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OCT-18-96 13:47 FROM: OMB: LA
ID:
PAGE 2/2
Talking Points on Medicare Subvention
Background
Representative Dicks may call to urge the President to sign an Executive Order initiating a
Department of Defense (DoD) Medicare subvention demonstration. As you know, HCFA, DoD
and OMB have worked hard to craft an agreement to establish a demonstration; this agreement
was reflected in legislation submitted to the Hill at the beginning of September. Neither the
House nor the Senate acted on the legislation. During the course of our interagency negotiations
on the agreement, it was determined that legislation is required to initiate the demonstration.
Talking Points
OMB's general counsel has determined that HCFA does not have adequate demonstration
authority under current law to conduct a demonstration of Medicare subvention. Under
the Social Security Act, Medicare cannot pay other government agencies to provide
services. Legislation must be enacted in order to conduct a Medicare subvention
demonstration. An Executive Order would not meet the test of enacted legislation.
The President is committed to conducting a Medicare subvention demonstration. This
was clearly reflected when the Secretary of Health and Human Services, in consultation
with the Secretary of Defense, submitted legislation to Congress that would provide the
authority necessary to conduct a Medicare subvention demonstration.
This legislation was based on an intensive process of negotiation between HCFA and DoD
in order to design a sound demonstration to test the concept of choice for military retirees
and to protect the Medicare trust fund. This process resulted in a memorandum of
agreement that was released to Congressional staff
An Executive Order, at this time, could be criticized on the grounds that it circumvents
budgetary considerations given CBO's estimate of the Administration's proposal as a cost
to the Medicare trust fund. Moreover, majority and minority members of the Ways and
Means Health Subcommittee and members of the Senate Finance and Budget
Committees were extremely concerned about the cost of this proposal to the Medicare
trust fund.
At the end of the session, a modification of the Administration's proposal under
pressure from Senate Majority Leader Lott that would have set the reimbursement
rate that DoD would pay Medicare at 50% of the AAPCC (the Administration's was
93%) with the rest made up from newly identified DoD asset sales.
Ways and Means Health Subcommittee Chairman Thomas (joined by Rep. Rangel
and Rep. Stark) objected to putting the newly developed proposal on the CR unless
other Medicare reforms were also included. No Medicare reforms were attached to
the CR
(NOTE): For your information, the Department of Defense indicated to Representative Dicks that
the demonstration would be conducted in and around his Congressional district.
106-08-96
FRUIT:W
H
PRESS
OFFICE
2024566210
10:b70c8
PHGE 00
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
August 8, 1996
STATEMENT BY THE PRESIDENT
Today, I have directed Secretary of Veterans Affairs Jesse Brown to send to
Congress legislation for an innovative pilot that will expand health care options for our
nation's older veterans.
/
The "Veterans' Medicare Reimbursement Model Project Act of 1996," fulfills 1
recommendation made by the Vice President's National Performance Review and moves
forward an idea proposed during the early days of this Administration. The proposa has
the potential of multiple benefits: expanding the choice of health-care for older vetel ans;
bringing new resources, utilization, and operational experience to the VA health-care
system; and producing savings for the Medicare Trust Fund by providing health care to
Medicare-eligible veterans at a lower cost in the VA system.
This bill would establish a model demonstration project under which the
Department of Veterans Affairs (VA) would be reimbursed by the Department of
Health and Human Services (HHS) for health care provided to certain Medicare-eligible
veterans.
It would open the VA system to Medicare-eligible veterans at a limited number of
sites, allowing VA to receive reimbursement from Medicare, and testing whether thi; is a
way of improving health care access and quality for Medicare-eligible veterans while
protecting the integrity of the Medicare program. The proposal incorporates a rigor bus
evaluation of this demonstration program.
This legislation is particularly important given the increasing number of veter ans
age 65 and older -- by the year 2000, the number of Medicare-eligible veterans will
exceed 9.3 million, or 38 percent of the total veteran population. This model project will
allow us to learn more about how we can meet the needs of veterans.
The Departments of Defense and Health and Human Services have also been
working on developing specifications for a model project to allow Medicare-eligible
military retirees to use military treatment facilities with Medicare reimbursement, and
plan to have a proposal ready in the near future.
30-30-30-
yo
17:41
FRUIT:W H PRESS UFFICE
2024566210
10:670c8
PHGE be
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
August 8, 1996
STATEMENT BY THE PRESIDENT
Today, I have directed Secretary of Veterans Affairs Jesse Brown to send to
Congress legislation for an innovative pilot that will expand health care options for our
nation's older veterans.
The "Veterans' Medicare Reimbursement Model Project Act of 1996," fulfills 1
recommendation made by the Vice President's National Performance Review and moves
forward an idea proposed during the early days of this Administration. The proposa has
the potential of multiple benefits: expanding the choice of health-care for older vetei ans;
bringing new resources, utilization, and operational experience to the VA health-care
system; and producing savings for the Medicare Trust Fund by providing health care to
Medicare-eligible veterans at a lower cost in the VA system.
This bill would establish a model demonstration project under which the
Department of Veterans Affairs (VA) would be reimbursed by the Department of
Health and Human Services (HHS) for health care provided to certain Medicare-eligible
veterans.
It would open the VA system to Medicare-eligible veterans at a limited numt er of
sites, allowing VA to receive reimbursement from Medicare, and testing whether thi; is a
way of improving health care access and quality for Medicare-eligible veterans while
protecting the integrity of the Medicare program. The proposal incorporates a rigor bus
evaluation of this demonstration program.
/
This legislation is particularly important given the increasing number of veter ans
age 65 and older -- by the year 2000, the number of Medicare-eligible veterans will
exceed 9.3 million, or 38 percent of the total veteran population. This model project will
allow us to learn more about how we can meet the needs of veterans.
