H.R. 3950 (104th): GI Bill of Health

104th Congress, 1995–1996. Text as of Aug 02, 1996 (Introduced).

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HR 3950 IH

104th CONGRESS

2d Session

H. R. 3950

To amend title 38, United States Code, to reorganize the veterans health system; to improve access to, and the quality and efficiency of, care provided to the Nation’s veterans; to operate the veterans health system based on the principles of managed care, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

August 2, 1996

Mr. LONGLEY introduced the following bill; which was referred to the Committee on Veterans’ Affairs


A BILL

To amend title 38, United States Code, to reorganize the veterans health system; to improve access to, and the quality and efficiency of, care provided to the Nation’s veterans; to operate the veterans health system based on the principles of managed care, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) SHORT TITLE- This Act may be cited as the ‘GI Bill of Health’.

    (b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

      Sec. 1. Short title; table of contents.

      Sec. 2. Findings.

      Sec. 3. Purposes.

      Sec. 4. Veterans Health Care Security.

      Sec. 5. Technical and conforming amendments to chapter 17 of title 38, United States Code.

      Sec. 6. Technical and conforming amendments to title 38, United States Code.

      Sec. 7. Effective date.

SEC. 2. FINDINGS.

    The Congress finds as follows:

      (1) The Veterans Health Administration of the Department of Veterans Affairs operates one of the Nation’s largest hospital and health care systems, consisting of 172 medical centers, 375 ambulatory clinics, 133 nursing homes, 39 domicilaries and 202 counseling centers.

      (2) The veterans health system is a national resource which must be preserved to ensure that all deserving veterans, including those who have suffered service-connected disabilities, receive the specialized care which only that system provides.

      (3) The costs of operating the veterans health system have increased substantially in recent years, thus jeopardizing the ability of the Veterans Health Administration to provide needed services to eligible veterans under funding levels established by law.

      (4) In response to escalating costs and the limited availability of appropriated funds, the Department of Veterans Affairs has imposed a complex set of restrictions on access to the veterans health system, thereby reducing eligibility for care and discouraging otherwise-eligible veterans from seeking care.

      (5) Restrictions on eligibility for services and access to the veterans health system, imposed as cost-control measures, defeat the purpose for which the system was established an undermine the compact between the United States and those who have served in uniform.

      (6) The Nation’s 27,000,000 veterans of military service, having sacrificed to protect their country, now require a veterans health system which provides comprehensive care for themselves and their dependents; one which provides services necessary for the treatment of service-connected disabilities at no charge, and provides other services on a cost-recovery basis where the veteran has health insurance or resources otherwise adequate for payment.

      (7) The veterans health system in order to offer comprehensive services must be reorganized based upon the principles of managed care and have the authority to recover costs, where appropriate, for providing such services.

SEC. 3. PURPOSES.

    The purposes of this Act are as follows:

      (1) To reorganize the veterans health system to improve access to, and the quality and efficiency of, care for the Nation’s veterans.

      (2) To operate the veterans health system based upon the principles of managed care.

      (3) To ensure all veterans with service-connected disabilities have access to all services necessary for the treatment of such disabilities at no charge.

      (4) To ensure all special-category veterans, as defined in law, along with indigent veterans and veterans with service-connected disabilities, receive a continuum of health care services at no charge or reduced charge.

      (5) To control the cost of operating the veterans health care system by encouraging veterans who do not currently receive care in Department of Veterans Affairs facilities to enroll in Veterans Health Plans.

      (6) To improve the long-term financial health of the veterans health system by attracting resources into the system from other Federal programs, third-party payers, and employers of veterans.

      (7) To permit the veterans health system to retain all payments made to the Department of Veterans Affairs for health care services.

      (8) To eliminate unnecessary, duplicative, or contradictory regulations that hamper the ability of the veterans health system to operate effectively and efficiently.

SEC. 4. VETERANS HEALTH CARE SECURITY.

    Title 38, United States Code, is amended by inserting after chapter 17 the following new chapter:

‘Chapter 18--Veterans Health System

‘subchapter i--enrollment

Sec.

