Health Care Financing Reform Amendments of 1986

Health Care Financing Reform Amendments of 1986 - Title I: Medicare - Amends title XVIII (Medicare) of the Social Security Act to increase the deductible under part B (Supplementary Medical Insurance) of title XVIII to $100 plus the percentage increase in the economic index used to determine increases in the prevailing charge for physicians' services.

Specifies that Medicare eligibility begins at age 65 and one month.

Establishes a coinsurance amount for home health services of one percent of the inpatient hospital deductible for each home health visit, except for visits: (1) occurring after the 100th visit in a year; or (2) related to a recent hospital or nursing facility stay.

Revises the formula for computing the supplementary medical insurance premium.

Prohibits workers' compensation laws, insurance policies, or large group health plans (covering at least 20 employees) from taking an individual's status as a Medicare beneficiary into account in providing coverage. Prohibits group health plans from taking into account an individual's end stage renal disease benefits under Medicare. Makes Medicare the secondary payor for all Medicare beneficiaries covered by workers' compensation, insurance policies, and group health plans. Authorizes the Federal Government to bring an action and collect double damages from primary payors. Amends the Internal Revenue Code to impose an excise tax equal to 25 percent of group health plan expenses if such a plan restricts its coverage of Medicare beneficiaries in violation of this Act. Amends title XIX (Medicaid) of the Act to reduce payments to a State contributing to group plans which provide such restrictive coverage. Specifies the benefits Medicare pays when other payors are primary but do not pay full charge.

Eliminates Medicare part B payments for ambulatory surgery facility services furnished in a physician's office. Requires the payment of a deductible for services furnished in ambulatory surgical centers.

Reduces the amounts paid to hospitals for the indirect costs of medical education.

Prohibits a cost-of-living adjustment in payments for clinical diagnostic laboratory tests for the year beginning July 1, 1986. Provides for a special adjustment in such payments for the 6-month period beginning July 1, 1987.

Excludes classroom and other educational program costs from the Secretary of Health and Human Services' determination of reasonable hospital costs for direct graduate medical education.

Authorizes the Secretary to count a day on which a patient is in a labor or delivery room at the census-taking hour as a patient day for the purpose of determining hospital routine inpatient per diem costs.

Prohibits, under the prospective payment system, any redetermination of any allowable operating costs of inpatient hospital services from affecting any payment for a cost-reporting period that has begun before the date of the redetermination.

Incorporates modifications which were not incorporated into the prevailing charge level for participating physicians during the previous calendar year, but which are included in participating physicians' prevailing charge levels for 1987, into the 1987 prevailing charge levels for nonparticipating physicians.

Makes administrative changes with respect to: (1) the Medicare deductible and coinsurance; and (2) claims of railroad retirement beneficiaries. Amends the Consolidated Omnibus Budget Reconciliation Act of 1985 to repeal a waiver of paperwork reduction rules in implementing certain Medicare hospital reimbursement provisions.

Amends the Medicare program to authorize the Secretary to enter into contracts with intermediaries for Medicare claims processing without regard to any requirement of competition. Requires the Secretary to publish and give the public an opportunity to comment upon standards and criteria to be used in evaluating intermediaries' peformances.

Title II: Medicaid - Amends title XIX (Medicaid) of the Social Security Act to place limits on the States' entitlement to Federal funding. Reduces Federal matching rates for State Medicaid administrative costs to the extent such rates exceed 50 percent, but sets the rate for excess administrative costs at 25 percent. Repeals the requirement that States establish mechanized claims processing and information retrieval systems.

Permits States to exclude certain benefits that they are presently required to provide. Revises provisions for determining eligibility for and the extent of benefits.

Amends the Unemployment Compensation Amendments of 1976 to provide continued Medicaid eligibility for individuals who cease to be eligible for benefits under title XVI (Supplemental Security Income) of the Act because of cost-of-living increases in benefits under title II (Old Age, Survivors and Disability Insurance) of the Act.

Requires that instead of a State's Medicaid plan being in effect Statewide, only required services must be provided to those individuals required to be covered.

Limits the applicability of freedom of choice in the selection of a provider of required services for the categorically needy.

Permits individuals enrolled with one of the following entities to receive benefits during a minimum enrollment period despite the fact that they would otherwise become ineligible for benefits during such period: (1) a health maintenance organization (HMO) under a Medicaid contract; (2) an entity receiving certain grants under the Public Health Service Act or the Appalachian Regional Development Act of 1965; or (3) a case management system approved under Medicaid.

Prohibits charging any enrollment fee, premium, deductible, or like charges for required services provided to groups required to be covered under a State's plan. Permits only nominal coinsurance or similar charges with respect to such services provided to such groups. Permits a State to exempt from deduction, cost sharing, or similar charges services provided: (1) to children and youths; (2) for pregnant women; (3) to inpatients required to spend their income in order to receive services; (4) in emergencies; or (5) to individuals by HMOs.

Repeals requirements that a State's plan provide for payment of services provided under the plan which are reasonable and adequate. Requires a State's plan to include a description of the methodology to be used by the State in setting payment rates.

Requires a State's plan to provide for an effective method of verifying whether services billed by providers were furnished.

Repeals a provision reducing payments to a State for expenditures it would not have made if certain Medicare eligible individuals had been enrolled under part B of Medicare.

Revises requirements with respect to the utilization control penalty applicable for inspections of mental hospitals, skilled nursing facilities, and intermediate care facilities so as to not impose the penalty: (1) (in the case of an institution with more than 50 Medicaid patients) if the lesser of ten such patients or two percent of Medicaid patients were not reviewed; or (2) (in the case of an institution with less than 50 Medicaid patients) one Medicaid patient was not reviewed.