The Departments of Defense and Health and Human Services have also been
working on developing specifications for a model project to allow Medicare-eligible
military retirees to use military treatment facilities with Medicare reimbursement, and
plan to have a proposal ready in the near future.
-30-30-30-
HUG-08
9b
FROM:W
OFFICE
2024566210
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
August 8, 1996
STATEMENT BY THE PRESIDENT
Today, I have directed Secretary of Veterans Affairs Jesse Brown to send to
Congress legislation for an innovative pilot that will expand health care options for our
nation's older veterans.
The "Veterans' Medicare Reimbursement Model Project Act of 1996," fulfills 1
recommendation made by the Vice President's National Performance Review and moves
forward an idea proposed during the early days of this Administration. The proposa has
the potential of multiple benefits: expanding the choice of health-care for older veter ans;
bringing new resources, utilization, and operational experience to the VA health-care
system; and producing savings for the Medicare Trust Fund by providing health care to
Medicare-eligible veterans at a lower cost in the VA system.
This bill would establish a model demonstration project under which the
Department of Veterans Affairs (VA) would be reimbursed by the Department of
Health and Human Services (HHS) for health care provided to certain Medicare-eli,
veterans.
It would open the VA system to Medicare-eligible veterans at a limited numt er of
sites, allowing VA to receive reimbursement from Medicare, and testing whether thi; is a
way of improving health care access and quality for Medicare-eligible veterans while
protecting the integrity of the Medicare program. The proposal incorporates a rigor bus
evaluation of this demonstration program.
This legislation is particularly important given the increasing number of veter ans
age 65 and older -- by the year 2000, the number of Medicare-eligible veterans will
exceed 9.3 million, or 38 percent of the total veteran population. This model project will
allow us to learn more about how we can meet the needs of veterans.
The Departments of Defense and Health and Human Services have also been
working on developing specifications for a model project to allow Medicare-eligible
military retirees to use military treatment facilities with Medicare reimbursement, and
plan to have a proposal ready in the near future.
-30-30-30-
Office of Public Affairs
Washington, D.C. 20420
News Service
(202) 273-5700
Department of
Veterans Affairs
News Release
FOR IMMEDIATE RELEASE
VA SEEKS AUTHORITY TO TREAT MEDICARE-ELIGIBLE VETS. BE
REIMBURSED FOR CARE
Washington, Aug. 9 -- The Department of Veterans Affairs (VA) has
submitted proposed legislation to establish a pilot program under which certain
veterans would have the option of using their Medicare benefits to obtain VA health
care. The legislation also would permit VA to be reimbursed by the Department of
Health and Human Services (HHS) for the services provided.
Secretary of Veterans Affairs Jesse Brown said: "This pilot program will
expand the choices for many veterans, particularly some. World War II and Korean
Conflict veterans, who would like to come to VA but are unable to get care because
of budget constraints and strict eligibility criteria. It also means that VA will be
able to recover and retain the costs of the services that we provide, just as any other
community provider."
Currently, higher-income, nonservice-connected veterans can receive VA
health care only on a space- and resource-available basis, and those over 65 are not
permitted to use their Medicare benefits. While VA is authorized to submit claims
to insurance carriers to recover a portion of the cost of medical care provided to
certain veterans, VA is not permitted to claim Medicare reimbursement.
"Many veterans have told me that they want to use their Medicare benefits at
VA," said Brown. "They served their country, they worked hard, they paid in to the
Medicare Trust Fund, and they should be able to choose where they use their
Medicare benefits. Once this pilot program is in place, they will choose VA because
it provides some of the best health care in the nation," he added.
The pilot program would be established at up to eight VA medical centers, or
four VA medical centers and one Veterans Integrated Service Network. The sites
would be determined by the Secretaries of Veterans Affairs and HHS.
-more-
002/003
MOLLY
SECTY
OF
OFF
VA
4876 273 2022
01:20
08/14/96
Medicare Pilot Program -- Page 2
Because VA is a cost-effective health-care provider, the proposed bill specifies
that payments to VA from the Medicare Hospital Insurance Trust Fund would be
less than what private providers receive for the same services. However, veterans
participating in the project would still be subject to Medicare's regular copayments.
The Medicare receipts would fund these patients' care, not VA appropriations.
The pilot program also would permit VA to establish managed health-care
plans at the sites. It also would provide VA with greater authority to contract for
health-care services, if necessary, and permit VA to conduct marketing and sales
activities, including the use of paid advertising, for outreach purposes.
The pilot program is expected to run for three years, with a possible two-year
extension. VA and HHS will arrange for an outside evaluation of the program, with
a first report submitted to Congress 18 months after the establishment of the
project at the first site. A final report, due to Congress no later than three and one-
half years after the project begins, will include recommendations on whether the
program should be expanded and whether permanent authorization should be
sought.
###
00/000
VA 0FC OF SECTY MOLLY
4876 273 2022
17:11
08/14/96
THE SECRETARY OF VETERANS AFFAIRS
WASHINGTON
)
The Honorable Newt Gingrich
Speaker of the House of
Representatives
Washington, D.C. 20515
Dear Mr. Speaker:
There is transmitted herewith, a draft bill, "To
require the Secretary of Veterans Affairs and the Secretary
of Health and Human Services to carry out a model project to
provide the Department of Veterans Affairs with Medicare
reimbursement for Medicare health-care services provided to
certain Medicare-eligible veterans." We request that it be
referred to the appropriate committees for prompt
consideration and enactment.
The draft bill would authorize the Department of
Veterans Affairs (VA) and the Department of Health and Human
Services (HHS) to conduct a model project which would give
certain veterans the option to use their Medicare benefits
to obtain care in the VA system. This approach has
potentially multiple beneficiaries. First, the proposal
could benefit veterans by expanding their choice of health
care providers. Second, the proposal could benefit the
Medicare trust funds which could pay less to VA for the
health-care of these Medicare patients. Finally, the
proposal could benefit VA by bringing new resources and
operational experience to the VA health-care system and by
allowing greater utilization of the existing system.
