Medicare-Medicaid Administrative and Reimbursement Reform Act

(Measure passed Senate, amended, roll call #486 (64-22))

Medicare-Medicaid Administrative and Reimbursement Reform Act - Establishes a new method of reimbursement for routine operating costs for hospitals under the Medicare and Medicaid programs.

Requires the establishment of a system by which hospitals will be classified by such criteria as: (1) size; (2) type of hospitals (general, teaching, or specialized care); (3) rural or urban; and (4) other criteria.

Stipulates that the term "routing operating costs" does not include: (1) capital costs; (2) direct personnel and supply costs of hospital education and training programs; (3) costs of interns, residents, and non-administrative physicians; (4) energy costs; and (5) malpractice insurance expenses; or (6) ancillary service costs.

Directs the Secretary of Health, Education, and Welfare to determine annually for the hospitals classified in each category of the hospital classification system established by this Act, an average per diem routine operating cost amount for use in determining the reasonable cost of that portion of the hospital's costs which consist of routine operating costs. Provides for the periodic increase during the year of the routine operating cost as determined pursuant to this Act to reflect increases in the cost of services which are attributable to inflation.

Provides for the adjustment of the routine operating cost of a hospital to reflect: (1) changes in the cost of goods and services hospitals purchase; and (2) changes in the hospital's classification. Sets forth the formulas to be used in determining payments to hospitals. Prohibits such payments from exceeding the hospital's routine operating costs in its immediately preceding accounting year with certain specified modifications. Allows the Secretary to determine greater routine operating costs for hospitals which demonstrate: (1) low utilization justified by unusually high standby costs necessary to meet the needs of a particular area; (2) cost patterns of newly opened hospitals; (3) changed services because of consolidation, sharing, or addition of services approved by specified agencies; or (4) a case mix which requires a greater intensity of care than that for other hospitals in the same classification.

Establishes a Health Facilities Cost Commission, composed of specified members appointed by the Secretary, to monitor and study the Medicare and Medicaid reimbursement system in order to devise and recommend annually to the Secretary measures for: (1) the improvement of the reimbursement reform program; (2) the possible application of such program to non-hospital service providers; and (3) the possible application of classification and comparison techniques similar to those applied to adjusted routine costs of hospitals to other hospital costs and other service providers. Authorizes the Secretary to adopt the recommended measures and put them into effect 60 days after notifying Congress.

Establishes goals for the maximum allowable rate of increase annually in total hospital expenses through 1982. Provides for the goals to be adjusted according to a formula established by the Secretary. Requires hospitals to provide data to enable the Secretary to monitor hospitals' compliance with the goals. Directs the Secretary to report quarterly to the appropriate committees of Congress on progress in meeting the goals.

Declares unreasonable and unreimbursable costs that exceed average costs per inpatient admission reimbursable in the hospitals' immediately preceding accounting year as adjusted by specified formulas, 60 days after the Secretary finds that hospitals failed to voluntarily reduce the rate of increase in their expenses consistent with the goals. Requires the Secretary to report such a finding to Congress. Stipulates that Congress may disapprove the limitation on hospital reimbursement.

Permits the Secretary to exclude from such application, at the request of the appropriate Governor, hospitals located in those States: (1) which have a program capable of containing hospital costs for inpatient hospital services; and (2) where the aggregate rate of increase for such services does not exceed the preceding goals. Stipulates that the Secretary must approve any State program for hospital cost containment which meets certain criteria. Authorizes appropriations to assist States with approved programs.

Amends the Internal Revenue Code to impose taxes on the excess reimbursement from the private cost payer to the covered hospital. Permits the covered hospitals to establish approved escrow accounts.

Directs the Secretary to establish a five- member Hospital Transitional Allowance Board to act on the applications of hospitals for reimbursement of expenses incurred in the retirement or conversion of underutilized facilities. Requires that such conversion promote efficient and economical delivery of services covered by the Medicare and Medicaid programs.

Revises the provisions of present Federal law which limit Medicare and Medicaid payments related to hospital capital expenditures. Requires that the State Health Planning and Development Agency approve certain capital expenditures as a condition of reimbursement. Establishes a special procedure for approval of proposed capital expenditures which include more than one State or jurisdiction.

Establishes a plan for the reimbursement of physicians under which participating doctors of medicine or osteopathy would accept the assignment of patients' claims for reimbursement under the Medicare program. Requires the Secretary to establish procedures for expediting the payment of such assigned claims to physicians. Promulgates an incentive payment to encourage physicians to participate in the program of assignment of claims.

Permits Medicare reimbursement on the basis of an all-inclusive rate to free-standing ambulatory centers and to physicians performing surgery in their offices for a listed group of surgical procedures.

Sets forth criteria for determining the reasonable charge which may be made for physicians' services, and medical services, supplies and equipment under the Medicare and Medicaid programs.

Authorizes payment, under the Supplementary Medical Insurance Benefits program of Medicare, for antigens prepared by an allergist for a particular patient.

Permits payment by Medicare to be made to the spouse or other legal representative of a deceased Medicare beneficiary on the basis of a nonreceipted bill for care.