      ‘1801. Enrollment of veterans.

      ‘1802. Enrollment of veterans’ dependents.

      ‘1803. Enrollment of CHAMPVA eligibles.

      ‘1804. Enrollment process.

‘subchapter ii--eligibility

      ‘1805. Eligibility definitions.

      ‘1806. Eligibility for benefits.

‘subchapter iii--benefits

      ‘1807. Basic benefits package.

      ‘1808. Comprehensive benefits package.

      ‘1809. Supplemental health benefits packages.

‘subchapter iv--payment policies

      ‘1810. Payment policies for entitled veterans.

      ‘1811. Payment policies for certain veterans and veterans’ dependents enrolled in a Veterans Health Plan.

      ‘1812. Payment policies for veterans eligible for federally-administered health care programs.

      ‘1813. Payment policies for eligible veterans and veterans’ dependents with Medicare Supplemental health insurance coverage.

      ‘1814. Payment policies for fee-for-service benefits.

‘subchapter v--financing

      ‘1815. Creation of Department of Veterans Affairs Health Plan Fund.

      ‘1816. Guaranteed funding of Federal Costs.

      ‘1817. Resource allocation.

‘subchapter vi--delivery of health care services

      ‘1818. Responsibilities of the Secretary of Veterans Affairs.

      ‘1819. Responsibilities of Veterans Health Plans and Veterans Health Plan Directors.

‘subchapter vii--state health care systems

      ‘1820. State health care reform.

      ‘1821. Applicability of State law.

      ‘1823. General definitions.

‘subchapter viii--general provisions

      ‘1822. Budget reporting requirements.

‘SUBCHAPTER I--ENROLLMENT

‘Sec. 1801. Enrollment of veterans

    ‘The Secretary shall establish a process for the enrollment into Veterans Health Plans of entitled and eligible veterans.

‘Sec. 1802. Enrollment of veterans’ dependents

    ‘The Secretary shall establish a process for the enrollment into Veterans Health Plans of the dependents of enrolled veterans, as defined in section 1805(c) of this title.

‘Sec. 1803. Enrollment of CHAMPVA eligibles

    ‘The Secretary shall establish a process for the enrollment into Veterans Health Plans, in the same manner as a veteran, of individuals who are eligible for benefits under section 1713 of this title.

‘Sec. 1804. Enrollment process

    ‘(a) The Secretary shall provide for a continuous open enrollment period of 18 months following implementation of the GI Bill of Health, during which period entitled and eligible veterans and their dependents may first enroll in a Veterans Health Plan.

    ‘(b) For each entitled or eligible veteran, when the veteran first becomes eligible to enroll in a Veterans Health Plan, there shall be an initial enrollment period of not less than 30 days during which the veteran may first enroll in such Veterans Health Plan.

    ‘(c) The Secretary shall establish an annual period of not less than 30 days during which entitled and eligible veterans may enroll in a Veterans Health Plan. Such annual enrollment period shall coincide with the annual open season under the Federal Employees Health Benefits Program as established under chapter 89 of title 5. All Veterans Health Plans shall designate the same annual enrollment period.

    ‘(d) If a veteran enrolls in a Veterans Health Plan, such veteran may at the same time enroll the veteran’s dependents in the Plan as a family enrollment.

    ‘(e) In the case of a veteran who experiences a change of family composition through marriage, divorce, birth or adoption of a child, or similar circumstances, the Secretary shall provide for a special enrollment period in which the veteran is eligible to change the individual or family basis of enrollment in a Veterans Health Plan.

    ‘(f) Enrollment of a dependent of an enrolled veteran shall be considered timely if a request for enrollment is made within 30 days of a marriage or birth or adoption of a child if family coverage is available as of such date.

    ‘(g) Dependent coverage shall become effective on the date of the marriage of a spouse or the date of the birth or adoption of a child.

    ‘(h) Coverage of a dependent under a policy under this chapter may not be canceled by reason of the death of the veteran, except that coverage of a dependent spouse or child of a spouse may be canceled in the event that the spouse remarries, unless such remarriage is annulled or made void by a court of law.