VA has long been recognized as the provider of choice
for many of our nation's veterans. However, constraints on
resources have required that VA limit the access of certain
categories of veterans to VA's health care services. These
veterans are commonly referred to as "category C veterans."
As a result, veterans with higher incomes who are 65 years
and older and who do not have a service-connected disability
often rely on Medicare. These veterans are currently not
able to use their Medicare benefits to obtain care in the VA
2/20
PAGE
ID:
FROM 12:37
2.
The Honorable Newt Gingrich
system. At a limited number of VA sites, the model project
would open the VA system to these Medicare-eliçible
veterans. The care of these new users would be funded by
Medicare reimbursements.
The proposed model project would be conducted at up to
eight sites or at up to four sites and one Veterans
Integrated Service Network (VISN). Medicare-eligible
"category C veterans" who seek care at a project site would
be required to obtain care under the provisions of the model
project. VA would provide the care in its facilities or by
contracting with private providers. A critical provision in
the bill specifies that HHS would reimburse VA for the care
of project participants at rates no more than 95 percent of
the rates at which private Medicare providers are
reimbursed. The bill also contains a provision to ensure
that VA does not receive both VA appropriations and Medicare
reimbursements for the care of Medicare cligible veterans
(i.e., the Department would maintain its current "level of
effort" in providing care for category C Medicare-eligible
veterans). The proposal further would require that VA meet
the same quality standards as private providers meet under
the Medicare program. VA currently meets or exceeds most of
these standards. Finally, veterans who participate in the
model project would be charged the same cost sharing as they
would be charged by private sector Medicare providers.
The project would continue for three years and could be
extended for up to two additional years. During its
operation, it would be evaluated by an independent entity.
Not later than four years after the project's initiation,
the Secretaries of VA and HHS would recommend to Congress
whether the project should be continued on an expanded
basis. The project would provide VA and HHS with valuable
information about the total costs of health care for their
dual benoficiarics. In addition, by permitting the
coordination of that care by a sole provider, VA and HHS
could reduce the cost and improve the quality of that care.
Enactment of this draft bill would benefit veterans,
the Medicare program, and the American public.
02/0
PAGE
: a l
AUG-02-96 FROM
3.
The Honorable Newt Gingrich
The Office of Management and Budget advises that there
is no objection to the submission of this legislative
proposal and that its enactment would be in accord with the
programs of the President.
Sincerely yours,
Jesse Brown
JB:er
E/C
PAGE
ID
AUG-02-96 16:30 FROM
104th Congress
2d Session
A BILL
To require the Secretary of Veterans Affairs and the
Secretary of Health and Human Services to carry out a model
project to provide the Department of Veterans Affairs with
Medicare reimbursement for Medicare health-care services
provided to certain Medicare-eligible veterans.
Be it enacted by the Senate and House of
Representatives of the United States of America in Congress
assembled,
SECTION 1. SHORT TITLE.
This Act shall be cited as the "Veterans' Medicare
Reimbursement Model Project Act of 1996".
SEC. 2. MODEL PROJECT.
(a) AUTHORITY. - - (1) Not later than sixty days after the
date of enactment of this Act, the Secretary of Veterans
Affairs and the Secretary of Health and Human Services shall
enter into an agreement to carry out a model project under
which the Secretary of Health and Human Services shall
reimburse the Secretary of Veterans Affairs, from the trust
funds established under title 18 of the Social Security Act,
for Medicare health-care services furnished to certain
Medicare-eligible veterans.
(2) Under the model project authorized in paragraph (1),
the Secretary of Veterans Affairs shall, notwithstanding any
other provision of law, furnish Medicare-eligible veterans
who are described in section 1710 (a) (2) to title 38, United
States Code, with needed health-care services.
PAGE 12/20
: a1
AUG-02-96 12:42 FROM
2.
(3) Payments made under subsection (c) (1) shall be made in
appropriate part, as determined by the Secretary of Health
and Human Services, from the Federal Hospital Insurance
Trust Fund and the Federal Supplementary Medical Insurance
Trust Fund.
(4) With respect to payments made under subsection (c) (1),
the Secretary of Health and Human Services may waive any
requirement of part B of title XI of the Social Security
Act, title XVIII of that Act, or a related provision of law.
(b) SITES. -- The model project shall be carried out at up
to four sites or at one Veterans Integrated Service Network
for payments on the basis described in
subsection (c) (1) (A) (i) and at up to four sites for payments
on the basis described in subsection (c) (1) (A) (ii). The
sites and any Network shall be designated jointly by the
Secretary of Health and Human Services and the Secretary of
Veterans Affairs. The Secretary of Veterans Affairs may
terminate the participation of any site in the model project
at any time subject to any obligations to veterans who have
agreed under subsection (d) to obtain care at the site.
(c) PROJECT REQUIREMENTS. -- The agreement entered into
under subsection (a) shall-
(1) provide that the Secretary of Health and Human
Services shall reimburse the Secretary of Veterans Affairs--
(A) (i) on the basis that payments are made under
section 1876 (a) of the Social Security Act, or
(ii) on the bases that payments are made under
title XVIII of that Act (other than under section
1876), and
(B) in amounts equal to ninety-five percent of the
amounts payable from the trust funds under that title
on the bases specified in clause (i) or (ii) of
subparagraph (A), as applicable, reduced as specified
in the agreement entered into under subsection (a) with
respect to specific components of payments made under
that title, and reduced as provided by paragraph (3) ;
PAGE 13/20
:01
AUG-02-96 12:42 FROM
3.