Permits Medicare and Medicaid reimbursement to small rural hospitals that use the facilities' beds interchangeably as either acute or long-term care beds, depending on need. Requires the Secretary to report within three years to Congress on the effects of such reimbursement, with recommendations on its continuance or its extension to other types of hospitals.

Allows States the option, when computing reimbursement rates under Medicaid to a skilled nursing facility (SNF) or intermediate care facility (ICF), to include reasonable allowances for the facility in the form of incentive payments related to efficient performance.

Requires the Secretary to make final determinations of basic eligibility of SNFs and ICFs and rural health clinics under Medicaid and Medicare and to advise the appropriate State agency accordingly. Entitles any SNF or ICF disqualified thereby to a hearing by the Secretary and to judicial review of the Secretary's final decision.

Prohibits the Secretary from imposing numerical limits in the number of home visits which might be made by SNF or ICF patients under the medicaid program.

Requires the Secretary to notify the Governor and appropriate committee chairpersons in a State legislature at the same time that a State is notified, of any audit, quality control perfomance report, deficiency, or change in Federal matching payments under the Social Security Act.

Terminates the Health Insurance Benefits Advisory Council.

Excludes commissions, finder's fees, and certain percentage arrangement payments in determining reasonable cost and reasonable charge for Medicare and Medicaid reimbursement, but exempts payments made to a hospital-based physician for services performed for patients of that hospital.

Provides for Medicare reimbursement for ambulance services to a more distant hospital when the nearest hospital does not have staff qualified to undertake the required care.

Authorizes the Secretary to make grants to public or nonprofit private regional pediatric pulmonary centers which are a part of, or are affiliated with, an institution of higher learning, to assist them in carrying out programs in the training of health care personnel in the prevention, diagnosis of, and treatment of respiratory disease in children.

Waives requirements of the human experimentation statute, otherwise held applicable for purposes of Medicare and Medicaid, with respect to coverage, or copayment, deductibles, or other limitations on payment for services. Requires the Secretary to apply the appropriate requirements of such statute before approving any application for any experimental pilot, or demonstration project.

Requires State plans for Medicaid to contain provisions reasonably directed at the denial of eligibility to an individual who would be ineligible except for the transfers of assets, for substantially less than fair market value, with specified exceptions.

Makes specified changes in the rates of return on net equity for for-profit hospitals.

Makes the deductible, which is used in determining Medicare payments, not applicable to expenses for certain independent laboratory tests.

Allows States to purchase laboratory services for Medicaid through competitive bidding arrangements for a three-year experimental period. Requires such services be from laboratories: (1) which are found by the Secretary to meet appropriate health and safety standards; (2) no more than 75 percent of whose charges for such services are under Medicare or Medicaid; and (3) which charge Medicaid at rates no higher than the lowest amount charged to others for similar tests. Directs the Secretary to send to Congress within one year an evaluation of such purchase arrangements, with recommendations as to extension or modification.

Removes the numerical limit on home health visits and the three-day prior hospitalization requirement for Medicare benefits.

Establishes a new method of reimbursement for durable medical equipment under which the Secretary would calculate reasonable charges at least once a year on a prospective basis.

Directs the Secretary to develop, and require to be used, uniform claims forms for Medicare and Medicaid within two years. Allows such forms to vary in form and content, but only as is clearly necessary. Requires the Secretary to consult with specified groups and to report to Congress the results and recommendations concerning the use of such forms.

Provides for the use of Medicare audit findings in the administration of Medicaid and the Maternal and Child Health and Crippled Children's Services programs.

Requires that unrestricted grants, gifts, and endowments and income therefrom, except that used to reduce interest expense below zero, shall not be deducted from the operating costs of a health services provider in determining reasonable costs of services under Medicare and Medicaid. Provides that grants, gifts and endowment income designated by a donor for paying specific operating costs shall be so deducted.

Directs the Secretary to study the availability and need for skilled nursing facility services in consultation with other groups in the field. Requires the Secretary to submit the report with recommendations to the appropriate committees of the House and Senate.

Extends Medicare coverage of dental services to include any services which are performed by a doctor of dental surgery or of dental medicine legally authorized to do so by the appropriate State, and would be covered if performed by a physician.

Authorizes Medicare reimbursement to optometrists for covered services related to aphakia which are within the scope of licensed optometric practice.

Directs the Secretary to review the criteria employed in determining a "skilled nursing facility" under the "spell of illness" requirement for Medicare eligibility and to recommend any appropriate modifications to Congress.

Allows States, which have not yet done so, a twelve-month period to "buy-in" coverage under Medicare for certain Medicaid recipients.

Amends the definitions of "physicians' services," "inpatient hospital services," and "medical and other health services." Exempts certain charges from the determination of a physician's customary charge to the extent that the charge exceeds a reasonable amount that would have been paid for the services.

Amends the Social Security Act concerning the payment of benefits to exempt from coverage those physicians who have not entered into a compensation agreement with the Secretary.

Extends through October 1, 1979, the interim provisions of the Social Security Act concerning payment for services of physicians rendered in a teaching hospital.

Permits courts to certify the amount of reasonable attorney's fees and costs to any prevailing party, other than the United States in an action concerning tax liability. Declares that the certified amount shall be creditable against any tax due the United States from such prevailing party.

Requires that failure to comply with a court order for child support shall be grounds for reprimand or discharge from Federal employment.