    ‘(i) The Secretary may terminate coverage for nonpayment of premiums.

    ‘(j) The Secretary shall guarantee that the terms of coverage, including the amount of any premiums or other cost-sharing requirements, and the availability of benefits shall not be changed for a full enrollment period of not less than one year, notwithstanding an enrolled veteran’s change in income or degree of service-connected disability, except that the Secretary shall have the discretion to reduce or eliminate the premium and cost-sharing charges for any veterans who qualified as entitled under section 1805(a)(8) of this title.

‘SUBCHAPTER II--ELIGIBILITY

‘Sec. 1805. Eligibility definitions

    ‘(a) An ‘entitled’ veteran under this chapter includes the following categories of veterans:

      ‘(1) Any veteran with a service-connected disability.

      ‘(2) Any veteran whose discharge or release from the active military, naval or air service was for a disability incurred or aggravated in the line of duty.

      ‘(3) Any veteran who is in receipt of, or who, but for a suspension pursuant to section 1151 of this title (or both such a suspension and the receipt of retired pay), would be entitled to disability compensation, but only to the extent that such a veteran’s continuing eligibility for such care is provided for in the judgment or settlement provided for in such section.

      ‘(4) Any veteran who is a former prisoner of war.

      ‘(5) Any veteran of the Mexican border period or World War I.

      ‘(6) Any veteran who is unable to defray the expenses of necessary care as determined under section 1722(a) of this title.

      ‘(7) Any veteran who served on active duty in the Republic of Vietnam during the Vietnam era and who the Secretary finds may have been exposed during such service to dioxin or was exposed during such service to a toxic substance found in a herbicide or defoliant used in connection with military purposes during that era, notwithstanding that there may be insufficient medical evidence to conclude that such illness or disability may be associated with such exposure.

      ‘(B) Any veteran who the Secretary finds was exposed to ionizing radiation from the detonation of a nuclear device in connection with such veteran’s participation in the test of such a device or with the American occupation of Hiroshima and Nagasaki, Japan, during the period beginning on September 11, 1945, and ending on July 1, 1946, notwithstanding that there may be insufficient medical evidence to conclude that such illness or disability may be associated with such exposure.

      ‘(C) Any veteran who served on active duty in the Southwest Asia theater of operations during the Persian Gulf War and who the Secretary finds has an illness or disability which may be associated with exposure to a toxic substance or environmental hazard, notwithstanding that there may be insufficient medical evidence to conclude that such illness or disability may be associated with such exposure.

      ‘(D) Any veteran who while on active duty was exposed to mustard gas while participating in full-body, field, or chamber experiments to test protective clothing or equipment during World War II and who the Secretary finds has an illness or disability which may be associated with such exposure, notwithstanding that there may be insufficient medical evidence to conclude that such illness or disability may be associated with such exposure.

      ‘(8) Any veteran who suffers a catastrophic illness or injury, payment for which would render such veteran destitute as determined under criteria established by the Secretary.

      ‘(9) Any veteran proven to be uninsurable in the private health insurance market, as determined under criteria established by the Secretary.

    ‘(b) An ‘eligible’ veteran under this chapter shall include all veterans who do not qualify under subsection (a) as ‘entitled’.

    ‘(c) A ‘dependent of a veteran’ under this chapter shall include, for any veteran enrolled in a Veterans Health Plan--

      ‘(1) a spouse;

      ‘(2) a widow or widower who has not remarried, unless such remarriage has been annulled or made void by a court of law; and

      ‘(3) an unmarried child, spouse’s child or adopted child who--

        ‘(A) has not attained the age of 21;

        ‘(B) has not attained the age of 23, is enrolled in a full-time course of study at an institution of higher learning, and is in fact dependent on the veteran for one half of the child’s support; or

        ‘(C) is incapable of self-support due to a mental or physical incapacity that occurs while a dependent of a veteran under subparagraph (A) or (B), and is in fact dependent on the veteran for one half of the child’s support.

