and
``(ii) the amounts allocated to a State pursuant to
this subparagraph shall be available to such State,
subject to the last sentence of subsection (c)(2).
Nothing in this paragraph shall preclude the application of
subsection (b) with respect to any allocation determined under
this subparagraph.
``(C) Any amounts described in clause (ii) of subparagraph
(A) (remaining in the employment security administration
account as of the close of any fiscal year specified in such
subparagraph) shall, as of the beginning of the succeeding
fiscal year, accrue to the Federal unemployment account,
without regard to the limit provided in section 902(a).''
(b) Conforming Amendment.--Paragraph (2) of section 903(c)
of the Social Security Act is amended by adding at the end, as
a flush left sentence, the following:
``Any amount allocated to a State under this section for fiscal
year 2000, 2001, or 2002 may be used by such State only to pay
expenses incurred by it for the administration of its
unemployment compensation law, and may be so used by it without
regard to any of the conditions prescribed in any of the
preceding provisions of this paragraph.''
SEC. 5404. INTEREST-FREE ADVANCES TO STATE ACCOUNTS IN UNEMPLOYMENT
TRUST FUND RESTRICTED TO STATES WHICH MEET FUNDING
GOALS.
(a) In General.--Paragraph (2) of section 1202(b) (42
U.S.C. 1322(b)) is amended--
(1) by striking ``and'' at the end of subparagraph
(A),
(2) by striking the period at the end of
subparagraph (B) and inserting ``, and'', and
(3) by adding at the end the following new
subparagraph:
``(C) such State meets funding goals, established
under regulations issued by the Secretary of Labor,
relating to the accounts of the States in the
Unemployment Trust Fund.''
(b) Effective Date.--The amendments made by this section
shall apply to calendar years beginning after the date of the
enactment of this Act.
SEC. 5405. EXEMPTION OF SERVICE PERFORMED BY ELECTION WORKERS FROM THE
FEDERAL UNEMPLOYMENT TAX.
(a) In General.--Paragraph (3) of section 3309(b) of the
Internal Revenue Code of 1986 (relating to exemption for
certain services) is amended--
(1) by striking ``or'' at the end of subparagraph
(D),
(2) by adding ``or'' at the end of subparagraph
(E), and
(3) by inserting after subparagraph (E) the
following new subparagraph:
``(F) as an election official or election
worker if the amount of remuneration received
by the individual during the calendar year for
services as an election official or election
worker is less than $1,000;''.
(b) Effective Date.--The amendments made by this section
shall apply with respect to service performed after the date of
the enactment of this Act.
SEC. 5406. TREATMENT OF CERTAIN SERVICES PERFORMED BY INMATES.
(a) In General.--Subsection (c) of section 3306 of the
Internal Revenue Code of 1986 (defining employment) is
amended--
(1) by striking ``or'' at the end of paragraph
(19),
(2) by striking the period at the end of paragraph
(20) and inserting ``; or'', and
(3) by adding at the end the following new
paragraph:
``(21) service performed by a person committed to a
penal institution.''
(b) Effective Date.--The amendments made by this section
shall apply with respect to service performed after January 1,
1994.
SEC. 5407. EXEMPTION OF SERVICE PERFORMED FOR AN ELEMENTARY OR
SECONDARY SCHOOL OPERATED PRIMARILY FOR RELIGIOUS
PURPOSES FROM THE FEDERAL UNEMPLOYMENT TAX.
(a) In General.--Paragraph (1) of section 3309(b) of the
Internal Revenue Code of 1986 (relating to exemption for
certain services) is amended--
(1) by striking ``or'' at the end of subparagraph
(A), and
(2) by inserting before the semicolon at the end
the following: ``, or (C) an elementary or secondary
school which is operated primarily for religious
purposes, which is described in section 501(c)(3), and
which is exempt from tax under section 501(a)''.
(b) Effective Date.--The amendments made by this section
shall apply with respect to service performed after the date of
the enactment of this Act.
SEC. 5408. STATE PROGRAM INTEGRITY ACTIVITIES FOR UNEMPLOYMENT
COMPENSATION.
Section 901(c) (42 U.S.C. 1101(c)) is amended by adding at
the end the following new paragraph:
``(5)(A) There are authorized to be appropriated out of the
employment security administration account to carry out program
integrity activities, in addition to any amounts available
under paragraph (1)(A)(i)--
``(i) $89,000,000 for fiscal year 1998;
``(ii) $91,000,000 for fiscal year 1999;
``(iii) $93,000,000 fiscal year 2000;
``(iv) $96,000,000 for fiscal year 2001; and
``(v) $98,000,000 for fiscal year 2002.
``(B) In any fiscal year in which a State receives funds
appropriated pursuant to this paragraph, the State shall expend
a proportion of the funds appropriated pursuant to paragraph
(1)(A)(i) to carry out program integrity activities that is not
less than the proportion of the funds appropriated under such
paragraph that was expended by the State to carry out program
integrity activities in fiscal year 1997.
``(C) For purposes of this paragraph, the term `program
integrity activities' means initial claims review activities,
eligibility review activities, benefit payments control
activities, and employer liability auditing activities.''.
Subtitle F--Welfare Reform Technical Corrections
CHAPTER 1--BLOCK GRANTS FOR TEMPORARY ASSISTANCE TO NEEDY FAMILIES
SEC. 5501. ELIGIBLE STATES; STATE PLAN.
(a) Later Deadline for Submission of State Plans.--Section
402(a) (42 U.S.C. 602(a)) is amended by striking ``2-year
period immediately preceding'' and inserting ``27-month period
ending with the close of the 1st quarter of''.
(b) Clarification of Scope of Work Provisions.--Section
402(a)(1)(A)(ii) (42 U.S.C. 602(a)(1)(A)(ii)) is amended by
inserting ``, consistent with section 407(e)(2)'' before the
period.
(c) Correction of Cross-Reference.--Section 402(a)(1)(A)(v)
(42 U.S.C. 602(a)(1)(A)(v)) is amended by striking
``403(a)(2)(B)'' and inserting ``403(a)(2)(C)(iii)''.
(d) Notification of Plan Amendments.--Section 402 (42
U.S.C. 602) is amended--
(1) by redesignating subsection (b) as subsection
(c) and inserting after subsection (a) the following:
``(b) Plan Amendments.--Within 30 days after a State amends
a plan submitted pursuant to subsection (a), the State shall
notify the Secretary of the amendment.''; and
(2) in subsection (c) (as so redesignated), by
inserting ``or plan amendment'' after ``plan''.
SEC. 5502. GRANTS TO STATES.
(a) Bonus for Decrease in Illegitimacy Modified To Take
Account of Certain Territories.--
(1) In general.--Section 403(a)(2)(B) (42 U.S.C.
603(a)(2)(B)) is amended to read as follows:
``(B) Amount of grant.--
``(i) In general.--If, for a bonus
year, none of the eligible States is
Guam, the Virgin Islands, or American
Samoa, then the amount of the grant
shall be--
``(I) $20,000,000 if there
are 5 eligible States; or
``(II) $25,000,000 if there
are fewer than 5 eligible
States.
``(ii) Amount if certain
territories are eligible.--If, for a
bonus year, Guam, the Virgin Islands,
or American Samoa is an eligible State,
then the amount of the grant shall be--
``(I) in the case of such a
territory, 25 percent of the
mandatory ceiling amount (as
defined in section 1108(c)(4))
with respect to the territory;
and
``(II) in the case of a
State that is not such a
territory--
``(aa) if there are
5 eligible States other
than such territories,
$20,000,000, minus \1/
5\ of the total amount
of the grants payable
under this paragraph to
such territories for
the bonus year; or
``(bb) if there are
fewer than 5 such
eligible States,
$25,000,000, or such
lesser amount as may be
necessary to ensure
that the total amount
of grants payable under
this paragraph for the
bonus year does not
exceed $100,000,000.''.
(2) Certain territories to be ignored in ranking
other states.--Section 403(a)(2)(C)(i)(I)(aa) (42
U.S.C. 603(a)(2)(C)(i)(I)(aa)) is amended by adding at
the end the following: ``In the case of a State that is
not a territory specified in subparagraph (B), the
comparative magnitude of the decrease for the State
shall be determined without regard to the magnitude of
the corresponding decrease for any such territory.''.
(b) Computation of Bonus Based on Ratios of Out-of-Wedlock
Births to All Births Instead of Numbers of Out-of-Wedlock
Births.--Section 403(a)(2) (42 U.S.C. 603(a)(2)) is amended--
(1) in the paragraph heading, by inserting
``ratio'' before the period;
(2) in subparagraph (A), by striking all that
follows ``bonus year'' and inserting a period; and
(3) in subparagraph (C)--
(A) in clause (i)--
(i) in subclause (I)(aa)--
(I) by striking ``number of
out-of-wedlock births that
occurred in the State during''
and inserting ``illegitimacy
ratio of the State for''; and
(II) by striking ``number
of such births that occurred
during'' and inserting
``illegitimacy ratio of the
State for''; and
(ii) in subclause (II)(aa)--
(I) by striking ``number of
out-of-wedlock births that
occurred in'' each place such
term appears and inserting
``illegitimacy ratio of''; and
(II) by striking
``calculate the number of out-
of-wedlock births'' and
inserting ``calculate the
illegitimacy ratio''; and
(B) by adding at the end the following:
``(iii) Illegitimacy ratio.--The
term `illegitimacy ratio' means, with
respect to a State and a period--
``(I) the number of out-of-
wedlock births to mothers
residing in the State that
occurred during the period;
divided by
``(II) the number of births
to mothers residing in the
State that occurred during the
period.''.
(c) Use of Calendar Year Data Instead of Fiscal Year Data
in Calculating Bonus for Decrease in Illegitimacy Ratio.--
Section 403(a)(2)(C) (42 U.S.C. 603(a)(2)(C)) is amended--
(1) in clause (i)--
(A) in subclause (I)(bb)--
(i) by striking ``the fiscal year''
and inserting ``the calendar year for
which the most recent data are
available''; and
(ii) by striking ``fiscal year
1995'' and inserting ``calendar year
1995'';
(B) in subclause (II), by striking
``fiscal'' each place such term appears and
inserting ``calendar''; and
(2) in clause (ii), by striking ``fiscal years''
and inserting ``calendar years''.
(d) Correction of Heading.--Section 403(a)(3)(C)(ii) (42
U.S.C. 603(a)(3)(C)(ii)) is amended in the heading by striking
``1997'' and inserting ``1998''.
(e) Clarification of Contingency Fund Provision.--Section
403(b) (42 U.S.C. 603(b)) is amended--
(1) in paragraph (6), by striking ``(5)'' and
inserting ``(4)'';
(2) by striking paragraph (4) and redesignating
paragraphs (5) and (6) as paragraphs (4) and (5),
respectively; and
(3) by inserting after paragraph (5) the following:
``(6) Annual reconciliation.--
``(A) In general.--Notwithstanding
paragraph (3), if the Secretary makes a payment
to a State under this subsection in a fiscal
year, then the State shall remit to the
Secretary, within 1 year after the end of the
first subsequent period of 3 consecutive months
for which the State is not a needy State, an
amount equal to the amount (if any) by which--
``(i) the total amount paid to the
State under paragraph (3) of this
subsection in the fiscal year; exceeds
``(ii) the product of--
``(I) the Federal medical
assistance percentage for the
State (as defined in section
1905(b), as such section was in
effect on September 30, 1995);
``(II) the State's
reimbursable expenditures for
the fiscal year; and
``(III) \1/12\ times the
number of months during the
fiscal year for which the
Secretary made a payment to the
State under such paragraph (3).
``(B) Definitions.--As used in subparagraph
(A):
``(i) Reimbursable expenditures.--
The term `reimbursable expenditures'
means, with respect to a State and a
fiscal year, the amount (if any) by
which--
``(I) countable State
expenditures for the fiscal
year; exceeds
``(II) historic State
expenditures (as defined in
section 409(a)(7)(B)(iii)),
excluding any amount expended
by the State for child care
under subsection (g) or (i) of
section 402 (as in effect
during fiscal year 1994) for
fiscal year 1994.
``(ii) Countable state
expenditures.--The term `countable
expenditures' means, with respect to a
State and a fiscal year--
``(I) the qualified State
expenditures (as defined in
section 409(a)(7)(B)(i) (other
than the expenditures described
in subclause (I)(bb) of such
section)) under the State
program funded under this part
for the fiscal year; plus
``(II) any amount paid to
the State under paragraph (3)
during the fiscal year that is
expended by the State under the
State program funded under this
part.''.
(f) Administration of Contingency Fund Transferred to the
Secretary of HHS.--Section 403(b)(7) (42 U.S.C. 603(b)(7)) is
amended to read as follows:
``(7) State defined.--As used in this subsection,
the term `State' means each of the 50 States and the
District of Columbia.''.
SEC. 5503. USE OF GRANTS.
Section 404(a)(2) (42 U.S.C. 604(a)(2)) is amended by
inserting ``, or (at the option of the State) August 21, 1996''
before the period.
SEC. 5504. MANDATORY WORK REQUIREMENTS.
(a) Family With a Disabled Parent Not Treated as a 2-Parent
Family.--Section 407(b)(2) (42 U.S.C. 607(b)(2)) is amended by
adding at the end the following:
``(C) Family with a disabled parent not
treated as a 2-parent family.--A family that
includes a disabled parent shall not be
considered a 2-parent family for purposes of
subsections (a) and (b) of this section.''.
(b) Correction of Heading.--Section 407(b)(3) (42 U.S.C.
607(b)(3)) is amended in the heading by inserting ``and not
resulting from changes in state eligibility criteria'' before
the period.
(c) State Option To Include Individuals Receiving
Assistance Under a Tribal Work Program in Participation Rate
Calculation.--Section 407(b)(4) (42 U.S.C. 607(b)(4)) is
amended--
(1) in the heading, by inserting ``or tribal work
program'' before the period; and
(2) by inserting ``or under a tribal work program
to which funds are provided under this part'' before
the period.
(d) Sharing of 35-Hour Work Requirement Between Parents in
2-Parent Families.--Section 407(c)(1)(B) (42 U.S.C.
607(c)(1)(B)) is amended--
(1) in clause (i)--
(A) by striking ``is'' and inserting ``and
the other parent in the family are''; and
(B) by inserting ``a total of'' before ``at
least''; and
(2) in clause (ii)--
(A) by striking ``individual's spouse is''
and inserting ``individual and the other parent
in the family are'';
(B) by inserting ``for a total of at least
55 hours per week'' before ``during the
month'';
(C) by striking ``20'' and inserting
``50''; and
(D) by striking ``or (7)'' and inserting
``(6), (7), (8), or (12)''.
(e) Clarification of Effort Required in Work Activities.--
Section 407(c)(1)(B) (42 U.S.C. 607(c)(1)(B)) is amended by
striking ``making progress'' each place such term appears and
inserting ``participating''.
(f) Additional Condition Under Which 12 Weeks of Job Search
May Count as Work.--Section 407(c)(2)(A)(i) (42 U.S.C.
607(c)(2)(A)(i)) is amended by inserting ``or the State is a
needy State (within the meaning of section 403(b)(6))'' after
``United States''.
(g) Caretaker Relative of Child Under Age 6 Deemed To Be
Meeting Work Requirements if Engaged in Work for 20 Hours Per
Week.--Section 407(c)(2)(B) (42 U.S.C. 607(c)(2)(B)) is
amended--
(1) in the heading, by inserting ``or relative''
after ``parent'' each place such term appears; and
(2) by striking ``in a 1-parent family who is the
parent'' and inserting ``who is the only parent or
caretaker relative in the family''.
(h) Extension to Married Teens of Rule That Receipt of
Sufficient Education Is Enough To Meet Work Participation
Requirements.--Section 407(c)(2)(C) (42 U.S.C. 607(c)(2)(C)) is
amended--
(1) in the heading, by striking ``Teen head of
household'' and inserting ``Single teen head of
household or married teen'';
(2) by striking ``a single'' and inserting
``married or a''; and
(3) by striking ``, subject to subparagraph (D) of
this paragraph,''.
(i) Clarification of Number of Hours of Participation in
Education Directly Related to Employment That Are Required in
Order for Single Teen Head of Household or Married Teen To Be
Deemed To Be Engaged in Work.--Section 407(c)(2)(C)(ii) (42
U.S.C. 607(c)(2)(C)(ii)) is amended by striking ``at least''
and all that follows through ``subsection'' and inserting ``an
average of at least 20 hours per week during the month''.
(j) Clarification of Refusal To Work for Purposes of Work
Penalties for Individuals.--Section 407(e)(2) (42 U.S.C.
607(e)(2)) is amended by striking ``work'' and inserting
``engage in work required in accordance with this section''.
SEC. 5505. PROHIBITIONS; REQUIREMENTS.
(a) Elimination of Redundant Language; Clarification of
Home Residence Requirement.--Section 408(a)(1) (42 U.S.C.
608(a)(1)) is amended to read as follows:
``(1) No assistance for families without a minor
child.--A State to which a grant is made under section
403 shall not use any part of the grant to provide
assistance to a family, unless the family includes a
minor child who resides with the family (consistent
with paragraph (10)) or a pregnant individual.''.
(b) Clarification of Terminology.--Section 408(a)(3) (42
U.S.C. 608(a)(3)) is amended--
(1) by striking ``leaves'' the 1st, 3rd, and 4th
places such term appears and inserting ``ceases to
receive assistance under''; and
(2) by striking ``the date the family leaves the
program'' the 2nd place such term appears and inserting
``such date''.
(c) Elimination of Space.--Section 408(a)(5)(A)(ii) (42
U.S.C. 608(a)(5)(A)(ii)) is amended by striking ``described.--
For'' and inserting ``described.--For''.
(d) Corrections to 5-Year Limit on Assistance.--
(1) Clarification of limitation on hardship
exemption.--Section 408(a)(7)(C)(ii) (42 U.S.C.
608(a)(7)(C)(ii)) is amended--
(A) by striking ``The number'' and
inserting ``The average monthly number''; and
(B) by inserting ``during the fiscal year
or the immediately preceding fiscal year (but
not both), as the State may elect'' before the
period.
(2) Residence exception made more uniform and
easier to administer.--Section 408(a)(7)(D) (42 U.S.C.
608(a)(7)(D)) is amended to read as follows:
``(D) Disregard of months of assistance
received by adult while living in indian
country or an alaskan native village with 50
percent unemployment.--
``(i) In general.--In determining
the number of months for which an adult
has received assistance under a State
or tribal program funded under this
part, the State or tribe shall
disregard any month during which the
adult lived in Indian country or an
Alaskan Native village if the most
reliable data available with respect to
the month (or a period including the
month) indicate that at least 50
percent of the adults living in Indian
country or in the village were not
employed.
``(ii) Indian country defined.--As
used in clause (i), the term `Indian
country' has the meaning given such
term in section 1151 of title 18,
United States Code.''.
(e) Reinstatement of Deeming and Other Rules Applicable to
Aliens Who Entered the United States Under Affidavits of
Support Formerly Used.--Section 408 (42 U.S.C. 608), as amended
by section 5001(h)(1) of this Act, is amended by striking
subsection (e) and inserting the following:
``(e) Special Rules Relating to Treatment of Certain
Aliens.--For special rules relating to the treatment of certain
aliens, see title IV of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996.
``(f) Special Rules Relating to the Treatment of Non-213A
Aliens.--The following rules shall apply if a State elects to
take the income or resources of any sponsor of a non-213A alien
into account in determining whether the alien is eligible for
assistance under the State program funded under this part, or
in determining the amount or types of such assistance to be
provided to the alien:
``(1) Deeming of sponsor's income and resources.--
For a period of 3 years after a non-213A alien enters
the United States:
``(A) Income deeming rule.--The income of
any sponsor of the alien and of any spouse of
the sponsor is deemed to be income of the
alien, to the extent that the total amount of
the income exceeds the sum of--
``(i) the lesser of--
``(I) 20 percent of the
total of any amounts received
by the sponsor or any such
spouse in the month as wages or
salary or as net earnings from
self-employment, plus the full
amount of any costs incurred by
the sponsor and any such spouse
in producing self-employment
income in such month; or
``(II) $175;
``(ii) the cash needs standard
established by the State for purposes
of determining eligibility for
assistance under the State program
funded under this part for a family of
the same size and composition as the
sponsor and any other individuals
living in the same household as the
sponsor who are claimed by the sponsor
as dependents for purposes of
determining the sponsor's Federal
personal income tax liability but whose
needs are not taken into account in
determining whether the sponsor's
family has met the cash needs standard;
``(iii) any amounts paid by the
sponsor or any such spouse to
individuals not living in the household
who are claimed by the sponsor as
dependents for purposes of determining
the sponsor's Federal personal income
tax liability; and
``(iv) any payments of alimony or
child support with respect to
individuals not living in the
household.
``(B) Resource deeming rule.--The resources
of a sponsor of the alien and of any spouse of
the sponsor are deemed to be resources of the
alien to the extent that the aggregate value of
the resources exceeds $1,500.
``(C) Sponsors of multiple non-213a
aliens.--If a person is a sponsor of 2 or more
non-213A aliens who are living in the same
home, the income and resources of the sponsor
and any spouse of the sponsor that would be
deemed income and resources of any such alien
under subparagraph (A) shall be divided into a
number of equal shares equal to the number of
such aliens, and the State shall deem the
income and resources of each such alien to
include 1 such share.
``(2) Ineligibility of non-213a aliens sponsored by
agencies; exception.--A non-213A alien whose sponsor is
or was a public or private agency shall be ineligible
for assistance under a State program funded under this
part, during a period of 3 years after the alien enters
the United States, unless the State agency
administering the program determines that the sponsor
either no longer exists or has become unable to meet
the alien's needs.
``(3) Information provisions.--
``(A) Duties of non-213a aliens.--A non-
213A alien, as a condition of eligibility for
assistance under a State program funded under
this part during the period of 3 years after
the alien enters the United States, shall be
required to provide to the State agency
administering the program--
``(i) such information and
documentation with respect to the
alien's sponsor as may be necessary in
order for the State agency to make any
determination required under this
subsection, and to obtain any
cooperation from the sponsor necessary
for any such determination; and
``(ii) such information and
documentation as the State agency may
request and which the alien or the
alien's sponsor provided in support of
the alien's immigration application.
``(B) Duties of federal agencies.--The
Secretary shall enter into agreements with the
Secretary of State and the Attorney General
under which any information available to them
and required in order to make any determination
under this subsection will beprovided by them
to the Secretary (who may, in turn, make the information available,
upon request, to a concerned State agency).
``(4) Non-213a alien defined.--An alien is a non-
213A alien for purposes of this subsection if the
affidavit of support or similar agreement with respect
to the alien that was executed by the sponsor of the
alien's entry into the United States was executed other
than pursuant to section 213A of the Immigration and
Nationality Act.
``(5) Inapplicability to alien minor sponsored by a
parent.--This subsection shall not apply to an alien
who is a minor child if the sponsor of the alien or any
spouse of the sponsor is a parent of the alien.
``(6) Inapplicability to certain categories of
aliens.--This subsection shall not apply to an alien
who is--
``(A) admitted to the United States as a
refugee under section 207 of the Immigration
and Nationality Act;
``(B) paroled into the United States under
section 212(d)(5) of such Act for a period of
at least 1 year; or
``(C) granted political asylum by the
Attorney General under section 208 of such
Act.''.
SEC. 5506. PENALTIES.
(a) States Given More Time To File Quarterly Reports.--
Section 409(a)(2)(A) (42 U.S.C. 609(a)(2)(A)) is amended by
striking ``1 month'' and inserting ``45 days''.
(b) Treatment of Support Payments Passed Through to
Families as Qualified State Expenditures.--Section
409(a)(7)(B)(i)(I)(aa) (42 U.S.C. 609(a)(7)(B)(i)(I)(aa)) is
amended by inserting ``, including any amount collected by the
State as support pursuant to a plan approved under part D, on
behalf of a family receiving assistance under the State program
funded under this part, that is distributed to the family under
section 457(a)(1)(B) and disregarded in determining the
eligibility of the family for, and the amount of, such
assistance'' before the period.
(c) Disregard of Expenditures Made To Replace Penalty Grant
Reductions.--Section 409(a)(7)(B)(i) (42 U.S.C.
609(a)(7)(B)(i)) is amended by redesignating subclause (III) as
subclause (IV) and by inserting after subclause (II) the
following:
``(III) Exclusion of
amounts expended to replace
penalty grant reductions.--Such
term does not include any
amount expended in order to
comply with paragraph (12).''.
(d) Treatment of Families of Certain Aliens as Eligible
Families.--Section 409(a)(7)(B)(i)(IV) (42 U.S.C.
609(a)(7)(B)(i)(IV)), as so redesignated by subsection (c) of
this section, is amended--
(1) by striking ``and families'' and inserting
``families''; and
(2) by striking ``Act or section 402'' and
inserting ``Act, and families of aliens lawfully
present in the United States that would be eligible for
such assistance but for the application of title IV''.
(e) Elimination of Meaningless Language.--Section
409(a)(7)(B)(ii) (42 U.S.C. 609(a)(7)(B)(ii)) is amended by
striking ``reduced (if appropriate) in accordance with
subparagraph (C)(ii)''.
(f) Clarification of Source of Data To Be Used in
Determining Historic State Expenditures.--Section 409(a)(7)(B)
(42 U.S.C. 609(a)(7)(B)) is amended by adding at the end the
following:
``(v) Source of data.--In
determining expenditures by a State for
fiscal years 1994 and 1995, the
Secretary shall use information which
was reported by the State on ACF Form
231 or (in the case of expenditures
under part F) ACF Form331, available as
of the dates specified in clauses (ii) and (iii) of section
403(a)(1)(D).''.
(g) Conforming Title IV-A Penalties to Title IV-D
Performance-Based Standards.--Section 409(a)(8) (42 U.S.C.
609(a)(8)) is amended to read as follows:
``(8) Noncompliance of state child support
enforcement program with requirements of part d.--
``(A) In general.--If the Secretary finds,
with respect to a State's program under part D,
in a fiscal year beginning on or after October
1, 1997--
``(i)(I) on the basis of data
submitted by a State pursuant to
section 454(15)(B), or on the basis of
the results of a review conducted under
section 452(a)(4), that the State
program failed to achieve the paternity
establishment percentages (as defined
in section 452(g)(2)), or to meet other
performance measures that may be
established by the Secretary;
``(II) on the basis of the results
of an audit or audits conducted under
section 452(a)(4)(C)(i) that the State
data submitted pursuant to section
454(15)(B) is incomplete or unreliable;
or
``(III) on the basis of the results
of an audit or audits conducted under
section 452(a)(4)(C) that a State
failed to substantially comply with 1
or more of the requirements of part D;
and
``(ii) that, with respect to the
succeeding fiscal year--
``(I) the State failed to
take sufficient corrective
action to achieve the
appropriate performance levels
or compliance as described in
subparagraph (A)(i); or
``(II) the data submitted
by the State pursuant to
section 454(15)(B) is
incomplete or unreliable;
the amounts otherwise payable to the State
under this part for quarters following the end
of such succeeding fiscal year, prior to
quarters following the end of the first quarter
throughout which the State program has achieved
the paternity establishment percentages or
other performance measures as described in
subparagraph (A)(i)(I), or is in substantial
compliance with 1 or more of the requirements
of part D as described in subparagraph
(A)(i)(III), as appropriate, shall be reduced
by the percentage specified in subparagraph
(B).
``(B) Amount of reductions.--The reductions
required under subparagraph (A) shall be--
``(i) not less than 1 nor more than
2 percent;
``(ii) not less than 2 nor more
than 3 percent, if the finding is the
2nd consecutive finding made pursuant
to subparagraph (A); or
``(iii) not less than 3 nor more
than 5 percent, if the finding is the
3rd or a subsequent consecutive such
finding.
``(C) Disregard of noncompliance which is
of a technical nature.--For purposes of this
section and section 452(a)(4), a State
determined as a result of an audit--
``(i) to have failed to have
substantially complied with 1 or more
of the requirements of part D shall be
determined to have achieved substantial
compliance only if the Secretary
determines that the extent of the
noncompliance is of a technical nature
which does not adversely affect the
performance of the State's program
under part D; or
``(ii) to have submitted incomplete
or unreliable data pursuant to section
454(15)(B) shall be determined to have
submitted adequate data only if the
Secretary determines that the extent of
the incompleteness or unreliability of
the data is of a technical nature which
does not adversely affect
thedetermination of the level of the State's paternity establishment
percentages (as defined under section 452(g)(2)) or other performance
measures that may be established by the Secretary.''.
(h) Correction of Reference to 5-Year Limit on
Assistance.--Section 409(a)(9) (42 U.S.C. 609(a)(9)) is amended
by striking ``408(a)(1)(B)'' and inserting ``408(a)(7)''.
(i) Correction of Errors in Penalty for Failure To Meet
Maintenance of Effort Requirement Applicable to the Contingency
Fund.--Section 409(a)(10) (42 U.S.C. 609(a)(10)) is amended--
(1) by striking ``the expenditures under the State
program funded under this part for the fiscal year
(excluding any amounts made available by the Federal
Government)'' and inserting ``the qualified State
expenditures (as defined in paragraph (7)(B)(i) (other
than the expenditures described in subclause (I)(bb) of
that paragraph)) under the State program funded under
this part for the fiscal year'';
(2) by inserting ``excluding any amount expended by
the State for child care under subsection (g) or (i) of
section 402 (as in effect during fiscal year 1994) for
fiscal year 1994,'' after ``(as defined in paragraph
(7)(B)(iii) of this subsection),''; and
(3) by inserting ``that the State has not remitted
under section 403(b)(6)'' before the period.
(j) Penalty for State Failure to Expend Additional State
Funds To Replace Grant Reductions.--Section 409(a)(12) (42
U.S.C. 609(a)(12)) is amended--
(1) in the heading--
(A) by striking ``Failure'' and inserting
``Requirement''; and
(B) by striking ``reductions'' and
inserting ``reductions; penalty for failure to
do so''; and
(2) by adding at the end the following: ``If the
State fails during such succeeding fiscal year to make
the expenditure required by the preceding sentence from
its own funds, the Secretary may reduce the grant
payable to the State under section 403(a)(1) for the
fiscal year that follows such succeeding fiscal year by
an amount equal to the sum of--
``(A) not more than 2 percent of the State
family assistance grant; and
``(B) the amount of the expenditure
required by the preceding sentence.''.
(k) Elimination of Certain Reasonable Cause Exceptions.--
Section 409(b)(2) (42 U.S.C. 609(b)(2)) is amended by striking
``(7) or (8)'' and inserting ``(6), (7), (8), (10), or (12)''.
(l) Clarification of What It Means To Correct a
Violation.--Section 409(c) (42 U.S.C. 609(c)) is amended--
(1) in each of subparagraphs (A) and (B) of
paragraph (1), by inserting ``or discontinue, as
appropriate,'' after ``correct'';
(2) in paragraph (2)--
(A) in the heading, by inserting ``or
discontinuing'' after ``correcting''; and
(B) by inserting ``or discontinues, as
appropriate'' after ``corrects''; and
(3) in paragraph (3)--
(A) in the heading, by inserting ``or
discontinue'' after ``correct''; and
(B) by inserting ``or discontinue, as
appropriate,'' before ``the violation''.
(m) Certain Penalties Not Avoidable Through Corrective
Compliance Plans.--Section 409(c)(4) (42 U.S.C. 609(c)(4)) is
amended to read as follows:
``(4) Inapplicability to certain penalties.--This
subsection shall not apply to the imposition of a
penalty against a State under paragraph (6), (7), (8),
(10), or (12) of subsection (a).''.
(n) Failure to Satisfy Minimum Participation Rates.--
Section 409(a)(3) (42 U.S.C. 609(a)(3)) is amended--
(1) in subparagraph (A), by striking ``not more
than''; and
(2) in subparagraph (C), by inserting before the
period the following: ``or if the noncompliance is due
to extraordinary circumstances such as a natural
disaster or regional recession. The Secretary shall
provide a written report to Congress to justify any
waiver or penalty reduction due to such extraordinary
circumstances''.
SEC. 5507. DATA COLLECTION AND REPORTING.
Section 411(a) (42 U.S.C. 611(a)) is amended--
(1) in paragraph (1)--
(A) in subparagraph (A)--
(i) by striking clause (ii) and
inserting the following:
``(ii) Whether a child receiving
such assistance or an adult in the
family is receiving--
``(I) Federal disability
insurance benefits;
``(II) benefits based on
Federal disability status;
``(III) aid under a State
plan approved under title XIV
(as in effect without regard to
the amendment made by section
301 of the Social Security
Amendments of 1972));
``(IV) aid or assistance
under a State plan approved
under title XVI (as in effect
without regard to such
amendment) by reason of being
permanently and totally
disabled; or
``(V) supplemental security
income benefits under title XVI
(as in effect pursuant to such
amendment) by reason of
disability.'';
(ii) in clause (iv), by striking
``youngest child in'' and inserting
``head of'';
(iii) in each of clauses (vii) and
(viii), by striking ``status'' and
inserting ``level''; and
(iv) by adding at the end the
following:
``(xvii) With respect to each
individual in the family who has not
attained 20 years of age, whether the
individual is a parent of a child in
the family.''; and
(B) in subparagraph (B)--
(i) in the heading, by striking
``estimates'' and inserting
``samples''; and
(ii) in clause (i), by striking
``an estimate which is obtained'' and
inserting ``disaggregated case record
information on a sample of families
selected''; and
(2) by redesignating paragraph (6) as paragraph (7)
and inserting after paragraph (5) the following:
``(6) Report on families receiving assistance.--The
report required by paragraph (1) for a fiscal quarter
shall include for each month in the quarter--
``(A) the number of families and
individuals receiving assistance under the
State program funded under this part (including
the number of 2-parent and 1-parent families);
and
``(B) the total dollar value of such
assistance received by all families.''.
SEC. 5508. DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES.
(a) Prorating of Tribal Family Assistance Grants.--Section
412(a)(1)(A) (42 U.S.C. 612(a)(1)(A)) is amended by inserting
``which shall be reduced for a fiscal year, on a pro rata basis
for each quarter, in the case of a tribal family assistance
plan approved during a fiscal year for which the plan is to be
in effect,'' before ``and shall''.
(b) Tribal Option To Operate Work Activities Program.--
Section 412(a)(2)(A) (42 U.S.C. 612(a)(2)(A)) is amended by
striking ``The Secretary'' and all that followsthrough ``2002''
and inserting ``For each of fiscal years 1997, 1998, 1999, 2000, 2001,
and 2002, the Secretary shall pay to each eligible Indian tribe that
proposes to operate a program described in subparagraph (C)''.
(c) Discretion of Tribes To Select Population To Be Served
by Tribal Work Activities Program.--Section 412(a)(2)(C) (42
U.S.C. 612(a)(2)(C)) is amended by striking ``members of the
Indian tribe'' and inserting ``such population and such service
area or areas as the tribe specifies''.
(d) Reduction of Appropriation for Tribal Work Activities
Programs.--Section 412(a)(2)(D) (42 U.S.C. 612(a)(2)(D)) is
amended by striking ``$7,638,474'' and inserting
``$7,633,287''.
(e) Availability of Corrective Compliance Plans to Indian
Tribes.--Section 412(f)(1) (42 U.S.C. 612(f)(1)) is amended by
striking ``and (b)'' and inserting ``(b), and (c)''.
(f) Eligibility of Tribes for Federal Loans for Welfare
Programs.--Section 412 (42 U.S.C. 612) is amended by
redesignating subsections (f), (g), and (h) as subsections (g),
(h), and (i), respectively, and by inserting after subsection
(e) the following:
``(f) Eligibility for Federal Loans.--Section 406 shall
apply to an Indian tribe with an approved tribal assistance
plan in the same manner as such section applies to a State,
except that section 406(c) shall be applied by substituting
`section 412(a)' for `section 403(a)'.''.
SEC. 5509. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES.
(a) Research.--
(1) Methods.--Section 413(a) (42 U.S.C. 613(a)) is
amended by inserting ``, directly or through grants,
contracts, or interagency agreements,'' before ``shall
conduct''.
(2) Correction of cross reference.--Section 413(a)
(42 U.S.C. 613(a)) is amended by striking ``409'' and
inserting ``407''.
(b) Correction of Erroneously Indented Paragraph.--Section
413(e)(1) (42 U.S.C. 613(e)(1)) is amended to read as follows:
``(1) In general.--The Secretary shall annually
rank States to which grants are made under section 403
based on the following ranking factors:
``(A) Absolute out-of-wedlock ratios.--The
ratio represented by--
``(i) the total number of out-of-
wedlock births in families receiving
assistance under the State program
under this part in the State for the
most recent year for which information
is available; over
``(ii) the total number of births
in families receiving assistance under
the State program under this part in
the State for the year.
``(B) Net changes in the out-of-wedlock
ratio.--The difference between the ratio
described in subparagraph (A) with respect to a
State for the most recent year for which such
information is available and the ratio with
respect to the State for the immediately
preceding year.''.
(c) Funding of Prior Authorized Demonstrations.--Section
413(h)(1)(D) (42 U.S.C. 613(h)(1)(D)) is amended by striking
``September 30, 1995'' and inserting ``August 22, 1996''.
(d) Child Poverty Reports.--
(1) Delayed due date for initial report.--Section
413(i)(1) (42 U.S.C. 613(i)(1)) is amended by striking
``90 days after the date of the enactment of this
part'' and inserting ``May 31, 1998''.
(2) Modification of factors to be used in
establishing methodology for use in determining child
poverty rates.--Section 413(i)(5) (42 U.S.C. 613(i)(5))
is amended by striking ``the county-by-county'' and
inserting ``, to the extent available, county-by-
county''.
SEC. 5510. REPORT ON DATA PROCESSING.
Section 106(a)(1) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Public Law 104-193; 110
Stat. 2164) is amended by striking ``(whether in effect before
or after October 1, 1995)''.
SEC. 5511. STUDY ON ALTERNATIVE OUTCOMES MEASURES.
Section 107(a) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Public Law 104-193; 110
Stat. 2164) is amended by striking ``409(a)(7)(C)'' and
inserting ``408(a)(7)(C)''.
SEC. 5512. LIMITATION ON PAYMENTS TO THE TERRITORIES.
(a) Certain Payments To Be Disregarded in Determining
Limitation.--Section 1108(a) (42 U.S.C. 1308) is amended to
read as follows:
``(a) Limitation on Total Payments to Each Territory.--
``(1) In general.--Notwithstanding any other
provision of this Act (except for paragraph (2) of this
subsection), the total amount certified by the
Secretary of Health and Human Services under titles I,
X, XIV, and XVI, under parts A and E of title IV, and
under subsection (b) of this section, for payment to
any territory for a fiscal year shall not exceed the
ceiling amount for the territory for the fiscal year.
``(2) Certain payments disregarded.--Paragraph (1)
of this subsection shall be applied without regard to
any payment made under section 403(a)(2), 403(a)(4),
406, or 413(f).''.
(b) Certain Child Care and Social Services Expenditures by
Territories Treated as IV-A Expenditures for Purposes of
Matching Grant.--Section 1108(b)(1)(A) (42 U.S.C.
1308(b)(1)(A)) is amended by inserting ``, including any amount
paid to the State under part A of title IV that is transferred
in accordance with section 404(d) and expended under the
program to which transferred'' before the semicolon.
(c) Elimination of Duplicative Maintenance of Effort
Requirement.--Section 1108 (42 U.S.C. 1308) is amended by
striking subsection (e).
SEC. 5513. CONFORMING AMENDMENTS TO THE SOCIAL SECURITY ACT.
(a) Amendments to Part D of Title IV.--
(1) Corrections to determination of paternity
establishment percentages.--Section 452 (42 U.S.C. 652)
is amended--
(A) in subsection (d)(3)(A), by striking
all that follows ``for purposes of'' and
inserting ``section 409(a)(8), to achieve the
paternity establishment percentages (as defined
under section 452(g)(2)) and other performance
measures that may be established by the
Secretary, and to submit data under section
454(15)(B) that is complete and reliable, and
to substantially comply with the requirements
of this part; and''; and
(B) in subsection (g)(1), by striking
``section 403(h)'' and inserting ``section
409(a)(8)''.
(2) Elimination of obsolete language.--Section
108(c)(8)(C) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Public Law 104-
193; 110 Stat. 2165) is amended by inserting ``and all
that follows through `the best interests of such child
to do so' '' before ``and inserting''.
(3) Insertion of language inadvertently omitted.--
Section 108(c)(13) of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (Public Law
104-193; 110 Stat. 2166) is amended by inserting ``and
inserting `pursuant to section 408(a)(3)' '' before the
period.
(4) Elimination of obsolete cross reference.--
Section 464(a)(1) (42 U.S.C. 664(a)(1)) is amended
bystriking ``section 402(a)(26)'' and inserting ``section 408(a)(3)''.
(b) Amendments to Part E of Title IV.--Each of the
following is amended by striking ``June 1, 1995'' each place
such term appears and inserting ``July 16, 1996'':
(1) Section 472(a) (42 U.S.C. 672(a)).
(2) Section 472(h) (42 U.S.C. 672(h)).
(3) Section 473(a)(2) (42 U.S.C. 673(a)(2)).
(4) Section 473(b) (42 U.S.C. 673(b)).
SEC. 5514. OTHER CONFORMING AMENDMENTS.
(a) Elimination of Amendments Included Inadvertently.--
Section 110(l) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Public Law 104-193; 110
Stat. 2173) is amended--
(1) by striking paragraphs (1), (4), (5), and (7);
(2) by redesignating paragraphs (2), (3), (6), and
(8) as paragraphs (1), (2), (3), and (4), respectively;
and
(3) by adding ``and'' at the end of paragraph (3),
as so redesignated.
(b) Correction of Citation.--Section 109(f) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(Public Law 104-193; 110 Stat. 2177) is amended by striking
``93-186'' and inserting ``93-86''.
(c) Correction of Internal Cross Reference.--Section
103(a)(1) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (Public Law 104-193; 110 Stat. 2112)
is amended by striking ``603(b)(2)'' and inserting ``603(b)''.
(d) Correction of References.--Section 416 (42 U.S.C. 616)
is amended by striking ``amendment made by section 2103 of the
Personal Responsibility and Work Opportunity'' and inserting
``amendments made by section 103 of the Personal Responsibility
and Work Opportunity Reconciliation''.
SEC. 5515. MODIFICATIONS TO THE JOB OPPORTUNITIES FOR CERTAIN LOW-
INCOME INDIVIDUALS PROGRAM.
Section 112(5) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Public Law 104-193; 110
Stat. 2177) is amended in each of subparagraphs (A) and (B) by
inserting ``under'' after ``funded''.
SEC. 5516. DENIAL OF ASSISTANCE AND BENEFITS FOR DRUG-RELATED
CONVICTIONS.
(a) Extension of Certain Requirements Coordinated With
Delayed Effective Date for Successor Provisions.--Section
115(d)(2) of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (Public Law 104-193; 110 Stat. 2181)
is amended by striking ``convictions'' and inserting ``a
conviction if the conviction is for conduct''.
(b) Immediate Effectiveness of Provisions Relating to
Research, Evaluations, and National Studies.--Section 116(a) of
the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 (Public Law 104-193; 110 Stat. 2181) is amended by
adding at the end the following:
``(6) Research, evaluations, and national
studies.--Section 413 of the Social Security Act, as
added by the amendment made by section 103(a) of this
Act, shall take effect on the date of the enactment of
this Act.''.
SEC. 5517. TRANSITION RULE.
Section 116 of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Public Law 104-193; 110
Stat. 2181) is amended--
(1) in subsection (a)(2), by inserting ``(but
subject to subsection (b)(1)(A)(ii))'' after ``this
section''; and
(2) in subsection (b)(1)(A)(ii), by striking ``June
30, 1997'' and inserting ``the later of June 30, 1997,
or the day before the date described in subsection
(a)(2)(B) of this section''.
SEC. 5518. EFFECTIVE DATES.
(a) Amendments to Part A of Title IV of the Social Security
Act.--The amendments made by this chapterto a provision of part
A of title IV of the Social Security Act shall take effect as if the
amendments had been included in section 103(a) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 at the
time such section became law.
(b) Amendments to Parts D and E of Title IV of the Social
Security Act.--The amendments made by section 5513 of this Act
shall take effect as if the amendments had been included in
section 108 of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 at the time such section 108 became
law.
(c) Amendments to Other Amendatory Provisions.--The
amendments made by section 5514(a) of this Act shall take
effect as if the amendments had been included in section 110 of
the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 at the time such section 110 became law.
(d) Amendments to Freestanding Provisions of the Personal
Responsibility and Work Opportunity Reconciliation Act of
1996.--The amendments made by this chapter to a provision of
the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 that have not become part of another statute shall
take effect as if the amendments had been included in the
provision at the time the provision became law.
CHAPTER 2--SUPPLEMENTAL SECURITY INCOME
SEC. 5521. CONFORMING AND TECHNICAL AMENDMENTS RELATING TO ELIGIBILITY
RESTRICTIONS.
(a) Denial of SSI Benefits for Fugitive Felons and
Probation and Parole Violators.--Section 1611(e)(6) (42 U.S.C.
1382(e)(6)) is amended by inserting ``and section 1106(c) of
this Act'' after ``of 1986''.
(b) Treatment of Prisoners.--Section 1611(e)(1)(I)(i)(II)
(42 U.S.C. 1382(e)(1)(I)(i)(II)) is amended by striking
``inmate of the institution'' and all that follows through
``this subparagraph'' and inserting ``individual who receives
in the month preceding the first month throughout which such
individual is an inmate of the jail, prison, penal institution,
or correctional facility that furnishes information respecting
such individual pursuant to subclause (I), or is confined in
the institution (that so furnishes such information) as
described in section 202(x)(1)(A)(ii), a benefit under this
title for such preceding month, and who is determined by the
Commissioner to be ineligible for benefits under this title by
reason of confinement based on the information provided by such
institution''.
(c) Correction of Reference.--Section 1611(e)(1)(I)(i)(I)
(42 U.S.C. 1382(e)(1)(I)(i)(I)) is amended by striking
``paragraph (1)'' and inserting ``this paragraph''.
SEC. 5522. CONFORMING AND TECHNICAL AMENDMENTS RELATING TO BENEFITS FOR
DISABLED CHILDREN.
(a) Eligibility Redeterminations and Continuing Disability
Reviews.--
(1) Disability eligibility redeterminations
required for ssi recipients who attain 18 years of
age.--Section 1614(a)(3)(H)(iii) (42 U.S.C.
1382c(a)(3)(H)(iii)) is amended by striking subclauses
(I) and (II) and all that follows and inserting the
following:
``(I) by applying the criteria used in determining
initial eligibility for individuals who are age 18 or
older; and
``(II) either during the 1-year period beginning on
the individual's 18th birthday or, in lieu of a
continuing disability review, whenever the Commissioner
determines that an individual's case is subject to a
redetermination under this clause.
With respect to any redetermination under this clause,
paragraph (4) shall not apply.''.
(2) Continuing disability review required for low
birth weight babies.--Section 1614(a)(3)(H)(iv) (42
U.S.C. 1382c(a)(3)(H)(iv)) is amended--
(A) in subclause (I), by striking ``Not''
and inserting ``Except as provided in subclause
(VI), not''; and
(B) by adding at the end the following:
``(VI) Subclause (I) shall not apply in the case of an
individual described in that subclause who, at the time of the
individual's initial disability determination, the Commissioner
determines has an impairment that is not expected to improve
within 12 months after the birth of that individual, and who
the Commissioner schedules for a continuing disability review
at a date that is after the individual attains 1 year of
age.''.
(b) Additional Accountability Requirements.--Section
1631(a)(2)(F) (42 U.S.C. 1383(a)(2)(F)) is amended--
(1) in clause (ii)(III)(bb), by striking ``the
total amount'' and all that follows through ``1613(c)''
and inserting ``in any case in which the individual
knowingly misapplies benefits from such an account, the
Commissioner shall reduce future benefits payable to
such individual (or to such individual and his spouse)
by an amount equal to the total amount of such benefits
so misapplied''; and
(2) by striking clause (iii) and inserting the
following:
``(iii) The representative payee may deposit into the
account established under clause (i) any other funds
representing past due benefits under this title to the eligible
individual, provided that the amount of such past due benefits
is equal to or exceeds the maximum monthly benefit payable
under this title to an eligible individual (including State
supplementary payments made by the Commissioner pursuant to an
agreement under section 1616 or section 212(b) of Public Law
93-66).''.
(c) Reduction in Cash Benefits Payable to Institutionalized
Individuals Whose Medical Costs Are Covered by Private
Insurance.--Section 1611(e) (42 U.S.C. 1382(e)) is amended--
(1) in paragraph (1)(B)--
(A) in the matter preceding clause (i), by
striking ``hospital, extended care facility,
nursing home, or intermediate care facility''
and inserting ``medical treatment facility'';
(B) in clause (ii)--
(i) in the matter preceding
subclause (I), by striking ``hospital,
home or''; and
(ii) in subclause (I), by striking
``hospital, home, or'';
(C) in clause (iii), by striking
``hospital, home, or''; and
(D) in the matter following clause (iii),
by striking ``hospital, extended care facility,
nursing home, or intermediate care facility
which is a `medical institution or nursing
facility' within the meaning of section
1917(c)'' and inserting ``medical treatment
facility that provides services described in
section 1917(c)(1)(C)'';
(2) in paragraph (1)(E)--
(A) in clause (i)(II), by striking
``hospital, extended care facility, nursing
home, or intermediate care facility'' and
inserting ``medical treatment facility''; and
(B) in clause (iii), by striking
``hospital, extended care facility, nursing
home, or intermediate care facility'' and
inserting ``medical treatment facility'';
(3) in paragraph (1)(G), in the matter preceding
clause (i)--
(A) by striking ``or which is a hospital,
extended care facility, nursing home, or
intermediate care'' and inserting ``or is in a
medical treatment''; and
(B) by inserting ``or, in the case of an
individual who is a child under the age of 18,
under any health insurance policy issued by a
private provider of such insurance'' after
``title XIX''; and
(4) in paragraph (3)--
(A) by striking ``same hospital, home, or
facility'' and inserting ``same medical
treatment facility''; and
(B) by striking ``same such hospital, home,
or facility'' and inserting ``same such
facility''.
(d) Correction of U.S.C. Citation.--Section 211(c) of the
Personal Responsibility and Work Opportunity Reconciliation Act
of 1996 (Public Law 104-193; 110 Stat. 2189) is amended by
striking ``1382(a)(4)'' and inserting ``1382c(a)(4)''.
SEC. 5523. ADDITIONAL TECHNICAL AMENDMENTS TO TITLE XVI.
Section 1615(d) (42 U.S.C. 1382d(d)) is amended--
(1) in the first sentence, by inserting a comma
after ``subsection (a)(1)''; and
(2) in the last sentence, by striking ``him'' and
inserting ``the Commissioner''.
SEC. 5524. ADDITIONAL TECHNICAL AMENDMENTS RELATING TO TITLE XVI.
Section 1110(a)(3) (42 U.S.C. 1310(a)(3)) is amended--
(1) by inserting ``(or the Commissioner, with
respect to any jointly financed cooperative agreement
or grant concerning title XVI)'' after ``Secretary''
the first place it appears; and
(2) by inserting ``(or the Commissioner, as
applicable)'' after ``Secretary'' the second place it
appears.
SEC. 5525. TECHNICAL AMENDMENTS RELATING TO DRUG ADDICTS AND
ALCOHOLICS.
(a) Clarification Relating to the Effective Date of the
Denial of SSI Disability Benefits to Drug Addicts and
Alcoholics.--Section 105(b)(5) of the Contract with America
Advancement Act of 1996 (Public Law 104-121; 110 Stat. 853) is
amended--
(1) in subparagraph (A), by striking ``by the
Commissioner of Social Security'' and ``by the
Commissioner''; and
(2) by redesignating subparagraph (D) as
subparagraph (F) and by inserting after subparagraph
(C) the following new subparagraphs:
``(D) For purposes of this paragraph, an
individual's claim, with respect to
supplemental security income benefits under
title XVI of the Social Security Act based on
disability, which has been denied in whole
before the date of the enactment of this Act,
may not be considered to be finally adjudicated
before such date if, on or after such date--
``(i) there is pending a request
for either administrative or judicial
review with respect to such claim, or
``(ii) there is pending, with
respect to such claim, a readjudication
by the Commissioner of Social Security
pursuant to relief in a class action or
implementation by the Commissioner of a
court remand order.
``(E) Notwithstanding the provisions of
this paragraph, with respect to any individual
for whom the Commissioner does not perform the
eligibility redetermination before the date
prescribed in subparagraph (C), the
Commissioner shall perform such eligibility
redetermination in lieu of a continuing
disability review whenever the Commissioner
determines that the individual's eligibility is
subject to redetermination based on the
preceding provisions of this paragraph, and the
provisions of section 1614(a)(4) of the Social
Security Act shall not apply to such
redetermination.''.
(b) Corrections to Effective Date of Provisions Concerning
Representative Payees and Treatment Referrals of SSI
Beneficiaries Who Are Drug Addicts and Alcoholics.--Section
105(b)(5)(B) of such Act (Public Law 104-121; 110 Stat. 853) is
amended to read as follows:
``(B) The amendments made by paragraphs (2)
and (3) shall take effect on July 1, 1996, with
respect to any individual--
``(i) whose claim for benefits is
finally adjudicated on or after the
date of the enactment of this Act, or
``(ii) whose eligibility for
benefits is based upon an eligibility
redetermination made pursuant to
subparagraph (C).''.
(c) Repeal of Obsolete Reporting Requirements.--Subsections
(a)(3)(B) and (b)(3)(B)(ii) of section 201 of the Social
Security Independence and Program Improvements Act of 1994
(Public Law 103-296; 108 Stat. 1497, 1504) are repealed.
SEC. 5526. ADVISORY BOARD PERSONNEL.
Section 703(i) (42 U.S.C. 903(i)) is amended--
(1) in the first sentence, by striking ``, and
three'' and all that follows through ``Board,''; and
(2) in the last sentence, by striking ``clerical''.
SEC. 5527. TIMING OF DELIVERY OF OCTOBER 1, 2000, SSI BENEFIT PAYMENTS.
Notwithstanding the provisions of section 708(a) of the
Social Security Act (42 U.S.C. 908(a)), the day designated for
delivery of benefit payments under title XVI of such Act for
October 2000 shall be the second day of such month.
SEC. 5528. EFFECTIVE DATES.
(a) In General.--Except as provided in this section, the
amendments made by this chapter shall take effect as if
included in the enactment of title II of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(Public Law 104-193; 110 Stat. 2185).
(b) Section 5524 Amendments.--The amendments made by
section 5524 of this Act shall take effect as if included in
the enactment of the Social Security Independence and Program
Improvements Act of 1994 (Public Law 103-296; 108 Stat. 1464).
(c) Section 5525 Amendments.--
(1) In general.--The amendments made by subsections
(a) and (b) of section 5525 of this Act shall take
effect as if included in the enactment of section 105
of the Contract with America Advancement Act of 1996
(Public Law 104-121; 110 Stat. 852 et seq.).
(2) Repeals.--The repeals made by section 5525(c)
shall take effect on the date of the enactment of this
Act.
(d) Section 5526 Amendments.--The amendments made by
section 5526 of this Act shall take effect as if included in
the enactment of section 108 of the Contract with America
Advancement Act of 1996 (Public Law 104-121; 110 Stat. 857).
(e) Section 5227.--Section 5227 shall take effect on the
date of the enactment of this Act.
CHAPTER 3--CHILD SUPPORT
SEC. 5531. STATE OBLIGATION TO PROVIDE CHILD SUPPORT ENFORCEMENT
SERVICES.
(a) Individuals Subject to Fee For Child Support
Enforcement Services.--Section 454(6)(B) (42 U.S.C. 654(6)(B))
is amended by striking ``individuals not receiving assistance
under any State program funded under part A, which'' and
inserting ``an individual, other than an individual receiving
assistance under a State program funded under part A or E, or
under a State plan approved under title XIX, or who is required
by the State to cooperate with the State agency administering
the program under this part pursuant to subsection (l) or (m)
of section 6 of the Food Stamp Act of 1977, and''.
(b) Correction of Reference.--Section 464(a)(2)(A) (42
U.S.C. 654(a)(2)(A)) is amended in the first sentence by
striking ``section 454(6)'' and inserting ``section
454(4)(A)(ii)''.
SEC. 5532. DISTRIBUTION OF COLLECTED SUPPORT.
(a) Continuation of Assignments.--Section 457(b) (42 U.S.C.
657(b)) is amended--
(1) by striking ``which were assigned'' and
inserting ``assigned''; and
(2) by striking ``and which were in effect'' and
all that follows and inserting ``and in effect on
September 30, 1997(or such earlier date, on or after
August 22, 1996, as the State may choose), shall remain assigned after
such date.''.
(b) State Option for Applicability.--
(1) In general.--Section 457(a) (42 U.S.C. 657(a))
is amended by adding at the end the following:
``(6) State option for applicability.--
Notwithstanding any other provision of this subsection,
a State may elect to apply the rules described in
clauses (i)(II), (ii)(II), and (v) of paragraph (2)(B)
to support arrearages collected on and after October 1,
1998, and, if the State makes such an election, shall
apply the provisions of this section, as in effect and
applied on the day before the date of enactment of
section 302 of the Personal Responsibility and Work
Opportunity Act of 1996 (Public Law 104-193, 110 Stat.
2200), other than subsection (b)(1) (as so in effect),
to amounts collected before October 1, 1998.''.
(2) Conforming amendments.--Section 408(a)(3)(A)
(42 U.S.C. 608(a)(3)(A)) is amended--
(A) in clause (i), by inserting ``(I)''
after ``(i)'';
(B) in clause (ii)--
(i) by striking ``(ii)'' and
inserting ``(II)''; and
(ii) by striking the period and
inserting ``; or''; and
(C) by adding at the end the following:
``(ii) if the State elects to
distribute collections under section
457(a)(6), the date the family ceases
to receive assistance under the
program, if the assignment is executed
on or after October 1, 1998.''.
(c) Distribution of Collections With Respect to Families
Receiving Assistance.--Section 457(a)(1) (42 U.S.C. 657(a)(1))
is amended by adding at the end the following flush language:
``In no event shall the total of the amounts paid to
the Federal Government and retained by the State exceed
the total of the amounts that have been paid to the
family as assistance by the State.''.
(d) Families Under Certain Agreements.--Section 457(a)(4)
(42 U.S.C. 657(a)(4)) is amended to read as follows:
``(4) Families under certain agreements.--In the
case of an amount collected for a family in accordance
with a cooperative agreement under section 454(33),
distribute the amount so collected pursuant to the
terms of the agreement.''.
(e) Study and Report.--Section 457(a)(5) (42 U.S.C.
657(a)(5)) is amended by striking ``1998'' and inserting
``1999''.
(f) Corrections of References.--Section 457(a)(2)(B) (42
U.S.C. 657(a)(2)(B)) is amended--
(1) in clauses (i)(I) and (ii)(I)--
(A) by striking ``(other than subsection
(b)(1))'' each place it appears; and
(B) by inserting ``(other than subsection
(b)(1) (as so in effect))'' after ``1996'' each
place it appears; and
(2) in clause (ii)(II), by striking ``paragraph
(4)'' and inserting ``paragraph (5)''.
(g) Correction of Territorial Match.--Section 457(c)(3)(A)
(42 U.S.C. 657(c)(3)(A)) is amended by striking ``the Federal
medical assistance percentage (as defined in section 1118)''
and inserting ``75 percent''.
(h) Definitions.--
(1) Federal share.--Section 457(c)(2) (42 U.S.C.
657(c)(2)) is amended by striking ``collected'' the
second place it appears and inserting ``distributed''.
(2) Federal medical assistance percentage.--Section
457(c)(3)(B) (42 U.S.C. 657(c)(3)(B)) is amended by
striking ``as in effect on September 30, 1996'' and
inserting ``as such section was in effect on September
30, 1995''.
(i) Conforming Amendments.--
(1) Section 464(a)(2)(A) (42 U.S.C. 664(a)(2)(A))
is amended, in the penultimate sentence, by inserting
``in accordance with section 457'' after ``owed''.
(2) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B))
is amended by striking ``457(b)(4) or (d)(3)'' and
inserting ``457''.
SEC. 5533. CIVIL PENALTIES RELATING TO STATE DIRECTORY OF NEW HIRES.
Section 453A (42 U.S.C. 653a) is amended--
(1) in subsection (d)--
(A) in the matter preceding paragraph (1),
by striking ``shall be less than'' and
inserting ``shall not exceed''; and
(B) in paragraph (1), by striking ``$25''
and inserting ``$25 per failure to meet the
requirements of this section with respect to a
newly hired employee''; and
(2) in subsection (g)(2)(B), by striking
``extracts'' and all that follows through ``Labor'' and
inserting ``information''.
SEC. 5534. FEDERAL PARENT LOCATOR SERVICE.
(a) In General.--Section 453 (42 U.S.C. 653) is amended--
(1) in subsection (a)--
(A) by inserting ``(1)'' after ``(a)''; and
(B) by striking ``to obtain'' and all that
follows through the period and inserting ``for
the purposes specified in paragraphs (2) and
(3).
``(2) For the purpose of establishing parentage,
establishing, setting the amount of, modifying, or enforcing
child support obligations, the Federal Parent Locator Service
shall obtain and transmit to any authorized person specified in
subsection (c)--
``(A) information on, or facilitating the discovery
of, the location of any individual--
``(i) who is under an obligation to pay
child support;
``(ii) against whom such an obligation is
sought; or
``(iii) to whom such an obligation is owed,
including the individual's social security number (or
numbers), most recent address, and the name, address,
and employer identification number of the individual's
employer;
``(B) information on the individual's wages (or
other income) from, and benefits of, employment
(including rights to or enrollment in group health care
coverage); and
``(C) information on the type, status, location,
and amount of any assets of, or debts owed by or to,
any such individual.
``(3) For the purpose of enforcing any Federal or State law
with respect to the unlawful taking or restraint of a child, or
making or enforcing a child custody or visitation
determination, as defined in section 463(d)(1), the Federal
Parent Locator Service shall be used to obtain and transmit the
information specified in section 463(c) to the authorized
persons specified in section 463(d)(2).'';
(2) by striking subsection (b) and inserting the
following:
``(b)(1) Upon request, filed in accordance with subsection
(d), of any authorized person, as defined in subsection (c) for
the information described in subsection (a)(2), or of any
authorized person, as defined in section 463(d)(2) for the
information described in section 463(c), the Secretary shall,
notwithstanding any other provision of law, provide through the
Federal Parent Locator Service such information to such person,
if such information--
``(A) is contained in any files or records
maintained by the Secretary or by the Department of
Health and Human Services; or
``(B) is not contained in such files or records,
but can be obtained by the Secretary, under the
authority conferred by subsection (e), from any other
department, agency, or instrumentality of the United
States or of any State,
and is not prohibited from disclosure under paragraph (2).
``(2) No information shall be disclosed to any person if
the disclosure of such information would contravene the
nationalpolicy or security interests of the United States or
the confidentiality of census data. The Secretary shall give priority
to requests made by any authorized person described in subsection
(c)(1). No information shall be disclosed to any person if the State
has notified the Secretary that the State has reasonable evidence of
domestic violence or child abuse and the disclosure of such information
could be harmful to the custodial parent or the child of such parent,
provided that--
``(A) in response to a request from an authorized
person (as defined in subsection (c) of this section
and section 463(d)(2)), the Secretary shall advise the
authorized person that the Secretary has been notified
that there is reasonable evidence of domestic violence
or child abuse and that information can only be
disclosed to a court or an agent of a court pursuant to
subparagraph (B); and
``(B) information may be disclosed to a court or an
agent of a court described in subsection (c)(2) of this
section or section 463(d)(2)(B), if--
``(i) upon receipt of information from the
Secretary, the court determines whether
disclosure to any other person of that
information could be harmful to the parent or
the child; and
``(ii) if the court determines that
disclosure of such information to any other
person could be harmful, the court and its
agents shall not make any such disclosure.
``(3) Information received or transmitted pursuant to this
section shall be subject to the safeguard provisions contained
in section 454(26).''; and
(3) in subsection (c)--
(A) in paragraph (1), by striking ``or to
seek to enforce orders providing child custody
or visitation rights''; and
(B) in paragraph (2)--
(i) by inserting ``or to serve as
the initiating court in an action to
seek an order'' after ``issue an
order''; and
(ii) by striking ``or to issue an
order against a resident parent for
child custody or visitation rights''.
(b) Use of the Federal Parent Locator Service.--Section 463
(42 U.S.C. 663) is amended--
(1) in subsection (a)--
(A) in the matter preceding paragraph (1)--
(i) by striking ``any State which
is able and willing to do so,'' and
inserting ``every State''; and
(ii) by striking ``such State'' and
inserting ``each State''; and
(B) in paragraph (2), by inserting ``or
visitation'' after ``custody'';
(2) in subsection (b)(2), by inserting ``or
visitation'' after ``custody'';
(3) in subsection (d)--
(A) in paragraph (1), by inserting ``or
visitation'' after ``custody''; and
(B) in subparagraphs (A) and (B) of
paragraph (2), by inserting ``or visitation''
after ``custody'' each place it appears;
(4) in subsection (f)(2), by inserting ``or
visitation'' after ``custody''; and
(5) by striking ``noncustodial'' each place it
appears.
SEC. 5535. ACCESS TO REGISTRY DATA FOR RESEARCH PURPOSES.
(a) In General.--Section 453(j)(5) (42 U.S.C. 653(j)(5)) is
amended by inserting ``data in each component of the Federal
Parent Locator Service maintained under this section and to''
before ``information''.
(b) Conforming Amendments.--Section 453 (42 U.S.C. 653) is
amended--
(1) in subsection (j)(3)(B), by striking
``registries'' and inserting ``components''; and
(2) in subsection (k)(2), by striking ``subsection
(j)(3)'' and inserting ``section 453A(g)(2)''.
SEC. 5536. COLLECTION AND USE OF SOCIAL SECURITY NUMBERS FOR USE IN
CHILD SUPPORT ENFORCEMENT.
Section 466(a)(13) (42 U.S.C. 666(a)(13)) is amended--
(1) in subparagraph (A)--
(A) by striking ``commercial''; and
(B) by inserting ``recreational license,''
after ``occupational license,''; and
(2) in the matter following subparagraph (C), by
inserting ``to be used on the face of the document
while the social security number is kept on file at the
agency'' after ``other than the social security
number''.
SEC. 5537. ADOPTION OF UNIFORM STATE LAWS.
Section 466(f) (42 U.S.C. 666(f)) is amended by striking
``together'' and all that follows and inserting ``and as in
effect on August 22, 1996, including any amendments officially
adopted as of such date by the National Conference of
Commissioners on Uniform State Laws.''.
SEC. 5538. STATE LAWS PROVIDING EXPEDITED PROCEDURES.
Section 466(c) (42 U.S.C. 666(c)) is amended--
(1) in paragraph (1)--
(A) in subparagraph (E), by inserting ``,
part E,'' after ``part A''; and
(B) in subparagraph (G), by inserting ``any
current support obligation and'' after ``to
satisfy''; and
(2) in paragraph (2)(A)--
(A) in clause (i), by striking ``the
tribunal and''; and
(B) in clause (ii)--
(i) by striking ``tribunal may''
and inserting ``court or administrative
agency of competent jurisdiction
shall''; and
(ii) by striking ``filed with the
tribunal'' and inserting ``filed with
the State case registry''.
SEC. 5539. VOLUNTARY PATERNITY ACKNOWLEDGEMENT.
Section 466(a)(5)(C)(i) (42 U.S.C. 666(a)(5)(C)(i)) is
amended by inserting ``, or through the use of video or audio
equipment,'' after ``orally''.
SEC. 5540. CALCULATION OF PATERNITY ESTABLISHMENT PERCENTAGE.
Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended, in the
matter following subparagraph (C), by striking ``subparagraph
(A)'' and inserting ``subparagraphs (A) and (B)''.
SEC. 5541. MEANS AVAILABLE FOR PROVISION OF TECHNICAL ASSISTANCE AND
OPERATION OF FEDERAL PARENT LOCATOR SERVICE.
(a) Technical Assistance.--Section 452(j) (42 U.S.C.
652(j)) is amended, in the matter preceding paragraph (1), by
striking ``to cover costs incurred by the Secretary'' and
inserting ``which shall be available for use by the Secretary,
either directly or through grants, contracts, or interagency
agreements,''.
(b) Operation of Federal Parent Locator Service.--
(1) Means available.--Section 453(o) (42 U.S.C.
653(o)) is amended--
(A) in the heading, by striking ``Recovery
of Costs'' and inserting ``Use of Set-Aside
Funds''; and
(B) by striking ``to cover costs incurred
by the Secretary'' and inserting ``which shall
be available for use by the Secretary, either
directly or through grants, contracts, or
interagency agreements,''.
(2) Availability of funds.--Section 453(o) (42
U.S.C. 653(o)) is amended by adding at the end the
following: ``Amounts appropriated under this subsection
for each of fiscal years 1997 through 2001 shall remain
available until expended.''.
SEC. 5542. AUTHORITY TO COLLECT SUPPORT FROM FEDERAL EMPLOYEES.
(a) Response to Notice or Process.--Section 459(c)(2)(C)
(42 U.S.C. 659(c)(2)(C)) is amended by striking ``respond to
the order, process, or interrogatory'' and inserting ``withhold
available sums in response to the order or process, or answer
the interrogatory''.
(b) Moneys Subject to Process.--Section 459(h)(1) (42
U.S.C. 659(h)(1)) is amended--
(1) in the matter preceding subparagraph (A) and in
subparagraph (A)(i), by striking ``paid or'' each place
it appears;
(2) in subparagraph (A)--
(A) in clause (ii)(V), by striking ``and''
at the end;
(B) in clause (iii)--
(i) by inserting ``or payable''
after ``paid''; and
(ii) by striking ``but'' and
inserting ``; and''; and
(C) by inserting after clause (iii), the
following:
``(iv) benefits paid or payable
under the Railroad Retirement System,
but''; and
(3) in subparagraph (B)--
(A) in clause (i), by striking ``or'' at
the end;
(B) in clause (ii), by striking the period
and inserting ``; or''; and
(C) by adding at the end the following:
``(iii) of periodic benefits under
title 38, United States Code, except as
provided in subparagraph (A)(ii)(V).''.
(c) Conforming Amendment.--Section 454(19)(B)(ii) (42
U.S.C. 654(19)(B)(ii)) is amended by striking ``section
462(e)'' and inserting ``section 459(i)(5)''.
SEC. 5543. DEFINITION OF SUPPORT ORDER.
Section 453(p) (42 U.S.C. 653(p)), is amended by striking
``a child and'' and inserting ``of''.
SEC. 5544. STATE LAW AUTHORIZING SUSPENSION OF LICENSES.
Section 466(a)(16) (42 U.S.C. 666(a)(16)) is amended by
inserting ``and sporting'' after ``recreational''.
SEC. 5545. INTERNATIONAL SUPPORT ENFORCEMENT.
Section 454(32)(A) (42 U.S.C. 654(32)(A)) is amended by
striking ``section 459A(d)(2)'' and inserting ``section
459A(d)''.
SEC. 5546. CHILD SUPPORT ENFORCEMENT FOR INDIAN TRIBES.
(a) Cooperative Agreements by Indian Tribes and States for
Child Support Enforcement.--Section 454(33) (42 U.S.C. 654(33))
is amended--
(1) by striking ``and enforce support orders, and''
and inserting ``or enforce support orders, or'';
(2) by striking ``guidelines established by such
tribe or organization'' and inserting ``guidelines
established or adopted by such tribe or organization'';
(3) by striking ``funding collected'' and inserting
``collections''; and
(4) by striking ``such funding'' and inserting
``such collections''.
(b) Correction of Subsection Designation.--Section 455 (42
U.S.C. 655) is amended by redesignating subsection (b), as
added by section 375(b) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Public Law 104-193, 110
Stat. 2256), as subsection (f).
(c) Direct Grants to Tribes.--Section 455(f) (42 U.S.C.
655(f)), as so redesignated by subsection (b) of this section,
is amended to read as follows:
``(f) The Secretary may make direct payments under this
part to an Indian tribe or tribal organization that
demonstrates to the satisfaction of the Secretary that it has
the capacity to operate a child support enforcement program
meeting the objectives of this part, including establishment of
paternity, establishment, modification, and enforcement of
support orders, and location of absent parents. The Secretary
shall promulgate regulations establishing the requirements
which must be met by anIndian tribe or tribal organization to
be eligible for a grant under this subsection.''.
SEC. 5547. CONTINUATION OF RULES FOR DISTRIBUTION OF SUPPORT IN THE
CASE OF A TITLE IV-E CHILD.
Section 457 (42 U.S.C. 657) is amended--
(1) in subsection (a), in the matter preceding
paragraph (1), by striking ``subsection (e)'' and
inserting ``subsections (e) and (f)''; and
(2) by adding at the end the following:
``(f) Notwithstanding the preceding provisions of this
section, amounts collected by a State as child support for
months in any period on behalf of a child for whom a public
agency is making foster care maintenance payments under part
E--
``(1) shall be retained by the State to the extent
necessary to reimburse it for the foster care
maintenance payments made with respect to the child
during such period (with appropriate reimbursement of
the Federal Government to the extent of its
participation in the financing);
``(2) shall be paid to the public agency
responsible for supervising the placement of the child
to the extent that the amounts collected exceed the
foster care maintenance payments made with respect to
the child during such period but not the amounts
required by a court or administrative order to be paid
as support on behalf of the child during such period;
and the responsible agency may use the payments in the
manner it determines will serve the best interests of
the child, including setting such payments aside for
the child's future needs or making all or a part
thereof available to the person responsible for meeting
the child's day-to-day needs; and
``(3) shall be retained by the State, if any
portion of the amounts collected remains after making
the payments required under paragraphs (1) and (2), to
the extent that such portion is necessary to reimburse
the State (with appropriate reimbursement to the
Federal Government to the extent of its participation
in the financing) for any past foster care maintenance
payments (or payments of assistance under the State
program funded under part A) which were made with
respect to the child (and with respect to which past
collections have not previously been retained);
and any balance shall be paid to the State agency responsible
for supervising the placement of the child, for use by such
agency in accordance with paragraph (2).''.
SEC. 5548. GOOD CAUSE IN FOSTER CARE AND FOOD STAMP CASES.
(a) State Plan.--Section 454(4)(A)(i) (42 U.S.C.
654(4)(A)(i)) is amended--
(1) by striking ``or'' before ``(III)''; and
(2) by inserting ``or (IV) cooperation is required
pursuant to section 6(l)(1) of the Food Stamp Act of
1977 (7 U.S.C. 2015(l)(1)),'' after ``title XIX,''.
(b) Conforming Amendments.--Section 454(29) (42 U.S.C.
654(29)) is amended--
(1) in subparagraph (A)--
(A) in the matter preceding clause (i), by
striking ``part A of this title or the State
program under title XIX'' and inserting ``part
A, the State program under part E, the State
program under title XIX, or the food stamp
program, as defined under section 3(h) of the
Food StampAct of 1977 (7 U.S.C. 2012(h)),'';
and
(B) by striking clauses (i) and (ii) and
all that follows through the semicolon and
inserting the following:
``(i) in the case of the State
program funded under part A, the State
program under part E, or the State
program under title XIX shall, at the
option of the State, be defined, taking
into account the best interests of the
child, and applied in each case, by the
State agency administering such
program; and
``(ii) in the case of the food
stamp program, as defined under section
3(h) of the Food Stamp Act of 1977 (7
U.S.C. 2012(h)), shall be defined and
applied in each case under that program
in accordance with section 6(l)(2) of
the Food Stamp Act of 1977 (7 U.S.C.
2015(l)(2));'';
(2) in subparagraph (D), by striking ``or the State
program under title XIX'' and inserting ``the State
program under part E, the State program under title
XIX, or the food stamp program, as defined under
section 3(h) of the Food Stamp Act of 1977 (7 U.S.C.
2012(h))''; and
(3) in subparagraph (E), by striking
``individual,'' and all that follows through ``XIX,''
and inserting ``individual and the State agency
administering the State program funded under part A,
the State agency administering the State program under
part E, the State agency administering the State
program under title XIX, or the State agency
administering the food stamp program, as defined under
section 3(h) of the Food Stamp Act of 1977 (7 U.S.C.
2012(h)),''.
SEC. 5549. DATE OF COLLECTION OF SUPPORT.
Section 454B(c)(1) (42 U.S.C. 654B(c)(1)) is amended by
adding at the end the following: ``The date of collection for
amounts collected and distributed under this part is the date
of receipt by the State disbursement unit, except that if
current support is withheld by an employer in the month when
due and is received by the State disbursement unit in a month
other than the month when due, the date of withholding may be
deemed to be the date of collection.''.
SEC. 5550. ADMINISTRATIVE ENFORCEMENT IN INTERSTATE CASES.
(a) Procedures.--Section 466(a)(14) (42 U.S.C. 666(a)(14))
is amended to read as follows:
``(14) High-volume, automated administrative
enforcement in interstate cases.--
``(A) In general.--Procedures under which--
``(i) the State shall use high-
volume automated administrative
enforcement, to the same extent as used
for intrastate cases, in response to a
request made by another State to
enforce support orders, and shall
promptly report the results of such
enforcement procedure to the requesting
State;
``(ii) the State may, by electronic
or other means, transmit to another
State a request for assistance in
enforcing support orders through high-
volume, automated administrative
enforcement, which request--
``(I) shall include such
information as will enable the
State to which the request is
transmitted to compare the
information about the cases to
the information in the data
bases of the State; and
``(II) shall constitute a
certification by the requesting
State--
``(aa) of the
amount of support under
an order the payment of
which is in arrears;
and
``(bb) that the
requesting State has
complied with all
procedural due process
requirements applicable
to each case;
``(iii) if the State provides
assistance to another State pursuant to
this paragraph with respect to a case,
neither State shall consider the case
to be transferred to the caseload of
such other State; and
``(iv) the State shall maintain
records of--
``(I) the number of such
requests for assistance
received by the State;
``(II) the number of cases
for which the State collected
support in response to such a
request; and
``(III) the amount of such
collected support.
``(B) High-volume automated administrative
enforcement.--In this part, the term `high-
volume automated administrative enforcement'
means the use of automatic data processing to
search various State data bases, including
license records, employment service data, and
State new hire registries, to determine whether
information is available regarding a parent who
owes a child support obligation.''.
(b) Incentive Payments.--Section 458(d) (42 U.S.C. 658(d))
is amended by inserting ``, including amounts collected under
section 466(a)(14),'' after ``another State''.
SEC. 5551. WORK ORDERS FOR ARREARAGES.
Section 466(a)(15) (42 U.S.C. 666(a)(15)) is amended to
read as follows:
``(15) Procedures to ensure that persons owing
overdue support work or have a plan for payment of such
support.--Procedures under which the State has the
authority, in any case in which an individual owes
overdue support with respect to a child receiving
assistance under a State program funded under part A,
to issue an order or to request that a court or an
administrative process established pursuant to State
law issue an order that requires the individual to--
``(A) pay such support in accordance with a
plan approved by the court, or, at the option
of the State, a plan approved by the State
agency administering the State program under
this part; or
``(B) if the individual is subject to such
a plan and is not incapacitated, participate in
such work activities (as defined in section
407(d)) as the court, or, at the option of the
State, the State agency administering the State
program under this part, deems appropriate.''.
SEC. 5552. ADDITIONAL TECHNICAL STATE PLAN AMENDMENTS.
Section 454 (42 U.S.C. 654) is amended--
(1) in paragraph (8)--
(A) in the matter preceding subparagraph
(A)--
(i) by striking ``noncustodial'';
and
(ii) by inserting ``, for the
purpose of establishing parentage,
establishing, setting the amount of,
modifying, or enforcing child support
obligations, or making or enforcing a
child custody or visitation
determination, as defined in section
463(d)(1)'' after ``provide that'';
(B) in subparagraph (A), by striking the
comma and inserting a semicolon;
(C) in subparagraph (B), by striking the
semicolon and inserting a comma; and
(D) by inserting after subparagraph (B),
the following flush language:
``and shall, subject to the privacy safeguards required
under paragraph (26), disclose only the information
described in sections 453 and 463 to the authorized
persons specified in such sections for the purposes
specified in such sections;'';
(2) in paragraph (17)--
(A) by striking ``in the case of a State
which has'' and inserting ``provide that the
State will have''; and
(B) by inserting ``and'' after ``section
453,''; and
(3) in paragraph (26)--
(A) in the matter preceding subparagraph
(A), by striking ``will'';
(B) in subparagraph (A)--
(i) by inserting ``, modify,''
after ``establish'', the second place
it appears; and
(ii) by inserting ``, or to make or
enforce a child custody determination''
after ``support'';
(C) in subparagraph (B)--
(i) by inserting ``or the child''
after ``1 party'';
(ii) by inserting ``or the child''
after ``former party''; and
(iii) by striking ``and'' at the
end;
(D) in subparagraph (C)--
(i) by inserting ``or the child''
after ``1 party'';
(ii) by striking ``another party''
and inserting ``another person'';
(iii) by inserting ``to that
person'' after ``release of the
information''; and
(iv) by striking ``former party''
and inserting ``party or the child'';
and
(E) by adding at the end the following:
``(D) in cases in which the prohibitions
under subparagraphs (B) and (C) apply, the
requirement to notify the Secretary, for
purposes of section 453(b)(2), that the State
has reasonable evidence of domestic violence or
child abuse against a party or the child and
that the disclosure of such information could
be harmful to the party or the child; and
``(E) procedures providing that when the
Secretary discloses information about a parent
or child to a State court or an agent of a
State court described in section 453(c)(2) or
463(d)(2)(B), and advises that court or agent
that the Secretary has been notified that there
is reasonable evidence of domestic violence or
child abuse pursuant to section 453(b)(2), the
court shall determine whether disclosure to any
other person of information received from the
Secretary could be harmful to the parent or
child and, if the court determines that
disclosure to any other person could be
harmful, the court and its agents shall not
make any such disclosure;''.
SEC. 5553. FEDERAL CASE REGISTRY OF CHILD SUPPORT ORDERS.
Section 453(h) (42 U.S.C. 653(h)) is amended--
(1) in paragraph (1), by inserting ``and order''
after ``with respect to each case''; and
(2) in paragraph (2)--
(A) in the heading, by inserting ``and
order'' after ``Case'';
(B) by inserting ``or an order'' after
``with respect to a case'' and
(C) by inserting ``or order'' after ``and
the State or States which have the case''.
SEC. 5554. FULL FAITH AND CREDIT FOR CHILD SUPPORT ORDERS.
Section 1738B(f) of title 28, United States Code, is
amended--
(1) in paragraph (4), by striking ``a court may''
and all that follows and inserting ``a court having
jurisdiction over the parties shall issue a child
support order, which must be recognized.''; and
(2) in paragraph (5), by inserting ``under
subsection (d)'' after ``jurisdiction''.
SEC. 5555. DEVELOPMENT COSTS OF AUTOMATED SYSTEMS.
(a) Definition of State.--Section 455(a)(3)(B) (42 U.S.C.
655(a)(3)(B)) is amended--
(1) in clause (i)--
(A) by inserting ``or system described in
clause (iii)'' after ``each State''; and
(B) by inserting ``or system'' after ``the
State''; and
(2) by adding at the end the following:
``(iii) For purposes of clause (i), a system described in
this clause is a system that has been approved by the Secretary
to receive enhanced funding pursuant to the Family Support Act
of 1988 (Public Law 100-485; 102 Stat. 2343) for the purpose of
developing a system that meets the requirements of sections
454(16) (as in effect on and after September 30, 1995) and
454A, including systems that have received funding for such
purpose pursuant to a waiver under section 1115(a).''.
(b) Temporary Limitation On Payments.--Section 344(b)(2) of
the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 (42 U.S.C. 655 note) is amended--
(1) in subparagraph (B)--
(A) by inserting ``or a system described in
subparagraph (C)'' after ``to a State''; and
(B) by inserting ``or system'' after ``for
the State''; and
(2) in subparagraph (C), by striking ``Act,'' and
all that follows and inserting ``Act, and among systems
that have been approved by the Secretary to receive
enhanced funding pursuant to the Family Support Act of
1988 (Public Law 100-485; 102 Stat. 2343) for the
purpose of developing a system that meets the
requirements of sections 454(16) (as in effect on and
after September 30, 1995) and 454A, including systems
that have received funding for such purpose pursuant to
a waiver under section 1115(a), which shall take into
account--
``(i) the relative size of such
State and system caseloads under part D
of title IV of the Social Security Act;
and
``(ii) the level of automation
needed to meet the automated data
processing requirements of such
part.''.
SEC. 5556. ADDITIONAL TECHNICAL AMENDMENTS.
(a) Elimination of Surplusage.--Section 466(c)(1)(F) (42
U.S.C. 666(c)(1)(F)) is amended by striking ``of section 466''.
(b) Correction of Ambiguous Amendment.--Section
344(a)(1)(F) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Public Law 104-193; 110
Stat. 2234) is amended by inserting ``the first place such term
appears'' before ``and all that follows''.
(c) Correction of Erroneously Drafted Provision.--Section
215 of the Department of Health and Human Services
Appropriations Act, 1997, (as contained in section 101(e) of
the Omnibus Consolidated Appropriations Act, 1997) is amended
to read as follows:
``Sec. 215. Sections 452(j) and 453(o) of the Social
Security Act (42 U.S.C. 652(j) and 653(o)), as amended by
section 345 of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (Public Law 104-193; 110 Stat. 2237)
are each amended by striking `section 457(a)' and inserting `a
plan approved under this part'. Amounts available under such
sections 452(j) and 453(o) shall be calculated as though the
amendments made by this section were effective October 1,
1995.''.
(d) Elimination of Surplusage.--Section 456(a)(2)(B) (42
U.S.C. 656(a)(2)(B)) is amended by striking ``, and'' and
inserting a period.
(e) Correction of Date.--Section 466(a)(1)(B) (42 U.S.C.
666(a)(1)(B)) is amended by striking ``October 1, 1996'' and
inserting ``January 1, 1994''.
SEC. 5557. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b), the
amendments made by this chapter shall take effect as if
included in the enactment of title III of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(Public Law 104-193; 110 Stat. 2105).
(b) Exception.--The amendments made by section 5532(b)(2)
of this Act shall take effect as if the amendments had been
included in the enactment of section 103(a) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(Public Law 104-193; 110 Stat. 2112).
CHAPTER 4--RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS
Subchapter A--Eligibility for Federal Benefits
SEC. 5561. ALIEN ELIGIBILITY FOR FEDERAL BENEFITS: LIMITED APPLICATION
TO MEDICARE AND BENEFITS UNDER THE RAILROAD
RETIREMENT ACT.
(a) Limited Application to Medicare.--Section 401(b) of the
Personal Responsibility and Work OpportunityReconciliation Act
of 1996 (8 U.S.C. 1611(b)) is amended by adding at the end the
following:
``(3) Subsection (a) shall not apply to any benefit
payable under title XVIII of the Social Security Act
(relating to the medicare program) to an alien who is
lawfully present in the United States as determined by
the Attorney General and, with respect to benefits
payable under part A of such title, who was authorized
to be employed with respect to any wages attributable
to employment which are counted for purposes of
eligibility for such benefits.''.
(b) Limited Application to Benefits Under the Railroad
Retirement Act.--Section 401(b) of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 (8 U.S.C.
1611(b)) (as amended by subsection (a)) is amended by inserting
at the end the following:
``(4) Subsection (a) shall not apply to any benefit
payable under the Railroad Retirement Act of 1974 or
the Railroad Unemployment Insurance Act to an alien who
is lawfully present in the United States as determined
by the Attorney General or to an alien residing outside
the United States.''.
SEC. 5562. EXCEPTIONS TO BENEFIT LIMITATIONS: CORRECTIONS TO REFERENCE
CONCERNING ALIENS WHOSE DEPORTATION IS WITHHELD.
Sections 402(a)(2)(A), 402(b)(2)(A), 403(b)(1)(C),
412(b)(1)(C), and 431(b)(5) of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (8 U.S.C.
1612(a)(2)(A), 1612(b)(2)(A), 1613(b)(1)(C), 1622(b)(1)(C), and
1641(b)(5)) as amended by this Act are each amended by striking
``section 243(h) of such Act'' each place it appears and
inserting ``section 243(h) of such Act (as in effect
immediately before the effective date of section 307 of
division C of Public Law 104-208) or section 241(b)(3) of such
Act (as amended by section 305(a) of division C of Public Law
104-208)''.
SEC. 5563. VETERANS EXCEPTION: APPLICATION OF MINIMUM ACTIVE DUTY
SERVICE REQUIREMENT; EXTENSION TO UNREMARRIED
SURVIVING SPOUSE; EXPANDED DEFINITION OF VETERAN.
(a) Application of Minimum Active Duty Service
Requirement.--Sections 402(a)(2)(C)(i), 402(b)(2)(C)(i),
403(b)(2)(A), and 412(b)(3)(A) of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 (8 U.S.C.
1612(a)(2)(C)(i), 1612(b)(2)(C)(i), 1613(b)(2)(A), and
1622(b)(3)(A)) are each amended by inserting ``and who fulfills
the minimum active-duty service requirements of section
5303A(d) of title 38, United States Code'' after ``alienage''.
(b) Exception Applicable to Unremarried Surviving Spouse.--
Sections 402(a)(2)(C)(iii), 402(b)(2)(C)(iii), 403(b)(2)(C),
and 412(b)(3)(C) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (8 U.S.C.
1612(a)(2)(C)(iii), 1612(b)(2)(C)(iii), 1613(b)(2)(C), and
1622(b)(3)(C)) are each amended by inserting before the period
``or the unremarried surviving spouse of an individual
described in clause (i) or (ii) who is deceased if the marriage
fulfills the requirements of section 1304 of title 38, United
States Code''.
(c) Expanded Definition of Veteran.--Sections
402(a)(2)(C)(i), 402(b)(2)(C)(i), 403(b)(2)(A), and
412(b)(3)(A) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (8 U.S.C.
1612(a)(2)(C)(i), 1612(b)(2)(C)(i), 1613(b)(2)(A), and
1622(b)(3)(A)) are each amended by inserting ``, 1101, or 1301,
or as described in section 107'' after ``section 101''.
SEC. 5564. NOTIFICATION CONCERNING ALIENS NOT LAWFULLY PRESENT:
CORRECTION OF TERMINOLOGY.
Section 1631(e)(9) of the Social Security Act (42 U.S.C.
1383(e)(9)) and section 27 of the United States Housing Act of
1937, as added by section 404 of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996, are
eachamended by striking ``unlawfully in the United States'' each place
it appears and inserting ``not lawfully present in the United States''.
SEC. 5565. FREELY ASSOCIATED STATES: CONTRACTS AND LICENSES.
Sections 401(c)(2)(A) and 411(c)(2)(A) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(8 U.S.C. 1611(c)(2)(A) and 1621(c)(2)(A)) are each amended by
inserting before the semicolon at the end ``, or to a citizen
of a freely associated state, if section 141 of the applicable
compact of free association approved in Public Law 99-239 or
99-658 (or a successor provision) is in effect''.
SEC. 5566. CONGRESSIONAL STATEMENT REGARDING BENEFITS FOR HMONG AND
OTHER HIGHLAND LAO VETERANS.
(a) Findings.--The Congress makes the following findings:
(1) Hmong and other Highland Lao tribal peoples
were recruited, armed, trained, and funded for military
operations by the United States Department of Defense,
Central Intelligence Agency, Department of State, and
Agency for International Development to further United
States national security interests during the Vietnam
conflict.
(2) Hmong and other Highland Lao tribal forces
sacrificed their own lives and saved the lives of
American military personnel by rescuing downed American
pilots and aircrews and by engaging and successfully
fighting North Vietnamese troops.
(3) Thousands of Hmong and other Highland Lao
veterans who fought in special guerilla units on behalf
of the United States during the Vietnam conflict, along
with their families, have been lawfully admitted to the
United States in recent years.
(4) The Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Public Law 104-
193), the new national welfare reform law, restricts
certain welfare benefits for noncitizens of the United
States and the exceptions for noncitizen veterans of
the Armed Forces of the United States do not extend to
Hmong veterans of the Vietnam conflict era, making
Hmong veterans and their families receiving certain
welfare benefits subject to restrictions despite their
military service on behalf of the United States.
(b) Congressional Statement.--It is the sense of the
Congress that Hmong and other Highland Lao veterans who fought
on behalf of the Armed Forces of the United States during the
Vietnam conflict and have lawfully been admitted to the United
States for permanent residence should be considered veterans
for purposes of continuing certain welfare benefits consistent
with the exceptions provided other noncitizen veterans under
the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996.
Subchapter B--General Provisions
SEC. 5571. DETERMINATION OF TREATMENT OF BATTERED ALIENS AS QUALIFIED
ALIENS; INCLUSION OF ALIEN CHILD OF BATTERED PARENT
AS QUALIFIED ALIEN.
(a) Determination of Status by Agency Providing Benefits.--
Section 431 of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (8 U.S.C. 1641) is amended in
subsections (c)(1)(A) and (c)(2)(A) by striking ``Attorney
General, which opinion is not subject to review by any court)''
each place it appears and inserting ``agency providing such
benefits)''.
(b) Guidance Issued by Attorney General.--Section 431(c) of
the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 (8 U.S.C. 1641(c)) is amended by adding at the end
the following new undesignated paragraph:
``After consultation with the Secretaries of Health and
Human Services, Agriculture, and Housing and Urban Development,
the Commissioner of Social Security, and with the heads of such
Federal agencies administering benefits as the Attorney General
considers appropriate, the Attorney Generalshall issue guidance
(in the Attorney General's sole and unreviewable discretion) for
purposes of this subsection and section 421(f), concerning the meaning
of the terms `battery' and `extreme cruelty', and the standards and
methods to be used for determining whether a substantial connection
exists between battery or cruelty suffered and an individual's need for
benefits under a specific Federal, State, or local program.''.
(c) Inclusion of Alien Child of Battered Parent as
Qualified Alien.--Section 431(c) of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 (8 U.S.C.
1641(c)) is amended--
(1) at the end of paragraph (1)(B)(iv) by striking
``or'';
(2) at the end of paragraph (2)(B) by striking the
period and inserting ``; or''; and
(3) by inserting after paragraph (2)(B) and before
the last sentence of such subsection the following new
paragraph:
``(3) an alien child who--
``(A) resides in the same household as a
parent who has been battered or subjected to
extreme cruelty in the United States by that
parent's spouse or by a member of the spouse's
family residing in the same household as the
parent and the spouse consented or acquiesced
to such battery or cruelty, but only if (in the
opinion of the agency providing such benefits)
there is a substantial connection between such
battery or cruelty and the need for the
benefits to be provided; and
``(B) who meets the requirement of
subparagraph (B) of paragraph (1).''.
(d) Inclusion of Alien Child of Battered Parent Under
Special Rule for Attribution of Income.--Section 421(f)(1)(A)
of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (8 U.S.C. 1631(f)(1)(A)) is
amended--
(1) at the end of clause (i) by striking ``or'';
and
(2) by striking ``and the battery or cruelty
described in clause (i) or (ii)'' and inserting ``or
(iii) the alien is a child whose parent (who resides in
the same household as the alien child) has been
battered or subjected to extreme cruelty in the United
States by that parent's spouse, or by a member of the
spouse's family residing in the same household as the
parent and the spouse consented to, or acquiesced in,
such battery or cruelty, and the battery or cruelty
described in clause (i), (ii), or (iii)''.
SEC. 5572. VERIFICATION OF ELIGIBILITY FOR BENEFITS.
(a) Regulations and Guidance.--Section 432(a) of the
Personal Responsibility and Work Opportunity Reconciliation Act
of 1996 (8 U.S.C. 1642(a)) is amended--
(1) by inserting at the end of paragraph (1) the
following: ``Not later than 90 days after the date of
the enactment of the Balanced Budget Act of 1997, the
Attorney General of the United States, after
consultation with the Secretary of Health and Human
Services, shall issue interim verification guidance.'';
and
(2) by adding after paragraph (2) the following new
paragraph:
``(3) Not later than 90 days after the date of the
enactment of the Balanced Budget Act of 1997, the Attorney
General shall promulgate regulations which set forth the
procedures by which a State or local government can verify
whether an alien applying for a State or local public benefit
is a qualified alien, a nonimmigrant under the Immigration and
Nationality Act, or an alien paroled into the United States
under section 212(d)(5) of the Immigration and Nationality Act
for less than 1 year, for purposes of determining whether the
alien is ineligible for benefits under section 411 of this
Act.''.
(b) Disclosure of Information for Verification.--Section
384(b) of the Illegal Immigration Reform and Immigrant
Responsibility Act of 1996 (division C of Public Law104-208) is
amended by adding after paragraph (4) the following new paragraph:
``(5) The Attorney General is authorized to
disclose information, to Federal, State, and local
public and private agencies providing benefits, to be
used solely in making determinations of eligibility for
benefits pursuant to section 431(c) of the Personal
Responsibility and Work Opportunity Reconciliation Act
of 1996.''.
SEC. 5573. QUALIFYING QUARTERS: DISCLOSURE OF QUARTERS OF COVERAGE
INFORMATION; CORRECTION TO ASSURE THAT CREDITING
APPLIES TO ALL QUARTERS EARNED BY PARENTS BEFORE
CHILD IS 18.
(a) Disclosure of Quarters of Coverage Information.--
Section 435 of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (8 U.S.C. 1645) is amended by adding
at the end the following: ``Notwithstanding section 6103 of the
Internal Revenue Code of 1986, the Commissioner of Social
Security is authorized to disclose quarters of coverage
information concerning an alien and an alien's spouse or
parents to a government agency for the purposes of this
title.''.
(b) Correction To Assure That Crediting Applies to All
Quarters Earned by Parents Before Child is 18.--Section 435(1)
of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (8 U.S.C. 1645(1)) is amended by
striking ``while the alien was under age 18,'' and inserting
``before the date on which the alien attains age 18,''.
SEC. 5574. STATUTORY CONSTRUCTION: BENEFIT ELIGIBILITY LIMITATIONS
APPLICABLE ONLY WITH RESPECT TO ALIENS PRESENT IN
THE UNITED STATES.
Section 433 of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (8 U.S.C. 1643) is
amended--
(1) by redesignating subsections (b) and (c) as
subsections (c) and (d); and
(2) by adding after subsection (a) the following
new subsection:
``(b) Benefit Eligibility Limitations Applicable Only With
Respect to Aliens Present in the United States.--
Notwithstanding any other provision of this title, the
limitations on eligibility for benefits under this title shall
not apply to eligibility for benefits of aliens who are not
residing, or present, in the United States with respect to--
``(1) wages, pensions, annuities, and other earned
payments to which an alien is entitled resulting from
employment by, or on behalf of, a Federal, State, or
local government agency which was not prohibited during
the period of such employment or service under section
274A or other applicable provision of the Immigration
and Nationality Act; or
``(2) benefits under laws administered by the
Secretary of Veterans Affairs.''.
Subchapter C--Miscellaneous Clerical and Technical Amendments;
Effective Date
SEC. 5581. CORRECTING MISCELLANEOUS CLERICAL AND TECHNICAL ERRORS.
(a) Information Reporting Under Title IV of the Social
Security Act.--Effective July 1, 1997, section 408 (42 U.S.C.
608), as amended by sections 5001(h)(1) and 5505(e) of this
Act, is amended by adding at the end the following new
subsection:
``(g) State Required To Provide Certain Information.--Each
State to which a grant is made under section 403 shall, at
least 4 times annually and upon request of the Immigration and
Naturalization Service, furnish the Immigration and
Naturalization Service with the name and address of, and other
identifying information on, any individual who the State knows
is not lawfully present in the United States.''.
(b) Miscellaneous Clerical and Technical Corrections.--
(1) Section 411(c)(3) of the Personal
Responsibility and Work Opportunity Reconciliation Act
of 1996 (8 U.S.C. 1621(c)(3)) is amended by striking
``4001(c)'' and inserting ``401(c)''.
(2) Section 422(a) of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 (8
U.S.C. 1632(a)) is amended by striking ``benefits (as
defined in section 412(c)),'' and inserting
``benefits,''.
(3) Section 412(b)(1)(C) of the Personal
Responsibility and Work Opportunity Reconciliation Act
of 1996 (8 U.S.C. 1622(b)(1)(C)) is amended by striking
``with-holding'' and inserting ``withholding''.
(4) The subtitle heading for subtitle D of title IV
of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 is amended to read as
follows:
``Subtitle D--General Provisions''.
(5) The subtitle heading for subtitle F of title IV
of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 is amended to read as
follows:
``Subtitle F--Earned Income Credit Denied to Unauthorized Employees''.
(6) Section 431(c)(2)(B) of the Personal
Responsibility and Work Opportunity Reconciliation Act
of 1996 (8 U.S.C. 1641(c)(2)(B)) is amended by striking
``clause (ii) of subparagraph (A)'' and inserting
``subparagraph (B) of paragraph (1)''.
(7) Section 431(c)(1)(B) of the Personal
Responsibility and Work Opportunity Reconciliation Act
of 1996 (8 U.S.C. 1641(c)(1)(B)) is amended--
(A) in clause (iii) by striking ``, or''
and inserting ``(as in effect prior to April 1,
1997),''; and
(B) by adding after clause (iv) the
following new clause:
``(v) cancellation of removal
pursuant to section 240A(b)(2) of such
Act;''.
SEC. 5582. EFFECTIVE DATE.
Except as otherwise provided, the amendments made by this
chapter shall be effective as if included in the enactment of
title IV of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996.
CHAPTER 5--CHILD PROTECTION
SEC. 5591. CONFORMING AND TECHNICAL AMENDMENTS RELATING TO CHILD
PROTECTION.
(a) Methods Permitted for Conduct of Study of Child
Welfare.--Section 429A(a) (42 U.S.C. 628b(a)) is amended by
inserting ``(directly, or by grant, contract, or interagency
agreement)'' after ``conduct''.
(b) Redesignation of Paragraph.--Section 471(a) (42 U.S.C.
671(a)) is amended--
(1) by striking ``and'' at the end of paragraph
(17);
(2) by striking the period at the end of paragraph
(18) (as added by section 1808(a) of the Small Business
Job Protection Act of 1996 (Public Law 104-188; 110
Stat. 1903)) and inserting ``; and''; and
(3) by redesignating paragraph (18) (as added by
section 505(3) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Public Law 104-
193; 110 Stat. 2278)) as paragraph (19).
SEC. 5592. ADDITIONAL TECHNICAL AMENDMENTS RELATING TO CHILD
PROTECTION.
(a) Part B Amendments.--
(1) In general.--Part B of title IV (42 U.S.C. 620-
635) is amended--
(A) in section 422(b)--
(i) by striking the period at the
end of the paragraph (9) (as added by
section 554(3) of the Improving
America's Schools Act of 1994 (Public
Law 103-382; 108 Stat. 4057)) and
inserting a semicolon;
(ii) by redesignating paragraph
(10) as paragraph (11); and
(iii) by redesignating paragraph
(9), as added by section 202(a)(3) of
the Social Security Act Amendments of
1994 (Public Law 103-432, 108 Stat.
4453), as paragraph (10);
(B) in sections 424(b) and 425(a), by
striking ``422(b)(9)'' each place it appears
and inserting ``422(b)(10)''; and
(C) by transferring section 429A (as added
by section 503 of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996
(Public Law 104-193; 110 Stat. 2277)) to the
end of subpart 1.
(2) Clarification of Conflicting Amendments.--
Section 204(a)(2) of the Social Security Act Amendments
of 1994 (Public Law 103-432; 108 Stat. 4456) is amended
by inserting ``(as added by such section 202(a))''
before ``and inserting''.
(b) Part E Amendments.--Section 472(d) (42 U.S.C. 672(d))
is amended by striking ``422(b)(9)'' and inserting
``422(b)(10)''.
SEC. 5593. EFFECTIVE DATE.
The amendments made by this chapter shall take effect as if
included in the enactment of title V of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(Public Law 104-193; 110 Stat. 2277).
CHAPTER 6--CHILD CARE
SEC. 5601. CONFORMING AND TECHNICAL AMENDMENTS RELATING TO CHILD CARE.
(a) Funding.--Section 418(a) (42 U.S.C. 618(a)) is
amended--
(1) in paragraph (1)--
(A) in the matter preceding subparagraph
(A), by inserting ``the greater of'' after
``equal to'';
(B) in subparagraph (A)--
(i) by striking ``the sum of'';
(ii) by striking ``amounts
expended'' and inserting
``expenditures''; and
(iii) by striking ``section--'' and
all that follows and inserting
``subsections (g) and (i) of section
402 (as in effect before October 1,
1995); or'';
(C) in subparagraph (B)--
(i) by striking ``sections'' and
inserting ``subsections''; and
(ii) by striking the semicolon at
the end and inserting a period; and
(D) in the matter following subparagraph
(B), by striking ``whichever is greater.''; and
(2) in paragraph (2)--
(A) by striking subparagraph (B) and
inserting the following:
``(B) Allotments to states.--The total
amount available for payments to States under
this paragraph, as determined under
subparagraph (A), shall be allotted among the
States based on the formula used for
determining the amount of Federal payments to
each State under section 403(n) (as in effect
before October 1, 1995).'';
(B) by striking subparagraph (C) and
inserting the following:
``(C) Federal matching of state
expenditures exceeding historical
expenditures.--The Secretary shall pay to each
eligible State for a fiscal year an amount
equal to the lesser of the State's allotment
under subparagraph (B) or the Federal medical
assistance percentage for the State for the
fiscal year (as defined in section 1905(b), as
such section was in effect on September 30,
1995) of so much of the State's expenditures
for child care in that fiscal year as exceed
the total amount of expenditures by the State
(including expenditures from amounts made
available from Federal funds) in fiscal year
1994 or 1995 (whichever is greater) for the
programs described in paragraph (1)(A).''; and
(C) in subparagraph (D)(i)--
(i) by striking ``amounts under any
grant awarded'' and inserting ``any
amounts allotted''; and
(ii) by striking ``the grant is
made'' and inserting ``such amounts are
allotted''.
(b) Data Used To Determine Historic State Expenditures.--
Section 418(a) (42 U.S.C. 618(a)) is amended by adding at the
end the following:
``(5) Data used to determine state and federal
shares of expenditures.--In making the determinations
concerning expenditures required under paragraphs (1)
and (2)(C), the Secretary shall use information that
was reported by the State on ACF Form 231 and available
as of the applicable dates specified in clauses (i)(I),
(ii), and (iii)(III) of section 403(a)(1)(D).''.
(c) Definition of State.--Section 418(d) (42 U.S.C. 618(d))
is amended by striking ``or'' and inserting ``and''.
SEC. 5602. ADDITIONAL CONFORMING AND TECHNICAL AMENDMENTS.
The Child Care and Development Block Grant Act of 1990 (42
U.S.C. 9858 et seq.) is amended--
(1) in section 658E(c)(2)(E)(ii), by striking
``tribal organization'' and inserting ``tribal
organizations'';
(2) in section 658K(a)--
(A) in paragraph (1)--
(i) in subparagraph (B)--
(I) by striking clause (iv)
and inserting the following:
``(iv) whether the head of the
family unit is a single parent;'';
(II) in clause (v)--
(aa) in the matter
preceding subclause
(I), by striking
``including the amount
obtained from (and
separately
identified)--'' and
inserting ``including--
''; and
(bb) by striking
subclause (II) and
inserting the
following:
``(II) cash or other
assistance under--
``(aa) the
temporary assistance
for needy families
program under part A of
title IV of the Social
Security Act (42 U.S.C.
601 et seq.); and
``(bb) a State
program for which State
spending is counted
toward the maintenance
of effort requirement
under section 409(a)(7)
of the Social Security
Act (42 U.S.C.
609(a)(7));''; and
(III) in clause (x), by
striking ``week'' and inserting
``month''; and
(ii) by striking subparagraph (D)
and inserting the following:
``(D) Use of samples.--
``(i) Authority.--A State may
comply with the requirement to collect
the information described in
subparagraph (B) through the use of
disaggregated case record information
on a sample of families selected
through the use of scientifically
acceptable sampling methods approved by
the Secretary.
``(ii) Sampling and other
methods.--The Secretary shall provide
the States with such case sampling
plans and data collection procedures as
the Secretary deems necessary to
produce statistically valid samples of
the information described in
subparagraph (B). The Secretary may
develop and implement procedures for
verifying the quality of data submitted
by the States.''; and
(B) in paragraph (2)--
(i) in the heading, by striking
``Biannual'' and inserting ``Annual'';
and
(ii) by striking ``6'' and
inserting ``12'';
(3) in section 658L, by striking ``1997'' and
inserting ``1998'';
(4) in section 658O(c)(6)(C), by striking ``(A)''
and inserting ``(B)''; and
(5) in section 658P(13), by striking ``or'' and
inserting ``and''.
SEC. 5603. EFFECTIVE DATES.
(a) In General.--Except as provided in subsection (b), this
chapter and the amendments made by this chapter shall take
effect as if included in the enactment of title VI of the
Personal Responsibility and Work Opportunity Reconciliation Act
of 1996 (Public Law 104-193; 110 Stat. 2278).
(b) Exceptions.--The amendment made by section
5601(a)(2)(B) shall take effect on October 1, 1997.
CHAPTER 7--ERISA AMENDMENTS RELATING TO MEDICAL CHILD SUPPORT ORDERS
SEC. 5611. AMENDMENTS RELATING TO SECTION 303 OF THE PERSONAL
RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION
ACT OF 1996.
(a) Privacy Safeguards for Medical Child Support Orders.--
Section 609(a)(3)(A) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1169(a)(3)(A)) is amended by adding at
the end the following: ``except that, to the extent provided in
the order, the name and mailing address of an official of a
State or a political subdivision thereof may be substituted for
the mailing address of any such alternate recipient,''.
(b) Payment to State Official Treated as Satisfaction of
Plan's Obligation.--Section 609(a) of such Act (29 U.S.C.
1169(a)) is amended by adding at the end the following new
paragraph:
``(9) Payment to state official treated as
satisfaction of plan's obligation to make payment to
alternate recipient.--Payment of benefits by a group
health plan to an official of a State or a political
subdivision thereof whose name and address have been
substituted for the name and address of an alternate
recipient in a qualified medical child support order,
pursuant to paragraph (3)(A), shall be treated, for
purposes of this title, as payment of benefits to the
alternate recipient.''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to medical child support orders issued
on or after the date of the enactment of this Act.
SEC. 5612. AMENDMENT RELATING TO SECTION 381 OF THE PERSONAL
RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION
ACT OF 1996.
(a) Clarification of Effect of Administrative Notices.--
Section 609(a)(2)(B) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1169(a)(2)(B)) is amended by adding at
the end the following new sentence: ``For purposes of this
subparagraph, an administrative notice which is issued pursuant
to an administrative process referred to in subclause (II) of
the preceding sentence and which has the effect of an order
described in clause (i) or (ii) of the preceding sentence shall
be treated as such an order.''.
(b) Effective Date.--The amendment made by this section
shall be effective as if included in the enactment of section
381 of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (Public Law 104-193; 110 Stat.
2257).
SEC. 5613. AMENDMENTS RELATING TO SECTION 382 OF THE PERSONAL
RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION
ACT OF 1996.
(a) Elimination of Requirement That Orders Specify Affected
Plans.--Section 609(a)(3) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1169(a)(3)) is amended--
(1) in subparagraph (B), by striking ``by the
plan'';
(2) by adding ``and'' at the end of subparagraph
(B);
(3) in subparagraph (C), by striking ``, and'' and
inserting a period; and
(4) by striking subparagraph (D).
(b) Clarification of Applicability of Orders.--Section
609(a)(1) of such Act (29 U.S.C. 1169(a)(1)) is amended by
adding at the end the following new sentence: ``A qualified
medical child support order with respect to any participant or
beneficiary shall be deemed to apply to each group health plan
which has received such order, from which the participant or
beneficiary is eligible to receive benefits, and with respect
to which the requirements of paragraph (4) are met.''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to medical child support orders issued
on or after the date of the enactment of this Act.
Subtitle G--Miscellaneous
SEC. 5701. INCREASE IN PUBLIC DEBT LIMIT.
Subsection (b) of section 3101 of title 31, United States
Code, is amended by striking the dollar amount contained
therein and inserting ``$5,950,000,000,000''.
SEC. 5702. AUTHORIZATION OF APPROPRIATIONS FOR ENFORCEMENT INITIATIVES
RELATED TO THE EARNED INCOME TAX CREDIT.
In addition to any other funds available therefor, there
are authorized to be appropriated to the Secretary of the
Treasury, for improved application of the earned income credit
under section 32 of the Internal Revenue Code of 1986, not more
than--
(1) $138,000,000 for fiscal year 1998;
(2) $143,000,000 for fiscal year 1999;
(3) $144,000,000 for fiscal year 2000;
(4) $145,000,000 for fiscal year 2001; and
(5) $146,000,000 for fiscal year 2002.
TITLE VI--EDUCATION AND RELATED PROVISIONS
Subtitle A--Higher Education
SEC. 6101. MANAGEMENT AND RECOVERY OF RESERVES.
(a) Amendment.--Section 422 of the Higher Education Act of
1965 (20 U.S.C. 1072) is amended by adding after subsection (g)
the following new subsection:
``(h) Recall of Reserves; Limitations on Use of Reserve
Funds and Assets.--
``(1) In general.--Notwithstanding any other
provision of law, the Secretary shall, except as
otherwise provided in this subsection, recall
$1,000,000,000 from the reserve funds held by guaranty
agencies on September 1, 2002.
``(2) Deposit.--Funds recalled by the Secretary
under this subsection shall be deposited in the
Treasury.
``(3) Required share.--The Secretary shall require
each guaranty agency to return reserve funds under
paragraph (1) based on the agency's required share of
recalled reserve funds held by guaranty agencies as of
September 30, 1996. For purposes of this paragraph, a
guaranty agency's required share of recalled reserve
funds shall be determined as follows:
``(A) The Secretary shall compute each
guaranty agency's reserve ratio by dividing (i)
the amount held in the agency's reserve funds
as of September 30, 1996 (but reflecting later
accounting or auditing adjustments approved by
the Secretary), by (ii) the original principal
amount of all loans for which the agency has an
outstanding insurance obligation as of such
date, including amounts of outstanding loans
transferred to the agency from another guaranty
agency.
``(B) If the reserve ratio of any guaranty
agency as computed under subparagraph (A)
exceeds 2.0 percent, the agency's required
share shall include so much of the amounts held
in the agency's reserve funds as exceed a
reserve ratio of 2.0 percent.
``(C) If any additional amount is required
to be recalled under paragraph (1) (after
deducting the total of the required shares
calculated under subparagraph (B)), such
additional amount shall be obtained by imposing
on each guaranty agency an equal percentage
reduction in the amount of the agency's reserve
funds remaining after deduction of the amount
recalled under subparagraph (B), except that
such percentage reduction under this
subparagraph shall not result in the agency's
reserve ratio being reduced below 0.58 percent.
The equal percentage reduction shall be the
percentage obtained by dividing--
``(i) the additional amount
required to be recalled (after
deducting the total of the required
shares calculated under subparagraph
(B)), by
``(ii) the total amount of all such
agencies' reserve funds remaining
(after deduction of the required shares
calculated under such subparagraph).
``(D) If any additional amount is required
to be recalled under paragraph (1) (after
deducting the total of the required shares
calculated under subparagraphs (B) and (C)),
such additional amount shall be obtained by
imposing on each guaranty agency with a reserve
ratio (after deducting the required shares
calculated under such subparagraphs) in excess
of 0.58 percent an equal percentage reduction
in the amount of the agency's reserve funds
remaining (after such deduction) that exceed
areserve ratio of 0.58 percent. The equal percentage reduction shall be
the percentage obtained by dividing--
``(i) the additional amount to be
recalled under paragraph (1) (after
deducting the amount recalled under
subparagraphs (B) and (C)), by
``(ii) the total amount of all such
agencies' reserve funds remaining
(after deduction of the required shares
calculated under such subparagraphs)
that exceed a reserve ratio of 0.58
percent.
``(4) Restricted accounts required.--
``(A) In general.--Within 90 days after the
beginning of each of the fiscal years 1998
through 2002, each guaranty agency shall
transfer a portion of the agency's required
share determined under paragraph (3) to a
restricted account established by the agency
that is of a type selected by the agency with
the approval of the Secretary. Funds
transferred to such restricted accounts shall
be invested in obligations issued or guaranteed
by the United States or in other similarly low-
risk securities.
``(B) Requirement.--A guaranty agency shall
not use the funds in such a restricted account
for any purpose without the express written
permission of the Secretary, except that a
guaranty agency may use the earnings from such
restricted account for default reduction
activities.
``(C) Installments.--In each of fiscal
years 1998 through 2002, each guaranty agency
shall transfer the agency's required share to
such restricted account in 5 equal annual
installments, except that--
``(i) a guaranty agency that has a
reserve ratio (as computed under
subparagraph (3)(A)) equal to or less
than 1.10 percent may transfer the
agency's required share to such account
in 4 equal installments beginning in
fiscal year 1999; and
``(ii) a guaranty agency may
transfer such required share to such
account in accordance with such other
payment schedules as are approved by
the Secretary.
``(5) Shortage.--If, on September 1, 2002, the
total amount in the restricted accounts described in
paragraph (4) is less than the amount the Secretary is
required to recall under paragraph (1), the Secretary
shall require the return of the amount of the shortage
from other reserve funds held by guaranty agencies
under procedures established by the Secretary. The
Secretary shall first attempt to obtain the amount of
such shortage from each guaranty agency that failed to
transfer the agency's required share to the agency's
restricted account in accordance with paragraph (4).
``(6) Enforcement.--
``(A) In general.--The Secretary may take
such reasonable measures, and require such
information, as may be necessary to ensure that
guaranty agencies comply with the requirements
of this subsection.
``(B) Prohibition.--If the Secretary
determines that a guaranty agency has failed to
transfer to a restricted account any portion of
the agency's required share under this
subsection, the agency may not receive any
other funds under this part until the Secretary
determines that the agency has so transferred
the agency's required share.
``(C) Waiver.--The Secretary may waive the
requirements of subparagraph (B) for aguaranty
agency described in such subparagraph if the Secretary determines that
there are extenuating circumstances beyond the control of the agency
that justify such waiver.
``(7) Limitation.--
``(A) Restriction on other authority.--The
Secretary shall not have any authority to
direct a guaranty agency to return reserve
funds under subsection (g)(1)(A) during the
period from the date of enactment of the
Balanced Budget Act of 1997 through September
30, 2002.
``(B) Use of termination collections.--Any
reserve funds directed by the Secretary to be
returned to the Secretary under subsection
(g)(1)(B) during such period that do not exceed
a guaranty agency's required share of recalled
reserve funds under paragraph (3)--
``(i) shall be used to satisfy the
agency's required share of recalled
reserve funds; and
``(ii) shall be deposited in the
restricted account established by the
agency under paragraph (4), without
regard to whether such funds exceed the
next installment required under such
paragraph.
``(C) Use of sanctions collections.--Any
reserve funds directed by the Secretary to be
returned to the Secretary under subsection
(g)(1)(C) during such period that do not exceed
a guaranty agency's next installment under
paragraph (4)--
``(i) shall be used to satisfy the
agency's next installment; and
``(ii) shall be deposited in the
restricted account established by the
agency under paragraph (4).
``(D) Balance available to secretary.--Any
reserve funds directed by the Secretary to be
returned to the Secretary under subparagraph
(B) or (C) of subsection (g)(1) that remain
after satisfaction of the requirements of
subparagraphs (B) and (C) of this paragraph
shall be deposited in the Treasury.
``(8) Definitions.--For the purposes of this
subsection:
``(A) Default reduction activities.--The
term `default reduction activities' means
activities to reduce student loan defaults that
improve, strengthen, and expand default
prevention activities, such as--
``(i) establishing a program of
partial loan cancellation to reward
disadvantaged borrowers for good
repayment histories with their lenders;
``(ii) establishing a financial and
debt management counseling program for
high-risk borrowers that provides long-
term training (beginning prior to the
first disbursement of the borrower's
first student loan and continuing
through the completion of the
borrower's program of education or
training) in budgeting and other
aspects of financial management,
including debt management;
``(iii) establishing a program of
placement counseling to assist high-
risk borrowers in identifying
employment or additional training
opportunities; and
``(iv) developing public service
announcements that would detail
consequences of student loan default
and provide information regarding a
toll-free telephone number established
by the guaranty agency for use by
borrowers seeking assistance in
avoiding default.
``(B) Reserve funds.--The term `reserve
funds' when used with respect to a guaranty
agency--
``(i) includes any reserve funds in
cash or liquid assets held by the
guaranty agency, or held by, or under
the control of, any other entity; and
``(ii) does not include buildings,
equipment, or other nonliquid
assets.''.
(b) Conforming Amendment.--Section 428(c)(9)(A) of the
Higher Education Act of 1965 (20 U.S.C. 1078(c)(9)(A)) is
amended--
(1) in the first sentence, by striking ``for the
fiscal year of the agency that begins in 1993''; and
(2) by striking the third sentence.
SEC. 6102. REPEAL OF DIRECT LOAN ORIGINATION FEES TO INSTITUTIONS OF
HIGHER EDUCATION.
Section 452 of the Higher Education Act of 1965 (20 U.S.C.
1087b) is amended--
(1) by striking subsection (b); and
(2) by redesignating subsections (c) and (d) as
subsections (b) and (c), respectively.
SEC. 6103. FUNDS FOR ADMINISTRATIVE EXPENSES.
Subsection (a) of section 458 of the Higher Education Act
of 1965 (20 U.S.C. 1087h(a)) is amended to read as follows:
``(a) Administrative Expenses.--
``(1) In general.--Each fiscal year, there shall be
available to the Secretary from funds not otherwise
appropriated, funds to be obligated for--
``(A) administrative costs under this part
and part B, including the costs of the direct
student loan programs under this part, and
``(B) administrative cost allowances
payable to guaranty agencies under part B and
calculated in accordance with paragraph (2),
not to exceed (from such funds not otherwise
appropriated) $532,000,000 in fiscal year 1998,
$610,000,000 in fiscal year 1999, $705,000,000 in
fiscal year 2000, $750,000,000 in fiscal year 2001, and
$750,000,000 in fiscal year 2002. Administrative cost
allowances under subparagraph (B) of this paragraph
shall be paid quarterly and used in accordance with
section 428(f). The Secretary may carry over funds
available under this section to a subsequent fiscal
year.
``(2) Calculation basis.--Administrative cost
allowances payable to guaranty agencies under paragraph
(1)(B) shall be calculated on the basis of 0.85 percent
of the total principal amount of loans upon which
insurance was issued in excess of $8,200,000,000 in
fiscal year 1997 and upon which insurance is issued on
or after October 1, 1997, except that such allowances
shall not exceed--
``(A) $170,000,000 for each of the fiscal
years 1998 and 1999; or
``(B) $150,000,000 for each of the fiscal
years 2000, 2001, and 2002.''.
SEC. 6104. EXTENSION OF STUDENT AID PROGRAMS.
Title IV of the Higher Education Act of 1965 (20 U.S.C.
1070 et seq.) is amended--
(1) in section 424(a), by striking ``1998.'' and
``2002.'' and inserting ``2002.'' and ``2006.'',
respectively;
(2) in section 428(a)(5), by striking ``1998,'' and
``2002.'' and inserting ``2002,'' and ``2006.'',
respectively; and
(3) in section 428C(e), by striking ``1998.'' and
inserting ``2002.''.
Subtitle B--Repeal of Smith-Hughes Vocational Education Act
SEC. 6201. REPEAL OF SMITH-HUGHES VOCATIONAL EDUCATION ACT.
The Act of February 23, 1917 (39 Stat. 929, chapter 114; 20
U.S.C. 11 et seq.) (commonly known as the ``Smith-Hughes
Vocational Education Act''), is repealed.
TITLE VII--CIVIL SERVICE RETIREMENT AND RELATED PROVISIONS
SEC. 7001. INCREASED CONTRIBUTIONS TO FEDERAL CIVILIAN RETIREMENT
SYSTEMS.
(a) Civil Service Retirement System.--
(1) Agency contributions.--
(A) In general.-- Notwithstanding section
8334 (a)(1) or (k)(1) of title 5, United States
Code, during the period beginning on October 1,
1997, through September 30, 2002, each
employing agency (other than the United States
Postal Service or the Metropolitan Washington
Airports Authority) shall contribute--
(i) 8.51 percent of the basic pay
of an employee;
(ii) 9.01 percent of the basic pay
of a congressional employee, a law
enforcement officer, a member of the
Capitol police, or a firefighter; and
(iii) 9.51 percent of the basic pay
of a Member of Congress, a Court of
Federal Claims judge, a United States
magistrate, a judge of the United
States Court of Appeals for the Armed
Forces, or a bankruptcy judge;
in lieu of the agency contributions otherwise
required under section 8334(a)(1) of title 5,
United States Code.
(B) Application.--For purposes of
subparagraph (A) and notwithstanding the
amendments made by paragraph (3), during the
period beginning on January 1, 1999 through
December 31, 2002, with respect to the United
States Postal Service and the Metropolitan
Washington Airports Authority, the agency
contribution shall be determined as though
those amendments had not been made.
(2) No reduction in agency contributions by the
postal service.--Contributions by the Treasury of the
United States or the United States Postal Service under
section 8348 (g), (h), or (m) of title 5, United States
Code--
(A) shall not be reduced as a result of the
amendments made under paragraph (3) of this
subsection; and
(B) shall be computed as though such
amendments had not been enacted.
(3) Individual deductions, withholdings, and
deposits.--
(A) Deductions.--The first sentence of
section 8334(a)(1) of title 5, United States
Code, is amended to read as follows: ``The
employing agency shall deduct and withhold from
the basic pay of an employee, Member,
Congressional employee, law enforcement
officer, firefighter, bankruptcy judge, judge
of the United States Court of Appeals for the
Armed Forces, United States magistrate, Court
of Federal Claims judge, or member of the
Capitol Police, as the case may be, the
percentage of basic pay applicable under
subsection (c).''.
(B) Deposits.--The table under section
8334(c) of title 5, United States Code, is
amended--
(i) in the matter relating to an
employee by striking:
``7....................................... After December 31, 1969.'';
and inserting the following:
``7....................................... January 1, 1970, to December
31, 1998.
7.25...................................... January 1, 1999, to December
31, 1999.
7.4....................................... January 1, 2000, to December
31, 2000.
7.5....................................... January 1, 2001, to December
31, 2002.
7......................................... After December 31, 2002.'';
(ii) in the matter relating to a
Member or employee for congressional
employee service by striking:
``7\1/2\.................................. After December 31, 1969.'';
and inserting the following:
``7.5..................................... January 1, 1970, to December
31, 1998.
7.75...................................... January 1, 1999, to December
31, 1999.
7.9....................................... January 1, 2000, to December
31, 2000.
8......................................... January 1, 2001, to December
31, 2002.
7.5....................................... After December 31, 2002.'';
(iii) in the matter relating to a
Member for Member service by striking:
``8....................................... After December 31, 1969.'';
and inserting the following:
``8....................................... January 1, 1970, to December
31, 1998.
8.25...................................... January 1, 1999, to December
31, 1999.
8.4....................................... January 1, 2000, to December
31, 2000.
8.5....................................... January 1, 2001, to December
31, 2002.
8......................................... After December 31, 2002.'';
(iv) in the matter relating to a
law enforcement officer for law
enforcement service and firefighter for
firefighter service by striking:
``7\1/2\.................................. After December 31, 1974.'';
and inserting the following:
``7.5..................................... January 1, 1975, to December
31, 1998.
7.75...................................... January 1, 1999, to December
31, 1999.
7.9....................................... January 1, 2000, to December
31, 2000.
8......................................... January 1, 2001, to December
31, 2002.
7.5....................................... After December 31, 2002.'';
(v) in the matter relating to a
bankruptcy judge by striking:
``8....................................... After December 31, 1983.'';
and inserting the following:
``8....................................... January 1, 1984, to December
31, 1998.
8.25...................................... January 1, 1999, to December
31, 1999.
8.4....................................... January 1, 2000, to December
31, 2000.
8.5....................................... January 1, 2001, to December
31, 2002.
8......................................... After December 31, 2002.'';
(vi) in the matter relating to a
judge of the United States Court of
Appeals for the Armed Forces for
service as a judge of that court by
striking:
``8....................................... On and after the date of the
enactment of the Department
of Defense Authorization
Act, 1984.'';
and inserting the following:
``8....................................... The date of enactment of the
Department of Defense
Authorization Act, 1984, to
December 31, 1998.
8.25...................................... January 1, 1999, to December
31, 1999.
8.4....................................... January 1, 2000, to December
31, 2000.
8.5....................................... January 1, 2001, to December
31, 2002.
8......................................... After December 31, 2002.'';
(vii) in the matter relating to a
United States magistrate by striking:
``8....................................... After September 30, 1987.'';
and inserting the following:
``8....................................... October 1, 1987, to December
31, 1998.
8.25..................................... January 1, 1999, to December
31, 1999.
8.4...................................... January 1, 2000, to December
31, 2000.
8.5...................................... January 1, 2001, to December
31, 2002.
8........................................ After December 31, 2002.'';
(viii) in the matter relating to a
Court of Federal Claims judge by
striking:
``8....................................... After September 30, 1988.'';
and insert the following:
``8....................................... October 1, 1988, to December
31, 1998.
8.25...................................... January 1, 1999, to December
31, 1999.
8.4....................................... January 1, 2000, to December
31, 2000.
8.5....................................... January 1, 2001, to December
31, 2002.
8......................................... After December 31, 2002.'';
and
(ix) by inserting after the matter
relating to a Court of Federal Claims
judge the following:
``Member of the Capitol Police... 2.5............. August 1, 1920, to
June 30, 1926.
3.5............. July 1, 1926, to
June 30, 1942.
5............... July 1, 1942, to
June 30, 1948.
6............... July 1, 1948, to
October 31, 1956.
6.5............. November 1, 1956,
to December 31,
1969.
7.5............. January 1, 1970, to
December 31, 1998.
7.75............ January 1, 1999, to
December 31, 1999.
7.9............. January 1, 2000, to
December 31, 2000.
8............... January 1, 2001, to
December 31, 2002.
7.5............. After December 31,
2002.''.
(4) Other service.--
(A) Mg1,t3,ilitary service.--Section
8334(j) of title 5, United States Code, is
amended--
(i) in paragraph (1)(A) by
inserting ``and subject to paragraph
(5),'' after ``Except as provided in
subparagraph (B),''; and
(ii) by adding at the end the
following new paragraph:
``(5) Effective with respect to any period of
mg1,t3,ilitary service after December 31, 1998, the percentage
of basic pay under section 204 of title 37 payable under
paragraph (1) shall be equal to the same percentage as would be
applicable under subsection (c) of this section for that same
period for service as an employee, subject to paragraph
(1)(B).''.
(B) Volunteer service.--Section 8334(l) of
title 5, United States Code, is amended--
(i) in paragraph (1) by adding at
the end the following: ``This paragraph
shall be subject to paragraph (4).'';
and
(ii) by adding at the end the
following new paragraph:
``(4) Effective with respect to any period of service after
December 31, 1998, the percentage of the readjustment allowance
or stipend (as the case may be) payable under paragraph (1)
shall be equal to the same percentage as would be applicable
under subsection (c) of this section for the same period for
service as an employee.''.
(b) Federal Employees' Retirement System.--
(1) Individual deductions and withholdings.--
(A) In general.--Section 8422(a) of title
5, United States Code, is amended by striking
paragraph (2) and inserting the following:
``(2) The percentage to be deducted and withheld from basic
pay for any pay period shall be equal to--
``(A) the applicable percentage under paragraph
(3), minus
``(B) the percentage then in effect under section
3101(a) of the Internal Revenue Code of 1986 (relating
to rate of tax for old-age, survivors, and disability
insurance).
``(3) The applicable percentage under this paragraph for
civilian service shall be as follows:
``Employee....................... 7............... January 1, 1987, to
December 31, 1998.
7.25............ January 1, 1999, to
December 31, 1999.
7.4............. January 1, 2000, to
December 31, 2000.
7.5............. January 1, 2001, to
December 31, 2002.
7............... After December 31,
2002.
Congressional employee........... 7.5............. January 1, 1987, to
December 31, 1998.
7.75............ January 1, 1999, to
December 31, 1999.
7.9............. January 1, 2000, to
December 31, 2000.
8............... January 1, 2001, to
December 31, 2002.
7.5............. After December 31,
2002.
Member........................... 7.5............. January 1, 1987, to
December 31, 1998.
7.75............ January 1, 1999, to
December 31, 1999.
7.9............. January 1, 2000, to
December 31, 2000.
8............... January 1, 2001, to
December 31, 2002.
7.5............. After December 31,
2002.
Law enforcement officer, 7.5............. January 1, 1987, to
firefighter, member of the December 31, 1998.
Capitol Police, or air traffic
controller.
7.75............ January 1, 1999, to
December 31, 1999.
7.9............. January 1, 2000, to
December 31, 2000.
8............... January 1, 2001, to
December 31, 2002.
7.5............. After December 31,
2002.''.
(B) Military service.--Section 8422(e) of
title 5, United States Code, is amended--
(i) in paragraph (1)(A) by
inserting ``and subject to paragraph
(6),'' after ``Except as provided in
subparagraph (B),''; and
(ii) by adding at the end the
following:
``(6) The percentage of basic pay under section 204 of
title 37 payable under paragraph (1), with respect to any
period of military service performed during--
``(A) January 1, 1999, through December 31, 1999,
shall be 3.25 percent;
``(B) January 1, 2000, through December 31, 2000,
shall be 3.4 percent; and
``(C) January 1, 2001, through December 31, 2002,
shall be 3.5 percent.''.
(C) Volunteer service.--Section 8422(f) of
title 5, United States Code, is amended--
(i) in paragraph (1) by adding at
the end the following: ``This paragraph
shall be subject to paragraph (4).'';
and
(ii) by adding at the end the
following:
``(4) The percentage of the readjustment allowance or
stipend (as the case may be) payable under paragraph (1), with
respect to any period of volunteer service performed during--
``(A) January 1, 1999, through December 31, 1999,
shall be 3.25 percent;
``(B) January 1, 2000, through December 31, 2000,
shall be 3.4 percent; and
``(C) January 1, 2001, through December 31, 2002,
shall be 3.5 percent.''.
(2) No reduction in agency contributions.--
Contributions under section 8423 (a) and (b) of title
5, United States Code, shall not be reduced as a result
of the amendments made under paragraph (1) of this
subsection.
(c) Central Intelligence Agency Retirement and Disability
System.--
(1) Agency contributions.--Notwithstanding section
211(a)(2) of the Central Intelligence Agency Retirement
Act (50 U.S.C. 2021(a)(2)), during the period beginning
on October 1, 1997, through September 30, 2002, the
Central Intelligence Agency shall contribute 8.51
percent of the basic pay of an employee participating
in the Central Intelligence Agency Retirement and
Disability System in lieu of the agency contribution
otherwise required under section 211(a)(2) of such Act.
(2) Individual deductions, withholdings, and
deposits.--Notwithstanding section 211(a)(1) of the
Central Intelligence Agency Retirement Act (50 U.S.C.
2021(a)(1)) beginning on January 1, 1999, through
December 31, 2002, the percentage deducted and withheld
from the basic pay of an employee participating in the
Central Intelligence Agency Retirement and Disability
System shall be as follows:
7.25...................................... January 1, 1999, to December
31, 1999.
7.4....................................... January 1, 2000, to December
31, 2000.
7.5....................................... January 1, 2001, to December
31, 2002.
(3) Military service.--Section 252(h)(1) of the
Central Intelligence Agency Retirement Act (50 U.S.C.
2082(h)(1)), is amended to read as follows:
``(h)(1)(A) Each participant who has performed military
service before the date of separation on which entitlement to
an annuity under this title is based may pay to the Agency an
amount equal to 7 percent of the amount of basic pay paid under
section 204 of title 37, United States Code, to the participant
for each period of military service after December 1956;
except, the amount to be paid for military service performed
beginning on January 1, 1999, through December 31, 2002, shall
be as follows:
``7.25 percent of basic pay............... January 1, 1999, to December
31, 1999.
7.4 percent of basic pay.................. January 1, 2000, to December
31, 2000.
7.5 percent of basic pay.................. January 1, 2001, to December
31, 2002.
``(B) The amount of such payments shall be based on such
evidence of basic pay for military service as the participant
may provide or, if the Director determines sufficient evidence
has not been provided to adequately determine basic pay for
military service, such payment shall be based upon estimates of
such basic pay provided to the Director under paragraph (4).''.
(d) Foreign Service Retirement and Disability System.--
(1) Agency contributions.--Notwithstanding section
805(a) (1) and (2) of the Foreign Service Act of 1980
(22 U.S.C. 4045(a) (1) and (2)), during the period
beginning on October 1, 1997, through September 30,
2002, each agency employing a participant in the
Foreign Service Retirement and Disability System shall
contribute to the Foreign Service Retirement and
Disability Fund--
(A) 8.51 percent of the basic pay of each
participant covered under section 805(a)(1) of
such Act participating in the Foreign Service
Retirement and Disability System; and
(B) 9.01 percent of the basic pay of each
participant covered under section 805(a)(2) of
such Act participating in the Foreign Service
Retirement and Disability System;
in lieu of the agency contribution otherwise required
under section 805(a) (1) and (2) of such Act.
(2) Individual deductions, withholdings, and
deposits.--
(A) In general.--Notwithstanding section
805(a)(1) of the Foreign Service Act of 1980
(22 U.S.C. 4045(a)(1)), beginning on January 1,
1999, through December 31, 2002, the amount
withheld and deducted from the basic pay of a
participant in the Foreign Service Retirement
and Disability System shall be as follows:
7.25...................................... January 1, 1999, to December
31, 1999.
7.4....................................... January 1, 2000, to December
31, 2000.
7.5....................................... January 1, 2001, to December
31, 2002.
(B) Foreign service criminal investigators/
inspectors of the office of the inspector
general, agency for international
development.--Notwithstanding section 805(a)(2)
of the Foreign Service Act of 1980 (22 U.S.C.
4045(a)(2)), beginning on January 1, 1999,
through December 31, 2002, the amount withheld
and deducted from the basic pay of an eligible
Foreign Service criminal investigator/inspector
of the Office of the Inspector General, Agency
for International Development participating in
the Foreign Service Retirement and Disability
System shall be as follows:
7.75...................................... January 1, 1999, to December
31, 1999.
7.9....................................... January 1, 2000, to December
31, 2000.
8......................................... January 1, 2001, to December
31, 2002.
(C) Conforming amendment.--Section
805(d)(1) of the Foreign Service Act of 1980
(22 U.S.C. 4045(d)(1)) is amended in the
tablein the matter following subparagraph (B) by striking:
``On and after January 1, 1970............................. 7'';
and inserting the following:
``January 1, 1970, through December 31, 1998, inclusive.... 7
January 1, 1999, through December 31, 1999, inclusive...... 7.25
January 1, 2000, through December 31, 2000, inclusive...... 7.4
January 1, 2001, through December 31, 2002, inclusive...... 7.5
After December 31, 2002.................................... 7''.
(D) Military service.--Section 805(e) of
the Foreign Service Act of 1980 (22 U.S.C.
4045(e)) is amended--
(i) in subsection (e)(1) by
striking ``Each'' and inserting
``Subject to paragraph (5), each''; and
(ii) by adding after paragraph (4)
the following new paragraph:
``(5) Effective with respect to any period of military or
naval service after December 31, 1998, the percentage of basic
pay under section 204 of title 37, United States Code, payable
under paragraph (1) shall be equal to the same percentage as
would be applicable under section 8334(c) of title 5, United
States Code, for that same period for service as an
employee.''.
(e) Foreign Service Pension System.--
(1) Individual deductions and withholdings from
pay.--
(A) In general.--Section 856(a) of the
Foreign Service Act of 1980 (22 U.S.C.
4071e(a)) is amended to read as follows:
``(a)(1) The employing agency shall deduct and withhold
from the basic pay of each participant the applicable
percentage of basic pay specified in paragraph (2) of this
subsection minus the percentage then in effect under section
3101(a) of the Internal Revenue Code of 1986 (26 U.S.C.
3101(a)) (relating to the rate of tax for old age, survivors,
and disability insurance).
``(2) The applicable percentage under this subsection shall
be as follows:
``7.5..................................... Before January 1, 1999.
7.75...................................... January 1, 1999, to December
31, 1999.
7.9...................................... January 1, 2000, to December
31, 2000.
8......................................... January 1, 2001, to December
31, 2002.
7.5....................................... After December 31, 2002.''.
(B) Volunteer service.--Subsection 854(c)
of the Foreign Service Act of 1980 (22 U.S.C.
4071c(c)) is amended to read as follows:
``(c)(1) Credit shall be given under this System to a
participant for a period of prior satisfactory service as--
``(A) a volunteer or volunteer leader under the
Peace Corps Act (22 U.S.C. 2501 et seq.),
``(B) a volunteer under part A of title VIII of the
Economic Opportunity Act of 1964, or
``(C) a full-time volunteer for a period of service
of at least 1 year's duration under part A, B, or C of
title I of the Domestic Volunteer Service Act of 1973
(42 U.S.C. 4951 et seq.),
if the participant makes a payment to the Fund equal to 3
percent of pay received for the volunteer service; except, the
amount to be paid for volunteer service beginning on January 1,
1999, through December 31, 2002, shall be as follows:
``3.25.................................... January 1, 1999, to December
31, 1999.
3.4....................................... January 1, 2000, to December
31, 2000.
3.5....................................... January 1, 2001, to December
31, 2002.
``(2) The amount of such payments shall be determined in
accordance with regulations of the Secretary of State
consistent with regulations for making corresponding
determinations under chapter 83, title 5, United States Code,
together with interest determined under regulations issued by
the Secretary of State.''.
(2) No reduction in agency contributions.--Agency
contributions under section 857 of the Foreign Service
Act of 1980 (22 U.S.C. 4071f) shall not be reduced as a
result of the amendments made under paragraph (1) of
this subsection.
(f) Effective Date.--
(1) In general.--This section shall take effect
on--
(A) October 1, 1997; or
(B) if later, the date of enactment of this
Act.
(2) Special rule.--If the date of enactment of this
Act is later than October 1, 1997, then any reference
to October 1, 1997, in subsection (a)(1), (c)(1), or
(d)(1) shall be treated as a reference to the date of
enactment of this Act.
SEC. 7002. GOVERNMENT CONTRIBUTIONS UNDER THE FEDERAL EMPLOYEES HEALTH
BENEFITS PROGRAM.
(a) In General.--Section 8906 of title 5, United States
Code, is amended by striking subsection (a) and all that
follows through the end of paragraph (1) of subsection (b) and
inserting the following:
``(a)(1) Not later than October 1 of each year, the Office
of Personnel Management shall determine the weighted average of
the subscription charges that will be in effect during the
following contract year with respect to--
``(A) enrollments under this chapter for self
alone; and
``(B) enrollments under this chapter for self and
family.
``(2) In determining each weighted average under paragraph
(1), the weight to be given to a particular subscription charge
shall, with respect to each plan (and option) to which it is to
apply, be commensurate with the number of enrollees enrolled in
such plan (and option) as of March 31 of the year in which the
determination is being made.
``(3) For purposes of paragraph (2), the term `enrollee'
means any individual who, during the contract year for which
the weighted average is to be used under this section, will be
eligible for a Government contribution for health benefits.
``(b)(1) Except as provided in paragraphs (2) and (3), the
biweekly Government contribution for health benefits for an
employee or annuitant enrolled in a health benefits plan under
this chapter is adjusted to an amount equal to 72 percent of
the weighted average under subsection (a)(1) (A) or (B), as
applicable. For an employee, the adjustment begins on the first
day of the employee's first pay period of each year. For an
annuitant, the adjustment begins on the first day of the first
period of each year for which an annuity payment is made.''.
(b) Effective Date.--This section shall take effect on the
first day of the contract year that begins in 1999. Nothing in
this subsection shall prevent the Office of Personnel
Management from taking any action, before such first day, which
it considers necessary in order to ensure the timely
implementation of this section.
SEC. 7003. REPEAL OF AUTHORIZATION OF TRANSITIONAL APPROPRIATIONS FOR
THE UNITED STATES POSTAL SERVICE.
(a) Repeal.--
(1) In general.--Section 2004 of title 39, United
States Code, is repealed.
(2) Technical and conforming amendments.--
(A) The table of sections for chapter 20 of
such title is amended by repealing the item
relating to section 2004.
(B) Section 2003(e)(2) of such title is
amended by striking ``sections 2401 and 2004''
each place it appears and inserting ``section
2401''.
(b) Clarification That Liabilities Formerly Paid Pursuant
to Section 2004 Remain Liabilities Payable by the Postal
Service.--Section 2003 of title 39, United States Code, is
amended by adding at the end the following:
``(h) Liabilities of the former Post Office Department to
the Employees' Compensation Fund (appropriations forwhich were
authorized by former section 2004, as in effect before the effective
date of this subsection) shall be liabilities of the Postal Service
payable out of the Fund.''.
(c) Effective Date.--
(1) In general.--This section and the amendments
made by this section shall take effect on the date of
the enactment of this Act or October 1, 1997, whichever
is later.
(2) Provisions relating to payments for fiscal year
1998.--
(A) Amounts not yet paid.--No payment may
be made to the Postal Service Fund, on or after
the date of the enactment of this Act, pursuant
to any appropriation for fiscal year 1998
authorized by section 2004 of title 39, United
States Code (as in effect before the effective
date of this section).
(B) Amounts paid.--If any payment to the
Postal Service Fund is or has been made
pursuant to an appropriation for fiscal year
1998 authorized by such section 2004, then, an
amount equal to the amount of such payment
shall be paid from such Fund into the Treasury
as miscellaneous receipts before October 1,
1998.
TITLE VIII--VETERANS AND RELATED MATTERS
SEC. 8001. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This title may be cited as the ``Veterans
Reconciliation Act of 1997''.
(b) Table of Contents.--The table of contents for this
title is as follows:
Sec. 8001. Short title; table of contents.
Subtitle A--Extension of Temporary Authorities
Sec. 8011. Enhanced loan asset sale authority.
Sec. 8012. Home loan fees.
Sec. 8013. Procedures applicable to liquidation sales on defaulted home
loans guaranteed by the Department of Veterans Affairs.
Sec. 8014. Income verification authority.
Sec. 8015. Limitation on pension for certain recipients of medicaid-
covered nursing home care.
Subtitle B--Copayments and Medical Care Cost Recovery
Sec. 8021. Authority to require that certain veterans make copayments in
exchange for receiving health care benefits.
Sec. 8022. Medical care cost recovery authority.
Sec. 8023. Department of Veterans Affairs medical-care receipts.
Subtitle C--Other Matters
Sec. 8031. Rounding down of cost-of-living adjustments in compensation
and DIC rates for fiscal years 1998 through 2002.
Sec. 8032. Increase in amount of home loan fees for the purchase of
repossessed homes from the Department of Veterans Affairs.
Sec. 8033. Withholding of payments and benefits.
Subtitle A--Extension of Temporary Authorities
SEC. 8011. ENHANCED LOAN ASSET SALE AUTHORITY.
Section 3720(h)(2) of title 38, United States Code, is
amended by striking out ``December 31, 1997'' and inserting in
lieu thereof ``December 31, 2002''.
SEC. 8012. HOME LOAN FEES.
Section 3729(a) of title 38, United States Code, is
amended--
(1) in paragraph (4), by striking out ``October 1,
1998'' and inserting in lieu thereof ``October 1,
2002''; and
(2) in paragraph (5)(C), by striking out ``October
1, 1998'' and inserting in lieu thereof ``October 1,
2002''.
SEC. 8013. PROCEDURES APPLICABLE TO LIQUIDATION SALES ON DEFAULTED HOME
LOANS GUARANTEED BY THE DEPARTMENT OF VETERANS
AFFAIRS.
Section 3732(c)(11) of title 38, United States Code, is
amended by striking out ``October 1, 1998'' and inserting in
lieu thereof ``October 1, 2002''.
SEC. 8014. INCOME VERIFICATION AUTHORITY.
Section 5317(g) of title 38, United States Code, is amended
by striking out ``September 30, 1998'' and inserting in lieu
thereof ``September 30, 2002''.
SEC. 8015. LIMITATION ON PENSION FOR CERTAIN RECIPIENTS OF MEDICAID-
COVERED NURSING HOME CARE.
Section 5503(f)(7) of title 38, United States Code, is
amended by striking out ``September 30, 1998'' and inserting in
lieu thereof ``September 30, 2002''.
Subtitle B--Copayments and Medical Care Cost Recovery
SEC. 8021. AUTHORITY TO REQUIRE THAT CERTAIN VETERANS MAKE COPAYMENTS
IN EXCHANGE FOR RECEIVING HEALTH CARE BENEFITS.
(a) Hospital and Medical Care.--
(1) Extension.--Section 1710(f)(2)(B) of title 38,
United States Code, is amended by inserting ``before
September 30, 2002,'' after ``(B)''.
(2) Repeal of superseded provision.--Section
8013(e) of the Omnibus Budget Reconciliation Act of
1990 (38 U.S.C. 1710 note) is repealed.
(b) Outpatient Medications.--Section 1722A(c) of title 38,
United States Code, is amended by striking out ``September 30,
1998'' and inserting in lieu thereof ``September 30, 2002''.
SEC. 8022. MEDICAL CARE COST RECOVERY AUTHORITY.
Section 1729(a)(2)(E) of title 38, United States Code, is
amended by striking out ``October 1, 1998'' and inserting in
lieu thereof ``October 1, 2002''.
SEC. 8023. DEPARTMENT OF VETERANS AFFAIRS MEDICAL-CARE RECEIPTS.
(a) Allocation of Receipts.--(1) Chapter 17 of title 38,
United States Code, is amended by inserting after section 1729
the following new section:
``Sec. 1729A. Department of Veterans Affairs Medical Care Collections
Fund
``(a) There is in the Treasury a fund to be known as the
Department of Veterans Affairs Medical Care Collections Fund.
``(b) Amounts recovered or collected after June 30, 1997,
under any of the following provisions of law shall be deposited
in the fund:
``(1) Section 1710(f) of this title.
``(2) Section 1710(g) of this title.
``(3) Section 1711 of this title.
``(4) Section 1722A of this title.
``(5) Section 1729 of this title.
``(6) Public Law 87-693, popularly known as the
`Federal Medical Care Recovery Act' (42 U.S.C. 2651 et
seq.), to the extent that a recovery or collection
under that law is based on medical care or services
furnished under this chapter.
``(c)(1) Subject to the provisions of appropriations Acts,
amounts in the fund shall be available, without fiscal year
limitation, to the Secretary for the following purposes:
``(A) Furnishing medical care and services under
this chapter, to be available during any fiscal year
for the same purposes and subject to the same
limitations (other than with respect to the period of
availability for obligation) as apply to amounts
appropriated from the general fund of the Treasury for
that fiscal year for medical care.
``(B) Expenses of the Department for the
identification, billing, auditing, and collection of
amounts owed the United States by reason of medical
care and services furnished under this chapter.
``(2) Amounts available under paragraph (1) may not be used
for any purpose other than a purpose set forth in subparagraph
(A) or (B) of that paragraph.
``(3)(A) If for fiscal year 1998 the Secretary determines
that the total amount to be recovered under the provisions of
law specified in subsection (b) will be less than the amount
contained in the latest Congressional Budget Office baseline
estimate (computed under section 257 of the Balanced Budget and
Emergency Deficit Control Act of 1985) for the amount of such
recoveries for fiscal year 1998 by at least $25,000,000, the
Secretary shall promptly certify to the Secretary of the
Treasury the amount of the shortfall (as estimated by the
Secretary) that is in excess of $25,000,000. Upon receipt of
such a certification, the Secretary of the Treasury shall, not
later than 30 days after receiving the certification, deposit
in the fund, from any unobligated amounts in the Treasury, an
amount equal to the amount certified by the Secretary.
``(B) If for fiscal year 1998 a deposit is made under
subparagraph (A) and the Secretary subsequently determines that
the actual amount recovered for that fiscal year under the
provisions of law specified in subsection (b) is greater than
the amount estimated by the Secretary that was used for
purposes of the certification by the Secretary under
subparagraph (A), the Secretary shall pay into the general fund
of the Treasury, from amounts available for medical care, an
amount equal to the difference between the amount actually
recovered and the amount so estimated (but not in excess of the
amount of the deposit under subparagraph (A) pursuant to such
certification).
``(C) If for fiscal year 1998 a deposit is made under
subparagraph (A) and the Secretary subsequently determines that
the actual amount recovered for that fiscal year under the
provisions of law specified in subsection (b) is less than the
amount estimated by the Secretary that was used for purposes of
the certification by the Secretary under subparagraph (A), the
Secretary shall promptly certify to the Secretary of the
Treasury the amount of the shortfall. Upon receipt of such a
certification, the Secretary of the Treasury shall, not later
than 30 days after receiving the certification, deposit in the
fund, from any unobligated amounts in the Treasury, an amount
equal to the amount certified by the Secretary.
``(d)(1) Of the total amount recovered or collected by the
Department during a fiscal year under the provisions of law
referred to in subsection (b) and made available from the fund,
the Secretary shall make available to each designated health
care region of the Department an amount that bears the same
ratio to the total amount so made available as the amount
recovered or collected by such region during that fiscal year
under such provisions of law bears to such total amount
recovered or collected during that fiscal year. The Secretary
shall make available to each region the entirety of the amount
specified to be made available to such region by the preceding
sentence.
``(2) In this subsection, the term `designated health care
regions of the Department' means the geographic areas
designated by the Secretary for purposes of the management of,
and allocation of resources for, health care services provided
by the Department.
``(e)(1) The Secretary shall submit to the Committees on
Veterans' Affairs of the Senate and House of Representatives
quarterly reports on the operation of this section for fiscal
years 1998, 1999, and 2000 and for the first quarter of fiscal
year 2001. Each such report shall specify the amount collected
under each of the provisions specified in subsection (b) during
the preceding quarter and the amount originally estimated to be
collected under each such provision during such quarter.
``(2) A report under paragraph (1) for a quarter shall be
submitted not later than 45 days after the end of that quarter.
``(f) Amounts recovered or collected under the provisions
of law referred to in subsection (b) shall be treated for the
purposes of sections 251 and 252 of the Balanced Budget and
Emergency Deficit Control Act of 1985 (2 U.S.C. 901, 902) as
offsets to discretionary appropriations (rather than as offsets
to direct spending) to the extent that such amounts are made
available for expenditure in appropriations Acts for the
purposes specified in subsection (c).''.
(2) The table of sections at the beginning of such chapter
is amended by inserting after the item relating to section 1729
the following new item:
``1729A. Department of Veterans Affairs Medical Care Collections Fund.''
(b) Conforming Amendments.--Chapter 17 of such title is
amended as follows:
(1) Section 1710(f) is amended by striking out
paragraph (4) and redesignating paragraph (5) as
paragraph (4).
(2) Section 1710(g) is amended by striking out
paragraph (4).
(3) Section 1722A(b) is amended by striking out
``Department of Veterans Affairs Medical-Care Cost
Recovery Fund'' and inserting in lieu thereof
``Department of Veterans Affairs Medical Care
Collections Fund''.
(4) Section 1729 is amended by striking out
subsection (g).
(c) Disposition of Funds in Medical-Care Cost Recovery
Fund.--The amount of the unobligated balance remaining in the
Department of Veterans Affairs Medical-Care Cost Recovery Fund
(established pursuant to section 1729(g)(1) of title 38, United
States Code) at the close of June 30, 1997, shall be deposited,
not later than December 31, 1997, in the Treasury as
miscellaneous receipts, and the Department of Veterans Affairs
Medical-Care Cost Recovery Fund shall be terminated when the
deposit is made.
(d) Determination of Amounts Subject to Recovery.--Section
1729 of title 38, United States Code, is amended--
(1) in subsection (a)(1), by striking out ``the
reasonable cost of'' and inserting in lieu thereof
``reasonable charges for''; and
(2) in subsection (c)(2)--
(A) by striking out ``the reasonable cost
of'' in the first sentence of subparagraph (A)
and in subparagraph (B) and inserting in lieu
thereof ``reasonable charges for''; and
(B) by striking out ``cost'' in the second
sentence of subparagraph (A) and inserting in
lieu thereof ``charges''.
(e) Technical Amendment.--Paragraph (2) of section 712(b)
of title 38, United States Code, is amended--
(1) by striking out subparagraph (B); and
(2) by redesignating subparagraph (C) as
subparagraph (B).
(f) Implementation.--Not later than January 1, 1999, the
Secretary of Veterans Affairs shall submit to the Committees on
Veterans' Affairs of the Senate and House of Representatives a
report on the implementation of this section. The report shall
describe the collections under each of the provisions specified
in section 1729A(b) of title 38, United States Code, as added
by subsection (a). Information on such collections shall be
shown for each of the health service networks (known as
Veterans Integrated Service Networks) and, to the extent
practicable for each facility within each such network. The
Secretary shall include in the report an analysis of
differences among the networks with respect to (A) the market
in which the networks operates, (B) the effort expended to
achieve collections, (C) the efficiency of such effort, and (D)
any other relevant information.
(g) Effective Date.--(1) Except as provided in paragraph
(2), this section and the amendments made by this section shall
take effect on October 1, 1997.
(2) The amendments made by subsection (d) shall take effect
on the date of the enactment of this Act.
Subtitle C--Other Matters
SEC. 8031. ROUNDING DOWN OF COST-OF-LIVING ADJUSTMENTS IN COMPENSATION
AND DIC RATES FOR FISCAL YEARS 1998 THROUGH 2002.
(a) Compensation COLAs.--(1) Chapter 11 of title 38, United
States Code, is amended by inserting after section 1102 the
following new section:
``Sec. 1103. Cost-of-living adjustments
``(a) In the computation of cost-of-living adjustments for
fiscal years 1998 through 2002 in the rates of, and dollar
limitations applicable to, compensation payable under this
chapter, such adjustments shall be made by a uniform percentage
that is no more than the percentage equal to the social
security increase for that fiscal year, with all increased
monthly rates and limitations (other than increased rates or
limitations equal to a whole dollaramount) rounded down to the
next lower whole dollar amount.
``(b) For purposes of this section, the term `social
security increase' means the percentage by which benefit
amounts payable under title II of the Social Security Act (42
U.S.C. 401 et seq.) are increased for any fiscal year as a
result of a determination under section 215(i) of such Act (42
U.S.C. 415(i)).''.
(2) The table of sections at the beginning of such chapter
is amended by inserting after the item relating to section 1102
the following new item:
``1103. Cost-of-living adjustments.''.
(b) DIC COLAs.--(1) Chapter 13 of title 38, United States
Code, is amended by inserting after section 1302 the following
new section:
``Sec. 1303. Cost-of-living adjustments
``(a) In the computation of cost-of-living adjustments for
fiscal years 1998 through 2002 in the rates of dependency and
indemnity compensation payable under this chapter, such
adjustments (except as provided in subsection (b)) shall be
made by a uniform percentage that is no more than the
percentage equal to the social security increase for that
fiscal year, with all increased monthly rates (other than
increased rates equal to a whole dollar amount) rounded down to
the next lower whole dollar amount.
``(b) For purposes of this section, the term `social
security increase' means the percentage by which benefit
amounts payable under title II of the Social Security Act (42
U.S.C. 401 et seq.) are increased for any fiscal year as a
result of a determination under section 215(i) of such Act (42
U.S.C. 415(i)).''.
(2) The table of sections at the beginning of such chapter
is amended by inserting after the item relating to section 1302
the following new item:
``1303. Cost-of-living adjustments.''.
SEC. 8032. INCREASE IN AMOUNT OF HOME LOAN FEES FOR THE PURCHASE OF
REPOSSESSED HOMES FROM THE DEPARTMENT OF VETERANS
AFFAIRS.
Section 3729(a) of title 38, United States Code, is
amended--
(1) in paragraph (2)--
(A) in subparagraph (A), by striking out
``or 3733(a)'';
(B) in subparagraph (D), by striking out
``and'' at the end;
(C) in subparagraph (E), by striking out
the period at the end and inserting in lieu
thereof ``; and''; and
(D) by adding at the end the following:
``(F) in the case of a loan made under section
3733(a) of this title, the amount of such fee shall be
2.25 percent of the total loan amount.''; and
(2) in paragraph (4), as amended by section 8012(1)
of this Act, by striking out ``or (E)'' and inserting
in lieu thereof ``(E), or (F)''.
SEC. 8033. WITHHOLDING OF PAYMENTS AND BENEFITS.
(a) Notice Required in Lieu of Consent or Court Order.--
Section 3726 of title 38, United States Code, is amended--
(1) by inserting ``(a)'' before ``No officer''; and
(2) by striking out ``unless'' and all that follows
and inserting in lieu thereof the following: ``unless
the Secretary provides such veteran or surviving spouse
with notice by certified mail with return receipt
requested of the authority of the Secretary to waive
the payment of indebtedness under section 5302(b) of
this title.''; and
(3) by adding at the end the following new
subsections:
``(b) If the Secretary does not waive the entire amount of
the liability, the Secretary shall then determine whether the
veteran or surviving spouse should be released from liability
under section 3713(b) of this title.
``(c) If the Secretary determines that the veteran or
surviving spouse should not be released from liability, the
Secretary shall notify the veteran or surviving spouse of that
determination and provide a notice of the procedure for
appealing that determination, unless the Secretary has
previously made such determination and notified the veteran or
surviving spouse of the procedure for appealing the
determination.''.
(b) Conforming Amendment.--Section 5302(b) of such title is
amended by inserting ``with return receipt requested'' after
``certified mail''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to any indebtedness to the United
States arising pursuant to chapter 37 of title 38, United
States Code, before, on, or after the date of enactment of this
Act.
TITLE IX--ASSET SALES, USER FEES, AND MISCELLANEOUS PROVISIONS
SEC. 9000. TABLE OF CONTENTS.
The table of contents for this title is as follows:
TITLE IX--ASSET SALES, USER FEES, AND MISCELLANEOUS PROVISIONS
Sec. 9000. Table of contents.
Subtitle A--Asset Sales
Sec. 9101. Sale of Governors Island, New York.
Sec. 9102. Sale of air rights.
Subtitle B--User Fees
Sec. 9201. Extension of higher vessel tonnage duties.
Subtitle C--Miscellaneous Provisions
Sec. 9301. Temporary Federal share formula adjustment.
Sec. 9302. Increase in excise taxes on tobacco products.
Sec. 9303. Lease of excess strategic petroleum reserve capacity.
Subtitle A--Asset Sales
SEC. 9101. SALE OF GOVERNORS ISLAND, NEW YORK.
(a) In General.--Notwithstanding any other provision of
law, the Administrator of General Services shall, no earlier
than fiscal year 2002, dispose of by sale at fair market value
all rights, title, and interests of the United States in and to
the land of, and improvements to, Governors Island, New York.
(b) Right of First Offer.--Before a sale is made under
subsection (a) to any other parties, the State of New York and
the city of New York shall be given the right of first offer to
purchase all or part of Governors Island at fair market value
as determined by the Administrator of General Services. Not
later than 90 days after notification by the Administrator of
General Services, such right may be exercised by either the
State of New York or the city of New York or by both parties
acting jointly.
(c) Proceeds.--Proceeds from the disposal of Governors
Island under subsection (a) shall be deposited in the general
fund of the Treasury and credited as miscellaneous receipts.
SEC. 9102. SALE OF AIR RIGHTS.
(a) In General.--Notwithstanding any other provision of
law, the Administrator of General Services shall sell, at fair
market value and in a manner to be determined by the
Administrator, the air rights adjacent to Washington Union
Station described in subsection (b), including air rights
conveyed to the Administrator under subsection (d). The
Administrator shall complete the sale by such date as is
necessary to ensure that the proceeds from the sale will be
deposited in accordance with subsection (c).
(b) Description.--The air rights referred to in subsection
(a) total approximately 16.5 acres and are depicted on the plat
map of the District of Columbia as follows:
(1) Part of lot 172, square 720.
(2) Part of lots 172 and 823, square 720.
(3) Part of lot 811, square 717.
(c) Proceeds.--Before September 30, 2002, proceeds from the
sale of air rights under subsection (a) shall be deposited in
the general fund of the Treasury and credited as miscellaneous
receipts.
(d) Conveyance of Amtrak Air Rights.--
(1) General rule.--As a condition of future Federal
financial assistance, Amtrak shall convey to the
Administrator of General Services on or beforeDecember
31, 1997, at no charge, all of the air rights of Amtrak described in
subsection (b).
(2) Failure to comply.--If Amtrak does not meet the
condition established by paragraph (1), Amtrak shall be
prohibited from obligating Federal funds after March 1,
1998.
Subtitle B--User Fees
SEC. 9201. EXTENSION OF HIGHER VESSEL TONNAGE DUTIES.
(a) Extension of Duties.--Section 36 of the Act of August
5, 1909 (36 Stat. 111; 46 U.S.C. App. 121) is amended by
striking ``for fiscal years 1991, 1992, 1993, 1994, 1995, 1996,
1997, 1998,'' each place it appears and inserting ``for fiscal
years 1991 through 2002,''.
(b) Conforming Amendment.--The Act entitled ``An Act
concerning tonnage duties on vessels entering otherwise than by
sea'', approved March 8, 1910 (36 Stat. 234; 46 U.S.C. App.
132) is amended by striking ``for fiscal years 1991, 1992,
1993, 1994, 1995, 1996, 1997, 1998,'' and inserting ``for
fiscal years 1991 through 2002,''.
Subtitle C--Miscellaneous Provisions
SEC. 9301. TEMPORARY FEDERAL SHARE FORMULA ADJUSTMENT.
The Federal share of the cost of assistance provided under
the Robert T. Stafford Disaster Relief and Emergency Assistance
Act (42 U.S.C. 5121 et seq.) for damages suffered in Kittson,
Marshall, Polk, Norman, Clay, and Wilkin Counties, Minnesota,
as a result of the 1997 floods in the Red River Valley in
Minnesota and North Dakota shall be at least 90 percent.
SEC. 9302. INCREASE IN EXCISE TAXES ON TOBACCO PRODUCTS.
(a) Cigarettes.--Subsection (b) of section 5701 of the
Internal Revenue Code of 1986 is amended--
(1) by striking ``$12 per thousand ($10 per
thousand on cigarettes removed during 1991 or 1992)''
in paragraph (1) and inserting ``$19.50 per thousand
($17 per thousand on cigarettes removed during 2000 or
2001)'', and
(2) by striking ``$25.20 per thousand ($21 per
thousand on cigarettes removed during 1991 or 1992)''
in paragraph (2) and inserting ``$40.95 per thousand
($35.70 per thousand on cigarettes removed during 2000
or 2001)''.
(b) Cigars.--Subsection (a) of section 5701 of such Code is
amended--
(1) by striking ``$1.125 cents per thousand (93.75
cents per thousand on cigars removed during 1991 or
1992)'' in paragraph (1) and inserting ``$1.828 cents
per thousand ($1.594 cents per thousand on cigars
removed during 2000 or 2001)'', and
(2) by striking ``equal to'' and all that follows
in paragraph (2) and inserting ``equal to 20.719
percent (18.063 percent on cigars removed during 2000
or 2001) of the price for which sold but not more than
$48.75 per thousand ($42.50 per thousand on cigars
removed during 2000 or 2001).''.
(c) Cigarette Papers.--Subsection (c) of section 5701 of
such Code is amended by striking ``0.75 cent (0.625 cent on
cigarette papers removed during 1991 or 1992)'' and inserting
``1.22 cents (1.06 cents on cigarette papers removed during
2000 or 2001)''.
(d) Cigarette Tubes.--Subsection (d) of section 5701 of
such Code is amended by striking ``1.5 cents (1.25 cents on
cigarette tubes removed during 1991 or 1992)'' and inserting
``2.44 cents (2.13 cents on cigarette tubes removed during 2000
or 2001)''.
(e) Smokeless Tobacco.--Subsection (e) of section 5701 of
such Code is amended--
(1) by striking ``36 cents (30 cents on snuff
removed during 1991 or 1992)'' in paragraph (1) and
inserting ``58.5 cents (51 cents on snuff removed
during 2000 or 2001)'', and
(2) by striking ``12 cents (10 cents on chewing
tobacco removed during 1991 or 1992)'' in paragraph (2)
and inserting ``19.5 cents (17 cents on chewing tobacco
removed during 2000 or 2001)''.
(f) Pipe Tobacco.--Subsection (f) of section 5701 of such
Code is amended by striking ``67.5 cents (56.25 cents on pipe
tobacco removed during 1991 or 1992)'' and inserting ``$1.0969
cents (95.67 cents on pipe tobacco removed during 2000 or
2001)''.
(g) Imposition of Excise Tax on Manufacture or Importation
of Roll-Your-Own Tobacco.--
(1) In general.--Section 5701 of such Code
(relating to rate of tax) is amended by redesignating
subsection (g) as subsection (h) and by inserting after
subsection (f) the following new subsection:
``(g) Roll-Your-Own Tobacco.--On roll-your-own tobacco,
manufactured in or imported into the United States, there shall
be imposed a tax of $1.0969 cents (95.67 cents on roll-your-own
tobacco removed during 2000 or 2001) per pound (and a
proportionate tax at the like rate on all fractional parts of a
pound).''.
(2) Roll-your-own tobacco.--Section 5702 of such
Code (relating to definitions) is amended by adding at
the end the following new subsection:
``(p) Roll-Your-Own Tobacco.--The term `roll-your-own
tobacco' means any tobacco which, because of its appearance,
type, packaging, or labeling, is suitable for use and likely to
be offered to, or purchased by, consumers as tobacco for making
cigarettes.''.
(3) Technical amendments.--
(A) Subsection (c) of section 5702 of such
Code is amended by striking ``and pipe
tobacco'' and inserting ``pipe tobacco, and
roll-your-own tobacco''.
(B) Subsection (d) of section 5702 of such
Code is amended--
(i) in the material preceding
paragraph (1), by striking ``or pipe
tobacco'' and inserting ``pipe tobacco,
or roll-your-own tobacco'', and
(ii) by striking paragraph (1) and
inserting the following new paragraph:
``(1) a person who produces cigars, cigarettes,
smokeless tobacco, pipe tobacco, or roll-your-own
tobacco solely for the person's own personal
consumption or use, and''.
(C) The chapter heading for chapter 52 of
such Code is amended to read as follows:
``CHAPTER 52--TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES''.
(D) The table of chapters for subtitle E of
such Code is amended by striking the item
relating to chapter 52 and inserting the
following new item:
``Chapter 52. Tobacco products and cigarette papers and
tubes.''.
(h) Modifications of Certain Tobacco Tax Provisions.--
(1) Exemption for exported tobacco products and
cigarette papers and tubes to apply only to articles
marked for export.--
(A) Subsection (b) of section 5704 of such
Code is amended by adding at the end the
following new sentence: ``Tobacco products and
cigarette papers and tubes may not be
transferred or removed under this subsection
unless such products or papers and tubes bear
such marks, labels, or notices as the Secretary
shall by regulations prescribe.''.
(B) Section 5761 of such Code is amended by
redesignating subsections (c) and (d) as
subsections (d) and (e), respectively, and by
insertingafter subsection (b) the following new
subsection:
``(c) Sale of Tobacco Products and Cigarette Papers and
Tubes for Export.--Except as provided in subsections (b) and
(d) of section 5704--
``(1) every person who sells, relands, or receives
within the jurisdiction of the United States any
tobacco products or cigarette papers or tubes which
have been labeled or shipped for exportation under this
chapter,
``(2) every person who sells or receives such
relanded tobacco products or cigarette papers or tubes,
and
``(3) every person who aids or abets in such
selling, relanding, or receiving,
shall, in addition to the tax and any other penalty provided in
this title, be liable for a penalty equal to the greater of
$1,000 or 5 times the amount of the tax imposed by this
chapter. All tobacco products and cigarette papers and tubes
relanded within the jurisdiction of the United States, and all
vessels, vehicles, and aircraft used in such relanding or in
removing such products, papers, and tubes from the place where
relanded, shall be forfeited to the United States.''.
(C) Subsection (a) of section 5761 of such
Code is amended by striking ``subsection (b)''
and inserting ``subsection (b) or (c)''.
(D) Subsection (d) of section 5761 of such
Code, as redesignated by subparagraph (B), is
amended by striking ``The penalty imposed by
subsection (b)'' and inserting ``The penalties
imposed by subsections (b) and (c)''.
(E)(i) Subpart F of chapter 52 of such Code
is amended by adding at the end the following
new section:
``SEC. 5754. RESTRICTION ON IMPORTATION OF PREVIOUSLY EXPORTED TOBACCO
PRODUCTS.
``(a) In General.--Tobacco products and cigarette papers
and tubes previously exported from the United States may be
imported or brought into the United States only as provided in
section 5704(d). For purposes of this section, section 5704(d),
section 5761, and such other provisions as the Secretary may
specify by regulations, references to exportation shall be
treated as including a reference to shipment to the
Commonwealth of Puerto Rico.
``(b) Cross Reference.--
``For penalty for the sale of tobacco products and cigarette
papers and tubes in the United States which are labeled for
export, see section 5761(c).''.
(ii) The table of sections for subpart F of
chapter 52 of such Code is amended by adding at
the end the following new item:
``Sec. 5754. Restriction on importation of previously exported
tobacco products.''.
(2) Importers required to be qualified.--
(A) Sections 5712, 5713(a), 5721, 5722,
5762(a)(1), and 5763 (b) and (c) of such Code
are each amended by inserting ``or importer''
after ``manufacturer''.
(B) The heading of subsection (b) of
section 5763 of such Code is amended by
inserting ``Qualified Importers,'' after
``Manufacturers,''.
(C) The heading for subchapter B of chapter
52 of such Code is amended by inserting ``and
Importers'' after ``Manufacturers''.
(D) The item relating to subchapter B in
the table of subchapters for chapter 52 of such
Code is amended by inserting ``and importers''
after ``manufacturers''.
(3) Books of 25 or fewer cigarette papers subject
to tax.--Subsection (c) of section 5701 of such Code is
amended by striking ``On each book or set of cigarette
papers containing more than 25 papers,'' and inserting
``On cigarette papers,''.
(4) Storage of tobacco products.--Subsection (k) of
section 5702 of such Code is amended by inserting
``under section 5704'' after ``internal revenue bond''.
(5) Authority to prescribe minimum manufacturing
activity requirements.--Section 5712 of such Code is
amended by striking ``or'' at the end of paragraph (1),
by redesignating paragraph (2) as paragraph (3), and by
inserting after paragraph (1) the following new
paragraph:
``(2) the activity proposed to be carried out at
such premises does not meet such minimum capacity or
activity requirements as the Secretary may prescribe,
or''.
(i) Effective Date.--
(1) In general.--The amendments made by this
section shall apply to articles removed (as defined in
section 5702(k) of the Internal Revenue Code of 1986,
as amended by this section) after December 31, 1999.
(2) Transitional rule.--Any person who--
(A) on the date of the enactment of this
Act is engaged in business as a manufacturer of
roll-your-own tobacco or as an importer of
tobacco products or cigarette papers and tubes,
and
(B) before January 1, 2000, submits an
application under subchapter B of chapter 52 of
such Code to engage in such business,
may, notwithstanding such subchapter B, continue to
engage in such business pending final action on such
application. Pending such final action, all provisions
of such chapter 52 shall apply to such applicant in the
same manner and to the same extent as if such applicant
were a holder of a permit under such chapter 52 to
engage in such business.
(j) Floor Stocks Taxes.--
(1) Imposition of tax.--On tobacco products and
cigarette papers and tubes manufactured in or imported
into the United States which are removed before any tax
increase date, and held on such date for sale by any
person, there is hereby imposed a tax in an amount
equal to the excess of--
(A) the tax which would be imposed under
section 5701 of the Internal Revenue Code of
1986 on the article if the article had been
removed on such date, over
(B) the prior tax (if any) imposed under
section 5701 of such Code on such article.
(2) Authority to exempt cigarettes held in vending
machines.--To the extent provided in regulations
prescribed by the Secretary, no tax shall be imposed by
paragraph (1) on cigarettes held for retail sale on any
tax increase date, by any person in any vending
machine. If the Secretary provides such a benefit with
respect to any person, the Secretary may reduce the
$500 amount in paragraph (3) with respect to such
person.
(3) Credit against tax.--Each person shall be
allowed as a credit against the taxes imposed by
paragraph (1) an amount equal to $500. Such credit
shall not exceed the amount of taxes imposed by
paragraph (1) on any tax increase date, for which such
person is liable.
(4) Liability for tax and method of payment.--
(A) Liability for tax.--A person holding
cigarettes on any tax increase date, to which
any tax imposed by paragraph (1) applies shall
be liable for such tax.
(B) Method of payment.--The tax imposed by
paragraph (1) shall be paid in such manner as
the Secretary shall prescribe by regulations.
(C) Time for payment.--The tax imposed by
paragraph (1) shall be paid on or before April
1 following any tax increase date.
(5) Articles in foreign trade zones.--
Notwithstanding the Act of June 18, 1934 (48 Stat. 998,
19 U.S.C. 81a) and any other provision of law, any
article which is located in a foreign trade zone on any
tax increase date, shall be subject to the tax imposed
by paragraph (1) if--
(A) internal revenue taxes have been
determined, or customs duties liquidated, with
respect to such article before such date
pursuant to a request made under the 1st
proviso of section 3(a) of such Act, or
(B) such article is held on such date under
the supervision of a customs officer pursuant
to the 2d proviso of such section 3(a).
(6) Definitions.--For purposes of this subsection--
(A) In general.--Terms used in this
subsection which are also used in section 5702
of the Internal Revenue Code of 1986 shall have
the respective meanings such terms have in such
section, as amended by this Act.
(B) Tax increase date.--The term ``tax
increase date'' means January 1, 2000, and
January 1, 2002.
(C) Secretary.--The term ``Secretary''
means the Secretary of the Treasury or the
Secretary's delegate.
