Medicare Modernization and Patient Protection Act of 1997

TABLE OF CONTENTS:

Title I: Promoting Competition, Quality, and Beneficiary

Choice in Medicare

Title II: Increasing Medicare Coverage Options

Subtitle A: Risk Plan Improvements

Subtitle B: Maintaining Fee-for-Service Program

Title III: Promotion of Programs of All-Inclusive Care for

the Elderly (PACE) and of Social Health Maintenance

Organizations (SHMOS)

Title IV: Other Medicare Changes

Title V: Prospective Payment for Home Health Services

Title VI: Prospective Payment System for Nursing Facilities

Title VII: Telemedicine

Medicare Modernization and Patient Protection Act of 1997 - Title I: Promoting Competition, Quality, and Beneficiary Choice in Medicare - Directs the Secretary of Health and Human Services to establish the Office of Plan Improvement and Competition within the Health Care Financing Administration to: (1) collect and distribute certain data, including research on improvement in health care quality and best-practice information; (2) monitor and supervise Medicare supplemental health insurance (Medigap) policy advertising; and (3) publish and distribute certain quality and comparative reports.

(Sec. 102) Directs the Secretary to conduct demonstration projects in applicable areas for the purpose of establishing competitive pricing for eligible organizations with risk-sharing contracts.

(Sec. 103) Amends title XVIII (Medicare) of the Social Security Act (SSA) to: (1) guarantee the issue of Medigap policies regardless of preexisting health conditions to certain eligible individuals who seek to enroll under the policy within a certain period of time after their current organization enrollment or policy coverage is terminated; (2) prohibit exclusion from coverage due to pre-existing health conditions during the initial open enrollment period; (3) revise non-discrimination requirements for initial enrollment periods; and (4) extend the six-month initial enrollment period to nonelderly Medicare beneficiaries.

Title II: Increasing Medicare Coverage Options - Subtitle A: Risk Plan Improvements - Amends SSA title XVIII (Medicare) with respect to Medicare managed care arrangements. Revises the formulae for determining the annual reimbursement rates for health maintenance organizations (HMOs) and competitive medical plans. Requires the Health Care Financing Administration (HCFA), beginning FY 1998, to pay no less than 80 percent of the national average for payments to all plans in 1997, with annual payment increases according to a specified formula.

(Sec. 201) Provides for additional enrollee protections involving provision of emergency services and renal dialysis.

Directs the Secretary to conduct a study for a report to the Congress on increased portability of items and services under organization plans.

Provides for intermediate sanctions against plans for program violations, short of termination.

Requires an HMO to meet quality standards the Secretary establishes in consultation with private quality accreditation entities.

Requires coordinated enrollment and disenrollment periods.

Requires an HMO's service area to include an entire metropolitan area if it includes any part of such area.

Authorizes certain additional (outlier) payments for 50 percent of imputed reasonable costs in certain circumstances.

Directs the Secretary to develop a model of the agreement that an eligible organization must enter into with an entity providing peer review services. Requires the Comptroller General to study and report to the Congress on the costs incurred by eligible organizations in complying with the requirement that any agreement it makes with an entity providing peer review services be in writing.

Eliminates organization "gag clauses" on health care providers which have prohibited them from openly communicating within the scope of their license with any of their patients.

(Sec. 202) Provides for quality report cards on eligible organizations and comparative reports on their plans in order to assist Medicare beneficiaries' decisionmaking regarding health care and treatment.

(Sec. 203) Preempts certain State laws mandating benefits and restricting managed care.

(Sec. 204) Amends SSA title XVIII to require eligible organizations to: (1) designate an independent ombudsman to assist members enrolled with such organization in exercising their right to file grievances and appeals; and (2) provide to enrollees a clear and understandable statement regarding such right.

Directs the Secretary to promulgate regulations intended to expedite determinations and appeals regarding covered items and services for individuals entitled to them under Medicare parts A and B.

(Sec. 205) Requires the Secretary to coordinate an annual enrollment fair in each Medicare payment area in order for eligible organizations to inform eligible individuals about their plans. Requires such organizations to participate in such fairs in each Medicare payment area in which the organization offers a plan.

Subtitle B: Maintaining Fee-for-Service Program - Requires adjustment in applicable payment rates or payments for items and services in each excess spending sector of Medicare services for a fiscal year if the fee-for-service expenditures for all sectors for the fiscal year will exceed the sum of their allotments ("failsafe budget mechanism"). Specifies the sectors of Medicare services, as well as the formula for determining each sector's fiscal year allotment.

(Sec. 212) Provides for maintenance of the part B Medicare premium at the current percentage of part B program costs.

Title III: Promotion of Programs of All-Inclusive Care for the Elderly (PACE) and of Social Health Maintenance Organizations (SHMOS) - Directs the Secretary to establish PACE (Program of All-Inclusive Care for the Elderly) provider status for public and nonprofit community-based organizations to enable them to provide comprehensive health care services of proper quality on a cost-effective, capitated basis to at-risk frail elderly patients under the Medicare or Medicaid programs or under any other applicable SSA program.