Sec. 1806. Eligibility for benefits

    ‘(a) Upon enrollment in a Veterans Health Plan, a veteran who qualifies as entitled under section 1805(a)(1) of this title shall receive--

      ‘(1) any medically necessary and appropriate care and services associated with such service-connected disability or illness; and

      ‘(2) any medically necessary and appropriate care and services for an established disability or illness determined to be proximately due to or the result of such service-connected disability or illness, in the same manner and to the same extent as if such disability or illness is service-connected.

    ‘(b)(1) Upon enrollment in a Veterans Health Plan, a veteran who qualifies as entitled under section 1805(a)(1) of this title and has a service-connected disability rated 50 percent or greater shall receive the medically necessary and appropriate care and services included in the comprehensive benefits package, as defined in section 1808 of this title, and the specialized services supplemental health benefits package, as defined in section 1809(a) of this title, and any care and services otherwise provided under the terms and conditions of chapter 17 of this title.

    ‘(2) Upon enrollment in a Veterans Health Plan, a veteran who qualifies as entitled under section 1805(a)(1) of this title and has a comprehensive service-connected disability rated less than 50 percent shall--

      ‘(A) receive the medically necessary and appropriate care and services in the basic benefits package as defined in section 1807 of this title; or

      ‘(B) be eligible to purchase the comprehensive benefits package, as defined in section 1808 of this title, at a premium discount, as set forth in subsection (f).

    The care and services provided in this subsection shall be in addition to care and services provided under subsection (a).

    ‘(3) Upon enrollment in a Veterans Health Plan, a veteran who qualifies as entitled under sections 1805(a)(2)-(a)(9) of this title shall receive the medically necessary and appropriate care and services included in the basic benefits package as defined in section 1807 of this title. When determined by a health care provider employed by or under contract with the Department under guidelines established by the Secretary, such veteran may also receive additional, specific and medically-appropriate care and services included in chapters 17 and 18 of this title when such care is deemed related to the circumstances of such veteran’s entitlement.

    ‘(c)(1) A veteran who qualifies as eligible under section 1805(b) of this title may enroll in a Veterans Health Plan to receive the medically necessary and appropriate care and services included in the basic, comprehensive, or supplemental health benefits packages, as defined in sections 1807, 1808, and 1809 of this title, respectively.

    ‘(2) A veteran who qualifies as entitled under section 1805(a)(1) of this title and has a non-compensable service-connected disability shall be eligible to enroll in a Veterans Health Plan on the same basis as a veteran who qualifies as eligible under subsection 1805(b) of this title. The care and services provided under this paragraph shall be in addition to care and services provided under subsection (a).

    ‘(d) A dependent of an enrolled veteran may enroll in a Veterans Health Plan to receive the medically necessary and appropriate services included in the basic, comprehensive, or supplemental health benefits package as defined in sections 1807, 1808, and 1809(c) of this title, respectively. A dependent of a veteran may not receive the specialized services supplemental health benefits package defined in section 1809(a) and (b) of this title.

    ‘(e) A veteran may receive the medically necessary and appropriate care and services contained in the comprehensive benefits package, defined in section 1808 of this title, or a supplemental health benefits package, defined in section 1809 of this title, with the exception of the long term care benefits provided under subsection (b) of such section, on a fee-for-service basis.

    ‘(f) A veteran who qualifies as entitled under section 1805(a)(1) of this title and has a compensable service-connected disability rated at less than 50 percent and enrolls in a Veterans Health Plan to receive the care and services included in the comprehensive health benefits package, as defined in section 1808 of this title, in accordance with subsection (b), shall be eligible to receive from the Secretary a premium discount equal to--

      ‘(1) 80 percent of the individual premium, for a veteran with a service-connected disability rated at 40 percent;

      ‘(2) 60 percent of the individual premium, for a veteran with a service-connected disability rated at 30 percent;

      ‘(3) 40 percent of the individual premium, for a veteran with a service-connected disability rated at 20 percent; and

      ‘(4) 20 percent of the individual premium, for a veteran with a service-connected disability rated at 10 percent.

