Explanation of law as amended by Public Law 97-35:

The provision repealed the measure providing for the reimbursement of services in freestanding detoxification facilities.

Effective date:

Effective for services furnished for stays beginning on or after the tenth day after the date of enactment.

Impact:

There would be no budgetary impact.

PROVISIONS RELATING TO SUPPLEMENTARY MEDICAL INSURANCE

(PART B)

INCREASE IN PART B DEDUCTIBLE AND ELIMINATION OF CARRYOVER FROM PRIOR YEARS

Prior law:

Medicare part B beneficiaries are subject to a $60 annual deductible. In addition, the annual part B deductible for any year is reduced by the amount of any covered expenses which the beneficiary incurred in the last 3 months of the preceding calendar year. Explanation of law as amended by Public Law 97-35:

The part B deductible is increased from $60 to $75, beginning on January 1, 1982, and beneficiaries will no longer be permitted to count expenses incurred in the last quarter of the previous calendar year in determining whether they have met the annual part B deductible for the current year.

Effective date:

January 1, 1982.

Impact:

These provisions are expected to reduce medicare outlays by $175, $265 and $295 million in the fiscal years 1982 to 1984, respectively.

CIVIL MONEY PENALTIES

Prior law:

Under prior law, the Secretary of HHS has no independent authority to impose monetary penalties for fraudulent claims under medicare and medicaid. Currently the Secretary's authority is limited to barring practitioners or providers from participation or referring cases to the Department of Justice for criminal prosecution. Explanation of law as amended by Public Law 97-35:

This provision authorizes the Secretary to impose a civil money penalty of up to $2,000 for fraudulent claims under medicare or medicaid, to impose an assessment of twice the amount of the fraudulent claim, and to bar from participation persons determined to have filed a fraudulent claim. There would be a right to written notice and an opportunity for a hearing on the record.

Effective date:
Enactment.

Impact:

This provision will reduce outlays by $7 million for each of the fiscal years from 1982 to 1984.

ELIMINATION OF UNLIMITED OPEN ENROLLMENT

Prior law:

Prior to the Budget Reconciliation Act of 1980, Public Law 96499, beneficiaries who failed to enroll when initially eligible for medicare could thereafter enroll only during an annual enrollment period in January through March of each year. Public Law 96-499 provided, effective April 1, 1981, for continuous open enrollment. Explanation of law as amended by Public Law 97-35:

This provision repeals continuous open enrollment and reinstitutes the January-March enrollment period.

Effective date:

The month after the month of enactment (September, 1981). Impact:

This provision will reduce outlays by $9, $10, and $11 million for fiscal years 1982 to 1984 respectively.

LIMITATION ON REASONABLE CHARGE FOR OUTPATIENT SERVICES Prior law:

Medicare reasonable costs or charges for outpatient services furnished by hospitals, community health centers and clinics are determined without reference to what doctors charge in their offices. Explanation of law as amended by Public Law 97-35:

This provision requires the Secretary to establish by regulation limitations on costs or charges that will be considered reasonable for outpatient services provided by hospitals, community health centers or clinics and by physicians utilizing these facilities. Limitations are to be reasonably related to the reasonable charges in the same area for similar services provided in physicians' offices. Effective date:

Enactment.

Impact:

This provision is expected to reduce SMI outlays by $15, $23, and $27 million for fiscal years 1982 to 1984 respectively.

INCENTIVE REIMBURSEMENT RATE FOR RENAL DIALYSIS SERVICES Prior law:

Public Law 95-292 authorized the Secretary of HHS to develop a reimbursement methodology for renal dialysis services to encourage cost effective delivery of services. No incentive system has yet been implemented.

Explanation of law as amended by Public Law 97-35:

The Secretary of HHS is required to prescribe in regulations a method (or methods) for determining prospectively the amounts of payment to be made for dialysis services furnished by hospitals and by freestanding renal facilities. Separate composite weighted formulae must be calculated for hospital based and for other renal dialysis facilities. Both formulae will be expected to take into account the proportions of patients dialyzing in a facility and those dialyzing at home and the relative costs of providing services in such settings. If, after detailed analysis, the Secretary determines that another method of determining prospectively the amounts of payments to be made for dialysis services would more effectively encourage the efficient delivery of dialysis services and would provide greater incentives for increased use of less costly home dialysis than the dual-composite weighted formula, the Secretary may use such other method (which must differentiate between hospitalbased facilities and other renal dialysis facilities).

Effective date:

Applies to services furnished on or after October 1, 1981. It also requires the Secretary to issue implementing regulations before October 1, 1981.

Impact:

The provision would save $105, $130, and $155 million in fiscal years 1982 to 1984 respectively.

MEDICARE SECONDARY IN THE CASE OF RENAL BENEFICIARIES Prior law:

For individuals eligible for medicare coverage because of kidney failure, medicare benefits are payable without regard to any other health insurance an individual may have.

Explanation of law as amended by Public Law 97-35:

Under the new law, medicare will become the secondary payor for the first 12 months after an individual has been determined to be eligible for end stage renal disease benefits under the medicare program but only where the individual has private health insurance under a group health plan. The Act requires medicare to pay first and recoup from the insurance company such amounts as would normally be payable under such plan in order to minimize inconveniences to the beneficiary. The Act also denies, as a business expense deduction under the tax code, the expenses paid or incurred by an employer for a health plan, if such plan contains a discriminatory provision that reduces or denies payment for renal patients.

Effective date:

October 1, 1981. Tax provision effective for taxable years beginning with 1982.

Impact:

The provision is expected to increase SMI revenues by $95, $165, and $180 million in fiscal years 1982 to 1984 respectively.

APPENDIX D

BRIEF EXPLANATION OF MEDICAID PROGRAM AND INTERACTION WITH AFDC, SSI, AND MEDICARE PROGRAMS