(7) Controlled groups.--Rules similar to the rules
of section 5061(e)(3) of such Code shall apply for
purposes of this subsection.
(8) Other laws applicable.--All provisions of law,
including penalties, applicable with respect to the
taxes imposed by section 5701 of such Code shall,
insofar as applicable and not inconsistent with the
provisions of this subsection, apply to the floor
stocks taxes imposed by paragraph (1), to the same
extent as if such taxes were imposed by such section
5701. The Secretary may treat any person who bore the
ultimate burden of the tax imposed by paragraph (1) as
the person to whom a credit or refund under such
provisions may be allowed or made.
SEC. 9303. LEASE OF EXCESS STRATEGIC PETROLEUM RESERVE CAPACITY.
(a) Amendment.--Part B of title I of the Energy Policy and
Conservation Act (42 U.S.C. 6231 et seq.) is amended by adding
at the end the following:
``use of underutilized facilities
``Sec. 168. (a) Authority.--Notwithstanding any other
provision of this title, the Secretary, by lease or otherwise,
for any term and under such other conditions as the Secretary
considers necessary or appropriate, may store in underutilized
Strategic Petroleum Reserve facilities petroleum product owned
by a foreign government or its representative. Petroleum
products stored under this section are not part of the
Strategic Petroleum Reserve and may be exported without license
from the United States.
``(b) Protection of Facilities.--All agreements entered
into pursuant to subsection (a) shall contain provisions
providing for fees to fully compensate the United States for
all related costs of storage and removals of petroleum products
(including the proportionate cost of replacement facilities
necessitated as a result of any withdrawals) incurred by the
United States on behalf of the foreign government or its
representative.
``(c) Access to Stored Oil.--The Secretary shall ensure
that agreements to store petroleum products forforeign
governments or their representatives do not impair the ability of the
United States to withdraw, distribute, or sell petroleum products from
the Strategic Petroleum Reserve in response to an energy emergency or
to the obligations of the United States under the Agreement on an
International Energy Program.
``(d) Availability of Funds.--Funds collected through the
leasing of Strategic Petroleum Reserve facilities authorized by
subsection (a) after September 30, 2007, shall be used by the
Secretary of Energy without further appropriation for the
purchase of petroleum products for the Strategic Petroleum
Reserve.''.
(b) Table of Contents Amendment.--The table of contents of
part B of title I of the Energy Policy and Conservation Act is
amended by adding at the end the following:
``Sec. 168. Use of underutilized facilities.''.
SEC. 9304. IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO LINE ITEM
VETO.
Section 1021(a)(3) of the Congressional Budget Act of 1974
shall only apply to 3306(c)(21) of the Internal Revenue Code of
1986 (as added by section 5406 of this Act).
SEC. 9305. PAYMENT OF BENEFITS IN APPROPRIATE FISCAL YEAR.
Section 5120(e) of title 38, United States Code, shall not
apply to benefit payments otherwise payable on October 1, 2000.
TITLE X--BUDGET ENFORCEMENT AND PROCESS PROVISIONS
SEC. 10001. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This title may be cited as the ``Budget
Enforcement Act of 1997''.
(b) Table of Contents.--The table of contents for this
title is as follows:
Sec. 10001. Short title; table of contents.
Subtitle A--Amendments to the Congressional Budget and Impoundment
Control Act of 1974
Sec. 10101. Amendment to section 3.
Sec. 10102. Amendments to section 201.
Sec. 10103. Amendments to section 202.
Sec. 10104. Amendment to section 300.
Sec. 10105. Amendments to section 301.
Sec. 10106. Amendments to section 302.
Sec. 10107. Amendments to section 303.
Sec. 10108. Amendment to section 304.
Sec. 10109. Amendment to section 305.
Sec. 10110. Amendments to section 308.
Sec. 10111. Amendments to section 310.
Sec. 10112. Amendments to section 311.
Sec. 10113. Amendment to section 312.
Sec. 10114. Adjustments.
Sec. 10115. Effect of adoption of a special order of business in the
House of Representatives.
Sec. 10116. Amendment to section 401 and repeal of section 402.
Sec. 10117. Amendments to title V.
Sec. 10118. Repeal of title VI.
Sec. 10119. Amendments to section 904.
Sec. 10120. Repeal of sections 905 and 906.
Sec. 10121. Amendments to sections 1022 and 1024.
Sec. 10122. Amendment to section 1026.
Sec. 10123. Senate task force on consideration of budget measures.
Subtitle B--Amendments to the Balanced Budget and Emergency Deficit
Control Act of 1985
Sec. 10201. Purpose.
Sec. 10202. General statement and definitions.
Sec. 10203. Enforcing discretionary spending limits.
Sec. 10204. Violent crime reduction spending.
Sec. 10205. Enforcing pay-as-you-go.
Sec. 10206. Reports and orders.
Sec. 10207. Exempt programs and activities.
Sec. 10208. General and special sequestration rules.
Sec. 10209. The baseline.
Sec. 10210. Technical correction.
Sec. 10211. Judicial review.
Sec. 10212. Effective date.
Sec. 10213. Reduction of preexisting balances and exclusion of effects
of this Act from paygo scorecard.
Subtitle A--Amendments to the Congressional Budget and Impoundment
Control Act of 1974
SEC. 10101. AMENDMENT TO SECTION 3.
Section 3(9) of the Congressional Budget and Impoundment
Control Act of 1974 is amended to read as follows:
``(9) The term `entitlement authority' means--
``(A) the authority to make payments
(including loans and grants), the budget
authority for which is not provided for in
advance by appropriation Acts, to any person or
government if, under the provisions of the law
containing that authority, the United States is
obligated to make such payments to persons or
governments who meet the requirements
established by that law; and
``(B) the food stamp program.''.
SEC. 10102. AMENDMENTS TO SECTION 201.
(a) Term of Office.--The first sentence of section
201(a)(3) of the Congressional Budget Act of 1974 isamended to
read as follows: ``The term of office of the Director shall be 4 years
and shall expire on January 3 of the year preceding each Presidential
election.''.
(b) Conforming Change.--Section 201(e) of the Congressional
Budget Act of 1974 is amended by inserting ``and'' before ``the
Library'', by striking ``and the Office of Technology
Assessment,'', by inserting ``and'' before ``the Librarian'',
and by striking ``, and the Technology Assessment Board''.
(c) Redesignation of Executed Provision.--Section 201 of
the Congressional Budget Act of 1974 is amended by
redesignating subsection (g) (relating to revenue estimates) as
subsection (f).
SEC. 10103. AMENDMENTS TO SECTION 202.
(a) Assistance to Budget Committees.--The first sentence of
section 202(a) of the Congressional Budget Act of 1974 is
amended by inserting ``primary'' before ``duty''.
(b) Elimination of Executed Provision.--Section 202 of the
Congressional Budget Act of 1974 is amended by striking
subsection (e) and by redesignating subsections (f), (g), and
(h) as subsections (e), (f), and (g), respectively.
(c) Reporting Requirement.--The first sentence of section
202(e)(1) of the Congressional Budget Act of 1974 (as
redesignated) is amended by--
(1) striking ``and'' before ``(B)''; and
(2) inserting before the period the following: ``,
and (C) a statement of the levels of budget authority
and outlays for each program assumed to be extended in
the baseline, as provided in section 257(b)(2)(A) and
for excise taxes assumed to be extended under section
257(b)(2)(C) of the Balanced Budget and Emergency
Deficit Control Act of 1985''.
SEC. 10104. AMENDMENT TO SECTION 300.
(a) Timetable.--The item relating to February 25 in the
timetable set forth in section 300 of the Congressional Budget
Act of 1974 is amended by striking ``February 25'' and
inserting ``Not later than 6 weeks after President submits
budget''.
(b) Conforming Amendments.--(1) Clause 4(g) of rule X of
the Rules of the House of Representatives is amended by
striking ``on or before February 25 of each year'' and
inserting ``not later than 6 weeks after the President submits
his budget''.
(2) Clause 3(c) of rule XLVIII of the Rules of the House of
Representatives is amended by striking ``On or before March 15
of each year'' and inserting ``Within 6 weeks after the
President submits a budget under section 1105(a) of title 31,
United States Code'' and by striking ``section 301(c)'' and
inserting ``section 301(d)''.
SEC. 10105. AMENDMENTS TO SECTION 301.
(a) Terms of Budget Resolutions.--Section 301(a) of the
Congressional Budget Act of 1974 is amended by striking ``, and
planning levels for each of the two ensuing fiscal years,'' and
inserting ``and for at least each of the 4 ensuing fiscal
years''.
(b) Contents of Budget Resolutions.--Paragraphs (1) and (4)
of section 301(a) of the Congressional Budget Act of 1974 are
amended by striking ``, budget outlays, direct loan
obligations, and primary loan guarantee commitments'' each
place it appears and inserting ``and outlays''.
(c) Additional Matters.--Section 301(b) of the
Congressional Budget Act of 1974 is amended by--
(1) striking paragraph (7) and inserting the
following:
``(7) set forth procedures in the Senate whereby
committee allocations, aggregates, and other levels can
be revised for legislation if that legislation would
not increase the deficit, or would not increase the
deficit when taken with other legislation enactedafter
the adoption of the resolution, for the first fiscal year or the total
period of fiscal years covered by the resolution;'';
(2) in paragraph 8, striking the period and
inserting ``; and''; and
(3) adding the following new paragraph:
``(9) set forth direct loan obligation and primary
loan guarantee commitment levels.''.
(d) Views and Estimates.--The first sentence of section
301(d) of the Congressional Budget Act of 1974 is amended by
inserting ``or at such time as may be requested by the
Committee on the Budget,'' after ``Code,''.
(e) Hearings and Report.--Section 301(e) of the
Congressional Budget Act of 1974 is amended--
(1) by striking ``In developing'' and inserting the
following:
``(1) In general.--In developing''; and
(2) by striking the sentence beginning with ``The
report accompanying'' and all that follows through the
end of the subsection and inserting the following:
``(2) Required contents of report.--The report
accompanying the resolution shall include--
``(A) a comparison of the levels of total
new budget authority, total outlays, total
revenues, and the surplus or deficit for each
fiscal year set forth in the resolution with
those requested in the budget submitted by the
President;
``(B) with respect to each major functional
category, an estimate of total new budget
authority and total outlays, with the estimates
divided between discretionary and mandatory
amounts;
``(C) the economic assumptions that
underlie each of the matters set forth in the
resolution and any alternative economic
assumptions and objectives the committee
considered;
``(D) information, data, and comparisons
indicating the manner in which, and the basis
on which, the committee determined each of the
matters set forth in the resolution;
``(E) the estimated levels of tax
expenditures (the tax expenditures budget) by
major items and functional categories for the
President's budget and in the resolution; and
``(F) allocations described in section
302(a).
``(3) Additional contents of report.--The report
accompanying the resolution may include--
``(A) a statement of any significant
changes in the proposed levels of Federal
assistance to State and local governments;
``(B) an allocation of the level of Federal
revenues recommended in the resolution among
the major sources of such revenues;
``(C) information, data, and comparisons on
the share of total Federal budget outlays and
of gross domestic product devoted to investment
in the budget submitted by the President and in
the resolution;
``(D) the assumed levels of budget
authority and outlays for public buildings,
with a division between amounts for
construction and repair and for rental
payments; and
``(E) other matters, relating to the budget
and to fiscal policy, that the committee deems
appropriate.''.
(f) Social Security Corrections.--(1) Section 301(i) of
the Congressional Budget Act of 1974 is amended by--
(A) inserting ``Social Security Point of Order.--''
after ``(i)''; and
(B) striking ``as reported to the Senate'' and
inserting ``(or amendment, motion, or conference report
on the resolution)''; and
(2) Section 22 of House Concurrent Resolution 218
(103d Congress) is repealed.
SEC. 10106. AMENDMENTS TO SECTION 302.
(a) Allocations and Suballocations.--Section 302 of the
Congressional Budget Act of 1974 is amended by striking
subsections (a) and (b) and inserting the following:
``(a) Committee Spending Allocations.--
``(1) Allocation among committees.--The joint
explanatory statement accompanying a conference report
on a concurrent resolution on the budget shall include
an allocation, consistent with the resolution
recommended in the conference report, of the levels for
the first fiscal year of the resolution, for at least
each of the ensuing 4 fiscal years, and a total for
that period of fiscal years (except in the case of the
Committee on Appropriations only for the fiscal year of
that resolution) of--
``(A) total new budget authority; and
``(B) total outlays;
among each committee of the House of Representatives or
the Senate that has jurisdiction over legislation
providing or creating such amounts.
``(2) No double counting.--In the House of
Representatives, any item allocated to one committee
may not be allocated to another committee.
``(3) Further division of amounts.--
``(A) In the senate.--In the Senate, the
amount allocated to the Committee on
Appropriations shall be further divided among
the categories specified in section 250(c)(4)
of the Balanced Budget and Emergency Deficit
Control Act of 1985 and shall not exceed the
limits for each category set forth in section
251(c) of that Act.
``(B) In the house.--In the House of
Representatives, the amounts allocated to each
committee for each fiscal year, other than the
Committee on Appropriations, shall be further
divided between amounts provided or required by
law on the date of filing of that conference
report and amounts not so provided or required.
The amounts allocated to the Committee on
Appropriations shall be further divided--
``(i) between discretionary and mandatory
amounts or programs, as appropriate; and
``(ii) consistent with the categories
specified in section 250(c)(4) of the Balanced
Budget and Emergency Deficit Control Act of
1985.
``(4) Amounts not allocated.--In the House of
Representatives or the Senate, if a committee receives
no allocation of new budget authority or outlays, that
committee shall be deemed to have received an
allocation equal to zero for new budget authority or
outlays.
``(5) Adjusting allocation of discretionary
spending in the house of representatives.--(A) If a
concurrent resolution on the budget is not adopted by
April 15, the chairman of the Committee on the Budget
of the House of Representatives shall submit to the
House, as soon as practicable, an allocation under
paragraph (1) to the Committee on Appropriations
consistent with the discretionary spending levels in
the most recently agreed to concurrent resolution on
the budget for the appropriate fiscal year covered by
that resolution.
``(B) As soon as practicable after an allocation
under paragraph (1) is submitted under this section,
the Committee on Appropriations shall make
suballocations and report those suballocations to the
House of Representatives.
``(b) Suballocations by Appropriations Committees.--As soon
as practicable after a concurrent resolution on the budget is
agreed to, the Committee on Appropriations of each House (after
consulting with the Committee on Appropriations of the other
House) shall suballocate each amount allocated to it for the
budget year under subsection (a) among its subcommittees. Each
Committee on Appropriations shall promptly report to its House
suballocations made or revised under this subsection. The
Committee on Appropriations of the House of Representatives
shall further divide among its subcommittees the divisions made
under subsection (a)(3)(B) and promptly report those divisions
to the House.''.
(b) Point of Order.--Section 302(c) of the Congressional
Budget Act of 1974 is amended to read as follows:
``(c) Point of Order.--After the Committee on
Appropriations has received an allocation pursuant to
subsection (a) for a fiscal year, it shall not be in order in
the House of Representatives or the Senate to consider any
bill, joint resolution, amendment, motion, or conference report
within the jurisdiction of that committee providing new budget
authority for that fiscal year, until that committee makes the
suballocations required by subsection (b).''.
(c) Enforcement of Point of Order.--
(1) In the house.--Section 302(f)(1) of the
Congressional Budget Act of 1974 is amended by--
(A) striking ``providing new budget
authority for such fiscal year or new
entitlement authority effective during such
fiscal year'' and inserting ``providing new
budget authority for any fiscal year''; and
(B) striking ``appropriate allocation made
pursuant to subsection (b)'' and all that
follows through ``exceeded.'' and inserting
``applicable allocation of new budget authority
made under subsection (a) or (b) for the first
fiscal year or the total of fiscal years to be
exceeded.''.
(2) In the senate.--Section 302(f)(2) of the
Congressional Budget Act of 1974 is amended to read as
follows:
``(2) In the senate.--After a concurrent resolution
on the budget is agreed to, it shall not be in order in
the Senate to consider any bill, joint resolution,
amendment, motion, or conference report that would
cause--
``(A) in the case of any committee except
the Committee on Appropriations, the applicable
allocation of new budget authority or outlays
under subsection (a) for the first fiscal year
or the total of fiscal years to be exceeded; or
``(B) in the case of the Committee on
Appropriations, the applicable suballocation of
new budget authority or outlays under
subsection (b) to be exceeded.''.
(d) Pay-As-You-Go Exception in the House.--Section 302(g)
of the Congressional Budget Act of 1974 is amended to read as
follows:
``(g) Pay-as-You-Go Exception in the House.--
``(1) In general.--(A) Subsection (f)(1) and, after
April 15, section 303(a) shall not apply to any bill or
joint resolution, as reported, amendment thereto, or
conference report thereon if, for each fiscal year
covered by the most recently agreed to concurrent
resolution on the budget--
``(i) the enactment of that bill or
resolution as reported;
``(ii) the adoption and enactment of that
amendment; or
``(iii) the enactment of that bill or
resolution in the form recommended in that
conference report,
would not increase the deficit, and, if the sum of any
revenue increases provided in legislation already
enacted during the current session (when added to
revenue increases, if any, in excess of any outlay
increase provided by the legislation proposed for
consideration) is at least as great as the sum of the
amount, if any, by which the aggregate level of Federal
revenues should be increased as set forth in that
concurrent resolution and the amount, if any, by which
revenues are to be increased pursuant to pay-as-you-go
procedures under section 301(b)(8), if included in that
concurrent resolution.
``(B) Section 311(a), as that section applies to
revenues, shall not apply to any bill, joint
resolution, amendment thereto, or conference report
thereon if, for each fiscal year covered by the most
recently agreed to concurrent resolution on the
budget--
``(i) the enactment of that bill or
resolution as reported;
``(ii) the adoption and enactment of that
amendment; or
``(iii) the enactment of that bill or
resolution in the form recommended in that
conference report,
would not increase the deficit, and, if the sum of any
outlay reductions provided in legislation already
enacted during the current session (when added to
outlay reductions, if any, in excess of any revenue
reduction provided by the legislation proposed for
consideration) is at least as great as the sum of the
amount, if any, by which the aggregate level of Federal
outlays should be reduced as required by that
concurrent resolution and the amount, if any, by which
outlays are to be reduced pursuant to pay-as-you-go
procedures under section 301(b)(8), if included in that
concurrent resolution.
``(2) Revised allocations.--(A) As soon as
practicable after Congress agrees to a bill or joint
resolution that would have been subject to a point of
order under subsection (f)(1) but for the exception
provided in paragraph (1)(A) or would have been subject
to a point of order under section 311(a) but for the
exception provided in paragraph (1)(B), the chairman of
the committee on the Budget of the House of
Representatives shall file with the House appropriately
revised allocations under section 302(a) and revised
functional levels and budget aggregates to reflect that
bill.
``(B) Such revised allocations, functional levels,
and budget aggregates shall be considered for the
purposes of this Act as allocations, functional levels,
and budget aggregates contained in the most recently
agreed to concurrent resolution on the budget.''.
SEC. 10107. AMENDMENTS TO SECTION 303.
(a) In General.--Section 303 of the Congressional Budget
Act of 1974 is amended to read as follows:
``concurrent resolution on the budget must be adopted before budget-
related legislation is considered
``Sec. 303. (a) In General.--Until the concurrent
resolution on the budget for a fiscal year has been agreed to,
it shall not be in order in the House of Representatives, with
respect to the first fiscal year covered by that resolution, or
the Senate, with respect to any fiscal year covered by that
resolution, to consider any bill or joint resolution, amendment
or motion thereto, or conference report thereon that--
``(1) first provides new budget authority for that
fiscal year;
``(2) first provides an increase or decrease in
revenues during that fiscal year;
``(3) provides an increase or decrease in the
public debt limit to become effective during that
fiscal year;
``(4) in the Senate only, first provides new
entitlement authority for that fiscal year; or
``(5) in the Senate only, first provides for an
increase or decrease in outlays for that fiscal year.
``(b) Exceptions in the House.-- In the House of
Representatives, subsection (a) does not apply--
``(1)(A) to any bill or joint resolution, as
reported, providing advance discretionary new budget
authority that first becomes available for the first or
second fiscal year after the budget year; or
``(B) to any bill or joint resolution, as reported,
first increasing or decreasing revenues in a fiscal
year following the fiscal year to which the concurrent
resolution applies;
``(2) after May 15, to any general appropriation
bill or amendment thereto; or
``(3) to any bill or joint resolution unless it is
reported by a committee.
``(c) Application to Appropriation Measures in the
Senate.--
``(1) In general.--Until the concurrent resolution
on the budget for a fiscal year has been agreed to and
an allocation has been made to the Committee on
Appropriations of the Senate under section 302(a) for
that year, it shall not be in order in the Senate to
consider any appropriation bill or joint resolution,
amendment or motion thereto, or conference report
thereon for that year or any subsequent year.
``(2) Exception.--Paragraph (1) does not apply to
appropriations legislation making advance
appropriations for the first or second fiscal year
after the year the allocation referred to in that
paragraph is made.''.
(b) Conforming Amendment.--The item relating to section 303
in the table of contents set forth in section 1(b) of the
Congressional Budget and Impoundment Control Act of 1974 is
amended to read as follows:
``Sec. 303. Concurrent resolution on the budget must be adopted before
budget-related legislation is considered.''.
SEC. 10108. AMENDMENT TO SECTION 304.
Section 304 of the Congressional Budget Act of 1974 is
amended by--
(1) striking ``(a) In General.--''; and
(2) striking subsection (b).
SEC. 10109. AMENDMENT TO SECTION 305.
(a) Budget Act.--Section 305(a)(1) of the Congressional
Budget Act of 1974 is amended to read as follows:
``(1) When a concurrent resolution on the budget
has been reported by the Committee on the Budget of the
House of Representatives and has been referred to the
appropriate calendar of the House, it shall be in order
on any day thereafter, subject to clause 2(l)(6) of
rule XI of the Rules of the House of Representatives,
to move to proceed to the consideration of the
concurrent resolution. The motion is highly privileged
and is not debatable. An amendment to the motion is not
in order and it is not in order to move to reconsider
the vote by which the motion is agreed to or disagreed
to.''.
(b) Conforming Amendment in the House.--The first sentence
of clause 2(l)(6) of rule XI of the Rules of the House of
Representatives is amended by striking ``, or as provided by
section 305(a)(1)'' and all that follows thereafter through
``under that section)''.
SEC. 10110. AMENDMENTS TO SECTION 308.
Section 308 of the Congressional Budget Act of 1974 is
amended--
(1)(A) in the heading of subsection (a), by
striking ``, New Spending Authority, or New Credit
Authority,'';
(B) in subsection (a)(1), by striking subparagraph
(B) and by redesignating subparagraphs (C) and (D) as
subparagraphs (B) and (C), respectively;
(C) in subsection (a)(1)(B) (as redesignated), by
striking ``spending authority'' through ``commitments''
and inserting ``revenues, or tax expenditures''; and
(D) in paragraphs (1) and (2) of subsection (a), by
striking ``, new spending authority described in
section 401(c)(2), or new credit authority,'' each
place it appears;
(2) in subsection (b)(1), by striking ``, new
spending authority described in section 401(c)(2), or
new credit authority,'';
(3) in subsection (c), by inserting ``and'' after
the semicolon at the end of paragraph (3), by striking
``; and'' at the end of paragraph (4) and inserting a
period; and by striking paragraph (5); and
(4) by inserting ``joint'' before ``resolution''
each place it appears except when ``concurrent'',
``such'', or ``reconciliation'' precedes ``resolution''
and, in subsection (b)(1), by inserting ``joint''
before ``resolutions'' each place it appears.
SEC. 10111. AMENDMENTS TO SECTION 310.
Section 310(c)(1)(A) of the Congressional Budget Act of
1974 is amended--
(1) by striking ``20 percent'' the first place it
appears and all that follows thereafter through ``,
and'' and inserting the following:
``(I) in the Senate, 20 percent of
the total of the amounts of the changes
such committee was directed to make
under paragraphs (1) and (2) of such
subsection; or
``(II) in the House of
Representatives, 20 percent of the sum
of the absolute value of the changes
the committee was directed to make
under paragraph (1) and the absolute
value of the changes the committee was
directed to make under paragraph (2);
and''; and
(2) by striking ``20 percent'' the second place it
appears and all that follows thereafter through ``;
and'' and inserting the following:
``(I) in the Senate, 20 percent of
the total of the amounts of the changes
such committee was directed to make
under paragraphs (1) and (2) of such
subsection; or
``(II) in the House of
Representatives, 20 percent of the sum
of the absolute value of the changes
the committee was directed to make
under paragraph (1) and the absolute
value of the changes the committee was
directed to make under paragraph (2);
and''.
SEC. 10112. AMENDMENTS TO SECTION 311.
(a) In General.--Section 311 of the Congressional Budget
Act of 1974 is amended to read as follows:
``budget-related legislation must be within appropriate levels
``Sec. 311. (a) Enforcement of Budget Aggregates.--
``(1) In the house of representatives.--Except as
provided by subsection (c), after the Congress has
completed action on a concurrent resolution on the
budget for a fiscal year, it shall not be in order in
the House of Representatives to consider any bill,
joint resolution, amendment, motion, or conference
report providing new budget authority or reducing
revenues, if--
``(A) the enactment of that bill or
resolution as reported;
``(B) the adoption and enactment of that
amendment; or
``(C) the enactment of that bill or
resolution in the form recommended in that
conference report;
would cause the level of total new budget authority or
total outlays set forth in the applicable concurrent
resolution on the budget for the first fiscal year to
be exceeded, or would cause revenues to be less than
the level of total revenues set forth in that
concurrent resolution for the first fiscal year or for
the total of that first fiscal year and the ensuing
fiscal years for which allocations are provided under
section 302(a), except when a declaration of war by the
Congress is in effect.
``(2) In the senate.--After a concurrent resolution
on the budget is agreed to, it shall not be in order in
the Senate to consider any bill, joint resolution,
amendment, motion, or conference report that--
``(A) would cause the level of total new
budget authority or total outlays set forth for
the first fiscal year in the applicable
resolution to be exceeded; or
``(B) would cause revenues to be less than
the level of total revenues set forth for that
first fiscal year or for the total of that
first fiscal year and the ensuing fiscal years
in the applicable resolution for which
allocations are provided under section 302(a).
``(3) Enforcement of social security levels in the
senate.--After a concurrent resolution on the budget is
agreed to, it shall not be in order in the Senate to
consider any bill, joint resolution, amendment, motion,
or conference report that would cause a decrease in
social security surpluses or an increase in social
security deficits relative to the levels set forth in
the applicable resolution for the first fiscal year or
for the total of that fiscal year and the ensuing
fiscal years for which allocations are provided under
section 302(a).
``(b) Social Security Levels.--
``(1) In general.--For purposes of subsection
(a)(3), social security surpluses equal the excess of
social security revenues over social security outlays
in a fiscal year or years with such an excess and
social security deficits equal the excess of social
security outlays over social security revenues in a
fiscal year or years with such an excess.
``(2) Tax treatment.--For purposes of subsection
(a)(3), no provision of any legislation involving a
change in chapter 1 of the Internal Revenue Code of
1986 shall be treated as affecting the amount of social
security revenues or outlays unless that provision
changes the income tax treatment of social security
benefits.
``(c) Exception in the House of Representatives.--
Subsection (a)(1) shall not apply in the House of
Representatives to any bill, joint resolution, or amendment
that provides new budget authority for a fiscal year or to any
conference report on any such bill or resolution, if--
``(1) the enactment of that bill or resolution as
reported;
``(2) the adoption and enactment of that amendment;
or
``(3) the enactment of that bill or resolution in
the form recommended in that conference report;
would not cause the appropriate allocation of new budget
authority made pursuant to section 302(a) for that fiscal year
to be exceeded.''.
(b) Table of Contents.--The table of contents set forth in
section 1(b) of the Congressional Budget and Impoundment
Control Act of 1974 is amended by striking the item relating to
section 311 and inserting the following:
``Sec. 311. Budget-related legislation must be within appropriate
levels.''.
SEC. 10113. AMENDMENT TO SECTION 312.
(a) In General.--Section 312 of the Congressional Budget
Act of 1974 is amended to read as follows:
``determinations and points of order
``Sec. 312. (a) Budget Committee Determinations.--For
purposes of this title and title IV, the levels of new budget
authority, outlays, direct spending, new entitlement authority,
and revenues for a fiscal year shall be determined on the basis
of estimates made by the Committee on the Budget of the House
of Representatives or the Senate, as applicable.
``(b) Discretionary Spending Point of Order in the
Senate.--
``(1) In general.--Except as otherwise provided in
this subsection, it shall not be in order in the Senate
to consider any bill or resolution (or amendment,
motion, or conference report on that bill or
resolution) that would exceed any of the discretionary
spending limits in section 251(c) of the Balanced
Budget and Emergency Deficit Control Act of 1985.
``(2) Exceptions.--This subsection shall not apply
if a declaration of war by the Congress is in effect or
if a joint resolution pursuant to section 258 of the
Balanced Budget and Emergency Deficit Control Act of
1985 has been enacted.
``(c) Maximum Deficit Amount Point of Order in the
Senate.--It shall not be in order in the Senate to consider any
concurrent resolution on the budget for a fiscal year, or to
consider any amendment to that concurrent resolution, or to
consider a conference report on that concurrent resolution,
if--
``(1) the level of total outlays for the first
fiscal year set forth in that concurrent resolution or
conference report exceeds; or
``(2) the adoption of that amendment would result
in a level of total outlays for that fiscal year that
exceeds;
the recommended level of Federal revenues for that fiscal year,
by an amount that is greater than the maximum deficit amount,
if any, specified in the Balanced Budget and Emergency Deficit
Control Act of 1985 for that fiscal year.
``(d) Timing of Points of Order in the Senate.--A point of
order under this Act may not be raised against a bill,
resolution, amendment, motion, or conference report while an
amendment or motion, the adoption of which would remedy the
violation of this Act, is pending before the Senate.
``(e) Points of Order in the Senate Against Amendments
Between the Houses.--Each provision of this Act that
establishes a point of order against an amendment also
establishes a point of order in the Senate against an amendment
between the Houses. If a point of order under this Act is
raised in the Senate against an amendment between the Houses
and the point of order is sustained, the effect shall be the
same as if the Senate had disagreed to the amendment.
``(f) Effect of a Point of Order in the Senate.--In the
Senate, if a point of order under this Act against a bill or
resolution is sustained, the Presiding Officer shall then
recommit the bill or resolution to the committee of appropriate
jurisdiction for further consideration.''.
(b) Technical and Conforming Amendments.--
(1) In general.--Section 313 of the Congressional
Budget Act of 1974 is amended--
(A) by striking ``(c) When'' and inserting
``(d) Conference Reports.--When''; and
(B) by striking subsection (e) and
redesignating subsection (d) as subsection (e).
(2) Table of contents.--The item relating to
section 312 in the table of contents set forth in
section 1(b) of the Congressional Budget and
Impoundment Control Act of 1974 is amended by striking
``Effect of points'' and inserting ``Determinations and
points''.
SEC. 10114. ADJUSTMENTS.
(a) In General.--Title III of the Congressional Budget Act
of 1974 is amended by adding at the end the following new
section:
``adjustments
``Sec. 314. (a) Adjustments.--
``(1) In general.--After the reporting of a bill or
joint resolution, the offering of an amendment thereto,
or the submission of a conference report thereon, the
chairman of the Committee on the Budget of the House of
Representatives or the Senate shall make the
adjustments set forth in paragraph (2) for the amount
of new budget authority in that measure (if that
measure meets the requirements set forth in subsection
(b)) and the outlays flowing from that budget
authority.
``(2) Matters to be adjusted.--The adjustments
referred to in paragraph (1) are to be made to--
``(A) the discretionary spending limits, if
any, set forth in the appropriate concurrent
resolution on the budget;
``(B) the allocations made pursuant to the
appropriate concurrent resolution on the budget
pursuant to section 302(a); and
``(C) the budgetary aggregates as set forth
in the appropriate concurrent resolution on the
budget.
``(b) Amounts of Adjustments.--The adjustment referred to
in subsection (a) shall be--
``(1) an amount provided and designated as an
emergency requirement pursuant to section 251(b)(2)(A)
or 252(e) of the Balanced Budget and Emergency Deficit
Control Act of 1985;
``(2) an amount provided for continuing disability
reviews subject to the limitations in section
251(b)(2)(C) of that Act;
``(3) for any fiscal year through 2002, an amount
provided that is the dollar equivalent of the Special
Drawing Rights with respect to--
``(A) an increase in the United States
quota as part of the International Monetary
Fund Eleventh General Review of Quotas (United
States Quota); or
``(B) any increase in the maximum amount
available to the Secretary of the Treasury
pursuant to section 17 of the Bretton Woods
Agreements Act, as amended from time to time
(New Arrangements to Borrow);
``(4) an amount provided not to exceed
$1,884,000,000 for the period of fiscal years 1998
through 2000 for arrearages for international
organizations, international peacekeeping, and
multilateral development banks; or
``(5) an amount provided for an earned income tax
credit compliance initiative but not to exceed--
``(A) with respect to fiscal year 1998,
$138,000,000 in new budget authority;
``(B) with respect to fiscal year 1999,
$143,000,000 in new budget authority;
``(C) with respect to fiscal year 2000,
$144,000,000 in new budget authority;
``(D) with respect to fiscal year 2001,
$145,000,000 in new budget authority; and
``(E) with respect to fiscal year 2002,
$146,000,000 in new budget authority.
``(c) Application of Adjustments.--The adjustments made
pursuant to subsection (a) for legislation shall--
``(1) apply while that legislation is under
consideration;
``(2) take effect upon the enactment of that
legislation; and
``(3) be published in the Congressional Record as
soon as practicable.
``(d) Reporting Revised Suballocations.--Following any
adjustment made under subsection (a), the Committees on
Appropriations of the Senate and the House of Representatives
may report appropriately revised suballocations under section
302(b) to carry out this section.
``(e) Definitions for CDRs.--As used in subsection (b)(2)--
``(1) the term `continuing disability reviews'
shall have the same meaning as provided in section
251(b)(2)(C)(ii) of the Balanced Budget and Emergency
Deficit Control Act of 1985; and
``(2) the term `new budget authority' shall have
the same meaning as the term `additional new budget
authority' and the term `outlays' shall have the same
meaning as `additional outlays' in that section.''.
(b) Table of Contents.--The table of contents set forth in
section 1(b) of the Congressional Budget and Impoundment
Control Act of 1974 is amended by adding after the item
relating to section 313 the following new item:
``Sec. 314. Adjustments.''.
SEC. 10115. EFFECT OF ADOPTION OF A SPECIAL ORDER OF BUSINESS IN THE
HOUSE OF REPRESENTATIVES.
(a) Effect of Points of Order.--Title III of the
Congressional Budget Act of 1974 is amended by adding after
section 314 the following new section:
``effect of adoption of a special order of business in the house of
representatives
``Sec. 315. For purposes of a reported bill or joint
resolution considered in the House of Representatives pursuant
to a special order of business, the term `as reported' in this
title or title IV shall be considered to refer to the text made
in order as an original bill or joint resolution for the
purpose of amendment or to the text on which the previous
question is ordered directly to passage, as the case may be.''.
(b) Conforming Amendment.--The table of contents set forth
in section 1(b) of the Congressional Budget and Impoundment
Control Act of 1974 is amended by adding after the item
relating to section 314 the following new item:
``Sec. 315. Effect of adoption of a special order of business in the
House of Representatives.''.
SEC. 10116. AMENDMENT TO SECTION 401 AND REPEAL OF SECTION 402.
(a) Section 401.--
(1) Controls.--Section 401 of the Congressional
Budget Act of 1974 is amended by--
(A) striking the heading and inserting the
following:
``budget-related legislation not subject to appropriations'';
and
(B) striking subsection (a) and inserting
the following:
``(a) Controls on Certain Budget-related Legislation Not
Subject to Appropriations.--It shall not be in order in either
the House of Representatives or the Senate to consider any bill
or joint resolution (in the House of Representatives only, as
reported), amendment, motion, or conference report that
provides--
``(1) new authority to enter into contracts under
which the United States is obligated to make outlays;
``(2) new authority to incur indebtedness (other
than indebtedness incurred under chapter 31 of title 31
of the United States Code) for the repayment of which
the United States is liable; or
``(3) new credit authority;
unless that bill, joint resolution, amendment, motion, or
conference report also provides that the new authority is to be
effective for any fiscal year only to the extent or in the
amounts provided in advance in appropriation Acts.''.
(2) Point of order.--Section 401(b) of the
Congressional Budget Act of 1974 is amended--
(A) by inserting ``new'' before
``entitlement'' in the heading;
(B) by striking paragraph (1) and inserting
the following:
``(1) Point of order.--It shall not be in order in
either the House of Representatives or the Senate to
consider any bill or joint resolution (in the House of
Representatives only, as reported), amendment, motion,
or conference report that provides new entitlement
authority that is to become effective during the
current fiscal year.''; and
(C) in paragraph (2)--
(i) by striking ``new spending
authority described in subsection
(c)(2)(C)'' and inserting ``new
entitlement authority''; and
(ii) by striking ``of that House''
and inserting ``of the Senate or may
then be referred to the Committee on
Appropriations of the House, as the
case may be,''.
(3) Definitions.--Section 401 of the Congressional
Budget Act of 1974 is amended by striking subsection
(c).
(4) Exceptions.--Section 401(d) of the
Congressional Budget Act of 1974 is amended--
(A) in paragraph (1), by striking ``new
spending authority if the budget authority for
outlays which result from such new spending
authority is derived'' and inserting ``new
authority described in those subsections if
outlays from that new authority will flow'';
(B) by striking paragraph (2) and
redesignating paragraph (3) as paragraph (2);
and
(C) in paragraph (2), as redesignated, by
striking ``new spending authority'' and
inserting ``new authority described in those
subsections''.
(5) Redesignation.--Subsection (d) of section 401
of the Congressional Budget Act of 1974 is redesignated
as subsection (c).
(6) Conforming Amendments.--(A) Clause 1(b)(4) of
rule X of the Rules of the House of Representatives is
amended to read as follows:
``(4) The amount of new authority to enter into
contracts under which the United States is obligated to
make outlays, the budget authority for which is not
provided in advance by appropriation Acts; new
authority to incur indebtedness (other than
indebtedness incurred under chapter 31 of title 31 of
the United States Code) for the repayment of which the
United States is liable, the budget authority for which
is not provided in advance by appropriation Acts; new
entitlement authority as defined in section 3(9) of the
Congressional Budget Act of 1974, including bills and
resolutions (reported by other committees) which
provide new entitlement authority as defined in section
3(9) of the Congressional Budget Act of 1974 and are
referred to the committee under clause 4(a); authority
to forego the collection by theUnited States of
proprietary offsetting receipts, the budget authority for which is not
provided in advance by appropriation Acts to offset such foregone
receipts; and authority to make payments by the United States
(including loans, grants, and payments from revolving funds) other than
those covered by this subparagraph, the budget authority for which is
not provided in advance by appropriation Acts.''.
(B) Clause 4(a)(2) of rule X of the Rules of the
House of Representatives is amended by striking ``new
spending authority described in section 401(c)(2)(C)''
and inserting ``new entitlement authority as defined in
section 3(9)'' and by striking ``total amount of new
spending authority'' and inserting ``total amount of
new entitlement authority''.
(C) Clause 2(l)(3) of rule XI of the Rules of the
House of Representatives is amended by striking ``new
spending authority as described in section 401(c)(2)''
and by inserting ``new entitlement authority as defined
in section 3(9)''.
(b) Repealer of Section 402.--Section 402 of the
Congressional Budget Act of 1974 is repealed.
(c) Conforming Amendments.--
(1) Redesignation.--Sections 403 through 407 of the
Congressional Budget Act of 1974 are redesignated as
sections 402 through 406, respectively.
(2) GAO analysis.--Section 404 (as redesignated) of
the Congressional Budget Act of 1974 is amended by
striking ``spending authority as described by section
401(c)(2) and which provide permanent appropriations,''
and inserting ``mandatory spending''.
(3) Table of contents.--The table of contents set
forth in section 1(b) of the Congressional Budget and
Impoundment Control Act of 1974 is amended by--
(A) striking the item for section 401 and
inserting the following:
``Sec. 401. Budget-related legislation not subject to appropriations.'';
and
(B) striking the item relating to section
402 and redesignating the items relating to
sections 403 through 407 as the items relating
to sections 402 through 406, respectively.
(4) Conforming amendments.--(A) Clause 2(l)(3) of
rule XI of the Rules of the House of Representatives is
amended by striking ``section 403'' and inserting
``section 402''.
(B) Clause 7(d) of rule XIII of the Rules of the
House of Representatives is amended by striking
``section 403'' and inserting ``section 402''.
SEC. 10117. AMENDMENTS TO TITLE V.
(a) Section 502.--Section 502 of the Federal Credit Reform
Act of 1990 is amended as follows:
(1) In the second sentence of paragraph (1), insert
``and financing arrangements that defer payment for
more than 90 days, including the sale of a government
asset on credit terms'' before the period.
(2) In paragraph (5)(A), insert ``or modification
thereof'' before the first comma.
(3) In paragraph (5), strike subparagraphs (B) and
(C) and insert the following:
``(B) The cost of a direct loan shall be the net
present value, at the time when the direct loan is
disbursed, of the following estimated cash flows:
``(i) loan disbursements;
``(ii) repayments of principal; and
``(iii) payments of interest and other
payments by or to the Government over the life
of the loan after adjusting for estimated
defaults, prepayments, fees, penalties, and
other recoveries;including the effects of
changes in loan terms resulting from the exercise by the borrower of an
option included in the loan contract.
``(C) The cost of a loan guarantee shall be the net
present value, at the time when the guaranteed loan is
disbursed, of the following estimated cash flows:
``(i) payments by the Government to cover
defaults and delinquencies, interest subsidies,
or other payments; and
``(ii) payments to the Government including
origination and other fees, penalties and
recoveries;
including the effects of changes in loan terms
resulting from the exercise by the guaranteed lender of
an option included in the loan guarantee contract, or
by the borrower of an option included in the guaranteed
loan contract.''.
(4) In paragraph (5), amend subparagraph (D) to
read as follows:
``(D) The cost of a modification is the difference
between the current estimate of the net present value
of the remaining cash flows under the terms of a direct
loan or loan guarantee contract, and the current
estimate of the net present value of the remaining cash
flows under the terms of the contract, as modified.''.
(5) In paragraph (5)(E), insert ``the cash flows
of'' after ``to''.
(6) In paragraph (5), by adding at the end the
following:
``(F) When funds are obligated for a direct loan or
loan guarantee, the estimated cost shall be based on
the current assumptions, adjusted to incorporate the
terms of the loan contract, for the fiscal year in
which the funds are obligated.''.
(7) Redesignate paragraph (9) as paragraph (11) and
after paragraph (8) add the following new paragraphs:
``(9) The term `modification' means any Government
action that alters the estimated cost of an outstanding
direct loan (or direct loan obligation) or an
outstanding loan guarantee (or loan guarantee
commitment) from the current estimate of cash flows.
This includes the sale of loan assets, with or without
recourse, and the purchase of guaranteed loans. This
also includes any action resulting from new
legislation, or from the exercise of administrative
discretion under existing law, that directly or
indirectly alters the estimated cost of outstanding
direct loans (or direct loan obligations) or loan
guarantees (or loan guarantee commitments) such as a
change in collection procedures.
``(10) The term `current' has the same meaning as
in section 250(c)(9) of the Balanced Budget and
Emergency Deficit Control Act of 1985.''.
(b) Section 504.--Section 504 of the Federal Credit Reform
Act of 1990 is amended as follows:
(1) Amend subsection (b)(1) to read as follows:
``(1) new budget authority to cover their costs is
provided in advance in an appropriations Act;''.
(2) In subsection (b)(2), strike ``is enacted'' and
insert ``has been provided in advance in an
appropriations Act''.
(3) In subsection (c), strike ``Subsection (b)''
and insert ``Subsections (b) and (e)''.
(4) In subsection (d)(1), strike ``directly or
indirectly alter the costs of outstanding direct loans
and loan guarantees'' and insert ``modify outstanding
direct loans (or direct loan obligations) or loan
guarantees (or loan guarantee commitments)''.
(5) Amend subsection (e) to read as follows:
``(e) Modifications.--An outstanding direct loan (or direct
loan obligation) or loan guarantee (or loan guarantee
commitment) shall not be modified in a manner thatincreases its
costs unless budget authority for the additional cost has been provided
in advance in an appropriations Act.''.
(c) Section 505.--Section 505 of the Federal Credit Reform
Act of 1990 is amended as follows:
(1) In subsection (c), by inserting before the
period at the end of the second sentence the following:
``, except that the rate of interest charged by the
Secretary on lending to financing accounts (including
amounts treated as lending to financing accounts by the
Federal Financing Bank (hereinafter in this subsection
referred to as the `Bank') pursuant to section 406(b))
and the rate of interest paid to financing accounts on
uninvested balances in financing accounts shall be the
same as the rate determined pursuant to section
502(5)(E). For guaranteed loans financed by the Bank
and treated as direct loans by a Federal agency
pursuant to section 406(b), any fee or interest
surcharge (the amount by which the interest rate
charged exceeds the rate determined pursuant to section
502(5)(E)) that the Bank charges to a private borrower
pursuant to section 6(c) of the Federal Financing Bank
Act of 1973 shall be considered a cash flow to the
Government for the purposes of determining the cost of
the direct loan pursuant to section 502(5). All such
amounts shall be credited to the appropriate financing
account. The Bank is authorized to require
reimbursement from a Federal agency to cover the
administrative expenses of the Bank that are
attributable to the direct loans financed for that
agency. All such payments by an agency shall be
considered administrative expenses subject to section
504(g). This subsection shall apply to transactions
related to direct loan obligations or loan guarantee
commitments made on or after October 1, 1991''.
(2) In subsection (c), by striking ``supercede''
and inserting ``supersede''.
(3) By amending subsection (d) to read as follows:
``(d) Authorization for Liquidating Accounts.--(1) Amounts
in liquidating accounts shall be available only for payments
resulting from direct loan obligations or loan guarantee
commitments made prior to October 1, 1991, for--
``(A) interest payments and principal repayments to
the Treasury or the Federal Financing Bank for amounts
borrowed;
``(B) disbursements of loans;
``(C) default and other guarantee claim payments;
``(D) interest supplement payments;
``(E) payments for the costs of foreclosing,
managing, and selling collateral that are capitalized
or routinely deducted from the proceeds of sales;
``(F) payments to financing accounts when required
for modifications;
``(G) administrative expenses, if--
``(i) amounts credited to the liquidating
account would have been available for
administrative expenses under a provision of
law in effect prior to October 1, 1991; and
``(ii) no direct loan obligation or loan
guarantee commitment has been made, or any
modification of a direct loan or loan guarantee
has been made, since September 30, 1991; or
``(H) such other payments as are necessary for the
liquidation of such direct loan obligations and loan
guarantee commitments.
``(2) Amounts credited to liquidating accounts in any year
shall be available only for payments required in that year. Any
unobligated balances in liquidating accounts at the end of a
fiscal year shall be transferred to miscellaneousreceipts as
soon as practicable after the end of the fiscal year.
``(3) If funds in liquidating accounts are insufficient
to satisfy obligations and commitments of such accounts, there
is hereby provided permanent, indefinite authority to make any
payments required to be made on such obligations and
commitments.''.
(d) Section 506.--Section 506 of the Federal Credit Reform
Act of 1990 is amended--
(1) by striking ``(a) In General.--'';
(2) by striking ``(1)'' and inserting the
following:
``(a) In General.--'';
(3) by striking ``(2) The'' and inserting the
following:
``(b) Study.--The'';
(4) by striking ``(3)'' and inserting the
following:
``(c) Access to Data.--''; and
(5) in subsection (c) (as redesignated) by striking
``paragraph (2)'' and inserting ``subsection (b)''.
SEC. 10118. REPEAL OF TITLE VI.
(a) Repealer.--Title VI of the Congressional Budget Act of
1974 is repealed.
(b) Conforming Amendments.--(1) The items relating to title
VI of the table of contents set forth in section 1(b) of the
Congressional Budget and Impoundment Control Act of 1974 are
repealed.
(2) Clause 4(h) of rule X of the Rules of the House of
Representatives is amended by striking ``section 302 or section
602 (in the case of fiscal years 1991 through 1995)'' and
inserting ``section 302''.
SEC. 10119. AMENDMENTS TO SECTION 904.
(a) Conforming Amendment.--Section 904(a) of the
Congressional Budget Act of 1974 is amended by striking
``(except section 905)'' and by striking ``V, and VI (except
section 601(a))'' and inserting ``and V''.
(b) Waivers.--Section 904(c) of the Congressional Budget
Act of 1974 is amended to read as follows:
``(c) Waivers.--
``(1) Permanent.--Sections 305(b)(2), 305(c)(4),
306, 310(d)(2), 313, 904(c), and 904(d) of this Act may
be waived or suspended in the Senate only by the
affirmative vote of three-fifths of the Members, duly
chosen and sworn.
``(2) Temporary.--Sections 301(i), 302(c), 302(f),
310(g), 311(a), 312(b), and 312(c) of this Act and
sections 258(a)(4)(C), 258A(b)(3)(C)(I), 258B(f)(1),
258B(h)(1), 258(h)(3), 258C(a)(5), and 258C(b)(1) of
the Balanced Budget and Emergency Deficit Control Act
of 1985 may be waived or suspended in the Senate only
by the affirmative vote of three-fifths of the Members,
duly chosen and sworn.''.
(c) Appeals.--Section 904(d) of the Congressional Budget
Act of 1974 is amended to read as follows:
``(d) Appeals.--
``(1) Procedure.--Appeals in the Senate from the
decisions of the Chair relating to any provision of
title III or IV or section 1017 shall, except as
otherwise provided therein, be limited to 1 hour, to be
equally divided between, and controlled by, the mover
and the manager of the resolution, concurrent
resolution, reconciliation bill, or rescission bill, as
the case may be.
``(2) Permanent.--An affirmative vote of three-
fifths of the Members, duly chosen and sworn, shall be
required in the Senate to sustain an appeal of the
ruling of the Chair on a point of order raised under
sections 305(b)(2), 305(c)(4), 306, 310(d)(2), 313,
904(c), and 904(d) of this Act.
``(3) Temporary.--An affirmative vote of three-
fifths of the Members, duly chosen and sworn, shall be
required in the Senate to sustain an appealof the
ruling of the Chair on a point of order raised under sections 301(i),
302(c), 302(f), 310(g), 311(a), 312(b), and 312(c) of this Act and
sections 258(a)(4)(C), 258A(b)(3)(C)(I), 258B(f)(1), 258B(h)(1),
258(h)(3), 258C(a)(5), and 258C(b)(1) of the Balanced Budget and
Emergency Deficit Control Act of 1985.''.
(d) Expiration of Supermajority Voting Requirements.--
Section 904 of the Congressional Budget Act of 1974 is amended
by adding at the end the following:
``(e) Expiration of Certain Supermajority Voting
Requirements.--Subsections (c)(2) and (d)(3) shall expire on
September 30, 2002.''.
SEC. 10120. REPEAL OF SECTIONS 905 AND 906.
(a) Repealer.--Sections 905 and 906 of the Congressional
Budget Act of 1974 are repealed.
(b) Conforming Amendments.--The table of contents set forth
in section 1(b) of the Congressional Budget and Impoundment
Control Act of 1974 is amended by striking the items relating
to sections 905 and 906.
SEC. 10121. AMENDMENTS TO SECTIONS 1022 AND 1024.
(a) Section 1022.--Section 1022(b)(1)(F) of the
Congressional Budget and Impoundment Control Act of 1974 is
amended by striking ``section 601'' and inserting ``section
251(c) of the Balanced Budget and Emergency Deficit Control Act
of 1985''.
(b) Section 1024.--Section 1024(a)(1)(B) of the
Congressional Budget and Impoundment Control Act of 1974 is
amended by striking ``section 601(a)(2)'' and inserting
``section 251(c) of the Balanced Budget and Emergency Deficit
Control Act of 1985''.
SEC. 10122. AMENDMENT TO SECTION 1026.
Section 1026(7)(A)(iv) of the Congressional Budget and
Impoundment Control Act of 1974 is amended by striking ``;
and'' and inserting ``; or''.
SEC. 10123. SENATE TASK FORCE ON CONSIDERATION OF BUDGET MEASURES.
(a) Appointment of Members.--The Majority Leader and
Minority Leader of the Senate shall each appoint 3 Senators to
serve on a bipartisan task force to study the floor procedures
for the consideration of budget resolutions and reconciliation
bills in the Senate as provided in sections 305(b) and 310(e)
of the Congressional Budget Act of 1974.
(b) Report of the Task Force.--The task force shall submit
its report to the Senate not later than October 8, 1997.
Subtitle B--Amendments to the Balanced Budget and Emergency Deficit
Control Act of 1985
SEC. 10201. PURPOSE.
The purpose of this subtitle is to extend discretionary
spending limits and pay-as-you-go requirements.
SEC. 10202. GENERAL STATEMENT AND DEFINITIONS.
(a) General Statement.--Section 250(b) of the Balanced
Budget and Emergency Deficit Control Act of 1985 is amended by
striking the first 2 sentences and inserting the following:
``This part provides for budget enforcement as called for in
House Concurrent Resolution 84 (105th Congress, 1st
session).''.
(b) Definitions.--Section 250(c) of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended--
(1) in paragraph (1)--
(A) by striking ``(but including'' through
``amount' ''; and
(B) by striking ``section 601 of that Act
as adjusted under sections 251 and 253'' and
inserting ``section 251'';
(2) by striking paragraph (4) and inserting the
following:
``(4) The term `category' means the subsets of
discretionary appropriations in section 251(c).
Discretionary appropriations in each of the categories
shall be those designated in the joint explanatory
statement accompanying the conference report on the
Balanced Budget Act of 1997. New accounts or activities
shall be categorized only after consultation with the
committees on Appropriations and the Budget of the
House of Representatives and the Senate and that
consultation shall, to the extent practicable, include
written communication to such committees that affords
such committees the opportunity to comment before
official action is taken with respect to new accounts
or activities.'';
(3) by striking paragraph (6) and inserting the
following:
``(6) The term `budgetary resources' means new
budget authority, unobligated balances, direct spending
authority, and obligation limitations.'';
(4) in paragraph (9), by striking ``submission of
the fiscal year 1992 budget that are not included with
a budget submission'' and inserting ``that budget
submission that are not included with it'';
(5) in paragraph (14), by inserting ``first 4''
before ``fiscal years'' and by striking ``through
fiscal year 1995'';
(6) by striking paragraphs (17) and (20) and by
redesignating paragraphs (18), (19), and (21) as
paragraphs (17), (18), and (19), respectively;
(7) in paragraph (17) (as redesignated), by
striking ``Omnibus Budget Reconciliation Act of 1990''
and inserting ``Balanced Budget Act of 1997'';
(8) in paragraph (18) (as redesignated), by
striking all after ``expenses'' and inserting ``the
Federal deposit insurance agencies, and other Federal
agencies supervising insured depository institutions,
resulting from full funding of, and continuation of,
the deposit insurance guarantee commitment in effect
under current estimates.''; and
(9) by striking paragraph (19) (as redesignated)
and inserting the following:
``(19) The term `asset sale' means the sale to the
public of any asset (except for those assets covered by
title V of the Congressional Budget Act of 1974),
whether physical or financial, owned in whole or in
part by the United States.''.
SEC. 10203. ENFORCING DISCRETIONARY SPENDING LIMITS.
(a) Extension Through Fiscal Year 2002.--Section 251 of the
Balanced Budget and Emergency Deficit Control Act of 1985 is
amended--
(1) in the heading of subsection (a), by striking
``Fiscal Years 1991-1998'';
(2) in subsection (a)(3), by striking ``(h)'' both
places it appears and inserting ``(f)'';
(3) by striking subsection (a)(7) and inserting the
following:
``(7) Estimates.--
``(A) CBO estimates.--As soon as
practicable after Congress completes action on
any discretionary appropriation, CBO, after
consultation with the Committees on the Budget
of the House of Representatives and the Senate,
shall provide OMB with an estimate of the
amount of discretionary new budget authority
and outlays for the current year (if any) and
the budget year provided by that legislation.
``(B) OMB estimates and explanation of
differences.--Not later than 7 calendar days
(excluding Saturdays, Sundays, and legal
holidays) after the date of enactment of any
discretionary appropriation, OMB shall
transmita report to the House of Representatives and to the Senate
containing the CBO estimate of that legislation, an OMB estimate of the
amount of discretionary new budget authority and outlays for the
current year (if any) and the budget year provided by that legislation,
and an explanation of any difference between the 2 estimates. If during
the preparation of the report OMB determines that there is a
significant difference between OMB and CBO, OMB shall consult with the
Committees on the Budget of the House of Representatives and the Senate
regarding that difference and that consultation shall include, to
extent practicable, written communication to those committees that
affords such committees the opportunity to comment before the issuance
of the report.
``(C) Assumptions and guidelines.--OMB
estimates under this paragraph shall be made
using current economic and technical
assumptions. OMB shall use the OMB estimates
transmitted to the Congress under this
paragraph. OMB and CBO shall prepare estimates
under this paragraph in conformance with
scorekeeping guidelines determined after
consultation among the House and Senate
Committees on the Budget, CBO, and OMB.
``(D) Annual appropriations.--For purposes
of this paragraph, amounts provided by annual
appropriations shall include any new budget
authority and outlays for the current year (if
any) and the budget year in accounts for which
funding is provided in that legislation that
result from previously enacted legislation.'';
(4) by striking subsection (b) and inserting the
following:
``(b) Adjustments to Discretionary Spending Limits.--
``(1) Preview report.--When the President submits
the budget under section 1105 of title 31, United
States Code, OMB shall calculate and the budget shall
include adjustments to discretionary spending limits
(and those limits as cumulatively adjusted) for the
budget year and each outyear to reflect changes in
concepts and definitions. Such changes shall equal the
baseline levels of new budget authority and outlays
using up-to-date concepts and definitions minus those
levels using the concepts and definitions in effect
before such changes. Such changes may only be made
after consultation with the committees on
Appropriations and the Budget of the House of
Representatives and the Senate and that consultation
shall include written communication to such committees
that affords such committees the opportunity to comment
before official action is taken with respect to such
changes.
``(2) Sequestration reports.--When OMB submits a
sequestration report under section 254(e), (f), or (g)
for a fiscal year, OMB shall calculate, and the
sequestration report and subsequent budgets submitted
by the President under section 1105(a) of title 31,
United States Code, shall include adjustments to
discretionary spending limits (and those limits as
adjusted) for the fiscal year and each succeeding year
through 2002, as follows:
``(A) Emergency appropriations.--If, for
any fiscal year, appropriations for
discretionary accounts are enacted that the
President designates as emergency requirements
and that the Congress so designates in statute,
the adjustment shall be the total of such
appropriations in discretionary accounts
designated as emergency requirements and the
outlays flowing in all fiscal years from such
appropriations. This subparagraph shall not
apply to appropriations to cover agricultural
crop disaster assistance.
``(B) Special outlay allowance.--If, in any
fiscal year, outlays for a category exceed the
discretionary spending limit for that category
but new budget authority does not exceed its
limit for that category (after application of
the first step of a sequestration described in
subsection (a)(2), if necessary), the
adjustment in outlays for a fiscal year is the
amount of the excess but not to exceed 0.5
percent of the sum of the adjusted
discretionary spending limits on outlays for
that fiscal year.
``(C) Continuing disability reviews.--(i)
If a bill or joint resolution making
appropriations for a fiscal year is enacted
that specifies an amount for continuing
disability reviews under the heading
`Limitation on Administrative Expenses' for the
Social Security Administration, the adjustments
for that fiscal year shall be the additional
new budget authority provided in that Act for
such reviews for that fiscal year and the
additional outlays flowing from such amounts,
but shall not exceed--
``(I) for fiscal year 1998,
$290,000,000 in additional new budget
authority and $338,000,000 in
additional outlays;
``(II) for fiscal year 1999,
$520,000,000 in additional new budget
authority and $520,000,000 in
additional outlays;
``(III) for fiscal year 2000,
$520,000,000 in additional new budget
authority and $520,000,000 in
additional outlays;
``(IV) for fiscal year 2001,
$520,000,000 in additional new budget
authority and $520,000,000 in
additional outlays; and
``(V) for fiscal year 2002,
$520,000,000 in additional new budget
authority and $520,000,000 in
additional outlays.
``(ii) As used in this subparagraph--
``(I) the term `continuing
disability reviews' means reviews or
redeterminations as defined under
section 201(g)(1)(A) of the Social
Security Act and reviews and
redeterminations authorized under
section 211 of the Personal
Responsibility and Work Opportunity
Reconciliation Act of 1996;
``(II) the term `additional new
budget authority' means the amount
provided for a fiscal year, in excess
of $200,000,000, in an appropriations
Act and specified to pay for the costs
of continuing disability reviews under
the heading `Limitation on
Administrative Expenses' for the Social
Security Administration; and
``(III) the term `additional
outlays' means outlays, in excess of
$200,000,000 in a fiscal year, flowing
from the amounts specified for
continuing disability reviews under the
heading `Limitation on Administrative
Expenses' for the Social Security
Administration, including outlays in
that fiscal year flowing from amounts
specified in Acts enacted for prior
fiscal years (but not before 1996).
``(D) Allowance for imf.--If an
appropriation bill or joint resolution is
enacted for a fiscal year through 2002 that
includes an appropriation with respect to
clause (i) or (ii), the adjustment shall be the
amount of budget authority in the measure that
is the dollar equivalent of the Special Drawing
Rights with respect to--
``(i) an increase in the United
States quota as part of the
International Monetary Fund Eleventh
General Review of Quotas (United States
Quota); or
``(ii) any increase in the maximum
amount available to the Secretary of
the Treasury pursuant to section 17 of
the Bretton Woods Agreements Act, as
amended from time to time (New
Arrangements to Borrow).
``(E) Allowance for international
arrearages.--
``(i) Adjustments.--If an
appropriation bill or joint resolution
is enacted for fiscal year 1998, 1999,
or 2000 that includes an appropriation
for arrearages for international
organizations, international
peacekeeping, and multilateral
development banks for that fiscal year,
the adjustment shall be the amount of
budget authority inthat measure and the
outlays flowing in all fiscal years from that budget authority.
``(ii) Limitations.--The total
amount of adjustments made pursuant to
this subparagraph for the period of
fiscal years 1998 through 2000 shall
not exceed $1,884,000,000 in budget
authority.
``(F) EITC compliance initiative.--If an
appropriation bill or joint resolution is
enacted for a fiscal year that includes an
appropriation for an earned income tax credit
compliance initiative, the adjustment shall be
the amount of budget authority in that measure
for that initiative and the outlays flowing in
all fiscal years from that budget authority,
but not to exceed--
``(i) with respect to fiscal year
1998, $138,000,000 in new budget
authority and $131,000,000 in outlays;
``(ii) with respect to fiscal year
1999, $143,000,000 in new budget
authority and $143,000,000 in outlays;
``(iii) with respect to fiscal year
2000, $144,000,000 in new budget
authority and $144,000,000 in outlays;
``(iv) with respect to fiscal year
2001, $145,000,000 in new budget
authority and $145,000,000 in outlays;
and
``(v) with respect to fiscal year
2002, $146,000,000 in new budget
authority and $146,000,000 in
outlays.''.
(b) Shifting of Discretionary Spending Limits Into the
Balanced Budget and Emergency Deficit Control Act of 1985.--
Section 251 of the Balanced Budget and Emergency Deficit
Control Act of 1985 is amended by adding at the end the
following new subsection:
``(c) Discretionary Spending Limit.--As used in this part,
the term `discretionary spending limit' means--
``(1) with respect to fiscal year 1997, for the
discretionary category, the current adjusted limits of
new budget authority and outlays;
``(2) with respect to fiscal year 1998--
``(A) for the defense category:
$269,000,000,000 in new budget authority and
$266,823,000,000 in outlays;
``(B) for the nondefense category:
$252,357,000,000 in new budget authority and
$282,853,000,000 in outlays; and
``(C) for the violent crime reduction
category: $5,500,000,000 in new budget
authority and $3,592,000,000 in outlays;
``(3) with respect to fiscal year 1999--
``(A) for the defense category:
$271,500,000,000 in new budget authority and
$266,518,000,000 in outlays;
``(B) for the nondefense category:
$255,699,000,000 in new budget authority and
$287,850,000,000 in outlays; and
``(C) for the violent crime reduction
category: $5,800,000,000 in new budget
authority and $4,953,000,000 in outlays;
``(4) with respect to fiscal year 2000--
``(A) for the discretionary category:
$532,693,000,000 in new budget authority and
$558,711,000,000 in outlays; and
``(B) for the violent crime reduction
category: $4,500,000,000 in new budget
authority and $5,554,000,000 in outlays;
``(5) with respect to fiscal year 2001, for the
discretionary category: $542,032,000,000 in new budget
authority and $564,396,000,000 in outlays; and
``(6) with respect to fiscal year 2002, for the
discretionary category: $551,074,000,000 in new budget
authority and $560,799,000,000 in outlays;
as adjusted in strict conformance with subsection (b).''.
(c) Repeal of Duplicative Provisions.--Sections 201, 202,
204(b), 206, and 211 of House Concurrent Resolution 84 (105th
Congress) are repealed.
SEC. 10204. VIOLENT CRIME REDUCTION SPENDING.
(a) Sequestration Regarding Violent Crime Reduction
Spending.--
(1) Repeal.--Section 251A of the Balanced Budget
and Emergency Deficit Control Act of 1985 is repealed.
(2) Table of contents.--The item relating to
section 251A in the table contents set forth in section
250(a) of the Balanced Budget and Emergency Deficit
Control Act of 1985 is repealed.
(b) Conforming Amendment.--Section 310002 of Public Law
103-322 (42 U.S.C. 14212) is repealed.
SEC. 10205. ENFORCING PAY-AS-YOU-GO.
Section 252 of the Balanced Budget and Emergency Deficit
Control Act of 1985 is amended--
(1) by striking subsections (a) and (b) and
inserting the following:
``(a) Purpose.--The purpose of this section is to assure
that any legislation enacted before October 1, 2002, affecting
direct spending or receipts that increases the deficit will
trigger an offsetting sequestration.
``(b) Sequestration.--
``(1) Timing.--Not later than 15 calendar days
after the date Congress adjourns to end a session and
on the same day as a sequestration (if any) under
section 251 or 253, there shall be a sequestration to
offset the amount of any net deficit increase caused by
all direct spending and receipts legislation enacted
before October 1, 2002, as calculated under paragraph
(2).
``(2) Calculation of deficit increase.--OMB shall
calculate the amount of deficit increase or decrease by
adding--
``(A) all OMB estimates for the budget year
of direct spending and receipts legislation
transmitted under subsection (d);
``(B) the estimated amount of savings in
direct spending programs applicable to budget
year resulting from the prior year's
sequestration under this section or section
253, if any, as published in OMB's final
sequestration report for that prior year; and
``(C) any net deficit increase or decrease
in the current year resulting from all OMB
estimates for the current year of direct
spending and receipts legislation transmitted
under subsection (d) that were not reflected in
the final OMB sequestration report for the
current year.'';
(2) by amending subsection (c)(1)(B), by inserting
``and direct'' after ``guaranteed'';
(3) by amending subsection (d) to read as follows:
``(d) Estimates.--
``(1) CBO estimates.--As soon as practicable after
Congress completes action on any direct spending or
receipts legislation, CBO shall provide an estimate to
OMB of that legislation.
``(2) OMB estimates.--Not later than 7 calendar
days (excluding Saturdays, Sundays, and legal holidays)
after the date of enactment of any direct spending or
receipts legislation, OMB shall transmit a report to
the House of Representatives and to the Senate
containing--
``(A) the CBO estimate of that legislation;
``(B) an OMB estimate of that legislation
using current economic and technical
assumptions; and
``(C) an explanation of any difference
between the 2 estimates.
``(3) Significant differences.--If during the
preparation of the report under paragraph (2) OMB
determines that there is a significant difference
between the OMB and CBO estimates, OMB shall consult
with the Committees on the Budget of the House of
Representatives and the Senate regarding that
difference and that consultation, to the extent
practicable, shall include written communication to
such committees that affords such committees the
opportunity to comment before the issuance of that
report.
``(4) Scope of estimates.--The estimates under this
section shall include the amount of change in outlays
or receipts for the current year (if applicable), the
budget year, and each outyear excluding any amounts
resulting from--
``(A) full funding of, and continuation of,
the deposit insurance guarantee commitment in
effect under current estimates; and
``(B) emergency provisions as designated
under subsection (e).
``(5) Scorekeeping guidelines.--OMB and CBO, after
consultation with each other and the Committees on the
Budget of the House of Representatives and the Senate,
shall--
``(A) determine common scorekeeping
guidelines; and
``(B) in conformance with such guidelines,
prepare estimates under this section.''; and
(4) in subsection (e), by striking ``, for any
fiscal year from 1991 through 1998,'' and by striking
``through 1995''.
SEC. 10206. REPORTS AND ORDERS.
Section 254 of the Balanced Budget and Emergency Deficit
Control Act of 1985 is amended--
(1) by striking subsection (c) and redesignating
subsections (d) through (k) as (c) through (j),
respectively;
(2) in subsection (c) (as redesignated), by
striking ``1998'' and inserting ``2002'';
(3) in subsection (d) (as redesignated), by
striking ``(h)'' and inserting ``(f)'';
(4)(A) in subsection (f)(2)(A) (as redesignated),
by striking ``1998'' and inserting ``2002'';
(B) in subsection (f)(3) (as redesignated), by
striking ``through 1998''; and
(C) by striking subsection (f)(4) (as redesignated)
and by redesignating paragraphs (5) and (6) of that
subsection as paragraphs (4) and (5), respectively; and
(5) in subsection (g) (as redesignated), by
striking ``(g)'' each place it appears and inserting
``(f)''.
SEC. 10207. EXEMPT PROGRAMS AND ACTIVITIES.
(a) Veterans Programs.--Section 255(b) of the Balanced
Budget and Emergency Deficit Control Act of 1985 is amended as
follows:
(1) In the item relating to Veterans Insurance and
Indemnity, strike ``Indemnity'' and insert
``Indemnities''.
(2) In the item relating to Veterans' Canteen
Service Revolving Fund, strike ``Veterans' ''.
(3) In the item relating to Benefits under chapter
21 of title 38, strike ``(36-0137-0-1-702)'' and insert
``(36-0120-0-1-701)''.
(4) In the item relating to Veterans' compensation,
strike ``Veterans' compensation'' and insert
``Compensation''.
(5) In the item relating to Veterans' pensions,
strike ``Veterans' pensions'' and insert ``Pensions''.
(6) After the last item, insert the following new
items:
``Benefits under chapter 35 of title 38, United
States Code, related to educational assistance for
survivors and dependents of certain veterans with
service-connected disabilities (36-0137-0-1-702);
``Assistance and services under chapter 31 of title
38, United States Code, relating to training and
rehabilitation for certain veterans with service-
connected disabilities (36-0137-0-1-702);
``Benefits under subchapters I, II, and III of
chapter 37 of title 38, United States Code, relating to
housing loans for certain veterans and for the spouses
and surviving spouses of certain veterans Guaranty and
Indemnity Program Account (36-1119-0-1-704);
``Loan Guaranty Program Account (36-1025-0-1-704);
and
``Direct Loan Program Account (36-1024-0-1-704).''.
(b) Certain Program Bases.--Section 255(f) of the Balanced
Budget and Emergency Deficit Control Act of 1985 is amended to
read as follows:
``(f) Optional Exemption of Military Personnel.--
``(1) In general.--The President may, with respect
to any military personnel account, exempt that account
from sequestration or provide for a lower uniform
percentage reduction than would otherwise apply.
``(2) Limitation.--The President may not use the
authority provided by paragraph (1) unless the
President notifies the Congress of the manner in which
such authority will be exercised on or before the date
specified in section 254(a) for the budget year.''.
(c) Other Programs and Activities.--(1) Section
255(g)(1)(A) of the Balanced Budget Emergency Deficit Control
Act of 1985 is amended as follows:
(A) After the first item, insert the following new
item:
``Activities financed by voluntary payments
to the Government for goods or services to be
provided for such payments;''.
(B) Strike ``Thrift Savings Fund (26-8141-0-7-
602);''.
(C) In the first item relating to the Bureau of
Indian Affairs, insert ``Indian land and water claims
settlements and'' after the comma.
(D) In the second item relating to the Bureau of
Indian Affairs, strike ``miscellaneous'' and insert
``Miscellaneous'' and strike ``, tribal trust funds''.
(E) Strike ``Claims, defense (97-0102-0-1-051);''.
(F) In the item relating to Claims, judgments, and
relief acts, strike ``806'' and insert ``808''.
(G) Strike ``Coinage profit fund (20-5811-0-2-
803);''.
(H) Insert ``Compact of Free Association (14-0415-
0-1-808);'' after the item relating to the Claims,
judgments, and relief acts.
(I) Insert ``Conservation Reserve Program (12-2319-
0-1-302);'' after the item relating to the Compensation
of the President.
(J) In the item relating to the Customs Service,
strike ``852'' and insert ``806''.
(K) In the item relating to the Comptroller of the
Currency, insert ``, Assessment funds (20-8413-0-8-
373)'' before the semicolon.
(L) Strike ``Director of the Office of Thrift
Supervision;''.
(M) Strike ``Eastern Indian land claims settlement
fund (14-2202-0-1-806);''.
(N) After the item relating to the Exchange
stabilization fund, insert the following new items:
``Farm Credit Administration, Limitation on
Administrative Expenses (78-4131-0-3-351);
``Farm Credit System Financial Assistance
Corporation, interest payment (20-1850-0-1-
908);''.
(O) Strike ``Federal Deposit Insurance
Corporation;''.
(P) In the first item relating to the Federal
Deposit Insurance Corporation, insert ``(51-4064-0-3-
373)'' before the semicolon.
(Q) In the second item relating to the Federal
Deposit Insurance Corporation, insert ``(51-4065-0-3-
373)'' before the semicolon.
(R) In the third item relating to the Federal
Deposit Insurance Corporation, insert ``(51-4066-0-3-
373)'' before the semicolon.
(S) In the item relating to the Federal Housing
Finance Board, insert ``(95-4039-0-3-371)'' before the
semicolon.
(T) In the item relating to the Federal payment to
the railroad retirement account, strike ``account'' and
insert ``accounts''.
(U) In the item relating to the health professions
graduate student loan insurance fund, insert ``program
account'' after ``fund'' and strike ``(Health Education
Assistance Loan Program) (75-4305-0-3-553)'' and insert
``(75-0340-0-1-552)''.
(V) In the item relating to Higher education
facilities, strike ``and insurance''.
(W) In the item relating to Internal Revenue
collections for Puerto Rico, strike ``852'' and insert
``806''.
(X) Amend the item relating to the Panama Canal
Commission to read as follows:
``Panama Canal Commission, Panama Canal
Revolving Fund (95-4061-0-3-403);''.
(Y) In the item relating to the Medical facilities
guarantee and loan fund, strike ``(75-4430-0-3-551)''
and insert ``(75-9931-0-3-550)''.
(Z) In the first item relating to the National
Credit Union Administration, insert ``operating fund
(25-4056-0-3-373)'' before the semicolon.
(AA) In the second item relating to the National
Credit Union Administration, strike ``central'' and
insert ``Central'' and insert ``(25-4470-0-3-373)''
before the semicolon.
(BB) In the third item relating to the National
Credit Union Administration, strike ``credit'' and
insert ``Credit'' and insert ``(25-4468-0-3-373)''
before the semicolon.
(CC) After the third item relating to the National
Credit Union Administration, insert the following new
item:
``Office of Thrift Supervision (20-4108-0-
3-373);''.
(DD) In the item relating to Payments to health
care trust funds, strike ``572'' and insert ``571''.
(EE) Strike ``Compact of Free Association, economic
assistance pursuant to Public Law 99-658 (14-0415-0-1-
806);''.
(FF) In the item relating to Payments to social
security trust funds, strike ``571'' and insert
``651''.
(GG) Strike ``Payments to state and local
government fiscal assistance trust fund (20-2111-0-1-
851);''.
(HH) In the item relating to Payments to the United
States territories, strike ``852'' and insert ``806''.
(II) Strike ``Resolution Funding Corporation;''.
(JJ) In the item relating to the Resolution Trust
Corporation, insert ``Revolving Fund (22-4055-0-3-
373)'' before the semicolon.
(KK) After the item relating to the Tennessee
Valley Authority funds, insert the following new items:
``Thrift Savings Fund;
``United States Enrichment Corporation (95-
4054-0-3-271);
``Vaccine Injury Compensation (75-0320-0-1-
551);
``Vaccine Injury Compensation Program Trust
Fund (20-8175-0-7-551);''.
(2) Section 255(g)(1)(B) of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended as follows:
(A) Strike ``The following budget'' and insert
``The following Federal retirement and disability''.
(B) In the item relating to Black lung benefits,
strike ``lung benefits'' and insert ``Lung Disability
Trust Fund''.
(C) In the item relating to the Court of Federal
Claims Court Judges' Retirement Fund, strike ``Court of
Federal''.
(D) In the item relating to Longshoremen's
compensation benefits, insert ``Special workers
compensation expenses,'' before ``Longshoremen's''.
(E) In the item relating to Railroad retirement
tier II, strike ``retirement tier II'' and insert
``Industry Pension Fund''.
(3) Section 255(g)(2) of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended as follows:
(A) Strike the following items:
``Agency for International Development,
Housing, and other credit guarantee programs
(72-4340-0-3-151);
``Agricultural credit insurance fund (12-
4140-0-1-351);''.
(B) In the item relating to Check forgery, strike
``Check'' and insert ``United States Treasury check''.
(C) Strike ``Community development grant loan
guarantees (86-0162-0-1-451);''.
(D) After the item relating to the United States
Treasury Check forgery insurance fund, insert the
following new item:
``Credit liquidating accounts;''.
(E) Strike the following items:
``Credit union share insurance fund (25-
4468-0-3-371);''.
``Economic development revolving fund (13-
4406-0-3-452);''.
``Export-Import Bank of the United States,
Limitation of program activity (83-4027-0-3-
155);''.
``Federal Deposit Insurance Corporation
(51-8419-0-8-371);''.
``Federal Housing Administration fund (86-
4070-0-3-371);''.
``Federal ship financing fund (69-4301-0-3-
403);''.
``Federal ship financing fund, fishing
vessels (13-4417-0-3-376);''.
``Government National Mortgage Association,
Guarantees of mortgage-backed securities (86-
4238-0-3-371);''.
``Health education loans (75-4307-0-3-
553);''.
``Indian loan guarantee and insurance fund
(14-4410-0-3-452);''.
``Railroad rehabilitation and improvement
financing fund (69-4411-0-3-401);''.
``Rural development insurance fund (12-
4155-0-3-452);''.
``Rural electric and telephone revolving
fund (12-4230-8-3-271);''.
``Rural housing insurance fund (12-4141-0-
3-371);''.
``Small Business Administration, Business
loan and investment fund (73-4154-0-3-376);''.
``Small Business Administration, Lease
guarantees revolving fund (73-4157-0-3-376);''.
``Small Business Administration, Pollution
control equipment contract guarantee revolving
fund (73-4147-0-3-376);''.
``Small Business Administration, Surety
bond guarantees revolving fund (73-4156-0-3-
376);''.
``Department of Veterans Affairs Loan
guaranty revolving fund (36-4025-0-3-704);''.
(d) Low-Income Programs.--Section 255(h) of the Balanced
Budget and Emergency Deficit Control Act of 1985 is amended as
follows:
(1) Amend the item relating to Child nutrition to
read as follows:
``Child nutrition programs (with the exception of
special milk programs) (12-3539-0-1-605);''.
(2) After the second item insert the following new
items:
``Temporary assistance for needy families (75-1552-
0-1-609);
``Contingency fund (75-1522-0-1-609);''
``Child care entitlement to States (75-1550-0-1-
609);
(3) Amend the item relating to Women, infants, and
children program to read as follows:
``Special supplemental nutrition program for women,
infants, and children (WIC) (12-3510-0-1-605);''.
(4) After the last item add the following new item:
``Family support payments to States (75-1501-0-1-
609);''.
(e) Identification of Programs.--Section 255(i) of the
Balanced Budget and Emergency Deficit Control Act of 1985 is
amended to read as follows:
``(i) Identification of Programs.--For purposes of
subsections (b), (g), and (h), each account is identified by
the designated budget account identification code number set
forth in the Budget of the United States Government 1998-
Appendix, and an activity within an account is designated by
the name of the activity and the identification code number of
the account.''.
(f) Optional Exemption of Military Personnel.--Section
255(h) of the Balanced Budget and Emergency Deficit Control Act
of 1985 (relating to optional exemption of military personnel)
is repealed.
SEC. 10208. GENERAL AND SPECIAL SEQUESTRATION RULES.
(a) Headings.--
(1) Section.--The section heading of section 256 of
the Balanced Budget and Emergency Deficit Control Act
of 1985 is amended by striking ``exceptions,
limitations, and special rules'' and inserting
``general and special sequestration rules''.
(2) Table of contents.--The item relating to
section 256 in the table contents set forth in section
250(a) of the Balanced Budget and Emergency Deficit
Control Act of 1985 is amended to read as follows:
``SEC. 256. GENERAL AND SPECIAL SEQUESTRATION RULES.''.
(b) Automatic Spending Increases.--Section 256(a) of the
Balanced Budget and Emergency Deficit Control Act of 1985 is
amended by striking paragraph (1)and redesignating paragraphs
(2) and (3) as paragraphs (1) and (2), respectively.
(c) Guaranteed and Direct Student Loan Programs.--Section
256(b) of the Balanced Budget and Emergency Deficit Control Act
of 1985 is amended to read as follows:
``(b) Student Loans.--For all student loans under part B or
D of title IV of the Higher Education Act of 1965 made during
the period when a sequestration order under section 254 is in
effect as required by section 252 or 253, origination fees
under sections 438(c)(2) and 455(c) of that Act shall each be
increased by 0.50 percentage point.''.
(d) Health Centers.--Section 256(e)(1) of the Balanced
Budget and Emergency Deficit Control Act of 1985 is amended by
striking the dash and all that follows thereafter and inserting
``2 percent.''.
(e) Treatment of Federal Administrative Expenses.--Section
256(h) of the Balanced Budget and Emergency Deficit Control Act
of 1985 is amended--
(1) in paragraph (2), by striking ``joint
resolution'' and inserting ``part''; and
(2) in paragraph (4), by striking subparagraphs (D)
and (H), by redesignating subparagraphs (E), (F), (G),
and (I), as subparagraphs (D), (E), (F), and (G),
respectively, and by adding at the end the following
new subparagraph:
``(H) Farm Credit Administration.''.
(f) Commodity Credit Corporation.--Section 256(j) of the
Balanced Budget and Emergency Deficit Control Act of 1985 is
amended by striking paragraphs (2) through (5) and inserting
the following:
``(2) Reduction in payments made under contracts.--
(A) Loan eligibility under any contract entered into
with a person by the Commodity Credit Corporation prior
to the time an order has been issued under section 254
shall not be reduced by an order subsequently issued.
Subject to subparagraph (B), after an order is issued
under such section for a fiscal year, any cash payments
for loans or loan deficiencies made by the Commodity
Credit Corporation shall be subject to reduction under
the order.
``(B) Each loan contract entered into with
producers or producer cooperatives with respect to a
particular crop of a commodity and subject to reduction
under subparagraph (A) shall be reduced in accordance
with the same terms and conditions. If some, but not
all, contracts applicable to a crop of a commodity have
been entered into prior to the issuance of an order
under section 254, the order shall provide that the
necessary reduction in payments under contracts
applicable to the commodity be uniformly applied to all
contracts for the next succeeding crop of the
commodity, under the authority provided in paragraph
(3).
``(3) Delayed reduction in outlays permissible.--
Notwithstanding any other provision of this title, if
an order under section 254 is issued with respect to a
fiscal year, any reduction under the order applicable
to contracts described in paragraph (1) may provide for
reductions in outlays for the account involved to occur
in the fiscal year following the fiscal year to which
the order applies.
``(4) Uniform percentage rate of reduction and
other limitations.--All reductions described in
paragraph (2) which are required to be made in
connection with an order issued under section 254 with
respect to a fiscal year shall be made so as to ensure
that outlays for each program, project, activity, or
account involved are reduced by a percentage rate that
is uniform for all such programs, projects, activities,
and accounts, and may not be made so as to achieve a
percentage rate ofreduction in any such item exceeding
the rate specified in the order.
``(5) Dairy program.--Notwithstanding any other
provision of this subsection, as the sole means of
achieving any reduction in outlays under the milk price
support program, the Secretary of Agriculture shall
provide for a reduction to be made in the price
received by producers for all milk produced in the
United States and marketed by producers for commercial
use. That price reduction (measured in cents per
hundred weight of milk marketed) shall occur under
section 201(d)(2)(A) of the Agricultural Act of 1949 (7
U.S.C. 1446(d)(2)(A)), shall begin on the day any
sequestration order is issued under section 254, and
shall not exceed the aggregate amount of the reduction
in outlays under the milk price support program that
otherwise would have been achieved by reducing payments
for the purchase of milk or the products of milk under
this subsection during the applicable fiscal year.''.
(g) Effects of Sequestration.--Section 256(k) of the
Balanced Budget and Emergency Deficit Control Act of 1985 is
amended as follows:
(1) In paragraph (1), strike ``other than a trust
or special fund account'' and insert ``, except as
provided in paragraph (5)'' before the period.
(2) Amend paragraph (6) to read as follows:
``(6) Budgetary resources sequestered in revolving,
trust, and special fund accounts and offsetting
collections sequestered in appropriation accounts shall
not be available for obligation during the fiscal year
in which the sequestration occurs, but shall be
available in subsequent years to the extent otherwise
provided in law.''.
SEC. 10209. THE BASELINE.
(a) In General.--Section 257 of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended--
(1) in subsection (b)(2) by amending subparagraph
(A) to read as follows:
``(A)(i) No program established by a law enacted on
or before the date of enactment of the Balanced Budget
Act of 1997 with estimated current year outlays greater
than $50,000,000 shall be assumed to expire in the
budget year or the outyears. The scoring of new
programs with estimated outlays greater than
$50,000,000 a year shall be based on scoring by the
Committees on Budget or OMB, as applicable. OMB, CBO,
and the Budget Committees shall consult on the scoring
of such programs where there are differenes between CBO
and OMB.
``(ii) On the expiration of the suspension of a
provision of law that is suspended under section 171 of
Public Law 104-127 and that authorizes a program with
estimated fiscal year outlays that are greater than
$50,000,000, for purposes of clause (i), the program
shall be assumed to continue to operate in the same
manner as the program operated immediately before the
expiration of the suspension.'';
(2) by adding the end of subsection (b)(2) the
following new subparagraph:
``(D) If any law expires before the budget year or
any outyear, then any program with estimated current
year outlays greater than $50,000,000 that operates
under that law shall be assumed to continue to operate
under that law as in effect immediately before its
expiration.'';
(3) in the second sentence of subsection (c)(5), by
striking ``national product fixed-weight price index''
and inserting ``domestic product chain-type price
index''; and
(4) by striking subsection (e) and inserting the
following:
``(e) Asset Sales.--Amounts realized from the sale of an
asset shall not be included in estimates under section 251,
252, or 253 if that sale would result in a financial cost to
the Federal Government as determined pursuant to scorekeeping
guidelines.''.
(b) President's Budget.--Section 1105(a) of title 31,
United States Code, is amended by adding at the end the
following:
``(32) a statement of the levels of budget
authority and outlays for each program assumed to be
extended in the baseline as provided in section
257(b)(2)(A) and for excise taxes assumed to be
extended under section 257(b)(2)(C) of the Balanced
Budget and Emergency Deficit Control Act of 1985.''.
(c) Budgetary Treatment of Certain Trust Fund Operations.--
Section 710 of the Social Security Act (42 U.S.C. 911) is
amended to read as follows:
``budgetary treatment of trust fund operations
``Sec. 710. (a) The receipts and disbursements of the
Federal Old-Age and Survivors Insurance Trust Fund and the
Federal Disability Insurance Trust Fund and the taxes imposed
under sections 1401 and 3101 of the Internal Revenue Code of
1986 shall not be included in the totals of the budget of the
United States Government as submitted by the President or of
the congressional budget and shall be exempt from any general
budget limitation imposed by statute on expenditures and net
lending (budget outlays) of the United States Government.
``(b) No provision of law enacted after the date of
enactment of the Balanced Budget and Emergency Deficit Control
Act of 1985 (other than a provision of an appropriation Act
that appropriated funds authorized under the Social Security
Act as in effect on the date of the enactment of the Balanced
Budget and Emergency Deficit control Act of 1985) may provide
for payments from the general fund of the Treasury to any Trust
Fund specified in subsection (a) or for payments from any such
Trust Fund to the general fund of the Treasury.''.
SEC. 10210. TECHNICAL CORRECTION.
Section 258 of the Balanced Budget and Emergency Deficit
Control Act of 1985, entitled ``Modification of Presidential
Order'', is repealed.
SEC. 10211. JUDICIAL REVIEW.
Section 274 of the Balanced Budget and Emergency Deficit
Control Act of 1985 is amended as follows:
(1) Strike ``252'' or ``252(b)'' each place it
occurs and insert ``254''.
(2) In subsection (d)(1)(A), strike ``257(l) to the
extent that'' and insert ``256(a) if'' and at the end
insert ``or''.
(3) In subsection (d)(1)(B), strike ``new budget''
and all that follows through ``spending authority'' and
insert ``budgetary resources'' and strike ``or'' after
the comma.
(4) Strike subsection (d)(1)(C).
(5) Strike subsection (f) and redesignate
subsections (g) and (h) as subsections (f) and (g),
respectively.
(6) In subsection (g) (as redesignated), strike
``base levels of total revenues and total budget
outlays, as'' and insert ``figures'', and strike
``251(a)(2)(B) or (c)(2),'' and insert ``254''.
SEC. 10212. EFFECTIVE DATE.
(a) Expiration.--Section 275(b) of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended--
(1) by striking ``Part C of this title, section''
and inserting ``Sections 251, 253, 258B, and'';
(2) by striking ``1995'' and inserting ``2002'';
and
(3) by adding at the end the following new
sentence: ``The remaining sections of part C of this
title shall expire September 30, 2006.''.
(b) Expiration.--Section 14002(c)(3) of the Omnibus Budget
Reconciliation Act of 1993 (2 U.S.C. 900 note) is repealed.
SEC. 10213. REDUCTION OF PREEXISTING BALANCES AND EXCLUSION OF EFFECTS
OF THIS ACT FROM PAYGO SCORECARD.
Upon the enactment of this Act, the Director of the Office
of Management and Budget shall--
(1) reduce any balances of direct spending and
receipts legislation for any fiscal year under section
252 of the Balanced Budget and Emergency Deficit
Control Act of 1985 to zero; and
(2) not make any estimates of changes in direct
spending outlays and receipts under subsection (d) of
that section for any fiscal year resulting from the
enactment of this Act or of the Taxpayer Relief Act of
1997.
TITLE XI--DISTRICT OF COLUMBIA REVITALIZATION
SECTION 11000. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This title may be cited as the ``National
Capital Revitalization and Self-Government Improvement Act of
1997''.
(b) Table of Contents.--The table of contents of this title
is as follows:
Sec. 11000. Short title; table of contents.
Subtitle A--District of Columbia Retirement Funds
Chapter 1--Short Title; Findings; Definitions
Sec. 11001. Short title.
Sec. 11002. Findings and declaration of policy.
Sec. 11003. Definitions.
Chapter 2--Federal Benefit Payments Under District Retirement Programs
Sec. 11011. Obligation of Federal government to make benefit payments.
Sec. 11012. Federal benefit payments described.
Sec. 11013. Establishment of single annual cost-of-living adjustment
under District Retirement Program.
Chapter 3--Determinations And Review of Eligibility and Payments;
Information Sharing
Sec. 11021. Determination of eligibility for and amount of Federal
benefit payments made by Trustee.
Sec. 11022. Procedures for resolving claims arising from denied benefit
payments.
Sec. 11023. Transfer of and access to records of District Government.
Sec. 11024. Federal information sharing for verification of benefit
determinations.
Chapter 4--District Of Columbia Federal Pension Liability Trust Fund
Sec. 11031. Creation of Trust Fund.
Sec. 11032. Uses of amounts in Trust Fund.
Sec. 11033. Transfer of assets and obligations of District Retirement
Funds.
Sec. 11034. Treatment of Trust Fund under certain laws.
Sec. 11035. Administration through Trustee.
Chapter 5--Responsibilities Of District Government
Sec. 11041. Interim administration.
Sec. 11042. Replacement plan.
Chapter 6--Financing Of Benefit Payments After Depletion of Trust Fund
Sec. 11051. Creation of Federal Supplemental Fund.
Sec. 11052. Uses of amounts in Fund.
Sec. 11053. Determination of annual payment into Federal Supplemental
Fund.
Sec. 11054. Determination of methodology for making payments.
Sec. 11055. Special requirements upon discontinuation of Trust Fund.
Chapter 7--Reports
Sec. 11061. Annual valuations and reports by enrolled actuary.
Sec. 11062. Reports by Comptroller General.
Chapter 8--Judicial Enforcement
Sec. 11071. Judicial review.
Sec. 11072. Jurisdiction and venue.
Sec. 11073. Statute of limitations.
Sec. 11074. Treatment of misappropriation of fund amounts as Federal
crime.
Chapter 9--Miscellaneous
Sec. 11081. Coordination between Secretary, Trustee, and District
Government.
Sec. 11082. Study of alternatives for financing Federal obligations.
Sec. 11083. Issuance of regulations by Secretary.
Sec. 11084. Effect on Reform Act and other laws.
Sec. 11085. Reference to new Federal program for retirement of judges of
District of Columbia courts.
Sec. 11086. Full faith and credit.
Sec. 11087. Severability of provisions.
Subtitle B--Management Reform Plans
Sec. 11101. Short title.
Sec. 11102. Management reform plans for District Government.
Sec. 11103. Procedures for development of plans.
Sec. 11104. Implementation of plans.
Sec. 11105. Reform of powers and duties of department heads.
Sec. 11106. No effect on powers of Financial Responsibility and
Management Assistance Authority.
Subtitle C--Criminal Justice
Chapter 1--Corrections
Sec. 11201. Bureau of Prisons.
Sec. 11202. Corrections Trustee.
Sec. 11203. Priority consideration for employees of the District of
Columbia.
Sec. 11204. Amendments related to persons with a mental disease or
defect.
Sec. 11205. Liability for and litigation authority of Corrections
Trustee.
Sec. 11206. Permitting expenditure of funds to carry out certain sewer
agreement.
Chapter 2--Sentencing
Sec. 11211. Truth-in-Sentencing Commission.
Sec. 11212. General duties, powers, and goals of Commission.
Sec. 11213. Data collection.
Sec. 11214. Enactment of amendments to District of Columbia Code.
Chapter 3--Offender Supervision and Parole
Sec. 11231. Parole.
Sec. 11232. Pretrial Services, Defense Services, Parole, Adult Probation
and Offender Supervision Trustee.
Sec. 11233. Offender Supervision, Defender and Courts Services Agency.
Sec. 11234. Authorization of appropriations.
Chapter 4--District Of Columbia Courts
SUBCHAPTER A--TRANSFER OF ADMINISTRATION AND FINANCING OF COURTS TO
FEDERAL GOVERNMENT
Sec. 11241. Authorization of appropriations.
Sec. 11242. Administration of courts under District of Columbia Code.
Sec. 11243. Budgeting and financing requirements for courts under Home
Rule Act.
Sec. 11244. Auditing of accounts of court system.
Sec. 11245. Miscellaneous budgeting and financing requirements for
courts under District law.
Sec. 11246. Other provisions relating to administration of District of
Columbia courts.
SUBCHAPTER B--JUDICIAL RETIREMENT PROGRAM
Sec. 11251. Judicial Retirement and Survivors Annuity Fund.
Sec. 11252. Termination of current fund and program.
Sec. 11253. Conforming amendments.
SUBCHAPTER C--MISCELLANEOUS CONFORMING AND ADMINISTRATIVE PROVISIONS
Sec. 11261. Treatment of courts under miscellaneous District laws.
Sec. 11262. Representation of indigents in criminal cases.
Chapter 5--Pretrial Services Agency and Public Defender Service
Sec. 11271. Amendments affecting Pretrial Services Agency.
Sec. 11272. Amendments affecting Public Defender Service.
Chapter 6--Miscellaneous Provisions
Sec. 11281. Technical assistance and research.
Sec. 11282. Exemption from personnel and budget ceilings for Trustees
and related agencies.
Subtitle D--Privatization of Tax Collection and Administration
Sec. 11301. Findings.
Sec. 11302. Authorizing Chief Financial Officer to privatize tax
administration and collection.
Subtitle E--Financing of District of Columbia Accumulated Deficit
Sec. 11401. Findings.
Sec. 11402. Authorization for intermediate-term advances of funds by the
Secretary of the Treasury to liquidate the accumulated general
fund deficit of the District of Columbia.
Sec. 11403. Conforming amendments.
Sec. 11404. Technical corrections.
Sec. 11405. Authorization for issuance of general obligation bonds by
the District of Columbia to finance or refund its accumulated
general fund deficit.
Subtitle F--District of Columbia Bond Financing Improvements
Sec. 11501. Short title.
Sec. 11502. Findings.
Sec. 11503. Amendment to Section 462 (relating to contents of borrowing
legislation and elections on issuing general obligation
bonds).
Sec. 11504. Amendment to Section 466 (relating to public or negotiated
sale of general obligation bonds).
Sec. 11505. Amendment to Section 467 (relating to authority to create
security interests in District revenues).
Sec. 11506. Amendment to Section 472 (relating to borrowing in
anticipation of revenues).
Sec. 11507. Addition of new Section 475 (relating to general obligation
bond anticipation notes).
Sec. 11508. Amendment to Section 490 (relating to revenue bonds and
other obligations).
Sec. 11509. Conforming amendment.
Subtitle G--District of Columbia Government Budget
Sec. 11601. Elimination of the annual Federal payment to the District of
Columbia.
Sec. 11602. Requirement that the District of Columbia balance its budget
in FY 1998.
Sec. 11603. Permitting expedited submission and approval of consensus
budget and financial plan.
Sec. 11604. Increase in maximum amount of permitted District borrowing.
Subtitle H--Miscellaneous Provisions
Chapter 1--Regulatory Reform in the District of Columbia
Sec. 11701. Review and revision of regulations and permit and
application processes.
Sec. 11702. Repeal of Clean Air Compliance Fee Act of 1994.
Sec. 11703. Repeal requirement for Congressional authorization of
certain mergers involving District of Columbia public utility
corporations.
Sec. 11704. Exemption of certain contracts from Council review.
Chapter 2--Other Miscellaneous Provisions
Sec. 11711. Revisions to Financial Responsibility and Management
Assistance Act.
Sec. 11712. Cooperative agreements between Federal agencies and
Metropolitan Police Department.
Sec. 11713. Permitting garnishment of wages of officers and employees of
District of Columbia government.
Sec. 11714. Permitting excess appropriations by Water and Sewer
Authority for capital projects.
Sec. 11715. Requiring certain Federal officials to provide notice before
carrying out activities affecting real property located in
District of Columbia.
Sec. 11716. Repeal term of deed of conveyance to certain hospital.
Sec. 11717. Short title of Home Rule Act.
Chapter 3--Effective Date; General Provisions
Sec. 11721. Effective date.
Sec. 11722. Technical assistance.
Sec. 11723. Liability.
Subtitle A--District of Columbia Retirement Funds
CHAPTER 1--SHORT TITLE; FINDINGS; DEFINITIONS
SEC. 11001. SHORT TITLE.
This subtitle may be cited as the ``District of Columbia
Retirement Protection Act of 1997''.
SEC. 11002. FINDINGS AND DECLARATION OF POLICY.
(a) Findings.--The Congress finds that--
(1) State and municipal retirement programs should
be funded on an actuarially sound basis;
(2) the retirement programs for the police officers
and firefighters, teachers and judges of the District
of Columbia had significant unfunded liabilities
totaling approximately $1,900,000,000 when the Federal
government transferred those programs to the District
of Columbia, and those liabilities have since increased
to nearly $4,800,000,000, an increase which is almost
entirely attributable to the accumulation of interest
on the value which existed at the time of transfer;
(3) the District of Columbia has fully met its
financial obligations under the District of Columbia
Retirement Reform Act of 1979 (Public Law 96-122);
(4) the growth of the unfunded liabilities of the
three pension funds listed above did not occur because
of any action taken or any failure to act that lay
within the power of the District of Columbia government
or the District of Columbia Retirement Board;
(5) the presence of the unfunded pension liability
is having and will continue to have a negative impact
on the District of Columbia's credit rating as it is a
legal obligation and the total unfunded liability
exceeds the total General Obligation debt of the
District, and the costs associated with this liability
are a contributing cause of the District's ongoing
financial crisis;
(6) the obligations of the District associated with
these pension programs in fiscal year 1997 represents
nearly 10 percent of the District's revenue;
(7) the annual Federal contribution toward these
costs under the District of Columbia Retirement Reform
Act has remained $52,000,000;
(8) if the unfunded pension liability situation is
not resolved, in 2004 the District of Columbia would be
responsible for annual costs exceeding $800,000,000, a
figure which would be impossible to meet without
catastrophic impact on the District government's
resources and programs;
(9) the financial resources of the District of
Columbia are not adequate to discharge the unfunded
liabilities of the retirement programs; and
(10) the level of benefits and funding of the
current retirement programs were authorized by various
Acts of Congress.
(b) Policy.--It is the policy of this subtitle--
(1) to relieve the District of Columbia government
of the responsibility for the unfunded pension
liabilities transferred to it by the Federal
government;
(2) for the Federal government to assume the legal
responsibility for paying certain pension benefits
(including certain unfunded pension liabilities which
existed as of the day prior to introduction of this
legislation) for the retirement plans of teachers,
police, and firefighters;
(3) to provide for a responsible Federal system for
payment of benefits accrued prior to the date of
introduction of this legislation; and
(4) to require the establishment of replacement
plans by the District of Columbia government forthe
current retirement plans for teachers, and police and firefighters.
SEC. 11003. DEFINITIONS.
For purposes of this subtitle, the following definitions
shall apply:
(1) The term ``contract'' means the contract under
section 11035 between the Secretary and the Trustee.
(2) The term ``covered District employee'' means a
teacher of the District of Columbia public schools, or
a member of the Metropolitan Police Force or the Fire
Department of the District of Columbia, as defined
under the District Retirement Program.
(3) The term ``District Government'' means any
entity treated as part of the District government under
section 305(5) of the District of Columbia Financial
Responsibility and Management Assistance Act of 1995,
including the District of Columbia Retirement Board (as
defined in section 102(5) of the Reform Act).
(4) The term ``District Retirement Fund'' means the
District of Columbia Police Officers and Fire Fighters
Retirement Fund and the District of Columbia Teachers
Retirement Fund, as defined in the Reform Act.
(5) The term ``District Retirement Program'' means
any of the retirement programs for teachers and members
of the Metropolitan Police Force and Fire Department,
as described in section 102(7) of the Reform Act as in
effect on the day before the freeze date (except as
amended by section 11013).
(6) The term ``enrolled actuary'' means the
enrolled actuary engaged by the Trustee under section
11061(a).
(7) The term ``Federal benefit payment'' means a
payment described in section 11012.
(8) The term ``Federal Supplemental Fund'' means
the Federal Supplemental District of Columbia Pension
Fund created under section 11051.
(9) The term ``freeze date'' means June 30, 1997.
(10) The term ``person'' means an individual,
partnership, joint venture, corporation, mutual
company, joint-stock company, trust, estate,
unincorporated organization, association, or employee
organization.
(11) The term ``Reform Act'' means the District of
Columbia Retirement Reform Act (Public Law 96-122).
(12) The term ``replacement plan'' means the plan
described in section 11042.
(13) The term ``replacement plan adoption date''
means the date upon which the legislation establishing
the replacement plan becomes effective, or the first
day after the expiration of the 1-year period which
begins on the date of the enactment of this Act,
whichever occurs first.
(14) The term ``Trust Fund'' means the District of
Columbia Federal Pension Liability Trust Fund
established under section 11031.
(15) The term ``Secretary'' means the Secretary of
the Treasury or the Secretary's designee.
(16) The term ``Trustee'' means the person or
persons selected by the Secretary under section 11035.
CHAPTER 2--FEDERAL BENEFIT PAYMENTS UNDER DISTRICT RETIREMENT PROGRAMS
SEC. 11011. OBLIGATION OF FEDERAL GOVERNMENT TO MAKE BENEFIT PAYMENTS.
(a) In General.--In accordance with the provisions of this
subtitle, the Federal Government shall make Federal benefit
payments associated with the pension plans for police officers,
firefighters, and teachers of the District of Columbia.
(b) No Reversion of Federal Responsibility to District.--At
no point after the effective date of this subtitle may the
responsibility or any part thereof assigned to the Federal
Government under subsection (a) for making Federal benefit
payments revert to the District of Columbia.
SEC. 11012. FEDERAL BENEFIT PAYMENTS DESCRIBED.
(a) In General.--Subject to the succeeding provisions of
this subtitle, a ``Federal benefit payment'' is any benefit
payment to which an individual is entitled under a District
Retirement Program, in such amount and under such terms and
conditions as may apply under such Program.
(b) Treatment of Service Occurring After Freeze Date.--
Service after the freeze date shall not be credited for
purposes of determining the amount of any Federal benefit
payment. Nothing in this subsection shall be construed to
affect the crediting of such service for any other purpose
under the District Retirement Program.
(c) Special Rule Regarding Disability Benefits.--To the
extent that any portion of a benefit payment to which an
individual is entitled under a District Retirement Program is
based on a determination of disability made by the District of
Columbia Retirement Board or the Trustee after the freeze date,
the Federal benefit payment determined with respect to the
individual shall be an amount equal to the deferred retirement
benefit or normal retirement benefit the individual would
receive if the individual left service on the day before the
commencement of disability retirement benefits.
(d) Special Rule Regarding Certain Death Benefits.--
(1) In general.--In the case of a benefit payment
to which an individual is entitled under a District
Retirement Program which is payable on the death of a
covered District employee or former covered District
employee and which is not determined by the length of
service of the employee or former employee, the Federal
benefit payment determined with respect to the
individual shall be equal to the pre-freeze date
percentage of the amount otherwise payable.
(2) Pre-freeze date percentage defined.--In
paragraph (1), the ``pre-freeze date percentage'' with
respect to a covered District employee or former
covered District employee is the amount (expressed as a
percentage) equal to the quotient of--
(A) the number of months of the covered
District employee's or former covered District
employee's service prior to the freeze date;
divided by
(B) the total number of months of the
covered District employee's or former covered
District employee's service.
SEC. 11013. ESTABLISHMENT OF SINGLE ANNUAL COST-OF-LIVING ADJUSTMENT
UNDER DISTRICT RETIREMENT PROGRAM.
(a) Program for Police and Fire Fighters.--Subsection (m)
of the Policemen and Firemen's Retirement and Disability Act
(DC Code, sec. 4-624) is amended--
(1) in paragraph (2), by striking ``the Mayor
shall'' and all that follows and inserting the
following: ``on January 1 of each year (or within a
reasonabletime thereafter), the Mayor shall determine
the per centum change in the price index for the preceding year by
determining the difference between the index published for December of
the preceding year and the index published for December of the second
preceding year.''; and
(2) by amending paragraph (3) to read as follows:
``(3)(A) If (in accordance with paragraph (2)) the Mayor
determines in a year (beginning with 1999) that the per centum
change in the price index for the preceding year indicates a
rise in the price index, each annuity having a commencing date
on or before March 1 of the year shall, effective March 1 of
the year, be increased by an amount equal to--
``(i) in the case of an annuity having a commencing
date on or before March 1 of such precedingyear, the
per centum change computed under paragraph (1), adjusted to the nearest
\1/10\ of 1 per centum; or
``(ii) in the case of an annuity having a
commencing date after March 1 of such preceding year, a
pro rata increase equal to the product of--
``(I) \1/12\ of the per centum change
computed under paragraph (1), multiplied by
``(II) the number of months (not to exceed
12 months, counting any portion of a month as
an entire month) for which the annuity was
payable before the effective date of the
increase,
adjusted to the nearest \1/10\ of 1 per centum.
``(B) On January 1, 1998 (or within a reasonable time
thereafter), the Mayor shall determine the per centum change in
the price index published for December 1997 over the price
index published for June 1997. If such per centum change
indicates a rise in the price index, effective March 1, 1998--
``(i) each annuity having a commencing date on or
before September 1, 1997, shall be increased by an
amount equal to such per centum change, adjusted to the
nearest \1/10\ of 1 per centum; and
``(ii) each annuity having a commencing date after
September 1, 1997, and on or before March 1, 1998,
shall be increased by a pro rata increase equal to the
product of--
``(I) \1/6\ of such per centum change,
multiplied by
``(II) the number of months (not to exceed
6 months, counting any portion of a month as an
entire month) for which the annuity was payable
before the effective date of the increase,
adjusted to the nearest \1/10\ of 1 per centum.''.
(b) Program for Teachers.--Section 21(b) of the Act
entitled ``An Act for the retirement of public-school teachers
in the District of Columbia'', approved August 7, 1946 (DC
Code, sec. 31-1241(b)) is amended--
(1) in paragraph (1), by striking ``The Mayor
shall--'' and all that follows and inserting the
following: ``On January 1 of each year (or within a
reasonable time thereafter), the Mayor shall determine
the per centum change in the price index for the
preceding year by determining the difference between
the index published for December of the preceding year
and the index published for December of the second
preceding year.''; and
(2) by amending paragraph (2) to read as follows:
``(2)(A) If (in accordance with paragraph (1)) the Mayor
determines in a year (beginning with 1999) that the per centum
change in the price index for the preceding year indicates a
rise in the price index, each annuity having a commencing date
on or before March 1 of the year shall, effective March 1 of
the year, be increased by an amount equal to--
``(i) in the case of an annuity having a commencing
date on or before March 1 of such preceding year, the
per centum change computed under paragraph (1),
adjusted to the nearest \1/10\ of 1 per centum; or
``(ii) in the case of an annuity having a
commencing date after March 1 of such preceding year, a
pro rata increase equal to the product of--
``(I) \1/12\ of the per centum change
computed under paragraph (1), multiplied by
``(II) the number of months (not to exceed
12 months, counting any portion of a month as
an entire month) for which the annuity was
payable before the effective date of the
increase,
adjusted to the nearest \1/10\ of 1 per centum.
``(B) On January 1, 1998 (or within a reasonable time
thereafter), the Mayor shall determine the per centum change in
the price index published for December 1997 over the price
index published for June 1997. If such per centum change
indicates a rise in the price index, effective March 1, 1998--
``(i) each annuity having a commencing date on or
before September 1, 1997, shall be increased by an
amount equal to such per centum change, adjusted to the
nearest \1/10\ of 1 per centum; and
``(ii) each annuity having a commencing date after
September 1, 1997, and on or before March 1, 1998,
shall be increased by a pro rata increase equal to the
product of--
``(I) \1/6\ of such per centum change,
multiplied by
``(II) the number of months (not to exceed
6 months, counting any portion of a month as an
entire month) for which the annuity was payable
before the effective date of the increase,
adjusted to the nearest \1/10\ of 1 per centum.''.
CHAPTER 3--DETERMINATIONS AND REVIEW OF ELIGIBILITY AND PAYMENTS;
INFORMATION SHARING
SEC. 11021. DETERMINATION OF ELIGIBILITY FOR AND AMOUNT OF FEDERAL
BENEFIT PAYMENTS MADE BY TRUSTEE.
Notwithstanding any provision of a District Retirement
Program or any other law, rule, or regulation, the Trustee--
(1) shall determine whether an individual is
eligible to receive a Federal benefit payment under
this subtitle;
(2) shall determine the amount and form of an
individual's Federal benefit payment under this
subtitle; and
(3) may recoup or recover any amounts paid under
this subtitle as a result of errors or omissions by the
Trustee, the District Government, or any other person.
SEC. 11022. PROCEDURES FOR RESOLVING CLAIMS ARISING FROM DENIED BENEFIT
PAYMENTS.
(a) Requiring Notice and Opportunity for Review.--In
accordance with procedures approved by the Secretary, the
Trustee shall provide to any individual whose claim for a
Federal benefit payment under this subtitle has been denied in
whole or in part--
(1) adequate written notice of such denial, setting
forth the specific reasons for the denial in a manner
calculated to be understood by the average participant
in the District Retirement Program; and
(2) a reasonable opportunity for a full and fair
review of the decision denying such claim.
(b) Standard for Review.--Any factual determination made by
the Trustee shall be presumed correct unless rebutted by clear
and convincing evidence. The Trustee's interpretation and
construction of the benefit provisions of the District
Retirement Program and this subtitle shall be entitled to great
deference.
SEC. 11023. TRANSFER OF AND ACCESS TO RECORDS OF DISTRICT GOVERNMENT.
(a) In General.--Within 30 days after the Secretary or the
Trustee requests, the District Government shall furnish copies
of all records, documents, information, or data the Secretary
or the Trustee deems necessary to carry out responsibilities
under this subtitle and the contract. Upon request, the
District Government shall grant the Secretary or the Trustee
direct access to such information systems, records, documents,
information or data as the Secretary or Trustee requires to
carry out responsibilities under this subtitle or the contract.
(b) Repayment by District Government.--The District
Government shall reimburse the Trust Fund for all costs,
including benefit costs, that are attributable to errors or
omissions in the transferred records that are identified within
3 years after such records are transferred.
SEC. 11024. FEDERAL INFORMATION SHARING FOR VERIFICATION OF BENEFIT
DETERMINATIONS.
(a) In General.--Except with respect to taxpayer returns
and return information subject to section 6103 of the Internal
Revenue Code of 1986, the Secretary may--
(1) secure directly from any department or agency
of the United States information necessary to enable
the Secretary to verify or confirm benefit
determinations under this subtitle; and
(2) by regulation authorize the Trustee to review
such information for purposes of administering this
subtitle and the contract.
(b) Amendments to Internal Revenue Code.--The Internal
Revenue Code of 1986 is amended as follows:
(1) In section 6103(l), as amended by section
1206(a) of the Taxpayer Bill of Rights 2, by adding at
the end the following new paragraph:
``(16) Disclosure of return information for
purposes of administering the district of columbia
retirement protection act of 1997.--
``(A) In general.--Upon written request
available return information (including such
information disclosed to the Social Security
Administration under paragraph (1) or (5) of
this subsection), relating to the amount of
wage income (as defined in section 3121(a) or
3401(a)), the name, address, and identifying
number assigned under section 6109, of payors
of wage income, taxpayer identity (as defined
in subsection 6103(b)(6)), and the occupational
status reflected on any return filed by, or
with respect to, any individual with respect to
whom eligibility for, or the correct amount of,
benefits under the District of Columbia
Retirement Protection Act of 1997, is sought to
be determined, shall be disclosed by the
Commissioner of Social Security, or to the
extent not available from the Social Security
Administration, by the Secretary, to any duly
authorized officer or employee of the
Department of the Treasury, or a Trustee or any
designated officer or employee of a Trustee (as
defined in the District of Columbia Retirement
Protection Act of 1997), or any actuary engaged
by a Trustee under the terms of the District of
Columbia Retirement Protection Act of 1997,
whose official duties require such disclosure,
solely for the purpose of, and to the extent
necessary in, determining an individual's
eligibility for, or the correct amount of,
benefits under the District of Columbia
Retirement Protection Act of 1997.
``(B) Disclosure for use in judicial or
administrative proceedings.--Return information
disclosed to any person under this paragraph
may be disclosed in a judicial or
administrative proceeding relating to
thedetermination of an individual's eligibility for, or the correct
amount of, benefits under the District of Columbia Retirement
Protection Act of 1997.''.
(2) In section 6103(a)(3), by striking ``(6) or
(12)'' and inserting ``(6), (12), or (16)'';
(3) In section 6103(i)(7)(B)(i), by inserting after
``(other than an agency referred to in subparagraph
(A))'' and before the word ``for'' the words ``or by a
Trustee as defined in the District of Columbia
Retirement Protection Act of 1997,''.
(4) In section 6103(p)(3)(A), by striking ``or
(15)'' and inserting ``(15), or (16)''.
(5) In section 6103(p)(4) in the matter preceding
subparagraph (A), by striking ``or (12)'' and inserting
``(12), or (16), or any other person described in
subsection (l)(16)''.
(6) In section 6103(p)(4)(F)(i), by striking ``or
(9),'' and inserting ``(9), or (16), or any other
person described in subsection (1)(16)''.
(7) In section 6103(p)(4)(F) in the matter
following clause (iii)--
(A) by inserting after ``any such agency,
body or commission'' and before the words ``for
the General Accounting Office'' the words ``,
including an agency or any other person
described in subsection (l)(16),'';
(B) by striking ``to such agency, body, or
commission'' and inserting ``to such agency,
body, or commission, including an agency or any
other person described in subsection
(l)(16),'';
(C) by striking ``or (12)(B)'' and
inserting ``, (12)(B), or (16)'';
(D) by inserting after the words ``any
agent,'' and before the words ``this paragraph
shall'' the words ``or any person including an
agent described in subsection (l)(16),'';
(E) by inserting after the words ``such
agent'' and before ``(except that'' the words
``or other person''; and
(F) by inserting after the words ``an
agent,'' and before the words ``any report''
the words ``or any person including an agent
described in subsection (l)(16),''.
(8) In section 7213(a)(2), by striking ``or (15),''
and inserting ``(15), or (16)''.
(c) Confidentiality.--The Secretary may issue regulations
governing the confidentiality of the information obtained
pursuant to subsection (a) and the provisions of law amended by
subsection (b).
CHAPTER 4--DISTRICT OF COLUMBIA FEDERAL PENSION LIABILITY TRUST FUND
SEC. 11031. CREATION OF TRUST FUND.
(a) Establishment.--There is established on the books of
the Treasury the District of Columbia Federal Pension Liability
Trust Fund, consisting of the assets transferred pursuant to
section 11033 and any income earned on the investment of such
assets pursuant to subsection (b).
(b) Investment of Assets.--The Trustee may invest the
assets of the Trust Fund in private securities and any other
form of investment deemed appropriate by the Secretary.
SEC. 11032. USES OF AMOUNTS IN TRUST FUND.
(a) In General.--Amounts in the Trust Fund shall be used--
(1) to make Federal benefit payments under this
subtitle;
(2) subject to subsection (b), to cover the
reasonable and necessary expenses of administering the
Trust Fund under the contract entered into pursuant to
section 11035(b); and
(3) for such other purposes as are specified in
this subtitle.
(b) Special Rules Regarding Administrative Expenses.--
(1) Budgeting; certification and approval.--The
administrative expenses of the Trust Fund shall be paid
in accordance with an annual budget set forth by the
Trustee which shall be subject to certification and
approval by the Secretary.
(2) Use of District retirement fund for interim
administration.--The Secretary is authorized to
requisition from the District Retirement Fund such sums
as are necessary to administer the Trust Fund until
assets are transferred to the Trust Fund pursuant to
section 11033.
SEC. 11033. TRANSFER OF ASSETS AND OBLIGATIONS OF DISTRICT RETIREMENT
FUNDS.
(a) In General.--As of the replacement plan adoption date,
all obligations to make Federal benefit payments and all assets
of the District Retirement Fund as of the replacement plan
adoption date (except as provided in subsections (b) and (c))
shall be transferred to the Trust Fund.
(b) Designation of Assets to be Retained by District
Retirement Fund.--The Secretary shall designate assets with a
value of $1.275 billion that shall not be transferred from the
District Retirement Fund under subsection (a). The Secretary's
designation and valuation of the assets shall be final and
binding.
(c) Exception for Certain Employee Contributions.--
(1) In general.--Subsection (a) shall not apply to
assets consisting of the District Retirement Fund
consisting of any employee contributions deducted and
withheld after the freeze date or any interest thereon
(computed at a rate and in a manner determined by the
Secretary).
(2) Employee contributions defined.--In paragraph
(1), the term ``employee contributions'' means amounts
deducted and withheld from the salaries of covered
District employees and paid to the District Retirement
Fund (and, in the case of teachers, amounts of
additional deposits paid to the District Retirement
Fund), pursuant to the District Retirement Program.
(d) Responsibilities of District Government.--
(1) In general.--The transfer of assets from the
District Retirement Fund under this section shall be
made in accordance with the direction of the Secretary.
The District Government shall promptly take all steps,
and execute all documents, that the Secretary deems
necessary to effect the transfer.
(2) Final reconciliation of accounts.--As soon as
practicable after the replacement plan adoption date,
the District Government shall furnish the Trustee a
final reconciliation of accounts in connection with the
transfer of assets and obligations to the Trust Fund.
The allocation of assets under this section shall be
adjusted in accordance with this reconciliation.
SEC. 11034. TREATMENT OF TRUST FUND UNDER CERTAIN LAWS.
(a) Internal Revenue Code.--For purposes of the Internal
Revenue Code of 1986--
(1) the Trust Fund shall be treated as a trust
described in section 401(a) of the Code which is exempt
from taxation under section 501(a) of the Code;
(2) any transfer to or distribution from the Trust
Fund shall be treated in the same manner as a transfer
to or distribution from a trust described in section
401(a) of the Code; and
(3) the benefits provided by the Trust Fund shall
be treated as benefits provided under a governmental
plan maintained by the District of Columbia.
(b) ERISA.--For purposes of the Employee Retirement Income
Security Act of 1974, the benefits provided by the Trust Fund
shall be treated as benefits provided under a governmental plan
maintained by the District of Columbia.
(c) Application of Certain Future Amendments to Internal
Revenue Code.--To the extent that any provision of subpart A of
part I of subchapter D of chapter 1 of the Internal Revenue
Code of 1986 (26 U.S.C. 401 et seq.) is amended after the date
of the enactment of this Act, such provision as amended shall
apply to the Trust Fund only to the extent the Secretary
determines that application of the provision as amended is
consistent with the administration of this subtitle.
SEC. 11035. ADMINISTRATION THROUGH TRUSTEE.
(a) In General.--As soon as practicable after the enactment
of this subtitle, the Secretary shall select a Trustee to
administer the Trust Fund and otherwise carry out the
responsibilities and duties specified in this subtitle in
accordance with the contract described in subsection (b).
(b) Contract.--The Secretary shall enter into a contract
with the Trustee to provide for the management, investment,
control and auditing of Trust Fund assets, the making of
Federal benefit payments under this subtitle from the Trust
Fund, and such other matters as the Secretary deems
appropriate. The Secretary shall enforce the provisions of the
contract and otherwise monitor the administration of the Trust
Fund.
(c) Reports.--The Trustee shall report to the Secretary, in
a form and manner and at such intervals as the Secretary may
prescribe, on any matters or transactions relating to the Trust
Fund, including financial matters, as the Secretary may
require.
CHAPTER 5--RESPONSIBILITIES OF DISTRICT GOVERNMENT
SEC. 11041. INTERIM ADMINISTRATION.
(a) Administration of Benefits Until Appointment of
Trustee.--Notwithstanding chapter 2, after the enactment of
this subtitle the District Government shall continue to
discharge its duties and responsibilities under the District
Retirement Program and the District Retirement Fund (as such
duties and responsibilities are modified by this subtitle),
including the responsibility for Federal benefit payments,
until such time as the Secretary notifies the District
Government that the Secretary has directed the Trustee to carry
out the duties and responsibilities required under the
contract.
(b) Reimbursement From Trust Fund.--The Trustee shall
reimburse the District Government for any administrative
expenses incurred by the District Government in carrying out
subsection (a)--
(1) if the Trustee finds such expenses to be
reasonable and necessary; and
(2) to the extent that the District Government is
not reimbursed for such expenses from other sources.
(c) Making District Retirement Fund Whole.--The District
Government shall reimburse the District Retirement Fund for any
benefits paid inconsistent with this subtitle from the District
Retirement Fund between the freeze date and the replacement
plan adoption date.
SEC. 11042. REPLACEMENT PLAN.
(a) Adoption by District Government.--Not later than one
year after the date of the enactment of this subtitle, the
District Government shall adopt a replacement plan for pension
benefits for covered District employees, effective as of the
freeze date.
(b) Replacement Plan Imposed If District Government Fails
to Adopt Plan.--If the DistrictGovernment fails to adopt a
replacement plan within the period prescribed in subsection (a), the
retirement program applicable to police, firefighters, and teachers
under the laws of the District of Columbia in effect as of June 1, 1997
(except as otherwise amended by this Act), including all requirements
of the program regarding benefits, contributions, and cost-of-living
adjustments, shall be treated as the replacement plan for purposes of
this subtitle.
(c) No Payment of Amounts Paid as Federal Benefit
Payment.--Notwithstanding any provision of the Reform Act or
any other law, rule, or regulation, the District Government is
not required to pay any amount under any replacement plan under
this subtitle if the amount is paid as a Federal benefit
payment under this subtitle.
CHAPTER 6--FINANCING OF BENEFIT PAYMENTS AFTER DEPLETION OF TRUST FUND
SEC. 11051. CREATION OF FEDERAL SUPPLEMENTAL FUND.
(a) Establishment.--There is established on the books of
the Treasury the Federal Supplemental District of Columbia
Pension Fund, which shall be administered by the Secretary and
shall consist of the following assets:
(1) Amounts deposited into such Fund under the
provisions of this subtitle.
(2) Any amount otherwise appropriated to such Fund.
(3) Any income earned on the investment of the
assets of such Fund pursuant to subsection (b).
(b) Investment of Assets.--The Secretary shall invest such
portion of the Federal Supplemental Fund as is not in the
judgment of the Secretary required to meet current withdrawals.
Such investments shall be in public debt securities with
maturities suitable to the needs of the Federal Supplemental
Fund, as determined by the Secretary, and bearing interest at
rates determined by the Secretary, taking into consideration
current market yields on outstanding marketable obligations of
the United States of comparable maturities.
(c) Recordkeeping for Actuarial Status.--The Secretary
shall provide for the keeping of such records as are necessary
for determining the actuarial status of the Federal
Supplemental Fund.
SEC. 11052. USES OF AMOUNTS IN FUND.
Amounts in the Federal Supplemental Fund shall be used for
the accumulation of funds in order to finance obligations of
the Federal Government for benefits and necessary
administrative expenses under the provisions of this subtitle,
in accordance with the methodology selected by the Secretary
under section 11054(b), except that payments from the Fund for
administrative expenses may be made only the extent and in such
amounts as are provided in advance in appropriations acts.
SEC. 11053. DETERMINATION OF ANNUAL PAYMENT INTO FEDERAL SUPPLEMENTAL
FUND.
(a) In General.--At the end of each applicable fiscal year
the Secretary shall promptly pay into the Federal Supplemental
Fund from the General Fund of the Treasury an amount equal to
the sum of--
(1) the annual amortization amount for the year
(which may not be less than zero); and
(2) the covered administrative expenses for the
year.
(b) Determination of Amounts.--For purposes of this
section:
(1) The ``original unfunded liability'' is the
amount that is the present value as of the freeze date
of future benefits payable from the Federal
Supplemental Fund.
(2) The ``annual amortization amount'' is the
amount determined by the enrolled actuary to be
necessary to amortize in equal annual installments
(until fully amortized)--
(A) the original unfunded liability over a
30-year period;
(B) a net experience gain or loss over a
10-year period; and
(C) any other changes in actuarial
liability over a 20-year period.
(3) The ``covered administrative expenses'' are the
expenses determined by the Secretary (on an annual
basis) to be necessary to administer the Federal
Supplemental Fund.
(c) Timing.--The first applicable fiscal year under
subsection (a) is the first fiscal year that ends more than six
months after the replacement plan adoption date.
SEC. 11054. DETERMINATION OF METHODOLOGY FOR MAKING PAYMENTS.
(a) Notice to President and Congress.--Not later than 18
months before the time that assets remaining in the Trust Fund
are projected to be insufficient for making Federal benefit
payments and covering necessary administrative expenses when
due, the Secretary shall so advise the President and the
Congress.
(b) Selection of Methodology.--Before all available assets
of the Trust Fund have been depleted, the Secretary shall
determine whether Federal benefit payments and necessary
administrative expenses under this subtitle shall be made by
one of the following methods:
(1) Continuation of the Trust Fund using payments
from the Federal Supplemental Fund.
(2) Discontinuation of the Trust Fund, with
payments made--
(A) by direct payment by the Secretary from
the Federal Supplemental Fund; or
(B) from the Federal Supplemental Fund
through another department or agency of the
United States.
(c) Arrangements by Secretary.--The Secretary shall make
appropriate arrangements to implement the determinations made
in this subsection.
SEC. 11055. SPECIAL REQUIREMENTS UPON DISCONTINUATION OF TRUST FUND.
(a) Successor to Trustee.--If the Secretary determines that
the Trust Fund shall be discontinued after it has been depleted
of assets, the Secretary shall appoint a successor to the
Trustee to administer the requirements of this subtitle, with
the same powers and subject to the same conditions as were
applicable to the Trustee.
(b) Continuing Application of Terms and Conditions.--The
methodology selected by the Secretary under section 11054(b),
and the payment of benefits pursuant to such methodology, shall
be subject to the same arrangements, terms, and conditions as
were applicable under this subtitle to the Trust Fund and the
benefits paid under the Trust Fund (including provisions
relating to the treatment of the Trust Fund under certain
laws).
CHAPTER 7--REPORTS
SEC. 11061. ANNUAL VALUATIONS AND REPORTS BY ENROLLED ACTUARY.
(a) Determination of Actuarial Valuations.--The Trustee
shall engage an enrolled actuary (as defined in section
7701(a)(35) of the Internal Revenue Code of 1986) who is a
member of the American Academy of Actuaries to perform an
annual actuarial valuation (in a manner and form determined by
the Secretary) of the Trust Fund and the Federal Supplemental
Fund for obligations assumed by the Federal Government under
this subtitle.
(b) Annual Report on Status of Funds.--The enrolled actuary
shall prepare and submit to the Secretary and the Trustee an
annual report on the actuarial status of the Trust Fund and the
Federal Supplemental Fund, and shall include in the report--
(1) a projection of when assets in the Trust Fund
will be insufficient to pay benefits and necessary
administrative expenses when due; and
(2) a determination of the annual payment to the
Federal Supplemental Fund under section 11053.
SEC. 11062. REPORTS BY COMPTROLLER GENERAL.
(a) In General.--The Comptroller General is authorized to
conduct evaluations of the administration of this subtitle to
ensure that the Trust Fund and Federal Supplemental Fund are
being properly administered and shall report the findings of
such evaluations to the Secretary and the Congress.
(b) Access to Information.--For the purpose of evaluations
under subsection (a) the Comptroller General, subject to
section 6103 of the Internal Revenue Code of 1986, shall have
access to and the right to copy any books, accounts, records,
correspondence or other pertinent documents that are in the
possession of the Secretary or the Trustee, or any contractor
or subcontractor of the Secretary or the Trustee.
CHAPTER 8--JUDICIAL ENFORCEMENT
SEC. 11071. JUDICIAL REVIEW.
(a) In General.--A civil action may be brought--
(1) by a participant or beneficiary to enforce or
clarify rights to benefits from the Trust Fund or
Federal Supplemental Fund under this subtitle;
(2) by the Trustee--
(A) to enforce any claim arising (in whole
or in part) under this subtitle or the
contract; or
(B) to recover benefits improperly paid
from the Trust Fund or Federal Supplemental
Fund or to clarify a participant's or
beneficiary's rights to benefits from the Trust
Fund or Federal Supplemental Fund; and
(3) by the Secretary to enforce any provision of
this subtitle or the contract.
(b) Treatment of Trust Fund.--The Trust Fund may sue and be
sued as an entity.
(c) Exclusive Remedy.--This chapter shall be the exclusive
means for bringing actions against the Trust Fund, the Trustee
or the Secretary under this subtitle.
SEC. 11072. JURISDICTION AND VENUE.
(a) In General.--The United States District Court for the
District of Columbia shall have exclusive jurisdiction and
venue, regardless of the amount in controversy, of--
(1) civil actions brought by participants or
beneficiaries pursuant to this subtitle, and
(2) any other action otherwise arising (in whole or
part) under this subtitle or the contract.
(b) Review by Court of Appeals.--Notwithstanding any other
provision of law, any order of the United States District Court
for the District of Columbia issued pursuant to an action
described in subsection (a) that concerns the validity or
enforceability of any provision of this subtitle or seeks
injunctive relief against the Secretary or Trustee under this
subtitle shall be reviewable only pursuant to a notice of
appeal to the United States Court of Appeals for the District
of Columbia Circuit.
(c) Review by Supreme Court.--Notwithstanding any other
provision of law, review by the Supreme Court of the United
States of a decision of the Court of Appeals that is issued
pursuant to subsection (b) may be had only if the petition for
relief is filed within 20 calendar days after the entry of such
decision.
(d) Restrictions on Declaratory or Injunctive Relief.--No
order of any court granting declaratory or injunctive relief
against the Secretary or the Trustee shall take effect during
the pendency of the action before such court, during the time
an appeal may be taken, or (if an appeal is taken or petition
for certiorari filed) during the period before the court has
entered its final order disposing of the action.
SEC. 11073. STATUTE OF LIMITATIONS.
(a) Action for Benefits.--Any civil action by an individual
with respect to a Federal benefit payment under this subtitle
shall be commenced within 180 days of a final benefit
determination.
(b) Action for Breach of Contract or Other Violations.--
Except as provided in subsection (c), any civil action for
breach of the contract or any other violation of this subtitle
shall be commenced within the later of--
(1) six years after the last act that constituted
the alleged breach or violation or, in the case of an
omission, six years after the last date on which the
alleged breach or violation could have been cured; or
(2) three years after the earliest date on which
the plaintiff knew or could have reasonably been
expected to have known of the act or omission on which
the action is based.
(c) Special Rule for Actions Against Secretary.--
Notwithstanding subsection (b), any action against the
Secretary arising (in whole or part) under this subtitle or the
contract shall be commenced within one year of the events
giving rise to the cause of action.
SEC. 11074. TREATMENT OF MISAPPROPRIATION OF FUND AMOUNTS AS FEDERAL
CRIME.
The provisions of section 664 of title 18, United States
Code (relating to theft or embezzlement from employee benefit
plans), shall apply to the Trust Fund and the Federal
Supplemental Fund.
CHAPTER 9--MISCELLANEOUS
SEC. 11081. COORDINATION BETWEEN SECRETARY, TRUSTEE, AND DISTRICT
GOVERNMENT.
The Secretary, Trustee, and District Government shall carry
out responsibilities under this subtitle and under the contract
in a manner which promotes the cost-effective and efficient
administration of benefit payments under the District
Retirement Programs, and in a manner which avoids unnecessary
interruptions and delays in paying individuals the full
benefits to which they are entitled under such Programs.
SEC. 11082. STUDY OF ALTERNATIVES FOR FINANCING FEDERAL OBLIGATIONS.
(a) In General.--As soon as practicable after the date of
the enactment of this subtitle, the Secretary shall enter into
a contract with an independent consultant to conduct a study of
actuarial alternatives for financing the federal obligations
assumed under this subtitle, together with an analysis of the
impact of each alternative on the federal budget. The Secretary
and the District Government shall cooperate with the consultant
and shall provide direct access to such information systems,
records, documents, information, or data as will enable the
consultant to conduct the study.
(b) Deadline.--The contract entered into under subsection
(a) shall require the consultant to report the results of the
study not later than 12 months after the date of enactment of
this Act.
(c) No Effect on Federal Obligations.--Nothing in this
section may be construed to affect any obligation of the
Federal Government to make payments under this subtitle.
SEC. 11083. ISSUANCE OF REGULATIONS BY SECRETARY.
The Secretary is authorized to issue regulations to
implement, interpret, administer and carry out the purposes of
this subtitle, and, in the Secretary's discretion, those
regulations may have retroactive effect.
SEC. 11084. EFFECT ON REFORM ACT AND OTHER LAWS.
(a) Reform Act.--
(1) In general.--This subtitle supersedes any
provision of the Reform Act inconsistent with this
subtitle and the regulations thereunder.
(2) Termination of payments to district retirement
funds.--Section 144 of the ReformAct (DC Code, sec. 1-
724) is amended by adding at the end the following new subsection:
``(f) Notwithstanding any other provision of this Act, no
Federal payments may be made to any Fund established by this
title for any fiscal year after fiscal year 1997.''.
(b) No Effect on Tax Treatment of Benefits.--Except as
otherwise specifically provided, nothing in this subtitle may
be construed to affect the application of any provision of the
Internal Revenue Code of 1986 to any annuity or other benefit
provided to or on behalf of any individual, including any
disability benefit or any portion of a retirement benefit
attributable to an individual's disability status.
(c) No Effect on Benefits for Park Police and Secret
Service.--Nothing in this subtitle shall be deemed to alter or
amend in any way the provisions of existing law (including the
Reform Act) relating to the program of annuities, other
retirement benefits, or medical benefits for members and
officers, retired members and officers, and survivors thereof,
of the United States Park Police force, the United States
Secret Service, or the United States Secret Service Uniformed
Division.
SEC. 11085. REFERENCE TO NEW FEDERAL PROGRAM FOR RETIREMENT OF JUDGES
OF DISTRICT OF COLUMBIA COURTS.
For provisions describing the retirement program for judges
and judicial personnel of the District of Columbia, see
subchapter B of chapter 4 of subtitle C.
SEC. 11086. FULL FAITH AND CREDIT.
Federal obligations for benefits under this subtitle are
backed by the full faith and credit of the United States.
SEC. 11087. SEVERABILITY OF PROVISIONS.
If any provision of this subtitle, or the application of
such provision to any person or circumstances, shall be held
invalid, the remainder of this subtitle, or the application of
such provision to persons or circumstances other than those as
to which it is held invalid, shall not be affected thereby.
Subtitle B--Management Reform Plans
SEC. 11101. SHORT TITLE.
This subtitle may be cited as the ``District of Columbia
Management Reform Act of 1997''.
SEC. 11102. MANAGEMENT REFORM PLANS FOR DISTRICT GOVERNMENT.
(a) In General.--In accordance with the provisions of this
subtitle, the District of Columbia Financial Responsibility and
Management Assistance Authority (hereafter in this subtitle
referred to as the ``Authority'') and the government of the
District of Columbia shall develop and implement management
reform plans--
(1) for each of the departments of the government
of the District of Columbia described in paragraph (1)
of subsection (b); and
(2) for all entities of the government of the
District of Columbia with respect to the items
described in paragraph (2) of subsection (b).
(b) Departments and Items Subject to Plans.--
(1) Departments described.--The departments
referred to in this paragraph are as follows:
(A) The Department of Administrative
Services.
(B) The Department of Consumer and
Regulatory Affairs.
(C) The Department of Corrections.
(D) The Department of Employment Services.
(E) The Department of Fire and Emergency
Medical Services.
(F) The Department of Housing and Community
Development.
(G) The Department of Human Services.
(H) The Department of Public Works.
(I) The Public Health Department.
(2) Items described.--The items referred to in this
paragraph are as follows:
(A) Asset management.
(B) Information resources management.
(C) Personnel.
(D) Procurement.
SEC. 11103. PROCEDURES FOR DEVELOPMENT OF PLANS.
(a) Contracts With Consultants.--Not later than 30 days
after the date of the enactment of this Act (or, at the option
of the Authority and upon notification to Congress, not later
than 60 days after such date), the Authority shall enter into
contracts with consultants to develop the management reform
plans under this subtitle.
(b) Deadline for Submission of Plans.--Under a contract
entered into with the Authority under subsection (a), a
consultant shall submit a completed management reform plan for
the department or item involved within 90 days (or, at the
option of the Authority, within 120 days).
(c) Authorization of Appropriations.--There are authorized
to be appropriated to the Authority such sums as may be
necessary to carry out the contracts entered into under this
section.
SEC. 11104. IMPLEMENTATION OF PLANS.
(a) Establishment of Management Reform Teams.--With respect
to each management reform plan developed under this subtitle,
there shall be a management reform team consisting of the
following:
(1) The Chair of the Authority (or the Chair's
designee).
(2) The Chair of the Council of the District of
Columbia (or the Chair's designee).
(3) The Mayor of the District of Columbia (or the
Mayor's designee).
(4) In the case of a management reform plan for a
department of the government of the District of
Columbia, the head of the department involved.
(b) Responsibility for Implementation of Plans.--
(1) Plans for specific departments.--In the case of
a management reform plan for a department of the
government of the District of Columbia, the head of the
department involved shall take any and all steps within
his or her authority to implement the terms of the
plan, in consultation and coordination with the other
members of the management reform team.
(2) Plans for items covering entire district
government.--In the case of a management reform plan
for an item described in section 11102(b)(2), each
member of the management reform team shall take any and
all steps within the member's authority to implement
the terms of the plan, under the direction and subject
to the instructions of the Chair of the Authority (or
the Chair's designee).
(3) Report to authority.--In carrying out any of
the management reform plans under this section, the
member of the management reform team described in
subsection (a)(4) shall report to the Authority.
SEC. 11105. REFORM OF POWERS AND DUTIES OF DEPARTMENT HEADS.
(a) Appointment and Removal.--
(1) Appointment.--
(A) In general.--During a control year, the
head of each department of the government of
the District of Columbia described in section
11102(b)(1) shall be appointed by the Mayor as
follows:
(i) Prior to appointment, the
Authority may submit recommendations
for the appointment to the Mayor.
(ii) In consultation with the
Authority and the Council, the Mayor
shall nominate an individual for
appointment and notify the Council of
the nomination.
(iii) After the expiration of the
7-day period which begins on the date
the Mayor notifies the Council of the
nomination under clause (ii), the Mayor
shall notify the Authority of the
nomination.
(iv) The nomination shall be
effective subject to approval by a
majority vote of the Authority.
(B) Appointment by authority if no
nomination made within 30 days.--During a
control year, if the Mayor fails to nominate an
individual to fill a vacancy in the position of
the head of any of the departments described in
section 11102(b)(1) during the 30-day period
which begins on the date the vacancy begins (or
during such longer period as the Authority may
establish, upon notification to Congress), the
Authority shall appoint an individual to fill
the vacancy.
(C) Positions deemed vacant upon
enactment.--For purposes of this paragraph, a
vacancy shall be deemed to exist in the
position of the head of each of the departments
described in section 11102(b)(1) upon the date
of the enactment of this Act. Nothing in this
subparagraph shall be deemed to affect any of
the powers and duties of any individual serving
as the head of such a department as of such
date.
(2) Removal.--During a control year, the head of
any of the departments of the government of the
District of Columbia described in section 11102(b)(1)
may be removed by the Authority or by the Mayor with
the approval of the Authority.
(3) Control year defined.--In this subsection, the
term ``control year'' has the meaning given such term
in section 305(4) of the District of Columbia Financial
Responsibility and Management Assistance Act of 1995.
(b) Control Over Personnel.--
(1) In general.--Notwithstanding any other
provision of law and except as provided in paragraph
(3), all personnel of the departments of the government
of the District of Columbia described in section
11102(b)(1) shall be appointed by and shall act under
the direction and control of the head of the department
involved.
(2) Reassignment of personnel.--The head of each of
the departments described in section 11102(b)(1) may
reassign any personnel of the department in such manner
as the head considers appropriate.
(3) Requirements for adverse actions.--The head of
each of the departments described in section
11102(b)(1) may take corrective or adverse action
against any personnel of the department pursuant to
rules (promulgated consistent with the publication and
comment provisions of the District of Columbia
Administrative Procedure Act) which--
(A) provide that adverse actions may only
be taken for cause;
(B) define the causes for which a
corrective or adverse action may be taken;
(C) require prior written notice of the
grounds on which the action is proposed to be
taken;
(D) require an opportunity to be heard
(which may be in writing only) before the
action becomes effective, unless the head of
the department finds that taking action prior
to the exercise of such opportunity is
necessary to protect the integrity of
government operations, in which case a hearing
shall be afforded within a reasonable time
after the action becomes effective; and
(E) provide that the head of the department
shall be the final administrative authority
with respect to the action, subject to judicial
review of the record of the administrative
proceeding in an action against the District of
Columbia to be brought only in the Superior
Court for the District of Columbia.
SEC. 11106. NO EFFECT ON POWERS OF FINANCIAL RESPONSIBILITY AND
MANAGEMENT ASSISTANCE AUTHORITY.
Nothing in this subtitle may be construed to affect the
authority of the District of Columbia Financial Responsibility
and Management Assistance Authority to carry out any of its
powers under the District of Columbia Financial Responsibility
and Management Assistance Act of 1995.
Subtitle C--Criminal Justice
CHAPTER 1--CORRECTIONS
SEC. 11201. BUREAU OF PRISONS.
(a) Felons Sentenced Pursuant to the Truth-In-Sentencing
Requirements.--Not later than October 1, 2001, any person who
has been sentenced to incarceration pursuant to the District of
Columbia Code or the truth-in-sentencing system as described in
section 11211 shall be designated by the Bureau of Prisons to a
penal or correctional facility operated or contracted for by
the Bureau of Prisons, for such term of imprisonment as the
court may direct. Such persons shall be subject to any law or
regulation applicable to persons committed for violations of
laws of the United States consistent with the sentence imposed.
(b) Felons Sentenced Pursuant to the D.C. Code.--
Notwithstanding any other provision of law, not later than
December 31, 2001, the Lorton Correctional Complex shall be
closed and the felony population sentenced pursuant to the
District of Columbia Code residing at the Lorton Correctional
Complex shall be transferred to a penal or correctional
facility operated or contracted for by the Bureau of Prisons.
Such persons shall be subject to any law or regulation
applicable to persons committed for violations of laws of the
United States consistent with the sentence imposed, and the
Bureau of Prisons shall be responsible for the custody, care,
subsistence, education, treatment and training of such persons.
(c) Privatization.--
(1) Transition of inmates from lorton.--The Bureau
of Prisons shall house, in private contract
facilities--
(A) at least 2000 District of Columbia
sentenced felons by December 31, 1999; and
(B) at least 50 percent of the District of
Columbia sentenced felony population by
September 30, 2003.
(2) Duties of deputy attorney general.--The Deputy
Attorney General shall--
(A) be responsible for overseeing Bureau of
Prisons privatization activities; and
(B) submit a report to Congress on October
1 of each year detailing the progress and
status of compliance with privatization
requirements.
(3) Duties of attorney general.--The Attorney
General shall--
(A) conduct a study of correctional
privatization, including a review of relevant
research and related legal issues, and
comparative analysis of the cost effectiveness
and feasibility of private sector and Federal,
State, and local governmental operation of
prisons and corrections programs at all
security levels; and
(B) submit a report to Congress no later
than one year after the date of enactment of
this Act.
(d) Site Acquisition and Construction.--In order to house
the District of Columbia felony inmate population the Bureau of
Prisons shall acquire land, construct and build new facilities
at sites selected by the Bureau of Prisons, or contract for
appropriate bed space, but no facilities may be built on the
grounds of the Lorton Reservation.
(e) National Capital Planning.--Notwithstanding any other
provision of law, the requirements of the National Capital
Planning Act of 1952 (40 U.S.C. 71 et seq.) shall not apply to
any actions taken by the Bureau of Prisons or its agents or
employees.
(f) Department of Corrections Authority.--The District of
Columbia Department of Corrections shall remain responsible for
the custody, care, subsistence, education, treatment, and
training of any person convicted of a felony offense pursuant
to the District of Columbia Code and housed at the Lorton
Correctional Complex untilDecember 31, 2001, or the date on
which the last inmate housed at the Lorton Correctional Complex is
designated by the Bureau of Prisons, whichever is earlier.
(g) Lorton Correctional Complex.--
(1) Transfer of functions.--Notwithstanding any
other provision of law, to the extent the Bureau of
Prisons assumes functions of the Department of
Corrections under this subtitle, the Department is no
longer responsible for such functions and the
provisions of ``An Act to create a Department of
Corrections in the District of Columbia'', approved
June 27, 1946 (D.C. Code 24-441, 442), that apply with
respect to such functions are no longer applicable.
Except as provided in paragraph (2), any property on
which the Lorton Correctional Complex is located shall
be transferred to the Department of the Interior.
(2) Transfer of land.--
(A) In general.--
(i) Fairfax county water
authority.--150 acres of parcel 106-4-
001-54 located west of Ox Road (State
Route 123) on which the Lorton
Correctional Complex is located shall
be transferred, without consideration,
to the Fairfax County Water Authority
of Fairfax, Virginia.
(ii) Fairfax county department of
parks and recreation.--Any acres of
parcel 106-4-001-54 located west of Ox
Road (State Route 123) on which the
Lorton Correctional Complex is located
not transferred under clause (i) shall
be assigned to the Department of the
Interior, National Park Service, for
conveyance to the Fairfax County
Department of Parks and Recreation for
recreational purposes pursuant to the
section 203(k)(2) of the Federal
Property and Administrative Services
Act of 1949 (40 U.S.C. 484(k)(2)).
(B) Condition of transfer.--
(i) Water services.--The United
States Government shall not transfer
any parcels under this paragraph unless
the Fairfax County Water Authority
certifies that it will continue to
provide water services to the Lorton
Correctional Complex at the rate it
provided water services prior to the
transfer.
(ii) Restriction on transfer.--No
Federal agency may transfer the
property under this paragraph until the
prospective recipient of the property
provides to such agency--
(I) a land description
survey suitable for
transferring property under
Virginia law; and
(II) any necessary surveys
to determine the presence of
any hazardous substances,
contaminants or pollutants.
(iii) Lorton correctional
complex.--The Lorton Correctional
Complex shall remain available for the
District of Columbia Department of
Corrections to house District of
Columbia felony inmates until the last
inmate at the Complex has been
designated by the Bureau of Prisons or
until December 31, 2003, whichever is
earlier.
(C) Authorization.--The General Services
Administration and the National Park Service is
authorized to expend any funds necessary to
ensure that the transfer or conveyance under
subparagraph (A) complies with all applicable
environmental and historic preservation laws.
(3) Water mains.--Any water mains located on or
across the Lorton Correctional Complex on the date of
the transfers under paragraph (2), that are owned by
the Fairfax County Water Authority and provide water to
the public, shall be permitted to remain in place, and
shall be operated, maintained, repaired, and replaced
by the Fairfax County Water Authority or a successor
agency furnishing water to the public in Fairfax County
or adjacent jurisdictions, but shall not interfere with
operations of the Lorton Correctional Complex.
(g) District of Columbia Corrections Information Council.--
(1) Establishment.--There is established a council
to be known as the District of Columbia Correction
Information Council (hereafter referred to as
``Council'').
(2) Membership.--The Council shall be composed of 3
members appointed as follows:
(A) 2 individuals appointed by the mayor of
the District of Columbia.
(B) 1 individual appointed by the Council
of the District of Columbia.
(3) Compensation.--Members of the Council may not
receive pay, allowances, or benefits by reason of their
service on the Council.
(4) Duties.--The Council shall report to the
Director of the Bureau of Prisons with advice and
information regarding matters affecting the District of
Columbia sentenced felon population.
(h) Timing of Inmate Transfers.--As soon as practicable
after the date of the enactment of this Act, the Director of
the Bureau of Prisons shall begin the transferring of inmates
to Bureau of Prison or private contract facilities required by
this section.
SEC. 11202. CORRECTIONS TRUSTEE.
(a) Appointment and Removal of Trustee.--
(1) Appointment.--Pursuant to the Federal
Government's assumption of responsibility for persons
convicted of a felony offense under the District of
Columbia Code, the Attorney General, in consultation
with the Chairman of the District of Columbia Financial
Responsibility and Management Assistance Authority
(hereafter in this chapter referred to as the ``D.C.
Control Board''), the Mayor of the District of
Columbia, the District of ColumbiaCouncil, and the
District of Columbia judiciary, shall select a Corrections Trustee, who
shall be an independent officer of the government of the District of
Columbia, to oversee financial operations of the District of Columbia
Department of Corrections until the Bureau of Prisons has designated
all felony offenders sentenced under the District of Columbia Code to a
penal or correctional facility operated or contracted for by the Bureau
of Prisons under section 11201.
(2) Removal.--The Corrections Trustee may be
removed by the Mayor with the concurrence of the
Attorney General. The Attorney General shall have the
authority to remove the Corrections Trustee for
misfeasance or malfeasance in office. At the request of
the Corrections Trustee, the District of Columbia
Financial Responsibility and Management Assistance
Authority may exercise any of its powers and
authorities on behalf of the Corrections Trustee.
(b) Duties of Trustee.--Beginning on the date of
appointment and continuing until the felony population
sentenced pursuant to the District of Columbia Code residing at
the Lorton Correctional Complex is transferred to a penal or
correctional facility operated or contracted for by the Bureau
of Prisons, the Corrections Trustee shall carry out the
following responsibilities (notwithstanding any law of the
District of Columbia to the contrary):
(1) Exercise financial oversight over the District
of Columbia Department of Corrections and allocate
funds as enacted in law or as otherwise allocated,
including funds for short term improvements which are
necessary for the safety and security of staff, inmates
and the community.
(2) Purchase any necessary goods or services on
behalf of the District of Columbia Department of
Corrections consistent with Federal procurement
regulations as they apply to the Bureau of Prisons.
(c) Funding.--
(1) In general.--Funds available for the
Corrections Trustee, staff and all necessary and
appropriate operations shall be made available to the
extent provided in appropriations acts to the
Corrections Trustee. Funding requests shall be proposed
by the Corrections Trustee to the President and
Congress for each Fiscal Year.
(2) Reimbursement to bureau of prisons.--Upon
receipt of Federal funds, the Corrections Trustee shall
immediately provide an advance reimbursement to the
Bureau of Prisons of all funds identified by the
Congress for construction of new prisons and major
renovations, which shall remain available until
expended. The Bureau of Prisons shall be responsible
and accountable for determining how these funds shall
be used for renovation and construction, including
type, security level, and location of new facilities.
(3) Accountability and reports.--The District of
Columbia Department of Corrections and the Bureau of
Prisons shall maintain accountability for funds
reimbursed from the Corrections Trustee, and shall
provide expense reports by project at the request of
the Corrections Trustee.
(d) Compensation and Detailees.--The Corrections Trustee
shall be compensated at a rate not to exceed the basic pay
payable for Level IV of the Executive Schedule. The Corrections
Trustee may appoint and fix the pay of additional staff without
regard to the provisions of the District of Columbia Code
governing appointments and salaries, without regard to the
provisions of title 5, United States Code, governing
appointments in the competitive service, and without regard to
the provisions of chapter 51 and subchapter III of chapter 53
of title 5, United States Code, relating to classification and
General Schedule pay rates. Upon request of the Corrections
Trustee, the head of any Federal department or agency may, ona
reimbursable or non reimbursable basis, provide services and detail any
personnel of that department or agency to the Corrections Trustee to
assist in carrying out his duties.
(e) Procurement and Judicial Review.--The provisions of the
District of Columbia Code governing procurement shall not apply
to the Corrections Trustee. The Corrections Trustee may seek
judicial enforcement of his authority to carry out his duties.
(f) Preservation of Retirement and Certain Other Rights of
Federal Employees Who Become Employed by the Corrections
Trustee.--
(1) In general.--A Federal employee who, within 3
days after separating from the Federal Government, is
appointed Corrections Trustee or becomes employed by
the Corrections Trustee--
(A) shall be treated as an employee of the
Federal Government for purposes of chapters 83,
84, 87, and 89 of title 5 of the United States
Code; and
(B) if, after serving with the Trustee,
such employee becomes reemployed by the Federal
Government, shall be entitled to credit for the
full period of such individual's service with
the Trustee, for purposes of determining the
applicable leave accrual rate.
(2) Regulations.--The Office of Personnel
Management shall prescribe such regulations as may be
necessary to carry out this subsection.
SEC. 11203. PRIORITY CONSIDERATION FOR EMPLOYEES OF THE DISTRICT OF
COLUMBIA.
(a) Establishment.--As soon as practicable after
appointment, the Bureau of Prisons, working with the
Corrections Trustee, shall establish a priority consideration
program to facilitate employment placement for employees of the
District of Columbia Department of Corrections who are
scheduled to be separated from service as a result of closing
the Lorton Correctional Complex.
(b) Provisions.--The priority consideration program shall
include provisions under which a vacant federal correctional
institution position established as a result of this Act and
identified for external hiring shall not be filled by the
appointment of any individual from outside of the District of
Columbia Department of Corrections if there is available any
interested applicant within the District of Columbia Department
of Corrections who meets all qualification and suitability
requirements for Bureau of Prisons law enforcement positions,
including those related to criminal history, educational
experience and level of functions, drug use, and work-related
misconduct. The priority consideration program shall also
include provisions under which an employee described in
subsection (a) who does not meet the qualification and
suitability requirements for Bureau of Prisons law enforcement
positions shall receive priority consideration for other
Federal positions, and any such employee who is found to be
well qualified for such a position may be appointed without
regard to the provisions of title 5, United States Code,
governing appointments in the competitive service. Such program
shall terminate one year after the closing of the Lorton
Correctional Complex.
SEC. 11204. AMENDMENTS RELATED TO PERSONS WITH A MENTAL DISEASE OR
DEFECT.
Title 18, United States Code, is amended as follows:
(1) Section 4246 is amended--
(A) in subsection (a) by inserting ``in the
custody of the Bureau of Prisons'' after
``certifies that a person''; and
(B) by adding at the end the following new
subsection:
``(h) Definition.--As used in this chapter the term
``State'' includes the District of Columbia.''.
(2) Section 4247(a) is amended--
(A) in paragraph (1)(D) by striking ``and''
after the semi-colon;
(B) in paragraph (2) by striking the period
and inserting ``; and''; and
(C) by adding at the end the following new
paragraph:
``(3) `State' includes the District of Columbia.''.
(3) Section 4247(j) of title 18, United States
Code, is amended by striking ``This chapter does'' and
inserting ``Sections 4241, 4242, 4243, and 4244 do''.
SEC. 11205. LIABILITY FOR AND LITIGATION AUTHORITY OF CORRECTIONS
TRUSTEE.
(a) Liability.--The District of Columbia shall defend any
civil action or proceeding brought in any court or other
official Federal, state, or municipal forum against the
Corrections Trustee, or against the District of Columbia or it
officers, employees, or agents, and shall assume any liability
resulting from such an action or proceeding, if the action or
proceeding arises from--
(1) an inmate's confinement with the District of
Columbia Department of Corrections;
(2) the District of Columbia's operation or
management of the buildings, facilities, or lands
comprising the Lorton property; or
(3) the District of Columbia's operations or
activities occurring on any property not specifically
transferred to the administrative control of the
Federal Government pursuant to this Act.
(b) Litigation.--
(1) Corporation counsel.--Subject to paragraph (2),
the Corporation Counsel of the District of Columbia
shall provide litigation services to the Corrections
Trustee, except that the Trustee may instead elect,
either generally or in relation to particular cases or
classes of cases, to hire necessary staff and personnel
or enter into contracts for the provision of litigation
services at the Trustee's expense.
(2) Attorney general.--
(A) In general.--Notwithstanding paragraph
(1), with respect to any litigation involving
the Corrections Trustee, the Attorney General
may--
(i) direct the litigation of the
Trustee, and of the District of
Columbia on behalf of the Trustee; and
(ii) provide on a reimbursable or
non-reimbursable basis litigation
services for the Trustee at the
Trustee's request or on the Attorney
General's own initiative.
(B) Approval of settlement.--With respect
to any litigation involving the Corrections
Trustee, the Trustee may not agree to any
settlement involving any form of equitable
relief without the approval of the Attorney
General. The Trustee shall provide to the
Attorney General such notice and reports
concerning litigation as the Attorney General
may direct.
(C) Discretion.--Any decision to exercise
any authority of the Attorney General under
this subsection shall be in the sole discretion
of the Attorney General and shall not be
reviewable in any court.
(c) Limitations.--Nothing in this section shall be
construed--
(1) as a waiver of sovereign immunity, or as
limiting any other defense or immunity that would
otherwise be available to the United States, the
District of Columbia, their agencies, officers,
employees, or agents; or
(2) to obligate the District of Columbia to
represent or indemnify the Corrections Trustee or any
officer, employee, or agent where the Trustee (or any
person employed by or acting under the authorityof the
Trustee) acts beyond the scope of his authority.
SEC. 11206. PERMITTING EXPENDITURE OF FUNDS TO CARRY OUT CERTAIN SEWER
AGREEMENT.
Notwithstanding the fourth sentence of section 446 of the
District of Columbia Self-Government and Governmental
Reorganization Act, the District of Columbia is authorized to
obligate or expend such funds as may be necessary during a
fiscal year (beginning with fiscal year 1997) to carry out the
Sewage Delivery System and Capacity Purchase Agreement between
Fairfax County and the District of Columbia with respect to
Project Number K00301, without regard to the amount
appropriated for such purpose in the budget of the District of
Columbia for the fiscal year.
CHAPTER 2--SENTENCING
SEC. 11211. TRUTH IN SENTENCING COMMISSION.
(a) Establishment.--There is established as an independent
agency of the District of Columbia a District of Columbia Truth
in Sentencing Commission (hereafter in this chapter referred to
as ``the Commission''), which shall consist of 7 voting
members. The Attorney General, or the Attorney General's
designee, shall be the chairperson of the Commission and shall
have the duty to convene meetings of the Commission to ensure
that it fulfills its responsibilities under this Act. The
members shall serve for the life of the Commission and shall be
subject to removal only for neglect of duty, malfeasance in
office, or other good cause shown.
(b) Membership.--The members of the Commission shall have
knowledge and responsibility with respect to criminal justice
matters. Two members of the Commission shall be judges of the
Superior Court of the District of Columbia, and shall be
appointed by the chief judge of that court; one member shall be
a representative of the District of Columbia Council and shall
be appointed by the chairperson or chairperson pro temp of the
Council; one member shall be a representative of the executive
branch of the District of Columbia government with official
responsibilities for criminal justice matters in the District
of Columbia and shall be appointed by the Mayor of the District
of Columbia; one member shall be a representative of the
District of Columbia Public Defender Service and shall be
appointed by the Director of such Service; and one member shall
be a representative of the United States Attorney for the
District of Columbia and shall be appointed by the United
States Attorney. A representative of the Federal Bureau of
Prisons and a representative of the office of Corporation
Counsel of the District of Columbia shall each serve as a non-
voting, ex officio member.
(c) Vacancy.--Any vacancy in the Commission shall be filled
in the same manner as the original appointment. Members of the
Commission shall receive no compensation for their services,
but shall be reimbursed for travel, subsistence, and other
necessary expenses incurred in the performance of duties vested
in the Commission, but not in excess of the maximum amounts
authorized under section 456 of title 28, United States Code.
SEC. 11212. GENERAL DUTIES, POWERS, AND GOALS OF COMMISSION.
(a) Recommendations.--The Commission shall, within 180 days
after the enactment of this Act, make recommendations to the
District of Columbia Council for amendments to the District of
Columbia Code with respect to the sentences to be imposed for
all felonies committed on or after 3 years after the date of
enactment of this Act.
(b) Contents of Recommendations.--Such recommendations
shall--
(1) as to all felonies described in paragraph (h),
meet the truth in sentencing standards of 20104(a)(1)
of the Violent Crime Control and Law Enforcement Act of
1994;
(2) as to all felonies ensure that--
(A) an offender will have a sentence
imposed that--
(i) reflects the seriousness of the
offense and the criminal history of the
offender; and
(ii) provides for just punishment,
affords adequate deterrence to
potential future criminal conduct of
the offender and others, and provides
the offender with needed educational or
vocational training, medical care, and
other correctional treatment;
(B) good time shall be calculated pursuant
to section 3624 of title 18, United States
Code; and
(C) an adequate period of supervision will
be imposed to follow release from the
imprisonment.
(c) Death Penalty.--The Commission shall not have the power
to recommend a sentence of death for any offense nor for any
offense a term of imprisonment less than that prescribed by the
D.C. Code as a mandatory minimum sentence.
(d) Other Features of Recommendations.--The Commission
shall ensure that its recommendations--
(1) will be neutral as to the race, sex, marital
status, ethnic origin, religious affiliation, national
origin, creed, socioeconomic status, and sexual
orientation of offenders;
(2) will include provisions designed to maximize
the effectiveness of the drug court of the Superior
Court of the District of Columbia; and
(3) will be fully consistent with all other
provisions of this Act, including provisions relating
to the administration of probation, parole, and
supervised release for District of Columbia Code
offenders.
(e) Vote; Termination.--The recommendations of the
Commission required under subsections (a)-(d) shall be adopted
by a vote of not less than 6 of the members and when made shall
be transmitted forthwith to the District of Columbia Council.
The Commission shall cease to exist 90 days after the
transmittal of recommendations to the Council or on the last
date on which timely recommendations may be made if the
Commission is unable to agree on such recommendations.
(f) Recommendations for Implementation.--In fulfilling its
responsibilities, the Commission may adopt by a vote of not
less than 6 of the members and transmit to the Superior Court
of the District of Columbia recommended rules and principles
for determining the sentence to be imposed, including--
(1) whether to impose a sentence of probation, a
term of imprisonment and/or a fine, and the amount or
length thereof, and including intermediate sanctions in
appropriate cases; and
(2) whether multiple sentences of terms of
imprisonment should run concurrently or consecutively.
(g) Powers.--The Commission is authorized--
(1) to hold hearings and call witnesses that might
assist the Commission in the exercise of its powers;
(2) to perform such other functions as may be
necessary to carry out the purposes of this section;
and
(3) except as otherwise provided, to conduct
business, exercise powers, and fulfill duties by the
vote of a majority of the members present at any
meeting.
(h) Felonies Described.--The felonies described in this
subsection are violations of any of the following provisions of
law:
(1) The following provisions relating to arson:
(A) Section 820 of the Act entitled ``An
Act to establish a code of law for the District
of Columbia,'' approved March 3, 1901 (DC Code,
sec. 22-401).
(B) Section 821 of the Act entitled ``An
Act to establish a code of law for the District
of Columbia,'' approved March 3, 1901 (DC Code,
sec. 22-402).
(2) The following provisions relating to felony
assault:
(A) Section 803 of the Act entitled ``An
Act to establish a code of law for the District
of Columbia,'' approved March 3, 1901 (DC Code,
sec. 22-501).
(B) Section 804 of the Act entitled ``An
Act to establish a code of law for the District
of Columbia,'' approved March 3, 1901 (DC Code,
sec. 22-502).
(C) Section 805 of the Act entitled ``An
Act to establish a code of law for the District
of Columbia,'' approved March 3, 1901 (DC Code,
sec. 22-503).
(D) Section 806a of the Act entitled ``An
Act to establish a code of law for the District
of Columbia,'' approved March 3, 1901 (DC Code,
sec. 22-504.1).
(E) Section 432 of the Revised Statutes,
relating to the District of Columbia (DC Code,
sec. 22-505).
(F) Section 807 of the Act entitled ``An
Act to establish a code of law for the District
of Columbia,'' approved March 3, 1901 (DC Code,
sec. 22-506).
(3) Section 502 of the District of Columbia Theft
and White Collar Crimes Act of 1982 (DC Code, sec. 22-
722) (relating to obstruction of justice).
(4) Section 3 of the Act of February 13, 1885
(chapter 58; 23 Stat. 303) (DC Code, sec. 22-901)
(relating to cruelty to children).
(5) Section 823 of the Act entitled ``An Act to
establish a code of law for the District of Columbia,''
approved March 3, 1901 (DC Code, sec. 22-1801)
(relating to first degree burglary).
(6) Section 812 of the Act entitled ``An Act to
establish a code of law for the District of Columbia,''
approved March 3, 1901 (DC Code, sec. 22-2101)
(relating to kidnapping).
(7) The following provisions relating to murder and
manslaughter:
(A) Section 798 of the Act entitled ``An
Act to establish a code of law for the District
of Columbia,'' approved March 3, 1901 (DC Code,
sec. 22-2401).
(B) Section 799 of the Act entitled ``An
Act to establish a code of law for the District
of Columbia,'' approved March 3, 1901 (DC Code,
sec. 22-2402).
(C) Section 800 of the Act entitled ``An
Act to establish a code of law for the District
of Columbia,'' approved March 3, 1901 (DC Code,
sec. 22-2403).
(D) Section 801 of the Act entitled ``An
Act to establish a code of law for the District
of Columbia,'' approved March 3, 1901 (DC Code,
sec. 22-2404).
(E) Section 802 of the Act entitled ``An
Act to establish a code of law for the District
of Columbia,'' approved March 3, 1901 (DC Code,
sec. 22-2405).
(F) Section 802a of the Act entitled ``An
Act to establish a code of law for the
Districtof Columbia,'' approved March 3, 1901 (DC Code, sec. 22-2406).
(8) Section 8 of the Act of July 15, 1932 (chapter
492; 47 Stat. 698) (DC Code, sec. 22-2601) (relating to
prison breach).
(9) The Act entitled ``An Act to prohibit the
introduction of contraband into the District of
Columbia penal institutions,'' approved December 15,
1941 (DC Code, sec. 22-2603).
(10) Section 810 of the Act entitled ``An Act to
establish a code of law for the District of Columbia,''
approved March 3, 1901 (DC Code, sec. 22-2901)
(relating to robbery).
(11) Section 811a of the Act entitled ``An Act to
establish a code of law for the District of Columbia,''
approved March 3, 1901 (DC Code, sec. 22-2903)
(relating to carjacking).
(12) The Dangerous Weapons Act (DC Code, sec. 22-
3201 et seq.).
(13) The following provisions relating to sex
offenses:
(A) Section 201 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4102).
(B) Section 202 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4103).
(C) Section 203 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4104).
(D) Section 204 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4105).
(E) Section 207 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4108).
(F) Section 208 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4109).
(G) Section 209 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4110).
(H) Section 212 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4113).
(I) Section 213 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4114).
(J) Section 214 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4115).
(K) Section 215 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4116).
(L) Section 217 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4118).
(M) Section 219 of the Anti-Sexual Abuse
Act of 1994 (DC Code, sec. 22-4120).
(14) Section 401 of the District of Columbia
Uniform Controlled Substances Act of 1981 (D.C. Code,
sec. 33-541) (relating to recidivist drug offenders),
but only in the case of a second or subsequent
violation.
SEC. 11213. DATA COLLECTION.
(a) Data for Attorney General.--The Commission, the
Superior Court of the District of Columbia, the District of
Columbia Department of Corrections, and other agencies as
necessary shall provide to the Attorney General such data as
are requested in furtherance of this Act.
(b) Superior Court.--The Superior Court of the District of
Columbia, in connection with defendants sentenced in such
Court, shall provide to the Commission and the Attorney General
such data as are requested for planning, statistical analysis
or projecting future prison population levels.
SEC. 11214. ENACTMENT OF AMENDMENTS TO DISTRICT OF COLUMBIA CODE.
If, within 270 days after the date of the enactment of this
Act, the Council of the District of Columbia has failed to
amend the District of Columbia Code to enact in whole the
recommendations of the Commission under this chapter, or if the
Commission fails to make such recommendations within the
deadline established under such section, the Attorney General
(after consultation with the Commission) shall promulgate
within 90 days amendmentsto the District of Columbia Code with
respect to the sentences to be imposed for all offenses committed on or
after 3 years after the date of the enactment of this Act. Such
amendments shall be consistent with the standards of subsections (a)
through (d) of section 11212. Such amendments shall take effect 30 days
after the Attorney General transmits the recommendations to Congress.
CHAPTER 3--OFFENDER SUPERVISION AND PAROLE
SEC. 11231. PAROLE.
(a) Paroling Jurisdiction.--
(1) Jurisdiction of parole commission to grant or
deny parole and to impose conditions.--Not later than
one year after date of the enactment of this Act, the
United States Parole Commission shall assume the
jurisdiction and authority of the Board of Parole of
the District of Columbia to grant and deny parole, and
to impose conditions upon an order of parole, in the
case of any imprisoned felon who is eligible for parole
or reparole under the District of Columbia Code. The
Parole Commission shall have exclusive authority to
amend or supplement any regulation interpreting or
implementing the parole laws of the District of
Columbia with respect to felons, provided that the
Commission adheres to the rulemaking procedures set
forth in section 4218 of title 18, United States Code.
(2) Jurisdiction of parole commission to revoke
parole or modify conditions.--On the date in which the
District of Columbia Offender Supervision, Defender,
and Courts Services Agency is established under section
11233, the United States Parole Commission shall assume
any remaining powers, duties, and jurisdiction of the
Board of Parole of the District of Columbia, including
jurisdiction to revoke parole and to modify the
conditions of parole, with respect to felons.
(3) Jurisdiction of superior court.--On the date on
which the District of Columbia Offender Supervision,
Defender, and Courts Services Agency is established
under section 11233, the Superior Court of the District
of Columbia shall assume the jurisdiction and authority
of the Board of Parole of the District of Columbia to
grant, deny, and revoke parole, and to impose and
modify conditions of parole, with respect to
misdemeanants.
(b) Abolition of the Board of Parole.--On the date on which
the District of Columbia Offender Supervision, Defender, and
Courts Services Agency is established under section 11233, the
Board of Parole established in the District of Columbia Board
of Parole Amendment Act of 1987 shall be abolished.
(c) Rulemaking and Legislative Responsibility for Parole
Matters.--The Parole Commission shall exercise the authority
vested in it by this section pursuant to the parole laws and
regulations of the District of Columbia, except that the
Council of the District of Columbia and the Board of Parole of
the District of Columbia may not revise any such laws or
regulations (as in effect on the date of the enactment of this
Act) without the concurrence of the Attorney General.
(d) Increase in the Authorized Number of United States
Parole Commissioners.--Section 2(c) of the Parole Commission
Phaseout Act of 1996 (Public Law 104-232) is amended to read as
follows:
``(c) The United States Parole Commission shall have no
more than five members.''.
SEC. 11232. PRETRIAL SERVICES, DEFENSE SERVICES, PAROLE, ADULT
PROBATION AND OFFENDER SUPERVISION TRUSTEE.
(a) Appointment and Removal.--
(1) Appointment.--The Attorney General, in
consultation with the Chairman of the District of
Columbia Financial Responsibility and
ManagementAssistance Authority (hereafter in this section referred to
as the ``D.C. Control Board'') and the Mayor of the District of
Columbia, shall appoint a Pretrial Services, Defense Services, Parole,
Adult Probation and Offender Supervision Trustee, who shall be an
independent officer of the government of the District of Columbia, to
effectuate the reorganization and transition of functions and funding
relating to pretrial services, defense services, parole, adult
probation and offender supervision.
(2) Removal.--The Trustee may be removed by the
Mayor with the concurrence of the Attorney General. The
Attorney General shall have the authority to remove the
Trustee for misfeasance or malfeasance in office. At
the request of the Trustee, the District of Columbia
Financial Responsibility and Management Assistance
Authority may exercise any of its powers and
authorities on behalf of the Trustee.
(b) Authority.--Beginning on the date of appointment, and
continuing until the District of Columbia Offender Supervision,
Defender, and Courts Services Agency is established under
section 11233, the Trustee shall--
(1) have the authority to exercise all powers and
functions authorized for the Director of the District
of Columbia Offender Supervision, Defender and Courts
Services Agency;
(2) have the authority to direct the actions of all
agencies of the District of Columbia whose functions
will be assumed by or within the District of Columbia
Offender Supervision, Defender and Courts Services
Agency, and of the Board of Parole of the District of
Columbia, including the authority to discharge or
replace any officers or employees of these agencies,
except that the Trustee may not direct the conduct of
particular cases by the District of Columbia Public
Defender Service;
(3) exercise financial oversight over all agencies
of the District of Columbia whose functions will be
assumed by or within the District of Columbia Offender
Supervision, Defender and Courts Services Agency, and
over the Board of Parole of the District of Columbia,
and allocate funds to these agencies as appropriated by
Congress and allocated by the President;
(4) receive and transmit to the District of
Columbia Pretrial Services Agency all funds
appropriated for such agency; and
(5) receive and transmit to the District of
Columbia Public Defender Service all funds appropriated
for such agency.
(c) Compensation.--The Trustee shall be compensated at a
rate not to exceed the basic pay payable for Level IV of the
Executive Schedule. The Trustee may appoint and fix the pay of
additional staff without regard to the provisions of the
District of Columbia Code governing appointments and salaries,
without regard to the provisions of title 5, United States
Code, governing appointments in the competitive service, and
without regard to the provisions of chapter 51 and subchapter
III of Chapter 53 of title 5, United States Code, relating to
classification and General Schedule pay rates. Upon request of
the Trustee, the head of any Federal department or agency may,
on a reimbursable or non-reimbursable basis, provide services
and/or detail any personnel of that department or agency to the
Trusteeship to assist in carrying out its duties.
(d) Procurement and Judicial Review.--The provisions of the
District of Columbia Code governing procurement shall not apply
to the Trustee. The Trustee may enter into such contracts as
the Trustee considers appropriate to carry out the Trustee's
duties. The Trustee mayseek judicial enforcement of the
Trustee's authority to carry out the Trustee's duties.
(e) Preservation of Retirement and Certain Other Rights of
Federal Employee Who Becomes the Trustee or Federal Employees
Who Become Employed by the Trustee.--
(1) In general.--A Federal employee who, within 3
days after separating from the Federal Government, is
appointed Trustee or becomes employed by the Trustee--
(A) shall be treated as an employee of the
Federal Government for purposes of chapters 83,
84, 87, and 89 of title 5 of the United States
Code; and
(B) if, after serving with the Trustee,
such employee becomes reemployed by the Federal
Government, shall be entitled to credit for the
full period of such individual's service with
the Trustee, for purposes of determining the
applicable leave accrual rate.
(2) Regulations.--The Office of Personnel
Management shall prescribe such regulations as may be
necessary to carry out this subsection.
(f) Funding.--Funds available for operations of the Trustee
shall be made available to the extent provided in
appropriations acts to the Trustee, through the State Justice
Institute. Funding requests shall be proposed by the Trustee to
the President and Congress for each Fiscal Year.
