Summary: H.R.2425 — 104th Congress (1995-1996)All Information (Except Text)

Bill summaries are authored by CRS.

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Passed House amended (10/19/1995)


Title XV (sic): Medicare

Subtitle A: MedicarePlus Program

Subtitle B: Preventing Fraud and Abuse

Subtitle C: Regulatory Relief

Subtitle D: Medical Liability Reform

Subtitle E: Teaching Hospitals and Graduate Medical


Subtitle F: Provisions Relating to Medicare Part A

Subtitle G: Provisions Relating to Medicare Part B

Subtitle H: Provisions Relating to Medicare Parts A and


Subtitle I: Clinical Laboratories

Subtitle J: Lock-Box Provisions for Medicare Part B

Savings from Growth Reductions

Title XV (sic): Medicare - Medicare Preservation Act of 1995 - Subtitle A: MedicarePlus Program - Amends titles XI and XVIII (Medicare) of the Social Security Act (SSA) and the Internal Revenue Code, restructuring the current Medicare program, creating a new MedicarePlus program within it, with certain organizational changes involving the Health Care Financing Administration (HCFA) as well, while also providing for corresponding tax treatments involving MedicarePlus medical savings accounts (MSAs) and other MedicarePlus- related matters.

(Sec. 15001) Gives individuals entitled to benefits under Medicare part A (Hospital Insurance) and enrolled under Medicare part B (Supplementary Medical Insurance) the opportunity to elect Medicare coverage during annual, coordinated election periods under either the new MedicarePlus benefit package or through the existing fee-for- service system under such parts. Includes in the MedicarePlus benefit package a high ($10,000) deductible-medisave product plus contributions to MedicarePlus MSAs, as well as separate fee-for- service products and products offered under certain provider- and union-sponsored plans by qualified MedicarePlus organizations.

Directs the Secretary to provide for a nationally coordinated educational and publicity campaign to inform individuals who are eligible to elect MedicarePlus products about them and the election processes provided under this subtitle.

(Sec. 15002) Requires qualified MedicarePlus organizations (except those with union sponsors, Taft-Hartley sponsors, or provider sponsors, and certain qualified associations) to be licensed under State law in each State in which they offer a MedicarePlus product.

Requires such organizations to assume full financial risk on a prospective basis for the provision of health care services (other than hospice care). Allows an organization to obtain insurance in specified circumstances.

Requires the Secretary to provide for certain Medigrant demonstration projects in at least ten States.

Sets forth requirements relating to benefits, provision of services (including limited physician incentive plans), enrollment, and premiums.

Specifies patient protection standards, including those for information disclosure, access to services, certain out-of-network emergency services, mandatory quality assurance programs, coverage determinations, grievances, appeals (including independent, outside reviews of certain coverage denials), and fair marketing procedures.

Prescribes policy for payments to MedicarePlus organizations, including monthly adjusted capitation rates (with budget neutral adjustments only), and payments to the MedicarePlus MSAs of individuals electing high deductible-medisave products.

Requires the Secretary of Health and Human Services to request the National Association of Insurance Commissioners to develop proposed standards consistent with this Act for MedicarePlus organizations (other than union-sponsored, Taft-Hartley-sponsored, and provider- sponsored organizations) and their MedicarePlus products. Permits such standards to relate to qualified associations only with respect to products they offer which are issued by State-licensed MedicarePlus organizations. Requires the Secretary to review and promulgate such standards, with any appropriate modifications. Requires the Secretary to develop standards for union sponsors, Taft-Hartley sponsors, and provider-sponsored organizations.

Mandates State certification processes, subject to the Secretary's approval, for State-regulated organizations. Requires the Secretary to establish a certification process for union sponsors, Taft-Hartley sponsors, and provider-sponsored organizations.

Requires MedicarePlus organizations to contract with the Secretary, subject to specified requirements.

(Sec. 15003) Revises Medicare supplemental health insurance policy certification requirements concerned with the unlawful duplication of health benefits coverage, adding appropriate references to MedicarePlus products and making such provisions effective as if enacted as part of the Omnibus Budget Reconciliation Act of 1990, among other changes. Requires a report by the Secretary to the Congress on certain duplication issues. (Sec. 15004) Sets forth transition rules for current Medicare health maintenance organization (HMO) programs.