(Sec. 302) Requires the terms and conditions of PACE provider status to include those of the On Lok waiver under the Social Security Amendments of 1983, and those under the PACE Protocol, as published by On Lok, Inc.

(Sec. 303) Applies Medicaid spousal impoverishment rules to individuals receiving services from any organization that is a PACE provider under this Act.

(Sec. 304) Declares that there shall be no limitations on how many Social Health Maintenance Organizations (SHMOS) demonstration projects the Secretary may approve, how many individuals may participate in any such project, or on the period of applicable waivers.

Title IV: Other Medicare Changes - Amends SSA title XVIII to: (1) provide for a competitive acquisition process for awarding contracts for specified items and services under Medicare part B (Supplementary Medical Services), including durable medical equipment and related supplies; (2) provide for new procedures for inherent reasonableness determinations; (3) revise requirements for the promotion of advance directives, especially in individual medical charts; (4) extend the benefit period for hospice care to an unlimited number of 60-day periods, and allow contracting with independent physicians and physician groups for such services; and (5) specify the entitlement structure for up to 32 hours of respite services per year.

(Sec. 404) Amends the Federal criminal code to establish criminal penalties for Medicare fraud, including forfeiture of real or personal property derived from such fraud.

Directs the Secretary to study and report to the Congress on the feasibility and desirability of establishing a standardized Medicare claims administration process, implementing other measures to improve recordkeeping, and taking other appropriate steps to reduce waste, fraud, and abuse in making Medicare payments.

Directs the Vice President's Commission on Reinventing Government to report to the Congress on the effectiveness of current Federal Government efforts to combat waste, fraud, and abuse in the Medicare program and on whether they would be enhanced by establishment of a coordinated, all-payer, multijurisdiction antifraud program.

(Sec. 406) Directs the Secretary to study and report to the Congress on providing pharmacy services to Medicare beneficiaries.

Title V: Prospective Payment for Home Health Service - Amends SSA title XVIII to direct the Secretary to: (1) require reimbursement for specified home health services under a prospective payment system (PPS), with a specified national per visit payment rate for each type of service, and per patient and per episode limits; and (2) implement a medical review process for such PPS providing an assessment of the pattern of home health service care furnished to individuals to ensure such services are appropriate.

Directs the Medicare Prospective Payment Review Commission to report annually to the Congress on the effectiveness of the payment methodology.

Directs the Secretary to: (1) develop a method of payments for home health services in accordance with an episodic PPS; (2) initiate development of a data base upon which a fair and accurate case mix adjustor can be developed and implemented.

Grants home health agencies receiving prospective payments the right to obtain a hearing by the Provider Reimbursement Review Board with respect to such payment.

(Sec. 502) Amends SSA title XI to provide for: (1) utilization and quality control peer review organization (PRO) review of the level of care and quality of services provided to individuals receiving home health services; and (2) hearing and judicial review rights for affected parties with respect to PRO determinations concerning home health services with which they are dissatisfied.

Amends SSA title XVIII to eliminate certain fiscal intermediary responsibilities with regard to denied claims for home health services.

Title VI: Prospective Payment System for Nursing Facilities - Establishes a PPS for nursing facilities reflecting specified payment objectives (and specifically exempting skilled nursing facilities under Medicare). Directs the Secretary to: (1) establish a resident classification system modelled after the updated RUG-II system, grouping residents into classes according to similarity of assessed condition and required services; and (2) determine payment rates for nursing facilities using specified cost- service groupings, adjusted at mid-year.

(Sec. 607) Requires nursing facilities, in order to be eligible to receive payments under such system, to perform a resident assessment within 14 days after admission of the resident and at such other times as required.

(Sec. 608) Establishes per diem reimbursement systems with respect to: (1) enrolled residents; (2) facility administrative and general costs, subject to geographic ceilings the Secretary shall formulate; and (3) property costs.

(Sec. 610) Requires the Secretary to: (1) pay for ancillary services on a prospective fee-for-service basis; but (2) reimburse for selected ancillary services on a retrospective basis as pass-through costs.

(Sec. 614) Provides payment rate exceptions for new and low volume nursing facilities.

(Sec. 615) Establishes a process for appealing decisions by the Secretary regarding payments in the amount of $10,000 or more.

Title VII: Telemedicine - Amends the Communications Act of 1934 to direct the Federal Communications Commission to adopt rules requiring telecommunications carriers to provide access (including requisite infrastructure and bandwidth) to the Internet or other interactive computer service necessary for the provision of health care services in rural areas at certain rates.

(Sec. 702) Establishes the Commission on Telemedicine to study, develop recommendations, and report to the President and the Congress on all matters relating to which telemedicine services should be covered under Medicare. Authorizes funds to the Commission.