(g) Liability and Litigation Authority.--
(1) Liability.--The District of Columbia shall
defend any civil action or proceeding brought in any
court or other official Federal, state, or municipal
forum against the Trustee, or against the District of
Columbia or its officers, employees, or agents, and
shall assume any liability resulting from such an
action or proceeding, if the action or proceeding
arises from the--
(A) supervision of offenders on probation,
parole, or supervised release;
(B) provision of pretrial services by the
District of Columbia; or
(C) activities of the District of Columbia
Board of Parole.
(2) Litigation.--
(A) Corporation counsel.--Subject to
subparagraph (B), the Corporation Counsel of
the District of Columbia shall provide
litigation services to the Trustee, except that
the Trustee may instead elect, either generally
or in relation to particular cases or classes
of cases, to hire necessary staff and personnel
or enter into contracts for the provision of
litigation services at the Trustee's expense.
(B) Attorney general.--
(i) In general.--Notwithstanding
subparagraph (A), with respect to any
litigation involving the Trustee, the
Attorney General may--
(I) direct the litigation
of the Trustee, and of the
District of Columbia on behalf
of the Trustee; and
(II) provide on a
reimbursable or non-
reimbursable basis litigation
services for the Trustee at the
Trustee's request or on the
Attorney General's own
initiative.
(ii) Approval of settlement.--With
respect to any litigation involving the
Trustee, the Trustee may not agree to
any settlement involving any form of
equitable relief without the approval
of the Attorney General. The Trustee
shall provide to the Attorney General
such notice and reportsconcerning
litigation as the Attorney General may direct.
(iii) Discretion.--Any decision to
exercise any authority of the Attorney
General under this paragraph shall be
in the sole discretion of the Attorney
General and shall not be reviewable in
any court.
(3) Limitations.--Nothing in this section shall be
construed--
(1) as a waiver of sovereign immunity, or as
limiting any other defense or immunity that would
otherwise be available to the United States, the
District of Columbia, their agencies, officers,
employees, or agents; or
(2) to obligate the District of Columbia to
represent or indemnify the Corrections Trustee or any
officer, employee, or agent where the Trustee (or any
person employed by or acting under the authority of the
Trustee) acts beyond the scope of his authority.
(h) Certification.--The District of Columbia Offender
Supervision, Defender, and Courts Services Agency shall assume
its duties pursuant to section 11233 when, within the period
beginning one year after the date of the enactment of this
subtitle and ending three years after the date of the enactment
of this subtitle, the Trustee certifies to the Attorney General
and the Attorney General concurs that the Agency can carry out
the functions described in section 11233 and the United States
Parole Commission can carry out the functions described in
section 11231.
SEC. 11233. OFFENDER SUPERVISION, DEFENDER AND COURTS SERVICES AGENCY.
(a) Establishment.--There is established within the
executive branch of the Federal Government the District of
Columbia Offender Supervision, Defender, and Courts Services
Agency (hereafter in this section referred to as the
``Agency'') which shall assume its duties not less than one
year or more than three years after the enactment of this Act.
(b) Director.--
(1) Appointment and compensation.--The Agency shall
be headed by a Director appointed by the President, by
and with the advice and consent of the Senate, for a
term of six years. The Director shall be compensated at
the rate prescribed for Level IV of the Executive
Schedule, and may be removed from office prior to the
expiration of term only for neglect of duty,
malfeasance in office, or other good cause shown.
(2) Powers and duties of director.--The Director
shall--
(A) submit annual appropriation requests
for the Agency to the Office of Management and
Budget;
(B) determine, in consultation with the
Chief Judge of the United States District Court
for the District of Columbia, the Chief Judge
of the Superior Court of the District of
Columbia, and the Chairman of the United States
Parole Commission, uniform supervision and
reporting practices for the Agency;
(C) hire and supervise supervision officers
and support staff for the Agency;
(D) direct the use of funds made available
to the Agency;
(E) enter into such contracts, leases, and
cooperative agreements as may be necessary for
the performance of the Agency's functions,
including contracts for substance abuse and
other treatment and rehabilitative programs;
(F) develop and operate intermediate
sanctions programs for sentenced offenders; and
(G) arrange for the supervision of District
of Columbia paroled offenders in jurisdictions
outside the District of Columbia.
(c) Functions.--
(1) In general.--The Agency shall provide
supervision, through qualified supervision officers,
for offenders on probation, parole, and supervised
release pursuant to the District of Columbia Code. The
Agency shall carry out its responsibilities on behalf
of the court or agency having jurisdiction over the
offender being supervised.
(2) Supervision of released offenders.--The Agency
shall supervise any offender who is released from
imprisonment for any term of supervised release imposed
by the Superior Court of the District of Columbia. Such
offender shall be subject to the authority of the
United States Parole Commission until completion of the
term of supervised release. The United States Parole
Commission shall have and exercise the same authority
as is vested in the United States district courts by
paragraphs (d) through (i) of section 3583 of title 18,
United States Code, except that--
(A) the procedures followed by the
Commission in exercising such authority shall
be those set forth in chapter 311 of title 18,
United States Code; and
(B) an extension of a term of supervised
release under subsection (e)(2) of section 3583
may only be ordered by the Superior Court upon
motion from the Commission.
(3) Supervision of probationers.--Subject to
appropriations and program availability, the Agency
shall supervise all offenders placed on probation by
the Superior Court of the District of Columbia. The
Agency shall carry out the conditions of release
imposed by the Superior Court (including conditions
that probationers undergo training, education, therapy,
counseling, drug testing, or drug treatment), and shall
make such reports to the Superior Court with respect to
an individual on probation as the Superior Court may
require.
(4) Supervision of district of columbia parolees.--
The Agency shall supervise all individuals on parole
pursuant to the District of Columbia Code. The Agency
shall carry out the conditions of release imposed by
the United States Parole Commission or, with respect to
a misdemeanant, by the Superior Court of the District
of Columbia, and shall make such reports to the
Commission or Court with respect to an individual on
parole supervision as the Commission or Court may
require.
(d) Authority of Officers.--The supervision officers of the
Agency shall have and exercise the same powers and authority as
are granted by law to United States Probation and Pretrial
Officers.
(e) Pretrial Services Agency and Public Defender Service.--
(1) Independent entities.--The District of Columbia
Pretrial Services Agency established by subchapter I of
chapter 13 title 23, District of Columbia Code, and the
District of Columbia Public Defender Service
established by title III of the District of Columbia
Court Reform and Criminal Procedure Act of 1970 (D.C.
Code, sec. 1-2701 et seq.) shall function as
independent entities within the Agency.
(2) Submission on behalf of pretrial services.--The
Director of the Agency shall submit, on behalf of the
District of Columbia Pretrial Services Agency and with
the approval of the Director of the Pretrial Services
Agency, an annual appropriation request to the Office
of Management and Budget. Such request shall be
separate from the request submitted for the Agency.
(3) Submission on behalf of public defender
service.--The Director of the Agency shall submit, on
behalf of the District of Columbia Public Defender
Service and with the approval of the Director of the
Public Defender Service, an annual appropriation
request to the Office of Management and Budget. Such
request shall be separate from that submitted for the
Agency.
(4) Liability of District of Columbia.--The
District of Columbia shall defend any civil action or
proceeding brought in any court or other official
Federal, state, or municipal forum against the District
of Columbia Pretrial Services Agency, the District of
Columbia Public Defender Service, or the District of
Columbia or its officers, employees, or agents, and
shall assume any liability resulting from such an
action or proceeding, if the action or proceeding
arises from the activities of the District of Columbia
Pretrial Services Agency or the District of Columbia
Public Defender Service prior to the date on which the
Offender Supervision, Defender and Courts Services
Agency assumes its duties.
(5) Litigation.--
(A) Corporation counsel.--Subject to
subparagraph (B), the Corporation Counsel of
the District of Columbia shall provide
litigation services to the District of Columbia
Pretrial Services Agency and the District of
Columbia Public Defender Service, except that
the District of Columbia Pretrial Services
Agency and the District of Columbia Public
Defender Service may instead elect, either
generally or in relation to particular cases or
classes of cases, to hire necessary staff and
personnel or enter into contracts for the
provision of litigation services at such
agency's expense.
(B) Attorney general.--
(i) In general.--Notwithstanding
subparagraph (A), with respect to any
litigation involving the District of
Columbia Pretrial Services Agency, the
Attorney General may--
(I) direct the litigation
of the agency, and of the
District of Columbia on behalf
of the agency; and
(II) provide on a
reimbursable or non-
reimbursable basis litigation
services for the agency at the
agency's request or on the
Attorney General's own
initiative.
(ii) Approval of settlement.--With
respect to any litigation involving the
District of Columbia Pretrial Services
Agency, the agency may not agree to any
settlement involving any form of
equitable relief without the approval
of the Attorney General. The agency
shall provide to the Attorney General
such notice and reports concerning
litigation as the Attorney General may
direct.
(iii) Discretion.--Any decision to
exercise any authority of the Attorney
General under this paragraph shall be
in the sole discretion of the Attorney
General and shall not be reviewable in
any court.
SEC. 11234. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated through the State
Justice Institute in each fiscal year such sums as may be
necessary for the following:
(1) District of Columbia Pretrial Services Agency.
(2) District of Columbia Public Defender Service.
(3) Supervision of offenders on probation, parole,
or supervised release for offenses under the District
of Columbia Code.
(4) Operation of the parole system for offenders
convicted of offenses under the District of Columbia
Code.
(5) Operation of the Trusteeship described in
section 11232.
CHAPTER 4--DISTRICT OF COLUMBIA COURTS
Subchapter A--Transfer of Administration and Financing of Courts to
Federal Government
SEC. 11241. AUTHORIZATION OF APPROPRIATIONS.
(a) Authorizations.--There are authorized to be
appropriated through the State Justice Institute in each fiscal
year such sums as may be necessary for the following:
(1) The Superior Court of the District of Columbia.
(2) The District of Columbia Court of Appeals.
(3) The District of Columbia Court System.
(b) Submission to OMB.--The Joint Committee on Judicial
Administration in the District of Columbia shall include in its
submissions to the Office of Management and Budget and the
Congress, the budget and appropriations requests of the
Superior Court for the District of Columbia, the District of
Columbia Court of Appeals, and the District of Columbia Court
System.
SEC. 11242. ADMINISTRATION OF COURTS UNDER DISTRICT OF COLUMBIA CODE.
(a) Submission of Annual Budget Requests by Joint Committee
on Judicial Administration.--Section 11-1701(b)(4), District of
Columbia Code, is amended to read as follows:
``(4) Submission of the annual budget requests of
the District of Columbia Court of Appeals, the Superior
Court of the District of Columbia, and the District of
Columbia Court System as the integrated budget of the
District of Columbia courts, except that such requests
may be modified upon the concurrence of four of the
five members of the Joint Committee.''.
(b) Audit of Accounts of Courts.--Section 11-1723(a)(3),
District of Columbia Code, is amended to read as follows:
``(3) The Fiscal Officer shall be responsible for
the approval of vouchers and the internal auditing of
the accounts of the courts and shall arrange for
anannual independent audit of the accounts of the courts.''.
(c) Appointment and Removal of Court Personnel.--Section
11-1725(b) of the District of Columbia Code is amended to read
as follows:
``(b) The Executive Officer shall appoint, and may remove,
the Director of Social Services, the clerks of the courts, the
Auditor-Master, and all other nonjudicial personnel for the
courts (other than the Register of Wills and personal law
clerks and secretaries of the judges) as may be necessary,
subject to--
``(1) regulations approved by the Joint Committee;
and
``(2) the approval of the chief judge of the court
to which the personnel are or will be assigned.
``Appointments and removals of court personnel shall not be
subject to the laws, rules, and limitations applicable to
District of Columbia employees.''.
(d) Procurement of Equipment and Supplies.--Section 11-
1742(b), District of Columbia Code, is amended to read as
follows:
``(b) The Executive Officer shall be responsible for the
procurement of necessary equipment, supplies, and services for
the courts and shall have power, subject to applicable law, to
reimburse the District of Columbia government for services
provided and to contract for such equipment, supplies, and
services as may be necessary.''.
(e) Budget and Expenditures.--
(1) In general.--Section 11-1743, District of
Columbia Code, is amended to read as follows:
``Sec. 11-1743. Annual Budget and Expenditures.
``(a) The Joint Committee shall prepare and submit to the
Mayor and the Council of the District of Columbia annual
estimates of the expenditures and appropriations necessary for
the maintenance and operations of the District of Columbia
courts, and shall submit such estimates to Congress and the
Director of the Office of Management and Budget after
submitting them to the Mayor and the Council. All such
estimates shall be included in the budget without revision by
the President but subject to the President's recommendations.
``(b) The District of Columbia Courts may make such
expenditures as may be necessary to execute efficiently the
functions vested in the Courts.
``(c) All expenditures of the Courts shall be allowed and
paid upon presentation of itemized vouchers signed by the
certifying officer designated by the Joint Committee. All such
expenditures shall be paid out of moneys appropriated for
purposes of the Courts.''.
(2) Clerical amendment.--The item relating to
section 11-1743 in the table of sections for subchapter
III of chapter 17 of title 11, District of Columbia
Code, is amended to read as follows:
``11-1743. Annual budget and expenditures.''.
SEC. 11243. BUDGETING AND FINANCING REQUIREMENTS FOR COURTS UNDER HOME
RULE ACT.
(a) Budget of Courts.--Section 445 of the District of
Columbia Self-Government and Governmental Reorganization Act
(DC Code, Title 11 App.) is amended to read as follows:
``Sec. 445. The District of Columbia courts shall prepare
and annually submit to the Director of the Office of Management
and Budget, for inclusion in the annual budget, annual
estimates of the expenditures and appropriations necessary for
the maintenance and operation of the District of Columbia court
system. The courts shall submit as part of their budgets both a
multiyear plan and a multiyear capital improvements plan and
shall submit a statement presenting qualitative and
quantitative descriptions of court activities and the status of
efforts to comply with reports of the Comptroller General of
the United States.''.
(b) Financial Duties of the Mayor.--Section 448(a)(6) of
such Act (DC Code, sec. 47-310(a)(6)) is amended to read as
follows:
``(6) supervise and be responsible for the levying
and collection of all taxes, special assessments,
license fees, and other revenues of the District, as
required by law, and receive all moneys receivable by
the District from the Federal Government or from any
agency or instrumentality of the District, except that
this paragraph shall not apply to moneys from the
District of Columbia Courts.''.
(c) Funds of the District.--Section 450 of such Act (DC
Code, sec. 47-130) is amended to read as follows:
``Sec. 450. The General Fund of the District shall be
composed of those District revenues which on the effective date
of this title are paid into the Treasury of the United States
and credited either to the General Fund of the District or its
miscellaneous receipts, but shall not include any revenues
which are applied by law to any special fund existing on the
date of enactment of this title. The Council may from time to
time establish such additional special funds as may be
necessary for the efficient operation of the government of the
District. All money received by any agency, officer, or
employee of the District in its or his official capacity shall
belong to the District government and shall be paid promptly to
the Mayor for deposit in the appropriate fund, except that all
money received by the District of Columbia Courts shall be
deposited in the Treasury of the United States or the Crime
Victims Fund.''.
(d) Reductions in Budgets of Independent Agencies.--Section
453(c) of such Act (DC Code, sec. 47-304.1(c)) is amended to
read as follows:
``(c) Subsection (a) shall not apply to amounts
appropriated or otherwise made available to the Council or to
the District of Columbia Financial Responsibility and
Management Assistance Authority established under section
101(a) of the District of Columbia Financial Responsibility and
Management Assistance Act of 1995.''.
(e) Treatment of Court Fees in Calculation of Limits on
District Borrowing.--Section 603 of such Act (DC Code, sec. 47-
313) is amended--
(1) in subsection (b)--
(A) in paragraph (1)--
(i) in the first sentence, by
striking ``less court fees, any fees''
and inserting ``less any fees''; and
(ii) in the second sentence, by
striking ``section 2501, title 47 of
the District of Columbia Code, as
amended'' and inserting ``title VI of
the District of Columbia Revenue Act of
1939'';
(B) in paragraph (3)(A), by striking ``less
court fees, any fees'' and inserting ``less any
fees''; and
(2) in subsection (c), by striking the last
sentence (relating to budget estimates of the District
of Columbia courts).
SEC. 11244. AUDITING OF ACCOUNTS OF COURT SYSTEM.
(a) Powers of District of Columbia Auditor.--Section 455 of
the District of Columbia Self-Government and Governmental
Reorganization Act (DC Code, sec. 47-117) is amended by adding
at the end the following new subsection:
``(g) This section shall not apply to the District of
Columbia Courts or the accounts and operations thereof.''
(b) Submission of GAO Audit Reports to Mayor and Council.--
Section 715(b) of title 31, United States Code (DC Code, sec.
47-118.1(b)), is amended by striking ``and the Mayor'' and
inserting ``and (other than the audit reports of the District
of Columbia Courts) the Mayor''.
(c) Independent Annual Audit.--Section 4 of Public Law 94-
399 (DC Code, sec. 47-119) is amended by adding at the end the
following new subsection:
``(d) This section shall not apply to the District of
Columbia Courts or the financial operations thereof.''
SEC. 11245. MISCELLANEOUS BUDGETING AND FINANCING REQUIREMENTS FOR
COURTS UNDER DISTRICT LAW.
(a) Deposit of Public Funds.--Section 2(21) of the District
of Columbia Depository Act of 1977 (DC Code, sec. 47-341(21))
is amended by striking ``a court, agency'' and inserting ``an
agency''.
(b) Reprogramming of Budget Amounts.--Section 4(h) of D.C.
Law 3-100 (DC Code, sec. 47-363(h)) is amended by striking
``the District of Columbia courts,''.
(c) Control of Grant Funds.--(1) Section 3(1) of D.C. Law
3-104 (DC Code, sec. 47-382(1)) is amended to read as follows:
``(1) `Agency' means the highest organizational
structure of the District at which budgeting data is
aggregated, but shall not include the District of
Columbia Courts.''
(2) Section 4(b) of D.C. Law 3-104 (DC Code, sec. 47-
383(b)) is amended to read at follows:
``(b) The Trustees of the University of the District of
Columbia, the Board of Education, and the D.C. General Hospital
Commission shall submit to the Mayor two copies of the
application and completed approval form, as an advisory notice,
concurrent with submitting the application and completed
approval form to a grant-making agency in accordance with rules
and regulations issued pursuant to subsection (c) of this
section.''.
SEC. 11246. OTHER PROVISIONS RELATING TO ADMINISTRATION OF DISTRICT OF
COLUMBIA COURTS.
(a) Juror Fees.--Section 11-1912(a), District of Columbia
Code, is amended to read as follows:
``(a) Notwithstanding section 602(a) of the District of
Columbia Self-Government and Governmental Reorganization Act,
grand and petit jurors serving in the Superior Court shall
receive fees and expenses at rates established by the Board of
Judges of the Superior Court'', except that such fees and
expenses may not exceed the respective rates paid to such
jurors in the Federal system.''.
(b) Compensation and Benefits for Court Personnel.--
(1) In general.--Section 11-1726, District of
Columbia Code, is amended to read as follows:
``Sec. 11-1726. Compensation and benefits for court personnel.
``(a) In the case of nonjudicial employees of the District
of Columbia courts whose compensation is not otherwise fixed by
this title, the Executive Officer shall fix the rates of
compensation of such employees without regard to chapter 51 and
subchapter III of chapter 53 of title 5, United States Code.
Any rates so established shall be subject to the limitation on
pay fixed by administrative action in section 5373 of such
title. In fixing the rates of compensation of nonjudicial
employees under this section, the Executive Officer may be
guided by the rates of compensation fixed for employees in the
executive and judicial branches of the Federal Government or
State or local governments occupying the same or similar
positions or occupying positions of similar responsibility,
duty, and difficulty.
``(b)(1) Nonjudicial employees of the District of Columbia
courts shall be treated as employees of the Federal Government
solely for purposes of any of the following provisions of title
5, United States Code:
``(A) Subchapter 1 of chapter 81 (relating to
compensation for work injuries).
``(B) Chapter 83 (relating to retirement).
``(C) Chapter 84 (relating to the Federal
Employees' Retirement System).
``(D) Chapter 87 (relating to life insurance).
``(E) Chapter 89 (relating to health insurance).
``(2) The employing agency shall make contributions under
the provisions referred to paragraph (1) at the same rates
applicable to agencies of the Federal Government.
``(3) An individual who is a nonjudicial employee of the
District of Columbia courts on the date of the enactment of the
Balanced Budget Act of 1997 may make, within 60 days after such
date, an election under section 8351 or section 8432 of title
5, United States Code, to participate in the Thrift Savings
Plan for Federal employees.
``(c)(1) Judicial employees of the District of Columbia
courts shall be treated as employees of the Federal Government
for purposes of any of the following provisions of title 5,
United States Code:
``(A) Subchapter 1 of chapter 81 (relating to
compensation for work injuries).
``(B) Chapter 87 (relating to life insurance).
``(C) Chapter 89 (relating to health insurance).
``(2) The employing agency shall make contributions under
the provisions referred to paragraph (1) at the same rates
applicable to agencies of the Federal Government.
``(3) For purposes of section 8706(b) and section
8901(3)(B) of title 5, United States Code, benefits paid from
the retirement system for judicial employees of the District of
Columbia courts or from the system providing benefits to
survivors of such employees shall be considered an annuity.
``(4) For purposes of section 8901(3)(A) of title 5, United
States Code, the retirement system for judicial employees of
the District of Columbia courts shall be considered a
retirement system for employees of the Government.''.
(2) Clerical amendment.--The table of sections for
subchapter II of chapter 15 of title 11, District of
Columbia Code, is amended by amending the item relating
to section 11-1726 to read as follows:
``11-1726. Compensation and benefits for court personnel.''.
(3) Effective date.--The amendments made by this
subsection shall apply with respect to all months
beginning after the date on which the Director of the
Office of Personnel Management issues regulations to
carry out section 11-1726, District of Columbia Code
(as amended by paragraph (1)).
(c) Retirement Period for Executive Officer.--Section 11-
1703(d), District of Columbia Code, is amended by striking the
period at the end and inserting the following: ``, except that
the Executive Officer (if initially hired after October 1,
1997) shall be eligible for retirement under subchapter III of
chapter 15 when the Executive Officer has completed 7 years of
service as Executive Officer, whether continuous or not.''.
Subchapter B--Judicial Retirement Program
SEC. 11251. JUDICIAL RETIREMENT AND SURVIVORS ANNUITY FUND.
(a) Establishment of Fund.--Section 11-1570, District of
Columbia Code, is amended to read as follows:
``Sec. 11-1570. The District of Columbia Judicial Retirement and
Survivors Annuity Fund.
``(a) There is established in the Treasury a fund known as
the District of Columbia Judicial Retirement and Survivors
Annuity Fund (hereafter in this section referred to as the
`Fund'), which shall consist of the following assets:
``(1) Amounts deposited by, or deducted and
withheld from the salary and retired pay of, a judge
under section 1563 or 1567 of this title, which shall
be credited to an individual account of the judge.
``(2) Amounts transferred from the District of
Columbia Judges' Retirement Fund under section
124(c)(1) of the District of Columbia Retirement Reform
Act, as amended by section 11252 of the Balanced Budget
Act of 1997.
``(3) Amounts deposited under subsection (d).
``(4) Any return on investment of the assets of the
Fund.
``(b)(1) The Secretary of the Treasury (hereafter in this
section referred to as the `Secretary') shall be responsible
for the administration of the Fund. The Secretary may carry out
such responsibilities through an agreement with a Trustee or
contractor (who may be the Trustee or contractor appointed to
carry out responsibilities relating to Federal benefit payments
under title I of the National Capital Revitalization and Self-
Government Improvement Act of 1997) and an enrolled actuary (as
defined in section 7701(a)(35) of the Internal Revenue Code of
1986) who is a member of the American Academy of Actuaries (who
may be the enrolled actuary engaged under such Act).
``(2) The chief judges of the District of Columbia Court of
Appeals and Superior Court of the District of Columbia shall
submit to the President and the Secretary an annual estimate of
the expenditures and appropriations necessary for the
maintenance and operation of the Fund, and such supplemental
and deficiency estimates as may be required from time to time
for the same purposes, according to law.
``(3) The Secretary may cause periodic examinations of the
Fund to be made by an enrolled actuary (as defined in section
7701(a)(35) of the Internal Revenue Code of 1986) who is a
member of the American Academy of Actuaries.
``(c)(1) Amounts in the Fund are available for the payment
of judges' retirement pay, annuities, refunds, and allowances
under this subchapter.
``(2) Notwithstanding any other provision of District law
or any other law, rule, or regulation, the Secretary may review
benefit determinations under this subchapter made prior to the
date of the enactment of the National Capital Revitalization
and Self-Government Improvement Act of 1997, and shall make
initial benefit determinations after such date.
``(d)(1) Subject to the availability of appropriations,
there shall be deposited in the Fund, not later than the close
of each fiscal year (beginning with the first fiscal year which
ends more than 6 months after the replacement plan adoption
date described in section 103(13) of the National Capital
Revitalization and Self-Government Improvement Act of 1997), an
amount equal to the sum of--
``(A) the normal cost for the year;
``(B) the annual amortization amount for the year
(which may not be less than zero); and
``(C) the covered administrative expenses for the
year.
``(2) For purposes of this subsection:
``(A) The `original unfunded liability' is the
amount that is the present value as of June 30, 1997,
of future benefits payable from the Fund (net the sum
of future normal cost and plan assets as of such date).
``(B) The `annual amortization amount' is the
amount determined by the enrolled actuary to be
necessary to amortize in equal annual installments
(until fully amortized)--
``(i) the original unfunded liability over
a 30-year period;
``(ii) a net experience gain or loss over a
10-year period; and
``(iii) any other changes in actuarial
liability over a 20-year period.
``(C) The `covered administrative expenses' are the
expenses determined by the Secretary (on an annual
basis) to be necessary to administer the Fund.
``(3) Deposits made under this subsection shall be taken
from sums available for that fiscal year for the payment of the
expenses of the Court, and shall not be credited to the account
of any individual.
``(e) The Secretary shall invest such portion of the Fund
as is not in the judgment of the Secretary required to meet
current withdrawals. Such investments shall bein public debt
securities with maturities suitable to the needs of the Fund, as
determined by the Secretary, and bearing interest at rates determined
by the Secretary, taking into consideration current market yields on
outstanding marketable obligations of the United States of comparable
maturities.
``(f) None of the moneys mentioned in this subchapter shall
be assignable, either in law or in equity, or be subject to
execution, levy, attachment, garnishment, or other legal
process (except to the extent permitted pursuant to the
District of Columbia Spouse Equity Act of 1988).
``(g) Notwithstanding any other provision of District law,
rule, or regulation, any civil action brought--
``(1) by an individual to enforce or clarify rights
to benefits from the Fund; or
``(2) by the Secretary--
``(A) to enforce any claim arising (in
whole or in part) under this section or any
contract entered into to carry out this
section,
``(B) to recover benefits improperly paid
from the Fund or to clarify an individual's
rights to benefits from the Fund, or
``(C) to enforce any provision of this
section or any contract entered into to carry
out this section,
shall be brought in the United States District Court for the
District of Columbia.''.
(b) Clerical Amendment.--The table of sections for
subchapter III of chapter 15 of title 11, District of Columbia
Code, is amended by amending the item relating to section 11-
1570 to read as follows:
``11-1570. The District of Columbia Judicial Retirement and Survivors
Annuity Fund.''.
SEC. 11252. TERMINATION OF CURRENT FUND AND PROGRAM.
(a) Termination of Judges' Retirement Fund.--Section 124 of
the District of Columbia Retirement Reform Act (DC Code, sec.
1-714) is amended by striking subsection (c) and inserting the
following:
``(c)(1) Notwithstanding any other provision of this Act or
the amendments made by this Act, upon the date the assets of
the Retirement Fund described in title I of the National
Capital Revitalization and Self-Government Improvement Act of
1997 are transferred, the assets of the District of Columbia
Judges' Retirement Fund established under subsection (a) shall
be transferred to the District of Columbia Judicial Retirement
and Survivors Annuity Fund under section 11-1570, District of
Columbia Code, and no amounts shall be deposited into the
District of Columbia Judges' Retirement Fund after the date on
which the assets are so transferred.
``(2) The District of Columbia Judges' Retirement Fund
established under subsection (a) shall be continued in the
Treasury and appropriated for the purposes provided in this Act
until such time as all amounts in such Fund have been expended
or transferred to the District of Columbia Judicial Retirement
and Survivors Annuity Fund pursuant to paragraph (1).
Thereafter any payments of retirement pay, annuities, refunds,
and allowances for judicial personnel of the District of
Columbia shall be paid from the District of Columbia Judicial
Retirement and Survivors Annuity Fund in accordance with
subchapter III of chapter 15 of title 11, District of Columbia
Code.''.
(b) Removal of Judges From Retirement Board.--Section
121(b)(1)(A) of the District of Columbia Retirement Reform Act
(DC Code, sec. 1-711(b)(1)(A)) is amended--
(1) in the matter preceding clause (i), by striking
``13'' and inserting ``11'';
(2) by striking clause (vii); and
(3) by redesignating clauses (viii) and (ix) as
clauses (vii) and (viii).
SEC. 11253. CONFORMING AMENDMENTS.
(a) Transfer of Authority Over Fund to Secretary of the
Treasury.--Title 11, District of Columbia Code, is amended as
follows:
(1) In sections 11-1561(8)(C), 11-1562(c), 11-
1563(b), 11-1563(c), 11-1564(d)(6), 11-1564(d)(7), 11-
1566(a), and 11-1570(c), by striking ``Commissioner
[Mayor]'' each place it appears and inserting
``Secretary of the Treasury''.
(2) In sections 11-1566(b)(2), 11-1567(a), 11-
1567(b), by striking ``Mayor'' each place it appears
and inserting ``Secretary of the Treasury''.
(3) In sections 11-1564(d)(2)(A) and 11-
1568.1(1)(B), by striking ``Mayor of the District of
Columbia'' each place it appears and inserting
``Secretary of the Treasury''.
(4) In section 11-1563(a), by striking ``paid to
the Custodian of Retirement Funds (as defined in
section 102(6) of the District of Columbia Retirement
Reform Act)'' and inserting ``paid to the Secretary of
the Treasury''.
(b) Definition of fund.--Section 11-1561(4), District of
Columbia Code, is amended to read as follows:
``(4) The term `fund' means the District of
Columbia Judicial Retirement and Survivors Annuity Fund
established by sections 11-1570.''.
(c) Treatment of Federal Service of Judges.--Section 11-
1564(d)(4), District of Columbia Code, is amended by striking
``Judges' Retirement Fund established by section 124(a) of the
District of Columbia Retirement Reform Act'' and inserting
``Judicial Retirement and Survivors Annuity Fund under section
11-1570''.
Subchapter C--Miscellaneous Conforming and Administrative Provisions
SEC. 11261. TREATMENT OF COURTS UNDER MISCELLANEOUS DISTRICT LAWS.
(a) Financial Responsibility and Management Assistance
Act.--Paragraph (5) of section 305 of the District of Columbia
Financial Responsibility and Management Assistance Act of 1995
(DC Code, sec. 47-393(5)) is amended to read as follows:
``(5) The term `District government' means the
government of the District of Columbia, including any
department, agency or instrumentality of the government
of the District of Columbia; any independent agency of
the District of Columbia established under part F of
title IV of the District of Columbia Self-Government
and Governmental Reorganization Act or any other
agency, board, or commission established by the Mayor
or the Council; the Council of the District of
Columbia; and any other agency, public authority, or
public benefit corporation which has the authority to
receive monies directly or indirectly from the District
of Columbia (other than monies received from the sale
of goods, the provision of services, or the loaning of
funds to the District of Columbia), except that such
term does not include the Authority.''.
(b) Merit Personnel Act.--(1) Section 201 of the District
of Columbia Comprehensive Merit Personnel Act of 1978 (DC Code,
sec. 1-602.1) is amended--
(A) by striking ``(a) Except as provided in
subsection (b) or unless'' and inserting ``Unless'';
and
(B) by striking subsection (b).
(2) Section 301(13) of the District of Columbia
Comprehensive Merit Personnel Act of 1978 (DC Code, sec. 1-
603.1(13)) is amended by striking ``, the Superior Court of the
District of Columbia, and the District of Columbia Court of
Appeals shall be considered independent agencies'' and
inserting ``shall be considered an independent agency''.
SEC. 11262. REPRESENTATION OF INDIGENTS IN CRIMINAL CASES.
(a) Budget.--Section 11-2607, District of Columbia Code, is
amended to read as follows:
``Sec. 11-2607. Preparation of Budget
``The joint committee shall prepare and include in its
annual budget requests for the District of Columbia court
system estimates of the expenditures and appropriations
necessary for furnishing representation by private attorneys to
persons entitled to representation in accordance with section
2601 of this title.''.
(b) Authorization of Appropriations.--Section 11-2608 of
the District of Columbia Code is amended to read as follows:
``Sec. 11-2608. Authorization of appropriations
``There are authorized to be appropriated through the State
Justice Institute such sums as may be necessary to pay for
representation by private attorneys and related services under
this chapter. When so specified in appropriation Acts, such
appropriations shall remain available until expended.''.
(c) Repeal Authority of Council.--
(1) In general.--Section 11-2609, District of
Columbia Code, is repealed.
(2) Clerical amendment.--The table of sections for
chapter 26 of title 11, District of Columbia Code, is
amended by striking the item relating to section 11-
2609.
CHAPTER 5--PRETRIAL SERVICES AGENCY AND PUBLIC DEFENDER SERVICE
SEC. 11271. AMENDMENTS AFFECTING PRETRIAL SERVICES AGENCY.
(a) In General.--Sections 23-1304 through 23-1308 of the
District of Columbia Code are amended to read as follows:
``Sec. 23-1304. Executive committee; composition; appointment and
qualifications of Director
``(a) The agency shall be advised by an executive committee
of seven members, of which four members shall constitute a
quorum. The Executive Committee shall be composed of the
following persons or their designees: the Chief Judge of the
United States Court of Appeals for the District of Columbia
Circuit, the Chief Judge of the United States District Court
for the District of Columbia, the Chief Judge of the District
of the Columbia Court of Appeals, the Chief Judge of the
Superior Court of the District of Columbia, the United States
Attorney for the District of Columbia, the Director of the
District of Columbia Public Defender Service, and the Director
of the District of Columbia Offender Supervision, Defender and
Courts Services Agency.
``(b) The Chief Judge of the United States Court of Appeals
for the District of Columbia Circuit and the Chief Judge of the
United States District Court for the District of Columbia, in
consultation with the other members of the executive committee,
shall appoint a Director of the agency who shall be a member of
the bar of the District of Columbia.
``Sec. 23-1305. Duties of director; compensation
``(a) The Director of the agency shall be responsible for
the supervision and execution of the duties of the agency. The
Director shall be compensated as a member of the Senior
Executive Service pursuant to subchapter VIII of chapter 53 of
title 5, United States Code.
``Sec. 23-1306. Chief assistant and other agency personnel;
compensation
``The Director shall employ a chief assistant who shall be
compensated as a member of the Senior Executive Service
pursuant to section 5382 of title 5, United States Code. The
Director shall employ such agency personnel as may be necessary
properly to conduct the business of the agency. All employees
other than the chief assistant shall receive compensation that
is comparable to levels of compensation established for Federal
pretrial services agencies.
``Sec. 23-1307. Annual reports
``(a) The Director shall each year submit to the executive
committee and to the Director of the District ofColumbia
Offender Supervision, Defender and Courts Services Agency a report as
to the Pretrial Services Agency's administration of its
responsibilities for the previous fiscal year. The Director shall
include in the report a statement of financial condition, revenues, and
expenses for the past fiscal year.
``Sec. 23-1308. Appropriation; budget
``There are authorized to be appropriated through the State
Justice Institute in each fiscal year such sums as may be
necessary to carry out the provisions of this subchapter. Funds
appropriated by Congress for the District of Columbia Pretrial
Services Agency shall be received by the Director of the
District of Columbia Offender Supervision, Defender and Courts
Services Agency, and shall be disbursed by that Director to and
on behalf of the District of Columbia Pretrial Services Agency.
The District of Columbia Pretrial Services Agency shall submit
to the Director of the District of Columbia Offender
Supervision, Defender and Courts Services Agency at the time
and in the form prescribed by that Director, reports of its
activities and financial position and its proposed budget.''.
(b) Clerical Amendment.--The table of sections for
subchapter I of chapter 13 of title 23, District of Columbia
Code, is amended by striking the items relating to sections 23-
1304 through 23-1308 and inserting the following:
``23-1304. Executive committee; composition; appointment and
qualifications of Director.
``23-1305. Duties of director; compensation.
``23-1306. Chief assistant and other agency personnel; compensation.
``23-1307. Annual reports.
``23-1308. Appropriation; budget.''
SEC. 11272. AMENDMENTS AFFECTING PUBLIC DEFENDER SERVICE.
(a) Board of Trustees.--Section 303(a) of the District of
Columbia Court Reform and Criminal Procedure Act of 1970 (DC
Code, sec. 1-2703(a)) is amended to read as follows:
``(a) The Service shall be advised on matters of general
policy by a Board of Trustees.''.
(b) Appointment of Director and Deputy Director.--Section
304 of such Act (DC Code, sec. 1-2704) is amended to read as
follows:
``SEC. 304. DIRECTOR AND DEPUTY DIRECTOR; APPOINTMENT; DUTIES;
MEMBERSHIP IN BAR REQUIRED.
``The Chief Judge of the United States Court of Appeals for
the District of Columbia Circuit and the Chief Judge of the
United States District Court for the District of Columbia, in
consultation with the persons described in subparagraphs (B)
through (D) of section 303(b)(1) and the Board of Trustees,
shall appoint a Director and Deputy Director of the Service.
The Director shall be responsible for the supervision and
execution of the duties of the Service. The Deputy Director
shall assist the Director and shall perform such duties as the
Director may prescribe. The Director and Deputy Director shall
be members of the bar of the District of Columbia. The Director
of the District of Columbia Offender Supervision, Defender and
Courts Services Agency shall fix the compensation of the
Director and the Deputy Director, but the compensation of the
Director shall not exceed the compensation received by the
United States Attorney for the District of Columbia.''.
(c) Annual Report and Audit.--Section 306 of such Act (DC
Code, sec. 1-2706) is amended--
(1) in subsection (a)--
(A) by striking ``Board of Trustees'' and
inserting ``Director'', and
(B) by striking ``and to the Mayor of the
District of Columbia'' and inserting ``to the
Director of the District of Columbia Offender
Supervision, Defender and Courts Services
Agency, and to the Office of Management and
Budget''; and
(2) in subsection (b)--
(A) by striking ``Board of Trustees'' and
inserting ``Director''; and
(B) by striking ``the Administrative Office
of the United States Courts'' and inserting
``the Director of the District of Columbia
Offender Supervision, Defender and Courts
Services Agency''.
(d) Appropriations.--Section 307 of such Act (DC Code, sec.
1-2707) is amended--
(1) by amending subsection (a) to read as follows:
``(a) There are authorized to be appropriated through the
State Justice Institute in each fiscal year such sums as may be
necessary to carry out the provisions of this chapter. Funds
appropriated by Congress for the District of Columbia Public
Defender Service shall be received by the Director of the
District of Columbia Offender Supervision, Defender and Courts
Services Agency, and shall be disbursed by that Director to and
on behalf of the Service. The Service shall submit to the
Director of the District of Columbia Offender Supervision,
Defender and Courts Services Agency, at the time and in the
form prescribed by that Director, reports of its activities and
financial position and its proposed budget.''; and
(2) in subsection (b), by striking ``Upon approval
of the Board of Trustees, the'' and inserting ``The'' .
CHAPTER 6--MISCELLANEOUS PROVISIONS
SEC. 11281. TECHNICAL ASSISTANCE AND RESEARCH.
There are authorized to be appropriated to the National
Institute of Justice in each fiscal year (beginning with fiscal
year 1998) such sums as may be necessary for the following
activities:
(1) Research and demonstration projects,
evaluations, and technical assistance to assess and
analyze the crime problem in the District of Columbia,
and to improve the ability of the criminal justice and
other systems and entities in the District of Columbia
to prevent, solve, and punish crimes.
(2) The establishment of a locally-based
corporation or institute in the District of Columbia
supporting research and demonstration projects relating
to the prevention, solution, or punishment of crimes in
the District of Columbia, including the provision of
related technical assistance.
SEC. 11282. EXEMPTION FROM PERSONNEL AND BUDGET CEILINGS FOR TRUSTEES
AND RELATED AGENCIES.
The Trustees described in sections 11202 and 11232 and the
activities and personnel of, and the funds allocated or
otherwise available to, the Trustees and the agencies over
which the Trustees exercise financial oversight pursuant to
those sections, shall not be subject to any general personnel
or budget limitations which otherwise apply to the District of
Columbia government or its agencies in any appropriations act.
Subtitle D--Privatization of Tax Collection and Administration
SEC. 11301. FINDINGS.
Congress finds as follows:
(1) The District of Columbia government has
historically had a poor record of determining and
collecting all revenue it is due under its revenue
code.
(2) The impact on the District's financial
condition of poor administration and collection is
significant and has contributed both to the size of its
accumulated operating deficit and to the difficulty in
balancing the budget going forward.
(3) More complete collection of taxes would not
only increase District of Columbia revenues, but would
give residents and businesses a sense of equity and
that all were paying their fair share.
(4) Once District tax processing and collection is
competently managed it will be possible for the
District government to accurately assess the true value
of its many taxes and determine that some may be
reduced or eliminated without a significant negative
impact on revenues.
(5) Any reduction or elimination of non-productive
or counterproductive taxes or taxes which cost more to
administer than they produce in revenue would
significantly improve the negative atmosphere
surrounding the District of Columbia tax system and its
enforcement.
SEC. 11302. AUTHORIZING CHIEF FINANCIAL OFFICER TO PRIVATIZE TAX
ADMINISTRATION AND COLLECTION.
The Chief Financial Officer of the District of Columbia may
enter into contracts with a private entity for the
administration and collection of taxes of the District of
Columbia.
Subtitle E--Financing of District of Columbia Accumulated Deficit
SEC. 11401. FINDINGS.
Congress finds as follows:
(1) The District of Columbia government sold
accumulated deficit financing bonds in 1991.
(2) Between 1991 and the end of fiscal year 1997
the District of Columbia government is expected to
accumulate an operating deficit in excess of
$500,000,000.
(3) Requiring the District of Columbia budget for
fiscal year 1998 to be balanced will ensure that no
further addition is made to the accumulated operating
deficit.
(4) In every other example of an American city in
financial crisis, a vital and necessary component of
recovery was to finance the accumulated operating
deficit.
(5) Carrying forward an accumualted operating
deficit of more than $500,000,000 has a significant
negative impact on the District of Columbia's cash flow
and financial condition and on its ability to improve
its credit rating.
(6) It is not feasible to carry forward such a debt
with an expectation of paying it off gradually from
future budget surpluses.
(7) Financing the accumulated deficit would improve
the District's cash management position and allow more
normal cash management techniques.
SEC. 11402. AUTHORIZATION FOR INTERMEDIATE-TERM ADVANCES OF FUNDS BY
THE SECRETARY OF THE TREASURY TO LIQUIDATE THE
ACCUMULATED GENERAL FUND DEFICIT OF THE DISTRICT OF
COLUMBIA.
Title VI of the District of Columbia Revenue Act of 1939
(DC Code, sec. 47-3401 et seq.) is amended--
(1) by redesignating sections 602 through 605 as
sections 603 through 606, respectively; and
(2) by inserting after section 601 the following:
``SEC. 602. INTERMEDIATE-TERM ADVANCES FOR LIQUIDATION OF DEFICIT.
``(a) In General.--If the conditions in subsection (b) are
satisfied, the Secretary shall make an advance of funds from
time to time, out of any money in the Treasury not otherwise
appropriated and to the extent provided in advance in annual
appropriations Acts, for the purpose of assisting the District
government in liquidating the outstanding accumulated operating
deficit of the general fund of the District government existing
as of September 30, 1997.
``(b) Conditions to Making Any Intermediate-Term Advance.--
The Secretary shall make an advance under this section if--
``(1) the Mayor delivers to the Secretary the
following instruments, in form and substance
satisfactory to the Secretary--
``(A) a financing agreement in which the
Mayor agrees to procedures for requisitioning
advances;
``(B) a requisition for an advance under
this section; and
``(C) a promissory note evidencing the
District government's obligation to reimburse
the Treasury for the requisitioned advance,
which note may be a general obligation bond
issued under section 461(a) of the District of
Columbia Self-Government and Governmental
Reorganization Act by the District government
to the Secretary if the Secretary determines
that such a bond is satisfactory;
``(2) the date on which the requisitioned advance
is requested to be made is not later than 3 years from
the date of enactment of the Balanced Budget Act of
1997;
``(3) the District government delivers to the
Secretary--
``(A) evidence demonstrating to the
satisfaction of the Secretary that, at the time
of the Mayor's requisition for an advance, the
District government is effectively unable to
obtain credit in the public credit markets or
elsewhere in sufficient amounts and on
sufficiently reasonable terms to meet the
District government's need for financing to
accomplish the purpose described in subsection
(a); and
``(B) a schedule setting out the
anticipated timing and amounts of requisitions
for advances under this section;
``(4) the Authority certifies to the Secretary
that--
``(A) there is an approved financial plan
and budget in effect under the District of
Columbia Financial Responsibility and
Management Assistance Act of 1995 for the
fiscal year in which the requisition is to be
made;
``(B) at the time that the Mayor's
requisition for an advance is delivered to
theSecretary, the District government is in compliance with the
approved financial plan and budget;
``(C) both the receipt of funds from such
advance and the reimbursement of Treasury for
such advance are consistent with the approved
financial plan and budget for the year;
``(D) such advance will not adversely
affect the financial stability of the District
government; and
``(E) at the time that the Mayor's
requisition for an advance is delivered to the
Secretary, the District government is
effectively unable to obtain credit in the
public credit markets or elsewhere in
sufficient amounts and on sufficiently
reasonable terms to meet the District
government's need for financing to accomplish
the purpose described in subsection (a);
``(5) the Inspector General of the District of
Columbia certifies to the Secretary the information
described in subparagraphs (A) through (D) of paragraph
(4), and in making this certification, the Inspector
General may rely upon an audit conducted by an outside
auditor engaged by the Inspector General under section
208(a)(4) of the District of Columbia Procurement
Practices Act of 1985 if, after reasonable inquiry, the
Inspector General concurs in the findings of such
audit;
``(6) the Secretary determines that--
``(A) there is reasonable assurance of
reimbursement for the requisitioned advance;
and
``(B) the debt owed by the District
government to the Treasury on account of the
requisitioned advance will not be subordinate
to any other debt owed by the District or to
any other claims against the District; and
``(7) the Secretary receives from such persons as
the Secretary determines to be appropriate such
additional certifications and opinions relating to such
matters as the Secretary determines to be appropriate.
``(c) Amount of Any Intermediate-Term Advance.--
``(1) In general.--Except as provided in paragraph
(3), if the conditions in paragraph (2) are satisfied,
each advance made under this section shall be in the
amount designated by the Mayor in the Mayor's
requisition for such advance.
``(2) Conditions applicable to designated amount.--
Paragraph (1) applies if--
``(A) the Mayor certifies that the amount
designated in the Mayor's requisition for such
advance is needed to accomplish the purpose
described in subsection (a) within 30 days of
the time that the Mayor's requisition is
delivered to the Secretary; and
``(B) the Authority concurs in the Mayor's
certification under subparagraph (A).
``(3) Maximum amount.--Notwithstanding paragraph
(1), the aggregate amount of all advances made under
this section shall not be greater than $300,000,000.
``(d) Maturity of Any Intermediate-Term Advance.--
``(1) In general.--Except as provided in paragraphs
(2) and (3), each advance made under this section shall
mature on the date designated by the Mayor in the
Mayor's requisition for such advance.
``(2) Latest permissible maturity date.--
Notwithstanding paragraph (1), the maturity date for
any advance made under this section shall not be later
than 10 years from the date on which the first advance
under this section is made.
``(4) Secretary's right to require early
reimbursement.--Notwithstanding paragraph (1),if the
Secretary determines, at any time while any advance made under this
section has not been fully reimbursed, that the District is able to
obtain credit in the public credit markets or elsewhere in sufficient
amounts and on sufficiently reasonable terms, in the judgment of the
Secretary, to refinance all or a portion of the unpaid balance of such
advance in the public credit markets or elsewhere without adversely
affecting the financial stability of the District government, the
Secretary may require reimbursement for all or a portion of the unpaid
balance of such advance at any time after the Secretary makes the
determination.
``(e) Interest Rate.--Each advance made under this section
shall bear interest at an annual rate equal to a rate
determined by the Secretary at the time that the Secretary
makes such advance taking into consideration the prevailing
yield on outstanding marketable obligations of the United
States with remaining periods to maturity comparable to the
repayment schedule of such advance, plus \1/8\ of 1 percent.
``(f) Other Terms and Conditions.--Each advance made under
this section shall be on such other terms and conditions,
including repayment schedule, as the Secretary determines to be
appropriate.
``(g) Deposit of Advances.--As provided in section 204(b)
of the District of Columbia Financial Responsibility and
Management Assistance Act of 1995, advances made under this
section for the account of the District government shall be
deposited by the Secretary into an escrow account held by the
Authority.''.
SEC. 11403. CONFORMING AMENDMENTS.
(a) Amendment to Section 601.--Section 601 of the District
of Columbia Revenue Act of 1939 (DC Code, sec. 47-3401) is
amended--
(1) in subsection (c)(2)(B)(i)(IV), by striking
``602(b)'' and inserting ``603(b)''; and
(2) in subsection (d)(2)(B)(iii), by striking
``602(b)'' and inserting ``603(b)''.
(b) Amendment to Section 604.--Section 604 of the District
of Columbia Revenue Act of 1939 (DC Code, sec. 47-3401.3) is
amended--
(1) in subsection (a)(2)(A)(i), by striking ``602''
and inserting ``603''; and
(2) in subsection (a)(2)(B)(i), by striking ``602''
and inserting ``603''.
SEC. 11404. TECHNICAL CORRECTIONS.
Section 601 of the District of Columbia Revenue Act of 1939
(DC Code, sec. 47-3401) is amended--
(1) in subsection (a)(3)(D), by striking
``September 30, 1995'' and inserting ``September 30,
1996'';
(2) in subsection (b)(2)(E), by striking
``September 30, 1996'' and inserting ``September 30,
1997'';
(3) in subsection (c)(2)(B)(i), by striking
``October 1, 1995'' and inserting ``September 30,
1995'';
(4) in subsection (d)(2)(B)(i)(II), by striking
``September 30, 1997'' and inserting ``September 30,
1998'';
(5) in subsection (d)(2)(B)(ii)--
(A) by striking ``September 30, 1995'' and
inserting ``October 1, 1995''; and
(B) by striking ``September 30, 1997'' and
inserting ``October 1, 1997''; and
(6) in subsection (d)(2)(C)(iv), by striking
``September 30, 1997'' and inserting ``September 30,
1998''.
SEC. 11405. AUTHORIZATION FOR ISSUANCE OF GENERAL OBLIGATION BONDS BY
THE DISTRICT OF COLUMBIA TO FINANCE OR REFUND ITS
ACCUMULATED GENERAL FUND DEFICIT.
Section 461(a) of the District of Columbia Self-Government
and Governmental Reorganization Act (DC Code, sec. 47-321(a))
is amended--
(1) in paragraph (1), by inserting ``to finance or
refund the outstanding accumulated operating deficit of
the general fund of the District of $500,000,000,
existing as of September 30, 1997,'' after ``existing
as of September 30, 1990,''; and
(2) in paragraph (2), by inserting ``existing as of
September 30, 1990'' after ``operating deficit''.
Subtitle F--District of Columbia Bond Financing Improvements
SEC. 11501. SHORT TITLE.
This subtitle may be cited as the ``District of Columbia
Bond Financing Improvements Act of 1997''.
SEC. 11502. FINDINGS.
Congress finds as follows:
(1) The bond authorization provision of the
District of Columbia Self-Government and Governmental
Reorganization Act (commonly known as the ``Home Rule
Act'') have not been updated to conform with changes in
the municipal securities marketplace.
(2) The Home Rule Act unduly limits the ability of
the District to take advantage of cost savings,
investment opportunities, and other efficiencies
generally available to municipal securities issuers.
(3) Section 461 of the Home Rule Act limits the
ability of the District government to implement cost-
effective capital planning to the extent that it does
not permit the District access to interim capital
financing in anticipation of its periodic long-term
borrowings.
(4) Section 462 of the Home Rule Act prevents the
reprogramming of unused bond proceeds from dormant
projects to other pending, authorized, and viable
projects.
(5) Section 466 of the Home Rule Act requires that
the District undertake competitive bond sales even
under circumstances in which greater efficiencies can
be achieved through negotiated sales.
(6) Section 490 of the Home Rule Act does not
permit the issuance and sale of taxable and tax-exempt
bonds for the full range of economic development and
governmental purposes permitted the States and their
political subdivisions.
SEC. 11503. AMENDMENT TO SECTION 462 (RELATING TO CONTENTS OF BORROWING
LEGISLATION AND ELECTIONS ON ISSUING GENERAL
OBLIGATION BONDS).
Section 462(a) of the District of Columbia Self-Government
and Governmental Reorganization Act (DC Code, sec. 47-322(a))
is amended to read as follows:
``(a) The Council may by act authorize the issuance of
general obligation bonds for the purposes specified in section
461. Such an Act shall contain, at least, provisions--
``(1) briefly describing the projects or categories
of projects to be financed by the Act;
``(2) identifying the act authorizing each such
project or category of projects;
``(3) setting forth the maximum amount of the
principal of the indebtedness which may be incurred for
the projects to be financed;
``(4) setting forth the maximum rate of interest to
be paid on such indebtedness;
``(5) setting forth the maximum allowable maturity
for the issue and the maximum debt service payable in
any year; and
``(6) setting forth, in the event that the Council
determines in its discretion to submit the question of
issuing such bonds to a vote of the qualified voters of
the District, the manner of holding such election, the
date of such election, the manner of voting for or
against the incurring of such indebtedness, and the
form of ballot to be used at such election.''.
SEC. 11504. AMENDMENT TO SECTION 466 (RELATING TO PUBLIC OR NEGOTIATED
SALE OF GENERAL OBLIGATION BONDS).
Section 466 of the District of Columbia Self-Government and
Governmental Reorganization Act (DC Code, sec. 47-326) is
amended by striking all after the heading and inserting the
following:
``Sec. 466. General obligation bonds issued under this part
may be sold at a private sale on a negotiated basis (in such
manner as the Mayor may determine to be in the public
interest), or may be sold at public sale upon sealed proposals
after publication of a notice of such public sale at least once
not less than 10 days prior to the date fixed for sale in a
daily newspaper carrying municipal bond notices and devoted
primarily to financial news or to the subject of State and
municipal bonds published in the city of New York, New York,
and in 1 or more newspapers of general circulation published in
the District. Such notice of public sale shall state, among
other things, that no proposal shall be considered unless there
is deposited with the District as a down payment a certified
check, cashier's check, or surety for an amount equal to at
least 2 percent of the par amount of general obligation bonds
bid for, and the Mayor shall reserve the right to reject any
and all bids.''
SEC. 11505. AMENDMENT TO SECTION 467 (RELATING TO AUTHORITY TO CREATE
SECURITY INTERESTS IN DISTRICT REVENUES).
Section 467 of the District of Columbia Self-Government and
Governmental Reorganization Act (D.C. Code Sec. 47-326.1.) is
amended by striking all after the heading and inserting the
following:
``Sec. 467. (a) In general.--An act of the Council
authorizing the issuance of general obligation bonds or notes
under section 461(a), section 471(a), section 472(a), or
section 475(a) may create a security interest in any District
revenues as additional security for the payment of the bonds or
notes authorized by such act.
``(b) Contents of Acts.--Any such act creating a security
interest in District revenues may contain provisions (which may
be part of the contract with the holders of such bonds or
notes)--
``(1) describing the particular District revenues
which are subject to such security interest;
``(2) creating a reasonably required debt service
reserve fund or any other special fund;
``(3) authorizing the Mayor of the District to
execute a trust indenture securing the bonds or notes;
``(4) vesting in the trustee under such a trust
indenture such properties, rights, powers, and duties
in trust as may be necessary, convenient, or desirable;
``(5) authorizing the Mayor of the District to
enter into and amend agreements concerning--
``(A) the custody, collection, use,
disposition, security, investment, and payment
of theproceeds of the bonds or notes and the
District revenues which are subject to such security interest; and
``(B) the doing of any act (or the
refraining from doing any act) that the
District would have the right to do in the
absence of such an agreement;
``(6) prescribing the remedies of the holders of
the bonds or notes in the event of a default; and
``(7) authorizing the Mayor to take any other
actions in connection with the issuance, sale,
delivery, security, and payment of the bonds or notes.
``(c) Timing and Perfection of Security Interests.--
Notwithstanding article 9 of title 28 of the District of
Columbia Code, any security interest in District revenues
created under subsection (a) shall be valid, binding, and
perfected from the time such security interest is created, with
or without the physical delivery of any funds or any other
property and with or without any further action. Such security
interest shall be valid, binding, and perfected whether or not
any statement, document, or instrument relating to such
security interest is recorded or filed. The lien created by
such security interest is valid, binding, and perfected with
respect to any individual or legal entity having claims against
the District, whether or not such individual or legal entity
has notice of such lien.
``(d) Obligations and Expenditures Not Subject to
Appropriation.--The fourth sentence of section 446 shall not
apply to any obligation or expenditure of any District revenues
to secure any general obligation bond or note under subsection
(a).''.
SEC. 11506. AMENDMENT TO SECTION 472 (RELATING TO BORROWING IN
ANTICIPATION OF REVENUES).
Section 472 of the District of Columbia Self-Government and
Governmental Reorganization Act (DC Code, sec. 47-328) is
amended by striking all after the heading and inserting the
following:
``Sec. 472. (a) In General.--In anticipation of the
collection or receipt of revenues for a fiscal year, the
Council may by act authorize the issuance of general obligation
notes for such fiscal year, to be known as revenue anticipation
notes.
``(b) Limit on Aggregate Notes Outstanding.--The total
amount of all revenue anticipation notes issued under
subsection (a) outstanding at any time during a fiscal year
shall not exceed 20 percent of the total anticipated revenue of
the District for such fiscal year, as certified by the Mayor
under this subsection. The Mayor shall certify, as of a date
which occurs not more than 15 days before each original
issuance of such revenue anticipation notes, the total
anticipated revenue of the District for such fiscal year.
``(c) Permitted Outstanding Duration.--Any revenue
anticipation note issued under subsection (a) may be renewed.
Any such note, including any renewal note, shall be due and
payable not later than the last day of the fiscal year during
which the note was originally issued.
``(d) Effective Date of Authorization Acts; Payments Not
Subject to Appropriation.--
``(1) Effective date.--Notwithstanding section
602(c)(1), any act of the Council authorizing the
issuance of revenue anticipation notes under subsection
(a) shall take effect--
``(A) if such act is enacted during a
control year (as defined in section 305(4) of
the District of Columbia Financial
Responsibility and Management Assistance Act of
1995), on the date of approval by the District
of Columbia Financial Responsibility and
Management Assistance Authority; or
``(B) if such act is enacted during any
other year, on the date of enactment of such
act.
``(2) Payments not subject to appropriation.--The
fourth sentence of section 446 shall not apply to any
amount obligated or expended by the District for the
payment of the principal of, interest on, or redemption
premium for any revenue anticipation note issued under
subsection (a).''.
SEC. 11507. ADDITION OF NEW SECTION 475 (RELATING TO GENERAL OBLIGATION
BOND ANTICIPATION NOTES).
(a) In General.--Subpart 2 of part E of title IV of the
District of Columbia Self-Government and Governmental
Reorganization Act is amended by adding at the end the
following new section:
``bond anticipation notes
``Sec. 475. (a) Authorizing Issuance.--
``(1) In general.--In anticipation of the issuance
of general obligation bonds, the Council may by act
authorize the issuance of general obligation notes to
be known as bond anticipation notes in accordance with
this section.
``(2) Purposes; permitting issuance of general
obligation bonds to cover indebtedness.--The proceeds
of bond anticipation notes issued under this section
shall be used for the purposes for which general
obligation bonds may be issued under section 461, and
such notes shall constitute indebtedness which may be
refunded through the issuance of general obligation
bonds under such section.
``(b) Maximum Annual Debt Service Amount.--The Act of the
Council authorizing the issuance of bond anticipation notes
shall set forth for the bonds anticipated by such notes an
estimated maximum annual debt service amount based on an
estimated schedule of annual principal payments and an
estimated schedule of annual interest payments (based on an
estimated maximum average annual interest rate for such bonds
over a period of 30 years from the earlier of the date of
issuance of the notes or the date of original issuance of prior
notes in anticipation of those bonds). Such estimated maximum
annual debt service amount as estimated at the time of issuance
of the original bond anticipation notes shall be included in
the calculation required by section 603(b) while such notes or
renewal notes are outstanding.
``(c) Permitted Outstanding Duration.--Any bond
anticipation note, including any renewal note, shall be due and
payable not later than the last day of the third fiscal year
following the fiscal year during which the note was originally
issued.
``(d) General Authority of Council.--If provided for in Act
of the Council authorizing such an issue of bond anticipation
notes, bond anticipation notes may be issued in succession, in
such amounts, at such times, and bearing interest rates within
the permitted maximum authorized by such Act.
``(e) Effective Date of Authorization Acts; Payments Not
Subject to Appropriation.--
``(1) Effective date.--Notwithstanding section
602(c)(1), any act of the Council authorizing the
renewal of bond anticipation notes under subsection (c)
or the issuance of general obligation bonds under
section 461(a) to refund any bond anticipation notes
shall take effect--
``(A) if such act is enacted during a
control year (as defined in section 305(4) of
the District of Columbia Financial
Responsibility and Management Assistance Act of
1995), on the date of approval by the District
of Columbia Financial Responsibility and
Management Assistance Authority; or
``(B) if such act is enacted during any
other year, on the date of enactment of such
act.
``(2) Payment not subject to appropriation.--The
fourth sentence of 446 shall not apply to any amount
obligated or expended by the Districtfor the payment of
the principal of, interest on, or redemption premium for any bond
anticipation note issued under this section.''.
(b) Clerical Amendment.--The table of contents for the
District of Columbia Self-Government and Governmental
Reorganization Act is amended by adding at the end of the items
relating to subpart 2 of part E of title IV the following new
item:
``Sec. 475. Bond anticipation notes.''.
SEC. 11508. AMENDMENT TO SECTION 490 (RELATING TO REVENUE BONDS AND
OTHER OBLIGATIONS).
Section 490 of the District of Columbia Self-Government and
Governmental Reorganization Act (DC Code, sec. 47-334), as
amended by section 2 of the District of Columbia Water and
Sewer Authority Act of 1996, is amended--
(1) in subsection (a)--
(A) by amending paragraphs (1) through (3)
to read as follows:
``(a)(1) Subject to paragraph (2), the Council may by act
or by resolution authorize the issuance of taxable and tax-
exempt revenue bonds, notes, or other obligations to borrow
money to finance, refinance, or reimburse and to assist in the
financing, refinancing, or reimbursing of or for capital
projects and other undertakings by the District or by any
District instrumentality, or on behalf of any qualified
applicant, including capital projects or undertakings in the
areas of housing; health facilities; transit and utility
facilities; manufacturing; sports, convention, and
entertainment facilities; recreation, tourism and hospitality
facilities; facilities to house and equip operations of the
District government or its instrumentalities; public
infrastructure development and redevelopment; elementary,
secondary and college and university facilities; educational
programs which provide loans for the payment of educational
expenses for or on behalf of students; facilities used to house
and equip operations related to the study, development,
application, or production of innovative commercial or
industrial technologies and social services; water and sewer
facilities (as defined in paragraph (5)); pollution control
facilities; solid and hazardous waste disposal facilities;
parking facilities, industrial and commercial development;
authorized capital expenditures of the District; and any other
property or project that will, as determined by the Council,
contribute to the health, education, safety, or welfare, of, or
the creation or preservation of jobs for, residents of the
District, or to economic development of the District, and any
facilities or property, real or personal, used in connection
with or supplementing any of the foregoing; lease-purchase
financing of any of the foregoing facilities or property; and
any costs related to the issuance, carrying, security,
liquidity or credit enhancement of or for revenue bonds, notes,
or other obligations, including, capitalized interest and
reserves, and the costs of bond insurance, letters of credit,
and guaranteed investment, forward purchase, remarketing,
auction, and swap agreements. Any such financing, refinancing,
or reimbursement may be effected by loans made directly or
indirectly to any individual or legal entity, by the purchase
of any mortgage, note, or other security, or by the purchase,
lease, or sale of any property.
``(2) Any revenue bond, note, or other obligation issued
under paragraph (1) shall be a special obligation of the
District and shall be a negotiable instrument, whether or not
such revenue bond, note, or other obligation is a security as
defined in section 28:8-102(1)(a) of title 28 of the District
of Columbia Code.
``(3) Any revenue bond, note, or other obligation issued
under paragraph (1) shall be paid and secured (as to principal,
interest, and any premium) as provided by the act or resolution
of the Council authorizing the issuance of such revenue bond,
note, or other obligation. Any act or resolution of the
Council, or any delegation of Council authority under
subsection (a)(6), authorizing the issuance of revenue bonds,
notes, or other obligations may provide for (A) the payment of
such revenue bonds, notes,or other obligations from any
available revenues, assets, property (including water and sewer
enterprise fund revenues, assets, or other property in the case of
bonds, notes, or obligations issued with respect to water and sewer
facilities), and (B) the securing of such revenue bond, note, or other
obligation by the mortgage of real property or the creation of a
security interest in available revenues, assets, or other property
(including water and sewer enterprise fund revenues, assets, or other
property in the case of bonds, notes, or obligations issued with
respect to water and sewer facilities).'',
(B) by amending paragraph (4)(A) to read as
follows:
``(4)(A) In authorizing the issuance of any revenue
bond, note, or other obligation under paragraph (1),
the Council may enter into, or authorize the Mayor to
enter into, any agreement concerning the acquisition,
use, or disposition of any available revenues, assets,
or property. Any such agreement may create a security
interest in any available revenues, assets, or
property, may provide for the custody, collection,
security, investment, and payment of any available
revenues (including any funds held in trust) for the
payment of such revenue bond, note, or other
obligation, may mortgage any property, may provide for
the acquisition, construction, maintenance, and
disposition of the undertaking financed or refinanced
using the proceeds of such revenue bond, note, or other
obligation, and may provide for the doing of any act
(or the refraining from doing of any act) which the
District has the right to do in the absence of such
agreement. Any such agreement may be assigned for the
benefit of, or made a part of any contract with, any
holder of such revenue bond, note, or other obligation
issued under paragraph (1).'', and
(C) by adding at the end the following new
paragraph:
``(6)(A) The Council may by act delegate to any
District instrumentality the authority of the Council
under subsection (a)(1) to issue taxable or tax-exempt
revenue bonds, notes, or other obligations to borrow
money for the purposes specified in this subsection.
For purposes of this paragraph, the Council shall
specify for what undertakings revenue bonds, notes, or
other obligations may be issued under each delegation
made pursuant to this paragraph. Any District
instrumentality may exercise the authority and the
powers incident thereto delegated to it by the Council
as described in the first sentence of this paragraph
only in accordance with this paragraph and shall be
consistent with this paragraph and the terms of the
delegation.
``(B) Revenue bonds, notes, or other obligations
issued by a District instrumentality under a delegation
of authority described in subparagraph (A) shall be
issued by resolution of that instrumentality, and any
such resolution shall not be considered to be an act of
the Council.
``(C) Nothing in this paragraph shall be construed
as restricting, impairing, or superseding the authority
otherwise vested by law in any District
instrumentality.'';
(2) by amending subsection (b) to read as follows:
``(b) No property owned by the United States may be
mortgaged or made subject to any security interest to secure
any revenue bond, note, or other obligation issued under
subsection (a)(1).'';
(3) by amending subsection (c) to read as follows:
``(c) Any and all such revenue bonds, notes, or other
obligations issued under subsection (a)(1) shall not be general
obligations of the District, shall not be a pledge of or
involve the faith and credit or taxing power of theDistrict
(other than with respect to any dedicated taxes) and shall not
constitute a debt of the District, and shall not constitute lending of
the public credit for private undertakings for purposes of section
602(a)(2).'';
(4) by amending subsection (f) to read as follows:
``(f) The fourth sentence of section 446 shall not apply
to--
``(1) any amount (including the amount of any
accrued interest or premium) obligated or expended from
the proceeds of the sale of any revenue bond, note, or
other obligations issued under subsection (a)(1);
``(2) any amount obligated or expended for the
payment of the principal of, interest on, or any
premium for any revenue bond, note, or other obligation
issued under subsection (a)(1);
``(3) any amount obligated or expended pursuant to
provisions made to secure any revenue bond, note, or
other obligations issued under subsection (a)(1); and
``(4) any amount obligated or expended pursuant to
commitments made in connection with the issuance of
revenue bonds, notes, or other obligations for repair,
maintenance, and capital improvements relating to
undertakings financed through any revenue bond, note,
or other obligation issued under subsection (a)(1).'';
and
(5) by adding at the end the following new
subsections:
``(i) The revenue bonds, notes, or other obligations issued
under subsection (a)(1) are not general obligation bonds of the
District government and shall not be included in determining
the aggregate amount of all outstanding obligations subject to
the limitation specified in section 603(b).
``(j) The issuance of revenue bonds, notes, or other
obligations by the District where the ultimate obligation to
repay such revenue bonds, notes, or other obligations is that
of one or more non-governmental persons or entities may be
authorized by resolution of the Council. The issuance of all
other revenue bonds, notes, or other obligations by the
District shall be authorized by act of the Council.
``(k) During any control period (as defined in section 209
of the District of Columbia Financial Responsibility and
Management Assistance Act of 1995), any act or resolution of
the Council authorizing the issuance of revenue bonds, notes,
or other obligations under subsection (a)(1) shall be submitted
to the District of Columbia Financial Responsibility and
Management Assistance Authority for certification in accordance
with section 204 of that Act. Any certification issued by the
Authority during a control period shall be effective for
purposes of this subsection for revenue bonds, notes, or other
obligations issued pursuant to such act or resolution of the
Council whether the revenue bonds, notes, or other obligations
are issued during or subsequent to that control period.
``(l) The following provisions of law shall not apply with
respect to property acquired, held, and disposed of by the
District in accordance with the terms of any lease-purchase
financing authorized pursuant to subsection (a)(1):
``(1) The Act entitled `An Act authorizing the sale
of certain real estate in the District of Columbia no
longer required for public purposes', approved August
5, 1939 (53 Stat. 1211; DC Code sec. 9-401 et seq.).
``(2) Subchapter III of chapter 13 of title 16,
District of Columbia Code.
``(3) Any other provision of District of Columbia
law that prohibits or restricts lease-purchase
financing.
``(m) For purposes of this section, the following
definitions shall apply:
``(1) The term `revenue bonds, notes, or other
obligations' means special fund bonds, notes, or other
obligations (including refunding bonds, notes, or other
obligations) used to borrow money to finance, assist in
financing, refinance, or repay, restore or reimburse
moneys used for purposes referred to in subsection
(a)(1) the principal of and interest, if any, on which
are to be paid and secured in the manner described in
this section and which are special obligations and to
which the full faith and credit of the District of
Columbia is not pledged.
``(2) The term `District instrumentality' means any
agency or instrumentality (including an independent
agency or instrumentality), authority, commission,
board, department, division, office, body, or officer
of the District of Columbia government duly established
by an act of the Council or by the laws of the United
States, whether established before or after the date of
enactment of the District of Columbia Bond Financing
Improvements Act of 1997.
``(3) The term `available revenues' means gross
revenues and receipts, other than general fund tax
receipts, lawfully available for the purpose and not
otherwise exclusively committed to another purpose,
including enterprise funds, grants, subsidies,
contributions, fees, dedicated taxes and fees,
investment income and proceeds of revenue bonds, notes,
or other obligations issued under this section.
``(4) The term `enterprise fund' means a fund or
account for operations that are financed or operated in
a manner similar to private business enterprises, or
established so that separate determinations may more
readily be made periodically of revenues earned,
expenses incurred, or net income for management
control, accountability, capital maintenance, public
policy, or other purposes.
``(5) The term `dedicated taxes and fees' means
taxes and surtaxes, portions thereof, tax increments,
or payments in lieu of taxes, and fees that are
dedicated pursuant to law to the payment of the debt
service on revenue bonds, notes, or other obligations
authorized under this section, the provision and
maintenance of reserves for that purpose, or the
provision of working capital for or the maintenance,
repair, reconstruction or improvement of the
undertaking to which the revenue bonds, notes, or other
obligations relate.
``(6) The term `tax increments' means taxes, other
than the special tax provided for in section 481 and
pledged to the payment of general obligation
indebtedness of the District, allocable to the increase
in taxable value of real property or the increase in
sales tax receipts, each from a certain date or dates,
in prescribed areas, to the extent that such increases
are not otherwise exclusively committed to another
purpose and as further provided for pursuant to an act
of the Council.''.
SEC. 11509. CONFORMING AMENDMENT.
The fourth sentence of section 446 of the District of
Columbia Self-Government and Governmental Reorganization Act
(DC Code, sec. 47-304) is amended to read as follows: ``Except
as provided in section 467(d), section 471(c), section
472(d)(2), section 475(e)(2), section 483(d), and section
490(f), (g), and (h)(3), no amount may be obligated or expended
by any officer or employee of the District of Columbia
government unless such amount has been approved by Act of
Congress, and then only according to such Act.''.
Subtitle G--District of Columbia Government Budget
SEC. 11601. ELIMINATION OF THE ANNUAL FEDERAL PAYMENT TO THE DISTRICT
OF COLUMBIA.
(a) Elimination of Payment.--
(1) In general.--Title V of the District of
Columbia Self-Government and Governmental
Reorganization Act (DC Code, sec. 47-3406 et seq.) is
hereby repealed.
(2) Clerical amendment.--The table of contents of
such Act is amended by striking the items relating to
title V.
(b) Conforming Amendments.--
(1) Home rule act.--The District of Columbia Self-
Government and Governmental Reorganization Act is
amended as follows:
(A) In section 103(10) (DC Code, sec. 1-
202(10)), by striking ``the annual Federal
payment to the District authorized under title
V,''.
(B) In section 483 (DC Code, sec. 47-
331.2), by striking subsection (c).
(C) In section 603(c) (DC Code, sec. 47-
313(c)), by striking the fourth sentence.
(D) In section 603(f)(1) (DC Code, sec. 47-
313(f)(1)), by striking ``(other than the
fourth sentence)''.
(2) Financial responsibility and management
assistance act.--The District of Columbia Financial
Responsibility and Management Assistance Act of 1995 is
amended--
(A) by striking section 205 (DC Code, sec.
47-392.5); and
(B) in the table of contents for such Act,
by striking the item relating to section 205.
(3) Procurement practices act.--Section 208(a)(2)
of the District of Columbia Procurement Practices Act
of 1985 (DC Code, sec. 1-1182.8(a)(2)) is amended--
(1) by striking subparagraph (B);
(2) by redesignating subparagraph (C) as
subparagraph (B); and
(3) in subparagraph (B), as so redesignated, by
striking ``Amounts deposited in the dedicated fund
described in subparagraph (B)'' and inserting ``Amounts
appropriated for the Inspector General''.
(4) District of columbia revenue act of 1939.--The
District of Columbia Revenue Act of 1939 (DC Code, sec.
47-3401 et seq.) is amended as follows:
(A) In section 603(b) (as redesignated by
section 11402)--
(i) in paragraph (5), by adding
``and'' at the end;
(ii) in paragraph (6), by striking
``; and'' and inserting a period; and
(iii) by striking paragraph (7).
(B) In section 603(c) (as redesignated by
section 11402), by amending subparagraph (C) to
read as follows:
``(C) Applicable limit defined.--In this
paragraph, the `applicable limit' for a fiscal
year is equal to 15 percent of the total
anticipated revenues of the District government
for such fiscal year, as certified by the Mayor
at the time of the Mayor's requisition for an
advance.''.
(C) In section 605(b) (as redesignated by
section 11402)--
(i) by striking paragraph (1) and
redesignating paragraphs (2) through
(4) as paragraphs (1) through (3);
(ii) in paragraph (1) (as so
redesignated), by striking ``other'' in
the heading;
(iii) in paragraph (1) (as so
redesignated), by striking ``If,
after'' and all that follows through
``the Secretary'' and inserting ``The
Secretary'';
(iv) in paragraph (1) (as so
redesignated), by striking ``to
individuals,'' and inserting ``to
individuals (including any Federal
contribution authorized to be
appropriated pursuant to section
11601(c)(2) of the Balanced Budget Act
of 1997),'';
(v) in paragraph (2) (as so
redesignated), by striking ``paragraphs
(1) and (2)'' and inserting ``paragraph
(1)''; and
(vi) in paragraph (3) (as so
redesignated), by striking ``(1)
through (3)'' and inserting ``(1) and
(2)''.
(c) Federal Contribution to Operations of Government of
Nation's Capital.--
(1) Findings.--Congress finds as follows:
(A) Congress has restricted the overall
size of the District of Columbia's economy by
limiting the height of buildings in the
District and imposing other limitations
relating to the Federal presence in the
District.
(B) Congress has imposed limitations on the
District's ability to tax income earned in the
District of Columbia.
(C) The unique status of the District of
Columbia as the seat of the government of the
United States imposes unusual costs and
requirements which are not imposed on other
jurisdictions and many of which are not
directly reimbursed by the Federal government.
(D) These factors play a significant role
in causing the relative tax burden on District
residents to be greater than the burden on
residents in other jurisdictions in the
Washington, D.C. metropolitan area and in other
cities of comparable size.
(2) Federal contribution.--There is authorized to
be appropriated a Federal contribution towards the
costs of the operation of the government of the
Nation's capital--
(A) for fiscal year 1998, $190,000,000; and
(B) for each subsequent fiscal year, such
amount as may be necessary for such
contribution.
In determining the amount appropriated pursuant to the
authorization under this paragraph, Congress shall take
into account the findings described in paragraph (1).
SEC. 11602. REQUIREMENT THAT THE DISTRICT OF COLUMBIA BALANCE ITS
BUDGET IN FY 1998.
(a) In General.--Section 201(c)(1) of the District of
Columbia Financial Responsibility and Management Assistance Act
of 1995 is amended--
(1) in subparagraph (A), by striking ``1999'' and
inserting ``1998''; and
(2) in subparagraph (B), by striking ``1996, 1997,
and 1998,'' and inserting ``1996 and 1997,''.
(b) Conforming Amendment.--Section 603(f) of the District
of Columbia Self-Government and Governmental Reorganization Act
(DC Code, sec. 47-313(f)) is amended by striking ``Act of
1995)--'' and all that follows through ``(2) the Council'' and
inserting ``Act of 1995), the Council''.
SEC. 11603. PERMITTING EXPEDITED SUBMISSION AND APPROVAL OF CONSENSUS
BUDGET AND FINANCIAL PLAN.
(a) Findings.--Congress finds the following:
(1) The District of Columbia Financial
Responsibility and Management Assistance Act (hereafter
in this subsection referred to as the ``Act'') was
structured as to preserve the maximum prerogatives of
each branch of elected self-government consistent with
returning the District of Columbia to full financial
stability and health.
(2) The Act was intended to eliminate unnecessary
bureaucratic barriers and procedures throughout the
District government, including the budget process.
(3) Preservation of home rule and self-government
are consistent with cooperation between elected
officials and the Authority in drawing the annual
budget and other matters affecting the District of
Columbia government, and are preferable to achieve
greater efficiency, communication among the parties,
and avoidance of conflict and delay.
(b) In General.--Section 202 of the District of Columbia
Financial Responsibility and Management Assistance Act of 1995
is amended by adding at the end the following new subsection:
``(i) Expedited Submission and Approval of Consensus Budget
and Financial Plan.--Notwithstanding any other provision of
this section, if the Mayor, the Council, and the Authority
jointly develop a financial plan and budget for the fiscal year
which meets the requirements applicable under section 201 and
which the Mayor, Council, and Authority certify reflects a
consensus among them--
``(1) such financial plan and budget shall serve as
the budget of the District government for the fiscal
year adopted by the Council under section 446 of the
District of Columbia Self-Government and Governmental
Reorganization Act; and
``(2) the Mayor shall transmit the financial plan
and budget to the President and Congress under such
section.''.
(c) Effective Date.--The amendment made by subsection (b)
shall apply with respect to fiscal years beginning with fiscal
year 1998.
SEC. 11604. INCREASE IN MAXIMUM AMOUNT OF PERMITTED DISTRICT BORROWING.
Section 603(b) of the District of Columbia Self-Government
and Governmental Reorganization Act (DC Code, sec. 47-313(b))
is amended by striking ``14 per centum'' each place it appears
in paragraph (1) and paragraph (3) and inserting ``17
percent''.
Subtitle H--Miscellaneous Provisions
CHAPTER 1--REGULATORY REFORM IN THE DISTRICT OF COLUMBIA
SEC. 11701. REVIEW AND REVISION OF REGULATIONS AND PERMIT AND
APPLICATION PROCESSES.
(a) Review of Current Regulations by Authority.--
(1) In general.--Not later than 6 months after the
date of the enactment of this title, the District of
Columbia Financial Responsibility and Management
Assistance Authority shall complete a review of
regulations of the District of Columbia in effect as of
the date of the enactment of this title and analyze the
extent to which such regulations unnecessarily and
inappropriately impair economic development in the
District of Columbia and the financial stability and
management efficiency of the District of Columbia
government. To the greatest extent possible, such
review shall take into account the work and
recommendations of the Business Regulatory Reform
Commission pursuant to the Business Regulatory Reform
Commission Act of 1994 (DC Code, sec. 2-4101 et seq.)
and other existing and ongoing public and private
regulatory reform efforts. The Authority shall transmit
the findings of its review to the Mayor, Council, and
Congress.
(2) Revision.--Based on the review conducted under
paragraph (1) and taking into account actions by the
Council and the Executive Branch of the District of
Columbia government, the Authority shall take such
additional actions as it considers appropriate to
repeal or revise the regulations of the District of
Columbia, in accordance with (and subject to the terms
and conditions described in) section 207 of the
District of Columbia Financial Responsibility and
Management Assistance Act of 1995.
(b) Survey and Revision of Permit and Application
Processes.--
(1) In general.--Not later than 6 months after the
date of the enactment of this title, the Authority
shall complete a review of the current processes of the
District of Columbia for obtaining permits and
applications of all types and analyze the extent to
which such processes and their completion times vary
from the processes applicable in other jurisdictions.
To the greatest extent possible, such review shall take
into account the work and recommendations of the
Business Regulatory Reform Commission pursuant to the
Business Regulatory Reform Commission Act of 1994 (DC
Code, sec. 2-4101 et seq.) and other existing and
ongoing public and private regulatory reform efforts.
The Authority shall transmit the findings of its review
to the Mayor, Council, and Congress.
(2) Revision.--Based on the review conducted under
paragraph (1) and taking into account actions by the
Council and the Executive Branch of the District of
Columbia government, the Authority shall take such
additional actions as it considers appropriate to
repeal or revise the permit and application processes
(and their completion times) of the District of
Columbia, in accordance with (and subject to the terms
and conditions described in) section 207 of the
District of Columbia Financial Responsibility and
Management Assistance Act of 1995. In carrying out such
repeals or revisions, the Authority shall seek to
ensure that the average time required to obtain a
permit or application from the District of Columbia is
consistent with the average time for other similar
jurisdictions in the United States.
(c) Reports to Congress.--Upon the expiration of the 6-
month period which begins on the date of the enactment of this
title and on a quarterly basis thereafter, the Authority shall
submit a report to Congress describing thesteps taken to carry
out the requirements of this section and the effectiveness of the
regulatory, permit, and application processes of the District of
Columbia.
SEC. 11702. REPEAL OF CLEAN AIR COMPLIANCE FEE ACT OF 1994.
(a) Repeal.--
(1) In general.--Effective March 21, 1995, the
Clean Air Compliance Fee Act of 1994 is hereby repealed
(DC Code, sec. 47-2731 et seq.), except as provided in
subsection (b).
(2) Conforming amendment.--Section 2(b)(2) of the
Stable and Reliable Source of Revenues for WMATA Act of
1982 (DC Code, sec. 1-2466(b)(2)) is amended by
striking subparagraph (H).
(b) Exception for Provisions Exempting Delivery of
Newspapers From Application of Certain Taxes.--Subsection (a)
shall not apply to section 14 of the Clean Air Compliance Fee
Act of 1994.
SEC. 11703. REPEAL REQUIREMENT FOR CONGRESSIONAL AUTHORIZATION OF
CERTAIN MERGERS INVOLVING DISTRICT OF COLUMBIA
PUBLIC UTILITY CORPORATIONS.
Section 11 of the Act of March 4, 1913 (37 Stat. 1006; DC
Code, sec. 43-802) is hereby repealed.
SEC. 11704. EXEMPTION OF CERTAIN CONTRACTS FROM COUNCIL REVIEW.
(a) In General.--Section 451 of the District of Columbia
Self-Government and Governmental Reorganization Act (sec. 1-
1130, D.C. Code) is amended by adding at the end the following
new subsection:
``(d) Exemption for Certain Contracts.--The requirements of
this section shall not apply with respect to any of the
following contracts:
``(1) Any contract entered into by the Washington
Convention Center Authority for preconstruction
activities, project management, design, or
construction.
``(2) Any contract entered into by the District of
Columbia Water and Sewer Authority established pursuant
to the Water and Sewer Authority Establishment and
Department of Public Works Reorganization Act of 1996,
other than contracts for the sale or lease of the Blue
Plains Wastewater Treatment Plant.
``(3) At the option of the Council, any contract
for a highway improvement project carried out under
title 23, United States Code.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply with respect to contracts entered into on or after
the date of the enactment of this title.
CHAPTER 2--OTHER MISCELLANEOUS PROVISIONS
SEC. 11711. REVISIONS TO FINANCIAL RESPONSIBILITY AND MANAGEMENT
ASSISTANCE ACT.
(a) Use of Interest on Accounts of Authority for Benefit of
District.--Section 106 of the District of Columbia Financial
Responsibility and Management Assistance Act of 1995 (DC Code,
sec. 47-391.6) is amended by adding at the end the following
new subsection:
``(d) Use of Interest on Accounts for District.--
``(1) In general.--Notwithstanding any other
provision of this Act, the Authority may transfer or
otherwise expend any amounts derived from interest
earned on accounts held by the Authority on behalf of
the District of Columbia for such purposes as it
considers appropriate to promote the economic stability
and management efficiency of the District government.
``(2) Spending not subject to appropriation by
congress.--Notwithstanding subsection (a)(3), any
amounts transferred or otherwise expended pursuant to
paragraph (1) may be obligated or expended without
approval by Act of Congress.''.
(b) Appointment of Inspector General.--Section 303(e)(1) of
such Act (DC Code, sec. 1-1182.8 note) is amended by striking
``the Authority'' and inserting ``the Mayor''.
SEC. 11712. COOPERATIVE AGREEMENTS BETWEEN FEDERAL AGENCIES AND
METROPOLITAN POLICE DEPARTMENT.
(a) Agreements.--Each covered Federal law enforcement
agency may enter into a cooperative agreement with the
Metropolitan Police Department of the District of Columbia to
assist the Department in carrying out crime prevention and law
enforcement activities in the District of Columbia, including
taking appropriate action to enforce subsection (e) (except
that nothing in such an agreement may be construed to grant
authority to the United States to prosecute violations of
subsection (e)).
(b) Contents of Agreement.--An agreement entered into
between a covered Federal law enforcement agency and the
Metropolitan Police Department pursuant to this section may
include agreements relating to--
(1) sending personnel of the agency on patrol in
areas of the District of Columbia which immediately
surround the area of the agency's jurisdiction, and
granting personnel of the agency the power to arrest in
such areas;
(2) sharing and donating equipment and supplies
with the Metropolitan Police Department;
(3) operating on shared radio frequencies with the
Metropolitan Police Department;
(4) permitting personnel of the agency to carry out
processing and papering of suspects they arrest in the
District of Columbia; and
(5) such other items as the agency and the
Metropolitan Police Department may agree to include in
the agreement.
(c) Coordination With U.S. Attorney's Office.--Agreements
entered into pursuant to this section shall be coordinated in
advance with the United States Attorney for the District of
Columbia.
(d) Covered Federal Law Enforcement Agencies Described.--In
this section, the term ``covered Federal law enforcement
agency'' means any of the following:
(1) United States Capitol Police.
(2) United States Marshals Service.
(3) Library of Congress Police.
(4) Bureau of Engraving and Printing Police Force.
(5) Supreme Court Police.
(6) Amtrak Police Department.
(7) Department of Protective Services, United
States Holocaust Museum.
(8) Government Printing Office Police.
(9) United States Park Police.
(10) Bureau of Alcohol, Tobacco, and Firearms.
(11) Drug Enforcement Administration.
(12) Federal Bureau of Investigation.
(13) Criminal Investigation Division, Internal
Revenue Service.
(14) Department of the Navy Police Division, Naval
District Washington.
(15) Naval Criminal Investigative Service.
(16) 11th Security Police Squadron, Bolling Air
Force Base.
(17) United States Army Military District of
Washington.
(18) United States Customs Service.
(19) Immigration and Naturalization Service.
(20) Postal Inspection Service, United States
Postal Service.
(21) Uniformed Division, United States Secret
Service.
(22) United States Secret Service.
(23) National Zoological Park Police.
(24) Federal Protective Service, General Services
Administration, National Capital Region.
(25) Defense Protective Service, Department of
Defense Washington Headquarters Services.
(26) Office of Protective Services, Smithsonian
Institution.
(27) Office of Protective Services, National
Gallery of Art.
(28) United States Army Criminal Investigation
Command, Department of the Army Washington District,
3rd Military Police Group.
(29) Marine Corps Law Enforcement.
(30) Department of State Diplomatic Security.
(31) United States Coast Guard.
(32) United States Postal Police.
(e) Certain Prohibited Activity.--Effective with respect to
conduct occurring on or after the date of the enactment of this
title, whoever in the District of Columbia knowingly and
willfully obstructs any bridge connecting the District of
Columbia and the Commonwealth of Virginia--
(1) shall be fined not less than $1,000 and not
more than $5,000, and in addition may be imprisoned not
more than 30 days; or
(2) if applicable, shall be subject to prosecution
by the District of Columbia under the provisions of
District law and regulation amended by the Safe Streets
Anti-Prostitution Amendment Act of 1996 (D.C. Law 11-
130).
SEC. 11713. PERMITTING GARNISHMENT OF WAGES OF OFFICERS AND EMPLOYEES
OF DISTRICT OF COLUMBIA GOVERNMENT.
Section 2 of D.C. Law 2-14 (DC Code, sec. 1-516) is
amended--
(1) by striking ``After July 25'' and inserting
``(a) After July 25''; and
(2) by adding at the end the following new
subsection:
``(b) After October 1, 1997, wages salaries, annuities,
retirement and disability benefits, and other remuneration
based upon employment, or other income owed by, due from, and
payable by the government of the District of Columbia to any
individual shall be subject to attachment, garnishment,
assignment, or withholding in accordance with subchapter III of
chapter 5 of title 16 of the District of Columbia Code in the
same manner and to the same extent as if the government of the
District of Columbia were a private person.''.
SEC. 11714. PERMITTING EXCESS APPROPRIATIONS BY WATER AND SEWER
AUTHORITY FOR CAPITAL PROJECTS.
(a) In General.--Section 445A of the District of Columbia
Self-Government and Governmental Reorganization Act (DC Code,
sec. 43-1691), as added by section 4(a) of the District of
Columbia Water and Sewer Authority Act of 1996, is amended--
(1) by striking ``The District'' and inserting
``(a) In General.--The District''; and
(2) by adding at the end the following new
subsection:
``(b) Permitting Expenditure of Excess Revenues for Capital
Projects in Excess of Budget.--Notwithstanding the amount
appropriated for the District of Columbia Water and Sewer
Authority for capital projects for a fiscal year, if the
revenues of the Authority for the year exceed the estimated
revenues of the Authority provided in the annual budget of the
District of Columbia for the fiscal year, the Authority may
obligate or expend an additional amount for capital projects
during the year equal to the amount of such excess revenues.''.
(b) Conforming Amendment.--The fourth sentence of section
446 of such Act (DC Code, sec. 47-304), as amended by section
2(c)(2) of the District of Columbia Water and Sewer Authority
Act of 1996, is amended bystriking ``in section 467(d)'' and
inserting ``in section 445A(b), section 467(d)''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to fiscal years beginning on or after
October 1, 1996.
SEC. 11715. REQUIRING CERTAIN FEDERAL OFFICIALS TO PROVIDE NOTICE
BEFORE CARRYING OUT ACTIVITIES AFFECTING REAL
PROPERTY LOCATED IN DISTRICT OF COLUMBIA.
(a) Heads of Federal Agencies.--
(1) In general.--Except as provided in subsection
(d), the head of any Federal agency may not carry out
any activity that affects real property located in the
District of Columbia unless--
(A) not later than 60 days before carrying
out such activity, the head of the agency
provides a notice describing such activity and
the property affected to the Administrator of
General Services and the Administrator of
General Services transmits such notice to the
individuals described in subsection (c); and
(B) the head of the agency provides the
individuals described in subsection (c) with
the opportunity to present oral or written
comments on the activity to a representative of
the head of the agency before the head of the
agency carries out the activity.
(2) Federal agency defined.--In subsection (a), the
term ``Federal agency'' means an executive department
(as defined in section 101 of title 5, United States
Code).
(b) Architect of the Capitol.--Except as provided in
subsection (d), the Architect of the Capitol may not carry out
any activity that affects real property located in the District
of Columbia unless--
(1) not later than 60 days before carrying out such
activity, the Architect provides a notice describing
such activity and the property affected to the
Committee on Transportation and Infrastructure of the
House of Representatives and the Committee on
Environment and Public Works of the Senate and such
Committees transmit such notice to the individuals
described in subsection (c); and
(2) the Architect provides the individuals
described in subsection (c) with the opportunity to
present oral or written comments on the activity to a
representative of the Architect before the Architect
carries out the activity.
(c) Individuals Described.--The individuals described in
this paragraph (with respect to the activity and the real
property involved) are the Mayor of the District of Columbia,
the Chair of the Council of the District of Columbia, and the
Chair of the Advisory Neighborhood Commission (as established
pursuant to section 738 of the District of Columbia Self-
Government and Governmental Reorganization Act) in whose
neighborhood such property is located.
(d) Exception for Emergencies.--The head of a Federal
agency or the Architect of the Capitol may waive the
requirements of subsection (a) if the head of the agency or the
Architect finds that compliance with the requirements would
jeopardize the public safety or the national security interests
of the United States, but only if the head of the agency or the
Architect--
(1) certifies such finding and the reasons for such
finding to the individuals described in subsection (c)
and to Congress; and
(2) at the earliest time practicable, provides such
individuals with the notice described in paragraph (1)
of subsection (a) or (b) (whichever is applicable) and
the opportunity to present comments described in
paragraph (2) of subsection (a) or (b).
(e) Effective Date.--Section 1 shall apply to activities
carried out after the expiration of the 60-day period that
begins on the date of the enactment of this title.
SEC. 11716. REPEAL TERM OF DEED OF CONVEYANCE TO CERTAIN HOSPITAL.
Secton 2 of the Act of June 6, 1952 (chapter 486; 66
Stat. 288) (DC Code, sec. 32-121) is hereby repealed.
SEC. 11717. SHORT TITLE OF HOME RULE ACT.
(a) In General.--Section 101 of the District of Columbia
Self-Government and Governmental Reorganization Act is amended
by striking ``District of Columbia Self-Government and
Governmental Reorganization Act'' and inserting ``District of
Columbia Home Rule Act''.
(b) References in Law.--Any reference in law or
regulation to the District of Columbia Self-Government and
Governmental Reorganization Act shall be deemed to be a
reference to the District of Columbia Home Rule Act.
CHAPTER 3--EFFECTIVE DATE; GENERAL PROVISIONS
SEC. 11721. EFFECTIVE DATE.
Except as otherwise provided in this title, the
provisions of this title shall take effect on the later of
October 1, 1997, or the day the District of Columbia Financial
Responsibility and Management Assistance Authority certifies
that the financial plan and budget for the District government
for fiscal year 1998 meet the requirements of section 201(c)(1)
of the District of Columbia Financial Responsibility and
Management Assistance Act of 1995, as amended by this title.
SEC. 11722. TECHNICAL ASSISTANCE
Any Federal agency (as defined in section 101 of title
31, United States Code) may provide, at the discretion of the
head of the agency, technical assistance to, and training for,
personnel of the Government of the District of Columbia. Such
assistance shall be limited to assistance that does not
interfere with the mission of the agency. The authority
provided by this section shall expire three years from the date
of enactment of this statute.
SEC. 11723. LIABILITY.
(a) District of Columbia.--The District of Columbia shall
defend any civil action or proceeding pending on the effective
date of this title in any court or other official municipal,
state, or federal forum against the District of Columbia or its
officers, employees, or agents, and shall assume any liability
resulting from such an action or proceeding.
(b) State Justice Institute.--The State Justice Institute
shall not be liable for damages or equitable relief on the
basis of the activities or operations of any federal or
District of Columbia agency which receives funds through the
State Justice Institute pursuant to this title.
(c) United States.--The United States, its officers,
employees, and agents, and its agencies shall not--
(1) be responsible for the payment of any judgments,
liabilities or costs resulting from any action or
proceeding against the District of Columbia or its
agencies, officers, employees, or agents;
(2) be subject to liability in any case on the basis
of the activities of the District of Columbia or its
agencies, officers, employees, or agents; or
(3) be subject to liability in any case under section
1979 of the Revised Statutes (42 U.S.C. 1983).
(d) Limitations.--Nothing in this section shall be
construed as a waiver of sovereign immunity, or as limiting any
other defense or immunity that would otherwise be available to
the United States, the District of Columbia, their agencies,
officers, employees, or agents.
And the Senate agree to the same.
For consideration of the House bill, and the
Senate amendment, and modifications committed
to conference:
John R. Kasich,
David L. Hobson,
Richard K. Armey,
Tom DeLay,
J. Dennis Hastert,
John M. Spratt, Jr.,
David E. Bonior,
Vic Fazio.
As additional conferees from the Committee on
Agriculture, for consideration of title I of
the House bill, and title I of the Senate
amendment, and modifications committed to
conference:
Robert Smith,
Bob Goodlatte,
Charles W. Stenholm.
As additional conferees from the Committee on
Banking and Financial Services, for
consideration of title II of the House bill,
and title II of the Senate amendment, and
modifications committed to conference:
James A. Leach,
Rick Lazio.
As additional conferees from the Committee on
Commerce, for consideration of subtitles A-C of
title III of the House bill, and title IV of
the Senate amendment, and modifications
committed to conference:
Tom Bliley,
Dan Schaefer,
John D. Dingell.
As additional conferees from the Committee on
Commerce, for consideration of subtitle D of
title III of the House bill, and subtitle A of
title III of the Senate amendment, and
modifications committed to conference:
Tom Bliley,
Billy Tauzin.
As additional conferees from the Committee on
Commerce, for consideration of subtitles E and
F of title III, titles IV and X of the House
bill, and divisions 1 and 2 of title V of the
Senate amendment, and modifications committed
to conference:
Tom Bliley,
Michael Bilirakis.
As additional conferees from the Committee on
Education and the Workforce, for consideration
of subtitle A of title V and subtitle A of
title IX of the House bill, and chapter 2 of
division 3 of title V of the Senate amendment,
and modifications committed to conference:
Bill Goodling,
Jim Talent.
As additional conferees from the Committee on
Education and the Workforce, for consideration
of subtitles B and C of title V of the House
bill, and title VII of the Senate amendment,
and modifications committed to conference:
Bill Goodling,
Howard ``Buck'' McKeon,
Dale E. Kildee.
As additional conferees from the Committee on
Education and the Workforce, for consideration
of subtitle D of title V of the House bill, and
chapter 7 of division 4 of title V of the
Senate amendment, and modifications committed
to conference:
Donald M. Payne.
As additional conferees from the Committee on
Government Reform and Oversight, for
consideration of title VI of the House bill,
and subtitle A of title VI of the Senate
amendment, and modifications committed to
conference:
Dan Burton,
John L. Mica.
As additional conferees from the Committee on
Transportation and Infrastructure, for
consideration of title VII of the House bill,
and subtitle B of title III and subtitle B of
title VI of the Senate amendment, and
modifications committed to conference:
Bud Shuster,
Wayne T. Gilchrest,
James L. Oberstar.
As additional conferees from the Committee on
Veterans' Affairs, for consideration of title
VIII of the House bill, and title VIII of the
Senate amendment, and modifications committed
to conference:
Bob Stump,
Christopher H. Smith,
Lane Evans.
As additional conferees from the Committee on
Ways and Means, for consideration of subtitle A
of title V and title IX of the House bill, and
divisions 3 and 4 of title V of the Senate
amendment, and modifications committed to
conference:
Bill Archer,
E. Clay Shaw, Jr.,
Dave Camp,
Charles B. Rangel,
Sander M. Levin.
As additional conferees from the Committee on
Ways and Means, for consideration of titles IV
and X of the House bill, and division 1 of
title V of the Senate amendment, and
modifications committed to conference:
Bill Archer,
William Thomas.
Managers on the Part of the House.
From the Committee on the Budget:
Pete Domenici,
Chuck Grassley,
Don Nickles,
Phil Gramm,
Frank Lautenberg.
From the Committee on Agriculture, Nutrition,
and Forestry:
Dick Lugar.
From the Committee on Banking, Housing, and
Urban Affairs:
Alfonse D'Amato,
Richard Shelby,
Paul Sarbanes.
From the Committee on Commerce, Science and
Transportation:
John McCain,
Ted Stevens,
(Except for provisions in
universal service fund).
From the Committee on Energy and Natural
Resources:
Frank H. Murkowski,
Larry E. Craig.
From the Committee on Finance:
Bill Roth,
Trent Lott,
Daniel P. Moynihan.
From the Committee on Governmental Affairs:
Fred Thompson,
Susan Collins.
From the Committee on Veterans' Affairs:
Arlen Specter,
Strom Thurmond,
John Rockefeller.
Managers on the Part of the Senate.
JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE
The managers on the part of the House and the Senate at
the conference on the disagreeing votes of the two Houses on
the amendment of the Senate to the bill (H.R. 2015) to provide
for reconciliation pursuant to sections 104 to 105 of the
concurrent resolution on the budget for fiscal year 1997,
submit the following joint statement to the House and the
Senate in explanation of the effect of the action agreed upon
by the managers and recommended in the accompanying conference
report:
TITLE I--AGRICULTURE
Exemption From the Work Requirement of Section 6(o) of the Food Stamp
Act
current law
Section 6(o) of the Food Stamp Act generally provides
that able-bodied adults between 18 and 50 years of age (and
without dependents) are ineligible if, during the prior 36
months, they received food stamps for 3 months while not
working at least 20 hours a week or participating in an
approved work/training activity. If they re-establish
eligibility by working or participating in a work/training
activity, and then become unemployed or leave work/training,
they are eligible for one extra 3-month period--for a potential
total of 6 months of eligibility (without working or
participating in a work/training program) in any 36-month
period.
[Sec. 6(o)(1), (2), (5), & (6).]
Individual excepted from the section 6(o) work
requirement include: Those under 18 or over 50; those medically
certified as unfit for employment; parents/caretakers with
responsibility for a dependent child; pregnant women; and those
otherwise exempt under food stamp employment and training rules
(e.g., caretakers of incapacitated persons, participants in
substance abuse treatment programs, those subject to
unemployment compensation work registration rules).
[Sec. 6(o)(3).]
At a state agency's request, the Secretary may waive
application of the section 6(o) work requirement for areas
that: (1) have an unemployment rate over 10% or (2) lack ``a
sufficient number of jobs.''
[Sec. 6(o)(4).]
house bill
Exemption
In addition to current-law exceptions and waiver
authority, permits state agencies to exempt from the section
6(o) work requirement up to 15% of those to whom the
requirement applies. [Section 1001]
Inserts a new sec. 6(o)(5), entitled ``15-Percent
Exemption''.
Definitions
``Caseload'' is defined as the average monthly number of
individuals receiving food stamps during the 12-month period
ending the preceding June 30.
``Covered Individual'' is defined as a food stamp
recipient (or person denied eligibility solely because of the
section 6(o) work requirement) who: (1) is not excepted from
the requirements of section 6(o), (2) does not reside in an
area covered by a waiver of the requirements of section 6(o),
(3) is not complying with the work or work/training activity
requirements of section 6(o), (4) is not in the first 3 months
of eligibility under section 6(o), and (5) is not in the second
3 months of eligibility under section 6(o).
Fiscal year 1998
Provides that the number of exemptions from the section
6(o) work requirement granted by state agencies must be such
that the average monthly number of exemptions in effect during
the year does not exceed 15% of the number of ``covered
individuals'' in the state. The number of covered individuals
for each state is to be estimated by the Secretary based on the
food stamp program's ``quality control'' survey for fiscal year
1996 and other factors the Secretary considers appropriate
because of the timing and limitations of the survey.
Each subsequent fiscal year
As with fiscal year 1998, provides that the number of
exemptions granted by state agencies in subsequent years must
be such that the average monthly number of exemptions in effect
during the year does not exceed 15% of the number of ``covered
individuals'' in the state. The number of covered individuals
for each state is to be estimated by the Secretary using the
number estimated for fiscal year 1998--adjusted to reflect
changes in the state's ``caseload'' and the Secretary's
estimate of changes in the proportion of food stamp recipients
covered by waivers.
Caseload adjustments
Provides that the Secretary must adjust estimates of
covered individuals for a state during any fiscal year if the
number of food stamp recipients varies by a significant number
from the caseload during the 12 months ending June 30 of the
preceding fiscal year--as determined by the Secretary.
Exemption adjustments
During fiscal year 1999 and each subsequent year,
provides that the Secretary must increase or decrease the
number of individuals who may be granted an exemption by a
state agency to the extent that the average monthly number of
exemptions in effect during the preceding fiscal year was
smaller or greater than the state agency's 15% allowance.
Reporting requirement
Requires that state agencies submit such reports as the
Secretary determines necessary to ensure compliance with the
15% exemption rule.
senate amendment
Same as the House Bill, with minor and technical
differences, noted below. [Section 1001.]
Inserts a new sec. 6(o)(6), entitled ``15-Percent
Hardship Exemption''.
Technical drafting difference in the fourth condition of
the definition of ``covered individual''.
Caseload adjustments are the same as the House bill
except that an adjustment must be made if the number of food
stamp recipients varies from the caseload during the 12 months
ending June 30 of the preceding fiscal year by more than 10%.
Exemption adjustments are the same as the House bill
except for a technical difference.
conference agreement
Senate recedes on all references to ``hardship''
exemption.
House recedesion technical difference in the fourth
condition of ``covered individual''.
House recedes on caseload adjustment.
Senate recedes on technical drafting difference in the
exemption adjustment.
[Section 1001.]
Additional Funding for Employment and Training
1. Added Federal Funding
Current Law
The Secretary is required to reserve the following
amounts to allocate to state agencies for employment and
training programs for food stamp recipients: For fiscal year
1998, $81 million; for fiscal year 1999, $84 million; for
fiscal year 2000, $86 million; for fiscal year 2001, $88
million; and for fiscal year 2002, $90 million.
No state matching is required to receive these funds.
Minimum state allocations are set at $50,000.
[Sec. 16(h)(1).]
house bill
Increases the amounts required to be reserved for
employment and training programs to: For fiscal year 1998, $221
million; for fiscal year 1999, $224 million; for fiscal year
2000, $226 million; for fiscal year 2001, $228 million; and for
fiscal year 2002, $210 million.
Unlike current law, the amounts reserved are to remain
available until expended. Retains minimum state allocations of
$50,000.
[Sec. 1002(a); new sec. 16(h)(1)(A)&(E).]
senate amendment
Same as the House Bill, except that the amount to be
reserved for fiscal year 2002 is less--$170 million.
[Sec. 1002; new sec. 16(h)(1)(A)&(D).]
conference agreement
Senate recedes with an amendment to increase the amounts
required to be reserved for employment and training programs as
follows: For fiscal year 1998, $81 million, with an additional
amount of $131 million; for fiscal year 1999, $84 million, with
an additional amount of $131 million; for fiscal year 2000, $86
million, with an additional amount of $131 million; for fiscal
year 2001, $88 million, with an additional amount of $131
million; and for fiscal year 2002, $90 million, with an
additional amount of $75 million.
[Sec. 1002(a); new sec. 16(h)(1)(A)&(D).]
2. Limit on use of funds for TANF recipients
current law
The amount of employment and training funding a state
agency may use for its Temporary Assistance for Needy Families
(TANF) recipients may not exceed the amount used for Aid to
Families with Dependent Children (AFDC) recipients in fiscal
year 1995.
[Sec. 6(d)(4)(K).]
house bill
Prohibts the use of unmatched federal funds for TANF
recipients.
[Sec. 1002(a); new sec. 16(h)(1)(B)(i).]
senate amendment
No comparable provision.
conference agreement
House recedes.
3. Use of funds for recipients not excepted from the section
6(o) work requirement.
current law
No provision.
house bill
Requires that not less than 80% of unmatched federal
funding be used for employment and training programs--other
than job search or job search training--for recipients not
excepted from the section 6(o) work requirement (not
categorically excepted on the basis of age, fitness to work,
etc.).
[Sec. 1002(a); new sec. 16(h)(1)(B)(ii).]
senate amendment
Requires that not less than 75% of unmatched federal
funding be used to serve recipients who: (1) are not excepted
from the section 6(o) work requirement and(2) are placed in and
comply with a work program--other than Job Training Partnership Act or
Trade Adjustment Assistance programs--that meets the eligibility
standards of section 6(o) (e.g., participation in a workfare program or
a work/training program for 20 hours a week).
[Sec. 1002; new sec. 16(h)(1)(F).]
Conference Agreement
House recedes with an amendment to require 80% of
unmatched federal funding to be used to serve recipients who:
(1) are not excepted from the section 6(o) work requirement;
and (2) are placed in and comply with a work program including
Job Training Partnership Act and the Trade Adjustment
Assistance programs, that meets the eligibility standards of
section 6(o) (e.g. participation in a workfare program or a
work/training program for 20 hours per week.)
[Sec. 1002(a); new sec. 16(h)(1)(E).]
4. Allocation and re-allocation of federal funds
Current Law
The Secretary must allocate unmatched federal funds among
state agencies using a reasonable formula--determined by the
Secretary--that gives consideration to the population in each
state affected by the section 6(o) work requirement.
State agencies must notify the Secretary if they
determine that they will not expend all of the unmatched
federal funds allocated to them. On notification, the Secretary
must reallocate these unexpended funds as the Secretary
considers appropriate and equitable.
[Sec. 16(h)(1)(C).]
House Bill
Requires the Secretary to allocate unmatched federal
funds using a reasonable formula set by the Secretary that
reflects each state's proportion of food stamp recipients who
(1) are not excepted from the section 6(o) work requirement and
(2) do not reside in an area subject to a waiver from the
section 6(o) work requirement. However, if a state agency
provides employment and training services to non-excepted
recipients in an area subject to a waiver, recipients in that
area would be counted in determining a state's allocation.
States' proportions of non-excepted recipients would be
adjusted each fiscal year for changes in the state's caseload
(in the 12 months ending the preceding June 30).
Requires state agencies to submit such reports as the
Secretary determines are necessary to ensure compliance with
funding allocation and reallocation rules.
No change from current law regarding the reallocation of
federal unmatched funds.
[Sec. 1002(a); new sec. 16(h)(1)(C) &(D).]
Senate Amendment
Requires the Secretary to allocate unmatched federal
funds using a reasonable formula set by the Secretary that
reflects each state's proportion of food stamp recipients who
are not excepted from the section 6(o) work requirement.
States' proportions of non-excepted recipients would be
estimated by the Secretary based on the fiscal year 1996
``quality control'' survey and other factors the Secretary
considers appropriate because of the timing and limitations of
the survey and adjusted each fiscal year for changes in each
state's caseload (in the 12 months ending the preceding June
30).
No comparable reporting requirement.
If a state agency will not expend all of the unmatched
federal funds allocated to it for a fiscal year, requires the
Secretary to reallocate the unexpended funds--during the fiscal
year or the subsequent fiscal year--as the Secretary considers
appropriate and equitable.
[Sec. 1002; new sec. 16(h)(1)(B) & (C).]
Conference Agreement
Senate recedes on the allocation of unmatched funds with
an amendment that for fiscal year 1998, the Secretary would
allocate funds according to the Senate amendment.
House recedes on the Secretary's estimate of states'
proportions of non-excepted recipients based on the ``quality
control'' survey.
Senate recedes on reporting requirement.
House recedes on reallocation of unexpended funds.
[Sec. 1002(a); new sec. 16(h)(1)(B)&(C).]
5. Placements
Current Law
No provisions.
House Bill
No comparable provisions.
Senate Amendment
Provides that state agencies are eligible to receive
unmatched federal funds (up to the amount of their allocation,
including any reallocations) in an amount equal to the sum of:
(1) the average monthly number of non-excepted recipients
placed in and complying with a work program--other than a Job
Training Partnership Act or Trade Adjustment Assistance
program--that meets the eligibility standards of section 6(o)
(e.g., participation in a workfare program or a work/training
program for 20 hours a week), multiplied by an amount
determined by the Secretary (and periodically adjusted) to
reflect the reasonable cost of efficiently and economically
providing services that meet the eligibility standards of
section 6(o); plus
(2) the average monthly number of non-excepted recipients
in employment and training activities that do not meet the
eligibility standards of section 6(o), multiplied by a lesser
amount determined by the Secretary (and periodically adjusted)
to reflect the reasonable cost of efficiently and economically
providing services that do not meet the eligibility standards
of section 6(o).
[Sec. 1002; new sec. 16(h)(1)(E).]
Conference Agreement
House recedes with an amendment to require the Secretary
to monitor state agencies' expenditure of funds for employment
training programs provided under this paragraph, including the
costs of individual components of state agencies' programs. The
Secretary may determine the reimbursable costs of employment
and training components, and, if the Secretary makes such a
determination, the Secretary shall determine that the amounts
spent or planned to be spent on the components reflect the
reasonable cost of efficiently and economically providing
components appropriate to recipient employment and training
needs, taking into account, as the Secretary deems appropriate,
prior expenditures on the components, the variability of costs
among state agencies' components, the characteristics of the
recipients to be served, and such other factors as the
Secretary considers necessary.
The conferees intend that the Secretary will exercise the
authority to determine employment and training costs so that
state agencies have reasonable flexibility in designing
employment and training programs for those covered by the work
requirement for 18-50 year olds. This authority should not be
used to effectively restrict state agencies' choices to one
employment and training component, such as providing only
workfare or only training positions. However, it also is
intended to allow the Secretary to circumscribe the makeup and
costs of state agencies' employment and training components for
18-50 year olds so that costs are reasonable and are not
excessive and the components are commensurate with
participants' employment and training requirements. The
Secretary may issue guidelines that allow a mix of components
and costs that the Secretary determines to be reasonable.
[Sec. 1002(a); new sec. 16(h)(1)(G).]
6. Maintenance of Effort
Current Law
No provision.
House Bill
In order to receive additional unmatched federal funding
(above the amounts set in current law), state agencies must
maintain their expenditures for employment and training and
workfare programs for food stamp recipients at a level not less
than their expenditures for fiscal year 1996.
[Sec. 1002(a); new sec. 16(h)(1)(F).]
Senate Amendment
In order to receive any unmatched federal funding, state
agencies must maintain their expenditures for employment and
training and workfare programs for food stamp recipients at a
level not less than 75% of their expenditures for fiscal year
1996.
[Sec. 1002; new sec. 16(h)(1)(G).]
Conference Agreement
Senate recedes with a technical amendment.
[Sec. 1002(a); new sec. 16(h)(1)(F).]
7. Additional payments to states
Current Law
If a state agency incurs costs that exceed the unmatched
federal funds allocated to it for employment and training
programs, the Secretary is required to pay 50% of additional
costs.
[Sec. 16(h)(2).]
House Bill
No change to current law.
Senate Amendment
If a state agency incurs costs to place individuals in
employment and training programs and does not use unmatched
federal funds to defray those costs, requires the Secretary to
pay 50% of the costs incurred.
[Sec. 1002; new sec. 16(h)(2).]
Conference Agreement
Senate recedes.
8. Report to Congress
Current Law
No provision.
House Bill
Requires the Secretary to submit annual reports to the
Agriculture Committees regarding whether the additional
employment and training funding provided in this measure has
been used by state agencies to increase the number of work/
training slots for recipients subject to the section 6(o) work
requirement in the most efficient and effective manner.
[Sec. 1002(a); new sec. 16(h)(2).]
Senate Amendment
No comparable provision.
Conference Agreement
Senate recedes with an amendment to require the Secretary
to submit one report not later than 30 months after the date of
enactment.
[Section 1002(b).]
Authorizing the Use of Nongovernmental Personnel in Making
Determinations of Eligibility for Benefits Under the Food Stamp Program
Current Law
State agencies must certify eligibility in accordance
with general procedures set by the Secretary in regulations,
and state agency personnel must be employed in accordance with
current federal ``merit system'' standards.
[Sec. 11(e)(6).]
House Bill
Provides that no provision of law be construed as
preventing any state from allowing eligibility determinations
to be made by an entity that is not a state or local government
(or by an individual who is not a state or local government
employee)--so long as state-set qualifications are met.
Determinations made by the non-governmental entity or
individual would be considered as made by the state agency.
Provides that this authority not be construed as
affecting conditions of eligibility, rights to challenge
eligibility determinations, and ``quality control''
determinations.
[Sec. 1003.]
Senate Amendment
No comparable provisions.
Conference Agreement
House recedes. The Managers understand that this issue is
addressed in another section of the Conference Report.
Denial of food stamps for prisoners
Current Law
No provisions.
House Bill
[Note: The House Bill does not contain an amendment
dealing with food stamps and prisoners. However, H.R. 1000
(approved by the House on April 8, 1997) requires state
agencies to establish a system and take action on a periodic
basis to verify and otherwise assure that an individual who is
officially detained in a correctional, detention, or penal
facility administered under federal or state law is not
considered to be part of any food stamp household--except to
the extent that the Secretary determines that extraordinary
circumstances have made it impracticable for the state agency
to obtain the necessary information.]
Senate Amendment
Requires state agencies to establish a system and take
action on a periodic basis to verify and otherwise ensure that
an individual placed under detention in a federal, state, or
local penal, correctional, or other detention facility (for
more than 30 days) is not eligible to participate as a member
of any food stamp household--except that (1) the Secretary may
determine that extraordinary circumstances make it
impracticable for a state agency to obtain the necessary
information and (2) state agencies obtaining information
collected under the Social Security Administration's system for
identifying prisoner recipients (or a comparable system) will
be judged to be in compliance.
Provides that this new requirement will take effect 1
year after enactment--except that the Secretary may grant an
extension (not to exceed 2 years after enactment) if a request
is submitted stating the reasons for noncompliance, providing
evidence of a good faith effort, and detailing a plan for
bringing the state into compliance.
Requires the Secretary to assist states--to the maximum
extent practicable--in implementing systems to carry out the
new requirement regarding prisoners.
[Sec. 1003.]
Conference Agreement
House recedes.
[Section 1003.]
Nutrition Education
Current Law
No provisions. [Note: Nutrition education funds provided
under the Food Stamp Act cannot typically be matched with
specifically earmarked non-governmental funds.]
House Bill
No comparable provisions.
Senate Amendment
Requires the Secretary to make available up to $600,000 a
year (for fiscal years 1998-2001) for special nutrition
education grants to private nonprofit organizations and state
agencies.
Provides that eligible organizations and agencies will be
those that agree to (1) use the funds to ``direct a
collaborative effort to coordinate and integrate nutrition
education into health, nutrition, social service, and food
distribution programs for food stamp participants and other
low-income households,''and (2) design the collaborative effort
``to reach large number of food stamp participants and other
low-income households through a network of organizations,
including schools, child care centers, farmers''markets, health
clinics, and outpatient education services.''
Requires the Secretary to give preference to
organizations and state agencies that conducted ``collaborative
efforts''and received funding for them from the Secretary prior
to enactment.
Limits the federal contribution to 50%, bars in-kind
matching contributions, and allows the non-federal share to
include private nongovernmental funds. No grant may exceed
$200,000 a year. [Sec. 1004.]
Conference Agreement
House recedes with an amendment to clarify that the
federal share of a grant can not exceed $200,000; and the
amendments in sections 1001 and 1002 of this title dealing with
exemptions and additional funding for employment and training
programs shall be effective on October 1, 1997, without regard
to whether regulations have been issued to implement such
amendments. Within one year after the date of enactment of this
Act, the Secretary shall prescribe such regulations as may be
necessary to implement the amendments made by this title.
[Sections 1004 and 1005.]
TITLE II--HOUSING, AND RELATED PROGRAMS
Section 2002--Extension of Foreclosure Avoidance and Borrower
Assistance Provisions for FHA Single Family Housing Mortgage Insurance
Program
House bill
The House bill would extend permanently the FHA
Assignment Reforms from Section 407 of the Balanced Budget
Downpayment Act, I. Section 407 amended Sections 204(a) and 230
of the National Housing Act to authorize HUD, under the
replacement assignment program, to pay mortgagees for
undertaking loss mitigation measures and to restrict HUD's
ability to accept assignments of mortgages. It reforms the
assignment process to achieve cost savings comparable to those
achieved in the private sector by working out delinquent loans
to avoid foreclosure and minimizing losses to the mortgage
insurer.
Senate amendment
The Senate language is identical.
Conference Agreement
The Conference agreement includes this language.
Section 2003--Adjustment of Maximum Monthly Rents For Certain Dwelling
Units In New Construction and Substantial or Moderate Rehabilitation
Projects Assisted Under Section 8 Rental Assistance Program
House bill
The House bill would provide limitations on the
application of the annual adjustment factor (AAF) for FY 1999,
and subsequent years, for Section 8 New Construction,
Substantial Rehabilitation, or Moderate Rehabilitation projects
where the rents are adjusted using the AAF and the rents are in
excess of the fair market rents (``FMRs'') for that housing
area. For such projects, the Secretary may adjust rents, but
only to the extent that the owner demonstrates that the
adjusted rent would not exceed the rent for a similar
unassisted unit. For FY 1998, it is expected that the HUD
appropriations Act will continue this same policy, which has
been in effect during FY 1996, FY 1996 prior to April 26, 1996,
and FY 1997.
Senate amendment
The Senate language is identical.
Conference Agreement
The conference agreement includes this language.
Section 2004--Adjustment of Maximum Monthly Rents for
Non-Turnover Dwelling Units Assisted Under Section 8 Rental
Assistance Program
House bill
The House provision would reduce the Annual Adjustment
Factor (AAF) by one percentage point, for FY 1999 and
subsequent fiscal years, for those Section 8 units in which
there has been no turnover since the preceding annual rental
adjustment, except that the AAF shall not be reduced to less
than 1.0% (so rents will not be reduced because of the one
percentage point reduction). For FY 1998, it is expected that
the HUD appropriations Act will continue this same policy,
which has been in effect during FY 1996, FY 1996 prior to April
26, 1996, and FY 1997.
Senate amendment
The Senate language is identical.
Conference Agreement
The conference agreement includes this language.
Subtitle B--Multifamily Housing Reform
House bill
There is no comparable provision in the House bill.
Senate amendment
Provides a FHA-Insured multifamily housing mortgage and
housing assistance restructuring program, and other multifamily
housing reform measures.
Conference Agreement
Senate recedes to the House.
TITLE III--COMMUNICATIONS AND SPECTRUM ALLOCATION PROVISIONS
Sec. 3001. Definitions
House bill
Sections 3302 and 3303(f) of the House bill define both
``digital television service'' and ``analog television
service.''
Senate amendment
Sections 3002 and 3003(h) of the Senate amendment have
similar definitions of ``digital television service'' and
``analog television service.''
Conference agreement
Section 3001 of the conference agreement states that,
unless otherwise specified, terms used in this title have the
same meaning as those terms have in the Communications Act of
1934. The section also amends the Communications Act of 1934
(hereinafter the Communications Act) to add the definitions of
``analog television service'' and ``digital television
service'' to section 3 of that Act. The conference agreement
adopts the House definition of analog television service, and
adopts the House definition of digital television service with
a modification that ties the definition to the Commission's
rules.
Sec. 3002. Spectrum auctions
House Bill
The House bill extended and expanded the Federal
Communication Commission's authority to use competitive bidding
to assign licenses for the use of the electromagnetic spectrum
until December 31, 2002, required the Commission to make
available through competitive bidding 100 megahertz (MHz) of
additional spectrum by September 30, 2002, specified the
specific bands of frequencies from which the 100 MHz was to be
obtained, required the National Telecommunications and
Information Administration (NTIA) to submit a report
identifying additional government spectrum that can be made
available for non-government use upon submission of a report by
the Commission, and required the NTIA to identify and
reallocate for non-government use an additional 20 MHz of
government use spectrum. The House bill included an effective
date for the expanded competitive bidding authority that
precluded its application to licenses or permits for which the
Commission had accepted mutually exclusive applications on or
before the date of enactment.
Senate Amendment
The Senate amendment contained provisions similar to the
House bill, but differed in three respects. The Senate
amendment extended the Commission's competitive bidding
authority until 2007, did not identify specific bands of
frequencies for 55 of the 100 MHz required to be made available
by the Commission, and included a provision that required
winning bidders for former government-use spectrum to pay the
costs of relocating federal users from the bidder's licensed
band to other frequency bands. The Senate amendment did not
specify an effective date for the expansion of the Commission's
auction authority.
Conference Agreement
Section 3002(a)--Extension and expansion of auction authority
The Senate recedes to the House with amendments on the
extension and expansion of the Commission's competitive bidding
authority. First, the conferees emphasize that, notwithstanding
its expanded auction authority, the Commission must still
ensure that its determinations regarding mutual exclusivity are
consistent with the Commission's obligations under section
309(j)(6)(E). The conferees are particularly concerned that the
Commission might interpret its expanded competitive bidding
authority in a manner that minimizes its obligations under
section 309(j)(6)(E), thus overlooking engineering solutions,
negotiations, or other tools that avoid mutual exclusivity.
Second, the exemption from competitive bidding authority
for ``public safety radio services'' includes ``private
internal radio services'' used by utilities, railroads,
metropolitan transit systems, pipelines, private ambulances,
and volunteer fire departments. Though private in nature, the
services offered by these entities protect the safety of life,
health, or property and are not made commercially available to
the public. This service exemption also includes radio services
used by not-for-profit organizations that offer emergency road
services, such as the American Automobile Association (AAA).
The Senate included this particular exemption in recognition of
the valuable public safety service provided by emergency road
services. The conferees do not intend this exemption to include
internal radio services used by automobile manufacturers and
oil companies to support emergency road services provided by
those parties as part of the competitive marketing of their
products. The conferees note that the public safety radio
services exemption described herein is much broader than the
explicit definition for ``public safety services'' contained in
section 3004 of this title (adding new section 337(f)(1) to the
Communications Act).
The Senate recedes to the House on the omission of an
auction exemption for licenses to offer global satellite
services. The conferees note that this omission should not be
construed as a Congressional endorsement of auctions for
licenses to offer global satellite services. The treatment of
global satellite systems raises numerous public policy
questions beyond the issue of spectrum auctions. These issues
are not germane to budget legislation and are better handled in
the context of substantive legislation.
The Senate recedes to the House with regard to the
provision that requires the Commission to conduct a test of
combinatorial bidding. The conferees expect that the Commission
will conduct the contingent combinatorial auction required by
this section as soon as possible. The Commission should,
consistent with non-discriminatory procedures for government
procurement of goods and services, test methods available in
the private sector which may assist the Commission in
successfully conducting competitive bidding. The conferees also
expect that the Commission will provide a report to the
Congress on the outcome of that test. Such report shall include
a detailed analysis of the impact of such bidding on the
ability of small businesses and new entrants to participate
effectively in the bidding process.
The Senate recedes to the House on two provisions
relating to the design of the Commission's auction rules.
First, to ensure that scarce spectrum is put to its highest and
best use, the Commission is now required to allow an adequate
period of time before each auction (1) to permit parties to
comment on proposed auction rules, and (2) after the issuance
of such rules, to ensure that interested parties have
sufficient time to develop business plans, assess market
conditions, and evaluate the availability of equipment. Second,
the Commission must also prescribe methods by which a
reasonable reserve price will be required, or a minimum bid
will be established, for any license or permit assigned by
means of auction.
The House recedes to the Senate with an amendment
regarding the Commission's authority to retain competitive
bidding receipts to offset its costs of conducting competitive
bidding from the proceeds of such bidding. The amendment
provides that the Commission may retain no auction receipts in
any fiscal year in which the Commission's annual report for the
second preceding fiscal year does not contain an itemized
statement of each expenditure made with receipts retained in
that year. For example, if the Commission's annual report for
fiscal year 1997 does not contain such an itemized statement,
then the Commission would be unable to retain any receipts from
competitive bidding to offset its costs for competitive bidding
in fiscal year 1999. The conferees intend that the Commission
will comply with both the letter and the spirit of this
amendment.
The House recedes to the Senate on the extension of the
Commission's auction authority until September 30, 2007. The
Senate recedes to the House on the acceleration of the
termination date of the Commission's program that provides for
preferential treatment in licensing (i.e., ``pioneer's
preference'').
The conferees adopted a provision that repeals the
Commission's lottery authority for all applications other than
for licenses for non-commercial educational and public
broadcast stations as defined in section 397(6) of the
Communications Act. This provision does not prevent the
Commission from awarding licenses for such stations through the
competitive bidding process.
The conferees adopted a new provision with respect to the
applicability of competitive bidding to pending comparative
licensing cases. New section 309(l) of the Communications Act
requires the Commission to use competitive bidding to resolve
any mutually exclusive applications for radio or television
broadcast licenses that were filed with the Commission prior to
July 1, 1997. The Commission shall limit the class of eligible
applicants who may be considered qualified bidders (provided
such applicants otherwise qualify under the Commission's rules)
to the persons who filed applications with the Commission
before that date. The Commission shall also waive its rules to
permit competing applicants to procure the removal of conflict
between their applications during the 180 days following
enactment of this title.
Any mutually exclusive applications for radio or
television broadcast licenses received after June 30, 1997,
shall be subject to the Commission's rules regarding
competitive bidding, including applications for secondary
broadcast services such as low power television, television
translators, and television booster stations. The conferees
recognize that there are instances where a single application
for a radio or television broadcast license has been filed with
the Commission, but that no competing applications have been
filed because the Commission has yet to open a filing window.
In these instances, the conferees expect that, regardless of
whether the application was filed before, on or after July 1,
1997, the Commission will provide an opportunity for competing
applications to be filed, consistent with the Commission's
procedures. Furthermore, if and when competing applications are
filed, the Commission shall assign such licenses using the
competitive bidding procedures developed under section 309(j)
as amended.
Section 3002(b)--Accelerated availability of spectrum
The conference agreement modifies the language in the
House bill and Senate amendment to accelerate the planned
competitive bidding for 45 MHz of spectrum in the 1710 to 1755
MHz frequency band from government to non-government use. The
conferees intend that government station use of the frequencies
to be reallocated pursuant to this section shall be terminated
or modified in accordance with the plan outlined in the
February 1995 Spectrum Reallocation Final Report by the NTIA.
The conferees note that Appendix F of the NTIA report
identifies sites at which certain Federal fixed microwave,
tactical radio relay, and aeronautical mobile stations in the
1710 to 1755 MHz band will be retained indefinitely. Nothing in
the accelerated timetable specified in this section shall be
construed to require the reallocation of frequencies within the
1710 to 1755 MHz band that the NTIA report recommends for
continued exclusive use by the government.
Section 3002(c)--Obligation to make additional spectrum available
The conference agreement adopts with clarifying
amendments the House provision requiring the Commission to
allocate an additional 55 MHz of spectrum for assignment to
licensees using competitive bidding under section 309(j) of the
Communications Act. Specifically, under the conference
agreement, 40 MHz in the 2110 to 2150 MHz band, and 15 MHz in
the 1990 to 2110 MHz band, are identified for assignment by
competitive bidding. The Commission or the President, as the
case may be, are given the authority to substitute other bands
of frequencies for those identified under certain conditions.
As to the 15 MHz located between 1990 to 2110 MHz, the
conferees expect that the President will carefully consider the
taxpayers clear interest in continued government use of the
1990 to 2110 MHz band for space research and exploration
activities. The President is permitted to identify other
frequencies forreallocation whenever such frequencies can be
expected to result in comparable receipts through competitive bidding.
The Commission is directed to accommodate incumbent
licensees who may be displaced under this section in whatever
suitable frequencies the Commission has available to it for
reallocation. To the extent the Commission cannot find any such
frequencies, the Commission is directed to notify the Secretary
of Commerce and recommend bands of frequencies reserved for
government use that could be used to accommodate the displaced
incumbents.
Section 3002(d)--Identification and reallocation of frequencies
The House recedes to the Senate with modifications to the
amendments made to the NTIA Organization Act. New section
113(f) of the NTIA Organization Act requires the Secretary of
Commerce to respond in a timely fashion to a notice from the
Commission requesting government spectrum to accommodate
displaced incumbent licensees.
New section 113(g) of the NTIA Organization Act permits
Federal entities to receive reimbursement for their costs of
relocating from government spectrum that is reallocated to
mixed or non-government use. The conference agreement adopts
language that was passed by both Houses of Congress in 1995,
with minor modifications. The modified language permits private
parties to reimburse Federal entities for the costs of
relocation to facilitate the private party's use of the
spectrum. The conferees intend that each federal entity will
keep an itemized accounting of all of its costs for each
relocation, and will provide such accounting to the appropriate
committees of Congress as an addendum to that entity's budget
submission for the next fiscal year.
This amendment puts Federal entities in the same position
as private parties when winning bidders seek to relocate
incumbent private parties from their existing frequency
allocation. The conferees expect that, where a winning bidder
decides it is in its financial interest to do so, this
authority will provide a mechanism for the expeditious
relocation of Federal entities from spectrum reallocated to
non-government use or allocated to mixed government and non-
government use.
The conference agreement also adds new sections 113(h)
and 113(i) of the NTIA Organization Act. Section 113(h)
requires Federal entities to make every effort to relocate
their licensed use to other frequencies reserved for government
use. Section 113(i) defines ``Federal entity.'' The conferees
note that the United States Postal Service qualifies as a
federal entity under this definition.
Section 3002(e)--Identification and reallocation of auctionable
frequencies
The conference agreement combines the provisions of the
House bill and Senate amendment to require the Secretary of
Commerce to identify 20 MHz of spectrum currently reserved for
government use for reallocation to commercial uses. The
reallocated spectrum is to be assigned using competitive
bidding pursuant to section 309(j) of the Communications Act.
The Commission is required to submit and implement a plan, in a
timely fashion, for the reallocation and assignment of the 20
MHz identified in this section. Finally, this section amends
sections 113 and 115 of the NTIA Organization Act in several
places so that the identification and reallocation are
accomplished through a second reallocation report under that
Act.
The conferees considered expanding the total reallocation
under section 3002(e) to allow for additional allocations for
private wireless users, but were unable to do so within the
context of the Reconciliation process. Nevertheless, the
conferees expect the Commission and the NTIA to consider the
need to allocate additional spectrum for shared or exclusive
use by private wireless services in a timely manner.
Section 3003. Auction of recaptured broadcast television spectrum
House bill
Section 3302 of the House bill adds a new section
309(j)(14) to the Communications Act of 1934 to require the
Commission to reclaim the 6 MHz broadcasters now use for analog
transmission by no later than December 31, 2006. The House bill
also required Commission to grant extensions to broadcasters in
those markets where more than five percent of the households
continue to rely exclusively on an over-the-air, analog
broadcast signal.
Section 3302 of the House bill directs the Commission to
assign by means of competitive bidding the 78 MHz that is
reclaimed from incumbent broadcast licensees. The Commission
would be required to complete assignment of licenses for new
uses of the reclaimed spectrum by September 30, 2002. To the
extent that the Commission reallocates the reclaimed spectrum
for services that include digital television service, section
3302 precludes the Commission from disqualifying a potential
bidder due to the Commission's duopoly or newspaper cross-
ownership rules.
Senate amendment
Section 3002 of the Senate amendment adds a new section
309(j)(15) to the Communications Act of 1934 to require the
Commission to reclaim the 6 MHz broadcasters now use for analog
transmission by no later than December 31, 2006. Under the
Senate amendment the Commission is required to extend or waive
this date for any television station in any television market
unless 95 percent of the households have access to digital
television signals, either by direct off-air reception or by
other means.
The Senate amendment requires the Commission to report to
Congress by December 31, 2001 and biennially thereafter on
consumer purchases of analog and digital television receivers,
the costs of digital televisions, and the percentage of
television households in each market that has access to digital
local television signals. Section 3002 of the Senate amendment
also requires the Commission to assign by means of competitive
bidding the 78 MHz that is reclaimed from incumbent broadcast
licensees. The Commission would be required to commence the
competitive bidding procedures by July 1, 2001 and complete
assignment of licenses for new uses of the reclaimed spectrum
by September 30, 2002.
Conference agreement
The conference agreement adopts modified provisions from
both the House bill and the Senate amendment. Section 3003 of
the conference agreement adds a new section 309(j)(14)(A) to
the Communications Act to require the Commission to reclaim the
6 MHz each broadcaster now uses for transmission of analog
television service signals by no later than December 31, 2006.
The conferees recognize that not all consumers and
broadcast stations will convert to the new digital television
service format at the same time. Thus, to ensure that a
significant number of consumers in any given market are not
left without broadcast television service as of January 1,
2007, the conference agreement includes new section
309(j)(14)(B) of the Communications Act which requires the
Commission to grant extensions to any station in any television
market if any one of the following three conditions exist.
First, the Commission is required to grant an extension
at the request of any television station in a market if one or
more of the television stations licenses to or affiliated with
the four largest national television networks in that market
are not broadcasting a digital television service signal.
Before granting an extension for this reason, the Commission
must ensure that each of the network stations that are not
broadcasting a digital television signal have exercised due
diligence and have satisfied the conditions for an extension of
the Commission's applicable construction deadlines for digital
television service in that market.
Second, the Commission is required to grant an extension
if it finds that digital-to- analog converter technology is not
generally available in the market served by the television
broadcast licensee requesting the extension. The conferees are
hopeful that, in light of section 304 of the Telecommunications
Act of 1996 (which requires the Commission to issue rules
allowing for the competitive availability of navigation
devices) and current industry projections, converter technology
should be generally available as of December 31, 2006.
Lastly, the Commission is required to grant an extension
if at least fifteen (15) percent or more of the television
households in the market served by the television station
requesting the extension (1) do not subscribe to a multichannel
video programming distributor (MVPD) that carries one or more
of the digital television service programming channels of each
of the television stations broadcasting such a channel in such
market, and (2) do not have either one or more digital
television sets or one or more analog television sets equipped
with a digital-to-analog converter technology that are capable
of receiving the digital television service signals of local
broadcast stations.
The conferees emphasize that, with regard to the inquiry
required by section 309(j)(14)(B)(iii)(I) into MVPD carriage of
local digital television service programming, Congress is not
attempting to define the scope of any MVPD's ``must carry''
obligations for digital television signals. The conferees
recognize that the Commission has not yet addressed the ``must
carry'' obligations with respect to digital television service
signals, and the conferees are leaving that decision for the
Commission to make at some point in the future. However, for
purposes of the inquiry under this section, a television
household must receive at least one programming signal from
each local television station broadcasting a digital television
service signal in order not to be counted toward the 15 percent
threshold. In addition, the conferees recognize that this
analysis will impose additional burdens on the Commission.
Consequently, the conferees expect that the Commission will
pursue this analysis only if it first concludes that a station
does not qualify for an extension under the network digital
television broadcast test or the converter technology test.
In establishing the requirements for the 15 percent test,
the conferees sought to establish objective criteria that could
be determined by ``yes'' or ``no'' answers obtained from
consumers surveyed in the relevant market. The conferees expect
that the Commission will perform its own analysis, and that it
will base this analysis of both the converter technology test
and the 15 percent test on statistically reliable sampling
techniques. A broadcast television licensee requesting the
extension and other interested parties are to be afforded an
opportunity to submit information and comment on the
Commission's analysis with respect to those tests.
New section 309(j)(14)(C) requires the Commission to
ensure that the spectrum now used for analog television service
is returned as required by Commission direction and that the
Commission must reclaim and reorganize the spectrum, consistent
with the objectives of section 309(j)(3) of the Communications
Act. It also requires the Commission to assign by means of
competitive bidding the 78 MHz that is reclaimed from incumbent
broadcast licensees and to complete assignment of licenses for
new uses of the reclaimed spectrum by September 30, 2002.
The conference agreement adopts, with modification, the
provision of the House bill prohibiting the Commission from
disqualifying potential bidders for reclaimed spectrum that is
allocated to a use that includes digital television service due
to the Commission's duopoly or newspaper cross-ownership rules.
The conferees expect that, by limiting the application of these
ownership rules, winning bids for the recaptured analog
spectrum will be higher than they otherwise would be.
Specifically, if the pool of bidders for the recaptured analog
spectrum is expanded to include broadcast station owners and
newspaper owners, then other auction participants may be forced
to raise their bids if they expect to prevail.
Thus, under new section 309(j)(14)(D) of the
Communications Act, a waiver of these ownership rules would
apply whenever the grade A contour is projected to encompass
the entirety of a city that has a population greater than
400,000 (as determined by the 1990 decennial census). The
conferees do not intend that the duopoly and television-
newspaper cross-ownership relief provided herein should have
any bearing upon the Commission's current proceedings, which
concerns more immediate relief. The conferees expect that the
Commission will proceed with its own independent examination in
these matters. Specifically, the conferees expect that the
Commission will provide additional relief (e.g., VHF/UHF
combinations) that it finds to be in the public interest, and
will implement the permanent grandfather requirement for local
marketing agreements as provided in the Telecommunications Act
of 1996.
Section 3004. Allocation and assignment of new public safety services
House bill
The House bill directs the Commission to reallocate on a
national, regional, or market basis 24 MHz of spectrum between
746 and 806 MHz (inclusive) to public safety services, unless
the Commission finds that the needs of public safety can be met
in particular areas with allocations of less than 24 MHz. The
Commission must allocate the remainder of the spectrum located
between 746 and 806 MHz for commercial use, and to assign these
commercial licenses by means of competitive bidding.
In the event the immediate need for public safety
spectrum cannot be met due to the unavailability of spectrum
between 746 and 806 MHz, the House bill requires the Commission
to permit public safety licensees to use unassigned frequencies
outside those channels. The House bill also directs the
Commission to make its best efforts to accommodate certain
qualifying low-power television stations once it completes its
reallocation and assignment responsibilities under this
section.
Senate amendment
The Senate amendment directs the Commission, in
consultation with the Secretary of Commerce and the Attorney
General, to reallocate 24 MHz of spectrum between 746 and 806
MHz (inclusive) for public safety services. The Commission must
allocate 36 MHz of spectrum between 746 and 806 MHz for
commercial use, and assign these commercial licenses by means
of competitive bidding.
In the event the immediate need public safety spectrum
cannot be met due to the unavailability of spectrum between 746
and 806 MHz, the Senate bill requires the Commission to permit
public safety licensees to use unassigned frequencies outside
those channels.
Conference agreement
The House recedes to the Senate with a modification. A
new section 337 is added to the Communications Act which
requires the Commission to reallocate 24 MHz of spectrum
between 746 and 806 MHz (inclusive) for public safety services.
In doing so, the Commission must consult with the Secretary of
Commerce and the Attorney General. Section 337(a) requires the
Commission to allocate 36 MHz in that same band for commercial
use, with the licenses to be assigned by competitive bidding.
New section 337(b) of the Communications Act directs the
Commission to commence assignment of the public safety licenses
no later than September 30, 1998. In addition, the Commission
must begin assignment of the commercial licenses by competitive
bidding after January 1, 2001.
New section 337(c) requires the Commission to waive any
provisions of the Communications Act or the Commission's rules
(other than those relating to harmful interference) to the
extent necessary to permit the use of unassigned frequencies
available to the Commission for the provision of public safety
services. The conferees recognize that, in heavily congested
markets, sufficient spectrum may not be available between 746
and 806 MHz for public safety services. The intent of the
conferees is that public safety agencies that demonstrate a
need for spectrum are not denied the use of unassigned
frequencies that have lain fallow for an extended period of
time.
Before granting applications under this subsection, the
Commission must make five specific findings. First, spectrum
must not be immediately available on a frequency already
allocated to public safety services. Second, the public safety
service use for which the unassigned frequency is requested
must not interfere with uses of that spectrum by other co-
primary users already licensed to use that frequency band.
Third, the use of the unassigned frequency must be consistent
with other public safety services in that geographic area, in
order to ensure that interoperability of public safety services
is not retarded by the allocation of that frequency for such
use. Fourth, the unassigned frequency must have been allocated
to the use for which it has not yet been assigned at least two
years prior to the date on which the application for public
safety service use is granted. This fourth requirement will
ensure that the Commission is given ample time to assign
licenses for recently allocated spectrum before that spectrum
can be assigned to public safety services. And fifth, the
Commission must determine that granting the application is
consistent with the public interest.
New section 337(d) establishes certain conditions on
those licensees that will operate between 746 and 806 MHz both
during and after the transition to digital television service.
The conferees expect that, for the period during the
transition, the Commission will ensure that full-power analog
and digital television licensees will operate free of
interference from public safety service licensees, and
conversely, that public safety service licensees will operate
free of interference from analog and digital television
licensees. The conferees also expect that the Commission will
ensure that public safety service licensees continue to operate
free of interference from any new commercial licensees.
New section 337(e) requires the Commission to clear all
broadcast television licensees from the spectrum located
between 746 and 806 MHz at the end of the transition to digital
television. The conferees recognize that in clearing this band,
the Commission will displace not only full-power licensees but
also secondary broadcast services, including low-power
licensees and television translator licensees. Consequently,
the conferees expect that the Commission will seek to assure,
consistent with its digital television table of allotments,
that certain qualifying low-power licensees (as defined in new
section 337(f)(2)) are assigned frequencies below 746 MHz. The
conferees also urge the Commission to accommodate television
translator stations to the maximum extent practicable,
consistent with the digital television table of allotments and
the requirement to accommodate low power television stations
pursuant to section 337(e)(2)
Section 3005. Flexible use of the electromagnetic spectrum
House bill
The House bill contains no comparable provision.
Senate amendment
Section 3004 of the Senate amendment added a new section
303(y) regarding spectrum flexibility. Specifically, the
Commission is required to allocate spectrum to provide for
flexibility of use if flexible use (1) is consistent with
international agreements, (2) is required by public safety
allocations, (3) is in the public interest, (4) will not deter
investment in services and technology, or (5) will not result
in harmful interference among users.
Conference agreement
The House recedes to the Senate with modifications. The
conferees find that, while flexible allocation of spectrum can,
under the right circumstances, result in more innovative and
productive use of the spectrum, unlimited flexibility can
introduce a level of entrepreneurial uncertainty that could
ultimately retard the development of new services and
technology. These modifications are intended to permit the
Commission to allocate spectrum for flexible use under
procedures and pursuant to conditions designed to avoid the
problems unlimited flexibility can cause. Specifically, new
section 303(y) of the Communications Act provides that the
Commission is permitted, but not required, to allocate spectrum
for flexible use if the Commission finds that such use is in
the public interest, will not deter investment in
telecommunications services and technology, and will not
produce harmful interference, and is consistent with
international agreements to which the United States is a party.
The conferees do not intend to require the Commission to
initiate a separate notice seeking comment on these issues
prior to proposing to allocate spectrum for flexible use. New
section 303(y) only requires that the Commission specifically
seek comment in the allocation proceeding itself on whether any
proposed flexible allocation meets the criteria enumerated in
section 303(y), and make appropriate findings in the context of
issuing a final decision in the allocation proceeding.
Section 3006. Universal service fund payment schedule
House bill
Section 3305 of the House bill requires the Treasury, for
fiscal year 2001, to appropriate 2 billion dollars to the
universal service fund established under part 54 of the
Commission's rules, in addition to any other revenues required
to be collected under such part. The House bill further
provides that expenditures from the universal service fund, for
fiscal year 2002, shall not exceed the amount of revenue to be
collected for that fiscal year, less 2 billion dollars.
senate amendment
The Senate amendment has no comparable provision.
conference agreement
The Senate recedes to the House with modifications.
Section 3006(a) of this title provides for an appropriation of
$3 billion to the universal service fund for fiscal year 2001,
to be repaid in fiscal year 2002 from the amounts collected by
the fund. Section 3006(b) further provides for a deferral, from
2001 to 2002, of $3 billion of the amounts paid into the fund
by interstate telecommunications carriers or providers. Section
3006(c) states that the purposes for which amounts are expended
from the fund should not be affected, whether the amounts come
from the appropriation or payments into the fund. The conferees
for this title are concerned about the precedent set by this
section and its possible impacts on universal service in the
United States.
Section 3007. Deadline for collection
House bill
Section 3304(b) of the House bill requires the Commission
to conduct any competitive bidding required by the House bill
in a manner that ensures that the proceeds from the auctions
are deposited in accordance with section 309(j)(8) of the
Communications Act of 1934 by September 30, 2002.
senate amendment
The Senate amendment contains no comparable provision.
conference agreement
The Senate recedes to the House, with the modification
that the deadline applies to all competitive bidding provisions
in this title of the conference agreement and any amendments to
other law made in this title.
Section 3008. Administrative procedures for spectrum auctions
house bill
Section 3304(a) of the House bill either waives or limits
several requirements of existing law to expedite the
commencement and completion of the competitive bidding required
under the House bill. The waivers and limitations affected by
procedures that apply both before and after the competitive
bidding occurs.
senate amendment
The Senate amendment contains no comparable provision.
conference agreement
The Senate recedes to the House, with a modification.
Specifically, section 3008 of this title prohibits the
Commission from granting a license under this title earlier
than 7 days after the Commission releases a public notice
announcing that the application for such license has been
accepted for filing. This section also requires the Commission
to provide at least 5 days following the public notice for the
filing of petitions to deny such application.
Establishment of MedicarePlus/Medicare Choice Program
Sections 10001 and 4001 of House bill and Section 5001 of Senate
amendment
current law
Persons enrolling in Medicare have two basic coverage
options. They may elect to obtain services through the
traditional fee-for-service system under which program payments
are made for each service rendered. Under Section 1876 of the
Social Security Act, they may also elect to enroll with a
managed care organization which has entered into a payment
agreement with Medicare. Three types of managed care
organizations are authorized to contract with Medicare: an
entity that has a risk contract with Medicare, an entity that
has a cost contract with Medicare, or a health care prepayment
plan (HCPP) that has a cost contract to provide Medicare Part B
services. Risk-contracts are frequently referred to as TEFRA
risk contracts and cost contracts are frequently referred to as
TEFRA cost contracts. TEFRA refers to the 1982 legislation, the
Tax Equity and Fiscal Responsibility Act of 1982, which
established the rules governing these types of contracts.
A beneficiary in an area served by a health maintenance
organization (HMO) or competitive medical plan (CMP) with a
Medicare risk contract may voluntarily choose to enroll in the
organization. (A CMP is a health plan that is not a federally
qualified HMO but that meets specific Medicare requirements.)
Medicare makes a single monthly capitation payment for each of
its enrollees. In return, the entity agrees to provide or
arrange for the full range of Medicare services through an
organized system of affiliated physicians, hospitals and other
providers. The beneficiary must obtain all covered services
through the HMO or CMP, except in emergencies. The beneficiary
may be charged the usual cost-sharing charges or pay the
equivalent in the form of a monthly premium to the
organization. Beneficiaries are expected to share in any of the
HMO's/CMP's projected cost savings between Medicare's
capitation payment and what it would cost the organization to
provide Medicare benefits to its commercial enrollees through
the provision of additional benefits. (It could also return the
``savings'' to Medicare.)
Beneficiaries may also enroll in organizations with TEFRA
cost contracts. These entities must meet essentially the same
conditions of participation as risk contractors; however they
may have as few as 1,500 enrollees (rather than 5,000) to
qualify. Under a cost contract, Medicare pays the actual cost
the entity incurs in furnishing covered services (less the
estimated value of beneficiary cost-sharing). Enrollees obtain
supplemental benefits by paying a monthly premium. The entity
must offer a basic package (which covers all or a portion of
Medicare cost-sharing charges); any additional benefits must be
priced separately. (Conversely, a risk-contractor may offer
just one package.) Enrollees in TEFRA cost-contract entities
may obtain services outside the entity's network; however, the
entity has no obligation to cover the beneficiary's cost-
sharing in this case.
A third type of managed care arrangement is the HCPP. A
HCPP arrangement is similar to a TEFRA cost contract except
that it provides only Part B services. Further, there are no
specific statutory conditions to qualify for a HCPP contract.
Some HCPPs are private market HMOs, while others are union or
employer plans. HCPPs have no minimum enrollment requirements,
no requirement that the plan have non-Medicare enrollees, or a
requirement for an open enrollment period. Unlike TEFRA cost
contractors (but like risk contractors), HCPPs may offer a
single supplemental package that includes both Part B cost-
sharing and other benefits; cost-sharing benefits need not be
priced separately.
Any Medicare beneficiary residing in the area served by
an HMO/CMP may enroll, with two exceptions. The first exception
applies to beneficiaries not enrolled in Part B. The second
exception applies to persons qualifying for Medicare on the
basis of end-stage renal disease (ESRD); however, persons
already enrolled who later develop ESRD may remain enrolled in
the entity.
The HMO/CMP must have an annual open enrollment period of
at least 30 days duration. During this period, it must accept
beneficiaries in the order in which they apply up to the limits
of its capacity, unless to do so would lead to violation of the
50% Medicare-Medicaid maximum or to an enrolled population
unrepresentative of the population in the area served by the
HMO.
TEFRA risk contractors are required to hold an additional
open enrollment period if any other risk-based entity serving
part of the same geographic area does not renew its Medicare
contract, has its contract terminated, or has reduced its
service area to exclude any portion of the service area
previously served by both contractors. In such cases, the
Secretary must establish a single coordinated open enrollment
period for the remaining contractors. These remaining HMOs/CMPs
must then accept its enrollees during an enrollment period of
30 days.
An enrollee may request termination of his or her
enrollment at any time. An individual may file disenrollment
requests directly with the HMO or at the local social security
office. Disenrollment takes effect on the first day of the
month following the month during which the request is filed.
The HMO may not disenroll or refuse to re-enroll a beneficiary
on the basis of health status or need for health services.
The requirement for an open enrollment period does not
apply to HCPPs. These entities may deny enrollment or terminate
enrollment on medical or other grounds, if in doing so they use
the same criteria for Medicare and non-Medicare enrollees. As a
result, employer or union plans may restrict enrollment to
covered retirees.
The Secretary is authorized to prescribe procedures and
conditions under which eligible organizations contracting with
Medicare may inform beneficiaries about the organization.
Brochures, applications forms, or other promotional or
informational material may be distributed only after review and
approval by the Secretary of HHS. HMOs may not disenroll or
refuse to re-enroll a beneficiary because of health status or
need for health care services. HMOs must provide enrollees, at
the time of enrollment and annually thereafter, an explanation
of rights to benefits, restrictions on services provided
through nonaffiliated providers, out-of-area coverage, coverage
of emergency and urgently needed services, and appeal rights. A
terminating HMO must arrange for supplementary coverage for
Medicare enrollees for the duration of any preexisting
condition exclusion under their successor coverage for the
lesser of 6 months or the duration of the exclusion period.
house bill
Section 10001 (new section 1851). The Social Security Act
would be amended to insert a new Part C, MedicarePlus Program.
New section 1851 of Part C of the Social Security Act would
specify requirements related to eligibility, election of
coverage, and enrollment.
Section 4001 (new section 1851). Identical provision.
senate amendment
Identical except the new program of choices would be
called Medicare Choice.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment except that
the new program of choices would be called Medicare+Choice.
Except for the addition of HMOs, modest benefit changes,
and episodic reforms in provider payment methods, the Medicare
program has remained essentially unchanged since the program's
inception in 1965. This contrasts starkly with the health
benefit design, delivery, and cost containment innovations that
have occurred in the private sector and, to a great extent,
have been captured by the Federal Employee Health Benefit
Program (FEHBP). The creation of Medicare+Choice will allow
beneficiaries to have access to a wide array of private health
plan choices in addition to traditional fee-for-service
Medicare. In addition, it will enable the Medicare program to
utilize innovations that have helped the private market contain
costs and expand health care delivery options.
The Conferees believe that one of the most significant
innovations is the Medical Savings Account (MSA). MSAs can give
the elderly genuine catastrophic protection, which the
traditional Medicare program does not guarantee. Well over
400,000 Medicare beneficiaries experience out-of-pocket costs
in excess of $5,000 every year, causing financial ruin in many
cases. In contrast, MSA plans could significantly limit such
costs--even for chronically ill beneficiaries. In addition,
Medical Savings Accounts can help discourage overutilization
and can give seniors more control over their health care
dollars.
Building upon the private market MSA demonstration
program available to small employers and the self-employed
under the recently-enacted bipartisan Health Insurance
Portability and Accountability Act (HIPAA), the conference
agreement would authorize a demonstration of Medicare MSAs
available to 390,000 of the 33 million senior citizens eligible
for Medicare. The Conferees note that this demonstration is
smaller relative to the size of the eligible population than
the HIPAA demonstration program, reaching less than 2 percent
of Medicare beneficiaries. Nevertheless, it is the hope and
intent of the Conferees that this number will allow a true test
of the potential benefits to the program and to beneficiaries
of the MSA concept. In addition, the Conferees note that the
private fee-for-service Medicare+Choice option authorized by
this agreement represents the first defined contribution plan
in which beneficiaries may enroll in the history of the
program.
In addition to ensuring more health care delivery options
for Medicare beneficiaries, the conference agreement also
ensures that these options will be available to beneficiaries
nationwide, not just to those in select geographic areas. By
blending local and national payment rates and by instituting a
minimum payment amount, the agreement significantly narrows the
range in capitated payments to Medicare risk plans. At the same
time, the Conferees have ensured that each county-level payment
rate will be increased by at least 2 percent a year, in order
to ensure that beneficiaries who are currently choosing to
enroll in private plans will continue to have this option. It
is the intent of the Conferees that these payment reforms will
provide incentives for health care organizations to broaden and
multiply their service areas beyond their current areas of
concentration to reach all Medicare beneficiaries, including
those in rural America. -
(a) Types of choices
house bill
Section 10001 (new section 1851(a)). Provides that every
individual entitled to Medicare Part A and enrolled under Part
B could elect to receive benefits through two options: (I) the
existing Medicare fee-for-service program (Medicare FFS) or
(ii) through a MedicarePlus plan. The exception to this would
be individuals medically determined to have ESRD. They would
not be able to elect MedicarePlus. Individuals who developed
ESRD while enrolled in a plan could continue in that plan. A
MedicarePlus plan could be offered by: (I) a coordinated care
plan (including an HMO or preferred provider organization (
PPO)), (ii) a provider sponsored organization (PSO); and (iii)
a combination of a medical savings account (MSA) and
contributions to a MedicarePlus MSA.
Section 4001 (new section 1851(a)). Identical provision.
senate amendment
Similar but provides for additional private plan options:
unrestricted fee-for-service private plans and any other
private plan for the delivery of health care items and
services. (HMOs, PPOs, and POS plans are specified in lieu of
``coordinated care'' plans.)
conference agreement
The conference agreement includes the House provision
with a modification specifying that the Medicare fee-for-
service program is the original fee-for-service program, that
coordinated care plans are defined as including but not limited
to HMO plans (with or without point of service options), and
that a Medicare+Choice plan includes a fee-for-service plan,
defined as a plan that reimburses hospitals, physicians, and
other providers at a rate determined by the plan on a fee-for-
service basis without placing the provider at financial risk;
does not vary such rates for such provider based on the
utilization relating to such provider; and does not restrict
the selection of providers among those who are lawfully
authorized to provide the covered services and agree to accept
the terms and conditions of payment established by the plan.
(This option is also referred to as a ``private fee-for-
service'' plan.)
The Conferees note that the GAO has recently attempted to
measure the quality of care provided to ESRD patients in
managed care organizations relative to original Medicare, but
thatHCFA did not have adequate data on these patients to enable
a comparison. HCFA is now working with the GAO to provide a data base
that will permit quality comparisons. It is important that HCFA be able
to measure ESRD quality and establish standards for care, as provided
in Section 4558, before individuals with ESRD are permitted to join
managed care organizations.
(b) Special rules
House Bill
Section 10001 (new section 1851(b)). In general, an
individual would be eligible to elect a MedicarePlus plan
offered by a MedicarePlus organization only if the organization
served the geographic area in which the individual resided.
Enrollment could continue if the plan provided benefits for
enrollees located in the area to which the individual moved. An
individual eligible for an annuity under the Federal Employee
Health Benefits Program would not be eligible for an MSA plan
until the Office of Management and Budget adopted policies to
ensure that such enrollment did not result in increased
expenditures for the federal government for FEHBP plans. The
Secretary could apply similar rules in the case of individuals
who are eligible for Departments of Defense or Veterans'
Affairs health care. An individual who is a qualified Medicare
beneficiary (QMB), a qualified disabled and working individual,
a specified low-income Medicare beneficiary (SLMB), or
otherwise entitled to Medicare cost-sharing assistance under a
state Medicaid program, would not be eligible to enroll in an
MSA plan.
In addition, individuals would not be eligible to enroll
in an MSA plan on or after January 1, 2003, or as of any date
if the number of individuals enrolled in MSA plans reached
500,000. Under rules established by the Secretary, an
individual would not be eligible to enroll or continue
enrollment in an MSA unless the individual would be residing in
the U.S. for at least 183 days during the year. Individuals
enrolling in MSA plans prior to either of those two events
would be allowed to continue such enrollment. The Secretary
would be required to regularly evaluate and report to Congress
on the impact of permitting enrollment of MSA plans on
selection (including adverse selection), use of preventive
care, access to care, and the financial status of the Trust
Funds. In addition, the Secretary would be required to submit
to Congress periodic reports on the number of individuals
enrolled in MSA plans and to submit a report to Congress by no
later than March 1, 2002 on whether the time limitation should
be extended or removed, and whether any change should be made
to the number of individuals permitted to enroll in Medicare
MSAs.
Section 4001 (new section 1851(b)). Identical provision.
Senate Amendment
Similar, except that enrollment in MSAs would be capped
at 100,000.
Conference Agreement
The conference agreement includes the House provision
with modifications relating to continuation of enrollment and
to the size of the MSA demonstration. Plans would have to
provide that individuals exercising the Medicare+Choice option
who no longer reside in the service area of such plan have, as
part of the basic benefit package, reasonable access within the
geographic area of the plan to the full range of services
covered under the contract, subject to reasonable cost sharing
liability in obtaining such benefits.
The enrollment in MSAs would be capped at 390,000.
(c) Process for exercising choice
House Bill
Section 10001 (new section 1851(c)). The Secretary would
be required to establish a process for elections (and changing
elections) of Medicare FFS and MedicarePlus options. Elections
would be made (or changed) only during specified coverage
election periods. An individual who wished to elect a
MedicarePlus plan could do so by filing an election form with
the organization. Disenrollment would be accomplished the same
way. An individual failing to make an election during the
initial election period would be deemed to have chosen the
Medicare FFS option. The Secretary would be required to
establish procedures under which individuals enrolled with a
MedicarePlus organization at the time of the initial election
period and who failed to elect to receive coverage other than
through the organization would be deemed to have elected the
MedicarePlus plan offered by the organization (or, if the
organization offered more than one such plan, such plan as the
Secretary provided for under such procedures). An individual
who made (or was deemed to have made) an election would be
considered to have continued such election until the individual
changed the election or the plan was discontinued.
Section 4001 (new section 1851(c)). Identical provision.
Senate Amendment
Similar except election into the Medicare fee-for-service
program is referred to as ``traditional Medicare'' to
distinguish it from the private fee-for-service plan option.
Conference Agreement
The conference agreement includes the House provision
with a clarification that an individual election would continue
until, in the case of an individual in a Medicare+Choice plan,
such election was discontinued or (subject to the provision
relating to continuation of enrollment) when the plan no longer
served the area in which the individual resided.
(d) Providing information to promote informed choice
House Bill
Section 10001 (new section 1851(d)). Requires the
Secretary to provide for activities to disseminate broadly
information to current and prospective Medicare beneficiaries
on the coverage options available in order to promote an
active, informed selection among such options. At least 30 days
before each annual, coordinated election period, the Secretary
would send to each MedicarePlus eligible person a notice
containing the information specified below in order to assist
the individual in making an election. This would include
general information, a list of plan options and comparative
plan option information, the MedicarePlus monthly capitation
rate, and other information determinedby the Secretary to be
helpful in making elections. This information would have to be written
in language easily understood by Medicare beneficiaries. The Secretary
would be required to coordinate the mailing of this information with
the annual mailing of other Medicare information required under current
law. To the extent practicable, the Secretary would provide such
information to new MedicarePlus individuals at least two months prior
to their initial enrollment period.
The required general election information would include
information on: (I) services covered and not covered by
Medicare FFS (including benefits, cost-sharing, and beneficiary
liability for balance billing); (ii) the Part B premium amount,
(iii) election procedures, (iv) rights including grievance and
appeals procedures and the right to be protected against
discrimination, (v) information on Medigap and Medicare Select
policies, and (vi) the right of the organization to terminate
the contract and what this would mean for enrollees.
Comparative plan option information would have to
include: (I) a description of benefits including any benefits
covered beyond Medicare FFS, any reductions in cost-sharing and
any maximum limits on out-of-pocket costs, and in the case of
MSA plans, the differences in their cost sharing compared to
other MedicarePlus plans; (ii) the monthly premium (and net
monthly premium) for the plan; (iii) to the extent available,
quality indicators (compared with indicators for Medicare FFS)
including disenrollment rates, enrollee satisfaction and health
outcomes, and whether the plan is out of compliance with any
federal requirements; and (iv) information on any supplemental
coverage. The required information would be updated at least
annually.
The Secretary would be required to maintain a toll-free
number and Internet site for inquiries regarding MedicarePlus
options and plans. A MedicarePlus organization would be
required to provide the Secretary with such information on the
organization and its plans as the Secretary needed to prepare
the information described above for Medicare beneficiaries. The
Secretary could enter into contracts with appropriate non-
Federal entities to carry out these information activities.
Section 4001 (new section 1851(d)). Similar except
requires additional elements to provided relating to
comparative plan information: (I) whether provider networks are
used and related payment policies, (ii) information on coverage
of emergency and urgently needed care, (iii) grievance and
appeals procedures, (iv) utilization review procedures, and (v)
exclusions in types of providers participating in the plan's
network.-
Senate Amendment
Similar except: (I) information must be provided to
beneficiaries at least 15 days (instead of 30 days) before each
annual coordinated election period; (ii) specifies that
comparative information be in chart-like form; (iii) does not
require provision of the area's monthly capitation rate in
information sent to beneficiaries; (iv) information to newly
Medicare Choice eligible beneficiaries would have to be sent no
later than 30 days (instead of 2 months) before their initial
enrollment period; (v) the required quality and performance
information would have to include the extent to which an
enrollee may select the provider of their choice and whether
the plan covers out-of-network services, and an indication of
the enrollee's exposure to balance billing and restriction on
coverage of items and services provided to enrollees by an out-
of-network health care provider; (vi) plan information would
have to include an overall summary of the method of physician
compensation used for participating physicians; and (vii) the
Secretary would be required to coordinate with states to the
maximum extent feasible in developing and distributing
information provided to beneficiaries. The required quality
information does not include the requirement in section 10001
to include the plan's recent record of compliance. (For
information on utilization review, see 1852(c)).
Conference Agreement
The conference agreement includes the Senate amendment
with modifications. The open season information that has to be
updated annually would have to include changes in the monthly
basic and supplemental beneficiary premiums. The general
information to be provided (such as covered items and services
and beneficiary cost-sharing) would not have to include the
amount of the Part B premium.
Comparative plan information (not required to be ``chart-
like form'') would have to include in the case of a private
fee-for-service plan, differences in cost sharing and balance
billing compared to such under other Medicare+Choice plans; the
extent to which an enrollee could obtain benefits through in-
network or out-of-network health care providers and could
select among such providers and the types of providers
participating in the plan's network; and the organization's
coverage of emergency and urgently needed care. A description
of the differences between the MSA plans and other plans and
differences between fee-for-service plans and other plans would
have to include premium information.
Information on the potential for contract termination
would have to include the fact that a Medicare+Choice
organization could reduce the service area included in its
contract and the effect of such a reduction on enrollees.
The agreement modifies the Senate requirements relating
to information on quality and performance by requiring
information on the plan's record of compliance. (Other Senate
quality requirements are moved to general comparative plan
information.) The conference agreement does not include the
Senate requirement that there be coordination with the states
on the development and distribution of information. However, in
providing information in this section, it is the conferees'
intent that the Secretary shall coordinate with States to the
maximum extent feasible and practicable in carrying out this
section. The agreement does not include the Senate requirement
that there be an overall summary description of the method of
compensating physicians. (See item () under section
1852 below.)
The Conferees intend that the Secretary take all steps
necessary to ensure that all seniors are provided the
information they need to make informed choices about health
coverage. Therefore, beneficiaries will for the first time have
access to accurate information, including comparative
information, about health plan choices. According to the 1990
Census, there are nearly 4 million people over the age of 65
who report that a language other than English is spoken in
their home. The Conferees believe that all beneficiaries,
including those who are limited in their English proficiency,
should have access to accurate and timely information about the
array of private health plan options available under
Medicare+Choice. Therefore, the Conferees intend that the
language requiring the Secretary to promote ``active, informed
selection among'' Medicare+Choice plans and to provide
information ``using language that is easily understandable by
Medicare beneficiaries'' include such information as may be
necessary to help all individuals eligible to enroll in
Medicare+Choice plans, including those with limited English
proficiency.
(e) Coverage election periods
House Bill
Section 10001 (new section 1851(e)). Provides that
individuals would first have a choice (``initial election'')
between Medicare FFS and MedicarePlus plans (if there were one
or more MedicarePlus plans to choose from in their area) upon
eligibility for Medicare. The Secretary would designate a time
for the election such that coverage would become effective when
the individual was eligible to begin coverage.
From 1998 through 2000, there would be continuous open
enrollment and disenrollment, when eligible individuals could
switch MedicarePlus plans or move into or out of the Medicare
FFS program option. For the first 6 months during 2001, there
would also be continuous open enrollment and disenrollment, but
individuals could only change their election once during 2001
(except during the annual coordinated open enrollment period or
a special enrollment period (as described below)). During
subsequent years, individuals would be able to enroll in a
MedicarePlus option and disenroll from it at any time during
the first 3 months of a year (or during the first 3 months
after an individual became eligible to enroll in a MedicarePlus
plan). Such changes could be made only once a year except
during annual coordinated election and special enrollment
periods.
Beginning in October 2000, there would be an annual,
coordinated election period during which individuals could
change elections for the following calendar year. The Secretary
would be required to hold MedicarePlus health fairs in October
of each year, beginning with 1998. Such fairs would provide for
nationally, coordinated educational and publicity campaigns to
inform MedicarePlus eligibles about MedicarePlus plans and the
election process, including the annual, coordinated election
periods.
Starting January 1, 2001, special election periods would
be provided in which an individual could discontinue an
election of a MedicarePlus plan and make a new election if: (I)
the organization's or plan's certification was terminated or
the organization terminated or otherwise discontinued providing
the plan; (ii) the person who elected a MedicarePlus plan was
no longer eligible because of a change in residence or certain
other changes in circumstances; (iii) the individual
demonstrated that the organization offering the plan violated
its contract with Medicare (including the failure to provide
the enrollee on a timely basis medically necessary care or to
provide such care in accordance with applicable quality
standards), or misrepresented the plan in its marketing; or (4)
the individual encountered other exceptional conditions
specified by the Secretary.
Special rules would apply for MSA plans. Individuals
could elect an MSA plan only during: (I) an initial open
enrollment period; (ii) an annual, coordinated election period,
or (iii) October 1998 and October 1999. Such individuals could
not discontinue an election of an MSA plan except during an
annual, coordinated election period, October 1998 and October
1999, or if the MSA plan had been decertified or terminated.
Section 4001 (new section 1851(e)). Identical provision.
Senate Amendment-
Similar with exceptions: (I) individuals would
permanently be allowed to enroll at any time a plan was open to
enrollment and during the annual coordinated election period;
(ii) individuals could disenroll at any time; (iii) the
coordinated election period would take place in November and
would begin in 1998; (iv) health fairs would be held for the
first time in November 1997 and would be conducted annually in
the month of November; (v) the special election periods would
apply effective in 1998 (and not 2001); MSA plans could be
elected during an initial open enrollment period and a
coordinated annual election period (i.e., not limited to
October 1998 and 1999).
Conference Agreement
The conference agreement includes the House bill with an
amendment. Continuous open enrollment and disenrollment would
last through the end of 2001. The transition period, when there
would be open enrollment and disenrollment but a limitation of
one change of election, would be for the first 6 months of
2002. This would be followed by full implementation of the
annual enrollment/disenrollment election process in which there
would be a limitation of one change during a three-month annual
open enrollment period each year.
Even after 2003, individuals age 65 and older who enroll
in a Medicare+Choice plan when they first become eligible for
Medicare would be able to disenroll from Medicare+Choice into
original fee-for-service Medicare at any time during their
first 12 months of enrollment in the Medicare program
notwithstanding the general open enrollment rules. During this
period, they would have an extended period of guaranteed access
to Medigap plans under corresponding provisions of the
conference agreement. In addition, individuals electing to
enroll in an MSA plan for the first time during an annual
coordinated election period would have an additional period,
until December 15, to disenroll from enrollment in such plan.
For the risk adjustment methods authorized by the Act to
work to their full potential and to provide organizations
offering Medicare+Choice plans with incentives to keep
beneficiaries healthy, the Conferees believe that it is
important to move away from a system where beneficiaries can
enroll and disenroll from HMOs at virtually any time.
Therefore, the Conference Agreement provides a transition to a
system of annual open enrollment periods based on the FEHBP
choice model. This model balances promotion of active
competition with protections for beneficiaries who wish to test
the broad array of private health plan choices made available
by the Act without losing their right to return to fee-for-
service Medicare.
The annual coordinated election period would take place
in November, beginning with November 1999. The Medicare+Choice
health information fair would be held in November, beginning
with 1999. A special educational and publicity campaign would
be conducted during November 1998 by the Secretary to inform
Medicare+Choice individuals about the Medicare+Choice plans and
risk contract plans offered in different areas and the election
process. A Medicare+Choice organization would be required to
provide for open enrollment periods during the initial
enrollment period, during the month of November of 1998 and
each subsequent year, and during special election periods.
Special election periods would start January 1, 2002. An
individual could elect an MSA only during an initial open
enrollment period, annual coordinated election period or the
month of November, 1998.
(f) Effectiveness of elections and changes of elections
House Bill
Section 10001 (new section 1851(f)). An election made
during the initial election period would become effective when
the individual became entitled to Medicare benefits, except as
the Secretary might provide in order to prevent retroactive
coverage. During continuous open enrollment periods, an
election or change of elections would take effect with the
first calendar month after the election was made. An election
or change of coverage made during a coordinated election period
would take effect as of the first day of the following year.
Elections during other periods would take effect in the manner
specified by the Secretary to protect continuity of coverage.
Section 4001 (new section 1851(f)). Identical provision.
Senate Amendment
Similar but an election or change of coverage during an
annual, coordinated election period could, at the individual's
option, take effect on December 1 of the election year.
Conference Agreement
The conference agreement includes the House provision.
(g) Guaranteed issue and renewal
House Bill
Section 10001 (new section 1851(g)). Requires
MedicarePlus organizations to accept MedicarePlus eligibles
without restriction during election periods. If the
organization had a capacity limit, it could limit enrollment
but only if priority were given to those who had already
elected the plan and then to other persons in a manner that did
not discriminate on the basis of health-status related factors
(which include health status, medical condition (including both
physical and mental illnesses), claims experience, receipt of
health care, medical history, genetic information, evidence of
insurability (including conditions arising out of acts of
domestic violence) and disability). These restrictions would
not apply if they would result in enrollment substantially
misrepresentative of the Medicare population in the service
area.
MedicarePlus organizations could not terminate an
enrollee's election except for failure to pay premiums on a
timely basis, disruptive behavior, or because of plan
termination of all MedicarePlus individuals. Individuals
terminated for cause would be deemed to have elected Medicare
FFS. An individual whose plan was terminated would have a
special election period to change into another MedicarePlus
plan. If the individual failed to make an election, he or she
would be deemed to be Medicare FFS. Plans would have to
transmit to the Secretary a copy of each enrollee's election
form.
Section 4001 (new section 1851(g)). Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment with
conforming changes and a modification clarifying that the
premium, for purposes of terminating an election because of
failure to pay premiums, is the basic premium or supplemental
premiums.
(h) Approval of marketing material and application forms
House Bill
Section 10001 (new section 1851(h)). Requires
MedicarePlus plans to submit marketing material to the
Secretary at least 45 days before distribution. The material
could then be distributed if not disapproved by the Secretary.
Medicare's new standards for plans (established under new
section 1856) would have to include guidelines for the review
of all marketing material submitted. Under these guidelines,
the Secretary would have to disapprove marketing materials if
they were materially inaccurate or misleading.
Each MedicarePlus organization would have to conform to
fair marketing standards, including a prohibition on a
MedicarePlus organization (or its agent) completing any portion
of any election form on behalf of any individual.
Section 4001 (new section 1851(h)). Identical provision.