(2) specify which requirements shall be waived under
subsection (a) (4) with respect to the model project;
(3) require the parties, for the purpose of avoiding the
imposition on the trust funds established under title XVIII
of the Social Security Act of the costs of the care that
Medicare-eligible veterans would, in absence of this Act, be
expected to receive from the Department of Veterans Affairs,
to--
(A) determine the average amount expended by the
Department of Veterans Affairs in the three fiscal
years ending on September 30, 1996, for furnishing
Medicare health-care services to Medicare-eligible
veterans eligible for care under section 1710 (a) (2) of
title 38, United States Code, at the sites
participating in the model project, and
(B) establish a procedure for adjusting the amount
determined under subparagraph (A) for purposes of
determining the amount by which the Secretary of Health
and Human Services shall reduce reimbursements under
paragraph (1) (B) i
(4) provide that, subject to the availability of
resources and appropriate charges, the Secretary of Veterans
Affairs may, as the Secretary considers it appropriate,
furnish Medicare-eligible veterans described in
section 1710 (a) (2) of title 38, United States Code, with
care and services authorized by chapter 17 of that title at
these sites in addition to health-care services provided
under the model project;
(5) provide that the care and services furnished under
paragraph (4) shall be subject to all eligibility criteria
and priorities set forth in chapter 17 of title 38, United
States Code; and
(6) specify a procedure for adjusting the provision of
health-care services under the model project in case the
number of veterans requesting care under the project from
outside the usual geographic catchment area of a site
significantly exceeds historical levels.
11/20 PAGE
:01
AUG-02-96 12:43 FROM
4.
(d) MANDATORY PARTICIPATION. -- (1) Subject to
paragraph (2), all Medicare-eligible veterans described in
section 1710 (a) (2) of title 38, United States Code, who
request health-care services at a site participating in the
model project must agree to obtain those services under the
provisions of the model project.
(2) Medicare-eligible veterans described in
section 1710 (a) (2) of title 38, United States Code, who are
receiving hospital care or nursing home care at a site
participating in the model project before initiation of the
project at that site shall not be required to agree to
obtain health-care services under the provisions of the
model project until after their discharge.
(e) MANAGED HEALTH-CARE PLANS. -- (1) In carrying out
this model project, the Secretary of Veterans Affairs may
establish and operate managed health-care plans.
(2) Any such plan shall be operated by or through a
Department of Veterans Affairs health-care facility or group
of facilities and may include the provision of health-care
services through other public and private entities under
arrangements made between the Department and the other
public or private entity concerned. Any such managed
health-care plan shall be established and operated in
conformance with standards prescribed by the Secretary of
Veterans Affairs after consultation with the Secretary of
Health and Human Services.
(3) The Secretary of Veterans Affairs shall prescribe the
minimum health-care benefits to be provided under the plan
to veterans enrolled in the plan. Those benefits shall
include at least all Medicare health-care services.
(f) COST SHARING. -- The Secretary of Veterans Affairs
shall establish cost-sharing requirements for veterans
participating in the model project. The cost-sharing
requirements for such veterans not participating in a
managed health-care plan under subsection (e) shall be the
same requirements that apply to Medicare-eligible patients
at non-Department of Veterans Affairs facilities.
15/20 PAGE
ID
AUG-02-96 12:43 FROM
5.
(g) MARKETING. -- The Secretary of Veterans Affairs may
conduct marketing and sales activities, which may include
the use of paid advertising, for the purpose of outreach to
veterans who are eligible to participate in the model
project.
(h) CONTRACTING. -- (1) To carry out this model project,
the Secretary of Veterans Affairs may, when the Secretary
determines it necessary in order to obtain health-care
resources which otherwise might not be feasibly available,
or to utilize health-care resources effectively, make
arrangements, by contract or other form of agreement for the
sharing of health-care resources between sites participating
in the project and non-Department health-care providers.
(2) (A) If the health-care resource required is a
commercial service, the use of either medical equipment
or space, or research, and is to be acquired from
institutions affiliated with the Department in
accordance with section 7302 of title 38, United States
Code, medical practice groups and other entities
associated with such institutions, blood banks, organ
banks, or research centers, the Secretary may make such
arrangements without regard to any law or regulation
relating to competitive procedures.
(B) If the health-care resource required is a
commercial service or the use of either medical
equipment or space, and is not to be acquired from an
entity described in subparagraph (i), any procurement
for such resource may be conducted without regard to
any law or regulation relating to competitive
procedures provided it is conducted in accordance with
simplified procedures established by the Secretary in
consultation with the Administrator for Federal
Procurement Policy that are published for public
comment in accordance with section 22 of the Office of
Federal Procurement Policy Act, 41 U.S.C. 418b. The
simplified procedures shall require at a minimum that
the Department of Veterans Affairs publish a notice in
accordance with section 18 of the Office of Federal
Procurement Policy Act, 41 U.S.C. 416, and
sections 8 (e), (f), and (g) of the Small Business Act,
15 U.S.C. 637 (e), (f), (g), that permits all
15/20 PAGE
: a I
AUG-02-96 12:44 FROM
6.
responsible sources to submit a bid, proposal, or
quotation (as appropriate) which shall be considered by
the agency. Pending publication of the simplified
procedures, these procurements shall be conducted in
accordance with all procurement laws and regulations.
(C) Any procurements for health-care resources other
than those covered by paragraphs (A) or (B) shall be
conducted in accordance with all procurement laws and
regulations.
(D) For any procurement to be conducted on a sole
source basis, a written justification must be prepared
that includes the information and is approved at the
levels prescribed at section 303 (f) of the Federal
Property and Administrative Services Act, 41 U.S.C.
253 (f).
(3) Arrangements entered into under this subsection shall
provide for reciprocal reimbursement based on a methodology
that provides appropriate flexibility to the parties
concerned to establish an appropriate reimbursement rate
after taking into account local conditions and needs and the
actual costs to the providing facility of the resources
involved. This paragraph does not apply to procurements
entered into under this subsection.
