REFORMS IN THE HEALTH BENEFITS PROGRAM.

SEC. 7002. REFORMS IN THE HEALTH BENEFITS PROGRAM. (a) Hospitalization-Cost-Containment Measures.—Section 8902 of title 5, United States Code, is amended by adding at the end the following: “(n) A contract for a plan described by section 8903 (1), (2). or (3), or section 8903a, shall require the carrier— “(1) to implement hospitalization-cost-containment measures, such as measures— “(A) for verifying the medical necessity of any proposed treatment or surgery; “(B) for determining the feasibility or appropriateness of providing services on an outpatient rather than on an inpatient basis; “(C) for determining the appropriate length of stay (through concurrent review or otherwise) in cases involving inpatient care; and “(D) involving case management, if the circumstances so warrant; and 104 STAT. 1388–330 “(2) to establish incentives to encourage compliance with measures under paragraph (1).”. (b) Improved Cash Management.—Section 8909(a) of title 5, United States Code, is amended by adding at the end (as a flush left sentence) the following: “Payments from the Fund to a plan participating in a letter-of-credit arrangement under this chapter shall, in connection with any payment or reimbursement to be made by such plan for a health service or supply, be made, to the maximum extent practicable, on a checks-presented basis (as defined under regulations of the Department of the Treasury).”. (c) Exemption from State Premium Taxes.—Section 8909 of title 5, United States Code, is amended by adding at the end the following: “(f)(1) No tax, fee, or other monetary payment may be imposed, directly or indirectly, on a carrier or an Underwriting or plan administration subcontractor of an approved health benefits plan by any State, the District of Columbia, or the Commonwealth of Puerto Rico, or by any political subdivision or other governmental authority thereof, with respect to any payment made from the Fund. “(2) Paragraph (1) shall not be construed to exempt any carrier or underwriting or plan administration subcontractor of an approved health benefits plan from the imposition, payment, or collection of a tax, fee, or other monetary payment on the net income or profit accruing to or realized by such carrier or underwriting or plan administration subcontractor from business conducted under this chapter, if that tax, fee, or payment is applicable to a broad range of business activity.”. (d) Improved Coordination With Medicare.—Section 8910 of title 5, United States Code, is amended by adding at the end the following: “(d) The Office, in consultation with the Department of Health and Human Services, shall develop and implement a system through which the carrier for an approved health benefits plan described by section 8903 or 8903a will be able to identify those annuitants or other individuals covered by such plan who are entitled to benefits under part A or B of title XVIII of the Social Security Act in order to ensure that payments under coordination of benefits with Medicare do not exceed the statutory maximums which physicians may charge Medicare enrollees.”. (e) Amendments to Public Law 101–76.—Public Law 101–76 (103 Stat. 556) is amended— (1) in subsection (a)(D, by striking “contract year 1990 or 1991,” and inserting “each of contract years 1990 through 1993 (inclusive),”; and (2) in subsection (c), by striking “contract year 1991,” and inserting “a contract year (or any period thereafter),”. (f) Application of Certain Medicare Limits to Federal Employee Health Benefits Enrollees Age 65 or Older.—(1) Section 8904 of title 5, United States Code, is amended by inserting “(a)” before the first sentence and by adding at the end of the section the following new subsection: “(b)(1) A plan, other than a prepayment plan described in section 8903(4) of this title, may not provide benefits, in the case of any retired enrolled individual who is age 65 or older and is not covered to receive Medicare hospital and insurance benefits under part A of title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.), to pay 104 STAT. 1388–331a charge imposed by any health care provider, for inpatient hospital services which are covered for purposes of benefit payments under this chapter and part A of title XVIII of the Social Security Act, to the extent that such charge exceeds applicable limitations on hospital charges established for Medicare purposes under section 1886 of the Social Security Act (42 U.S.C. 1395ww). Hospital providers who have in force participation agreements with the Secretary of Health and Human Services consistent with sections 1814(a) and 1866 of the Social Security Act (42 U.S.C. 13956a) and 1395cc), whereby the participating provider accepts Medicare benefits as full payment for covered items and services after applicable patient copayments under section 1813 of such Act (42 U.S.C. 1395e) have been satisfied, shall accept equivalent benefit payments and enrollee copayments under this chapter as full payment for services described in the preceding sentence. The Office of Personnel Management shall notify the Secretary of Health and Human Services if a hospital is found to knowingly and willfully violate this subsection on a repeated basis and the Secretary may invoke appropriate sanctions in accordance with section 1866(b)(2) of the Social Security Act (42 U.S.C. 1395cc(b)(2)) and applicable regulations. “(2) Notwithstanding any other provision of law, the Secretary of Health and Human Services and the Director of the Office of Personnel Management, and their agents, shall exchange any information necessary to implement this subsection. “(3)(A) Not later than December I, 1991, and periodically thereafter, the Secretary of Health and Human Services (in consultation with the Director of the Office of Personnel Management) shall supply to carriers of plans described in paragraphs (1) through (3) of section 8903 the Medicare program information necessary for them to comply with paragraph (1). “(B) For purposes of this paragraph, the term ‘Medicare program information’ includes the limitations on hospital charges established for Medicare purposes under section 1886 of the Social Security Act (42 U.S.C. 1395ww) and the identity of hospitals which have in force agreements with the Secretary of Health and Human Services consistent with section 1814(a) and 1866 of the Social Security Act (42 U.S.C. 13956(a) and 1395cc).”. (2) The amendments made by this subsection shall apply with respect to contract years beginning on or after January 1, 1992. (g) Effective Date.—Except as provided in subsection (f), the amendments made by this section shall apply with respect to contract years beginning on or after January 1, 1991,