Senate Amendment
Identical except that the provision does not include a
prohibition against an organization or its agent completing any
portion of any election form used to carry out elections.
Conference Agreement
The conference agreement includes the House provision
with a modification changing the requirement on the Secretary
to prohibit an organization or its agent from completing any
portion of an election form used to carry out elections to an
authorization of the Secretary to prohibit such an activity. It
also adds a provision prohibiting Medicare+Choice organizations
from providing for cash or other monetary rebates as an
inducement for enrollment.
(i) Effect of election of MedicarePlus plan option
Section 10001 (new section 1851(I)). Payments under a
contract with a MedicarePlus organization with respect to an
individual electing a MedicarePlus plan offered by an
organization would be instead of the amounts which otherwise
would have been payable under Medicare Parts A and B.
Section 4001 (new section 1851(I)). Identical provision.
Effective date.
Section 10001. Unless otherwise provided, the provision
is generally effective upon enactment.
Section 4001. Identical.-
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment with technical
modifications.
Benefits and Beneficiary Protections
New section 1852-
Current Law
Section 1876 provides for requirements relating to
benefits, payment to the plans by Medicare, and payments to the
plans by beneficiaries. In addition, it specifies standards for
patient protection and quality assurance.
A Medicare beneficiary enrolled in an HMO/CMP is entitled
to receive all services and supplies covered under Medicare
Parts A and B (or Part B only, if only enrolled in Part B).
These services must be provided directly by the organization or
under arrangements with the organization. Enrollees in risk-
based organizations are required to receive all services from
the HMO/CMP except in emergencies. (Exceptions apply to risk
plans that offer a point-of-service (POS) option in which
enrollees are permitted to use non-network providers but
typically at higher enrollee cost-sharing levels.)
In general, HMOs/CMPs offer benefits in addition to those
provided under Medicare's benefit package. In certain cases,
the beneficiary has the option of selecting the additional
benefits, while in other cases some or all of the supplementary
benefits are mandatory.
Some entities may require members to accept additional
benefits (and pay extra for them in some cases). These required
additional services may be approved by the Secretary if it is
determined that the provision of such additional services will
not discourage enrollment in the organization by other Medicare
beneficiaries.
Medicare HMOs/CMPs must provide enrollees, at the time of
enrollment and annually thereafter, an explanation of: rights
to benefits, restrictions on services provided through
nonaffiliated providers, out-of-area coverage, coverage of
emergency and urgently needed services, and appeal rights.
Medicare HMOs/CMPs must make all Medicare-covered
services and all other services contracted for available and
accessible within their service areas, with reasonable
promptness and in a manner that assures continuity of care.
Urgent care must be available and accessible 24 hours a day and
7 days a week. HMOs must also pay for services provided by
nonaffiliated providers when services are medically necessary
and immediately required because of an unforeseen illness,
injury, or condition and it is not reasonable, given the
circumstances, to obtain the services through the HMO.
HMOs/CMPs are required to have arrangements for an
ongoing quality assurance program that stresses health outcomes
and provides review by physicians and other health care
professionals of the process followed in the provision of
health services. External review is conducted by a peer review
organization (PRO), one of the groups that has contracted with
the Secretary for review of the quality and appropriateness of
hospital services. PRO reviews of HMOs/CMPs covers both
inpatient and outpatient care. The Secretary also has the right
to inspect or otherwise evaluate the quality, appropriateness,
and timeliness of services provided and the facilities of the
organization when there is reasonable evidence of some need for
inspection.
In up to 25 states, the Secretary is authorized to
designate another external agency, known as a quality review
organization or QRO to perform reviews. QROs must meet many of
the same standards as PROs, but have not contracted with the
Department of HHS for the review of services other than those
provided by an HMO/CMP.
HMOs/CMPs must have meaningful grievance procedures for
the resolution of individual enrollee complaints about such
problems as failure to receive covered services or unpaid
bills. In addition, an enrollee who believes that the HMO has
improperly denied a service or imposed an excessive charge has
the right to a hearing before the Secretary if the amount
involved is greater than $100. If the amount is greater than
$1,000, either the enrollee or the HMO may seek judicial
review. On April 30, 1997, HCFA issued final rules for
establishing an expedited review process for Medicare
beneficiaries enrolled in HMOs and CMPs.
Hospitals and other providers are required under Medicare
as a condition of participation to ask whether an individual
has an advance directive and make a notice of such in the
patient's record. Such hospitals and other providers also have
to provide upon admission and at other specified times written
information to adult patients: on applicable advance directive
laws of the relevant state and of the advance directive
policies of the provider.
Payments to Medicare HMOs/CMPs include amounts that
reflect Medicare's fee-for-service payments to hospitals in an
area for indirect and direct medical education costs and
disproportionate share adjustments.
Penalties apply for violations of limits on the use of
``physician incentive plans,'' i.e., compensation arrangements
between HMOs and physicians that might induce physicians to
withhold services. An HMO may not make a specific payment to a
physician as an inducement to reduce or limit services to a
specific enrollee. In addition, if physicians or physician
groups are placed at substantial financial risk for services
other than their own, the HMO must provide adequate stop-loss
protection to limit the physicians' potential liability and
must periodically survey enrollee satisfaction.
There are no provisions in current law equivalent to the
provider protections required in these provisions. HCFA has
indicated that Medicare managed care beneficiaries are entitled
to physicians'advice and counsel and are therefore protected by
law from contractual provisions placing limits on such communications
(i.e., ``gag'' clauses). There is no provision in current law for
medical savings account plans for Medicare beneficiaries.
House Bill
Section 10001 (new section 1852). The provision
establishes a new Section 1852 specifying federal requirements
related to MedicarePlus plan benefits and beneficiary
protections.
Section 4001 (new section 1852). Identical provision.
Senate Amendment
Identical provision except applies to Medicare Choice.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment, except that
the provisions apply to Medicare+Choice organizations and
plans.
(a) Basic benefits
House Bill
Section 10001 (new section 1852(a)). Each MedicarePlus
plan, except an MSA plan, would be required to provide benefits
for at least the items and services for which benefits are
available under Parts A and B of Medicare and any additional
health services as the Secretary may approve under section 1854
of this provision (see below). A MedicarePlus plan would meet
this requirement if, for items and services furnished other
than through a provider that has a contract with the
organization offering the plan, the plan provides (in addition
to any cost sharing provided for under the plan) for at least
the dollar amount of payment as would otherwise be authorized
under Medicare FFS (including any balance billing permitted
under Medicare FFS). These cost-sharing limitations would not
apply to an individual enrolled under an MSA plan.
MedicarePlus organizations could offer under their
MedicarePlus plans supplemental benefits. Supplemental benefits
approved by the Secretary could be offered without affording
enrollees an option to decline them. Alternatively, a
MedicarePlus organization could provide to enrollees (other
than those in an MSA plan) optional supplemental benefits. A
MedicarePlus plan could seek payment from other payers, such as
insurers or employer plans, in circumstances where secondary
payer rules apply.
The provision would establish a policy relating to a
national coverage determination made between the annual
announcements of MedicarePlus payment rates. The application of
the determination would be delayed if the determination would
result in a significant change in costs to the MedicarePlus
plan, and such change was not incorporated in the MedicarePlus
payment rate established for that period. In such cases, the
national coverage determination would apply to the first
contract year beginning after such period. If the determination
provided for coverage of additional benefits or benefits under
additional circumstances, it would also apply to the first
contract year beginning after such period, unless otherwise
required by law.
Section 4001 (new section 1852(a)). Identical provision.
Senate Amendment
Similar except the provision that a Medicare Choice plan
pay at least the dollar amount of payment as would otherwise be
authorized under Medicare FFS (including any balance billing
permitted) does not apply to unrestricted fee-for-service as
well as MSA plans.
Conference Agreement
The conference agreement includes the House provision
with modifications. A plan would not have to provide for
hospice care. A plan, including a private fee-for-service plan,
would have to pay for items and services furnished through non-
contract providers in an amount so that the sum of such payment
and any cost sharing required under the plan was equal to at
least the dollar amount of payment as would otherwise be
authorized under Medicare fee-for-service (including any
balanced billing permitted under parts A and B). (The
conference agreement includes a cross-reference to other
sections of the bill related to limitations on balance billing
and on enrollee liabilities.) The agreement also includes a
provision specifying that a Medicare+Choice organization could
not provide an MSA plan supplemental health care benefit that
covered the plan deductible. Health benefits sold as accident,
disability, workers compensation, dread disease and other
specified types of plans would not be considered as covering
the deductible. (See Medigap conforming amendments.) A private
fee-for-service plan could offer supplemental benefits that
include payment for some or all of the balance billing amounts
permitted consistent with section 1852(k) (as described below
and relating to treatment by non-contracting providers) and
coverage of additional services that the plan finds to be
medically necessary.
(b) Antidiscrimination
House Bill
Section 10001 (new section 1852(b)). A MedicarePlus
organization could not deny, limit, or condition the coverage
or provision of benefits under this part based on any health-
status related factor (health status, medical condition
(including both physical and mental illnesses), claims
experience, receipt of health care, medical history, genetic
information, evidence of insurability (including conditions
arising out of acts of domestic violence) and disability). This
requirement should not be construed to mean that a MedicarePlus
organization had to enroll individuals determined to have ESRD.
Section 4001 (new section 1852(b)). Identical provision.
(See section 1852(k) on provider nondiscrimination.)-
Senate Amendment
Similar but also includes anti-discrimination protection
for providers. Provides that a Medicare Choice organization
could not discriminate with respect to participation,
reimbursement, or indemnification as to any provider who is
acting within the scope of the provider's license or
certification under applicable state law, solely on the basis
of such license or certification. This provision should not be
construed to prohibit a plan from including providers only to
the extent needed to meet the needs of the plan's enrollees or
from establishing any measure designed to maintain quality and
control costs consistent with the responsibilities of the plan.
Conference Agreement
The conference agreement includes the Senate amendment.
(c) Disclosure/detailed description of plan provisions
House Bill
Section 10001 (new section 1852 (c)). The provision would
require each MedicarePlus plan to disclose in clear, accurate,
and standardized form to each enrollee at the time of
enrollment and annually thereafter, the following information
about the plan: (I) its service area; (ii) its benefits and
exclusions from coverage (and, in the case of an MSA plan, a
comparison with other MedicarePlus plans); (iii) the number,
mix, and distribution of participating providers, (iv)
permitted out-of-area coverage; (v) coverage of and procedures
for obtaining emergency services (including the appropriate use
of 911 or local equivalent); (vi) any optional supplemental
coverage, including the benefits and premium price; (vii) any
prior authorization or other rules that could result in
nonpayment; (viii) any plan-specific grievance and appeals
procedures; and (ix) its quality assurance program.
Section 4001 (new section 1852(c)). Similar but also
requires that the detailed description of the plan provisions
include whether there is a point-of-service option and, if so,
the premium for it.-
Senate Amendment
Similar except in the detailed description of plan
provisions, the plan would not have to describe benefits that
are not offered. The organization would have to describe any
out-of-network coverage provided under the plan. Also upon
request of a Medicare Choice eligible individual, an
organization would have to provide: general information on
Medicare and Medicare Choice and comparative plan information
as well as information on utilization review procedures.
Conference Agreement -
The conference agreement includes the Senate provision
with an amendment to require that organizations provide
information on out-of-network coverage (if any) provided by the
plan, and any point-of-service option (including the
supplemental premium for such option). Organizations also would
have to disclose upon request information on procedures used to
control expenditures, information on the number of grievances,
reconsideration, and appeals and on the disposition in the
aggregate of such matters, and an overall summary description
as to the method of compensation of participating physicians.
(d) Access to services
House Bill
Section 10001 (new section 1852(d)). Permits a
MedicarePlus organization offering a MedicarePlus plan to
restrict the providers from whom benefits could be provided so
long as: (I) the organization makes the benefits available and
accessible to each individual electing the plan within the
service area with reasonable promptness and in a manner which
assures continuity in the provision of benefits; (ii) when
medically necessary, the organization makes benefits available
and accessible 24 hours a day, 7 days a week; (iii) the plan
provides reimbursement for covered out-of-network services if
the services are medically necessary and immediately required
because of unforeseen illness, injury, or condition and it is
not reasonable to provide the services through the organization
or met other conditions; (iv) the organization provides access
to appropriate providers, including credentialed specialists,
for medically necessary treatment and services; and (v)
coverage is provided for emergency services without regard to
either prior authorization requirements or the emergency care
entity's contractual relationship with the organization.
A MedicarePlus organization would be required to comply
with such guidelines as the Secretary might prescribe relating
to promoting efficiency and timely coordination of appropriate
maintenance and post-stabilization care provided to an enrollee
determined to be stable by a medical screening examination
required under the Examination and Treatment under Emergency
Medical Conditions and Women in Labor requirements of the
Social Security Act (Section 1867).
Emergency services mean covered inpatient and outpatient
services that are furnished to an enrollee of a MedicarePlus
organization by a provider qualified to provide services under
Medicare, and are needed to evaluate or stabilize an emergency
medical condition.
An emergency medical condition is one manifesting itself
by acute symptoms of sufficient severity such that a prudent
layperson, who possesses an average knowledge of health and
medicine, could reasonably expect the absence of immediate
medical attention to result in: (I) placing the health of the
individual in serious jeopardy (and in case of a pregnant
woman, her health or that of her unborn child; (ii) serious
impairment to bodily functions, or (iii) serious dysfunction of
any bodily organ or part.
Section 4001 (new section 1852(d)). Similar except it
adds ``in the opinion of the treating health care provider'' to
the requirement that services be available and accessible 24
hours a day/7 days a week when medically necessary. Under the
provision to require access to appropriate providers, specifies
when such treatment and services are determined to be medically
necessary in the professional opinion of the treating health
care provider, in consultation with the individual.
Also, includes a provision to require a MedicarePlus
organization to ensure that the length of an inpatient hospital
stay covered under Medicare be determined by the attending
physician (or other attending health care provider to the
extent permitted under state law) and the patient to be
medically appropriate. Provides that this requirement not be
construed as requiring the provision of inpatient coverage if
the attending physician or provider and patient determine that
a shorter stay is medically appropriate or as affecting the
application of deductibles and coinsurance.
Senate Amendment
Similar but also requires that, except as provided by the
Secretary on a case-by-case basis, the organization provide
primary care services within 30 minutes or 30 miles from an
enrollee's place of residence if the enrollee resides in a
rural area. Specifies the content of the guidelines to be used
respecting coordination of post-stabilization care. Includes
``including severe pain'' in the prudent layperson definition
of emergency medical condition.
Conference Agreement
The conference agreement includes section 10001 of the
House provision with a modification to clarify that a plan must
provide for reimbursement for services provided to an
individual other than through the organization if the services
were not emergency services but met the conditions described
above. The conference agreement also includes severe pain in
the definition of an emergency medical condition.
In the case of a private fee-for-service plan, the
organization offering the plan would have to demonstrate to the
Secretary that the organization had a sufficient number and
range of providers with such agreements to provide services
under the terms of the plan. The Secretary would be required to
find that an organization met this requirement if, with respect
to any category of health care professional or provider, the
plan established payment rates for covered services furnished
by that category of provider that were not less than the
payment rates provided for under part A, part B, or both, for
such services or the plan had contracts or agreements with a
sufficient number and range of providers within such category
to provide covered services under the plan, or a combination of
both. This requirement does not restrict the persons from whom
enrollees in a fee-for-service plan may obtain covered
benefits.
The conference agreement allows plans to select the
providers from whom benefits are provided only if the plan
provides adequate access to services to its enrollees. The
Conferees believe that access to primary care services for
Medicare beneficiaries residing in rural areas can be judged as
adequate if those primary care services are no more than 30
minutes or 30 miles from an enrollee's place of residence.
(e) Quality assurance program
House Bill
Section 10001 (new section 1852(e)). The provision would
require a MedicarePlus organization to have arrangements
(established in accordance with regulations of the Secretary)
for an ongoing quality assurance program for services provided
to its MedicarePlus enrollees. The program has to: (I) stress
health outcomes and provide for the collection, analysis, and
reporting of data that will permit measurement of outcomes and
other indices of MedicarePlus plans and organizations; (ii)
provide for written protocols for utilization review; (ii)
provide review by physicians and other health care
professionals of the process followed in the provision of
health services; (iv) monitor and evaluate high volume and high
risk services and the care of acute and chronic conditions; (v)
evaluate the continuity and coordination of care; (vi) have
mechanisms in place to detect both underutilization and
overutilization; (vii) after identifying areas for improvement,
establish or alter practice parameters; (viii) take action to
improve quality and assess effectiveness of such actions; (ix)
make available information on quality and outcomes measures to
facilitate beneficiary comparison and choice; (x) be evaluated
on an ongoing basis; (xi) includemeasures of consumer
satisfaction; and (xii) provide the Secretary with such access to
information collected as may be appropriate to monitor and ensure
quality.
Each organization would be required to have an agreement
with an independent quality review and improvement
organization, approved by the Secretary, for each plan it
operates, to perform functions such as quality review, review
for the appropriateness of setting of care, adequacy of access,
beneficiary outreach, and review of complaints about poor
quality of care. A MedicarePlus organization would be deemed to
meet the requirements for quality assurance external review if
it is accredited by a private organization under a process that
the Secretary has determined assures that the organization
applies and enforces standards that are no less stringent than
those specified under the plan standards requirements
established by this provision (see new Section 1856 as
described below).
Section 4001 (new section 1852(e)). Identical provision.
Senate Amendment
Identical except provides that the quality assurance
provisions (including the external review requirements) and the
requirement below (item ``h'') relating to maintaining medical
records, would not apply to the case of a Medicare Choice
organization in relation to a Medicare Choice unrestricted fee-
for-service plan. In addition, the external review requirements
are not included in those for which an organization could
obtain deemed approval as a result of being accredited by a
private organization.
Requires that each Medicare Choice organization report
annually (at the request of the enrollee) a statement
disclosing the proportion of premiums and revenues received by
the organization that are expended for non-health care items
and services.
Conference Agreement
The conference agreement includes the Senate amendment
with a clarification that, except in the case of the review of
quality complaints and consistent with the disclosure
requirements in this part, the Secretary would be required to
ensure that the external review activities not be duplicative
of the review activities conducted as part of the accreditation
process. The Secretary would be authorized to waive the
external review requirement if he or she determined that the
organization consistently maintained an excellent record of
quality assurance and compliance with other requirements under
this part. The conference agreement does not include the Senate
requirement requiring organizations to provide annual reports
on non-health expenditures to enrollees at their request.
The conference agreement further provides for specific
quality assurance elements for Medicare+Choice private fee-for-
service plans and Medicare+Choice MSA non-network plans. (The
quality assurance elements for plans are reordered.) Such plans
would have to have a program that (I) stresses health outcomes
and provides for data permitting measurement of outcomes and
other indices of quality, (ii) monitors and evaluates high
volume and high risk services and the care of acute and chronic
conditions, (iii) evaluates the continuity and coordination of
care that enrollees receive; (iv) is evaluated on an ongoing
basis as to its effectiveness; (v) includes measures of
consumer satisfaction, and (vi) provides the Secretary with
certain information to monitor and evaluate the plan's quality.
In addition, insofar as such plans provided for written
protocols of utilization review, they would have to base them
on current standards of medical practice. Finally, they would
have to have mechanisms to evaluate utilization of services and
inform providers and enrolles of the results of such an
evaluation.
(f) Coverage determinations
House Bill
Section 10001 (new section 1852(f)). A MedicarePlus
organization would be required to make determinations regarding
authorization requests for nonemergency care on a timely basis.
Reconsideration of denials would generally have to be decided
within 30 days of receiving medical information, but not later
than 60 days after the coverage determination. Physicians,
other than a physician involved in the initial determination,
would be the only individuals permitted to make decisions to
deny coverage based on medical necessity.
Section 4001 (new section 1852 (f)). Similar but adds a
requirement that the organization provide notice of any denial
and the reasons for it, and to provide an explanation of the
grievance and appeals process. Also, the physician acting on a
reconsideration would have to be one with appropriate expertise
in the field of medicine which needs treatment.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes section 4001 of the
House provision with modifications which incorporate into the
section provisions relating to reconsideration and appeals. A
Medicare+Choice organization would have to have a procedure for
making determinations regarding whether an individual enrolled
within the plan was entitled to receive a health service and
the amount (if any) that the individual was required to pay
with respect to the service. Subject to the provision related
to expedited determinations and reconsideration, such a
procedure would have to provide for the determination to be
made on timely basis, depending on the urgency of the
situation. The explanation of the determination would have to
be in understandable language, state the reasons for the
denial, and provide a description of the reconsideration and
appeals processes. The organization generally would have to
provide for reconsideration of a determination upon request by
the enrollee. The reconsideration would have to be within a
time period specified by the Secretary but (except for those
falling under expedited determinations and reconsideration)
would have to be made within 60 days after the date of the
receipt of the request for reconsideration. A reconsideration
relating to a determination to deny coverage based on lack of
medical necessity would have to be made only by a physician
with appropriate expertise in the field of medicine which
relates to the condition necessitating treatment who is other
than a physician involved in the initial determination. It is
not the Conferee's intent to require that a physician involved
in the reconsideration process in all cases be of the same
specialty or sub-speciality as the treating physician.
The conference agreement further modifies the provision
relating to expedited determinations and reconsideration. An
enrollee in a Medicare+Choice plan could request an expedited
determination or an expedited reconsideration. A physician,
regardless of whether the physician was affiliated with the
organization, could request such an expedited determination or
reconsideration.
The conference agreement modifies the provision relating
to organizational procedures to require that in the case of a
request for an expedited determination or reconsideration made
by a physician, the organization expedite the determination or
reconsideration if the request indicated that the application
of the normal time frame for making a determination (or a
reconsideration involving a determination) could seriously
jeopardize the life or health of the enrollee or the enrollee's
ability to regain maximum function. The time limitations for
the organization to respond to the request would be established
by the Secretary, but could not be later than 72 hours of the
time of receipt of the request for determination or
reconsideration, or such longer period as the Secretary might
permit in specified cases.
The bill includes maximum time frames for the processing
of reconsideration and expedited determinations and
reconsideration. These time frames codify existing regulations
and, in some instances, provide additional protections to
beneficiaries beyond current law or regulation. These time
frames were included to assure through a statutory provision a
minimum level of protection consistent with current regulation
under the Medicare program. They do not represent a judgment by
the Conferees in regard to time frames that would be optimum in
the future. In fact, the Conferees understand that HCFA is
currently developing proposed regulations that would reduce
certain time frames included in current regulations. These
efforts will now be superseded by the need to develop
regulations to implement Part C. The Conferees assume that the
Secretary will address the issue of time frames in the Part C
regulations and intend through these provisions to provide her
sufficient flexibility to adopt time frames that are shorter
than the maximum time frames included in this agreement.
(g) Grievances and appeals
House Bill
Section 10001 (new section 1852(g)). The provision would
require each MedicarePlus organization to provide meaningful
procedures for hearing and resolving grievances. An enrollee
dissatisfied by reason of the enrollee's failure to receive
health services would be entitled, if the amount in controversy
was $100 or more, to a hearing before the Secretary. If the
amount in controversy was $1,000 or more, the individual or
organization, upon notifying the other party, would be entitled
to judicial review. The Secretary would be required to contract
with an independent, outside entity to review and resolve
appeals of denials of coverage related to urgent or emergency
services.
An enrollee in a MedicarePlus plan could request an
expedited determination by the organization regarding an
appeal. Such requests could also come from physicians. The
organization would have to maintain procedures for expediting
organization determinations when, upon request of an enrollee,
the organization determined that the application of a normal
time frame for making a determination or a reconsideration
could seriously jeopardize the life or health of an enrollee or
the enrollee's ability to regain maximum function. In an urgent
case, the organization would have to notify the enrollee (and
physician involved) of the determination as expeditiously as
the enrollee's condition requires, but not later than 72 hours
(or 24 hours in the case of a reconsideration), or such longer
period as the Secretary may permit in specified cases.
Section 4001 (new Section 1852(h)). Identical except adds
a requirement that the Secretary annually report publicly on
the number and disposition of denials and appeals within each
organization, and those resolved by the independent entity.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes section 10001 of the
House bill with modifications to reflect the changes made in
the prior provision relating to coverage determinations and
reconsideration. (The grievance mechanism to be established by
each organization is treated as a distinct item in the
conference agreement.)
(h) Confidentiality and accuracy of enrollee records
House Bill
Section 10001 (new section 1852(h)). Each MedicarePlus
organization would be required to establish procedures to
safeguard the privacy of individually identifiable enrollee
information, to maintain accurate and timely medical records
and other health information, and to assure timely access of
enrollees to their medical records.
Section 4001 (new section 1852(h)). Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment with some
changes in wording.
(i) Information on advance directives
House Bill
Section 10001 (new section 1852(I)). Each MedicarePlus
organization would be required to maintain written policies and
procedures respecting advance directives.
Section 4001 (new section 1852(I)). Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
(j) Rules requiring physician participation
House Bill
Section 10001 (new section 1852(j)). Each MedicarePlus
organization would be required to establish reasonable
procedures relating to the participation of physicians under a
MedicarePlus plan offered by the organization. The procedures
would include: (I) providing notice of the rules regarding
participation; (ii) providing written notice of adverse
participation decisions; and (iii) providing a process for
appealing adverse decisions. The organization would be required
to consult with physicians who have entered into participation
agreements regarding the organization's medical policy,
quality, and medical management procedures.
The provision would prohibit interference with physician
advice to enrollees. A MedicarePlus organization could not
prohibit a covered health professional from advising a patient
about the patient's health status or about medical care or
treatment for the patient's condition or disease, regardless of
whether benefits for such care or treatment are provided under
the plan if the professional is acting within the lawful scope
of practice. ``Health care provider'' is defined to include
physicians and other health care professionals (as specified).
This provision should not be construed as requiring a
MedicarePlus plan to provide, reimburse for, or provide
coverage of a counseling or referral service if the
MedicarePlus organization offering the plan objects to the
provision of such service on moral or religious grounds, and,
in the manner and through the written instrumentalities the
MedicarePlus organization deems appropriate, makes available
information on its policies regarding such service to
prospective enrollees before or during enrollment. For those
beneficiaries enrolled in the plan at any time a policy is
adopted by the MedicarePlus organization or MedicarePlus plan
regarding coverage of a counseling or referral service, the
MedicarePlus organization offering such plan would have to
notify enrollees of such policy within 90 days.
The provision also would limit the use of physician
incentive plans. The provision would define a physician
incentive plan as any compensation arrangement between a
MedicarePlus organization and a physician group that has the
effect, directly or indirectly, of reducing or limiting
services provided. The provision would prohibit MedicarePlus
plans from operating such a physician incentive plan unless the
following conditions were met. No specific payment could be
made, directly or indirectly, to a physician group as an
inducement to reduce or limit medically necessary services
provided with respect to a specific individual. If the plan
placed a physician or physician group at substantial financial
risk, the organization would be required to provide adequate
and appropriate stop-loss protection and to conduct periodic
surveys of currently and previously enrolled individuals to
determine the degree of access to and satisfaction with the
quality of services. Further, the organization would be
required to provide the Secretary with sufficient descriptive
information for the Secretary to determine compliance with
these requirements.
A MedicarePlus organization would not be able to provide
(directly or indirectly) for a provider (or group of providers)
to indemnify the organization against any liability resulting
from a civil action brought by or on behalf of an enrollee for
any damage caused to the enrollee by the organization's denial
of medically necessary care.
Section 4001 (new section 1852 (j)). Similar except
regulation of incentive plans applies for health care providers
(and not just physicians). Also, the provision includes a
limitation on non-compete clauses. This prohibits a
MedicarePlus organization from directly or indirectly seeking
to enforce any contractual obligations to the organization for
the provision of services through the organization have ended
from joining or forming any competing MedicarePlus organization
that is a PSO in the same area.-
Senate Amendment
Similar but does not include the prohibition on
restrictions on physician communications.
Conference Agreement
The conference agreement includes section 10001 of the
House bill with a clarification that the rules regarding
provider participation relate to organizations that offer
benefits under a Medicare+Choice plan through agreements with
physicians, and that the limitation on provider indemnification
applies to a health care professional or other entity providing
health care services in addition to a provider of services.
The conference agreement further provides for special
rules for Medicare+Choice private fee-for-service plans. The
following would apply to this provision and to item ``k'' below
(as well as to section 1866(a)(1)(O) related to hospitals and
SNFs that do not have contracts with managed care plans that
establish payment amounts or payment limits that would be made
as payment in full). A hospital (or other provider of
services), a physician or other health care professional, or
other entity furnishing health care services would be treated
as having a contract in effect with a Medicare+Choice
organization (with respect to enrollees in a Medicare+Choice
fee-for-service plan it offers) if: (I) the provider,
professional, or other entity furnished services that were
covered under the plan to such an enrollee and (ii) before
providing such services, the provider, professional or other
entity was informed of the individual's enrollment and either
was informed of the terms and conditions of payments for such
services under the plan or was given a reasonable opportunity
to obtain information concerning such terms and conditions, in
a manner reasonably designed to effect informed agreement by a
provider. This would only apply in the absence of an explicit
agreement between the provider, professional, or other entity
and the Medicare+Choice organization.
This provision of the conference agreement also permits
organizations offering Medicare+Choice plans that object to the
coverage or provision of counseling or referral services on
moral or religious grounds to make information on these
policies available in the manner and through the written
instrumentalities the organization deems appropriate. This
limitation was included primarily to remove discretion from the
Secretary or other governmental entities that may seek to
impose burdensome regulatory, legal, or stylistic requirements
with respect to this notice requirement. This limitation is not
intended to allow Medicare+Choice organizations to
intentionally obfuscate or seek to deceive prospective or
current enrollees about their coverage policies. Rather,the
Conferees intend for such notice to be provided in a manner that would
be meaningful to beneficiaries and reasonably inform them of any plan
restrictions.
(k) Treatment of services furnished by certain providers
House Bill
Section 10001 (new section 1852(k)). Requires a physician
or other entity (other than a provider of services) that does
not have a contract establishing payment amounts for services
furnished to an individual enrolled with a MedicarePlus
organization to accept as payment in full for covered services
the amounts that the physician or other entity could collect if
the individual were in Medicare FFS. Any penalty or other
provision of law that applies to such a payment under Medicare
FFS would also apply with respect to an individual covered
under a MedicarePlus plan.
Section 4001 (new section 1852(k)). Identical provision.
(See ``p'' below for exemption of requirement for Medicare MSA
plans.)
Senate Amendment
Similar provision except that it excepts from the
requirement an unrestricted fee-for-service plan as well as an
MSA plan.
Conference Agreement
The conference agreement includes the Senate provision
with an amendment to provide for application of the provision
to Medicare+Choice private fee-for-service plans as follows:
(A) Balance Billing Limits.--In the case of an individual
enrolled in such a plan, a physician, provider, or other entity
that has a contract (including one assumed under item ``j''
above) establishing a payment rate for services furnished to
the enrollee would have to accept as payment in full for
covered Medicare services an amount not to exceed (including
any deductibles, coinsurance, copayments, or balance billing
otherwise permitted under the plan) an amount equal to 115% of
such payment rate. The plan would have to establish procedures
similar those in section 1848(g)(1)(A) (relating to Medicare's
limitation on actual charges) to carry out this requirement. An
organization's failure to establish and enforce these
procedures would be subject to intermediate sanctions (as
established under new section 1857(g)).
(B) Enrollee Liability for Noncontract Providers.--In the
case of an enrollee who is provided covered services by a
noncontract provider, the plan would have to pay for items and
services in an amount so that the sum of such payment and any
cost sharing required under the plan was equal to at least the
dollar amount of payment as would otherwise be authorized under
Medicare fee-for-service (including any balanced billing
permitted under parts A and B). Enrollee liability would be
limited in the same way as it is for other plans. Providers
would have to accept as payment in full for covered services
the amounts that the physician or other entity could collect if
the individual were in Medicare FFS. (Section 1866(a)(1)(O)
related to hospitals and SNFs that do not have contracts with
managed care plans that establish payment amounts or payment
limits that would be made as payment in full would apply where
appropriate.)
(C) Information on Beneficiary Liability.--Each
Medicare+Choice organization that offered a private fee-for-
service plan would have to provide that enrollees were provided
an appropriate explanation of benefits (consistent with that
provided under Medicare FFS and, if applicable, under Medicare
supplemental policies) that included a clear statement of the
amount of the enrollee's liability (including any for balance
billing). The organization would also have to provide that the
hospital provide enrollees prior notice before receipt of
inpatient hospital services and certain other services when the
amount of balance billing could be substantial. Such notice
would have to include a good faith estimate of the likely
amount of balance billing (if any) with respect to such
services, based upon the presenting condition of the enrollee.
(l) Disclosure of use of DSH and teaching hospitals
House Bill
Section 10001 (new section 1852(l)). Each MedicarePlus
organization would have to provide the Secretary with
information on (I) the extent to which it provides inpatient
and outpatient hospital benefits under MedicarePlus through the
use of hospitals that are eligible for disproportionate share
hospital adjustments or through the use of teaching hospitals
that receive indirect and direct graduate medical education
payments, and (ii) the extent to which differences between
payment rates to different hospitals reflect the
disproportionate share percentage of low-income patients and
the presence of medical residency training programs in those
hospitals.
Section 4001 (new section 1852 (l)). Identical
provision.-
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill.
(m) Out-of-network access
House Bill
Section 10001. No provision.
Section 4001 (new section 1852(m)). Requires that if a
MedicarePlus organization offers one plan which provides for
coverage primarily through network providers, that it also be
allowed to offer individuals (at the time of enrollment)
another plan which provides for coverage through non-network
providers.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill.
(n) Non-preemption of state law
House Bill
Section 10001. No provision.
Section 4001 (new section 1852(n)). A state could
establish or enforce requirements with respect to beneficiary
protections in this section but only if such requirements were
more stringent.-
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill.
(o) Nondiscrimination in selection of network health professionals
House Bill
Section 10001. No provision.
Section 4001 (new section 1852(o)). Prohibits a
MedicarePlus plan offering network coverage from discriminating
in selecting the members of its health professional network (or
in establishing the terms and conditions for membership in the
network) on the basis of the race, national origin, gender,
age, or disability (other than a disability that impairs the
ability of an individual to provide health care services of
that may threaten the health of enrollees) of the health
professional. A MedicarePlus organization could not deny any
health care professionals, based solely on the license or
certification as applicable under state law, the ability to
participate in providing covered health care services or to be
reimbursed or indemnified for providing such services.
Senate Amendment
No provision. (See section 1852(b) above regarding
restrictions on organizations denying participation solely on
the basis of license or certification.)
Conference Agreement
The conference agreement does not include the House
provision in this section, but includes similar language on
prohibiting plans from denying health care professionals the
ability to participate solely on the license or certification--
from the Senate bill in section 1852(b).
(p) Special rule for private fee-for-service MSA plan
House Bill
Section 10001. No provision.
Section 4001 (new section 1852(p)). Provides that a
MedicarePlus MSA plan that is a fee-for-service plan would not
be subject to the requirements described above relating to
procedures for establishing physician participation in the plan
or the limitations on balance billing.
Effective date.
Section 10001. Unless otherwise provided, the provision
is generally applicable to contracts entered into or renewed on
or after January 1, 1998.
Section 4001. Identical.-
Senate Amendment
See 1852(k) above.
Effective date. Identical.-
Conference Agreement
The conference agreement includes the House bill.
Payments to MedicarePlus/Medicare Choice Organizations (New Section
1853)-
Current Law
Under a Medicare risk contract, an HMO agrees to provide
or arrange for the full scope of covered Medicare services in
return for a single monthly capitation payment issued by
Medicare for each enrolled beneficiary. One of the numbers used
to determine this payment is the adjusted average per capita
cost, or AAPCC. The other, the adjusted community rate or ACR,
is discussed below (see new Section 1854).
The AAPCC is Medicare's estimate of the average per
capita amount it would spend for a given beneficiary
(classified by certain demographic characteristics and county
of residence) who was not enrolled in an HMO and who obtained
services on the usual fee-for-service basis. Separate AAPCCs
are established for enrollees on the basis of age, sex, whether
they are in a nursing home or other institution, whether they
are also eligible for Medicaid, whether they are working and
beingcovered under an employer plan, and the county of their
residence. These AAPCC values are calculated in three basic steps:
Medicare national average calendar year per capita costs
are projected for the future year under consideration. These
numbers are known as the U.S. per capita costs (USPCCs) and are
estimated average incurred benefit costs per Medicare enrollee
and adjusted to include program administration costs. USPCCs
are developed separately for Parts A and B of Medicare, and for
costs incurred by the aged, disabled, and those with ESRD in
those two parts of the program.
Geographic adjustment factors that reflect the historical
relationships between the county's and the Nation's per capita
costs are used to convert the national average per capita costs
to the county level. Expected Medicare per capita costs for the
county are calculated only for fee-for-service beneficiaries by
removing both reimbursement and enrollment attributable to
Medicare beneficiaries in prepaid plans.
Once the county AAPCC is calculated, it is then adjusted
for the demographic variables described above, such as age,
sex, and Medicaid status.
For each Medicare beneficiary enrolled under a risk
contract, Medicare will pay the HMO 95% of the rate
corresponding to the demographic class to which the beneficiary
is assigned.
Medicare payments to risk-contract HMOs include amounts
that reflect Medicare's fee-for-service payments to hospitals
in an area for disproportionate share adjustment.-
House Bill
Section 10001 (new section 1853). Establishes a new
section 1853 specifying the methodology for determining payment
to MedicarePlus plans and the procedures for announcing rates
and paying plans.
Section 4001 (new section 1853). Identical provision.
Senate Amendment
Similarly establishes new section 1853 but all references
are to Medicare Choice, such as Medicare Choice capitation
payments.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment except that
the requirements apply to Medicare+Choice organizations and
plans.
(a) In general
House Bill
Section 10001 (new section 1853(a)). Provides that under
a MedicarePlus contract, the Secretary would be required to
make monthly payments in advance to each MedicarePlus
organization for each covered individual in a payment area in
an amount equal to \1/12\ of the annual MedicarePlus capitation
rate with respect to that individual for that area. The payment
would be adjusted for such risk factors as age, disability
status, gender, institutional status, and other such factors as
the Secretary determined to be appropriate, so as to ensure
actuarial equivalence.
The Secretary could add to, modify, or substitute for
such factors, if such changes would improve the determination
of actuarial equivalence. The Secretary would be required to
establish separate rates of payment with respect to individuals
with end stage renal disease (ESRD).
Payments to organizations could be retroactively adjusted
for (I) actual versus the estimated enrollment used to
determine the amount of advance payment; and (ii) individuals'
change of enrollment from a MedicarePlus organization sponsored
or contributed to by an employer to a MedicarePlus
organization.
Risk Adjustment. The Secretary would be required to
develop and submit to Congress by no later than October 1,
1999, a report on a method of risk adjustment of payment rates
that accounts for variations in per capita costs based on
health status. This report would have to include an evaluation
of the proposal by an independent actuary of the actuarial
soundness of the proposal. The Secretary would have to require
MedicarePlus organizations (and risk-contract plans) to submit,
for periods beginning on or after January 1, 1998, data
regarding inpatient hospital and other services and other
information the Secretary deems necessary. The Secretary would
have to provide for implementation of a risk adjustment
methodology that accounts for variations in per capita costs
based on health status by no later than January 1, 2000.
Section 4001 (new section 1853(a)). Identical provision.
Senate Amendment
Identical except with respect to risk adjustment.
Risk Adjustment. Prohibits the Secretary from
implementing a risk adjustment methodology until the Secretary
receives an evaluation by an outside, independent actuary of
the actuarial soundness of the method. (Does not specify a date
by which the risk adjustment method has to be implemented.)
Interim Risk Adjustment. Provides for an interim risk
adjustment: For each enrollee in a Medicare Choice plan (one
that had not been enrolled in Medicare Choice plans or risk
contract plans for an aggregate number of months greater than
60), the payment to the organization would be reduced by an
amount equal to the following applicable percentage:
Percentage reduction
Months enrolled in a Medicare Choice plan:
1-12...................................................... 5
13-24..................................................... 4
25-36..................................................... 3
37-48..................................................... 2
49-60..................................................... 1
The interim risk adjustment would not apply to an
enrollee in a Medicare Choice plan offered by a Medicare Choice
organization if the enrollee was in a health plan (other than a
Medicare Choice plan) offered by the organization at the time
of the individual's initial election period and had been
continuously enrolled in that plan or another plan offered by
the same organization since the initial election period. The
adjustment would also not apply to new plans in the first 12
months during which they enrolled individuals provided the
Medicare Choice capitation rate for such area for the preceding
calendar year was less than the annual national capitation rate
(or, for 1998, the 1997 AAPCC). This interim adjustment would
terminate once the new risk adjustment methodology (to be
developed by the Secretary) was applied.
Conference Agreement
The conference agreement includes section 10001 of the
House provision with a modification specifying that the
Secretary develop and submit to Congress by not later than
March 1, 1999 a report of the method of risk adjustment to be
implemented. In addition, Medicare+Choice organizations and
risk contract plans would have to submit data for inpatient
hospital services beginning on or after July 1, 1997 and data
for other services for periods beginning on or after July 1,
1998. The Secretary could not require an organization to submit
data before January 1, 1998. It also requires that the payment
methodology be applied uniformly without regard to the type of
plan.
(b) Annual announcement of payment rates
House Bill
Section 10001 (new section 1853(b)). Payments to plans
would be calculated based on the annual MedicarePlus capitation
rate. The Secretary would be required to annually determine,
and announce no later than August 1 before the calendar year
concerned: (I) the annual MedicarePlus capitation rate for each
MedicarePlus payment area for the year, and (ii) the risk and
other factors to be used in adjusting such rates for payments
for months in that year. An explanation of the assumptions and
changes in methodology would have to be included in sufficient
detail so that organizations could compute monthly adjusted
MedicarePlus capitation rates. The Secretary would be required
to provide advance notice (at least 45 days prior to the
announcement) of the proposed changes in the methodology and
assumptions used to develop the rates, and give organizations
an opportunity to comment.
Section 4001 (new section 1853(b)). Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment except that
the date for announcing the payment rates is changed to March 1
before the calendar year concerned.
(c) Calculation of annual MedicarePlus capitation rates
House Bill
Section 10001 (new section 1853(c)). Provides that the
annual MedicarePlus capitation rate, for a payment area (for a
contract for a calendar year) would be equal to the greatest of
the following:
(A) A blended capitation rate, defined as the sum of:
(1) the area-specific percentage (as defined below)
of the annual area-specific MedicarePlus capitation
rate for the year for the payment area, and
(2) the national percentage (as defined below) of
the input-price adjusted annual national MedicarePlus
capitation rate for the year. This sum is multiplied by
the budget neutrality adjustment factors (described
below);
(B) A minimum (i.e. ``floor'') monthly payment amount set
at $350 for 1998 (but not to exceed, in the case of an area
outside the 50 states and the District of Columbia, 150% of the
1997 AAPCC). For a subsequent year, this payment amount would
be increased by the national per capita MedicarePlus growth
percentage for that year.
(c) A minimum percentage increase (i.e., ``hold
harmless'' amount). In 1998, the payment area would receive a
rate that is 102% of its 1997 AAPCC. For a subsequent year, it
would be 102% of the annual MedicarePlus capitation rate for
the previous year.
There are four elements in the blended capitation rate
referred to in ``A'' above: First, the area-specific and
national percentages are as follows:
1998--the area-specific percentage is 90% and the
national percentage is 10%.
1999--the area-specific percentage is 80% and the
national percentage is 20%.
2000--the area-specific percentage is 70% and the
national percentage is 30%.
2001--the area-specific percentage is 60% and the
national percentage is 40%.
After 2001--the area-specific percentage is 50% and
the national percentage is 50%.
Second, the annual area-specific MedicarePlus capitation
rate for a MedicarePlus payment area would be:
For 1998, the annual per capita rate of payment for
1997 (as determined under the current law calculation
to derive the AAPCC), increased by the national average
per capita growth percentage for 1998 (as defined
below), or
For a subsequent year, the annual area-specific
MedicarePlus capitation rate for the previous year,
increased by the national per capita MedicarePlus
growth percentage for such subsequent year.
Third, the input-price-adjusted annual national
MedicarePlus capitation rate for a MedicarePlus payment area
for a year would be equal to the sum, for all types of Medicare
services, of the product of three amounts: (I) the national
standardized annual MedicarePlus capitation rate for the year
(defined as the weighted average of area-specific MedicarePlus
capitation rates), (ii) the proportion of such rate for the
year which is attributable to such type of services, and (iii)
an index that reflects (for that year and that type of service)
the relative input price of such services in the area as
compared to the national average input price of such services.
(In applying (iii), the Secretary would use those indices that
are used in applying (or updating) national payment rates for
specific areas and localities.) Special rules specified in the
provision would apply for 1998 (and optionally for 1999) in
providing for the input price adjustment.
Fourth, in calculating the payment rates, the Secretary
would be required to apply a budget neutrality adjustment to
the blended rate payments. This adjustment would ensure that
the aggregate of payments equals that which would have been
made if the payment was based on 100% of the area-specific
MedicarePlus capitation rates for each payment area. In doing
this, the budget neutral amount for all counties would be equal
to the sum of the area-specific rates used to compute the
blended rates multiplied by the product of the update factor
and the number of enrollees in that county.
With respect to the blended and the minimum payment rate
categories described in ``A'' and ``B'' above, the national per
capita MedicarePlus growth percentage is the percentage
determined by the Secretary, by April 30th before the beginning
of the year involved, to reflect the Secretary's estimate of
the projected per capita rate of growth in expenditures under
Medicare parts A and B, reduced by 0.5 percentage points for
1998-2002, and by 0 percentage points for years thereafter.
Separate determinations would have to be made for aged
enrollees, disabled enrollees, and enrollees with ESRD. The
percentage adjustment would have to reflect an adjustment for
over or under projecting the percentage growth for previous
years.
Section 4001 (new section 1853(c)). Differs with respect
to several major elements:
Plans would get the greatest of the blended rate, minimum
(floor) or minimum percentage increase (hold harmless). The
minimum percentage increase is treated differently as follows:
In 1998, the payment area would receive a MedicarePlus
capitation rate that is 100% of its 1997 AAPCC. For 1999 and
2000, it would be 101% of the previous year's rate. For 2001
and subsequent years, it would be 102% of the previous year's
rate.
There are five (instead of four) elements in the blended
capitation rate: First, the area-specific and national
percentages are as follows:
1998--the area-specific percentage is 90% and the
national percentage is 10%.
1999--the area-specific percentage is 85% and the
national percentage is 15%.
2000--the area-specific percentage is 80% and the
national percentage is 20%.
2001--the area-specific percentage is 75% and the
national percentage is 25%.
After 2001--the area-specific percentage is 70% and
the national percentage is 30%.
Second, the annual area-specific MedicarePlus capitation
rate for a MedicarePlus payment area would be calculated as
follows, after removing certain amounts from historical payment
amounts (as described below):
For 1998--the annual per capita rate of payment for
1997 (as determined under the current law calculation
to derive the AAPCC), increased by the national average
per capita growth percentage for 1998 (as defined
below), or
For a subsequent year--the annual area-specific
MedicarePlus capitation rate for the previous year,
increased by the national per capita MedicarePlus
growth percentage for such subsequent year.
Third, in determining the area-specific MedicarePlus
capitation rate, amounts attributable to payments for hospitals
serving a disproportionate share of low-income patients,
payments for the indirect costs of medical education, and
payments for direct graduate medical education costs, should be
deducted from the 1997 payment amount as follows:
1998--20% of such payments.
1999--40% of such payments.
2000--60% of such payments.
2001--80% of such payments.
2002--100% of such payments.
Fourth, the input-price-adjusted annual national
MedicarePlus capitation rate for a MedicarePlus payment area
for a year would be determined. This is done in the same way as
in section 10001.
Fifth, in calculating the payment rates, the Secretary
would be required to apply a budget neutrality adjustment to
the blended rate payments. This is done in the same way as in
section 10001.
Treatment of areas with highly variable payment rates.
Adds a provision requiring that in the case of a MedicarePlus
payment area for which the AAPCC for 1997 varies by more than
20% from such rate for 1996, the Secretary, where appropriate,
could substitute for the 1997 rate a rate that is more
representative of the cost of the enrollees in the area.
Senate Amendment
Similar but varies with respect to specific parameters,
as follows. The annual Medicare Choice capitation rate (for a
contract year) would be the greatest of the:
(A) A blended capitation rate, defined as the sum of the:
(1) the area-specific percentage of the annual
area-specific Medicare Choice capitation rate for the
year for the payment area, and the
(2) National percentage of the annual national
Medicare Choice capitation rate for the year (not
adjusted for input prices). This sum is multiplied by
the budget neutrality adjustment factors (described
below);
(B) A minimum (i.e., ``floor'') monthly payment amount
set at $4,200 for 1998 (which is $350 per month) (but not to
exceed, in the case of an area outside the 50 states and the
District of Columbia, 150% of the 1997 AAPCC). This floor would
then be raised to no more than 85% of the national average
payment. The amount it would be raised would depend on the
amount of dollars saved by lowering the minimum update (see
below).
(c) A minimum percentage increase (i.e., ``hold
harmless'' amount). In 1998, the payment area would receive a
rate equal to 101% of the 1997 AAPCC. This amount would be
lowered to 100% of the previous year's rate to pay for the
higher floor amounts.
There are five elements in the blended capitation rate.
First the phase in of area-specific and national percentages
are the same as for section 10001: The blend starts at 90%
local and 10% national in 1998 and phases down to 50% local and
50% national in 2002.
Second, the annual area-specific Medicare Choice
capitation rate for a Medicare Choice payment area would be
calculated as follows, after removing amounts for certain
historical payments:
For 1998, the modified 1997 AAPCC, increased by the
national average per capita growth percentage for 1998
(see below), or
For a subsequent year, the annual area-specific
Medicare Choice capitation rate for the previous year
increased by the national average per capita growth
percentage for such subsequent year.
Third, in determining the area-specific Medicare Choice
capitation rate, amounts attributable to payments for hospitals
serving a disproportionate share of low-income patients,
payments for the indirect costs of medical education, and
payments for direct graduate medical education costs, should be
deducted from the 1997 payment amount as follows:
1998--25% of such payments.
1999--50% of such payments.
2000--75% of such payments.
2001--100% of such payments.
Fourth, the annual national Medicare Choice capitation
rate for a Medicare Choice payment area for a payment year
would be equal to the sum, for all Medicare Choice payment
areas, of the product of: (I) the annual area-specific Medicare
Choice capitation rate, and (ii) the average number of Medicare
beneficiaries residing in that area divided by the number of
Medicare beneficiaries for all Medicare Choice payment areas
for that year.
Fifth, in calculating payment rates, the Secretary would
be required to apply a budget neutrality adjustment to blended
rate payments. This is identical to the provision in section
10001.
With respect to the blended payment rate categories
described in ``A'' above, the national per capita Medicare
Choice growth percentage for any year beginning with 1998 is
the percentage increase in the gross domestic product (GDP) per
capita for the preceding year plus 0.5 percentage points.
Treatment of areas with highly variable payment rates.
Identical to section 4001.
Study of local price indicators. The Secretary and the
Medicare Payment Advisory Commission would be required to
conduct a study with respect to appropriate measures for
adjusting the annual Medicare Choice capitation rates
determined under this section to reflect local price
indicators, including the medical hospital wage index and the
case mix of a geographic region. The Secretary and the
Commission would be required to report the study results to the
appropriate committees of Congress, including recommendations
(if any) for legislation.
Conference Agreement
The conference agreement includes provisions from section
10001 of the House bill with modifications. These are as
follows:
Calculations of the annual capitation rates for each
payment area would have to take into account any adjustment for
over or under projecting the national per capita
Medicare+Choice growth percentage and any adjustment for
national coverage determinations. (These adjustments are
described in greater detail below.)
The minimum (``floor'') amount in 1998 would be $367 (but
not to exceed, in the case of areas outside the 50 states and
Washington, D.C., 150% of the 1997 AAPCC). For a succeeding
year, the payment would be increased by the national per capita
Medicare+Choice growth percentage (see below). (The floor for
the territories would be updated by the national per capita
Medicare+Choice growth percentage from the 150% amount.)
The area-specific and national percentages used to
calculate the rates for the blended counties would be as
follows:
1998--the area-specific percentage is 90% and the
national percentage is 10%.
1999--the area-specific percentage is 82% and the
national percentage is 18%.
2000--the area-specific percentage is 74% and the
national percentage is 26%.
2001--the area-specific percentage is 66% and the
national percentage is 34%.
2002--the area-specific percentage is 58% and the
national percentage is 42%.
After 2002--the area-specific percentage is 50% and
the national percentage is 50%.
Calculation of the area-specific rates would have to take
into account the substituted rates for areas with highly
variable payment rates. (Such areas are those for which the
annual per capita rate of payment for risk contract plans for
1997 varied by more than 20% for such rate for 1996.
TheSecretary would be authorized to substitute for the 1997 rate one
that was more representative of the costs of the enrollees in the
area.)
Payments (direct and indirect) for graduate medical
education would be ``carved out'' of the payments to the
Medicare+Choice plans over 5 years. Specifically, in
determining the area-specific Medicare+Choice capitation rate,
amounts attributable to payments for the indirect costs of
medical education, and payments for direct graduate medical
education costs, would be deducted from the 1997 payment amount
as follows:
1998--20% of such payments.
1999--40% of such payments.
2000--60% of such payments.
2001--80% of such payments.
2002--100% of such payments.
Payments for DSH would not be carved out. The conference
agreement includes technical drafting changes to the provision
specifying the treatment of payments covered under state
hospital reimbursement systems.
The conference agreement includes clarifying changes to
the budget neutrality requirement. Based on the modeling of the
rates that was done while developing the payment provisions
included in the conference agreement, the Conferees understand
that the application of the budget neutrality factor to the
blended rates may require that all rates be calculated for a
given year through an iterative process. For example, the
application of the budget neutrality factor in a given year may
result in the reduction, for some counties, of the blended rate
below the level provided under the minimum increase provision.
Since the rate for any county is based on the greatest of the
three payment rate amounts, payments would then be recalculated
with these counties now being paid based on the minimum
increase or floor provision. Budget neutrality would then be
achieved through the application of a different budget
neutrality factor to the remaining blend counties. The rate
calculation is completed when the application of the budget
neutrality factor does not result in any additional county
payment rates falling below the minimum increase or floor
amounts.
The national per capita Medicare+Choice growth percentage
would be the growth in per capita Medicare fee-for-service
expenditures minus 0.8 percentage points in 1998, minus 0.5
percentage points for 1999 through 2002 and minus 0 percentage
points for 2003 and thereafter. Beginning with rates calculated
for 1999, before computing rates for a year, the Secretary
would adjust all area-specific and national rates (and
beginning in 2000, minimum payment rates) for the previous year
for the differences between the projections of the national per
capita Medicare+Choice percentage for that year and previous
years and the current estimate of such percentage for such
years.
National coverage determination adjustment. If the
Secretary made a determination with respect to coverage that he
or she projected would result in a significant increase in the
costs to Medicare+Choice of providing benefits under contracts
under this part, the Secretary would have to adjust
appropriately the payments to Medicare+Choice organizations.
(d) MedicarePlus payment area defined
house bill
Section 10001 (new section 1853(d)). Defines a
MedicarePlus payment area as a county or equivalent area
specified by the Secretary. In the case of individuals
determined to have ESRD, the MedicarePlus payment area would be
each state, or other payment areas as the Secretary specified.
Upon request of a state for a contract year (beginning
after 1998) made at least 7 months before the beginning of the
year, the Secretary would redefine MedicarePlus payment areas
in the state to: (1) a single statewide MedicarePlus payment
area; (2) a metropolitan system (described in the provision);
or (3) a single MedicarePlus payment area consolidating
noncontiguous counties (or equivalent areas) within a state.
This adjustment would be effective for payments for months
beginning with January of the year following the year in which
the request was received. The Secretary would be required to
make an adjustment to payment areas in the state to ensure
budget neutrality.
Section 4001 (new section 1853(d)). Identical provision.-
senate amendment
Identical provision.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.-
(e) Special rules for individuals electing MSA plans
house bill
Section 10001 (new section 1853(e)). Provides that if the
monthly premium for an MSA plan for a MedicarePlus payment area
was less than 1/12 of the annual MedicarePlus capitation rate
for the area and year involved, the Secretary would deposit the
difference in a MedicarePlus MSA established by the individual.
No payment would be made unless the individual had established
the MedicarePlus MSA before the beginning of the month or by
such other deadline the Secretary specifies. If the individual
had more than one account, he or she would designate one to the
receive the payment. The payment for the first month for which
an MSA plan was effective for a year would also include amounts
for successive months in the year. For cases when an MSA
election was terminated before the end of the year, the
Secretary would establish a procedure to recover deposits
attributable to the remaining months.
Section 4001 (new section 1853(e)). Identical provision.
-
senate amendment
Similar provision except deposit would be subject, if
applicable, to the new enrollee risk adjustment reduction.
conference agreement
The conference agreement includes the House bill.
(f) Payments from trust fund
house bill
Section 10001 (new section 1853(f)). Payments to
MedicarePlus organizations and payments to MedicarePlus MSAs,
would be made from the HI and SMI trust funds in such
proportion as the Secretary determined reflected the relative
weights that benefits under Parts A and B represented
Medicare's actuarial value of the total benefits. Monthly
payments otherwise payable for October 2001 would be paid on
the last business day of September 2001.
Section 4001 (new section 1853(f)). Identical provision.
senate amendment
Identical except adds that monthly payments otherwise
payable for October 2006 would be paid on the first business
day of October 2006.
conference agreement
The conference agreement includes the Senate amendment
with modifications. Monthly payments otherwise payable under
this section for October 2000 would be paid on the first
business day of such month. Monthly payments otherwise payable
under this section for October 2001 would be paid on the last
business day of September 20001. Monthly payments otherwise
payable under this section for October 20006 would be paid on
the first business day of October 2006.
(g) Special rule for certain inpatient hospital stays
house bill
Section 10001 (new section 1853(g)). Provides that in the
case of an individual receiving inpatient hospital services
from a hospital covered under Medicare's prospective payment
system as of the effective date of the (1) individual's
election of a MedicarePlus plan: (a) payment for such services
until the date of the individual's discharge would be made as
if the individual did not elect coverage under the MedicarePlus
plan; (b) the elected organization would not be financially
responsible for payment for such services until the date of the
individual's discharge; and (c) the organization would
nevertheless be paid the full amount otherwise payable to the
organization; or (2) termination of enrollment with a
MedicarePlus organization: (a) the organization would be
financially responsible for payment for such services after the
date of termination and until the date of discharge; (b)
payment for such services during the stay would not be made
under Medicare's PPS system; and (c) the terminated
organization would not receive any payment with respect to the
individual during the period in which the individual was not
enrolled.
Section 4001 (new section 1853g)). Identical provision.
Effective date.--
Section 10001. Effective upon enactment and would be
applied for contracting periods beginning on or after January
1, 1998.
Section 4001. Identical.
senate amendment
Identical provision.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment with an
amendment providing for a special rule for hospice care. A
contract under this part would have to require a
Medicare+Choice organization to inform each individual enrollee
in a Medicare+Choice plan about the availability of hospice
care if (I) a hospice program participating under Medicare was
located within the organization's service area or (ii) it was
common practice to refer patients to hospice programs outside
the service area. If an enrollee elected to receive hospice
care from a particular hospice program, payment for the hospice
care would have to be made by the Secretary. In addition,
payment for other services for which the individual was
eligible, notwithstanding the hospice election, would be made
by the Secretary to the Medicare+Choice organization or
provider or supplier of the service instead of payments to the
plan. The Secretary would continue to make monthly payments to
the organization equal to the value of any additional benefits
calculated under section 1854.
Premiums (new section 1854)
Current Law
Section 1876 of the Social Security Act provides for
requirements relating to benefits, payment to the plans by
Medicare, and payments to the plans by beneficiaries. A
Medicare beneficiary enrolled in an HMO/CMP is entitled to
receive all services and supplies covered under Medicare Parts
A and B (or Part B only, if only enrolled in Part B). These
services must be provided directly by the organization or under
arrangements with the organization. Enrollees in risk-based
organizations are required to receive all services from the
HMO/CMP except in emergencies.
In general, HMOs/CMPs offer benefits in addition to those
provided under Medicare's benefit package. In certain cases,
the beneficiary has the option of selecting the additional
benefits, while in other cases some or all of the supplementary
benefits are mandatory.
Some entities may require members to accept additional
benefits (and pay extra for them in some cases). These required
additional services may be approved by the Secretary if it is
determined that the provision of such additional services will
not discourage enrollment in the organization by other Medicare
beneficiaries.
The amount an HMO/CMP may charge for additional benefits
is based on a comparison of the entity's adjusted community
rate (ACR, essentially the estimated market price) for the
Medicare package and the average of the Medicare per capita
payment rate. A risk-based organization is required to offer
``additional benefits'' at no additional charge if the
organization achieves a savings from Medicare. This ``savings''
occurs if the ACR for the Medicare package is less than the
average of the per capita Medicare payment rates. The
difference between the two is the amount available to pay
additional benefits to enrollees. These may include types of
services not covered, such as outpatient prescription drugs, or
waivers of coverage limits, such as Medicare's lifetime limit
on reserve days for inpatient hospital care. The organization
might also waive some or all of the Medicare's cost-sharing
requirements.
The entity may elect to have a portion of its ``savings''
placed in a benefit stabilization fund. The purpose of this
fund is to permit the entity to continue to offer the same set
of benefits in future years even if the revenues available to
finance those benefits diminish. Any amounts not provided as
additional benefits or placed in a stabilization fund would be
offset by a reduction in Medicare's payment rate.
If the difference between the average Medicare payment
rate and the adjusted ACR is insufficient to cover the cost of
additional benefits, the HMO/CMP may charge a supplemental
premium or impose additional cost-sharing charges. If, on the
other hand, the HMO does not offer additional benefits equal in
value to the difference between the ACR and the average
Medicare payment, the Medicare payments are reduced until the
average payment is equal to the sum of the ACR and the value of
the additional benefits.
For the basic Medicare covered services, premiums and the
projected average amount of any other cost-sharing may not
exceed what would have been paid by the average enrollee under
Medicare rules if she or he had not joined the HMO. For
supplementary services, premiums and projected average cost-
sharing may not exceed what the HMO would have charged for the
same set of services in the private market.
house bill
Section 10001 (new section 1854). The provision creates a
new Section 1854 specifying requirements for the determination
of premiums charged by MedicarePlus organizations to
MedicarePlus enrollees.
Section 4001 (new section 1854). Identical provision.
Senate Amendment
Similar but applies to Medicare Choice.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment but applies to
Medicare+Choice organizations and plans.
(a) Submission and charging of premiums
House Bill
Section 10001 (new section 1854(a)). Requires each
MedicarePlus organization to file annually with the Secretary
the amount of the monthly premium for coverage under each of
the plans it would be offering in each payment area, and the
enrollment capacity in relation to the plan in each such area.
The net monthly premium is the premium for covered services
reduced by the monthly MedicarePlus capitation payment.
Section 4001 (new section 1854 (a)). Identical
provision.-
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement provides that in general, no
later than May 1 of each year, each Medicare+Choice
organization submit to the Secretary, in a form and manner
specified by the Secretary, and for each Medicare+Choice plan
for the service area in which it intends to be offered in the
following year, specific information and the enrollment
capacity (if any) in relation to the plan and the area. For
coordinated care plans, the following information would be
required:
(1) For basic (and) additional benefits, the adjusted
community rate (ACR), the Medicare+Choice monthly basic
beneficiary premium, a description of deductibles, coinsurance,
and copayments applicable under the plan and the actuarial
value of such, and (if applicable) a description of the
additional benefits to be provided and value for such proposed
benefits.
(2) For supplemental benefits, the ACR, the supplemental
beneficiary premium, and a description of deductibles,
coinsurance, and copayments applicable under the plan and the
actuarial value of such.
For MSA plans, the required information would include the
monthly MSA premium for the basic (and additional) benefits and
the amount of the supplementary beneficiary premium. For
private fee-for-service plans, the required information would
include for the basic (and additional) benefits, the ACR, the
amount of the Medicare+Choice monthly basic beneficiary
premium, and (if applicable) a description of the additional
benefits to be provided and value for such proposed benefits.
In addition, they would have to include the amount of the
monthly supplementary premium.
In general, the Secretary would be required to review the
ACRs, the amounts of the premiums, and the values filed under
this provision and approve or disapprove such fates, amounts,
and values. The Secretary could not review the MSA premiums or
the premiums for the private fee-for-service plans.
(b) Monthly premium charged
House Bill
Section 10001 (new section 1854(b)). Provides that the
monthly amount of premium charged in a payment area to an
enrollee would equal the net monthly premium plus any monthly
premium charged (in accordance with (e) below) for supplemental
benefits.
Section 4001 (new section 1854 (b)). Identical
provision.-
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement provides that the monthly
premium, for other than MSA plans, would be equal to the sum of
the Medicare+Choice monthly basic beneficiary premium and the
Medicare+Choice monthly supplementary beneficiary premium (if
any). For MSA plans, the monthly amount of the premium charged
to an enrollee would be equal to the Medicare+Choice monthly
supplemental beneficiary premium (if any).
The Medicare+Choice monthly basic premium is defined to
mean the amount authorized to be charged for basic and
additional benefits for the plan (see below), or, in the case
of a private fee-for-service plan, the amount filed with the
Secretary.
The Medicare+Choice monthly supplemental beneficiary
premium is defined to mean the amount authorized to be charged
for supplemental benefits or, in the case of a MSA plan or a
fee-for-service plan, the amount filed with the Secretary.
The Medicare+Choice MSA premium is defined at the amount
of such premium filed with the Secretary.
(c) Uniform premium
House Bill
Section 10001 (new section 1854(c)). Premiums could not
vary among individuals who resided in the same payment area.
Section 4001 (new section 1854(c)). Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment with a
modification to specify that the monthly basic and supplemental
premium could not vary among individuals enrolled in the plan
and to conform with the definitional changes noted above.
(d) Terms and conditions of imposing premiums
House Bill
Section 10001 (new section 1854(d)). Each MedicarePlus
organization would have to permit monthly payment of premiums.
An organization could terminate election of individuals for a
MedicarePlus plan for failure to make premium payments but only
under specified conditions. A MedicarePlus organization could
not provide for cash or other monetary rebates as an inducement
for enrollment or otherwise.
Section 4001 (new section 1854(d)). Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment with
conforming changes reflecting the definitional changes noted
above.
(e) Limitation on enrollee cost-sharing
House Bill
Section 10001 (new section 1854(e)). In no case could the
actuarial value of the net monthly premium rate, deductibles,
coinsurance, and copayments applicable on average to
individuals enrolled with a MedicarePlus plan with respect to
required benefits exceed the actuarial value of the
deductibles, coinsurance, and copayments applicable on average
to individuals in Medicare FFS. For supplemental benefits, the
premium for such benefits and the actuarial value of its
deductibles, coinsurance, and copayments could not exceed the
adjusted community rate for such benefits. These provisions
would not apply to an MSA plan. If the Secretary determined
that adequate data were not available to determine the
actuarial value of the cost-sharing elements of the plan, the
Secretary could determine the amount.
Section 4001 (new section 1854(e)). Identical provision.
senate amendment
Identical except provides for exception to the
limitations on enrollee cost-sharing to unrestricted fee-for-
service plans as well as MSA plans.
conference agreement
The conference agreement includes the Senate amendment
with conforming changes and an amendment providing for a
special rule for Medicare+Choice private fee-for-service plans
that are not MSA plans. In no event could the actuarial value
of the deductibles, coinsurance, and copayments applicable on
average to individuals enrolled with such a plan with respect
to required Medicare benefits exceed the actuarial value of the
deductibles, coinsurance, and copayments that would be
applicable on average to individuals entitled to benefits under
part A and enrolled under part B of Medicare if they were not
members of a Medicare+Choice organization for the year.
(f) Requirement for additional benefits
house bill
Section 10001 (new section 1854(f)). Provides that the
extent to which a MedicarePlus plan (other than a MSA plan)
would have to provide additional benefits would depend on
whether the plan's adjusted community rate (ACR) was lower than
its average capitation payments. The ACR would mean, at the
election of the MedicarePlus organization, either: (i) the rate
of payment for services which the Secretary annually determined
would apply to the individuals electing a MedicarePlus plan if
the payment were determined under a community rating system, or
(ii) the portion of the weighted aggregate premium which the
Secretary annually estimated would apply to the individual but
adjusted for differences between the utilization of individuals
under Medicare and the utilization of other enrollees (or
through another specified manner). For PSOs, the ACR could be
computed using data in the general commercial marketplace or
(during a transition period) based on the costs incurred by the
organization in providing such a plan.
If the actuarial value of the benefits under the
MedicarePlus plan (as determined based upon the ACR) for
individuals was less than the average of the capitation
payments made to the organization for the plan at the beginning
of a contract year, the organization would have to provide
additional benefits in a value which was at least as much as
the amount by which the capitation payment exceeded the ACR.
These benefits would have to be uniform for all enrollees in a
plan area. (The excess amount could, however, be lower if the
organization elected to withhold some of it for a stabilization
fund.) A MedicarePlus organization could provide additional
benefits (over and above those required to be added as a result
of the excess payment), and could impose a premium for such
additional benefits.
Section 4001 (new section 1854(f)). Identical provision.
senate amendment
Identical provision except does not include the lack of
enrollment experience in the case of a PSO under the provision
related to determinations based on insufficient data.
conference agreement
The conference agreement includes the House provision
with a modification relating to the determination when
insufficient data on enrollment experience exists or to
determine the adjusted community rate for a newly established
organization. It would permit the Secretary to determine a rate
using data in the general commercial marketplace.
(g) Periodic auditing
house bill
Section 10001 (new section 1854(g)). Requires the
Secretary to provide annually for the auditing of the financial
records (including data relating to utilization and computation
of the ACR) of at least one-third of the MedicarePlus
organizations offering MedicarePlus plans. The General
Accounting Office would be required to monitor such auditing
activities.
Section 4001 (new section 1854(g)). Identical provision.
senate amendment
Identical provision.
conference agreement
The conference agreement does not include the House or
Senate provisions (but see item (a) above).
(h) Prohibition of State imposition of premium taxes
house bill
Section 10001 (new section 1854(h)). No state could
impose a premium tax or similar tax on the premiums of
MedicarePlus plans or the offering of such plans.
Section 4001 (new section 1854(h)). Identical provision.
Effective date.
Section 10001. Unless otherwise provided, generally
applicable to contracts entered into or renewed on or after
January 1, 1998.
Section 4001. Identical provision.
senate amendment
Identical provision.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment with a
clarification to provide that no state could impose a premium
tax or similar tax with respect to payments to Medicare+Choice
organizations under section 1853 (which provides for payments
to Medicare+Choice plans).
Organizational and Financial Requirements for MedicarePlus/Medicare
Choice Organizations; Provider Sponsored Organizations (PSOs) (New
section 1855)-
current law
Under Section 1876 of the Social Security Act, Medicare
specifies requirements to be met by an organization seeking to
become a managed care contractor with Medicare. In general,
these include the following: (1) the entity must be organized
under the laws of the state and be a federally qualified HMO or
a competitive medical plan (CMP) which is an organization that
meets specified requirements (it provides physician, inpatient,
laboratory, and other services, and provides out-of-area
coverage); (2) the organization is paid a predetermined amount
without regard to the frequency, extent, or kind of services
actually delivered to a member; (3) the entity provides
physicians' services primarily through physicians who are
either employees or partners of the organization or through
contracts with individual physicians or physician groups; (4)
the entity assumes full financial risk on a prospective basis
for the provision of covered services, except that it may
obtain stop-loss coverage and other insurance for catastrophic
and other specified costs; and (5) the entity has made adequate
provision for protection against the risk of insolvency.
Provider Sponsored Organizations (PSOs) that are not
organized under the laws of a state and are neither a federally
qualified HMO or CMP are not eligible to contract with Medicare
under the risk contract program. A PSO is a term generally used
to describe a cooperative venture of a group of providers who
control its health service delivery and financial arrangements.
house bill
Section 10001 (new section 1855). Adds a new Section 1855
to the Social Security Act providing organizational and
financial requirements for MedicarePlus organizations,
including PSOs.
Section 4001 (new section 1855). Identical provision.-
senate amendment
Similar but applies to Medicare Choice Organizations.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment except that
the provisions apply to Medicare+Choice organizations and
plans.
(a) Organized and licensed under State law
house bill
Section 10001 (new section 1855(a)). Requires a
MedicarePlus organization to be organized and licensed under
state law as a risk-bearing entity eligible to offer health
insurance or health benefits coverage in each state in which it
offers a MedicarePlus plan.
A special exception would apply, however, for PSOs. In
general, a PSO seeking to offer a MedicarePlus plan could apply
to the Secretary for a waiver of the state licensing
requirement. The Secretary would be required to grant or deny a
waiver application within 60 days of a completed application.
The Secretary could grant a waiver of the state licensing
requirement for an organization that is a PSO if the Secretary
determined that: (i) the state had failed to substantially
complete action on a licensing application within 90 days of
the receipt of a completed application (not including any
period before the date of enactment); or (ii) the state denied
such a licensing application and (a) the state had imposed
documentation or information requirements not related to
solvency requirements that were not generally applicable to
other entities engaged in substantially similar business, or
(b) the state's standards or review process imposed any
material requirements, procedures, or standards (other than
requirements relating to solvency) on such organizations that
were not generally applicable to other entities engaged in
substantially similar business; or (iii) the state used its own
solvency requirements which were not the same as the federal
requirements to deny the licensing application, or the state
had imposed as a condition of licensure approval any
documentation requirements relating to solvency or other
material requirements, procedures, or standards that were
different from the requirements, procedures, or standards
applied by the Secretary.
In the case of a waiver granted under this paragraph for
a PSO: (i) the waiver would be effective for a 36-month period,
except it could be renewed based on a subsequent application
filed during the last 6 months of such period; and (ii) any
provision of state law related to the licensing of the
organization which prohibited the organization from providing
coverage pursuant to a MedicarePlus contract would be
preempted. Waivers could be renewed more than once.
The state licensing requirement would not apply to a
MedicarePlus organization in a state if the state required the
organization, as a condition of licensure, to offer any plan
other than a MedicarePlus plan. The fact that an organization
was licensed under state law would not substitute for or
constitute certification.
Section 4001 (new section 1855(a)). Identical except: (i)
the waiver application from the PSO to the state would not have
to be a completed application; the waiver would be conditioned
upon the pendency of the licensure application during the
period the waiver was in effect; and (ii) the preemption of
state laws would not be construed as waiving any provision of
state law which related to quality of care or consumer
protection standards) and which was imposed on a uniform basis
and was generally applicable to other entities engaged in
substantially similar business.
senate amendment
In general, organizations would have to be licensed under
state law as risk-bearing entities eligible to offer health
insurance or benefits coverage in each state in which it
offered a Medicare Choice plan. The provision establishes,
however, a different exceptions process for PSOs. Prior to
2001, the Secretary would be required to waive the state
licensure requirement for a PSO if: (i) the organization filed
an application for a waiver with the Secretary, and (ii) the
contract with the organization with Medicare under new section
1857 (see below) required the organization to meet all
requirements of state law which related to the licensing of the
organization (other than solvency requirements or a prohibition
on licensure for the organization). The waiver would be
effective for the years specified in the waiver but could be
renewed based on a subsequent application, and (ii) (subject to
the provision described above), any provision of state law
which would otherwise prohibit the organization from providing
coverage pursuant to a Medicare Choice contract would be
superseded. No waiver would extend beyond the earlier of
December 31, 2000 or the date on whichthe Secretary determined
that the state had in effect federal solvency standards (as established
through the process described for new section 1856 below).
The Secretary would be required to grant or deny the
waiver application within 60 days after the date the Secretary
determined that a substantially completed application had been
filed.
The Secretary would be required to enter into agreements
with states subject to a waiver to ensure the adequate
enforcement of standards incorporated into the contract with
the organization. Such agreements would have to provide methods
by which states could notify the Secretary of any failure by an
organization to comply with such standards. If the Secretary
determined that an organization was not in compliance, he/she
would be required to take appropriate actions with respect to
civil penalties and termination of the contract. The Secretary
would be required to allow an organization 60 days to comply
with the standards after notification.
The Secretary would be required to report to Congress, no
later than December 31, 1998, on the PSO waiver procedure. The
report would have to include an analysis of state efforts to
adopt regulatory standards that take into account health plan
sponsors that provide services directly to enrollees through
affiliated providers.
Includes the same provision relating to: (i) exceptions
if the organization is required to offer more than Medicare
Choice plans and (ii) licensure not substituting or
constituting certification.
Conference agreement
The conference agreement includes section 10001 of the
House bill with an amendment. PSOs could seek a waiver of state
law by filing an application with the Secretary by no later
than November 1, 2002. The waiver would be effective for 3
years, would not apply to any other state, and could not be
renewed. The agreement clarifies that with respect to waiver
applications filed on or after the date of publication of
solvency standards (required under new section 1856 as
described below), the ground for approval of a waiver
application would be that the state had denied a licensing
application based (in whole or in part) on the organization's
failure to meet applicable solvency requirements and such
requirements were not the same as those established under
section 1856 as described below, or the state imposed as a
condition of approval procedures or standards regarding
solvency that were different from those applied by the
Secretary as required under this section (see below).
The Conferees intend that such reasonable grounds for
approval of a federal waiver when a state has denied a
licensing application or delayed in granting an application
include the imposition of documentation or information
requirements that are dilatory or unduly burdensome and that
are not generally applied to other entities engaged in a
substantially similar business.
A waiver granted to a PSO with respect to licensing under
state law would depend upon the organization's compliance with
all consumer protection and quality standards insofar as such
standards: (I) would apply in the state to the organization if
it were licensed under state law; (ii) were generally
applicable to other Medicare+Choice organizations and plans in
the state; and (iii) were consistent with the standards
established under this part. Such standards would not include
those preempted under section 1856 relating to non-solvency
standards established by the Secretary.
In the case of a waiver granted to an organization with
respect to a state, the Secretary would be required to
incorporate the requirement that the organization (and
Medicare+Choice plans it offers) comply with state consumer
protection and quality standards as part of the contract with
Medicare.
In the case of a waiver granted to a PSO with respect to
a state, the Secretary could enter into an agreement with the
state in which the state agreed to provide for monitoring and
enforcement activities with respect to compliance of an
organization and its Medicare+Choice plans with the consumer
protection and quality standards. Such monitoring and
enforcement would have to be done in the same way as the state
enforced such standards with respect to other Medicare+Choice
organizations and plans. Such state monitoring and enforcement
could not be discriminatory with respect to types of
organizations. The agreement would have to specify or establish
mechanisms by which compliance activities were undertaken,
while not lengthening the time required to review and process
applications for waivers.
By December 31, 2001, the Secretary would have to submit
to the House Committees on Ways and Means and Commerce and the
Senate Committee on Finance a report regarding whether the
waiver process should be continued after December 31, 2002. In
making this recommendation, the Secretary would have to
consider, among other factors, the impact on beneficiaries and
on the long-term solvency of the Medicare program.
(b) Prepaid payment
house bill
Section 10001 (new section 1855(b)). Provides that a
MedicarePlus organization would have to be compensated (except
for deductibles, coinsurance, and copayments) by a fixed
payment paid on a periodic basis and without regard to the
frequency, extent, or kind of health care services actually
provided to an enrollee.
Section 4001 (new section 1855(b)). Identical provision.
senate amendment
Identical provision.
conference agreement
The conference agreement does not include the House or
Senate provision.
(c) Assumption of full financial risk
house bill
Section 10001 (new section 1855(c)). Requires the
MedicarePlus organization to assume full financial risk on a
prospective basis for the provision of health services (other
than hospice care) except the organization could obtain
insurance or make other arrangements for costs in excess of
$5,000, services needing to be provided other than through the
organization; and obtain insurance or make other arrangements
for not more than 90 percent of the amount by which its fiscal
year costs exceed 115 percent of its income for such year. It
could also make arrangements with providers orhealth
institutions to assume all or part of the risk on a prospective basis
for the provision of basic services.
Section 4001 (new section 1855(c)). Identical provision.
Senate Amendment
Identical except also provides that the applicable amount
of insurance for 1998 is the amount established by the
Secretary and for 1999 and any succeeding year, is the amount
in effect for the previous year increased by the percentage
change in the CPI-urban for the 12-month period ending with
June of the previous year.
Conference Agreement
The conference agreement includes the House bill with a
modification specifying that, in lieu of specifying excess
costs of $5,000, provides that the Secretary establish the
amount from time to time.
(d) Certification of provision against risk of insolvency for
unlicenced PSOs
House Bill
Section 10001 (new section 1855(d)). Requires each
MedicarePlus PSO that is not licensed by a state and for which
a waiver of state law has been approved by the Secretary to
meet federal financial solvency and capital adequacy standards
(see new section 1856 as described below). The Secretary would
be required to establish a process for the receipt and approval
of applications of entities for certification (and periodic
recertification) of a PSO as meeting the federal solvency
standards. The Secretary would be required to act upon the
PSO's certification application within 60 days of its receipt.
Section 4001 (new section 1855(d)). Identical provision.
Senate Amendment
Similar. Requires each Medicare Choice organization that
is a PSO with a waiver of the state licensure requirement to
meet standards established under new section 1856 relating to
financial solvency and capital adequacy.
Conference Agreement
The conference agreement includes the House bill.
(e) Provider sponsored organization defined
House Bill
Section 10001 (new section 1855(e)). Defines a PSO as a
public or private entity that is a provider or group of
affiliated providers that provides a substantial portion of the
required services under the contract directly through the
provider or affiliated group of providers, and with respect to
those affiliated providers that share, directly or indirectly,
substantial financial risk, have at least a majority interest
in the entity. In defining substantial proportion, the
Secretary would be required to consider the need for such an
organization to assume responsibility for a substantial portion
of required services in order to assure financial stability and
other factors.
A provider meets the ``affiliation'' requirement if,
through contract, ownership, or otherwise: (A) one provider,
directly or indirectly, controls, is controlled by, or is under
common control with the other; (B) both providers are part of a
controlled group of corporations under section 1563 of the
Internal Revenue Code (IRC); or (C) both providers are part of
an affiliated service group under section 44 of the IRC.
``Control,'' and ``health care provider'' are
specifically defined. The Secretary would be required to issue
regulations to carry out this provision.
Section 4001 (new section 1855(e)). Identical provision.
Effective date.
Section 10001. Unless otherwise provided, generally
effective upon enactment.
Section 4001. Identical.
Senate Amendment
Similar but includes in the definition of a PSO an entity
that is established or organized and operated by a local
provider or group of providers.
``Substantial proportion'' is defined differently. The
Secretary would be required to: (A) take into account the need
for a PSO to assume: (I) significantly more than the majority
of the items and services under the Medicare Choice contract
through its own affiliated providers; and (ii) most of the
remainder of the items and services under the contract through
providers with which the organization has an agreement to
provide such items and services, in order to assure financial
stability and to address the practical considerations involved
in integrating the delivery of a wide range of service
providers, (B) take into account the need for a PSO to provide
a limited proportion of the items and services under the
Medicare Choice contract through providers that are neither
affiliated or have an agreement with the organization, and (C)
may allow for variation in the definition of substantial
proportion among PSOs based on relevant differences among them,
such as their local in an urban or rural area.
Includes the additional requirement for ``affiliation''
that each provider be a participant in a lawful combination
under which each provider shares substantial financial risk in
connection with the organization's operations.
Identical definitions of ``control'' and ``health care
provider.''
Effective date. Identical.-
Conference Agreement
The conference agreement includes the Senate amendment
with a modification removing local from the definition of a
PSO. Accordingly, a PSO is a public or private entity that is
established or organized and operated by a health care
provider, or group of affiliated health care providers.
Establishment of Standards new section 1856-
Current Law
Under Section 1876 of the Social Security Act, Medicare
specifies requirements to be met by an organization seeking to
become a managed care contractor with Medicare. There is no
provision for Provider Sponsored Organizations (PSOs).
House Bill
Section 10001 (new section 1856). The provision would add
a new Section 1856 providing for the establishment of federal
standards for MedicarePlus plans, including solvency standards
or PSOs.
Section 4001 (new section 1856). Identical provision.
Senate Amendment
Similar provision but applies to Medicare Choice
organizations and plans.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment except that
the provisions apply to Medicare+Choice organizations and
plans.
(a) Establishment of solvency standards for PSOs
House Bill
Section 10001 (new section 1856(a)). Requires the
Secretary of HHS to establish, on an expedited basis and using
a negotiated rule-making process, final standards related to
financial solvency and capital adequacy of organizations
seeking to qualify as PSOs. The target date for publication of
the resulting rules would be April 1, 1998. The Secretary would
be required to consult with interested parties and to take into
account: (I) the delivery system assets of such an organization
and its ability to provide services directly to enrollees
through affiliated providers; and (ii) alternative means of
protection against insolvency, including reinsurance,
unrestricted surplus, letters of credit, guarantees,
organizational insurance coverage, etc. Requires the solvency
standards to include provisions to prevent enrollees from being
held liable to any person or entity for the MedicarePlus's
organization's debts in the event of the organization's
insolvency. The negotiated rule-making committee would be
appointed by the Secretary. If the committee reported by
January 1, 1998 that it had failed to make significant progress
toward consensus or was unlikely to reach consensus by a target
date, the Secretary could terminate the process and provide for
the publication of a rule. If the committee was not terminated,
it would have to report with the proposed rule by March 1,
1998. The Secretary would then publish the rule on an interim
final basis, but it would be subject to change after public
notice and comment. In connection with the rule, the Secretary
would specify the process for timely review and approval of
applications of entities to be certified as PSOs, consistent
with this subsection. The Secretary would be required to
provide for consideration of such comments and republication of
the rule within one year of its publication.
Section 4001 (new section 1856(a)). Identical provision.-
Senate Amendment
Identical except also requires that, in establishing the
standards for PSO solvency, the Secretary take into
consideration in any standards developed by the National
Association of Insurance Commissioners specifically for risk-
based health care delivery organizations.
Conference Agreement
The conference agreement includes the Senate amendment.
(b) Establishment of other standards
Section 10001 (new section 1856(b)). Requires the
Secretary to establish by regulation other standards (not
included in (a)) for MedicarePlus organizations and plans
consistent with, and to carry out, this part. By June 1, 1998,
the Secretary would be required to issue interim standards
based on currently applicable standards for Medicare HMOs/CMPs.
The new standards established under this provision would
supersede any state law or regulation with respect to
MedicarePlus plans offered by Medicare contractors to the
extent that such state law or regulations was inconsistent with
such standards.
Section 4001 (new section 1856(b)). Identical except with
respect to preemption of state law. Provides that subject to
section 1852(n) (related to non-preemption of state law), the
MedicarePlus standards to be established by the Secretary would
supersede any state law or regulation to the extent such law or
regulation was inconsistent. Provides that this should not be
construed as superseding a state law or regulation that is not
related to solvency, that is applied on a uniform basis and is
generally applicable to other entities engaged in substantially
similar business, and that provides consumer protections in
addition to, or more stringent than, those provided under this
subsection.
Effective date.
Section 10001. Unless otherwise provided, generally
effective upon enactment.
Section 4001. Identical.
Senate Amendment
Identical provision to section 10001.
Conference Agreement
The conference agreement includes section 10001 of the
House bill with modifications. The Secretary would be required
to publish regulations implementing the standards by June 1,
1998. To carry out this requirement in a timely manner, the
Secretary would be authorized to promulgate regulations that
would take effect on an interim basis, after notice and pending
opportunity for public comment.
The conference agreement clarifies that the federal non-
solvency standards would preempt any state law or regulation
(including those about to be described) with respect to
Medicare+Choice plans which are offered by Medicare+Choice
organizations to the extent such law or regulation was
inconsistent with the federal standards. State standards
relating to the following would be preempted: (I) benefit
requirements, (ii) requirements relating to inclusion or
treatment by providers, and (iii) coverage determinations
(including related appeals and grievance processes).
The Conferees believe that the Medicare+Choice program
will continue to grow and eventually eclipse original fee-for-
service Medicare as the predominant form of enrollment under
the Medicare program. Under original fee-for-service, the
Federal government alone set legislative requirements regarding
reimbursement, covered providers, covered benefits and
services, and mechanisms for resolving coverage disputes.
Therefore, the Conferees intend that this legislation provide a
clear statement extending the same treatment to private
Medicare+Choice plans providing Medicare benefits to Medicare
beneficiaries.
Contracts with Medicare+Choice Organizations
(new section 1857)-
(a) In general
current law
No provision.-
house bill
Section 10001 (new section 1857(a)). The Secretary would
not permit the election of a Medicare+Choice plan and no
payment would be made to an organization unless the Secretary
had entered into a contract with the organization with respect
to the plan. A contract with an organization could cover more
than one Medicare+Choice plan. Contracts would provide that
organizations agree to comply with applicable requirements and
standards.
Section 4001 (new section 1857(a)). Identical provision.-
senate amendment
Identical provision except applies to Medicare Choice
organization.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment except
plans are called Medicare+Choice plans.
(b) Minimum enrollment requirements
current law
To be eligible as a risk contractor, HMOs/CMPs generally
must have at least 5,000 members. However, if HMOs/CMPs
primarily serve members outside urbanized areas, they may have
fewer members (regulations specify at least 1,500).
Organizations eligible for Medicare cost contracts also may
have fewer than 5,000 members (regulations specify at least
1,500).
house bill
Section 10001 (new section 1857(b)). The Secretary would
be prohibited from entering into a contract with a
Medicare+Choice organization unless the organization had at
least 5,000 individuals (or 1,500 individuals in the case of a
PSO) who were receiving health benefits through the
organization. An exception would apply if the Medicare+Choice
standards (as established in new section 1856 described above)
permitted the organization to have a lesser number of
beneficiaries (but not less than 500 for a PSO) if the
organization primarily served individuals residing outside of
urbanized areas. These lower minimum enrollment requirements
relating to PSOs are effective January 1, 1998. In addition,
the Secretary could waive this requirement during an
organization's first 3 contract years. Minimum enrollment
requirements would not apply to a contract that related only to
an MSA plan.
Section 4001 (new section 1857(b)). Identical provision.-
senate amendment
The Secretary would be prohibited from entering into a
contract with a Medicare Choice organization unless the
organization had at least 1,500 individuals who were receiving
health benefits through the organization (500 if the
organization primarily serves individuals residing outside of
urbanized areas). The Secretary may waive this provision during
the first 2 contract years with an organization.
In the case of a PSO, the provision would be applied by
taking into account individuals for whom the organization had
assumed substantial financial risk.
conference agreement
The conference agreement includes the House provision
with clarification that the organization would have at least
1,500 individuals (or 500 individuals in the case of a PSO) if
the organization primarily serves individuals residing outside
of urban areas. The agreement provides that in applying the
minimum enrollment requirements to a Medicare+Choice
organization that is offering an MSA plan, covered lives would
be substituted for individuals. The Secretary has the authority
to waive the minimum enrollment during the first three contract
years for any organization.
(c) Contract period and effectiveness
current law
Contracts with HMOs are for 1 year, and may be made
automatically renewable. However, the contract may be
terminated by the Secretary at any time (after reasonable
notice and opportunity for a hearing) in the event that the
organization fails substantially to carry out the contract,
carries out the contract in a manner inconsistent with the
efficient and effective administration of Medicare HMO law, or
no longer meets the requirements specified for Medicare HMOs.
The Secretary also has authority to impose lesser sanctions.
house bill
Section 10001 (new section 1857(c)). Contracts would be
for at least one year, and could be made automatically
renewable in the absence of notice by either party of intention
to terminate. The Secretary could terminate a contract at any
time if the Secretary determined that the organization: (i) had
failed substantially to carry out the contract; (ii) was
carrying it out in a manner substantially inconsistent with the
efficient and effective administration of Medicare+Choice; or
(iii) no longer substantially met Medicare+Choice conditions.
Contracts would specify their effective date, but contracts
providing coverage under an MSA plan could not take effect
before January 1999. The Secretary would not contract with an
organizationthat had terminated its Medicare+Choice contract
within the previous 5 years, except in special circumstances as
determined by the Secretary. The authority of the Secretary with
respect to Medicare+Choice plans could be performed without regard to
laws or regulations relating to contracts of the United States that the
Secretary determined were inconsistent with the purposes of Medicare.
Section 4001 (new section 1857(c)). Similar provision
except that the Secretary may impose intermediate sanctions
described below. Contracts providing coverage under an MSA plan
could not take effect before January 1998.
senate amendment
Similar provision except that the Secretary may impose
intermediate sanctions described in subsection (g) below to
Medicare Choice organization.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment except
that there is no reference to intermediate sanctions and
contacts providing coverage under an MSA plan could not take
effect before January 1999.
(d) Protections against fraud and beneficiary protections
current law
Under section 1856, the Secretary has the right to
inspect or otherwise evaluate the quality, appropriateness and
timeliness of services, as well as the organization's
facilities if there were reasonable evidence of need for such
inspection. In addition, the Secretary has the right to audit
and inspect any books and records that pertain either to the
ability of the organization to bear the risk of potential
financial loss or to services performed or determinations of
amounts payable under the contract. Contractors may be required
to provide and pay for advance written notice to each enrollee
of a termination, along with a description of alternatives for
obtaining benefits. Organizations must also notify the
Secretary of loans and other special financial arrangements
made with subcontractors, affiliates, and related parties. -
house bill
Section 10001 (new section 1857(d)). Contracts would
provide that the Secretary or his or her designee would have
the right to inspect or otherwise evaluate the quality,
appropriateness and timeliness of services, as well as the
organization's facilities if there were reasonable evidence of
need for such inspection; in addition, the Secretary would have
the right to audit and inspect any books and records that
pertain either to the ability of the organization to bear the
risk of potential financial loss or to services performed or
determinations of amounts payable under the contract. Contracts
would also require the organization to provide and pay for
advance written notice to each enrollee of a termination, along
with a description of alternatives for obtaining benefits. They
would also require that organizations notify the Secretary of
loans and other special financial arrangements made with
subcontractors, affiliates, and related parties.
Medicare+Choice organizations would be required to report
financial information to the Secretary, including information
demonstrating that the organization was fiscally sound, a copy
of the financial report filed with HCFA containing information
required under section 1124 of the Social Security Act, and a
description of transactions between the organization and
parties in interest. These transactions would include: (I) any
sale, exchange, or leasing of property; (ii) any furnishing for
consideration of goods, services, and facilities (but generally
not including employees' salaries or health services provided
to members); and (iii) any lending of money or other extension
of credit. Financial information would be available to
enrollees upon reasonable request. Consolidated financial
statements could be required when the organization controls, is
controlled by, or is under common control with another entity.
With respect to financial information, the term ``party
in interest'' means: (I) any director, officer, partner, or
employee responsible for management or administration of a
Medicare+Choice organization; any person who directly or
indirectly is a beneficial owner of more than 5 percent of its
equity; any person who is the beneficial owner of a mortgage,
deed of trust, note, or other interest secured by, and valuing
more than 5% of the organization; and in the case of a
nonprofit Medicare+Choice organization, an incorporator or
member of such corporation; (ii) any entity in which a person
described in (I) is an officer or director; a partner; has
directly or indirectly a beneficial interest in more than 5
percent of the equity; or has a mortgage, deed of trust, note,
or other interest valuing more than 5 percent of the assets of
the entity; (iii) any person directly or indirectly
controlling, controlled by, or under common control with an
organization; and (iv) any spouse, child, or parent of an
individual described in (I).
Section 4001 (new section 1857(d)). Identical provision.-
senate amendment
Identical provision except applies to Medicare Choice
organization.-
conference agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment with a
modification that the Secretary would provide for annual
auditing of financial records (including data relating to
Medicare utilization, costs, and computation of the adjusted
community rate) of at least one-third of the Medicare+Choice
organizations offering Medicare+Choice plans. The Comptroller
General would monitor these auditing activities.
(e) Additional contract terms
current law
No provision.
House Bill
Section 10001 (new section 1857(e)). Contracts would
contain other terms and conditions (including requirements for
information) as the Secretary found necessary and appropriate.
Contracts would require payments to the Secretary for the
organization's pro rata share of the estimated costs to be
incurred by the Secretary relating to enrollment and
dissemination of information. These payments would be
appropriated to defray such costs and would remain available
until expended.
Section 4001 (new section 1857(e)). Similar provision
except required payments to the Secretary would include pro
rate share of estimated costs for certain counseling and
assistance programs. If a contract with a Medicare+Choice
organization were terminated, the organization would have to
notify each enrollee.
Senate Amendment
Similar provision except if a contract with a Medicare
Choice organization were terminated, the organization would
have to notify each enrollee.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment, with a
modification. The conference agreement authorizes the Secretary
to collect user fees on a pro rata basis from Medicare+Choice
organizations to offset administrative costs associated with
additional requirements relating to enrollment and
dissemination of information required by the agreement. The
conference agreement also requires Medicare+Choice
organizations to make payments to the Secretary for the pro
rata share of estimated costs for certain counseling and
assistance programs. The fees collected under this section are
limited to $200 million in fiscal year 1998, $150 million in
fiscal year 1999, and $100 million in fiscal year 2000 and
beyond.
The agreement does not include a requirement that the
organization would have to notify each enrollee if a contract
with a Medicare+Choice organization were terminated.
(f) Prompt payment by Medicare+Choice Organization
Current Law
Section 1856 of the Social Security Act requires managed
care contractors to provide prompt payment of covered services
if the services are not furnished by a contract provider.
House Bill
Section 10001 (new section 1857(f)). Contracts would
require a Medicare+Choice organization to provide prompt
payment of claims submitted for services and supplies furnished
to individuals pursuant to the contract, if they are not
furnished under a contract between the organization and the
provider or supplier. If the Secretary determined (after notice
and opportunity for a hearing) that the organization had failed
to pay claims promptly, the Secretary could provide for direct
payment of the amounts owed providers and suppliers. In these
cases, the Secretary would reduce Medicare+Choice payments
otherwise made to the organization to reflect the amount of the
payments and the Secretary's cost in making them.
Section 4001 (new section 1857(f)). Identical provision.
Senate Amendment
Identical provision except applies to Medicare Choice
organization.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
(g) Intermediate sanctions
Current Law
The Secretary has authority to impose lesser sanctions,
including suspension of enrollment or payment and imposition of
civil monetary penalties. These sanctions may be applied for
denial of medically necessary services, overcharging,
enrollment violations, misrepresentation, failure to pay
promptly for services, or employment of providers barred from
Medicare participation.
House Bill
Section 10001 (new section 1857(g)). The Secretary would
be authorized to carry out specific remedies in the event that
a Medicare+Choice organization: (I) failed substantially to
provide medically necessary items and services required to be
provided, if the failure adversely affected (or had the
substantial likelihood of adversely affecting) the individual;
(ii) imposed net monthly premiums on individuals that were in
excess of the net monthly premiums permitted; (iii) acted to
expel or refused to re-enroll an individual in violation of
Medicare+Choice requirements; (iv) engaged in any practice that
would reasonably be expected to have the effect of denying or
discouraging enrollment (except as permitted by
Medicare+Choice) of eligible individuals whose medical
condition or history indicates a need for substantial future
medical services; (v) misrepresented or falsified information
to the Secretary or others; (vi) failed to comply with rules
regarding physician participation; or (vii) employed or
contracted with any individual or entity that was excluded from
participation in Medicare under section 1128 or 1128A of the
Social Security Act (relating to sanctions for program
violations) for the provision of health care, utilization
review, medical social work, or administrative services, or
employed or contracted with any entity for the provision
(directly or indirectly) through such an excluded individual or
entity.
The remedies would include civil money penalties of not
more than $25,000 for each determination of a failure described
above or not more than $100,000 with respect to misrepresenting
information furnished to the Secretary or denying enrollment to
persons with a preexisting medical condition. In cases of the
latter failure, the Secretary could also levy a $15,000 fine
for each individual not enrolled. In cases of excess premium
charges, the Secretary could also recover twice the excess
amount and return the excess amount to the affected individual.
In addition, the Secretary could suspend enrollment of
individuals and payment for them after notifying the
organization of an adverse determination, until the Secretary
was satisfied that the failure had been corrected and would not
likely recur.
Other intermediate sanctions could be imposed if the
Secretary determined that a failure had occurred other than
those described above. These include: (I) civil money penalties
up to $25,000 if the deficiency directly adversely affected (or
had the likelihood of adversely affecting) an individual under
the organization's contract; (ii) civil money penalties of not
more than $10,000 for each week after the Secretary initiated
procedures for imposing sanctions; and (iii) suspension of
enrollment until the Secretary is satisfied the deficiency had
been corrected and would not likely recur.
Section 4001 (new section 1857(g)). Identical provision.
Senate Amendment
Similar provision except applies to Medicare Choice
organization. The provisions of section 1128A (other than
subsections (a) and (b)) would apply to a civil money penalty
in the same manner as they apply to a civil money penalty or
proceeding under that section.
Conference Agreement
The conference agreement includes identical provisions in
the House bill and the Senate amendment, including provisions
relating to civil money penalties that are under termination
procedures in the House bill.
(h) Procedures for termination
Current Law
Under section 1856 of the Social Security Act, the
Secretary may terminate a contract with an organization for
noncompliance with the law's requirements after reasonable
notice and opportunity for hearings.
House Bill
Section 10001 (new section 1857(h)). The Secretary could
terminate a contract in accordance with formal investigation
and compliance procedures under which the Secretary (1)
provides the organization with an opportunity to develop and
implement a corrective action plan, and (ii) provides
reasonable notice and opportunity for a hearing, including the
right to appeal an initial decision, before imposing any
sanction or terminating the contract. The provisions of section
1128A (other than subsections (a) and (b)) would apply to a
civil money penalty in the same manner as they apply to a civil
money penalty or proceeding under that section. The Secretary
would be authorized not to delay termination of a contract
(resulting from the formal investigation and compliance
procedures) if such termination would pose an imminent and
serious risk to enrollees' health.
Section 4001 (new section 1857(h)). Similar provision
except the compliance procedures also provide (1) the Secretary
imposes more severe sanctions on organizations that have a
history of deficiencies or have not taken steps to correct
those the Secretary brought to their attention, and (ii) there
are no unreasonable or unnecessary delays between finding a
deficiency and imposing sanctions.
Effective date.
Section 10001 (new section 1857). Effective generally
starting January 1, 1999 but applies to PSO enrollment January
1, 1998.
Section 4001 (new section 1857). Identical.-
Senate Amendment
Similar provision except that the compliance procedures
also provide (1) the Secretary imposes more severe sanctions on
Medicare Choice organizations that have a history of
deficiencies or have not taken steps to correct those the
Secretary brought to their attention, and (ii) there are no
unreasonable or unnecessary delays between finding a deficiency
and imposing sanctions. Provision regarding section 1128A is in
(g), above.
Effective date. Identical.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment except
that provisions relating to civil money penalties in the House
bill are included above under intermediate sanctions. The
agreement does not include provisions relating to sanctions on
an organization with a history of deficiencies and to
unreasonable and unnecessary delays between finding a
deficiency and imposing sanctions.
Definitions; Miscellaneous Provisions
New section 1859
(a) Definitions related to Medicare+Choice organizations
Current Law
No provision.
House Bill
Section 10001 (new section 1859(a)). A Medicare+Choice
organization is a public or private entity that is certified
under section 1856 (as created by this Act) as meeting the
Medicare+Choice requirements and standards for such an
organization.
A provider-sponsored organization is defined in section
1855(e)(1) as created by this Act.
Section 4001 (new section 1859(a)). Identical provision.
Senate Amendment
Identical provision except applies to Medicare Choice
organization.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment but
applies the provisions to Medicare+Choice organizations and
plans.
(b) Definitions relating to Medicare+Choice plans
House Bill
Section 10001 (new section 1859 ``(b)). A Medicare+Choice
plan is health benefits coverage offered under a policy,
contract, or plan by a Medicare+Choice organization pursuant to
and in accordance with a contract under section 1857 as created
by this Act.
An MSA plan is a Medicare+Choice plan that (I) provides
reimbursement for at least the items and services for which
benefits are available under Medicare parts A and B to
individuals residing in the area served by the plan and
additional health services the Secretary may approve, but only
after the enrollee incurs countable expenses (as specified in
the plan) equal to the amount of the annual deductible; (ii)
counts as such expenses at least all amounts that would have
been payable under parts A and B or by the enrollee as
deductibles, coinsurance, or copayments if the enrollee had
elected to receive benefits through those parts; and (iii)
provides, after the deductible is met for a year (and for all
subsequent expenses referred to in (I) in the year) for a level
of reimbursement that is not less than the lesser of (A) 100
percent of such expenses, or (B) 100 percent of the amount that
would have been paid (without regard to any deductibles or
coinsurance) under Medicare parts A and B. For contract year
1999, the annual deductible under a MSA plan could not be more
than $6,000. For a subsequent contract year, the annual
deductible could not be more than the maximum amount for the
previous contract year increased by the national per capita
Medicare+Choice growth percentage and rounded to the nearest
multiple of $50.
Section 4001 (new section 1859(b)). Identical provision.-
Senate Amendment
Similar provision except applies to Medicare Choice
plans.
A Medicare Choice unrestricted fee-for-service plan is a
Medicare Choice plan that provides for coverage of benefits
without regard to utilization and to whether the provider has a
contract or other arrangement with the organization offering
the plan for the provision of such benefits.
The annual deductible under an MSA plan could not be less
than $1,500 nor more than $2,250, and annual out-of-pocket
expenses required to be paid under an MSA plan (other than for
premiums) could not exceed $3,000. For taxable years after
1998, these amounts would be increased by the percentage by
which the Consumer Price Index (CPI) for all urban consumers
for the preceding calendar year exceeds the CPI for calendar
year 1992, rounded to the nearest multiple of $50.
Conference Agreement
The conference agreement includes the House provision
with an amendment that defines a Medicare+Choice private fee-
for-service plan as a Medicare+Choice plan that (A) reimburses
hospitals, physicians, and other providers at a rate determined
by the plan on a fee-for-service basis without placing the
provider at financial risk; (B) does not vary such rates for
such a provider based on utilization relating to such provider;
and (C) does not restrict the selection of providers among
those who are lawfully authorized to provide the covered
services and agree to accept the terms and conditions of
payment established by the plan.
(c) Other references to other terms
House Bill
Section 1001 (new section 1859(``c)). Defines through
reference (I) Medicare+Choice Eligible Individual; (ii)
Medicare+Choice payment are; (iii) national per capita
Medicare+Choice growth percentage; and (iv) monthly premium;
net monthly premium.
Section 4001 (new section 1859(``c)). Identical
provision.
Senate Amendment
Similar provision except applies to Medicare Choice plans
and in (iii) refers to national average per capita growth
percentage.
Conference Agreement
The conference agreement includes the House provision
with clarification that references in (iv) are to
Medicare+Choice monthly basic beneficiary premium and
Medicare+Choice monthly supplemental beneficiary premium.
(d) Coordinated acute and long-term care benefits under a
Medicare+Choice Plan
House Bill
Section 10001 (new section 1859(``d)). A state would not
be prevented from coordinating benefits under a Medicaid plan
and a Medicare+Choice plan in a manner that assures continuity
of a full range of acute care and long-term care services to
poor elderly or disabled individuals eligible for Medicare
benefits under a Medicare+Choice plan.
Section 4001 (new section 1859(``d)). Identical
provision.-
Senate Amendment
Identical provision except applies to Medicare Choice
plan.--
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment.
(e) Restriction on enrollment for certain Medicare+Choice Plans
House Bill
Section 10001 (new section 1859(e)). A Medicare+Choice
religious fraternal benefit society plan could restrict
enrollment to individuals who are members of the church,
convention, or group with which the society is affiliated. A
Medicare+Choice religious fraternal benefit society plan would
be a Medicare+Choice plan that: (I) is offered by a religious
fraternal benefit society only to members of the church,
convention, or affiliated group; and (ii) permits all members
to enroll without regard to health status-related factors. This
provision could not be construed as waiving plan requirements
for financial solvency. In developing solvency standards, the
Secretary would take into account open contract and assessment
features characteristic of fraternal insurance certificates.
Under regulations, the Secretary would provide for adjustments
to payment amounts under section 1854 (as created by this Act)
to assure an appropriate payment level, taking account of the
actuarial characteristics of the individuals enrolled in such a
plan.
A religious fraternal benefit society is an organization
that (I) is exempt from Federal income taxation under section
501(c)(8) of the Internal Revenue Code; (ii) is affiliated
with, carries out the tenets of, and shares a religious bond
with, a church or convention or association of churches or an
affiliated group of churches; (iii) offers, in addition to a
Medicare+Choice religious fraternal benefit society plan, at
least the same level of health coverage to individuals entitled
to Medicare benefits who are members of such church,
convention, or group; and (iv) does not impose any limitation
on membership in the society based on any health status-related
factor.
Section 4001 (new section 1859(``e)). Identical
provision.
Senate Amendment
Identical provision except applies to Medicare Choice
plans.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment.
(f) Report on coverage of beneficiaries with end-stage renal disease
House Bill
Section 10001 (new section 1859(b)). The Secretary would
provide for a study on the feasibility and impact of removing
the restriction on beneficiaries with end-stage renal disease
from enrolling in a MSA Medicare+Choice plan. No later than
October 1, 1998, the Secretary would submit to Congress a
report on this study and include recommendations regarding
removing or restricting the limitation as may be appropriate.
Section 4001 (new section 1859(b)). Identical provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not contain the House bill.
(g) Report on Medicare+Choice teaching programs and use of DSH and
teaching hospitals
House Bill
Section 10001 (new section 1859(c)). No later than
October 1, 1999, the Secretary would submit to Congress a
report on the extent to which Medicare+Choice organizations are
providing payments to disproportionate share hospitals and
teaching hospitals. The report would be based on information
providedto the Secretary by Medicare+Choice organizations as
required by this provision and such information as the Secretary may
obtain.
Section 4001 (new section 1859(c)). Identical provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not contain the House bill.
Transitional Rules for Current Medicare HMO Program
Sections 10002 and 4002 of House bill and Section 5002 of Senate
amendment-
(a) Waiver of the 50:50 Rule
Current Law
Current law requires that to be a risk contractor, no
more than 50 percent of the organization's enrollees may be
Medicare or Medicaid beneficiaries. The rule may be waived,
however, for an organization that serves a geographic area
where Medicare and Medicaid beneficiaries make up more than 50
percent of the population or (for 3 years) for an HMO that is
owned and operated by a governmental entity.-
House Bill
Section 10002. Effective for contract periods beginning
after December 31, 1996, the Secretary could waive or modify
the 50:50 rule to the extent the Secretary finds the waiver is
in the public interest. Beginning in 1999, the 50:50 rule would
no longer be applicable to organizations offering
Medicare+Choice plans.
Section 4002. Identical provision.-
Senate Amendment
Limits 50-50 rule to contract periods beginning before
January 1, 1999. Deletes provision that applies to Medicaid
beneficiaries. The Secretary could waive the requirement if the
Secretary determines that the plan meets all other beneficiary
protections and quality standards under the section.
Conference Agreement
The conference agreement includes the Senate provision
with an amendment that the Secretary could waive or modify the
50:50 rule to the extent the Secretary finds the waiver is in
the public interest.
The Conferees believe it is unnecessary to continue in
effect the outdated 50:50 rule after January 1, 1999. Between
the date of enactment and January 1, 1999, the conference
agreement grants the Secretary broad authority to waive the
50:50 rule. The Conferees expect that the Secretary will use
this authority, among other things, to provide extensions of
existing waivers and new waivers to organizations that have a
demonstrated history of adherence to quality standards. In
particular, the Conferees intend that the Secretary grant
waivers to the Wellness Plan in Southeastern Michigan and the
Watts Health Foundation providing care in medically under
served inner city areas.
(b) Transition
House Bill
Section 10002. The Secretary would be prohibited from
entering into, renewing, or continuing any risk-sharing
contract under section 1876 for any contract year beginning on
or after the date Medicare+Choice standards are first
established for Medicare+Choice organizations that are insurers
or HMOs. If the organization had a contract in effect on that
date, the prohibition would be effective one year later. The
Secretary could not enter into, renew, or continue a risk-
sharing contract for any contract year beginning on or after
January 1, 2000. An individual who is enrolled in Medicare part
B only and also in an organization with a risk-sharing contract
on December 31, 1998 could continue enrollment in accordance
with regulations issued not later than July 1, 1998.
For individuals enrolled under both Medicare part A and
part B, payments for risk-sharing contracts for months
beginning with January 1998 would be computed by substituting
the Medicare+Choice payment rates specified in this bill. For
individuals enrolled only under part B, the substitution would
be based upon the proportion of those rates that reflects the
proportion of payments under title XVIII of the Social Security
Act (i.e., Medicare) attributable to part B. With respect to
months in 1998, the Secretary would compute, announce, and
apply the Medicare+Choice payment rates in as timely manner as
possible (notwithstanding deadlines in section 1853(a) as
described above) and could provide for retroactive adjustments
in risk-sharing contract payments not in accordance with those
rates.
Section 4002. Identical provision.
Senate Amendment
Similar provision except applies to Medicare+Choice
organizations. Makes clear that Secretary could not enter into,
renew, or continue a risk-sharing contract for any contract
year beginning on or after January 1, 2000.--
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment with a
clarification that on or after the date standards for
Medicare+Choice organizations and plans are first established
under section 1856(b)(1), the Secretary could not enter into
any risk-sharing contract with aneligible organization, and
that for any contract year beginning on or after January 1, 1999, the
Secretary could not renew any such contract. The agreement also
clarifies that an individual who is enrolled in Medicare part B only
and also in an organization with a risk-sharing contract on December
31, 1998, could continue enrollment in accordance with regulations
described in section 1856(b)(1). The agreement does not include the
provision that for months in 1998 the Secretary would compute,
announce, and apply the Medicare+Choice payment rates in as timely a
manner as possible and could provide for retroactive adjustments in
risk-sharing contract payments not in accordance with those rates.
The conference agreement also provides that the following
requirements would apply to eligible organizations with risk-
sharing contracts in the same manner as they apply to
Medicare+Choice organizations under Part C: (A) data collection
requirements under section 1853(a)(3)(B) relating to in-patient
hospital services and other services; (B) restrictions on
imposition of premium taxes under section 1854(h) relating to
payments to such organizations; (C) the requirement to accept
enrollment of new enrollees during November 1998 under section
1851(e)(6); and (D) payments under section 1857(e)(2) relating
to cost-sharing in enrollment-related costs.
In addition, the conference agreement provides that after
enactment of this provision the Secretary may not enter into a
reasonable cost reimbursement contract (if the contract is not
in effect as of that date) except for an organization which
immediately prior to entering into such contract had an
agreement in effect under section 1833(a)(1)(A). The Secretary
could not extend or renew a reasonable cost reimbursement
contract under this subsection beyond December 31, 2002. Not
later than January 1, 2001, the Secretary would submit to
Congress a report analyzing the potential impact of termination
of reasonable cost reimbursement contracts on Medicare
beneficiaries enrolled under them. The report would include
recommendations regarding any extension or transition of the
contracts that the Secretary deems appropriate.
(c) Enrollment transition rule
House Bill
Section 10002. An individual who is enrolled on December
31, 1998 with an organization having a section 1876 contract
would be considered to be enrolled with that organization under
Medicare+Choice if the organization has a Medicare+Choice
contract for providing services on January 1, 1999, unless the
individual had disenrolled effective that date.
Section 4002. Identical provision.-
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment.
(e) Extension of provider requirement
House Bill
Section 10002. Hospitals would accept Medicare payment
rates as payment in full for inpatient emergency services
covered under Medicare that an out-of-plan provider furnishes
enrollees in a Medicare+Choice plan which does not have a
contract establishing such payment amounts.
Section 4002. Similar provision except amount would be
reduced by any payment under section 1858 as created by this
Act for disproportionate share hospitals and graduate medical
education.
Senate Amendment
Identical provision except applies to Medicare Choice
organization.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment with an
amendment that the amount would be reduced by any payment under
sections 1886(d)(11) and 1886(h)(3)(D) relating to graduate
medical education.
(f) Additional conforming changes
House Bill
Section 10002. Any reference in law in effect before the
date of enactment of this legislation to part C of Medicare
would be deemed a reference to part D as in effect after such
date.
Not later than 90 days after enactment of this
legislation, the Secretary would submit to Congress a
legislative proposal providing for technical and conforming
amendments as the Medicare+Choice provisions require.
Section 4002. Identical provision.-
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment with an
amendment that the Secretary would submit the proposal not
later than 6 months after enactment.
(g) Immediate effective date for certain requirements for
demonstrations
house bill
Section 10002. Required Medicare+Choice organization
contributions for costs related to enrollment and dissemination
of information would apply to demonstrations if their
enrollment were effected or coordinated under section 1851 as
created by this Act.
Section 4002. Identical provision.
senate amendment
Identical provision.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment.
(h) Use of interim, final regulations
house bill
Section 10002. In order to carry out the Medicare+Choice
provisions in a timely manner, the Secretary could (after
notice and opportunity for public comment) promulgate
regulations that take effect on an interim basis.
Section 4002. Identical provision.
senate amendment
Identical provision.
conference agreement
The conference agreement does not include the House bill.
(i) Transition rule for PSO enrollment
house bill
Section 10002. Provides that a PSO with at least 1,500
enrollees in urban areas and 500 enrollees in rural areas may
qualify for a risk-sharing contract beginning on or after
January 1, 1998.
Section 4002. Identical provision.
senate amendment
Similar provision except that the PSO may count toward
the threshold numbers individuals for whom the organization has
assumed substantial financial risk.
conference agreement
The conference agreement includes the House provision
with amendments. It provides that not later than 4 weeks after
enactment the Secretary would announce the annual
Medicare+Choice capitation rates for 1998. In addition, the
conference agreement eliminates the health care prepayment plan
option for entities eligible to participate as a managed care
organization.-
Conforming Changes in Medigap Program
Section 10003 and 4003 of House bill; and Section 5003 and 5652 of
Senate amendment
current law
Current law contains rules regarding the sale of Medicare
supplement policies (generally referred to as ``Medigap''
policies). Included are prohibitions governing the sale of
duplicative policies and exceptions to the general
prohibitions.
house bill
Section 10003. Includes conforming language to the
duplication provisions for persons electing a Medicare+Choice
plan. Included in the general prohibitions would be a general
prohibition against selling to a person electing a
Medicare+Choice plan a Medicare supplemental policy with the
knowledge that it duplicated benefits to which the individual
was otherwise entitled to under Medicare or another
supplemental policy. A Medicare+Choice policy is not included
within the definition of a Medicare supplementary policy.
Prohibits the sale of certain policies to a person
electing a high deductible plan. Specifically, the prohibition
would apply to the sale of policies providing coverage for
expenses that are otherwise required to be counted toward
meeting the annual deductible amount provided under a medical
savings account (MSA) plan.
Effective Date. Enactment
Section 4003. Identical provision
Senate Amendment
Identical provision, except refers to Medicare Choice.
Adds to list of exceptions for policies not considered
duplicative. A health insurance policy (which may be a contract
with a health maintenance organization) would not be considered
duplicative if it: (1) provides comprehensive health care
benefits that replace benefits provided by another insurance
policy, (2) is being provided to a disabled enrollee, and (3)
coordinates against items and services available or paid for
under Medicare or Medicaid, provided that Medicare or Medicaid
payments are not treated as payments in determining annual or
lifetime benefits under the policy.
Effective Date. Enactment
conference agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment with a
modification. The modification specifies that the prohibition
on the sale of health insurance policies to persons with MSA
plans would not apply to the following types of policies: (a) a
policy that provides coverage (whether through insurance or
otherwise) for accidents, disability, dental care, vision care,
or long term care; (2) an insurance policy whose coverage
primarily relates to liabilities incurred under workers
compensation laws, tort liabilities, liabilities relating to
ownership or use of property, or other similar liabilities
specified by the Secretary in regulations; (3) an insurance
policy that provides coverage for a specified disease or
illness; or (4) an insurance policy that pays a fixed amount
per day (or other period) of hospitalization.
The conference agreement does not include the Senate
provision adding to the list of exceptions for policies
considered duplicative.
Description of Taxation of Medicare+Choice/Medicare Choice Medical
Savings Accounts
Secs. 4006 and 10006 of the House bill and sec. 5006 of the Senate
amendment
Present law
Under present law, the value of Medicare coverage and
benefits is not includible in taxable income.
Individuals who itemize deductions may deduct amounts
paid during the taxable year (if not reimbursed by insurance or
otherwise) for medical expenses of the taxpayer and the
taxpayer's spouse and dependents (including expenses for
insurance providing medical care) to the extent that the total
of such expenses exceeds 7.5 percent of the taxpayer's adjusted
gross income (``AGI'').
Within limits, contributions to a medical savings account
(``MSA'') are deductible in determining AGI if made by an
eligible individual and are excludable from gross income and
wages for employment tax purposes if made by the employer of an
eligible individual.\1\ Individuals covered under Medicare are
not eligible to have an MSA.
---------------------------------------------------------------------------
\1\ The number of MSAs which can be established is subject to a
cap.
---------------------------------------------------------------------------
Earnings on amounts in an MSA are not currently
includible in income. Distributions from an MSA for medical
expenses of the MSA account holder and his or her spouse or
dependents are not includible in income. For this purpose,
medical expenses are defined as under the itemized deduction
for medical expenses, exceptthat medical expenses do not
include any insurance premiums other than premiums for long-term care
insurance, continuation coverage (so-called ``COBRA coverage''), or
premiums for coverage while an individual is receiving unemployment
compensation. Distributions not used for medical expenses are subject
to an additional 15-percent tax unless the distribution is made after
age 65, death, or disability.
Under present law, there are no tax provisions for
Medicare+Choice medical savings accounts (``Medicare+Choice
MSAs'').
house bill
In general
Under the bill, individuals who are eligible for Medicare
are permitted to choose either the traditional Medicare program
or a Medicare+Choice MSA plan. To the extent an individual
chooses such a plan, the Secretary of Health and Human Services
makes a specified contribution directly into a Medicare+Choice
MSA designated by such individual. Only contributions by the
Secretary of Health and Human Services can be made to a
Medicare+Choice MSA and such contributions are not included in
the taxable income of the Medicare+Choice MSA holder. Income
earned on amounts held in a Medicare+Choice MSA are not
currently includible in taxable income. Withdrawals from a
Medicare+Choice MSA are excludable from taxable income if used
for the qualified medical expenses of the Medicare+Choice MSA
holder. Withdrawals from a Medicare+Choice MSA that are not
used for the qualified medical expenses of the account holder
are includible in income and may be subject to an additional
tax (described below).
Definition of Medicare+Choice MSAs
In general, a Medicare+Choice MSA is an MSA that is
designated as Medicare+Choice MSA and to which the only
contributions that can be made are those by the Secretary of
Health and Human Services.\2\ Thus, a Medicare+Choice MSA is a
tax-exempt trust (or a custodial account) created exclusively
for the purpose of paying the qualified medical expenses of the
account holder that meets requirements similar to those
applicable to individual retirement arrangements (``IRAs'').\3\
The trustee of a Medicare+Choice MSA can be a bank, insurance
company, or other person that demonstrates to the satisfaction
of the Secretary of the Treasury that the manner in which such
person will administer the trust will be consistent with
applicable requirements.
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\2\ Medicare+Choice MSAs are not taken into account for purposes of
the cap on non-Medicare+Choice MSAs, nor are they subject to that cap.
\3\ For example, no Medicare+Choice MSA assets could be invested in
life insurance contracts, Medicare+Choice MSA assets could not be
commingled with other property except in a common trust fund or common
investment fund, and an account holder's interest in a Medicare+Choice
MSA would be nonforfeitable. In addition, if an account holder engages
in a prohibited transaction with respect to a Medicare+Choice MSA or
pledges assets in a Medicare+Choice MSA, rules similar to those for
IRAs would apply, and any amounts treated as distributed to the account
holder under such rules would be treated as not used for qualified
medical expenses.
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A Medicare+Choice MSA trustee would be required to make
such reports as may be required by the Secretary of the
Treasury. A $50 penalty would be imposed for each failure to
file without reasonable cause.
Taxation of distributions from a Medicare+Choice MSA
Distributions from a Medicare+Choice MSA that are used to
pay the qualified medical expenses of the account holder would
be excludable from taxable income regardless of whether the
account holder is enrolled in the Medicare+Choice MSA plan at
the time of the distribution.\4\ Qualified medical expenses are
defined as under the rules relating to the itemized deduction
for medical expenses. However, for this purpose, qualified
medical expenses would not include any insurance premiums other
than premiums for long-term care insurance, continuation
insurance (so-called ``COBRA coverage''), or premium for
coverage while an individual is receiving unemployment
compensation. Distributions from a Medicare+Choice MSA that are
excludable from gross income under the provision cannot be
taken into account for purposes of the itemized deduction for
medical expenses.
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\4\ Under the provision, medical expenses of the account holder's
spouse or dependents would not be treated as qualified medical
expenses.
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Distributions for purposes other than qualified medical
expenses are includible in taxable income. An additional tax of
50 percent applies to the extent the total distributions for
purposes other than qualified medical expenses in a taxable
year exceed the amount by which the value of the
Medicare+Choice MSA as of December 31 of the preceding taxable
year exceeds 60 percent of the deductible of the plan under
which the individual is covered. The additional tax does not
apply to distributions on account of the disability or death of
the account holder.
Following is an example of how the amount available to be
withdrawn from a Medicare+Choice MSA without penalty is
calculated.\5\
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\5\ The numbers are provided for illustrative purposes only.
------------------------------------------------------------------------
Year 1 Year 2 Year 3 Year 4
------------------------------------------------------------------------
1. Deductible-.............. $3,000- $3,000 $3,000 $3,000
2. 60% of deductible........ 1,800 1,800 1,800 1,800
3. -Contributions-.......... 1,300- 1,300- 1,300- 1,300
4. Earnings................. 130- 200- 300- 400
5. Total Withdrawals........ 600- 500 600 600
6. Closing Account (Dec. 31
of current year)........... 830- 1,830- 2,830- 3,930
7. Amount available for
nonmedical withdrawal
without penalty (2-3 from
prior year, or 0 if less
than 0).................... 0 0 30 1,030
------------------------------------------------------------------------
Direct trustee-to-trustee transfers could be made from one
Medicare+Choice MSA to another Medicare+Choice MSA without
income inclusion.
The provision includes a correction mechanism so that if
contributions for a year are erroneously made by the Secretary
of Health and Human Services, such erroneous contributions can
be returned to the Secretary of Health and Human Services
(along with any attributable earnings) from the Medicare+Choice
MSA without tax consequence to the account holder.
Treatment of Medicare+Choice MSA at death
Upon the death of the account holder, if the beneficiary of
the Medicare+Choice MSA is the account holder's surviving
spouse, the surviving spouse may continue the Medicare+Choice
MSA, but no new contributions could be made. Distributions from
the Medicare+Choice MSA are subject to the rules applicable to
MSAs that are not Medicare+Choice MSAs. Thus, earnings on the
account balance are not currently includible in income.
Distributions from the account for the qualified medical
expenses of the spouse or the spouse's dependents (or
subsequent spouse) are not includible in income. Distributions
not for such medical expenses are includible in income, and
subject to a 15-percent excise tax unless the distribution is
made after the surviving spouse attains age 65, dies, or
becomes disabled.
If the beneficiary of a Medicare+Choice MSA is not the
account holder's spouse, the Medicare+Choice MSA is no longer
treated as a Medicare+Choice MSA and the value of the
Medicare+Choice MSA on the account holder's date of death is
included in the taxable income of the beneficiary for the
taxable year in which the death occurred (under the rules
applicable to MSAs generally). If the account holder fails to
name a beneficiary, the value of the Medicare+Choice MSA on the
account holder's date of death is to be included in the taxable
income of the account holder's final income tax return (under
the rules applicable to MSAs generally).
In all cases, the value of the Medicare+Choice MSA is
included in the account holder's gross estate for estate tax
purposes.
Effective date
The provision is effective with respect to taxable years
beginning after December 31, 1998.
senate amendment
The Senate amendment is the same as the House bill
(except that the account is called a Medicare Choice MSA).
conference agreement
The conference agreement follows the House bill and the
Senate amendment.
Subchapter C--GME, IME, and DSH Payments for Managed Care Enrollees
Graduate Medical Education and Indirect Medical Education Payments for
Managed Care Enrollees
Section 4008 of the House bill and Section 5451 of the Senate amendment
current law
Medicare payments to risk-contract HMOs include amounts
that reflect Medicare's fee-for-service payments to hospitals
in an area for indirect and direct graduate medical education
costs.
(a) Payments to managed care organizations operating graduate medical
education programs
house bill
Amends Section 1853 of the new Medicare Part C of the
Social Security Act, as established by this legislation, to
establish a mechanism for the allocation of payments for direct
GME and IME costs carved out from the AAPCCs and
Medicare+Choice capitation rates to be made to risk contract
plans under Section 1876 and Medicare+Choice organizations.
Beginning January 1, 1998, each contract with a Medicare+Choice
organization would be required to provide an additional payment
for Medicare's share of allowable direct GME costs incurred by
the organization for an approved medical residency program. A
Medicare+Choice organization that incurred all or substantially
all of the costs of the medical residency program would receive
a payment equal to the national average per resident amount
times the number of full-time-equivalent (FTE) residents in the
program in non-hospital settings. The Secretary would be
required to estimate the national average per resident amount
equal to the weighted average amount that would be paid per FTE
resident under the direct GME payment in a calendar year. A
separate determination would be required to be made for primary
care residency programs as defined by Medicare, including
obstetrics and gynecology residency programs.
senate amendment
No provision.
conference agreement
The conference agreement does not include the House bill.
(See Subtitle G-Provisions Relating to Parts A and B, Chapter
2--Graduate Medical Education.)
(b) Payments to hospitals for direct and indirect costs of graduate
medical education programs attributable to managed care
enrollees
house bill
Amends Part C of Medicare, as amended by Section 4001 of
the bill, by inserting a new section 1858, ``Payments to
Hospitals for Certain Costs Attributable to Managed Care
Enrollees.''
The Secretary would be required to make additional
payments for the direct GME costs to PPS and PPS-exempt
hospitals and hospitals located in a state with a state
hospital reimbursement control system for services furnished to
Medicare beneficiaries enrolled in managed care. These payments
would be phased in over 5 years in the same proportion as
amounts are deducted (carved out) from Medicare managed care
plans under the new Section 1853 established by the bill. Total
payments under this provision could not exceed amounts deducted
(carved out) of the Medicare+Choice capitation rates. Subject
to certain limits, the direct GME payment amount would be equal
to the product of: (1) the aggregated approved amount of direct
GME payments for the period, and (2) the fraction of the total
number of inpatient-bed-days determined by the Secretary during
the period which was attributable to Medicare managed care
enrollees. The Secretary would be required to separately
determine the direct GME payment amount that would be paid to
hospitals in a state with a reimbursement control system.
The IME payment amount would be determined, subject to
certain limits, as equal to the product of: (1) the amount of
the IME adjustment factor applicable to the hospital under PPS,
and (2) the product of (I) the number of discharges
attributable to Medicare managed care enrollees and (ii) the
estimated average per discharge amount that would otherwise
have been paid under PPS if the individuals had not been
enrolled in a managed care plan. The Secretary would also be
required to make payments for the costs attributable to
Medicare managed care enrollees, subject to certain limits in
the same way as the direct GME payment amount. The Secretary
would be required to separately determine the IME payment
amounts that would be paid to hospitals in a state with a
reimbursement control system.
Effective date. Applies to contracts entered into on or
after January 1, 1998.
senate amendment
Provides for additional direct GME payments to hospitals
for the services provided to Medicare managed care enrollees
for cost reporting periods beginning on or after January 1,
1998. Payments would be equal to the product of (1) the
aggregate approved direct GME amount for the hospital in that
period, and the fraction of the total number of inpatient-bed
days attributable to Medicare managed care enrollees. The
direct GME payment amount would be phased in over a 4-year
period. The Secretary would be required to determine separately
the direct GME payment amount that would be paid to hospitals
in a state with a reimbursement control system.
The Secretary would also be required to make additional
payments to PPS hospitals and hospitals located in a state with
a rate setting system for IME costs attributable to providing
services to Medicare managed care enrollees. The amount of the
payment would be phased in over 4 years and be the product of
(1) the aggregate approved amount for that period, and (2) the
fraction of the total number of inpatient-bed days attributable
to Medicare managed care enrollees.
Effective date. Applies to contracts entered into on or
after January 1, 1998.
Conference Agreement
The conference agreement includes the Senate provision
with amendments to phase in the payments over 5 years equal to
20% in 1998; 40% in 1999; 60% in 2000; 80% in 2001; and 100% in
2002. (See Subtitle G-Provisions Relating to Parts A and B,
Chapter 2--Graduate Medical Education.)
Disproportionate Share Hospital Payments for Managed Care Enrollees
Section 4009 of the House bill and Section 5461 of the Senate amendment
Current Law
Medicare payments to risk-contract HMOs include amounts
that reflect Medicare's fee-for-service payments to hospitals
in an area for disproportionate share adjustments.-
House Bill
Amends new Section 1858, as added above, to require the
Secretary to provide additional payments for PPS hospitals and
hospitals in a state with a state hospital reimbursement
control system for hospitals that furnish services to Medicare
risk plan enrollees under Section 1876 and Medicare+Choice
enrollees. These payments would be phased in over 5 years in
the same proportion as amounts are deducted (carved out) from
Medicare managed care plans under the new Section 1853 (see
above). Subject to certain limits, the DSH payment would be
equal to the product of (1) the DSH adjustment factor that
would be attributable to the hospital under PPS, and (2) the
product of (i) the number of discharges attributable to
Medicare managed care enrollees and (ii) the estimated average
per discharge amount that would otherwise have been paid under
PPS if the individuals had not been enrolled in a managed care
plan. The Secretary would be required to separately determine
the DSH payment amount that would be paid to hospitals in a
state with a reimbursement control system.
Effective date. Applies to contracts entered into on or
after January 1, 1998.-
Senate Amendment
Provides for additional payments for Medicare managed
care enrollees for cost reporting periods beginning on or after
January 1, 1998. Additional payments would be made to PPS
hospitals and hospitals located in states with state rate
setting systems that qualify as disproportionate share
hospitals, and would be phased in over a 4-year period. The
amount of the payment would be equal to the phased-in
percentage provided for IME and direct GME payments under
Section 5451, of the estimated average per discharge amount
that would otherwise have been paid DSH if the individual had
not been a managed care enrollee.
Effective date. Applies to contracts entered into on or
after January 1, 1998.
Conference Agreement
The conference agreement does not include the House bill
or the Senate amendment.
Chapter 2. Integrated Long-Term Care Programs (Sections 10011-10019 and
4011-4019 of House bill and Sections 5011-5018 of Senate amendment)
(a) Coverage of PACE under the Medicare program
Current Law
OBRA 86 required the Secretary to grant waivers of
certain Medicare and Medicaid requirements to not more than 10
public or non-profit private community-based organizations to
provide health and long-term care services on a capitated basis
to frail elderly persons at risk of institutionalization. These
projects, known as the Programs of All Inclusive Care for the
Elderly, or PACE projects, were intended to determine whether
an earlier demonstration program, On Lok, could be replicated
across the country. OBRA 90 expanded the number of
organizations eligible for waivers to 15.
House Bill
Section 10011-10014. Repeals current On Lok and PACE
project demonstration waiver authority and establishes in
Medicare law PACE as a permanent benefit category eligible for
coverage and reimbursement under the Medicare program. PACE
providers would offer comprehensive health care services to
eligible individuals in accordance with a PACE program
agreement and regulations. In general, PACE providers would be
public or private nonprofit entities, except for entities (up
to 10) participating in a demonstration to test the operation
of a PACE program by private, for-profit entities.
Eligible individuals would be 55 years of age or older
requiring nursing facility level of care, reside in the service
area of the program, and meet such other conditions as may be
required under the program agreement. Enrollees would be
required to receive all covered benefits through the program.
Eligibility would be determined by the State agency
responsible for administering PACE program agreements. An
individual's health status would have to be comparable to that
of persons who participate in the PACE demonstration. Enrollees
would be reevaluated annually to determine continued
qualification for nursing facility level of care, except where
the State determines there would be no reasonable expectation
of improvement or significant change in an individual's
condition because of advanced age, severity of chronic
condition or degree of impairment. A person could continue to
be considered a PACE eligible individual, even though that
person no longer requires nursing facility level of care, if in
the absence of continued coverage, the individual reasonably
would be expected to meet the requirement within the succeeding
6-month period. Enrollment and disenrollment in a PACE program
would be done according to regulation and enrollees would be
permitted to voluntarily disenroll without cause at any time.
At a minimum, a PACE provider would be required to
provide to eligible persons, regardlessof source of payment and
directly or under contracts with other entities, all items and services
covered under Medicare and Medicaid without any limitation as to
amount, duration, or scope and without application of deductibles,
copayments, coinsurance, or other cost-sharing provisions. Providers
would also have to cover all additional items and services specified in
regulations, based on those required under the PACE protocol. The PACE
protocol would be defined as that published by On Lok, Inc., as of
April 14, 1995.
PACE providers would be required to provide enrollees
access to necessary covered items and services on a continuous
basis, 24 hours per day, 365 days a year. Services would be
provided through a comprehensive, multidisciplinary team that
integrates acute and long-term care services. Providers also
would specify covered items and services that would not be
provided directly, and arrange for delivery of these services
through contracts meeting regulatory requirements. Providers
would be required to have a written plan of quality assurance
and improvement and implementing procedures as well as written
safeguards of the enrollee rights.
The Secretary would be required to make prospective
monthly capitation payments for each PACE program enrollee in
the same manner and from the same sources as payments are made
to a MedicarePlus organization. The amount would be adjusted to
take into account the comparative frailty of PACE enrollees and
such other factors as the Secretary determines to be
appropriate. The total payment level for all PACE program
enrollees would be required to be less than the projected
payment under Medicare for a comparable population not enrolled
under PACE.
The Secretary, in cooperation with the State agency,
would establish procedures for entering into, extending, and
terminating PACE agreements. The Secretary could not enter into
more than 40 agreements (including those in effect as the
result of demonstration waivers) as of enactment, and 20
additional agreements upon each succeeding anniversary date
(without regard to the actual number of agreements in effect as
of a previous anniversary date). The numeric limitation would
not apply to a provider operating under the for-profit
demonstration or which subsequently qualifies for PACE provider
status.
A PACE agreement would designate its service area and
could include additional eligibility requirements for
individuals. The Secretary (in consultation with the State)
could exclude an area already covered under another agreement,
so as to avoid unnecessary duplication of services and/or
impairing the financial and service viability of an existing
program. Agreements would be effective for a year, and could be
extended in the absence of notice to terminate, but would be
subject to termination by the Secretary or the State at any
time for cause.
Under an agreement, providers would be required to
collect and maintain data, provide the Secretary and State
access to records relating to the program, including pertinent
financial, medical and personnel records; and make reports to
the Secretary and the State necessary to monitor operation,
cost, and effectiveness. During a provider's first 3 years of
operation, it would be required to provide such additional data
as the Secretary might specify for comprehensive annual review.
Subsequently, the Secretary would continue to conduct reviews
of PACE providers as might be appropriate, to evaluate
performance levels and compliance with regulations.
Under regulations, the Secretary or State could terminate
an agreement for, among other reasons, significant deficiencies
in the quality of care, failure to comply substantially with
conditions of participation, or failure to develop and
successfully initiate within 30 days of notice a plan to
correct deficiencies.
If the Secretary determines (after consultation with the
State) that a provider fails substantially to comply with
program requirements, the Secretary and State could take any or
all of the following actions: (1) condition continuation upon
timely execution of a corrective action plan; (2) withhold some
or all payments until the deficiencies were corrected; or, (3)
terminate the agreement. The Secretary could provide for the
application of intermediate sanctions for certain deficiencies.
Procedures for termination and sanctions of PACE programs would
be the same as those that apply to MedicarePlus managed care
entities.
The Secretary would issue interim and final regulations
to carry out the statutory provisions for PACE. The Secretary
would incorporate the requirements applied to PACE
demonstration waiver programs under the PACE Protocol, to the
extent consistent with this section. The Secretary (in close
consultation with States) could modify or waive provisions of
the PACE Protocol to provide reasonable flexibility in adapting
the PACE service delivery model to the needs of particular
organizations (such as those in rural areas or those that may
wish to use non-staff physicians) where flexibility is not
inconsistent with and would not impair the essential elements,
objectives, and requirements of the PACE program. The Secretary
could also apply to PACE requirements which apply to managed
care plans, taking into account differences in populations
served and not including requirements restricting the
proportion of enrollees eligible for Medicare and Medicaid.
Certain Medicare requirements would be waived for PACE,
including those pertaining to limits on coverage of
institutional services, rules for payment for benefits, limits
on coverage of SNF and home health services, the 3-day prior
hospitalization requirement for SNF care, and other coverage
rules.
The Secretary would be required to promulgate regulations
for PACE in a timely manner so that entities may establish and
operate PACE programs beginning not later than 1 year after
enactment.
During the transition from demonstration waiver authority
to permanent provider status, applications for waivers (subject
to the numerical limitation) would be deemed approved unless
the Secretary, within 90 days after the date of submission,
either denies the request in writing or informs the applicant
in writing that additional information is needed. After the
date the Secretary receives the additional information, the
application would be deemed approved unless the Secretary,
within 90 days, denies the request. The same time frames would
be applicable to non-waiver applications for PACE.
During the 3-year period beginning with enactment, the
Secretary would give priority, in processing applications to:
(1) entities that are operating a PACE demonstration waiver
program; and, (2) entities that applied to operate a program as
of May 1, 1997. In awarding additional waivers under the
original demonstration authority, the Secretary would also be
required to give priority to entities which applied for waivers
as of May 1, 1997, and to entities that as of May 1, 1997, have
formally contracted with States to provide services on a
capitation basis with an understanding that they were seeking
to become PACE providers. The Secretary would give special
consideration, in the processing of PACE applications for
provider status and demonstration waivers, to entities which as
of May 1, 1997, indicated through formal activities (such as
entering into contracts for feasibility studies) a specific
intent to become PACE providers. Repeal of waiver demonstration
authority would not apply to waivers granted before the initial
effective date of regulations. Repeals would apply to waivers
granted before this date only after allowing organizations a
transition period (of up to 24 months) in order to permit
sufficient time for orderly transition from demonstration to
general authority.
The Secretary (in close consultation with States) would
be required to conduct a study of the quality and cost of
providing PACE services under Medicare and Medicaid. This study
would specifically compare cost, quality, and access to
services offered by private for-profit entities operating under
the new demonstration described above with the costs, quality,
and access to services of other PACE providers. The Secretary
would report to Congress on findings of the study (including
specific findings on private for-profit providers), together
with any recommendations for changes, not later than 4 years
after enactment. The Medicare Payment Evaluation Commission
would include in its annual report to Congress recommendations
on the methodology and level of payments made to PACE providers
and on the treatment of private for-profit PACE providers.
The provision would also establish PACE as an optional
benefit under Medicaid.
Effective date. Enactment.
Section 4011-4014. Similar provisions, except establishes
PACE as an optional benefit under Medicaid, with similar
provisions applied to Medicare.
Senate Amendment
Medicare provisions similar to Sections 10011-10014,
except:
(1) The PACE protocol would be defined to include not
only that as published April 14, 1995, but also any successor
protocol agreed upon between the Secretary and On Lok, Inc.
(2) A provision clarifies that the evaluation of a
person's health status for purposes of eligibility would be
determined by the Secretary and State administering agency in
accordance with regulations, rather than simply according to
regulations.
(3) PACE programs could not disenroll individuals on the
ground that they have engaged in noncompliant behavior, if the
behavior is related to a mental or physical condition.
(4) Capitation payments to PACE providers would be based
on payment rates established for risk-sharing HMOs under
current Medicare law (with no reference to Medicare Choice
program).
(5) PACE providers, the Secretary, and the State
administering agency would be required to cooperate jointly in
the development and implementation of health status and quality
of life outcome measures for PACE enrollees.
(6) A provision clarifies language about termination and
plans to correct deficiencies.
(7) Procedures for termination and application of
sanctions would be the same as those that apply to HMOs under
current Medicare law (with no reference to Medicare Choice
program).
(8) The Secretary could not modify or waive certain
enumerated provisions of the PACE protocol (rather than
defining these same provisions as essential elements,
objectives, and requirements of the PACE programs).
(9) The Secretary could apply to PACE providers
requirements relating to beneficiary protections and program
integrity that exist under current Medicare HMO law (with no
reference to Medicare Choice program).
(10) The Physician Payment Review Commission and the
Prospective Payment Review Commission would be required to
report on PACE until they are terminated and replaced with the
Medicare Payment Advisory Commission.
Similar provisions are included in Medicaid law.
Conference Agreement
The conference agreement includes the Senate amendment
with clarifying language and amendments. The amendments would
(1) allow PACE programs to disenroll individuals for nonpayment
of premiums (if applicable) on a timely basis or for engaging
in disruptive or threatening behavior as defined in regulations
(developed in close consultation with State administering
agencies); (2) require that a proposed disenrollment be subject
to timely review and final determination by the Secretary or by
the State administering agency (as applicable), prior to the
proposed disenrollment becoming effective; and (3) allow the
Secretary to include in regulations provisions to ensure the
health and safety of individuals enrolled in PACE programs.
(b) Social health maintenance organizations (SHMOs)
Current Law
The Deficit Reduction Act of 1984 required the Secretary
to grant 3-year waivers for demonstrations of social health
maintenance organizations (SHMOs) which provide integrated
health and long-term care services on a prepaid capitation
basis. The waivers have been extended on several occasions
since then and a second generation of projects was authorized
by OBRA 90.
House Bill
Section 10015. Requires the Secretary to extend waivers
for SHMOs through December 31, 2000, and to submit a final
report on the projects by March 31, 2001. The limit on the
number of persons served per site would be expanded from 12,000
to 36,000. The Secretary would also be required to submit to
Congress by January 1, 1999, a plan, including an appropriate
transition, for the integration of health plans offered by
first and second generation SHMOs and similar plans into the
MedicarePlus program. The report on the plan would be required
to include recommendations on appropriate payment levels for
SHMO plans, including an analysis of the extent to which it is
appropriate to apply the MedicarePlus risk adjustment factors
to SHMO populations.
Effective date. Enactment.
Section 4015. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment. The Conferees
intend that this legislation be the last such waiver extension
for both SHMO I and SHMO II sites, and that all HCFA activities
and resources previously focused on ``testing'' the SHMO
concept during the last 13 years should be shifted immediately
toward efforts to make SHMOs a permanent option available for
beneficiaries under the Medicare+Choice program.
(c) Orderly transition of municipal health service demonstration
projects
Current Law
Under a general demonstration authority, the Health Care
Financing Administration began waiving in the late 1970s
certain Medicare requirements to conduct the Municipal Health
Services Demonstration. This project has been conducted in four
cities--Baltimore, Cincinnati, Milwaukee, and San Jose. As
originally conceived, the project was intended to encourage the
use of municipal health centers, in place of more costly
hospital emergency rooms and outpatient departments, by
eliminating coinsurance and deductibles, expanding the range of
covered services, and paying the cities the full cost of
delivering services at the clinics. Waivers have been extended
several times since the inception of the project by budget
reconciliation bills.
House Bill
Section 10018. Extends the demonstration through December
31, 2000, but only with respect to persons enrolled in the
projects before January 1, 1998. The Secretary would be
required to work with each demonstration project to develop a
plan, to be submitted to the House Ways and Means and Senate
Finance Committees by March 31, 1998, for the orderly
transition of projects and project enrollees to a non-
demonstration health plan, such as a Medicaid managed care or
MedicarePlus plan. A demonstration project which does not
develop and submit a transition plan by March 31, 1998 or
within 6 months after enactment of the Act, whichever is later,
would be discontinued as of December 31, 1998. The Secretary
would be required to provide appropriate technical assistance
to assist in the transition so that disruption of medical
services to project enrollees would be minimized.
Effective date. Enactment.
Section 4018. Identical provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House provision
with a modification to specify that the demonstration would be
extended through the year 2000 only for individuals who
received at least one service during the period January 1,
1996, through the date of enactment of this Act.
(d) Community nursing organization demonstration projects
Current Law
OBRA 87 required the Secretary to conduct demonstration
projects to test a prepaid capitated, nurse-managed system of
care. Covered services include home health care, durable
medical equipment, and certain ambulatory care services. Four
sites (Mahomet, Illinois; Tucson,Arizona; New York, New York;
and St. Paul, Minnesota) were awarded contracts in September 1992, and
represent a mix of urban and rural sites and different types of health
care providers, including a home health agency, a hospital-based
system, and a large multi-specialty clinic. The community nursing
organization (CNO) sites completed development activities and
implemented the demonstration in January 1994, with service delivery
beginning February 1994.
House Bill
Section 10019. Extends the CNO demonstration for an
additional period of 2 years, and the deadline for the report
on the results of the demonstration would be not later than 6
months before the end of the extension.
Effective date. Enactment.
Section 4019. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
Chapter 3--Commissions
Bipartisan Commission on the Effect of the Baby Boom Generation on the
Medicare Program; National Bipartisan Commission on the Future of
Medicare
Sections 10721 and 4721 of House bill and Section 5021 of Senate
amendment
Current Law
No provision.
(a) Establishment; duties
House Bill
Section 10721. Establishes a commission to be known as
the Bipartisan Commission on the Effect of the Baby Boom
Generation on the Medicare Program, hereafter referred to as
``the Commission.'' It would be required to: (1) examine the
financial impact on the Medicare program of the significant
increase in the number of Medicare eligible individuals which
will occur beginning approximately in 2010 and lasting for
approximately 25 years, (2) make specific recommendations to
Congress with respect to a comprehensive approach to preserve
the Medicare program for the period during which such
individuals are eligible for Medicare; and (3) study the
feasibility and desirability of: (I) establishing an
independent commission on Medicare to make annual
recommendations on how best to match the program's structure to
available funding, (ii) an expedited process for consideration
of recommendations by Congress, and (iii) a default mechanism
to enforce congressional spending targets if Congress fails to
approve recommendations. In making its recommendations, the
Commission would be required to consider: (1) the amount and
sources of federal funds to finance Medicare, including
innovative financing methods; (2) methods used by other nations
to respond to comparable demographics; (3) modifying age-based
eligibility to correspond to that under the OASDI program; and
(4) trends in employment-related health care for retirees,
including the use of medical savings accounts and similar
financing devices;
Section 4721. Similar provision, except: (1) does not
include requirement to study feasibility of establishing a
commission to make annual recommendations, a process for
expedited consideration and a default process for meeting
spending targets; (2) includes as a consideration in making
recommendations the role Medicare should play in addressing the
needs of persons with chronic illness.
Senate Amendment
Establishes a National Bipartisan Commission on the
Future of Medicare. Includes Congressional findings that:
Medicare provides essential health care coverage, the Part A
trust fund will be bankrupt in 2001, that the fund will face
even greater solvency problems in the long run, that the
trustees have reported that Part B growth is not sustainable,
and that expeditious action is needed.
Requires the Commission to review the long-term financial
conditions of the trust funds, identify problems that threaten
their financial integrity (including the extent to which
current update indexes do not accurately reflect inflation),
and analyze potential solutions that will ensure both financial
integrity and provision of appropriate benefits. It would be
required to make recommendations concerning the following
issues: (1) restoring financial solvency and integrity through
2030; (2) establishing an appropriate financial structure for
the program as a whole; (3) establishing the appropriate
balance of benefits and beneficiary contributions; (4)
financing graduate medical education; (5) feasibility of
allowing those between age 62 and the Medicare eligibility age
to buy into the program; (6) impact of chronic disease and
disability trends on the future costs and quality of services
under the current system and (7) time periods during which
recommendations under (1) (2), and (3) should be implemented.
Conference Agreement
The conference agreement includes the Senate amendment
with modifications. The provision does not include
Congressional findings and modifies the required duties. The
Commission, in identifying the problems threatening the
program's financial integrity, would berequired to include the
financial impact of the increase in the number of beneficiaries that
will occur beginning in 2010. The Commission would be required to
analyze methods used by other nations to respond to comparable
demographic patterns and trends in employment-related health care for
retirees. The Commission would be required to make recommendations on
modifying the age-based eligibility criteria to conform to that
applicable for social security. It would further be required to make
recommendations regarding a comprehensive approach to preserve the
program.
The charge to the Bipartisan Commission includes a
responsibility for making recommendations regarding the
financing of graduate medical education. The Conferees intend
that such recommendations address the graduate training of all
health professions that currently receive Medicare funds, such
as nurses and certain allied health professions, as well as
other health professions that do not receive Medicare support
but who receive graduate clinical training in hospitals, such
as psychologists and physician assistants.
(b) Membership; administration
House Bill
Section 10721. Specifies that the Commission would be
composed of 15 voting members, 6 appointed by the Majority
Leader of the Senate in consultation with the Minority Leader,
of whom no more than 4 are of the same party; 6 by the Speaker
of the House, after consultation with the Minority Leader, of
whom no more than 4 are in the same party; and 3 ex officio
members of the Board of Trustees of the Federal Hospital
Insurance Trust Fund and of the Federal Supplementary Medical
Insurance Trust Fund who are Cabinet-level officials. The
provision spells out the appointment of a chair and vice chair,
appointment of staff and consultants, compensation, the
procedure for filling vacancies, and requirements relating to
meetings and quorums.
Authorizes the Chairman, in consultation with the vice
chairman, to appoint an advisory panel. Upon request of the
Commission, the Comptroller General would be required to
conduct such studies or investigations as the Commission
determined were needed to carry out its duties. The Director of
the Congressional Budget Office (CBO) would be required to
provide the Commission with cost estimates, and CBO would be
compensated for such estimates. The Commission would be
authorized to detail to it employees of federal agencies, and
to obtain technical assistance and information from federal
agencies.
Section 4721. Identical provision.
Senate Amendment
Specifies that the Commission would be composed of 15
voting members, 3 appointed by the President; 6 appointed by
the Majority Leader of the Senate in consultation with the
Minority Leader, of whom no more than 4 are of the same party;
and 6 by the Speaker of the House, after consultation with the
Minority Leader, of whom no more than 4 are in the same
political party.
Requires the Comptroller General to advise on methodology
to be used in identifying problems and analyzing potential
solutions. The provision spells out the appointment of a
chairperson, terms of appointment, appointment of staff and
consultants, and use of other resources.
Conference Agreement
The conference agreement includes the Senate provision
with amendments. It would increase the number of total members
to 17. One of the additional members would be appointed by the
President (for a total of four appointed by the President). The
other additional member, who would serve as Chairman of the
Commission, would be appointed jointly by the President,
Majority Leader of the Senate, and the Speaker of the House.
The Commission would be appointed by December 1, 1997.
The agreement would require the CBO or the Chief Actuary
of HCFA to provide cost estimates to the Commission upon
request of the Commission. CBO, but not the Chief Actuary,
would be compensated for such estimates. The agreement also
would modify the role of the Comptroller General to specify
that the GAO would conduct studies or investigations at the
request of the Commission. The conference agreement includes
further clarifying language.
(c) Reports
House Bill
Section 10721. Requires Commission to submit to Congress
a report, no later than May 1, 1999, containing its findings
and recommendations regarding how to protect and preserve the
Medicare program in a financially solvent manner until 2030
(or, if later, throughout a period of projected solvency of the
Federal Old-Age and Survivors Insurance Trust Fund). The report
would be required to include detailed recommendations for
legislative initiatives with respect to how to accomplish this
objective.
Requires submission of report within 12 months of
enactment regarding feasibility and desirability of
establishing a commission to make annual recommendations, a
process for expedited consideration and a default process for
meeting spending targets. If considered feasible and desirable,
the report would recommend specific legislative changes.
Section 4701. Does not include requirement for second
report.
Senate Amendment
Requires submission of a report to the President and
Congress within one year of enactment which contains detailed
statement of recommendations, findings, and conclusions.
Conference Agreement
The conference agreement includes the Senate amendment
with an amendment. The report would be due by March 1, 1999. It
would include a detailed statement of only those
recommendations, findings, and conclusions of the Commission
that receive approval of at least 11 members of the Commission.
(d) Appropriation; termination
House Bill
Section 10721. Provides for termination 30 days after the
date of submission of the mandated report. An amount of $1.5
million would be authorized to be appropriated; 60% would be
payable from the Federal Hospital Insurance Trust Fund and 40%
from the Federal Supplementary Medical Insurance Trust Fund.
Effective Date. Enactment.
Section 4721. Identical provision.
Senate Amendment
Provides for termination 30 days after the date of
submission of the mandated report. Such sums as necessary would
be authorized to be appropriated; amounts would be payable in
equal parts from the Federal Hospital Insurance Trust Fund and
the Federal Supplementary Medical Insurance Trust Fund.
Effective Date. Enactment.
Conference Agreement
The conference agreement includes the House bill.
Medicare Payment Advisory Commission
Sections 10021 and 4021 of House bill and Section 5022 of Senate
amendment
Current Law
The Prospective Payment Assessment Commission was
established by Congress through the Social Security Act
Amendments of 1983 (P.L. 98-21). The Commission is charged with
reporting each year its recommendation of an update factor for
PPS payment rates and for other changes in reimbursement
policy. It is also required each year to submit a report to
Congress which provides background information on trends in
health care delivery and financing. The Physician Payment
Review Commission was established by the Congress through the
Consolidated Omnibus Budget Reconciliation Act of 1985 (P.L.
99-272). It was charged with advising and making
recommendations to the Congress on methods to reform payment to
physicians under the Medicare program. In subsequent laws,
Congress mandated additional responsibilities relating to the
Medicare and Medicaid programs as well as the health care
system more generally.
The law specified that both Commissions were to be
appointed by the Director of the Office of Technology
Assessment and funded through appropriations from the Medicare
trust funds. In 1995, the Office of Technology Assessment was
abolished. In May 1997, P.L. 105-13 was enacted; this
legislation extended the terms of those Commission members
whose terms were slated to expire in 1997 to May 1, 1998.
House Bill
Section 10021. Establishes the Medicare Payment Advisory
Commission (hereafter referred to as the Commission) to review
and make recommendations to Congress concerning payment
policies under Medicare. The Commission would be required to
submit a report to Congress by March 1 of each year (beginning
in 1998) containing the results of its reviews of payment
policies and its recommendations concerning such policies. By
June 1 of every year it would be required to submit a report
containing an examination of issues affecting Medicare,
including implications of changes in health care delivery in
the U.S. and in the market for health care services on
Medicare.
Charges Commission with the following specific review
responsibilities with respect to the MedicarePlus program: (1)
the methodology for making payments to the plans, including the
making of differential payments and the distribution of
differential updates among different payment areas; (2) the
risk adjustment mechanisms and the need to adjust such
mechanisms to take into account health status; (3) the
implications of risk selection among MedicarePlus organizations
and between the MedicarePlus option and the Medicare fee-for-
service option; (4) in relation to payment under MedicarePlus,
the development and implementation of quality assurance
mechanisms for those enrolled with MedicarePlus organizations;
(5) the impact of the MedicarePlus program on beneficiary
access to care; and (6) other major issues in implementation
and further development of the MedicarePlus program.
Requires Commission to review payment policies under
Medicare Parts A and B fee-for-service system, including: (1)
factors affecting expenditures in different sectors, including
the process for updating hospital, skilled nursing facility,
physician, and other fees; (2) payment methodologies; and (3)
the relationship of payment policies to access and quality of
care. It would also review the effect of Medicare payment
policies on the delivery of health care services not provided
under Medicare and assess the implications of changes in the
health services market on Medicare.
Requires Commission to evaluate required reports on
payment policies submitted by the Secretary to Congress (or a
committee of Congress). The Commission would be required to
submit a report on the evaluation within 6 months of the
Secretary's report. The Commission would also be required to
consult with the Chairmen and ranking Members of the
appropriate committees ofCongress (House Ways and Means, House
Commerce, and Senate Finance) regarding its agenda. The Commission
would be authorized to submit from time to time other reports as
requested by such Chairmen and Members and as it deemed appropriate.
The reports would be made public.
Specifies that the Commission would be composed of 19
members appointed by the Comptroller General, with the first
appointments being made by September 30, 1997. These members
would have to meet specific qualifications (such as national
recognition for their expertise). Commission membership would
consist of a broad mix of different professionals, a broad
geographic representation, and a balance between urban and
rural representatives. It would include representatives of
consumers and the elderly. Health care providers could not
constitute a majority of the membership. Commissioners would
serve for 3-year staggered terms. The provision would include a
mechanism for filling vacancies, compensating commissioners,
appointing a chair and vice chair; convening meetings; and
providing for the executive director and other staff, experts,
and consultants. The Commission would be authorized to secure
directly from any department or agency information to carry out
these provisions. It would be required to collect and assess
information (which would be available on an unrestricted basis
to GAO). The Commission would be subject to periodic audit by
GAO.
Requires the Commission to submit appropriations requests
in the same manner as the Comptroller General does; however,
the amounts appropriated for each would be separate. It would
authorize such sums as may be necessary to be appropriated from
the Medicare trust funds (60% from Part A and 40% from Part B).
Effective Date. Requires the Comptroller General to first
provide for appointment of members of the Commission (to be
known as MedPAC) by not later than September 30, 1997. As
quickly as possible after they were first appointed, the
Comptroller General (in consultation with ProPac and PPRC)
would provide for termination of these entities. As of that
date, ProPac and PPRC would be abolished. To the extent
possible, the Comptroller General would be required to provide
for the transfer to the new commission assets and staff of the
former commissions without any loss of benefits or seniority by
virtue of such transfers. Fund balances available to the former
commissions would be transferred to the new commission. MedPAC
would be responsible for the preparation and submission of
reports required by law to be submitted (and which had not been
submitted by the time it was established) by the former
commissions.
Section 4021. Similar provision except: (1) does not
include requirement for June report; (2) adds requirement for
examination of Medicare issues to March report; (3) adds to
review requirement for MedicarePlus an examination of
appropriate role for Medicare program in addressing needs of
individuals with chronic illnesses; (4) specifies that
Commission is composed of 11 members; (5) does not eliminate
requirement for PPRC review of Secretary's update
recommendation; and (6) does not eliminate required quarterly
reporting by Secretary to PPRC.
Effective Date. Same as Section 10021.
Senate Amendment
Identical to Section 10021, except Commission composed of
15 members.
Conference Agreement
The conference agreement includes the Senate amendment.
Chapter 4--Medigap Protections
Medigap Protections
Sections 10031 and 4031 of House bill and Section 5031 of Senate
amendment
Current Law
Medigap is the term used to describe individually-
purchased Medicare supplement policies. In 1990, Congress
provided for a standardization of Medigap policies; the
intention was to enable consumers to better understand policy
choices. Implementing regulations generally limit the number of
different types of Medigap plans that can be sold in a state to
no more than 10 standard benefit plans; these are known as
Plans A through J. The Plan A standardized package covers a
basic benefits package. Each of the other nine plans includes
the basic benefits plus a different combination of additional
benefits.
All insurers offering Medigap policies are required to
offer a 6-month open enrollment period for persons turning age
65. This is known as guaranteed open enrollment. There is no
guaranteed open enrollment provision for the under-65 disabled
population.
At the time insurers sell a Medigap policy, whether or
not during an open enrollment period, they are permitted to
limit or exclude coverage for services related to a preexisting
health condition; such exclusions cannot be imposed for more
than 6 months. An individual who has met the preexisting
condition limitation in one Medigap policy does not have to
meet the requirement under a new policy for previously covered
benefits. However, an insurer could impose exclusions for newly
covered benefits.
Federal requirements for open enrollment and limits on
preexisting condition exclusions are designed to insure
beneficiaries have access to Medigap protection. However,
persons who disenroll (or wish to disenroll) from managed care
plans and move back into fee-for-service Medicare may not have
the same access to Medigap coverage as those who join during
the open enrollment period.
(a) Guaranteed issue without preexisting conditions for continuously
covered individuals
House Bill
Section 10031. Guarantees issuance of a Medigap ``A'',
``B'', ``C'', or ``F'' policy without a pre-existing condition
exclusion for certain continuously covered individuals. The
insurer also would be prohibited from discriminating in the
pricing of such policy on the basis of the individual's health
status, claims experience, receipt of health care, or medical
condition. The following persons would be covered under the
guaranteed issuance provision:
(i) Individuals enrolled under an employee welfare
benefit plan that provides benefits supplementing Medicare and
the plan terminates or ceases to provide such benefits.
(ii) Persons enrolled with a MedicarePlus organization
who discontinue under circumstances permitting disenrollment
other than during an annual election period. (These include:
(1) the termination of the entity's certification, (2) the
individual moves outside of the entity's service area; or (3)
the individual elects termination due to cause.)
(iii) Persons enrolled with a risk or cost contract HMO,
a similar organization operating under a demonstration project
authority, a Medicare SELECT policy, and enrollment ceases for
the reasons noted above, and in the case of a SELECT policy,
there is no applicable provision in state law for continuation
of such coverage.
(iv) Individuals enrolled under a Medigap policy and
enrollment ceases because of the bankruptcy or insolvency of
the issuer, or because of other involuntary termination of
coverage and there is no provision under applicable state law
for the continuation of such coverage.
(v) An individual who: (1) was enrolled under a Medigap
policy; (2) subsequently terminates such enrollment and enrolls
with a MedicarePlus organization, a risk or cost contract HMO,
a similar organization operating under a demonstration project
authority, or a Medicare SELECT policy; and (3) terminates such
enrollment within 6 months (or within 3 months beginning in
2003), but only if the individual was never previously enrolled
with such an entity.
Specifies that at the time of the event which results in
the cessation of enrollment or loss of coverage, the
organization, insurer, or plan administrator (whichever is
appropriate) would notify the individual of his or her rights
and the obligations of issuers of Medigap policies. The
individual must seek to enroll under the Medigap ``A'', ``B'',
``C'', or ``F'' policy not later than 63 days after termination
of other enrollment and provide evidence of the date of
termination or disenrollment along with the application for
such Medicare supplemental policy. Individuals who re-enroll
with a Medigap plan after the one time test specified in (v)
above could re-enroll in the same Medigap policy (if still
available from the same issuer) as they had before trying
MedicarePlus.
Section 4031. Similar provision. Adds an additional
category of persons for whom the guaranteed issue applies.
These are persons who terminate such first time enrollment
(occurring in 2002 or later) with an organization described in
(v) above during the next coordinated annual coordinated
election period.
Senate Amendment
Similar to Section 10031, except: (1) specifies that for
persons described in (v) the enrollment is terminated during
the first 12 months of enrollment; (2) includes an additional
category of persons defined as those who upon first becoming
eligible at age 65 enroll in a Medicare Choice plan and
disenroll from such plan within 12 months; (3) specifies that
guaranteed issue is for a policy of comparable or lesser
benefits to that under the prior plan or policy, except for
those described in (2) above for which guaranteed issue is for
any Medigap policy; (4) does not include reference to states
which offer benefit packages other than A through J and (5)
refers to Medicare Choice.
Conference Agreement
The conference agreement includes the House bill as
contained in Section 10031 with modifications. For individuals
described in item (v) the subsequent enrollment may be
terminated by the enrollee during any 12 month period (during
the first 12 months of enrollment) during which the individual
is permitted to terminate such subsequent enrollment.
The agreement adds an additional category of persons to
those guaranteed issuance of Medigap policies. These are
individuals who upon first becoming eligible for Medicare at
age 65, enroll in a Medicare+Choice plan, and disenroll from
such plan within 12 months of the effective date of such
enrollment. For these persons, the guaranteed issue would be
for any type of Medigap policy.
The agreement includes additional clarifying language.
(b) Limitation on imposition of preexisting condition exclusion during
initial open enrollment period
Section 10031. Limits the application of a preexisting
condition exclusion during the initial 6-month open enrollment
period. Specifically, such an exclusion could not be imposed on
an individual who, on the date of application, had a continuous
period of at least 6 months of health insurance coverage
defined as ``creditable coverage'' under the Health Insurance
Portability and Accountability Act (HIPAA). If the individual
had less than 6 months coverage, the policy would reduce the
period of any pre-existing exclusion by the aggregate of
periods of ``creditable coverage'' applicable to the individual
as of the enrollment date. The rules used to determine the
reduction would be based on rules used under HIPAA.
Section 4031. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment with
clarifying language.
(c) Extending six month initial enrollment period to non-elderly
beneficiaries
House Bill
No provision.
Senate Amendment
Extends guaranteed issue period to disabled persons who
enroll during the first six months they are entitled to Part A
benefits.
Conference Agreement
The conference agreement does not include the Senate
amendment.
(d) Effective date
House Bill
Section 10031. Guaranteed issue effective July 1, 1998.
Limit on preexisting exclusion applies to policies issued on or
after July 1, 1998. In general, a state would not be deemed out
of compliance due solely to failure to make changes before 1
year after the date the National Association of Insurance
Commissioners (NAIC) or Secretary made changes in its
regulations. A longer time may be permitted if a state requires
legislation. The NAIC would be given 9 months to modify its
regulations to conform to the new requirements. If the NAIC,
did not make the changes within this time, the Secretary would
make the appropriate modification in the regulations.
Section 4031. Identical provision.
Senate Amendment
Effective Date. Similar provision. Guaranteed issuance
for disabled applies to policies issued on or after July 1,
1998. Disabled persons enrolled before that date would have a
six-month guaranteed issue period beginning July 1, 1998;
before that date the Secretary would notify them of their
rights.
Conference Agreement
The conference agreement includes the House bill with
clarifying language.
Addition of High Deductible Medigap Policy
Section 5032 of Senate amendment
Current Law
In 1990, Congress provided for a standardization of
Medigap policies. Implementing regulations generally limit the
number of different types of Medigap plans that can be sold in
a state to no more than 10 standard benefit plans; these are
known as Plans A through J. The Plan A standardized package
covers a basic benefits package. Each of the other nine plans
includes the basic benefits plus a different combination of
additional benefits. All 10 plans cover Part A and Part B
coinsurance; all but Plan A cover the Part B deductible; and
three (including the most popular) include the part B
deductible.
House Bill
No provision.
Senate Amendment
Authorizes States to allow at least one high deductible
Medigap policy. The high-deductible policy would offer one of
the benefit packages included in one of the ten standardized
plans. In addition, it would require the beneficiary to pay
annual out-of-pocket expenses (not including the premium) of
$1,500 before the policy begins paying benefits.
Effective Date. One year after enactment, except that a
longer time permitted where state legislation is required.
Conference Agreement
The conference agreement includes the Senate amendment
with an amendment. Under the agreement the high deductible plan
must either be classified as Plan F or Plan J, except that it
has a high deductible feature. The high deductible amount would
be $1,500 in 1998 and 1999, increased by the CPI in subsequent
years. The beneficiary would be responsible for payment of
expenses up to this amount; the policy would pay 100% of
covered out-of-pocket expenses once the deductible had been
met. The provision would be effective on enactment, with delay
permitted where state legislation required.
Chapter 5.--Demonstrations
Medicare Prepaid Competitive Pricing Demonstration Project
Sections 10032 and 4032 of House bill and sections 5041-5044 of the
Senate amendment
(a) Establishment of project
current law
Under section 402 of the Social Security Amendments of
1967 (P.L. 90-248, 42 U.S.C. 1395b-1), the Secretary is
authorized to develop and engage in experiments and
demonstration projects for specified purposes, including to
determine whether, and if so, which changes in methods of
payment or reimbursement for Medicare services, including a
change to methods based on negotiated rates, would have the
effect of increasing the efficiency and economy of such health
services. Under this authority, HCFA is seeking to demonstrate
the application of competitive bidding as a method for
establishing payments for risk contract HMOs in the Denver
area. HCFA's actions have been challenged in the courts.
house bill
Section 10032. Requires the Secretary to provide, no
later than one year after enactment, for implementation of a
project to demonstrate the application of, and the consequences
of applying, a market-oriented pricing system for the provision
of a full range of Medicare benefits in several geographic
areas.
Section 4032. Identical provision.
senate amendment
Requires the Secretary, beginning January 1, 1999, to
conduct demonstration projects in applicable areas for the
purpose of: (I) applying a pricing methodology for payments to
Medicare Choice organizations that use the competitive market
approach described in this provision; (ii) applying a benefit
structure and beneficiary premium structure described in this
provision; (iii) applying information and quality programs
specified herein; and (iv) evaluating the effects of this
methodology and these structures to Medicare FFS.
conference agreement
The conference agreement includes the Senate amendment,
with modifications. It requires that the Secretary of HHS
establish up to seven demonstration projects.
(b) Research design advisory committee
house bill
Section 10032. Before implementing the project, the
Secretary would be required to appoint a national advisory
committee, including independent actuaries and individuals with
expertise in competitive health plan pricing, to recommend to
the Secretary the appropriate research design for implementing
the project, including the method for area selection, benefit
design among plans offered, structuring choice among health
plans offered, methods for setting the price to be paid to
plans, collection of plan information, information
dissemination, and methods of evaluating the results of the
project. Upon implementation of the project, the Committee
would continue to advise the Secretary on the application of
the design in different areas and changes in the project based
on experience with its operations.
Section 4032. Identical provision.
senate amendment
Requires the Secretary to appoint a technical advisory
group, composed of representatives of Medicare Choice
organizations, beneficiaries, employers and others in affected
areas who have technical expertise relative to the design and
implementation of the project to advise the Secretary
concerning how the project would be implemented in the area.
conference agreement
The conference agreement includes the House provision,
with modifications. The Competitive Pricing Advisory Committee
would make initial recommendations regarding the method for
area selection, benefit design, structuring choice, etc. Upon
implementation of the project, the Committee would continue to
advise the Secretary on the application of the design in the
different areas and changes in the project based on experience
with its operations. Notwithstanding section 9(c) of the
Federal Advisory Committee Act, the Committee could meet as
soon as members were appointed. The Committee would terminate
December 31, 2004.
Upon the designation of an area, the Secretary would be
required to appoint an area advisory committee, composed of
representatives of health plans, providers, and Medicare
beneficiaries in the area, to advise the Secretary concerning
how the project would be implemented in the area.
Notwithstanding section 9(c) of the Federal Advisory Committee
Act, these committees could meet as soon as members were
appointed.
(c) Area selection
house bill
Section 10032. Taking into account the national advisory
committee's recommendations, the Secretary would be required to
designate demonstration areas. Upon such designation, the
Secretary would be required to appoint an area advisory
committee, composed of representatives of health plans,
providers, and beneficiaries in each demonstration area. The
committee could advise the Secretary on marketing and pricing
of plans in the area, and other relevant factors.
Section 4032. Identical provision.
senate amendment-
The applicable area would be determined by the Secretary
and would mean 10 urban areas with respect to which less than
25% of beneficiaries enrolled with an eligible organization
under section 1876 and 3 rural areas. Any applicable area would
be treated as a Medicare Choice payment area.-
conference agreement
The conference agreement includes the House bill with a
modification. The Secretary would designate, in accordance with
recommendations of the Competitive Pricing Advisory Committee,
up to 7 Medicare payment areas in which the project would be
conducted. The Committee would be required to recommend to the
Secretary the designation of 4 specific areas to be included.
Such recommendations would have to be made to ensure that
payments under the project in 2 areas would begin on January 1,
1999 and in 2 areas on January 1, 2000. Of the 4 areas
recommended, 3 would have to be in urban areas and 1 in a rural
area. By December 31, 2001, the Committee could recommend to
the Secretary the designation of up to 3 additional payment
areas to be included in the project.
Subject to consultation with the area advisory committee,
the Secretary would, for each Medicare payment area designated
in accordance with the recommendations of the Competitive
Pricing Advisory Committee: (I) establish the benefit design
among plans offered in the area, (ii) structure the method for
selecting plans offered in the area, and (iii) in consultation
with the Committee, (a) establish methods for setting the price
to be paid to the plans, including the rewarding and penalizing
Medicare+Choice plans on the basis of the attainment of, or
failure to attain, applicable quality standards, and (b)
provide for the collection of plan information, information
dissemination, and methods for project evaluation.
The aggregate payments under the project for any
designated area could not exceed the aggregate payments that
would have been made under Medicare if the project had not been
conducted.
(d) Monitoring and report/evaluation
house bill
Section 10032. Taking into consideration the
recommendations of the advisory committee (established under
(b)), the Secretary would be required to closely monitor the
impact of projects in areas on the price and quality of, and
access to, Medicare covered services, choice of plans, changes
in enrollment, and other relevant factors. The Secretary would
be required to periodically report to Congress on project
progress.
Section 4032. Identical provision.
senate amendment
Not later than December 31, 2001, the Secretary would be
required to submit to the President a report regarding the
demonstration projects conducted under this section. The report
would have to include the following: (I) a description of the
demonstration projects; (ii) an evaluation of the effectiveness
of the demonstration projects and any legislative
recommendations determined appropriate by the Secretary; (iii)
any other information regarding the demonstration projects that
the Secretary determines to be appropriate; (iv) an evaluation
as to whether the method of payment under section 5042 (see
below) used in the demonstration projects for payment to
Medicare Choice plans should be extended to the entire Medicare
population and if such evaluation determines that such method
should not be extended, legislative recommendations to modify
such method so that it may be applied to the entire Medicare
population.
Requires the President to report to the Congress and if
the President determines appropriate, any legislative
recommendations for extending the project to the entire
Medicare population.
conference agreement
The conference agreement includes the Senate provision
with a modification. Taking into consideration the
recommendations of the Competitive Pricing Advisory Committee
and the area advisory committees, the Secretary would be
required to closely monitor and measure the impact of the
project in the different areas on the price and quality of, and
access to, Medicare covered services, choice of health plans,
changes in enrollment, and other relevant factors. By December
31, 2002, the Secretary would be required to submit to Congress
a report on the progress of the project, including a comparison
of the matters noted above among the different designated
areas. Such report could include legislative recommendations
for extending the project to the entire Medicare population.
(e) Waiver authority
Section 10032. Authorizes the Secretary to waive such
requirements of section 1876 (relating to Medicare risk, cost,
and HCPP plans) and of MedicarePlus as may be needed to carry
out the demonstration project.
