SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veterans Medicare Reimbursement 
Demonstration Act of 1997''.

SEC. 2. ESTABLISHMENT OF DEMONSTRATION PROJECT.

    (a) Authority.--
            (1) In general.--The Secretary of Veterans Affairs and the 
        Secretary of Health and Human Services shall jointly carry out 
        a demonstration project under which the Secretary of Health and 
        Human Services provides the Department of Veterans Affairs with 
        reimbursement, determined in accordance with section 3, from 
        the medicare program for health care services provided to 
        targeted medicare-eligible veterans in or through facilities of 
        the Department of Veterans Affairs selected under subsection 
        (b).
            (2) Duration.--The Secretaries shall conduct the 
        demonstration project during the three-year period beginning on 
        January 1, 1998.
            (3) Waiver of certain medicare requirements.--To the extent 
        necessary to carry out the demonstration project, 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) Selection of Participating Facilities.--
            (1) Designation of service areas covered.--The Secretary of 
        Veterans Affairs shall designate up to three geographic service 
        areas from which facilities are selected to participate in the 
        demonstration project.
            (2) Facility selection.--
                    (A) In general.--The Secretary, in consultation 
                with the Secretary of Health and Human Services, shall 
                establish a plan for the selection of facilities under 
                the jurisdiction of the Secretary and located within a 
                geographic service area designated under paragraph (1) 
                to participate in the project.
                    (B) General criteria.--The selection plan shall 
                favor selection of those facilities that are suited to 
                serve targeted medicare-eligible individuals because--
                            (i) there is a high potential demand by 
                        targeted medicare-eligible veterans for their 
                        services;
                            (ii) they have sufficient capability in 
                        billing and accounting to participate;
                            (iii) they have favorable indicators of 
                        quality of care, including patient 
                        satisfaction; and
                            (iv) they meet other relevant factors 
                        identified in the plan.
                    (C) Facility near closed base.--There shall be at 
                least one facility selected that is in the same 
                catchment area as a military medical facility which was 
                closed pursuant to either of the following laws:
                            (i) The Defense Base Closure and 
                        Realignment Act of 1990 (part A of title XXIX 
                        of Public Law 101-510; 10 U.S.C. 2687 note).
                            (ii) Title II of the Defense Authorization 
                        Amendments and Base Closure and Realignment Act 
                        (Public Law 100-526; 10 U.S.C. 2687 note).
    (c) Voluntary Participation.--Participation of targeted medicare-
eligible veterans in the demonstration project shall be voluntary, 
subject to the capacity of participating facilities and the funding 
limitations specified in section 3.
    (d) Cost Sharing.--The Secretary shall establish cost-sharing 
requirements for veterans participating in the demonstration project. 
Those requirements shall be the same as the requirements that apply to 
targeted medicare-eligible patients at nongovernmental facilities.
    (e) Crediting of Payments.--Payments received by the Secretary 
under the demonstration project shall be credited to the applicable 
Department of Veterans Affairs medical appropriation.

SEC. 3. DETERMINATION OF REIMBURSEMENT AMOUNTS.