    ‘(g) The Secretary shall guarantee that the terms of coverage under a Veterans Health Plan benefits package, including the amount of any premium or other cost-sharing requirement, and the availability of benefits under a Veterans Health Plan benefits package, shall not be changed for a full enrollment period of not less than one year, notwithstanding an enrolled veteran’s change in income or degree of service-connected disability, except that the Secretary shall have the discretion to reduce or eliminate the premium and cost-sharing charges for any veteran who qualifies under section 1805(a)(8) of this title.

‘SUBCHAPTER III--BENEFITS

‘Sec. 1807. Basic benefits package

    ‘(a) The Secretary shall have the authority to establish a basic benefits package consisting of the following items, care, and services:

      ‘(1) Hospital services.

      ‘(2) Services of health professionals.

      ‘(3) Women’s health services.

      ‘(4) Medical and surgical services.

      ‘(5) Outpatient services.

      ‘(6) 24-hour emergency services.

      ‘(7) Preventive health care services, including those services defined in section 1701(9) of this title.

      ‘(8) Diagnostic services.

    ‘(b) The Secretary shall establish an individual and family schedule of premiums, deductibles, copayments, and coinsurance charges for the basic benefits package created under this section, based upon the fully-allocated cost to provide the items, care, and services set forth in this section. The annual deductible under the basic benefits package shall be set a rate equivalent to two times the deductible established under section 1808(b) of this title for the comprehensive benefits package.

    ‘(c) The Secretary shall not be required to provide any care or service listed in the basic benefits package created under this section within a Department facility, so long as such service is provided through a provider contract, medical resource-sharing agreement, or similar arrangement.

‘Sec. 1808. Comprehensive benefits package

    ‘(a) The Secretary shall have the authority to establish a comprehensive benefits package consisting of the following items, care, and services:

      ‘(1) Hospital services, including psychiatric hospital care.

      ‘(2) Services of health professionals.

      ‘(3) Medical and surgical services.

      ‘(4) Outpatient services.

      ‘(5) 24-hour emergency services.

      ‘(6) Preventive care services, including those services defined in section 1701(9) of this title.

      ‘(7) Diagnostic services.

      ‘(8) Women’s health services.

      ‘(9) Pediatric services.

      ‘(10) Mental health and substance abuse prevention and treatment.

      ‘(11) Hospice care.

      ‘(12) Home health care.

      ‘(13) Extended care services.

      ‘(14) Authorized transportation services.

      ‘(15) Durable medical equipment.

      ‘(16) Outpatient prescription drugs and biologicals.

      ‘(17) Investigational devices and treatments.

      ‘(18) Routine vision testing and eye care services.

    ‘(b) The Secretary shall establish an individual and family schedule of premiums, deductibles, copayments, and coinsurance charges for the comprehensive benefits package created under this section, based upon the fully-allocated cost to provide the items, care, and services set forth in this section.

    ‘(c) The Secretary shall have the discretion to add benefits to the comprehensive benefits package created under this section upon a finding that such additional benefits are necessary to provide effective and cost-efficient health care to veterans.

    ‘(d) The Secretary shall not be required to provide any care or service listed in the comprehensive benefits package created under this section within a Department facility, so long as such care or service provided through a provider contract, medical resource-sharing agreement, or similar arrangement.

‘Sec. 1809. Supplemental health benefits packages

    ‘(a)(1) The Secretary shall provide to veterans the care and services authorized under chapter 17 of this title in accordance with the terms and conditions applicable to such care and services under such chapter, notwithstanding whether such care and services are included in the basic or comprehensive benefits packages established under sections 1807 and 1808 of this title, respectively. Care and services provided under this subsection shall be administered by Veterans Health Plans as a specialized services supplemental health benefits package and shall include prosthetic and orthotic services, blind rehabilitation services, services necessary for the rehabilitation of veterans with spinal cord dysfunction, and treatment for chronic psychiatric illnesses such as Post Traumatic Stress Disorder (PTSD). The specialized services supplemental health care benefits package may include long-term care services only to the extent provided under subsection (b).