Section 4032.--Identical provision.-
senate amendment
Authorizes the Secretary to waive compliance with the
requirements of titles XI, XVIII (Medicare), and XIX (Medicaid)
of the Social Security Act to such extent and for such period
as the Secretary determines is necessary to conduct
demonstration projects.
conference agreement
The conference agreement includes the Senate amendment
with a modification to provide that only the requirements of
title XVIII would be waived.
(f) Relationship to other authority
house bill
Section 10032 (new section 1854(a)).--No provision.
Section 4032.--Except as specified above, the Secretary
would be prohibited fromconducting or continuing any ongoing
demonstration project (i.e., the Denver demonstration) designed to
demonstrate competitive bidding as an alternative to paying plans on
the basis of the AAPCCs (as specified under current law) or the
Medicare Plus capitation rates (as established under new Section 1853
of the provision).
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House provision
with a modification providing that the Secretary could not
conduct or continue any related demonstration project on the
basis of a competitive bidding process or pricing system (as
described above) other than on the basis described in this
section of the legislation.
(g) Determination of annual Medicare Choice capitation rates
House Bill
Section 10032. No provision.
Section 4032. No provision.
Senate Amendment-
Provides that for a Medicare Choice payment area within
which a demonstration project is being conducted, the annual
Medicare Choice capitation rate would be the standardized
payment amount determined under this section rather than the
amount determined under section 1853.
Not later than June 1 of each calendar year, each
Medicare Choice organization offering one or more Medicare
Choice plans in an applicable Medicare Choice payment would be
required to file with the Secretary a bid which contained the
amount of the monthly premium for coverage under each such
Medicare Choice plan. The premiums charged by a Medicare Choice
plan sponsor under this part could not vary among individuals
who reside in the same applicable Medicare Choice payment area.
After bids were submitted, the Secretary could negotiate
with Medicare Choice organizations to modify such bids if the
Secretary determined that the bids did not provide enough
revenues to ensure the plan's actuarial soundness, were too
high, or met other conditions. Not later than July 31 of each
calendar year (beginning with 1998), the Secretary would
determine and announce a standardized payment amount the
following calendar year for each applicable Medicare Choice
payment area.
The standardized payment amount for a calendar year after
1998 for any applicable Medicare Choice payment area would be
equal to the maximum premium. The maximum premium for any
applicable Medicare Choice payment area would be equal to the
weighted average bid price (disregarding certain plans) but in
no case would the amount be greater than the sum of: (I) the
average per capita amount, as determined by the Secretary as
appropriate for the population eligible to enroll in Medicare
Choice plans in such payment area, for such calendar year that
the Secretary would have expended for an individual in such
payment area enrolled under Medicare FFS plus (ii) the amount
equal to the actuarial value of deductibles, coinsurance, and
copayments charged an individual for services provided under
the Medicare FFS. Payments to plans would be adjusted for
specified risk factors (e.g., age and disability status). PPRC
and ProPAC would be required to develop recommendations on the
risk factors to adjust payments by January 1, 1999 and report
such to Congress in their respective annual reports.
The Secretary would make monthly payments to plan
sponsors from the HI and SMI trust funds equal to \1/12\ of the
specified payment amounts. These would be the lesser of: (I)
the standardized payment amount for the applicable Medicare
Choice payment area, as adjusted for the individual's risk
factors, or (ii) the premium charged by the plan for such
individual, as adjusted for such individual, minus the amount
such individual paid to the plan pursuant to section 5043
(relating to 10 percent of the premium). A physician or other
entity (other than a provider of services) that did not have a
contract with a Medicare Choice organization would have to
accept as payment in full for services to such an individual
the amounts that the physician or other entity could collect if
the individual were in Medicare FFS.
An Office of Competition would be established in the
Department of HHS. The Secretary would be required to appoint a
director of the office who would administer the competitive
demonstration. Requires the Secretary, to the maximum extent
feasible, to enter into contracts with appropriate non-Federal
entities to carry out related activities.
conference agreement
The conference agreement does not include the Senate
amendment.
(h) Benefits and beneficiary protections
Section 10032. No provision.
Section 4032. No provision.
senate amendment
Requires each Medicare Choice plan in an applicable
Medicare Choice payment area to provide those items and
services covered under Medicare FFS, subject to nominal
copayments as determined by the Secretary, prescription drugs,
subject to such limits as established by the Secretary, and
such additional health services as the Secretary may approve.
Supplemental benefits.--Each Medicare Choice plan could
offer any of the optional supplemental benefit plans specified
to an individual enrolled in the basic benefit plan for an
additional premium amount. Such benefits may be marketed and
sold by the Medicare Choice organization outside of the
enrollment process described in part C. The provision limits
the premiums that could be charged for supplemental benefits.
Premium Requirements for Beneficiaries.--If an eligible
individual enrolled in a MedicareChoice demonstration plan, the
individual would be required to pay the following premium
differentials: (I) 10 percent of the plan's premium; (ii) if the
premium of the plan was higher than the standardized payment amount,
100% of such difference; and (iii) an amount equal to cost-sharing
under Medicare FFS, except that such amount could not exceed the
actuarial value of the deductibles and coinsurance less the actual
value of nominal copayments for the plan's basic benefits. An
individual enrolled in a Medicare Choice demonstration plan could not
be required to pay the Part B premium.
conference agreement
The conference agreement does not include the Senate
amendment.
(I) Information and quality standards
House Bill
Section 10032. No provision.
Section 4032. No provision.
Effective Date.--
Section 10032. Enactment.
Section 4032. Identical.-
senate amendment
A. Information requirements.--Requires the Secretary to
provide that the following information and cooperative reports
be used in the competitive pricing demonstration instead of
those required under the Medicare Part C established by this
legislation. Specifies requirements for the communication of
notice and informational materials. The information required
would include: (I) general information (e.g., Part B premium
rates, cost-sharing, benefits, how to enroll, etc.), and (ii) a
copy of the most recent comparative plan report for the
demonstration plans in the individual's payment area. This
report would provide easily understood comparison information
on the plan's service area, coverage of emergency services,
cost-sharing, disenrollment rates, quality information,
information on access, utilization review procedures, premium
prices, out-of-network providers, and additional specified
information. This information would have to be updated
annually. Plans would be required to help share in the
estimated costs incurred by the Secretary in preparing
information.
B. Quality demonstration plans.--Provides definitions of
comparative report, director, Medicare, demonstration plan, and
demonstration plan sponsor.
Establishes a Quality Advisory Institute to recommend to
the Director licensing and certification criteria and
comparative measurement methods. Provides for the membership,
duties, terms, and other aspects of the institute.
Establishes the duties of the Director of the Quality
Advisory Institute, which would include adopting criteria for
licensing of certifying entities, issuing licenses, developing
comparative health care measures, etc.
Provides that by January 1, 1999, the Director ensure
that no demonstration plan be offered, contracted with, or
reimbursed unless it has been certified in accordance with the
requirements of this provision.
Requires that the director of the Quality Advisory
Institute establish a program under which payments are made to
various demonstration plans to reward such plans for meeting or
exceeding quality targets. The Director would be required to
establish broad categories of quality targets and performance
measures. The Director would be required to withhold 0.50% from
any payment that a demonstration plan sponsor received with
respect to an enrolled beneficiary and to use such amounts to
make annual payments to plans that have been determined to meet
or exceed the quality targets and performance measures. Excess
funds would be applied to deficit reduction. Specified the
amount of payment.
Requires a plan to participate in the certification
process described above. Specifies procedures in the event of a
plan merger or purchase and treatment of new plans.
Requires the Director to develop procedures for the
licensing of entities to certify demonstration plans.
Requires the Director to establish minimum criteria to be
used by licensed certifying entities in the certification of
demonstration plans and establishes requirements for the
criteria.
Requires the Director to develop grievance and appeals
procedures under which a demonstration plan that is denied
certification may appeal such denial to the director.
Effective date.--Enactment.
conference agreement
The conference agreement does not include the Senate
amendment.-
The effective date for the demonstration projects would
be enactment.--
Medicare Enrollment Demonstration Project
Section 5045 of Senate amendment
current law
No provision.
House Bill
No provision.-
Senate Amendment
Requires the Secretary to implement a demonstration
project to evaluate the use of a third-party contractor to
conduct the Medicare Choice plan enrollment and disenrollment
functions, as described in Medicare Part C, Medicare Choice,
established under this provision.
Before implementing the project, the Secretary would be
required to consult with affected parties on the: (I) design of
the project; (ii) selection criteria for the third-party
contractor; and (iii) establishment of performance standards.
The Secretary would be required to establish performance
standards for the accuracy and timeliness of the Medicare
Choice plan enrollment and disenrollment functions performed by
the third-party contractor. If the Secretary determined that a
third-party contractor was out of compliance with the
performance standards, the enrollment and disenrollment
functions would be performed by the Medicare Choice plan until
the Secretary appointed a new third-party contractor. In the
event that there was a dispute between the Secretary and a
Medicare Choice plan regarding whether or not the third-party
contractor was in compliance, such enrollment and disenrollment
functions would be performed by the Medicare Choice plan.
The Secretary would be required to periodically report to
Congress on the progress of the project.
The Secretary would be required to waive compliance with
the requirements of Medicare Choice to such extent and for such
period as the Secretary determined was necessary to conduct the
project.
The demonstration project would be conducted for a 3-year
period. This project would be conducted separately from any
other demonstration.
Effective date.--Enactment.
Conference Agreement
The conference agreement includes the Senate amendment
except that the provision relating to disputes between the
Secretary and a Medicare Choice plan regarding whether or not
the third-party contractor is in compliance is not included.
Medicare Coordinated Care Demonstration Project
Section 5046 of Senate amendment
Current Law
No provision.-
House Bill
No provision.-
Senate Amendment
Requires the Secretary to establish a demonstration
program to evaluate methods such as case management and other
models of coordinated care that improve the quality of care and
reduce Medicare expenditures for beneficiaries with chronic
illnesses enrolled in traditional Medicare.
The Secretary would be required to examine best practices
in the private sector for coordinating care for individuals
with chronic illnesses for one year and, using the results of
the evaluation, establish at least nine demonstration projects
(6 urban and 3 rural) within 2 years of enactment.
Not later than two years after implementation (and
biannually thereafter), the Secretary would be required to
evaluate the demonstrations and submit a report to Congress.
The evaluation would have to address, at a minimum, the cost-
effectiveness of the demonstration projects, quality of care
received by beneficiaries, beneficiary satisfaction, and
provider satisfaction. If the initial evaluation showed the
demonstration projects to either reduce Medicare expenditures
or to not increase Medicare expenditures while increasing the
quality of care received by beneficiaries and increasing
beneficiary and provider satisfaction, the Secretary would
continue the projects and could expand the number of
demonstration projects.
The Secretary would be authorized to waive compliance
with existing requirements of Medicare and Medicaid to such
extent and for such period as necessary to conduct the
demonstration projects.
Such sums as necessary would be authorized to be
appropriated for the purpose of evaluating and reporting on the
demonstrations.
Effective date.--Enactment.
Conference Agreement
The conference agreement includes the Senate amendment
with modifications. The number of demonstration projects would
be 5 in urban areas, 3 in rural areas, and 1 in the District of
Columbia which is operated by a nonprofit academic medical
center that maintains a National Cancer Institute certified
comprehensive cancer center. Funding for this last project
would be available only as provided in any federal law making
appropriations for the District of Columbia. The Secretary
could waive requirements of Medicare to the extent needed to
conduct the projects.
Establishment of Medicare Reimbursement Demonstration Projects
Section 5047 of Senate amendment
Current Law
Medicare is prohibited from reimbursing for any services
provided by a federal health careprovider, unless the provider
is determined by the Secretary of Health and Human Services to be
providing services to the public generally as a community institution
or agency or is operated by the Indian Health Service. In addition,
Medicare is prohibited from making payment to any federal health care
provider who is obligated by law or contract to render services at the
public expense.
(a) Medicare subvention project for veterans
House Bill
No provision.
Senate Amendment
Authorizes a Medicare subvention project for veterans.
The Secretaries of HHS and VA would be authorized to establish
a demonstration project, under an agreement, under which the
Secretary of HHS would reimburse the Secretary of VA from the
Medicare trust funds, for Medicare health care services
furnished to certain targeted medicare-eligible veterans. The
agreement would include at a minimum: (1) a description of the
benefits to be provided to the participants; (2) a description
of the eligibility rules for participation, (3) a description
of how the demonstration would satisfy Medicare requirements;
(4) a description of the sites selected; (5) a description of
how reimbursement and maintenance of effort requirements would
be implemented; and (6) a statement that the Secretary would
have access to all data of the VA that the Secretary determined
was necessary to conduct independent estimates and audits of
the maintenance of effort requirement, the annual
reconciliation, and related matters required under the
demonstration project.
Provides that the Secretaries would establish a plan for
the selection of up to 12 medical centers under the
jurisdiction of the Secretary of VA and located in
geographically dispersed locations. The selection plan would
favor selection of those medical centers that were suited to
serve targeted medicare-eligible individuals because: (1) there
is a high potential demand by targeted medicare-eligible
veterans for their services; (2) they have sufficient
capability in billing and accounting to participate; (3) they
have favorable indicators of quality of care, including patient
satisfaction; (4) they deliver a range of services required by
targeted medicare-eligible veterans; and (5) they meet other
relevant factors identified in the plan. The Secretaries would
endeavor to include at least 1 medical center that was in the
same catchment area as a military medical facility which was
closed pursuant to either: The Defense Base Closure and
Realignment Act of 1990; or Title II of the Defense
Authorization Amendments and Base Closure and Realignment Act.
No new facilities would be built or expanded with funds from
the demonstration project. The Secretaries would conduct the
project during the 3-year period beginning on January 1, 1998.
Specifies that participation of veterans would be
voluntary, subject to the capacity of participating medical
centers and the funding limitations. Veterans who were military
retirees would be given preference at military centers near a
closed base. The Secretary of VA could establish cost-sharing
requirements. The Secretaries would be required to submit a
report 30 days prior to the start of a project.
Permits the Secretary of VA to establish and operate
managed health care plans. Any such plan would be operated by
or through a VA medical center or group of medical centers and
could include the provision of health care services through
other facilities under the jurisdiction of the Secretary of VA
as well as public and private entities under arrangements made
between them and the VA. The benefits would include at least
those covered under Medicare.
Specifies that the Secretary of VA could establish a
managed health care plan using one or more medical centers only
after submission of a report to Congress setting forth a plan
for their use. The plan could not be implemented until the
Secretary of VA received from the VA Inspector General a
certification that the plan meets specified criteria. The
Secretary would maintain necessary reserves.
Specifies that, in general, payments would equal 95% of
amounts that would otherwise be payable under Medicare for
services provided both on a capitated and non-capitated basis.
In computing payments for services provided on a non-capitated
basis the following would be excluded: (1) disproportionate
share hospital adjustment; (2) direct graduate medical
education payments; (3) 40% of indirect medical education
adjustment; and (4) 67% of any capital-related costs. In years
prior to 2001, the capitated payments would be computed as if
amounts excluded for non-capitated payments had been excluded
for determining Medicare Choice payments. Payments under the
demonstration could not exceed $50 million in any year.
Payments would be reduced to the extent that the VA failed to
maintain the effort level in effect for targeted veterans in FY
1997.
Requires the Secretaries, in consultation with the
Comptroller General, to closely monitor the expenditures made
under the medicare program for targeted medicare-eligible
veterans compared to the expenditures that would have been made
if the demonstration had not been conducted. The Comptroller
General would submit to the Secretaries and the appropriate
committees of Congress an annual report on the extent, if any,
to which Medicare costs increased during the preceding fiscal
year as a result of the demonstration. If so, the Secretaries
would be required to take steps necessary to recoup costs and
prevent future increases.
Requires the administering Secretaries to arrange for an
independent entity with expertise in the evaluation of health
services to conduct an evaluation of the demonstration project.
The entity would submit annual reports to the administering
Secretaries and to appropriate congressional committees. The
first report would be submitted not later than 12 months after
the demonstration project begins operation, and the final
report not later than 3\1/2\ years after that date. The reports
would include an assessment of: (1) the cost to the VA of
providing care to veterans under the project; (2) compliance of
participating medical centers with applicable measures of
quality of care, compared to such compliance for other
medicare-participating medical centers; (3) a comparison of the
costs of medical centers' participation in the program with the
reimbursements provided for services of such medical centers;
(4) savings or costs to medicare from the project; (5) any
change in access to care or quality of care for targeted
medicare-eligible veterans participating in the project; (6)
any effect of the project on the access to care and quality of
care for targeted medicare-eligible veterans not participating
in the project and other veterans not participating in the
project; (7) provision of services under managed health care
plans; (8) any impact on enrollment in Medicare Choice. Within
6 months of submission of the penultimate report, the
Secretaries would submit to Congress a report containing
recommendations on whether to extend the demonstration or make
it permanent; whether to expand the project to cover additional
sites and increase the maximum amount of reimbursement; and
whether terms and conditions of the project should be extended
or modified.
Conference Agreement
The conference agreement does not include the Senate
amendment. However, it does require the Secretary and the
Secretary of Veterans Affairs (in consultation with the
Secretary of Defense) to jointly submit to Congress a detailed
implementation plan for a subvention demonstration project for
veterans. The provision would require submission of the plan
within 12 months of the start of the subvention demonstration
project for military retirees; the plan would follow the DoD
model.
(b) Medicare subvention project for military retirees
House Bill
No provision.
Senate Amendment
Authorizes the Secretary of DoD and the Secretary of HHS
to establish a demonstration project (under an agreement
entered into by the administering Secretaries) under which the
Secretary of HHS would reimburse the Secretary of DoD from the
trust funds, for medicare health care services furnished to
certain medicare-eligible military retirees or dependents. The
agreement would include (1) a description of the benefits to be
provided; (2) a description of the eligibility rules for
participation; (3) a description of how the demonstration
project would satisfy Medicare requirements; (4) a description
of the sites selected; (5) a description of how reimbursement
and maintenance of effort requirements would be implemented;
and (6) a statement that the Secretary shall have access to all
data of the DoD that the Secretary determines necessary. The
project would be limited to six sites after review of all
TRICARE regions. No new military treatment facility could be
built or expanded with the funds. The project would be
conducted during the 3-year period beginning January 1, 1998.
The Inspector General of HHS could investigate any matters
regarding expenditure of funds. The administering Secretaries
would be required to submit a copy of the agreement at least 30
days prior to the start of the project.
Specifies participation is voluntary, subject to capacity
and funding limitation. Cost-sharing requirements could be
established. TRICARE enrollment fee would be waived for persons
enrolled in the managed care option of TRICARE. The minimum
benefits would include at least Medicare benefits.
Specifies that, in general, payments would equal 95% of
amounts that would otherwise be payable under Medicare for
services provided both on a capitated and non-capitated basis.
In computing payments for services provided on a non-capitated
basis the following would be excluded: indirect medical
education costs, disproportionate share costs, and direct
graduate medical education costs. In addition, the Secretaries
would determine the portion of capital-related costs to be
excluded. In years prior to 2001, the capitated payments would
be computed as if amounts excluded for non-capitated payments
had been excluded for determining Medicare Choice payments.
Specifies that the aggregate amount to be reimbursed
under the project is $55 million in 1998, $65 million in 1999,
and $75 million in 2000.
Requires the Secretaries, in consultation with the
Comptroller General, to closely monitor the expenditures made
under the medicare program for medicare-eligible military
retirees and their dependants compared to the expenditures that
would have been made if the demonstration had not been
conducted. Any participating military treatment facility would
be required to maintain the level of effort for space available
care to medicare-eligible military retirees and their
dependants. The Comptroller General would submit to the
Secretaries and the appropriate committees of Congress an
annual report on the extent, if any, to which Medicare costs
increased during the preceding fiscal year as a result of the
demonstration. If so, the Secretaries would be required to take
steps necessary to recoup costs and prevent future increases.
Requires the administering Secretaries to arrange for an
independent entity with expertise in the evaluation of health
services to conduct an evaluation of the demonstration project.
The entity would submit annual reports to the administering
Secretaries and to appropriate congressional committees. The
first report would be submitted not later than 12 months after
the demonstration project begins operation, and the final
report not later than 3\1/2\ years after that date. The reports
would include an evaluation of the demonstration project,
including the financial costs to Medicare and Defense, the
quality of care provided to military retirees, and the impact
on military readiness. Within 6 months of submission of the
final report, the Secretaries would submit to Congress a report
containing recommendations on whether to extend the
demonstration or make it permanent; whether to expand the
project to cover additional sites and increase the maximum
amount of reimbursement; and whether terms and conditions of
the project should be extended or modified.
Effective Date. Enactment.
Conference Agreement
The conference agreement includes the Senate amendment
with modifications. It would add to the minimum standards for
the agreement. The agreement would have to include a
description of any requirements waived by the Secretary. It
would also have to include a certification, provided after
review by the administering Secretaries, that any entity that
is receiving payments under the demonstration: (1) has
sufficient resources and expertise to provide the full range of
required benefits; and (2) has information and billing systems
in place to assure the accurate and timely submission of claims
for benefits and ensure timely reimbursement of providers and
practitioners. The administering Secretaries would be required
to submit a copy of the agreement to the committees of
jurisdiction at least 60 days prior to commencement of the
project.
The conference agreement would permit the Secretary to
waive Medicare requirements (or approve alternative ways of
meeting such requirements), except for the following specified
requirements relating to beneficiary protections and quality
assurance: enrollment and disenrollment, nondiscrimination,
information provided to beneficiaries, cost-sharing
limitations, appeal and grievance procedures, provider
participation, access to services, quality assurance and
external review, advance directives, and other areas of
beneficiary protections the Secretary determines are
applicable.
The agreement would clarify that the authority to modify
existing TRICARE contracts must be consistent with
Medicare+Choice.
The agreement would authorize the Secretaries of HHS and
DoD to include in the demonstration project any of the
Medicare+Choice plans (excluding unrestricted fee-for-service
plans and MSAs). The Secretary of Defense could enter an
agreement with the Medicare+Choice organization to provide
medicare services to medicare-eligible military retirees or
dependents.
The conference agreement specifies that payments under the
demonstration project would equal 95% of the amount that would
be paid to a Medicare+Choice organization for that enrollee. In
computing the amount, the following would be excluded: indirect
medical education costs, disproportionate share costs, and
direct graduate medical education costs. In addition, the
Secretaries would determine the portion of capital-related
costs to be excluded. The conference agreement would cap the
amount of total payments at $50 million in calendar 1998, $60
million in calendar 1999, and $65 million in FY 2000.
The conference agreement would provide that the independent
evaluation and reports would be conducted by the Comptroller
General. The list of items the evaluation is required to assess
would be modified. Added to the list would be any additional
elements the Comptroller General determines is appropriate to
assess. Dropped from the list are an analysis of the impact on
prescription drug costs. The agreement would further provide
that within six months of submission of the final (rather than
penultimate) report by the GAO, the Secretaries would be
required to submit their report to Congress. This report would
be required to contain recommendations concerning whether there
is a cost to Medicare in conducting the demonstration and
whether the project could be expanded without there being a
cost to Medicare or the Federal government.
Tax Treatment of Hospitals Which Participate in Provider-Sponsored
Organizations
Sec. 10041 of the House bill and sec. 5049 of the Senate amendment
Present Law
To qualify as a charitable tax-exempt organization
described in Internal Revenue Code (the ``Code'') section
501(c)(3), an organization must be organized and operated
exclusively for religious, charitable, scientific, testing for
public safety, literary, or educational purposes, or to foster
international sports competition, or for the prevention of
cruelty to children or animals. Although section 501(c)(3) does
not specifically mention furnishing medical care and operating
a nonprofit hospital, such activities have long been considered
to further charitable purposes, provided that the organization
benefits the community as a whole.
No part of the net earnings of a 501(c)(3) organization may
inure to the benefit of any private shareholder or individual.
No substantial part of the activities of a 501(c)(3)
organization may consist of carrying on propaganda, or
otherwise attempting to influence legislation, and such
organization may not participate in, or intervene in, any
political campaign on behalf of (or in opposition to) any
candidate for public office. In addition, under section 501(m),
an organization described in section 501(c)(3) or 501(c)(4) is
exempt from tax only if no substantial part of its activities
consists of providing commercial-type insurance.
A tax-exempt organization may, subject to certain
limitations, enter into a joint venture or partnership with a
for-profit organization without affecting its tax-exempt
status. Under current ruling practice, the IRS examines the
facts and circumstances of each arrangement to determine (1)
whether the venture itself and the participation of the tax-
exempt organization therein furthers a charitable purpose, and
(2) whether the sharing of profits and losses or other aspects
of the arrangement entail improper private inurement or more
than incidental private benefit.\1\
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\1\ See IRS General Counsel Memorandum 39862; Announcement 92-83,
1992-22 I.R.B. 59 (IRS Audit Guidelines for Hospitals). Even where no
prohibited private inurement exists, however, more than incidental
private benefits conferred on individuals may result in the
organization not being operated ``exclusively'' for an exempt purpose.
See, e.g., American Campaign Academy v. Commissioner, 92 T.C. 1053
(1989).
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House Bill
The provision provides that an organization does not fail
to be treated as organized and operated exclusively for a
charitable purpose for purposes of Code section 501(c)(3)
solely because a hospital which is owned and operated by such
organization participates in a provider-sponsored organization
(``PSO'') (as defined in section 1845(a)(1) of the Social
Security Act), whether or not such PSO is exempt from tax.
Thus, participation by a hospital in a PSO (whether taxable or
tax-exempt) is deemed to satisfy the first part of the inquiry
under current IRS ruling practice.\2\
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\2\ The qualification of a hospital as a tax-exempt charitable
organization under section 501(c)(3) is determined as under present
law. See Rev. Rul. 69-545, 1969-2 C.B. 117.
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The provision does not change present-law restrictions on
private inurement and private benefit. However, the provision
provides that any person with a material financial interest in
such a PSO shall be treated as a private shareholder or
individual with respect to the hospital for purposes of
applying the private inurement prohibition in Code section
501(c)(3). Accordingly, the facts and circumstances of each PSO
arrangement are evaluated to determine whether the arrangement
entails impermissible private inurement or more than incidental
private benefit (e.g., where there is a disproportionate
allocation of profits and losses to the non-exempt partners,
the tax-exempt partner makes loans to the joint venture that
are commercially unreasonable, the tax-exempt partner provides
property or services to the joint venture at less than fair
market value, or a non-exempt partner receives more than
reasonable compensation for the sale of property or services to
the joint venture).
The provision does not change present-law restrictions on
lobbying and political activities. In addition, the
restrictions of Code section 501(m) on the provision of
commercial-type insurance continue to apply.
Effective date.--The provision is effective on the date of
enactment.
Senate Amendment
The Senate amendment is the same as the House bill.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment.
Subtitle B--Prevention Initiatives
Screening Mammography
Sections 10101 and 4101 of House bill and section 5101 of Senate
amendment
current law
Medicare provides coverage for screening mammograms.
Frequency of coverage is dependent on the age and risk factors
of the woman. For women ages 35-39, one test is authorized. For
women ages 40-49, a test is covered every 24 months, except, an
annual test is authorized for women at high risk. Annual tests
are covered for women ages 50-64. For women aged 65 and over,
the program covers one test every 24 months. Medicare's Part B
deductible and coinsurance apply for these services.
house bill
Section 10101. Authorizes coverage for annual mammograms
for all women ages 40 and over. It would also waive the
deductible for screening mammograms.
Effective Date. Applies to items and services furnished
on or after January 1, 1998.
Section 4101. Identical provision.
senate amendment
Similar provision except that it would waive the
coinsurance rather than the deductible.
Effective Date. Applies to items and services furnished
on or after January 1, 1998.
conference agreement
The conference agreement includes the House provision.
Screening Pap Smear and Pelvic Exams
Sections 10102 and 4102 of House bill
current law
Medicare covers a screening Pap smear once every 3 years
for purposes of early detection of cervical cancer. The
Secretary is permitted to specify a shorter time period in the
case of women at high risk of developing cervical cancer.
house bill
Section 10102. Authorizes coverage, every 3 years, for a
screening pelvic exam which would include a clinical breast
examination. It would modify the purpose of Pap smears to
include early detection of vaginal cancer.
Specifies that for both Pap smears and screening pelvic
exams, coverage would be authorized on a yearly basis for women
at high risk of developing cervical or vaginal cancer (as
determined pursuant to factors identified by the Secretary).
Coverage would also be authorized on a yearly basis for a woman
of childbearing age who had not had a negative test in each of
the preceding 3 years. The deductible would be waived for
screening Pap smears and screening pelvic exams.
Effective Date. Applies to items and services furnished
on or after January 1, 1998.
Section 4102. Identical provision. In addition, it would
require the Secretary, within 6 months of enactment, to submit
a report to Congress on the extent to which the use of
supplemental computer-assisted diagnostic tests (consisting of
interactive automated computer imaging of an exfoliative
cytology test) in conjunction with pap smears improves the
early detection of cervical or vaginal cancer. The report must
also consider cost implications.
Effective Date. Enactment
senate amendment
No provision.
conference agreement
The conference agreement includes the House provision,
except that the requirement for a report on computer assisted
diagnostic tests contained in Section 4102 is not included. The
Conferees strongly recommend that the Secretary examine the
value of new technologies in improving the accuracy of
screening procedures, such as computer-assisted diagnostic
tests, and expanding Medicare coverage policies to include
proven new technologies.
Prostate Cancer Screening Tests
Sections 10103 and 4103 of House bill
current law
Medicare does not cover prostate cancer screening tests.
house bill
Section 10103. Authorizes an annual prostate cancer
screening test for men over age 50. The test could consist of
any (or all) of the following procedures: (1) a digital rectal
exam; (2) a prostate-specific antigen blood test; and (3) after
2001, other procedures as the Secretary finds appropriatefor
the purpose of early detection of prostate cancer, taking into account
such factors as changes in technology and standards of medical
practice, availability, effectiveness, and costs.
Specifies that payment for prostate-specific antigen
blood tests would be made under the clinical laboratory fee
schedule.
Effective Date. Applies to items and services furnished
on or after January 1, 1998.
Section 4103. Identical provision.
senate amendment
No provision.
conference agreement
The conference agreement includes the House provision
with an amendment. The provision would apply to services
furnished on or after January 1, 2000. The provision
authorizing coverage for additional procedures specified by the
Secretary would be effective for years beginning after 2002.
Coverage of Colorectal Screening
Sections 10104 and 4104 of House bill and section 5102 of Senate
amendment
current law
Medicare does not cover preventive colorectal screening
procedures. Such services are covered only as diagnostic
services.
house bill
Section 10104. Authorizes coverage of colorectal cancer
screening tests. A test covered under the provision would be
any of the following procedures furnished for the purpose of
early detection of colorectal cancer: (1) screening fecal-
occult blood test; (2) screening flexible sigmoidoscopy; (3)
screening colonoscopy for high-risk individuals; (4) screening
barium enema, if found by the Secretary to be an appropriate
alternative to screening flexible sigmoidoscopy or screening
colonoscopy; and (5) after 2002, other procedures as the
Secretary finds appropriate for the purpose of early detection
of colorectal cancer, taking into account such factors as
changes in technology and standards of medical practice,
availability, effectiveness, and costs. A high-risk individual
(for purposes of coverage for screening colonoscopy) would be
defined as one who faces a high risk for colorectal cancer
because of family history, prior experience of cancer or
precursor neoplastic polyps, a history of chronic digestive
disease condition (including inflammatory bowel disease,
Crohn's disease or ulcerative colitis), the presence of any
appropriate recognized gene markers, or other predisposing
factors. The Secretary would be required to make a decision
with respect to coverage of screening barium enema tests within
2 years of enactment; the determination would be published.
Establishes frequency and payment limits for the tests.
For screening fecal-occult blood tests, payment would be made
under the lab fee schedule. In 1998, the payment amount could
not exceed $5; in future years the update would be limited to
the update applicable under the fee schedule. Medicare could
not make payments if the test were performed on an individual
under age 50 or within 11 months of a previous screening fecal-
occult blood test.
Requires the Secretary to establish a payment amount
under the physician fee schedule for screening flexible
sigmoidoscopies that is consistent with payment amounts for
similar or related services. The payment amount could not
exceed the amount the Secretary specifies, based upon the rates
recognized for diagnostic flexible sigmoidoscopy services. For
services performed in ambulatory surgical centers or hospital
outpatient departments, the payment amount could not exceed the
lesser of the payment rate that would apply to such services if
they were performed at either site. Medicare could not make
payments for a screening flexible sigmoidoscopy if the test
were performed on an individual under age 50 or within 47
months of a previous screening flexible sigmoidoscopy.
Requires the Secretary to establish a payment amount
under the physician fee schedule for screening colonoscopy for
high risk individuals that is consistent with payment amounts
for similar or related services. The payment amount could not
exceed the amount the Secretary specifies, based upon the rates
recognized for diagnostic colonoscopy services. For services
performed in ambulatory surgical centers or hospital outpatient
departments, the payment amount could not exceed the lesser of
the payment rate that would apply to such services if they were
performed at either site. Medicare could not make payments if
the test were performed on a high-risk individual within 23
months of a previous screening colonoscopy.
Establishes special payment rules, in the case of both a
screening flexible sigmoidoscopy or screening colonoscopy, if a
lesion or growth is discovered during the procedure which
results in a biopsy or removal of the lesion or growth during
the procedure. In these cases, payment would be made for the
procedure classified as either a flexible sigmoidoscopy with
such biopsy or removal or screening colonoscopy with such
biopsy or removal.
Requires the Secretary to review from time to time the
appropriateness of the amount of the payment limit for fecal-
occult blood tests. The Secretary could, beginning after 2000,
reduce the amount of the limit as it applies nationally or in a
given area to the amount the Secretary estimates is required to
assure that such tests of an appropriate quality are readily
and conveniently available.
Requires the Secretary to review periodically the
appropriate frequency for performing colorectal cancer
screening tests based on age and other factors the Secretary
believes to be pertinent. The Secretary may revise from time to
time the frequency limitations, but no revisions could occur
before January 1, 2001.
Specifies that nonparticipating physicians providing
screening flexible sigmoidoscopies or screening colonoscopies
for high risk individuals would be subject to limiting charge
provisions applicable for physicians services. The Secretary
could impose sanctions if a physician or supplier knowingly and
willfully imposed a charge in violation of this requirement.
Requires the Secretary to establish payment limits and
frequency limits for screening barium enema tests if the
Secretary issues a determination that such tests should be
covered. Payment limits would be consistent with those
established for diagnostic barium enema procedures.
Effective Date. Applies to items and services furnished
on or after January 1, 1998.
Section 4104. Identical provision.
senate amendment
Authorizes coverage of colorectal cancer screening tests.
A covered test is defined as a procedure the Secretary
prescribes in regulations as appropriate for the purpose of
early detection of colorectal cancer, taking into account
availability, effectiveness, costs, changes in technology and
standards of medical practice, and other factors the Secretary
considers appropriate. The Secretary would consult with
appropriate organizations.
Requires the Secretary to prescribe regulations that
establish frequency limits for colorectal cancer screening
tests. The limits would take into account the risk status of an
individual and would be consistent with frequency limits for
similar or related services. The regulations would also
establish payment limits (including limits on charges of
nonparticipating physicians) for colorectal cancer screening
tests that are consistent with payment limits for similar
services. The Secretary would be required to periodically
review, and to the extent considered appropriate, revise the
frequency and payment limits.
Specifies that in establishing criteria to determine
whether an individual is at high risk, the Secretary would take
into consideration family history, prior experience of cancer,
a history of chronic digestive disease condition, and the
presence of any appropriate recognized gene markers for
colorectal cancer. The Secretary would consult with appropriate
organizations.
Effective Date. Applies to items and services furnished
on or after January 1, 1998. The Secretary would be required to
issue the regulations within three months of enactment.
conference agreement
The conference agreement includes the House provision
with modifications. Specified covered procedures would be: (1)
screening fecal-occult blood test, (2) screening flexible
sigmoidoscopy, (3) screening colonoscopy for high risk
individuals, and (4) such other tests or procedures, and
modifications to tests and procedures with such frequency and
payment limits as the Secretary determines appropriate, in
consultation with appropriate organizations. The Secretary
would be required within 90 days of enactment or January 1,
1998, whichever is earlier, to publish a notice in the Federal
Register with respect to a determination on the coverage of a
screening barium enema as a colorectal cancer screening test.
The conference agreement would specify that the payment
amount for a screening fecal-occult blood test would be the
same as the payment amount for a diagnostic fecal-occult blood
test under the lab fee schedule. The requirement for periodic
review of the limits for such tests would be deleted.
The Conference agreement provides that screening flexible
sigmoidoscopies and screening colonoscopies furnished in an
ambulatory surgical center or a hospital outpatient department
after January 1, 1999 would be subject to the applicable fee
schedule amounts. Beneficiary liability would be limited to 25
percent of the fee schedule payment amount for ambulatory
surgical centers. The conference agreement does not include the
language relating to limiting charges of nonparticipating
physicians or the requirement for periodic review of frequency
limits.
Diabetes Screening Tests
Sections 10105 and 4105 of House bill and section 5103 of Senate
amendment
current law
In general, Medicare covers only those items and services
which are medically reasonable and necessary for the diagnosis
or treatment of illness or injury. In addition, Medicare covers
home blood glucose monitors and associated testing strips for
certain diabetes patients. Home blood glucose monitors enable
diabetics to measure their blood glucose levels and then alter
their diets or insulin dosages to ensure that they are
maintaining an adequate blood glucose level. Home glucose
monitors and testing strips are covered under Medicare's
durable medical equipment benefit. Coverage of home blood
glucose monitors is currently limited to certain diabetics,
formerly referred to as Type I diabetics, if: (1) the patient
is an insulin-treated diabetic; (2) the patient is capable of
being trained to use the monitor in an appropriate manner, or,
in some cases, another responsible person is capable of being
trained to use the equipment and monitor the patient to assure
that the intended effect is achieved; and (3) the device is
designed for home rather than clinical use.
house bill
Section 10105. Effective January 1, 1998, the Ways and
Means and Commerce Committees would include among Medicare's
covered benefits diabetes outpatient self-management training
services. These services would include educational and training
services furnished to an individual with diabetes by a
certified provider in an outpatient setting meeting certain
quality standards. They would be covered only if the physician
who is managing the individual's diabetic condition certifies
that the services are needed under a comprehensive plan of care
to provide the individual with necessary skills and knowledge
(including skills related to the self-administration of
injectable drugs)to participate in the management of the
individual's condition. Certified providers for these purposes would be
defined as physicians or other individuals or entities that, in
addition to providing diabetes outpatient self-management training
services, provide other items or services reimbursed by Medicare.
Providers would have to meet quality standards established by the
Secretary. They would be deemed to have met the Secretary's standards
if they meet standards originally established by the National Diabetes
Advisory Board and subsequently revised by organizations who
participated in the establishment of standards of the Board, or if they
are recognized by an organization representing persons with diabetes as
meeting standards for furnishing such services. In establishing payment
amounts for diabetes outpatient self-management training provided by
physicians and determining the relative value for these services, the
Secretary would be required to consult with appropriate organizations,
including organizations representing persons or Medicare beneficiaries
with diabetes.
In addition, beginning January 1, 1998, the provision
would extend Medicare coverage of blood glucose monitors and
testing strips to Type II diabetics and without regard to a
person's use of insulin (as determined under standards
established by the Secretary in consultation with appropriate
organization). The provision would also reduce the national
payment limit used by Medicare for testing strips by 10%
beginning in 1998.
The Secretary, in consultation with appropriate
organizations, would be required to establish outcome measures,
including glysolated hemoglobin (past 90-day average blood
sugar levels), for purposes of evaluating the improvement of
the health status of Medicare beneficiaries with diabetes. The
Secretary would also be required to submit recommendations to
Congress from time to time on modifications to coverage of
services for these beneficiaries.
Effective date. Applies to items and services furnished
on or after January 1, 1998.
Section 4105. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that were
identical in the House bill and Senate amendment, with
amendments (1) to clarify that the Secretary would determine
the times when diabetes self-management educational and
training services would be considered appropriate, (2) to
require that physicians certify that services are needed to
ensure therapy compliance or to provide necessary skills and
knowledge; and (3) to postpone the effective date for coverage
of diabetes outpatient self-management training services to
July 1, 1998.
This provision is intended to empower Medicare
beneficiaries with diabetes to better manage and control their
condition. The Conferees believe that this provision will
provide significant Medicare savings over time due to reduced
hospitalizations and complications arising from diabetes. The
provision would allow reimbursement for physicians, as well as
other providers designated by the Secretary who currently are
reimbursed by Medicare. The Conferees intend that these
additional classes of providers have expertise in diabetes
self-management training and, consistent with the standards set
forth in the provision, demonstrate the ability to provide
counseling and training in a cost-effective way to
beneficiaries. In addition, the Conferees are aware that there
are a wealth of innovative disease management programs that are
not now covered by Medicare. However, there is not sufficient
evidence at this time that indicates these programs will be
cost-effective for Medicare.
Bone Mass Measurement
Sections 10106 and 4106 of House bill and section 5104 of Senate
amendment
Current Law
Medicare does not include specific coverage of bone mass
measurement.
House Bill
Section 10106. Authorizes coverage of bone mass
measurement procedures for the following high risk persons: an
estrogen-deficient woman at clinical risk for osteoporosis; an
individual with vertebral abnormalities; an individual
receiving long-term glucocorticoid steroid therapy, and an
individual with primary hyperparathyroidism, or an individual
being monitored to assess the response to or efficacy of an
approved osteoporosis drug therapy. Covered procedures are
radiologic or radioisotopic procedure or other procedure
approved by the FDA for the purpose of identifying bone mass or
detecting bone loss or deterioration; it would include a
physician's interpretation. The Secretary would be required to
establish frequency limits. Payments would be made under the
physician fee schedule.
Effective Date. Applies to measurements performed on or
after July 1, 1998.
Section 4106. Identical provision.
Senate Amendment
Similar provision except: (1) specifies that an estrogen-
deficient individual who is at clinical risk of developing
osteoporosis is one who is also considering treatment; (2)
refers to FDA ``approved technology'' rather than ``other
procedure'' approved by the FDA; (3) does not include
provisions relating to payment under the physician fee
schedule.
Effective Date. Applies to measurements performed on or
after January 1, 1998.
Conference Agreement
The conference agreement includes the House provision.
Vaccines Outreach Expansion
Sections 10107 and 4107 of House bill
Current Law
The Health Care Financing Administration, in conjunction
with the Centers for Disease Control and the National Coalition
for Adult Immunization, conducts an Influenza and Pneumococcal
Vaccination Campaign. The Campaign is scheduled to cease
operations in 2000.
House Bill
Section 10107. Extends the campaign through the end of FY
2002. It would authorize appropriations of $8 million for each
fiscal year 1998-2002 to the Campaign; 60% of the appropriation
would come from the Federal Hospital Insurance Trust Fund and
40% from the Federal Supplementary Medical Insurance Trust
Fund.
Effective Date. Enactment
Section 4107. Similar provision, except that it
appropriates the funds.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House provision as
contained in Section 10107.
There is evidence that education and outreach efforts
alone can increase immunization rates. For example, pneumonia
and influenza vaccination rates have increased 8 percent during
the past few years due largely to educational outreach efforts.
Therefore, this provision is intended to nearly double the $9
million annual budget of the Health Care Financing
Administration's Influenza and Pneumococcal Vaccination
Campaign through 2000, and extend the program for two
additional years through 2002.
Study on Preventive Benefits
Sections 10108 and 4108 of House bill and section 5105 of Senate
amendment
Current Law
No provision.
House Bill
Section 10108. Requires the Secretary to request the
National Academy of Sciences, in conjunction with the U.S.
Preventive Services Task Force, to analyze the expansion or
modification of preventive services covered under Medicare. The
study would consider both the short term and long term benefits
and costs to Medicare. The study would have to include specific
findings with respect to the following: (1) nutrition therapy,
including parenteral and enteral nutrition; (2) medically
necessary dental care; (3) routine patient care costs for
beneficiaries enrolled in approved clinical trial programs; and
(4) elimination of time limitation for coverage of
immunosuppressive drugs for transplant patients. The Secretary
would be required to provide such funding as may be necessary
in FY 1998 and FY 1999
Effective Date. Enactment
Section 4108. Similar provision, except also includes
study of coverage for bone mass measurement.
Senate Amendment
Requires the Secretary to request the National Academy of
Sciences, in conjunction with the U.S. Preventative Services
Task Force, to analyze the expansion or modification of
preventative benefits to include medical nutritional therapy
services by a registered dietitian. The Secretary would be
required to submit a report on the findings to the House Ways
and Means and Commerce Committees and the Senate Finance
Committee. The report would include specific findings regarding
cost to Medicare, savings to Medicare, clinical outcomes, and
short and long term benefits to Medicare. The Secretary would
provide for such funds as may be necessary for FY 1998 and FY
1999.
Effective Date. Enactment
Conference Agreement
The conference agreement includes the House provision
with a modification to clarify that the study applies to other
benefits in addition to preventive benefits. Skin cancer
screening would be added to the list of benefits studied. The
study of nutrition therapy services would be modified to
include the provision of such services by a dietician.
The Conference agreement includes a study on both
preventive and enhanced benefits in the Medicare program,
including nutrition therapy services. Because of widespread
interest in expanding and updating Medicare's current benefit
package to focus more attention on prevention, this provision
is intended to signal the interest of the Conferees in
continuing to reexamine Medicare's benefits in light of
evolving scientific evidence about the costs and benefits of
various prevention initiatives.
The Conferees recommend that the nutrition study include
an examination of nutritional services provided by registered
dieticians to Medicare beneficiaries in both individual and
group settings. The nutrition study should also examine the
cost and benefits of treatment of obesity, which is a
significant cause of morbidity and mortality in the United
States.
Subtitle C--Rural Initiatives
Sole Community Hospitals
Section 5151 of the Senate amendment
Current Law
Medicare designates certain hospitals as sole community
hospitals (SCHs) that, because of factors such as isolated
location, weather conditions, travel conditions, or the absence
of other hospitals, are the sole source of inpatient services
reasonably available in a geographic area, or are located more
than 35 road miles from another hospital.
An SCH may be paid the higher of the following rates: a
target amount based on FY 1982 hospital-specific rates, updated
to the present; a target amount based on FY 1987 hospital-
specific rates based on FY 1987, updated to the present; or the
federal PPS payment rate.
House Bill
No provision.
Senate Amendment
Beginning with discharges occurring in FY 1998,
substitutes for the base cost reporting period either (1) the
allowable operating costs of inpatient hospital services for a
cost reporting period beginning during FY 1994 increased (in a
compounded manner) by the applicable percentage increases
applied to hospitals for discharges occurring in fiscal years
1995, 1996, 1997, and 1998; or (2) the allowable operating
costs of inpatient hospital services for a cost reporting
period beginning during FY 1995 increased (in a compounded
manner) by the applicable percentage increase for discharges
occurring in fiscal years 1995, 1996, 1997, and 1998. The new
base cost reporting period would be substituted if it resulted
in an increase in the target amount for the SCH.
Effective Date. Enactment.
Conference Agreement
The conference agreement does not include the Senate
amendment.
Rural Primary Care Hospital Program
Section 10201 of the House bill and Section 5153 of the Senate
amendment
Current Law
Under the Essential Access Community Hospital (EACH)
demonstration program, seven states received grants to develop
rural health networks consisting of essential access community
hospitals (EACHs) and rural primary care hospitals (RPCHs). In
order to have been designated by a State as a RPCH, a facility
was required to meet certain criteria, including a requirement
that inpatient stays not exceed 72 hours.
Montana also has a limited service hospital program
called the Medical Assistance Facility (MAF). The Medical
Assistance Facility Demonstration Project in Montana has been
in operation since 1988. The program operates under a waiver
from HCFA that allows these limited service hospitals to be
reimbursed for providing treatment to Medicare beneficiaries.
In addition, HCFA supplies grant funding to the Montana
Hospital Research and Education Foundation to provide technical
assistance, liaison, public education and other services to the
MAFs. The first MAF was licensed and certified in 1990. Since
then, a total of 12 MAFs have been licensed and certified.
Additional facilities are in the process of considering a
conversion to this model.
House Bill
Expands the Medicare Rural Primary Care Hospital Program
under which a state could designate one or more facilities as a
rural primary care hospital (RPCH). A facility could be
designated as a RPCH if it was a nonprofit or public hospital
located in a county in a rural area that was located at a
distance that corresponded to travel time of more than 30
minutes from another hospital or RPCH, or was certified by the
state as being a necessary provider of health care services. A
RPCH would be required to provide 24-hour emergency care
services, provide not more than 15 acute care inpatient beds
and a total of 25 swing beds for providing inpatient care for a
period not to exceed 96 hours (except under certain
conditions), and would not have to meet all the staffing
requirements that apply to hospitals under Medicare.
RPCHs would be required to have agreements with at least
one hospital for patient referral and transfer, the development
and use of communication systems including telemetry systems
and systems for electronic sharing of patient data, and the
provision of emergency and non-emergency transportation between
the facility and the hospital. Each RPCH would also be required
to have an agreement concerning credentialing and quality
assurance with at least one hospital, peer review organization
or equivalent entity, or other appropriate and qualified entity
identified by the state.
Payment for inpatient and outpatient services provided at
RPCHs would be made on the basis of the reasonable costs of
providing such services. Reasonable cost payment would also
continue for designated EACH hospitals, as well as for the MAF
demonstration program.
Effective Date. Applies to services furnished in cost
reporting periods beginning on or after October 1, 1997.
Senate Amendment
Similar provision, except replaces the EACH program with
the Medicare Rural Hospital Flexibility Program. The provision
would require that facilities be located more than a 35-mile
drive from another hospital or other health care facility. The
Secretary would be authorized to award grants to states for
activities related to engaging in planning and implementing a
rural health care plan, engaging in planning and implementing
rural health networks, and designating facilities as critical
access hospitals (CAHs). The provision would authorize
appropriations of $25 million for each of the years FY 1998-
2002 for the grants.
Conference Agreement
The conference agreement includes the Senate provision
with amendments. The distance requirement for facilities
includes a 15-mile drive in the case of mountainous terrain or
in areas with only secondary roads available. The conference
includes the House provision that would allow States to
designate or the Secretary to certify facilities applying for
the designation as long as the total number of beds used at any
time for furnishing either extended care services or acute care
inpatient services does not exceed 25 beds and the number of
beds used at any time for acute care inpatient services does
not exceed 15 beds. Beds in a facility licensed as a distinct-
part skilled nursing facility at the time the facility applied
to the state for designation would not be counted. The
Secretary would also be required to provide for an appropriate
transition for facilities participating in the MAF
demonstration program, and at the conclusion of the transition
period, the demonstration would be terminated.
The Critical Access Hospital (CAH) provisions of this
legislation are largely based on both the successful MAF
demonstration project in Montana and the EACH/RPCH
demonstration project.
Regarding MAFs, it is the intent of the Conferees that
MAFs that are licensed and certified prior to the date of
enactment will be grandfathered into the new CAH program. To
ease this transition in Montana, the MAF demonstration project
is extended until October 1, 1998 to allow the Secretary of HHS
time to issue regulations for the CAH program. New facilities
may still seek certification under the MAF demonstration until
the demonstration project has been terminated. It is the intent
of the Conferees that the MAF demonstration be folded into the
new rural hospital flexibility program. It is the intent of the
Conferees that there be no gap in grant money from HCFA to
Montana in the event the grant program that accompanies the CAH
legislation is not in operation as of October 1, 1998. If the
new grant program is available prior to termination of the MAF
demonstration, HCFA would be required to terminate the grant
money available from the demonstration and provide money to
Montana from the new grant program as long as there is no gap
in the grant money.
Prohibiting Denial of Request By Rural Referral Centers For
Reclassification on Basis of Comparability of Wages
Section 10202 of the House bill and Section 5154 of the Senate
amendment
Current Law
Rural Referral Centers are defined as:
(1) rural hospitals having 275 or more beds;
(2) hospitals having at least 50 percent of their
Medicare patients referred from other hospitals or from
physicians not on the hospital's staff, at least 60
percent of their Medicare patients residing more than
25 miles from the hospital, and at least 60 percent of
the services furnished to Medicare beneficiaries living
25 miles or more from the hospital; or
(3) rural hospitals meeting the following criteria
for hospital cost reporting periods beginning on or
after October 1, 1985:-
(a) a case mix index equal to or greater
than the median case mix for all urban
hospitals (the national standard), or the
median case mix for urban hospitals located in
the same census region, excluding hospitals
with approved teaching programs;
(b) a minimum of 5,000 discharges, the
national discharge criterion (3,000 in the case
of osteopathic hospitals), or the median number
of discharges in urban hospitals for the region
in which the hospital is located; and
(c) at least one of the following three
criteria: more than 50 percent of the
hospital's medical staff are specialists, at
least 60 percent of discharges are for
inpatients who reside more than 25 miles from
the hospital, or at least 40 percent of
inpatients treated at the hospital have been
referred either from physicians not on the
hospital's staff or from other hospitals.
Under Section 1886(d)(10)(d), RRCs are allowed to apply
to the Medicare Geographic Classification Review Board (MGCRB)
to be reclassified for purposes of wage index adjustment. (A
wage index adjustment translates to higher prospective payment
system reimbursement for the reclassified hospitals.) To be
reclassified, RRCs must meet two thresholds: (1) the hospital's
average hourly wage must be at least 108 percent of the
statewide rural hourly wage; and, (2) the hospital's average
hourly wage must be at least 84 percent of the average hourly
wage of the target urban area to which the RRC is applying.
RRCs were paid prospective payments based on the
applicable urban payment amount rather than the rural payment
amount, as adjusted by the hospital's area wage index, until FY
1995 when the standardized payment amount for ``other urban''
and ``rural'' were combined into a single payment category,
``other areas.''
OBRA 93 extended the classification through FY 1994 for
those referral centers classified as of September 30, 1992.
House Bill
Prohibits the Medicare Geographic Classification Review
Board (MGCRB) from rejecting a hospital's request for
reclassification on the basis of any comparison between the
average hourly wage of any hospital ever classified as a RRC
and the average hourly wage of hospitals in the area in which
the RRC is located. The provision would also permanently
grandfather RRC status for any hospitals designated since 1991.
Effective Date. Enactment.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
Hospital Geographic Reclassification Permitted for Purposes of
Disproportionate Share Payment Adjustments
Section 10203 of the House bill
Current Law
The MGCRB is required to consider applications from PPS
hospitals requesting that the Secretary change the hospital's
geographic classification for purposes of determining for a
fiscal year the hospital's average standardized amount and the
wage index used to adjust the DRG payment to reflect area
differences in hospital wage levels.
House Bill
Permits hospitals to request geographic reclassification
for purposes of receiving additional disproportionate share
hospital (DSH) payment amounts provided to hospitals that treat
a disproportionate share of low-income patients. The provision
would require the Board to apply the guidelines established for
reclassification for the standardized amount to applications
for DSH payments until the Secretary promulgates separate
guidelines for reclassification for DSH.
Effective Date. Enactment.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House bill with an
amendment to limit the geographic reclassification for DSH
payments to the period beginning on the date of enactment and
ending 30 months after enactment.
It is the intent of Conferees to allow eligible rural
hospitals to be reclassified for purposes of receiving a DSH
adjustment until such time as a new DSH methodology is adopted
that more accurately distributes Medicare DSH payments to
hospitals in both rural and urban areas.
Medicare-Dependent Small Rural Hospital Payment Extension
Section 10204 of the House bill and Section 5152 of the Senate
amendment
Current Law
Medicare-dependent small rural hospitals are hospitals
located in a rural area, with 100 beds or less, that are not
classified as a sole community provider, and for which not less
than 60 percent of inpatient days or discharges in the hospital
cost reporting period are attributable to Medicare. These
hospitals were reimbursed on the same basis as sole community
hospitals. The designation for Medicare-dependent small rural
hospitals expired on October 1, 1994.
House Bill
Reinstates and extends the classification, and extends
the target amount for inpatient costs through October 1, 2001.
The provision would also permit hospitals to decline
reclassification.
Effective Date. Applies to discharges occurring on or
after October 1, 1997.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
Rural Health Clinic (RHC) Services
Sections 10618 and 4618 of the House bills and Section 5155 of the
Senate amendment
Current Law
Medicare establishes payment limits for RHC services
provided by independent (RHCs). RHCs, among other requirements,
must have appropriate procedures for utilization review of
clinic services. The Secretary is required to waive the RHC
requirement for certain staffing of healthprofessionals if the
clinic has been unable to hire a physician assistant, nurse
practitioner, or certified nurse-midwife in the previous nine years.
The Secretary is prohibited from granting a waiver to a facility if the
request for the waiver is made less than 6 months after the date of the
expiration of previous waiver of the facility. RHCs are required to be
located in a health professional shortage area. For RHCs that are in
operation and subsequently fail to meet the requirement of being
located in a health professional shortage area, the Secretary would be
required to continue to consider the facility to meet the health
professions shortage area requirement.
House Bill
Section 10618. Applies per-visit payment limits to all
RHCs, other than such clinics in rural hospitals with less than
50 beds. The provision would require that RHCs have a quality
assessment and performance improvement program, in addition to
appropriate procedures for utilization review. The provision
would amend the waiver on the staffing requirement, to provide
a waiver if the facility cannot meet the requirement of having
a nurse practitioner, physician assistant, or a certified
nurse-midwife available 50% of the time the clinic operates;
such a waiver would only be available to clinics once they have
been certified. The provision would require that shortage
designations for RHCs be reviewed every three years. The
provision would further amend the shortage area requirement by
adding that RHCs must be located in an area in which there are
insufficient numbers of needed health care practitioners as
determined by the Secretary. The provision would require that
operating RHCs that subsequently fail to meet the requirement
of being located in a health professional shortage area
continue to be considered to meet the health professional
shortage requirement, but only when, under criteria established
by the Secretary in regulations, the RHCs are determined to be
essential to the delivery of primary care services that would
otherwise be unavailable in the geographic area served by the
clinic. The Secretary would be required to issue final
regulations implementing the grandfathered clinics that would
take effect no later than January 1 of the third calendar year
beginning at least one month after enactment.
Effective Date. Per-visit payment limit provision applies
to services furnished after 1997. The provision on the
assurance of quality assessment would take effect on January 1,
1998. The waiver of staffing requirements provision would apply
to waiver requests made after 1997. The refinement of the
shortage area requirements provision would go into effect on
January 1 of the first calendar years after enactment. The
grandfathered clinics provision would take effect on the
effective date of the regulations required by the provision.
Section 4618. Identical provision.
Senate Amendment
Similar provision, except requires the Secretary to
include in the regulations issued to implement the
grandfathered clinics, provisions for the direct payment to the
physician assistant (PA) for any PA services provided at a RHC
that is principally owned, as determined by the Secretary, by a
PA as of the date of enactment and continuously from that date
through the date on which services are provided. The PA payment
provision would sunset (not apply) after January 1, 2003.
Effective Date. Takes effect on the effective date of
regulations issued for grandfathered RHCs.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment, with
amendments to include the provision for payment of certain PAs
through January 1, 2003 from the Senate amendment, and to
require the Secretary to issue final regulations for
implementing the grandfathered RHCs no later than January 1,
1999.
Geographic Reclassification for Certain Disproportionately Large
Hospitals
Section 10205 of the House bill
Current Law
OBRA 1989 created the five member panel and set forth
criteria for the Medicare Geographic Classification Review
Board (MGCRB) to use in issuing its decisions concerning
geographic reclassification of hospitals as rural or urban for
prospective payment purposes of Medicare's hospital
reimbursement. In 1992, HCFA issued guidelines requiring that
hospitals seeking reclassification for years beginning with FY
1994 have an average hourly wage of at least 108 percent of the
average hourly wage of hospitals in its home region.
House Bill
Allows certain relatively large hospitals to be
reclassified by the MGCRB if the hospital has 40 percent of the
wages in a region and its wages are 108 percent or higher than
the other hospitals in the region.
Effective Date. Enactment.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House provision
with an amendment clarifying that the provision would apply to
hospitals that applied in each of the fiscal years 1992-1997
and were subsequently approved for reclassification for
purposes of the wage index.
Floor on Area Wage Index
Section 10206 of the House bill and Section 5467 of the Senate
Amendment
Current Law
As part of the methodology for determining prospective
payments to hospitals under PPS, the Secretary is required to
adjust a portion of the standardized amounts for area
differences in hospital wage levels by a factor reflecting the
relative hospital wage level in the geographic area of the
hospital compared to the national average hospital wage level.
House Bill
Provides that, for discharges occurring on or after
October 1, 1997, the area wage index applicable for any
hospital which was not located in a rural area could not be
less than the area wage indices applicable to hospitals located
in rural areas in the state in which the hospital was located.
The Secretary would be required to make any adjustments in the
wage index in a budget neutral manner.
Effective Date. Enactment.
Senate Amendment
Identical provision on the area wage index. In addition,
the Senate amendment provides that in the case of a hospital
that is owned by a municipality and that was reclassified as an
urban hospital for FY 1996, in calculating the hospital's
average hourly wage for the purposes of geographic
reclassification for FY 1998, the Secretary would be required
to exclude the general service wages and hours of personnel
associated with a skilled nursing facility that is owned by the
hospital of the same municipality and that is physically
separated from the hospital to the extent that such wages and
hours of such personnel are not shared with the hospital and
are separately documented. A hospital that applied for and was
denied reclassification as an urban hospital for FY 1998, but
that would have received reclassification had the exclusion
required by this section been applied to it, would be
reclassified as an urban hospital for FY 1998.
Conference Agreement
The conference agreement includes the Senate amendment.
Medicare Reimbursement for Telehealth Services
Section 5156 of the Senate amendment
Current Law
HCFA is currently conducting a 3-year demonstration
project under which Medicare will pay for telemedicine services
at 57 Medicare-Certified facilities. The demonstration will
focus on medical consultations between medical specialists
located at medical center facilities and primary care providers
treating Medicare patients at remote rural sites. Five
telemedicine centers are participating in the project.
House Bill
No provision.
Senate Amendment
Requires the Secretary, no later than July 1, 1998, to
make payments under Part B of Medicare for professional
consultation via telecommunications systems with a health care
provider furnishing a service for which Medicare payment would
be made for a beneficiary residing in a rural county that was
designated as a health professional shortage area, or is a
rural county not adjacent to a Metropolitan Statistical Area.
The Secretary would be required to develop a methodology
for making such payments taking into account the findings of
the report on Medicare payments for telemedicine that was
required by the Health Insurance Portability and Accountability
Act of 1996 (P.L. 104-191), and any other findings related to
the clinical efficacy and cost-effectiveness of telehealth
applications. The Secretary would be required to develop a
payment methodology that would (1) include bundled payments to
be shared between the referring health care provider and the
consulting provider that could not be greater than the current
fee schedule of the consulting health care providers for the
services provided, and (2) would not include any reimbursement
for any line charges or any facility fees.
The provision would require the Secretary to submit a
report to Congress no later than January 1, 1998, which would
analyze in detail: (1) how telemedicine and telehealth systems
are expanding access to health care services; (2) the clinical
efficacy and cost-effectiveness of telemedicine and telehealth
applications; (3) the quality of telemedicine and telehealth
services delivered; and (4) the reasonable cost of
telecommunications charges incurred in practicing telemedicine
and telehealth in rural, frontier, and underserved areas.
The provision would require the Secretary to submit a
report to Congress by January 1, 1999, that would examine the
possibility of making Medicare Part B payments for professional
consultation via telecommunications systems to beneficiaries
who do not reside in a rural area designated as a health
manpower shortage area, who are homebound or nursing homebound,
and for whom being transferred for health care services imposes
a serious hardship. The report would be required to contain a
detailed statement of the potential costs to Medicare of making
these payments using various reimbursement schemes.
Effective Date. Enactment.
Conference Agreement
The conference agreement includes the Senate provision
with amendments. The Secretary would be required to make Part B
payments for telehealth services by no later than January 1,
1999. In determining the amount of payments for telehealth
services, the payments would be subject to Medicare coinsurance
and deductible requirements, and balanced billing limits would
apply to services furnished by non-participating physicians.
Beneficiaries could not be billed for any telephone line
charges or any facility fees. In addition, payment for
telehealth services would be increased annually by the update
factor for physician services under the fee schedule.
It is the intent of the Conferees that the enhanced
Medicare reimbursement provided by the conference agreement not
inadvertently modify the payment provided to participants in
the on-going HCFA telemedicine demonstration projects.
Informatics, Telemedicine, and Education Demonstration Project
Sections 10207 and 4206 of the House bills and Section 5157 of the
Senate amendment
Current Law
HCFA is currently conducting a 3-year demonstration
project under which Medicare will pay for telemedicine services
at 57 Medicare-Certified facilities. The demonstration will
focus on medical consultations between medical specialists
located at medical center facilities and primary care providers
treating Medicare patients at remote rural sites. Five
telemedicine centers are participating in the project.
House Bill
Requires the Secretary to conduct, no later than 9 months
after enactment, a 4-year demonstration project designed to use
eligible health care provider telemedicine networks to apply
high-capacity computing and advanced networks for the provision
of health care to Medicare beneficiaries who are residents of
medically underserved rural and inner-city areas. The project
would focus on improvements in primary care and prevention of
complications for those residents with diabetes mellitus. The
Secretary would be required to waive any Medicare provisions
necessary to provide payment for services under the project.
The objectives of the project would include: (1) improving
patient access to and compliance with appropriate care
guidelines for chronic diseases through direct
telecommunications links with information networks; (2)
developing a curriculum to train, and provide standards for
credentialing and licensure of, health professionals
(particularly primary care) in the use of medical informatics
and telecommunications; (3) demonstrating the application of
advanced technologies to assist primary care providers in
assisting patients with chronic illnesses in a home setting;
(4) applying medical informatics to residents with limited
English language skills; (5) developing standards in the
application of telemedicine and medical informatics; and (6)
developing a model for the cost-effective delivery of primary
and related care both in a managed care and fee-for-service
environment.
The provision defines an eligible health care provider
telemedicine network as a consortium that includes at least one
tertiary care hospital (but no more than two such hospitals),
at least one medical school, no more than four facilities in
rural or urban areas, and at least one regional
telecommunications provider that meets certain additional
requirements. The provision would define those services to be
covered under Part B for the purposes of this demonstration
project. Medicare payment for covered Part B services would be
made at a rate of 50% of the reasonable costs of providing such
services. The Secretary would be required to recognize the
following project costs as permissible costs for coverage under
Part B: (1) the acquisition of telemedicine equipment for use
in patient homes; (2) curriculum development and training of
health professionals in medical informatics and telemedicine,
(3) payment of certain telecommunications costs, including
costs of telecommunications between patients' homes and the
eligible network and between the network and other entities
under the arrangements described in the bill; and (4) payments
to practitioners and providers under Medicare. Costs not
covered under Part B would include: (1) purchase or
installation of transmission equipment, (2) the establishment
or operation of a telecommunications common carrier network,
(3) the costs of construction (except for minor renovations
related to the installation of reimbursable equipment), or (4)
the acquisition or building of real property.
The total amount of Medicare payments permitted under the
project would be $30 million. The project would be prohibited
from imposing cost sharing on a Medicare beneficiary for the
receipt of services under the project of more than 20% of the
recognized costs of the project attributable to these services.
The Secretary would be required to submit to the House
Committees on Ways and Means and Commerce and the Senate
Committee on Finance interim reports on the project and a final
report on the project within 6 months of the conclusion of the
project. The final report would be required to include an
evaluation of the impact of the use of telemedicine and medical
informatics on improving the access of Medicare beneficiaries
to health care services, on reducing the costs of such
services, and on improving the quality of life of such
beneficiaries.
Effective Date. Enactment.
Section 4206. Identical provision.
Senate Amendment
Similar provision, except establishes a 5-year
demonstration project to study the use of eligible health care
provider telemedicine networks to implement high-capacity
computing and advanced networks to improve primary care,
improve access to specialty care, and provide educational and
training support to rural practitioners. The Secretary would be
required to waive any Medicare, title XI of the Social Security
Act, or Medicaid provisions necessary to conduct the project.
The provision would not include the objectives of improving
patient access to and compliance with appropriate care
guidelines for individuals with diabetes mellitus through
direct telecommunications links with information networks, or
the application of medical informatics to residents with
limited English language skills, but would include the
objective of improving accessto primary and specialty care and
the reduction of inappropriate hospital visits in order to improve
patient quality-of-life and reduce overall health care costs.
The provision would allow an eligible telemedicine
network to include no more than six facilities, including at
least three rural referral centers in rural areas and require
that the consortium would be located in a region that is
predominantly rural.
The total amount of Medicare payments permitted under the
project would be $27 million.
Conference Agreement
The conference agreement includes the House bill with
modifications.
Subtitle D--Anti-Fraud and Abuse Provisions and Administrative
Efficiencies
Permanent Exclusion for Those Convicted of 3 Health Care Related Crimes
Section 10301 and 4301 of House bill
Current Law
Section 1128(a) of the Social Security Act directs the
Secretary of Health and Human Services to mandatorily exclude
individuals and entities from participation in the Medicare
program and state health care programs (Medicaid, Title V
Maternal and Child Health Block Grants, and Title XX Social
Services Block Grants) upon conviction of certain criminal
offenses including Medicare and Medicaid program-related
crimes, patient abuse crimes, health care fraud felonies, and
felonies relating to controlled substances. Such mandatory
exclusions are, in most cases, for a minimum period of five
years.
House Bill
Section 10301. Provides that if an individual has been
mandatorily excluded by the Secretary of Health and Human
Services from participation in Federal health care programs, as
defined in Section 1128b(f) of the Social Security Act (see
Section 10310(c) of this subtitle), and state health care
programs, because of a conviction relating to Medicare and
Medicaid program-related crimes, patient abuse, or felonies
related to health care fraud or controlled substances, that the
exclusion be either for a period of 10 years if the individual
has been convicted on only one previous occasion of one or more
offenses for which such an exclusion may be imposed, or that
the exclusion be permanent if the individual has been convicted
on two or more previous occasions of one or more offenses for
which such an exclusion may be imposed. The provision would
apply to exclusions based on a conviction occurring on or after
the date of enactment of this section where the individual has
had prior convictions occurring before, on or after the date of
enactment of this section.
Section 4301. Identical provision.
Effective Date. Enactment.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House provision
with clarifying language.
Authority to Refuse to Enter into Medicare Agreements with Individuals
or Entities Convicted of Felonies
Section 10302 and 4302 of House bill and Section 5201 of Senate
amendment
Current Law
Section 1866 of the Social Security Act sets forth
certain conditions under which providers may become qualified
to participate in the Medicare program. The Secretary may
refuse to enter into an agreement with a provider, or may
refuse to renew or may terminate such an agreement, if the
Secretary determines that the provider has failed to comply
with provisions of the agreement, other applicable Medicare
requirements and regulations, or if the provider has been
excluded from participation in a health care program under
section 1128 or 1128A of the Social Security Act. Section 1842
of the Social Security Act permits physicians and suppliers to
enter into agreements with the Secretary under which they
become ``participating'' physicians or suppliers under the
Medicare program.
House Bill
Section 10302. Adds a new section giving the Secretary
authority to refuse to enter into an agreement, or refuse to
renew or terminate an agreement with a provider if the provider
has been convicted of a felony under federal or state law for
an offense which the Secretary determines is inconsistent with
the best interests of program beneficiaries. This authority
would extend to the Secretary's agreements with physicians or
suppliers who become ``participating'' physicians or suppliers
under the Medicare program. Similar provisions would apply to
the Medicaid program.
Section 4302. Identical provision.
Effective Date. Enactment, with application to new and
renewed contracts on or after that date.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions which are
identical in the House bill and the Senate amendment with
clarifying language.
Improving Information to Medicare Beneficiaries (Inclusion of Toll-Free
Number to Report Medicare Waste, Fraud, and Abuse in Explanation of
Benefits Forms)
Section 10303 and 4303 of the House bill and Section 5219 and 5222 of
the Senate Amendment
Current Law
Carriers and fiscal intermediaries are the entities which
process claims for Medicare. Intermediaries process claims
submitted by institutional providers of services and carriers
process claims submitted by physicians and suppliers.
House Bill
Section 10303. Specifies that each explanation of
benefits form contain a toll-free telephone number maintained
by the Inspector General in the Department of Health and Human
Services for persons to report complaints and information about
waste, fraud and abuse in Medicare services or billing for
services.
Section 4303. Identical provision.
Effective Date. Effective for explanations of benefits as
of such date, not later than January 1, 1999, as the Secretary
provides.
Senate Amendment
While the Senate amendment also requires a toll-free
fraud and abuse telephone number in each explanation of
benefits, the provision is broader, including requirements
regarding a beneficiary's right to request an itemized bill for
Medicare services within 30 days, penalties for failure to
comply with such requests, and procedures for review of
itemized bills by the appropriate carrier or fiscal
intermediary upon request.
Effective Date. Effective for medical or other items or
services provided on or after January 1, 1998.
Conference Agreement
The conference agreement includes the House provision
regarding a toll-free fraud and abuse telephone number and the
Senate amendment with modifications regarding new statutory
requirements for information to beneficiaries regarding fraud
and abuse, explanation of benefits statements, and a
beneficiary's right to request an itemized bill for Medicare.
Liability of Medicare Carriers and Fiscal Intermediaries for Claims
Submitted by Excluded Persons
Section 10304 and 4304 of House bill
Current Law
Carriers and fiscal intermediaries are the entities which
process claims for Medicare. Intermediaries process claims
submitted by institutional providers of services and carriers
process claims submitted by physicians and suppliers.
House Bill
Section 10304. Provides that agreements with fiscal
intermediaries or carriers require that such organizations
reimburse the Secretary for any amounts paid for services under
Medicare which have been furnished, directed, or prescribed by
an individual or entity during any period in which the
individual or entity has been excluded from participation under
Medicare, if the amounts have been paid after the fiscal
intermediary or carrier has received notice of the exclusion.
Similar restrictions would be imposed upon states under the
Medicaid program.
Section 4304. Identical provision.
Effective Date. Applies to contracts and agreements
entered into, renewed, or extended after the date of enactment
of this Act, but only with respect to claims submitted on or
after either January 1, 1998, or the effective date of the
contract, whichever is later.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House
provision.
Exclusion of Entity Controlled by Family Member of a Sanctioned
Individual
Section 10305 and 4305 of House bill and Section 5202 of Senate
amendment
Current Law
Section 1128 of the Social Security Act authorizes the
Secretary of HHS to imposemandatory and permissive exclusions
of individuals and entities from participation in the Medicare program,
Medicaid program and programs receiving funds under the Title V
Maternal and Child Health Services Block Grant, or the Title XX Social
Services Block Grant. The Secretary may exclude any entity which the
Secretary determines has a person with a direct or indirect ownership
or control interest of 5 percent or more in the entity or who is an
officer, director, agent, or managing employee of the entity, where
that person has been convicted of a specified criminal offense, or
against whom a civil monetary penalty has been assessed, or who has
been excluded from participation under Medicare or a state health care
program.
House Bill
Section 10305. Provides that if a person transfers an
ownership or control interest in an entity to an immediate
family member or to a member of the household of the person in
anticipation of, or following, a conviction, assessment or
exclusion against the person, that the entity may be excluded
from participation in Federal health care programs on the basis
of that transfer. The terms ``immediate family member'' and
``member of the household'' are defined in this section.
Section 4305. Identical provision.
Effective Date. Effective 45 days after enactment.
Senate Amendment
Identical provision
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment. The Conferees
expect the Secretary to examine the facts and circumstances of
each case carefully before applying this penalty.
Imposition of Civil Money Penalties
Section 10306 and 4306 of House bill and Section 5203 of Senate
amendment
Current Law
Section 1128A of the Social Security Act sets forth a
list of fraudulent activities relating to claims submitted for
payments for items of services under a Federal health care
program. Civil money penalties of up to $10,000 for each item
or service may be assessed. In addition, the Secretary of HHS
(or head of the department or agency for the Federal health
care program involved) may also exclude the person involved in
the fraudulent activity from participation in a Federal health
care program, defined as any program providing health benefits,
whether directly or otherwise, which is funded directly, in
whole or in part, by the United States Government (other than
the Federal Employees Health Benefits Program).
House Bill
Section 10306. Adds a new civil money penalty for cases
in which a person contracts with an excluded provider for the
provision of health care items or services, where the person
knows or should know that the provider has been excluded from
participation in a Federal health care program. A civil money
penalty is also added for cases in which a person provides a
service ordered or prescribed by an excluded provider, where
that person knows or should know that the provider has been
excluded from participation in a Federal health care program.
Section 4306. Similar, but does not provide a civil money
penalty for cases in which a person provides a service ordered
or prescribed by an excluded provider.
Effective Date. Enactment.
Senate Amendment
Identical to Ways and Means provision, with an additional
provision providing a civil money penalty of $50,000 for each
kickback violation under Section 1128B(b) of the Social
Security Act and damages of up to 3 times the total amount of
remuneration offered, paid, solicited, or received under that
section.
Effective Date. Enactment.
Conference Agreement
The conference agreement includes the Senate amendment
providing civil money penalties for kickbacks and civil money
penalties for persons who contract with excluded providers,
with a modification eliminating the civil money penalty for
services ordered or prescribed by an excluded individual or
entity.
Disclosure of Information and Surety Bonds
Section 10307 and 4307 of House bill and Section 5211 of Senate
amendment
Current Law
Section 1834(a) of the Social Security Act establishes
requirements for payments under Medicare for covered items
defined as durable medical equipment. Home health agencies are
required, under Section 1861(o) of the Social Security Act, to
meet specified conditions in order to provide health care
services under Medicare, including requirements, set by the
Secretary, relating to bonding or establishing of escrow
accounts, as the Secretary finds necessary for the effective
and efficient operation of the Medicare program.
House Bill
Section 10307. Requires that suppliers of durable medical
equipment provide the Secretary with full and complete
information as to persons with an ownership or control interest
in the supplier, or in any subcontractor in which the supplier
has a direct or indirect 5 percent or more ownership interest,
other information concerning such ownership or control, and a
surety bond for at least $50,000. Home health agencies,
comprehensive outpatient rehabilitation facilities, and
rehabilitation agencies would also be required to provide a
surety bond for at least $50,000. The Secretary may impose the
surety bond requirement which applies to durable medical
equipment suppliers to suppliers of ambulance services and
certain clinics that furnish medical and other health services
(other than physicians' services). In each of these cases the
Secretary could waive the surety bond requirement if the entity
provides a comparable surety bond under state law.
Section 4307. Identical provision.
Effective Date. Applies with respect to items and
services furnished on or after January 1, 1998.
Senate Amendment
Identical, except minor wording differences and provision
that Secretary may also require a supplier of durable medical
equipment to provide evidence of compliance with applicable
Medicare conditions or requirements through an accreditation
survey conducted by a national accreditation body.
Conference Agreement
The conference agreement includes provisions in the House
bill and the Senate amendment which are similar, with a
modification making all surety bond requirements mandatory and
eliminating the Senate amendment language regarding
accreditation, and with clarifying language.
The Conferees wish to clarify that these surety bond
requirements do not apply to physicians and other health care
professionals.
Provision of Certain Identification Numbers
Section 10308 and 4208 of House bill and Section 5212 of Senate
amendment
Current Law
Section 1124 of the Social Security Act requires that
entities participating in Medicare, Medicaid and the Maternal
and Child Health Block Grant programs (including providers,
clinical laboratories, renal disease facilities, health
maintenance organizations, carriers and fiscal intermediaries),
provide certain information regarding the identity of each
person with an ownership or control interest in the entity, or
in any subcontractor in which the entity has a direct or
indirect 5 percent or more ownership interest. Section 1124A of
the Social Security Act requires that providers under part B of
Medicare also provide information regarding persons with
ownership or control interest in a provider or any
subcontractor in which the provider has a direct or indirect 5
percent or more ownership interest.
House Bill
Section 1308. Requires that all Medicare providers supply
the Secretary with both the employer identification number and
Social Security account number of each disclosing entity, each
person with an ownership or control interest, and any
subcontractor in which the entity has a direct or indirect 5
percent or more ownership interest. The Secretary of HHS is
directed to transmit to the Commissioner of Social Security
information concerning each social security account number and
employer identification number supplied to the Secretary for
verification of such information. The Secretary would reimburse
the Commissioner for costs incurred in performing the
verification services required by this provision. The Secretary
of HHS would report to Congress on the steps taken to assure
confidentiality of Social Security numbers to be provided to
the Secretary of HHS under this section.
Section 4308. Similar, but specifies that Social Security
numbers would not be disclosed to other persons or entities,
and use of such numbers would be limited to verification and
matching purposes only.
Effective Date. Effective 90 days after submission of
Secretary's report to Congress on confidentiality of Social
Security numbers.
Senate Amendment
Identical to Ways and Means provision.
Conference Agreement
The conference agreement includes provisions that are
similar in the House bill and the Senate amendment with
modifications. Although the Conferees are aware of the
widespread use of Social Security numbers as personal
identifiers, the Conferees had concern about the
confidentiality of such numbers under this new disclosure
requirement. Therefore, this provision provides for a study by
the Secretary before this requirement would become effective.
In addition, the Conferees note that the disclosure of Social
Security numbers and other personal identifiers to a Federal
agency are protected by applicable provisions of the Privacy
Act.
Advisory Opinions Regarding Certain Physician Self-Referral Provisions
Section 10309 and 4309 of House bill
Current Law
Section 1877 of the Social Security Act establishes a ban
on certain financial arrangements between a referring physician
and an entity. Specifically, if a physician (or immediate
family member) has an ownership or investment interest in or a
compensation arrangement with an entity, the physician is
prohibited from making certain referrals to the entity for
services for which Medicare would otherwise pay.
House Bill
Section 10309. Requires the Secretary of HHS to issue
written advisory opinions concerning whether a physician
referral relating to designated health services (other than
clinical laboratory services) is prohibited under Section 1877
of the Social Security Act. Such opinions would be binding as
to the Secretary and the party requesting the opinion. To the
extent practicable, the Secretary is to apply the regulations
issued under the advisory opinion provisions of Section 1128D
of the Social Security Act to the issuance of advisory opinions
under this provision.
Section 4309. Identical provision.
Effective Date. Enactment.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House provision.
The conference agreement also clarifies the application of
certain rules to advisory opinions.
Other Fraud and Abuse Related Provisions
Section 10310 and 4311 of House bill and Section 5221 of Senate
amendment
Current Law
Section 1128D provides for safe harbors, advisory
opinions, and fraud alerts as guidance regarding application of
health care fraud and abuse sanctions. Section 1128E of the
Social Security Act directs the Secretary of HHS to establish a
national health care fraud and abuse data collection program
for the reporting of final adverse actions against health care
providers, suppliers, or practitioners.-
House Bill
Section 10310. Makes certain technical changes in
provisions added by the Health Insurance Portability and
Accountability Act of 1996. The provision would also provide
that mandatory and permissive exclusions under Section 1128
apply to any Federal health care program, defined as any
program providing health benefits, whether directly or
otherwise, which is funded directly, in whole or in part, by
the United States Government (other than the Federal Employees
Health Benefits Program). A new provision is added to the
health care fraud and abuse data collection program to provide
a civil money penalty of up to $25,000 to be imposed against a
health plan that fails to report information on an adverse
action required to be reported under this program. The
Secretary would also publicize those government agencies which
fail to report information on adverse actions as required.
Section 4311. Identical provision.
Effective Date. The change in the federal programs under
which a person may be excluded under Section 1128 of the Social
Security Act would be effective on the date of enactment of
this Act. The sanction provision for failure to report adverse
action information as required under Section 1128E of the
Social Security Act would apply to failures occurring on or
after the date of the enactment of this Act. The other
amendments made by this section would be effective as if
included in the enactment of the Health Insurance Portability
and Accountability Act of 1996.
Senate Amendment
Identical, but with an additional provision clarifying
that certain waivers and payments of premiums do not violate
Section 1128A, as amended by the Health Insurance Portability
and Accountability Act of 1996.
Conference Agreement
The conference agreement includes provisions in the House
bill and the Senate amendment which are identical, with a
modification adding the Senate amendment language clarifying
the definition of ``remuneration'' under Section 1128A(I)(6) of
the Social Security Act, and adding additional clarifying
language to that section.
Notification of Availability of Providers as Part of Discharge Planning
Process
Section 4310 of House bill
Current Law
Hospitals are required to have a discharge planning
process meeting certain requirements. The discharge planning
evaluation must include an evaluation of the patient's need for
likely post-hospital services and the availability of those
services.
House Bill
Includes, as part of this evaluation, the availability of
those services through individuals and entities that
participate in Medicare, serve the geographic area where the
patient resides, and request to be listed by the hospital as
available. The provision would prohibit the discharge plan from
specifying or otherwise limiting the qualified provider which
may provide post-hospital care. The plan would also identify
any provider (to whom the individual is referred) in which the
hospital has a disclosable financial interest or which has such
disclosable interest in the hospital.
Effective Date. Discharge plan provisions would be
effective 90 days after enactment. The Secretary of HHS would
issue regulations implementing the information disclosure
provisions within one year of date of enactment, and such
regulations would specify the effective date of such
provisions.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House provision
with a modification expanding the required notification of
financial interest to include any post-hospital provider.
Competitive Bidding
Section 4743 of House bill and Section 5218 of Senate amendment
Current Law
Medicare does not use competitive bidding for the
selection of providers authorized to provide covered services
to beneficiaries.
House Bill
Requires the Secretary, within 1 year of enactment, to
establish and operate, over a 2-year period, demonstration
projects in two geographic areas selected by the Secretary.
Under the demonstration, the amount of payment for selected
items or services furnished in the region would be the amount
determined pursuant to a competitive bidding process. The
process would have to meet the requirements imposed by the
Secretary to ensure cost-effective delivery to beneficiaries of
items and services of high quality.
Provides that the Secretary would select the items and
services based on a determination that the use of competitive
bidding would be appropriate and cost effective. The Secretary
would be required to consult with an advisory task force which
included representatives of providers and suppliers (including
small business providers and suppliers) in each project region.
Senate Amendment
Requires the Secretary to establish competitive
acquisition areas for furnishing Part B services (except for
physicians services) as specified by the Secretary. The
Secretary could establish different competitive acquisition
areas for different classes of items and services. The areas
would be chosen based on availability and accessibility of
entities able to furnish items and services and probable
savings to be realized.
Requires the Secretary to conduct a competition among
individuals and entities supplying items and services for each
area for each class of items and services. The Secretary could
not award a contract unless the Secretary found that the entity
met quality standards specified by the Secretary. Further, the
Secretary would have to find that the total amounts to be paid
are expected to be less than would otherwise be paid. A
contract could not be let for an amount in excess of the
applicable fee schedule amount unless the Secretary determined
that the amount of the excess is warranted by reason of
technological innovation, quality improvement, or similar
reasons. Regardless, the total amount paid under the contract
could not exceed the amount that would otherwise be paid.
Authorizes the Secretary to specify contract terms. The
Secretary would be authorized to limit the number of
contractors in an area to the number needed to meet projected
demand. Payment could not be made in a competitive acquisition
area to a non-contracting entity unless the Secretary found
that the expenses were incurred in a case of urgent need or
other circumstances specified by the Secretary.
Effective Date. Applies to items and services furnished
after December 31, 1997.
Conference Agreement
The conference agreement includes the Senate amendment
with an amendment to limit the Secretary's authority to the
conduct of demonstration projects. The Secretary would be
authorized to implement not more than five such projects, at
three sites each. The agreement would further specify that at
least one competitive acquisition area would be for oxygen and
oxygen equipment.
The agreement would require the Secretary to evaluate the
impact of establishing competitive acquisition areas on
Medicare program savings, access, diversity of product
selection, and quality. The Secretary would make annual reports
to the House Committees on Ways and Means and Commerce and the
Senate Committee on Finance on the results of the evaluation.
If the Secretary determined that a demonstration project was
successful at the end of three years, the Secretary could
expand bidding for that item or service to additional sites.
The GAO would be required to study the effectiveness of the
competitive acquisition areas.
All projects authorized under this provision would
terminate no later than December 31, 2002. This provision would
be effective on enactment.
Application of Certain Provisions of the Bankruptcy Code
Section 5213 of the Senate amendment
Current Law
Under the Bankruptcy Code, a provider can assert that any
civil monetary penalty due to the Medicare program is
discharged and does not survive the bankruptcy proceeding.
Current law provides for various causes of exclusion from the
Medicare program. However, several bankruptcy courts have held
that a provider may not be excluded from Medicare during the
pendency of a bankruptcy proceeding because of the court's
automatic stay.
House Bill
No provision.
Senate Amendment
Changes the current status of the United States as a
creditor in a bankruptcy proceeding involving a debtor who
participates in Medicare or Medicaid. It would exempt the
United States from bankruptcy's automatic stay with respect to
actions to exclude the debtor from program participation, to
assess civil money penalties, or to deny, recoup or setoff
overpayments due to fraud (not including overpayments for
medical services); it would specify that debts owed to the
United States for certain overpayments, or for certain
penalties are nondischargeable; it would exclude debt
repayments to the United States for certain overpayments from
the Bankruptcy Code's preferential transfer provision; it would
permit the Department of HHS, not a U.S. bankruptcy court, to
determine the allowability and finality of debtor claims for
payment; and it would provide special notice requirements.
Effective Date. Enactment.
Conference Agreement
The Conference agreement does not include the bankruptcy
provisions in the Senate amendment, which would have barred
bankruptcy courts from staying exclusions of physicians and
other health care providers from Medicare, and from the
dischargeability in a bankruptcy proceeding of fines and
recovery of payments received through fraud. The Conferees
recommend that the committees with jurisdiction over the
Medicare program and over bankruptcy law continue to address
these significant issues in other pending legislation.
Replacement of Reasonable Charge Fee Schedule
Section 5214 of Senate amendment
Current Law
Medicare pays for most Part B services (including
physicians services, lab services and durable medical
equipment) on the basis of fee schedules. A few items are still
paid on the basis of reasonable charges.
House Bill
No provision.
Senate Amendment
Provides that payment under Medicare Part B is to be
based on the lessor of the actual charge for the service or
amounts determined by the applicable fee schedule developed by
the Secretary for the particular service. The provision would
make conforming changes to Part B. For an enteral or parenteral
pump furnished on a rental basis during a period of medical
need, payment would be limited to 15 months of medical need
after which payment could be made for maintenance and servicing
of the pump in amounts reasonable and necessary to ensure
proper operation. The provision would delete current provisions
relating to determination of reasonable charges for services
personally performed by teaching physicians and inherent
reasonableness authority for determining payments to
physicians.
Specifies that the Secretary in developing a fee schedule
for a particular service shall, in the first year set payment
amounts so that total payments for those services would be
approximately equal to those which would have been made if the
fee schedule had not been in effect.
Effective Date. Applies, to the extent the amendments
substitute fee schedules for reasonable charges, to particular
services as of the date specified by the Secretary.
Conference Agreement
The conference agreement includes the Senate amendment
with an amendment. Under the agreement, the Secretary would be
authorized to implement a statewide or other areawide fee
schedule for payment of specified items and services paid on a
reasonable charge basis. The specified items and services are
medical supplies; home dialysis supplies and equipment;
therapeutic shoes; parenteral and enteral nutrients, equipment,
and supplies; electromyogram devices; salivation devices; blood
products; and transfusion medicine.
The agreement provides that the fee schedule would be
updated each year by the percentage increase in the CPI for the
12-month period ending the preceding June. No update could
occur before 2003 for parenteral and enteral nutrients,
equipment, and supplies. The Secretary, in developing a fee
schedule would be required to set amounts for the first year
period to which the fee schedule applies so that total Medicare
payments for those services would be approximately equal to the
estimated total payments if those amendments had not been made.
With regard to parenteral and enteral nutrition, the
Conferees recommend that the Secretary examine carefully the
appropriateness of including the costs of professional services
and variations in payments according to the setting where
services are provided.
Application of Inherent Reasonableness to All Part B Services Other
Than Physicians Services
Section 5215 of Senate amendment
Current Law
The Secretary is permitted to increase or decrease
Medicare payments in cases where the payment amount is
``grossly excessive or grossly deficient and not inherently
reasonable.'' The Secretary's authority to make these payment
adjustments is generally referred to as ``inherent
reasonableness authority''.
House Bill
No provision.
Senate Amendment
Requires the Secretary to describe by regulation the
factors to be used in determining cases in which application of
payment rules under Part B (other than to physicians services)
results in the determination of an amount that is not
inherently reasonable. The Secretary would provide in these
cases for factors to be considered in establishing a realistic
and equitable amount.
Effective Date. Enactment
Conference Agreement
The conference agreement includes the Senate amendment
with an amendment. The factors provided by the Secretary could
not increase or decrease payment amounts by more than 15
percent from the preceding year for a particular item or
service. The Conference agreement also includes additional
clarifying language.
Requirement To Furnish Diagnostic Information
Section 5216 of Senate amendment
Current Law
Physicians are required to provide diagnostic codes when
billing for services.
House Bill
No provision
Senate Amendment
Extends the requirement to furnish diagnostic information
to non-physician practitioners.
Specifies that physicians and non-physician practitioners
would be required to furnish diagnostic information to entities
when ordering specified items or services furnished by such
entities. Specifically they would be required to supply
diagnostic information to the entity if the entity is required
by the Secretary (or fiscal agent of the Secretary) to furnish
such information as a condition of payment. This requirement
would apply to diagnostic X-rays, diagnostic lab tests, and
other diagnostic tests, durable medical equipment, prosthetic
devices, and braces and artificial legs, arms and eyes.
Effective Date. Applies to items and services furnished
on or after January 1, 1998.
Conference Agreement
The conference agreement includes the Senate amendment.
Report by GAO on Operation of Fraud and Abuse Control Program
Section 5217 of Senate amendment
Current Law
The Health Insurance Portability and Accountability Act
of 1996 requires the first report by the General Accounting
Office (GAO) not later than January 1, 2000 on the operation of
a new Medicare fraud and abuse control program designed to
improve investigation and prosecution of fraud against the
Medicare program.
House Bill
No provision.
Senate Amendment
Requires the first GAO report no later than June 1, 1998.
Effective Date. Enactment.
Conference Agreement
The conference agreement includes the Senate amendment.
Prohibiting Unnecessary and Wasteful Medicare Payments for Certain
Items
Section 5220 and 5223 of Senate amendment
Current Law
The reasonable cost of medical services and items under
Medicare is defined and limitations upon such costs are set
forth in Section 1861(v) of the Social Security Act.-
House Bill
No provision.
Senate Amendment
Specifies that reasonable costs would not include costs
for entertainment, gifts, costs for fines and penalties under
Federal or state law, or certain education expenses for spouses
or dependents of providers of services, their employees or
contractors. Section 5223, with similar language, also includes
personal use of motor vehicles as a non-reimbursable charge
under Medicare.
Effective Date. Effective with respect to medical or
other items or services provided on or after January 1, 1998.
Conference Agreement
The conference agreement includes the Senate provision
with clarifying language.
Reducing Excessive Billings and Utilization for Certain Items
Section 5221 and 5224 of Senate amendment
Current Law
Medicare law authorizes the Secretary to develop and
periodically update a list of DME items that are determined, on
the basis of prior payment experience, to be frequently subject
to unnecessary utilization throughout a carrier's entire
service area or a portion of an area. The Secretary is also
authorized to develop and periodically update a list of DME
suppliers for whom the Secretary has found a substantial number
of denied claims because items were not medically necessary and
reasonable or the Secretary has identified a pattern of
overutilization resulting from the business practice of the
supplier.
House Bill
No provision.
Senate Amendment
Requires the Secretary to develop the list of DME items
and suppliers (see also item 16, durable medical equipment
below).
Effective date. Enactment.
Conference Agreement
The conference agreement does not include the Senate
provision.
Improved Carrier Authority to Reduce Excessive Medicare Payments/
Itemization of Surgical Dressings
Sections 5225 and 5226 of Senate amendment
Current Law
Surgical dressings are paid according to the DME fee
schedule for inexpensive and other routinely purchased items
(with national limited payment amounts based on 1992 reasonable
charge data, updated). Fee schedule payments do not apply to
dressings furnished as an incident to a physician's service or
by a home health agency.
House Bill
No provision.
Senate Amendment
Authorizes the Secretary to apply inherent reasonableness
authority to payments for surgical dressings. Applies fee
schedule to surgical dressings provided by a home health
agency. (Note that other provisions on prospective payment for
home health specify that all services covered and paid on a
reasonable cost basis, including medical supplies, would be
required to be included in the prospective rate.)
Effective date. Enactment.
Conference Agreement
The conference agreement does not include the Senate
provision.
Subtitle E--Provisions Relating to Part A
Chapter 1--Payment of PPS Hospitals
PPS Hospital Payment Update
Section 10501 of the House bill and Section 5401 of the Senate
amendment
Current Law
Hospitals are paid on the basis of a prospectively fixed
payment rate for costs associated with each discharge. Each
hospital's basic payment rate is based on a national
standardized payment amount, which is higher for hospitals in
large urban areas than for other hospitals. Each standardized
payment amount is adjusted by a wage index. Payment also
depends on the relative costliness of the case, based on the
diagnosis related group (DRG) to which the discharge is
assigned. Additional payments are made for the following:
extraordinary costly cases (outliers); indirect costs of
medical education; and for hospitals serving a disproportionate
share of low-income patients. Other exceptions and adjustments
are made.
PPS payment rates are annually updated using an ``update
factor.'' The annual update factor applied to increase the
Federal base payment amounts is determined, in part, by the
projected increase in the hospital market basket index (MBI),
which measures the costs of goods and services purchased by
hospitals. Under the Omnibus Budget Reconciliation Act of 1993
(OBRA 93), the PPS update factor in FY 1998 for all PPS
hospitals is equal to the percentage increase in the market
basket.
House Bill
Sets the update factor for FY 1998 at 0% for all
hospitals in all areas; for FY 1999-2002, at MBI minus 1.0
percentage points for all hospitals in all areas; and for FY
2003 and each subsequent fiscal year equal to the MBI for all
hospitals in all areas.
Effective Date. Enactment.
Senate Amendment
Establishes a calendar year (CY) update cycle for PPS
hospital payments. Hospital payment rates for FY 1997 would be
continued until January 1, 1998. For CY 1998, the annual update
for PPS hospitals would be equal to the MBI minus 2.5
percentage points; for CY 1999, the MBI minus 1.3 percentage
points; for CY 2000-2002, the MBI minus 1.0 percentage point;
and for CY 2003 and each subsequent year, the MBI.
Effective Date. Enactment.
Conference Agreement
The conference agreement includes 0% update for FY 1998;
the MBI minus 1.9 percentage points for FY 1999; the MBI minus
1.8 percentage points for FY 2000; the MBI minus 1.1 percentage
points for FY 2001 and FY 2002; and for FY 2003 and each
subsequent fiscal year, the MBI percentage increase for all
hospitals in all areas. The conference agreement includes a
provision which would set a different update for certain non-
teaching, non-DSH, and non-Medicare dependent hospitals to
provide these hospitals with temporary relief. Hospitals would
qualify for the higher update if they were located in states in
which a non-teaching, non-DSH hospital received lower aggregate
payments for their cost reporting periods beginning during FY
1995 than the aggregate allowable operating costs of inpatient
hospital services for all such hospitals in the state. In
addition, the amount of payments for discharges occurring in
the cost reporting period involved would have to be less than
the allowable operating cost of inpatient hospital services for
such a hospital for such period. In FY 1998, these hospitals
would receive a payment update equal to the update provided
that year for all other hospitals plus 0.5 percentage points;
for FY 1999, a payment update equal to the update for that year
provided for all other hospitals plus 0.3 percentage points.
Regarding temporary relief for certain non-teaching, non-
DSH hospitals, it is the intent of Conferees that these payment
adjustments be available for eligible hospitals for FY 1998 and
FY 1999 to account for disproportionately low Medicare margins.
Moreover, the conferees intend that Medicare payments be paid
to eligible hospitals in a timely manner, first through
estimated interim payments, and then reconciled when the
respective fiscal year cost reports are settled.
Historically, the Health Care Financing Administration
(HCFA) has analyzed only Medicare Provider Analysis and Review
(MedPAR) data in its annual recalibration of diagnosis related
group (DRG) relative weights and when considering whether to
reclassify certain procedures within the DRG system. Because
the International Classification of Disease 9th Revision
Clinical Modification (ICD-9-CM) system used in conjunction
with MedPAR may not be fully updated to permit tracking the
administration of inpatient drug therapies, certain drug
therapies essentially are eliminated from HCFA's recalibration
and reclassification process. Thus, in order to ensure that
Medicare beneficiaries have access to innovative new drug
therapies, the Conferees believe that HCFA should consider, to
the extent feasible, reliable, validated data other than MedPAR
data in annually recalibrating and reclassifying the DRGs. Data
collection should be done in such a manner so as to assure
accurate reflection of drug utilization. The Conferees are
concerned that because of the connection between reporting and
payment, drug therapies not already included in the DRG could
be under-reported. Furthermore, to the extent feasible, any new
procedure coding system adopted under the Health Insurance
Portability and Accountability Act of 1996, should consider a
means of tracking the administration of drug therapies such
that future MedPAR data shall contain information regarding the
utilization of specific drugs.
Capital Payments for PPS Hospitals
Section 10502 of the House bill and Section 5402 of the Senate
amendment
Current Law
In FY 1992, Medicare began phasing in prospectively-
determined per case rates for capital-relatedcosts. During the
10-year transition to a single capital rate, payments will reflect both
hospital-specific costs and a single Federal capital payment rate.
During the transition, hospitals are paid according to either a fully
prospective method or a ``hold harmless'' method of payment.
Capital payment rates are updated annually. For the first
5 years of the transition to prospectively determined per-case
rates, historical cost increases were used to increase the
Federal and hospital-specific rates. Under a budget neutrality
requirement, per case capital rates were adjusted in the first
5 years of the transition so that total payments equaled 90
percent of estimated Medicare-allowed capital costs. In FY
1996, the budget neutrality requirement was lifted. In
addition, the cost-based updates are replaced by an ``update
framework'' (developed by HCFA and proposed in the June 2, 1995
Federal Register), which determines payment rate growth. This
analytical framework is to take into account changes in the
price of capital and appropriate changes in capital
requirements resulting from development of new technologies and
other factors. With the expiration of the budget neutrality
language in 1996, the federal capital rate jumped 22.6 percent.
Medicare, through regulation, provides for capital
exception payments for hospitals that incur unanticipated
capital expenditures due to circumstances beyond the hospital's
control. Eligible hospitals include: (1) sole community
hospitals; (2) hospitals located in an urban area with at least
100 beds that qualify for DSH payments; and (3) hospitals with
a combined inpatient Medicare and Medicaid utilization of at
least 70%. In most instances, the additional payment is based
on the minimum payment amount of 85% of Medicare's share of
allowable capital-related costs. The hospital must show that it
obtained approval from a state planning authority for the
capital project, must satisfy an age-of-asset test, and, in the
case of an urban hospital, a specified excess capacity test. To
be eligible for exception payments, the capital project must be
completed during the period from the beginning of its first
cost reporting period beginning on or after October 1, 1991, to
the end of its last cost reporting period beginning before
October 1, 2001, and have costs of at least: (1) $200 million;
or (2) 100% of its operating cost during the first 12 month
cost reporting period beginning on or after October 1, 1991.
house bill
Requires the Secretary to rebase the capital payment
rates in FY 1998 using the actual rates in effect in FY 1995,
by applying the budget neutrality adjustment factor used to
determine the federal capital payment rate on September 30,
1995, to the unadjusted standard federal capital payment rate
in effect on September 30, 1997, and to the unadjusted
hospital-specific rate in effect on September 30, 1997.
The provision would also revise the exceptions process
for certain capital projects provided under PPS for eligible
hospitals located in urban areas with over 100 beds.
Effective Date. Enactment.
senate amendment
Similar provision, except the provision would also amend
the exceptions process for major capital projects provided in
federal regulation to include, as eligible for an exception,
hospitals located in an urban area and has more than 300 beds,
without regard to its disproportionate share patient percentage
or whether it qualifies for additional disproportionate share
hospital (DSH) payment amounts. The provision would amend the
project size requirement to require that a hospital's project
costs must be at least 150% of its operating costs during the
first 12-month cost reporting period beginning on or after
October 1, 1991. The provision would also require the Secretary
to reduce the federal capital and hospital rates by up to $50
million in a calendar year to ensure that the amended
exceptions process would not result in an increase in the total
amount that would have otherwise been paid in a fiscal year.
Effective Date. Enactment.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment on the
rebasing of capital payment rates with an amendment to reduce
the capital payment rate by an additional 2.1%. The conference
agreement does not include capital exceptions payment
provisions.
Disproportionate Share
Section 10503 of the House bill and Section 5462 of the Senate
amendment
Current Law
Under PPS, an adjustment is made to the payment to
hospitals that serve a disproportionate share of low-income
patients. The disproportionate share hospital (DSH) adjustment
is intended to compensate hospitals that treat large
proportions of low-income patients. The factors considered in
determining whether a hospital qualifies for a DSH payment
adjustment include the number of beds, the hospital's location,
and the disproportionate patient percentage. A hospital's
disproportionate patient percentage is the sum of (1) the total
number of inpatient days attributable to federal Supplemental
Security Income (SSI) beneficiaries divided by the total number
of Medicare patient days, and (2) the number of Medicaid
patient days divided by total patient days, expressed as a
percentage. A hospital is classified as a DSH under any of the
following circumstances:
(1) If its disproportionate patient percentage equals or
exceeds: (a) 15 percent for an urban hospital with 100 or more
beds, or a rural hospital with 500 or more beds (the latter is
set by regulation); (b) 30 percent for a rural hospital with
more than 100 beds and fewer than 500 beds or is classified as
a sole community hospital (SCH); (c) 40 percent for an urban
hospital with fewer than 100 beds; or (d) 45 percent for a
rural hospital with 100 or fewer beds, or
(2) if it is located in an urban area, has 100 or more
beds, and can demonstrate that, during its cost reporting
period, more than 30 percent of its net inpatient care revenues
are derived from State and local government payments for care
furnished to indigent payments. (This provision is intended to
help hospitals in States that fund care for low-income patients
through direct grants rather than expanded Medicaid programs.)
For a hospital qualifying on the basis of (1)(a) above,
if its disproportionate patient percentage is greater than 20.2
percent, the applicable PPS payment adjustment factor is 5.88
percent plus 82.5 percent of the difference between 20.2
percent and the hospital's disproportionate patient percentage.
If the hospital's disproportionate patient percentage is less
than 20.2 percent, the applicable payment adjustment factor is
equal to: 2.5 percent plus 65 percent of the difference between
15 percent and the hospital's disproportionate patient
percentage. If the hospital qualifies as a DSH on the basis of
(1)(b), the payment adjustment factor is determined as follows:
(a) if the hospital is classified as a rural referral center,
the payment adjustment factor is 4 percent plus 60 percent of
the difference between the hospital's disproportionate patient
percentage and 30 percent; (b) if the hospital is a SCH, the
adjustment factor is 10 percent; (c) if the hospital is
classified as both a rural referral center and a SCH, the
adjustment factor is the greater of 10 percent or 4 percent
plus 60 percent of the difference between the hospital's
disproportionate patient percentage and 30 percent; and (d) if
the hospital is not classified as either a SCH or a rural
referral center, the payment adjustment factor is 4 percent.
If the hospital qualifies on the basis of (1)(c), the
adjustment factor is equal to 5 percent. If the hospital
qualifies on the basis of (1)(d), the adjustment factor is 4
percent. If the hospital qualifies on the basis of (2) above,
the payment adjustment factor is 35 percent.
house bill
Freezes DSH payments for discharges for FY 1998 and FY
1999. The Secretary would be required to develop a proposal to
modify the current definitions for DSH payments and transmit
the proposal to the Ways and Means and Finance Committees by
April 1, 1999.
Effective Date. Enactment.
senate amendment
Applies the current formula with a 4% reduction in the
DSH adjustment from October 1, 1997 to January 1, 1999. For
calendar years 1999-2002, the Secretary would be required to
apply an additional 4% reduction each year in the DSH
adjustment. By January 1, 1999, the Secretary would be required
to establish a new formula that takes into account Medicaid and
Medicare SSI beneficiaries, and uncompensated/charity care. The
new formula would be required to have a single (one) threshold
for all hospitals. In each calendar year that the formula
applied, the additional payment determined for a calendar year
could not exceed an amount equal to the additional payment that
would have been determined without the formula, reduced by 8%
in CY 1999; 12% in CY 2000; 16% in CY 2001; 20% in CY 2002; and
by 0% in CY 2003 and subsequent calendar years.
Effective Date. Applies to discharges occurring on and
after October 1, 1997.
conference agreement
The conference agreement includes the Senate provision
with amendments. The current DSH payment formula amounts would
be reduced by 1% for FY 1998; 2% in FY 1999; 3% in FY 2000; 4%
in FY 2001; 5% in FY 2002; and 0% in FY 2003 and each
subsequent fiscal year. The conference agreement includes a
requirement that the Secretary submit to the House Ways and
Means and Senate Finance Committees, no later than 1 year after
enactment, a report that contains a formula for determining
additional DSH payments to hospitals. In determining the
formula, the Secretary would be required to establish a single
threshold for costs incurred by hospitals in serving low-income
patients, and consider the following costs: (1) the costs
incurred of furnishing hospital services to individuals
entitled to Medicare Part A and SSI; and (2) the costs incurred
by the hospital of furnishing services to individuals receiving
Medicaid who are not entitled to benefits under Part A of
Medicare, including individuals enrolled in a managed care
organization or any other managed care plan under Medicaid and
individuals who receive medical assistance in a state with an
1115 waiver under Medicaid. In developing the formula, the
Secretary would be allowed to require hospitals receiving DSH
payments to submit any information the Secretary requested to
develop the formula.
Medicare Capital Asset Sales Price Equal to Book Value
Section 10504 of the House bill and Section 5463 of the Senate
amendment
current law
Medicare provides for establishing an appropriate
allowance for depreciation and for interest on capital
indebtedness and a return on equity capital when a hospital has
undergone a change of ownership. The valuation of the asset is
the lesser of the allowable acquisition costs of the asset to
the owner of record, or the acquisition cost of such asset to
the new owner.
House Bill
Eliminates the allowance for return on equity capital,
and provides for a depreciation adjustment of the historical
cost of the asset recognized by Medicare, less depreciation
allowed, to the owner of record as of the date of enactment of
this bill, or to the first owner of record of the asset in the
case of an asset not in existence as of the date of enactment.
Effective date. Applies to changes of ownership that
occur beginning three months after enactment.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
Elimination of Indirect Medical Education (IME) Adjustment and DSH
Payments Attributable to Outlier Payments
Section 10505 of the House bill and Section 5464 of the Senate
amendment
Current Law
Medicare provides outlier payments to hospitals that are
intended to protect them from the risk of large financial
losses associated with cases having exceptionally high costs or
unusually long hospital stays. Beginning in FY 1998, the length
of stay outlier policy will terminate, and hospitals will
receive outlier payments only for very high cost cases. For
each DRG, a specific dollar loss threshold is set, and outlier
payments are calculated based on the amount by which a
hospital's costs exceed this loss threshold. For teaching and
disproportionate share hospitals, however, their estimated cost
for each case is reduced by the amount of the hospital's IME
and DSH payment adjustments. The amount by which the estimated
cost exceeds the outlier threshold thus is less for a case
treated at a teaching or disproportionate share hospital,
resulting in lower outlier payments. The lower outlier payment
amount is then increased by the hospital's IME and DSH
adjustments, but this generally is not enough to offset the
loss in outlier payments resulting from the reduced cost
estimate for the case.
House Bill
Allows teaching and disproportionate share hospitals to
be treated like all other hospitals in the calculation of
outlier payment amounts. Their estimated costs per case would
not be reduced by their IME and DSH payments, and an additional
IME or DSH adjustment would not be added to these payments.
Effective Date. Applies to discharges occurring after
September 30, 1997.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
Certain Discharges To Post Acute Care
Section 10507 of the House bill and Section 5465 of the Senate
amendment
Current Law
PPS hospitals that move patients to PPS-exempt hospitals
and distinct-part hospital units, or skilled nursing facilities
are currently considered to have ``discharged'' the patient and
receive a full DRG payment. Under current law, a ``transfer''
is defined as moving a patient from one PPS hospital to another
PPS hospital. In a transfer case, payment to the first PPS
hospital is made on a per diem basis, and the second PPS
hospital is paid the full DRG payment.
House Bill
Defines a ``transfer case'' to include an individual
discharged from a PPS hospital who is: (1) admitted as an
inpatient to a hospital or distinct-part hospital unit that is
not a PPS hospital for further inpatient hospital services; (2)
is admitted to a skilled nursing facility or other extended
care facility for extended care services; or (3) receives home
health services from a home health agency if such services
directly relate to the condition or diagnosis for which the
individual received inpatient hospital services, and if such
services were provided within an appropriate period, as
determined by the Secretary in regulations promulgated no later
than September 1, 1998. Under the provision, a PPS hospital
that ``transferred'' a patient would be paid on a per diem
basis up to the full DRG payment. The PPS-exempt hospital or
other facility would be paid under its own Medicare payment
policy.
Effective Date. With respect to transfers from PPS-exempt
hospitals and SNFs, applies to discharges occurring on or after
October 1, 1997. For home health care, applies to discharges
occurring on or after October 1, 1998.
Senate Amendment
Similar provision, except defines a transfer case as
including the case of an individual who, immediately upon
discharge from, and pursuant to the discharge planning process
of a PPS hospital, is admitted to a PPS-exempt hospital,
hospital unit, SNF, or other extended care facility. The
provision does not include home health services in the
definition of a transfer.
Conference Agreement
The conference agreement would provide that for
discharges occurring on or after October 1, 1998, those that
fall within a specified group of 10 DRGs would be treated as a
transfer for payment purposes. The Secretary would be given the
authority to select the 10 DRGs focusing on those with high
volume and high post acute care. The provision would apply to
patients transferred from a PPS hospital to a PPS-exempt
hospital or unit, SNF, discharges with subsequent home health
care provided within an appropriate period (as defined by the
Secretary), and for discharges occurring on or after October 1,
2000, the Secretary may propose to include additional post
discharge settings and DRGs to the transfer policy.
Payments to PPS hospitals would be fully or partially
based on Medicare's current payment policies applicable to
patients transferred from one PPS hospital to another PPS
hospital (per diem rates). The Secretary would determine
whether the full transfer policy or a blended payment rate (50%
of the transfer per diem payment and 50% of the total DRG
payment) would apply based on the distribution of marginal
costs across days, so that if a substantial portion of the
costs of a case are incurred in the early days of a hospital
stay the payment would reflect these costs. For FY 2001, the
Secretary would be required to publish a proposed rule which
included a description of the effect of the transfer policy.
The Secretary would be authorized to include in the proposed
rule and final rule for FY 2001 or a subsequent fiscal year, a
description of additional post-discharge services that would
result in a qualified discharge and diagnosis-related groups
specified by the Secretary in addition to the 10 diagnosis-
related groups originally selected under this policy.
The Conferees are concerned that Medicare may in some
cases be overpaying hospitals for patients who are transferred
to a post acute care setting after a very short acute care
hospital stay. The Conferees believe that Medicare's payment
system should continue to provide hospitals with strong
incentives to treat patients in the most effective and
efficient manner, while at the same time, adjust PPS payments
in a manner that accounts for reduced hospital lengths of stay
because of a discharge to another setting.
The Conferees expect that the application of the transfer
policy to 10 high volume/high post-acute use DRGs will provide
extensive data to examine hospital behavioral effects under the
new transfer policy.
Increase Base Payment Rate to Puerto Rico Hospitals
Section 10508 of the House bill and Section 5468 of the Senate
amendment
Current Law
Medicare's hospital PPS includes a special provision for
determining payment to hospitals in Puerto Rico. These
hospitals are paid a blended rate based on a standardized
payment amount for large urban or other areas specific to
Puerto Rico and the national standardized payment amount for
all areas combined. The two rates have weights of 75 percent
and 25 percent, respectively.
House Bill
Adjusts the base payment rate to Puerto Rico hospitals to
50 percent local and 50 percent national.
Effective Date. Enactment.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
Inclusion of Stanly County, N.C. In A Large Urban Area Under Medicare
Program
Section 5651 of the Senate amendment
Current Law
No provision.
House Bill
No provision.
Senate Amendment
Specifies that, for the purpose of Medicare PPS payments
to inpatient hospitals, the large urban area of Charlotte-
Gastonia-Rock Hill, North Carolina-South Carolina may be deemed
to include Stanly County, North Carolina.
Effective Date. Applies to discharges occurring on or
after October 1, 1997.
Conference Agreement
The conference agreement includes the Senate amendment.
Chapter 2--Payment of PPS Exempt Hospitals
Payment Update
Section 10511 of the House bill and Section 5421 of the Senate
amendment
Current Law
Under Medicare, five types of specialty hospitals
(psychiatric, rehabilitation, long-term care, children's and
cancer) and two types of distinct-part units in general
hospitals (psychiatric and rehabilitation) are exempt from PPS.
They are subject to the payment limitations and incentives
established in the Tax Equity and Fiscal Responsibility Act of
1982 (TEFRA). Each provider is paid on the basis of reasonable
cost subject to a rate of increase ceiling on inpatient
operating costs. The ceiling is based on a target amount per
discharge. The target amount for a cost reporting period is
equal to the hospital's allowable inpatient operating costs
(excluding capital) per discharge in a base year increased by
applicable update factors for subsequent years. This amount is
then multiplied by Medicare discharges, to yield the ceiling or
upper limit on operating costs.
Updates to the target amounts for fiscal years 1994
through 1997 range from the PPS-excluded market basket index
(MBI) to the MBI minus 1.0 percentage point, depending on how a
hospital's costs compare to its target amount. For fiscal years
1998 and beyond, the updates are the market basket percentage
increase.
House Bill
Sets the FY 1998 update at 0%, and for FY 1999 through FY
2002, the update factor would depend on a hospital's target
amount and costs. For hospitals (1) with costs that equal or
exceed their target amounts by 10% or more, the update would
equal the market basket; (2) that exceed their target, but by
less than 10%, the update factor would be equal to the market
basket minus 0.25 percentage points for each percentage point
by which costs are less than 10% over the target (but in no
case less than zero); (3) that are either at their target, or
below (but not below 2/3 of the target amount for the
hospital), the market basket percentage minus 2.5 percentage
points (but in no case less than zero); or (4) that do not
exceed 2/3 of their target amount, the update factor would be
0%.
Effective Date. Enactment.
Senate Amendment
Sets the update for FY 1998 through FY 2001 at 0%; for FY
2002, at the MBI minus 3.0 percentage points. The Secretary
would be required to treat the applicable update factor for a
fiscal year as being equal to the MBI for the purposes of
exceptions and adjustments to payment amounts.
Conference Agreement
The conference agreement includes the House bill.
Reductions to Capital Payments For Certain PPS-Exempt Hospitals and
Units
Section 10512 of the House bill and Section 5422 of the Senate
amendment
Current Law
Medicare pays for capital costs for PPS exempt hospitals
on a reasonable cost basis.
House Bill
Requires the Secretary to reduce capital payment amounts
for PPS-exempt hospitals and distinct part units by 10% for
fiscal years 1998 through 2002.
Effective Date. Enactment.
Senate Amendment
Similar provision except, requires the Secretary to
reduce capital payment amounts for PPS-exempt hospitals and
distinct part units by 15% for fiscal years 1998 through 2002.
Conference Agreement
The conference agreement includes the Senate amendment.
Cap on TEFRA Limits
Section 10513 of the House bill and Section 5423 of the Senate
amendment
Current Law
Medicare places limits, referred to as ``TEFRA limits,''
on the annual increase allowed for the operating costs of
certain categories of hospitals.
House Bill
Sets limits on the target amounts for PPS-exempt
hospitals or units for cost reporting periods beginning on or
after October 1, 1997, and before October 1, 2002. The target
amounts could not be greater than the 90th percentile of the
target amounts for cost reporting periods beginning during that
fiscal year. The cap on the target amounts would apply to
psychiatric, rehabilitation, and long-term care hospitals and
distinct-part units of such hospitals.
Effective Date. Enactment.
Senate Amendment
Similar provision, except that the target amounts could
not be greater than the 75th percentile of the target amount
for each class of hospitals. Hospitals or units that are below
their target amount for the cost reporting period beginning on
or after October 1, 1997 and before October 1, 1998, the target
amount for the period would be equal to the greater of 90% of a
dollar limit on the targetamounts or the operating costs of the
hospital or unit during the period.
Conference Agreement
The conference agreement includes the House bill, with
amendments. The Secretary would be required to estimate the
75th percentile of the target amounts for each category of
hospitals (excluding childrens and cancer hospitals) for cost
reporting periods ending during 1996, and then update the
amount up to the first cost reporting period beginning on or
after October 1, 1997, by a factor equal to the market basket
percentage increase. For cost reporting periods beginning
during each of fiscal years 1999 through 2002, the Secretary
would be required to update the amount by a factor equal to the
market basket increase.
Change In Bonus Payments
Section 10514 of the House bill and Section 5424 of the Senate
amendment
Current Law
Medicare provides for bonus payments for hospitals whose
operating costs are less than or equal to the target amount, as
well as makes relief payments to hospitals whose costs exceed
their target amount. If the hospital's costs are less than or
equal to the target amount for that period, the hospital
receives a bonus payment equal to 50% of the amount by which
the target amount exceeds the amount of the operating costs, or
5% of the target amount, whichever is less. If a hospital's
operating costs are greater than the target amount, the amount
of the payment is equal to (1) the target amount, plus (2) an
additional amount equal to 50% of the amount by which the
operating costs exceed the target amount, but not more than 10%
of the target amount.
House Bill
Allows bonus payments of (1) 10% of the amount by which
the target amount exceeds the amount of operating costs, or (2)
1% of operating costs, whichever is less. The provision would
change the relief payments to provide that costs would be
required not to exceed 110% in order to receive relief payments
and that the relief payment could not be more than 20% of the
target amount.
Effective Date. Enactment.
Senate Amendment
Similar provision, except bonus payments for hospitals
with (1) a target amount less than 135% of the median of the
target amounts for hospitals in the same class, the lesser of
40% of the amount by which the target amount exceeds the amount
of the operating costs, or 4% of the target amount; (2) a
target amount that equals or exceeds 135% of the median but is
less than 150%, the lesser of 30% of the amount by which the
target amount exceeds the amount of the operating costsor 3% of
the target amount; and (3) a target amount that equals or exceeds 150%
of such median, the lesser of 20% of the amount that the target amount
exceeds the amount of operating costs or 2% of the target amount.
Identical provision for relief payments.
Conference Agreement
The conference agreement includes the House bill with
amendments to bonus payments. Bonus payments would be the
lesser of (1) 15% of the amount by which the target amount
exceeds the amount of operating costs, or (2) 2% of the target
amount.
For cost reporting periods beginning on or after October
1, 1997, eligible hospitals could receive continuous
improvement bonus payments. To qualify, their operating costs
for the period must be less than the least of its target
amount, its trended costs, or its expected costs for the
period. The amount of the payment would be equal to the lesser
of: (1) 50% of the amount by which the operating costs were
less than the expected costs for the period; or (2) 1% of the
target amount for the period. The trended costs would be (1) in
the case of a hospital whose cost reporting period ending in FY
1996 was its third or subsequent full cost reporting period,
the hospital's operating costs for its cost reporting period
ending in 1996; or (2) in the case of any other hospital, the
operating costs for that hospital for its third full cost
reporting period. These base costs would then be increased (in
a compounded manner) for each succeeding fiscal year (through
the fiscal year involved) by the market basket percentage
increase for the fiscal year. The expected costs per discharge
would be the operating costs of inpatient hospital services per
discharge for the previous fiscal year cost reporting period,
updated by the market basket percentage increase for the fiscal
year.
The conference agreement also amends the relief payment
to limit such payment to 10% of the target amount, and the
effective date for the change in bonus and relief payments to
apply with respect to cost reporting periods beginning on or
after October 1, 1997. The agreement also includes a
requirement that the Secretary report to the Congress by
October 1, 1999 on the effects of the relief payment changes on
psychiatric hospitals that have approved medical residency
training programs.
Change in Payment and Target Amount for New Providers
Section 10515 of the House bill and Section 5425 of the Senate
amendment
Current Law
No provision.
House Bill
Establishes different payment and target amount rules for
hospitals or distinct-part units within hospitals that first
receive Medicare payments on or after October 1, 1997. The
provision would apply to psychiatric, rehabilitation, and long-
term care hospitals and distinct-part units of hospitals. For
the first two full or partial cost reporting periods, the
amount of payment for operating costs under Part A on a per
discharge or per admission basis would be equal to the lesser
of the amount of operating costs for the respective period, or
150% of the national median operating costs for hospitals in
the same class of hospital for cost reporting periods beginning
during the same fiscal year, adjusted for labor-related costs.
This same limited target amount would then be updated in
subsequent years using the update factor described above.
For determining national median operating costs for
hospitals in the same class, the Secretary would be required to
provide for an appropriate adjustment to the labor-related
portion of the amount determined to take into account
differences between average wage-related costs in the area the
hospital is located in and the national average of such costs
within the same class of hospital. The Secretary would also be
required to create subclasses of long-term care hospitals based
on differences in the case mix and patient acuity in
calculating and applying the 150% of the national median cost
limits.
Effective Date. Enactment.
Senate Amendment
Establishes new target amounts for rehabilitation
hospitals or units for cost reporting periods beginning on or
after October 1, 1997. For rehabilitation facilities that
received Medicare payments before October 1, 1997, the target
amount would be required to be no less than 50% of the national
mean of the target amounts determined for all such hospitals
for cost reporting periods beginning during the fiscal year.
Rehabilitation facilities that first receive Medicare payments
on or after October 1, 1997, would have a target amount that
could not be more than 110% of the national mean of the target
amounts for such hospitals and units for cost reporting periods
beginning during FY 1991. The target amounts for long-term care
and psychiatric hospitals and units would be determined in the
same manner.
Conference Agreement
The conference agreement includes the House bill with
modifications which would require that payments for operating
costs for the first 2 cost reporting periods for which the
hospital has a settled cost report be equal to the lesser of
the amount of operating costs for the period, or 110% of the
national median of the target amount for hospitals in the same
class of hospital for cost reporting periods ending during
1996, updated by the hospital market basket increase percentage
to the fiscal year in which the hospital first received
payments. The conference agreement also modifies the effective
date of the provision to apply to discharges occurring on or
after October 1, 1997.
Rebasing
Section 10516 of the House bill and Section 5426A of the Senate
amendment
Current Law
No provision.
House Bill
Provides psychiatric, rehabilitation, children's, cancer,
and long-term care hospitals and psychiatric and rehabilitation
distinct units of hospitals that received Medicare payments for
services furnished during cost reporting periods ending before
October 1, 1990, the option of electing to rebase the
hospital's target amount for the 12-month cost reporting period
beginning during FY 1998. The rebased target amount would be
equal to an average determined by the Secretary as follows: (1)
the Secretary would be required to determine the allowable
operating cost for inpatient hospital services for the hospital
or hospital unit for each of the five cost reporting periods
for which the Secretary had settled cost reports as of the date
of enactment; (2) the Secretary would be required to increase
the amount determined for the five cost reporting periods by
the applicable percentage increase used to update costs for
each of the cost reporting periods; (3) the Secretary would be
required to identify among the five cost reporting periods the
periods for which the updated cost amount was the highest and
the lowest; (4) the Secretary would be required to compute the
average cost per discharge of the updated cost report amounts
for the three cost reporting periods that were not the highest
or the lowest amounts.
The provision would also allow certain qualified long-
term care hospitals that elect to do so, to apply for rebasing
of their target amount beginning during FY 1998. The target
amount for the hospital's 12-month cost reporting period would
be equal to the allowable operating costs of inpatient hospital
services recognized by Medicare for the 12-month cost reporting
periods beginning during FY 1996, increased by the applicable
percentage increase for the cost reporting period beginning
during FY 1997. The provision would define a qualified long-
term care hospital as those facilities that, for each of the
two most recent settled cost reports as of the date of
enactment, have operating costs of inpatient hospital services
under Medicare that exceeded 115% of the hospital's target
amount, and the hospital had a disproportionate patient
percentage of at least 70%.
Effective Date. Enactment.
Senate Amendment
Similar provision, except applies to hospital services
furnished before January 1, 1990. The provision does not
include provision for rebasing of certain qualified long-term
care hospitals with high disproportionate share percentages.
Conference Agreement
The conference agreement includes the House provision.
Treatment of Certain Long-Term Care Hospitals
Section 10517 of the House bill and Section 5426 of the Senate
amendment
current law
No provision.
house bill
Extends the status of a hospital that was classified by
the Secretary on or before September 30, 1995, as a long-term
care hospital, notwithstanding that it was located in the same
building as, or on the same campus as, another hospital.
Effective Date. The provision would apply to discharges
occurring on or after October 1, 1995.
senate amendment
Identical provision.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
Elimination of Exemptions; Report on Exceptions and Adjustments
Section 10518 of the House bill and Section 5427 of the Senate
amendment
current law
The Secretary is required to provide an exemption from
various provisions of the law regarding Medicare payments to
PPS-excluded hospitals.
house bill
Amends current law, replacing the term ``exemption from,
or an exception and adjustment to,'' with ``an exception and
adjustment to'' each place it appears, eliminating exemption
from the target amounts for all PPS-exempt hospitals except
children's hospitals.
The provision would also require the Secretary to publish
annually in the Federal Register a report describing the total
amount of exceptions payments made to PPS-excluded hospitals
and units for cost reporting periods ending during the previous
fiscal year.
Effective Date. The provision would apply to hospitals
that first qualify as PPS-excluded facilities on or after
October 1, 1997.
senate amendment
Similar provision, except does not apply to children's or
cancer hospitals.
conference agreement
The conference agreement includes the House provision
with modifications.
Technical Correction Relating to Subsection (d) Hospitals
Section 5428 of the Senate amendment
current law
Certain special categories of hospitals, including cancer
hospitals, are exempt from the Medicare inpatient PPS and are
paid on the basis of reasonable costs, subject to certain
limits.
house bill
No provision.
senate amendment
Amends the provision for PPS-exempt cancer hospitals to
include hospitals that: (1) were recognized as a comprehensive
cancer center or clinical cancer research center by the
National Cancer Institute of the National Institutes of Health
as of April 20, 1983, or were able to demonstrate that for any
six-month period at least 50% of its total discharges had a
principal diagnosis that reflected a finding of neoplastic
disease; (2) applied on or before December 31, 1990, for
classification as a cancer hospital; and (3) were located in a
state which, as of December 19, 1989, was not operating a state
hospital rate-setting demonstration project. The hospital
classifications would apply to all cost reporting periods
beginning on or after January 1, 1991, and any resulting
payments owed to a hospital would be required to be paid no
later than one year after enactment.
Effective Date. Enactment.
conference agreement
The conference agreement includes the Senate amendment
with an amendment which would establish the base cost reporting
period for purposes of determining the target amount for such a
hospital as the hospital's cost reporting period beginning
during FY 1990. The conference agreement would also require
that the facility demonstrate that for the 4-year period ending
on December 31, 1996, that at least 50% of the total discharges
have a principle finding of neoplastic disease, defined to
include patient admissions for certain specified diagnostic
codes.
Certain Long Term Care and Cancer Hospitals
Section 10516(c) of the House bill and Section 5429 of the Senate
amendment
current law
No provision.
house bill
Amends the definition of long-term care hospitals to
include long-term care hospitals that received Medicare payment
in 1986, have an average inpatient length of stay of more than
20 days, and that had 80% or more of its annual Medicare
inpatient discharges with a diagnosis that reflects a finding
of neoplastic disease.
Effective Date. Applies to cost reporting periods
beginning on or after the date of enactment.
senate amendment
Further amends the classification for cancer hospitals to
include long-term care hospitals classified as such beginning
on or before December 31, 1990 through December 31, 1995, that
throughout the period and currently had greater than 49% of its
total patient discharges with a principle diagnosis that
reflects a finding of neoplastic disease. The provision would
also prohibit rebasing of such hospital's base period costs and
would require that such hospital use the base period in effect
for the hospital's December 31, 1995 cost report.
Effective Date. Enactment.
conference agreement
The conference agreement includes the House bill with a
modification which would specify that the finding of neoplastic
disease would be for the 12-month cost reporting period ending
in FY 1997.
Chapter 3--Prospective Payment System for PPS-Exempt Hospitals
Prospective Payment For Inpatient Rehabilitation Hospital Services
Based on Discharges Classified By Patient Case Mix Groups
Section 10402 of the House bill and Section 5301 of the Senate
amendment
current law
Under Medicare, five types of specialty hospitals
(psychiatric, rehabilitation, long-term care, children's and
cancer) and two types of distinct-part units in general
hospitals (psychiatric and rehabilitation) are exempt from PPS.
They are subject to the payment limitations and incentives
established in the Tax Equity and Fiscal Responsibility Act of
1982 (TEFRA). Each provider is paid on the basis of reasonable
cost subject to a rate of increase ceiling on inpatient
operating costs. The ceiling is based on a target amount per
discharge. The target amount for a cost reporting period is
equal to the hospital's allowable inpatient operating costs
(excluding capital and medical education costs) per discharge
in a base year increased by applicable update factors for
subsequent years. This amount is then multiplied by Medicare
discharges, to yield the ceiling or upper limit on operating
costs.
house bill
Requires the Secretary to establish a prospective payment
system for inpatient rehabilitation hospital services based on
patient case mix groups.
For this system, the Secretary would be required to
establish (1) classes of discharges of rehabilitation
facilities by patient case mix groups based on impairment, age,
related prior hospitalization, comorbidities, and functional
capability of the discharged individual and other appropriate
factors; and (2) a method of classifying specific discharges
from rehabilitation facilities within these groups.
The provision would require the Secretary to assign each
case mix group an appropriate weighting factor which would
reflect the relative facility resources used with respect to
discharges classified within a group compared to discharges
classified within other groups. The Secretary would be required
to adjust the classifications and weighting factors to correct
for forecast errors and to reflect changes in treatment
patterns, technology, case mix, number of discharges paid for
under Medicare, and other factors which might affect the
relative use of resources. The Secretary would be authorized to
require rehabilitation facilities providing inpatient hospital
services to submit data on discharges classified according to
case mix group or other rehabilitation impairment groups,
measurement of functional disability, and other patient
assessment factors as deemed necessary to establish and
administer the prospective payment system.
The Secretary would be required to determine a
prospective payment rate for each payment unit for which a
rehabilitation facility would be entitled to be paid under
Medicare. The payment rate would be based on the average
payment under Medicare for operating and capital costs of
rehabilitation facilities using the latest available data,
adjusted by (1) updating such per-unit amounts to the fiscal
year involved by the applicable percentage increases provided
by the bill for each fiscal year and up to FY 2000, and an
increase factor specified by the Secretary for subsequent
fiscal years; (2) reducing such rates by a factor equal to the
proportion of payments by Medicare for outliers; (3) variations
among rehabilitation facilities by areas; (4) weighting factors
described in the bill; and (5) other factors the Secretary
determined were necessary to reflect variations in necessary
costs of treatment among rehabilitation facilities.
Prospective payment rates would be phased in between
October 1, 2000 and before October 1, 2003, by blending the
prospective rate with the TEFRA percentage of the hospital's
target amount that would have been paid under Part A if this
provision did not apply, and the prospective payment percentage
of the per unit payment rate established by the Secretary. For
cost reporting periods beginning on or after October 1, 2000
and before October 1, 2001, the TEFRA percentage would be 75%
and the prospective payment percentage would be 25%; for cost
reporting periods on or after October 1, 2001, and before
October 1, 2002, the TEFRA percentage would be 50% and the
prospective payment percentage would be 50%; for cost reporting
periods on or after October 1, 2002, and before October 1,
2003, the TEFRA percentage would be 25% and the prospective
payment percentage would be 75%. Payment rates on or after
October 1, 2003, would be equal to the per unit fully
prospective payment rate. Payment per unit would mean a
discharge, day of inpatient hospital services, or other unit of
payment specified by the Secretary.
For fiscal years 2001 through 2004, the Secretary would
be required to establish prospective payment amounts that were
budget neutral, so that total payments for rehabilitation
hospitals would equal 99% of the amount of payments that would
have been made if prospective payments had not been made. The
Secretary would be required to develop an increase factor which
could be based on an appropriate percentage increase in a
market basket of goods and services purchased by rehabilitation
hospitals. The Secretary would also be required to provide for
additional payments for outlier cases that involved unusually
long lengths of stay or were very costly, or other factors.
These adjustments would be made in a budget neutral manner. The
Secretary would also be required to adjust prospective payments
to rehabilitation facilities by a wage index that reflected
area differences for wages and wage-related costs. No later
than October 1, 2001, the Secretary would be required to update
the area wage adjustment factor based on a survey of wages and
wage related costs of providing rehabilitation services.
Effective Date. Enactment. The prospective payment system
would be implemented for cost reporting periods beginning on or
after October 1, 2000.
senate amendment
Similar provision, except does not specify that, in
determining budget neutral prospective payment rates equal to
99% of what would have been paid, the Secretary would include
adjustments for outlier and special payments, or area wage
adjustments.
conference agreement
The conference agreement includes the House bill with
amendments. The prospective system would be fully implemented
by October 1, 2002. Payments during the transition period would
be based on TEFRA and prospective payment percentage amounts
equal to 66\2/3\% and 33\1/3\%, respectively, for cost
reporting periods beginning on or after October 1, 2000, and
before October 1, 2001; and 33\1/3\% and 66\2/3\%,
respectively, for cost reporting periods beginning on or after
October 1, 2001, and before October 1, 2002. The budget neutral
rates would be required to be equalto 98% of the amount of
payments that would have been made if the prospective payment system
had not been enacted. The Secretary would be required to update the
area wage adjustment on the basis of information collected on wages and
wage-related costs incurred in furnishing rehabilitation services. The
conference agreement does not include the provision allowing the
Secretary to make other adjustments to payment rates.
Study and Report on Payments for Long-Term Care Hospitals
Section 5302 of the Senate amendment
current law
No provision.
house bill
No provision.
senate amendment
Requires the Secretary to collect data to develop,
establish, administer, and evaluate a case-mix adjusted
prospective payment system for long-term care hospitals. The
Secretary would be required to develop a legislative proposal
for establishing and administering a payment system that would
include an adequate patient classification system that would
reflect differences in patient resource use. The Secretary
would be required to submit the proposal to the appropriate
committees of Congress by no later than October 1, 1999.
Effective Date. Enactment.
conference agreement
The conference agreement includes the Senate amendment
with modifications.
Chapter 4--Skilled Nursing Facility (SNF) Prospective Payment
Prospective Payment for SNF Services
Section 10401 of House bill and Sections 5332 of Senate amendment
current law
Currently, Medicare reimburses the great bulk of SNF care
on a retrospective cost-based basis. This means that SNFs are
paid after services are delivered for the reasonable costs (as
defined by the program) they have incurred for the care they
provide. For Medicare reimbursement purposes, the costs SNFs
incur for providing services to beneficiaries can be divided
into three major categories: (1) routine services costs that
include nursing, room and board, administration, and other
overhead; (2) ancillary services, such as physical and
occupational therapy and speech language pathology, laboratory
services, drugs, supplies and other equipment; and (3) capital-
related costs, including net depreciation expense, taxes, lease
and rental payments, improvements that extend the life or
increase the productivity of assets, net interest expense,
etc.).
Routine costs are subject to national average per diem
limits. Separate per diem routine cost limits are established
for freestanding and hospital-based SNFs by urban or rural
area. Freestanding SNF routine limits are set at 112% of the
average per diem labor-related and nonlabor-related costs.
Hospital-based SNF limits are set at the limit for freestanding
SNFs, plus 50% of the difference between the freestanding
limits and 112% of the average per diem routine services costs
of hospital-based SNFs. Routine cost limits for SNF care are
required to be updated every 2 years. In the interim, the
Secretary applies a SNF market basket developed by HCFA to
reflect changes in the price of goods and services purchased by
SNFs. OBRA93 eliminated updates in SNF routine cost limits for
cost reporting periods beginning in FY 1994 and FY 1995.
Ancillary service and capital costs are both paid on the
basis of reasonable costs and neither are subject to limits.
SNFs providing less than 1,500 days of care per year to
Medicare patients in the preceding year have the option of
being paid a prospective payment rate set at 105 percent of the
regional mean for all SNFs in the region. The rate covers
routine and capital-related costs (but not ancillary services)
and is calculated separately for urban and rural areas,
adjusted to reflect differences in wage levels. Prospective
rates can not exceed the routine service costs limits that
would be applicable to the facility, adjusted to take into
account average capital-related costs with respect to the type
and location of the facility.
Congress on a number of occasions has required the
Secretary to develop alternative methods for paying for SNF
care on a prospective basis. In response, the Health Care
Financing Administration has conducted research to develop a
prospective payment system that uses a patient classification
system, known as resource utilization groups (RUGs), that will
account for variations in resource use among Medicare SNF
patients.
house bill
Phases in a prospective payment system for SNF care that
would pay a Federal per diem rate for covered SNF services.
Covered services would include Part A SNF benefits as well as
all services for which payment may be made under Part B during
the period when the beneficiary is provided covered SNF care
(excluding, however, physician services, certain nurse
practitioner and physician assistant services, certified nurse-
midwife services, qualified psychologist services, services of
a certified registered nurse anesthetist, certain dialysis
services and drugs, and in 1998, the transportation costs of
electrocardiogram equipment). The per diem payment would cover
routine service costs, ancillary and capital-related costs, but
would not include costs associated with approved educational
activities.
During a transition period lasting through the three cost
reporting periods beginning on or after July 1, 1998, a portion
of the per diem payment to a SNF would be based on a facility-
specific rate, and the remaining portion on the Federal rate.
For the first cost reporting period, the facility specific
percentage would be 75 percent and Federal per diem percentage
would be 25. For the second cost reporting period, the
facility-specific percentage would be 50 percent and the
Federal 50. For the last period, the facility-specific
percentage would be 25 percent and the Federal 75.
In determining for a cost reporting period the facility-
specific per diem rate for each SNF, the Secretary would
calculate, on a per diem basis, the total allowable costs for
covered Part A SNF benefits and estimates of amounts that would
be payable under Part B for services described above,
regardless of whether or not payment had been made for the Part
B services to the facility or another entity. The Part A
calculations would be done using cost reports for cost
reporting periods beginning in fiscal year 1995, with
appropriate adjustments made to non-settled fiscal year 1995
cost reports. The total would be updated to the relevant cost
reporting period by the SNF historical trend factor. The SNF
historical trend factor for a fiscal year or other annual
period would be defined as the percentage change, from the
midpoint of a prior fiscal year to the midpoint of the year
involved, in the SNF routine cost index used for per diem
routine cost limits, reduced (on an annualized basis) by 1
percentage point. Beginning with the first cost reporting
period of the transition, the facility-specific per diem rate
would be updated by the SNF market basket.
For the Federal per diem rate, the Secretary would first
estimate, on a per diem basis for each freestanding SNF that
received Medicare payments during a cost reporting period
beginning in fiscal year 1995 and that was subject to (and not
exempted from) routine cost limits of current law (including
low-volume SNFs if appropriate), the total allowable costs for
covered Part A SNF benefits and an estimate of amounts that
would be payable under Part B, regardless of whether or not
payment had been made for the Part B services to the facility
or another entity. The Part A calculations would be done using
cost reports for cost reporting periods beginning in fiscal
year 1995, with appropriate adjustments to non-settled fiscal
year 1995 cost reports. This total would be updated to the
relevant cost reporting period by the SNF historical trend
factor (again reflecting a 1 percentage point reduction in the
routine cost index). The Secretary would standardize the
updated amount for each facility by adjusting for variations
among facilities in average wage levels and case mix. The
Secretary would then compute a weighted average per diem rate.
This would equal the average of the standardized amounts,
weighted for each facility by the number of covered days of
care provided during the cost reporting period. The Secretary
could compute and apply an average separately for facilities
located in urban and rural areas.
Beginning with fiscal year 1998, the Secretary would be
required to compute for each SNF an unadjusted Federal per diem
rate equal to the weighted average per diem rate, updated by
the SNF market basket. The actual per diem rate paid to a SNF
would include adjustments for case mix based on a resident
classification system established by the Secretary to account
for relative resource utilization of different patient types.
The labor-related portion of the rate would also include budget
neutral adjustments to reflect the relative level of wages and
wage-related costs for the geographic area in which the
facility is located. To deal with case-mix ``creep'' when
changes in the coding or classification of residents result in
higher aggregate payments that do not reflect real changes in
case mix, the Secretary would be authorized to adjust per diem
rates to discount the effect of coding changes.
The Secretary would be required to publish in the Federal
Register before July 1 preceding each fiscal year (beginning
with fiscal year 1999): (1) the unadjusted Federal per diem
rates for covered SNF care during the fiscal year; (2) the case
mix classification system to be applied to the rates; and (3)
the factors to be applied in making area wage adjustments. SNFs
would be required to provide the Secretary resident assessment
data necessary to develop and implement per diem rates in the
manner and within the timeframes prescribed by the Secretary.
Low volume SNFs and rural hospitals using inpatient beds
to provide SNF care (swing-bed hospitals) would be included in
the new prospective per diem payment system in a manner and
timeframe established by the Secretary (but not earlier than
July 1, 1999).
Administrative or judicial review would not be permitted
for the establishment of facility-specific per diem rates; the
establishment of federal per diem rates, including the
computation of the standardized per diem rates and adjustments
for case mix and relative wage levels; and for the
establishment of transitional amounts for low-volume SNFs and
rural hospitals providing SNF care with inpatient beds.
For beneficiaries residing in SNFs but no longer eligible
for Part A SNF care, payments for Part B covered services would
have to be made to the facility without regard as to whether or
not the item or service was furnished by the facility, by
others under arrangement, or under any other contracting or
consulting arrangement. Payments for Part B services would be
based on existing or other fee schedules established by the
Secretary. Claims for Part B items and services would be
required to include a code identifying the items or services
delivered. Covered SNF services when provided by an entity
other than the SNF would have to be furnished under
arrangements.
The Secretary would be required to establish and
implement a thorough medical review process to examine the
effects of the new prospective payment system on the quality of
covered SNF care. In this medical review process, the Secretary
would be required to place a particular emphasis on the quality
of ancillary services and physician services.
Effective date. Effective for cost-reporting periods
beginning on or after July 1, 1998.
Senate Amendment
Similar provisions except:
(1) For the facility-specific per diem rates, 1995
allowable costs would be updated by the SNFmarket basket rather
than by the SNF historical trend factor (which includes a 1 percentage
point reduction from the SNF routine cost index). In addition, 1995
costs would be updated to the first cost reporting period, as opposed
to the cost reporting period immediately preceding the first cost
reporting period. For SNFs participating in HCFA's RUGs prospective
payment demo, the facility-specific per diem rate after 1997 would be
the 1997 RUGS-III rate increased by the SNF market basket.
(2) The Federal per diem rate would be based on 1995
allowable costs for all SNFs, including low-volume SNFs, and
not just freestanding facilities. In addition, 1995 costs would
be updated to 1998 by the SNF market basket minus 1 percentage
point, rather than the SNF historical trend factor (which
includes a 1 percentage point reduction from the SNF routine
cost index). Furthermore, 1995 costs would be updated to the
first cost reporting period, as opposed to the cost reporting
period immediately preceding the first cost reporting period.
In determining allowable costs for the Federal per diem rate,
the Secretary would be required to exclude payments made as
exceptions to the routine cost limits and exclude cost reports
from new SNFs exempted from routine cost limits. For FY 1999
(as opposed to FY 1998), the Federal per diem would be updated
by the SNF market basket.
(3) The Secretary would be required to develop an
appropriate transition to the new prospective payment system
for swing bed hospitals only, and not for low-volume SNFs as
well.
(4) The limitation on administrative or judicial review
would apply to Federal per diem rates and transitional amounts
for swing-bed hospitals, but not to the establishment of
facility-specific per diem rates.
(5) Covered SNF services when provided by an entity other
than a SNF would have to be provided under arrangements or by a
physician.
(6) Payments for Part B services would be based on the
Part B methodology applicable to the item or service, except
that for services that would be included in the facility's cost
report if not for this provision, the SNF could continue to use
a cost report until the new prospective payment system is
established.
(7) Payment for physical, respiratory, and occupational
therapy, and speech language pathology services would be
required to reflect new salary equivalency guidelines when
finalized through the regulatory process.
Effective date. Effective for cost-reporting period
beginning on or after July 1, 1998.
Conference Agreement
The conference agreement includes the Senate amendment
with clarifying language and amendments. Amendments include the
following:
(1) In making appropriate adjustments to 1995 allowable
Part A costs for purposes of calculating the facility-specific
per diem rate, the Secretary would be required to take into
account exceptions to the routine cost limits as well as
exemptions, but only to the extent that routine costs of the
exempted facility do not exceed 150 percent of the routine cost
limits otherwise applicable.
(2) The base year facility-specific rate would be updated
to the first cost reporting period by the SNF market basket
minus 1 percentage point. For SNFs participating in HCFA's RUGs
prospective payment demonstration, the updated facility-
specific rate would be the 1997 RUGS-III rate. During FY 1998
and 1999, the facility-specific rate would be updated by the
SNF market basket minus 1 percentage point and during each
subsequent fiscal year, by the SNF market basket.
(3) For purposes of calculating the 1995 base year
Federal per diem rate, allowable Part A costs would exclude
exceptions payments and cost reports from SNFs exempted from
routine cost limits. The Secretary would be required to compute
a weighted average standardized per diem rate for all SNFs and
a weighted average standardized per diem rate for freestanding
facilities. For the initial period beginning on July 1, 1998,
and ending September 30, 1999, the Secretary would then compute
an unadjusted Federal per diem rate equal to the average of the
two previous amounts increased by the SNF market basket minus 1
percentage point. For FY 2000 through 2002, the Federal per
diem rate would be updated by the SNF market basket minus 1
percentage point. In subsequent years, it would be updated by
the SNF market basket.
(4) The Secretary would be required to publish in the
Federal Register prior to May 1, 1998, the unadjusted Federal
per diem rate in effect for the period July 1, 1998, through
September 30, 1990. For each subsequent fiscal year, the
Secretary would be required to publish in the Federal Register
prior to August 1 the unadjusted Federal per diem rates, the
case-mix classification system, and the factors to be applied
in the making area wage adjustments.
(5) In the case of SNFs first receiving Medicare payments
on or after October 1, 1995, payment would be made as if all
services were furnished after the transition period.
(6) Consolidated billing requirements would apply to
Medicare beneficiaries residing in SNFs or facilities of which
only a distinct part is a SNF. Payments for Part B services
would be based on existing or other fee schedules established
by the Secretary.
(7) Each bill submitted by a physician for a service
furnished to a resident of a facility that is (or is part of a
facility that includes) a SNF would be required to include the
facility's Medicare provider number.
The Conferees note that under the proposed SNF
prospective payment system, services and supplies provided to
residents will be included in pre-determined per diem payment
rates. To ensure that the frail elderly residing in SNFs
receive needed and appropriate medication therapy, theSecretary
of Health and Human Services should consider the results of studies
conducted by independent organizations including those which examine
appropriate payment mechanisms and payment rates for medication therapy
under a prospective payment system for SNFs. It is the intent of the
Conferees that the Secretary develop case mix adjusters that reflect
the needs of such patients.
It is also the intent of the Conferees that restrictions
on judicial review should not preclude skilled nursing
facilities from using the regular appeals process to correct
for errors in their cost reports.
Extension of Cost Limits
Section 5331 of Senate amendment
Current Law
Routine costs are subject to national average per diem
limits. Separate per diem routine cost limits are established
for freestanding and hospital-based SNFs by urban or rural
area. Freestanding SNF routine limits are set at 112% of the
average per diem labor-related and nonlabor-related costs.
Hospital-based SNF limits are set at the limit for freestanding
SNFs, plus 50% of the difference between the freestanding
limits and 112% of the average per diem routine services costs
of hospital-based SNFs. Routine cost limits for SNF care are
required to be updated every 2 years. In the interim, the
Secretary applies a SNF market basket developed by HCFA to
reflect changes in the price of goods and services purchased by
SNFs. OBRA93 eliminated updates in SNF routine cost limits for
cost reporting periods beginning in FY 1994 and FY 1995.
House Bill
No provision.
Senate Amendment
SNF routine cost limits effective for cost reporting
periods beginning on or after October 1, 1997, would be based
on limits in effect for the previous year.
Conference Agreement
The conference agreement includes the Senate amendment.
Chapter 5--Provisions Related to Hospice Services
Sections 10521-10528 of House bill and Sections 5481-5488 of Senate
amendment
(a) Payments for Hospice Services
Current Law
Medicare covers hospice care, in lieu of most other
Medicare benefits, for terminally ill beneficiaries. Payment
for hospice care is based on one of four prospectively
determined rates, which correspond to four different levels of
care, each day a beneficiary is under the care of the hospice.
The four rate categories are routine home care, continuous home
care, inpatient respite care, and general inpatient care. The
prospective payment rates are updated annually by the hospital
market basket (MB).
House Bill
Updates the hospice prospective payment rates by the
market basket minus 1.0 percentage point for each of the fiscal
years 1998 through 2002. The Secretary would be required to
collect data from participating hospices on the costs of care
they provide for each fiscal year beginning with FY 1999.
Effective date. Enactment.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House bill with
clarifying language about cost data that hospices would be
required to submit to the Secretary.
(b) Payment for Home Hospice Care Based on Location Where Care is
Furnished
Current Law
Hospices generally bill Medicare on the basis of the
location of the home office, rather than where service is
actually delivered.
House Bill
Effective for cost reporting periods beginning on or
after October 1, 1997, requires hospices to submit claims on
the basis of the location where a service is actually
furnished.
Effective date. Applies to cost reporting periods
beginning on or after October 1, 1997.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
(c) Hospice Care Benefits Periods
Current Law
Persons electing Medicare's hospice benefit are covered
for four benefit periods: two 90-day periods, a subsequent 30-
day period, and a final period of unlimited duration.
House Bill
Restructures hospice benefit periods to include two 90-
day periods, followed by an unlimited number of 60-day periods.
The medical director or physician member of the hospice
interdisciplinary team would have to re-certify at the
beginning of the 60-day periods that the beneficiary is
terminally ill.
Effective date. Enactment.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
(d) Other Items and Services Included in Hospice Care
Current Law
Hospice services are defined in Medicare statute to
include nursing care; physical and occupational therapy and
speech language pathology services; medical social services;
home health aide services; homemaker services; medical supplies
(including drugs and biologicals) and medical appliances;
physician services; short-term inpatient care (including both
respite care and procedures necessary for pain control and
acute and chronic symptom management); and counseling.
Beneficiaries electing hospice waive coverage to most Medicare
services when the services they need are related to the
terminal illness.
House Bill
Amends the definition for hospice care to include the
existing enumerated services as well as any other item or
service which is specified in a patient's plan of care and
which Medicare may pay for.
Effective date. Enactment.
Senate Amendment
Identical provision.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment, with a
modification to change the effective date to April 1, 1998.
(e) Contracting with Independent Physicians or Physician Groups for
Hospice Care Services Permitted
current law
Medicare law requires that hospices routinely directly
provide the majority of certain specified services, often
referred to as core services. Physician services are among
these core services. HCFA has defined ``directly'' to require
that services be provided by hospice employees.
house bill
Deletes physician services from a hospice's core services
and allows hospices to employ or contract with physicians for
their services.
Effective date. Enactment.
senate amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
(f) Waiver of Certain Staffing Requirements for Hospice Care Programs
in Non-Urbanized Areas
Current Law
Hospices must provide certain services in order to
participate in Medicare.
House Bill
Allows the Secretary to waive requirements with regard to
hospices having to provide certain services so long as they are
not located in urbanized areas and can demonstrate to the
satisfaction of the Secretary that they have been unable,
despite diligent efforts, to recruit appropriate personnel. For
these hospices, the Secretary could waive specifically the
provision of physical or occupational therapy or speech-
language pathology services and dietary counseling.
Effective date. Enactment.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
(g) Limitation on Liability of Beneficiaries and Providers for Certain
Hospice Coverage Denials
Current Law
Medicare law provides financial relief to beneficiaries
and providers for certain services for which Medicare payment
would otherwise be denied. Medicare payment under this
``limitation of liability'' provision is dependent on a finding
that the beneficiary or provider did not know and could not
reasonably have been expected to know that services would not
be covered on one of several bases (but not on the
determination that an individual is not terminally ill).
House Bill
Extends the limitation of liability protection to
determinations that an individual is not terminally ill.
Effective date. Enactment.
Senate Amendment
Similar provision, except also specifies that when care
is denied because an individual is not terminally ill, only the
beneficiary that received care would be indemnified for any
payments that the individual made to the provider or other
person for care that would otherwise be paid by Medicare.
Conference Agreement
The conference agreement includes the House bill.
(h) Extending the Period for Physician Certification of an Individual's
Terminal Illness
Current Law
At the beginning of the first 90-day period when a
Medicare beneficiary elects hospice, both the individual's
attending physician and the hospice physician must certify in
writing that the beneficiary is terminally ill not later than 2
days after hospice is initiated (or, verbally not later than 2
days after care is initiated and in writing not later than 8
days after care has begun).
House Bill
Eliminates the specific time frame specified in statute
for completion of physicians' certifications for admission to
hospice to require only that physicians certify that a
beneficiary is terminally ill at the beginning of the initial
90-day period.
Effective date. Enactment.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
Chapter 6--Other Part A Payment Provisions
Reductions in Payments For Enrollee Bad Debt
Section 10541 of the House bill and Section 5466 of the Senate
amendment
current law
Certain hospital and other provider bad debts are
reimbursed by Medicare on an allowable cost basis. To be
qualified for reimbursement, the debt must be related to
covered services and derived from deductible and coinsurance
amounts left unpaid by Medicare beneficiaries. The provider
must be able to establish that reasonable collection efforts
were made and that sound business judgement established that
there was no likelihood of recovery at any time in the future.
house bill
Reduces the allowable costs of bad debt payments to
providers to 75% for cost reporting periods beginning during FY
1998; 60% for cost reporting periods beginning during FY 1999;
and 50% for cost reporting periods beginning during FY 2000 and
each subsequent fiscal year.
Effective Date. Enactment.
senate amendment
Similar provision, except that for cost reporting periods
beginning on or after October 1, 1997 and on or before December
31, 1998, payments would be reduced by 25%; beginning January
1, 1999, payments would be reduced on a calendar year basis by
40%; for cost reporting periods beginning during subsequent
calendar years, payments would be reduced by 50%.
conference agreement
The conference agreement includes provisions that are
similar in the House bill and Senate amendment, with an
amendment to provide for a 25% reduction in FY 1998, a 40%
reduction in FY 1999, and a 45% reduction in FY 2000 and each
subsequent year.
Permanent Extension of Hemophilia Pass-Through
Section 10542 of the House bill and Section 5469 of the Senate
amendment
current law
Medicare makes additional payments for the costs of
administering blood clotting factor to Medicare beneficiaries
with hemophilia admitted for hospital stays where the clotting
factor was furnished between June 19, 1990 and September 30,
1994.
house bill
Makes the payment for the costs of administering blood
clotting factor permanent.
Effective Date. Enactment.
senate amendment
Identical provision.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment, effective
October 1, 1997.
Reduction in Part A Medicare Premium For Certain Public Retirees
Section 10543 of House bill
current law
Almost all persons age 65 or over are automatically
entitled to Part A. These individuals (or their spouses)
established entitlement during their working careers by paying
the hospital insurance (HI) payroll tax on earnings covered by
either the social security or railroad retirement systems.
Persons not automatically entitled to Part A include some
state and local government employees. State and local
governments can choose whether or not to participate in
Medicare for employees hired before April 1, 1986. They are
required to participate (and pay the employer share of the
payroll taxes) for all employees hired after that date.
Persons not automatically entitled to Part A may obtain
coverage by paying the Part A premium. The 1997 premium is
$311.
house bill
Specifies that the premium amount is zero for certain
public retirees. An individual covered under this provision is
one who has established to the satisfaction of the Secretary
that the individual is receiving cash benefits under a
qualified State or local government retirement system on the
basis of the individual's employment over at least 40 calendar
quarters (or on the basis of some combination of such covered
employment and quarters of coverage under social security
totaling atleast 40 quarters). Also included would be an
individual: (1) married for at least a year to an individual who had at
least 40 quarters of such coverage; (2) had been married for at least a
year to a worker who had at least 40 quarters of coverage before the
worker died; or (3) are divorced from (after at least 10 years of
marriage to) a worker with at least 40 quarters of coverage.
Individuals covered under this provision are those whose premium will
not be paid in whole or part by a state (including under its Medicaid
program), a political subdivision of a state, or agency or
instrumentality of one or more states or political subdivisions.
Further, for each of the preceding 60 months, the individual must have
been enrolled in Part B and not have the premium paid in whole or in
part by such governmental entity.
Specifies that a qualified state or local government
retirement system is one which: (1) is established or
maintained by a state or political subdivision, or an agency or
instrumentality of one or more states or political subdivisions
thereof; (2) covers positions of some or all employees of such
entity; and (3) does not adjust cash retirement benefits based
on eligibility for a premium reduction.
Effective Date. Applies to premiums for months beginning
with January 1, 1998, except that months before that date could
be counted in determining whether an individual met the 60
month requirement specified above.
senate amendment
No provision.
Conference Agreement
The conference agreement includes the House bill with a
modification specifying that the individual must have been
enrolled in Part B and not have had the premium paid in whole
or in part by a governmental entity for the preceding 84 months
(rather than the preceding 60 months).
Coverage of Services in Religious Non-Medical Health Care Institutions
Under the Medicare and Medicaid Programs
Section 5470 of the Senate amendment
current law
Medicare covers the services furnished by Christian
Science sanatoria under Part A of the program. In order to be a
covered provider, the institution must be listed and certified
by the First Church of Christ, Scientist of Boston, Mass. A
certified sanatorium qualifies as both a hospital and as a
skilled nursing facility. Under Medicare, two separate types of
benefits are payable: services received in an inpatient
Christian Science sanatorium and extended care services in a
sanatorium. Section 1861(e)(9) of the Social Security Act
includes a Christian Science sanatorium in the definition of a
hospital; 1861(y) defines an extended care in a Christian
Science skilled nursing facility.
house bill
No provision.
senate amendment
Strikes the reference to Christian Science sanatorium in
the definition of ``hospital,'' and in the definition of
extended care in Christian Science skilled nursing facilities,
and inserts the term ``a religious nonmedical health care
institution'' in these sections. The provision would define a
nonmedical health care institution as an institution that (1)
is exempt from taxes under section 501(c)(3) of the Internal
Revenue Code of 1986; (2) is lawfully operated under all
applicable federal, state, and local laws and regulations; (3)
provides only nonmedical nursing items and services exclusively
to patients who choose to rely solely upon a religious method
of healing, and for whom the acceptance of medical health
services would be inconsistent with their religious beliefs;
(4) provides such nonmedical items and services exclusively
through nonmedical nursing personnel who are experienced in
caring for the physical needs of such patients; (5) provides
such nonmedical items and services to inpatients on a 24-hour
basis; (6) on the basis of religious beliefs, does not provide
through its personnel or otherwise medical items and services
(including any medical screening, examination, diagnosis,
prognosis, treatment, or the administration of drugs) for its
patients; (7) is not part of, or owned by, or under common
ownership with, or affiliated with a health care facility that
provides medical services; (8) has in effect a specified
utilization review plan; (9) provides the Secretary with
information required to implement this section, to monitor
quality of care, and to provide for coverage determinations;
and (10) meets such other requirements as the Secretary finds
necessary in the interest of the health and safety of
individuals who are furnished services in these institutions.
The Secretary would be required to treat an institution
as meeting the conditions of participation for Medicare if the
accreditation of an institution by a State, regional, or
national agency or association provided reasonable assurances
that any or all of the preceding requirements were met. The
Secretary would be prohibited from requiring any patient of a
religious nonmedical health care institution to undergo any
medical screening, examination, diagnosis, prognosis, or
treatment of any kind or to accept any other medical health
care service, if the patient (or legal representative of the
patient) objects on religious grounds. The Secretary would be
prohibited from subjecting a religious nonmedical health care
institution (or its patients or personnel) to any medical
supervision, regulation, or control, to the extent that such
supervision, regulation or control would be contrary to the
religious beliefs of the institution or its patients or
personnel.
Medicare payment would be made for inpatient hospital
services or post-hospital extended care services furnished to
an individual in a religious nonmedical health care institution
only if: (1) the individual had made an election in effect for
such benefits; and (2) the individual had a condition such that
the individual would qualify for benefits under Medicare for
inpatient hospital services or extended care services if the
individual was an inpatient of a hospital or skilled nursing
facility.
To elect religious nonmedical health care services, an
individual or their legal representative would be required to
sign a statement that they were conscientiously opposed to
acceptance of non-excepted medical treatment and the
individual's acceptance of non-excepted medical treatment would
be inconsistent with the individual's sincere religious
beliefs. (Excepted medical treatment would include medical care
or treatment for the setting of fractured bones, medical care
or treatment received involuntarily, or medical care or
treatment required under federal or state law or law of a
political subdivision of a state.) An election could be revoked
in a manner specified by the Secretary, and would be deemed to
be revoked if the individual received Medicare reimbursable
non-excepted medical treatment, regardless of whether or not
benefits for such treatment were provided under Medicare. If an
individual's election had been made and revoked twice, the next
election could not become effective until one year after the
most recent previous revocation, and any succeeding election
could not become effective until 5 years after the date of the
most recent previous revocation.
The Secretary would also be required to estimate the
relevant Medicare expenditure level before the beginning of
each fiscal year, beginning with FY 2000. If the Secretary
determined that the level estimated Medicare expenditures for a
fiscal year would exceed the trigger level for that fiscal
year, the Secretary would be required to provide for a
proportional reduction in payment amounts under Part A of
Medicare for covered services for the fiscal year involved that
would assure that the level does not exceed the trigger level
for that year. The Secretary would be authorized to, instead of
making some or all of the payment reduction, impose other
conditions or limitations with respect to the coverage of
services as appropriate to reduce the relevant Medicare
expenditure level to the trigger level.
The trigger level for a fiscal year for FY 1998 would be
$20 million, and for a succeeding fiscal year the amount would
be specified as the amount for the previous fiscal year
increased by the percentage increase in the consumer price
index for all urban consumers for the 12-month period ending
with July preceding the beginning of the fiscal year.
The Secretary would be required to monitor the relevant
Medicare expenditure level for each fiscal year beginning with
FY 1999. If the Secretary determined that the relevant Medicare
expenditure level for a fiscal year exceeded, or was less than,
the trigger level for that fiscal year, then the trigger level
for the succeeding fiscal year would be required to be reduced,
or increased, respectively, by the amount of the excess or
deficit expenditure.
At the beginning of each fiscal year (beginning with FY
1999), the Secretary would be required to submit to the
Committee on Ways and Means of the House of Representatives and
the Committee on Finance of the Senate an annual report on
coverage and expenditures for covered services under the
Medicare and Medicaid programs. The report would be required to
include: (1) the relevant Medicare expenditure level for the
previous fiscal year and estimated for the fiscal year
involved; (2) trends in the expenditure level; and (3) facts
and circumstances of any significant change in the expenditure
level from the levels in previous fiscal years.
The provision would amend Medicaid to strike references
to Christian Science and inserting ``a religious nonmedical
health care institution.'' The provision would provide
conforming amendments to sections of the Social Security Act.
Effective Date. Applies to items and services furnished
on or after enactment. By no later than July 1, 1998, the
Secretary would be required to issue regulations to carry out
these amendments on an interim basis pending notice and
opportunity for public comment. For periods before the
effective date of the regulations, such regulations would be
required to recognize elections entered into in good faith in
order to comply with the requirements of this section.
Conference Agreement
The conference agreement includes the Senate provision
with amendments specifying what would constitute common
ownership or ownership interest by a provider of medical
services, that ownership interest of less than 5% would not be
taken into account, and what would be considered to create an
affiliation between a medical care provider and a religious
nonmedical health care institution. Excepted medical treatment
would not include medical care or treatment for the setting of
broken bones. In making adjustments to the trigger level, if
expenditures for a fiscal year were less than the trigger level
projected for a fiscal year, the Secretary could not increase
the trigger level for a succeeding fiscal year by more than $50
million.
The conference agreement continues the provision of
needed nonmedical nursing services to poor and elderly
Americans who have contributed to the Medicare and Medicaid
systems, without requiring them to violate their sincerely held
religious beliefs. Like the Senate amendment, it repeals
certain provisions applicable only to Christian Science
sanatoria and nursing care, 42 U.S.C. Sec. Sec. 1395x(e),
1395x(y)(1), 1320c-11, which were held unconstitutional by a
federal district court on the ground that they were sect-
specific, in violation of the Establishment Clause (C.H.I.L.D.,
Inc. v. Vladeck, 938 F. Supp. 1466 (D. Minn. 1996)). The
conference agreement replaces these provisions with a sect-
neutral accommodation available to any person who is relying on
a religious method of healing and for whom the acceptance of
medical health services would be inconsistent with his or her
religious beliefs. The Conferees believe these modifications
fully respond to and satisfy the constitutional concerns raised
by the district court.
The conference agreement limits Medicare and Medicaid
reimbursements to services furnished to patients having a
condition such that they would be inpatients in a hospital or a
medical skilled nursing facility were it not for their
religious beliefs. Reimbursable services are limited to
nonmedical nursing services and related items, comparable to
services and related nursing materials supplied to inpatients
in a hospital or a medical skilled nursing facility. These
services and items are plainly secular in nature. No payments
can be made for the services of those who provide spiritual
treatment through prayer; and, therefore, in the case of
Christian Scientists, for example, no payments can be made for
the services of the Christian Science practitioner.
Accordingly, the proposed statute meets the requirements of
Establishment Clause decisions precluding the direct funding of
religious teaching or prayer. See Bradfield v. Roberts, 175
U.S. 291 (1899); Bowen v. Kendrick, 487 U.S. 589 (1988).
The Conference Committee, after extensive consultation
with the Committee on the Judiciary of the Senate and of the
House of Representatives, is satisfied that the conference
agreement comports with the First Amendment, and indeed that it
serves the interest of religious freedom. The conference
agreement does not provide unconstitutional benefits to
religion. Rather, it avoids the unfairness of requiring these
Americans to pay taxes, including payroll taxes to the Medicare
Trust Fund, for years without being able to receive any
benefits. The Conferees believe it would be particularly harsh
to cut off nursing benefits for poor and elderly men and women
who have not made alternative arrangements for financing their
health care and who now rely on the availability of nonmedical
nursing benefits at a time when other patients receive
reimbursement for hospital care.
In addition, the conference agreement sets out detailed
eligibility criteria for religious nonmedical health care
institutions that the Conferees believe are necessary to
protect the health and safety of patients in such institutions
and to prevent fraud and abuse
The Conferees understand that there are religious
nonmedical health care institutions that have been Medicare
and/or Medicaid providers since the inception of these
programs. It is the intent of the Conferees that these
providers will continue to receive reimbursement during the
interim period prior to regulations being finalized, unless the
Secretary concludes they are ineligible under the new
provision.
Subtitle G--Provisions Relating to Part B Only
Chapter 1--Physicians' Services
Establishment of Single Conversion Factor for 1998
Sections 10601 and 4601 of House Bill and Section 5501 of Senate
Amendment
Current Law
Medicare pays for physicians services on the basis of a
fee schedule. The fee schedule assigns relative values to
services. Relative values reflect three factors: physician work
(time, skill, and intensity involved in the service), practice
expenses, and malpractice costs. These relative values are
adjusted for geographic variations in the costs of practicing
medicine. Geographically-adjusted relative values are converted
into a dollar payment amount by a dollar figure known as the
conversion factor. There are three conversion factors--one for
surgical services, one for primary care services, and one for
other services. The conversion factors in 1997 are $40.96 for
surgical services, $35.77 for primary care services, and $33.85
for other services.
House Bill
Section 10601. Sets a single conversion factor for 1998,
based on the 1997 primary care conversion factor, updated to
1998 by the Secretary's estimate of the weighted average of the
three separate updates that would occur in the absence of the
legislation. In subsequent years, the conversion factor would
be the conversion factor established for the previous year,
adjusted by the update.
Effective Date. Enactment.
Section 4601. Identical provision.
senate Amendment
Similar provision, except that the Secretary would be
required during the last 15 days of October each year, to
publish the conversion factor and the update for the following
year.
Effective Date. Enactment.
conference Agreement
The conference agreement includes the House provision.
Establishing Update to Conversion Factor to Match Spending Under
Sustainable Growth Rate
Sections 10602 and 4602 of House bill and 5502 of Senate amendment
current Law
The conversion factors are updated each year by a formula
specified in the law. The update equals inflation plus or minus
actual rate of spending growth in a prior period compared to a
target known as the Medicare volume performance standard
(MVPS). (For example, fiscal year 1995 data were used in
calculating the calendar 1997 update.) However, regardless of
actual performance during a base period, there is a 5
percentage point limit on the amount of the reduction. There is
no limit on the amount of the increase.
house bill
Section 10602. Specifies the update to the conversion
factor that would apply beginning in 1999 (unless otherwise
provided for by law). The update to the single conversion
factor for a year would equal the Medicare Economic Index (MEI)
subject to an adjustment to match spending under a sustainable
growth rate. Specifically, the update for a year would be
calculated by multiplying: (1) 1 plus the percentage change in
the MEI, times (2) 1 plus the update adjustment factor
(expressed as a percentage) for the year. The result would be
reduced by 1 and multiplied by 100.
Links the update to the sustainable growth rate. The
update adjustment factor would be calculated as follows. First,
the Secretary would estimate the difference between the
cumulative sum of allowed expenditures for July 1, 1997 through
June 30 of the year involved and the cumulative sum of actual
expenditures for July 1, 1997 through June 30 of the preceding
year. This amount would be divided by the actual expenditures
for the 12-month period (ending June 30) of the preceding year,
increased by the applicable sustainable growth rate which
begins during such 12 month period. For the 12-month period
ending June 30, 1997, allowed expenditures would be defined as
actual expenditures for the period, as estimated by the
Secretary. For a subsequent 12-month period, allowed
expenditures would be defined as allowed expenditures
established for the previous period, increased by the
sustainable growth rate established for the fiscal year which
begins during that 12-month period.
Establishes limits on the amount of variation from the
MEI; the update could not be more than three percentage points
above or seven percentage points below the MEI.
Effective Date. Applies to update for years beginning
with 1999.
Section 4602. Identical provision.
senate amendment
Similar provision except refers to cumulative ``amount''
rather than cumulative ``sum'' of actual expenditures.
Effective Date. Applies to update for years beginning
with 1999.
conference agreement
The conference agreement includes the Senate provision
with an amendment that specifies that the base period for the
update adjustment factor would begin April 1, 1997 rather than
July 1, 1997 and that calculations would be for 12-month
periods ending March 31 rather than June 30.
Replacement of Volume Performance Standard with Sustainable Growth Rate
Section 10603 and 4603 of House bill and Section 5503 of Senate
amendment
current law
The Medicare Volume Performance Standard (MVPS), used to
calculate the update in the conversion factor, is a goal for
the rate of expenditure growth from one fiscal year to the
next. The MVPS for a year is based on estimates of several
factors (changes in fees, enrollment, volume and intensity, and
laws and regulations). The calculation is subject to a
reduction known as the performance standard factor.
House Bill
Section 10603. The provision would replace the MVPS with
the sustainable growth rate based on real gross domestic
product (GDP) growth. Specifically, the rate for FY 1998 and
subsequent years would be equal to the product of: (1) 1 plus
the weighted average percentage change in fees for all
physicians services in the fiscal year; (2) 1 plus the
percentage change in the average number of individuals enrolled
under Part B (other than private plan enrollees) from the
previous fiscal year; (3) 1 plus the Secretary's estimate of
the percentage growth in real GDP per capita from the previous
fiscal year; and (4) 1 plus the Secretary's estimate of the
percentage change in expenditures for all physicians services
in the fiscal year which will result from changes in law and
regulations (excluding changes in volume and intensity
resulting from changes in the conversion factor update). The
result would be reduced by one and multiplied by 100. The term
``physicians services'' would exclude services furnished to a
MedicarePlus plan enrollee.
Requires publication of sustainable growth rates for each
fiscal year beginning with FY 1999. The publication would occur
in the last 15 days of October of the fiscal year in which the
year begins, except that the FY 1999 rate would be published
not later than January 1, 1999.
Effective Date. Enactment.
Section 4603. Identical provision.
Senate Amendment
Similar provision except requires publication of
sustainable growth rates for each fiscal year beginning with FY
1998 with the FY 1998 rate published not later than January 1,
1998.
Effective Date. Enactment.
Conference Agreement
The conference agreement includes the Senate amendment.
Payment Rules for Anesthesia Services
Section 10604 and 4604 of House bill and Section 5504 of Senate
amendment
Current Law
Anesthesia services are paid under a separate fee
schedule (based on base and time units) with a separate
conversion factor. The 1997 conversion factor is $16.68.
House Bill
Section 10604. Specifies that the conversion factor would
equal 46% of the conversion factor established for other
services for the year, except as adjusted for changes in work,
practice expense, or malpractice relative value units.
Effective Date. Applies to services furnished on or after
January 1, 1998.
Section 4604. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment with
clarifying language.
Implementation of Resource-Based Physician Practice Expense
Section 10605 and 4605 of House bill and section 5504 of Senate
amendment
Current Law
The Social Security Amendments of 1994 (P.L. 103-432)
required that the Secretary develop and provide for the
implementation, beginning in 1998, of a resource-based
methodology for payment of practice expenses under the
physician fee schedule. Such expenses are currently paid on the
basis of historical charges.
(a) One-year delay in implementation; special rules for 1998
House Bill
Section 10605. Delays implementation of the practice
expense methodology for 1 year until 1999.
Section 4605. Identical provision.