(i) REVOLVING FUND. -- (1) There is established in the
Treasury of the United States a revolving fund for the
conduct of the model project.
(2) The Secretary of Veterans Affairs shall deposit in
this revolving fund--
(A) amounts received under this section,
(B) recoveries and collections under section 1729 of
title 38, United States Code, for Medicare-eligible
veterans eligible for care under section 1710 (a) (2) of
title 38, United States Code, at the sites
participating in the model project, and
12/20
PAGE
:01
AUG-02-96 5 12:45 FROM:
7.
(C) from the Department of Veterans Affairs medical
care account, the amount needed to conduct the model
project.
(3) The Secretary of Veterans Affairs shall use the
amounts in this fund for conducting this model project and
for reimbursing the Department of Veterans Affairs medical
care account for expenditures from that account in support
of this project. Amounts in the fund not needed for the
conduct of the model project may be used to enhance the care
of Medicare-eligible veterans not participating in this
project.
(j) EVALUATION AND REPORTS. -- (1) The Secretary of
Veterans Affairs and the Secretary of the Health and Human
Services shall arrange for an independent entity with
expertise in the evaluation of health services to conduct an
evaluation of the model project. The entity shall submit
annual reports on the model project. The first report shall
be submitted not later than eighteen months after the date
on which the model project begins operation, and the final
report not later than three and one-half years after that
date. The evaluation and reports shall include an
assessment of the following:
(A) Compliance by the Department of Veterans Affairs
with the requirements under title XVIII of the Social
Security Act.
(B) The cost to the Department of Veterans Affairs
of providing care to veterans under the project.
(C) Compliance by the Department of Veterans Affairs
with the standards of quality required of entities that
furnish Medicare health-care services.
(D) Any savings or costs to the programs under
title XVIII of the Social Security Act from this
project.
(E) Any change in access to care or quality of care
for the veterans under this project.
13/20 PAGE
:01
AUG-02-96 12:45 FROM
8.
(F) Any impact of the project on the access to care
of veterans who did not participate in this project and
of Medicare-eligible nonveterans.
Additional elements to be included in the report shall be
specified in the agreement entered into under
subsection (a).
(2) Not later than six months after publication of the
final report under paragraph (1), the Secretary of Veterans
Affairs and the Secretary of the Health and Human Services
shall submit to the Congress a report containing their
recommendation as to (A) whether reimbursement under title
XVIII of the Social Security Act should be authorized for
Medicare health-care services provided by the Department of
Veterans Affairs to Medicare-eligible veterans described in
section 1710 (a) (2) of title 38, United States Code, on an
expanded basis, and (B) if so, the terms and conditions
under which reimbursement should be made.
(k) DEFINITIONS. -- For the purposes of this section:
(1) The term "commercial service" means services offered
and sold competitively in the commercial marketplace,
performed under standard commercial terms and conditions,
and procured using firm-fixed price contracts.
(2) The term "health-care providers" includes health-care
plans, insurers, organizations, institutions, or any other
entity or individual who furnishes any health-care resource.
(3) The term "health-care resource" includes hospital
care, medical services, rehabilitative services, and
preventive health services, as those terms are defined in
paragraphs (5), (6), (8), and (9) of section 1701 of
title 38, United States Code, any other health-care service,
and any health-care support or administrative resource.
(4) The term "Medicare health-care services" means items
or services covered under part A or B of title XVIII of the
Social Security Act.
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9.
(5) The term "Medicare-eligible veteran" means a veteran
who is entitled to benefits under part A and B of title
XVIII of the Social Security Act.
(6) The term "site" means a Department of Veterans Affairs
medical treatment facility, or group of facilities that
share services and administrative functions.
(7) The term "veteran" has the meaning given that term in
section 101 (2) of title 38, United States Code.
(8) The term "Veteran Integrated Service Network" means a
field component of the Veterans Health Administration. It
is based on a geographic area which encompasses a population
of veteran beneficiaries and is defined on the basis of
natural patient referral patterns. Health-care is provided
through strategic alliances among Department of Veterans
Affairs medical centers, clinics, and other sites.
(1) DURATION OF AUTHORITY. - - The model project shall
operate for a period of three years unless terminated
earlier or extended for up to two additional years by the
mutual agreement of Secretary of Veterans Affairs and the
Secretary of Health and Human Services. The Secretary of
Veterans Affairs shall not accept new patients in the model
project during any extension period unless such acceptance
is approved under procedures established by the Secretary of
Veterans Affairs and the Secretary of Health and Human
Services.
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ANALYSIS OF PROPOSED BILL
Section 1 of the draft bill names the Act the "Veterans'
Medicare Reimbursement Model Project Act of 1996."
Section 2 contains twelve subsections:
Subsection (a) (1) would require VA and HHS to enter into an
agreement to carry out the model project not later than
60 days after the date of enactment of this draft bill.
Under the model project, HHS would reimburse VA from the
Medicare program for "Medicare health-care services"
provided to certain Medicare-eligible veterans. The term
"Medicare health-care services" is defined in subsection (k)
as all Medicare-covered items and services.
Subsection (a) (2) would require VA to furnish Medicare-
eligible veterans who are described in section 1710 (a) (2) of
title 38the United States Code with needed Medicare health-
care services under this model project. Veterans described
in section 1710 (a) (2) of the United States Code are those
veterans with relatively higher incomes who do not have a
service-connected disability. These veterans are commonly
referred to as "category C veterans" and have the lowest
priority for care in the VA system.
Subsection (a) (3) would require that HHS payments to VA
under the bill would be made from the Medicare trust funds.
Subsection (a) (4) would authorize HHS to waive any
requirement of the Medicare program with respect to the
model project.
Subsection (b) would permit VA to be paid under the Medicare
provision of law which authorizes payments on a capitated
basis at up to four sites or one Veterans Integrated Service
Network and establish up to four sites for providing
Medicare health-care services on a fee-for-service basis.