(Sec. 15011) Amends the Internal Revenue Code to exclude from an individual's gross income any Federal payment to his or her MedicarePlus MSA, but include any MSA distribution not used to pay the account holder's qualified medical expenses. Excludes the value of such an MSA from the account holder's gross estate. Exempts an account holder from the excise tax on prohibited transactions even if an MSA ceases to be a MedicarePlus MSA because a distribution was not used to pay qualified medical expenses.

(Sec. 15012) Amends the Internal Revenue Code to exclude from gross income any Medicare Part B premium discount rebate.

(Sec. 15021) Declares that, in any Federal or State antitrust action, to conduct of a provider service network (and any member of such network) in negotiating, making, or performing a contract, to the extent such contract is for providing services under a MedicarePlus provider-sponsored organization (PSO) contract, shall not be illegal per se. Subjects such conduct to the antitrust rule of reason standard.

(Sec. 15031) Amends SSA title XVIII to establish the Medicare Payment Review Commission (replacing the Prospective Payment Assessment Commission (ProPAC) and the Physician Payment Review Commission (PPRC), hereby abolished) which shall, among other things, review program payment policies (including those under the new MedicarePlus program) for appropriate recommendations to the Congress concerning such policies. Authorizes appropriations.

(Sec. 15032) Creates the Commission on the Effect of the Baby Boom Generation on the Medicare Program 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 2010 and last for approximately 25 years; and (2) make specific recommendations to the Congress about a comprehensive approach to preserve Medicare for the period during which such individuals are Medicare-eligible. Authorizes appropriations.

(Sec. 15033) Amends SSA title XI to make the HCFA Administrator a secretarial, as opposed to a presidential, appointee.

(Sec. 15041) Amends the Internal Revenue Code to continue to treat as a tax-exempt charitable organization any organization which owns and operates a hospital which participates in a provider-sponsored organization, regardless of whether such provider-sponsored organization is itself tax-exempt.

Subtitle B: Preventing Fraud and Abuse - Outlines various specified measures designed for preventing fraud and abuse under the Medicare program, including among them: (1) special outreach and other efforts by the Secretary which include establishing a beneficiary incentive program for collecting information on fraud and abuse under Medicare and a voluntary disclosure program for Medicare violators to disclose wrongdoing (for which sanctions may then be waived or otherwise mitigated); (2) revisions to current sanctions which include new intermediate sanctions for Medicare HMO violations; (3) establishment of the Medicare Integrity Program and associated Anti-Fraud and Abuse Trust Fund for contracting out to private entities specified anti-fraud and abuse activities; (4) permitting carriers to carry out prior authorization for certain items of durable medical equipment (DME); (5) establishment by the Attorney General of a national health care anti-fraud task force to coordinate Federal law enforcement activities relating to health care fraud and abuse; and (6) an HCFA-sponsored study of the adequacy of quality assurance and consumer protection programs under MedicarePlus for a report to the Congress. Provides appropriations from: (1) the Anti-Fraud and Abuse Trust Fund to carry out the Medicare Integrity Program; and (2) from the social security trust funds for Medicare-related activities of the Health and Human Services Inspector General.

(Sec. 15110) Sets forth a civil penalty for false certification for home health services.

(Sec. 15111) Directs the Secretary to establish and operate five pilot projects for implementing innovative approaches to monitor payment claims under the Medicare program to detect those claims that are wasteful or fraudulent.

(Sec. 15121) Revises the Federal criminal code to define and specify criminal penalties for: (1) health care offenses; (2) health care fraud; (3) theft, embezzlement, and bribery and graft in connection with health care; (4) false statements relating to health care matters; (5) illegal remuneration with respect to health care benefit programs; (5) obstruction of criminal investigations of health care offenses; and (6) laundering of monetary instruments related to a health care offense.

Sets forth civil penalties for Federal health care offenses. Provides for injunctive relief and criminal forfeiture with respect to such offenses. Prescribes investigative demand procedures. Provides for: (1) disclosure of grand jury information to the Government for use in any civil investigation or proceeding relating to a Federal health care offense; (2) interception of wire, oral, or electronic communications in connection with such an offense; and (3) rewards for information leading to possible prosecution of such an offense, which results in a conviction.