Senate Amendment
Delays implementation of proposed HCFA rule on practice
expenses for one year, until January 1, 1999. Specifics for
1998, practice expense relative value units would be reduced to
110%of the number of work relative value units for specified
services. These are services: (1) which have work relative units; and
(2) for which the number of practice expense relative value units
determined for 1998 exceeds 110% of the number of work relative value
units. Not included are services which the Secretary determines at
least 75% of which are provided in an office setting. A budget neutral
increase would be made in practice expense relative value units for
office visit procedure codes.
Conference Agreement
The conference agreement includes the Senate provision
with an amendment. If the Secretary determined that the amount
of the reallocation would exceed $390 million, the Secretary
would apply a higher percentage than 110% so that the estimated
reallocation would not exceed $390 million. Further, the
practice expense relative value units for a procedure performed
in an office or a setting outside an office could not be
reduced if the in-office or out-of-office practice expense
relative value would be increased under the proposed
regulations issued June 18, 1997.
(b) Phased-in implementation
House Bill
Section 10605. Phases-in new methodology. In 1999, 25% of
the practice payment would be based on the new methodology.
This percentage would increase to 50% in 2000 and 75% in 2001.
Beginning in 2002, the payment would be based solely on the new
methodology.
Section 4605. Similar provision.
Senate Amendment
Requires the Secretary to implement the resource-based
practice expense unit methodology ratably over the three year
period, 1999-2001, such that the methodology is fully
implemented for 2001 and subsequent years.
Conference agreement
The conference agreement includes the House provision
contained in Section 4605.
(c) Secretarial direction
House Bill
Section 10605. No provision.
Section 4605. Requires the Secretary, to develop new
resource-based relative value units. In developing the units,
the Secretary would be required to utilize, to the maximum
extent practicable, generally accepted cost accounting
principles and standards which recognize all staff, equipment,
supplies and expenses, not just those that can be tied to
specific procedures. The Secretary would be required to use
actual data on equipment utilization and other key assumptions
such as the proportion of costs which are direct versus
indirect. The Secretary would be required to study whether
hospital cost reduction methods and changing practice patterns
may have increased physician practice costs and consider
adverse effects on patient access. The Secretary would further
be required to consult with organizations representing
physicians regarding methodology and data to be used.
Requires the Secretary to transmit a report to the House
Ways and Means and Commerce Committees and the Senate Finance
Committee by March 1, 1998. The report would include a
presentation of the data used and an explanation of the
methodology.
Requires the Secretary to publish a notice of proposed
rule-making by May 1, 1998, and allow for a 90-day public
comment period. The proposed rule would include: (1) detailed
impact projections which compare proposed payment amounts with
data on actual practice expenses; (2) impact projections for
specialties, sub-specialties, geographic payment localities,
urban versus rural localities, and academic versus non-academic
medical staffs; and (3) impact projections on access to care
for Medicare patients and physician employment of clinical and
administrative staff.
Senate Amendment
Requires the Secretary to assemble physicians in both
surgical and nonsurgical areas, accounting experts and the
chairman of the PPRC (or its successor) to solicit individual
views on whether sufficient data exist to allow HCFA to proceed
with implementation. The Secretary would then determine whether
sufficient data exists to proceed with practice expense
relative value determination and would report on views of
individual members to the congressional committees including
any recommendations for modifying the rule. If the Secretary
determines insufficient data exists or that the rule needs to
be revised, the Secretary would provide for additional data
collection and other actions to correct deficiencies.
Conference Agreement
The conference agreement includes the House provision
with an amendment. The Secretary would be required to utilize
to the maximum extent practicable, generally accepted
accounting principles and standards which recognize all staff
equipment, supplies and expenses, not just those that can be
tied to specific procedures. The Secretary would be required to
use actual data on equipment utilization and other key
assumptions. The Secretary would be required to consult with
physician organizations regarding methodology and data to be
used. Further, the Secretary would be required to develop a
refinement process to be used during each of the four years of
the transition. The agreement makes clarifying modifications to
items to be included in the proposed rule.
(d) Review by Comptroller General
house bill
No provision.-
senate amendment
Requires the Comptroller General to review and evaluate
the proposed rule issued by HCFA. Within six months of
enactment, the Comptroller General would be required to report
to the Committees on Ways and Means and Finance on the results
of the evaluation including the adequacy of the data used,
categories of allowable costs, methods for allocating direct
and indirect costs, and potential impact on beneficiary access.
conference agreement
The conference agreement includes the Senate amendment.
(e) Malpractice relative value units
house bill
Section 10605. No provision.
Section 4605. No provision.
Effective Date.--
Section 10605. Enactment.
Section 4605. Enactment.
senate amendment
Requires that for years beginning in 1999, the
malpractice expense component would be based on the malpractice
expense resources involved in furnishing the service.
Effective Date. Applies to years beginning on or after
January 1, 1998, except that provision relating to application
of resource-based malpractice expense methodology applies to
years beginning on or after January 1, 1999.
conference agreement
The conference agreement includes the Senate amendment
with an amendment specifying that the application of resource-
based methodology to malpractice relative value units would
apply beginning January 1, 2000. The provision clarifies that
the current law limitation on annual adjustments, namely that
the adjustments would be budget neutral, would apply.
Dissemination of Hospital-Specific Per Discharge Relative Values for
Inpatient Hospital Services
Section 10606 and 4606 of House bill
current law
In general, the law does not include a specific limit on
the number or mix of physicians services provided in connection
with an inpatient hospital stay. (However, the law does require
that certain services provided in connection with a surgery be
included in a global surgical package and not billed
separately.)
house bill
Section 10606. Requires the Secretary, during 1999 and
2001, to determine for each hospital the hospital-specific per
discharge relative value amount for the following year and
whether this amount is projected to be excessive. The Secretary
would be required to notify the medical executive committee of
each hospital having been identified as having an excessive
hospital-specific relative value.
Specifies that the hospital-specific relative value
projected for a non-teaching hospital would be the average per
discharge relative value for inpatient physicians services
furnished by the medical staff for the second preceding
calendar year, adjusted for variations in case mix and
disproportionate share status. For teaching hospitals, the
projected hospital-specific relative value would be: (1) the
average per discharge relative value for inpatient physicians
services furnished by the medical staff for the second
preceding calendar year; plus (2) the equivalent per discharge
relative value for physicians services furnished by interns and
residents during the second preceding year, adjusted for case-
mix, disproportionate share status, and teaching status among
hospitals. The Secretary would be required to determine the
equivalent relative value unit per intern and resident based on
the best available data and could make such adjustment in the
aggregate. The Secretary would be required to adjust the
allowable per discharge relative value otherwise determined to
take into account the needs of teaching hospitals and hospitals
receiving additional payments under PPS as disproportionate
share hospitals or on the basis of their classification as
Medicare-dependent small rural hospitals. The adjustment for
teaching or disproportionate share status could not be less
than zero.
Section 4606. Identical provision.
senate amendment
No provision.
Conference Agreement
The conference agreement includes the House provision
with a modification. The notice would be sent to a subset of
identified hospitals. Further, the Secretary would be required
to evaluate responses of notified hospitals and identified
hospitals not notified.
Temporary Coverage Restoration for Portable Electrocardiogram
Transportation
Sections 10608 and 4608 of House bill
current law
Medicare regulations for the 1997 physician fee schedule
eliminated the separate payment for transportation of EKG
equipment by any supplier.
house bill
Section 10608. Restores separate payment for 1 year,
1998, for transportation of EKG equipment based on the coding
in effect in 1996. The Secretary would be required by July 1,
1998 to determine, taking into account the study by GAO and
other information, whether portable EKG transportation should
be covered.
Effective date. Enactment
Section 4608. Similar provision except replaces
requirement for Secretarial determination with requirement for
submission of GAO report by July 1, 1998 on appropriateness of
continuing payment.
senate amendment
No provision.
conference agreement
The conference agreement includes the House provision as
contained in Section 10608 with a modification to specify that
payment in 1998 would be based on the payment methods in effect
in 1996. The Secretary would be required to make
recommendations to Congress by July 1, 1998 as to whether
portable X-ray transportation should be covered. Further
Congressional action would be needed to extend the
transportation payment after 1998.
Facilitating the Use of Private Contracts Under the Medicare Program
Section 5613 of Senate amendment
current law
Physicians are required to submit claims for services
provided to their Medicare patients and are subject to limits
on amounts they can bill these patients.
house bill
No provision.
senate amendment
Specifies that nothing in Medicare law shall prohibit a
physician or another health care professional who does not
provide items and services under Medicare from entering into a
private contract with a Medicare beneficiary for health
services for which no Medicare claim is to be submitted.
Medicare's limiting charge provisions would not apply to
services provided to a beneficiary under such a contract. The
Administrator of HCFA would be required to report to Congress
by October 1, 2001, on the effect of private contracts under
Medicare. The report would include analyses regarding the
fiscal impact of such contracts on total Medicare expenditures
and out-of-pocket expenditures for covered Medicare services.
It would also include analyses of the quality of health
services provided under the contracts. In addition, the report
would include recommendations as to whether Medicare
beneficiaries should continue to be able to enter private
contracts and, if so, what legislative changes if any should be
made to improve such contracts.
Effective Date. Applies with respect to contracts entered
into on and after October 1, 1997.
conference agreement
The conference agreement includes the Senate provision
with an amendment relating to contract requirements. The
amendment would specify that nothing in Medicare law would
prohibit a physician or other practitioner from entering into a
private contract with a Medicare beneficiary for health
services, provided certain conditions are met. The physician or
practitioner could not receive Medicare reimbursement for any
item or service, either directly or on a capitated basis.
Further, the physician or practitioner could not receive
reimbursement from an organization which receives Medicare
reimbursement for the item or service directly or on a
capitated basis.
The private contract would have to provide specified
beneficiary protections. It would have to be written and signed
by the beneficiary before any item or service was provided
pursuant to the contract. It could also not be entered into at
a time when the beneficiary was facing an emergency or urgent
health care situation. The contract would also clearly indicate
to the beneficiary that by signing the contract the
beneficiary: (1) agrees not to submit a claim for services even
if they were otherwise covered under Medicare; (2) agrees to be
responsible, whether through insurance or otherwise, for
payments of such items and services and understands that no
Medicare reimbursement will be provided; (3) acknowledges that
no Medicare limiting charge limits apply; (4) acknowledgesthat
Medigap plans do not, and other supplemental insurance plans may elect
not to, make payments for such items and services; and (5) acknowledges
that the Medicare beneficiary has the right to have such items or
services provided by other physicians or practitioners for whom
Medicare payment would be made. The contract would also be required to
indicate whether the individual is excluded from participation in
Medicare.
The conference agreement would specify that an affidavit
must be in effect at the time services are provided pursuant to
the contract. The affidavit must be in writing and signed by
the physician or practitioner. It must provide that the
physician or practitioner would not submit any Medicare claim
for any item or service provided to a Medicare beneficiary (and
will not receive any reimbursement for any such item or
service) for a 2-year period beginning on the date the
affidavit is signed. A copy of the affidavit would have to be
filed with the Secretary within 10 days after the first
contract to which the affidavit applies is entered into. If a
physician or practitioner signing an affidavit knowingly and
willfully submits a Medicare claim (or receives Medicare
reimbursement for) an item or service during such 2-year
period, the ability to provide services under the private
contract provision would not apply for the remainder of the
period. Further, the physician or practitioner could not
receive Medicare payments during such period.
The Secretary rather than the Administrator would submit
the required report. The provision would apply with respect to
contracts entered into on or after January 1, 1998.
Chapter 2--Other Health Care Professionals
Increased Medicare Reimbursement for Nurse Practitioners and Clinical
Nurse Specialists
Section 10619 and 4619 of House bill and section 5506 of Senate
amendment
Current Law
Separate payments are made for nurse practitioner (NP)
services provided in collaboration with a physician, which are
furnished in a nursing facility. Recognized payments equal 85%
of the physician fee schedule amount. Nurse practitioners and
clinical nurse specialists (CNSs) are paid directly for
services provided in collaboration with a physician in a rural
area. Payment equals 75% of the physician fee schedule amount
for services furnished in a hospital and 85% of the fee
schedule amount for other services.
House Bill
Section 10619. Removes the restriction on settings. It
would also provide that payment for NP and CNS services could
only be made if no facility or other provider charges are paid
in connection with the service. Payment would equal 80% of the
lesser of either the actual charge or 85% of the fee schedule
amount for the same service if provided by a physician. For
assistant-at-surgery services, payment would equal 80% of the
lesser of either the actual charge or 85% of the amount that
would be recognized for a physician serving as an assistant at
surgery. The provision would authorize direct payment for NP
and CNS services.
Clarifies that a clinical nurse specialist is a
registered nurse licensed to practice in the state and who
holds a master's degree in a defined clinical area of nursing
from an accredited educational institution.
Effective Date. Applies with respect to services
furnished and supplies provided on or after January 1, 1998.
Section 4619. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
Increased Medicare Reimbursement for Physician Assistants
Section 10620 and 4620 of House bill and Section 5507 of Senate
amendment
Current Law
Separate payments are made for physician assistant (PA)
services when provided under the supervision of a physician:
(1) in a hospital, skilled nursing or nursing facility, (2) as
an assistant at surgery, or (3) in a rural area designated as a
health professional shortage area.
House Bill
Section 10620. Removes the restriction on settings.
Payment for PA services could only be made if no facility or
other provider charges were paid in connection with the
service. Payment would equal 80% of the lesser of either the
actual charge or 85% of the fee schedule amount for the same
service if provided by a physician. For assistant-at-surgery
services, payment would equal 80% of the lesser of either the
actual charge or 85% of the amount that would be recognized for
a physician serving as an assistant at surgery. The PA could be
in an independent contractor relationship with the physician.
Employer status would be determined in accordance with state
law.
Effective Date. Applies with respect to services
furnished and supplies provided on or after January 1, 1998.
Section 4620. Identical provision.
senate amendment
Identical provision.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
Chiropractor Services
Section 10607 and 4607 of House bill
current law
Medicare covers chiropractic services involving manual
manipulation of the spine to correct a subluxation demonstrated
to exist by X-ray. Medicare regulations prohibit payment for
the X-ray either if performed by a chiropractor or ordered by a
chiropractor.
house bill
Section 10607. Eliminates the X-ray requirement effective
January 1, 1998.
Section 4607. Similar provision, except it would also
require the Secretary to develop and implement utilization
guidelines relating to coverage of chiropractic services when a
subluxation has not been demonstrated to exist by X-ray.
senate amendment
No provision.
conference agreement
The conference agreement includes the House bill as
contained in Section 4607 with an amendment to change the
effective date to January 1, 2000.
Nothing in this section shall be interpreted as a
legislative indication that x-ray findings are not important
and can serve a purpose in the practice of chiropractic.
Chapter 3--Outpatient Hospital Services
Elimination of Formula-Driven Overpayments (FDO) for Certain Outpatient
Hospital Services
Sections 10411 and 4411 of the House bills and section 5311 of the
Senate amendment
current law
Medicare payments for hospital outpatient ambulatory
surgery, radiology, and other diagnostic services equals the
lesser of: (1) the lower of a hospital's reasonable costs or
its customary charges, net of deductible and coinsurance
amounts, or (2) a blended amount comprised of a cost portion
and a fee schedule portion, net of beneficiary cost-sharing.
The cost portion of the blend is based on the lower of the
hospital's costs or charges, net of beneficiary cost sharing,
and the fee schedule portion is based, in part, on ambulatory
surgery center payment rates or the rates for radiology and
diagnostic services in other settings, net of beneficiary
coinsurance (for those settings). The hospital cost portion and
the fee schedule portion for surgical and radiology services
are 42% and 58%, respectively. For diagnostic services the
hospital cost portion is 50 percent and the fee schedule
portion is 50 percent.
A hospital may bill a beneficiary for the coinsurance
amount owed for the outpatient service provided. The
beneficiary coinsurance is based on 20 percent of the
hospital's submitted charges for the outpatient service,
whereas Medicare usually pays based on the blend of the
hospital's costs and the amount paid in other settings for the
same service. This results in an anomaly whereby the amount a
beneficiary pays in coinsurance does not equal 20 percent of
the program's payment and does not result in a dollar-for-
dollar decrease in Medicare program payments.
house bill
Section 10411. Requires that beneficiary coinsurance
amounts be deducted later in the reimbursement calculation for
hospital outpatient services, so that Medicare payments for
covered services would be lower. Medicare's payment for
hospital outpatient services would equal the blended amount
less any amount the hospital may charge the beneficiary as
coinsurance for services furnished during portions of cost
reporting periods occurring on or after October 1, 1997.
Effective Date. Applies to services furnished during
portions of cost reporting periods occurring on or after
October 1, 1997.
Section 4411. Identical provision.
senate amendment
Identical provision.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
Extension of Reductions in Payments for Costs of Hospital Outpatient
Services
Sections 10412 and 4412 of the House bills and Section 5312 of the
Senate amendment
a. Reduction in payments for capital-related costs
Current Law
Hospitals receive payments for Medicare's share of
capital costs associated with outpatient departments. OBRA 93
extended a 10 percent reduction in payments for the capital
costs of outpatient departments through FY 1998.
House Bill
Section 10412. The provision would extend the 10 percent
reduction in payments for outpatient capital through FY 1999
and during FY 2000 before January 1, 2000.
Effective Date. Effective for cost reporting periods
beginning on or after October 1, 1997.
Section 4412. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
b. Reduction in payments for non-capital-related costs
Current Law
Certain hospital outpatient services are paid on the
basis of reasonable costs. OBRA 93 extended a 5.8 percent
reduction for those services paid on a cost-related basis
through FY 1998.
House Bill
Section 10412. The 5.8 percent reduction for outpatient
services paid on a cost basis would be extended through FY 1999
and during FY 2000 before January 1, 2000.
Effective Date. Effective for cost reporting periods
beginning on or after October 1, 1997.
Section 4412. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
Prospective Payment System for Hospital Outpatient Department Services
Sections 10413 and 4413 of the House bills and Section 5313 of the
Senate amendment
Current Law
Medicare payments for hospital outpatient ambulatory
surgery, radiology, and other diagnostic services equals the
lesser of: (1) the lower of a hospital's reasonable costs or
its customary charges, net of deductible and coinsurance
amounts, or (2) a blended amount comprised of a cost portion
and a fee schedule portion, net of beneficiary cost-sharing.
The cost portion of the blend is based on the lower of the
hospital's costs or charges, net of beneficiary cost sharing,
and the fee schedule portion is based on ambulatory surgery
center payment rates or the rates for radiology and diagnostic
services in other settings, net of beneficiary coinsurance (for
these other settings). For cost reporting periods beginning on
or after January 1, 1991, the hospital cost portion and the fee
schedule portion for surgical and radiology services are 42
percent and 58 percent, respectively. For diagnostic services
the hospital cost portion is 50 percent and the fee schedule
portion is 50 percent.
House Bill
Section 10413. Requires the Secretary to establish a
prospective payment system for covered OPD services furnished
beginning in 1999. The Secretary would be required to develop a
classification system for covered OPD services, such that
services classified within each group would be comparable
clinically and with respect to the use of resources. The
Secretary would be required to establish relative payment rates
for covered OPD services using 1996 hospital claims and cost
report data, and determine projections of the frequency of
utilization of each such service or group of services in 1999.
The Secretary would be required to determine a wage adjustment
factor to adjust the portions of payment attributable to labor-
related costs for relative geographic differences in labor and
labor-related costs that would be applied in a budget neutral
manner. The Secretary would be required to establish other
adjustments as necessary, including adjustments to account for
variations in coinsurance payments for procedures with similar
resource costs, to ensure equitable payments under the system.
The Secretary would also be required to develop a method for
controlling unnecessary increases in the volume of covered OPD
services.
Hospital OPD coinsurance payments would be limited to 20%
of the national median of the charges for the service (or
services within the group) furnished in 1996 updated to 1999
using the Secretary's estimate of charge growth during this
period. The Secretary would be required to establish rules for
the establishment of a coinsurance payment amount for a covered
OPD service not furnished during 1996, based on its
classification within a group of such services.
For 1999, the Secretary would be required to establish a
conversion factor for determining the Medicare OPD fee payment
amounts for each covered OPD service (or group of services)
furnished in 1999 so that the sum of the products of the
Medicare OPD fee payment amounts and the frequencies for each
service or group would be equal to the total amounts estimated
by the Secretary that would be paid for OPD services in 1999.
In subsequent years, the Secretary would be required to
establish a conversion factor for covered OPD services
furnished in an amount equal to the conversion factor
established for 1999 and applicable to services furnished in
the previous year increased by the OPD payment increase factor.
The OPD payment increase factor would be equal to the sum of
the hospital market basket (MB) percentage increase, plus 3.5
percentage points, but in no case more than the number of
percentage points that would result in the pre-deductible
payment percentage exceeding 80%. When the amount of the
beneficiary coinsurance for an individual procedure is equal to
20 percent of the total payment, both the coinsurance and the
Medicare program payment would be increased by the full market
basket.
The Secretary would be required to establish a procedure
under which a hospital, before the beginning of a year
(starting with 1999), could elect to reduce the coinsurance
payment for some or all covered OPD services to an amount that
would not be less than 20% of the total (Medicare program plus
beneficiary coinsurance payment) amount paid for the service
involved, adjusted for relative differences in labor costs and
other factors. A reduced coinsurance payment could not be
further reduced or increased during the year involved, and
hospitals could disseminate information on the reduction of
coinsurance amounts.
The Secretary would be authorized to periodically review
and revise the groups, relative payment weights, and the wage
and other adjustments to take into account changes in medical
practice, medical technology, the addition of new services, new
cost data, and other relevant information. Any adjustments made
by the Secretary would be made in a budget neutral manner. If
the Secretary determined that the volume of services paid for
under this subsection increased beyond amounts established
through those methodologies, the Secretary would be authorized
to adjust the update to the conversion factor otherwise
applicable in a subsequent year.
The coinsurance payment for covered OPD services would be
determined by the provisions of this bill instead of the
standard 20% coinsurance for other Part B services.
Effective Date. Effective for services delivered on or
after January 1, 1999.
Section 4413. Identical provision.
Senate amendment
Similar provision, except requires the Secretary to use
claims data from 1997 for establishing the system requirements,
the unadjusted copayment amount, and rules for new services.
conference agreement
The conference agreement includes the House bill with
amendments. These include defining covered OPD services and
updating the entire fee schedule amount (program payments plus
beneficiary coinsurance payments) by the market basket increase
minus one percentage point for 2000 through 2002, and by the
market basket percentage increase in subsequent years.
Beneficiary coinsurance payments would be subtracted from the
fee schedule amount to determine Medicare program payments.
The Conferees have given the Secretary discretion in
determining the adjustment factors that will be applied to the
OPD prospective rates. In examining the necessary adjustment
factors, the Conferees would like the Secretary to examine
whether an adjustment is warranted for those Eye and Ear
specialty hospitals that received payments under a different
blend formula for cost reporting periods beginning on or after
October 1, 1988 and before January 1, 1995.
Chapter 4--Ambulance Services
Payments for Ambulance Services
Sections 10431 and 4431 of House bill and Section 5321 of Senate
amendment
current law
Payment for ambulance services provided by freestanding
suppliers is based on reasonable charge screens developed by
individual carriers based on local billings. Hospital or other
provider-based ambulance services are paid on a reasonable cost
basis; payment cannot exceed what would be paid to a
freestanding suppliers.
house bill
Specifies payment limits for ambulance services for FY
1998 through FY 2002. For ambulance services paid on a
reasonable cost basis, the annual increase in the costs
recognized as reasonable would be limited to the percentage
increase in the consumer price index reduced for fiscal years
1998 and 1999 by 1 percentage point. Similarly, for ambulance
services furnished on a reasonable charge basis, the annual
increase in the charges recognized as reasonable would be
limited to the percentage increase in the consumer price index
reduced for fiscal years 1998 and 1999 by 1 percentage point.
Requires the Secretary to establish a fee schedule for
ambulance services through a negotiated rule-making process. In
establishing the fee schedule, the Secretary would be required
to: (1) establish mechanisms to control Medicare expenditure
increases; (2) establish definitions for services; (3) consider
appropriate regional and operational differences; (4) consider
adjustments to payment rates to account for inflation and other
relevant factors; and (5) phase-in the application of the
payment rates in an efficient and fair manner. In establishing
the fee schedule, the Secretary would be required to consult
with various national organizations representing individuals
and entities who furnish and regulate ambulance services.
Requires the Secretary to assure that payments in FY 2000
under the fee schedule do not exceed the aggregate amount of
payments which would have been made in the absence of the fee
schedule. The annual increase in the payment amounts in each
subsequent year would be limited to the increase in the
consumer price index. Medicare payments would equal 80% of the
lesser of the fee schedule amount or the actual charge.
Services would be paid on as assignment basis.
Authorizes payment for advanced life support (ALS)
services provided by paramedic intercept service providers in
rural areas. The ALS services would be provided under contract
with one or more volunteer ambulance services. The volunteer
ambulance service involved must be certified as qualified to
provide the service, provide only basic life support services
at the time of the intercept, and be prohibited by state law
from billing for services. The ALS service provider must be
certified to provide the services and bill all recipients (not
just Medicare beneficiaries) for ALS intercept services.
Effective Date. Enactment, except fee schedule provisions
apply to services furnished on or after January 1, 2000.
Section 4431. Similar provision, except specifies that
limits on reasonable cost increases for FY 1998--FY 2002 apply
on a per trip basis.
senate amendment
Similar to Section 10431, except that: (1) the one
percentage point reduction in the increase in reasonable charge
and cost limits would be made only in 1998; (2) the fee
schedule would be implemented in 1999 with payments not to
exceed those which would have been made in the absence of the
fee schedule; and (3) the annual increase would be limited to
the increase in the CPI minus one percentage point (but not
less than zero).
Effective Date. Enactment, except fee schedule provisions
apply to services furnished on or after January 1, 1999.
conference agreement
The conference agreement includes the Senate amendment
with modifications. The reasonable costs limits would be
applied in FY 1998, FY 1999 and so much of FY 2000 as precedes
January 1, 2000. The reduction would be one percentage point
each fiscal year. The limits would be applied on a per trip
basis. The Secretary could require, for services provided after
June 30, 1998, that a code be provided; the code would be under
a uniform coding system specified by the Secretary. The limits
on reasonable charge payments would apply on a calendar basis
for FY 1998 and FY 1999 with the one percentage point reduction
applicable in both years.
The conference agreement specifies that the fee schedule
would be implemented in 2000. The aggregate amount of payments
could not exceed what would be paid if the interim reductions
remained in effect in that year. For purposes of this
determination, the Secretary would assume the update in 2002 to
be equal to the CPI minus one percentage point in 2001 and
2002. Beginning in 2001, the update would equal the preceding
year's amount updated by the CPI, reduced by one percentage
point in 2001 and 2002. The Secretary could require the use of
a code under a uniform coding system. The fee schedule would
apply to ambulance services whether provided directly by a
supplier or provider or under arrangements with a provider.
Demonstration of Coverage of Ambulance Services Under Medicare Through
Contracts With Units of Local Government
Sections 10432 and 4432 of House bill
current law
No provision.
house bill
Section 10432. Requires the Secretary to establish up to
three demonstration projects under which, at the request of a
county or parish, the Secretary enters into agreement with such
entity to furnish or arrange for the furnishing of ambulance
services. The county or parish could not enter into a contract
unless the contract covered at least 80% of the residents
enrolled in Part B. Individuals or entities furnishing services
would have to meet the requirements otherwise applicable. The
Secretary would make monthly per capita payments to the county
or parish. In the first year, the capitated payment would equal
95% of the average annual per capita payment for ambulance
services made in the most recent 3 years for which data is
available. In subsequent years, it would be the amount
established for the preceding year increased by the CPI.
Payments under the contract would be in lieu of other payments
for ambulance services.
Specifies that the contract may provide for the inclusion
of persons residing in additional counties or parishes, permit
transportation to non-hospital providers, and implement other
innovations proposed by the county or parish.
Requires the Secretary to evaluate the demonstration
projects and report by January 1, 2000, on the study including
recommendations regarding modifications to the payment
methodology and whether to extend or expand such projects.
Effective Date. Enactment.
Section 4432. Identical provision.
senate amendment
No provision.
conference agreement
The conference agreement includes the House bill with
clarifying language to specify that the contracts would be made
with units of local government. Further, the determination of
whether the contract covers 80 percent of Part B enrollees
residing in the area would not include persons in a
Medicare+Choice plan.
Chapter 5--Rehabilitation Services
Rehabilitation Agencies and Services
Sections 10421 and 4421 of the House bills
current law
Medicare provides for special payment rules for certain
types of providers of services covered under Part B and paid
out of the SMI Trust Fund.
house bill
Section 10421. For outpatient physical therapy and
occupational therapy services, Medicare program payments for
services provided in 1998 would be, the lesser of the actual
charges for the services or the adjusted reasonable costs for
the services minus beneficiary coinsurance payments. Adjusted
reasonable costs would be defined as operating costs reduced by
5.8% and capital costs reduced by 10%. After 1998, payment for
these services would be 80% of the lesser of the actual charge
for the services, or 80% of the applicable physician fee
schedule amount. The provision would also exclude from Medicare
coverage outpatient occupational therapy and physical therapy
services furnished as incident to a physician's professional
services that did not meet the standards provided for
outpatient physical therapy services furnished by a provider in
a clinic, rehabilitation agency, public health agency, or by
others under an arrangement with and under the supervision of
such providers.
The provision would also apply the independent therapist
per beneficiary cap of $900 per year to outpatient therapy
services beginning in 1999. The cap would be increased each
year by the estimated increase in gross domestic product (GDP).
Effective Date. Effective for services provided on or
after January 1, 1998.
Section 4421. Identical provision.
senate amendment
No provision.
conference agreement
The Conference agreement includes the House provisions
with modifications. For rehabilitation agencies and certain
outpatient therapy providers other than outpatient hospital
departments, the Conference agreement includes: (1) 10-percent
operating and capital cost reductions for 1998, (2) application
of fee-schedule provisions for therapy services beginning in
1999, and (3) per beneficiary therapy caps currently applicable
to independent therapists. Other non-therapy services provided
by CORFs would be paid under existing fee schedules or those
established by the Secretary, beginning in 1999. The per
beneficiary cap is also amended to equal $1,500 (instead of
$900) per year in 1999 through 2001, then increased for each
subsequent year by the increase in the MEI, rounded to the
nearest multiple of $10. Beginning in 1999, hospital outpatient
departments would be subject to the fee schedule for therapy
services; however, the per beneficiary cap would not apply.
The conference agreement requires the Secretary to report
to the Congress, by no later than January 1, 2001, on
recommendations on a revised coverage policy of outpatient
physical therapy services and outpatient occupational therapy
services based on classification of individuals by diagnostic
category and prior use of services, in both inpatient and
outpatient settings, in place of uniform dollar limitations.
The recommendations would be required to include how a system
of durational limits by diagnostic category might be
implemented in a budget-neutral manner. The conference
agreement also modifies the effective date to provide that
payments made under the physician fee schedule and the higher
per beneficiary cap apply to services furnished and expenses
incurred on or after January 1, 1999.
Comprehensive Outpatient Rehabilitation Facilities (CORFs)
Sections 10422 and 4422 of the House bills
current law
Medicare provides for special payment rules for certain
types of providers of services covered under Part B and paid
out of the SMI Trust Fund.
house bill
Section 10422. CORF payments for services provided in
1998 would be the lessor of the actual charges for the services
or the adjusted reasonable costs for the services minus
beneficiary coinsurance payments. Adjusted reasonable costs
would be defined as operating costs reduced by5.8% and capital
costs reduced by 10%. After 1998, payment for these services would be
80% of the lesser of the actual charge for the services, or 80% of the
applicable physician fee schedule amount. The provision would also
exclude from Medicare coverage outpatient occupational therapy and
physical therapy services furnished as incident to a physician's
professional services that did not meet the standards provided for
outpatient physical therapy services furnished by a provider in a
clinic, rehabilitation agency, public health agency, or by others under
an arrangement with and under the supervision of such providers.
The provision would also apply the independent therapist
per beneficiary cap of $900 per year to outpatient therapy
services beginning in 1999. The cap would be increased each
year by the estimated increase in gross domestic product (GDP).
Effective Date. Effective for services delivered on or
after January 1, 1998.
Section 4422. Identical provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill
or the Senate amendment. (See Rehabilitation Agencies and
Services, above.)
Chapter 6--Other Payment Provisions
Payments for Durable Medical Equipment
Sections 10611, 10612 and 4611, 4612, and 4622 of House bill and
Sections 5523, 5524, 5221, 5224, 5225, and 5226 of Senate amendment
(a) Durable Medical Equipment (DME) Updates
Current Law
DME is reimbursed on the basis of a fee schedule. Items
are classified into five groups for purposes of determining the
fee schedules and making payments: (1) inexpensive or other
routinely purchased equipment (defined as items costing less
than $150 or which are purchased at least 75 percent of the
time); (2) items requiring frequent and substantial servicing;
(3) customized items; (4) oxygen and oxygen equipment; and (5)
other items referred to as capped rental items. In general, the
fee schedules establish national payment limits for DME. The
limits have floors and ceilings. The floor is equal to 85
percent of the weighted median of local payment amounts and the
ceiling is equal to 100 percent of the weighted median of local
payment amounts. Fee schedule amounts are updated annually by
the consumer price index for all urban consumers, CPI-U.
House Bill
Section 10611(a)(1). Eliminates updates to the DME fee
schedules for each of the years 1998 through 2002.
Effective date. Enactment.
Section 4611(a)(1). Identical provision.
Senate Amendment
Reduces the DME fee schedule update to CPI minus 2
percentage points (but not below zero) for each of the years
1998 through 2002.
Effective date. Applies to items furnished on and after
January 1, 1998.
Conference Agreement
The conference agreement includes the House bill.
(b) Upgraded Durable Medical Equipment
Current Law
Medicare requires that the payment amount for covered DME
be consistent with what is reasonable and medically necessary
to serve the intended purpose. Additional expenses for upgraded
or deluxe features or items which are rented or purchased for
added convenience or other purposes do not meet the
reasonableness test. A beneficiary wishing upgraded features
must purchase the upgraded item and seek reimbursement from
Medicare for the basic item. Payment is based on the payment
amount for the kind of item normally used to meet the intended
purpose (i.e., the standard item). Usually this is the least
costly item.
House Bill
No provision.
Senate Amendment
Effective on the date the Secretary issues regulations,
beneficiaries could purchase or rent an item of upgraded DME
for which payment would be made by Medicare as if the item were
a standard item. Suppliers of the upgraded item would receive
payment as if the item were a standard item and the beneficiary
would pay the supplier the difference between the supplier's
charge and Medicare's payment. In no event could the supplier's
charge for an upgraded item exceed theapplicable fee schedule
amount (if any) for the item. The Secretary's regulations would address
the determination of fair market prices for upgraded items; full
disclosure of the availability and price of standard items and proof of
receipt of this information by the beneficiary before furnishing of the
upgraded item; conditions of participation for suppliers in the
simplified billing arrangement; sanctions of suppliers who are
determined to engage in coercive or abusive practices, including
exclusion; and such other safeguards as the Secretary determines are
necessary.
Effective date. Enactment.
Conference Agreement
The conference agreement includes the Senate amendment
with clarifying language. The provision would apply to
purchases or rentals after the effective date of any
regulations issued by the Secretary.
(c) Update for Orthotics and Prosthetics
Current Law
Prosthetics and orthotics are paid according to a fee
schedule with principles similar to the DME fee schedule. The
fee schedule establishes regional payment limits for covered
items. The payment limits have floors and ceilings. The floor
is equal to 90 percent of the weighted average of regional
payment amounts and the ceiling is 120 percent. Fee schedule
amounts are updated annually by CPI-U.
House Bill
Section 10611(a)(2). Limits the update for the
prosthetics and orthotics fee schedule to 1 percent for each of
the years 1998 through 2002.
Effective date. Enactment.
Section 4611(a)(2). Identical provision.
Senate Amendment
Reduces the prosthetics and orthotics fee schedule update
to CPI minus 2 percentage points (but not below zero) for each
of the years 1998 through 2000.
Effective date. Applies to items furnished on and after
January 1, 1998.
Conference Agreement
The conference agreement includes the House bill.
(d) Payment Freeze for Parenteral and Enteral Nutrients, Supplies, and
Equipment (PEN)
Current Law
Parenteral and enteral nutrients, supplies, and equipment
are paid on the basis of the lowest reasonable charge levels at
which items are widely and consistently available in the
community.
House Bill
Section 10611(a)(3). Freezes reasonable charge payments
for PEN at 1995 levels for the period 1998 through 2002.
Effective date. Enactment.
Section 4611(a)(3). Identical provision.
Senate Amendment
Reduces the reasonable charge updates for PEN to CPI
minus 2 percentage points (but not below zero) for each of the
years 1998 through 2002.
Effective date. Enactment.
Conference Agreement
The conference agreement includes the House bill.
The Conferees note that there is scientific evidence
suggesting that intradialytic parenteral nutrition (IDPN)
therapy may be of benefit to certain subgroups of chronic
dialysis patients. However, many questions remain about the
physiologic effects, efficacy, and indications for IDPN
therapy. The Conferees urge the Secretary to further
investigate the clinical value of IDPN therapy, in consultation
with appropriate organizations, and to provide recommendations
regarding Medicare coverage of this therapy.
(e) Payment for Cochlear Implants
Current Law
Prosthetics and orthotics are paid according to a fee
schedule with principles similar to the DME fee schedule. The
fee schedule establishes regional payment limits for covered
items. Thepayment limits have floors and ceilings. The floor is
equal to 90 percent of the weighted average of regional payment amounts
and the ceiling is 120 percent.
House Bill
Section 4622. Specifies that cochlear implants would be
paid according to DME fee schedule for customized items.
Effective date. Applies to implants implanted on or after
January 1, 1998.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House
provision regarding cochlear implants. A cochlear implant is a
surgically implanted, biomedical device used to improve hearing
for patients with serious hearing loss. The Conferees were
concerned that the cochlear provision would, in effect,
establish in statute the reimbursement for one specific item of
durable medical equipment. Given that cochlear implant
technology is rapidly advancing, and the relatively low number
of such implants each year, the Conferees believed this matter
requires further examination. The Conferees also noted that the
Secretary is currently developing a fee schedule limit on
cochlear implants but has not yet done so. Cochlear
manufacturers are concerned that the Secretary is using
inaccurate data in developing the fee schedule. According to
manufacturers, many cochlear development programs will cease to
be financially viable if inaccurate data is used to generate a
fee schedule. In this regard, the Conferees request that the
Secretary examine this issue carefully and report to Congress
on the fee schedule proposal. The Conferees recommend that the
committees with jurisdiction over the Medicare program
carefully monitor this issue. In addition, the Conferees note
that other provisions of the conference agreement may address
the concerns of cochlear manufacturers. For example, the
conference agreement includes a more flexible ``inherent
reasonableness'' authority for the Secretary to adjust payment
amounts that are ``grossly excessive or grossly deficient and
not inherently reasonable.'' The Conferees believe cochlear
implants may be a candidate for inherent reasonableness action
if a problem develops in the future.
Oxygen and Oxygen Equipment
Sections 10612 and 4612 of House bill and Section 5524 of Senate
amendment
Current Law
Under Medicare oxygen and oxygen equipment are considered
durable medical equipment and are paid according to a DME fee
schedule. The fee schedule establishes a national payment limit
for oxygen and oxygen equipment.
House Bill
Section 10612. Reduces the national payment limit for
oxygen and oxygen equipment by 20 percent in 1998 through 2002.
Effective date. Enactment.
Section 4612. Identical provision.
Senate Amendment
Reduces the national payment limit for oxygen and oxygen
equipment by 25 percent in 1998 and an additional 12.5 percent
in 1999. These reductions would continue to be reflected in
payments for oxygen in subsequent years. The Secretary would be
authorized to establish separate classes of oxygen and oxygen
equipment with differing payments, but only to the extent
payments for home oxygen equipment are no greater (or less)
than they would have been had separate classes and payment
rates not been established. The Secretary would be required to
establish, as soon as practicable, service standards and
accreditation requirements for home oxygen providers. The
General Accounting Office (GAO) would be required to study and
report to the Ways and Means and Finance Committees on access
to oxygen equipment, including recommendations for legislation,
within 6 months of enactment. The Secretary would be required
to arrange with peer review organizations to evaluate access to
and quality of home oxygen equipment. In addition, the
Secretary would be required to conduct a demonstration project
on competitive bidding for home oxygen equipment.
Effective date. Reductions in payments for oxygen
effective January 1, 1998. Other provisions effective on
enactment.
Conference Agreement
The conference agreement includes the Senate amendment
with modifications. The national payment limit for oxygen and
oxygen equipment would be reduced by 25 percent in 1998 and an
additional 5 percent in 1999; the thirty percent reduction
would apply in each subsequent year. The Secretary would be
required to establish service standards but not accreditation
requirements for home oxygen providers. GAO's report on access
to oxygen would be required to be submitted to Ways and Means,
Commerce, and Finance within 18 months of enactment. The
requirement for the Secretary to conduct a competitive bidding
demonstration for home oxygen would be eliminated (but at least
one of the competitive acquisition areas established in
Subtitle D, Anti-Fraud and Abuse, would have to be for oxygen
and oxygen equipment). The conferees wish to clarify that
reductions in payments to oxygen and home oxygen equipment are
in lieu of the Administration's proposed reductions through the
regulatory process.
Clinical Laboratory Services
Section 10613 and 4613 of House bill and Section 5521 of Senate
amendment
Current Law
Clinical diagnostic laboratory tests are paid on the
basis of areawide fee schedules. The law sets a cap on payment
amounts equal to 76% of the median of all fee schedules for the
test. The fee schedules amounts are updated by the percentage
change in the CPI.
(a) Update; cap
House Bill
Section 10613. Freezes fee schedule payments for the
1998-2002 period. The cap would be lowered from 76% of the
median to 72% of the median beginning in 1998.
Section 4613. Identical provision.
Senate Amendment
Reduces (but not below zero) the update by 2 percentage
points for each year, 1998-2002. The cap would be lowered to
74% of the median beginning in 1998.
Conference Agreement
The conference agreement includes the House provision on
the update. It includes the Senate amendment on lowering the
cap.
(b) Study.
House Bill
No provision.
Effective Date. Enactment.
Senate Amendment
Requires the Secretary to request the Institute of
Medicine to conduct a study of lab payments. The study would
include a review of the adequacy of the current methodology and
recommendations regarding alternative payment systems. It would
also analyze and discuss the relationship between payment
systems and access to high quality lab services for
beneficiaries, including availability and access to new testing
methodologies. The Secretary would be required to report to
Congress within 2 years of enactment.
Effective Date. Enactment.
Conference Agreement
The conference agreement includes the Senate amendment
with clarifying language.
Improvements in Administration of Laboratory Services Benefit
Sections 10614 and 4614 of House bill and Section 5522 of Senate
amendment
Current Law
Significant variations exist among carriers in rules
governing requirements labs must meet in filing claims for
payments.
House Bill
Section 10614. Requires the Secretary to divide the
country into no more than five regions and designate a single
carrier for each region to process laboratory claims (other
than for independent physicians offices) no later than January
1, 1999. One of the carriers would be selected as a central
statistical resource. The allocation of claims to a particular
carrier would be based on whether the carrier serves the
geographic area where the specimen was collected or other
method selected by the Secretary.
Requires the Secretary, by July 1, 1998, to adopt uniform
coverage, administration, and payment policies for lab tests
using a negotiated rule-making process. The policies would be
designed to promote uniformity and program integrity and reduce
administrative burdens with respect to clinical diagnostic
laboratory tests in connection with beneficiary information
submitted with a claim, physicians' obligations for
documentation and recordkeeping, claims filing procedures,
documentation, and frequency limitations. Carriers could
implement changes pending implementation of uniform policies.
Permits the use of interim regional policies where a
uniform national policy had not been established and there is a
demonstrated need for policy to respond to aberrant utilization
or provision of unnecessary services. The Secretary would
establish a process under which designated carriers could
collectively develop and implement interim national standards
for up to 2 years.
Requires the Secretary to conduct a review, at least
every 2 years, of uniform national standards. The review would
consider whether to incorporate or supercede interim regional
or national policies.
Specifies that before carriers implement a change in
requirements (including use of interim regional and interim
national policies) in the period prior to the adoption of
uniform policies, they must provide advance notice to
interested parties and allow a 45 day period for parties to
submit comments on proposed modifications.
Requires the inclusion of a laboratory representative on
carrier advisory committees. The representative would be
selected by the committee from nominations submitted by
national and local organizations representing independent
clinical labs.
Effective Date. Enactment.
Section 4614. Similar provision, except that designation
of single carrier excludes tests performed in ``physicians
offices'' rather than ``independent physicians offices.''
Senate Amendment
Similar provision, except: (1) specifies that the
provision designating single carriers for each of five regions
would not apply to lab services furnished by independent
physicians offices until such time as the Secretary determines
such offices would not be unduly burdened by the application of
billing requirements with respect to more than one carrier; (2)
specifies that one of the goals in designing uniform policies
is to ``simplify administrative requirements'' rather than
``reduce administrative burdens''; and (3) specifies that
interim and national guidelines would apply to all lab
services.
Effective Date. Enactment.
Conference Agreement
The conference agreement includes the Senate provision
with amendments. The provision designating single carriers for
each of five regions would not apply to those physician office
laboratories which the Secretary determines would be unduly
burdened by the application of billing responsibilities with
respect to more than one carrier.
The agreement would clarify that uniform policies are
national uniform policies. The policies would be designed to
promote program integrity and national uniformity and simplify
administrative requirements with respect to lab tests in
connection with beneficiary information submitted with a claim,
medical conditions for which a lab test is reasonable and
necessary, appropriate use of procedure codes in billing,
required medical documentation, recordkeeping requirements,
claims filing procedures, and limitations on frequency of
coverage for the same test performed on the same individual.
The agreement would provide that recommendations from
national and local organizations that represent clinical
laboratories would be considered in selecting the laboratory
representative on a carrier advisory committee.
Updates for Ambulatory Surgical Services
Sections 10615 and 4615 of the House bills and Section 5525 of the
Senate amendment
Current Law
Medicare pays for ambulatory surgical center (ASC)
services on the basis of prospectively determined rates. These
rates are updated annually by the CPI-U. OBRA 93 eliminated
updates for ASCs for FY 1994 and FY 1995.
House Bill
Section 10615. Sets the updates for FY 1998 through FY
2002 at the increase in the CPI-U minus 2.0 percentage points.
The provision would set the update for each succeeding fiscal
year equal to the increase in the CPI-U.
Effective date. Enactment.
Section 4615. Identical provision.
Senate Amendment
Similar provision, except sets the updates for FY 1998
through FY 2002 at the increase in the CPI-U minus 2.0
percentage points, but not below zero. The provision does not
include updates for succeeding years.
Conference Agreement
The conference agreement includes the Senate amendment.
Reimbursement for Drugs and Biologicals
Sections 10614 and 4614 of House bill and 5526 of Senate amendment
Current Law
Payment for drugs is based on the lower of the estimated
acquisition cost or the national average wholesale price.
Payment may also be made as part of a reasonable cost or
prospective payment.
House Bill
Section 10616. Specifies that in any case where payment
is not made on a cost or prospective payment basis, the payment
would equal 95% of the average wholesale price.
Effective Date. Applies to drugs and biologicals
furnished on or after January 1, 1998.
Section 4616. Identical provision.
Senate Amendment
Similar provision except the average wholesale price
would be ``as specified by the Secretary''.
Specifies that in 1998, the payment amount could not
exceed the amount payable on May 1, 1997, and in subsequent
years could not exceed the previous year's amount increased by
the percentage increase in the CPI. For any other drug or
biological, the annual increase for any year following the
first year for which payment is made would be limited to the
percentage increase in the CPI. If payment is made to a
licensed pharmacy, the Secretary (as the Secretary determines
appropriate) would pay a dispensing fee (less applicable
deductible and insurance amounts).
Requires the Secretary to conduct studies and surveys as
necessary to determine the average wholesale price (and such
other prices the Secretary determines appropriate). The
Secretary would report to the appropriate congressional
committees within six months of enactment on the results.
Effective Date. Applies to drugs and biologicals
furnished on or after January 1, 1998.
Conference Agreement
The conference agreement includes the House bill with
modifications. The provision would specify that if payment is
made to a licensed pharmacy, the Secretary (as the Secretary
determines appropriate) would pay a dispensing fee (less
applicable deductible and coinsurance amounts).
The agreement would require the Secretary to study the
effect of the provision on average wholesale prices and report
the results of such study to the appropriate committees of
Congress by July 1, 1999.
Coverage of Oral Anti-Nausea Drugs Under Chemotherapeutic Regimen
Sections 10617 and 4617 of House bill
Current Law
Medicare provides coverage for certain oral cancer drugs.
The Administration has specified that Medicare will pay for
self-administrable oral or rectal versions of self-administered
anti-emetic drugs when they are needed for the administration
and absorption of primary Medicare covered oral anticancer
chemotherapeutic agents when a high likelihood of vomiting
exists.
House Bill
Section 10617. Provides coverage, under specified
conditions, for an oral drug used as an acute anti-emetic used
as part of an anticancer chemotherapeutic regimen. It would
have to be administered by a physician (or as prescribed by a
physician) for use immediately before, at, or within 48 hours
after the time of administration of the chemotherapeutic agent
and used as a full replacement for the anti-emetic therapy
which would otherwise be administered intravenously.
Establishes a per dose payment limit equal to 90% of the
average per dose payment basis for the equivalent intravenous
anti-emetics administered during the year, as computed based on
the payment basis applied in 1996. The Secretary would be
required to make adjustments in the coverage of, or payment,
for the anti-nausea drugs so that an increase in aggregate
payments per capita does not result.
Effective Date. Applies to services furnished on or after
January 1, 1998.
Section 4617. Identical provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House bill with
modifications. It deletes the provisions specifying payment
limits. The Conferees expect that the oral forms of the anti-
emetics will result in substantial cost savings to Medicare
relative to the intraveneous versions of anti-emetics.
Renal Dialysis-Related Services
Sections 10621 and 4621 of the House bills
Current Law
Medicare covers persons who suffer from end-stage renal
disease. Facilities providing dialysis services must meet
certain requirements.
House Bill
Section 10621. Requires the Secretary to audit a sample
of cost reports of renal dialysis providers for 1995 and for
each third year thereafter. The Secretary would also be
required to develop and implement by January 1, 1999, a method
to measure and report on the quality of renaldialysis services
provided under Medicare in order to reduce payments for inappropriate
or low quality care.
Effective date. Enactment.
Section 4621. Identical provision.
Senate Amendment
No provision.
Conference Agreement
The Conference agreement includes the House provision
with modifications. The Conference agreement would require each
provider to be audited at least once every three years. The
Conference agreement would require the Secretary to develop by
no later than January 1, 1999, and implement by no later than
January 1, 2000, a method to measure and report on the quality
of renal dialysis services provided under Medicare. The
conference agreement does not include the provision specifying
that the quality measures are to be implemented in order to
reduce payments for inappropriate or low quality care.
Chapter 7--Part B Premium
Part B Premium
Section 10631 and 4631 of House bill and Section 5541 of Senate
amendment
Current Law
When Medicare was established in 1965, the Part B monthly
premium was intended to equal 50% of program costs. The
remainder was to be financed by federal general revenues, i.e.,
tax dollars. Legislation enacted in 1972 limited the annual
percentage increase in the premium to the same percentage by
which social security benefits were adjusted for cost-of-living
increases (i.e., cost-of-living or COLA adjustments). As a
result, revenues dropped to below 25% of program costs in the
early 1980s. Since the early 1980s, Congress has regularly
voted to set the premium equal to 25% of costs. Under current
law, the 25% provision is extended through 1998; the COLA
limitation would again apply in 1999.
House Bill
Section 10631. Sets permanently the Part B premium at 25%
of program costs.
Effective Date. Enactment.
Section 4631. Identical provision.
Senate Amendment
Similar provision.
Effective Date. Enactment.
Conference Agreement
The conference agreement includes the Senate amendment
with clarifying language.
Income-Related Reduction in Medicare Subsidy
Section 5542 of Senate amendment
Current Law
Under current law, all beneficiaries, regardless of
income, pay the same Part B premium. The premium is equal to
25% of program costs. The remaining 75% of Part B costs are
paid from Federal general revenues.
(a) Amount
House Bill
No provision.
Senate Amendment
Specifies that individuals with incomes over $50,000 and
couples (filing joint returns) with incomes over $75,000 would
be subject to an increased Part B premium. The Federal subsidy
would be phased out so that individuals with incomes at
$100,000 and couples with incomes at $125,000 would pay 100% of
program costs. There would be a straight line sliding scale
phase-out of the subsidy for individuals with incomes between
$50,000 and $100,000 and couples with incomes between $75,000
and $125,000. Income is defined as modified adjusted gross
income (AGI) for a taxable year. (Married couples living
together but filing separate returns would be subject to a
straight line sliding scale phase-out over the income range
from zero to $50,000)
Conference Agreement
The conference agreement does not include the Senate
amendment.
(b) Administration
House Bill
No provision.
Senate Amendment
Requires the Secretary to make an initial determination
of the amount of an individual's modified AGI for a year. Not
later than the preceding September, the Secretary would be
required to notify each individual the Secretary determines
would be subject to an increased premium. The determination
would be based on the individual's actual modified AGI for the
most recent taxable year for which such information is
available or other information provided to the Secretary by the
Secretary of the Treasury. The notice to the individual would
include the Secretary's estimate of the individual's AGI for
the year. The individual would have a 30 day period (beginning
with the date the notice is provided) to provide information on
the individual's anticipated AGI for the forthcoming year. If
the individual provides information during this period, it
would serve as the basis for determining the individual's
modified AGI.
Requires the Secretary to make a premium adjustment if he
or she determined (based on information provided by the
Secretary of the Treasury) that actual modified AGI was
different from the amount initially determined. The adjustment
would be made to the subsequent year's premium to account for
any overpayments or underpayments in the previous year.
Requires the Secretary to increase the adjustment for an
underpayment if the initial determination was based on
information supplied by the individual. The increase would
equal the interest rate (as determined under the Internal
Revenue Code, compounded daily) applied to any underpayment.
The interest would accrue from the first day of the month after
the individual supplied information to the Secretary. It would
end 30 days before the first month for which the monthly
premium was increased to account for the underpayment.
Authorizes the Secretary to make appropriate recovery
efforts in the case of an individual who owed an additional
amount, but was not enrolled in Part B in the subsequent year.
The Secretary would also be authorized, in the case of a
deceased individual, to make payments to the surviving spouse,
or an individual's estate, in the case of overpayments to the
program.
Conference Agreement
The conference agreement does not include the Senate
amendment.
(c) Definition of Modified AGI
House Bill
No provision.
Senate Amendment
Specifies that modified AGI would generally be defined
as such term is used in the tax Code. The determination of
modified AGI would be made without regard to provisions in the
Code relating to: income from U.S. savings bonds used to pay
higher education costs, income for persons living abroad, and
income from sources within the U.S. possessions and Puerto
Rico. The definition would include interest income which is
exempt from Federal taxes.
Conference Agreement
The conference agreement does not include the Senate
amendment.
(d) Transfer of Premium Amounts
House Bill
No provision.
Senate Amendment
Specifies that Part B premium amounts attributable to the
income-related reduction in the Federal subsidy would be
transferred to the Part A trust fund. Amounts appropriated to
cover the government contribution to Part B would not take into
account the premium amounts attributable to the income-related
reduction in the Federal subsidy.
Conference Agreement
The conference agreement does not include the Senate
amendment.
(e) Impact on Other Part B Premium Calculations
House Bill
No provision.
Senate Amendment
Specifies that the delayed enrollment penalty would apply
to the income-related premium amount. The provision that
specifies that an individual's premium increase could not
result in a reduction in an individual's social security check
would not apply to persons subject to an income-related
premium.
Specifies that individuals would be able to pay the
Secretary if the amount of estimated modified AGI is too low
and results in a portion of the required premium not being
deducted from the beneficiary's social security check.
Conference Agreement
The conference agreement does not include the Senate
amendment.
(f) Reporting Requirements for Secretary of the Treasury
House Bill
No provision.
Senate Amendment
Permits the Secretary of the Treasury, upon written
request from the Secretary of HHS, to disclose to officers and
employees of HCFA return information for taxpayers required to
pay Part B premiums. The information would be limited to:
taxpayer identity information; filing status; AGI; amounts
excluded from gross income (under provisions relating to
savings bonds used to pay higher education costs and persons
living abroad); tax-exempt interest income to the extent such
information is available; and amounts excluded from gross
income (under provisions relating to income from sources within
U.S. possessions or Puerto Rico) to the extent such information
is available. The information disclosed to HCFA could only be
used for purposes of establishing the monthly Part B premium.
Effective date. Applies to monthly premiums for months
beginning with January 1998. The Secretary would be permitted
to request taxpayer return information for taxable years
beginning after December 31, 1994.
Conference Agreement
The conference agreement does not include the Senate
amendment.
Demonstration Project on Income-Related Part B Deductible
Section 5543 of Senate amendment
Current Law
No provision.
House Bill
No provision.
Senate Amendment
Requires the Secretary to conduct a demonstration project
in which individuals otherwise responsible for an income-
related premium (under Section 5542 of the Senate amendment)
would instead be responsible for an income-related deductible.
The income limits and administrative procedures would be the
same as those used for the income-related premium. The
Secretary would conduct the project in a representative number
of sites and include a sufficient number of individuals to
ensure that the project produced statistically valid findings.
Participation in the project would be on a voluntary basis.
Individuals enrolled in a Medigap plan could not participate in
the project.
Specifies that the project could not exceed a five-year
period. The Secretary would consult with appropriate
organizations and experts in conducting the project. The
Secretary would be permitted to waive compliance with Medicare
and Medicaid law to the extent determined necessary.
Requires the Secretary to report on the project to
Congress within two years of enactment, within five years of
enactment, and biannually thereafter. The reports would include
a description of the demonstration projects; a description of
the utilization and health care status of individuals
participating in the project; and any other information the
Secretary determined to be appropriate.
Effective date. Enactment.
Conference Agreement
The conference agreement does not include the Senate
amendment.
Low Income Beneficiary Block Grant Program
Section 5544 of Senate amendment
Current Law
Medicare beneficiaries are liable for specific cost-
sharing charges, namely premiums, deductibles, and coinsurance.
Certain low-income beneficiaries, known as qualified Medicare
beneficiaries (QMBs), are entitled to have their Medicare cost-
sharing charges paid by the Federal-State Medicaid program. A
QMB is an aged or disabled person with income at or below the
Federal poverty line ($7,890 for a single and $10,610 for a
couple in 1997) and resources below $4,000 for an individual
and $6,000 for a couple. Medicaid protection is limited to
payment of Medicare cost-sharing charges unless the individual
is otherwise entitled to Medicaid.
States are also required to pay Medicare Part B premiums
for Specified Low-Income Medicare beneficiaries (SLIMBs). These
are persons who meet the QMB criteria, except that their income
is slightly over the QMB limit. The SLIMB limit is 120% of the
Federal poverty line. Medicaid protection is limited to payment
of the Medicare Part B premium unless the individual is
otherwise entitled to Medicaid.
The Federal government and the States share in the
payment for QMB and SLIMB benefits according to the matching
formula applicable for Medicaid services (known as the Federal
Medical Assistance Percentage (FMAP)).
House Bill
No provision (see Section 3422 in discussion of
Medicaid).
Senate Amendment
Requires the Secretary to establish a block grant program
to the States for the payment of Medicare Part B premiums for
persons meeting the SLIMB definition, except that their income
is between 120% and 150% of the Federal poverty line.
Requires States to submit a grant application to the
Secretary. The Secretary would award grants to States with
approved applications. The amount of a State grant would bear
the same ratio to the total appropriated as the total number of
eligible persons in the State bears to the total eligible
population nationwide. The FMAP in a State with a grant would
be 100%.
Authorizes the Secretary to transfer from Part B the
following amounts: $200 million in FY 1998, $250 million in FY
1999, $300 million in FY 2000, $350 million in FY 2001, and
$400 million in FY 2002. The funds would remain available
without fiscal year limitation. The section would establish
budget authority and represent an obligation of the Federal
government. Grants could be made to the 50 States, the District
of Columbia, Puerto Rico, Guam, the Virgin Islands, American
Samoa, and the Northern Mariana Islands.
Conference Agreement
The conference agreement does not include the Senate
amendment. However, see Section 4731 which authorizes State
coverage of additional low-income Medicare beneficiaries under
the Medicaid program.
Governmental Entities Eligible to Elect to Pay Part B Premiums for
Eligible Individuals
Conference Agreement
The conference agreement authorizes the Secretary to
enter into an agreement with any State or local governmental
entity specified by the Secretary for payment of the Part B
late enrollment penalty.
Subtitle G--Provisions Relating to Parts A and B
Chapter 1--Home Health Services
(a) Home Health Prospective Payment
Sections 10441 and 4441 of House bill and Section 5343 of Senate
amendment
Current Law
Medicare reimburses home health agencies on a
retrospective cost-based basis. This means that agencies are
paid after services are delivered for the reasonable costs (as
defined by the program) they have incurred for the care they
provide to program beneficiaries, up to certain limits. In
provisions contained in the Orphan Drug Act of 1983, OBRA 87
and OBRA 90, Congress required the Secretary to develop
alternative methods for paying for home health care on a
prospective basis. In 1994, the Office of Research and
Demonstration in the Health Care Financing Administration
completed a demonstration project that tested prospective
payment on a per visit basis. Preliminary analysis indicates
that the per visit prospective payment methodology had no
effect on cost per visit or volume of visits. The Health Care
Financing Administration has begun a second project, referred
to as Phase II, to test prospective payment on a per episode
basis, and has also undertaken research to develop a home
health case-mix adjustor that would translate patients' varying
service needs into specific reimbursement rates.
House Bill
Section 10441. Requires the Secretary to establish a
prospective payment system for home health and implement the
system beginning October 1, 1999. All services covered and paid
on a reasonable cost basis at the time of enactment of this
section, including medical supplies, would be required to be
paid on a prospective basis. In implementing the system, the
Secretary could provide for a transition of not longer than 4
years during which a portion of the payment would be based on
agency-specific costs, but only if aggregate payments were not
greater than they would have been if a transition had not
occurred.
In establishing the prospective system, the Secretary
would be authorized to consider an appropriate unit of service
and the number of visits provided within that unit, potential
changes in the mix of services provided within that unit and
their cost, and a general system design that provides for
continued access to quality services.
Under the new system, the Secretary would compute a
standard prospective payment amount (or amounts) that would
initially be based on the most current audited cost report data
available to the Secretary. For fiscal year 2000, payment
amounts under the prospective system would be computed in such
a way that total payments would equal amounts that would have
been paid had the system not been in effect, but would also
reflect a 15% reduction in cost limits and per beneficiary
limits in effect September 30, 1999. Payment amounts would be
standardized in a manner that eliminates the effect of
variations in relative case mix and wage levels among different
home health agencies in a budget neutral manner. The Secretary
could recognize regional differences or differences based on
whether or not services are provided in an urbanized area.
Beginning with fiscal year 2001, standard prospective payment
amounts would be adjusted by the home health market basket.
The payment amount for a unit of home health service
would be adjusted by a case mix adjustor factor established by
the Secretary to explain a significant amount of the variation
in the cost of different units of service. The labor-related
portion of the payment amount would be adjusted by an area wage
adjustment factor that would reflect the relative level of
wages and wage-related costs in a particular geographic area as
compared to the national average. The Secretary could provide
for additions or adjustments to payment amounts for outliers
because of unusual variations in the type or amount of
medically necessary care. The total amount of outlier payments
could not exceed 5 percent of total payments projected or
estimated to be made in a year. The Secretary would be required
to reduce the standard prospective payments by amounts that in
the aggregate would equal outlier adjustments. If a beneficiary
were to transfer to or receive services from another home
health agency within the period covered by a prospective
payment amount, then the payment would be prorated between the
agencies involved.
Claims for home health services furnished on or after
October 1, 1998, would be required to contain an appropriate
identifier for the physician prescribing home health services
or certifying the need for care. Claims would also be required
to include information (coded in an appropriate manner) on the
length of time of a service, as measured in 15 minute
increments. The categories of services for which time
information would have to be included on a claim would be
skilled nursing care; therapies--physical and occupational
therapy and speech language pathology; medical social services;
and home health aide services.
Administrative or judicial review would not be permitted
for the establishment of the transition period (if any) for the
prospective payment system; the definition and application of
payment units; the computation of initial standard payment
amounts; the establishment of the reduction in the standard
prospective payment amount for outliers and the establishment
of any adjustments for outliers; the establishment of case-mix
and area wage adjustments; and the amounts or types of
adjustments to the prospective payment amounts.
Periodic interim payments for home health services would
be eliminated. All home health care agencies would be paid
according to the prospective payment system.
In order for home health services to be considered
covered care, home health care agencies would be required to
submit claims for all services, and all payments would be made
to a home health agency without regard to whether or not the
item or service was furnished by the agency, by others under
arrangement, or under any other contacting or consulting
arrangement.
Effective date. Applies to cost-reporting periods
beginning on or after October 1, 1999.
Section 4441. Identical provision.
Senate Amendment
Identical provision, except requires the Secretary to
reduce cost limits and per beneficiary limits in effect
September 30, 1999, by 15%, even if the Secretary is not
prepared to implement the new prospective payment system
October 1, 1999.
Conference Agreement
The conference agreement includes the Senate amendment
with clarifying language.
The Conferees continue to be concerned about ``shell''
certified home health agencies and support efforts to route out
abuses that exist. However, the Conferees believe that in
establishing cost limits or a prospective payment system for
home health care, the Secretary should consider state programs
aimed at targeting such abuses, particularly those that provide
for increased flexibility in the training and utilization of
home health aides.
(b) Recapturing Savings Resulting from Temporary Freeze on Payment
Increases for Home Health Services (Sections 10711 and 4711 of
House bill and Section 5341 of Senate amendment)
Current Law
Home health limits are updated annually. The Omnibus
Budget Reconciliation Act of 1993 (OBRA93) required that there
be no updates in home health cost limits (including no
adjustments for changes in the wage index or other updates of
data) for cost reporting periods beginning on or after July 1,
1994, and before July 1, 1996.
House Bill
Section 10711. Requires the Secretary, in establishing
home health limits for cost reporting periods beginning after
September 30, 1997, to capture the savings stream resulting
from the OBRA 93 freeze of home health limits by not allowing
for the market basket updates to the limits that occurred
during the cost reporting periods July 1, 1994 through June 30,
1996. In granting exemptions or exceptions to the cost limits,
the Secretary would not consider the preceding provision for
recapturing savings from the OBRA 93 freeze.
Effective date. Enactment.
Section 4711. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
(c) Interim Payments for Home Health Services (Section 10712 and 4712
of House bill and Section 5342 of Senate amendment)
Current Law
Limits for individual home health services are set at 112
percent of the mean labor-related and nonlabor per visit costs
for freestanding agencies (i.e., agencies not affiliated with
hospitals). The limits are effective for cost reporting periods
beginning on or after July 1 of a given year and ending June 30
of the following year.
House Bill
Section 10712. Prior to implementation of the new home
health prospective payment system, reduces per visit cost
limits to 105 percent of the national median of labor-related
and nonlabor costs for freestanding home health agencies,
effective for cost-reporting periods beginning October 1, 1997
( in effect, delaying the cycle for updating the limits).
In addition, for cost reporting periods beginning on or
after October 1, 1997, home health agencies would be paid the
lesser of: (1) their actual costs (i.e., allowable reasonable
costs); (2) the per visit limits, reduced to 105% of the
national median, applied in the aggregate; or (3) a new blended
agency-specific per beneficiary annual limit, applied to the
agency's unduplicated census count of Medicare patients. The
blended per beneficiary limit would be based 75% on an agency's
own costs per beneficiary and 25% on the average cost per
beneficiary for agencies in the same census region (adjusted
for differences in labor costs). These costs would be
calculated using cost reports for cost reporting periods ending
in 1994, updated by the home health market basket and would
include the costs associated with non-routine medical supplies.
For new providers and those providers without a 12-month cost
reporting period ending in calendar year 1994, the per
beneficiary limit would be equal to the median of these limits
(or the Secretary's best estimates) applied to home health
agencies. Home health agencies that have altered their
corporate structure or name would not be considered new
providers for these purposes. For beneficiaries using more than
one home health agency, the per beneficiary limitation would be
prorated among the agencies.
The Secretary would be required to expand research on a
prospective payment system forhome health that ties prospective
payments to a unit of service, including an intensive effort to develop
a reliable case mix adjuster that explains a significant amount of
variance in cost. The Secretary would be authorized to require all home
health agencies to submit additional information that is necessary for
the development of a reliable case-mix system, effective for cost
reporting periods beginning on or after October 1, 1997.
Effective date. Enactment.
Section 4712. Identical provision.
Senate Amendment
Identical, except the per beneficiary limit would be
based strictly on agency-specific costs, and not on a blended
amount.
Conference Agreement
The conference agreement includes the House provision
with amendments to (1) calculate the blended per beneficiary
limits based on 98 percent of 1994 costs; (2) specify that the
per beneficiary limits for new providers and others without a
12-month cost reporting period ending in fiscal year 1994 would
be equal to the median of limits for home health agencies; and
(3) require the Secretary to establish by April 1, 1998, per
beneficiary limits that would be effective for FY 1998.
(d) Clarification of Part-Time or Intermittent Nursing Care (Section
10713 and 4713 of House bill and Section 5363 of Senate
amendment)
Current Law
Both Parts A and B of Medicare cover home health visits
for persons who need skilled nursing care on an intermittent
basis or physical therapy or speech therapy. Once beneficiaries
qualify for the benefit, the program covers part-time or
intermittent nursing care provided by or under the supervision
of a registered nurse and part-time or intermittent home health
aide services, among other services. Coverage guidelines issued
by HCFA have defined part-time and intermittent.
House Bill
Section 10713. Effective for services furnished on or
after October 1, 1997, includes in Medicare statute definitions
for part-time and intermittent skilled nursing and home health
aide services. For purposes of receiving skilled nursing and
home health aide services, ``part-time or intermittent'' would
mean skilled nursing and home health aide services furnished
any number of days per week as long as they are furnished
(combined) less than 8 hours each day and 28 or fewer hours
each week (or, subject to review on a case-by-case basis as to
the need for care, less than 8 hours each day and 35 or fewer
hours per week). For purposes of qualifying for Medicare's home
health benefit because of a need for intermittent skilled
nursing care, ``intermittent'' would mean skilled nursing care
that is either provided or needed on fewer than 7 days each
week, or less than 8 hours of each day for periods of 21 days
or less (with extensions in exceptional circumstances when the
need for additional care is finite and predictable).
Effective date. Applies to services furnished on or after
October 1, 1997.
Section 4713. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
(e) Study on Definition of Homebound (Section 10714 and 4714 of House
bill and Section 5364 of Senate amendment)
Current Law
In order to be eligible for home health care, a Medicare
beneficiary must be confined to his or her home. The law
specifies that this ``homebound'' requirement is met when the
beneficiary has a condition that restricts the ability of the
individual to leave home, except with the assistance of another
individual or with the aid of a supportive device (such as
crutches, a cane, a wheelchair, or a walker), or if the
individual has a condition such that leaving his or her home is
medically contraindicated. The law further specifies that while
an individual does not have to be bedridden to be considered
confined to home, the condition of the individual should be
such that there exists a normal inability to leave home, that
leaving home requires a considerable and taxing effort by the
individual, and that absences from home are infrequent or of
relatively short duration, or are attributable to the need to
receive medical treatment.
House Bill
Section 10714. Requires the Secretary of Health and Human
Services to conduct a study on the criteria that should be
applied, and the method for applying criteria, to the
determination of whether an individual is considered homebound
for purposes of qualifying for Medicare's home health benefit.
The Secretary would be required to report to Congress no later
than October 1, 1998, and make specific recommendations on such
criteria.
Effective date. Enactment.
Section 4714. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
(f) Payment Based on Location Where Home Health Service is Furnished
(Section 10715 and 4715 of House bill and Section 5344 of
Senate amendment)
Current Law
Some home health agencies are established with the home
office in an urban area and branch offices in rural areas.
Payment is based on where the service is billed, in this case
the urban area with its higher wage rate, even if the service
had been delivered in a rural area.
House Bill
Section 10715. Effective for cost reporting periods
beginning on or after October 1, 1997, requires home health
agencies to submit claims on the basis of the location where a
service is actually furnished.
Effective date. Applies to cost reporting periods
beginning on or after October 1, 1997.
Section 4715. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
(g) Normative Standards for Home Health Claims Denials (Section 10716
and 4716 of House bill and Section 5365 of Senate amendment)
Current Law
As long as they remain eligible, home health users are
entitled to unlimited number of visits.
House Bill
Section 10716. Authorizes the Secretary to establish
normative guidelines for the frequency and duration of home
health services. Payments would be denied for visits that
exceed the normative standards. Also authorizes the Secretary
to establish a process for notifying a physician in which the
number of home health visits furnished according to a
prescription or certification of the physician significantly
exceeds the threshold normative number of visits that would be
covered for specific conditions or situations.
Effective date. Applies to services on or after October
1, 1997.
Section 4716. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment.
(h) No Home Health Benefits Based Solely on Drawing Blood (Section
10717 and 4717 of House bill)
Current Law
In order to qualify for Medicare's home health benefit, a
person must be homebound and be in need of intermittent skilled
nursing care or physical or speech therapy.
House Bill
Section 10717. Clarifies that a person could not qualify
for Medicare's home health benefit on the basis of needing
skilled nursing care for venipuncture for the purpose of
obtaining a blood sample.
Effective date. Applies to home health services furnished
beginning 6 months after enactment.
Section 4717. Identical provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House provision.
(I) Copayment for Part B Home Health Services (Section 5362 of Senate
amendment)
Current Law
Medicare's home health benefit is subject neither to
deductibles nor coinsurance.
House Bill
No provision.
Senate Amendment
Establishes a $5 per visit copayment for Part B covered
home health services, billed monthly, and capped annually at an
amount equal to the Part A hospital deductible.
Effective date. Applies to services furnished on or after
October 1, 1997.
Conference Agreement
The conference agreement does not include the Senate
amendment.
(j) Inclusion of Cost of Service in Explanation of Medicare Benefits
(Section 5366 of Senate amendment)
Current Law
The Health Care Financing Administration is required to
include certain information in the explanation of benefits that
beneficiaries receive following the provision of services.
House Bill
No provision.
Senate Amendment
Requires, in the case of home health services covered
under Part B, that the explanation of benefits include
information about the total amount the home health agency
billed for services provided.
Effective date. Applies to explanation of benefits
provided on and after October 1, 1997.
Conference Agreement
The conference agreement does not include the Senate
amendment.
(k) Transfer of Certain Home Health Visits to Part B (Sections 10531
and 4718 of House bill and Section 5361 of Senate amendment)
Current Law
Both Parts A and B of Medicare cover home health. Neither
part of the program applies deductibles or coinsurance to
covered visits, and beneficiaries are entitled to an unlimited
number of visits as long as they meet eligibility criteria.
Section 1833(d) of Medicare law prohibits payments to be made
under part B for covered services to the extent that
individuals are also covered under Part A for the same
services. As a result, the comparatively few persons who have
no Part A coverage are the only beneficiaries for whom payments
are made under Part B.
House Bill
Section 10531. Gradually transfers from Part A to Part B
home health visits that are not part of the first 100 visits
following a beneficiary's stay in a hospital or skilled nursing
facility and during a home health spell of illness. The
transfer would be phased in over a period of 6 years between
1998 and 2003. In order to determine what portion of visits to
transfer in a given year, the Secretary would first estimate
the amount of payments that would have been made if (1) Part A
home health services had the definition they did before
enactment of this section and (2) Part A home health services
were limited to the 100 visits following an institutional stay.
The Secretary would next determine the difference between the
two amounts for each year 1998 through 2002 and then multiply
that amount by a proportion specified for the given year. For
1998, the proportion is 1/6; for 1999, 2/6; for 2000, 3/6; for
2001, 4/6; for 2002, 5/6; and for 2003, 6/6. The Secretary
wouldbe required to specify a visit limit or a post-
institutional limitation that would result in a reduction in the amount
of Part A home health payments equal to the transfer amount specified
above. On or after January 1, 2003, Part A would cover only post-
institutional home health services for up to 100 visits during a home
health spell of illness, except for those persons with Part A coverage
only who would be covered for services without regard to the post-
institutional limitation.
The increase in the Part B premium attributable to the
transferred visits would be phased in over a period of 7 years,
between 1998 and 2004. For 1998, the Part B premium would be
increased by one-seventh of the extra costs due to the
transfer; for 1999, the Part B premium would be increased by
two-sevenths of the extra costs; for 2000, three-sevenths; for
2001, four-sevenths; for 2002, five-sevenths; for 2003, six-
sevenths; and for 2004, the total of the extra costs due to the
transfer.
Post-institutional home health services would be defined
as services furnished to a Medicare beneficiary: (1) after an
inpatient hospital or rural primary care hospital stay of at
least 3 days, initiated within 14 days after discharge; or (2)
after a stay in a skilled nursing facility, initiated within 14
days after discharge. Home health spell of illness would be
defined as the period beginning when a patient first receives
post-institutional home health services and ending when the
beneficiary has not received inpatient hospital, skilled
nursing facility, or home health services for 60 days.
Claims administration for transferred visits would
continue to be done by Part A fiscal intermediaries.
The threshold for hearings before an administrative law
judge on disputed claims would be $100 for home health services
covered under Part B.
Effective date. Applies to services furnished on or after
January 1, 1998.
Section 4718. All home health visits that are not post-
hospital visits would be transferred from Part A to Part B
effective October 1, 1997. Post-hospital home health services
would be defined as the first 100 visits furnished to an
individual under a plan of treatment established when the
individual is an inpatient of a hospital or rural primary care
hospital for at least 3 consecutive days, or during a covered
SNF stay, so long as services are initiated within 30 days
after discharge from the institution. The Secretary would be
required to calculate the increase in the Part B premium
attributable to the transfer. This increase would be phased in
over a period of 7 years, between 1998 and 2004. For 1998, the
Part B premium would be increased by one-seventh of the extra
costs due to the transfer; for 1999, the Part B premium would
be increased by two-sevenths of the extra costs; for 2000,
three-sevenths; for 2001, four-sevenths; for 2002, five-
sevenths; for 2003, six-sevenths; and for 2004, the total of
the extra costs due to the transfer.
Identical provision regarding hearings for home health
disputed claims, but no provision on fiscal intermediary
administration of transferred Part B home health visits.
The Secretary would be required to submit to Congress by
October 1, 1999, a report on the impact on home health
utilization and admissions to hospitals and skilled nursing
facilities of covering only the first 100 post-hospital home
health visits under Part A. In addition, the Secretary would be
required to re-examine and submit a report on this impact 1
year after the full implementation of the home health
prospective payment system required under the bill.
Effective date. Applies to services furnished on or after
October 1, 1997.
Senate Amendment
Similar to Section 10531, except that transfer to Part B
(of home health visits that are not part of the first 100 post-
institutional visits) would take place over a period of 7
years, rather than 6.
Conference Agreement
The conference agreement includes the House Ways and
Means provision as included in section 10531, with an amendment
to require the Secretary to transfer, over the 6-year period
and in the specified proportions, expenditures rather than
visits.
The conference agreement also includes a provision
requiring the Secretary, not later than October 1, 1997, to
report to the Commerce, Ways and Means, and Finance Committees
on an estimate of Medicare home health outlays under parts A
and B during each of the fiscal years 1998 through 2002. Not
later than the end of each of the years 1999 through 2002, the
Secretary would also be required to submit a report that
compares actual outlays with estimated outlays. If the
Secretary finds for a fiscal year that actual outlays were
greater than estimated outlays, the report would also be
required to include recommendations regarding beneficiary
copayments or such other methods as will reduce the growth in
outlays for Medicare home health services.
Chapter 2--Graduate Medical Education
Subchapter A--Indirect Medical Education
Reduction in Adjustment for Indirect Medical Education
Section 10506 of the House bill and Section 5446 of the Senate
amendment
Current Law
Medicare recognizes the costs of graduate medical
education in teaching hospitals and the higher costs of
providing services in those institutions. Medicare recognizes
the costs of graduate medical education under two mechanisms:
direct graduate medical education (GME) payments and an
indirect medical education (IME) adjustment. The IME is
designed to compensate hospitals for indirect costs
attributable to the involvement of residents in patient. The
additional payment to ahospital is based on a formula that
provides an increase of approximately 7.7 percent in the DRG payment,
for each 10 percent increase in the hospital teaching intensity (based
on its intern and resident-to-bed).
house bill
Reduces the IME adjustment from the current aggregate
7.7% to 6.6% in FY 1998, and to 5.5% during and after FY 1999.
For discharges occurring on or after October 1, 1997, the total
number of residents and interns in either a hospital or non-
hospital setting could not exceed the number of interns and
residents reported on the hospital's cost report for the period
ending December 31, 1996. For hospital's first cost reporting
period beginning on or after October 1, 1997, the total number
of FTE residents and interns for payment purposes would equal
the average of the actual FTE resident and intern count for the
cost reporting period and the preceding year's cost reporting
period. For the cost reporting period beginning October 1,
1998, and each subsequent cost reporting period, subject to
certain limits, the total number of FTE residents and interns
for payment purposes would equal the average of the actual FTE
resident count for the cost reporting period and the preceding
two year's cost reporting periods. The Secretary would have
discretion to establish rules for new residency programs.
Effective Date. Enactment.
senate amendment
Similar provision, except reduces the IME adjustment from
the current 7.7% to 7.0% in FY 1998; to 6.5% in FY 1999; to
6.0% in FY 2000; and to 5.5% in FY 2001 and subsequent years.
The provision would authorize the Secretary to allow
hospitals with new approved residency training programs, for
the first 5 years of such a program, an additional amount of
FTE interns and residents, subject to the overall limit on the
total number of FTE interns and residents. The additional
number of FTE residents could not exceed the amount which would
result in the number of FTE interns or residents for all
hospitals exceeding the number for the preceding year. In
allocating any additional residents, the Secretary would be
required to give special consideration to facilities that meet
the needs of underserved rural areas.
For discharges occurring on or after October 1, 1997, all
the time spent by an intern or resident in patient care
activities under an approved residency training program in a
nonhospital setting would be counted towards the determination
of FTEs if the hospital incurred all, or substantially all, of
the costs of the training program in that setting.
Effective Date. Enactment.
conference agreement
The conference agreement includes the Senate provision
with amendments. The conference agreement includes a
requirement that the Secretary prescribe rules for limiting and
counting the number of interns and residents in training
programs established on or after January 1, 1995. The Secretary
would be required to prescribe special rules for new and
developing medical residency training programs. In promulgating
such rules, the Secretary would be required to give special
consideration to facilities that meet the needs of underserved
rural areas.
The conference agreement includes new permission for
hospitals to rotate residents through non-hospital settings,
which include primarily ambulatory care settings, without
reduction in indirect medical education funds. The Conferees
are concerned about the current lack of data on the number of
residents receiving training in ambulatory care sites. To
address this matter, the Secretary is directed to develop an
inventory of the number and types of such sites and the average
number of residents at these sites. The Conferees also intend
that the Secretary include in this inventory residents in
training at qualified non-hospital providers which receive
direct graduate medical education payments, as provided
elsewhere in this legislation.
Graduate Medical Education and Indirect Medical Education Payments for
Managed Care Enrollees
Section 4008 of the House bill and Section 5451 of the Senate amendment
current law
Medicare payments to risk-contract HMOs include amounts
that reflect Medicare's fee-for-service payments to hospitals
in an area for indirect and direct graduate medical education
costs.
(a) Payments to Managed Care Organizations Operating
Graduate Medical Education Programs.
house bill
Amends Section 1853 of the new Medicare Part C of the
Social Security Act, as established by this legislation, to
establish a mechanism for the allocation of payments for direct
GME and IME costs carved out from the AAPCCs and MedicarePlus
capitation rates to be made to risk contract plans under
Section 1876 and MedicarePlus organizations. Beginning January
1, 1998, each contract with a MedicarePlus organization would
be required to provide an additional payment for Medicare's
share of allowable direct GME costs incurred by the
organization for an approved medical residency program. A
MedicarePlus organization that incurred all or substantially
all of the costs of the medical residency program would receive
a payment equal to the national average per resident amount
times the number of full-time-equivalent (FTE) residents in the
program in non-hospital settings. The Secretary would be
required to estimate the national average per resident amount
equal to the weighted average amount that would be paid per FTE
resident under the direct GME payment in a calendar year. A
separate determination would be required to be made for primary
care residency programs as defined by Medicare, including
obstetrics and gynecology residency programs.
senate amendment
No provision.
conference agreement
The conference agreement does not include the House bill.
(b) Payments to Hospitals for Direct and Indirect Costs of Graduate
Medical Education Programs Attributable to Managed Care
Enrollees.
house bill
Amends Part C of Medicare, as amended by Section 4001 of
the bill, by inserting a new section 1858, ``Payments to
Hospitals for Certain Costs Attributable to Managed Care
Enrollees.''
The Secretary would be required to make additional
payments for the direct GME costs to PPS and PPS-exempt
hospitals and hospitals located in a state with a state
hospital reimbursement control system for services furnished to
Medicare beneficiaries enrolled in managed care. These payments
would be phased in over 5 years in the same proportion as
amounts are deducted (carved out) from Medicare managed care
plans under the new Section 1853 established by the bill. Total
payments under this provision could not exceed amounts deducted
(carved out) of the MedicarePlus capitation rates. Subject to
certain limits, the direct GME payment amount would be equal to
the product of: (1) the aggregated approved amount of direct
GME payments for the period, and (2) the fraction of the total
number of inpatient-bed-days determined by the Secretary during
the period which was attributable to Medicare managed care
enrollees. The Secretary would be required to separately
determine the direct GME payment amount that would be paid to
hospitals in a state with a reimbursement control system.
The IME payment amount would be determined, subject to
certain limits, as equal to the product of: (1) the amount of
the IME adjustment factor applicable to the hospital under PPS,
and (2) the product of (I) the number of discharges
attributable to Medicare managed care enrollees and (ii) the
estimated average per discharge amount that would otherwise
have been paid under PPS if the individuals had not been
enrolled in a managed care plan. The Secretary would also be
required to make payments for the costs attributable to
Medicare managed care enrollees, subject to certain limits in
the same way as the direct GME payment amount. The Secretary
would be required to separately determine the IME payment
amounts that would be paid to hospitals in a state with a
reimbursement control system.
Effective date. Applies to contracts entered into on or
after January 1, 1998.
senate amendment
Provides for additional direct GME payments to hospitals
for the services provided to Medicare managed care enrollees
for cost reporting periods beginning on or after January 1,
1998. Payments would be equal to the product of (1) the
aggregate approved direct GME amount for the hospital in that
period, and the fraction of the total number of inpatient-bed
days attributable to Medicare managed care enrollees. The
direct GME payment amount would be phased in over a 4-year
period. The Secretary would be required to determine separately
the direct GME payment amount that would be paid to hospitals
in a state with a reimbursement control system.
The Secretary would also be required to make additional
payments to PPS hospitals and hospitals located in a state with
a rate setting system for IME costs attributable to providing
services to Medicare managed care enrollees. The amount of the
payment would be phased in over 4 years and be the product of
(1) the aggregate approved amount for that period, and (2) the
fraction of the total number of inpatient-bed days attributable
to Medicare managed care enrollees.
Effective date. Applies to contracts entered into on or
after January 1, 1998.
conference agreement
The conference agreement includes the Senate provision
with amendments to phase in the payments over 5 years equal to
20% in 1998; 40% in 1999; 60% in 2000; 80% in 2001; and 100% in
2002.
Subchapter B--Direct Graduate Medical Education
Limitation on Payment Based on Number of Residents and Implementation
of Rolling Average FTE Count
Sections 10731 and 4731 of the House bills and Section 5441 of the
Senate amendment
current law
The direct costs of approved graduate medical education
(GME) programs (such as the salaries of residents and faculty,
and other costs related to medical education programs) are
excluded from PPS and are paid on the basis of a formula that
reflects Medicare's share of each hospital's per resident
costs. Medicare's payment to each hospital equals the
hospital's costs per full-time-equivalent (FTE) resident, times
the weighted average number of FTE residents, times the
percentage of inpatient days attributable to Medicare Part A
beneficiaries. Each hospital's per FTE resident amount is
calculated using data from the hospital's cost reporting period
that began in FY 1984, increased by 1 percent for hospital cost
reporting periods beginning July 1, 1985, and updated in
subsequent cost reporting periods by the change in the CPI.
OBRA 93 provided that the per resident amount would not be
updated by the CPI for costs reporting periods during FY 1994
and FY 1995, except for primary care residents and residents in
obstetrics and gynecology. The number of FTE residents is
weighted at 100 percent for residents in their initial
residency period (i.e., the numberof years of formal training
necessary to satisfy specialty requirements for board eligibility).
Residents in preventive care or geriatrics are allowed a period of up
to 2 additional years in the initial residency training period. For
residents not in their initial residency period, the weighting factor
is 50 percent. On or after July 1, 1986, residents who are foreign
medical graduates can only be counted as FTE residents if they have
passed designated examinations.
house bill
Section 10731. For cost reporting periods beginning on or
after October 1, 1997, limits the total number of full-time
equivalent (FTE) residents for which Medicare would make
payments to the number of FTE residents in medical residency
training program during the hospital's cost reporting period
ending December 31, 1996. For cost reporting periods beginning
on or after October 1, 1997, the total number of FTE equivalent
residents counted for determining the hospital's direct GME
payment would equal the average FTE counts for the cost
reporting period and the preceding cost reporting period. For
each subsequent cost reporting period, the total number of FTEs
residents counted for determining the hospital's direct GME
payment, would be equal to the average of the actual FTE counts
for the cost reporting period and preceding two cost reporting
periods. The provision would allow that, if a hospital's cost
reporting period beginning on or after October 1, 1997, was not
equal to 12 months, the Secretary would make appropriate
modifications to ensure that the average FTE resident counts
were based on the equivalent of full 12-month cost reporting
periods. The provision would require the Secretary to establish
rules for new residency medical training programs.
Effective Date. Enactment.
Section 4731. Similar provision, except would not require
the Secretary to establish rules for new programs. The
provision would exclude dental residents from the counts of FTE
residents.
senate amendment
Similar provision, except limit on the total number of
residents specifically includes only residents in a hospital's
approved medical residency training program in the fields of
allopathic medicine and osteopathic medicine. The provision
would count the number of FTE residents as equal to the FTE
count for the cost reporting period and the preceding two cost
reporting periods. For new residency programs, defined as
programs in their first five years of existence, the provision
would authorize the Secretary to provide an additional amount
of FTE residents, as long as the number of new FTEs would not
cause the total number of all FTE residents for all programs to
exceed the total number of FTEs in the preceding year. In
allocating additional FTE residents, the Secretary would be
required to give special consideration to facilities that meet
the needs of the underserved rural areas.
conference agreement
The conference agreement includes the Senate provision
with amendments including a requirement that the Secretary
prescribe rules for limiting and counting the number of interns
and residents in training programs established on or after
January 1, 1995. In promulgating such rules, the Secretary
would be required to give special consideration to facilities
that meet the needs of underserved rural areas.
The conference agreement provides for a ``cap'' or limit
on the number of residents that may be reimbursed by the
Secretary, on a national and a facility level, both in this
section and in an earlier provision on indirect medical
education payments. However, the Conferees recognize that such
limits raise complex issues, and provide for specific authority
for the Secretary to promulgate regulations to address the
implementation of this provision. The Conferees believe that
rulemaking by the Secretary would allow careful but timely
consideration of this matter, and that the record of the
Secretary's rulemaking would be valuable when Congress revisits
this provision.
Among the specific issues that concerned the Conferees
was application of a limit to new facilities, that is,
hospitals or other entities which established programs after
January 1, 1995. The Conferees understand that there are a
sizeable number of hospitals that elect to initiate such
programs (as well as terminate such programs) over any period
of time, and the Conferees are concerned that within the
principles of the cap that there is proper flexibility to
respond to such changing needs, including the period of time
such programs would be permitted to receive an increase in
payments before a cap was applied. Nonetheless, the Secretary's
flexibility is limited by the conference agreement that the
aggregate number of FTE residents should not increase over
current levels.
In addition, the Conferees have included a provision for
direct medical education payments to entities not previously
eligible, including Federally qualified health centers, rural
health centers, and Medicare+Choice organizations. The
Secretary is expected to establish rules for such payments
within the principles established by this provision.
Another issue was the treatment of institutions which are
members of an affiliated group. In some circumstances, the
Conferees believe that the intent of this provision would best
be met by providing an aggregate limit for such affiliates or
consortia rather than a per facility limit. Examples of
consortia include an institution that operates affiliated
programs at various sites nationwide, and a group of community-
based hospitals that together provide for residency training in
conjunction with a medical school.
The Conferees are also concerned about the application of
the limit on the number of residents to programs established to
serve rural underserved areas, which the Conferees believe have
special importance in easing physician shortages in such areas.
The conference agreement provides the Secretary with statutory
direction to provide special consideration to such programs.
The Conferees also note that a facility limit on the
number of residents was provided, rather than any direction on
payments according to specialty of physicians in training, to
specifically avoid the involvement by the Secretary in decision
making about workforce matters. The Confereesemphatically
believe such decisions should remain within each facility, which is
best able to respond to clinical needs and opportunities.
With regard to graduate medical education payments, the
Conferees also note that the Secretary reimburses for the
training of certain allied health professionals, and urges the
Secretary to include physician assistants and psychologists
under such authority.
Phased-In Limitation on Hospital Overhead and Supervisory Physician
Component of Direct Medical Education Costs
Sections 10732 and 4732 of the House bills
Current Law
Medicare's direct medical education costs for a cost
reporting period includes an aggregate amount that is the
product of the hospital's approved FTE resident amount and the
weighted average number of FTE residents in the hospitals
approved medical residency training programs in that period.
House Bill
Section 10732. Phases in over five years a limitation on
hospital overhead and supervisory physician costs. For
hospitals with overhead GME amounts that exceed the 75
percentile of the overhead GME for all hospitals, the GME
amount made for periods beginning on or after October 1, 1997,
would be reduced by the lesser of: (1) 20% of the amount by
which the overhead GME amount exceeds the 75th percentile
amount, or (2) 15% of the hospital's overhead GME amount
otherwise determined without regard to this provision.
The overhead GME amount for a period would be the product
of the percentage of the hospital's per resident payment amount
for the base period that was not attributable to salaries and
fringe benefits, and the hospital specific per resident payment
amount for the period involved. The base period would be
defined as the cost reporting period beginning in FY 1984 or
the period used to establish the hospital's per resident
payment amount for hospitals that did not have approved
residency training programs in FY 1984. The Secretary would be
required to establish rules for hospitals that initiate
residency training programs during or after the base period.
Effective Date. Applies to per resident payment amounts
attributable to periods beginning on or after October 1, 1997.
Section 4732. Identical provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House bill with an
amendment which would require the Secretary to conduct a study
on the variations among hospitals in hospital overhead and
supervisory physician components of their direct medical
education costs, and the reasons for such variations. The
report would be required to be submitted to the Congress no
later than one year after enactment.
The Conferees are aware of and concerned about studies
and reports from the Prospective Payment Assessment Commission
and the Physician Payment Review Commission that describe wide
variation in hospital-specific per resident payment amounts.
The Conferees have directed the Secretary to study and report
back to the Committees of jurisdiction on reasons for such
variations and to provide recommendations to reduce such
variation, as appropriate, to provide greater payment equity
among all teaching facilities receiving direct graduate medical
education payments.
Permitting Payment to Non-Hospital Providers
Sections 10733 and 4733 of the House bills and Section 5442 of the
Senate amendment
Current Law
No provision.
House Bill
Section 10733. Requires the Secretary to submit to
Congress, no later than 18 months after enactment, a proposal
for payment to qualified non-hospital providers for their
direct costs of medical education, if those costs were incurred
in the operation of a Medicare approved medical residency
training program. The Secretary would be required to specify
the amounts, form, and manner in which such payments would be
made, and the portion of the payments that would be made from
each of the Medicare trust funds. The Secretary would be
authorized to implement the proposal for residency years
beginning no earlier than 6 months after the date the report is
submitted. Qualified non-hospital providers could include
federally qualified health centers, rural health clinics,
MedicarePlus organizations, and other providers the Secretary
determines to be appropriate.
The provision would also require the Secretary to reduce
the hospital's approved amount to the extent payment would be
made to non-hospital providers for residents included in the
hospital's count of FTE residents. In the case of residents not
included in the FTE count, the Secretary would be required to
provide for such a reduction in aggregate approved hospital
payment amounts under this subsection to assure that the
application of non-hospital providers does not result in any
increase in expenditures than would have occurred if payments
were not made to non-hospital providers.
Effective Date. Enactment.
Section 4733. Similar provision, except does not include
MedicarePlus organizations as a qualified non-hospital
provider.
Senate Amendment
Authorizes the Secretary to establish rules for payment
to qualified nonhospital providers for their direct costs of
medical education for cost reporting periods beginning on or
after October 1, 1997, if the costs were incurred in the
operation of a Medicare approved medical residency training
program. The rules would be required to specify the amounts,
form, and manner in which payments will be made and the portion
of such payments that would be made from each of the Medicare
trust funds.
Qualified non-hospital providers are similar, except
would not include MedicarePlus organizations.
Conference Agreement
The conference agreement includes the Senate amendment
with an amendment to include Medicare+Choice organizations as
qualified nonhospital providers.
The Conferees believe this authority may help alleviate
physician shortages in underserved rural areas. The Conferees
also note that preventive medicine residency training occurs
most often in non-hospital settings, and the Conferees
encourage the Secretary to examine carefully the opportunities
to provide support to such training programs.
Incentive Payments Under Plans for Voluntary Reduction in Number of
Residents
Sections 10734 and 4734 of the House bills
Current Law
No provision.
House Bill
Section 10734. Establishes a program to provide incentive
payments to qualifying entities that developed plans for the
voluntary reduction in the number of residents in a training
program. For voluntary residency reduction plans for which an
application was approved, the qualifying entity submitting the
plan would be required to be paid an applicable percentage
(defined below) equal to the sum of the following: (1) the
amount of payment which would have been made under this
subsection if there had been a 5% reduction in the number of
FTE residents in the approved medical education training
programs as of June 30, 1997, exceeded the amount of the
payment which would be made taking into account the reduction
in the number effected FTEs under the plan; and, (2) the amount
of the reduction in payment under Medicare's indirect medical
education adjustment that was attributable to the reduction in
the number of residents effected under the plan.
The base number of residents would be defined as the
number of FTE residents in the residency training program of
the entity as of June 30, 1997. The ``applicable hold harmless
percentage'' for entities electing a 5-year reduction plan
would be 100% for the first and second residency training years
of the reduction plan; 75% in the third year; 50% in the fourth
year; and 25% in the fifth year. The ``applicable hold harmless
percentage'' for entities electing a 6-year reduction plan
would be 100% in the first residency training year of the plan;
95% in the second year of the plan; 85% in the third year; 70%
in the fourth year; 50% in the fifth year; 25% in the sixth
year. In addition, if payments were made under this program to
an entity that increased the number of FTE residents above the
number provided in the plan, the entity would then be liable
for repayment to the Secretary of the total amount paid under
the plan. The Secretary would also be required to establish
rules regarding the counting of residents who are assigned to
institutions that do not have medical residency training
programs participating in a residency reduction plan.
The provision specifies that qualifying entities would
include individual hospitals operating one or more approved
medical residency training programs; two or more hospitals
operating residency programs that apply as a single qualifying
entity; or a qualifying consortium. In the case of an
application by a qualifying entity consisting of two hospitals,
the Secretary would be prohibited from approving the
application unless the application represented that the
qualifying entity either would not: (1) reduce the number of
FTE residents in primary care during the period of the plan, or
(2) reduce the proportion of its residents in primary care (to
the total number of residents) below such proportion as in
effect during the period the residency reduction plan was in
effect. In the case of an application from a consortia, the
Secretary would be prohibited from approving the application
unless the application represented that the qualifying
consortium would not reduce the proportion of residents in
primary care (to total residents) below such proportion in
effect during the period the residency reduction plan was in
effect.
For individual hospital applicants, the number of FTE
residents in all the approved medical residency training
programs operated by or through the facility would be required
to be reduced as follows: (1) if the base number of residents
exceeded 750 residents, by a number equal to at least 20% of
the base number; (2) if the base number of residents exceeded
500, but was less than 750 residents, by 150 residents; (3) if
the base number of residents did not exceed 500 residents, by a
number equal to at least 25% of the base number; (4) in the
case of a qualifying entity that was a consortia, by a number
equal to at least 20% of the base number. The reductions in the
number of FTE residents in the approved medical residency
programs operated through or by an entity would be below the
base number of residents for the entity and would be fully
effective no later than the 5th residency training year for
entities electing a 5-year plan, or the 6th residency training
year for entities making the election of a 6-year reduction
plan.
The provision would require that entities provide
assurance that in reducing the number of residents, the
entities would maintain the number of primary care residents.
Entities would be required to provide assurance that they would
maintain the number of primary care residents if: (1)the base
number of residents is less than 750; (2) the number of FTE residents
in primary care included in the base year was at least 10% of the total
number of residents; and (3) the entity represented in its application
that there would be no reduction under the plan in the number of FTE
residents in primary care. If the entity failed to comply with the
requirement that the number of FTE residents in primary care were
maintained, the entity would be subject to repayment of all amounts
received under this program.
The requirements of the residency reduction plan would
not apply to any residency training demonstration project
approved by HCFA as of May 27, 1997. The Secretary would be
required to take necessary action to assure that in no case the
amount of payments under the plan would exceed 95% of what
payments would have been prior to the plan for direct GME
payments under Medicare. As of May 27, 1997, the Secretary
would be prohibited from approving any demonstration project
that would provide for additional Medicare payments in
connection with reductions in the number of residents in a
training program for any residency training year beginning
before July 1, 2006. The Secretary would be authorized to
promulgate regulations, that would take effect on an interim
basis, after notice and pending opportunity for public comment,
by no later than 6 months after the date of enactment.
Effective Date. Enactment.
Section 4734. Identical provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House provision
with amendments which would require plan applications to be
submitted by no later than November 1, 1999. Reductions in the
number of residents would occur over no greater than a 5-year
period, and that the applying entity would provide assurances
that it would not reduce the proportion of its residents in
primary care relative to the total number of residents. The
residency reduction requirements would be: (1) 20% of the base
number of residents if the base number of residents exceeds 750
residents; (2) 150 residents if the base number of residents
exceeds 600 but is less than 750; (3) 25% if the base number
does not exceed 600 residents; and (4) at least 20% of the base
number of residents in cases where the qualifying entity has
less than 750 base number of residents or is joint applicant,
and represents in its application that it would increase the
number of FTE residents in primary care by at least 20% from
the number included in the base number of residents by no later
than the 5th year of the plan. The Conference agreement would
not reduce incentive payments for the initial five-percent
reduction of residents for current demonstration projects.
The Conferees believes that this policy can provide long-
term savings to Medicare while providing important assistance
to hospitals making a difficult transition to smaller residency
programs. The conference agreement is modeled directly on a
demonstration project currently underway, and the Conferees
believe that this opportunity should be extended on equal terms
to hospitals elsewhere in the United States.
Demonstration Project on Use of Consortia
Sections 10735 and 4735 of the House bills and Section 5452 of the
Senate amendment
Current Law
No provision.
House Bill
Section 10735. Requires the Secretary to establish a
demonstration project under which, instead of making direct GME
payments to teaching hospitals, the Secretary would make
payments to each consortium that met the requirements of the
demonstration project. A qualifying consortia would be required
to be in compliance with the following: (1) the consortium
would consist of an approved medical residency training program
in a teaching hospital and one or more of the following
entities: a school of allopathic or osteopathic medicine,
another teaching hospital, including a children's hospital,
another approved medical residency training program, a
federally qualified health center, a medical group practice, a
managed care entity, an entity providing outpatient services,
or an entity determined to be appropriate by the Secretary; (2)
the members of the consortium would have agreed to participate
in the programs of graduate medical education that are operated
by entities in the consortium; (3) with respect to receipt by
the consortium of direct GME payments, the members of the
consortium would agree on a method for allocating the payments
among the members; and (4) the consortium would meet additional
requirements established by the Secretary. The total payments
to a qualifying consortium for a fiscal year would not be
permitted to exceed the amount that would have been paid under
the direct GME payment to teaching hospitals in the consortium.
The payments would be required to be made in such proportion
from each of the Medicare trust funds as the Secretary
specifies.
Effective Date. Enactment.
Section 4735. Identical provision.
Senate Amendment
Identical provision.
Conference Agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment with
modifications.
Recommendations on Long-Term Payment Policies Regarding Financing
Teaching Hospitals and Graduate Medical Education
Sections 10736 and 4736 of the House bills
Current Law
No provision.
House Bill
Section 10736. Requires the Medicare Payment Advisory
Commission (established by the bill) to examine and develop
recommendations on whether and to what extent Medicare payment
policies and other federal policies regarding teaching
hospitals and graduate medical education should be reformed.
The Commission's recommendations would be required to include
each of the following: (1) the financing of graduate medical
education, including consideration of alternative broad-based
sources of funding for such education and models for the
distribution of payments under any all-payer financing
mechanism; (2) the financing of teaching hospitals, including
consideration of the difficulties encountered by such hospitals
as competition among health care entities increases, including
consideration of the effects on teaching hospitals of the
method of financing used for the MedicarePlus program under
part C of Medicare; (3) possible methodologies for making
payments for graduate medical education and the selection of
entities to receive such payments, including consideration of
matters as (A) issues regarding children's hospitals and
approved medical residency training programs in pediatrics, and
(B) whether and to what extent payments were being made (or
should be made) for training in the various nonphysician health
professions; (4) federal policies regarding international
graduates; (5) the dependence of schools of medicine on
service-generated income; (6) whether and to what extent the
needs of the U.S. regarding the supply of physicians, in the
aggregate and in different specialties, would change during the
10-year period beginning on October 1, 1997, and whether and to
what extent any such changes would have significant financial
effects on teaching hospitals; and, (7) methods for promoting
an appropriate number, mix, and geographical distribution of
health professionals.
The Commission would be required to consult with the
Council on Graduate Medical Education and individuals with
expertise in the area of graduate medical education, including
(1) deans from allopathic and osteopathic schools of medicine;
(2) chief executive officers (or their equivalent) from
academic health centers, integrated health care systems,
approved medical residency training programs, and teaching
hospitals that sponsor approved medical residency training
programs; (3) chairs of departments or divisions from
allopathic and osteopathic schools of medicine, schools of
dentistry, and approved medical residency training programs in
oral surgery; (4) individuals with leadership experience from
allopathic and osteopathic schools of dentistry and approved
medical residency training programs in oral surgery; (5)
individuals with experience from representative fields of non-
physician health professionals; (6) individuals with experience
in three study of issues regarding the composition of the U.S.
health care workforce; and, (7) individuals with expertise on
the financing of health care.
The Commission would be required to submit a report to
the Congress no later than 2 years after enactment providing
its recommendations under this section and the reasons and
justifications for such recommendations.
Effective Date. Enactment.
Section 4736. Identical provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House bill with an
amendment which would not require the Commission to include
recommendations on the financing of graduate medical education
or the financing of teaching hospitals. Issues of long-term
financing of GME would be considered by the Bipartisan
Commission.
Medicare Special Reimbursement Rule for Certain Combined Residency
Programs
Sections 10737 and 4737 of the House bills and Section 5443 of the
Senate amendment
Current Law
Combined residency programs run concurrently for a period
of time that is longer than the required time for certification
in either program, but shorter than would be required if the
programs were taken sequentially. Medicare makes direct GME
payments for residents in their initial residency period. The
initial residency period is defined as the number of years of
formal training necessary to satisfy specialty requirements for
board eligibility, but not more than 5 years, with an exception
for residents in preventive care or geriatrics who are allowed
a period of up to 2 additional years in the initial residency
training period. Residents in their initial residency period
are counted as 1.0 FTE during their initial residency period
and as 0.5 FTE for subsequent years. For combined residency
training programs there is no special provision in current law,
so that regardless of the number of additional years the second
program requires for certification, during the initial
residency period residents are counted as a full (1.0) FTE and
subsequent years are paid at half (0.5) the FTE.
House Bill
Section 10737. Permits residents enrolled in a combined
medical residency training program in which all of the
individual programs that are combined are for training in
primary care, to have a defined period of board eligibility
equal to the minimum number of years of formal trainingrequired
to satisfy the requirements for initial board eligibility in the
longest of the individual programs, plus one additional year.
Effective Date. Applies to combined medical residency
programs for residency years beginning on or after July 1,
1998.
Section 4737. Identical provision.
senate amendment
Identical provision.
Effective Date. Applies to combined medical residency
programs in effect on or after January 1, 1998.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and Senate amendment, with an
amendment to the effective dates of July 1, 1997.
Chapter 3--Medicare Secondary Payer Provisions/Coordination of Benefits
Permanent Extension of Certain Secondary Payer Provisions
Section 10701 and 4701 of House bill and Section 5601 of Senate
amendment
current law
Generally, Medicare is the primary payer, that is, it
pays health claims first, with an individual's private or other
public plan filling in some or all of the coverage gaps. In
certain cases, the individual's other coverage pays first,
while Medicare is the secondary payer. This is known as the
Medicare secondary payer (MSP) program. The MSP provisions
apply to group health plans for the working aged, large group
health plans for the disabled, and employer health plans
(regardless of size) for the end-stage renal disease (ESRD)
population for 18 months. The MSP provisions for the disabled
expire October 1, 1998. The MSP provisions for the ESRD
population apply for 12 months, except the period is extended
to 18 months for the February 1, 1991-October 1, 1998 period.
The law authorizes a data match program which is intended
to identify potential secondary payer situations. Medicare
beneficiaries are matched against data contained in the Social
Security Administration and Internal Revenue Service files to
identify cases where a working beneficiary (or working spouse)
may have employer-based health insurance coverage.
house bill
Section 10701. Makes permanent the provisions relating to
the disabled and the data match program.
Extends application of the MSP provisions for the ESRD
population for 30 months on a permanent basis.
Effective Date. Enactment. ESRD provision applies to
items and services furnished on or after enactment with respect
to periods beginning on or after the date that is 18 months
prior to enactment.
Section 4701. Identical provision.
senate amendment
Similar provision.
Effective Date. Enactment. ESRD provision applies to
items and services furnished on or after enactment with respect
to periods beginning on or after the date that is 18 months
prior to enactment.
conference agreement
The conference agreement includes provisions that are
essentially identical in the House bill and Senate amendment.
Clarification of Time and Filing Limitations
Section 10702 and 4702 of House bill and Section 5602 (b and c) of
Senate amendment
current law
In many cases where MSP recoveries are sought, claims
have never been filed with the primary payer. Identification of
potential recoveries under the data match process typically
takes several years--considerably in excess of the period many
health plans allow for claims filing. A 1994 appeals court
decision held that HCFA could not recover overpayments without
regard to an insurance plan's filing requirements.
house bill
Section 10702. Specifies that the U.S. could seek to
recover payments if the request for payments was submitted to
the entity required or responsible to pay within 3 years from
the date the item or service was furnished. This provision
would apply notwithstanding any other claims filing time limits
that may apply under an employer group health plan.
Effective Date. Applies to items and services furnished
after 1990. The provision should not be construed as permitting
any waiver of the 3-year requirement in the case of items and
services furnished more than 3 years before enactment.
Section 4702. Identical provision.
senate amendment
Identical provision.
Effective Date. Applies to items and services furnished
on or after enactment.
conference agreement
The conference agreement includes the Senate amendment.
Permitting Recovery Against Third Party Administrators
Sections 10703 and 4703 of House bill and Section 5602(a) of Senate
amendment
current law
A 1994 appeals court decision held that HCFA could not
recover from third party administrators of self-insured plans.
house bill
Section 10703. Permits recovery from third party
administrators of primary plans. However, recovery would not be
permitted where the third-party administrator would not be able
to recover the amount at issue from the employer or group
health plan for whom it provides administrative services due to
the insolvency or bankruptcy of the employer or plan.
Clarifies that the beneficiary is not liable in MSP
recovery cases unless the benefits were paid directly to the
beneficiary.
Effective Date. Applies to services furnished on or after
enactment.
Section 4703. Identical provision.
senate amendment
Similar provision except does not include clarification
of beneficiary liability.
Effective Date. Applies to items and services furnished
on or after enactment.
conference agreement
The conference agreement includes the House bill with
clarification that the third party administrator must be
employed by or under contract with the employer or group health
plan at the time the recovery action is initiated.
Chapter 4--Other Provisions
Centers of Excellence
Sections 10741 and 4741 of the House bills
current law
No provision.
house bill
Section 10741. Establishes a new program, the Centers of
Excellence, under which the Secretary would be required to use
a competitive process to contract with specific hospitals or
other entities for furnishing services related to surgical
procedures, and for furnishing services (unrelated to surgical
procedures) to hospital inpatients that the Secretary
determines to be appropriate. The services could include any
services covered by Medicare that the Secretary determined were
appropriate, including post-hospital services. The Secretary
would be required to contract with entities that meet quality
standards established by the Secretary, and contracting
entities would be required to implement a quality improvement
plan approved by the Secretary.
Payment for services provided under the program would be
made on the basis of a negotiated all-inclusive rate. The
amount of payment made for services covered under a contract
would be required to be less than the aggregate amount of
payments that would have been made otherwise for these same
services. The contract period would be required to be 3 years,
and could be renewed as long as the entity continued to meet
quality and other contractual standards. Entities under these
contracts would be permitted to furnish additional services (at
no cost to a Medicare beneficiary) or waive cost-sharing,
subject to approval by the Secretary. The Secretary would be
required to limit the number of centers in a geographic area to
the number needed to meet project demand for contracted
services.
Effective date. Applies to services furnished on or after
October 1, 1997.
Section 4741. Similar provision, except requires the
Secretary to consider quality as the primary factor in
selecting hospitals or other entities to enter into contracts
under this section.
senate amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill.
Medicare Part B Special Enrollment Period and Waiver of Part B Late
Enrollment Penalty and Medigap Special Open Enrollment Period for
Certain Military Retirees and Dependents
Sections 10742 and 4702 of House bill
Current Law
Persons generally enroll in Part B when they turn 65.
Persons who delay enrollment in the program after their initial
enrollment period are subject to a premium penalty. This
penalty is a surcharge equal to 10% of the premium amount for
each 12 months of delayed enrollment. There is no upper limit
on the amount of penalty that may apply. Further, the penalty
continues to apply for the entire time the individual is
enrolled in Part B.
Some persons declined Part B coverage because they
thought they would be able to get health care coverage at a
nearby military base; many of these bases subsequently closed.
House Bill
Section 10742. Waives the delayed enrollment penalty for
certain persons who enroll during a special six month
enrollment period which begins with the first month that begins
at least 45 days after enactment. An individual covered under
this provision is one: (1) who, on the date of enactment is at
least 65 and eligible to enroll in Part B; (2) who, at the time
the individual first met the enrollment requirements was a
``covered beneficiary'' under the military medical and dental
care program. Covered beneficiary as defined in section 1072(5)
of title 10 of the U.S. Code excludes an active duty
beneficiary. Part B coverage would begin the month after
enrollment.
Guarantees issuance of a Medigap type ``A'', ``B'',
``C'', or ``F'' policy to an individual who enrolls with a
Medigap plan during the same 6-month enrollment period.
Effective Date. Enactment
Section 4742. Identical provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill.
Protections Under the Medicare Program for Disabled Workers Who Lose
Benefits Under a Group Health Plan
Section 10743 of House bill
Current Law
Persons generally enroll in Part B when they turn 65.
Persons who delay enrollment in the program after their initial
enrollment period are subject to a premium penalty. This
penalty is a surcharge equal to 10% of the premium amount for
each 12 months of delayed enrollment. There is no upper limit
on the amount of penalty that may apply. Further, the penalty
continues to apply for the entire time the individual is
enrolled in Part B.
Some persons declined Part B coverage because they
thought they would be able to continue to get health care
coverage from their employer-sponsored health plan.
House Bill
Waives the Part B enrollment penalty for certain disabled
retired workers who were continuously enrolled in a group
health plan and whose coverage was involuntarily terminated. To
qualify, individuals must be disabled and continuously enrolled
under a group health plan at the time they first become
eligible to enroll in Medicare Part B. Individuals meeting
these requirements may enroll in Medicare Part B without
penalty within the 6-month enrollment period beginning on the
date their employer-provided coverage is terminated at a time
when enrollment under the plan is not by reason of the
individual's, or the individual's spouse's, current employment.
Effective Date. Applies to involuntary terminations of
coverage under a group health plan occurring on or after
enactment.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House bill with
clarifying language.
The Secretary should provide by regulation for
recognition of short-time, erroneous enrollments in Medicare
during the individual's initial enrollment period which are
quickly reversed. Such an error should not disqualify an
individual for later use of this section.
Placement of Advanced Directive in Medical Record
Section 10744 of the House bill
Current Law
The Patient Self-Determination Act of 1990 requires that
hospitals, skilled nursing facilities, home health agencies,
hospice programs and health maintenance organizations which
participate in Medicare guarantee that every adult receiving
medical care be given written information concerning patient
involvement in treatment decisions. Providers must document in
the medical record whether the patient has an advance directive
or not.
House Bill
Requires that the individual's advance directive be
placed in a prominent part of the individual's current medical
record.
Effective date. Applies to provider agreements entered
into, renewed, or extended on or after such date (but no later
than 1 year after the date of enactment) as specified by the
Secretary.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the House bill.
Conforming Age for Eligibility Under Medicare to Retirement Age for
Social Security
Section 5611 of Senate amendment
Current Law
The Social Security Amendments of 1983 raised the full
retirement age (the age at which one receives unreduced
benefits) for social security cash benefits from age 65 to 67
over the 2003-2027 period. The legislation provided for two
transition periods. First, the retirement age increases by 2
months for each year that a person is born in 1938 or later
(i.e. attains 65 in 2003 or later) until it reaches age 66 for
those born in 1943 (i.e. attain age 66 in 2009). For persons
born between 1943 and 1954 (i.e. attain age 66 between 2009 and
2020), the full retirement age is 66. The second transition
begins for persons born in 1955 (i.e. attain 66 in 2021). The
retirement age again increases by 2 months for each year that a
person is born in 1955 or later until it reaches age 67 for
persons born in 1960 (i.e. attain age 67 in 2027). The Medicare
eligibility remains at age 65.
House Bill
No provision.
Senate Amendment
Raises the Medicare eligibility age from age 65 to 67
according to the same schedule established in law for social
security cash benefits. The provision makes conforming changes
in provisions relating to: (1) purchase of hospital insurance
coverage for those not otherwise eligible; (2) hospital
insurance benefits for disabled persons who have exhausted
other entitlement; (3) eligibility for Part B benefits; (4)
appropriations to cover government contributions and
contingency reserve; (5) Medicare secondary payer; and (6)
medicare supplemental policies.
Effective Date. Enactment.
Conference Agreement
The conference agreement does not include the Senate
amendment.
Increase Certification Period for Organ Procurement Organizations
Section 5612 of the Senate amendment
Current Law
Section 1138(b) of the Social Security Act requires that
the Secretary can make Medicare and Medicaid payments for organ
procurement costs to organ procurement organizations (OPOs)
operating under Section 371 of the Public Health Service Act,
or having been certified or recertified by the Secretary within
the previous 2 years as meeting certain requirements.
House Bill
No provision.
Senate Amendment
Amends current law to provide OPOs three years between
certifications or recertifications if the Secretary deems the
organizations as having a good record in meeting standards to
be a qualified OPO.
Effective date. Enactment.
Conference Agreement
The conference agreement includes the Senate amendment
with a modification authorizing the Secretary to allow four
years between certifications or recertifications if it is
appropriate on the basis of an organization's past practices.
The Conferees note with concern that a few Organ
Procurement Organizations may be earning excessive profits that
could violate the provision in the National Transplant Act that
prohibits profits on the sale of human organs. OPOs are
supposed to facilitate and promote transplantation in America
and should guard against institutional aggrandizement.
Office of the Chief Actuary in the Health Care Financing Administration
Conference Agreement
The conference agreement would establish the position of
Chief Actuary in the Health Care Financing Administration. The
Chief Actuary would be appointed by the Administrator of HCFA
among individuals who have demonstrated by their education and
experience, superior expertise in the actuarial sciences. The
Chief Actuary would be in direct line of authority to the
Administrator. The individual would exercise such duties as are
appropriate for the office and in accordance with professional
standards of actuarial independence. The individual could only
be removed for cause. Compensation would be at the highest rate
of basic pay for the Senior Executive Service. The provision
would be effective on enactment.
The Conferees wish to emphasize the very important role
of the Office of the Actuary in assessing the financial
condition of the Medicare trust funds and in developing
estimates of the financial effects of potential legislative and
administrative changes in the Medicare and Medicaid programs.
The Office of the Actuary has a unique role within the agency
in that it serves both the Administration and the Congress.
While the Chief Actuary is an official within the
Administration, this individual and his or her office often
must work with the committees of jurisdiction in the
development of legislation.
Beginning with the appointment of the first Chief Actuary
for Social Security in 1936, through the enactment of Medicare
and Medicaid in 1965, and through the establishment of the
Health Care Financing Administration in 1977, the tradition has
been for a close and confidential working relationship between
the SSA and HCFA chief actuaries and the committees of
jurisdiction in the Congress--a relationship which the
Committees value highly. It is important to emphasize that the
Senate Committee on Finance, the House Committee on Ways and
Means, and the House Committee on Commerce all rely on their
ability to seek estimates and other technical assistance from
the Chief Actuary, especially when developing new legislation.
Similarly, the Congressional Budget Office and Congressional
Research Service depend heavily on such assistance. Thus, the
independence of the Office of the Actuary with respect to
providing assistance to the Congress is vital. The process of
monitoring, updating, and reforming the Medicare and Medicaid
programs is greatly enhanced by the free flow of actuarial
information from the Office of the Actuary to the committees of
jurisdiction in the Congress.
The Conferees believe that it is important for the Office
of the Actuary to receive adequate staffing and support from
the agency and the Administration at large. The Committees rely
on the actuaries to provide prompt, impartial, authoritative,
and confidential information with respect to the effects of
legislative proposals. When information is delayed or
circumscribed by the operation of an internal Administration
clearance process or the inadequacy of actuarial resources, the
Committees' ability to make informed decisions based on the
best available information is compromised. The Conferees
consider independent analyses by the Office of the Actuary to
be consistent with the general role and responsibilities of the
actuarial profession, and in the past have found these analyses
helpful in understanding the factors underlying estimates and
trends in the Medicare and Medicaid programs.
With respect to adequate staffing, the conferees wish to
note that it is essential that the strength of the Office of
the Actuary be maintained. The Conferees strongly urge that the
actuarial staff at HCFA be enhanced on an ongoing basis. The
need for actuarial assistance will be greater than ever in the
next few years as the Congress and the Administration, with
advice from the bipartisan commission mandated in this
legislation, address the future financial pressures facing the
Medicare program as a result of the retirement of the post-
World War II ``baby boom'' generation.
The conferees recognize the important role of the Office
of the Chief Actuary and expect that in the reorganized HCFA
the office will be permitted to function with a high degree of
independence and professionalism.
Conforming Amendments To Comply With Congressional Review of Agency
Rule-Making
Conference Agreement
The conference agreement also includes provisions related
to changing the annual deadlines for agency rulemaking in order
to comply with requirements for congressional review of agency
rulemaking. The provision would change the required date for
publication in the Federal Register the DRG prospective payment
rate methodology from September 1, to August 1; for hospital
payment updates, from May 1, to April 1; for applications for
geographic reclassification, from ``the first day of the
preceding year,'' to ``the first day of the 13-month period
ending on September 30 of the preceding fiscal year.'' The
agreement would require publication of the physician fee
schedule by November 1 of the calendar year preceding the year
it applies and the performance standard rate of increase by
August 1 of each year. The agreement further establishes
transition rules for 1998.
Subtitle H--Medical Liability Reform
Chapter 1--General Provisions
Federal Reform of Health Care Liability Actions
Sections 10801 and 4801 of House bill
Current Law
There are no uniform Federal standards governing health
care liability actions.
House Bill
Section 10801. Provides for Federal reform of health care
liability actions. It would apply to any health care liability
action brought in any State or Federal court. The provisions
would not apply to any action for damages arising from a
vaccine-related injury or death or to the extent that the
provisions of the National Vaccine Injury Compensation Program
apply. The provisions would also not apply to actions under the
Employment Retirement Income Security Act (ERISA). The
provisions would preempt State law to the extent State law
provisions were inconsistent with the new requirements.
However, it would not preempt State law to the extent State law
provisions were more stringent. The provision would not affect
or waive the defense of sovereign immunity asserted by any
State or the U.S., affect the applicability of the Foreign
Sovereign Immunities Act of 1976, preempt State choice-of-law
rules with respect to claims brought by a foreign nation or
citizen, or affect the right of any court to transfer venue.
Effective Date. See Sections 10803 and 4803, below.
Section 4801. Similar provision except: (1) does not
include exemption for actions arising under ERISA; and (2)
specifies preemption applies to both Federal and State laws.
Effective Date. See Sections 10803 and 4803, below.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill.
Definitions
Sections 10802 and 4802 of House bill
Current Law
No provision.
House Bill
Section 10802. Defines the following terms for purposes
of the Federal reforms: actual damages; alternative dispute
resolution system; claimant; clear and convincing evidence;
collateral source payments; drug; economic loss; harm; health
benefit plan; health care liability action; health care
liability claim; health care provider; health care service;
medical device; noneconomic damages; person; product seller;
punitive damages; and State. Harm is defined as legally
cognizable wrong or injury for which punitive damages may be
imposed.
Effective Date. See Sections 10803 and 4803, below.
Section 4802. Similar provision except: (1) specifies
that economic loss is attributable to harm rather than injury;
(2) defines harm as any physical injury, illness or death or
mental anguish or emotional injury caused by or causing the
claimant's physical injury; (3) does not include definition of
health benefit plan or health care service; (4) excludes from
the definition of health care liability action a claim based
upon the provision of health care services or the use of a
medical product, regardless of the theory of liability on which
the claim is based or the number of plaintiffs, defendants, or
causes of action; (5) includes within the definition of health
care liability claim the use of a medical product, regardless
of the theory of liability on which the claim is based; (7)
adds definition for the term manufacturer; (8) modifies
exclusion from the term product seller to apply to a person who
leases a product under a lease arrangement in which the lessor
does not initially select the leased product and does not
during the lease term ordinarily control the daily operations
and maintenance of the product; and (9) includes the Trust
Territory of the Pacific Islands within the definition of
state.
Effective Date. See Sections 10803 and 4803, below.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill.
Effective Date
Sections 10803 and 4803 of House bill
Current Law
No provision.
House Bill
Section 10803. Specifies that Federal reforms apply to
any health care liability action brought in any Federal or
state court that is initiated on or after the date of
enactment. The provision would also apply to any health care
liability claim subject to an alternative dispute resolution
system. Any health care liability claim or action arising from
an injury occurring prior to enactment would be governed by the
statute of limitations in effect at the time the injury
occurred.
Section 4803. Similar provision, except does not include
language relating to claims or actions arising from an injury
occurring prior to enactment.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill.
Chapter 2--Uniform Standards for Health Care Liability Actions
Statute of Limitations
Sections 10811 and 4811 of House bill
Current Law
To date, reforms of the malpractice system have occurred
primarily at the State level and have generally involved
changes in the rules governing tort cases. (A tort case is a
civil action to recover damages, other than for a breach of
contract.)
House Bill
Section 10811. Establishes uniform standards for health
care liability claims. It would establish a uniform statute of
limitations. Actions could not be brought more than two years
after the injury was discovered or reasonably should have been
discovered. In no event could the action be brought more than
five years after the date of the alleged injury.
Effective Date. Enactment.
Section 4811. Specifies that a health care liability
action could be filed not later than 2 years after the date on
which the claimant discovered, or in the exercise of reasonable
care, should have discovered the harm that is subject of the
action and the cause of the harm. A person with a legal
disability (as determined under applicable state law) could
file a health care liability action not later than 2 years
after the person ceased to have such disability. If either of
these provisions would shorten the period during which an
action could otherwise be brought under another provision of
law, the claimant could bring the action not later than 2 years
after enactment.
Effective Date. Enactment.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill.
Calculation and Payment of Damages
Sections 10812 and 4812 of House bill
Current Law
No provision.
(a) Noneconomic Damages
House Bill
Section 10812. Limits noneconomic damages to $250,000 in
a particular case. The limit would apply regardless of the
number of persons against whom the action was brought or the
number of actions brought.
Section 4812. Similar provision except refers to ``harm''
rather than ``losses resulting from the injury''.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill.
(b) Joint and Several Liability
House Bill
Section 10812. Specifies that a defendant would only be
liable for the amount of noneconomic damages attributable to
that defendant's proportionate share of the fault or
responsibility for that claimant's injury, as determined by the
trier of fact. In all cases, the liability of the defendant for
noneconomic damages would be several and not joint.
Section 4812. Specifies that a defendant would only be
liable for the amount of noneconomic damages attributable to
that defendant's proportionate share of the fault or
responsibility for the harm to that claimant. The court would
render a separate judgment against each defendant. The trier of
fact would determine the percentage of responsibility of each
person responsible for the harm, whether or not the person is
party to the action. The liability of each defendant would be
several and not joint.
Senate Amendment
No provision.
conference agreement
The conference agreement does not include the House bill.
(c) Treatment of punitive damages
house bill
Section 10812. Permits the award of punitive damages (to
the extent allowed under State law) only if the claimant
established by clear and convincing evidence either that the
harm was the result of conduct that specifically intended to
cause harm or the conduct manifested a conscious flagrant
indifference to the rights or safety of others. The amount of
punitive damages awarded could not exceed $250,000 or three
times the amount of economic damages, whichever was greater.
The determination of punitive damages would be determined by
the court and not be disclosed to the jury. The provision would
not create a cause of action for punitive damages. Further, it
would not preempt or supersede any State or Federal law to the
extent that such law would further limit punitive damage
awards.
Permits either party to request a separate proceeding
(bifurcation) on the issue of whether punitive damages should
be awarded and in what amount. If a separate proceeding was
requested, evidence related only to the claim of punitive
damages would be inadmissible in any proceeding to determine
whether actual damages should be awarded.
Section 4812. Similar provision except: (1) does not
include punitive damages for conduct specifically intended to
cause harm; (2) refers to applicable law rather than applicable
state law; (3) does not include provision relating to
applicability in Federal or State courts; and (4) specifies
that a request for bifurcation applies to proceedings held
subsequent to award of compensatory damages. In addition, any
evidence, argument, or contention that is relevant only to the
claim of punitive damages would be inadmissable in any
proceeding relating to the award of compensatory damages.
senate amendment
No provision.
conference agreement
The conference agreement does not include the House bill.
(d) Drugs and devices
house bill
Section 10812. Prohibits the award of punitive damages
against a manufacturer or product seller in a case where a drug
or medical device was subject to premarket approval by the Food
and Drug Administration (or generally recognized as safe
according to conditions established by the FDA), unless there
was misrepresentation or fraud. A manufacturer or product
seller would not be held liable for punitive damages related to
adequacy of required tamper resistant packaging unless the
packaging or labeling was found by clear and convincing
evidence to be substantially out of compliance with the
regulations.
Section 4812. Similar provision, except specifies that
the manufacturer would not be held liable for punitive damages
related to adequacy of required tamper resistant packaging
unless the drug was found by clear and convincing evidence to
be substantially out of compliance with the regulations.
senate amendment
No provision.
conference agreement
The conference agreement does not include the House bill.
(e) Periodic payments for future losses
house bill
Section 10812. Permits the periodic (rather than lump
sum) payment of future economic and noneconomic losses in
excess of $50,000, with payments determined by the court. The
judgment of a court awarding periodic payments could not, in
the absence of fraud, be reopened at any time to contest,
amend, or modify the schedule or amount of payments. A lump sum
settlement would not be precluded.
Section 4812. Identical provision, except specifies both
the amount and schedule of payments would be determined by the
court.
senate amendment
No provision.
conference agreement
The conference agreement does not include the House bill.
(f) Collateral source payments
House Bill
Section 10812. Permits a defendant to introduce evidence
of collateral source payments. Such payments are those which
are any amounts paid or reasonably likely to be paid by health
or accident insurance, income-disability coverage, workers
compensation, or other third party sources. If such evidence
was introduced, the claimant could introduce evidence of any
amount paid or reasonably likely to be paid to secure the right
to such collateral source payments. No provider of collateral
source payments would be permitted to recover any amount
against the claimant or against the claimant's recovery.
Effective Date. Enactment.
Section 4812. Identical provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill.
Alternative Dispute Resolution
Sections 10813 and 4813 of House bill
Current Law
No provision.
House Bill
Section 10813. Requires that any alternative dispute
resolution system used to resolve health care liability actions
or claims must include provisions identical to those specified
in the bill relating to statute of limitations, non-economic
damages, joint and several liability, punitive damages,
collateral source rule, and periodic payments.
Effective Date. Enactment.
Section 4813. Identical provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement does not include the House bill.
Chapter 1--Managed Care
State Options of Using Managed Care; Change in Terminology
Section 3401 of House bill and Section 5701 (new section 1941 and
1942), and Section 5703 of Senate amendment
current law
To control costs and quality of care, states are
increasingly delivering services to their Medicaid populations
through Health Maintenance Organizations (HMOs) and other
managed care arrangements. Medicaid programs use three main
types of managed care arrangements. These vary according to the
comprehensiveness of the services they provide and the degree
to which they accept risk, and include Primary Care Case
Management (PCCM), fully capitated HMOs and Health Insuring
Organizations (HIOs), and partially capitated Pre-Paid Health
plans (PHPs). Under PCCM a Medicaid beneficiary selects or is
assigned to a single primary care provider, which provides or
arranges for all covered services and is reimbursed on a fee-
for-service basis in addition to receiving a small monthly
``management'' fee. Fully capitated plans contract on a risk
basis to provide beneficiaries with a comprehensive set of
covered services in return for a monthly capitation payment.
Partially capitated plans provide a less than comprehensive set
of services on a risk basis; services not included in the
contract are reimbursed on a fee-for-service basis. Under fully
and partially capitated managed care arrangements,
beneficiaries have a regular source of coordinated care and
states have predictable, controlled spending per beneficiary.
This is in contrast to the traditional fee-for-service
arrangements used by Medicaid beneficiaries where Medicaid pays
for each service used.
The Medicaid statute contains several provisions that
limit a state's ability to use managed care, including the
freedom of choice, statewideness, and comparability
requirements. Currently, states may only bypass statewideness
and comparability requirements by establishing voluntary
capitated managed care plans or by providing voluntary case
management. Voluntary capitated MCOs must meet other
requirements that govern how Medicaid managed care plans
contracting to provide a comprehensive set of services operate.
These requirements, contained in Section 1903(m) of the
Medicaid statute, include rules about solvency, enrollment
practices, procedures for protecting beneficiaries' rights, and
contracting arrangements of managed care plans.
Under current law, a state may offer managed care
services on a voluntary basis and may contract with a health
plan that provides services in addition to those covered under
the state plan. Once a beneficiary chooses the managed care
plan, a state may define the beneficiary's freedom of choice to
providers participating in that managed care plan. However, to
mandate that a beneficiary enroll in a managed care
organization, including PCCM, a state must first obtain a
waiver of the freedom-of-choice provision of Medicaid law.
These renewable waivers, as authorized under Section 1915(b) of
Medicaid law, are initially good for 2 years. (States also may
implement statewide demonstration programs that may include
mandatory managed care under the authority of a Section 1115(a)
waiver.)
Beneficiaries are permitted to disenroll from a managed
care plan without cause during the first month of enrollment
and may disenroll at any time for cause. Enrollees may be
locked into the same plan for up to 6 months if the plan is a
federally qualified HMO. States may also guarantee eligibility
for up to 6 months for persons enrolled in federally qualified
HMOs. States may not restrict access to family planning
services under managed care. Plans may not discriminate against
individuals in enrollment, disenrollment, or reenrollment based
on health status or need for care.
house bill
The House bill provides states, under section 1915(a),
the option of requiring individuals eligible for medical
assistance under the state plan to enroll in a capitated
managed care plan or with a primary care case manager, without
a 1915(b) waiver. It also permits states to restrict the number
of plans or providers it contracts with, consistent with
quality of care. Individuals must be permitted to choose their
manager or managed care entity from among those that meet
Medicaid requirements. Individuals must be given a choice of at
least two managed care entities or managers. In the case of
rural areas, eligible individuals who are required to enroll
with a single entity must be given the option of obtaining
covered services through an alternative provider; those
individuals offered no alternative to a single entity or
manager must be given the choice of at least two providers
within the managed care entity or through the primary care case
manager.
Under the House bill, Native Americans/Alaskan Natives
could only be required to enroll in a managed care entity if it
is a participating Indian Health Service, tribally operated, or
urban Indian Health program.
The bill also permits states to limit beneficiary
migration from plans for periods up to 6 months. As under
current law, beneficiaries would be allowed to disenroll from a
plan at any time for cause. Prior to establishing a mandatory
managed care requirement, a state would be required to provide
for public notice and comment. States could not require either
special needs children or Qualified Medicare Beneficiaries to
enroll in managed care plans. As under current law, access to
family planning providers may not be restricted.
senate amendment
The Senate bill designates current Medicaid law as Part
A, General Provisions, and establishes a Part B, Provisions
Relating to Managed Care. It gives states the option to require
enrollment in managed care without a waiver in new section
1941, which is similar to House bill except it also:
Requires states to permit individuals to have access to
religiously-affiliated long-term care facilities;
Requires states to allow individuals to change enrollment
among managed care entities once annually and to terminate
enrollment at any time for cause. Establishes notice of
termination requirements for individuals, managed care
entities, and states;
Requires states to establish a method for establishing
enrollment priorities in the event a managed care entity
doesn't have sufficient capacity to enroll all those seeking
enrollment;
Requires states to establish a default enrollment process
for enrolling any individual who does not choose a managed care
entity within the enrollment period specified by the state. The
default enrollment process must provide for enrollment with an
MCO that maintains existing provider-individual relationships
or has contracted with providers that have traditionally served
Medicaid recipients; if no such provider exists, the process
must provide for equitable distribution of individuals among
all available qualified managed care entities with sufficient
capacity;
Provides for automatic reenrollment for those individuals
enrolled with a managed care entity that lose Medicaid
eligibility for no longer than 2 months;
Allows states to establish a minimum enrollment period of
not more than 6 months (states may extend such period up to 12
months if extension is done uniformly for all individuals).
Deems individuals who lose Medicaid eligibility prior to the
end of the minimum enrollment period eligible to receive
benefits through the entity until the end of the enrollment
period;
Prohibits managed care entities from discriminating
against eligible individuals in enrollment, disenrollment, or
reenrollment based on health status or need for care;
Requires states, enrollment brokers, or MCOs to provide
all enrollment notices and informational and instructional
materials in a manner and form which may be easily understood
by Medicaid-eligible enrollees and potential enrollees,
including those who are blind, deaf, disabled, or unable to
read or understand English;
Requires states and managed care entities to provide
specified information to all enrollees and potential enrollees.
Requires states to provide, on an annual basis, comparative
information (in a chart-like form) that includes: benefits,
premiums, service area, quality and performance, disenrollment
rates, enrollee satisfaction, grievance procedures,
supplemental benefits option, and physician compensation; and
Requires managed care entities to inform enrollees of any
benefits to which they are entitled that the entity does not
provide, and how and where enrollees may access such benefits.
Conference Agreement
The conference agreement includes the Senate amendment
with clarifying language and amendments. Section 4701 of the
conference agreement would amend the Social Security Act to
establish a new section, ``Provisions Related to Managed
Care,'' Section 1932. New Section 1932 gives states the option
of requiring individuals eligible for medical assistance under
the state plan to enroll with a managed care entity without a
1915(b) waiver. The agreement defines a Medicaid managed care
organization as a health maintenance organization, an eligible
organization with a contract under section 1876 or a
Medicare+Choice organization with a contract under part C of
title XVIII, a provider sponsored organization, or any other
public or private organization meeting the requirement of
section 1902(w) that (1) makes services it provides accessible
to enrolled individuals to the same extent as such services are
made accessible to Medicaid-eligible individuals not enrolled
with the organization and (2) has made adequate provision
against the risk of insolvency. Qualified HMOs would be deemed
to meet requirements (1) and (2). Section 1932 contains
provisions relating to (a) special rules, (b) choice of
coverage, (c) process for enrollment and termination and change
of enrollment, and (d) provision of information.
With respect to requiring that individuals be given a
choice of at least two managed care entities or managers, the
conference agreement includes the Senate amendment, which
allows beneficiaries to choose among qualified managed care
plans, with a choice of at least two plans. A special rule
applies for certain Health Insuring Organizations (HIOs). With
respect to rural areas, changes in enrollment, enrollment
priorities, termination of enrollment, Medicare beneficiaries,
and information on benefit carve outs, the conference agreement
includes the Senate amendment. With respect to religious
choice, notice of termination, reenrollment, and
nondiscrimination, the conference agreement does not include
the Senate amendment. With respect to Indian enrollment and
special needs children, the conference agreement includes
provisions that are identical in the House bill and Senate
amendment. Children who receive Adoption Assistance under part
E of title IV are added to those considered to be special needs
children. With respect to default enrollment process, the
conference agreement includes the Senate amendment.
With respect to state minimum enrollment option, the
conference agreement includes the Senate amendment modified to
allow states to guarantee eligibility for up to 6 months
(without extension up to 12 months) for persons enrolled with a
Medicaid managed care organization (as defined in section
1903(m)(1)(A)), with a primary care case manager (as defined in
section 1905(t)), or by or through a case manager. (See ``6-
month Guaranteed Eligibility for All Individuals Enrolled in
Managed Care,'' below). With respect to provision of
information in easily understood form, the conference agreement
modifies the Senate amendment to delete the specification of
for whom such information must be presented in an easily
understood form. With respect to the provision of information
and comparative information to enrollees and potential
enrollees, the conference agreement includes the Senate
amendment with modifications. Managed care entities must make
available to enrollees and potential enrollees information
about (a) providers, (b) enrollee rights and responsibilities,
(c) grievance and appeal procedures, and (d) information on
covered items and services. States must, on an annual basis,
provide individuals required to enroll with managed care
entities with a list identifying the managed care entities
available and comparative information about each
entity'sbenefits and cost-sharing, service area, and quality and
performance.
Primary Care Case Management Services as State Option Without Need for
Waiver
Section 3403 of House bill and Section 5702 of Senate amendment
current law
All states are required to provide some services and are
permitted to provide others. Under current law a state may
offer case management services on a voluntary basis. However,
to mandate that a beneficiary enroll in a PCCM system a state
must first obtain a waiver of the freedom-of-choice provision
of Medicaid law. Section 1915(b)(1) waivers allow states to
restrict the provider from whom a beneficiary can obtain
services. Except in the case of an emergency, the beneficiary
may obtain other services, such as specialty physician and
hospital care, only with the authroization of the primary care
provider. The aim of the program is to reduce the use of
unnecessary services and provide better overall coordination of
beneficiaries' care.
house bill
Effective October 1, 1997, the House bill adds primary
care case management as an optional service states may provide.
Primary care case management services are those case management
and primary care services a physician, a physician group
practice, or an entity employing or having other arrangements
with physicians, or, at state option, nurse practitioners,
certified nurse-midwives, or physician assistants contracts
with the state to provide. These include covered primary care
services provided or arranged for directly by the primary care
case manager and other services as specified under the
contract.
The contract must provide that: (1) hours of operation
are reasonable and adequate, including 24-hour availability of
information, referral, and treatment with respect to medical
emergencies; (2) enrollment is restricted to those living
reasonably near a service delivery site; (3) a sufficient
number of providers are employed or contracted with to meet the
needs of enrollees; (4) individuals are not discriminated
against in enrollment, disenrollment, or reenrollment based on
health status or need for care; (5) enrollees are allowed to
disenroll without cause during the first month of each
enrollment period and to disenroll at any time for cause.
Enrollees may not be locked in to a provider for more than 6
months.
Primary care services include all health care and
laboratory services customarily provided in accordance with
State licensure and certification laws and regulations by or
through a general practitioner, family medicine physician,
internal medicine physician, obstetrician/gynecologist, or
pediatrician.
senate amendment
The Senate bill includes a similar provision, except that
it repeals Section 1915(b)(1) freedom-of-choice waiver
authority.
conference agreement
The conference agreement includes House provision with
conforming amendments. Effective for PCCM services furnished on
or after October 1, 1997.
Elimination of 75:25 Restriction on Risk Contracts
Section 3402 of House bill and Section 5703 of Senate amendment
current law
As a proxy for quality, current law requires that plans
limit their enrollment of Medicaid and Medicare beneficiaries
to less than 75% of total enrollment (known as the ``75/25
rule''). This requirement may be waived for community, migrant,
or Appalachian health centers which receive federal grant funds
and meet certain other conditions. It may be waived temporarily
for a publicly owned contracting plan, a plan with more than
25,000 enrollees that serves a designated ``medically
underserved'' area and that previously participated in an
approved demonstration project, or a plan that has had a
Medicaid contract for less than 3 years, if the plan is making
continuous and reasonable efforts to comply with the 75% limit.
For some HMOs, the 75/25 rule has been bypassed through state
demonstration waivers or through specific federal legislation.
house bill
The House bill eliminates the 75/25 rule, effective on
the date of enactment.
senate amendment
The Senate bill has a similar provision, except that the
provision is effective on and after June 20, 1997.
conference agreement
The conference agreement includes Senate amendment.
Increased Beneficiary Protections
Sections 3463, 3465, and 3466 of House bill and Section 5701 (new
sections 1941-1945) of Senate amendment
a. Specification of Benefits
current law
No provision.
house bill
No provision.
senate amendment
Requires contracts with Medicaid managed care entities to
specify the benefits the provision (or arrangement) for which
the entity is responsible.
conference agreement
The conference agreement includes the Senate amendment
with conforming language.
b. Application of Prudent Layperson Standard for Medical
Emergencies
current law
Contracts with MCOs that provide a comprehensive set of
Medicaid services must provide that either the MCO or the state
shall reimburse enrollees for medically necessary services
provided by a nonparticipating provider if the services were
immediately required due to an unforeseen illness, injury, or
condition.
house bill
Requires that contracts with managed care plans provide
for coverage for emergency services without regard to: (1)
whether the emergency care provider has an arrangement with the
plan or (2) prior authorization. Plans would be required to
comply with such guidelines as the Secretary may prescribe
relating to promoting efficiency and timely coordination of
appropriate maintenance and post-stabilization care provided to
an enrollee determined to be stable by a medical screening
examination required under the Examination and Treatment under
Emergency Medical Conditions and Women in Labor requirements of
the Social Security Act (Section 1867).
Emergency services would be defined, with respect to an
individual enrolled with a participating HMO, as covered
inpatient and outpatient services that are furnished by a
qualified provider and needed to evaluate or stabilize an
emergency medical condition. An emergency medical condition
would be defined as one manifesting itself by acute symptoms of
sufficient severity such that a prudent layperson, who
possesses an average knowledge of health and medicine, could
reasonably expect the absence of immediate medical attention to
result in: (a) placing the health of the individual in serious
jeopardy (and in case of a pregnant woman, her health or that
of her unborn child); (b) serious impairment to bodily
functions; or (c) serious dysfunction of any bodily organ or
part.
Prohibits interference with physician advice to
enrollees. A participating health plan may not prohibit or
otherwise restrict covered health care professionals from
talking to their patients about their health status, health
care, or treatment options, regardless of whether benefits for
such care or treatment are provided under the plan, so long as
the professional is acting within the lawful scope of practice.
``Covered health care professional'' includes physicians and
other health care professionals (as specified).
HMOs could not be required to provide, reimburse, or
provide coverage of a counseling or referral service if they
objected to the provision of such service on moral or religious
grounds. Requires HMOs to inform prospective and current
enrollees of any such services they do not provide, before or
during enrollment or within 90 days after the date that the HMO
adopts a change in policy regarding such a counseling or
referral service.
senate amendment
Similar provision to House bill except (1) adds severe
pain to definition of emergency medical services and (2) does
not include the prohibition on physician communication.
conference agreement
The conference agreement includes the House and Senate
provisions.
c. Grievances Procedures
current law
No provision.
house bill
Requires that contracts with capitated managed care
entities provide for compliance with the following grievance
and appeals requirements: (1) Participating managed care
entities must provide a meaningful and expedited procedure for
resolving grievances between the entity and its enrollees. Such
a procedure would include notice and hearing requirements. (2)
The managed care entity must inform plan enrollees in a timely
manner of any denial, termination, or reduction of services.
The plan must clearly state the reason for the denial of
service. The plan must provide enrollees with an explanation of
the plan's complaint process and of all other appeal rights
available to them. (3) Plans must establish a board of appeals
to resolve grievances concerning denials of coverage or payment
for services. The board would consist of representatives of the
managed care entity, including physician and nonphysicians;
consumers who are not plan enrollees; and providers with
expertise in the field of medicine related to the condition or
disease which requires treatment. The board would hear and
resolve filed complaints within 30 days. This provisiondoes not
replace or supercede any other Medicaid appeal mechanisms.
senate amendment
Requires Medicaid managed care entities to establish an
internal grievance procedure under which an enrollee who is
eligible for medical assistance under the State plan, or a
provider on behalf of such an enrollee, may challenge the
denial of coverage of or payment for such assistance. Requires
entities to provide effective procedures for hearing and
resolving grievances between the entity and members enrolled
with the entity.
conference agreement
The conference agreement includes the Senate amendment.
d. Demonstration of Adequate Capacity and Services
current law
No provision.
house bill
No provision.
senate amendment
Requires Medicaid MCOs to provide the state and the
Secretary with adequate assurances as determined by the
Secretary, that the organization meets specified requirements
with respect to a service area. Such requirements include: (1)
the capacity to serve the expected enrollment in such service
area; (2) an appropriate range of services, including
transportation and translation services; (3) a sufficient
number, mix, and geographic distribution of providers; (4)
extended hours of operation with respect to primary care
services; (5) preventive and primary care services in readily
accessible locations; (6) information about health and other
services offered by other programs for which enrollees may be
eligible; (7) compliance with other access to care requirements
the Secretary or state may impose.
conference agreement
The conference agreement includes the Senate amendment
modified to require assurances with respect to (1) the capacity
to serve the expected enrollment in such service area; (2) an
appropriate range of services and access to preventive and
primary care; and (3) a sufficient number, mix, and geographic
distribution of providers.
e. Protecting Enrollees Against Liability for Payment
current law
Requires MCOs to make adequate provision against the risk
of insolvency, which assures that individuals eligible for
benefits are not held liable for debts of the organization in
case of the organization's insolvency.
house bill
No provision.
senate amendment
Managed care entities are required to assure that
individuals enrolled with the entity are not held liable for
the debts of the entity (or any health care provider with a
contractual or other arrangement with the entity) in the event
of insolvency, or for services provided to them in the event
the entity (or any health care provider with a contractual or
other arrangement with the entity) fails to receive payment
from the state for such services.
conference agreement
The conference agreement includes the Senate amendment.
f. Antidiscrimination
current law
No provision.
house bill
No provision.
senate amendment
Prohibits managed care entities from discriminating
against any provider acting within the scope of the provider's
license or certification under applicable state law with
respect to participation, reimbursement, or indemnification,
solely on the basis of such license or certification.
conference agreement
The conference agreement includes the Senate amendment.
g. Compliance with Certain Maternity and Mental Health
Requirements
current law
Public Law 104-204 requires group health plans and
issuers of health insurance plans in the group and individual
markets to provide coverage of 48 hours of inpatient care for
normal childbirth deliveries and 96 hours for caesareans.
Public Law 104-204 also prohibits group health plans that cover
medical, surgical, and mental health benefits from imposing
more restrictive annual or lifetime dollar limitations on the
coverage of mental health benefits than on medical and surgical
benefits. The definition of mental health benefits does not
include treatment of substance abuse and chemical dependency.
house bill
No provision.
senate amendment
Requires Medicaid MCOs to comply with the mental health
parity and maternity length-of-stay requirements enacted by
Public Law 104-204.
conference agreement
The conference agreement includes the Senate amendment.
h. Protection of Enrollees Against Balance Billing Through
Subcontractors
current law
Section 1128B(d)(1) of the Social Security Act contains
penalties for those who knowingly and willfully charge, for any
service provided to a patient under an approved Medicaid state
plan, money or other consideration at a rate in excess of the
rates established by the state.
house bill
No provision.
senate amendment
Applies balance billing limitation requirements to any
entity subcontracting with participating managed care entities.
conference agreement
The conference agreement includes the Senate amendment,
with clarifications to simplify language.
i. Standards Relating to Access and Obstetrical and
Gynecological Services Under Managed Care
current law
No provision.
house bill
Managed care plans requiring or allowing enrollees to
designate their primary care provider must permit female
enrollees to designate a participating obstetrician-
gynecologist as their primary care provider. Enrollees who have
designated other providers as their primary care provider must
be permitted to obtain obstetric and gynecologic care from a
participating obstetrician-gynecologist without prior
authorization. The ordering of any other gynecologic care by
the participating obstetrician-gynecologist is considered prior
authorization for such care. Provision shall be effective for
contracts entered into, renewed, or extended on or after
January 1, 1998.
senate amendment
No provision.
conference agreement
The conference agreement does not include the House
provision.
j. Miscellaneous
current law
Requires MCOs to make services they provide accessible to
enrolled individuals to the same extent as such services are
made accessible to Medicaid-eligible individuals not enrolled
with the organization.
Requires MCO contracts to provide, in the case of
medically necessary services provided to an individual other
than through the MCO, that either the MCO or the state provides
for reimbursement with respect to those services if they were
immediately required due to an unforseen illness, injury, or
condition.
senate amendment
Requires a managed care entity to provide Medicaid
services to provide or arrange for all medically necessary
services specified in the contract. Requires entities to meet
standards, established by the Secretary, relating to the ratio
of enrollees to full-time-equivalent primary care providers.
Requires a managed care entity to refer enrollees
requiring specialty care to an available and accessible
specialist. Specialty care provided must be approved by the
entity, in accordance with quality assurance and utilization
review standards. Referral to a nonparticipating specialty
provider is required only if the plan doesn't have the
appropriate specialist available. Care provided to an enrollee
referred to a nonparticipating specialists may cost the
enrollee no more than care provided by a participating
specialist.
Requires managed care entities to make medical assistance
available to enrollees with reasonable promptness and medically
necessary care available and accessible 24 hours a day and 7
days a week. Provides reimbursement to individuals who receive
medical assistance other than through the managed care entity
or without prior approval, if the services are medically
necessary and immediately required because of an unforeseen
emergency.
Assistance to special needs children enrolled in a
managed care entity shall be provided either by a participating
experienced pediatric health care provider or, if appropriate
services are not available through the entity, from appropriate
outside providers. An individual referred to a provider or
allowed to seek outside treatment shall be deemed to have
obtained any prior authorization required by the entity.
conference agreement
With respect to access to services, primary care provider
ratios, referral to specialty care, timely delivery of
services, and treatment of special needs children, the
conference agreement does not include the Senate amendment.
Quality Assurance Standards
Section 3461 of the House bill and Section 5701 (new sections 1945,
1946, 1947, and 1950) and Section 5758 of Senate amendment
current law
The Medicaid statute includes a number of provisions
intended to improve quality of care in prepaid programs and to
protect beneficiaries. States are required to obtain an
independent assessment of the quality of services furnished by
contracting HMOs and pre-paid health plans (those offering a
non-comprehensive set of services under partial capitation),
using either a utilization and quality control peer review
organization (PRO) under contract to the Secretary or another
independent accrediting body.
States are prohibited from contracting with an
organization which is managed or controlled by, or has a
significant subcontractual relationship with, individuals or
entities potentially excludable from participating in Medicaid
or Medicare.
States are required to collect sufficient data on HMO
enrollees' encounters with physicians to identify the
physicians furnishing services to Medicaid beneficiaries. As a
proxy for quality, federal law requires that less than 75% of a
managed care organization's enrollment must be Medicaid and
Medicare beneficiaries. For some HMOs, the 75/25 rule has been
bypassed through state demonstration waivers or through
specific federal legislation. Some HMOs are federally
qualified--determined by the Secretary to meet standards set
forth in title XIII of the Public Health Service Act that
includes quality standards.
States' payments under contracts with MCOs must be
established on a actuarially sound basis. By regulation,
payment rates may not exceed what the state would have paid for
similar services for a beneficiary not enrolled in a MCO. This
upper payment limit is known as the fee-for-service equivalent.
States may pay less than the upper limit.
MCOs' physician incentive plans are required to meet the
requirements of section 1876(i)(8) and comparable requirements
under part C of title XVIII.
house bill
States entering into contracts with managed care entities
would be required to establish a quality assurance program,
consistent with standards that the Secretary would establish
and monitor, in consultation with states and that do not
preempt the application of stricter state standards. State
quality assurance programs are required to include (1)
standards for access to care that ensure (a) that covered
services are available within reasonable timeframes, (b)
adequate primary care, and (c) specialized service capacity,
including pediatric services for special needs children, (2)
procedures for monitoring and evaluating quality of care that
includes submitting quality assurance data using requirements
for entities with Medicare contracts or other requirements as
approved by the Secretary, and periodic assessment of quality
improvement strategies, and (3) provisions for financial
reporting.
Managed care entities would be required to submit to the
state any information the state may find necessary to monitor
care, maintain an internal quality assurance program consistent
with the state's quality assurance program described above, and
provide effective grievance procedures.
Health maintenance organizations with contracts in effect
under Section 1876 of the Social Security Act or MedicarePlus
organizations with contracts in effect under Part C of Title
XVIII of the Social Security Act could, at state option, be
deemed to be in compliance with the requirements of Section
1903(m) pertaining to managed care organizations.
The provision would allow states to deem those managed
care entities that have been accredited by an accrediting
organization to be in compliance with the requirements of
Section 1903(m) pertaining to managed care entities. The
accrediting organization must be: (1) private and nonprofit;
(2) in existence for the primary purpose of accrediting managed
organizations or health care providers; and (3) independent of
health care providers or associations of health care providers.
The Secretary is required to specify requirements for the
standards and process by whicha managed care entity may be
accredited by such an accrediting organization.
The provisions of this section apply to agreements
between state agencies and managed care entities entered into
or renewed on or after January 1, 1999.
senate amendment
Similar to House provision, except it requires primary
care case managers and managed care organizations to obtain an
annual external independent review of the quality outcomes and
timeliness of, and access to the services included in the
manager's or organization's contract with the state. The MCO's
review shall include: (1) a review of the MCO's medical care
and enrollee inpatient and ambulatory data for indications of
quality of care, inappropriate utilization, and treatment; (2)
notification of the entity and the state if inappropriate care,
treatment, or utilization is found; and (3) other activities
prescribed by the Secretary or the state. Requires the review
to use protocols, developed and validated by the Secretary,
that are at least as rigorous as those used by the National
Committee on Quality Assurance as of the date of enactment.
Requires the results of the reviews to be available to
participating providers, enrollees and potential enrollees of
the MCO. Requires the Secretary to review the external
independent reviews each year, and monitor the effectiveness of
the state's monitoring of managed care entities.
In addition, the Senate Amendment: requires Medicaid
managed care organizations and primary care case managers to
provide specified information to states; requires entities
entering into contracts with the state to submit to the state
information that demonstrates improvement in the care delivered
to members and requires MCOs to provide enrollees with an
annual report on non-health expenditures; and requires Medicaid
MCOs to maintain sufficient patient encounter data to identify
the health care provider furnishing services to Medicaid
beneficiaries and to submit such data to the state or Secretary
upon request.
Permits the Secretary and the State to establish an
incentive program to reward high quality managed care entities.
Provides federal financial participation (FFP) for 75% of
the amount expended with respect to costs incurred in a quarter
(as found necessary by the Secretary for the proper and
efficient administration of the state plan) as are attributable
to the performance of independent external reviews of managed
care entities.
Modifies the payment limit and actuarial soundness
standards to require that capitated payment amounts be set at
rates that have been determined to be sufficient and not
excessive. Such determination would be made by an independent
actuary meeting the standards of qualification and practice
established to the Actuarial Standards Board.
Requires MCO's physician incentive plans to meet the
requirements of section 1876(i)(8) and comparable requirements
under part C of title XVIII.
Requires specified aspects of an MCOs provider
participation agreements with rural health clinics, federally
qualified health centers, and clinics providing Title X
services to be no more restrictive than the MCOs agreements
with other participating providers. Payments to federally
qualified health centers and rural health clinics are required,
at the election of such center or clinic, to be made on a cost
basis.
Requires the Secretary, in consultation with specified
others, to conduct a study and develop guidelines regarding
managed care entities and individuals with special health care
needs. The Secretary shall report such guidelines to Congress
not later than 2 years after the date of enactment and make
recommendations for implementing legislation. The guidelines
shall relate to specified issues and will apply to primary care
case management and capitated risk sharing arrangements.
Requires other specified studies and reports:
(1) By January 1, 1998, the Secretary must report to the
Senate Finance and House Commerce Committees on the effect of
managed care entities on the delivery of and payment for the
services traditionally provided through FOHCs, RHCs, and DSH
hospitals that have traditionally served Medicaid
beneficiaries. The report must include specified information.
(2) The Secretary and Comptroller General must submit
annually a report on the rates paid for hospital services under
Medicaid managed care entities.
(3) Requires each state to report information on hospital
rates submitted to such state under section 1947(b)(2).
(4) Requires the Institute of Medicine to analyze whether
the quality assurance programs and accreditation standards
applicable to managed care entities operating in the private
sector or under contract under the Medicare program include
consideration of the accessibility and quality of health care
items and services such entities deliver to low-income
individuals.
conference agreement
With respect to quality improvement strategy the
conference agreement includes provisions that are similar in
the House bill and Senate amendment. States entering into
contracts with managed care entities would be required to
establish a quality assurance program, consistent with
standards that the Secretary would establish and monitor, in
consultation with states and that do not preempt the
application of stricter state standards. State quality
assurance programs are required to include (1) standards for
access to care that ensure (a) that covered services are
available within reasonable timeframes, (b) adequate primary
care, and (c) specialized service, (2) examination of other
aspects of care and service directly related to the improvement
of quality of care (including grievance procedures andmarketing
and information standards), and (3) procedures for monitoring and
evaluating quality of care that includes submitting quality assurance
data using requirements for entities with Medicare contracts or other
requirements as approved by the Secretary, and periodic assessment of
quality improvement strategies.
With respect to external independent review of managed
care activities, the conference agreement includes the Senate
amendment with modifications. The modifications would apply the
requirement for external review for external review to managed
care organizations only (not PCCMs) and require the Secretary,
in coordination with the National Governors' Association, to
contract with an independent quality review organization to
develop the protocols to be used in external independent
reviews. The conference agreement does not include the Senate
amendment with respect to the contents of the review,
Secretarial review and monitoring, information requirements,
annual report on non-health expenditures, and incentives for
high quality.
With respect to deemed compliance, the conference
agreement includes the Senate amendment with modifications. The
modifications would, at the option of a state, deem Medicaid
MCOs with contracts in effect under Section 1876 of the Social
Security Act of Medicare+Choice organizations with contracts in
effect under Part C of Title XVIII of the Social Security Act
that have had contracts in effect under section 1903(m) at
least during the previous 2-year period to be in compliance
with external independent review requirements, permit private
accreditation at the option of a state, and allow the Secretary
to waive the external independent review requirement for
organizations she determines have consistently maintained a
good record of quality assurance.
With respect to FFP for external quality review
organizations, the conference agreement includes the Senate
amendment with clarifications to simplify language.
With respect to payment limits and encounter data,
physician incentive plans, provider participation agreements,
and payments to federally qualified health centers and rural
health clinics, the conference agreement does not include the
Senate amendment.
With respect to studies and reports, the conference
agreement includes the Senate amendment with modifications
requiring only studies of (1) managed care entities and
individuals with special health care needs and (2) quality
assurance programs and accreditation standards applicable to
managed care entities operating in the private sector.
Solvency Standards
Section 3462 of House bill and Section 5701 (new section 1948) of
Senate amendment
Current Law
HMOs are required to make adequate provision against the
risk of insolvency that is satisfactory to the state and
assures that Medicaid beneficiaries are in no case held liable
for debt of the HMO in case of its insolvency.
House Bill
Effective for contracts entered into or renewed on or
after October 1, 1998, requires an HMO to either meet the same
solvency standards set by the states for private HMOs or be
licensed or certified by the state as a risk-bearing entity.
Such requirements would not apply to an organization if: (1)
the organization does not provide inpatient and physician
services; (2) the organization is a public entity; (3) the
organization's solvency is guaranteed by the state; or (4) the
organization is a federally qualified health center.
Such requirements shall not apply to fully capitated HMOs
under contract of the date of enactment of this Act until 3
years after the date of enactment of this Act.
Senate Amendment
The Secretary would be required to establish standards
under which MCOs would make adequate provision against
insolvency. Requires the Secretary to issue guidelines
concerning solvency standards for risk contracting entities and
their subcontractors.
Requires Medicaid MCOs to report to the state such
financial information as the state may require to demonstrate
the MCO can bear risk and that it doesn't place providers at
risk for services they don't provide. The Secretary and the
state have the right to audit and inspect the MCO's books
relating to financial information. Each MCO shall furnish the
state with an audited financial statement of the organization's
net earnings, consistent with generally accepted accounting
principles.
Conference Agreement
The conference agreement includes the House provision,
effective for contracts entered into or renewed on or after
October 1, 1998.
Additional Fraud and Abuse Protections in Managed Care
Section 3464 in House bill and Section 5701 (new sections 1948 and
1949) of Senate amendment
Current Law
a. Prohibiting Affiliations With Individuals Debarred by
Federal Agencies
No provision.
b. Protection Against Marketing Abuse
No provision.
c. Application of State Conflict-of-Interest Safeguards
Medicaid state andlocal officers, or employees, former
officers or employees, and partners of former officers or employees are
prohibited from committing any act that is prohibited by Section 207 or
208 of title 18 of the United States Code.
d. Sanctions for Noncompliance by Managed Care Entities
The Secretary may carry out specific remedies, including
civil money penalties and the suspension of enrollment of
individuals and the payment for services provided to them, in
the event an MCO: (1) fails to substantially provide medically
necessary items and services required to be provided, and if
the failure adversely affected (or had the substantial
likelihood of adversely affecting) the individual; (2) imposed
premiums in excess of premiums permitted; (3) discriminated
among individuals on the basis of their health status or
requirements for health care service; (4) misrepresented or
falsified information that it furnished to the Secretary or
others; or (5) failed to comply with rules regarding physician
incentive participation.
e. Limitation on Availability of FFP for Use of Enrollment
Brokers
No provision.
f. Disclosure of Ownership and Related Information
Section 1124 of the Social Security Act requires that
entities participating in Medicare, Medicaid, and the Maternal
and Child Health Block Grant programs provide certain
information regarding the identity of each person with an
ownership or control interest in the entity, or in any
subcontractor in which the entity has a direct or indirect 5%
or more ownership interest.
g. Disclosure of Transaction Information
Each non-qualified HMO must report to the state and upon
request to the Secretary and selected others a description of
transactions between the organization and a party of interest
(as defined in section 1318(b) of the Social Security Act),
including: (1) any sale or exchange, or leasing of any property
between the organization and such party; (2) any furnishing for
consideration of goods, services, and facilities (but generally
not including employees' salaries or health services provided
to members); and (3) any lending of money or other extension of
credit.
House Bill
a. Prohibiting Affiliations With Individuals Debarred by
Federal Agencies
An HMO could not knowingly affiliate with a person (or an
affiliate of such person) debarred, suspended, or otherwise
excluded from participating in procurement activities under the
federal acquisition regulation, or from participating in
nonprocurement activities under regulations issued pursuant to
Executive Order 12549. Specifically, an HMO may not have such a
person as a director, officer, partner, or person with
beneficial ownership of more than 5% of the organization
equity. Further, an HMO may not have an employment, consulting,
or other agreement with such a person for items and services
related to the organization's contract with the state.
If a state found an HMO contractor to be out of
compliance with the above requirements, it could not continue
an existing agreement with such organization unless the
Secretary, in consultation with the Inspector General of the
Department, directs otherwise. The state could not renew or
otherwise extend the duration of an existing contract with such
organization unless the Secretary, in consultation with the
Inspector General of the Department, provided to the state and
to Congress compelling reasons for such renewal or extension.
b. Protection Against Marketing Abuse
Requires that a state, in consultation with a medical
care advisory committee, approve all marketing material an HMO
wishes to distribute, prior to distribution. HMOs would be
prohibited from: (1) distributing any marketing material
containing false or misleading information; (2) seeking to
influence enrollment in conjunction with the sale of any other
insurance; and (3) directly or indirectly conducting door-to-
door, telephonic, or other ``cold call'' marketing of
enrollment. Requires HMOs to distribute marketing information
to their entire service area. Before an individual is enrolled
in a plan, HMOs are required to comply with conditions the
Secretary would prescribe to ensure that they are provided with
accurate oral and written information sufficient to make an
informed enrollment decision. Prohibits the state from
contracting with an HMO found to have distributed false or
misleading marketing information.
c. Application of State Conflict-of-Interest Safeguards
Requires states to have conflict-of-interest safeguards
in effect relating to state officers and employees having
responsibilities over contracts with managed care
organizations. Such safeguards must be at least as effective as
the federal safeguards provided under Section 27 of the Office
of Federal Procurement Policy Act.
d. Sanctions for Noncompliance by Managed Care Entities
No provision.
e. Limitation on Availability of FFP for Use of Enrollment
Brokers
Federal financial participation (FFP) would be available
for expenditures for the use of an enrollment broker in
marketing HMOs and other managed care entities to eligible
individuals, on the condition that the broker is independent of
any plan or provider in the state, and that no person who is an
owner, employee, consultant, or has a contract with the broker
has any financial relationship with participating managed care
entities or providers, or has been excluded from participating
in Medicaid or Medicare. This provision would be effective
January 1, 1998.
f. Disclosure of Ownership and Related Information
No provision.
g. Disclosure of Transaction Information
No provision.
Senate Amendment
a. Prohibiting Affiliations With Individuals Debarred by
Federal Agencies
Identical to House provision except would apply
protection against marketing abuse to managed care entities.
b. Protection Against Marketing Abuse
Identical to House provision except would apply
protection against marketing abuse to managed care entities
including PCCM.
c. Application of State Conflict-of-Interest Safeguards
Identical to House provision.
d. Sanctions for Noncompliance by Managed Care Entities
Requires states to establish intermediate sanctions
(other than the termination of a contract with a managed care
entity), including civil money penalties, the appointment of
temporary management, the suspension of enrollment of
individuals and the payment for services provided to them, and
permitting enrollees to terminate enrollment without cause, in
the event an MCO or primary care case manager contracting with
the state: (1) fails to substantially provide medically
necessary items and services required to be provided, and if
the failure adversely affected (or had the substantial
likelihood of adversely affecting) the individual; (2) imposed
premiums in excess of premiums permitted; (3) discriminated
among individuals on the basis of their health status or
requirements for health care service; (4) misrepresented or
falsified information that it furnished to the Secretary or
others; or (5) failed to comply with rules regarding physician
incentive participation. The Secretary could also to apply the
sanctions described above and could deny payments to states for
persons enrolled in plans.
The term ``medically necessary'' may not be construed as
requiring an abortion be performed by an individual, except if
necessary to save the life of the mother or if a pregnancy is
the result of an act of rape or incest.
Applies specified sanctions against chronically
substandard managed care entities.
Allows states to terminate contracts with managed care
entities failing to meet the requirements described above.
Establishes due process for managed care entities prior
to the termination of a contract or the imposition of
sanctions.
e. Limitation on Availability of FFP for Use of Enrollment
Brokers
Identical to House provision.
f. Disclosure of Ownership and Related Information
Requires each Medicaid MCO to provide for disclosure of
information in accordance with section 1124.
g. Disclosure of Transaction Information
Similar to current law except applies to Medicaid MCOs
that are not qualified HMOs.
conference agreement
With respect to prohibiting affiliations of debarred
individuals and marketing protection, the conference agreement
includes the House provision.
With respect to conflict of interest safeguards and
limitation on availability of FFP for use of enrollment
brokers, the conference agreement includes provisions that are
identical in the House bill and Senate amendment. Provisions on
FFP for enrollment brokers would apply to amounts expended on
or after October 1, 1997.
With respect to intermediate sanctions for noncompliance,
the conference agreement provides the states with the tools
they need to ensure that beneficiaries are enrolled in quality
managed care plans and that they will receive the services
provided for under contract. This section requires, as a
condition of state entry into or renewal of a contract under
Section 1903(m), that a state establishes intermediate
sanctions which it may impose on an entity which fails to
provide an item or service under its contract with the state.
This section is intended to ensure that a state may not impose
a sanction on any plan that does not provide abortion services
if the plan is not contracted to provide that service, whether
or not that service is required to be provided under law.
With respect to sanctions for chronically substandard
managed care entities, authority to terminate contracts, and
due process for managed care entities prior to the termination
of a contract or the imposition of sanctions, the conference
agreement will include the Senate amendment with conforming
amendments, effective for contracts entered into or renewed on
or after April 1, 1998.
With respect to disclosure of ownership and related
information and disclosure of transaction information, the
conference agreement does not include the Senate amendment.
Improved Administration
Section 3404 and 3402 of House bill and Section 5701 (new section 1948)
and 5703 of Senate amendment
a. Change in Threshold Amount for Contracts Requiring
Secretary's Prior Approval
current law
All state contracts with a managed care organization must
receive prior approval from the Secretary if expenditures are
expected to be over $100,000.
house bill
For contracts entered into or renewed on or after the
date of enactment, raises the managed care contract expenditure
level requiring prior approval from the Secretary of Health and
Human Services to $1,000,000, effective 1998. In future years,
indexes the amount for inflation according to the percentage
increase in the consumer price index for all urban consumers
(CPI-U) over the previous year.
senate amendment
Similar provision except does not index the amount for
inflation in future years.
conference agreement
The conference agreement includes House provision,
effective on date of enactment.
b. Permitting same copayments in HMOs as in fee-for-service
current law
Enrollment fees, coinsurance, or other cost-sharing
charges may not be imposed on certain Medicaid recipients for
services furnished by health maintenance organizations.
house bill
Eliminates the prohibition on cost sharing for services
furnished by health maintenance organizations. Applies to cost-
sharing for items and services furnished on and after the date
of enactment.
senate amendment
Similar provision.
conference agreement
The conference agreement includes the Senate amendment.
c. Timeliness of payment
current law
No provision.
house bill
No provision.
senate amendment
Requires managed care organizations to pay affiliated
providers in a timely manner for items and services provided to
Medicaid beneficiaries.
conference agreement
The conference agreement includes the Senate amendment.
6-Month Guaranteed Eligibility for All Individuals Enrolled in Managed
Care
Section 5701 (new section 1941) of the Senate amendment
current law
States may also guarantee eligibility for up to 6 months
for persons enrolled in federally qualified HMOs.
house bill
No provision.
senate amendment
Would allow states to establish a minimum enrollment
period of not more than 6 months (states may extend such period
up to 12 months if extension is done uniformly for all
individuals). Deems individuals who lose Medicaid eligibility
prior to the end of the minimum enrollment period eligible to
receive benefits through the entity until the end of the
enrollment period.
conference agreement
The conference agreement includes the Senate amendment
modified to allow states to guarantee eligibility for up to 6
months for persons enrolled with a Medicaid managed care
organization (as defined in section 1903(m)(1)(A)), with a
primary care case manager (as defined in section 1905(t)), or
by or through a case manager. Provision shall take effect on
October 1, 1997.
Effective Dates (Section 5701 (new section 1950) of
Senate amendment)
house bill
No provision.
senate amendment
Except as otherwise provided, amendments take effect on
the date of enactment and apply to contracts entered into or
renewed on or after October 1, 1997.
Makes allowances for States with section 1915 or section
1115 Medicaid waivers either approved or in effect.
conference agreement
The conference agreement includes the Senate amendment
with modifications.
Chapter 2--Flexibility in Payment of Providers
Flexibility in Payment Methods for Hospital, Nursing Facility, ICF/MR,
and Home Health Services
Section 3411 of House bill and Section 5711 of Senate amendment
Current Law
Under so-called Boren amendments, states are required to
pay hospitals, nursing facilities, and intermediate care
facilities for the mentally retarded (ICFs/MR) rates that are
``reasonable and adequate'' to cover the costs which must be
incurred by ``efficiently and economically operated
facilities.'' A number of courts found that state systems
failed to meet the test of ``reasonableness'' and some states
have had to increase payments to these providers.
house bill
Repeals the Boren amendments and establishes a public
notice process for setting payment rates for hospitals, nursing
facilities, and ICFs/MR. In the case of hospitals, rates would
have to take into account the situation of hospitals that serve
a disproportionate number of low-income patients with special
needs. For hospitals and nursing facilities, each state would
have to assure that the average level of payments furnished
during the 18-month period beginning October 1, 1997, is not
less than the average level of payments that would be made for
such services based on rates in effect as of May 1, 1997.
senate amendment
Repeals the Boren amendments and establishes a public
notice process for rates and their underlying methodologies,
including a description of how such methodologies will affect
access to services, quality of services, and safety of
beneficiaries. The Secretary would be required to study the
effects of the rate-setting methods used by states and submit a
report with recommendations not later than 4 years after
enactment.
conference agreement
Repeals the Boren amendments and establishes a public
process under which proposed rates, methodologies underlying
the rates and the justifications for such rates are published
and subject to public review and comment, and final rates are
published with underlying methodologies and justifications.
Requires the Secretary to study the effects of states' rate-
setting methods on access to and quality of services and submit
a report with recommendations not later than 4 years after
enactment.