    (a) Payments Based on 95 Percent of Regular Medicare Payment 
Rates.--
            (1) In general.--Subject to the succeeding provisions of 
        this section, the Secretary of Health and Human Services shall 
        reimburse the Secretary of Veterans Affairs for services 
        provided under the demonstration project at a rate equal to 95 
        percent of the amounts that otherwise would be payable under 
        the medicare program on a non-capitated basis for such services 
        if the facility were not a Federal facility, were participating 
        in the program, and imposed charges for such services. In cases 
        in which a payment amount may not otherwise be readily 
        computed, the Secretaries shall establish rules for computing 
        equivalent or comparable payment amounts.
            (2) Periodic payments from medicare trust funds.--Payments 
        under this section shall be made--
                    (A) on a periodic basis consistent with the 
                periodicity of payments under the medicare program; and
                    (B) 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.
            (3) Annual limit on medicare payments.--The amount paid to 
        the Department of Veterans Affairs under this section for any 
        year for the demonstration project may not exceed $50,000,000.
    (b) Reduction in Payment for Failure to Maintain VA Effort.--
            (1) In general.--In order to avoid shifting onto the 
        medicare program the costs of the Department of Veterans 
        Affairs for hospital care and medical services for targeted 
        medicare-eligible veterans, the payment amounts under this 
        section for the project for a year shall be reduced by the 
        amount (if any) by which--
                    (A) the amount of the actual VA medical 
                expenditures for targeted veterans (as defined in 
                paragraph (3)) for the fiscal year ending in such year, 
                is less than
                    (B) the amount of the maintenance of effort level 
                for such fiscal year, as determined under paragraph 
                (2).
            (2) Maintenance of effort levels.--The maintenance of 
        effort level for any fiscal year is the amount equal to the 
        maintenance of effort level for the preceding fiscal year or, 
        in the case of fiscal year 1998, the amount of VA medical 
        expenditures for targeted veterans (as defined in paragraph 
        (3)) for fiscal year 1997--
                    (A) increased or decreased by the same percentage 
                as the percentage by which the amount of the medical 
                care appropriation for the Department of Veterans 
                Affairs for that fiscal year exceeds (or is less than, 
                respectively) the amount of such appropriation for the 
                preceding fiscal year; and
                    (B) decreased by the amount of the decrease (if 
                any) in VA medical expenditures for targeted veterans 
                for that fiscal year (relative to the preceding fiscal 
                year) that, as estimated by the Secretaries, results 
                from--
                            (i) a rate of increase in the level of 
                        medical care appropriations for the Department 
                        of Veterans Affairs described in subparagraph 
                        (A) that is less than the general rate of 
                        increase in health care costs; and
                            (ii) the reduction in priority in delivery 
                        of services to targeted medicare-eligible 
                        veterans attributable to the amendments made by 
                        title I of the Veterans' Health Care 
                        Eligibility Reform Act of 1996 (Public Law 104-
                        262; 110 Stat. 3177) and to implementation of 
                        the plan developed pursuant to section 429 of 
                        Public Law 104-204 (110 Stat. 2929).
            (3) VA medical expenditures for targeted veterans 
        defined.--For purposes of this subsection, the term ``VA 
        medical expenditures for targeted veterans'' means, with 
        respect to a fiscal year, the amount expended by the Department 
        of Veterans Affairs during the fiscal year for providing 
        hospital care and medical services under chapter 17 of title 
        38, United States Code to targeted medicare-eligible veterans. 
        Such amount does not include--
                    (A) expenditures for the conduct of medical 
                examinations to adjudicate claims under such title, or
                    (B) expenditures attributable to services for which 
                reimbursement is made under the demonstration project.
    (c) Assuring No Increase in Cost to Medicare Program.--
            (1) Monitoring impact on costs to medicare program.--
                    (A) In general.--The Secretaries, in consultation 
                with the Comptroller General, shall closely monitor the 
                expenditures made under the medicare program for 
                targeted medicare-eligible veterans during the period 
                of the demonstration project compared to the 
                expenditures that would have been made for such 
                veterans during that period if the demonstration 
                project had not been conducted.
                    (B) Auditing by the comptroller general.--Not later 
                than December 31 of each year during which the 
                demonstration project is conducted, the Comptroller 
                General shall determine and submit to the Secretaries 
                and the appropriate committees of Congress a report on 
                the extent, if any, to which the costs of the Secretary 
                of Health and Human Services under the medicare program 
                increased during the preceding fiscal year as a result 
                of the demonstration project.
            (2) Required response in case of increase in costs.--
                    (A) In general.--If the Secretaries find, based on 
                paragraph (1), that the expenditures under the medicare 
                program increased (or are expected to increase) during 
                a fiscal year because of the demonstration project, the 
                Secretaries shall take such steps as may be needed--
                            (i) to recoup for the medicare program the 
                        amount of such increase in expenditures; and
                            (ii) to prevent any such increase in the 
                        future.
                    (B) Steps.--Such steps--
                            (i) under subparagraph (A)(i) shall include 
                        payment of the amount of such increased 
                        expenditures by the Secretary from the current 
                        medical care appropriation of the Department of 
                        Veterans Affairs to the trust funds under the 
                        medicare trust program; and
                            (ii) under subparagraph (A)(ii) shall 
                        include suspending or terminating the 
                        demonstration project (in whole or in part) or 
                        substitution of a lower percentage for 95 
                        percent under subsection (a)(1).

SEC. 4. EVALUATION AND REPORTS.

    (a) Annual Report by Independent Entity.--
            (1) In general.--The Secretaries shall arrange for an 
        independent entity with expertise in the evaluation of health 
        services to conduct an ongoing evaluation of the demonstration 
        project.
            (2) Annual reports.--The entity shall submit a report on 
        the project jointly to the Secretaries and to the appropriate 
        committees of the Congress not later than March 1 following 
        each year during which the project is conducted.
            (3) Assessment.--Each such report shall include the results 
        of the evaluation under subsection (a), including an assessment 
        of each of the following:
                    (A) The cost to the Department of Veterans Affairs 
                of providing care to veterans under the project.
                    (B) Compliance of participating facilities with 
                applicable measures of quality of care, compared to 
                such compliance for other medicare-participating 
                facilities.
                    (C) A comparison of the costs of facilities' 
                participation in the program with the reimbursements 
                provided for services of such facilities.
                    (D) Any savings or costs to the medicare programs 
                from the project.
                    (E) Any change in access to care or quality of care 
                for targeted medicare-eligible veterans participating 
                in the project.
                    (F) Any effect of the project on the access to care 
                of veterans who did not participate in the project and 
                of targeted medicare-eligible veterans.
    (b) Report on Extension and Expansion of Demonstration Project.--
Not later than six months after the date of the submission of the final 
report under subsection (a), the Secretaries shall submit to the 
Congress a report containing their recommendation as to--
            (1) whether to extend the demonstration project or make it 
        permanent;
            (2) whether to expand the project to cover additional sites 
        and areas and to increase the maximum amount of reimbursement 
        under the project in any year; and
            (3) whether the terms and conditions of the project should 
        be continued (or modified) if the project is extended or 
        expanded.
    (c) Recommendation Concerning New Demonstration Project for Payment 
to Managed Health-Care Plans.--Not later than March 1, 1999, the 
Secretaries shall submit to the appropriate committees of the Congress 
a report on the feasibility and advisability of establishing a new 
demonstration project to reimburse the Secretary of Veterans Affairs 
under section 1876(a) of the Social Security Act for health care 
services furnished to targeted medicare-eligible veterans enrolled in 
managed health-care plans established by the Secretary.