Subtitle C: Regulatory Relief - Amends SSA titles XI and XVIII, as well as the Omnibus Budget Reconciliation Act of 1993, to outline various specified revisions to Medicare physician referral prohibitions and anti-kickback and other penalties for the purpose of achieving Medicare regulatory relief.

(Sec. 15201) Includes among such revisions: (1) removal of compensation arrangements from the proscribed financial arrangements between a physician and any entity to which he or she may refer a Medicare beneficiary (thus limiting proscribed financial arrangements to an ownership or investment interest in the entity); (2) limitation of the designated health services subject to such prohibition to parenteral and enteral nutrients, equipment and supplies, magnetic resonance imaging and computerized tomography services, and outpatient physical therapy services; (3) repeal of mandate for the Medicare and Medicaid Coverage Data Bank; and (4) the issuance of advisory opinions under SSA title XI.

(Sec. 15204) Revises exceptions to the prohibition against physician referrals to an entity in which the referring physician has an ownership or investment relationship to: (1) repeal the site-of- service requirement for excepted in-office ancillary services; (2) revise the exceptions for services furnished in a rural area and for pre-paid plans; and (3) add new exceptions for shared facility services and services furnished in communities with no alternative providers, in ambulatory surgical centers, in renal dialysis facilities, in a hospice, or in a comprehensive outpatient rehabilitation facility.

(Sec. 15213) Exempts from anti-kickback penalties certain managed care arrangements, including: (1) a written agreement between an individual or entity providing services and a MedicarePlus organization; or (2) a written agreement which places such service- provider at substantial financial risk for the cost or utilization of the items or services which the individual or entity is obligated to provide.

(Sec. 15214) Directs the Secretary to publish a notice in the Federal Register soliciting proposals for modifications to existing safe harbors (issued pursuant to the Medicare and Medicaid Patient and Program Protection Act of 1987)and special fraud alerts. Requires publication of such proposals in the Register and issuance of final implementing rules by the Secretary as appropriate after consideration of any public comments received.

(Sec. 15216) Provides for prior notice of changes in billing and claims processing requirements for physicians' services.

(Sec. 15221) Outlines various specified measures designed for promoting physician self-policing, including antitrust exemption for certain activities of medical self-regulatory entities.

Subtitle D: Medical Liability Reform - Outlines various specified measures with respect to health care liability, including changes establishing, among other things: (1) a statute of limitations for health care liability actions; (2) a limitation on noneconomic damages; and (3) standards for alternative dispute resolution used to resolve such an action or claim.

(Sec. 15301) Exempts from this subtitle: (1) an action for damages arising from a vaccine-related injury or death to the extent that the Public Health Service Act applies; and (2) an action under the Employee Retirement Income Security Act of 1974 (ERISA).

Subtitle E: Teaching Hospitals and Graduate Medical Education - Adds a new SSA title XXII (Teaching Hospitals and Graduate Medical Education Trust Fund) establishing in the Treasury the Teaching Hospital and Graduate Medical Education Trust Fund, consisting of the Indirect-Costs Medical Education Account, the Medicare Direct-Costs Medical Education Account, and the General Direct-Costs Medical Education Account. Prescribes requirements: (1) governing payments from such trust fund to teaching hospitals; and (2) providing for a temporary advisory panel which shall develop recommendations to the Congress with regard to the financing of teaching hospitals and graduate medical education, Federal policies regarding international medical graduates, and the dependence of medical schools on service- generated income. Authorizes appropriations.

(Sec. 15412) Modifies payment policies under Medicare regarding graduate medical education, including reallotment of unused residency positions to other approved medical residency training programs.

Subtitle F: Provisions Relating to Medicare Part A - Outlines various specified technical revisions in Medicare Part A rural and urban hospital and skilled nursing facility payment requirements, providing for various reductions in payment updates, disproportionate share payment adjustments, and other specified adjustments and payment-related changes. Includes chiefly among such technical revisions: (1) a reduction in payments to hospitals for enrollees' bad debts; (2) establishment of the rural emergency access care hospital program; (3) establishment of a program of incentives for cost-effective management of covered non-routine services of skilled nursing facilities; and (4) standards for the certification of Medicare low volume skilled nursing facilities.