Effective upon enactment; applies to payments for
services furnished on or after October 1, 1997.
Payment for Center and Clinic Services
Section 3412 of House bill and Section 1946(d) of Senate amendment
Current law
State Medicaid programs are required to cover ambulatory
services that are furnished by federally qualified health
centers (FQHCs) and rural health clinics (RHCs). Medicaid
payments for ambulatory services that are provided by FQHCs or
RHCs must be equal to 100% of the facilities' reasonable costs
for providing the services. If an FQHC enters into a contract
with a health maintenance organization (HMO) that contracts
with a state Medicaid program, the HMO must pay the FQHC 100%
of reasonable costs and the state's capitation payment to the
HMO must reflect the 100% rate that is due to the FQHC.
The law defines FQHC as a center that receives, or meets
the requirements to receive, a certain grant under the Public
Health Service Act. In addition, an entity is an FQHC if (1)
based on the recommendation of the Health Resources and
Services Administration within the Public Health Service, the
Secretary determines that the entity meets the requirements for
receiving such a grant or (2) the entity was treated by the
Secretary as a comprehensive FQHC as of January 1, 1990. The
definition includes a program or facility operated by an Indian
tribe, a tribal organization, or by an urban Indian
organization.
house bill
States would be required to continue to pay 100% of
reasonable costs for services furnished by FQHCs and RHCs
during fiscal years 1998 and 1999, but could reduce rates in
later years. States are required to pay FQHCs and RHCs at least
95% of costs for services furnished during FY2000, 90% for
FY2001, and 85% for FY2002.
To ease the transition from cost-based payment rates, the
provision specifies two special payment rules that would be
applicable during fiscal years 1998-2002. In the case of a
contract between an FQHC or RHC and an HMO, the HMO would have
to pay the FQHC or RHC at least as much as it would pay any
other provider for similar services. States would be required
to make supplemental payments to the FQHCs and RHCs. Such
payments would be equal to the difference between the
contracted amount and the cost-based amount.
Modifies the definition of FQHC to allow states
flexibility in coverage. With respect to an entity that the
Secretary determined met the requirements for a grant, and the
entity was owned, controlled, or operated by another provider,
the state would have the option of whether to treat the entity
as an FQHC or not.
The Comptroller General would be required, not later than
February 1, 2001, to report on the impact of these amendments
on access to health care for Medicaid beneficiaries and the
uninsured, and on the ability of FQHCs and RHCs to become
integrated in a managed care system.
The provision would apply to services furnished on and
after the date of enactment.
Senate Amendment
Requires a Medicaid managed care organization that has a
contract with an FQHC or RHC to pay the center on a basic that
was comparable to the basis on which other providers were paid.
In addition, the provision would require that, at the election
of the center, a managed care organization pay 100% of
reasonable costs for services furnished under a contract with
an FQHC or RHC.
Effective October 1, 1997.
Conference Agreement
The conference agreement includes the House bill with
amendments. The conference agreement would phase out the
requirement that states pay 100% of costs to FQHCs and RHCs.
Under the phase-out schedule, states could pay 95% of
reasonable costs for services furnished during FY2000, 90% for
2001, 85% for 2002, and 70% for 2003.
The conference agreement includes the House bill's
transitional provisions regarding states' supplemental payments
to FQHCs and RHCs, and HMO payments to FQHCs or RHCs under
contracts with the HMO.
The conferees recognize the important contributions to
the health of many low-income individuals made by these
facilities. States are encouraged to work with the FQHCs and
RHCs in making the transition to the new challenges and
opportunities presented in Medicaid reform.
With respect to an entity which, based on the
recommendation of the Health Resources and Services
Administration is determined to meet the requirements of
receiving a grant, the conference agreement amends the
definition to mean an entity that is determined to meet the
requirements of receiving a grant including requirements of the
secretary that an entity may not be owned, controlled, or
operated by another entity.
Elimination of Obstetrical and Pediatric Payment Rate Requirements
Section 5752 of the Senate amendment
Current Law
States are required to assure adequate payment levels for
obstetrical and pediatric services and provide annual reports
on their payment rates for such services.
House Bill
No provision.
Senate Amendment
Repeals the current law provision effective with services
furnished on or after October 1, 1997.
Conference Agreement
The conference agreement includes the Senate amendment.
Medicaid Payment Rates for Certain Medicare Cost-Sharing
Section 5712 of Senate amendment
Current Law
State Medicaid programs are required to pay Medicare
cost-sharing charges for individuals who are beneficiaries
under both Medicaid and Medicare, (dual eligibles) and for
qualified Medicare beneficiaries (QMBs). QMBs are individuals
who have incomes not over 100% of the poverty level and who
meet specified resources standards.) The amount of required
payment has been the subject of some controversy.
State Medicaid programs frequently have lower payment
rates for services than the rates that would be paid under
Medicare. Program guidelines permit states to pay either (1)
the full Medicare deductible and coinsurance amounts or (2)
cost-sharing charges only to the extent that the Medicare
provider has not received the full Medicaid rate for an item or
service. Some courts have forced state Medicaid programs to
reimburse Medicare providers to the full Medicare allowable
rates for services provided to QMBs and dually eligible
individuals.
House Bill
No provision.
Senate Amendment
Clarifies that state Medicaid programs may limit Medicare
cost-sharing to amounts that, with the Medicare payment, do not
exceed what the state's Medicaid program would have paid for
such service to a recipient who is not a QMB. Specifies that
the Medicare payment plus the state's Medicaid payment will be
considered payment in full and the QMB will not be liable for
payment to a provideror managed care entity. Additionally,
provides that any sanctions for excess charges that may be imposed on a
provider or managed care entity under Medicare may be imposed for
making excess charges under Medicaid.
Applies to items and services furnished on or after the
date of enactment. In the case of payment that is subject to a
law suit pending as of the date of enactment, or initiated
after the date of enactment, applies to items and services
furnished before the date of enactment.
conference agreement
The conference agreement includes the Senate amendment.
Treatment of Veterans Pensions under Medicaid
Section 5766 of Senate amendment
current law
No provision.
house bill
No provision.
senate amendment
Specifies that in the case of a Medicaid-eligible
resident in a state veterans home to which the Secretary of
Veterans Affairs makes payments for nursing home care, if the
veteran has no spouse or child, and receives a veteran's
pension of more than $90 per month, any pension payment
(including any payment due to the need for aid and attendance,
or for unreimbursed medical expenses) that is over $90 per
month will be counted as income to be applied to the cost of
nursing home care. These provisions will also apply to a
Medicaid-eligible surviving spouse of a veteran.
Effective October 1, 1997.
conference agreement
The conference agreement includes the Senate amendment.
3--FEDERAL PAYMENTS TO STATES
Chapter 3--Federal Payments to States
Disproportionate Share Payments
Section 3471 of House Bill and Subchapter C of Senate Amendment
current law
(a) Direct Payment by State. States are required to make
payment adjustments to the rates of certain hospitals that
treat large numbers of low income and Medicaid patients.
The law sets minimum standards by which a hospital may
qualify as a disproportionate share (DSH) hospital, and minimum
payments to be made to those hospitals. State are generally
free to exceed federal minimums in both designation and
payments up to certain ceilings.
(b) State DSH allocations. Each year states are
designated as either ``high'' DSH states or ``low'' DSH states
based on the percentage of total medical assistance payments
for DSH adjustments in the prior year. States making DSH
payments in excess of 12% of medical assistance are designated
``high'' DSH, while those paying less than 12% of medical
assistance for DSH are designated as low DSH. Total
disproportionate share payments to each state are limited to a
published allotment amount that can be no more than 12% of
medical assistance payments in states designated as ``low'' DSH
states, and in states designated as ``high'' DSH states the
amount of payments in 1992. A hospital may not be designated as
a DSH hospital by a state unless it serves a minimum of 1%
Medicaid clients among its caseload.
(c) Transition Rule. Under current law, DSH payments to
inpatient general hospitals are limited to no more than the
costs of providing inpatient and outpatient services to
Medicaid and uninsured patients, less payments received from
Medicaid and uninsured patients. This cap, known as the
hospital-specific or facility-specific DSH cap, was phased-in
for certain public hospitals so that during state fiscal years
beginning before January 1995, those hospitals could receive
200% of the above costs. After that, all hospitals would be
limited to no more than 100% of unreimbursed costs.
(d) Limitations on Payments to IMDs. No provision.
(e) Effective Date. no provision.
(f) DSH Payments for Certain Children's and Teaching
Hospitals. Under current law, states have a great deal of
flexibility in defining hospitals qualifying as DSH hospitals
and setting payment adjustments for those hospitals within
broad federal guidelines. DSH hospitals must include at least
all hospitals meeting minimum criteria and may not include
hospitals that do not have a Medicaid utilization rate of at
least 1%. The DSH payment formulas must at least meet minimum
criteria and DSH payments cannot exceed a hospital-specific cap
based on the unreimbursed costs of providing hospital services
to Medicaid and uninsured patients.
House Bill
(a) Direct Payment by State. Requires states to pay for
services furnished by a hospital on behalf of individuals
enrolled in Medicaid managed care entities directly to
hospitals rather than to the managed care entities and not to
include such payments in the capitation rate.
(b) State DSH allocations. Establishes additional caps on
the state DSH allotments for fiscal years 1998-2002. The state
DSH allotments for states in which 1995 DSH payments were less
than 1% of total medical assistance spending would be frozen at
the level of payments for DSH adjustments in those states in
1995. For states classified as ``high'' DSH states (those with
DSH payments in excess of 12% of medical assistance payments)
for fiscal year 1997, DSH allotments would be reduced from 1995
payment levels. The reduction percentage for ``high'' DSH
states would be equal to 2% in 1998, 5% in 1999, 20% in 2000,
30% in 2001, and 40% in 2002. All other states' DSH payments
would be equal to 1995 DSH payments levels reduced by one-half
of the reduction percentages for ``high'' DSH states. The
provisions of this section would become effective beginning
with fiscal year 1998.
(c) Transition Rule. Increases the hospital-specific cap
on DSH payments for the State of California to 175% of the cost
of care provided to Medicaid recipients and individuals who
have no health insurance or other third-party coverage for
services during the year (net of non-disproportionate-share
Medicaid payments and other payments by uninsured individuals)
for the period October 1, 1997, to October 1, 1999.
(d) Limitations on Payments to IMDs. No provision.
(e) Effective Date. Fiscal year 1998.
(f) DSH Payments for Certain Children's and Teaching
Hospitals. No provision.
Senate Amendment
(a) Direct Payment by State. No Provision.
(b) State DSH allocations. Establishes additional caps on
state DSH allotments for ``high'' and non-high DSH states
beginning in fiscal year 1998. ``High'' DSH states would be
defined as those designated as such for 1997 using the
preliminary DSH allotment as published in the Federal Register
on January 31, 1997.
In 1998, DSH allotments for state that are not ``high''
DSH states would be equal to actual 1995 DSH payment and for
States that are ``high'' DSH states, would be the sum of 1995
DSH payments to general hospitals and 70% of DSH payments to
mental hospitals.
Except as provided below, allotments for non-high DSH
states for 1999 through 2002 would be equal to 1995 payments
reduced by the following percentages: 2% in 1999, 5% in 2000,
10% in 2001, and 15% in 2002. Allotments for ``high'' DSH
states for those years would be reduced in the following
manner. In 1999, ``high'' DSH states would be allotted the sum
of 1995 DSH payments to inpatient general hospitals plus 50% of
their 1995 DSH payments to mental hospitals and then the sum
would be reduced by 8%, in 2000, the sum of their 1995 DSH
payments to inpatient general hospitals plus 20% of their 1995
DSH payments to mental hospitals and then the sum would be
reduced by 15%. In 2001 and 2002, ``high'' DSH states would be
allotted an amount equal to 1995 DSH payments to inpatient
general hospitals reduced by 20%.
For states with 1995 DSH spending of more than 12% of
total medical assistance payments and which reported no DSH
payments to inpatient mental health facilities in that year,
allotments for the years 1998-2002 would be equal to the
average of reported DSH payments in 1995 and 1996.
For states with 1995 DSH spending of less than 3% of
total medical assistance payments, allotments for years 1998-
2002 would be equal to their 1995 spending amounts.
For states with 1995 DSH spending of over 3% of total
medical assistance payments, allotments for 1998-2002 would be
equal to the greater of the formula as described above or 50%
of 1995 DSH payments.
Allotments for all states for 2003 and thereafter would
be equal to the allotment for the preceding year, increased by
the estimated percentage change in the consumer price index for
medical services (as determined by the Bureau of Labor
Statistics.)
(c) Transition Rule. No provision.
(d) Limitations on Payments to IMDs.--
Payments to institutions for mental diseases and other
mental health facilities would not be allowed to exceed total
DSH spending in 1995 for such facilities or the applicable
percentage multiplied by 1995 DSH payments to such facilities.
The applicable percentage is the lesser of the percentage of
total 1995 DSH payments that were paid to IMDs or other mental
health facilities or 50% in 2001, 40% in 2002, or 33% in 2003.
(e) Effective Date. October 1, 1997, without regard to
whether or not final regulations to carry out such provisions
have been promulgated.
(f) DSH Payments for Certain Children's and Teaching
Hospitals. Requires states to provide assurances to the
Secretary that the state has developed a methdology for
prioritizing DSH payments to hospitals, including
children'shospitals, that is based on the proportion of low-income and
medicaid patients served by such hospitals. Such assurance would be
required to include a definition of high volume disproportionate share
hospitals and a detailed description of the methodology to be used to
provide DSH payments to such hospitals. The state would also be
required to provide a report annually to the secretary that describes
the payments to such hospitals.
Conference Agreement
(a) Direct Payment by State. The conference agreement
includes the House provision with the following modification.
The provision would not apply to DSH payments made under
payment arrangements in effect on July 1, 1997.
(b) State DSH allocations. The conference agreement
establishes additional caps on the state DSH allotments for
fiscal years beginning in 1998. The agreement sets the caps for
1998 to 2002 and establishes specific amounts that states would
receive in each of these years. Thereafter, the DSH allotments
for a state would be equal to the allotment for the proceeding
fiscal year increased by the percentage change in the medical
care component of the consumer price index for all urban
consumers as estimated by the Secretary for the previous fiscal
year subject to a ceiling of 12% of the total amount of
expenditures under the State plan for medical assistance during
the fiscal year.
(c) Transition Rule. The conference agreement includes
the House provision.
(d) Limitations on Payments to IMDs. The conference
agreement includes the Senate Amendment with further
specifications that 1995 DSH payments and DSH payments to IMDs
are defined as those reported by the state on HCFA Form 64 no
later than January 1, 1997.
(e) Effective Date. Fiscal Year 1998.
(f) DSH Payments for Certain Children's and Teaching
Hospitals. The conference agreement includes the Senate
amendment with the modification that states must submit to the
Secretary a description of the methodology to be used by the
State for to identify and to make payments to disproportionate
share hospitals, including children's hospitals, on the basis
of the proportion of low-income and medicaid patients services
by such hospitals. The state shall make an annual report to the
Secretary describing the DSH payments made.
Treatment of State Taxes Imposed on Certain Hospitals
Section 3413 of House bill and Section 5765 and 5768 of Senate
Amendment
Current Law
States may not claim for federal matching payments state
spending generated from health care taxes that are not broad
based. Health care provider-specific taxes are not considered
broad-based and, thus, may not be used to claim federal
matching payments for Medicaid spending.
House Bill
Amends the definition of the term ``broad-based health
care related tax'' to specify that health related taxes that
exclude hospitals described in section 501(c)(3) of the
Internal Revenue code that are exempt from taxation under
section 501(a) of the code, and do not accept Medicaid or
Medicare reimbursement would qualify for federal matching
payments if used as state Medicaid spending. The provision also
prohibits states from claiming federal matching payments for
state spending generated from health care taxes applied to
these facilities.
The provision applies to taxes imposed before, on, or
after the date of enactment.
Senate Amendment
Identical provision, additionally, deems taxes, fees, or
assessments that were collected by the state of New York from a
health care provider before June 1, 1997, and for which a
waiver has been applied for, to be permissible health care
related taxes in compliance with the requirements of Medicaid
law.
Conference Agreement
The conference agreement includes the House bill and the
Senate amendment.
Additional Funding for State Emergency Health Services Furnished to
Undocumented Aliens
Section 3472 of House bill
Current Law
The Medicaid program requires states to cover the cost of
care and services necessary for the treatment of an emergency
medical condition for undocumented aliens as long as those
individuals would otherwise meet the eligibility requirements
for the state Medicaid program.
House Bill
Provides for additional funding for emergency health
services furnished to undocumented aliens for 1998 through
2001. For each of the four fiscal years, $25 million would be
available to distribute among the 12 states (including the
District of Columbia) having the highest number of undocumented
aliens. In a fiscal year, each state's portion of total funds
available would be based on its share of totalundocumented
aliens in all of the eligible states. From the allotments, the
Secretary will pay to each state amounts the state demonstrates it paid
for services furnished to undocumented aliens. Any amount of a state's
allotment not paid out would be available for the following fiscal
year. The number of undocumented aliens in a state would be based on
estimates prepared by the Statistics Division of the Immigration and
Naturalization Services as of October 1992.
senate amendment
No provision.
Conference agreement
The conference agreement includes the House bill.
Elimination of Waste, Fraud, and Abuse
Section 5756 of Senate amendment
Current Law
(a) Ban on Spending for Nonhealth Related Items. No
provision.
(b) Disclosure of Information and Surety Bond Requirement
for Suppliers of Durable Medical Equipment. Under Section 1124
of the Social Security Act, an entity (other than an individual
practitioner or group of practitioners) that furnishes, or
arranges for furnishing Medicaid items or services is required
to supply full and complete information as to the identity of
each person with an ownership or control interest in the
entity.
(c) Surety Bond Requirement for Home Health Agencies. No
provision.
(d) Conflict of Interest Safeguards. Medicaid state and
local officers, or employees, former officers or employees, and
partners of former officers or employees are prohibited from
committing any act that is prohibited by Section 207 or 208 of
title 18 of the United States Code.
(e) Authority to Refuse to Enter Into Medicaid Agreement
with Individuals or Entities Convicted of Felonies. Generally,
Medicaid beneficiaries are free to obtain services from any
providers that undertake to provide them.
(f) Monitoring Payment for Dual Eligibles. No provision.
(g) Beneficiary and Program Protection Against Waste,
Fraud, and Abuse. No provision.
House BIll
(a) Ban of Spending for Nonhealth Related Items. No
provision.
(b) Disclosure of Information and Surety Bond Requirement
for Suppliers of Durable Medicaid Equipment. No provision.
(c) Surety Bond Requirement for Home Health Agencies. No
provision.
(d) Conflict of Interest Safeguards. No provision.
(e) Authority to Refuse to Enter Into Medicaid Agreement
with Individuals or Entities Convicted of Felonies. No
provision.
(f) Monitoring Payment for Dual Eligibles. No provision.
(g) Beneficiary and Program Protection Against Waste,
Fraud, and Abuse. No provision.
Senate Amendment
(a) Ban of Spending for Nonhealth Related Items.
Specifies that federal Medicaid payment would not be made for
any amount spent for roads, bridges, stadiums, or any other
item or service not covered under a Medicaid state plan.
(b) Disclosure of Information and Surety Bond Requirement
for Suppliers of Durable Medical Equipment. Adds the
requirement that states would be prohibited from issuing or
renewing provider status for suppliers of durable medical
equipment unless, on a continuing bases, the supplier provided
the state Medicaid agency with a surety bond in an amount not
less than $50,000.
(c) Surety Bond Requirement for Home Health Agencies.
Requires home health agencies to provide state Medicaid
agencies with surety bonds in amounts to less than $50,000.
(d) Conflict of Interest Safeguards. Amends the officer
and employee provisions to include independent contractors and
require that if they are responsible for obtaining services
under a Medicaid state plan, that they will be subject to
safeguards against conflicts of interest that are as stringent
as the safeguards that apply under section 27 of the Office of
Federal Procurement Policy Act.
(e) Authority to Refuse to Enter Into Medicaid Agreement
with Individuals or Entities Convicted of Felonies. Clarifies
that a state is not required to have, as a Medicaid provider,
any person or entity convicted of a felony which the state
agency determines is inconsistent with the best interest of
Medicaid beneficiaries.
(f) Monitoring Payment for Dual Eligibles. Requires the
Administrator of the Health Care Financing Administration
(HCFA) to:
Develop mechanisms to monitor and prevent inappropriate
Medicaid payments for services furnished to individuals
eligible for both Medicare and Medicaid benefits;
Study the use of case management or care coordination to
improve care for individuals who are eligible for both
programs; and
Work with states to ensure better care coordination for
dual eligibles and recommend changes to Congress.
(g) Beneficiary and Program Protection Against Waste,
Fraud, and Abuse. Requires each state to provide programs to
ensure program integrity, protect and advocate on behalf of
individuals, and report data about beneficiary concerns,
complaints, and instances of beneficiary abuse, program waste,
or fraud by managed care plans. Each state's programs would
provide assistance to beneficiaries, with emphasis on the
families of special needs children and persons with
disabilities. Such assistance would include beneficiary
education on managed care plans. The state's programs would
collect and report data to the state and report to the state on
any systematic problems in the implementation of managed care
entities.
conference agreement
(a) Ban of Spending for Nonhealth Related Items.
The conference agreement includes the Senate amendment.
(b) Disclosure of Information and Surety Bond Requirement
for Suppliers of Durable Medical Equipment.
The conference agreement includes the Senate amendment.
(c) Surety Bond Requirement for Home Health Agencies.
The conference agreement includes the Senate amendment
modified to require a surety bond of not less than $50,000 or
such comparable surety bond as the Secretary may permit.
Applies to home health care services furnished on or
after January 1, 1998.
(d) Conflict of Interest Safeguards.
The conference agreement includes the Senate amendment
with technical modifications.
Effective January 1, 1998.
(e) Authority to Refuse to Enter Into Medicaid Agreement
with Individuals or Entities Convicted of Felonies.
The conference agreement includes the Senate amendment
with technical modifications.
(f) Monitoring Payment for Dual Eligibles.
The conference agreement includes only the first item of
the Senate amendment. That is, the conference agreement
includes the Senate provision amended to require only that the
HCFA Administrator monitor and prevent inappropriate payments.
(g) Beneficiary and Program Protection Against Waste,
Fraud, and Abuse.
The conference agreement requires each state to provide,
not later than 1 year after enactment, a mechanism to receive
reports from beneficiaries and others, and compile data
concerning alleged instances of waste, fraud, and abuse.
The conferees support efforts at all levels of government
to eliminate waste, fraud, and abuse in this program. States
are encouraged to develop innovative approaches in this area.
Increased FMAPs
Section 5761 of Senate amendment
current law
The federal share of a state's expenditures for Medicaid
items and services is called the federal medical assistance
percentage (FMAP). Each state's FMAP is determined annually
according to a statutory formula designed to pay a higher
matching percentage to states with lower per capita incomes
relative to the national average per capita income. The law
establishes a minimum FMAP of 50% and a maximum of 83%. For the
District of Columbia (treated as a state under Medicaid law)
and 11 states including Alaska, the FMAP is 50%. The FMAP does
not apply to a state's administrative expenditures; the federal
share of those is generally 50% for all states.
house bill
No provision.
senate amendment
Increases the FMAP for the District of Columbia to 60%
during fiscal years 1998-2000 and increases the FMAP for Alaska
to 59.8% during the same period.
conference agreement
For the District of Columbia, the FMAP is increased
permanently to 70% beginning in 1998. For the state of Alaska,
the FMAP is increased to 59.8% for fiscal years 1998, 1999, and
2000. The conference agreement specifies that the increased
FMAPs apply only to items and services furnished under Medicaid
or a state child health plan, payments made on a capitation or
other risk-basis, andpayments attributable to disproportionate
share hospital allotments for such fiscal years.
The conferees note the importance of establishing
equitable matching rates across the states. The current
methodology for calculating match rates, per capita income, is
a poor and inadequate measure of the states' needs and
abilities to participate in the Medicaid program. The conferees
note that the poverty guidelines for Alaska and Hawaii, for
example, are different than those for the rest of the nation
but there is no variation from the national calculation in the
FMAP. The increase in Alaska's FMAP demonstrates there is a
recognition that a more accurate measurement is needed in the
program. Conferees also note that comparable adjustments are
generally made for Alaska and Hawaii.
Increase in Payment Limitation for Territories
Section 5762 of Senate amendment
current law
Puerto Rico and each of the territories has a federal
Medicaid matching rate of 50%. Total annual Medicaid payments
to them are subject to statutory limits. Beginning with amounts
specified for each territory for FY1994, Medicaid limits
increase annually according to the percentage increase in the
medical care component of the consumer price index for all
urban consumers (CPI-U).
house bill
No provision.
senate amendment
For FY1998, for federal Medicaid payment limits would be
increased as follows: Puerto Rico, $30,000,000; Virgin Islands,
$750,000; Guam, $750,000; Northern Mariana Islands, $500,000;
and American Samoa, $500,000.
For FY1999 and thereafter, the Medicaid payment limit for
each territory would be the amount provided for the preceding
fiscal year increased by the percentage increase in the medical
care component of the CPI-U.
conference agreement
The conference agreement includes the Senate amendment.
Chapter 4--Eligibility
State Option of Continuous Eligibility for 12 Months; Clarification of
State Option To Cover Children
Section 3421 of House bill and Section 5732 of Senate amendment
current law
In general, Medicaid coverage can be provided only to
individuals who continue to meet all the requirements for
eligibility. For some individuals and families, income
fluctuates so that there are frequent interruptions in
eligibility. Medicaid law makes an exception to provide
continuous eligibility for pregnant women and infants
regardless of changes in income. The law specifies that a
pregnant recipient continues to be eligible for Medicaid until
60 days after the pregnancy ends. Further, a child born to a
woman receiving medical assistance remains eligible for medical
assistance for one year so long as the child is a member of the
woman's household and the woman remains (or would remain if
pregnant) eligible for medical assistance. The law requires
states to provide Medicaid coverage to children who are in
households with incomes not over 100% of the federal poverty
level, and who were born after September 30, 1983.
house bill
Permits states to provide a full continuous 12 months of
eligibility for children up to age 19 or an earlier age
specified by the state. Each state would also be permitted to
cover older children under age 19, at an age specified by the
state, in households with incomes not over 100% of poverty.
Applies to items and services furnished on or after
October 1, 1997.
senate amendment
Similar provision.
Applies to items and services furnished on or after
October 1, 1997.
conference agreement
The conference agreement includes the House provision.
Payment of Part B Premiums
Section 3422 of the House bill and Section 5544 of Senate amendment
current law
Medicare beneficiaries are liable for specific cost-
sharing charges, namely premiums, deductibles, and coinsurance.
State Medicaid programs are required topay Medicare cost-
sharing charges for certain low-income Medicare beneficiaries known as
qualified Medicare beneficiaries (QMBs). A QMB is an aged or disabled
person with income at or below the federal poverty line and resources
below $4,000 for an individual and $6,000 for a couple.
States are also required to pay Medicare Part B Premiums
for specified low-income Medicare beneficiaries (SLMBs) These
are persons who meet the QMB criteria, except that their income
is slightly over the QMB limit. The SLMB limit is 120% of
poverty.
The federal government and the states share in the
payment for QMB and SLMB benefits according to each state's
Medicaid matching formula known as the federal medical
assistance percentage (FMAP).
House Bill
Beginning in calendar year 1998, raises the poverty
threshold for mandatory Medicaid payment of Medicare Part B
premiums for Medicare beneficiaries from 120% of poverty to
135% of poverty.
For individuals who would be specified low-income
Medicare beneficiaries except that their incomes are between
135% of poverty and 175% of poverty, state Medicaid programs
would be required to cover that portion of the Medicare Part B
premium attributable to the transfer of certain home health
visits from Part A to Part B. The federal government would pay
100% of these costs.
Effective on date of enactment.
Senate Amendment
Requires the Secretary to establish a block grant program
to the states for the payment of Medicare Part B premiums for
persons meeting the SLMB definition, except that their income
is between 120% and 150% of the federal poverty level. See
discussion of ``Low Income Beneficiary Block Grant Program'' in
Medicare provisions.
Conference Agreement
The conference agreement includes the House provision
with amendments. State Medicaid programs would make payments
for Medicare Part B premiums for the additional low-income
Medicaid beneficiaries described in the provision (qualifying
individuals) only to the extent that premiums are payable for
months during the period beginning January 1998 and ending
December 2002.
The Secretary would be required to provide for
allocations to states based on the sum of (1) a state's number
of Medicare beneficiaries with incomes between 135% and 175% of
poverty and (2) twice the number of Medicare beneficiaries with
incomes between 120% and 135% of poverty, relative to the sum
for all eligible states. Total amounts available for
allocations are $200 million for FY 1998, $250 million for FY
1999, $300 million for FY 2000, $350 million for FY 2001, and
$400 million for FY 2002. The FMAP for each participating state
would be 100% up to the state's allocation. If a state exceeded
its allocation, the FMAP would be zero.
A state would permit all qualifying individuals to apply
for assistance during a calendar year and select qualifying
individuals in the order in which they apply, limiting the
number selected so that the state's allocation would not be
exceeded. An individual selected for assistance for a month
would be entitled to receive assistance for the remainder of
the year so long as the individual continued to be a qualifying
individual. However, an individual selected to receive
assistance at any time during a year would not be entitled to
continued assistance for any succeeding year. It is the
Conferees' expectation that States will budget the capped funds
received under this section to ensure payment for the full year
for qualifying individuals selected for, and therefore entitled
to, premium assistance.
State Option To Permit Workers with Disabilities To Buy Into Medicaid
Section 5731 of Senate amendment
Current Law
States must continue Medicaid coverage for ``qualified
severely impaired individuals under the age of 65.'' These are
disabled and blind individuals whose earnings reach or exceed
the SSI benefit standard. (The current law threshold for
earnings is $1,053 per month.) This special eligibility status
applies as long as the individual (1) continues to be blind or
have a disabling impairment; (2) except for earnings, continues
to meet all the other requirements for SSI eligibility; (3)
would be seriously inhibited from continuing or obtaining
employment if Medicaid eligibility were to end; and (4) has
earnings that are not sufficient to provide a reasonable
equivalent of benefits from SSI, state supplementary payments
(if provided), Medicaid, and publicly funded attendant care
that would have been available in the absence of those
earnings. To implement the fourth criterion, the Social
Security Administration compares the individual's gross
earnings to a ``threshold'' amount that represents average
expenditures for Medicaid benefits for disabled SSI cash
recipients in the individual's state of residence.
House Bill
No provision.
Senate Amendment
Provides states the option of allowing disabled SSI
beneficiaries with incomes up to 250% of poverty to ``buy
into'' Medicaid by paying a premium. Premium levels are on a
sliding scale, based on the individual's income as determined
by the State.
Effective on and after October 1, 1997.
conference Agreement
The conference agreement includes the Senate amendment.
Penalty for Fraudulent Eligibility
Section 3423 of House bill and Section 5755 of Senate amendment
current law
A person who knowingly and willfully disposes of assets,
including transfers to certain trusts, in order to obtain
Medicaid eligibility for nursing home care is liable for a
criminal fine and/or imprisonment, if the disposition of assets
results in a period of ineligibility for such Medicaid
benefits.
house bill
Specifies that a person who, for a fee, assists an
individual to dispose of assets in order to obtain Medicaid
eligibility for nursing home care, would be subject to criminal
liability if the individual disposes of assets and a period of
ineligibility is imposed against such individual.
Effective on date of enactment.
senate amendment
Identical provision.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment.
Treatment of Certain Settlement Payments
Section 3424 of House bill
current law
Under a recent class settlement, four manufacturers of
blood plasma products will pay $100,000 to each of 6,200
hemophilia patients who are infected with human
immunodeficiency virus (HIV). Some of the HIV-infected patients
are receiving or may apply for, Medicaid benefits. The amount
of the settlement would exceed the income and resource limits
for Medicaid eligibility.
House bill
Specifies that payments made from the specified
settlement shall not be considered income or resources in
determining Medicaid eligibility, or the amount of benefits
under Medicaid.
senate amendment
No provision.
conference agreement
The conference agreement includes the House provision
with technical modifications. Conferees do not consider this
provision to set precedent for future class settlements.
Programs of All-Inclusive Care for the Elderly (PACE)
Sections 3431-3434 of the House bill and Sections 5741-5743 of Senate
amendment
current law
OBRA 86 required the Secretary to grant waivers of
certain Medicare and Medicaid requirements to not more than 10
public or non-profit private community-based organizations to
provide health and long-term care services on a capitated basis
to frail elderly persons at risk of institutionalization. These
projects, known as the Programs of All Inclusive Care for the
Elderly, or PACE projects, were intended to determine whether
an earlier demonstration program, On Lok, serving frail elderly
persons, could be replicated across the country. OBRA 90
expanded the number of organizations eligible for waivers to
15.
house bill
Repeals current On Lok and PACE project demonstration
waiver authority and establishes PACE as a State option under
Medicaid. Persons enrolled in PACE would be eligible for
Medicaid and need not be eligible for Medicare. Enrollees would
receive Medicaid covered benefits solely through the PACE
program. PACE providers would offer comprehensive health care
services to eligible individuals in accordance with a PACE
program agreement and regulations. Through its PACE program
agreement, a state could limit the number of individuals who
could be enrolled in a PACE program. In general, PACE providers
would be public or private nonprofit entities, except for
entities (up to 10) participating in a demonstration to test
the operation of a PACE program by private, for-profit
entities.
Eligible individuals would be those persons who are 55
years of age or older; who require nursing facility level of
care that would be covered under a State's Medicaid program;
who reside in the service area of the PACE program; and whomeet
such other eligibility conditions as may be imposed under the PACE
program agreement.
Eligiblity determinations would be made in accordance
with the PACE program agreement, and for enrollees entitled to
Medicaid, would be made by the state agency, responsible for
administering PACE agreements. An eligible individual's health
status would have to be comparable to the health status of
persons who have participated in the PACE demonstration
waivers. Information on health status and related indicators
would be part of a uniform minimum data set collected by PACE
providers. Persons would be reevaluated annually to determine
if they continue to need nursing facility level of care, except
for those cases where the state determines that there is no
reasonable expectation of improvement or significant change in
an individual's condition during the period because of advanced
age, severity of chronic condition, or degree of impairment. A
person could continue to be considered a PACE eligible
individual, even though that person no longer requires nursing
facility level of care, if in the absence of continued coverage
under a PACE program the individual reasonably would be
expected to meet the requirements within the succeeding 6-month
period. Enrollment and disenrollment in a PACE program would be
done according to regulation and enrollees would be permitted
to voluntarily disenroll without cause at any time.
Under a PACE agreement, a provider would be required to
provide to eligible persons, regardless of source of payment
and directly or under contracts with other entities, at a
minimum, all items and services covered under Medicaid and
Medicare. Services would be provided without any limitation or
condition as to amount, duration, or scope and without
application of deductibles, copayments, coinsurance, or other
cost-sharing that would otherwise apply under Medicare or
Medicaid. Providers would also have to provide all additional
items and services specified in regulations, based on those
required under a PACE protocol. The PACE protocol would be
defined as that published by On Lok, Inc., as of April 14,
1995.
PACE providers would be required to provide enrollees
access to necessary covered items and services 24 hours per
day, every day of the year. They would have to provide services
through a comprehensive, multidisciplinary health and social
services delivery system which integrates acute and long-term
care services according to regulations. Providers would also
have to specify the covered items and services that would not
be provided directly by the entity, and to arrange for delivery
of these services through contracts meeting the requirements of
regulations.
PACE providers would be required to have in effect, at a
minimum, a written plan of quality assurance and improvement
and procedures implementing the plan as well as written
safeguards of the rights of enrolled participants (including a
patient bill of rights and procedures for grievances and
appeals), in accordance with regulations.
States would be required to make prospective monthly
capitation payments for each enrollee, in an amount specified
in the PACE agreement. The amount would be required to be less
than the amount that would have been made had the person not
been enrolled in PACE and would be adjusted to take into
account the comparative frailty of PACE enrollees and such
other factors as the Secretary determines to be appropriate.
Payments would be in addition to amounts received from Medicare
for the dually eligible individual.
The Secretary, in close cooperation with the State
administering agency, would be required to establish procedures
for entering into, extending, and terminating PACE agreements
with entities that meet Medicaid and Medicare statutory and
regulatory requirements. The Secretary could not enter into
more than 40 agreements (including those in effect as the
result of demonstration waivers) as of the date of enactment,
and 20 additional agreements for each succeeding anniversary
date (without regard to the actual number of agreements in
effect as of a previous anniversary date). This numeric
limitation would not apply to a PACE provider that is operating
under the for-profit demonstration or that subsequently
qualifies for PACE provider status.
A PACE agreement would designate the service area of the
program and could provide additional requirements for
individuals to qualify as eligible individuals. The Secretary
(in consultation with the State administering agency) could
exclude from designation an area that is already covered under
another PACE agreement, in order to avoid unnecessary
duplication of service and impairing the financial and service
viability of an existing program. The PACE agreement would be
effective for a year, but could be extended for additional
contract years in the absence of a notice to terminate and
would be subject to termination by the Secretary and the State
administering agency at any time for cause. PACE providers
would be required to meet all applicable state and local laws
and requirements and would have such additional terms and
conditions as the parties agree to, consistent with the law and
regulations.
Under an agreement, PACE providers would be required to
collect data; maintain and provide the Secretary and State
administering agency access to the records relating to the
program, including pertinent financial, medical and personnel
records; and make reports to the Secretary and the state that
are necessary to monitor the operation, cost, and effectiveness
of the PACE program. During the trial period of the first 3
years of operation, a PACE provider would be required to
provide additional data the Secretary specifies in order to
perform a comprehensive annual review of its operation. After
the trial period, the Secretary (in cooperation with the state)
would continue to conduct a review of the operation of PACE
providers as may be appropriate, taking into account the
performance level of a provider and compliance with
requirements of law and regulations.
Under regulations, the Secretary or state could terminate
an agreement for, among other reasons, significant deficiencies
in the quality of care, failure to comply substantially with
conditions for participation, or failure to develop and
successfully initiate within 30 days of notice a plan to
correct deficiencies.
If the Secretary determines (after consultation with a
state) that a provider is failing substantially to comply with
the requirements for participation, the Secretary and state
could take any or all of the following actions: (1) condition
the continuation of the PACE program agreement upon timely
execution of a corrective action plan; (2) withhold some or all
further payments until the deficiencies have been corrected;
(3) terminate the agreement. Under regulations, the Secretary
could provide for the application of intermediate sanctions for
certain deficiencies. Procedures for termination and sanctions
of PACE programs would be the same as those that apply to
managed care entities participating in Medicare.
An application for PACE provider program status would be
deemed approved unless the Secretary, within 90 days after the
date of submission, either denies the request in writing or
informs the applicant in writing that additional information is
needed. After the date the Secretary receives the additional
information, the application would be deemed approved unless
the Secretary, within 90 days, denies the request.
The Secretary would be required to issue interim and
final regulations to carry out Medicaid and Medicare statutory
provisions on PACE. In issuing regulations, the Secretary would
be required to incorporate the requirements applied to PACE
demonstration waiver programs under the PACE protocol, to the
extent they are consistent with this section. The Secretary (in
close consultation with states) could modify or waive
provisions of the PACE protocol in order to provide for
reasonable flexibility in adapting the PACE service delivery
model to the needs of particular organizations (such as those
in rural areas or those that may wish to use nonstaff
physicians) where flexibility is not inconsistent with and
would not impair the essential elements, objectives, and
requirements of the PACE program. The Secretary could also
apply to PACE programs and providers Medicare and Medicaid
requirements that apply to managed care plans, taking into
account differences in populations served and not including
requirements that restrict the proportion of enrollees eligible
for Medicaid and Medicare.
For purposes of carrying out a PACE program, certain
Medicaid requirements would be waived, including those
pertaining to statewideness, comparability of services among
different population groups, freedom of choice of providers,
and restrictions on receiving prepaid capitation payments.
States could provide for the post-eligibility treatment of
income for PACE enrollees in the same manner a State treats
post-eligibility income for persons receiving home and
community-based care waiver services.
A PACE provider could enter into contracts with other
governmental or nongovernmental payers for the care of PACE
program eligible persons who are not eligible for Medicare or
Medicaid.
The Secretary would be required to promulgate regulations
for PACE in a timely manner so that entities may establish and
operate PACE programs under Medicare and Medicaid beginning not
later than 1 year after enactment.
During the transition from demonstration waiver authority
to permanent provider status, applications for waivers (subject
to the numerical limitation) would be deemed approved unless
the Secretary, within 90 days after the date of submission,
either denies the request in writing or informs the applicant
in writing that additional information is needed. After the
date the Secretary receives the additional information, the
application would be deemed approved unless the Secretary,
within 90 days, denies the request.
During the 3-year period beginning on the date of
enactment, the Secretary would be required to give priority, in
processing applications of entities seeking to qualify as PACE
programs under Medicare or Medicaid (1) first, to entities that
are operating a PACE demonstration waiver program, (2) then, to
entities that have applied to operate a program as of May 1,
1997. In awarding additional waivers under the original PACE
demonstration authority, the Secretary would be required to
give priority to any entities that have applied for a waiver as
of May 1, 1997, and to any entity that, as of May 1, 1997, has
formally contracted with a State to provide services on a
capitation basis with an understanding that the entity was
seeking to become a PACE provider. The Secretary would be
required to give special consideration, in the processing of
applications for PACE provider status and for demonstration
waivers, to entities which, as of May 1, 1997, have indicated
through formal activities (such as entering into contracts for
feasibility studies) a specific intent to become a PACE
provider. Repeal of waiver demonstration authority would not
apply to waivers granted before the initial effective date of
regulations. Repeals would apply to waivers granted before this
date only after allowing organizations a transition period (of
up to 24 months) in order to permit sufficient time for an
orderly transition from demonstration project authority to
general authority.
The Secretary (in close consultation with States) would
be required to conduct a study of the quality and cost of
providing PACE program services under the Medicare and Medicaid
programs. This study would be required specifically to compare
the costs, quality, and access to services offered by private
for-profit entities operating under the new demonstration
described above with the costs, quality, and access to services
of other PACE providers. The Secretary would be required to
report to Congress on findings of the study (including specific
findings on private for-profit providers), together with
recommendations for changes, not later than 4 years after
enactment. The Medicare Payment Evaluation Commission would be
required to include in its annual report to Congress
recommendations on the methodology and level of payments made
to PACE providers and on the treatment of private for-profit
PACE providers.
Certain provisions applied to Medicare statute.
Effective date. Enactment.
Senate Amendment
Similar provisions, except:
(1) States would not be authorized to limit the number of
persons enrolled in PACE programs.
(2) The PACE protocol would be defined to include not
only that as published April 14, 1995, but also any successor
protocol agreed upon between the Secretary and On Lok, Inc.
(3) A provision clarifies that the evaluation of a
person's health status for purposes of eligibility would be
determined by the Secretary and State administering agency in
accordance with regulations, rather than simply according to
regulations.
(4) PACE programs could not disenroll individuals on the
ground that they have engaged in noncompliant behavior, if the
behavior is related to a mental or physical condition.
(5) PACE providers, the Secretary, and the State
administering agency would be required to cooperate jointly in
the development and implementation of health status and quality
of life outcome measures for PACE enrollees.
(6) A provision clarifies language about termination and
plans to correct deficiencies.
(7) The Secretary could not modify or waive certain
enumerated provisions of the PACE protocol (rather than
defining these same provisions as essential elements,
objectives, and requirements of the PACE programs).
(8) States would not have the option of continuing to
operate a PACE demonstration program under demonstration waiver
authority rather than the new optional benefit authority.
(9) The Physician Payment Review Commission and the
Prospective Payment Review Commission would be required to
report on PACE until they are terminated and replaced with the
Medicare Payment Advisory Commission.
Similar provisions included in Medicare law.
Effective date. Enactment.
Conference Agreement
The conference agreement includes the Senate amendment
with clarifying language and amendments. The amendments would
(1) allow States to limit the number of persons who could be
enrolled in PACE programs; (2) allow PACE programs to disenroll
individuals for nonpayment of premiums (if applicable) on a
timely basis or for engaging in disruptive or threatening
behavior as defined in regulations (developed in close
consultation with State administering agencies); (3) require
that a proposed disenrollment be subject to timely review and
final determination by the Secretary or by the State
administering agency (as applicable), prior to the proposed
disenrollment becoming effective; (4) allow the Secretary to
include in regulations provisions to ensure the health and
safety of individuals enrolled in PACE programs; (5) allow the
Secretary to waive, in addition to specified provisions of
Medicaid law, any other requirements that the Secretary
determines are inapplicable to carrying out PACE programs; and
(6) allow States to continue to operate PACE waiver programs
under the waiver authority for 3 years after the date that
waivers would otherwise expire, but only so long as programs
continue to operate under the waiver's terms and conditions.
Chapter 5--Benefits
Elimination of Requirements to Pay for Private Insurance
Section 3441 of House bill and Section 5751 of Senate amendment
Current Law
Under Section 1906 of the Social Security Act, states are
required to identify cases in which it would be cost-effective
to enroll a Medicaid-eligible individual in a private insurance
plan and, as a condition of eligibility, require the individual
to enroll in the plan.
House Bill
Eliminates identification and enrollment requirements.
States would have the option of identifying cases and
purchasing private insurance for Medicaid-eligible individuals.
Effective on date of enactment.
Senate Amendment
Repeals Section 1906, and adds payment enrollee costs of
health insurance as an optional Medicaid service.
Conference Agreement
The conference agreement includes the House bill
effective on enactment.
Physician Qualification Requirements
Section 3443 of House bill and Section 5753 of Senate amendment
Current law
Medicaid law established special minimum qualifications
for a physician who furnishes services to a child under age 21
or to a pregnant woman.
house bill
Repeals the current law provision.
Applies to services furnished on or after the date of
enactment.
senate amendment
Identical provision.
conference agreement
The conference agreement includes provisions that are
identical in the House bill and the Senate amendment.
Elimination of Requirement of Prior Institutionalization with Respect
to Habilitation Services Furnished Under a Waiver for Home or
Community-Based Services
Section 3444 of House bill
current law
States may obtain waivers to provide a broad range of
home and community-based services, including habilitation
services, to persons who otherwise would require institutional
care. Habilitation services, however, may be provided only to
an individual who has been discharged from a nursing facility
or an intermediate care facility for the mentally retarded.
house bill
Repeals the prior institutionalization requirement that
applies to habilitation services offered under home and
community-based waiver programs.
Applies to services furnished on or after October 1,
1997.
senate amendment
No provision.
conference agreement
The conference agreement includes the House provision.
The conferees support and encourage efforts enable individuals
to remain in their homes and communities.
Study and Report on EPSDT Benefit
Section 3446 of House bill and Section 5757 of Senate amendment
current law
States are required to provide early and periodic
screening, diagnostic, and treatment services (EPSDT) to
Medicaid beneficiaries under age 21. Such services include
screening, vision, dental, and hearing services. A state is
required to provide other necessary health care services to
correct or ameliorate defects and conditions discovered by the
screening services, whether or not the services are covered
under the state's Medicaid plan.
house bill
Requires the Secretary to provide for a study on the
actuarial value of EPSDT services. The study must include an
examination of the value attributable to the non-screening
portions of EPDST services. A report on the results of the
study would be due to Congress not later than 18 months after
the date of enactment.
senate amendment
In consultation with Governors, directors of state
Medicaid and state maternal and child health programs, the
Institute of Medicine, the American Academy of Pediatrics, and
representatives of Medicaid beneficiaries, the Secretary would
be required to conduct a study of EPSDT services. A report on
the results of the study would be due to Congress not later
than 12 months after the date of enactment.
conference agreement
The conference agreement includes the Senate amendment
with modifications. The Secretary would consult with Governors,
directors of state Medicaid programs, the American Academy of
Actuaries, and representatives of appropriate provider and
beneficiary organizations. The study would include examination
of the actuarial value of the provision of EPSDT services and
an examination of the actuarial value attributable to the non-
screening portions of EPSDT services.
Chapter 6--Administration and Miscellaneous
Elimination of Duplicative Inspection of Care Requirements for ICFs/MR
and Mental Hospitals
Section 3451 of House bill
current law
States that provide services in mental hospitals and in
intermediate care facilities for the mentally retarded (ICF/MR)
must provide for periodic inspectionsof care for each Medicaid
beneficiary who receives services in the institution. Inspections of
care have been conducted to assure that persons are receiving the
appropriate level of care of adequate quality. The Department of Health
and Human Services has established a new survey outcome-oriented
process for mental hospitals and ICFs/MR.
house bill
Eliminates Inspection of Care reviews in mental hospitals
and ICFs/MR. Survey and certification reviews for the
facilities would remain in place.
Effective on date of enactment.
senate amendment
No provision.
conference agreement
The conference agreement includes the House bill.
Alternative Sanctions for Noncompliant ICFs/MR
Section 3452 of House bill
current law
ICFs/MR must meet certain requirements and standards for
safety and for the proper provision of care. If a state finds
that a facility is out of compliance with the requirements, the
facility's participation in Medicaid can be terminated, or the
state can withhold payment for new admissions to the facility
until the deficiencies have been corrected. States have limited
sanctions available for use for ICFs/MR that are found to have
deficiencies that do not jeopardize the health and safety of
patients.
house bill
Allows states to establish alternative remedies that are
demonstrated to be effective in deterring noncompliance with
correcting deficiencies.
Effective on date of enactment.
senate amendment
No provision.
conference agreement
The conference agreement includes the House provision.
Modification of MMIS Requirements
Section 3453 of House bill
current law
Beginning October 1, 1986 states have been required to
maintain mechanized claims processing and information retrieval
systems better known as Medicaid Management Information Systems
(MMIS). Failure to meet the 1986 deadline resulted in reduced
federal Medicaid funds. An MMIS is reviewed at least once every
three years by the Health Care Financing Administration of the
Department of Health and Human Services. Failure to pass a
systems performance review could result in reduction of the
usual 75% federal Medicaid match rate for operation of an
approved MMIS.
house bill
Deletes the statutory language that relates to 1980s
requirements for MMIS, and requires each state to operate a
system that is adequate to provide efficient, economical, and
effective administration, and is compatible with the claims
processing and information retrieval systems that are used to
administer the Medicare program. In addition, for claims filed
on or after January 1, 1999, requires each state's system to
electronically transmit data to the Secretary in a specific
format.
Effective January 1, 1998.
senate amendment
No provision.
conference agreement
The conference agreement includes the House provision.
Facilitating Imposition of State Alternative Remedies on Noncompliant
Nursing Facilities
Section 3454 of House bill
current law
States have available a range of sanctions they may take
against nursing facilities found to be out of compliance with
the requirements for participation in Medicaid. These include
termination of participation in the program, denial of payment
for new admissions, civil money penalties, appointment of
temporary management; and authority to close the facility or
transfer residents. For facilities that are not terminated and
that are taking steps to eliminate deficiencies according to an
approved plan of correction, the Secretary of HHS is authorized
to continue federal Medicaid matching payments to the State for
no longer than 6 months.States, however, are required to repay
to the federal government any payments made to facilities that fail to
take corrective action according to the approved plan and timetable.
house bill
Eliminates the requirement for States to repay federal
funds for failure of a facility to correct deficiencies
according to an approved plan of correction.
Effective on date of enactment.
senate amendment
No provision.
conference agreement
The conference agreement includes the House provision.
Removal of Name from Nurse Aide Registry
Section 5767 of Senate amendment
current law
If a State finds that a nurse aide has neglected or
abused a nursing facility resident or misappropriated property
of the resident, then the State must have such information
included in the State's nurse aide registry.
house bill
No provision.
senate amendment
Requires States, in the case of a finding of neglect of a
nursing facility resident, to establish a procedure to permit a
nurse aide to petition the State to have his or her name
removed from the registry if the State determines that the
employment and personal history of the nurse aide does not
reflect a pattern of abusive behavior or neglect and the
original finding of neglect was a singular occurrence. Names
would have to be on the registry for at least 1 year before
they could be removed. Individuals could petition for a review
of a state finding made after January 1, 1995. The Secretary
would be required to conduct a study, and to report to Congress
within 2 years of enactment, on (1) the use of nurse aide
registries by states, (2) the extent to which institutional
environmental factors contribute to cases of abuse and neglect,
and (3) whether alternatives to existing sanctions for abuse
and neglect might be more effective in minimizing future cases
of abuse.
Effective on October 1, 1997.
conference agreement
The conference agreement includes the Senate amendment.
Medically Accepted Indication
Section 3455 of House bill
current law
Each state is required to provide for a drug use review
(DUR) program to assure that covered outpatient drugs are
appropriate, medically necessary, and are not likely to result
in adverse medical results. Under the DUR program, data on drug
use are to be assessed against predetermined standards
consistent with compendia specified in the law.
house bill
Adds the DRUGDEX Information System to specified
compendia for assessing data on drug use.
Effective on date of enactment.
senate amendment
No provision.
conference agreement
The conference agreement includes the House bill.
Continuation of State-Wide Section 1115 Medicaid Waivers
Section 3456 of House bill and Section 5769 of Senate amendment
current law
Under Section 1115 of the Social Security Act, a state
may obtain waivers of compliance with a broad range of Medicaid
requirements in order to conduct an experimental, pilot, or
demonstration project that is likely to promote the objectives
of Medicaid. In the absence of established conditions for these
projects, each request receives individual consideration from
the Department of Health and Human Services. Some states are
using the waiver authority to operate comprehensive statewide
demonstration projects. Typically, a waiver is approved for 5
years. States have objected to the waiver process as
unnecessarily complex and lengthy.
house bill
Amends Section 1115 of the Act to provide for a
simplified renewal or extension process. Within a year before
the expiration date of a waiver project, the chief executive
officer of a state could submit a written request to the
Secretary of HHS to extend the project for up to 3 years. If
the Secretary did not respond to the request within 6 months,
the request would be deemed to have been granted. Extends the
deadline for a final report on the project until 1 year after
the waivers would originally have expired, and the Secretary's
evaluation of the project up to 1 year after the final report.
The project extension would be on the same terms and conditions
that applied to the project before the extension. If budget
neutrality was an original condition of approval of a waiver
project, the Secretary would be required to assure that such
condition was met in the extension of the project. In so doing,
the Secretary must take into account the Secretary's best
estimate of rates of change in expenditures at the time of the
extension.
Provision shall apply to demonstration projects initially
approved before, on, or after the date of enactment.
senate amendment
Similar to House provision, except:
Gives states the option of requesting a waiver project be
extended for up to 2 years. Extension would be available to
projects that: (1) have been successfully operated for 5 or
more years and (2) have been shown, through independent HCFA-
sponsored evaluations, to successfully contain costs and
provide access to health care. A state with a waiver project
meeting the above requirements and an independent HCFA-
sponsored evaluation that shows the state's Medicaid managed
care waiver program is more cost effective than the fee-for-
service program may expand Medicaid coverage to individuals
with incomes up to the Federal poverty level and be deemed
budget neutral.
The permanent continuation of a waiver project shall be
on the same terms and conditions, including financing, and
subject to the same set of waivers. No test of budget
neutrality shall apply to waiver projects meeting the above
requirements after the date on which the permanent extension
was granted.
Provision will be effective on the date of enactment.
conference agreement
The conference agreement includes the House bill modified
to require that the chief executive officer of a state submit a
written extension request to the Secretary of HHS during the 6-
month period ending a year before the expiration date of a
waiver project.
Community-Based Mental Health Services
Section 5763 of Senate amendment
current law
All states are required to provide some services and are
permitted to provide others.
house bill
No provision.
senate amendment
Adds community-based mental health services as an
optional service states may provide. Community-based mental
health services would include outpatient and intensive
community-based mental health services, including psychiatric
rehabilitation, day treatment, intensive in-home treatment,
therapeutic out-of-home placements (excluding room and board),
clinic services, partial hospitalization, and targeted case
management.
conference agreement
The conference agreement does not include Senate
amendment.
Extension of Moratorium
Section 3458 of House bill and Section 5000A of Senate amendment
current law
Medicaid payment for services provided by an institution
for mental disease (IMD) may be made only for beneficiaries who
are under age 21 or over 65. IMD means a hospital, nursing
facility, or other institution of more than 16 beds, that is
primarily engaged in providing diagnosis, treatment, or care of
persons with mental diseases, including medical attention,
nursing care, and related services. For two facilities in
Michigan--Kent Community Hospital Complex and Saginaw Community
Hospital--previous legislation has imposed a moratorium on
determination of the facilities as IMDs.
house bill
For purposes of Medicaid reimbursement, exempts the two
facilities from classification as IMDs through December 31,
2002.
senate amendment
Similar provision.
conference agreement
The conference agreement includes the House bill.
Extension of effective date for state law amendment
The conference agreement provides that in the case of a
state that must pass state legislation to meet the requirements
of these amendments, the state will not be out of compliance
solely on the basis of failure to meet these additional
requirements before the first day of the first calendar quarter
beginning after the close of the first regular session of the
state legislature that begins after enactment. In the case of a
state that has a 2-year legislative session, each year of the
session is considered to be a separate regular session of the
state legislature.
(1) State Children's Health Insurance Program
Subtitle F Section 3502 of House bill, Subtitle J Section 5801 of
Senate amendment
(a) Purpose; State child health plans
current law
No provision.
House bill
Establishes the Child Health Assistance Program (CHAP)
under new Title XXI of the Social Security Act to provide
federal matching funds, beginning in 1998, to States to enable
them to implement plans to initiate and expand the provision of
child health care assistance to targeted uninsured, low-income
children.
States would be able to use CHAP funds for: (1) providing
Medicaid benefits to uninsured children, (2) obtaining coverage
under group or individual health plans, (3) directly purchasing
services from providers, or (4) other methods to increase
access to health coverage for children. States would also be
able to choose to use some or all of their CHAP allotments for
an enhanced federal Medicaid matching rate for expanding
Medicaid to targeted, uninsured low income children. States
exercising this option would have their allotment under this
section reduced by such amounts.
States would be eligible for payment once the state has
submitted to the Secretary and received approval of a plan that
sets forth how the state intends to use the child health
assistance funds. States would be permitted to use CHAP funds
for non-coverage purposes (defined as administration, outreach,
and services), but the total of such expenditures would be
limited to not more than 10 percent of the matched allotment in
any quarter.
senate amendment
Establishes the Child Health Insurance Initiatives under
new Title XXI of the Social Security Act to provide eligible
states with federal matching funds for 1998 through 2007 to
increase access to health insurance for low-income children.
To access the funds, states would be required to phase-in
Medicaid coverage for children under poverty who are under age
17 by 1998 and the remaining children under age 19 by 2000 and
to submit to the Secretary and receive approval for a program
outline that sets forth how the State intends to use Child
Health Insurance Initiative funds. Participating states would
choose to receive their allotted funds either: (1) through
Medicaid, or (2) for the purchase of FEHBP equivalent insurance
coverage. States would be required to use 1% of their basic
allotment for Medicaid outreach and public awareness campaigns
to encourage employers to provide health insurance for
children.
conference agreement
The conference agreement includes the House provisions
with the following modifications. The SCHIP program is
authorized through FY 2007. States would be able to use SCHIP
funds for obtaining health benefit coverage, expanding Medicaid
coverage, providing needed health care services, or through a
combination of the three to the extent permitted by this title.
(b) Funding levels
current law
No provision.
house bill
Authorizes and appropriates $2.8 billion for each of the
fiscal years 1998 through 2002 for the State Child Health
Assistance Program.
Creates an entitlement to states for amounts in
accordance with the provisions of Title XXI.
senate amendment
Authorizes and appropriates $2.5 billion in 1998, $3.2
billion in 1999, $3.2 billion in 2000, $3.6 billion in 2001,
$3.5 billion in 2002, and for each of the fiscal years 2003
through 2007, $4.58 billion and would be available without
fiscal year limitation. Provisions in the tax bill would add an
additional $8 billion to the Child Health Insurance Initiatives
for 1998 through 2002.
Creates an entitlement to states for amounts in
accordance with the provisions of Title XXI.
conference agreement
Authorizes and appropriates $5.0 billion for each of
fiscal years 1998 through 2001, $4.0 billion for each of fiscal
years 2002 through 2004, $5.0 billion for each of fiscal years
2005 through 2006, and $6.0 billion for fiscal year 2007 for
the State Child Health Assistance Program.
Creates an entitlement to states for amounts in
accordance with the provisions of Title XXI.
(c) Eligibility
current law
States choosing to participate in the Medicaid program
are required to cover children in families who would have
qualified to receive AFDC under the program rules in effect on
August 22,1996; children under age 6 in families with income
below 133% of the federal poverty level; and children under age 14 in
families with income below 100% of the federal poverty level. Coverage
for children between the ages of 14 and 18 and in families with income
below 100% of the federal poverty level is being phased-in through
2002. States also have the option to cover other categories of low-
income children under Medicaid and many have done so.
house bill
Defines targeted low income children as those whose
family income exceeds the Medicaid applicable levels including
those children being phased-in under OBRA 1990 provisions but
whose family income does not exceed an income level that is 75
percentage points higher than the Medicaid applicable income
level, or if higher, 133 percent of the poverty line for the
size of the family involved. The poverty line is defined as
that used in section 673(2) of the Community Services Block
Grant Act.
Eligibility standards could include geography, age,
income and resources, residency, disability status, and others
as specified. The eligibility standards could not, within any
defined class or group of covered targeted low-income children,
cover children with higher family incomes without covering
children with lower family incomes. They also could not deny
eligibility to a child based on a preexisting medical condition
(defined as a limitation or exclusion of benefits relating to a
condition based on the fact that the condition was present
before the date of enrollment, whether or not any medical
advice, diagnosis, care, or treatment was recommended or
received before such date.)
Title XXI would not establish an entitlement for benefits
for any individual under a State child health plan.
senate amendment
Defines low income children as those in families whose
income is below 200 percent for the poverty line for a family
of the size involved. The poverty line is defined as that use
in section 673(2) of the Community Services Block Grant Act.
The option allowing states to purchase and provide FEHBP-
equivalent coverage under new or existing state programs, would
not create an individual entitlement and nothing in this
section would prevent a state from adjusting the eligibility
criteria or the program in any way necessary to ensure that
funds under this section are sufficient to cover the costs of
the program.
conference agreement
Defines targeted low-income children as those who (1)
meet the eligibility standards as determined by the state, (2)
reside in families with income below 200% of the federal
poverty level (defined as that in use in section 673(2) of the
Community Services Block Grant Act) or, in states with Medicaid
applicable income levels at, above, or less than 50 percentage
points below 200% of poverty on the date of enactment, below
the Medicaid applicable income level increased by no more than
50 percentage points, and (3) are not eligible for Medicaid or
covered under a group health plan or other health insurance as
defined in section 2791 of the Public Health Service Act.
Children who are inmates of a public institution, patients in
institutions for mental disease, or eligible for health
benefits under a state plan on the basis of a family member's
employment with the state are not considered targeted low-
income children. Targeted low-income children may include
children covered under a health insurance program which has
been in operation since before July 2, 1997, and which receives
no Federal funds.
Eligibility standards could include geography, age,
income and resources (including standards for spending down
income and disposition of resources), residency, disability
status, access to other health insurance and duration of
eligibility. The eligibility standards could not, within any
defined class or group of covered targeted low-income children,
cover children with higher family incomes before covering
children with lower family incomes. They also could not deny
eligibility to a child based on a preexisting medical condition
(defined as a limitation or exclusion of benefits relating to a
condition based on the fact that the condition was present
before the date of enrollment, whether or not any medical
advice, diagnosis, care, or treatment was recommended or
received before such date.)
Title XXI would not establish an entitlement for benefits
for any individual under a State child health plan (children
enrolled through the State plan into Medicaid would be entitled
to Medicaid coverage).
(d) Benefits
current law
No provision.
house bill
The child health assistance provided under the plan would
be required to include at least the following items and
services: inpatient and outpatient hospital care, physician
services, laboratory and x-ray, well-baby and well child care
including immunizations unless the care is provided under a
group health plan. If the care is provided under a group health
plan, then the benefits under the plan could be no less for
CHAP beneficiaries than the benefits provided for other
individuals covered by that plan.
A plan could not permit the imposition of any preexisting
medical condition exclusion for covered benefits. If the plan
provided for benefits through a group health plan or group
insurance, preexisting condition exclusions could be imposed
only to the extent that such exclusions are permitted under the
Health Insurance Portability and Accountability Act (P.L. 104-
191). Stateswould be required to assure access to specialty
care as required by eligible children who have chronic or life-
threatening conditions.
senate amendment
States opting to use Medicaid would be required to follow
Medicaid coverage rules. States providing coverage through new
or existing state programs would be required to provide a FEHB-
equivalent children's health insurance coverage. FEHB
equivalent children's health insurance coverage would be
defined as any plan or arrangement that provides or pays the
cost of health benefits that the Secretary has certified is
equivalent to or better than the services covered for a child,
including hearing and vision services that are covered under
the standard Blue Cross/Blue Shield preferred provider option
under the Federal Employees Health Benefits Plan.
conference agreement
The conference agreement includes provisions defining
four options for minimum benefits for states choosing to
provide child health assistance coverage under Title XXI
instead of under the Medicaid program. The options include (1)
coverage of benefits that are equivalent to those provided in a
benchmark benefit package, (2) coverage of benefits that are
the same actuarial value, as certified in an actuarial
memorandum, as one of the benchmark benefit packages, (3)
coverage of comprehensive benefits provided by an existing
child health program, or (4) any other health benefits plan
that the Secretary determines, upon application by a State,
provides appropriate coverage for the targeted population of
low-income children.
A state choosing to provide benefits with the same
actuarial value as a benchmark plan under option (2) must
provide for at least the benefits in the basic benefits
category plus at least 75% of the actuarial value of coverage
under the benchmark plan for each of the benefits in the
additional service category. The basic benefits category
includes inpatient and outpatient hospital services,
physicians' surgical and medical services, lab and x-ray
services and well-baby and well-child care, including age-
appropriate immunizations. The additional services category
includes prescription drugs, mental health services, vision
services, and hearing services. Existing state programs under
option (3) are defined as those child health programs that were
in effect on the date of enactment, are administered or
overseen by the state and received state funds, and are located
in Florida, New York, or Pennsylvania. Nothing in this section
is intended to prevent SCHIP plans from providing coverage for
benefits that are not in the basic or additional service
categories.
A benchmark benefit package would be one of the following
three plans: (1) the standard Blue Cross/Blue Shield preferred
provider option service benefit plan offered under the Federal
Employees Health Benefits Plan, (2) the health coverage that is
offered and generally available to state employees in the state
involved, (3) the health coverage that is offered by an HMO (as
defined in section 2791(b)(3) of the Public Health Service Act)
and has the largest commercial (non-Medicaid) enrollment of
such coverage offered by such an organization in the state
involved.
Actuarial memorandums must (a) be rendered by an
individual who is a member of the American Academy of
Actuaries, (b) use generally accepted actuarial principles and
methodologies, (c) use a single standardized set of utilization
and price factors, (d) use a standardized population consisting
of children of the age to be covered under the State child
health plan (e) apply the same principles and factors in
comparing the value of different coverage, and (f) not take
into account any differences in coverage based on the method of
delivery, or means of cost control, or utilization used.
Coverage of items or services for which payment is prohibited
in the benchmark benefits packages should not be considered in
determining equivalent coverage or actuarial equivalent
coverage.
The conference agreement includes the House provisions
restricting the imposition of preexisting conditions. Coverage
under title XXI must comply with the requirements of the Health
Insurance Portability Act of 1996 and shall be treated as
creditable coverage for purposes of part 7 of subtitle B of
title II of the Employee Retirement Income Security Act.
Nothing in this title shall be construed as affecting or
modifying section 514 of the Employee Retirement Income
Security Act of 1974.
The Conferees urge the states to provide for prompt
placement of high risk infants into neonatal specialty service
facilities because of the critical connection between
appropriate and timely care and healthy childhoods, lower
infant mortality, and reduced long-term care needs. The
Conferees also encourage the states, in making dental coverage
and service provision decisions, to recognize the importance of
oral health for children and the role that regular preventive
and restorative dental care plays in addressing pediatric
dental and oral diseases. Finally, the Conferees encourage the
states to provide for such means as considered appropriate to
assure access to quality specialty care for children with
chronic illnesses.
(e) Cost sharing
current law
State Medicaid programs may impose a monthly enrollment
fee or premium charge for certain non-mandatory recipients that
is related to the individuals' income in compliance with the
standards prescribed by the Secretary. If a state chooses to
impose monthly enrollment fees, the fees charged to pregnant
women and infants cannot exceed 10% of the amount by which the
family income (less expenses for the care of a dependent child)
of an individual exceeds 150% of poverty. Medicaid programs may
include premiums of no more than 3% of a family's average gross
monthly earnings for certain families with income over poverty
who are receiving transitional Medicaid benefits in a 6-month
extension period.
For most Medicaid beneficiaries, no deductibles cost
sharing or similar charges may be imposed. No such charges may
be imposed for services that relate to pregnancy or a medical
condition which may complicate pregnancy, or for emergency
services, family planning services and supplies. For the
remaining beneficiaries and services such charges may not be
imposed unless they are ``nominal in amount'' as defined by the
Secretary.
house bill
Allows child health assistance plans to vary premiums,
deductibles, coinsurance and other cost-sharing based on family
income of the targeted low-income children only in a manner
that did not favor children from higher-income families over
those from lower incomes. Cost sharing would not be allowed for
preventive services or benefits.
senate amendment
States opting to use Medicaid would be required to follow
Medicaid cost sharing rules. States choosing to use a new or
existing program to provide coverage would be allowed to impose
any family premium or cost sharing requirement otherwise
permitted under Title XXI for children in families with income
above 150% of poverty. For children in families with income
below 150% of poverty, cost sharing rules under the Medicaid
program would apply.
conference agreement
The conference agreement would require that state child
health plans include descriptions of the amount, if any, of
premiums, deductibles, coinsurance, and other cost sharing
imposed. Any cost sharing imposed must be pursuant to a public
schedule. The agreement would allow child health assistance
plans to impose premiums, deductibles, coinsurance and other
cost-sharing based on family income only in a manner that did
not favor children from higher-income families over those from
families with lower incomes. Cost sharing would not be allowed
for preventive services or benefits.
For targeted low-income children in families with income
below 150% of the poverty line, premiums may be imposed only
insofar as they do not exceed those maximum monthly charges
permitted under Medicaid for medically-needy individuals. Other
cost sharing for such children may not exceed ``nominal''
amounts, as determined consistent with Medicaid regulations,
with adjustments determined as appropriate by the Secretary.
For targeted low-income children in families with income above
150% of the poverty line, premiums, deductibles, cost sharing
or similar charges may be imposed on a sliding scale related to
income only insofar as the total annual cost sharing for all
targeted low-income children in a family does not exceed 5% of
such family's income.
Cost sharing rules for coverage provided under Title XXI
would not impact Medicaid cost sharing rules for any targeted
low-income children covered under the Medicaid program.
(f) Allotments
current law
No provision.
house bill
For each of 1998 through 2002, a total allotment of $2.83
billion, and for succeeding fiscal years, $2.85 billion would
be available for the State Child Health Assistance Program. The
funds would be allotted to states based on the number of
uncovered children in families with income below 300% of
poverty during a base period in a state and the relative cost
of health care services in that state with a floor of $2
million. The base would be determined by taking the state's
average number of uninsured children for the years 1993 through
1995 as reported in the March 1994, March 1995, and March 1996
supplements to the Current Population Surveys of the Bureau of
the Census. The Secretary would be required to allot .5% of the
total amount of funds to the territories, in a manner specified
by the provision.
A state's allotment under this section would be reduced
by the amount of payments made to the state for presumptive
eligibility for children under the Medicaid program.
In the case of a state electing the increased Medicaid
matching option, the amount of the state allotment would be
reduced by the amount of the state's additional federal
Medicaid payment. States would have 3 years to spend their
allotments.
senate amendment
To determine the amounts available for distribution among
states, the following amounts would be subtracted from the
total amounts authorized: the cost of (1) the state option
providing 12 months of continuous Medicaid eligibility, (2)
increased participation in the Medicaid program resulting from
new outreach activities, and (3) the accelerated phase-in of
children under age 19 in families with income under poverty.
The remaining child health initiative funds would be
divided into two pools: a basic allotment pool and a new
coverage incentive pool. In 1998, the basic allotment pool
would be comprised of 85% of funds remaining and the new
coverage incentive pool would be 15%. For years thereafter, the
Secretary would make annual adjustments to the size of the two
pools in order to provide sufficient basic allotments and new
coverage incentives.
A set aside of .25% of the basic allotment pool would be
established for the territories. The rest of the basic
allotment pool would be allotted to each state based on the
average percentage of all children in families with income
below 200% of poverty that reside in the state during the three
fiscal years beginning on October 1, 1992 (as reported in the
Current Population Surveys of March 1994, 1995 and 1996).
Amounts allotted to a state would be available to the state for
a period of three years beginning with the fiscal year for
which the allotment was made.
States would be eligible for bonus payments for the
number of low income children covered under either Medicaid or
other state-run health insurance programs who are not in a
required Medicaid coverage group during 1996 in an amount equal
to 5% of the cost of providing healthinsurance coverage. This
5% bonus would come from the state's basic allotment pool. Performance
bonus payments in an amount of 10% of the cost of providing health
insurance coverage for newly covered children in excess of those
covered in 1996 would also be available with funds coming from the new
coverage incentive pool.
States would receive 1% of their allotted funds prior to
the beginning of the fiscal year for the purpose of conducting
outreach activities. During the year, the state would receive
quarterly payments in an amount equal to the Federal Medicaid
medical assistance percentage of the cost of providing health
insurance coverage for an eligible low-income child and any
applicable bonuses based on estimates by the states. The
Secretary could increase or reduce payments as necessary to
adjust for any overpayment or underpayment for prior quarters.
conference agreement
The conference agreement authorizes for the State
Children's Health Insurance Program for each of fiscal year
1998 through 2001, a total allotment of $4.275 billion; for FY
2003 and 2004, $3.15 billion; for FY 2005 and 2006, $4.05
billion; and for FY 2007, $5.0 billion. Before distribution
among the states and the District of Columbia, total amounts
authorized for child health assistance would be reduced by .25%
for allotments for the commonwealths and territories to be
distributed in the following manner; Puerto Rico would receive
91.6%, Guam, 3.5%, Virgin Islands, 2.6%, American Samoa, 1.2%,
and Northern Mariana Islands, 1.1%. After being reduced by the
allotments to territories, funds would be allotted to states
and the District of Columbia based on the product of the number
of low-income uncovered children for the state for the fiscal
year and the state cost factor. The number of low-income
uncovered children in families would, for each of fiscal years
1998 through 2000, be equal to the 3-year average of uninsured
children in families with income below 200% of poverty as
estimated using the three most recent supplements to the March
Current Population Surveys of the Bureau of the Census. For
fiscal year 2001, low-income uncovered children would be equal
to 75% of the 3-year average of the number of low-income
children in the state for the fiscal year with no health
insurance coverage plus 25% of the number of low-income
children in the State. For years thereafter, low-income
uncovered children would be equal to 50% of the 3-year average
of the number of low-income children in the state for the
fiscal year with no health insurance coverage plus 50% of the
number of low-income children in the state. The state cost
factor for a fiscal year would be equal to the sum of .85
multiplied by the ratio of the annual average wages per
employee in the state for such year to the national average
wages per employee for such year and .15. The annual average
wage per employee for each year would be calculated using the
wages of employees in the health services industry as reported
by the Bureau of Labor Statistics of the Department of Labor
for each of the most recent 3 years before the beginning of the
fiscal year involved.
The agreement includes a floor on allotments for the
states and the District of Columbia of $2 million. In case a
state's allotment would be required to be raised to the $2
million floor, all other states' allotments would be adjusted
in a pro rata manner such that the total of all allotment does
not exceed the total of allotment available under Title XXI.
States would have 3 years to spend their allotments.
(g) Payments to States
current law
No provision.
house bill
The Secretary would be required to make quarterly
payments to each State with an approved child health assistance
plan in amounts up to 80% of program spending during that
quarter for child health assistance, other initiatives for
improving child health, outreach and administration of the
plan, except that no more than 15% of the total program
spending could be used for other child health initiatives,
outreach and administration. The Secretary would establish
rules regarding the extent to which funds could be used to
purchase family coverage for families that include targeted
low-income children. The rules would allow such payment if the
State demonstrates that the purchase of such coverage is cost
effective when compared with the cost of covering only the
targeted low-income children in the families involved.
CHAP funds may not be used to (a) cover children who
would be eligible for Medicaid using the income and assets
standards or methodologies as in effect on June 1, 1997, (b)
pay for the services of a provider who has been excluded from
participation under the MCH or Social Services Block Grant
programs, Medicare or other federal programs except for
emergency services not provided in hospital emergency rooms,
(c) pay for services that a private insurer would be obligated
to cover but for a provision of its insurance contract that
limits its obligation because the child is eligible for child
health assistance, (d) pay for services for which payment can
reasonably be expected to be made under any other federally
operated or financed health insurance program or the Indian
Health Service, (e) pay for abortions, except in the case of a
pregnancy resulting from rape or incest, or unless the mother
is in danger of death unless an abortion is performed.
Federal funds or program spending that is largely
subsidized by federal funds may not be claimed as the required
non-federal share of costs.
The Secretary may make payments to states on the basis of
advance estimates of spending made by the State and other
investigation that the Secretary may find necessary, and may
adjust payments as necessary to account for overpayment in
prior quarters.
senate amendment
The funds would be distributed in the following manner.
States would receive 1% of their allotted funds prior to the
beginning of the fiscal year for the purpose of conducting
outreach activities. During the year, the states would receive
quarterly payments in an amount equal to theFederal Medicaid
medical assistance percentage of the cost of providing health insurance
coverage for an eligible low-income child and any applicable bonuses
based on estimates by the states. The Secretary could increase or
reduce payments as necessary to adjust for any overpayment or
underpayment for prior quarters.
Provisions of Title IV of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996, prohibiting the
receipt of public benefits for certain legal immigrants for a
period of five years, would not be applied to benefits provided
under the Child Health Insurance Initiatives.
As a term and condition of receiving funds under this
program, a state may not use funds to cover the costs of
abortions except in cases of rape or incest or when necessary
to save the women's life. No more than between 5 and 10% of
funds under this title would be allowed for the administrative
costs of the program. Funds could not be used to provide health
insurance coverage for families of State public employees or
children in penal institutions nor to cover the costs of
abortions except in cases of rape or incest or when necessary
to save the women's life.
Under this program the Secretary would not approve any
amount in excess of a state's allotment and would make
adjustments in the federal share of the costs to ensure the
caps are not exceeded.
conference agreement
The Secretary would make quarterly payments to each State
with an approved child health assistance plan in amounts up to
the amount of the allotment using the enhanced FMAP. The
allotment would be reduced by the amount of the cost of the
state's Medicaid program of presumptive eligibility and the
costs of covering targeted low-income uninsured children under
the Medicaid program. Payments for child health assistance may
be made for coverage meeting the requirements of section 2103,
other initiatives for improving child health, outreach and
administration of the plan, except that no more than 10% of the
total program spending could be used for other child health
initiatives, outreach and administration. The enhanced FMAP is
defined as the Federal medical assistance percentage under the
Medicaid program increased by the 30% multiplied by the number
of percentage points by which the FMAP for the state is less
than 100%. The enhanced FMAP can be no higher than 85%. The 10%
limitation on payments for child health assistance that does
not meet the coverage requirements may be waived if a state
establishes to the satisfaction of the Secretary that 1) the
coverage provided to targeted low-income children meets the
benefits and cost sharing requirements of Title XXI, 2) the
cost of such coverage is no more than it would otherwise be
under such section, and 3) such coverage is provided through
the use of a community-based health delivery system.
A state may use Title XXI funds to purchase family
coverage for families that include targeted low-income children
if the state establishes to the satisfaction of the Secretary
that the purchase of such coverage is cost effective when
compared with the cost of covering only the target low-income
children in the families involved and would not substitute for
other health insurance coverage.
SCHIP funds may not be used to (a) cover children who
would be eligible for Medicaid using the income and assets
standards or methodologies as in effect on April 15, (b) pay
for services that a private insurer would be obligated to cover
but for provision of its insurance contract that limits its
obligation because the child is eligible for child health
assistance, or (c) pay for services for which payment can
reasonably be expected to be made under any other federally
operated or financed health insurance program or the Indian
Health Service.
In addition, as a term and condition of receiving funds
under this program, a state may not use funds for any abortion
or for health benefits coverage that includes coverage of
abortion except in cases of rape or incest or when necessary to
save the women's life. It is the Conferees' intention that
Section 2105(c)(7) not restrict the ability of any provider
from offering abortion coverage or the ability of a state to
contract with such a provider by such coverage except, as
prohibited under this section, where federal funds are used in
whole or in part to obtain such coverage under this title.
Federal funds or program spending that is largely
subsidized by federal funds may not be claimed as the required
non-federal share of costs.
The Secretary may make payments to states on the basis of
advance estimates of spending made by the State and other
investigation that the Secretary may find necessary, and may
adjust payments as necessary to account for overpayment or
underpayment in prior quarters.
(h) State matching requirement
current law
The costs of providing Medicaid coverage are shared by
the states and the federal government. The federal share is
determined by a formula that takes into account the average per
capita income in the state relative to the national average.
States with lower per capita incomes have higher federal
matching rates. These federal matching rates range from a floor
of 50% to almost 80%. All 50 states currently participate in
Medicaid.
Federal funds or program spending that is largely
subsidized by federal funds may not be claimed as the required
non-federal share of costs.
house bill
CHAP funds paid to states under the block grant option
would be equal to 80% of program costs requiring a 20% state
matching share. States would be provided with an enhanced
federal Medicaid matching rate if the state chooses to use CHAP
funds under the Medicaid program. The enhanced medical
assistance percentage would be equal to the Federal medical
assistance percentageincreased by the number of percentage
points equal to 30% multiplied by the number of percentage points by
which the Federal medical assistance percentage is less than 100%.
States may not use state funds that are used as state
match for purposes of another federal program, such as the TANF
block grant, to satisfy the state matching requirement under
the child health block grant.
senate amendment
Requires states to share the cost of providing new
coverage equal to the state Medicaid matching percentage.
States choosing the option to provide FEHBP coverage would also
be eligible for federal matching payments for eligible children
currently covered under existing state-funded programs. Total
amounts paid to a state under this title, including bonus
payments, would not be allowed to exceed 85% of the total cost
of a state program conducted under this title.
Bonus payments of 5% of the cost of providing insurance
to children covered during 1996, and 10% of the cost of
covering new children would effectively reduce the state
matching shares for these groups by 5 and 10%, respectively.
States would be prohibited from including cost sharing
imposed on beneficiaries as program costs when determining
Federal medical assistance percentage for reimbursement of
expenditures.
Medicaid rules, relating to limitations on the use of
provider taxes and donations as the state share of
expenditures, would apply to the Child Health Insurance
Initiatives.
conference agreement
The conference agreement would provide for federal
matching under the Title XXI equal to the states' Medicaid
Federal medical assistance percentage increased by the number
of percentage points that is equal to 30% multiplied by the
number of percentage points by which the Federal medical
assistance percentage is less than 100%. All child health
assistance, including child health coverage for targeted low-
income children provided under the Medicaid program, would be
subject to the same federal matching percentage.
(i) Maintenance of effort
current law
No provision.
house bill
Prohibits payments under Title XXI on behalf of a child
if the child would be eligible for Medicaid using the income
and resource standards and methodologies in place in the state
on June 1, 1997.
States that choose to use state child health assistance
funds for enhanced Medicaid matching payments for expanded
Medicaid eligibility would be prohibited from using income and
resource standards and methodologies for children that are more
restrictive than those used as of June 1, 1997.
senate amendment
Requires participating states to maintain Medicaid income
and resource standards and methodologies that are no more
restrictive than those in place on June 1, 1997 and to maintain
state spending on children's health care that is no less than
the amounts spent in 1996. If states do not maintain Medicaid
income and resource standards, they would be ineligible for
payments and bonuses for children who would have been eligible
for Medicaid under the standards in place in June of 1997.
State children's health expenditures is defined to include
spending for children under (a) Medicaid, (b) the maternal and
child health services block grant program under Title V of the
Social Security Act, (c) the preventive health services block
grant program under part A of Title XIX of the Public Health
Services Act, (d) state-funded programs providing health care
items and services to children, (e) school-based health
programs, (f) state programs providing for uncompensated or
indigent care, (g) county indigent care programs for which an
intergovernmental transfer is made from the county to the
State, (h) other programs providing children with health care
as determined by the Secretary.
Conference Agreement
The conference agreement includes the house provisions,
with amendments adding a maintenance of effort requirement for
spending on state-only health insurance programs and changing
the effective date to April 15, 1997.
(j) State child health plans
current law
No provision.
house bill
State participating in Title XXI would be required to
submit a plan to the Secretary that specifies how the state
intends to use the federal funds to provide health assistance
to needy children consistent with requirements of the CHAP
program. States that meet the requirements would be entitled to
federal assistance from funds appropriated for this purpose.
A state child health plan would have to include a
description of: (a) the current insurancestatus of children,
including targeted low-income children; (b) current state efforts to
provide or obtain creditable coverage for uncovered children; and (c)
how the plan is designed to be coordinated with current state efforts
to increase creditable coverage of children. A state plan also would
have to include a description of the methods of establishing and
continuing eligibility and enrollment, including a methodology for
computing family income that is consistent with the method used for
certain Medicaid beneficiaries. Procedures established for eligibility
would have to ensure: (a) that only targeted low-income children
received the assistance, (b) that children found through screening to
be eligible for medical assistance under the state's Medicaid program
were enrolled in Medicaid, (c) that the new insurance did not
substitute for coverage under group health plans, and (d) that there
was coordination with other public and private programs providing
creditable coverage for low-income children.
A state plan would have to describe the nature of the
assistance to be provided including: cost-sharing, the health
care delivery method (e.g., managed care, fee-for-service,
direct provision of services, or vouchers), and utilization
control systems. A state would not be permitted to pay benefits
to an individual to the extent that such benefits were
available to the individual under another public or private
health care insurance program. Payments in the form of a
voucher or cash would not be considered income for purposes of
eligibility for, or benefits provided, under any means-tested
federal or federally-assisted program.
A state plan would have to describe the procedures to be
used to accomplish outreach and enrollment assistance to
families of eligible children and to coordinate with other
public and private health insurance programs.
Senate Amendment
States participating in Title XXI would be required to
submit to the Secretary, no later than March 31 of any fiscal
year (or, in the case of fiscal year 1998, October 1, 1997), an
outline that identifies which option the State intends to use
to provide coverage under this section (Medicaid or other
qualified program), describes how such coverage shall be
provided, and includes other information as the Secretary may
require. The outline would also include: (a) the eligibility
standards for the program, (b) the methodologies to be used to
determine eligibility, (c) the procedures to be used to ensure
only eligible children receive benefits and that the
establishment of a program under this section does not reduce
the number of children who currently have insurance coverage,
and (d) a description of how the state would ensure that
Indians are served by a program under this title.
Conference Agreement
The conference agreement includes the House provisions
with the following modifications. The State child health plans
would be required to include descriptions of the child health
assistance to be provided under the plan for targeted low
income children, including the proposed methods of delivery and
utilization control systems, eligibility standards, and
outreach activities. The Conferees encourage states to consider
such innovative means as vouchers and tax credits in developing
these strategies. The plan would be required to include a
description of (1) the methods of establishing and continuing
eligibility and enrollment and (2) the provision of child
health assistance to targeted low-income children in the state
who are Indians as defined in the Indian Health Care
Improvement Act.
A state plan would have to describe the procedures to be
used to accomplish outreach and enrollment assistance to
families of eligible children and to coordinate with other
public and private health insurance programs.
(k) Process for submission, approval, and amendment of State child
health plan
Current Law
No provision.
House Bill
States participating in Title XXI would be required to
submit a State child health plan for approval by the Secretary.
A state plan would become effective beginning in a specified
calendar quarter that is at least 60 days after the plan is
submitted. A state may amend its state child health plan at any
time with a plan amendment. Plan amendments must be approved
for the purposes of this title and would take effect on dates
as specified in the amendment. Amendments restricting or
limiting eligibility or benefits could not take effect until
there had been public notice of the change. The Secretary would
be required to promptly review State plans and amendments to
determine compliance with the requirements of this title.
Unless the state were notified in writing within 90 days that a
plan or amendment was disapproved and the reasons for
disapproval or that additional information was needed, the plan
or amendment would be deemed approved. In the case of a
disapproval, the Secretary would provide a state with a
reasonable opportunity for correction.
CHAP programs would have to be conducted in accordance
with the state plan and any approved amendments. The Secretary
would establish a process for enforcing requirements under this
title. Approved plans would continue in effect unless amended
or unless the Secretary found the plan out of compliance with
this title.
A State child health plan would be required to identify
(a) specific strategic objectives aimed at increasing health
coverage among low-income children, (b) performance goals for
each strategic objective identified, and (c) performance
measures that are objective and verifiable, so that when
compared with the performance goals, indicate the State's
performance under this title. Plans must include assurances
that the state will collect data, maintain records, and furnish
reports as required by the Secretary as well as provide the
required annual assessments and evaluations. The Secretary
would be required to have access to any records or information
for reviews or audits as deemed necessary.
Plans would be required to include a description of the
process for obtaining ongoing public involvement in the design
and implementation of the plan, and the plan's budget to be
updated periodically including details on the sources of the
non-Federal share of plan spending.
senate amendment
States participating in Title XXI would be required to
submit to the Secretary for approval, no later than March 31 of
any fiscal year (or, in the case of fiscal year 1998, October
1, 1997), an outline that identifies which option the State
intends to use to provide coverage (Medicaid or other qualified
program), describes how such coverage shall be provided, and
includes other information as the Secretary may require.
conference agreement
The conference agreement includes the House provisions
with the following modifications. Plan amendments that would
eliminate or restrict eligibility or benefits would require
prior public notice of the change before taking effect.
(l) Strategic objectives and performance goals; plan administration
current law
No provision.
house bill
A state child health plan would be required to describe
strategic objectives, performance goals, and performance
measures for providing child health assistance to targeted low-
income children. Strategic objectives shall be specific and
relate to increasing the extent of creditable health coverage
among targeted low-income children and other low-income
children. One or more performance goals would be specified for
each strategic objective. Performance measures must be
objective and independently verifiable and must be compared
against performance goals in order to determine the State's
performance under this title. The state child health plan would
be required to include an assurance that the State will collect
data, maintain records, and furnish report to the Secretary as
needed. The plan would be required to describe the State's
plans for annual assessment, reports and evaluations as
required and to assure that the Secretary would have access to
information for the purposes of review or audit as necessary.
The plan would include a description of the budget and the
process for involving the public in the design and
implementation and ensuring ongoing public involvement. The
following sections of Title XI would apply to States' Child
Health Assistance Insurance Programs as they do under Medicaid:
Section 1101(a)(1) relating to the definition of a State,
Section 1116 relating to administrative and judicial review,
Section 1124 relating to disclosure of ownership and related
information, Section 1126 relating to disclosure of information
about certain convicted individuals, Section 1128B(d) relating
to criminal penalties, and Section 1132 relating to periods
within which claims must be filed.
senate amendment
The following sections of Title XI would apply to states'
Child Health Insurance Initiatives as they do under Medicaid:
Section 1116 relating to administrative and judicial review,
Section 1124 relating to disclosure of ownership and related
information, Section 1126 relating to disclosure of information
about certain convicted individuals, Section 1128A relating to
criminal penalties for certain additional charges, Section
1128B(d) relating to criminal penalties, and Section 1132
relating to periods within which claims must be filed, Section
1902(a)(4)(C) relating to conflict of interest standards,
Section 1903(e) relating to limitations on payment, Section
1903(w) relating to limitations on provider taxes and
donations, Section 1905(a)(B) relating to exclusion of care or
services for individuals under the age of 65 in IMDs from the
definition of medical assistance, Section 1921 relating to
state licensure, Sections 1902(a)(25), 1912(a)(1)(A), and
1903(o) relating to third party liability. Section 506(b) of
Title V, the Maternal and Child Health Block Grant program,
relating to independent audits of state expenditures and
receipts would apply to the Child Health Insurance Initiatives.
conference agreement
The conference agreement includes the House provision
with the following modifications. The following additional
provisions of Title XI and XIX would apply the SCHIP as they
apply to the Medicaid program. Section 1128A relating to
criminal penalties for certain additional charges, Section
1128B(d) relating to criminal penalties, Section 1902(a)(4)(c)
relating to conflict of interest standards, Paragraphs (2) and
(16) of Section 1903(i) relating to limitations on payments,
Section 1903(w) relating to limitations on provider taxes and
donations, Section 1921 relating to state licensure, and
Sections 1932(d) and 1932(e) as added by the Balanced Budget
Act of 1997 relating to fraud and sanctions for managed care
entities.
(m) Annual reports and evaluations
current law
No provision.
house bill
A State would be required to provide an annual report to
the Secretary by January 1 following the end of each fiscal
year assessing the operation of the plan and the progress made
in reducing the number of uncovered low-income children during
the prior fiscal year. States would also be required to provide
an evaluation by March 31, 2000, assessing (a) the
effectiveness of the State plan in increasing the number of
children with health coverage, (b) the effectiveness of
specific elements of the plan, such as characteristics of
families and children assisted the quality of coverageprovided,
(c) the effectiveness of other public and private programs in the State
in increasing health coverage for children, (d) state activities to
coordinate the plan with other public and private programs providing
health care coverage, (e) trends in the state affecting the provision
of health care to children, (f) plans for improving the availability of
health insurance and health care for children, and (g) recommendations
for improving the program, among other matters the State and Secretary
consider appropriate. By December 31, 2000, the Secretary would be
required to submit to Congress a report based on the state evaluations
and make the report available to the public.
Senate Amendment
Participating states would be required to provide an
annual assessment of the operation of the program funded under
this title that includes a description of the progress made in
providing health insurance coverage for low income children.
The Secretary would be required to submit to Congress an annual
report and evaluation of the State programs based on the annual
assessment and would include any conclusions and
recommendations the Secretary considers appropriate.
Conference Agreement
The conference agreement includes the House provisions
with the following modification. The Secretary would be
required to submit to Congress a report based on the state
evaluation by December 31, 2001.
(n) Definitions
Current Law
No provision.
House Provision
The House provision defines the following terms: child
health assistance, targeted low-income child, Medicaid
applicable income level, child, creditable health coverage,
group health plan and health insurance coverage, low-income,
poverty line, preexisting condition exclusion, state child
health plan, and uncovered child.
Senate Amendment
The Senate Amendment defines the following terms: base-
year covered low-income child population, child, eligible
state, federal medical assistance percentage, FEHBP-equivalent
children's health insurance coverage, Indians, low-income
child, poverty line, Secretary, state, state children's health
expenditures, and state Medicaid program.
Conference Agreement
The conference agreement defines the following terms:
child health assistance, targeted low-income child, child,
creditable health coverage, group health plan and health
insurance coverage, low-income, poverty line, preexisting
condition exclusion, state child health plan, and uncovered
child.
(o) Outreach
Current Law
No provision.
House Bill
Requires state health plans to include a description of
the procedures to be used to inform families of children
eligible for child health assistance under any public or
private programs of the availability of such assistance and to
assist in enrolling children.
Senate Amendment
Requires states to use 1% of their basic allotment for
Medicaid outreach and public awareness campaigns to encourage
employers to provide health insurance for children.
Conference Report
The conference report follows the House and Senate
provisions. Outreach is included within a 10% administrative
cap.
(p) Effective date
Current Law
No provision.
House Bill
States become eligible for payments for calendar quarters
after October 1, 1997.
Senate Amendment
States become eligible for payments for calender quarters
after October 1, 1997.
Conference Agreement
States become eligible for payments for child health
assistance provided after October 1, 1997.
(2) Mental health parity--Title XV of Senate tax bill--sec. 2107A
current law
Public Law 104-204 prohibits group health plans that
cover medical, surgical, and mental health benefits from
imposing more restrictive annual or lifetime dollar limitations
on the coverage of mental health benefits than on medical and
surgical benefits.
The definition of mental health benefits does not include
treatment of substance abuse and chemical dependency.
house bill
No provision.
senate amendment
Prohibits plans that enroll children under the Child
Health Insurance Initiative and cover medical, surgical, and
mental health benefits from imposing treatment limitations of
financial requirements on the coverage of mental health
benefits if similar limitations or requirements are not imposed
on medical and surgical benefits.
The definition of mental health benefits does not include
treatment of substance abuse and chemical dependency.
conference agreement
Mental health services are included as one of the four
categories of additional services.
(3) Medicaid presumptive eligibility for low-income children--section
3504 of House bill)
current law
The Medicaid program allows States the option to provide
presumptive eligibility for pregnant women. Under presumptive
eligibility, health care providers are able to grant pregnant
women with immediate, short-term Medicaid eligibility as the
provider site while formal determination is being made.
Presumptive eligibility is intended to provide immediate access
to prenatal care services. As of 1996, 30 States have opted to
provide presumptive eligibility.
house bill
Allows State Medicaid programs to provide for a
presumptive eligibility period for children under the age of
19. The presumptive eligibility period would begin when a
qualified entity determines, based on preliminary information,
that the family income of the child is below the applicable
income eligibility threshold for the state Medicaid program,
and ends when a formal determination is made. For children on
whose behalf an application is not filed, the presumptive
eligibility period would end on the last day of the month
following the month when the period began.
senate amendment
No provision.
conference agreement
The conference agreement includes the House provision.
(4) Continuation of Medicaid eligibility for disabled children who lose
SSI benefits--section 3505 of House bill
current law
In most States, people who receive benefits under the
Supplemental Security (SSI) program automatically are eligible
for Medicaid benefits only because they are SSI beneficiaries.
P.L. 104-193, the Personal Responsibility and Work Opportunity
Act (PRWOA) of 1996, established a new definition of childhood
disability for receipt of SSI benefits. Under the new
definition, some chldren will lose their SSI and their Medicaid
eligibility as well.
house bill
Allows states the option of continuing Medicaid coverage
for disabled children who were receiving SSI as of the date of
enactment of PRWOA if they lose SSI because of the new
definition.
senate amendment
No provision.
conference agreement
The conference agreement requires States to continue
Medicaid coverage for disabled children who were receiving SSI
on the date of the enactment of PRWOA if they lose SSI because
of the new definition of disability.
Chapter 3--Diabetes Grant Programs
Special Diabetes Programs for Children With Type I Diabetes
Current Law
No provision.
House Bill
No provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement amends Title III of the Public
Health Service Act to create a grant program under which the
Secretary shall make grants to support prevention and treatment
services of, and research relating to, type I diabetes in
children. This section transfers $30 million for each of fiscal
years 1998 through 2002 from Title XXI for these grants.
Special Diabetes Programs for Indians
Current Law
No provision.
House Bill
No provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement amends Title III of the Public
Health Service Act to create a grant program under which the
Secretary shall make grants to support prevention and treatment
services of diabetes in Indians. These grants shall purchase
services provided through one or more of the following
entities: the Indian Health Service, a tribal Indian health
program, and an urban Indian health program. This section
transfers $30 million for each of fiscal years 1998 through
2002 from Title XXI for these grants.
Report on Diabetes Grant Programs
Current Law
No provision.
House Bill
No provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement requires the Secretary to
conduct an evaluation of the diabetes grant programs
established under this chapter and to report to the appropriate
committees of Congress an interim report on January 1, 2000,
and a final report on January 1, 2002.
I. Welfare-to-Work Grant, Block Grants for Temporary Assistance to
Needy Families, and Other Provisions
1. Welfare-to-Work Grants
a. Purpose
current law
The 1996 welfare reform law combined recent Federal
funding levels for three repealed programs--AFDC, Emergency
Assistance (EA), and JOBS--into a single block grant for
Temporary Assistance for Needy Families (TANF). The TANF grant
equals $16.4 billion annually through Fiscal Year 2002. The law
also provides an average of $2.3 billion annually in a child
care block grant. Each State is entitled to the sum it received
for AFDC, EA, and JOBS in a recent year, but no part of the
TANF grant is earmarked for any program component, such as
benefits or work programs.
house bill
Provides $3 billion to States and localities for
additional resources to support welfare-to-work (WTW) efforts.
senate amendment
Same as House.
conference agreement
The conference agreement follows the House bill and the
State amendment.
b. Administering agency
current law
HHS administers the TANF block grant but has limited
authority over State programs, except in setting penalties and
in conducting evaluations of State performance in meeting
program goals
house bill
The WTW block grant would be administered by the
Department of Labor in consultation with the Secretary of HHS
and the Secretary of HUD.
senate amendment
The WTW block grant would be administered by the
Secretary of HHS.
conference agreement
The conference agreement follows the House bill so that
the Department of Labor would administer the program.
c. Inter-agency coordination
current law
No provision.
house bill
Note: the House bill contains separate provisions from
the committees of jurisdiction (the Committee on Ways and Means
and the Committee on Education and the Workforce) on
interagency coordination and several other provisions described
below related to welfare-to-work grants.
Committee on Ways and Means
Formula Grant Provisions:
1. Administered by the State TANF agency or another
agency designated by the Governor.
2. Plans must be approved by the State TANF agency.
3. Private Industry Councils (PICs) have sole
authority for expenditures in Service Delivery Areas
(SDAs) under the 85 percent portion of the non-
competitive funds, pursuant to an agreement with the
agency responsible for administering TANF in the SDA.
4. If the Secretary of Labor, in consultation with
the Secretary of HHS and the Secretary of HUD,
determines that a PIC and the agency responsible for
administering TANF in the SDA are not adhering to their
agreement, funding shall be remitted to the Secretary
of Labor.
Competitive Grant Provisions:
Proposals must be approved by State TANF agency.
Committee on Education and the Workforce
Formula Grant Provisions:
1. Administered by the State TANF agency or another
agency designated by the Governor.
2. No provision on whether plans must be approved
by the State TANF agency.
3. Private Industry Councils have sole authority
for expenditures in SDAs under the 85 percent portion
of the non-competitive funds, in coordination with the
chief elected official of the SDA.
4. No provision on remission of funding in the
event of noncompliance.
senate amendment
Formula Grant Provisions:
1. Administered by the State TANF agency.
2. Plans must be approved by the State TANF agency
(same as Ways and Means).
3. No provision on PICs.
4. If the Secretary of HHS determines that an
entity operating a project and the agency responsible
for administering the State TANF program are not
adhering to their agreement, funding shall be remitted
to the Secretary.
Competitive Grant Provisions:
Proposals must be approved by State TANF agency. In
addition, if the Secretary of HHS determines that an
entity operating a project and the agency responsible
for administering the State TANF program are not
adhering to their agreement, funding shall be remitted
to the Secretary.
conference agreement
The conference agreement follows the House bill and the
Senate amendment with modifications. The Governor is to submit
the plan to the Secretary of Labor and Secretary of HHS. The
provision regarding approval of State plans by State agencies
is dropped. Private Industry Councils (PICs) have authority, in
coordination with the area's chief elected official, for
expenditures in SDAs under the 85 percent portion of the non-
competitive funds. The addendum to the State TANF plan for
formula grants must contain an assurance by the Governor that
the PIC (or through a waiver, an alternative entity) will
coordinate welfare-to-work funds with TANF funds.
The conference agreement requires that PICs, political
subdivisions of States, or private entities working in
conjunction with a PIC or a political subdivision develop
competitive grant proposals in consultation with the State's
Governor.
d. Entitlement and Distribution of Funds
current law
No provision.
house bill
A total of $3 billion is authorized for distribution
among States, sub-state units, and Indian tribes for the
welfare-to-work program: $1.5 billion is provided in Fiscal
Year 1998, and $1.5 billion in Fiscal Year 1999.
Under the provision adopted by the Committee on Ways and
Means, after subtracting set-asides, funds are distributed 50
percent by formula to States and 50 percent to PICs or
political subdivisions of States through a competitive grant
process (see below).
Under the provision adopted by the Committee on Education
and the Workforce, after set-asides, funds are distributed 95
percent by formula to States and 5 percent to PICs or political
subdivisions of States through a competitive grant process.
The House bill provides for the following set-asides: (1)
1 percent set-aside each year for Indian tribes that choose to
run their own program; and (2) 0.5 percent set-aside each year
for evaluations through HHS.
Funds not expended within 3 years must be returned.
senate amendment
A total of $3 billion is authorized for distribution
among States, sub-state units, and Indian tribes for the
welfare-to-work program. In Fiscal Year 1998, $0.75 billion is
provided; in Fiscal Year 1999, $1.25 billion; and in Fiscal
Year 2000, $1.00 billion.
After set-asides, funds are distributed 75 percent by
formula to States and 25 percent to political subdivisions of
States through a competitive grant process (see below).
The set-asides for Indian tribes and evaluation and the
provisions allowing Statesand localities up to three years to
expend grant funds are identical to the House bill.
A $100 million set-aside from Fiscal Year 1999 funding is
provided for a high performance bonus payable to qualifying
States in Fiscal Year 2003.
conference Agreement
The conference agreement follows the House bill by
providing $1.5 billion in each of Fiscal Years 1998 and 1999.
The conference agreement follows the Senate amendment on
division of funds between formula and competitive grants so
that 75 percent of funds is for formula grants and 25 percent
is for competitive grants. The conference agreement provides a
reservation of 0.8 percent of welfare-to-work funds for each of
Fiscal Years 1998 and 1999 for evaluations; in addition, the
conference agreement authorizes the Secretary to use no more
than $6 million of this funding for evaluation of abstinence
programs. The provisions on set-asides for Indian tribes and
spending funds over no more than three years are identical in
the House bill and the Senate amendment. The conference
agreement follows the Senate amendment in providing a $100
million performance set-aside from Fiscal Year 1999 funds. The
successful performance bonus would be paid to States in Fiscal
Year 2000.
e. Matching requirements
Current Law
No provision.
House Bill
States must meet a 33 percent match requirement for non-
competitive grants (i.e. State must spend 50 cents to receive
$1 in Federal funds). States that do not fully expend the
estimated State share of welfare-to-work funds will have their
TANF grants reduced by the difference the following year. State
matching funds cannot be used to satisfy matching requirements
for other programs. Indian tribes are not required to put up
any matching funds.
Senate Amendment
States must certify that they plan to spend 33 for each
Federal dollar received in noncompetitive funds (\1/4\ match).
State matching funds cannot be used to satisfy matching
requirements for other programs. The provision on matching by
Indian tribes is identical to the House bill.
Conference Agreement
The conference agreement follows the House bill by
requiring a 33 percent State match. The House bill and the
Senate amendment are identical in requiring no match by Indian
tribes. The conference agreement follows the House bill and the
Senate amendment in providing that State funds cannot be used
to satisfy matching requirements for other programs, with the
added clarification that State funds expended to match Federal
welfare-to-work grants cannot be used to match or satisfy State
spending requirements for the TANF contingency fund, child care
block grant matching funds, or any other Federal program.
f. Prior State spending requirements
Current Law
States are required to maintain their own spending for
TANF-eligible families at 75 percent of their ``historic''
level (Fiscal Year 1994 spending on the replaced programs and
AFDC-related child care), and, under penalty of loss of funds,
they must achieve specified work participation rates. If work
participation rates are not met, the State must spend 80
percent of its historic level.
House Bill
Under the provision adopted by the Committee on Ways and
Means, qualified State expenditures must be at least 80 percent
of historic State expenditures for the current or prior year.
The Committee on Education and the Workforce did not specify a
prior State spending requirement.
Senate Amendment
State must meet prior year's State maintenance of effort
requirement.
Conference Agreement
The conference agreement follows the Senate amendment,
with the clarification that a State must meet the TANF
maintenance of effort requirement in a year for which it
receives a welfare-to-work formula grant.
g. Allocation of formula funds to States
Current Law
No provision.
House Bill
Committee on Ways and Means
50 percent of the appropriated funds (after subtracting
set-asides for Indian tribes and evaluation) are distributed to
States with approved State welfare-to-work plans allocated on
the basis of each State's average of the following:
1. percent of U.S. poverty population;
2. percent of U.S. adults receiving TANF assistance; and
3. percent of U.S. unemployed.
Committee on Education and the Workforce
95 percent of appropriated funds (after subtracting set-
asides for Indian tribes and evaluation) are distributed to
States with approved State welfare-to-work plans allocated on
the basis of each State's average of the following:
1. percent of U.S. poverty population; and
2. percent of U.S. adults receiving TANF assistance.
Senate Amendment
75 percent of the appropriated funds (after subtracting
set-asides for Indian tribes, evaluation, and high performance
bonuses) are distributed to States with approved State welfare-
to-work plans allocated on the basis of each State's average of
the following:
1. percent of U.S. poverty population;
2. percent of U.S. adults receiving TANF assistance; and
3. percent of U.S. unemployed.
A small State minimum of 0.5 percent of appropriated
funds (after subtracting set-asides for Indian tribes and
evaluation) will apply to all States; i.e. regardless of how
much a small State would receive under the distribution
formula, no State can receive less than 0.5 percent of total
appropriated funds.
Conference Agreement
The conference agreement follows the provision adopted by
the Committee on Education and the Workforce, thus dropping
unemployment as a factor. The conference agreement adopts a
small State minimum (Senate provision), but reduces it to 0.25
percent of formula grant funds. The small State minimum does
not apply to Guam, the Virgin Islands, or American Samoa.
h. Definition of welfare-to-work State
Current Law
No provision.
House Bill
Committee on Ways and Means
The Secretary of Labor, in consultation with the
Secretary of HHS and the Secretary of HUD, determines whether
States meet the following criteria to qualify as a welfare-to-
work State:
1. submit a plan as an addendum to their TANF State plan
that includes a description of how welfare-to-work funds will
be used, the sub-State distribution formula, and evidence that
the plan was developed in consultation and coordination with
sub-State areas and approved by the State TANF agency;
2. provide an estimate of State spending;
3. agree to negotiate with the Secretary of HHS on the
substance of and cooperate with the conduct of an evaluation;
4. be an eligible TANF State for the fiscal year; and
5. meet 80 percent Maintenance of Effort (MOE)
requirements under TANF for current or preceding fiscal year.
Committee on Education and the Workforce
The Secretary of Labor, in consultation with the
Secretary of HHS and the Secretary of HUD, determines whether
States meet the following criteria as a welfare-to-work State:
1. submit a plan as an addendum to their TANF State plan
that includes a description of how welfare-to-work funds will
be used, a description of the sub-State distribution formula,
and evidence that the plan was developed through a
collaborative process that, at minimum, included sub-State
areas;
2. provide an estimate of State spending;
3. agree to negotiate with the Secretary of HHS on the
substance of and cooperate with the conduct of an evaluation;
and
4. be an eligible TANF State for the fiscal year.
Senate Amendment
The Secretary of HHS determines whether States meet the
following criteria as a welfare-to-work State:
1. submit a plan as an addendum to their TANF State plan
that includes a description of how welfare-to-work funds will
be used, a description of the sub-State distribution formula,
and evidence that the plan was developed in consultation with
sub-State areas and approved by the State TANF agency;
2. provide an estimate of State spending;
3. agree to negotiate with the Secretary of HHS on the
substance of and cooperate with the conduct of an evaluation;
4. be an eligible TANF State for the fiscal year; and
5. meet prior year's State maintenance of effort
requirement.
Conference Agreement
The conference agreement adopts provisions common to both
House bills and the Senate amendment, with the clarification
that a welfare-to-work State must also certify that it will
meet TANF maintenance of effort requirements. The conference
agreement requires that the State plan addendum contain
assurance that the PIC in SDA will coordinate expenditure of
welfare-to-work funds with the expenditure of the TANF block
grant. The plan may contain an application to the Secretary of
Labor for a waiver of the requirement that the PIC administer
welfare-to-work formula funds within the SDA.
i. Distribution of Formula Funds Within States
Current Law
No provision.
House Bill
Within each State, 85 percent of formula funds are to be
distributed to service delivery areas (SDAs) as defined in the
Job Training Partnership Act. At least half of the funds must
be distributed on the basis of the share of each SDA's
population in high poverty (above 5 percent). Additionally,
States may incorporate either or both of the following for the
remaining 50 percent of the formula: (1) the number of adults
receiving TANF assistance in the SDA for 30 months or more
(whether or not consecutive); and (2) the number of unemployed
residents in the SDA. The remaining 15 percent of formula funds
may be distributed by the Governor for projects to help move
long-term recipients into work.
Grants to SDAs have a minimum threshold of $100,000 in
lieu of distributing lesser amounts, unused funds as a result
of this threshold would be added to the Governor's 15 percent
fund for projects to help move long-term recipients into work.
Senate Amendment
Within each State, at least 85 percent of formula funds
are to be distributed to political subdivisions with poverty
and unemployment rates above the State average. At least half
of the funds must be distributed on the basis of each
subdivision's population in poverty. States may incorporate
either or both of the following for the remaining 50 percent of
the formula: (1) the number of adults receiving TANF assistance
in the political subdivision for 30 months or more (whether or
not consecutive); and (2) the number of unemployed residents in
the political subdivision (in each case rather than in the SDA
as in the House bill). The remaining 15 percent of formula
funds may be distributed by the Governor for projects to help
move long-term recipients into work.
Grants to political subdivisions (rather than to SDAs as
in the House bill) have a minimum threshold of $100,000; in
lieu of distributing lesser amounts, unused funds as a result
of this threshold would be added to the Governor's 15 percent
fund for projects to help move long-term recipients into work.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment with the following modifications: the
conference agreement follows the House bill with respect to
distribution of funds to service delivery areas; and the
conference agreement follows the House bill with respect to the
formula for such distribution, except the portion of funds
distributed based on the share of each SDA's population in
poverty is determined by the number in poverty above 7.5
percent instead of above 5 percent.
j. Performance Bonuses
Current Law
No provision. However, the 1996 welfare reform law
provides a total of $1 billion in Federal performance bonus
funds through Fiscal Year 2003 for States that are the most
successful in meeting the goals of the TANF block grant,
including ending the dependence of the needy parents on
government assistance by promoting job preparation and work.
house bill
No provision.
senate amendment
$100 million of Fiscal Year 1999 funds are to be reserved
and added to the High Performance Bonus under TANF in Fiscal
Year 2003 for welfare-to-work States that are most successful
in increasing the earnings of long-term welfare recipients or
those at risk of long-term welfare dependency.
conference agreement
The conference agreement follows the Senate amendment,
with a modification. The conference agreement sets aside $100
million of Fiscal Year 1999 funds of successful performance
bonuses to be paid in Fiscal Year 2000. Within 1 year, the
Secretary of Labor, in consultation with the Department of
Health and Human Services, the National Governors' Association,
and the American Public Welfare Association, shall develop a
formula for measuring the success of a State which received
welfare-to-work formula grants in Fiscal Year 1998 and Fiscal
Year 1999 in placing individuals in employment; the duration of
such placements; any increase in earnings of individuals and
other factors. The Secretary shall use the formula to score
each welfare-to-work State and set a threshold for awarding
bonuses.
k. Competitive Grant Funds for Private Industry Councils,
Private Entities, and Political subdivisions of
States
current law
No provision.
house bill
Committee on Ways and Means
50 percent of welfare-to-work funds (after subtracting
set-asides for Indian tribes and evaluation) is distributed to
establish competitive grants. Eligible applicants are PICs or
political subdivisions of States.
Grants must be sufficient to ensure a reasonable
opportunity for success. Not less than 25 percent of
competitive funds will be available for grants in rural areas
with populations less than 50,000. Not less than 65 percent of
competitive funds will be available for grants among the 100
cities in the U.S. with the highest number of individuals in
poverty.
Grants are based on: the likelihood of the project's
effectiveness in expanding the base of knowledge about welfare-
to-work programs for the least job ready, moving the least job
ready into the labor force, and moving the least job ready into
the labor force even in labor markets with a shortage of low-
skill jobs; at the Secretary's discretion, other factors may be
considered: the applicant's success in addressing multiple
barriers, ability to leverage other resources, use of State or
local resources that exceed the required match, plans to
coordinate with other organizations, or use of current or
former recipients as mentors, case managers or providers.
Grants made by the Secretary of Labor in consultation
with the Secretary of HHS and the Secretary of HUD in Fiscal
Years 1998 and 1999.
Committee on Education and the Workforce
5 percent of welfare-to-work funds (after subtracting
set-asides for Indian tribes and evaluation) plus any
unobligated funds from prior fiscal years, is distributed to
establish demonstration projects. Eligible applicants are PICs
or political subdivisions of States.
Grants are based on the likelihood of the demonstration
project placing long-term recipients into the workforce.
Grants are made by the Secretary of Labor in consultation
with the Secretary of HHS and the Secretary of HUD in Fiscal
Years 1998 and 1999. Funds remain available until the end of
Fiscal Year 2001.
senate amendment
Twenty-five percent of welfare-to-work funds (after
subtracting set-asides for Indian tribes, evaluation, and high
performance bonuses) is distributed to establish competitive
grants to political subdivisions of States. Eligible applicants
are political subdivisions of States or community action
agencies, community development corporations, and other non-
profit organizations with demonstrated effectiveness in moving
recipients into the work force. Their proposals must be
approved by the State TANF agency.
Grants must be sufficient to ensure a reasonable
opportunity for success. Not less than 30 percent of
competitive funds will be available for grants in rural areas,
as defined by the House.
Grants are based on: the likelihood of the project's
effectiveness in expanding the base of knowledge about welfare-
to-work programs for the least job ready, moving the least job
ready into the labor force, and moving the least job ready into
the labor force even in labor markets with a shortage of low-
skill jobs; at the Secretary's discretion, other factors may be
considered: the applicant's success in addressing multiple
barriers, ability to leverage other resources, use of State or
local resources that exceed the required match, plans to
coordinate with other organizations, or use of current or
former recipients as mentors, case managers or providers.
Competitive grants awards are made in Fiscal Year 1998
and Fiscal Year 2000.
conference agreement
The conference agreement provides that eligible
applicants include PICs, political subdivisions of States, or
private entities applying in conjunction with a PIC or
political subdivision. The House bill and the Senate amendment
are identical on the requirement that grants must be sufficient
to ensure a reasonable opportunity for success.
The conference agreement does not include a set-aside for
rural areas or cities with large concentrations of poverty.
However, the Secretary is directed to consider the needs of
rural areas and cities in awarding competitive grants.
The conference agreement follows the House bill (Ways and
Means provision) and the Senate amendment on the requirement
that grants must be made on the basis of the likelihood of the
project's effectiveness in expanding knowledge about welfare-
to-work programs, among other factors.
The conference agreement follows the House bill so that
grants are available in Fiscal Years 1998 and 1999.
l. Grants to Indian Tribes
current law
No provision.
house bill
1 percent of appropriated funds is distributed to Indian
tribes with welfare-to-work plans, in such amounts as the
Secretary deems appropriate.
An Indian tribe shall be considered a welfare-to-work
tribe if it meets the following criteria:
1. submit a plan in the form of an amendment to the
tribal family assistance plan, if any, (including a description
of how welfare-to-work funds will be used);
2. provide an estimate tribal spending; and
3. agree to negotiate in good faith with the Secretary of
HHS on the substance of and cooperate with the conduct of an
evaluation.
senate amendment
The set-aside for Indian tribes is identical to the House
(1 percent of appropriated funds). The criteria for determining
an eligible tribe is similar to the House bill.
conference agreement
The conference agreement follows the House bill and the
Senate amendment, but adds a provision allowing Secretary of
Labor to waive or modify limitations on the use of welfare-to-
work funds by Indian tribes.
m. Grants to Territories/Outlying Areas
current law
Total Federal funding to the territories (Puerto Rico,
U.S. Virgin Islands, Guam and American Samoa) for public
assistance programs, including TANF, is limited to specified
dollar amounts. These limits are raised effective October 1,
1996. Territories may receive TANF funds in addition to their
family assistance grant on a matching basis to take advantage
of their increased caps.
house bill
Welfare-to-work funds to territories do not count against
their public assistance funding cap.
senate amendment
Same as House, except refers to ``outlying areas''
instead of ``territories.''
conference agreement
The conference agreement follows the Senate amendment.
n. Use of Funds
Current Law
No provision.
House bill
Committee on Ways and Means
Funds must be used to move TANF recipients and
noncustodial parents of any minor who is a recipient into the
work force through the following:
1. job creation through public or private wage subsidies;
2. on-the-job training;
3. contracts (through public or private providers) for
job readiness, placement or post-employment services;
4. vouchers for job readiness, placement or post-
employment services; and
5. job support services (excluding child care) if not
otherwise available.
PICs cannot be used to provide direct services.
Funds are subject to the 15 percent cap on administrative
costs, may be used for public or private job placement
agencies, and may be used to fund Individual Development
Accounts.
Committee on Education and the Workforce
Funds must be used to move TANF recipients into the work
force through the following:
1. job creation through public or private wage subsidies;
2. on-the-job training;
3. job placement contracts (through companies or public
programs);
4. job vouchers; and
5. job retention or support services, if not otherwise
available.
Senate Amendment
Funds must be used to move TANF recipients and
noncustodial parents of any minor who is a recipient into the
work force through the following:
1. job creation through public or private wage subsidies;
2. on-the-job training;
3. contracts (through public or private providers) for
job readiness, placement or post-employment services;
4. vouchers for job readiness, placement or post-
employment services;
5. job support services (excluding child care) if not
otherwise available; and
6. technical assistance and related services that lead to
self-employment through the microloan demonstration program
under section 7(m) of the Small Business Act.
Contracts or vouchers for job placement services using
welfare-to-work funds must require that at least one-half of
the payment be withheld until after the person placed in a job
has been at work for at least six months.
conference Agreement
The conference agreement adopts most provisions of the
House bill and Senate amendment on allowable activities, but
adds permission for States to spend welfare-to-work fund on
community service and work experience programs, and it drops
the exclusion of child care from allowable job support
services.
The conference agreement follows the Senate amendment to
require that contracts or vouchers for job placement services
supported by welfare-to-work fund must withhold at least one-
half of the payment until after the person has been at work for
at least six months. The conference agreement follows the
Senate amendment by dropping the House provision specifying
that PICs cannot use funds to provide direct services.
The conference agreement adopts the provision in the
House bill and the Senate amendment specifying that funds are
subject to the 15 percent administrative cap and may be used
for job placement or to fund Individual Development Accounts.
o. Eligible Individuals
Current Law
No provision
House Bill
Committee on Ways and Means
90 percent of funds must be expended on TANF recipients
who have received assistance for at least 30 months (whether or
not consecutive); OR who are within 12 months of reaching the
time limit; AND who meet at least two of the following
criteria:
1. are not high school graduates or do not have GED and
have low skills in reading and math;
2. require substance abuse treatment for employment;
3. have a poor work history.
The Secretary shall prescribe regulations necessary to
interpret these criteria.
Committee on Education and the Workforce
90 percent of funds must be expended on TANF recipients
who have received assistance for at least 30 months (whether or
not consecutive); OR who are within 12 months of reaching the
time limit; OR who meet at least two of the following criteria:
1. are not high school graduates or do not have GED and
have low skills in reading and math;
2. require substance abuse treatment for employment;
3. have a poor work history.
Senate Amendment
90 percent of funds must be expended on TANF recipients
who have received assistance for at least 30 months (whether or
not consecutive); OR who are within 12 months of reaching the
time limit; OR who meet at least two of the following criteria:
1. are not high school graduates or do not have GED and
have low skills in reading and math;
2. require substance abuse treatment for employment;
3. have a poor work history.
Conference Agreement
The conference agreement follows the House bill (Ways and
Means) on target criteria, but modifies the provision to
require that at least 70 percent of funds (instead of 90
percent) must be spent on the specified groups, with a
modification that non-high school graduates have low skills in
reading OR mathematics rather than reading AND mathematics.
States may spend up to 30 percent of funds on individuals
(including non-custodial parents of minors whose custodial
parent is a TANF recipient) who have the characteristics of
long-term recipients, with the clarification that funds not
spent for these purposes shall be used for the same purposes as
the 70 percent spent on specified groups. The conference
agreement follows the House bill so that the Secretary must
prescribe necessary regulations within 90 days after the date
of enactment.
p. Interaction with TANF
Current Law
No provision.
House Bill
Adults who received TANF for 60 months are eligible for
assistance from the welfare-to-work program. Assistance to
individuals from welfare-to-work funds is not counted as TANF
assistance for purposes of the TANF 60-month time limit.
Welfare-to-work is considered assistance for purposes of other
TANF requirements; for example, work participation, child
support, and data reporting. States must adopt the welfare-to-
work plan as an addendum to their TANF State plan. States must
be eligible TANF States for the fiscal year.
Senate Amendment
Same as House.
Conference Agreement
The conference agreement follows the identical provisions
in the House bill and the Senate amendment with two
modifications. It provides authority to provide assistance to
those who have reached the TANF 60-month limit. It also
clarifies that assistance to individuals from welfare-to-work
funds does not count toward the TANF 60-month time limit.
Months when cash assistance is provided, directly or indirectly
(for example, wage subsidies), count toward the 60-month limit.
q. Evaluation
Current Law
No provision.
House Bill
The Secretary of HHS must develop, in consultation with
the Secretary of Labor, a plan to evaluate use of welfare-to-
work grants. States must agree to negotiate with the Secretary
of HHS on the substance and cooperate with the conduct of an
evaluation; 0.5 percent of funds is reserved for HHS
evaluation. The Secretary is urged to include the following
measures:
1. placements in the labor force and placements that last
at least six months;
2. placements in the private and public sectors;
3. earnings of individuals who obtain employment;
4. average expenditures per placement.
The Secretary of HHS, in consultation with the Secretary
of Labor and the Secretary of HUD, must report to Congress on
projects funded under the welfare-to-work program and on the
evaluations of projects. An interim report is due January 1,
1999, and a final report is due January 1, 2001.
Senate Amendment
Same as House.
Conference Agreement
The conference agreement follows the identical provisions
in the House bill and the Senate amendment, with the
modification that 0.8 percent of total funds is reserved for
evaluations, including $6 million for evaluation of abstinence
education programs.
r. Data Reporting
Current Law
States are required to collect on a monthly basis and
report to the Secretary on a quarterly basis specified
information about families receiving TANF assistance.
Information on the demographic and financial characteristics of
TANF families is reported as disaggregated case records, and
may be based on a sample of TANF families. In addition to the
disaggregated case records, States are required to report
aggregate information on total expenditures, Federal funds used
to cover administrative costs, the number of noncustodial
parents participating in work activities, and transitional
services. The Secretary has the authority to regulate and
define the data elements for the required reports.
House Bill
No provision.
Senate Amendment
No provision.
Conference Agreement
Recipients of welfare-to-work funds are subject to TANF
reporting requirements. In addition to the information required
of all TANF families, States are required to report additional
information on families with a member receiving welfare-to-work
assistance, including the types of welfare-to-work activities
they engaged in, the amount expended for the recipient in the
activity, and information about their employment or training
status when their welfare-to-work assistance ends.
Additionally, separate information on aggregate welfare-to-work
expenditures, administrative costs, and noncustodial parents in
the welfare-to-work program is required.
2. Workfare--Rules for Community Service and Work Experience Programs
Current Law
States may establish work experience and community
service programs in which TANF recipients may be required to
work as a condition of receiving their grant. These programs
are often called ``workfare.'' The Department of Labor has held
that workfare participants may be considered ``employees'' and
thus would be covered by the Fair Labor Standards Act (FLSA),
which sets hour and wage standards, and other employment laws.
House Bill
Work experience and community service programs are
designed to improve the employability of participants through
actual work experience or training. Such programs are limited
to projects which serve a useful public purpose. Participants
may not be placed in private, for-profit organizations and may
not be required to participate for more hours than the combined
value of their TANF and Food Stamp benefits minus child support
collected and retained by the State, divided by the greater of
the Federal or State minimum wage. Participants engaged in work
experience and community service programs are not entitled to a
salary or work or training expenses and are not entitled to any
other compensation for work performed.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the Senate amendment (no
provision).
2a. Sanctions
Current Law
No provision (see above).
House Bill
No provision.
Senate Amendment
Notwithstanding minimum wage requirements, States retain
the ability to sanction a family for noncompliance with program
rules.
Conference Agreement
The conference agreement follows the Senate amendment.
3. Counting Any Other Work Activity for Recipients With Sufficient
Participation in Workfare Programs
Current Law
TANF law requires single adult parents to engage in
``work activities'' for an average of 20 hours weekly in Fiscal
Years 1997 and 1998 (more in later years) and requires that all
20 hours be spent in specified ``priority'' activities (not
including, for instance, job skills training). In Fiscal Year
1999, when required work hours for those without a preschooler
climb to 25 hours, 5 hours credit may be received for lower
priority work activities. (Required weekly work hours for 2-
parent families are 35, with 30 in ``priority'' activities.)
TANF law also places time limits on vocational educational
training (12 months per person) and job search.
House Bill
Participants in work experience and community service
programs who do not meet the hourly work requirements when
minimum wage is taken into account can meet the remaining hours
of the work requirement by participating in any other work
activity. States must treat persons who participate enough
hours, calculated at the minimum wage, to equal their combined
TANF/food stamp benefits (less child support collections
notdistributed to them) as engaged in work if they make up any
shortfall in required hours by time spent in other work activity.
The provision provides an alternative method for a TANF
recipient to meet the hourly work requirements. It does not
preclude a recipient from meeting the hourly work requirements
through other means. For example, a single parent with a child
under age 6 would meet hourly work requirements by engaging in
work for 20 hours per week.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the Senate amendment (no
provision).
4. Protections for employees and TANF participants
Current Law
Although a TANF recipient may fill a vacant employment
position, no adult in a TANF work activity may be employed or
assigned when another person is on layoff from the same or any
substantially equivalent job; or if the employer has caused an
involuntary workforce reduction in order to fill the resulting
vacancy with a TANF recipient. These provisions do not preempt
or supersede any State or local law that provides greater
protection against displacement. TANF-funded activities are
subject to the Age Discrimination Act, the Americans with
Disabilities Act, Title VI of the Civil Rights Act, and Sec.
504 of the Rehabilitation Act.
House Bill
Displacement: Participants in activities funded by
welfare-to-work funds and TANF may fill a vacant employment
position in order to engage in a work activity, except when
another individual is on layoff from the same or substantially
equivalent job or if the employer has caused an involuntary
reduction in the workforce with the intention of filling the
vacancy with the participant.
Impairment of contracts: The work activity cannot impair
an existing contract for services or collective bargaining
agreement. Any activity that would impair an existing contract
or agreement cannot be undertaken without written consent of
the labor organization and employer.
Health and safety: Otherwise applicable Federal and State
health standards shall apply to all TANF and welfare-to-work
participants engaged in a work activity.
Nondiscrimination: Adds gender to the other
nondiscrimination provisions applicable to TANF and welfare-to-
work participants.
Grievance procedure: States must establish grievance
procedures for employees alleging nondisplacement violations
and for TANF and welfare-to-work participants who allege
violations of provisions regarding nondisplacement, health and
safety standards, or gender discrimination. The procedure must
include an opportunity for a hearing.
Remedies: States must provide remedies for violations of
anti-displacement, health and safety, and anti-discrimination
protections, which may include reinstatement of an employee
with payment of lost wages and benefits, reestablishment of
terms, conditions and privileges of employment, and where
appropriate, other equitable relief.
Senate Amendment
Displacement: Participants in activities funded by
welfare-to-work funds cannot displace current employees
(including a reduction in hours, wages, or benefits) or be
employed in a job resulting from a layoff or a workforce
reduction to create the vacancy or in a job that impairs
promotional opportunities for current employees.
Impairment of contracts: Existing contracts for services
or collective bargaining agreements cannot be impaired by a
work activity; any activity inconsistent with a collective
bargaining agreement cannot be undertaken without the written
consent of the labor organization and employer.
Health and safety: Otherwise applicable Federal and State
health and safety standards, as well as workers' compensation,
apply to welfare-to-work participants.
Grievance procedures: States must establish grievance
procedures which include an opportunity for a hearing within 60
days, with appeal rights to the Secretary of Labor.
Investigation: Requires the Secretary of Labor to
investigate alleged violations of nondisplacement and health
and safety provisions if decision on alleged complaint is not
reached within 60 days and either party appeals; or if decision
is reached and appealed.
Remedies: Remedies are limited to suspension or
termination of payments, prohibition of placement with an
employer who violated these provisions, reinstatement of the
employee and payment of lost wages and benefits, or equitable
relief.
Conference Agreement
The conference agreement follows the Senate amendment by
applying the specified protections to welfare-to-work
participants but not all TANF participants engaged in work
activities. The agreement follows the House bill regarding
displacement, with the modification that an involuntary
reduction in hours to less than full-time work is prohibited
and the clarification that State laws, if broader, are not
preempted by this federal provision. With regard to impairment
of contracts, the conference agreement follows the Senate
amendment, with clarification that an activity that would
``violate'' a collective bargaining agreement cannot be
undertaken without written consent of the labor organization
and employer. The conference agreement follows the House bill
and the Senate amendment on health and safety protections.
The conference agreement follows the House bill on
nondiscrimination protections. On grievance procedures, the
conference agreement follows the House bill with the
modification that States have the option of continuing any
sanctions during the grievance procedure. In addition, the
State grievance procedure must include an opportunity for
appeal to a State agency other than the agency administering
the State welfare-to-work program; however, this condition will
be satisfied by the allowance of appeals to an independent
review board within the agency administering the State welfare-
to-work program. On investigations, the conference agreement
follows the House bill (thus, there is no provision). The
conference agreement follows the Senate amendment on remedies.
5. Limit on Vocational Educational Training as a Work Activity
Current Law
The law restricts to 20 percent the proportion of TANF
recipients ``in all families and in 2-parent families'' who may
be treated as engaged in work for a month by reason of
participating in vocational educational training or, if single
teenage household heads without a high school diploma, by
reason of satisfactory attendance at secondary school or
participation in education directly related to employment.
House Bill
The provision adopted by the Committee on Ways and Means
clarifies the limit on the number of persons who may be treated
as engaged in work by reason of participation in vocational
educational activities as 30 percent of individuals in all
families and in two-parent families, respectively, who are
engaged in work for a month. Teen heads of households who are
deemed to be meeting the work requirements by maintaining
satisfactory school attendance or participating in education
directly related to work are specifically excluded from the
cap.
The provision adopted by the Committee on Education and
the Workforce clarifies the limit on the number of persons who
may be treated as engaged in work by reason of participation in
vocational educational activities as 20 percent of individuals
in all families and in two-parent families, respectively, who
are engaged in work for a month or deemed to be engaged in work
by reason of being teen heads of households who are maintaining
satisfactory school attendance or participating in education
directly related to work.
Senate Amendment
Allows 20 percent of persons in all families and in two-
parent families (other than those headed by teen parents
without a high school diploma) to be treated as engaged in work
by reason of participation in vocational educational
activities. Strikes the limit on the number of teen parents who
may meet the work requirement by maintaining satisfactory
school attendance or participating in education directly
related to work.
Conference Agreement
The conference agreement follows the House bill
(provision adopted by the Committee on Ways and Means) so that
the number of persons who may be treated as engaged in work by
reason of participation in vocational educational activities is
limited to 30 percent of individuals in all families and in
two-parent families, respectively, who are engaged in work for
a month. The conference agreement provides that teen heads of
households who are deemed to be meeting the work requirements
by maintaining satisfactory school attendance or participating
in education directly related to work are specifically excluded
from the cap for Fiscal Years 1998 and 1999.
6. Limit on Transfer of TANF Funds
Current Law
States may transfer up to 30 percent of their TANF funds
to the Title XX social services block grant and the Child Care
and Development Block Grant (CCDBG), but no more than one-third
of the total transfer may go to the former. Thus, for every $1
transferred to Title XX, $2 must be transferred to the child
care block grant. TANF funds transferred to Title XX can be
spent only on children and families with income below 200
percent of the poverty guideline.
house bill
Limits the amount transferable to Title XX to 10 percent
of the TANF block grant without respect to any transfers to the
Child Care and Development Block Grant. Up to 30 percent may be
transferred to the CCDBG, but total transfers are limited to 30
percent, and current law restrictions on funds transferable
into the Title XX program remain in effect.
senate amendment
No provision.
conference agreement
The conference agreement follows the House bill.
7. Penalty Against State for Not Reducing Benefit of
Recipient for Refusal to Work
current law
If an adult recipient refuses to engage in required work,
the State must reduce aid to the family pro rata (or more, at
State option) or shall discontinue aid, subject to good cause
and other exceptions of the State.
house bill
A State shall be penalized between 1 percent and 5
percent of its TANF block grant if it fails to reduce a
recipient's grant for refusing without good cause to
participate in work. The Secretary is to impose the reduction
based on the degree of noncompliance.
senate amendment
No provision.
conference agreement
The conference agreement follows the House bill.
8. Family Violence Exemptions from TANF Rules
current law
TANF law gives the State an option to certify that it has
established and is enforcing standards to screen and identify
recipients with a history of domestic violence, to refer them
to counseling and supportive services, and to waive some
program requirements, such as time limits (subject to the 20
percent limit on exemptions from the Federal 5-year time
limit), for TANF recipients in cases where the requirements
would make it harder for them to escape domestic violence or
would unfairly penalize persons who have been victimized by
domestic violence or those at risk of further violence.
house bill
No provision.
senate amendment
Provides that:
1. States shall not be subject to any numerical
limitation in the granting of good cause waivers in accordance
with the Family Violence Option;
2. HHS shall exclude persons with a family violence
waiver in determining a State's compliance with work
participation rates and enforcement of the time limit. HHS
shall exclude these persons in determining whether to impose a
penalty for a State's failure to meet participation rates,
enforce the time limit, or enforce penalties requested by the
child support agency against TANF recipients for their failure
to cooperate in establishing paternity or in establishing,
modifying, or enforcing a child support order without good
cause;
3. Prohibits the Federal Parent Locator Service from
disclosing information (except to a court) if there is
reasonable evidence of domestic violence or child abuse or if
the health, safety, or liberty of a parent or child would be
unreasonably put at risk by the disclosure.
conference agreement
The conference agreement follows the House bill (i.e.
dropping the Senate provision). Instead, the conference
agreement requires that the General Accounting Office conduct a
study of the effect of family violence on the use of welfare
programs.
9. Penalty for Failure to Meet Minimum Participation Rates
current law
TANF law requires the HHS Secretary to reduce a State's
TANF block grant if itfalls short of the required work
participation rate. For the first year of failure, the penalty is not
more than 5 percent of the grant; in subsequent years, annual penalties
would rise by 2 percentage points per year; e.g., up to 7 percent in
second year, 9 percent in the third year, and so forth--with a maximum
cumulative penalty of 21 percent. States must replace Federal funds
lost because of penalties with funds of their own.
house bill
No provision.
senate amendment
Requires penalty of 5 percent for first failure (7
percent for next, rising to a maximum of 21 percent). Adds
proviso that the Secretary may reduce the penalty if
noncompliance is due to ``extraordinary circumstances, such as
a natural disaster or regional recession.'' In this case, the
Secretary must justify the penalty reduction to Congress in
writing.
Conference Agreement
The conference agreement follows the Senate amendment.
10. Data Collection About TANF Families
current law
TANF law requires States to report quarterly information
about recipient families. One question asks whether a child
receiving TANF or an adult in the family is disabled.
house bill
Revises and expands the current question. Requires States
to report: whether a child or adult in a TANF recipient family
is receiving disability benefits under specified provisions of
the Social Security Act; namely, section 202, section 223,
Title XIV (for needy adults in the outlying areas), Title XVI
(Federal SSI), or Title XVI (State supplements to SSI).
senate amendment
Broadens the question about disability status to include
benefits outside the Social Security Act. Requires States to
report whether a TANF child or adult is receiving ``Federal
disability insurance benefits or benefits based on Federal
disability status.''
Conference Agreement
The conference agreement follows the Senate amendment.
(This provision appears in the section on technical
corrections.)
II. SUPPLEMENTAL SECURITY INCOME
11. Requirement to Perform Childhood Disability Redeterminations in
Missed Cases
current law
By August 22, 1997 (one year after the date of enactment
of P.L. 104-193), the Commissioner of the Social Security
Administration (SSA) is expected to redetermine the eligibility
of any child receiving SSI benefits on August 22, 1996, whose
eligibility may be affected by changes in childhood disability
eligibility criteria, including the new definition of childhood
disability and the elimination of the individualized functional
assessment. Benefits of current recipients will continue until
the later of July 1, 1997 or a redetermination assessment.
Should a child be found ineligible, benefits will end following
redetermination. Within 1 year of attainment of age 18, SSA is
expected to make a medical redetermination of current SSI
childhood recipients using adult disability eligibility
criteria. For low birth weight babies, a review must be
conducted within 12 months after the birth of a child whose low
birth weight is a contributing factor to his or her disability.
house bill
This provision extends from 1 year after the date of
enactment to 18 months after the date of enactment the period
by which SSA must redetermine the eligibility of any child
receiving benefits on August 22, 1996 whose eligibility may be
affected by changes in childhood disability. The provision also
specifies that any child subject to an SSI redetermination
under the terms of the welfare reform law whose redetermination
does not occur during the 18-month period following enactment
(that is, by February 22, 1998) is to be assessed as soon as
practicable thereafter using the new eligibility standards
applied to other children under the welfare reform law.
senate amendment
No provision.
Conference Agreement
The conference agreement follows the House bill.
12. Repeal of Maintenance-of-Effort Requirement for Optional State
Supplementation of SSI Benefits
Current Law
States have an option to supplement the Federal SSI
payment with their own funds. States that operate optional
supplementation programs are required by Section 1618 of the
Social Security Act to ``pass along'' the amount of any Federal
SSI benefit increase to recipients. The law allows States to
comply with this requirement by either maintaining their
supplementary payment levels to recipients of a given type at
or above 1983 levels or by maintaining their supplementary
payments at a level that, when combined with Federal payments,
at least equals combined payments to the same type of
recipients during the previous 12 months. In effect, Section
1618 requires that once a State elects to provide supplementary
payments, it must continue to do so.
House Bill
The House Bill repeals Section 1618, ending the
requirement that States pass along any Federal benefit increase
to recipients.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the Senate amendment
(no provision).
13. Fees for Federal Administration of State Supplementary Payments
Current Law
The law requires the Commissioner of Social Security to
assess an administration fee for making State supplementary SSI
payments (optional or mandatory) on behalf of States. For
Fiscal Year 1997 and each succeeding fiscal year, the fee is
$5.00 monthly or a different rate that the Commissioner
determines to be appropriate for the State. The administration
fees--along with any additional service fees that the
Commissioner imposes to cover costs--are deposited in the
general fund of the Treasury as miscellaneous receipts.
House Bill
The House Bill increases fees for administering State
supplements (optional or mandatory) as follows:
For Fiscal Year 1998.......................................... $6.20
For Fiscal Year 1999.......................................... $7.60
For Fiscal Year 2000.......................................... $7.80
For Fiscal Year 2001.......................................... $8.10
For Fiscal Year 2002.......................................... $8.50
For Fiscal Year 2003 and each succeeding fiscal year, the
rate in the preceding year, adjusted for price inflation (by
use of the Consumer Price Index); or a different rate that the
Commissioner determines to be appropriate for the State.
The first $5 in monthly administration shall be deposited
in the general fund of the Treasury as miscellaneous receipts.
The remaining portion of administration fees (and 100 percent
of additional services fees) shall, upon collection for Fiscal
Year 1998 and later years, be credited to a special Treasury
fund to be available to defray expenses in carrying out SSI and
related laws.
The bill authorizes $35 million to be appropriated from
the new special Treasury fund for Fiscal Year 1998 and ``such
sums as are necessary'' for later years.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the House bill, with the
modification that administration fees authorized by this
section to be charged and credited to a special fund
established in the Treasury for State supplementary payment
fees shall not be scored as receipts under section 252 of the
Balanced Budget and Emergency Deficit Control Act of 1985; such
amounts shall be credited as a discretionary offset to
discretionary spending to the extent they are made available
for expenditure in appropriations Acts.
III. CHILD SUPPORT ENFORCEMENT
14. Clarification of Authority to Permit Certain Redisclosures of Wage
and Claim Information
Current Law
P.L. 104-193 gives HHS the authority to obtain
information about the wages and unemployment compensation paid
to individuals from State unemployment compensation agencies
for the State Directory of New Hires. The State Directory of
New Hires is then required to furnish this wage and
unemployment compensation claim information, on a quarterly
basis, to the National Directory of New Hires. The law also
requires State unemployment compensation agencies to establish
such safeguards as the Secretary of Labor determines are
necessary to insure that the information disclosed to the
National Directory of New Hires is used only for the purpose of
administering programs under State plans approved under the
Child Support Enforcement program, the TANF block grant, and
for other purposes authorized in section 453 of the Social
Security Act (as amended by P.L. 104-193).
House Bill
Clarifies that HHS may disclose wage and unemployment
compensation information contained in the Directory of New
Hires to the Department of Treasury, the Social Security
Administration, and to State Child Support Enforcement
agencies.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the House bill.
IV. RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS
15. Extension of SSI/Medicaid Eligibility Period for Refugees and
Certain Other Qualified Aliens From 5 to 7 Years
Current Law
Provides 5-year exemption from: (1) the bar against SSI
and Food Stamps; and (2) the provision allowing States to deny
``qualified aliens'' access to Medicaid, TANF, and Social
Services Block Grant for refugees, asylees, and aliens granted
withholding of deportation for persecution.
House Bill
Lengthens from 5 years to 7 years the period during
which SSI and Medicaid eligibility is guaranteed to refugees,
asylees, and aliens whose deportation has been withheld.
Senate Amendment
Similar to House, except also clarifies that Cuban-
Haitian entrants would be considered ``refugees.''
Conference Agreement
The conference agreement follows the Senate amendment.
16. Definition: ``Qualified Aliens''
Current Law
Defined by P.L. 104-193 (as amended by P.L. 104-208) as
aliens admitted for legal permanent residence (i.e.,
immigrants), refugees, aliens paroled into the United States
for at least 1 year, aliens granted asylum or related relief,
and certain abused spouses and children. Most Cuban/Haitian
entrants are paroled for 1 year and, as such, are ``qualified
aliens.'' Amerasians enter as immigrants and, as such, are
qualified aliens.
House Bill
Specifies that Cuban and Haitian entrants and Amerasian
permanent resident aliens are to be considered qualified aliens
for purpose of continuing SSI and Medicaid eligibility of those
who were receiving benefits on August 22, 1996.
Senate Amendment
Specifies Cuban and Haitian entrants are qualified
aliens for purpose of continuing SSI and Medicaid eligibility
of those who were receiving benefits on August 22, 1996 (see
below regarding treatment of Amerasians).
Conference Agreement
The conference agreement follows the Senate amendment.
17. SSI Eligibility for Noncitizens Receiving SSI on August 22, 1996
Current Law
Most ``qualified aliens'' are barred from Supplemental
Security Income (SSI) for the Aged, Blind, and Disabled.
Current recipients must be screened for continuing eligibility
by September 30, 1997.
House Bill
``Qualified aliens'' receiving SSI benefits on August
22, 1996 would remain eligible for SSI. Applies to both the
aged and disabled.
Senate Amendment
Similar to House, but clarifies that ban does not apply
to an alien who is ``lawfully residing in any State.''
Conference Agreement
The conference agreement follows the Senate amendment,
with the modification that the ban does not apply to an alien
who is ``lawfully residing in the United States.'' The
conference agreement clarifies that non-qualified aliens who
are current SSI recipients would remain eligible for SSI and
guaranteed Medicaid until October 1, 1998.
18. SSI Eligibility for Noncitizens Here by August 22, 1996 and
Subsequently Disabled
Current Law
Not eligible under current law (unless otherwise exempt
from ineligibility).
House Bill
No provision (thus eligibility continues beyond September
30, 1997 only for those receiving benefits as of August 22,
1996; see above).
Senate Amendment
Eligibility for SSI disability benefits provided for
``qualified aliens'' here by August 22, 1996 who subsequently
become disabled.
Conference Agreement
The conference agreement follows the Senate amendment,
with the modification that benefits are to be provided to
aliens ``lawfully residing in the United States'' on August 22,
1996.
19. SSI Eligibility for the Severely Disabled
Current Law
No provision for eligibility of severely disabled
``qualified aliens'' beyond continued coverage through
September 30, 1997 of those on rolls as of August 22, 1996.
House Bill
No special provision for the severely disabled.
Eligibility of those on the rolls as of August 22, 1996 would
continue (see above).
Senate Amendment
Provides for coverage of future severely disabled
``qualified aliens'' who are unable to naturalize solely
because of their disability.
Conference Agreement
The conference agreement follows the House bill (no
provision). However, qualified aliens present in the U.S. on
August 22, 1996 who subsequently become disabled would be
eligible for SSI (see item 18 above).
20. SSI Eligibility for SSI Recipients with Applications Filed Before
January 1, 1979
Current Law
Not eligible under current law beyond September 30, 1997
unless can prove citizenship (or are otherwise exempt because
of work record or veteran status).
House Bill
No provision.
Senate Amendment
Individuals who have been receiving SSI on basis of an
application filed before January 1, 1979 would continue to be
eligible unless there is convincing evidence that they are non-
qualified aliens.
Conference Agreement
The conference agreement follows the Senate amendment.
21. Medicaid eligibility for noncitizens receiving SSI on August 22,
1996
Current Law
States may exclude ``qualified aliens'' who entered the
United States before enactment of the welfare law (August 22,
1996) from Medicaid beginning January 1, 1997. Additionally, to
the extent that legal immigrants' receipt of Medicaid is based
only on their eligibility for SSI, some will lose Medicaid
because of their ineligibility for SSI.
House Bill
``Qualified aliens'' who were receiving derivative
Medicaid benefits on August 22, 1996 as a result of receipt of
SSI would remain eligible for Medicaid.
Senate Amendment
Similar to House.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment.
22. Food stamp eligibility
Current Law
``Qualified aliens'' here before August 22, 1996 are
barred from food stamps by August 22, 1997; new arrivals are
barred from date of entry.
House Bill
No derivative eligibility from SSI eligibility; i.e., no
change in existing law.
Senate Amendment
No derivative eligibility from SSI eligibility; i.e., no
change in existing law.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment.
23. Medicaid eligibility for children
Current Law
``Qualified aliens'' entering after August 22, 1996 are
barred from all but emergency Medicaid for their first 5 years
after entry, at which point their participation is a State
option; no special provision is made for children.
House Bill
No change in existing law.
Senate Amendment
Exempts ``qualified alien'' children under age 19
entering after August 22, 1996 from the 5-year bar on full
Medicaid.
Conference Agreement
The conference agreement follows the House bill (no
provision).
24. SSI/Medicaid eligibility for permanent resident aliens who are
members of an Indian Tribe
Current Law
Makes no exception for qualified aliens who are Native
Americans. Section 289 of the Immigration and Nationality Act
of 1952 (INA) preserves the right of free passage recognized in
the Jay Treaty of 1794 by allowing ``American Indians born in
Canada'' unimpeded entry and residency rights if they ``possess
at least 50 per centum of blood of the American Indian race.''
By regulation, individuals who enter the U.S. and reside here
under this provision are regarded as lawful permanent resident
aliens.
House Bill
Excepts members of federally recognized American Indian
tribes who are lawfully admitted for permanent residence from
the SSI (and derivative Medicaid if applicable) restrictions on
qualified aliens.
Senate Amendment
Excepts (1) members of federally recognized tribes and
(2) American Indians who come under Sec. 289 of the INA from
the SSI (and derivative Medicaid if applicable) restrictions on
qualified aliens. Makes similar exceptions to the 5-year bar on
benefits for newly arriving qualified aliens.
Conference Agreement
The conference agreement follows the Senate amendment,
with clarifying amendments.
25. Amerasians
Current Law
Amerasians enter as immigrants and, as such, are
qualified aliens.
House Bill
Considered to be ``qualified aliens'' for purpose of
continued eligibility for SSI for those here by August 22,
1996.
Senate Amendment
Amerasians would be made eligible for benefits on same
basis as refugees. Provides for funding through $100 processing
fees to be levied on unlawfully present aliens who are ordered
removed after having been convicted in the U.S. of a felony.
Conference Agreement
The conference agreement follows the Senate amendment,
with the modification that the funding provision is dropped.
26. Verification of eligibility for state and local public benefits
Current Law
Requires verification that applicants for federal
benefits are eligible for the benefits, and that States
administering such programs have a verification system.
House Bill
Authorizes State and local governments to verify
eligibility for State or local public benefits.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the House bill.
V. Unemployment Compensation
27. Clarifying provision relating to base periods
Current Law
A ``base period'' is used to measure a claimant's covered
wages for eligibility determination. Each State sets its base
period, and most use the first 4 of the last 5 completed
calendar quarters. A Federal court decision in Illinois (in the
Pennington case) has ruled that the State's choice of base
period does not ensure full payment of benefits when due as
Federal law requires.
House Bill
A State's decision of which base period to use will not
be considered a provision for a method of administration to
which the ``when due'' clause of Federal law applies. This
means States would have complete authority in setting base
periods for determining eligibility for benefits.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the House bill.
28. Increase in Federal unemployment account ceiling
Current Law
The Federal Unemployment Account (FUA), a reserve account
in the Unemployment Trust Fund, provides authority for loans to
insolvent State benefit accounts in the trust fund. If FUA's
assets exceed 0.25 percent of wages in covered employment,
excess assets are transferred to certain other trust fund
accounts, including State benefit accounts if Federal accounts
are at their ceilings.
House Bill
The ceiling on FUA assets will be increased to 0.5
percent of wages in covered employment for Fiscal Year 2002 and
subsequent years.
Senate Amendment
Same as House.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment.
29. Special distribution to states from unemployment trust fund
Current Law
80 percent of Federal unemployment tax revenue is
credited to the Employment Security Administration Account
(ESAA) of the Unemployment Trust Fund. Up to 95 percent of
these funds may be appropriated annually for grants to States
for program administration. The distribution of the
appropriation among the States is determined by the U.S.
Secretary of Labor based on each State's expected caseload and
its agency's cost structure. At the end of each fiscal year,
ESAA funds in excess of 40 percent of the prior year's
appropriation are transferred to other accounts.
House Bill
ESAA funds up to $100 million that would otherwise be
transferred to other accounts at the end of a fiscal year will
instead be made available to each State in the same proportion
as the State's share of funds appropriated for administration
for that fiscal year. Excess ESAA funds greater than $100
million will be transferred to FUA without regard to that
account's ceiling. This provision applies for Fiscal Year 1999,
Fiscal Year 2000, and Fiscal Year 2001.
Senate Amendment
Same as House.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment.
30. Interest-free advances to state accounts in unemployment trust fund
restricted to states which meet funding goals
Current Law
Each State decides how to fund benefit payments and the
extent to which reserves are accumulated to meet future
obligations. States that borrow Federal funds to pay benefits
receive interest-bearing repayable loans.
House Bill
A ``funding goal'' is established as the average annual
benefit payment during the 3-year period within the past 20
years when benefit payments were the largest. A State must meet
this funding goal to be eligible for interest-free advances of
Federal funds to its Unemployment Trust Fund benefit account.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the House bill, with the
modification that the Secretary is to establish appropriate
funding goals for States.
31. Exemption of service performed by election workers from the Federal
unemployment tax
Current Law
Federal law requires States to cover most jobs in State
and local governments. Certain exceptions to coverage are
allowed, but election workers are not identified as an excepted
group.
House Bill
An election official or election worker could be excluded
from coverage if the individual's calendar-year pay as an
election official or election worker is less than $1,000.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the House bill.
32. Treatment of certain services performed by inmates
Current Law
Although Federal law requires States to cover most jobs
in State and local governments, an exception is allowed for
services performed for a governmental agency by inmates of
custodial or penal institutions. However, wages earned by
inmates in private-sector jobs may still be covered under the
broad coverage requirement that applies to private employment.
House Bill
The definition of private-sector employment subject to
coverage would exclude service performed by an inmate of a
penal institution. This exclusion would apply for service
performed after March 26, 1996.
Senate Amendment
Same as House.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment, with the modification that the exclusion
would apply for service performed after January 1, 1994.
33. Exemption of service performed for an elementary or secondary
school operated primarily for religious purposes from the
Federal unemployment tax
Current Law
Although States are required to cover most jobs in
nonprofit organizations, an exception is allowed for employment
subject to supervision or control by a church or association of
churches.
House Bill
The exception for jobs under church control is broadened
to include employment in an elementary or secondary school
operated primarily for religious purposes (including religious
schools operated by lay boards).
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the House bill.
34. State program integrity activities for unemployment compensation
Current Law
States receive Federal grants for program administration.
While funds have sometimes been designated for certain
activities, generally States have authority to use their grants
as they choose for program administration.
House Bill
Appropriations for ``program integrity activities'' are
authorized in the following amounts:
Million
Fiscal year:
1998.......................................................... $89
1999.......................................................... 91
2000.......................................................... 93
2001.......................................................... 96
2002.......................................................... 98
Program integrity activities are initial claims review,
eligibility review, benefit payments control, and employer
liability auditing activities.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the House bill.
VI. Technical Corrections
Note: Provisions of the House-passed Technical
Corrections Act (H.R. 1048) are identical to those of the
Senate-passed Technical Corrections Act (Subtitle M of Title V
of S. 947) except the items noted below.
35. Inadvertent references to Internal Revenue Code
Current Law
No provision.
House Bill
Strikes one paragraph (number 7) of Sec. 110(l) of P.L.
104-193, which made an inadvertent change in the Internal
Revenue Code.
Senate Amendment
Strikes additional paragraphs (numbers 1, 4, and 5) which
made inadvertent or obsolete changes in the Internal Revenue
Code.
Conference Agreement
The conference agreement follows the Senate amendment.
36. Expenditures to be excluded from historic state expenditures
Current Law
No provision.
House Bill
Clarifies that State funds spent as a condition of
receiving other Federal funds may not count toward the State
maintenance of effort requirement; also makes a minor wording
change to ensure that State spending on JOBS is included in the
maintenance-of-effort baseline (historic State expenditures).
Senate Amendment
Makes this change in conforming amendments to the
welfare-to-work block grant (see item 1 above). Language is the
same as that in the Ways and Means welfare-to-work provision.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment.
37. Correction of references
Current Law
No provision.
House Bill
No provision.
Senate Amendment
Strikes ``amendment made by section 2103 of the Personal
Responsibility and Work Opportunity'' and inserts ``amendments
made by section 103 of the Personal Responsibility and Work
Opportunity Reconciliation.''
Conference Agreement
The conference agreement follows the Senate amendment.
38. Technical correction pertaining to Social Security
Current Law
The two technical changes made in this section pertain to
the definition of ``qualified organization'' that may serve as
a representative payee, ``final adjudication'' as it applies to
drug addicts and alcoholics, and cost-of-living increases as
they apply to Social Security benefits.
House Bill
Makes minor changes in wording to improve clarity.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the Senate amendment
with the modification that only the provisions of subtitle B of
H.R. 1048 affecting title II of the Social Security Act are
deleted.
The provisions of Public Law 104-121 denying Social
Security and Supplemental Security Income disability benefits
to drug addicts and alcoholics used identical language in
pegging the effective dates to the ``final adjudication'' of an
individual's claim. Those provisions warrant clarification,
since at least one court has already reached
conclusionsregarding their meaning that are contrary to the intent of
Congress. The conference agreement includes language clarifying the
effective date of the Supplemental Security Income provision only; it
does not include parallel language clarifying the effective date of the
Social Security provision due only to procedural considerations in the
Senate regarding reconciliation bills.
39. Timing of delivery of October 2000 SSI benefit payments
Current Law
Section 708 of the Social Security Act provides that
benefits for a month are paid in the preceding month if the
regular pay date falls on a Saturday, Sunday, or Federal
holiday. Since the regular pay date for October 2000 (October
1) falls on a Sunday, the check for that month, under current
law, would be delivered on Friday, September 29, 2000. As a
result, 13 months of SSI benefits would be paid in FY 1999.
House Bill
No provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement includes the technical
modification that the date of delivery of SSI benefits in
October 2000 will be October 2, 2000. It is the intention of
conferees to return to this issue and work with the Social
Security Administration to minimize any possible difficulties
recipients might experience as a result of this change.
40. Clarification of the Contingency Fund
Current Law
States that have high unemployment (at least 6.5 percent
and up 10 percent or more from the comparable period in at
least one of the two preceding years) or a substantial increase
in food stamp recipients (10 percent above same period of
Fiscal Year 1994 or Fiscal Year 1995, assuming the new law had
been in effect throughout Fiscal Year 1994) are entitled to
matching grants out of a contingency fund, provided their State
spending under the TANF program exceeds 100 percent of its
`historic' level. Historic spending level is Fiscal Year 1994
State spending on AFDC, JOBS, Emergency Assistance, and AFDC-
related child care. Monthly payments from the contingency fund
cannot exceed \1/12\th of 20 percent of the State TANF grant.
House Bill
The contingency fund operates in two stages: (1) States
get an advance payment of \1/12\th of 20 percent of their block
grant every month that they meet the trigger and then for 1
month after they no longer meet the trigger; and (2) an annual
reconciliation is performed in which States are required to
remit money they did not deserve, usually because either they
did not achieve the 100 percent maintenance of effort
requirement or they financed more of the extra spending from
contingency fund advances than they should have. The primary
change is how the annual reconciliation is conducted.
Generally, countable expenditures are subtracted from historic
State expenditures to compute a new measure called reimbursable
expenditures. Countable expenditures are defined as qualified
State expenditures (as defined in the Act) under the TANF
program (minus spending on child care) plus expenditures made
by States from contingency fund monthly advances. Historic
State expenditures are the same as under the Act except that
spending on AFDC-related child care is not counted. The amount
to which States are entitled under the contingency fund equals
reimbursable expenditures times the State Medicaid match rate
times the number of months in the year during which States were
eligible divided by 12. This formula provides States with a
Federal match on the amount of money they spent under the TANF
program out of State funds that exceed the State's historic
State expenditures prorated for the number of months during the
year the State was eligible for contingency payments. This
section also contains a slight modification of language to
clarify that the Medicaid matching rate formula itself, and not
the values for each State produced by the formula, is
maintained as it existed on September 30, 1995.
The amendment retains the policy of only counting State
expenditures made under the TANF program toward meeting
contingency fund spending requirements. It would permit States
to count only the portion of qualified State expenditures made
under the TANF program, and hence under the rules that apply to
State expenditures under TANF, toward meeting contingency fund
maintenance of effort and matching requirements.
Senate Amendment
Same as House.
Conference Agreement
The conference agreement follows the identical provisions
in the House bill and the Senate amendment.
VII. MISCELLANEOUS
41. Increase in the public debt limit
Current Law
The current statutory limit on the public debt is $5.5
trillion.
House Bill
The statutory limit would be increased to $5.950
trillion. This is sufficient debt authority until December 15,
1999.
Senate Amendment
Same as House.
Conference Agreement
The conference agreement follows the House bill and the
Senate amendment.
42. Administration by non-governmental entity
Current Law
P.L. 104-193 allows States to ``administer and provide
services'' under TANF, food stamps, and Medicaid through
contracts with charitable, religious, or private organizations.
However, basic provisions of food stamp and Medicaid law
effectively require that eligibility be determined by a public
official. Some elements of eligibility for the Special
Supplemental Nutrition Program of Women, Infants, and Children
(WIC) also must be determined by a public official.
House Bill
The House bill allows determinations of food stamp
eligibility and Medicaid eligibility to be made by an entity
that is not a State or local government, or by a personwho is
not an employee of a State or local government, that meets
qualifications set by the State. The House bill provides that for
purposes of any Federal law, these eligibility determinations shall be
considered to be made by the State and by a State agency. The House
bill stipulates that these provisions shall not be construed to affect
eligibility conditions, the rights to challenge eligibility
determinations or benefit rights, and determinations regarding quality
control or error rates.
Senate Amendment
No provision.
Conference Agreement
The conference agreement follows the Senate amendment (no
provision).
43. Earned income credit mandatory appropriation
Current Law
No provision.
House Bill
No provision.
Senate Amendment
No provision.
Conference Agreement
The conference agreement specifies that, out of any funds
in the Treasury not otherwise appropriated, there is
appropriated to the Internal Revenue Service for Earned Income
Credit enforcement, in addition to other amounts for this
purpose, the following amounts: $138 million in FY 1998, $143
million in FY 1999, $144 million in FY 2000, $145 million in FY
2001, and $146 million in FY 2002.
STATEMENT OF MANAGERS
Subconference on Student Loans/Other (#8) Balanced Budget Act of 1997
(H.R. 2015/ S. 947)
Subtitle B--Higher Education
RECALL OF GUARANTY AGENCY RESERVES
Note #1.
House bill
The House bill requires the return of $1,000,000,000 in
guaranty agency reserve funds.
Senate amendment
The Senate amendment requires the return of
$1,028,000,000 in guaranty agency reserve funds and defines
reserve funds as any reserve funds held by or under the control
of any other entity.
Conference agreement
The Senate recedes.
Note #2.
House bill
The House bill uses the term ``required share'' to
describe each guaranty agency's share of recalled reserve
funds.
Senate amendment
The Senate amendment uses the term ``equitable share'' to
describe each guaranty agency's share of recalled reserve
funds.
Conference agreement
The Senate recedes.
Note #3.
House bill
The House bill allows for accounting adjustments approved
by the Secretary in determining reserve ratios and ties the
outstanding insurance obligations to September 30, 1996.
Senate amendment
The Senate amendment defines reserve funds as including
funds held by, or under the control of, any other entity.
Conference agreement
The Senate recedes with an amendment adding at the end of
the subparagraph ``including amounts of outstanding loans
transferred to the guaranty agency from another guaranty
agency.''
Note #4.
House bill
The House bill includes all funds in excess of a 2-
percent reserve ratio in an agency's required share.
Senate amendment
The Senate amendment includes all funds in excess of a
1.12-percent reserve ratio in an agency's equitable share.
Conference agreement
The Senate recedes with an amendment. The compromise
amendment includes a three step formula for calculating the
required share for each guaranty agency. In step one, all funds
in excess of a 2-percent reserve ratio will be included in an
agency's required share. In step two, the total amount recalled
under step one shall be subtracted from the total amount to be
recalled under this part and the difference shall be calculated
as a percentage of total remaining reserves. Each agency will
then include this percentage of its remaining reserves in its
required share with the exception that no agency will be
required to reduce its reserve ratio below .58%. If an
additional amount is required to meet the total recall, a third
calculation shall be employed. The remaining amount required to
meet the total recall after steps one and two shall be
calculated as a percentage of the total reserves above .58% of
all agencies with reserve levels above .58%. This percentage
shall, in turn, be multiplied by each agency's remaining
reserves over a .58% level. This additional amount shall be
included within the agency's required share. If any agency
fails to transfer its required share to its restricted account,
the Secretary will attempt to obtain the shortage from the
agency which fails to make the required payment. If, on
September 1, 2002, after collecting funds from agencies which
have failed to make required payments, the Secretary determines
that the total amount within the restricted accounts is less
than the amount required, the Secretary shall require the
return of the amount of the shortage from other reservefunds
held by guaranty agencies.
Note #5.
House bill
The House bill uses the term ``required shares.''
Senate amendment
The Senate amendment uses the term ``equitable shares.''
Conference agreement
The Senate recedes.
Note #6.
6a.
House bill
The House bill requires five equal annual installments to
the restricted accounts, except that a guaranty agency with a
reserve ratio under 1.10-percent may make four equal annual
installments beginning in 1999 or in accordance with an
agreement with the Secretary.
Senate amendment
The Senate amendment provides that the transfer to the
restricted accounts in the first year is based on all agencies
combined transferring 20 percent. All amounts in excess of a 2-
percent reserve ratio would first be transferred and, then,
equal percentages would come from each agency. In 1999 through
2002, each agency must transfer 25 percent of its remaining
equitable share.
Conference agreement
The Senate recedes with an amendment incorporating the
compromise formula. (See note #4.)
6b.
House bill
The House bill allows guaranty agencies to use earnings
on the restricted account for operational expenses.
Senate amendment
The Senate amendment allows guaranty agencies to use
earnings on the restricted account for activities to reduce
student loan defaults.
Conference agreement
The House recedes with an amendment defining default
reduction activities as activities to reduce student loan
defaults that improve, strengthen and expand default prevention
activities. It is the intent of the conferees that guaranty
agencies use the earnings on the restricted account to improve
and strengthen current default prevention activities as well as
to expand these activities.
Note #7.
House bill
The House bill gives the Secretary the authority to
withhold funds if a guaranty agency fails to comply with this
part, prohibits the Secretary from requiring the return of
excess reserves under subsection (g)(1)(A) and requires that
any reserve funds returned under (g)(1)(B) or (g)(1)(C) will be
placed in the restricted accounts and returned to the Treasury
in 2002.
Senate amendment
The Senate amendment has no comparable provision dealing
with the withholding of funds but does prohibit the Secretary
from requiring the return of excess reserves under subsection
(g)(1)(A) and requires that any reserve funds returned under
(g)(1)(B) or (g)(1)(C) will be placed in the restricted
accounts and returned to the Treasury in the year 2002.
Conference agreement
The Senate recedes with an amendment clarifying that a
guaranty agency which has not transferred its required share to
a restricted account may not receive any other funds under Part
B of Title IV until the Secretary determines the agency is in
compliance. The Secretary may waive this provision due to
extenuating circumstances beyond the control of the agency.
In addition, the amendment clarifies that reserve amounts
returned to the Secretary under section 422(g)(1)(B) will first
be applied to the agency's total required share. Amounts
recalled to the Secretary in excess of the required share will
be returned to the Treasury. Reserve amounts recalled by the
Secretary under section 422(g)(1)(C) will first be used to
satisfy the agency's next installment required under the recall
formula. Amounts recalled in excess of thisamount will be
returned to the Treasury.
Note #8.
House bill
The House bill refers to cash reserve funds when defining
reserve funds.
Senate amendment
The Senate amendment refers to reserve funds without
specifically mentioning cash.
Conference agreement
The Senate recedes with an amendment including both cash
and ``liquid assets'' in the definition of ``reserve funds.''
Note #9
House bill
The House bill provides that funds under Section 458 may
be used for administrative costs under Part B.
Senate amendment
The Senate amendment does not mention Part B.
Conference agreement
The Senate recedes.
Note #10.
House bill
The House bill includes a provision which clarifies the
amounts that may be retained by guaranty agencies when
defaulted loans are collected through consolidation. Under the
House provision, guaranty agencies may retain 18.5 percent plus
the reinsurance complement in effect for all such loans
consolidated on or after July 1, 1997. For defaulted loans
consolidated prior to that date, guaranty agencies which have
retained 18.5 percent are allowed to retain only 18.5 percent,
and agencies which have been retaining 27 percent plus the
reinsurance complement are allowed to retain 27 percent plus
the reinsurance complement.
Senate amendment
The Senate amendment has no comparable provision.
Conference agreement
The House recedes. This agreement to remove this
provision is not an endorsement or rejection of any particular
position on the collection retention issue. Rather, it
represents the conferees' agreement that this policy issue
should be addressed during the reauthorization process where it
can be given full and thorough consideration. In recognition of
that agreement, five of the six conferees will be asking that
the Department defer further attempts to collect amounts in
dispute with respect to these particular loans for a period of
one year or until the Higher Education Act is reauthorized,
whichever occurs first. It is the conferees' understanding that
the Department has issued final regulations on this issue which
went into effect on July 1, 1997. The conferees fully expect
that guaranty agencies will comply with those regulations for
loans consolidated on or after that date until Congress has the
opportunity to act on this issue.
Subtitle C--Smith-Hughes Vocational Education Act
SMITH-HUGHES VOCATIONAL EDUCATION ACT
Note #11
House bill
The House bill repeals the Smith-Hughes Vocational
Education Act.
Senate amendment
The Senate amendment has no comparable provision.
Conference agreement
The Senate recedes.
Subtitle D--Expansion of Portability and Health Insurance Coverage
House bill
The House bill amends the Employee Retirement Income
Security Act (ERISA) to establish a certification procedure for
Association Health Plans (AHPs) in order to promote multiple
employer pooling, particularly among small businesses, so as to
expand health insurance coverage for the employees of such
businesses and their families. In general, bona fide
associations, multiemployer plans, franchise networks, and
certain other entities meeting financial, reporting, fiduciary
and solvency requirements would be able to offer self-insured
coverage as well as fully-insured coverage options. The bill
also clarifies the status of single employer, multiemployer and
other collectively-bargained plans with respect to the
application of the preemption provisions of section 514 of
ERISA. The bill amends ERISA's enforcement sections to provide
federal cease and desist authority to shut down fraudulent
health insurance operations and to provide for criminal
penalties for certain willful misrepresentations by such
entities.
Senate amendment
The Senate amendment has no comparable provision.
Conference agreement
The House recedes.
Section-by-Section Analysis of Conference Agreement
Subtitle B--Higher Education
Section 6101. Management and Recovery of Reserves
This section describes section 422 of the Higher
Education Act of 1965 as proposed to be added to or amended by
the conference agreement. Unless otherwise noted, all section
and paragraph references are to the Balanced Budget Act of
1997.
Required shares
The conference agreement requires that the guaranty
agencies return one billion dollars of their current excess
cash reserves to the Federal Treasury in Fiscal Year 2002. The
Secretary shall require each guaranty agency to return excess
reserve funds based on each agency's required share. This share
will be calculated based upon the excess reserve funds held by
the agency as of September 30, 1996. For the sole purpose of
determining each agency's required share, the calculation of
the reserve ratio will include transfers of the liabilities to
each agency of the outstanding loans from merged agencies as
well as transfers of the reserves from the merged agencies.
Once the reserve ratios are determined for each agency, their
required shares will be calculated in accordance with a three-
step formula.
In step one, all funds in excess of a 2-percent reserve
ratio will be included in an agency's required share. In step
two, the total amount recalled under step one shall be
subtracted from the total amount to be returned under the
recall ($1 billion) and the difference shall be calculated as a
percentage of the total remaining reserves. Each agency will
then include this percentage of its remaining reserves in its
required share with the exception that no agency will be
required to reduce its reserve ratio below .58%. Such
guarantors will pay their share up until the point where their
reserve level is .58%.
If an additional amount is required to meet the $1
billion recall, a third calculation shall be made. The
remaining amount required to meet the $1 billion recall after
steps one and two shall be calculated as a percentage of the
reserves above .58% of all agencies with reserve levels above
.58%. This percentage shall, in turn, be multiplied by each
agency's remaining reserves over a .58% level. This additional
amount shall be included within each agency's required share.
The formula approved by the conferees meets the goals of
the bipartisan budget agreement without jeopardizing the
viability of guaranty agencies with low reserve levels. This
step was necessary to ensure that students participating in the
Federal Family Education Loan Program would continue to be able
to access loans and services without disruption. The conferees
deferred consideration of all proposals to restructure the
FFELP program until they could be reviewed in the context of
reauthorization of the Higher Education Act.
Restricted accounts
Each agency shall establish a restricted account of its
own choosing with approval from the Secretary. Each agency
shall, consistent with current law, invest the reserves placed
within the restricted accounts in obligations issued or
guaranteed by the United States or in other similarly low-risk
securities. A guaranty agency may use the earnings from these
funds to improve and strengthen current default reduction
activities as well as to initiate new default reducation
activities. Authorized activities include, but are not limited
to, partial loan cancellation programs, debt management
counseling programs, placement counseling programs, and
development of public service announcements.
Orderly recall
Paragraph (4) establishes a timetable for the orderly
recall of the $1 billion in excess guaranty agency reserves
over the next five years. In each of fiscal years 1998-2002,
each guaranty agency that has a reserve ratio in excess of 1.10
percent must transfer its required share into its restricted
account in five equal annual installments. Each agency with a
reserve ratio equal to or less than 1.10 percent may transfer
its required share into its restricted account in four equal
payments beginning in fiscal year 1999. A guaranty agency may
also transfer its required share in accordance with an
alternate payment schedule approved by the Secretary of
Education.
Shortage
Paragraph (5) provides that if, on September 1, 2002, any
agency has failed to transfer all of its required share to its
restricted account, the Secretary will attempt to obtain the
shortage from the agency which fails to make the full required
payment. If, on September 1, 2002, after collecting funds from
agencies which have failed to make required payments, the
Secretary determines that the total amount within the
restricted accounts is less than the amount required, the
Secretary shall require the return of the amount of the
shortage from other reserve funds held by guaranty agencies.
Enforcement
Paragraph (6) provides that the Secretary of Education
may take reasonable measures to ensure that guaranty agencies
comply with the requirements of the subsection. If a guaranty
agency fails to transfer a portion of its required share into
its restricted account, the agency may not receive any other
funds under Part B of Title IV until the agency has made the
required transfer of funds. The Secretary may waive this
provision in the case of extenuating circumstances.
Limitations on recall authority
In order to ensure that sufficient reserve funds will be
available to meet the $1 billion recall, paragraph (7) places
restrictions on the Secretary's recall authority during the
five year period covered by the budget agreement. The Secretary
may not recall reserves under 422(g)(1)(A) of the Higher
Education Act. Funds recalled to the Secretary under
422(g)(1)(B) must first be used to satisfy the agency's
required share of reserve funds and deposited in the restricted
account established by the agency. Funds recalled to the
Secretary in excess of this amount will be deposited in the
Treasury. Funds recalled to the Secretary under 422(g)(1)(C)
shall be used to satisfy the agency's next installment of its
required share and deposited in its restricted account. Funds
recalled to the Secretary in excess of the amount required for
the nextannual installment will be deposited in the Treasury.
Minimum reserve ratio
Each guaranty agency is required to maintain a minimum
reserve level in order to ensure that it will be able to meet
its insurance obligations. In 1993, the minimum level was 0.5%
of outstanding loans guaranteed by an agency. Between FY 1994
and FY 1996, the minimum level rose to 1.1%. In order to
accommodate the reduced reserve ratios that will be produced
under the recall formula, Section 428(c)(9)(A) of the Higher
Education Act of 1965 is amended to restore the minimum reserve
ratio for guaranty agencies to .5%.
Section 6102. Repeal of the direct lending loan origination payment
This section describes section 452 of the Higher
Education as proposed to be amended by the conference report.