    ‘(2)(A) In order to meet the special needs of veterans, the Secretary may offer to veterans described in subparagraph (B) one or more supplemental health benefits packages for care and services provided under chapter 17 of this title but not otherwise included in the basic or comprehensive benefits packages established under sections 1807 and 1808 of this title, respectively, and not otherwise provided under subsection (b).

    ‘(B) A veteran may be offered a specialized services supplemental health benefits package under this subsection only if such veteran does not otherwise qualify to receive such care and services under paragraph (1).

    ‘(C) The Secretary shall establish premiums, deductibles, copayments, and coinsurance charges for a specialized services supplemental health benefits package based upon the fully-allocated cost to provide such services.

    ‘(b) The Secretary shall have the discretion to provide long-term care services (including nursing home care, domiciliary care, respite care, adult day care, home health care, and community residential care) to veterans under the authority provided in chapter 17 of this title in accordance with the terms and conditions to such care under such chapter.

    ‘(c)(1) The Secretary may establish and offer to veterans and veterans’ dependents supplemental health benefits packages for care and services, not otherwise provided in the basic, comprehensive or specialized services supplemental health benefits packages established in sections 1807, 1808, and 1809(a) of this title, respectively.

    ‘(2) The Secretary shall establish a schedule of premiums, deductibles, copayments, and coinsurance charges for supplemental health benefits packages established under this subsection, based upon the fully-allocated cost to provide such care and services. For the purposes of paragraph (1), such schedule shall include both an individual and a family rate.

‘SUBCHAPTER IV--PAYMENT POLICIES

‘Sec. 1810. Payment policies for entitled veterans

    ‘(a) The Secretary may not impose any charge (whether a premium, deductible, copayment, coinsurance, or other amount)--

      ‘(1) for any medically necessary and appropriate care or services provided under section 1806(a) of this title to a veteran who qualifies as entitled under section 1805(a)(1) of this title;

      ‘(2) for any medically necessary and appropriate care or services provided under section 1806(b)(1) of this title to a veteran who qualifies as entitled under section 1805(a)(1) of this title and has a service-connected disability rated at 50 percent or greater;

      ‘(3) for any medically necessary and appropriate care or services provided under section 1806(b)(2)(A) of this title to a veteran who qualifies as entitled under section 1805(a)(1) of this title and has a compensable service connected disability rated at less than 50 percent and does not choose to purchase the comprehensive benefits package under section 1806(b)(2)(B) of this title; or

      ‘(4) for any medically necessary and appropriate care or services provided under section 1806(b)(3) of this title to a veteran who qualifies as entitled under sections 1805(a)(2)-(a)(9) of this title.

    ‘(b) The Secretary shall grant a premium discount for the purchase of the comprehensive benefits package established in section 1808 of this title in accordance with the provisions of section 1806(f) of this title for any medically necessary and appropriate care and services provided under section 1806(b)(2)(B) of this title. Such premium discount shall be based upon the individual premiums established under section 1808(b) of this title.

‘Sec. 1811. Payment policies for certain veterans and veterans’ dependents enrolled in a Veterans Health Plan

    ‘The Secretary shall establish premiums, copayments, deductibles, and coinsurance charges for care and services provided under sections 1807, 1808 and 1809 of this title to veterans and veterans’ dependents who enroll in a Veterans Health Plan to receive such care and services under sections 1806(c), 1806(d), 1809(a)(2) and 1809(c) of this title. The Secretary shall set such rates based upon the fully-allocated cost to provide care. The cost to provide care shall not take into account costs otherwise recovered by the Secretary under section 1816 of this title.

‘Sec. 1812. Payment policies for veterans eligible for federally-administered health care programs

    ‘(a) For purposes of this section, the term ‘federally-administered health care program’ shall include Medicare and Medicaid, as established in the Social Security Act; the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), as established under chapter 55 of title 10 or its successor; the Federal Employees Health Benefits Program (FEHBP), as established under chapter 89 of title 5; and the Indian Health Service (IHS), as established under the Indian Health Care Improvement Act (25 U.S.C. 1601 et seq.).

    ‘(b) For purposes of any federally-administered health care program, a Veterans Health Plan or Department facility shall be deemed to be a qualified provider or carrier, notwithstanding any other provision of law.