SEC. 5. DEFINITIONS.

    For the purpose of this Act:
            (1) Demonstration project; project.--The terms 
        ``demonstration project'' and ``project'' mean the 
        demonstration project carried out under section 2(a).
            (2) Geographic service area.--The term ``geographic service 
        area'' means a field component of the Veterans Health 
        Administration that--
                    (A) is based on a geographic area which encompasses 
                a population of veteran beneficiaries and is defined on 
                the basis of natural patient referral patterns; and
                    (B) provides health care through strategic 
                alliances among Department of Veterans Affairs medical 
                centers, clinics, and other sites.
            (3) Medicare program.--The term ``medicare program'' means 
        the programs of health benefits provided under title XVIII of 
        the Social Security Act (42 U.S.C. 1395 et seq.).
            (4) Secretary; secretaries.--Unless otherwise provided, the 
        term ``Secretary'' means the Secretary of Veterans Affairs and 
        the term ``Secretaries'' means the Secretary of Veterans 
        Affairs and the Secretary of Health and Human Services acting 
        jointly.
            (5) Targeted medicare-eligible veteran.--The term 
        ``targeted medicare-eligible veteran'' means an individual--
                    (A) who is a veteran (as defined in section 101(2) 
                of title 38, United States Code) described in section 
                1710(a)(3) of title 38, United States Code;
                    (B) who is entitled to hospital insurance benefits 
                under part A of the medicare program and enrolled in 
                the supplementary medical insurance program under part 
                B of the medicare program; and
                    (C) whose annual income is an amount between the 
                applicable income threshold under section 1722(b) of 
                title 38, United States Code, and the amount equal to 
                three times the amount of such applicable income 
                threshold.
Veterans Medicare Reimbursement Demonstration Act of 1997 - Directs the Secretaries of Veterans Affairs (VA) and Health and Human Services (HHS) to jointly carry out a demonstration project, during the three-year period beginning on January 1, 1998, under which the HHS Secretary provides the VA with reimbursement from the Medicare program (title XVIII of the Social Security Act) for health-care services provided to targeted Medicare-eligible veterans in or through selected VA medical centers.  Provides for the waiver of certain Medicare requirements in order to carry out the project.  Requires the VA Secretary to establish a plan for the selection of up to 12 medical centers located in geographically dispersed locations for project participation.  Requires at least one medical center selected to be in the same catchment area as a military medical facility which was closed pursuant to a defense base closure law. 
 Requires project participation to be voluntary.  Directs the VA Secretary to establish requirements for participating veterans. 
Authorizes the VA Secretary, in carrying out the demonstration project, to operate managed health care plans, either through the VA or public or private entities.  Directs the Secretary to prescribe minimum health care benefits to be provided under such plans.  Allows the Secretary to establish a managed health care plan only after:  (1) reporting to the Congress a plan for the use of such centers and facilities; and (2) receiving from the VA Inspector General certain certifications relating to costs and conformity with health plan requirements. 
Requires project reimbursement at a rate equal to 95 percent of amounts that would otherwise be payable under the Medicare program if the facility was not a Federal facility, was participating in the project, and imposed charges for such services.  Excludes certain amounts from such computation.  Requires reimbursement payments periodically from Medicare trust funds, with an annual Medicare payment limit of $50 million, of which no more than $10 million may be used for the conduct of the project through managed health care plans. Requires reductions in such payments when the amount of the actual VA effort level for targeted veterans for that fiscal year is less than the amount of the VA effort level for FY 1997. 
Directs the Secretaries to compare the expenditures made under the project to the expenditures that would have been made for such veterans if the project had not been conducted, and to take appropriate steps if the expenditures under the Medicare program increased as a result of the project.  Requires annual reports by the Comptroller General. 
Prohibits the VA Secretary from carrying out a demonstration project at a medical center until 30 days after reporting to the Congress on plans for the selection of appropriate centers. 
Requires:  (1) an independent entity to conduct an ongoing project evaluation and report results to the Secretaries and appropriate congressional committees; and (2) a report from the Secretaries to the Congress on possible project extension and expansion.
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