The term "site" is defined in subsection (k) (6) as a VA
medical treatment facility or group of facilities that share
services and administrative functions. The term "Veterans
Integrated Service Network" is defined in subsection (k) (8)
All sites and any Network would be designated jointly by VA
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2.
and HHS. VA would be authorized to terminate the
participation of any site at any time subject to any
obligations to veterans who have agreed to obtain care at
the site.
Subsection (c) (1) (A) (i) would require that the agreement to
be entered into by VA and HHS provide that, at project sites
furnishing care on a capitated basis, HHS shall reimburse VA
on the basis of the provision of law which requires HHS to
annually determine a per capita rate of payment for each
class of individuals who are enrolled under that provision.
Subsection (c) (1) (A) (ii) would require that the agreement to
be entered into by VA and HHS provide that, at project sites
furnishing care on a fee-for-service basis, HHS shall
reimburse VA on the basis of the provisions of law which
provide for reimbursement on a fee-for-service basis.
Subsection (c) (1) (B) would require that the agreement to be
entered into by VA and HHS shall provide that amounts which
HHS would reimburse VA under section 2 (c) (1) (A) (i) and (ii)
shall be reduced by five percent. In addition, the
agreement shall specify further reductions in these amounts
for specific components of the Medicare payments under those
subsections. The agreement could thus specify reductions
for components such as Graduate Medical Education (GME) and
capital costs. Finally, this provision would require that
the agreement to be entered into by VA and HHS would provide
that amounts which HHS would reimburse VA under
section 2 (c) (1) (A) (i) and (ii) shall be reduced as provided
for by section 2 (c) (3). This last reduction would ensure
that VA does not receive both VA appropriations and Medicare
reimbursements for the care of Medicare-eligible veterans.
Subsection (c) (2) would require that the agreement to be
entered into by VA and HHS specify the Medicare requirements
which HHS shall waive with respect to the model project.
Subsection (c) (3) (A) - (B) would require that the agreement to
be entered into by VA and HHS establish a procedure for the
purpose of avoiding the imposition on the Medicare trust
funds of the costs of the care that Medicare-eligible
veterans would, in absence of this Act, be expected to
receive from VA. Subparagraph (A) of this subsection would
require that the agreement require the parties to determine
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3.
the average amount expended by VA for furnishing Medicare-
reimbursable care to Medicare-eligible category C veterans
over the last three fiscal years at each model project site.
Subparagraph (B) would require the agreement to require the
parties to establish a procedure for adjusting the amount
determined in subparagraph (A) The adjusted amount would
be used to reduce the Medicare payments to VA under the
model project.
Subsection (c) (4) would require the agreement to be entered
into by VA and HHS to provide that VA could furnish eligible
participants in the model project with non-Medicare-
reimbursable care and services which they would otherwise be
eligible for under VA law subject to the availability of
resources and appropriate charges.
Subsection (c) (5) would require the agreement to be entered
into by VA and HHS to provide that all care and services
furnished to participants in the model project which are not
Medicare-reimbursable would be subject to all eligibility
criteria and priorities set forth in VA law.
Subsection (c) (6) would require the agreement to be entered
into by VA and HHS to specify a procedure for adjusting the
provision of care under the model project if the number of
veterans requesting care under the project from outside the
usual geographic catchment area of a site significantly
exceeds historical levels.
Subsection (d) (1) would provide that all Medicare-eligible
category C veterans who request care at a model project site
must agree to obtain those services under the provisions of
the model project, subject to subsection (d) (2).
Subsection (d) (2) would provide that Medicare-eligible
category C veterans who would be receiving hospital or
nursing home care at a model project site before initiation
of the project at that site would not be required to agree
to obtain services under the provisions governing the model
project until after their discharge from inpatient care.
Subsection (e) (1) would authorize VA to establish and
operate managed health-care plans for purposes of the model
project.
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4.
Subsection (e) (2) would require that VA operate any managed
health-care plan under the model project by or through a VA
health-care facility or facilities and permit the provision
of care at contract entities. The provision further
requires the plan to be established and operated in
conformance with standards prescribed by VA after
consultation with HHS.
Subsection (e) (3) would require VA to prescribe the minimum
health-care benefits to be provided under the plan to
veterans enrolled in the plan. The benefits must include at
least all Medicare-reimbursable items and services.
Subsection (f) would require VA to establish cost-sharing
requirements for veterans participating in the model
project. For care being provided on a fee-for-service
basis, these cost-sharing requirements must be the same
requirements that apply to Medicare-eligible patients at
non-VA facilities.
Subsection (g) would authorize VA to conduct marketing and
sales activities which could include the use of paid
advertising for the purpose of outreach to veterans who
would be eligible to participate in the model project.
Subsection (h) (2) would authorize VA to make arrangements by
contract or other form of agreement for the sharing of
"health-care resources" between model project sites and non-
VA health-care providers when VA would need to obtain such
resources or utilize them effectively. The term "health-
care resource" is defined in section 2 (k) (3)
Subsection (h) (2) (A) would permit VA to acquire health-care
resources by making arrangements with affiliated
institutions; medical practice groups and other entities
associated with affiliated institutions; and blood banks,
organ banks, or research centers without regard to the laws
requiring the use of competitive procedures if the health-
care resource required is research, a "commercial service,"
or the use of medical equipment or space. The term
"commercial service" is defined in subsection (k) (1)
Subsection (h) (2) (B) would permit VA to acquire health-care
resources by making arrangements with health-care providers
which are not described in section 2 (h) (2) (A) without regard
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to the laws requiring the use of competitive procedures if
the health-care resource required is a commercial service or
the use of medical equipment or space and provided that the
acquisition is conducted under simplified procedures which
are published for public comment. The simplified procedures
must at least require VA to publish a notice in the Commerce
Business Daily that permits all responsible sources to
submit a bid, proposal, or quotation, as appropriate, which
VA must consider. Until these simplified procedures are
published, VA would be required to conduct these
procurements under existing procurement laws.