The authority to make the Federal payment of $10 per loan
to schools and/or alternative originators that make direct
loans under subsection (b) of section 452 of the Higher
Education Act of 1965 is repealed. This repeal extends for five
years a provision currently contained within the FY 1997 Labor,
HHS, Education and Related Agencies Appropriations Bill and
provides savings of $160 million over five years.
Section 6103. Funds for administrative expenses
Unless otherwise indicated, references are to section 458
of the Higher Education Act of 1965, as proposed to be added or
amended by the conference report.
The bipartisan budget agreement preserved a commitment to
maintaining two viable student loan programs and called for
``an equitable balance of savings between the direct student
loan program and the guaranteed student loan program.'' In
order to preserve this balance, $604 million in savings are
required from the Department of Education's mandatory account
to administer the federal direct lending program, the FFELP
program and to pay the administrative cost allowance to
guaranty agencies. The Department will receive $3.2 billion for
this account over the next five years.
In accordance with current law, the payment of
administrative cost allowances to guaranty agencies is to be
provided by the Department of Education from funds available in
Section 458. The conference agreement provides that the
administrative cost allowance paid to guaranty agencies will be
capped at .85% of every new loan. These expenditures are capped
at $170 million in each of Fiscal Years 1998 and 1999 and $150
million in each of Fiscal Years 2000, 2001, and 2002.
Section 6104. Extension of student aid programs
This section refers to Title IV of the Higher Education
Act, as proposed to be amended by the conference report.
Section 424(a) is amended to extend the duration of the
Federal Loan Insurance program from 1998 to 2002. Section
428(a)(5) is amended to extend the duration of the authority to
make interest subsidized loans from 1998 until 2002. Section
428C(e) is amended to extend the authority to make
consolidation loans from 1998 until 2002. These extensions are
required for Congressional Budget Office scoring purposes.
Subtitle C--Repeal of Smith-Hughes Vocational Education Act
The Smith-Hughes Act (39 Stat. 929, chapter 114; 20
U.S.C. 11 et seq) provides a permanent appropriation for
vocational education. Consistent with the Administration's
budget request, this program is repealed providing $29 million
in savings over 5 years.
STATEMENT OF MANAGERS
TITLE VII--FEDERAL RETIREMENT AND RELATED PROVISIONS
Increased Contributions to Federal Civilian Retirement Systems
house bill
Sections 6101 and 6102 provide for increased
contributions to the Civil Service Retirement System (CSRS) and
the Federal Employees Retirement System (FERS), respectively.
Agencies will be required to increase their contributions to
the CSRS for their employees who participate in the CSRS.
Employees participating in either the CSRS or the FERS system
will be required to increase their contributions to the system.
The increase in employee contributions to CSRS and FERS
will apply to all individuals participating in these systems.
The amount deducted from basic pay for an individual
participating in CSRS and FERS will be increased above the
level in effect on the date of enactment by .25% in 1999, by an
additional .15% in 2000, and by an additional .10% in 2001. The
increase will then remain constant at .5% throughout 2002.
The bill also requires all federal agencies, except for
the United States Postal Service to contribute an additional
1.51% each year above the percentage an agency is now
contributing for each individual employee participating in
CSRS. These additional contributions begin on October 1, 1997
and continue through September 30, 2002. The 1.51% increase
does not apply to the United States Postal Service, which, with
its employees, currently contributes the full actuarial cost of
each employee's retirement under CSRS.
This bill adjusts the amounts employees must repay for
any military service or any covered volunteer service between
January 1, 1999 and December 31, 2002 for which they would like
to receive retirement credit under CSRS and FERS to reflect the
increases in employee contributions.
The bill prohibits employing agencies (including the
Postal Service) from reducing their contributions to FERS for
each individual employee as a result of the increases in
individual contributions contained in the bill. Under current
law, agency contributions would automatically decrease with any
increase in employee contributions.
senate amendment
The Senate amendment (section 6001) is similar to the
House bill in many respects; however, it differs substantively
from the House bill in the following ways: (1) it increases
agency contributions from October 1, 2001 through September 30,
2002 by 1.6% rather than 1.51%; (2) employees in the CSRS-
offset program are not covered by the agency contribution; (3)
it exempts the Metropolitan Washington Airports Authority and
the District of Columbia from increased agency contributions
under CSRS; (4) it does not exempt the Postal Service from
matching increases in employee contributions; (5) it prohibits
reductions in the Postal Service's 30-year amortization
payments under the CSRS; (6) it increases employee and agency
contributions to the Central Intelligence Agency Retirement and
Disability System, the Foreign Service Retirement and
Disability System, and the Foreign Service Pension System
corresponding to the increases under CSRS and FERS; (7) it
provides an effective date of the first day of the first pay
period beginning on or after January 1, 1999; and (8) the
Senate amendment also delineates the Capitol Police in a table
separate from other congressional employees; the House bill
does not.
conference agreement
The Conference agreement includes the language of the
Senate and House bills with modifications. Under the agreement,
the differences are resolved as follows: (1) agency
contributions are increased by a uniform 1.51% throughout the
five-year period; (2) increased agency contributions are
required for CSRS-offset employees; (3) the Metropolitan
Washington Airports Authority by law provides full funding for
its employees and thus is exempted from the increased agency
contributions; but the District of Columbia is not provided a
special exemption; (4) the Postal Service is not required to
match the increases in employee contributions; (5) both the
Postal Service and Treasury are prohibited from reducing
payments required under 5 U.S.C. Sec. Sec. 8348 and 8423 as a
result of the increases in employee contributions; (6) employee
and agency contributions to the Central Intelligence Agency
Retirement and Disability System, the Foreign Service
Retirement and Disability System, and the Foreign Service
Pension System are increased to correspond to the increases
under CSRS and FERS; (7) the effective date adopted is October
1, 1997, with a special rule to cover a later date of
enactment.
Government Contribution for Health Benefits
house bill
Section 6103 amends 5 U.S.C. Sec. 8906 to establish a
permanent formula for computing the government's share of
premiums for self alone and self and family enrollments under
the Federal Employees Health Benefits Program (FEHBP). Under
this formula, the government's contribution will be based upon
72% of the weighted average of the subscription charges for
self alone enrollments for all options of all plans
participating in the FEHBP. A similar calculation for self and
family enrollments will be performed. Current law regarding
part-time employees and the prohibition against payment of more
than 75% of any premium are retained. The Office of Personnel
Management (Office) is required to determine, not later than
October 1 of each year, the weighted average of the
subscription charges that will be in effect during the
following contract year by weighting the subscription charges
of each option of each plan by the actual distribution of
enrollees entitled to a government contribution as ofMarch 31
of the year in which the determination is being made. (This assumes the
Office will continue to produce and make publicly available the
enrollment reports semi-annually; the enrollment used in weighting
includes all individuals who are eligible to receive a contribution,
including active Postal Service employees, in participating plans that
will be continuing in the FEHBP during the contract year to which the
weighted average applies; and that the Office will perform a
straightforward mathematical calculation based on the actual number of
enrollees.) The bill allows for ministerial actions the Office may deem
necessary to take before the effective date in order to ensure timely
implementation of this provision. This section is effective on the
first day of the contract year that begins in 1999.
senate amendment
The Senate amendment (section 6002) is almost identical
to the House bill.
conference agreement
The House recedes to the Senate.
Repeal of Transitional Appropriations for the United States Postal
Service
house bill
Section 6001 eliminates the authorization for
appropriations to the U.S. Postal Service for reimbursement for
workers' compensation liabilities incurred by the former Post
Office Department. The elimination of this funding will result
in the Postal Service assuming the liabilities for this payment
to the Employee Compensation Fund, within the Department of
Labor, providing payments made to employees of the former Post
Office Department.
Under the existing framework, the Department of Labor
assesses the U.S. Postal Service for claims to both its
employees and those of the former Post Office Department. The
U.S. Postal Service pays for its own employees and requests
funding from Congress for the amount attributable to former
Post Office Department employees.
The bill removes the federal government and Congress from
the process and directs that employees of the Post Office
Department be treated the same as the current employees of the
U.S. Postal Service for purposes of the Employee Compensation
Fund.
This section of the House bill is effective on October 1,
1997 or, if later, the date of enactment. Under a special rule,
if any payment for workers' compensation liabilities incurred
by the former Post Office Department is made to the Postal
Service Fund pursuant to an appropriation for fiscal year 1998,
an equal amount shall be paid from Fund into the Treasury as
miscellaneous receipts before October 1, 1998.
senate amendment
The Senate amendment (section 6003) is the same as the
House bill but does not contain the special rule governing
payments under fiscal year 1998 appropriations.
conference agreement
The Senate agrees to adopt the special rule as provided
in the House bill.
Medicare Means Testing Standard Applicable to Senators' Health Coverage
Under the FEHBP
house bill
The House bill contains no provision on this subject.
senate amendment
The Senate amendment (section 6004) eliminates the
government contribution to the FEHBP on behalf of Senators.
Senators will be required to make both the individual and
government contributions in order to participate in the FEHBP.
conference agreement
The Senate recedes to the House.
TITLE VIII--VETERANS' PROGRAMS
Subtitle A--Extension of Expiring Authorities
Enhanced Loan Asset Sale Authority
Current Law
Section 3720(h) of title 38, United States Code,
authorizes VA to guarantee the timely payment of principal and
interest to purchasers of real mortgage investment conduits
(REMICs). REMICs are used to ``bundle'' and market vendee loan
notes. Such notes are made on direct loans made by VA to
purchasers of VA-acquired real estate. Using this authority, VA
guarantees to REMIC purchasers that principal and interest will
be paid in a timely manner which in turn, enhances the value of
the REMICs in the secondary market and increases the return to
VA when such securities are sold. This provision expires on
December 31, 1997.
House Bill
Section 8018 would extend VA's authority to market REMICs
through September 30, 2002.
Senate Amendment
Section 8011 would extend VA's authority to market REMICs
through December 31, 2002.
Compromise Agreement
Section 8011 follows the Senate Amendment.
Home Loan Fees
Current Law
Section 3729 of title 38, United States Code, specifies
that borrowers who obtain VA-guaranteed, insured or direct home
loans will pay a fee. For first loans, the fees range from 0.5
percent to 2 percent, depending on the amount of down payment
and the type of military or naval service (active duty or
reserve). Public Law 103-66, the Omnibus Budget Reconciliation
Act of 1993 (OBRA '93), added section 3729(a)(4) of title 38,
United States Code, to require a surcharge of .75 percent for
all first-use loans. This provision expires on October 1, 1998.
There is no limitation to the number of times a veteran
may use the VA home loan program. Section 3729 of title 38,
United States Code, requires a 3 percent fee for all second and
subsequent home loans with less than a 5 percent down payment.
This provision expires on October 1, 1998.
House Bill
Section 8016 would extend the surcharge provision to
October 1, 2002, and extend VA's authority to charge the 3
percent fee for second and subsequent use of the home loan
program to October 1, 2002.
Senate Amendment
Section 8012 contains a substantially identical
provision.
Compromise Agreement
Section 8012 follows the Senate Amendment.
Procedures Applicable to Liquidation Sales on Defaulted Home Loans
Guaranteed by the Department of Veterans Affairs
Current Law
Section 3732 of title 38, United States Code, specifies
that VA has two options when a property, the financing of which
is guaranteed under the VA Home Loan Guaranty Program, goes
into foreclosure. VA may simply pay off the guaranty, or elect
to purchase the property securing the loan in default and
resell it. The decision on the course of action to take
depends, generally, on VA calculations as to which action would
be less costly and, therefore, more advantageous to the
government. The Secretary's authority to use ``no-bid''
procedures, by which VA determines which option is more
advantageous, expires on October 1, 1998.
House Bill
Section 8017 would extend VA's authority to use the
alternative ``no-bid'' formula to October 1, 2002.
Senate Amendment
Section 8013 contains an identical provision.
Compromise Agreement
Section 8013 contains this provision.
Income Verification Authority
Current Law
VA administers a needs-based pension program and provides
priority access to health care services on a means-tested
basis. Section 5317 of title 38, United States Code, and
section 6103 of the Internal Revenue Code of 1986, authorize VA
to verify the eligibility of recipients of, or applicants for,
VA needs-based benefits and VA means-tested medical care by
gaining access to income records of the Department of Health
and Human Services/Social Security Administration and the
Internal Revenue Service. These provisions were originally
enacted as section 8051 of Public Law 101-508, the Omnibus
Budget Reconciliation Act of 1990 (OBRA '90), and extended by
section 12004 of OBRA '93 to September 30, 1998.
House Bill
Section 8014 would extend VA's authority to verify this
data under section 5317(g) of title 38, United States Code,
through September 30, 2002. Section 8014 would also extend VA's
authority to verify this data under section 6103(l)(7) of the
Internal Revenue Code of 1986, through September 30, 2002.
Senate Amendment
Section 8014 would extend VA's authority to verify this
data under section 5317(g) of title 38, United States Code,
through September 30, 2002.
Compromise Agreement
Section 8014 follows the Senate Amendment.
Limitation of Pension for Certain Recipients of Medicaid-Covered
Nursing Home Care
Current Law
Section 5503(f) of title 38, United States Code, limits
to $90 per month the maximum amount of VA pension that may be
paid to Medicaid-eligible veterans and surviving spouses who
have no dependents and who are in nursing homes that
participate in Medicaid. The payments may not be used to offset
the costs of care. This section treats such individuals as if
the care were being furnished at VA expense. This provision was
originally enacted as section 8003 OBRA '90, and extended by
section 12005 of OBRA '93 to September 30, 1998.
VA pension is a needs-based program that provides a
minimum level of income to wartime veterans who are permanently
and totally disabled due to non-service-connected causes. The
minimum level of income is approximately equal to the poverty
level, with additional amounts payable for dependents. Pension
payments are offset dollar-for-dollar by any household income
and can also be adjusted for unusualmedical expenses. Today,
the maximum annual rate for a single veteran with no dependents is
$8,486.
House Bill
Section 8015 would extend the $90 limitation to September
30, 2002.
Senate Amendment
Section 8015 contains an identical provision.
Compromise Agreement
Section 8015 contains this provision.
Subtitle B--Copayments and Medical Care Cost Recovery
Authority to Require That Certain Veterans Make Copayments in Exchange
for Receiving Health Care Benefits
Current Law
Public Law 99-272 required veterans with incomes
exceeding so-called ``category A and B'' means-tests levels to
agree to pay copayments as a condition of receiving VA health
care. (That law also provided that ``category C'' veterans--
generally those not eligible for priority access to VA health
care services--were only eligible for care to the extent
resources and facilities were available.) Public Law 101-508,
the Omnibus Budget Reconciliation Act of 1990 (OBRA `90),
eliminated the distinction, for purposes of copayments, between
veterans in income categories ``B'' and ``C'' and provided
that, in addition to the copayments established earlier,
veterans in both so-called ``B'' and ``C'' income categories
would be required to make per diem payments of $10 for VA-
provided hospital care and $5 for nursing home care. The per
diem payment requirement, which would have expired under OBRA
`90 on September 30, 1997, was extended through September 30,
1998, by OBRA `93.
Section 1722A of title 38, United States Code, requires a
veteran (other than a veteran who has a service-connected
disability rated 50% or greater, or a veteran whose income is
at or below the maximum annual rate of VA pension) to pay $2
for each 30-day supply of prescription medication furnished on
an outpatient basis. Congress, in OBRA `93, extended this
provision through September 30, 1998.
House Bill
Section 8011 would extend these expiring copayment
authorities through September 30, 2002.
Senate Amendment
Section 8021 contains a substantially identical
provision.
Compromise Agreement
Section 8021 follows the House Bill.
Medical Care Cost Recovery Authority
Current Law
Section 1729 of title 38, United States Code, provides
ongoing authority for the Department of Veterans Affairs to
collect from a third-party payer the reasonable cost of VA-
furnished care and treatment rendered to a non-service-
connected veteran. That section of law also authorizes VA to
collect from a health care payment plan the reasonable cost of
medical care furnished for a non-service-connected disability
of a veteran who has a service-connected disability and who,
under that health plan, is entitled to care or to payment of
the expenses of that care. VA's authority to collect for non-
service-connected care furnished to a service-connected veteran
was initially established by section 8011 of OBRA `90.
Congress, in OBRA `93 extended the expiration date of that
provision (which is codified at section 1729(a)(2)(E) of title
38, United States Code) to October 1, 1998.
House Bill
Section 8012 of the bill would extend this date until
October 1, 2002.
Senate Amendment
Section 8022 contains an identical provision.
Compromise Agreement
Section 8022 contains this provision.
Department of Veterans Affairs Medical Care Receipts
Current Law
Section 1729(g) of title 38, United States Code,
established in the United States Treasury the Department of
Veterans Affairs Medical-Care Cost Recovery Fund (``the
Fund''). Copayments and receipts from health care plans and
insurance carriers under section 1729 of title 38, United
States Code, are deposited in the Fund. VA is authorized to use
money deposited in the Fund for payment of necessary expenses
for the identification, billing, and collection of the cost of
care and services furnished byVA and for the administration and
collection of certain payments required by sections 1710 and 1722A of
title 38, United States Code. VA is also authorized to use money
deposited in the Fund for payment of certain administrative expenses,
including reasonable charges for services and utilities furnished by
VA, recovery and collection activities under section 1729 of title 38,
United States Code, and administration of the Fund. After such
withdrawals from the Fund by VA, receipts in the Fund are remitted to
the United States Treasury.
House Bill
Section 8013 would establish the Department of Veterans
Affairs Medical Care Collections Fund and provide that amounts
collected or recovered after September 30, 1997, under
specified provisions of chapter 17 and the Federal Medical Care
Recovery Act, are to be deposited in that fund. Subject to the
provisions of appropriations acts, amounts in that fund are to
be available, without fiscal year limitation, only for (1)
furnishing VA medical care and services during any fiscal year
and (2) for VA expenses for identification, billing, auditing,
and collection of amounts owed the government by reason of VA
provision of medical care and services.
Section 8013 also reflects a recognition that, despite
the apparent incentives associated with authority (subject to
provisions of appropriations acts) for VA to retain
collections, factors beyond the Department's control could
result in collections falling substantially short of targets
during the initital years. The measure, accordingly, would
establish a special funding mechanism to address that
contingency. It would provide that if, during fiscal year 1998,
1999, or 2000, the Secretary of Veterans Affairs
(``Secretary'') determines that the total amount to be
recovered for that fiscal year will be more than $25 million
below the Congressional Budget Office's estimate for that
fiscal year, the Secretary shall promptly certify to the
Secretary of the Treasury the amount of the estimated shortfall
in excess of $25 million. The measure would require the
Secretary of the Treasury to deposit that amount in the Medical
Care Collections Fund within 30 days of receipt of the VA
certification. In the event of such contingency payments from
the Treasury, the measure provides for the further contingency
that if VA is fact recovered more than the amount certified by
the Secretary, VA would pay back into the Treasury the
difference between the amount actually recovered and the amount
certified. On the other hand, if the actual shortfall exceeded
VA's projected shortfall, VA is to certify the amount of that
difference to the Treasury, and the Secretary is to deposit
such sum in the fund. The measure contains reporting
requirements applicable to the contingency funding mechanism,
which require quarterly reporting (within 45 days after the end
of each quarter) as to amounts collected (accounting separately
for collections under each of the specified authorities and the
amount orginally estimated to be collected for such period).
Section 8013 would also direct the Secretary to establish
a policy for allocation of monies in the Medical Care
Collections Fund. That policy would be designed to achieve the
maximum possible collections under applicable laws, and to take
account of factors beyond VA's control which could impede VA
efforts.
Section 8013 would also require certain reporting
requirements, including a report on January 1, 1999, tabulating
collections by network, and, if feasible, by facility, and
including an analysis of differences among networks in
collecting funds, and other relevant information. The Secretary
would be required to adjust the policy for allocating monies
from the collections fund to take account of differences among
networks attributable to the respective markets in which each
operates.
Section 8013 would take effect on October 1, 1997, except
that amendments to section 1729 (a)(1) and (c)(2) of title 38,
United States Code, relating to the determination of amounts
subject to recovery under section 1729 of title 38, United
States Code, would take effect upon enactment.
These amendments would allow VA to move away from a cost-
based medical care recovery system to one that more
appropriately resembles market pricing for health care
services; the Committee envisions VA would establish health
care charges that would allow it to recover amounts needed to
help preserve the viability of the health care system for all
veterans and that also reflect the substantial advantages to VA
patients both in having the quality services provided by that
system available and in using them. The amendments reflect the
expectation that VA would establish reasonable charges that are
responsive to market prices--charges that are not constrained
to recovery of costs, but which may yield net revenues. (The
concept of ``market price'' here refers to the price for a
service that is based on competition in open markets. When a
substantial competitive demand exists for a service, its market
price normally is determined using commercial practices, such
as by reference to prevailing prices and payments in
competitive markets for services the same or similar to those
provided by the Government.)
Not later than December 31, 1997, the unobligated balance
in the Medical Care Cost Recovery Fund at the close of
September 30, 1997, is to be deposited in the Treasury as
miscellaneous receipts and that fund terminated at that time.
Senate Amendment
Section 8023 would establish the Department of Veterans
Affairs Medical Care Collections Fund and provide that amounts
collected or recovered after June 30, 1997, under specified
provisions of chapter 17 and the Federal Medical Care Recovery
Act, would be deposited in that fund. Not later than December
31, 1997, the unobligated balance in the Medical Care Cost
Recovery Fund (which would be terminated by section 8023) would
also be deposited in the new fund.
Subject to the provisions of appropriations acts, amounts
in that fund would be available only for (1) furnishing VA
medical care and services during any fiscal year and (2) for VA
expenses for identification, billing, auditing, and collection
of amounts owed the government by reason of VA provision of
medical care and services. The provision would direct that the
Secretary ensure that the amount made available to a Veterans
Integrated Service Network from the fund in a fiscal year be
equal to the amount recovered or collected by the Veterans
Integrated Service Network.
Compromise Agreement
Section 8023 generally follows section 8013 of the House
bill. The compromise agreement, however, incorporates the
policy established in the Senate bill of requiring that funds
recovered or collected by VA and made available to VA for
distribution under the provisions of appropriations acts shall
be distributed to the collecting service networks.
In addition, the compromise agreement adds language
anticipating the possibility, contrary to the expectation of
the Committees, that less than the entire amount of funds
recovered or collected by VA might be made available to VA for
distribution under appropriations acts. That language specifies
that, in that contingency, (1) all funds received under
appropriations acts shall be distributed among the service
networks (and more shall be retained by VA headquarters for use
for other purposes) and (2) that each network shall receive a
percentage of distributed funds equal to that network's
percentage of recoveries and collections paid into the fund.
Further, the compromise agreement strikes language from
the Senate bill which refers specifically to VA's current
organizational structure of 22 ``Veterans Integrated Service
Networks (VISNs),'' and substitutes in place of that language
general language referring to the ``designated health care
regions of the Department.'' It is the Committees' intention
that, under the current organizational structure, all funds
recovered or collected and made available to VA under this
provision would be distributed to the VISNs. The purpose of
this modification is solely to afford VA administrative
flexibility to organize its regional structure differently than
the current VISN structure, and to assure that, if VA does
reorganize that structure, the policies of this provision will
be carried out under that reorganized structure.
The compromise measure would also limit the application
of the ``contingency funding'' provision in the House bill to
fiscal year 1998.
Finally, the managers agree that the language in section
(8023(g)) is included in the bill solely for purposes of budget
scoring and is not intended to, and does not, limit, in any way
the amount available to be appropriated from discretionary
funding for VA medical care.
Subtitle C--Other Matters
Rounding Down of Cost-of-Living Adjustments in Compensation and DIC
Rates for Fiscal Years 1998 Through 2002
Current Law
Compensation is paid to veterans with service-connected
disabilities. Amounts of compensation are based on a rating
schedule that uses 10 percent increments from zero percent to
100 percent. Calendar year 1997 payments range from $94 for a
veteran rated as 10 percent disabled to $1,924 for a 100%
disability rating.
Dependency and Indemnity Compensation (DIC) is paid to
survivors of veterans who die from service-connected
disabilities. Prior to the passage of Public Law 102-568,
payments were based on the rank of the deceased veteran. With
the passage of Public Law 102-568, compensation for deaths
occurring after January 1, 1993, is paid on a flat-rate basis.
With the addition of subsequent cost-of-living adjustments
(COLA), that rate is now $794. However, survivors receiving
payments in excess of the flat rate were ``grandmothered'' at
the higher rates for deaths prior to January 1, 1993. The top
rate for these beneficiaries is now $1,774.
Compensation and DIC payments are not indexed. Congress
has, however, enacted legislation which, for a given year, has
adjusted compensation and DIC benefits to reflect the
percentage of change in the consumer price index (CPI) relative
to the prior year. When such a COLA is enacted and new
compensation and DIC rates are computed, the prior year's
benefit--which is paid in ``round dollar'' amounts--is
multiplied by a fraction which expresses the change in the CPI,
and the product is then converted to a whole-dollar amount
using ``normal'' rounding techniques. That is, if the product
of the whole dollar amount multiplied by the CPI is a
fractional dollar amount of $0.50 or more, the compensation or
DIC payment is rounded up; if it is a fractional amount of
$0.49 or less, it is rounded down.
House Bill
Section 8021 would require that any increase authorized
in the rates of compensation and DIC during fiscal years 1998-
2002 could not exceed the percentage increase applied to
payments under title II of the Social Security Act. The
provision would also require that such increases be rounded
down to the next lower whole dollar. For example, based on a
projected 2.7 percent increase in the Social Security cost-of-
living allowance, the current $94 payment for a 10 percent
disability would be multiplied by 2.7 percent. The result would
be $96.53, which would then be rounded down to $96.
Senate Amendment
Section 8031 contains a substantially identical round
down provision.
Compromise Agreement
Section 8031 follows the House Bill.
Increase in Amount of Home Loan Fees for the Purchase of Repossessed
Homes From the Department of Veterans Affairs
Current Law
Section 3729 of title 38, United States Code, specifies
that borrowers who obtain VA-guaranteed, insured, or direct
home loans will pay a fee. In addition, purchasers of VA-owned
foreclosed properties pay a fee of 1 percent of the loan amount
borrowed from VA to finance the purchase of a VA-owned
property.
House Bill
Section 8016 would increase, from 1 percent to 2.25
percent, the fee paid by purchasers of VA-owned properties.
Senate Amendment
Section 8032 contains a substantially identical
provision.
Compromise Agreement
Section 8032 follows the Senate Amendment.
Withholding of Payments and Benefits
Current Law
Section 3726 of title 38, United States Code, prohibits
the offset of federal payments, other than veterans' or
survivors' benefits, to recover losses incurred by VA arising
from loans made to, assumed by, or guaranteed or insured on
behalf of a veteran or surviving spouse. To offset losses
through other federal payments such as salaries or federal tax
refunds, the veteran or surviving spouse must consent in
writing to the offset, or a court must determine the veteran or
surviving spouse is liable.
House Bill
Section 8022 would eliminate the consent and court
determination requirements. Prior to referring the debt to
another federal agency for offset, such as the IRS, the
Secretary would be required to notify the veteran or surviving
spouse by certified mail of the process by which the Secretary
may waive indebtedness under section 5302(b) of title 38,
United States Code. If such a request is filed, the Secretary
must determine whether the veteran or surviving spouse is
responsible for some or all of the liability incurred by the
Secretary, and that decision may be appealed. If the Secretary
does not waive the entire amount of the liability, the
Secretary must also determine whether the veteran should be
released from liability under the provisions of 38 U.S.C.
3713(b) (which authorizes the Secretary to ``look back'' at the
time a loan was assumed and decide whether a release of
liability would have been issued had the veteran applied for
such a release).
senate amendment
Section 8033 contains a substantially identical
provision.
Compromise Agreement
Section 8033 follows the Senate Amendment.
STATEMENT OF MANAGERS
TITLE IX--ASSET SALES, USER FEES, AND MISCELLENEOUS PROVISIONS
Subtitle A--GSA Property Sales
Sale of Governors Island, New York
House bill
Section 7002 of the House bill calls for the General
Services Administration, notwithstanding any other provision of
law, to sell, at fair market value, no earlier than the fiscal
year 2002, Governors Island, New York. This property is
currently occupied but being vacated by the Coast Guard. The
sale of this 171 acre island, in the New York City harbor, is
not subject to laws and regulations that normally apply to the
disposal of real property by the Federal Government, including
requirements of the National Environmental Policy Act, and the
National Historic Preservation Act. It is recognized, however,
that State and local environmental and historic preservation
laws will protect the property upon sale and during any
development of the property. The sale is intended for cash. The
language provides the State and City be given the right of
first refusal to purchase all or part of Governors Island. Such
right may be exercised either by the State, the city, or both
acting jointly. Net proceeds from the sale, estimated to
generate approximately $500 million, would be deposited in the
miscellaneous account of the Treasury.
Senate amendment
The Senate amendment (section 6011) is substantially the
same; however, it provides the State and City the right of
first offer to purchase as opposed to the right of first
refusal to purchase.
Conference agreement
The House recedes to the Senate.
Sale of Air Rights
House bill
Section 7003 of the House bill directs the sale of air
rights over the train tracks at Union Station, Washington, D.C.
These air rights cover approximately 16.5 acres and are bounded
by Union Station on the south, 2nd Street NE on the east, K
Street NE on the north, and 1st Street NE on the west. The
provision would direct the General Services Administration,
notwithstanding any other provision of law, to sell these air
rights, at fair market value, in a manner to be determined
before September 30, 2002. The air rights are a combination of
the Department of Transportation (DOT) and AMTRAK air rights.
The provision calls for the transfer of AMTRAK air rights to
DOT without compensation to AMTRAK, then GSA would sell the air
rights.
Senate amendment
The Senate amendment is the same as the House provision.
Conference agreement
The House recedes to the Senate.
BUDGET RECONCILIATION CONFERENCE REPORT
Report language to accompany section 9---- (Extension of Higher Vessel
Tonnage Duties)
Section 9--- of the Senate bill extends through fiscal year
2002 the authority to collect the higher vessel tonnage duties
first authorized for fiscal year 1991. These higher tonnage
duties were to have expired after fiscal year 1998. The
statutes amended by this provision originally authorized two
vessel tonnage duties: $0.02 per net registered ton for the
first five entries a vessel makes into the United States from
another port in the Western Hemisphere and $0.06 per net
registered ton for the first five entries a vessel makes from
outside the Western Hemisphere. In 1991, these duties were
increased to $0.09 and $0.27, respectively, through fiscal year
1998. Upon expiration of the temporary higher vessel tonnage
duties, the original rates would remain in effect.
The House provision is similar to the Senate provision.
The Conference substitute adopts the House provision with
a technical amendment.
--. Increase Tobacco Excise Taxes
Sec. 846 of the Senate amendment to H.R. 2014
present law
The following excise taxes are imposed on tobacco
products:
Cigarettes--
Small cigarettes--24 cents/pack of 20
Large cigarettes--$25.20/1000
Cigars--
Large cigars--12.75% of mfgr. price up to $30/1000
Small cigars--$2.125/1000
Cigarette papers--$0.0075/50 papers
Cigarette tubes--$0.15/50 tubes
Chewing tobacco--$0.12/lb.
Snuff--$0.36/lb.
Pipe tobacco--$0.675/lb.
house bill
No provision.
senate amendment
No provision in H.R. 2015. However, the Senate amendment
to H.R. 2014 increases the small cigarette tax rate by 20 cents
per pack of 20 (i.e., to 44 cents per pack), and increases the
tax rates on other tobacco products proportionately. The Senate
amendment also extends the tax to ``roll-your-own'' cigarette
tobacco at $0.66/lb., and includes compliance provisions for
untaxed cigarettes destined for export.
Floor stocks taxes are imposed on cigarettes and other
currently taxed tobacco products held for sale on October 1,
1997 (including articles held in foreign trade zones).
Effective date.--October 1, 1997.
Conference Agreement
The conference agreement follows the Senate amendment to
H.R. 2014, with modifications. First, the tax rate on small
cigarettes is increased by $5 per thousand (10 cents per pack
of 20 cigarettes) and the tax rates on other currently taxed
tobacco products are increased proportionately beginning on
January 1, 2000. On January 1, 2002, the small cigarette tax
rate is increased by an additional $2.50 per thousand (5 cents
per pack) with the tax rates on other currently taxed tobacco
products also being increased proportionately at that time.
Thus, the aggregate tax increase on small cigarettes is 15
cents per pack of 20 cigarettes. The conference agreement
imposes tax on ``roll-your-own'' tobacco at the same rate as
pipe tobacco.
Effective date.--The conference agreement is effective on
the date of enactment for tobacco products removed after
December 31, 1999, and December 31, 2001, respectively.
Appropriate floor stocks taxes are imposed on January 1, 2000,
and on January 1, 2002.
TITLE IX--DEPARTMENT OF ENERGY
Sec. 9303. Lease of Excess Strategic Petroleum Reserve Capacity
house bill
The bill provides for the lease of excess Strategic
Petroleum Reserve capacity, subject to certain conditions. The
bill provides for the use of funds collected through the
leasing to be used for the purchase of oil for the Strategic
Petroleum Reserve beginning in fiscal year 2003.
senate amendment
The amendment provides for the lease of excess Strategic
Petroleum Reserve capacity. The amendment provides for the use
of funds collected through the leasing to be used for the
purchase of oil for the Strategic Petroleum Reserve beginning
in fiscal year 2008.
conference agreement
The conference agreement includes the House language,
with technical changes, except that the conference agreement
provides for the use of funds collected through the leasing to
be used for the purchase of oil for the Strategic Petroleum
Reserve beginning in fiscal year 2008.
TITLE X--BUDGET ENFORCEMENT ACT OF 1997
Background
current law
Current budget enforcement mechanisms were put into place
as a result of the Congressional Budget and Impoundment Control
Act of 1974 and the Balanced Budget and Emergency Deficit
Control Act of 1985 (GRH). While the Supreme Court's 1986
decision in Bowsher v. Synar (478 U.S. 714) invalidated the GRH
sequester mechanism, Congress moved to correct the
constitutional flaw in the law by enacting the Balanced Budget
and Emergency Deficit Control Reaffirmation Act of 1987.
In the spring of 1990 it was evident that the deficit
would exceed the GRH maximum deficit amount by more than $100
billion. Later that year, the Office of Management and Budget
estimated that a sequester of $85 billion would be required to
eliminate the excess deficit amount. A key feature of the 1990
budget summit agreement was a major restructuring of budget
enforcement provisions of GRH. The budget process provisions of
the 1990 budget summit agreement were enacted as the Budget
Enforcement Act of 1990 (BEA) (title XIII of the Omnibus Budget
Reconciliation Act of 1990; H.R. 5835; Pub. L. 101-508). The
BEA created a two-tiered budget enforcement regime by
establishing caps on discretionary appropriations spending and
a ``pay-as-you-go'' requirement for legislation affecting
mandatory spending or revenues.
While the BEA also extended deficit limits through 1995,
it relied exclusively on discretionary spending limits and the
pay-as-you-go requirement for 1991 through 1993 to impose
budgetary discipline. For 1991 through 1993, the BEA required
the President to adjust the deficit limits each year to equal
the deficit. This effectively made the deficit limits
unenforceable for those years. The BEA, however, gave the
President the choice of returning to fixed enforceable deficit
limits in 1993. In 1993, President Clinton chose to continue to
adjust the deficit limits and effectively discontinued
enforceable deficit limits. Later that year, when the BEA was
extended through 1998, Congress did not extend deficit limits.
The discretionary spending limits and the pay-as-you-go
requirement are scheduled to sunset at the end of 1998. These
mechanisms have been extremely useful tools for the Congress to
control discretionary spending and to ensure legislation is not
enacted that wouldincrease the deficit.
Congressional budget process
Under the Congressional Budget Act of 1974, as amended,
the Congress adopts its own budget in the form of a concurrent
budget resolution. The budget resolution provides a budgetary
framework within which it considers spending and tax
legislation. The budget resolution establishes aggregate
spending and revenue levels and distributes the spending levels
across 20 functional categories.
The conference report accompanying the budget resolution
allocates a lump sum of spending authority to all committees
with jurisdiction over federal spending. The Appropriations
Committee subdivides this allocation amount among each of its
13 subcommittees.
If the budget resolution envisions changes in revenue and
mandatory spending, the budget resolution may provide
reconciliation instructions directing the authorizing
committees to report legislation that achieves the specified
spending and revenue targets. The authorizing committees
respond to these reconciliation directives by reporting their
legislative recommendations to the Budget Committees. The
Budget Committees compile these legislative recommendations
into omnibus reconciliation bills that are considered under
fast-track procedures in the Congress.
The spending and revenue levels in the budget resolution
and the accompanying report are enforced through points of
order that may be raised by members of Congress when the House
or Senate considers spending and tax legislation.
Statutory controls over the budget
The Budget Enforcement Act of 1990 amended the
Congressional Budget Act of 1974 and the Balanced Budget Act of
1985 to establish two new statutory controls over federal
spending: (1) limits on general purpose discretionary budget
authority and discretionary outlays, which apply to spending
controlled through the annual appropriations process; and (2) a
pay-as-you-go (PAYGO) requirement, which applies to direct
spending and revenues. Initially, the two processes were to be
effective for 1991 through 1995. The spending limits and PAYGO
were extended through 1998 by Title XIV of P.L. 103-66, the
Omnibus Budget Reconciliation Act of 1993. The Congress
established separate discretionary spending limits through 1998
for crime prevention and certain law enforcement activities as
part of the Violent Crime Control and Law Enforcement Act of
1994 (P.L. 103-322).
Breaches of the discretionary spending limits and PAYGO
requirements are enforced by sequestration--automatic across-
the-board spending reductions in non-exempt programs. A
sequester is triggered under the discretionary spending limits
if either the budget authority or outlay limit for the
applicable fiscal year is exceeded. A sequester is triggered
under PAYGO if the net effect of legislation affecting receipts
or entitlement spending is to increase the deficit.
Summary of this title
The primary purpose of this title is to implement the
budget process provisions of the Bipartisan Budget Agreement.
The Bipartisan Budget Agreement called for the extension of the
BEA through 2002 with some modifications (the text of the
Bipartisan Budget Agreement appears on pages 75-92 of the
Senate print accompanying S. Con. Res. 27, S.Rpt. 105-27). This
title also makes a number of changes to consolidate provisions,
repeal obsolete provisions, make technical and conforming
changes, and to update the Budget Act and GRH. The Budget Act
and GRH have been amended in a piecemeal fashion over the
years. Consequently both of these laws contain redundant and
obsolete provisions. Finally, this title calls for a task force
in the Senate to review the floor procedures used during the
considerations of budget resolutions and reconciliation bills.
House procedures
This title makes various changes in the application of
certain budget procedures in the House. Many of these changes
are applicable only in the House of Representatives. The title
allows the Committee on Ways and Means to reduce revenue below
the revenue floor if it is offset by reductions in spending (in
excess of amounts required under reconciliation). In addition,
this title discontinues the practice of providing an allocation
of new entitlement authority separate from other forms of
mandatory spending. Finally, this title provides that it is not
necessary to waive the Budget Act where through rulemaking the
Budget Act violation is removed in the text pending before the
House.
Senate procedures
This title makes a number of changes to the Budget Act
regarding the congressional budget process and its application
to the Senate. During consideration of the revenue
reconciliation bill, Senator Byrd offered an amendment to
incorporate many aspects of Senate Rule XXII (cloture) to
procedures governing the Senate's consideration of
reconciliation bills. The Senate adopted the Byrd amendment
(#572) by a vote of 92-8. After a great deal of consultation,
the Senate leadership concluded that any change to floor
procedures under fast-track requires further study.
Consequently, the conference agreement includes the creation of
a bipartisan Senate task force which is to report to the Senate
by October 8, 1997.
Structure of this title
During the course of the past year, the House and Senate
Committees on the Budget, with the assistance of the
Congressional Budget Office and the Office of Management and
Budget, developed legislation to extend the BEA, incorporate
the budget process provisions of the Bipartisan Budget
Agreement, and make technical and conforming changes to budget
laws.
At the start of the legislative process, the House and
Senate Committees on the Budget worked from the same basic
draft. This draft was then modified to meet the specific
concerns of the membership of each House. In the House of
Representatives, the draft was incorporated into the language
of H.R. 2015 (as title XI Budget Enforcement) as part of a
Manager's Amendment. During consideration in the Senate of the
spending reconciliation bill, S. 947, (the text of which became
the Senate amendment to H.R. 2015) no budget enforcement
language was included. However, during consideration in the
Senate of the revenue reconciliation bill, S. 949, (the text of
which became the Senate amendment to H.R. 2014) the enforcement
language was adopted by a vote of 98-2 in the form of an
amendment offered by Senators Domenici and Lautenberg
(amendment number 537) and became title XVI.
As a result of each House sending the enforcement
language to conference on a different bill, this joint
explanatory statement: (1) sets forth the language found in
each bill (by identifying the section in the respective bill),
(2) compares the two (by reference to the section of the Budget
Act or GRH which is sought to be amended), and (3) indicates
the agreement reached by the conferees. Where the position of
the House and Senate are identical with respect to any
particular language, for purposes of clarity, the Senate will
recede to the language of the House bill. Any other results
will be specifically explained below.
Subtitle A: Amendments to the Congressional Budget and Impoundment
Control Act of 1974; Sections 10001-10123
1. Table of Contents
House Bill (Section 11001)
Sets forth a short title and table of contents for the
Budget Enforcement Act of 1997.
Senate Amendment
No provision.
Conference Agreement (10001)
The Senate recedes to the House with the appropriate
renumbering.
2. Amendments to section 3 of the Congressional Budget Act
House Bill (Section 11101)
Amends Section 3 of the Congressional Budget and
Impoundment Control Act of 1974 (``Budget Act'') to include
entitlement authority as defined under current law in section
401(c)(2)(C) of the Budget Act and the Food Stamp program
(which is technically not an entitlement). This change is taken
in concert with the discontinuation of separate allocations of
new entitlement authority in section 11106. As a consequence of
these changes, entitlement authority will be allocated as new
budget authority and will be subject to the points under the
Budget Act that apply to new budget authority.
Senate Amendment
No provision.
Conference Agreement (Section 10101)
The Conference agreement reflects the House bill with
modifications. The Conference agreement defines the term
``entitlement authority'' in section 3 of the Budget Act and
adds the food stamp program to that definition.
It is the intent of the conferees that legislation
providing new entitlement authority as defined in section
401(c)(2)(C) is also a form of new budget authority as set
forth in Section 3(2). In the House, legislation providing new
entitlement authority will also be considered as new budget
authority and subject to the same Budget Act requirements that
apply to new budget authority. In the Senate, this provision
merely conforms to current practice.
3. Amendment to section 201 of the Congressional Budget Act
House Bill (Section 11102)
Provides a nonsubstantive change clarifying that the term
of the Director of the Congressional Budget Office is one of
four years that expires in the year preceding a Presidential
election.
Corrects an error made by Section 13202 of the Budget
Enforcement Act of 1990 that designated two different
subsections as 201(g) by redesignating the first as Section
201(f).
senate amendment (Section 1601)
Provides a technical correction to redesignate a
subsection regarding revenue estimates which was not properly
executed in prior amendments.
conference agreement (Section 10102)
The Conference agreement reflects the House bill with
modifications to eliminate the references to the Office of
Technology Assessment and the Technology Assessment Board from
this section.
4. Amendments to section 202 of the Congressional Budget Act
house bill (Section 11103)
Amends Section 202(a) of the Budget Act to clarify that
the ``primary'' duty of the Congressional Budget Office is to
assist the House and Senate Budget Committees. This section
also eliminates an obsolete provision relating to the transfer
of the functions of the Joint Committee on Reductions of
Federal Expenditures to the Congressional Budget Office.
senate amendment (Section 1602)
The language in the Senate Amendment is identical to the
House Bill.
conference agreement (Section 10103)
The Conference agreement reflects the House bill with a
modification. The conferees recognize that CBO's
responsibilities have expanded considerably, particularly with
the enactment of the Unfunded Mandate Reform Act of 1995. In
addition to scoring reported legislation and providing spending
and revenue projections, CBO also provides assistance to
committees and individual members upon request. The intent of
this language is to clarify that CBO's primary duty is to
assist the Budget Committees in its duties to the Congress to
develop, implement, and enforce the budget resolution and
address other budgetary matters.
The Conference agreement also requires CBO to include in
its report the estimated budgetary impact associated with
assuming the extension of mandatory programs that exceed $50
million and excise taxes dedicated to trust funds for the
baseline as required by section 257 of GRH.
5. Amendments to section 300 of the Congressional Budget Act
house bill (Section 11104)
Conforms the date in the table in Section 300 of the
Budget Act for committee submission of views and estimates (six
weeks after the submission of the President's budget) with the
date in Section 301(d) of the Budget Act (which was in turn
amended to allow the Budget Committee Chairman to set an
alternative deadline for submission of committee views and
estimates).
senate amendment (Section 1603)
The language in the Senate Amendment is identical to the
House Bill.
conference agreement (Section 10104)
The Conference agreement reflects House bill with a
modification.
6. Amendments to section 301 of the Congressional Budget Act
house bill (Section 11105)
This section makes various changes in the content and
enforcement of the budget resolution through changes to Section
301 of the Budget Act. First, and most importantly, it
permanently extends the requirement that the term of budget
resolutions be for a period of at least 5 years. Under current
law, the resolution must cover three fiscal years, but this
window was temporarily extended to five years as part of the
Omnibus Budget Reconciliation Acts of 1990 and 1993.
Second, it eliminates the requirement that budget
resolutions set forth levels of direct loan obligations and
primary loan guarantee commitment levels because under the
Credit Reform Act of 1990 all loans are scored up front as new
budget authority.
Third, it extends a provision, applicable only in the
Senate, that provides foradjustments of committee allocations
for deficit-neutral legislation as long as the legislation is deficit-
neutral in the first year covered by the resolution and for the 5-year
period covered by the resolution.
Fourth, it allows the Budget Committee Chairmen to set an
alternative deadline for submission of committee views and
estimates.
Finally, it extends the Social Security point of order in
the Senate to include the concurrent budget resolution and any
related amendments, motions, or conference reports.
senate amendment (Section 1604)
The Senate amendment is identical to the House bill with
two exceptions. First, it adds a new paragraph (9) to include
direct loan obligations and primary loan commitment guarantee
levels as items that may be included in a budget resolution.
Second, it also amends the listing of those items that must be
included in a committee report accompanying a budget resolution
and adds a listing of those items that may be included in such
a report.
conference agreement (Section 10105)
The Conference agreement reflects the House bill with an
amendment.
The Conference agreement modifies the scope of budget
resolutions to provide that a budget resolution must cover at
least five years. The Congress has expanded the scope of budget
enforcement activities in recent years. The 1990 BEA (section
606 of the Budget Act) expanded the scope of budget enforcement
by requiring budget resolutions to set 5-year enforceable
levels. The Senate adopted its pay-as-you-go rule in 1993 that
established a 10-year time-frame with respect to direct
spending and revenue legislation. The 1996 budget resolution
covered 7 years. The Bipartisan Budget Agreement covers ten
years. The conference agreement retains the requirement that
budget resolutions cover at least five years and provides
Congress with the discretion to set a longer time frame in a
budget resolution.
The conference agreement eliminates the requirement that
a budget resolution contain direct loan and loan guarantee
levels. The Conference agreement allows a budget resolution to
set credit levels. The Federal Credit Reform Act of 1990
(``Credit Reform'') modified the budgetary treatment of credit
programs to require a subsidy appropriation before a direct
loan obligation or loan guarantee commitment is made. Under
credit reform, budget authority and outlays are scored when the
subsidy appropriation is made and these levels are enforced by
the section 302 allocations and the section 311 aggregates
established by the budget resolution. Since the subsidy
appropriation controls credit activity levels, there is no
reason to continue these credit levels.
Credit reform is largely dependent on estimates made by
the Executive Branch about interest rates and default risk. The
integrity of these subsidy estimates is entirely in the control
of the Executive Branch. If the Executive Branch made gross
errors with respect to subsidy estimates or intentionally
manipulated these estimates, the subsidy appropriation becomes
much less relevant for determining credit levels. The conferees
have been satisfied with the implementation of the Federal
Credit Reform Act. However, if there are significant errors in
subsidy estimates, for whatever reason, the Congress may want
to return to establishing credit levels in a budget resolution.
While the conferees do not believe credit levels need to be
established in a budget resolution, for the reasons stated
above, the conference agreement leaves this option to the
discretion of the Congress.
7. Amendments to section 302 of the Congressional Budget Act
house bill (Section 11106)
The House bill permanently extends the requirement that
allocations to the authorizing committees cover at least a
five-year period. In the process, it collapses the temporary
allocations under section 602 into section 302, generally
conforming to the structure set forth in section 602.
It also modifies the default allocation in which an
interim allocation is provided to the Appropriations Committee
in the House if the budget resolution is not agreed to by April
15. Under the modified default allocation, the Appropriations
Committee would be allocated an amount based on the prior
year's budget resolution (instead of the President's budget).
It clarifies that the Appropriations Committee shall subdivide
its allocation among its 13 subcommittees. It provides that the
allocations and suballocations shall be divided between
defense, non-defense, and the violent crime reduction category
as long as separate spending limits are in effect.
senate amendment (Section 1605)
The Senate amendment is essentially identical to the
House bill, though it does not contain the provision regarding
temporary allocations to the House Appropriations Committee in
section 302.
conference agreement (Section 10106)
The Conference agreement reflects the House bill with
modifications. As with section 301 regarding the scope of the
timeframes in a budget resolution, the conference agreement
also requires that section 302 allocations made to committees
cover at least five years.Interim allocations only apply in the
House.
The conference agreement also provides that the Budget
Committee must make separate allocations of defense,
nondefense, and violent crime reduction funding. Section
302(a)(3) requires that the allocation of budget authority and
outlays to the Appropriations Committees will be further
divided among the categories specified in section 250(c)(4) of
GRH. Under section 302(b), the Appropriations Committees are
required to allocate these separate categories among its 13
subcommittees. These separate divisions of the allocations are
enforced in the Senate pursuant to section 302(f) of the Budget
Act.
As modified, section 302(f) of the Budget Act refers to
the ``applicable'' allocation. The word ``applicable'' is used
in part to recognize the fact that two budget resolutions will
often be in force at the same time.
8. Amendments to section 303 of the Congressional Budget Act
house bill (section 11107)
The House bill makes several technical changes to Section
303(a) of the Budget Act which prohibits the consideration of
spending legislation before Congress has agreed to a budget
resolution. It eliminates references to new credit authority
and new entitlement authority. In the future, legislation
providing new entitlement authority will be scored as providing
new budget authority which is also subject to section 303(a).
Credit authority is already scored as new budget authority, in
the amount of the subsidy.
senate amendment (section 1606)
The Senate amendment repeals subsection (c) of section
303, which provides a process for the Senate to consider a
resolution to waive this point of order. Since this point of
order can be waived under section 904 of the Budget Act through
a motion, the waiver resolution process is not needed.
conference agreement (section 10107)
The Conference agreement reflects the House bill with an
amendment. The Conference agreement rewrites section 303 in its
entirety to simplify this section, drop obsolete provisions,
and make conforming changes to reflect changes made to other
provisions in the Act. The Conference agreement retains the
general objective of section 303: to discourage the Congress
from considering budget-related legislation until the adoption
of a budget resolution for a year.
The language of current section 303 is vague with respect
to its application to appropriations measures in the Senate.
Under section 302 of the Budget Act, allocations are made to
the Senate Appropriations Committee for just the first year of
a budget resolution (the budget year). The conference clarifies
the application of this point of order to provide that it is
out of order to consider an appropriations measure for a year
until an allocation under section 302(a) has been made pursuant
to the budget resolution for that year. The conference
agreement retains the current law exception that allows
appropriations measures to contain advance appropriations for
the two years following that year. By ``advance
appropriations'', the conferees mean an appropriation which is
first available in a year beyond the year for which the
appropriation bill applies.
The conferees intend to clarify that section 303(a) is a
gross test which looks at whether any provision within the
measure provides new budget authority, increases revenue, etc.
It is not a net test that looks at the sum of changes in budget
authority, increases in revenue, etc. as is the case with
sections 302(f) and 311(a).
9. Amendments to section 304 of the Congressional Budget Act
house bill
No provision
senate amendment
No provision
conference agreement (section 10108)
The Conference agreement repeals subsection (b) of
section 304. Subsection 304(a) provides the authority for
Congress to revise a budget resolution at any time. Subsection
(b) provides that section 301(g), regarding economic
assumptions, applies to revisions to budget resolutions. This
subsection is not needed and raises an ambiguity with respect
to whether other provisions of the Budget Act apply to
revisions of a budget resolution.
By repealing subsection 304(b), the conferees intend that
all provisions of the Budget Act apply to revised budget
resolutions unless there is a specific exception made for a
revision to a budget resolution, such as section 305(b) which
provides for only 10 hours of debate on a revision to a budget
resolution.
10. Amendments to section 305 of the Congressional Budget Act
house bill (section 11108)
Clarifies that the five day layover requirement for
budget resolutions includes Saturdays, Sundays and holidays
when the House is in session. This is a conforming change to
clause 2(1)(5) of House Rule XI, which was amended in the 104th
Congress to count Saturdays, Sundays and holidays when the
House is in session towards the layover requirement for bills
and resolutions.
senate amendment (section 1607)
The Senate amendment includes the same provision.
conference agreement (section 10109)
The Conference agreement reflects the House bill with a
modification providing that the resolution can be considered
the third calendar day (except Saturdays, Sundays and legal
holidays when the House is not in session) after the report has
been made available to Members.
11. Amendments to section 308 of the Congressional Budget Act
house bill (section 11109)
The House bill includes a technical change eliminating a
reference to credit authority in legislation for which
committees must include a statement essentially justifying
changes in revenue or direct spending. It also clarifies that
such statements are to be provided for joint resolutions rather
than simple (one-House) resolutions.
senate amendment (section 1608)
The Senate amendment is essentially identical to the
House bill.
conference agreement (Section 10110)
The Conference agreement reflects the House bill with
modifications to make additional technical and conforming
changes regarding section 308.
12. Amendments to section 310 of the Congressional Budget Act
house bill (section 11110)
The House bill provides that reconciliation instructions
may direct committees to achieve specified changes in direct
spending. Under current law, the instructions are to be
expressed as a change in new entitlement authority and new
budget authority. This section essentially codifies the recent
practice of reconciling committees to report legislation
providing the necessary change in direct spending. Under
current law, reconciliation instructions may be for new budget
authority, outlays and new entitlement authority. Direct
spending is defined under section 250(c)(8) of GRH.
It also codifies the interpretation of the House that the
fungibility rule in section 310 of the Budget Act applies to
legislation regardless of whether it increases or decreases
revenues or spending. In order to preserve the original intent
of section 310 to provide committees maximum flexibility in
meeting their reconciliation targets, committees are allowed to
substitute changes in revenue for changes in spending, or vice
versa, by up to 20 percent of the sum of the reconciled changes
in spending and revenue as long as the result does not increase
the deficit relative to the reconciliation instructions.
Under one interpretation, the existing fungibility rule
could not be invoked when a committee reduces revenues because
the revenue change may cancel out reductions in spending.
Accordingly, the rule now explicitly provides that the
substitution factor is 20 percent of the sum of the absolute
value of the reconciled change in revenue and the absolute
value of the reconciled change in spending.
senate amendment (section 787)
The Senate amendment amends section 310(e)(2) of the
Congressional Budget Act to provide 30 hours of Senate
consideration of a Reconciliation Bill. The amendment requires
consent to yield back time on the bill or to limit debate. It
also provides 30 minutes of debate per first degree amendment,
and 20 minutes of debate per second degree amendment until the
15th hour of debate after which all amendments are limited to
30 minutes of debate. And, it prohibits submitting first degree
amendments after the 15th hour of consideration, and prohibits
submitting second degree amendments after the 20th hour.
conference agreement (section 10111)
The Conference agreement reflects the House bill with a
modification. The conference agreement only amends section 310
to modify subsection 310(c)(1)(A) regarding the application of
the fungibility rule in the House. While no language regarding
Senate floor procedure is included, the conference agreement
calls for a Senate bipartisan task force to study and report on
budget resolution and reconciliation floor procedures.
13. Amendments to section 311 of the Congressional Budget Act
House Bill (Section 11111)
This section modifies section 311, which enforces the
budget resolution by prohibiting the consideration of
legislation that exceeds its aggregate spending levels or
reduces revenues below its revenue floor.
It eliminates references in section 311 to new
entitlement authority. It clarifies that the exception under
303 for legislation providing new budget authority applies only
to advanced discretionary budget authority--not mandatory
spending.
This section also preserves the so-called Fazio exception
in the House that allows appropriation measures to exceed the
aggregate ceiling on new budget authority or outlays if they do
not exceed the Appropriations Committee's applicable
allocation.
Finally, this section eliminates a redundant point of
order in the Senate and clarifies the Social Security
``firewall'' point of order, making its application more clear.
Senate Amendment (Section 1609)
The Senate amendment is identical to the House bill.
Conference Agreement (Section 10112)
The Conference agreement reflects the House bill with
modifications. The Conference agreement provides that the
spending and revenue levels are enforced for the first year
covered by the budget resolution. The Conference agreement also
provides that the revenue level is also enforced for the same
multiyear period covered by the allocations provided in a
conference report accompanying a budget resolution, which is at
least 5 years.
14. Amendments to section 312 of the Congressional Budget Act
House Bill (Section 11112)
The House bill makes stylistic changes to the heading and
consolidates existing provisions regarding points of order and
adds some new provisions.
Subsection (a) provides generic authority clarifying that
the Committees on the Budget are responsible for providing
estimates (or ``scoring'' information) to the House and Senate
for the purposes of evaluating the applicability of Budget Act
points of order. Redundant language is repealed throughout the
Act and replaced with this one statement that applies to all
points of order under titles III and IV.
Subsection (b) moves the existing section 601(b) point of
order in the Senate for the enforcement of discretionary
spending limits to subsection 312(b).
Subsection (c) moves the existing section 605(b) point of
order in the Senate for the enforcement of the maximum deficit
amount to subsection 312(c). This point of order will not be
enforced because the House bill does not provide ``maximum
deficit amounts'' in GRH. The House bill retains both the point
of order and the sequester procedures (section 253 of GRH) in
the event the Congress wants to return to deficit limits.
Subsection (d) adds new language which places into law
the current practice in the Senate with respect to the timing
of points of order.
Subsection (e) retains current law (first paragraph of
section 312) with respect to amendments between the Houses.
Subsection (f) retains current law (section 312(b)) with
respect to the effect of a point of order against a bill in the
Senate.
It repeals the now redundant (by virtue of new 312(a))
language from current law.
Senate Amendment (Section 1610)
The Senate amendment is identical to the House Bill.
Conference Agreement (Section 10113)
The Conference agreement reflects the House bill with
technical changes.
15. Addition of a new section ``314'' of the Congressional Budget Act
House Bill (Section 11113)
Adds a new section 314 to the Budget Act containing some
of the elements in the now-eliminated title VI. Most
importantly, section 314 provides a procedure for adjusting the
appropriate budget resolution levels for certain legislation
for which similar adjustments areprovided in the statutory
discretionary spending levels under section 11203 of this title. The
adjustments are for continuing disability reviews, the IMF, arrearages
and emergencies.
In a change from current law, the appropriate spending
levels are adjusted for legislation designating funding for
emergencies instead of the previous practice of simply not
counting such spending against the budget resolution's levels.
In another change in allocation procedures for the House,
the adjustments are made only for the consideration of the
relevant legislation and do not become permanent until the
legislation is actually enacted.
Senate Amendment (Section 1611)
The Senate amendment is the same as the House language
with slight modifications.
Conference Agreement (Section 10114)
The Conference agreement reflects the House bill with
modifications. The conference agreement provides for a process
for the Budget Committee Chairman to make adjustments to levels
set forth in or pursuant to a budget resolution for emergency
legislation, continuing disability reviews, an IMF allowance,
an allowance for international arrearages, and earned income
tax credit compliance. The purpose of these adjustments is to
ensure that budgetary limits, are only adjusted for the
legislation that meets the specific criteria spelled out in
this section. This section sets out a process regarding
discretionary spending limits that is similar to the process in
section 251 of GRH.
Subsection (a)(1) provides the general authority for the
Budget Committee Chairman to make adjustments for legislation.
Subsection (a)(2) provides the Chairman with the authority to
revise the levels set forth by or pursuant to a budget
resolution. Subsection (b) provides the criteria for
legislation that qualified for the adjustments. A bill,
resolution, amendment or conference report must meet the
specific terms spelled out in one of these paragraphs before
the Chairman can make any adjustments pursuant to this section.
Subsection (c) provides that the adjustments only apply while
the legislation is under consideration and only take final
effect upon the legislation's enactment. The conferees intend
that the adjustments only apply while the legislation that
meets the terms of one of the paragraphs of subsection (b) is
under consideration. In subsection (c), the reference to
``legislation'' means a bill, joint resolution, amendment,
motion or conference report. It is the Chairman's
responsibility to ensure these adjustments are only available
for legislation that meets the terms of subsection (b). This
could necessitate that the Chairman reverse the adjustments,
particularly the aggregates, after the pending legislation is
disposed of.
16. Addition of a new section 315 to the Congressional Budget Act
House Bill (Section 11114)
The House bill provides that it is not necessary to waive
the Budget Act as part of a House resolution to consider
legislation in which the resolution eliminates the source of
the Budget Act violation. Most points of order under the Budget
Act lie against consideration of the bill as originally
reported by a committee. If the reported version of the bill
violates the Budget Act, then the Chairman of the Budget
Committee often arranges to have the violation corrected as
part of a rule that effectively amends the version of the bill
pending before the House. However, it is still necessary to
waive the point of order because the point of order lies
against the bill as reported. As modified, it will no longer be
necessary to waive the point of order in order to consider a
bill in which the rule eliminates the source of the violation.
Senate Amendment
No provision.
Conference Agreement (Section 10115)
The Conference agreement reflects the House bill with
technical changes providing that it is not necessary to waive
the Budget Act when the source of the Budget Act violation in
the reported bill is eliminated through a special rule or
unanimous consent request. This provision only applies in the
House.
17. Amendments to section 401 and repeal of section 402 of the
Congressional Budget Act
House Bill (Section 11115)
The House bill makes changes in section 401 (which
defines and enforces various forms of spending authority that
are not controlled through the annual appropriations process).
It repeals the definition of new entitlement authority (which
is shifted into section 3 of the Budget Act). It repeals a
seldom used process in the House for referring bills providing
certain forms of mandatory appropriations to the Committee on
Appropriations. Finally, it collapses a point of order against
legislation providing credit authority not subject to
appropriations into section 401, which also prohibits the
consideration of legislation providing contract or borrowing
authority.
Senate Amendment
No provision.
conference agreement (section 10116)
The Conference agreement reflects the House bill with
modifications.
Sections 401 and 402 were enacted as a means of
controlling ``backdoor'' spending. This is spending not under
the annual control of the Congress through the appropriations
process. The Conference agreement's changes to section 401 are
not intended to weaken this section, but to update it.
The conference agreement provides that section 401(a)
will apply, just as it does under current law, to contract
authority and borrowing authority. The conference expands
section 401(a) to apply to credit authority and repeals section
402. This change has no practical effect. It just consolidates
the point of order against creating these types of spending
authority in one section of the Budget Act.
The Conference agreement repeals the definition of ``new
spending authority''. This definition is no longer needed and
raises questions about what constitutes new spending authority.
Since being defined in the original 1974 Budget Act, the
Congress has expanded the definition of budget authority. Under
the current definition, ``new spending authority'' as defined
in section 401(c) and ``budget authority'' as defined in
section 3 are essentially the same. As a result, the separate
definition in section 401(c) of the Budget Act is unneeded.
The important provisions of section 401 of the Budget Act
are to provide controls on backdoor spending and to provide a
definition of ``entitlement authority''. The definition of the
term ``entitlement authority'' has been moved to section 3 of
the Budget Act. The conference agreement refers to ``new
entitlement authority.'' The conferees intend that this term
applies to legislation that either expands an existing
entitlement or creates a new entitlement. The existing controls
on backdoor spending authority have been retained.
This Conference agreement generally makes technical and
conforming changes to the Budget Act. The conferees note that
there are major deficiencies in section 401 that have not been
corrected in this section. It is the intent of the conferees
that future legislation should address the purposes of section
401 and the definitions of ``contract authority'' and
``borrowing authority'', and should provide an up-to-date and
more effective means of controlling backdoor spending.
18. Amendments to Title V of the Congressional Budget Act (Credit
Reform)
house bill
No provision.
senate amendment (section 1612)
The Senate amendment contains technical corrections and
conforming amendments to the Federal Credit Reform Act of 1990.
All of the proposed changes to Credit Reform in this amendment
are taken from suggestions made by OMB. In general they reflect
the experience with implementing Credit Reform since 1990 and
codify current working definitions used by the Congressional
Budget Office and the Office of Management and Budget.
The amendments to section 502 clarify the definition of a
direct loan by explicitly including the sale of assets on
credit terms. These amendments also clarify the law to reflect
current practice concerning the treatment of modifications of
outstanding direct loans and loan guarantees that affect their
cost, adding a definition of the term ``modification.''
The amendments to section 504 clarify that appropriation
action is required before direct loans and loan guarantees can
be made (subsidy costs must be appropriated in advance), except
for mandatory programs that are exempt from this requirement.
The existing language with respect to modifications is also
made clearer.
The amendments to section 505 provide technical
instructions concerning the interest rate charged to Government
agencies by Treasury to finance credit programs, including the
interest rate charged on loans financed by the Federal
Financing Bank (FFB). The amendments require Treasury,
including the FFB, to use the same rate as the one used to
calculate the cost of a direct loan or loan guarantee. That is
the current practice for Treasury financing other than
financing by the FFB. The FFB is permitted to add a surcharge
to the Treasury rate of interest, which is paid by the borrower
and, in turn, by the agency. Current law does not provide
instructions for dealing with the surcharge. The amendments
specify that the surcharge will be credited to the credit
program's financing account along with other interest paid to
the Government. Currently, a fraction of the surcharge is used
to finance the FFB's administrative expenses. The amendments
allow the FFB to require reimbursement from an agency to cover
the FFB's administrative expenses. The agency will pay for its
administrative expenses out of appropriations for that purpose,
as is required now for other administrative expenses of most
credit programs.
conference agreement (section 10117)
The Conference agreement adopts the Senate Amendment with
additional changes for clarification.
Amendments to section 502 clarify the definition of the
term ``cost,'' including a modification of the requirement
concerning the ``discount rate'' used to determine cost so that
it is based on the timing of the cash flows, as opposed to the
term of the loan. Under this approach, a claim payment that
will occur in year 1 of a guaranteed loan is discounted using
the rate on a 1-year Treasury security, while a claim payment
that will occur in year 30 is discounted using the rate on a
30-year Treasury security. The total cost is the sum of the
present values of each year's cash flows over the life of the
direct loan or loan guarantee. This change increases accuracy
and reduces bias. Accuracy is improved because each cash flow
is discounted by the interest rate on a Treasury security
having the same maturity as the period of that cash flow. Under
the present practice, the rate on a Treasury security of
similar maturity to the loan is based on the pattern of
interest and principal payments for the security (semi-annual
interest payments and full principal repayment on the last
payment date). The estimated cash flows for credit programs
almost never match this pattern. Bias is reduced because loans
with the same cash flows but different maturities would be
priced using the same basket of discount rates, and would
therefore have the same cost.
Also under the definition of ``cost,'' the amendments
requires that, for purposes of an agency obligating funds for
the cost of a credit program, the cost estimate will be based
on the assumptions used in the President's budget for the
fiscal year in which the direct loan or loan guarantee is
obligated, adjusted for differences between the projected and
actual terms of the contract. For example, assuming no
difference between the projected and actual terms of the loan
contract, the cost estimate for the obligation of a direct loan
in 1998 would be based on the assumptions used in the
President's 1998 budget. This incorporates by statute OMB's
current guidelines for calculating the cost estimate when funds
are obligated for a direct loan or loan guarantee. For one-year
funds, it provides Congress with the assurance that loan volume
will not be affected by changes in assumptions during the
period of program execution. In effect, it means that Congress
will get the volume it paid for when it appropriated funds for
the credit program. For programs with multi-year funds, the
cost estimate will reflect more recent assumptions.
Workouts are not assumed to be included in the
definition of modifications. The conference agreement does not
change the treatment of workouts as implemented under the
Federal Credit Reform Act of 1990. OMB and CBO shall report
recommendations for any changes in such treatment to the House
and Senate Committees on the Budget not later than March 30,
1998. Such report shall include data on the extent of the use
of workouts and the resulting costs or savings.
The amendments add a definition of the term ``current,''
which is used in other credit definitions with regard to credit
assumptions. By referring to GRH, the definition is the same as
the one that is used for Budget Enforcement Act purposes.
19. Repeal of title VI of the Congressional Budget Act (Budget
Agreement Enforcement Provisions)
house bill (section 11116)
The House bill repeals title VI, which provided changes
in Congressional budget procedures that were expected to last
only for the duration of previous budget agreements. Title VI
temporarily extended the coverage and enforcement of budget
resolutions from three to five fiscal years. It also provided
for adjustments in the budget resolution for such factors as
emergencies, estimating differences, and tax compliance.
The five-year scope of the resolution is permanently
extended in sections 11105 and 11106. The new adjustments are
set forth in section 11113. The House bill repeals an unused
provision in section 604 of the Budget Act, which provided the
House Budget Committee with the authority to report a
reconciliation directive providing for tax increases to offset
legislation cutting taxes.
senate amendment (section 1613)
The language in the Senate Amendment is identical to the
House Bill.
conference agreement (section 10118)
The Senate recedes to the House.
20. Amendments to section 904 of the Congressional Budget Act
house bill (Section 11117)
The House bill contains technical corrections regarding
waivers and appeals. It redrafts the section so as to make it
possible to differentiate between those points of order which
are subject to supermajority discipline and those that are not.
It adds a new subsection ``(e)'' to indicate which waiver and
appeal provisions expire at the end of 2002. This has
previously been applicable in the Senate by virtue of a
provision of the 1996 Budget Resolution. This amendment thus
codifies the current Senate rules regarding the sunset date for
these points of order. Generally for those points of order
which relate to budget levels, the supermajority requirements
sunset in 2002. With respect to the other points of order which
relate to the substantive effect of language (germaneness, the
Byrd Rule, Budget Committee jurisdiction etc.), the
supermajority requirements are permanent.
senate amendment (section 1614)
The language in the Senate Amendment is identical to the
House Bill.
conference agreement (section 10119)
The Conference agreement reflects the House bill with
technical modifications.
21. Repeal of sections 905 and 906 of the Congressional Budget Act
house bill (section 11118)
The House bill repeals two obsolete sections in the
Budget Act: the original effective dates for the Budget Act in
section 905 and a special rule relating to the applicability of
the Act for Fiscal Year 1976.
senate amendment (section 1615)
The language in the Senate Amendment is identical to the
House Bill.
conference agreement (section 10120)
The Senate recedes to the House.
22. Amendments to sections 1022 and 1024 of the Congressional Budget
Act
house bill (section 11119)
The House bill makes conforming changes to sections 1022
and 1024 of the Line Item Veto Act reflecting the repeal of
section 601 of the Budget Act and its incorporation into
section 251(c) of GRH.
senate amendment (section 1616)
The language in the Senate Amendment is identical to the
House Bill.
conference agreement (section 10121)
The Senate recedes to the House.
23. Amendments to section 1026 of the Congressional Budget Act
house bill (section 11120)
The House bill makes conforming changes to section 1026
(definitions) to correct a drafting error in the definition of
``dollar amount of discretionary budget authority'' to reflect
the repeal of section 601 of the Budget Act and its
incorporation into section 251(c) of GRH.
senate amendment (section 1617)
The language in the Senate Amendment is identical to the
House Bill.
conference agreement (section 10122)
The Senate recedes to the House.
24. Senate task force
house bill
No provision.
senate amendment (section 787)
During consideration of S. 949 (spending reconciliation
bill in the Senate) the Senate adopted by a vote of 92 to 8 an
amendment offered by Senator Byrd (number 148) which provided
new floor procedures for the consideration of reconciliation
legislation in the Senate. The most significant aspect of the
Byrd amendment was the proposal to adopt cloture like
procedures at the conclusion of consideration. The amendment
called for changing the current law's 20 hour limit on
consideration to 30 hours of debate. In addition, it called for
imposing a filing requirement for all amendments to be
considered after 15 hours. This is a significant departure from
current law in that it would have the effect of closing off the
amendment process once all time has expired.
Current law provides that an unlimited number of
amendments and motions are in order, without debate, at the end
of time. Although this is not explicitly set forth in section
305 of the Budget Act, it is the interpretation that has
governed the Senate's consideration of budget resolutions and
reconciliation legislation. At the insistence of a number of
Senators, current Senate practice has permitted (by unanimous
consent) a very brief time for debate (usually between 2 and 4
minutes, equally divided) prior to the vote on such amendments.
This at least permits proponents and the managers to lay out
for their colleagues the basic issue presented by the
amendment. This has resulted in what many refer to as a ``vote-
a-ramma'' at the end of time. In this situation Senators are
forced to vote on scores of amendments with little or no
debate.
In addition to ending the ``vote-a-ramma'', the Byrd
amendment provides that the time for debate on individual
amendments be reduced from 2 hours to 30 minutes for amendments
in the first degree, from 1 hour to 20 minutes for amendments
in the second degree or debatable motions and appeals, and
after 15 hours debate on all debatable items would be limited
to 20 minutes. The Byrd amendment also provides that the motion
to reduce time be debatable for 30 minutes and that time may be
yielded back only by unanimous consent. Current law permits
this motion to be voted on without debate and time to be
yielded back as a matter of right.
conference agreement (Section 10123)
The conference agreement provides for a bipartisan task
force in the Senate to review the floor procedures governing
consideration of budget resolutions and reconciliation bills.
The task force is to report to the Senate by October 8, 1997.
Subtitle B: Amendments to the Balanced Budget and Emergency Deficit
Control Act of 1985; Sections 10201-10213
24. Purpose
house bill (section 11201)
Purpose. States that the purpose of this subtitle is to
extend discretionary spending limits and pay-as-you-go
requirements.
senate amendment (section 1651)
The language in the Senate Amendment is identical to the
House bill.
conference agreement (section 10201)
The Senate recedes to the House.
25. Amendments to section 250 of Gramm-Rudman-Hollings
house bill (section 11202)
Amends section 250(b) of GRH to state that it provides
for the enforcement of a balanced budget by 2002 as called for
in H. Con. Res. 84.
This section also defines the terms ``category'',
``budgetary resources'' and ``consultation''. ``Consultation''
means that the Budget Committee is consulted by CBO in manner
timely enough to afford the committee an opportunity to comment
on the matter; ``category'' means defense, non-defense, and
violent crime reduction discretionary spending, and the
definition of budgetary resources is amended to drop an
obsolete reference to credit authority. The terms ``current''
and ``outyear'' are also modified and extended.
senate amendment (section 1652)
The Senate amendment is substantially similar to the
House bill though it does not provide a definition of
``consultation''.
conference agreement (section 10202)
The Conference agreement reflects the Senate amendment
with modifications. The conference agreement also updates the
definition of ``budget authority'' and other terms in section
250(c)(1).
26. Amendments to section 251 of Gramm-Rudman-Hollings
house bill (section 11203)
The House bill provides for the extension of
discretionary spending limits and enforcement procedures
(sequestration) through 2002. Retains adjustments for
emergencies, changes in concepts and definitions, and
estimating differences in outlays. Adds automatic adjustments
in these limits for legislation relating to the International
Monetary Fund and arrearages. Eliminates adjustments for
inflation, estimating differences in budget authority as well
as expired adjustments for loan forgiveness and IRS compliance.
It imposes separate spending limits for defense and non
defense discretionary spending for 1998 and 1999 and then
collapses these limits under a general purpose discretionary
spending limit for 2000, 2001 and 2002.
In conformance with the Bipartisan Budget Agreement, the
House bill allows the separate limits on the violent crime
reduction category to expire at the end of 1998. Funding for
these programs will be subject to the non defense discretionary
spending limit in 1999 and 2000 and the general purpose
discretionary limits in 2001 and 2002.
senate amendment (section 1653)
The Senate amendment is substantially similar to the
House bill except that it extends separate violent crime
reduction spending limits through 2002.
conference agreement (section 10203)
The Conference agreement reflects the House bill with
some modifications. The violent crime reduction spending limits
are extended through 2000.
27. Amendments to section 251A of Gramm-Rudman-Hollings and to section
310002 of P.L. 103-322
house bill (section 11204)
The House bill shifts the separate spending limits on
the Violent Crime Reduction Trust Fund spending into section
251 of GRH, which includes the limits for defense and
nondefense discretionary spending. Under current law, section
251 provides sequester procedures for defense and nondefense
discretionary spending and section 251A provides sequester
procedures for violent crime reduction spending. Because this
bill amends section 251 to provide for violent crime reduction
as a separate category of discretionary spending, section 251A
is not needed and is repealed. Also makes a conforming change
by repealing section 310002 of the Violent Crime Control and
Law Enforcement Act of 1994, which reduced the discretionary
caps to provide a separate category for violent crime reduction
funding. Since the section 251(c) caps reflect these
reductions, section 310002 of the Crime Act is no longer
necessary.
Senate Amendment (Section 1654)
The Senate amendment is identical to the House bill.
Conference Agreement (Section 10204)
The Senate recedes to the House.
28. Amendments to section 252 of Gramm-Rudman-Hollings
House Bill (Section 11205)
The House bill extends the pay-as-you-go requirements for
legislation enacted through 2002. Under current law, PAYGO
expires at the end of 1998.
In order to impede legislation that would exacerbate the
deficit beyond 2002, the House bill provides a ``rolling''
PAYGO scorecard. Under a rolling five year scorecard, OMB will
score legislation for the budget year and each of the ensuing
four fiscal years through 2002. If this legislation causes a
net deficit increase for any year through 2006, OMB will be
required to implement a sequester in that year to eliminate any
deficit increase. For example, a bill enacted in January 2002
would be scored for 2002 through 2006. Although the PAYGO
requirements expire at the end of 2002, the estimates and
enforcing sequestration process would extend as late as 2006
for legislation that is enacted prior to the end of 2002.
The House bill also corrects the ``lookback'' procedure
in which size of a sequester can be offset by savings from the
prior fiscal year. Current law provides a ``lookback''
procedure to ensure that legislation that is enacted after the
beginning of a fiscal year is captured by the pay-as-you-go
requirements. Under OMB's current interpretation of the
existing lookback mechanism, OMB double-counts pay-as-you-go
surpluses or deficits in calculating whether a sequester would
be necessary. OMB currently interprets the PAYGO lookback
mechanism to require that the PAYGO balance for the current
year be added to the budget year in determining if there will
be a net deficit increase (this results in ``double-
counting'').
The House bill amends the pay-as-you-go lookback
procedures to require OMB to calculate the net deficit impact
on the current year of all legislation enacted after the final
deficit sequester report for that year. If this legislation
would result in a net deficit increase, OMB is required to add
the amount of this net deficit increase to the next year's
sequester calculations. If legislation is not enacted to offset
this deficit increase, a sequester will occur.
The House bill makes other technical and conforming
changes to PAYGO.
Senate Amendment (Section 1655)
The Senate amendment is substantially similar to the
House bill except that it would sunset pay-as-you-go sequester
procedures in 2002.
Conference Agreement (Section 10205)
The conference agreement reflects the House bill with
modifications. The lookback procedure is modified to provide
that any net deficit increase or decrease created during the
current year that is enacted after the final sequester report
for that year is added to the pay-as-you-go estimates for the
budget year. The conference agreement makes other clarifying
and conforming changes to section 252.
The conference agreement also modifies the manner in
which deposit insurance and emergency spending estimates are
covered under section 252. The conference agreement provides
that estimates associated with either deposit insurance
legislation or emergency legislation will not be recorded on
the pay-as-you-go scorecard. The conferees intend that OMB and
CBO include the estimated budgetary impact of deposit insurance
and emergency legislation separately for informational purposes
in their reports to Congress, but these estimates should not be
recorded for the purposes of calculating pay-as-you-go.
For deposit insurance, the conference agreement provides
that OMB and CBO should only score legislation that modifies
the deposit insurance guarantee commitment under current
estimates. ``Current'' is a defined term and the conferees
intend that OMB use the technical and economic assumptions for
deposit insurance contained in the President's most recent
budget submission (CBO should use the economic and technical
assumptions in the baseline). Section 252 presently requires
OMB and CBO to measure the impact relative to the deposit
insurance commitment in effect in 1990. To the extent
legislation modifies the depositinsurance guarantee commitment,
it should be scored by OMB and CBO. If this legislation becomes law,
the cost will have been captured for the purposes of pay-as-you-go and
should be reflected in the next baseline.
29. Amendments to section 254 of Gramm-Rudman-Hollings
House Bill (Section 11206)
Amends section 254 of GRH by removing an expired
provision relating to the optional adjustment of maximum
deficit amounts and extending the requirements for
sequestration reports through fiscal year 2006 (for legislation
enacted prior to the end of 2002).
Senate Amendment (Section 1656)
The Senate amendment is identical to the House bill
except that it deletes the requirement for a General Accounting
Office compliance report.
Conference Agreement (Section 10206)
The Senate recedes to the House.
30. Amendments to section 255 of Gramm-Rudman-Hollings
House Bill (Section 11207)
Makes several conforming changes to the list of exempt
programs to account for changes in the program code, changes in
program names, and programs that are no longer in existence.
Senate Amendment (Section 1657)
The Senate amendment is identical to the House bill with
a few minor exceptions.
Conference Agreement (Section 10207)
The conference agreement reflects the Senate amendment
with modifications, including a technical correction regarding
the treatment of low-income programs.
The amendments to section 255(d) change the titles of
three accounts to reflect actions by the Committees on
Appropriation. Also, three accounts have been added to this
section. The Personal Responsibility and Work Opportunities Act
of 1996 eliminated the former Aid to Families with Dependent
Children (AFDC) Program and created these three accounts in its
place. As such, the exemption of these accounts is a
continuation of the exemption of the former AFDC program.
31. Amendments to section 256 of Gramm-Rudman-Hollings
House Bill (Section 11208)
The House bill makes technical corrections and conforming
changes to special sequestration procedures to reflect changes
since the Budget Enforcement Act of 1990. The only substantive
change in this section is in the sequestration procedure for
the student loan program, which provides that in the event of a
PAYGO sequester, origination fees for both direct loans and
guaranteed loans will be increased by 0.50 percent.
Senate Amendment (Section 1658)
The Senate amendment makes similar technical corrections
and conforming changes, but does not change the sequestration
procedure for student loan programs.
Conference Agreement (Section 10208)
The conference agreement reflects the House bill with an
additional technical change related to agriculture programs.
The amendments to section 256(b) update the special rule
for guaranteed student loans to reflect recent changes in the
Higher Education Act, including the introduction of the direct
loan program, and for consistency with the Federal Credit
Reform Act. The rule continues to allow a sequestration order
to be carried out through a limited increase in loan
origination fees.
The amendments to section 256(j) update the special rule
for programs of the Commodity Credit Corporation to reflect
recent changes in farm legislation. The rule allows for the
application of a sequester order, if one is issued, to CCC
programs on a crop-year basis, instead of a fiscal year basis,
and for sequestration of the dairy program through reduction in
price supports.
32. Amendments to section 257 of Gramm-Rudman-Hollings
House Bill (Section 11209)
The House bill makes various changes in the definition of
the baseline which is used to score legislation for the purpose
of enforcing PAYGO requirements. It modifies the rule that
programs with outlays greater than $50 million are assumed to
continue beyond their expiration date. As modified, the
exception would apply only when the legislation explicitly
designates that a provision is exempt from the baseline
extension requirement.
It assumes that the baseline for expiring mandatory
programs continues to operate under the law that was
immediately in effect before the program's expiration.
It changes the index used for calculating the inflator
from the ``national product fixed-weight price index'' to the
``domestic product chain-type price index''.
It changes the budgetary treatment of asset sales (which
currently prohibits counting the proceeds of asset sales for
PAYGO purposes). As modified, the proceeds will score only if
the sale does not result in a net cost to the Federal
government. The formula for making this determination is
included in the scorekeeping guidelines.
Senate Amendment (Section 1659)
The Senate amendment is similar to the House bill with
two exceptions. First, the Senate amendment provides a
different treatment of the baseline for mandatory programs that
exceed $50 million. Under current law, CBO and OMB will not
score savings associated with terminating mandatory programs
that exceed $50 million or reflect the termination of such
programs in their baselines. The Senate amendment would allow
CBO and OMB to score savings associated with the termination of
mandatory programs and reflect the program's termination in the
baseline if the legislation clearly eliminated the Federal
government's financial obligation to continue to fund the
program. Second, the Senate amendment conforms provisions of
the Social Security Act regarding the budgetary treatment of
the Hospital Insurance Fund with section 257 of GRH. The law is
ambiguous regarding the budgetary treatment of the Hospital
Insurance Fund. The amendment clarifies that this trust fund is
not off-budget and modifies provisions regarding the budget
resolution's display of health care budgetary levels.
Conference Agreement (Section 10209)
The conference agreement reflects the Senate amendment
with modifications. The conference agreement amends section 257
to provide that only those programs with current year outlays
in excess of $50 million and that were in existence on or
before the date of enactment of the Balanced Budget Act of 1997
are assumed to continue for the purposes of the baseline. The
conference agreement provides that the Budget Committees and
OMB, as applicable, will determine the scoring of new programs
in excess of $50 million annually and CBO and OMB will consult
on any differences on scoring of such new programs. The
subsequent baseline treatment of such a new program should be
consistent with the scoring of that program.
33. Amendments to section 258 of Gramm-Rudman-Hollings
House Bill (Section 11210)
This section removes a superseded provision (Section 258
of GRH) regarding modification of a presidential order.
Senate Amendment (Section 1660)
The Senate amendment is identical to the House bill.
Conference Agreement (Section 10210)
The Senate recedes to the House.
34. Amendments to section 274 of Gramm-Rudman-Hollings
House Bill (Section 11211)
Makes conforming changes to Section 274 of GRH (providing
standing for Members of Congress and other persons affected by
sequestration orders to seek judicial review) to reflect
changes in section numbers made by this Act.
Senate Amendment (Section 1661)
The Senate amendment is identical with one technical
exception.
Conference Agreement (Section 10211)
The conference agreement reflects the House bill with
modifications.
35. Amendments to section 275(b) of Gramm-Rudman-Hollings and section
14002(c)(3) of OBRA 1993
House Bill (Section 11212)
Makes conforming changes to the effective dates of
certain programs in Part C of GRH to indicate that the
sequestration rules and the special reconciliation process
expire in 2002, while the other programs in Part C of GRH
(including five-year estimates) expire in 2006.
This section also repeals an expiring provision of OBRA
1993 (section 14002(c)(3)) which provided that Part C of GRH
(sequestration procedures) and Title VI of the Budget Act were
to expire on September 30, 1998.
Senate Amendment (Section 1662)
The Senate amendment is identical to the House bill
except that it sunsets pay-as-you-go sequester procedures in
2002.
Conference Agreement (Section 10212)
The Senate recedes to the House.
36. Provisions related to the Paygo Scorecard
House Bill (Section 11213)
The House bill provides that existing PAYGO balance is
eliminated. It further provides that the net deficit reduction
from reconciliation is not counted under PAYGO. Such net
savings could not be used to offset future PAYGO legislation.
This effectively locks in the net savings from reconciliation
and previously enacted PAYGO legislation for deficit reduction.
This language is similar to language enacted as part of the
Omnibus Reconciliation Act of 1993.
Senate Amendment (Section 1663)
The language in the Senate Amendment has the same effect
as the House bill.
Conference Agreement (Section 10213)
The conference agreement reflects the House bill with a
modification with respect to the references to the two
reconciliation bills.
Scorekeeping Guidelines
These budget scorekeeping guidelines are to be used by
the House and Senate Budget Committees, the Congressional
Budget Office, and the Office of Management and Budget (the
``scorekeepers'') in measuring compliance with the
Congressional Budget Act of 1974 (CBA), as amended, and GRH as
amended. The purpose of the guidelines is to ensure that the
scorekeepers measure the effects of legislation on the deficit
consistent with established scorekeeping conventions and with
the specific requirements in those Acts regarding discretionary
spending, direct spending, and receipts. These rules shall be
reviewed annually by the scorekeepers and revised as necessary
to adhere to the purpose. These rules shall not be changed
unless all of the scorekeepers agree. New accounts or
activities shall be classified only after consultation among
the scorekeepers. Accounts and activities shall not be
reclassified unless all of the scorekeepers agree.
1. Classification of appropriations
Following is a list of appropriations that are normally
enacted in appropriations acts. The list identifies
appropriated entitlements and other mandatory spending in
appropriations acts, and it identifies discretionary
appropriations by category.
2. Outlays prior
Outlays from prior-year appropriations will be classified
consistent with the discretionary/mandatory classification of
the account from which the outlays occur.
3. Direct spending programs
Entitlements and other mandatory programs (including
offsetting receipts) will be scored at current law levels as
defined in section 257 of GRH, unless Congressional action
modifies the authorizing legislation. Substantive changes to or
restrictions on entitlement law or other mandatory spending law
in appropriations laws will be scored against the
Appropriations Committee's section 302(b) allocations in the
House and the Senate. For the purpose of CBA scoring, direct
spending savings that are included in both an appropriations
bill and a reconciliation bill will be scored to the
reconciliation bill and not to the appropriations bill. For
scoring under sections 251 or 252 of GRH, such provisions will
be scored to the first bill enacted.
4. Transfer of budget authority from a mandatory account to
a discretionary account
The transfer of budget authority to a discretionary
account will be scored as anincrease in discretionary budget
authority and outlays in the gaining account. The losing account will
not show an offsetting reduction if the account is an entitlement or
mandatory program.
5. Permissive transfer authority
Permissive transfers will be assumed to occur (in full or
in part) unless sufficient evidence exists to the contrary.
Outlays from such transfers will be estimated based on the best
information available, primarily historical experience and,
where applicable, indications of Executive or Congressional
intent.
This guideline will apply both to specific transfers
(transfers where the gaining and losing accounts and the
amounts subject to transfer can be ascertained) and general
transfer authority.
6. Reappropriations
Reappropriations of expiring balances of budget authority
will be scored as new budget authority in the fiscal year in
which the balances become newly available.
7. Advance appropriations
Advance appropriations of budget authority will be scored
as new budget authority in the fiscal year in which the funds
become newly available for obligation, not when the
appropriations are enacted.
8. Rescissions and transfers of unobligated balances
Rescissions of unobligated balances will be scored as
reductions in current budget authority and outlays in the year
the money is rescinded.
Transfers of unobligated balances will be scored as
reductions in current budget authority and outlays in the
account from which the funds are being transferred, and as
increases in budget authority and outlays in the account to
which these funds are being transferred.
In certain instances, these transactions will result in a
net negative budget authority amount in the source accounts.
For purposes of section 257 of GRH, such amounts of budget
authority will be projected at zero. Outlay estimates for both
the transferring and receiving accounts will be based on the
spending patterns appropriate to the respective accounts.
9. Delay of obligations
Appropriations acts specify a date when funds will become
available for obligation. It is this date that determines the
year for which new budget authority is scored. In the absence
of such a date, the act is assumed to be effective upon
enactment.
If a new appropriation provides that a portion of the
budget authority shall not be available for obligation until a
future fiscal year, that portion shall be treated as an advance
appropriation of budget authority. If a law defers existing
budget authority (or unobligated balances) from a year in which
it was available for obligation to a year in which it was not
available for obligation, that law shall be scored as a
rescission in the current year and a reappropriation in the
year in which obligational authority is extended.
10. Contingent legislation
If the authority to obligate is contingent upon the
enactment of a subsequent appropriation, new budget authority
and outlays will be scored with the subsequent appropriation.
If a discretionary appropriation is contingent on the enactment
of a subsequent authorization, new budget authority and outlays
will be scored with the appropriation. If a discretionary
appropriation is contingent on the fulfillment of some action
by the Executive branch or some other event normally estimated,
new budget authority will be scored with the appropriation, and
outlays will be estimated based on the best information about
when (or if) the contingency will be met. If direct spending
legislation is contingent on the fulfillment of some action by
the Executive branch or some other event normally estimated,
new budget authority and outlays will be scored based on the
best information about when (or if) the contingency will be
met. Non-lawmaking contingencies within the control of the
Congress are not scoreable events.
11. Scoring purchases, lease-purchases, capital leases, and
operating leases
When a law provides the authority for an agency to enter
into a contract for the purchase, lease-purchase, capital
lease, or operating lease of an asset, budget authority and
outlays will be scored as follows:
For lease-purchases and capital leases, budget authority
will be scored against the legislation in the year in which the
budget authority is first made available in the amount of the
estimated net present value of the government's total estimated
legal obligations over the life of the contract, except for
imputed interest costs calculated at Treasury rates for
marketable debt instruments of similar maturity to the lease
period and identifiable annual operating expenses that would be
paid by the Government as owner (such as utilities,
maintenance, and insurance). Property taxes will not be
considered to be an operating cost.Imputed interest costs will
be classified as mandatory and will not be scored against the
legislation or for the current level but will count for other purposes.
For operating leases, budget authority will be scored
against the legislation in the year in which the budget
authority is first made available in the amount necessary to
cover the government's legal obligations. The amount scored
will include the estimated total payments expected to arise
under the full term of a lease contract or, if the contract
will include a cancellation clause, an amount sufficient to
cover the lease payments for the first fiscal year during which
the contract is in effect, plus an amount sufficient to cover
the costs associated with cancellation of the contract. For
funds that are self-insuring under existing authority, only
budget authority to cover the annual lease payment is required
to be scored.
Outlays for a lease-purchase in which the Federal
government assumes substantial risk--for example, through an
explicit government guarantee of third party financing--will be
spread across the period during which the contractor
constructs, manufactures, or purchases the asset. Outlays for
an operating lease, a capital lease, or a lease-purchase in
which the private sector retains substantial risk, will be
spread across the lease period. In all cases, the total amount
of outlays scored over time against legislation will equal the
amount of budget authority scored against that legislation.
No special rules apply to scoring purchases of assets
(whether the asset is existing or is to be manufactured or
constructed). Budget authority is scored in the year in which
the authority to purchase is first made available in the amount
of the government's estimated legal obligations. Outlays scored
will equal the estimated disbursements by the government based
on the particular purchase arrangement, and over time will
equal the amount of budget authority scored against that
legislation.
Existing contracts will not be rescored.
To distinguish lease purchases and capital leases from
operating leases, the following criteria will be used for
defining an operating lease:
--Ownership of the asset remains with the lessor during
the term of the lease and is not transferred to the Government
at or shortly after the end of the lease period.
--The lease does not contain a bargain-price purchase
option.
--The lease term does not exceed 75 percent of the
estimated economic lifetime of the asset.
--The present value of the minimum lease payments over
the life of the lease does not exceed 90 percent of the fair
market value of the asset at the inception of the lease.
--The asset is a general purpose asset rather than being
for a special purpose of the Government and is not built to
unique specification for the Government as lessee.
--There is a private-sector market for the asset.
Risks of ownership of the asset should remain with the
lessor.
Risk is defined in terms of how governmental in nature
the project is. If a project is less governmental in nature,
the private-sector risk is considered to be higher. To evaluate
the level of private-sector risk associated with a lease-
purchase, legislation and lease-purchase contracts will be
considered against the following type of illustrative criteria,
which indicate ways in which the project is less governmental:
--There should be no provision of Government financing
and no explicit government guarantee of third party financing.
--Risks of ownership of the asset should remain with the
lessor unless the government was at fault for such losses.
--The asset should be a general purpose asset rather than
for a special purpose of the government and should not be built
to unique specification for the government as lessee.
--There should be a private-sector market for the asset.
--The project should not be constructed on government
land.
Language that attempts to waive the Anti-Deficiency Act,
or to limit the amount or timing of obligations recorded, does
not change the government's obligations or obligational
authority, and so will not affect the scoring of budget
authority or outlays.
Unless language that authorizes a project clearly states
that no obligations are allowed unless budget authority is
provided specifically for that project in an appropriations
bill in advance of the obligation, the legislation will be
interpreted as providing obligation authority, in an amount to
be estimated by the scorekeepers.
12. Write-offs of uncashed checks, unredeemed food stamps, and similar
instruments
Exceptional write-offs of uncashed checks, unredeemed
food stamps, and similar instruments (i.e., write-offs of
cumulative balances that have built up over several years or
have been on the books for several years) shall be scored as an
adjustment to the means of financing the deficit rather than as
an offset. An estimate of write-offs or similar adjustments
that are part of a continuing routine process shall be netted
against outlays in the year in which the write-off will occur.
Such write-offs shall be recorded in the account in which the
outlay was originally recorded.
13. Reclassification after an agreement
Except to the extent assumed in a budget agreement, a law
that has the effect of altering the classification or scoring
of spending and revenues (e.g., from discretionary to
mandatory, special fund to revolving fund, on-budget to off-
budget, revenue to offsetting receipt), will not be scored as
reclassified for the purpose of enforcing a budget agreement.
14. Scoring of receipt increases or direct spending reductions for
additional administrative or program management expenses
No increase in receipts or decrease in direct spending
will be scored as a result of provisions of a law that provides
direct spending for administrative or program management
activities.
15. Asset sales
If the net financial cost to the government of an asset
sale is zero or negative (a savings), the amount scored shall
be the estimated change in receipts and mandatory outlays in
each fiscal year on a cash basis. If the cost to the government
is positive (a loss), the proceeds from the sale shall not be
scored for purposes of the CBA or GRH.
The net financial cost to the federal government of an
asset sale shall be the net present value of the cash flows
from:
(1) estimated proceeds from the asset sale;
(2) the net effect on federal revenues, if any, based on
special tax treatments specified in the legislation;
(3) the loss of future offsetting receipts that would
otherwise be collected under continued government ownership
(using baseline levels for the projection period and estimated
levels thereafter); and
(4) changes in future spending, both discretionary and
mandatory, from levels that would otherwise occur under
continued government ownership (using baseline levels for the
projection period and at levels estimated to be necessary to
operate and maintain the asset thereafter).
The discount rate used to estimate the net present value
shall be the average interest rate on marketable Treasury
securities of similar maturity to the expected remaining useful
life of the asset for which the estimate is being made, plus 2
percentage points to reflect the economic effects of continued
ownership by the government.
Explanation of changes to the scorekeeping guidelines
The Scorekeeping Guidelines above are based on the
guidelines that accompanied the Budget Enforcement Act of 1990
and have been used for scoring legislation since that time.
Some of the existing guidelines have been changed in order to
clarify them. Some new guidelines were added to make certain
current scoring conventions explicit. There are no substantive
changes from current scorekeeping practices. The changes to the
introductory paragraph make it clear that the scorekeepers--the
Budget Committees, CBO, and OMB--are bound by established
scorekeeping conventions and the specific requirements of the
Congressional Budget Act and the Balanced Budget Act, as
amended by the Budget Enforcement Act. They also make it clear
that the guidelines will be reviewed and changed if all of the
scorekeepers agree. The scorekeepers are required to consult on
new account classifications and must agree to any
reclassification. Following is a description of the significant
changes to specific scorekeeping guidelines.
1. Classification of appropriations
There was no substantive change to this guideline. The
title was changed to more accurately reflect the nature of the
list of accounts to which the guideline refers. The list
includes mandatory appropriations and discretionary accounts
listed according to the new categories--defense, non-defense,
and violent crime reduction.
2. Outlays prior
No significant change.
3. Direct spending programs
Language was added on scoring provisions that affect
direct spending when similar provisions are included in both an
appropriations bill and a reconciliation bill. Thisrequirement
applies to bills, not to enacted legislation.
4. Transfer of budget authority from a mandatory to a
discretionary account--No change.
5. Permissive transfer authority--No significant change.
6. Reappropriations--No change.
7. Advance appropriations--No significant change.
8. Rescissions and transfers of unobligated balances--No
significant change.
9. Delay of obligations
The existing guideline covers the scoring of legislation
with provisions that delay obligations and contingencies. There
are no significant changes to the part concerning delay of
obligations. The part concerning contingencies has been broken
out as a separate guideline--new guideline 10.
10. Contingent legislation
The existing language (formerly part of guideline 9) was
changed to clarify the treatment of contingencies affecting
discretionary spending versus those affecting direct spending.
The former guideline 10, concerning the absorption of pay
raises, has been deleted because it was no longer necessary.
Any pay raises are assumed to be within the caps.
11. Scoring purchases, lease-purchases, and capital leases
The changes in this guideline clarify existing
conventions that were developed to implement the 1990
requirements. The requirements are generally consistent with
commercial accounting practices. Matter formerly included in an
addendum to the rule has been integrated into the rule itself.
12. Write-offs of uncashed checks, unredeemed food stamps,
and similar instruments--No change.
13. Reclassification after an agreement--No significant
change.
14. Scoring of receipt increases or direct spending
reductions for additional administrative or program
management expenses
This new rule would prohibit scoring direct spending,
savings, or receipt increases to legislation providing
mandatory spending for administrative or program management
activities.
15. Asset sales
GRH formerly included a prohibition on the scoring of the
proceeds from asset sales. That provision was amended to allow
scoring on a cash basis if the sale does not result in a net
cost to the government over the long term. This guideline
specifies the method for determining the net financial cost to
the government of an asset sale. It requires a calculation of
the net present value of the estimated changes in cash flows
resulting from the sale. It requires using a discount rate
equal to the interest rate on Treasury securities plus 2
percentage points. The 2 percentage points addition is an
arbitrary factor intended to take into account the economic
effects of continued government ownership. This is believed to
be a fairer test that handicaps for private sector risk and
taxes.
APPROPRIATED ENTITLEMENTS AND MANDATORIES FOR FISCAL YEAR 1997
Agriculture, Rural Development and Related Agencies
Agriculture Department:
Agricultural Marketing Service:
12-5209 -0-2-605 Funds for strengthening markets,
income, and supply (section 32) \1\
Risk Management Agency:
12-4085 -0-3-351 Federal Crop Insurance Corporation
fund
Farm Service Agency:
12-3314 -0-1-351 Dairy indemnity program
12-4336 -0-3-351 Commodity Credit Corporation fund
Food and Consumer Service:
12-3505 -0-1-605 Food stamp program
12-3539 -0-1-605 Child nutrition programs
Treasury Department:
Financial Management Service:
20-1850 -0-1-351 Payments to the farm credit system
financial assistance corp.
COMMERCE, JUSTICE, STATE, THE JUDICIARY AND RELATED AGENCIES
The Judiciary:
10-0100 -0-1-752 Supreme Court of the United States,
Salaries and expenses \2\
10-0400 -0-1-752 U.S. Court of International Trade,
Salaries and expenses \2\
10-0510 -0-1-752 U.S. Court of Appeals for the Federal
Circuit, Salaries and expenses \2\
10-0920 -0-1-752 Courts of Appeals, District Courts,
etc., Salaries and expenses \2\
10-0941 -0-1-752 Judicial Retirement Funds, Payment to
judiciary trust funds
Commerce Department:
National Oceanic and Atmospheric Administration:
13-4313 -0-3-306 Coastal zone management fund \3\
Justice Department:
Legal Activities:
15-0311 -0-1-752 Fees and expenses of witnesses
15-0327 -0-1-752 Independent counsel
15-0329 -0-1-808 Civil liberties public education fund
Office of Justice Programs:
15-0403 -0-1-754 Public safety officers' benefits \4\
State Department:
Administration of Foreign Affairs:
19-0540 -0-1-153 Payment to the Foreign Service
retirement and disability fund
DEFENSE
Central Intelligence Agency:
56-3400 -0-1-054 Payment to Central
Intelligence Agency retirement and disability fund
DISTRICT OF COLUMBIA
No mandatory accounts.
ENERGY AND WATER DEVELOPMENT
No mandatory accounts.
FOREIGN OPERATIONS
Agency for International Development:
72-1036 -0-1-153 Payment to the Foreign Service
retirement and disability fund
INTERIOR AND RELATED AGENCIES
Interior Department:
Bureau of Land Management:
14-5132 -0-2-302 Range improvements
14-9971 -0-7-302 Miscellaneous trust funds
Insular Affairs:
14-0412 -0-1-808 Assistance to territories \5\
14-0415 -0-1-808 Compact of free association \6\
LABOR, HHS, EDUCATION AND RELATED AGENCIES
Labor Department:
Employment and Training Services:
16-0326 -0-1-504 Federal unemployment benefits and
allowances (FUBA)
16-0326 -0-1-603 Federal unemployment benefits and
allowances (FUBA)
16-0327 -0-1-601 Advances to the unemployment trust
fund and other funds
Employment Standards Administration:
16-1521 -0-1-601 Special benefits
16-1521 -0-1-602 Special benefits
20-8144 -0-7-601 Black lung disability trust fund
Health and Human Services:
Health Resources and Services Administration:
75-0350 -0-1-551 Health resources and services \7\
75-0320 -0-1-551 Vaccine injury compensation
75-9931 -0-3-551 Health loan funds
75-4430 -0-1-551 Medical facilities guarantee and loan
fund
20-8175 -0-7-551 Vaccine injury compensation program
trust fund \8\
Health Care Financing Administration (HCFA):
75-0512 -0-1-551 Grants to States for Medicaid
75-0580 -0-1-571 Payments to health care trust funds
75-4420 -0-3-551 HMO loan and loan guarantee fund
Administration for Children and Families:
75-1501 -0-1-609 Family support payments to States
75-1509 -0-1-504 Job opportunities and basic skills
75-1512 -0-1-506 Family preservation and support
75-1534 -0-1-506 Social services block grant
75-1545 -0-1-506 Payments to States for foster care and
adoption assistance
Program Support Center:
75-0379 -0-1-551 Retirement pay and medical benefits
for commissioned officers
Education Department:
Office of Special Education and Rehabilitative Services:
91-0301 -0-1-506 Rehabilitative services and disability
research
Social Security Administration:
28-0404 -0-1-651 Payments to social security trust
funds
28-0409 -0-1-601 Special benefits for disabled coal
miners
28-0406 -0-1-609 Supplemental security income program
\9\
Treasury Department:
20-1702 -0-1-808 Payment to D.C. financial
responsibility and management assistance authority
LEGISLATIVE BRANCH
Legislative Branch:
Senate:
00-0100 -0-1-801 Compensation of members, Senate
00-0115 -0-1-801 Payments to widows and heirs of
deceased members of Congress--Senate
House:
00-0200 -0-1-801 Compensation of members, House and
related administrative expenses
00-0215 -0-1-801 Payments to widows and heirs of
deceased members of Congress--House
MILITARY CONSTRUCTION
No mandatory accounts.
TRANSPORTATION
Transportation Department:
Coast Guard:
69-0241 -0-1-403 Retired pay
69-8349 -0-7-304 Oil spill recovery
TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT
Treasury Department:
Bureau of the Public Debt:
20-1710 -0-1-803 Payment of government losses in
shipment
20-0560 -0-1-803 Administering the public debt \10\
Postal Service:
18-1004 -0-1-372 Payment to the Postal Service fund for
non-funded liabilities
Office of Personnel Management:
24-0206 -0-1-551 Government payment for annuitants,
employees health benefits
24-0500 -0-1-602 Government payment for annuitants,
employee life insurance benefits
24-0200 -0-1-805 Payment to civil service retirement
and disability fund
Executive Office of the President:
Compensation of the President and the White House Office:
11-0001 -0-1-802 Compensation of the President
VETERANS, HOUSING AND URBAN, AND INDEPENDENT AGENCIES
Housing and Urban Development:
Housing Programs:
86-0183 -0-1-371 FHA-mutual mortgage insurance program
account \11\
Veterans Affairs:
Veterans Benefits Administration:
36-0153 -0-1-701 Compensation
36-0154 -0-1-701 Pensions
36-0155 -0-1-701 Burial benefits and miscellaneous
assistance
36-0137 -0-1-702 Readjustment benefits
36-0120 -0-1-701 Veterans insurance and indemnities
36-0138 -0-1-704 Veterans housing benefit program fund
program account \9\
Other Agencies:
51-4065 -0-3-373 FSLIC resolution fund
APPROPRIATED ENTITLEMENTS AND MANDATORIES FOR FISCAL YEAR 1997--
Footnotes:
\1\ The entire account shall be scored as mandatory except to the
extent that discretionary set asides are specified in appropriations
language.
\2\ Account split--only salaries of judges are mandatory.
\3\ Account split--loan repayments from the former Coastal Zone
Emergency Impact Program are mandatory.
\4\ Account split--the entire account shall be scored as mandatory
except to the extent that discretionary activities are specified in
appropriations language.
\5\ Account split--the interest rate differential related to the
Guam Power Authority refinancing and the Northern Marianas covenant
will be scored as mandatory.
\6\ Account split--the account shall be split between mandatory
payments (required by treaty) and discretionary costs.
\7\ Account split--the Welfare Reform bill provides $50 million in
mandatory funding for each fiscal year from 1998 through 2002.
\8\ The administrative expenses associated with this account are
discretionary within the jurisdiction of the Commerce, Justice, State
subcommittee.
\9\ Account split--administrative expenses shall be scored as
discretionary budget authority and outlays.
\10\ Account split--reimbursement to the Federal Reserve is
mandatory.
\11\ Portion of account is discretionary.
DISCRETIONARY APPROPRIATIONS CATEGORIES
The following is a list of discretionary accounts
organized by three subsets of discretionary appropriations:
defense discretionary; non-defense discretionary, excluding
violent crime reduction; and, violent crime reduction, pursuant
to Section 250(c)4. New accounts or activities shall be
classified or reclassified consistent with the Scorekeeping
Guidelines.
APPROPRIATED DEFENSE DISCRETIONARY ACCOUNTS FOR FISCAL YEAR 1997
COMMERCE, JUSTICE, STATE
Transportation Department:
Maritime Administration:
69-1711 -0-1-054 Maritime security program
Justice Department:
Radiation Exposure Compensation:
15-0105 -0-1-054 Administrative expenses
15-0333 -0-1-054 Payment to the radiation exposure
compensation trust fund
15-8116 -0-7-054 Radiation exposure compensation trust
fund
Federal Bureau of Investigation:
15-0200 -0-1-054 Salaries and expenses
15-0202 -0-1-054 Telecommunications carrier compliance
fund
Defense Department:
Military Personnel:
21-2010 -0-1-051 Army
17-1453 -0-1-051 Navy
17-1105 -0-1-051 Marine Corps
57-3500 -0-1-051 Air Force
21-2070 -0-1-051 Reserve Forces, Reserve personnel,
Army
17-1405 -0-1-051 Reserve personnel, Navy
17-1108 -0-1-051 Reserve personnel, Marine Corps
57-3700 -0-1-051 Reserve personnel, Air Force
21-2060 -0-1-051 National Guard personnel, Army
57-3850 -0-1-051 National Guard personnel, Air Force
Operations and Maintenance:
21-2020 -0-1-051 Army
17-1804 -0-1-051 Navy
17-1106 -0-1-051 Marine Corps
57-3400 -0-1-051 Air Force
97-0100 -0-1-051 Defense-wide
97-0107 -0-1-051 Office of the Inspector General
21-2080 -0-1-051 Army Reserve
17-1806 -0-1-051 Navy Reserve
17-1107 -0-1-051 Marine Corps Reserve
57-3740 -0-1-051 Air Force Reserve
21-2065 -0-1-051 Army National Guard
57-3840 -0-1-051 Air National Guard
97-0839 -0-1-051 Quality of Life Enhancements, Defense
97-0118 -0-1-051 Overseas contingency operations
transfer account
97-0104 -0-1-051 United States Courts of Appeals for
the armed forces
97-0105 -0-1-051 Drug interdiction and counter-drug
activities, Defense
97-0838 -0-1-051 Support for international sporting
competitions, Defense
97-0131 -0-1-051 Real property maintenance, Defense
97-0132 -0-1-051 Disaster relief
97-0130 -0-1-051 Defense health program
97-0810 -0-1-051 Environmental restoration, Defense
97-0819 -0-1-051 Overseas humanitarian, disaster and
civic aid
97-0828 -0-1-051 Defense reinvestment for economic
growth
97-0134 -0-1-051 Former Soviet Union threat reduction
account
97-0837 -0-1-051 Defense Against Weapons of Mass
Destruction
17-1236 -0-1-051 Payment to Kaho'Olawe conveyance,
remediation, and environmental Restoration fund
97-0833 -0-1-051 Emergency response fund
97-9922 -0-2-051 Disposal and lease of DOD real
property
97-5193 -0-2-051 Overseas military facility investment
recovery
97-5441 -0-2-051 Burdensharing and other cooperative
activities
17-5185 -0-2-051 Kaho'Olawe Island conveyance,
remediation, and environmental restoration fund
Procurement:
21-2031 -0-1-051 Aircraft procurement, Army
21-2032 -0-1-051 Missile procurement, Army
21-2033 -0-1-051 Procurement of weapons and tracked
combat vehicles, Army
21-2034 -0-1-051 Procurement of ammunition, Army
21-2035 -0-1-051 Other procurement, Army
97-0835 -0-1-051 Defense export loan guarantee program
account
17-1506 -0-1-051 Aircraft procurement, Navy
17-1507 -0-1-051 Weapons procurement, Navy
17-1508 -0-1-051 Procurement of ammunition, Navy and
Marine Corps
17-1611 -0-1-051 Shipbuilding and conversion, Navy
17-1810 -0-1-051 Other procurement, Navy
17-1109 -0-1-051 Marine Corps
57-3010 -0-1-051 Aircraft procurement, Air Force
57-3020 -0-1-051 Missile procurement, Air Force
57-3011 -0-1-051 Procurement of ammunition, Air Force
57-3080 -0-1-051 Other procurement, Air Force
97-0300 -0-1-051 Procurement, Defense-wide
97-0350 -0-1-051 National guard and reserve equipment
97-0360 -0-1-051 Defense production act purchases
97-0390 -0-1-051 Chemical agents and munitions
destruction, Army
Research, development, test, and evaluation:
21-2040 -0-1-051 Army
17-1319 -0-1-051 Navy
57-3600 -0-1-051 Air Force
97-0400 -0-1-051 Defense-wide
97-0450 -0-1-051 Developmental test and evaluation,
Defense
97-0460 -0-1-051 Operational test and evaluation,
Defense
Revolving and Management Funds:
97-4555 -0-3-051 National defense stockpile transaction
fund
17-4557 -0-4-051 National defense sealift fund
97-4930 -0-4-051 Defense Business Operation Fund (DBOF)
Allowances:
97-9918 -0-1-051 General transfer authority outlay
allowance
Trust Funds:
97-8168 -0-7-051 Trust Funds, National security
education trust fund
Other Agencies:
95-0401 -0-1-054 Intelligence community management
account
ENERGY AND WATER DEVELOPMENT
Energy Department:
Atomic Energy Defense Activities:
89-0240 -0-1-053 Weapons activities
89-0242 -0-1-053 Defense environmental restoration and
waste management
89-0243 -0-1-053 Other Defense Activities
89-0244 -0-1-053 Defense nuclear waste disposal
Other Agencies:
95-3900 -0-1-053 Defense Nuclear Facilities Safety
Board, Salaries and expenses
MILITARY CONSTRUCTION
Defense Department:
Military Construction:
21-2050 -0-1-051 Army
17-1205 -0-1-051 Navy
57-3300 -0-1-051 Air Force
97-0500 -0-1-051 Defense-wide
97-0804 -0-1-051 North Atlantic Treaty Organization
security investment program
21-2085 -0-1-051 Army National Guard
57-3830 -0-1-051 Air National Guard
21-2086 -0-1-051 Army Reserve
17-1235 -0-1-051 Naval Reserve
57-3730 -0-1-051 Air Force Reserve
97-0103 -0-1-051 Base realignment and closure account
Family Housing:
21-0702 -0-1-051 Army
17-0703 -0-1-051 Navy and Marine Corps
57-0704 -0-1-051 Air Force
97-0706 -0-1-051 Defense-wide
97-4090 -0-3-051 Homeowners assistance fund, Defense
97-0834 -0-1-051 Family housing improvement fund
97-0836 -0-1-051 Military unaccompanied housing
improvement fund
TRANSPORTATION AND RELATED AGENCIES
Transportation Department:
Coast Guard:
69-0201 -0-1-054 Operating expenses
VETERANS AFFAIRS, HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT
AGENCIES
FEMA:
58-0100 -0-1-054 Salaries and expenses
58-0101 -0-1-054 Emergency management planning and
assistance
NSF:
49-0100 -0-1-054 Research and related activities
Selective Service System:
90-0400 -0-1-054 Salaries and expenses
APPROPRIATED DOMESTIC DISCRETIONARY ACCOUNTS FOR FISCAL YEAR 1997
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES
Agriculture Department:
Office of the Secretary:
12-0115 -0-1-352 Office of the Secretary
Executive Operations:
12-0705 -0-1-352 Executive Operations
12-0014 -0-1-352 Chief financial officer
Departmental Administration:
12-0120 -0-1-352 Departmental Administration
12-0500 -0-1-304 Hazardous waste management
12-0117 -0-1-352 Agriculture buildings and facilities
and rental payments
Office of Communication:
12-0150 -0-1-352 Office of Communications
Office of the Inspector General:
12-0900 -0-1-352 Office of the Inspector General
Office of the General Counsel:
12-2300 -0-1-352 Office of the General Counsel
Economic Research Service:
12-1701 -0-1-352 Economic Research Service
National Agricultural Statistics Service:
12-1801 -0-1-352 National Agricultural Statistics
Service
Agricultural Research Service:
12-1400 -0-1-352 Agricultural Research Service
12-1401 -0-1-352 Buildings and facilities
Cooperative State Research, Education and Extension Service:
12-1500 -0-1-352 Cooperative state research activities
12-0502 -0-1-352 Extension activities
Animal and Plant Health Inspection Service:
12-1600 -0-1-352 Salaries and expenses \1\
12-1601 -0-1-352 Buildings and facilities
Food Safety and Inspection Services:
12-3700 -0-1-554 Salaries and expenses
Grain Inspection, Packers, and Stockyards Administration:
12-2400 -0-1-352 Salaries and expenses
Agricultural Marketing Service:
12-2500 -0-1-352 Marketing services
12-2501 -0-1-352 Payments to States and possessions
Risk Management Agency (Federal Crop Insurance Corporation):
12-2707 -0-1-351 Administrative and operating expenses
Farm Service Agency:
12-0600 -0-1-351 Salaries and expenses
12-3300 -0-1-351 Salaries and expenses
12-3315 -0-1-302 Agricultural conservation program
12-0170 -0-1-351 State mediation grants
12-3316 -0-1-453 Emergency conservation program
12-1336 -0-1-351 Commodity Credit Corporation export
loans program account \1\
12-1140 -0-1-351 Agricultural credit insurance fund
program account
Natural Resources Conservation Service:
12-1000 -0-1-302 Conservation operations
12-1066 -0-1-301 Watershed surveys and planning
12-1072 -0-1-301 Watershed and flood prevention
operations
12-1010 -0-1-302 Resource conservation and development
12-0601 -0-1-351 Outreach for socially disadvantaged
farmers
12-2268 -0-1-302 Great plains conservation program
12-3336 -0-1-302 Forestry incentives program
12-3320 -0-1-302 Water Bank program
12-3318 -0-1-304 Colorado river basin salinity control
program
12-3337 -0-1-304 Rural clean water program
Rural Utilities Service:
12-1981 -0-1-452 Salaries and expenses
12-2045 -0-1-304 Solid waste management grants
12-2046 -0-1-451 Emergency community water assistance
grants
12-2066 -0-1-452 Rural water and waste disposal grants
12-1230 -0-1-271 Rural electrification and
telecommunications loans program account \1\
12-1980 -0-1-452 Rural water and waste disposal loans
program account
12-1231 -0-1-452 Rural telephone bank program account
Rural Housing Service:
12-1952 -0-1-452 Salaries and expenses
12-1953 -0-1-452 Rural housing assistance grants
12-0137 -0-1-604 Rental assistance program
12-2002 -0-1-604 Rural Housing Service, Rural housing
voucher program
12-2004 -0-1-604 Rural housing for domestic farm labor
grants
12-2006 -0-1-604 Mutual and self-help housing grants
12-2009 -0-1-604 Supervisory and technical assistance
grants
12-2064 -0-1-604 Very low income housing repair grants
12-2067 -0-1-452 Rural community fire protection grants
12-2070 -0-1-604 Rural housing preservation grants
12-1951 -0-1-452 Rural community facility loans program
account
12-2081 -0-1-371 Rural housing insurance fund program
account
Rural Business and Cooperative Development Service:
12-1903 -0-1-452 Rural Business--Cooperative Service,
Salaries and Expenses
12-3400 -0-1-452 Salaries and expenses (Rural
Development Administration)
12-1900 -0-1-452 Rural cooperative development grants
12-1901 -0-1-452 Local technical assistance and
planning grants
12-2065 -0-1-452 Rural Business--Cooperative Service
12-1902 -0-1-452 Rural business and industry loans
program account
12-2069 -0-1-452 Rural development loan fund program
account
12-3108 -0-1-452 Rural economic development loans
program account
12-4144 -0-3-352 Alternative agricultural research and
commercialization corporation
Foreign Agricultural Service:
12-2900 -0-1-352 Foreign agricultural service and
general sales manager
12-1404 -0-1-352 Scientific activities overseas
(foreign currency program)
12-2278 -0-1-151 Public Law 480 Grants--Titles I (OFD),
II, and III
12-2277 -0-1-351 P.L. 480 program account
Food and Consumer Service:
12-3508 -0-1-605 Food program administration
12-3510 -0-1-605 Special supplemental nutrition program
for women, infants, and children
12-3507 -0-1-605 Commodity assistance program
12-3503 -0-1-605 Food donations programs for selected
groups \2\
Health and Human Services:
Food and Drug Administration:
75-0600 -0-1-554 Salaries and expenses
75-0601 -0-1-554 Rental payments
75-0603 -0-1-554 Buildings and facilities
75-9911 -0-1-554 Salaries and expenses
Other Agencies:
95-1400 0-1-376 Commodity Futures Trading Commission
COMMERCE, JUSTICE, STATE, THE JUDICIARY AND RELATED AGENCIES
Legislative Branch:
48-2101 -0-1-801 Gambling Impact Study Commission:
Salaries and expenses
00-0110 -0-1-153 Commission on Security and
Cooperation in Europe: Salaries and expenses
95-0650 -0-1-801 Commission on Immigration Reform:
Salaries and expenses
The Judiciary:
Supreme Court of the United States:
10-0100 -0-1-752 Salaries and expenses \2\
10-0103 -0-1-752 Care of the buildings and grounds
United States Court of Appeals for the Federal Circuit:
10-0510 -0-1-752 Salaries and expenses \2\
United States Court of International Trade:
10-0400 -0-1-752 Salaries and expenses \2\
Courts of Appeals, District Courts, and other judicial services:
10-0920 -0-1-752 Salaries and expenses \2\
10-0923 -0-1-752 Defender services
10-0925 -0-1-752 Fees of jurors and commissioners
10-0930 -0-1-752 Court security
Administrative Office of the United States Courts:
10-0927 -0-1-752 Salaries and expenses
Federal judicial center:
10-0928 -0-1-752 Salaries and expenses
United States Sentencing Commission:
10-0938 -0-1-752 Salaries and expenses
Commerce Department:
General Administration:
13-0120 -0-1-376 Salaries and expenses
13-0126 -0-1-376 Office of the Inspector General
Economic Development Agency:
13-0125 -0-1-452 Salaries and expenses
13-2050 -0-1-452 Economic development assistance
programs
Bureau of the Census:
13-0401 -0-1-376 Salaries and expenses \1\
13-0450 -0-1-376 Periodic censuses and programs
Economic and Statistical Analysis:
13-1500 -0-1-376 Salaries and expenses
13-4323 -0-3-376 Economics and statistics
administration revolving fund
International Trade Administration:
13-1250 -0-1-376 Operations and administration
Export Administration:
13-0300 -0-1-376 Operations and administration
Minority Business Development Agency:
13-0201 -0-1-376 Minority business development
U.S. Travel and Tourism Administration:
13-0700 -0-1-376 United States Travel and Tourism
Administration, Salaries and expenses
National Oceanic and Atmospheric Administration:
13-1450 -0-1-306 Operations, research, and facilities
13-1450 -0-1-376 Operations, research, and facilities
13-1452 -0-1-306 Construction
13-1457 -0-1-376 Fleet Modernization, shipbuilding and
conversion
13-5139 -0-2-376 Promote and develop fishery products
and research pertaining to American fisheries \1\
13-5124 -0-2-376 Fisheries promotional fund
13-4313 -0-3-306 Coastal zone management fund \2\
13-5120 -0-2-376 Fishermen's contingency fund
13-5119 -0-2-376 Fishing vessel and gear damage
compensation fund
13-4316 -0-3-304 Damage assessment and restoration
revolving fund
13-1456 -0-1-376 Fisheries finance, program account
13-5122 -0-2-376 Foreign fishing observer fund
Patent and Trademark Office:
13-1006 -0-1-376 Salaries and expenses
Technology Administration:
13-1100 -0-1-376 Salaries and expenses
National Technical Information Service:
13-4295 -0-3-376 NTIS revolving fund
National Institutes of Standards and Technology:
13-0500 -0-1-376 Scientific and technical research and
services
13-0525 -0-1-376 Industrial technology services
13-0515 -0-1-376 Construction of research facilities
13-4650 -0-4-376 Working capital fund
National Telecommunications and Information Administration:
13-0550 -0-1-376 Salaries and expenses
13-0551 -0-1-503 Public broadcasting facilities,
planning and construction
13-0552 -0-1-503 Information infrastructure grants
Department of Health and Human Services:
Health Resources and Services Administration:
20-8175 -0-7-551 Vaccine injury compensation program
trust fund \2\
Justice Department:
General Administration:
15-0129 -0-1-751 General Administration, Salaries and
expenses
15-0130 -0-1-751 Counterterrorism fund
15-0328 -0-1-751 Office of the Inspector General
15-0339 -0-1-751 Administrative review and appeals
U.S. Parole Commission:
15-1061 -0-1-751 Salaries and expenses
Legal Activities:
15-0128 -0-1-752 Salaries and expenses, General legal
activities
15-0319 -0-1-752 Antitrust division, Salaries and
expenses
15-0322 -0-1-752 United States Attorneys, Salaries and
expenses
15-0100 -0-1-153 Salaries and expenses, foreign claims
settlement commission
15-0324 -0-1-752 United States Marshals service,
Salaries and expenses
15-1020 -0-1-752 Federal prisoner detention
15-0500 -0-1-752 Community relations service, Salaries
and expenses
15-5073 -0-2-752 United States trustees system fund
15-5042 -0-2-752 Assets forfeiture fund \1\
Interagency Law Enforcement:
15-0323 -0-1-751 Interagency crime and drug enforcement
Federal Bureau of Investigation:
15-0200 -0-1-751 Salaries and expenses
15-0203 -0-1-751 Construction
15-0202 -0-1-751 Telecommunications carrier compliance
fund
Drug Enforcement Administration:
15-1100 -0-1-751 Salaries and expenses
15-1101 -0-1-751 Construction
Immigration and Naturalization Service:
15-1217 -0-1-751 Salaries and expenses
15-1219 -0-1-751 Construction
15-1218 -0-1-751 Immigration Emergency Fund
Federal Prison System:
15-1060 -0-1-753 Salaries and expenses
15-1003 -0-1-753 Buildings and facilities
15-4500 -0-4-753 Federal Prison Industries,
Incorporated \1\
Office of Justice Programs:
15-0401 -0-1-754 Justice assistance
15-0404 -0-1-754 State and local law enforcement
assistance
15-0405 -0-1-754 Juvenile justice program
15-0403 -0-1-754 Public safety officers' benefits \2\
State Department:
Administration of Foreign Affairs:
19-0113 -0-1-153 Diplomatic and consular programs
19-0107 -0-1-153 Salaries and expenses
19-0120 -0-1-153 Capital investment fund
19-0529 -0-1-153 Office of the Inspector General
19-0535 -0-1-153 Security and maintenance of United
States missions
19-0545 -0-1-153 Representation allowances
19-0520 -0-1-153 Protection of foreign missions and
officials
19-0522 -0-1-153 Emergencies in the diplomatic and
consular service
19-0523 -0-1-153 Payment to the American Institute in
Taiwan
19-0601 -0-1-153 Repatriation loans program account
International Organizations and Conferences:
19-1126 -0-1-153 Contributions to international
organizations
19-1124 -0-1-153 Contributions for international
peacekeeping activities
19-1125 -0-1-153 International conferences and
contingencies
International Commissions:
19-1069 -0-1-301 Salaries and expenses, IBWC
19-1078 -0-1-301 Construction, IBWC
19-1082 -0-1-301 American sections, international
commissions
19-1087 -0-1-302 International fisheries commissions
Other:
19-0525 -0-1-154 Payment to the Asia foundation
Transportation Department:
Maritime Administration:
69-1709 -0-1-403 Operating differential subsidies
69-1750 -0-1-403 Operations and Training
69-1752 -0-1-403 Maritime guaranteed loan (Title XI)
program account
Small Business Administration:
73-0100 -0-1-376 Small Business Administration,
Salaries and expenses
73-0200 -0-1-376 Office of Inspector General
73-4156 -0-3-376 Surety bond guarantees revolving fund
73-1154 -0-1-376 Business loan program account
73-1152 -0-1-453 Disaster loans program account
Legal Services Corporation:
20-0501 -0-1-752 Payment to the Legal Services
Corporation
United States Information Agency:
67-0201 -0-1-154 International information programs
67-0400 -0-1-154 Technology fund
67-0209 -0-1-154 Educational and cultural exchange
programs
67-0210 -0-1-154 National Endowment for Democracy
67-0208 -0-1-154 Broadcasting to Cuba
67-0202 -0-1-154 East-West center
67-0203 -0-1-154 North/South Center
67-0206 -0-1-154 International broadcasting operations
67-0204 -0-1-154 Radio construction
Ounce of Prevention Council:
95-0100 -0-1-754 Violent crime reduction programs
Other Agencies:
09-9911 -0-1-801 Other legislative branch boards and
commissions
11-0400 -0-1-802 Office of the United States Trade
Representative, Salaries and expenses
27-0100 -0-1-376 Federal Communications Commission,
Salaries and expenses
29-0100 -0-1-376 Federal Trade Commission, Salaries and
expenses
34-0100 -0-1-153 International Trade Commission,
Salaries and expenses
45-0100 -0-1-751 Equal Employment Opportunity
Commission, Salaries and expenses
48-0052 -0-1-752 State Justice Institute, Salaries and
expenses
48-2101 -0-1-801 Legislative Branch, Legislative Branch
Boards and Commissions, Gambling impact study commission
50-0100 -0-1-376 Securities and Exchange Commission,
Salaries and expenses
65-0100 -0-1-403 Federal Maritime Commission, Salaries
and expenses
94-0100 -0-1-153 Arms Control and Disarmament Agency,
Arms control and disarmament activities
95-1900 -0-1-751 Commission on Civil Rights, Salaries
and expenses
95-2200 -0-1-302 Marine Mammal Commission, Salaries and
expenses
95-3700 -0-1-153 Commission for the Preservation of
America's Heritage Abroad, Salaries and expenses
95-8025 -0-7-154 Japan-United States Friendship
Commission, Japan-United States friendship trust fund
95-8276 -0-7-154 Israeli Arab and Eisenhower exchange
fellowship programs
defense
Department of Defense:
Research, Development, Test, and Evaluation:
21-2040 -0-1-552 Army
District of Columbia
20-1700 -0-1-806 Federal payment to the District of
Columbia
ENERGY AND WATER DEVELOPMENT
DOD-Civil, Corps of Engineers:
Corps of Engineers:
96-3121 -0-1-301 General investigations
96-3122 -0-1-301 Construction, general
96-3123 -0-1-301 Operation and maintenance, general
96-3126 -0-1-301 Regulatory Program
96-3125 -0-1-301 Flood control and coastal emergencies
96-3124 -0-1-301 General expenses
96-3112 -0-1-301 Flood control, Mississippi River and
tributaries
20-8861 -0-7-301 Inland waterways trust fund
96-8863 -0-7-301 Harbor maintenance trust fund
Energy Department:
Energy Programs:
89-0222 -0-1-251 Department of Energy, General science
and research activities
89-0224 -0-1-271 Energy supply, R&D activities
89-0226 -0-1-271 Uranium supply and enrichment
activities
89-5227 -0-2-271 Nuclear waste disposal fund
89-0212 -0-1-276 Federal Energy Regulatory Commission
89-5231 -0-2-271 Uranium enrichment decontamination and
decommissioning fund
Power Marketing Administration:
89-0304 -0-1-271 Operation and Maintenance, Alaska
Power Administration
89-0302 -0-1-271 Southeastern Power Administration,
Operation and Maintenance
89-0303 -0-1-271 Southwestern Power Administration,
Operation and Maintenance
89-5068 -0-2-271 Construction, rehabilitation,
operation and maintenance, Western Area P.A.
89-4452 -0-3-271 Colorado river basins power marketing
fund, Western Area P.A.
Departmental Management:
89-0228 -0-1-276 Departmental Administration
89-0236 -0-1-276 Office of the inspector general
Interior Department:
Bureau of Reclamation:
14-0680 -0-1-301 Water and related resources
14-5065 -0-2-301 Policy and administration
14-5173 -0-2-301 Central valley project restoration
fund
14-5656 -0-2-301 Colorado River dam fund, Boulder
Canyon project \1\
14-4079 -0-3-301 Lower Colorado river basin development
fund \1\
14-4081 -0-3-301 Upper Colorado river basin fund \1\
14-0685 -0-1-301 Bureau of reclamation loan program
account
14-0787 -0-1-301 Central Utah Project, Central Utah
project completion account
14-5174 -0-2-301 Utah reclamation mitigation and
conservation account
Nuclear Regulatory Commission:
31-0200 -0-1-276 Salaries and expenses
31-0300 -0-1-276 Office of Inspector General
Other Agencies:
46-0200 -0-1-452 Appalachian Regional Commission,
development programs
64-4110 -0-3-452 Tennessee Valley Authority fund \3\
48-0500 -0-1-271 Nuclear Waste Technical Review Board,
Salaries and expenses
FOREIGN OPERATIONS
Funds Appropriated to the President:
International Security Assistance:
72-1037 -0-1-152 Economic support fund
11-1082 -0-1-152 Foreign military financing program
11-1080 -0-1-152 International Security Assistance,
Military assistance
11-1081 -0-1-152 International military education and
training
72-1032 -0-1-152 Peacekeeping operations
11-1075 -0-1-152 Non-proliferation, anti-terrorism,
demining, and related programs
11-1071 -0-1-152 Non-proliferation and disarmament fund
11-1085 -0-1-152 Foreign military financing loan
program account
Multilateral Assistance:
11-0077 -0-1-151 Contribution to the International Bank
for Reconstruction and Development (World Bank)
11-0073 -0-1-151 Contribution to the International
Development Association
11-0078 -0-1-151 Contribution to the International
Finance Corporation
11-0072 -0-1-151 Contribution to the Inter-American
Development Bank
11-0076 -0-1-151 Contribution to the Asian Development
Bank
11-0079 -0-1-151 Contribution to the African
Development Fund
11-0088 -0-1-151 Contribution to the European bank for
reconstruction and development
11-1008 -0-1-151 North American development bank
11-0089 -0-1-151 Contribution to enterprise for the
Americas multilateral investment fund
72-1005 -0-1-151 International organizations and
programs
11-0091 -0-1-151 Debt restructuring
Agency for International Development:
72-1021 -0-1-151 Sustainable development assistance
program
72-1010 -0-1-151 Assistance for Eastern Europe and the
Baltic States
72-1093 -0-1-151 Assistance for the New Independent
States of the former Soviet Union
72-1014 -0-1-151 Development fund for Africa
72-1012 -0-1-151 Sahel development program
11-1013 -0-1-151 American schools and hospitals abroad
72-1040 -0-1-151 Sub-Saharan Africa disaster assistance
72-1035 -0-1-151 International disaster assistance
72-1000 -0-1-151 Operating expenses of the Agency for
International Development
72-1007 -0-1-151 Operating expenses of AID, office of
inspector general
72-0402 -0-1-151 Assistance for the New Independent
States of the Former Soviet Union, Ukraine export credit
insurance program account
72-0401 -0-1-151 Urban and environmental credit program
account
72-0400 -0-1-151 Microenterprise and other development
credit program account
Overseas Private Investment Corporation:
71-4184 -0-3-151 OPIC noncredit account
71-0100 -0-1-151 OPIC program account
Trade and Development Agency:
11-1001 -0-1-151 Trade and development agency
Peace Corps:
11-0100 -0-1-151 Peace Corps
Inter-American Foundation:
11-3100 -0-1-151 Inter-American foundation
African Development Foundation:
11-0700 -0-1-151 African Development Foundation
International Monetary Programs:
11-0005 -0-1-155 Contribution to enhanced structural
adjustments facility of the international monetary fund
Military sales programs:
11-4116 -0-3-155 Special defense acquisition fund
Special Assistance for Central America:
72-1500 -0-1-152 Demobilization and transition fund
State Department:
Other:
19-1143 -0-1-151 Migration and refugee assistance
11-0040 -0-1-151 U.S. emergency refugee and migration
assistance fund
19-1022 -0-1-151 International narcotics control
19-0114 -0-1-152 Anti-terrorism assistance
Export-Import Bank:
83-0100 -0-1-155 Export-Import Bank of the United
States loans program account
INTERIOR AND RELATED AGENCIES
Agriculture Department:
Forest Service:
12-1106 -0-1-302 National forest system
12-1103 -0-1-302 Reconstruction and construction
12-1104 -0-1-302 Forest and rangeland research
12-1105 -0-1-302 State and Private Forestry
12-1115 -0-1-302 Wildland fire management
12-1108 -0-1-451 Southeast Alaska economic disaster
fund
12-5207 -0-2-302 Range betterment fund
12-9923 -0-2-302 Land acquisition accounts
12-9923 -0-2-303 Land acquisition accounts
Energy Department:
Energy Programs:
89-0213 -0-1-271 Fossil energy research and development
89-0219 -0-1-271 Naval petroleum and oil shale reserves
89-0215 -0-1-272 Energy conservation
89-0218 -0-1-274 Strategic petroleum reserve
89-0233 -0-1-274 SPR petroleum account
89-0216 -0-1-276 Energy information administration
89-0234 -0-1-274 Emergency preparedness
89-0217 -0-1-276 Economic regulation
89-0235 -0-1-271 Clean coal technology
89-5180 -0-2-271 Alternative Fuels Production
Health and Human Service:
Indian Health Services:
75-0390 -0-1-551 Indian health services
75-0391 -0-1-551 Indian health facilities \1\
Interior Department:
Bureau of Land Management:
14-1109 -0-1-302 Management of lands and resources
14-1110 -0-1-302 Construction
14-1114 -0-1-806 Payments in lieu of taxes
14-1116 -0-1-302 Oregon and California grant lands
14-1125 -0-1-302 Wildland fire management
14-1121 -0-1-304 Central hazardous materials fund
14-5033 -0-2-302 Land acquisition
14-5017 -0-2-302 Service charges, deposits, and
forfeitures
Minerals Management Service:
14-1917 -0-1-302 Royalty and offshore minerals
management
14-8370 -0-7-302 Oil spill research
Office of Surface Mining Reclamation and Enforcement:
14-5015 -0-2-302 Abandoned mine reclamation fund
14-1801 -0-1-302 Regulation and technology
U.S. Geological Service:
14-0804 -0-1-306 Geological survey, Surveys,
investigations and research
14-0804 -0-1-303 Surveys, investigations and research
Bureau of Mines:
14-0959 -0-1-306 Mines and minerals
U.S. Fish and Wildlife Service:
14-1611 -0-1-303 Resource management
14-1612 -0-1-303 Construction
14-1618 -0-1-303 Natural resource damage assessment
fund \1\
14-1692 -0-1-303 Rewards and Operations
14-5020 -0-2-303 Land acquisition
14-5091 -0-2-806 National wildlife refuge fund \1\
14-5150 -0-2-303 Wildlife conservation and appreciation
fund
14-5241 -0-2-303 North American Wetlands Conservation
Fund
14-5143 -0-2-303 Cooperative endangered species
conservation fund \1\
National Park Service:
14-1036 -0-1-303 Operation of the national park system
14-1042 -0-1-303 National recreation and preservation
14-1039 -0-1-303 Construction
14-1031 -0-1-303 Urban Park and Recreation Fund
14-5035 -0-2-303 Land acquisition and State assistance
\1\
14-5140 -0-2-303 Historic preservation fund
14-8215 -0-7-401 Construction (trust fund)
Bureau of Indian Affairs:
14-2100 -0-1-302 Operation of Indian programs
14-2100 -0-1-452 Operation of Indian programs
14-2100 -0-1-501 Operation of Indian programs
14-2628 -0-1-452 Indian guaranteed loan program account
14-2301 -0-1-452 Construction
14-2303 -0-1-452 Indian land and water claim
settlements and miscellaneous payments
14-2369 -0-1-452 Technical assistance of Indian
enterprises
Departmental Management:
14-0102 -0-1-306 Salaries and expenses
Insular Affairs:
14-0412 -0-1-808 Assistance to territories \2\
14-0414 -0-1-808 Trust Territory of the Pacific Islands
14-0415 -0-1-808 Compact of free association
\1\,\2\
Office of the Inspector General:
14-0104 -0-1-306 Office of Inspector General
Office of the Solicitor:
14-0107 -0-1-306 Office of the Solicitor
Office of Special Trustee for American Indians:
14-0120 -0-1-306 Office of the special trustee for
American Indians
National Indian Gaming Commission:
14-0118 -0-1-806 Salaries and expenses
Treasury Department:
Financial Management Service:
20-0112 -0-1-271 Energy security reserve
National Endowment for the Arts:
59-0100 -0-1-503 National Endowment for the Arts,
grants and administration \1\
National Endowment for the Humanities:
59-0200 -0-1-503 National Endowment for the Humanities,
grants and administration
Smithsonian Institution:
33-0100 -0-1-503 Salaries and expenses
33-0102 -0-1-503 Museum programs and related research
(special foreign currency program)
33-0129 -0-1-503 Construction and improvements,
National Zoological Park
33-0132 -0-1-503 Repair and restoration of buildings
33-0133 -0-1-503 Construction
33-0200 -0-1-503 National Gallery of Art, Salaries and
expenses
33-0201 -0-1-503 Repair, restoration, and renovation of
buildings
33-0400 -0-1-503 Woodrow Wilson International Center
for scholars, Salaries and expenses
33-0302 -0-1-503 Operations and maintenance, JFK center
for the performing arts
33-0303 -0-1-503 Construction, JFK center for the
performing arts
Other Agencies:
95-2300 -0-1-303 Advisory Council on Historic
Preservation, Salaries and expenses
95-2600 -0-1-451 Commission of Fine Arts, Salaries and
expenses
95-2602 -0-1-503 Commission of Fine Arts, National
capital arts and cultural affairs
95-2900 -0-1-502 Institute of American Indian and
Alaska Native Culture and Arts, Salaries and expenses
59-0300 -0-1-503 Institute of Museum and Library
Services, grants and administration
95-2500 -0-1-451 National Capital Planning Commission,
Salaries and expenses
48-1100 -0-1-808 Office of Navajo and Hopi Indian
Relocation, Salaries and expenses
95-3300 -0-1-808 United States Holocaust Memorial
Council
95-9911 -0-1-808 Other commissions and boards
LABOR, HHS, EDUCATION, AND RELATED AGENCIES
Legislative Branch:
95-3400 -0-1-551 Prospective Payment Assessment
Commission: Salaries and expenses
95-1000 -0-1-801 Physician Payment Review Commission:
Salaries and expenses
DOD-Civil:
Armed Forces Retirement Home:
84-8522 -0-7-602 Armed forces retirement home
Education Department:
Office of Elementary and Secondary Education:
91-0500 -0-1-501 Education reform
91-0900 -0-1-501 Education for the disadvantaged
91-0102 -0-1-501 Impact aid
91-1000 -0-1-501 School improvement programs
91-0220 -0-1-501 Chicago litigation settlement
91-0101 -0-1-501 Indian education
Office of Bilingual Education and Minority Languages Affairs:
91-1300 -0-1-501 Bilingual and immigrant education
Office of Special Education and Rehabilitative Services:
91-0300 -0-1-501 Special education
91-0600 -0-1-501 American printing house for the blind
91-0601 -0-1-502 National technical institute for the
deaf
91-0602 -0-1-502 Gallaudet University
Office of Vocational and Adult Education:
91-0400 -0-1-501 Office of Vocational and Adult
Education \1\
Office of Postsecondary Education:
91-0200 -0-1-502 Student Financial Assistance
91-0201 -0-1-502 Higher education
91-0603 -0-1-502 Howard University
91-0231 -0-1-502 Federal family education loan program
account \1\
91-0241 -0-1-502 College housing and academic
facilities loans, program account
Office of Educational Research and Improvement:
91-1100 -0-1-503 Education research, statistics, and
improvement
Departmental Management:
91-0800 -0-1-503 Program administration
91-0700 -0-1-751 Office for Civil Rights
91-1400 -0-1-751 Office of the Inspector General
91-1500 -0-1-503 Headquarters renovation
Health and Human Services:
Health Resources and Services Administration:
75-0350 -0-1-551 Health resources and services \1\
75-0350 -0-1-552 Health resources and services
75-0340 -0-1-552 Health professions graduate student
loan insurance program account \1\
75-4306 -0-1-553 Nurse training fund
75-4307 -0-1-553 Health education loans
Centers for Disease Control and Prevention:
75-0943 -0-1-551 Disease control, research, and
training
75-0943 -0-1-552 Disease control, research, and
training \1\
National Institutes of Health:
75-0807 -0-1-552 National Library of Medicine
75-0819 -0-1-552 John E. Fogarty International Center
75-0838 -0-1-552 Buildings and facilities
75-0843 -0-1-552 National Institute on Aging
75-0844 -0-1-552 National Institute of Child Health and
Human Development
75-0846 -0-1-552 Office of the Director
75-0848 -0-1-552 National Center for Research Resources
75-0849 -0-1-552 National Cancer Institute
75-0851 -0-1-552 National Institute of General Medical
Science
75-0862 -0-1-552 National Institute of Environmental
Health Sciences
75-0872 -0-1-552 National Heart, Lung and Blood
Institute
75-0873 -0-1-552 National Institute of Dental Research
75-0884 -0-1-552 National Institute of Diabetes and
Digestive and Kidney Disease
75-0885 -0-1-552 National Institute of Allergy and
Infectious Diseases
75-0886 -0-1-552 National Institute of Neurological
Disorders and Stroke
75-0887 -0-1-552 National Eye Institute
75-0888 -0-1-552 National Institute of Arthritis and
Musculoskeletal and Skin Diseases
75-0889 -0-1-552 National Institute for Nursing
Research
75-0890 -0-1-552 National Institute on Deafness and
other Communicative Disorders
75-0891 -0-1-552 National Center for Human Genome
Research
75-0894 -0-1-552 National Institute on Alcohol Abuse
and Alcoholism
75-0893 -0-1-552 National Institute on Drug Abuse
75-0892 -0-1-552 National Institute of Mental Health
75-9915 -0-1-552 National Institutes of Health \1\
Substance Abuse and Mental Health Services Administration:
75-1362 -0-1-551 Substance abuse and mental health
services \1\
Agency for Health Care Policy and Research:
75-1700 -0-1-552 Health care policy and research
Health Care Financing Administration:
75-0511 -0-1-551 Program management
75-0511 -0-1-552 Program management
20-8005 -0-7-571 Federal hospital insurance trust fund
\1\
20-8004 -0-7-571 Federal supplementary medical
insurance trust fund \1\
Administration for Children and Families:
75-1502 -0-1-609 Low income home energy assistance
75-1503 -0-1-609 Refugee and entrant assistance
75-1508 -0-1-506 State legalization impact assistance
grants
75-1515 -0-1-609 Child care and development block grant
75-1536 -0-1-506 Children and families services
programs
Administration on Aging:
75-0142 -0-1-506 Aging services programs
Departmental Management:
75-0122 -0-1-609 Policy research
75-0135 -0-1-751 Office for Civil Rights
75-1101 -0-1-551 Assistant Secretary for Health, Public
Health service management
75-9912 -0-1-551 General departmental management
Program Support Center:
75-9913 -0-1-552 Health activities funds
Office of the Inspector General:
75-0128 -0-1-551 Office of the Inspector General
Labor Department:
Employment and Training Administration:
16-0174 -0-1-504 Training and employment services
16-0175 -0-1-504 Community service employment for older
Americans
16-0179 -0-1-504 State unemployment insurance and
employment service operations
16-0172 -0-1-504 Program administration
20-8042 -0-7-504 Unemployment Trust fund
20-8042 -0-7-603 Unemployment Trust fund \1\
Pension and Welfare Benefit Administration:
16-1700 -0-1-601 Salaries and expenses
Pension Benefit Guaranty Corporation:
16-4204 -0-3-601 Pension Benefit Guaranty Corporation
fund \1\
Employment Standards Administration:
16-0105 -0-1-505 Salaries and expenses
16-9971 -0-7-601 Special workers' compensation \1\
Occupational Safety and Health Administration:
16-0400 -0-1-554 Salaries and expenses
Mine Safety and Health Administration:
16-1200 -0-1-554 Salaries and expenses
Bureau of Labor Statistics:
16-0200 -0-1-505 Salaries and expenses
Departmental Management:
16-0165 -0-1-505 Salaries and Expenses
16-0106 -0-1-505 Office of the Inspector General
16-4601 -0-4-505 Working capital fund
Social Security Administration:
28-0406 -0-1-609 Supplemental security income program
\2\
28-0400 -0-1-651 Office of the inspector general
20-8006 -0-7-651 Federal old-age and survivors
insurance trust fund \1\
20-8007 -0-7-651 Federal disability insurance trust
fund \1\
Corporation for National and Community Service:
95-0103 -0-1-506 Domestic volunteer service programs,
operating expenses
Corporation for Public Broadcasting:
20-0151 -0-1-503 Corporation for Public Broadcasting
Railroad Retirement Board:
60-0111 -0-1-601 Federal windfall subsidy \1\
60-8051 -0-7-603 Railroad unemployment insurance trust
fund \1\
60-8011 -0-7-601 Rail Industry Pension Fund \1\
60-8010 -0-7-601 Railroad social security equivalent
benefit account \1\
60-8012 -0-7-601 Supplemental Annuity Pension Fund \1\
United States Institute of Peace:
95-1300 -0-1-153 Operating expenses
Other Agencies:
93-0100 -0-1-505 Federal Mediation and Conciliation
Service, Salaries and expenses
95-2800 -0-1-554 Federal Mine Safety and Health Review
Commission, Salaries and expenses
95-2700 -0-1-503 National Commission on Libraries and
Information Science, Salaries and expenses
95-3500 -0-1-506 National Council on Disability,
Salaries and expenses
95-2650 -0-1-503 National Education Goals Panel,
Salaries and expenses
63-0100 -0-1-505 National Labor Relations Board,
Salaries and expenses
95-2400 -0-1-505 National Mediation Board, Salaries and
expenses
59-0301 -0-1-503 Institute of Museum and Library
Services, Office of libraries: grants and administration
95-2100 -0-1-554 Occupational Safety and Health Review
Commission, Salaries and expenses
LEGISLATIVE BRANCH
Legislative Branch:
Senate:
00-0107 -0-1-801 Expense allowances
00-0108 -0-1-801 Representation allowances for the
Majority and Minority Leaders
00-0110 -0-1-801 Salaries, officers and employees
00-0185 -0-1-801 Office of the Legislative Counsel of the
Senate
00-0171 -0-1-801 Office of the Senate Legal Counsel
00-0172 -0-1-801 Expense allowances of the Secretary of
the Senate, Sergeant at Arms and Doorkeeper of the Senate, and
Secretaries for the Majority and Minority of the Senate
00-0128 -0-1-801 Contingent expenses of the Senate:
Inquiries and investigations
00-0129 -0-1-801 Expenses of the United States Senate
Caucus on International Narcotics Control
00-0126 -0-1-801 Secretary of the Senate
00-0127 -0-1-801 Sergeant at Arms and Doorkeeper of the
Senate
00-0123 -0-1-801 Miscellaneous items
00-0130 -0-1-801 Senators' official personnel and office
expense account
00-0140 -0-1-801 Stationery
00-0132 -0-1-801 Official mail costs
House of Representatives:
00-0400 -0-1-801 Salaries and expenses
Joint Items:
00-0186 -0-1-801 Joint Committee on Inaugural Ceremonies
00-0181 -0-1-801 Joint Economic Committee
00-0180 -0-1-801 Joint Committee on Printing
00-0460 -0-1-801 Joint Committee on Taxation
00-0425 -0-1-801 Office of the Attending Physician
00-0474 -0-1-801 Capitol Police: Salaries
00-0476 -0-1-801 Capitol Police: General expenses
00-0174 -0-1-801 Capitol guide service and special
services office
00-0199 -0-1-801 Statements of appropriations
Office of Compliance:
09-1200 -0-1-801 Salaries and expenses
09-1450 -0-1-801 Awards and settlements
Congressional Budget Office:
08-0100 -0-1-801 Salaries and expenses
Architect of the Capitol:
01-0100 -0-1-801 Office of the Architect of the Capitol:
Salaries
01-0102 -0-1-801 Contingent expenses
01-0105 -0-1-801 Capitol buildings
01-0108 -0-1-801 Capitol grounds
01-0123 -0-1-801 Senate office buildings
01-0127 -0-1-801 House office buildings
01-0133 -0-1-801 Capitol power plant
01-0155 -0-1-801 Library buildings and grounds,
structural and mechanical care
Botanic Garden:
09-0200 -0-1-801 Salaries and expenses
Library of Congress:
03-0101 -0-1-503 Salaries and expenses
03-0102 -0-1-376 Copyright Office: Salaries and expenses
03-0127 -0-1-801 Congressional Research Service: Salaries
and expenses
03-0141 -0-1-503 Books for the blind and physically
handicapped: Salaries and expenses
03-0146 -0-1-503 Furniture and furnishings
Government Printing Office:
04-0203 -0-1-801 Congressional printing and binding
04-0201 -0-1-808 Office of Superintendent of Documents:
Salaries and expenses
General Accounting Office:
05-0107 -0-1-801 Salaries and expenses
U.S. Tax Court:
23-0100 -0-1-752 Salaries and expenses
transportation and related agencies
Transportation Department:
Office of the Secretary:
69-0102 -0-1-407 Salaries and expenses
69-0118 -0-1-407 Office of Civil Rights
69-0119 -0-1-407 Minority business outreach
69-0117 -0-1-407 Rental payments
69-0142 -0-1-407 Transportation, planning, research, and
development
69-0150 -0-1-402 Payments to air carriers
69-0155 -0-1-407 Minority business resource center
program account
69-8066 -0-7-407 Trust fund share of rental payments
69-8304 -0-7-402 Payments to air carriers (trust fund)
\1\
Coast Guard:
69-0201 -0-1-403 Operating expenses
69-0240 -0-1-403 Acquisition, construction, and
improvements
69-0247 -0-1-403 Port safety development
69-0230 -0-1-304 Environmental compliance and restoration
69-0244 -0-1-403 Alteration of bridges
69-0242 -0-1-403 Reserve training
69-0243 -0-1-403 Research, development, test, and
evaluation
69-8149 -0-7-403 Boat safety \1\
69-8314 -0-7-304 Trust fund share of expenses
Federal Aviation Administration:
69-1301 -0-1-402 Operations
69-1334 -0-1-402 National Civil Aviation Review
Commission
69-9912 -0-1-402 Miscellaneous expired accounts
69-4120 -0-3-402 Aviation insurance revolving fund
69-8106 -0-7-402 Grants-in-aid for airports (Airport and
airway trust fund) 1,}4
69-8107 -0-7-402 Facilities and equipment (Airport and
airway trust fund)
69-8104 -0-7-402 Trust fund share of FAA operations
69-8108 -0-7-402 Research, engineering, and development
(Airport and airway trust fund)
Federal Highway Administration:
69-9911 -0-1-401 Miscellaneous appropriations
69-0543 -0-1-401 Orange County (CA) Toll Road
Demonstration Project Program
69-0549 -0-1-401 State infrastructure banks
69-8083 -0-7-401 Federal-aid highways 1, 4
69-8019 -0-7-401 Highway-related safety grants
1, 4
69-8048 -0-7-401 Motor carrier safety grants
1, 4
69-9972 -0-7-401 Miscellaneous highway trust funds
National Highway Traffic Safety Administration:
69-0650 -0-1-401 Operations and research
69-8016 -0-7-401 Operations and research (trust fund
share)
69-8020 -0-7-401 Highway traffic safety grants \1\
Federal Railroad Administration:
69-0700 -0-1-401 Office of the Administrator
69-0714 -0-1-401 Local rail freight assistance
69-0702 -0-1-401 Railroad safety
69-0745 -0-1-401 Railroad research and development
69-0747 -0-1-401 Conrail commuter transition assistance
69-9914 -0-1-401 Northeast corridor high-speed rail
infrastructure program
69-0755 -0-1-401 High-speed rail trainsets and facilities
69-0730 -0-1-401 Railroad rehabilitation activities
69-0704 -0-1-401 Grants to National Railroad Passenger
Corporation
69-0722 -0-1-401 Next generation high-speed rail program
69-0536 -0-1-401 Direct loan financing program
69-9973 -0-7-401 Trust fund share of next generation
high-speed rail
Federal Transit Administration:
69-1120 -0-1-401 Administrative expenses
69-1121 -0-1-401 Research, training, and human resources
69-1127 -0-1-401 Interstate transfer grants-transit
69-1128 -0-1-401 Washington Metropolitan Area Transit
Authority
69-1129 -0-1-401 Formula grants
69-1136 -0-1-401 University transportation centers
69-1137 -0-1-401 Transit planning and research
69-9913 -0-1-401 Miscellaneous expired accounts
69-8191 -0-7-401 Major capital investments (highway trust
fund, mass transit account) \1\
69-8350 -0-7-401 Trust fund share of expenses \1\
69-0124 -0-1-401 Emergency railroad rehabilitation and
repair
St. Lawrence Seaway Development Corporation:
69-8003 -0-7-403 Operations and maintenance
Research and Special Programs Administration:
69-0104 -0-1-407 Research and Special programs
69-5172 -0-2-407 Pipeline safety
69-8121 -0-7-407 Trust fund share of pipeline safety
Office of the Inspector General:
69-0130 -0-1-407 Salaries and expenses
Surface Transportation Board:
69-0301 -0-1-401 Salaries and expenses
Bureau of Transportation Statistics:
69-0305 -0-1-407 Transportation statistics
National Transportation Safety Board:
95-0310 -0-1-407 Salaries and expenses
95-0311 -0-1-407 Emergency fund
Other Agencies:
95-3200 -0-1-751 Architectural and Transportation
Barriers Compliance Board, Salaries and expenses
treasury, postal service and general government
Executive Office of the President:
Compensation of the President and White House Office:
11-0110 -0-1-802 Compensation of the President and the
White House Office \2\
Executive Residence at the White House:
11-0210 -0-1-802 Operating expenses
11-0109 -0-1-802 White House repair and restoration
Special Assistance to the President and Official Residence of the
Vice President:
11-1454 -0-1-802 Special assistance to the President
and the official residence of the Vice President
Council of Economic Advisers:
11-1900 -0-1-802 Salaries and expenses
Office of Policy Development:
11-2200 -0-1-802 Salaries and expenses
National Security Council:
11-2000 -0-1-802 Salaries and expenses
Office of Administration:
11-0038 -0-1-802 Salaries and expenses
Armstrong Resolution:
11-1073 -0-1-802 Armstrong resolution account
Office of Management and Budget:
11-0300 -0-1-802 Salaries and expenses
Office of National Drug Control Policy:
11-1457 -0-1-802 Salaries and expenses
Funds Appropriated to the President:
Unanticipated Needs:
11-0037 -0-1-802 Unanticipated needs
Federal Drug Control Programs:
11-5001 -0-2-802 Special forfeiture fund
11-1070 -0-1-802 High intensity drug trafficking areas
program
Treasury Department:
Departmental Offices:
20-0101 -0-1-803 Salaries and expenses
20-0115 -0-1-803 Automation enhancement
20-0106 -0-1-803 Office of Inspector General
20-0108 -0-1-803 Treasury buildings and annex repair
and restoration
20-0173 -0-1-751 Financial crimes enforcement network
20-5407 -0-2-808 Sallie Mae assessments
20-5697 -0-2-751 Department of the Treasury forfeiture
fund \1\
Federal Law Enforcement Training Center:
20-0104 -0-1-751 Salaries and expenses
20-0105 -0-1-751 Acquisitions, construction,
improvements, and related expenses
Financial Management Service:
20-1801 -0-1-803 Salaries and expenses
Bureau of Alcohol, Tobacco, and Firearms:
20-1000 -0-1-751 Salaries and expenses
20-1003 -0-1-751 Laboratory facilities and headquarters
U.S. Customs Service:
20-0602 -0-1-751 Salaries and expenses \1\
20-0604 -0-1-751 Operation and maintenance, air and
marine interdiction programs
20-0608 -0-1-751 Customs facilities, construction,
improvements and related expenses
20-5694 -0-2-751 Customs services at small airports
20-8870 -0-7-751 Harbor maintenance fee collection
Bureau of Engraving and Printing:
20-4502 -0-4-803 Bureau of Engraving and Printing fund
U.S. Mint:
20-4159 -0-3-803 United States mint public enterprise
fund
Bureau of the Public Debt:
20-0560 -0-1-803 Administering the public debt \2\
Internal Revenue Service:
20-0912 -0-1-803 Processing assistance and management
\2\
20-0913 -0-1-803 Tax law enforcement \2\
20-0919 -0-1-803 Information systems
U.S. Secret Service:
20-1408 -0-1-751 Salaries and expenses
20-1409 -0-1-751 Acquisition, construction,
improvements and related expenses
General Services Administration:
Real Property Activities:
47-0535 -0-1-804 Real property relocation
47-0118 -0-1-451 Pennsylvania avenue activities \1\
47-4542 -0-4-804 Federal buildings fund
Supply and Technology Activities:
47-4548 -0-4-804 Information technology fund
General Activities:
47-0110 -0-1-804 Policy and operations
47-0108 -0-1-804 Office of Inspector General
47-0105 -0-1-802 Allowances and office staff for former
Presidents
47-0107 -0-1-802 Expenses, Presidential transition
Office of Personnel Management:
24-0100 -0-1-805 OPM, Salaries and expenses
24-0400 -0-1-805 Office of the Inspector General
24-8135 -0-7-602 Civil service retirement and
disability fund \1\
24-8424 -0-8-602 Employees life insurance fund \1\
24-9981 -0-8-551 Employees and retired employees health
benefits fund \1\
National Archives and Records Administration:
88-0300 -0-1-804 Operating expenses
88-0301 -0-1-804 National historical publications and
records commission grants program
88-0302 -0-1-804 Repairs and restoration
Postal Service:
18-1001 -0-1-372 Payment to the Postal Service fund
Other Agencies:
23-0100 -0-1-752 Federal litigative and judicial
activities, U.S. Tax Court, Salaries and expenses
41-0100 -0-1-805 Merit Systems Protection Board,
Salaries and expenses
54-0100 -0-1-805 Federal Labor Relations Authority,
Salaries and expenses
95-1100 -0-1-805 Office of Government Ethics, Salaries
and expenses
62-0100 -0-1-8085 Office of Special Counsel, Salaries
and expenses
95-1600 -0-1-808 Federal Election Commission, Salaries
and expenses
48-1001 -0-1-808 John F. Kennedy assassination records
review board
48-2450 -0-1-803 National Commission on Restructuring
the IRS, Salaries and expenses
95-2000 -0-1-505 Committee for Purchase from People who
are Blind or Severely Disabled, Salaries and expenses
veterans affairs, housing and urban development, and independent
agencies
Executive Office of the President:
Council on Environmental Quality and Office of Environmental Quality:
11-1453 -0-1-802 Council on Environmental Quality and
Office of Environmental Quality
Office of Science and Technology Policy:
11-2600 -0-1-802 Salaries and expenses
DOD--Civil:
Cemeterial Expenses, Army:
21-1805 -0-1-705 Salaries and expenses
Health and Human Services:
Departmental Management:
75-0137 -0-1-506 Office of Consumer Affairs
Housing and Urban Development:
Public and Indian Housing:
86-0311 -0-1-604 Housing certificate fund
86-0164 -0-1-604 Annual contributions for assisted
housing
86-0312 -0-1-604 Preserving existing housing investment
86-0163 -0-1-604 Public housing operating fund
86-0197 -0-1-604 Drug elimination grants, low income
housing
86-0218 -0-1-604 Revitalization of severely distressed
public housing projects (HOPE VII)
86-0223 -0-1-604 Indian housing loan guarantee fund
program account
Community Planning and Development:
86-0308 -0-1-604 Housing opportunities for persons with
AIDS
86-0162 -0-1-451 Community development block grants
86-0205 -0-1-604 Home investment partnership program
86-0170 -0-1-451 Urban Development action grants
86-0222 -0-1-451 Capacity building for community
development and affordable housing
86-0181 -0-1-604 Emergency shelter grants program
86-0188 -0-1-604 Supportive housing program
86-0187 -0-1-451 Supplemental assistance for facilities
to assist the homeless
86-0204 -0-1-604 Shelter plus care
86-0221 -0-1-604 Innovative homeless initiatives
demonstration program
86-0192 -0-1-604 Homeless assistance grants
86-0219 -0-1-604 Youthbuild program
86-0220 -0-1-451 National cities in schools community
development program
86-0198 -0-1-451 Community development loan guarantees
program account
Housing Programs:
86-0310 -0-1-604 Housing for special populations
86-0206 -0-1-604 Other assisted housing programs
86-0196 -0-1-604 Homeownership and opportunity for
people everywhere grants (HOPE)
86-0178 -0-1-604 Congregate services
86-0156 -0-1-506 Housing counseling assistance
86-0195 -0-1-604 Section 8 moderate rehabilitation,
single room occupancy
86-4044 -0-3-604 Flexible subsidy fund
86-4071 -0-3-604 Nehemiah housing opportunity fund
86-0183 -0-1-371 FHA-mutual mortgage insurance program
account \5\
86-0200 -0-1-371 FHA-General and special risk program
account
Government National Mortgage Association:
86-0186 -0-1-371 Guarantees of mortgage-backed
securities loan guarantee program
Policy Development and Research:
86-0108 -0-1-451 Research and technology
Fair Housing and Equal Opportunity:
86-0144 -0-1-751 Fair housing activities
Management and Administration:
86-0143 -0-1-451 Salaries and expenses
86-0189 -0-1-451 Office of the Inspector General
86-5272 -0-2-371 Office of federal housing enterprise
oversight
Treasury Department:
Departmental Offices:
20-1881 -0-1-451 Community development financial
institutions fund program account
Veterans Affairs:
Veterans Health Administration:
36-0160 -0-1-703 Medical care
36-0161 -0-1-703 Medical and prosthetic research
36-0152 -0-1-703 Medical administration and
miscellaneous operating expenses
36-0163 -0-1-703 Health professional scholarship
program
Veterans Benefits Administration:
36-0138 -0-1-704 Veterans housing benefit program fund
program account \1\
36-0140 -0-3-702 Miscellaneous Veterans Programs loan
fund program account
Construction:
36-0110 -0-1-703 Construction, Major projects
36-0111 -0-1-703 Construction, Minor projects
36-0181 -0-1-703 Grants for construction of state
extended care facilities
36-0183 -0-1-705 Grants for the construction of State
veterans cemeteries
36-4538 -0-3-703 Parking revolving fund
Departmental Administration:
36-0151 -0-1-705 General operating expenses
36-0170 -0-1-705 Office of the Inspector General
36-0129 -0-1-705 National cemetery system
Environmental Protection Agency:
68-0200 -0-1-304 Program and research operations
68-0112 -0-1-304 Office of the Inspector General
68-0107 -0-1-304 Science and technology
68-0108 -0-1-304 Environmental programs and management
68-0110 -0-1-304 Buildings and facilities
68-0103 -0-1-304 State and tribal assistance grants
68-0250 -0-1-304 Payment to the hazardous substance
superfund
68-8145 -0-7-304 Interfund transactions, Hazardous
substance superfund
68-0118 -0-1-304 Abatement, control, and compliance
loan program account
20-8145 -0-7-304 Hazardous substance superfund
20-8153 -0-7-304 Leaking underground storage tank trust
fund
68-8221 -0-7-304 Oil spill response
General Services Administration:
General Activities:
47-4549 -0-3-376 Consumer information center fund
National Aeronautics and Space Administration:
80-0111 -0-1-252 Human space flight
80-0110 -0-1-252 Science, aeronautics and technology
80-0110 -0-1-402 Science, aeronautics and technology
80-0112 -0-1-252 Mission support
80-0112 -0-1-402 Mission support
80-0108 -0-1-252 Research and development
80-0108 -0-1-402 Research and development
80-0105 -0-1-252 Space flight, control, and data
communications
80-0107 -0-1-252 Construction of facilities
80-0107 -0-1-402 Construction of facilities
80-0103 -0-1-252 Research and program management
80-0103 -0-1-402 Research and program management
80-0109 -0-1-252 Office of the Inspector General
Corporation for National and Community Service:
National and Community Service Programs:
95-2720 -0-1-506 Operating expenses
95-2721 -0-1-506 Inspector general
95-9972 -0-7-506 Gifts and contributions
FEMA:
58-0104 -0-1-453 Disaster relief
58-0100 -0-1-453 Salaries and expenses
58-0101 -0-1-453 Emergency management planning and
assistance
58-0300 -0-1-453 Office of the inspector general
58-0103 -0-1-605 Emergency food and shelter program
58-4188 -0-4-803 Working capital fund
58-0105 -0-1-453 Disaster assistance direct loan
program account
National Science Foundation:
49-0100 -0-1-251 Research and related activities
49-0106 -0-1-251 Education and human resources
49-0150 -0-1-251 Academic research infrastructure
49-0551 -0-1-251 Major research equipment
49-0180 -0-1-251 Salaries and expenses
49-0300 -0-1-251 Office of the Inspector General
Resolution Trust Corporation:
22-1500 -0-1-373 Office of Inspector General
Other Agencies:
82-1300 -0-1-451 Payment to the Neighborhood
Reinvestment Corporation
61-0100 -0-1-554 Consumer Product Safety Commission,
Salaries and expenses
74-0100 -0-1-705 American Battle Monuments Commission,
Salaries and expenses
95-0300 -0-1-705 Court of Veterans Appeals, Salaries
and expenses
25-4472 -0-3-373 National Credit Union Administration,
Community development credit union revolving loan fund
51-5100 -0-1-604 FDIC, Affordable housing program
VIOLENT CRIME REDUCTION ACCOUNTS FOR FISCAL YEAR 1997
commerce, justice, state, the judiciary and related agencies
The Judiciary:
10-8516 -0-1-752 Violent crime reduction programs
Justice Department:
General Administration:
15-8593 -0-1-751 Violent crime reduction programs,
General administration
15-8608 -0-1-751 Violent crime reduction programs,
Administrative review and appeals
Legal Activities:
15-8595 -0-1-752 Violent crime reduction programs,
General legal activities
15-8596 -0-1-752 Violent crime reduction programs, U.S.
Attorneys
15-8603 -0-1-752 Violent crime reduction programs, U.S.
Marshals Service
Federal Bureau of Investigation:
15-8604 -0-1-751 Violent crime reduction programs
Drug Enforcement Administration:
15-8602 -0-1-751 Violent crime reduction programs
Immigration and Naturalization Service:
15-8598 -0-1-751 Violent crime reduction fund programs
Federal Prison System:
15-8600 -0-1-753 Violent crime reduction programs
Office of Justice Programs:
15-0401 -0-1-754 Justice assistance
15-8594 -0-1-754 Community oriented policing services
15-8586 -0-1-754 Violent crime reduction programs
Ounce of Prevention Council:
95-0100 -0-1-754 Violent crime reduction programs
LABOR, HHS, EDUCATION, AND RELATED AGENCIES
Health and Human Services:
Centers for Disease Control and Prevention:
75-0943 -0-1-551 Disease control, research, and
training
75-8606 -0-1-754 Violent crime reduction programs
Administration for Children and Families:
75-8605 -0-1-754 Violent crime reduction programs
TREASURY, POSTAL SERVICE AND GENERAL GOVERNMENT
Treasury Department:
Federal Law Enforcement Training Center
20-0104 -0-1-751 Salaries and expenses
Violent Crime Reduction Programs:
20-8526 -0-1-751 Violent crime reduction programs
DISCRETIONARY APPROPRIATIONS CATEGORIES--Footnotes:
\1\ Portion of account is mandatory and is provided by authorizing
legislation.
\2\ Portion of account is mandatory and is provided by
Appropriations Committee action.
\3\ Authority to borrow available to the Tennessee Valley Authority
is available on a permanent indefinite basis. This authority is limited
only in that the amount outstanding at any time can not exceed $30
billion.
\4\ Contract authority is mandatory--provided in authorization
bill. Outlays scored as discretionary because obligation limitation is
set by Appropriations Committee action.
\5\ Portion of account is mandatory.
REPORT LANGUAGE FOR DC TITLE
Criminal Justice Subtitle
(1) The managers recognize that it will require
substantial resources to implement the provisions of title III,
and that the obligation of the Department of Justice to meet
the deadlines set forth in this title is contingent on the
appropriation of funds sufficient to carry out the requirements
of this title.
(2) It is the intent of the managers that the funds
necessary to implement the provisions of this title come from
the savings achieved by reducing the existing Federal payment
to the District of Columbia, not from the existing programs of
the Department of Justice.
For consideration of the House bill, and the
Senate amendment, and modifications committed
to conference:
John R. Kasich,
David L. Hobson,
Richard K. Armey,
Tom DeLay,
J. Dennis Hastert,
John M. Spratt, Jr.,
David E. Bonior,
Vic Fazio.
As additional conferees from the Committee on
Agriculture, for consideration of title I of
the House bill, and title I of the Senate
amendment, and modifications committed to
conference:
Robert Smith,
Bob Goodlatte,
Charles W. Stenholm.
As additional conferees from the Committee on
Banking and Financial Services, for
consideration of title II of the House bill,
and title II of the Senate amendment, and
modifications committed to conference:
James A. Leach,
Rick Lazio.
As additional conferees from the Committee on
Commerce, for consideration of subtitles A-C of
title III of the House bill, and title IV of
the Senate amendment, and modifications
committed to conference:
Tom Bliley,
Dan Schaefer,
John D. Dingell.
As additional conferees from the Committee on
Commerce, for consideration of subtitle D of
title III of the House bill, and subtitle A of
title III of the Senate amendment, and
modifications committed to conference:
Tom Bliley,
Billy Tauzin.
As additional conferees from the Committee on
Commerce, for consideration of subtitles E and
F of title III, titles IV and X of the House
bill, and divisions 1 and 2 of title V of the
Senate amendment, and modifications committed
to conference:
Tom Bliley,
Michael Bilirakis.
As additional conferees from the Committee on
Education and Workforce, for consideration of
subtitle A of title V and subtitle A of title
IX of the House bill, and chapter 2 of division
3 of title V of the Senate amendment, and
modifications committed to conference:
Bill Goodling,
Jim Talent.
As additional conferees from the Committee on
Education and the Workforce, for consideration
of subtitles B and C of title V of the House
bill, and title VII of the Senate amendment,
and modifications committed to conference:
Bill Goodling,
Howard ``Buck'' McKeon,
Dale E. Kildee.
As additional conferees from the Committee on
Education and Workforce, for consideration of
subtitle D of title V of the House bill, and
chapter 7 of division 4 of title V of the
Senate amendment, and modifications committed
to conference:
Donald M. Payne.
As additional conferees from the Committee on
Government Reform and Oversight, for
consideration of title VI of the House bill,
and subtitle A of title VI of the Senate
amendment, and modification committed to
conference:
Dan Burton,
John L. Mica.
As additional conferees from the Committee on
Transportation and Infrastructure, for
consideration of title VII of the House bill,
and subtitle B of title III and subtitle B of
title VI of the Senate amendment, and
modifications committed to conference:
Bud Shuster,
Wayne T. Gilchrest,
James L. Oberstar.
As additional conferees from the Committee on
Veterans' Affairs, for consideration of title
VIII of the House bill, and title VIII of the
Senate amendment, and modifications committed
to conference:
Bob Stump,
Christopher H. Smith,
Lane Evans.
As additional conferees from the Committee on
Ways and Means, for consideration of subtitle A
of title V and title IX of the House bill, and
divisions 3 and 4 of title V of the Senate
amendment, and modifications committed to
conference:
Bill Archer,
E. Clay Shaw, Jr.,
Dave Camp,
Charles B. Rangel,
Sander M. Levin.
As additional conferees from the Committee on
Ways and Means, for consideration of titles IV
and X of the House bill, and division 1 of
title V of the Senate amendment, and
modifications committed to conference:
Bill Archer,
William Thomas.
Managers on the part of the House.
From the Committee on the Budget:
Pete Domenici,
Chuck Grassley,
Don Nickles,
Phil Gramm,
Frank Lautenberg.
From the Committee on Agriculture, Nutrition,
and Forestry:
Dick Lugar.
From the Committee on Banking, Housing, and
Urban Affairs:
Alfonse D'Amato,
Richard Shelby,
Paul Sarbanes.
From the Committee on Commerce, Science and
Transportation:
John McCain,
Ted Stevens,
(Except for provisions in
universal service fund).
From the Committee on Energy and Natural
Resources:
Frank H. Murkowski,
Larry E. Craig.
From the Committee on Finance:
Bill Roth,
Trent Lott,
Daniel P. Moynihan.
From the Committee on Governmental Affairs:
Fred Thompson,
Susan Collins.
From the Committee on Veterans' Affairs:
Arlen Specter,
Strom Thurmond,
John Rockefeller.
Managers on the part of the Senate.