(Sec. 15505) Directs the HHS Secretary to report to the Congress on the advisability and feasibility of providing for payment based on a prospective payment system for inpatient services of rehabilitation hospitals and units under the Medicare program.

(Sec. 15507) Makes permanent the pass-through payment to hospitals with respect to the costs of administering blood-clotting factors to hemophilia inpatients.

(Sec. 15508) Provides for coverage as hospitals and skilled nursing facilities of Christian Science sanatoria certified by the Commission for Accreditation of Christian Science Nursing Organizations-Facilities, Inc.

(Sec. 15511) Requires the Medicare Payment Review Commission established by this Act to study and report to the Congress on the impact of the designation of hospitals as sole community hospitals under the Medicare program on the delivery of health care services to individuals in rural areas.

(Sec. 15527) States that, in order to ensure that Medicare beneficiaries are furnished appropriate extended care services, the Secretary shall establish and implement a medical review process to examine the effects of the amendments made by this subtitle on the quality of extended care services furnished to Medicare beneficiaries.

(Sec. 15528) Requires the Medicare Payment Review Commission to report to the Congress on the system under which payment is made under Medicare for extended care services of skilled nursing facilities.

(Sec. 15531) Amends the Social Security Amendments of 1983 to require the Secretary of the Treasury to credit to the Federal Hospital Insurance Trust Fund certain income taxes relating to Social Security and tier 1 railroad retirement benefits without regard to any relevant amendments to such Act or to the Internal Revenue Code which take effect on or after January 1, 1994.

Subtitle G: Provisions Relating to Medicare Part B - Revises specified Medicare Part B requirements, among other things: (1) replacing the volume performance standard for payments for physicians' services with a sustainable growth rate; (2) eliminating formula- driven overpayments for certain outpatient hospital services; and (3) reducing updates to payment amounts for clinical diagnostic laboratory tests. Makes other specified payment changes similar in nature with regard to DME (including payment for certain upgraded items, about the furnishing of which the HHS Secretary shall issue consumer protection standards), while also providing for a seven-year freeze in inflation updates in payments for ambulatory surgical center services.

(Sec. 15603) Limits the reasonable charges during each of the years 1996 through 2002 for parenteral and enteral nutrients, supplies, and equipment to the amount of charges determined reasonable during 1993.

(Sec. 15607) Bases payment to rural emergency access care hospitals on payment for outpatient rural primary care hospital services.

(Sec. 15608) Limits to 50 percent of the fee schedule amount each for a physician and a certified registered nurse anesthetist who jointly furnish single case anesthesia services, if the carrier determines that such joint services were not medically necessary.

(Sec. 15609) Provides that in the case of Wisconsin, the Secretary shall treat the State as a single fee schedule area for purposes of determining the fee schedule amount for physicians' services under part B of the Medicare program, while ensuring budget neutrality.

(Sec. 15609A) Requires the Secretary to establish a certain fee schedule for ambulance services through a specified negotiated rulemaking process.

(Sec. 15609B) Requires application to a physician furnishing outpatient physical therapy services or outpatient occupational therapy services the same standards applicable to a clinic or rehabilitation agency.

(Sec. 15611) Provides for permanent extension of the Medicare part B premium, with a new formula for monthly premiums higher than 50 percent of the monthly actuarial rate.

(Sec. 15612) Provides for certain part B premium increases for individuals with modified adjusted gross incomes for a taxable year in excess of certain threshold amounts, or decreases if the actual modified adjusted gross income is less than the initially determined amount. Requires premium decrease payments to an individual's surviving spouse or estate if the eligible individual is deceased.

Amends the Internal Revenue Code to authorize the Secretary of the Treasury, upon the request of the HHS Secretary, to disclose to the HCFA return information about a taxpayer required to pay a monthly Medicare part B premium.

(Sec. 15621) Directs the HHS Secretary to adopt uniform coverage, administration, and payment policies for clinical diagnostic laboratory (CDL) tests under part B of the Medicare program.

(Sec. 15622) Places certain restrictions on direct billing for CDL test services, with violations subject to specified civil money and other administrative penalties. Sets forth a process for certain CDL test payment reductions according to specified guidelines.

(Sec. 15631) Directs the Secretary to establish a broadly based task force to develop recommendations for DME quality standards.