Subsection (h) (2) (C) would require VA to conduct any
procurement not covered by section 2 (h) (2) (A) or (B) in
accordance with all procurement laws.
Subsection (h) (2) (D) would require a written justification
to be prepared for any procurement to be conducted on a sole
source basis.
Subsection (h) (3) would provide that arrangements entered
into for the sharing of health-care resources between model
project sites and non-VA health-care providers shall provide
for reciprocal reimbursement based on a methodology that
provides appropriate flexibility to the parties concerned to
establish an appropriate reimbursement rate after taking
into account local conditions and needs and the actual costs
to the providing facility of the resources involved. This
provision would not apply to procurements entered into under
this subsection.
Subsection (i) (1) would establish a revolving fund in the
U.S. Treasury for the conduct of the model project.
Subsection (i) (2) (A) - (C) would require VA to deposit in the
revolving fund:
monies received under the model project;
collections under the model project from third parties
such as insurance companies and tortfeasors as authorized
by the law which gives the United States the right to
recover or collect for providing care to veterans; and
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6.
monies from the VA medical care account as needed to
conduct the model project.
Subsection (i) (3) would require VA to use monies in the
revolving fund for conducting the model project and for
reimbursing the VA medical care account for expenditures in
support of the project. VA could use the monies in the
revolving fund which are not needed to conduct the model
project to enhance the care of Medicare-eligible veterans
not participating in the model project.
Subsection (j) (1) (A) - (F) would require VA and HHS to arrange
for an independent entity to evaluate the model project.
The entity would be required to submit annual reports with
the first report due not later than 18 months after the date
on which the model project begins operation. The final
report would be due not later than three and one-half years
after the date of operation. The evaluation and reports
would include an assessment of the following:
Compliance by VA with Medicare requirements.
The cost to VA of providing care to veterans under
the project.
Compliance by VA with the standards of quality
required of entities that furnish items or services
under the Medicare programs.
Any savings or costs to the Medicare programs.
Any change in access to care or quality of care for
the veterans under the model project.
Any impact of the project on the access to care of
veterans who did not participate in the project and
of Medicare-eligible nonveterans.
In the agreement between VA and HHS, the parties would be
required to specify additional elements to be included in
the independent entity's report
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7.
Subsection (j) (2) would require VA and HHS to submit to
Congress a report containing their recommendation whether
Medicare reimbursement to VA for the care of Medicare-
eligible veterans should be authorized on an expanded basis.
If the report would recommend expanding Medicare
reimbursement to VA, the report would also need to recommend
the terms and conditions under which reimbursement should be
made.
Subsection (k) (1) would define the term "commercial service"
for purposes of the provision authorizing sharing under the
model project (section 2 (h) ) The definition is similar to
but slightly modified from the definition contained in the
Federal Acquisition Regulations and would encompass most
health-care resources which VA would procure except for
research and the use of equipment.
Subsection (k) (2) would define the term "health-care
providers" for purposes of the provision authorizing sharing
under the model project (section 2(h)). The definition
would cover all entities and persons with whom VA would be
interested in sharing health-care resources.
Subsection (k) (3) would define the term "health-care
resource" for purposes of the provision authorizing sharing
under the model project (section 2 (h) ) The definition
would include any health-care service and any health-care
support or administrative resource.
Subsection (k) (4) would define the term "Medicare health-
care services" to mean all services which are reimbursable
under Medicare.
Subsection (k) (5) would define the term "Medicare-eligible
veteran" to mean a veteran who is included in the category
of veterans who have the lowest priority for VA care. The
veterans in this category, commonly referred to as "category
C veterans," have higher incomes and do not have service-
connected disabilities.
Subsection (k) (6) would define the term "site" to mean a VA
medical treatment facility or group of facilities that share
services and administrative functions.
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8.
Subsection (k) (7) would define the term "veteran" as having
the same meaning given it in the definitions for title 38,
United States Code.
Subsection (k) (8) would define the term "Veteran Integrated
Service Network" to mean one of the field components of the
Veterans Health Administration.
Subsection (1) would provide that the model project would
continue for three years and could be extended by VA and HHS
for up to two additional years. During any extension
period, VA could not accept new patients in the model
project unless VA and HHS establish procedures for accepting
new patients.
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Medicare Subvention
Today: Only veterans with service-connected disabilities or low-
income veterans can get care in VA medical system (VA
appropriation not sufficient to allow them to cover others);
higher-income, non-service connected veterans with Medicare
eligibility cannot receive care at VA and have Medicare
reimburse. VA believes that allowing veterans the choice of care
at VA facilities will lead to their care in less expensive
settings, and thus some savings for Medicare.
NPR proposal: 3-month study (with OMB, HCFA, and VA experts) to
develop Medicare reimbursement demonstration project alternatives
at selected VA hospitals. These options will have defined
parameters and cost impacts that will be part of decision on
which/whether a pilot is implemented.
Biggest problem: VA does not account for their costs/manage
costs. With no ability to determine the cost of a medical
procedure, it is unclear whether they do it cheaper, what to
charge Medicare, etc.
-Also PAYGO issues.
-Also shift of $ from Medicare to VA (Medicare trust fund in
trouble; and VA has more clout with Hill appropriations)
Concept good, particularly in context of health reform; but not
for this year (Medicare budget cuts and TF).
Medicare Reimbursement Pilots
Department of Veterans Affairs (VA) and
Health Care Financing Administration (HCFA)
Veterans with service-connected disabilities or who qualify because their income falls below a
minimum threshold are given priority in VA Medical Centers. All other veterans (Category C
veterans) are generally not treated because of budget constraints.