Subtitle H: Provisions Relating to Medicare Parts A and B - Amends SSA title XVIII to provide for Medicare payment for home health services in accordance with various specified guidelines.

(Sec. 15701) Includes payment for prosthetics and orthotics along with payment for durable medical equipment under Medicare part A.

Limits the entitlement to part A home health services to 165 days during any spell of illness.

States that, in estimating the benefits and administrative costs payable from the Federal Supplementary Medical Insurance Trust Fund for a year (beginning with 1996), the Secretary shall exclude an estimate of any benefits and costs attributable to home health services for which payment would have been made under part A during the year but for certain requirements with respect to the determination of the monthly actuarial rate.

(Sec. 15702) Provides for maintaining savings resulting from a temporary freeze on payment increases for home health services, basing updates to per visit cost limits on the limits for FY 1993.

(Sec. 15703) Amends the Omnibus Budget Reconciliation Act of 1986 to extend through FY 1996 the waiver of presumption of lack of knowledge of exclusion from coverage for home health agencies.

(Sec. 15704) Directs the Secretary to submit recommendations to the Congress regarding an appropriate methodology for making payments under Medicare for home health services furnished by Christian Science providers who meet certain applicable requirements, and appropriate criteria for Medicare certification of such providers.

(Sec. 15705) Extends from 15 months to 36 months the period between standard surveys for home health agency certification. Requires the Secretary to establish a frequency for surveys of home health agencies within the 36-month interval commensurate with the need to assure the delivery of quality home health services.

(Sec. 15711) Provides, with regard to Medicare as secondary payer, for: (1) extension and expansion of existing requirements; (2) recovery against third party administrators of primary plans; and (3) prohibition of retroactive application (before April 24, 1995) of a certain policy directive regarding end stage renal disease beneficiaries enrolled in primary plans.

(Sec. 15721) Specifies Medicare budget targets for FY 1997 through 2002, with a formula for determination of such targets in subsequent fiscal years. Requires adjustment in applicable payment rates or payments for items and services in a sector of Medicare services for a fiscal year if the fee-for-service expenditures for that sector will exceed its allotment ("failsafe budget mechanism"). Requires such adjustment to result in a reduction by 133 1/3 percent of the amount of such excess. Specifies the sectors of Medicare services, as well as the formula for determining each sector's fiscal year allotment.

Requires an annual report by the Board of Trustees of the Federal Hospital Insurance Trust Fund on the growth in Medicare part A expenditures.

(Sec. 15731) Establishes the Medicare Information Advisory Committee, and requires the Secretary, with the Committee's assistance, to adopt standards for Medicare information transactions and data elements in order to reduce the administrative costs of providing and paying for health care, and to make Medicare information uniformly available for electronic exchange.

(Sec. 15741) Provides that nothing in SSA title XVIII may be construed to prohibit coverage under Medicare part A or B of items and services associated with the use of a medical device in the furnishing of inpatient or outpatient hospital services (including outpatient diagnostic imaging services) solely on the grounds that the device is not an approved device, if it is an investigational device and is used instead of either an approved device or a covered procedure.

States that the amount of Medicare payment for any item or service associated with the use of an investigational device may not exceed the amount of the payment which would have been made for the item or service if it were associated with the use of an approved device or covered procedure.

(Sec. 15742) Excludes from Medicare coverage items or services used for euthanasia.

(Sec. 15743) Requires the Secretary to establish and operate a two-year demonstration project in two geographic regions for competitive bidding for certain items and services.

(Sec. 15744) Mandates disclosure, upon any person's request, of information pertaining to felony convictions relating to the provision of home health services.

(Sec. 15745) Requires renal dialysis facilities to make services available on a 24-hour basis.

Subtitle I: Clinical Laboratories - Amends the Public Health Service Act to exempt from certification requirements under such Act clinical laboratories in physician offices (except when performing pap smear analysis).

Subtitle J: Lock-Box Provisions for Medicare Part B Savings from Growth Reductions - Amends Medicare part B to create in the Treasury the Federal Medicare Growth Reduction Trust Fund, consisting of certain gifts, bequests, and part B savings attributable to enactment of this Act. Prohibits transfers or appropriations from such Fund for Medicare until FY 2003.