A VA initiative implemented as a result of the second National Performance Review called for
a study to develop a range of VA Medicare pilot options. The pilots would test the feasibility
of using Medicare reimbursement to cover the cost of expanding VA health care to Medicare-
eligible Category C veterans.
The Study Group includes representatives from VA, HCFA and OMB and has been meeting
since June 1995. It is supported by three work groups of technical and program experts from
these agencies, with each work group assigned to one of the pilot models being considered:
Under the centers of excellence model the VA pilot location would function as a
Medicare referral center for certain procedures in which the VA has a reputation for high
quality and low cost.
Under the fee-for-service model, patients have the option of selecting from among many
providers. Patients may continually change providers at their own discretion. If an
eligible veteran chooses to receive care from the VA for a certain procedure, the pilot
location would be reimbursed by Medicare for that episode of care.
Under the capitation model a VA medical center would operate its own health
maintenance organization (HMO) for Medicare-eligible "Category C" veterans. Patients
would be required to enroll in a VA plan, and receive all of their care from the plan.
The work groups were formed in August 1995. Since the work groups must resolve issues of
access, cost, eligibility, benefits design, quality, delivery systems, and pilot evaluation; they
include physicians and experts in the areas of VA and Medicare programs, finance, budget, quality
assurance and management.
Under existing budget authority, VA currently treats approximately 37,000 of the estimated four
million Category C veterans who are Medicare-eligible. VA would continue to fund health care
for these veterans so as to insure that the liability is not transferred to the Medicare Trust Fund.
The Study Group expects to submit a draft report and recommendations to VA, HCFA and OMB
policy officials in mid-February 1996. The report is meant to give policy makers the protocols
necessary to administer pilots they choose to implement.
7 pros pcons of
full proposal
+cost
EXECUTIVE OFFICE OF THE PRESIDENT
25-May-1995 09:51am
TO:
Molly Brostrom
FROM:
Toni S. Hustead
Office of Mgmt and Budget, VAPD
SUBJECT: RE: medicare/va
Molly,
The NPR proposal on Medicare has to be taken very delicately. The
proposal calls for a 3 month study (with OMB, HCFA, and VA experts
on the study group) that will produce a report that will contain a
range of options that might be used as pilots in selected VA
hospitals. These options will have defined parameters and cost
impacts which will play a big role in the selection and definition
of any pilot that is finally implimented. There are numerous ways
to define such a pilot - the most problematic thing here is that
the VA has never had a managed care system. It is unable to tell
us what is costs to produce any service like managed care systems
in the private sector. With no ability to determine the cost of a
medical procedure, it is unclear whether they do it cheaper, what
to charge medicare, etc. Also there are tremendous PAYGO issues
here. We are committed to try to figure out how to do this but
not in a hurry, hence the study. It is key not to speed this
process up. Our official language here:
"VA will work with HCFA and OMB to develop Medicare reimbursement
demonstration project alternatives. Currently, veterans who may
wish to choose VA as their health care provider do not have that
option because VA's medical care appropriation is insufficient to
allow the VA health care delivery system to provide services to
all veterans. Only those with service-connencted disabilitis and
low-income veterans are generally covered by the appropriation.
Higher-income, non-service connected veterans with MEdicare
eligibiltiy should be able to choose VA and bring their Medicare
reimbursement to VA to cover the cost of their care. To ensure
that these veterans have this choice available to them, VA
proposes to recover and retain revenues from Medicare for
designated categories of veterans. By permitting VA access to
these revenues, VA will be able to expand the choices of veterans
and potentially offer some savings to Medicare which is now paying
for the health care needs of these veterans in what VA believes
are more expensive settings. The study will serve to identify a
range of detailed pilot options with defined parameters and cost
impacts for consideration."
Status Report on Medicare Subvention for VA
, ne
VA Medicare subvention will test the feasibility of VA as a Medicare provider. They
will also test its ability to integrate its core mission -- caring for Category A veterans
with competition with the private sector to provide care to Medicare-eligible Category C
veterans. The decision to expand the pilots nationally will be made after the evaluation
demonstrates VA's ability to meet the cost, quality and access standards.
The importance of the evaluation was demonstrated recently when CBO scored the DoD
200 97 is
200
Medicare subvention demonstration at a cost of $1.5 billion over six years (FYs 1997-
200
9
2002). CBO based its scoring on uncertainties about how DoD and beneficiary behavior
would affect Medicare costs in a demonstration. The same uncertainties cited by CBO in
200
v°
its DoD scoring also exist in the VA. Like DoD,
200
2.
VA cannot accurately estimate the current level of services it now provides to
300
dually eligible beneficiaries.
VA pilot sites may have incentive to shift costs to Medicare.
a VA capitation pilot (the option VA appears to be most in favor of) could attract
relatively healthy beneficiaries that currently receive care in the private sector on
a fee-for-service basis. If this occurs, Medicare could end up paying more to VA
for the care of these patients than it now pays the private sector.
We expect CBO to score any VA proposal similarly due to the difficulty in addressing
these issues prior to the pilot's start. Consequently, the evaluation must address these
questions before a decision to expand subvention nationally can be considered to avoid
paygo costs and a drain on the Medicare Trust Fund.
Three work groups were established late last summer to develop working models for the
capitation, fee-for-service, and bundled payment pilot options. The work groups report to
the study team, which has overall responsibility for creating a final report for policy-
makers at all three agencies.
The workgroups have developed interim reports, but several cross cutting decisions
needed to be addressed before final reports could be prepared. Work was temporarily
halted during the winter as the study team struggled to develop a common set of
overriding principals to guide work team efforts.
At this time, all issues have essentially been settled. The final issue, the evaluation, was
resolved in early April when the study team agreed that the pilots will be subject to a
comprehensive evaluation that considers the full range of cost, quality and access issues.
We expect the work groups to submit final reports to the study team in early June. The
study team plans to present its report and recommendations to policy officials in July.