    ‘(c) The Secretary of health and Human Services, the Director of the Office of Personnel Management, the Secretary of the Interior, the Secretary of Defense, and any other administrator of a federal health care program shall enter into an

agreement with the Secretary to treat the Veterans Health Plan as a qualified provider or carrier, including treatment as a qualified Medicare Health Maintenance Organization as defined in section 1876 of the Social Security Act, for veterans covered by this chapter, in any case in which the Secretary seeks to enter into such an agreement.

    ‘(d) In the case of care provided under this chapter to a veteran who is eligible for benefits under a federally-administered health care program, the federally-administered health care program shall reimburse the Veterans Health Plan or facility providing services as a qualified provider on the same basis as that program reimburses other qualified providers.

    ‘(e) When the Secretary provides care--

      ‘(1) under section 1806(a) of this title to a veteran who qualifies as entitled under section 1805(a)(1) of this title;

      ‘(2) under section 1806(b)(1) of this title to a veteran who qualifies as entitled section 1805(a)(1) of this title and has a service-connected disability rated at 50 percent or greater;

      ‘(3) under section 1806(b)(2)(a) of this title to a veteran who qualifies as entitled under section 1805(a)(1) of this title and has a compensable service-connected disability rated at less than 50 percent and does not choose under section 1806(b)(2)(B) of this title to purchase the comprehensive benefits package established in section 1808 of this title; or

      ‘(4) under section 1806(b)(3) of this title to a veteran who qualifies as entitled under sections 1805(a)(2)-(a)(9) of this title;

    the veteran shall not be required to pay any otherwise applicable deductible or copayment that is not covered by the federally-administered health program, notwithstanding any other provision of law.

    ‘(f) When the Secretary provides care to any veteran not described in subsection (e), the Secretary shall require such veteran to pay to the Veterans Health Plan any otherwise applicable deductible or copayment that is not covered by the federally-administered health program.

‘Sec. 1813. Payment policies for eligible veterans and veterans’ dependents with Medicare Supplemental health insurance coverage

    ‘When the Secretary provides care on an enrolled or fee-for-service basis to--

      ‘(1) a veteran described in section 1806(c) of this title who has coverage under a Medicare Supplemental health insurance plan as established under the Social Security Act; or

      ‘(2) a veteran’s dependent who has coverage under a Medicare Supplemental health insurance plan as established under the Social Security Act; the Secretary has the authority to establish, charge, recover and collect payment for such care or services from the Medicare Supplemental health insurance plan to the extent that the veteran or veteran’s dependent (or the provider of the care or services) would be eligible to receive payment for such care or services from such party if the care or services had not been furnished by the Secretary.

‘Sec. 1814. Payment policies for fee-for-service benefits

    ‘The Secretary shall establish and charge rates for care and services provided to veterans who elect to obtain services in a Veterans Health Plan on a fee-for-service basis without enrolling in a Veterans Health Plan. Such rates shall be based upon the fully-allocated cost to provide the care and services received.

‘SUBCHAPTER V--FINANCING

‘Sec. 1815. Creation of Department of Veterans Affairs Health Plan Fund

    ‘(a)(1) There is hereby established in the Treasury a revolving fund to be known as Department of Veterans Affairs Health Plan Fund (Veterans Health Plan Fund).

    ‘(2) The Secretary of the Treasury shall deposit into the Veterans Health Plan Fund the balance of funds remaining in the Medical-Care Cost Recovery Fund as of the date of the enactment of this chapter. If the balance in the Medical-Care Cost Recovery Fund on that date is less than $0, $0 shall be credited to the Veterans Health Plan Fund.

    ‘(b) Any amount received by the Department by reason of the furnishing of health care services to a veteran or veteran’s dependent, including amounts received as premiums, copayments, coinsurance, deductibles, reimbursements from private health insurance or federally-administered health plans and from other out-of-pocket payments made by veterans, shall be credited to the Veterans Health Plan Fund.

    ‘(c) Amounts in the Veterans Health Plan Fund shall be available until expended by the Secretary for the delivery of health care services under chapters 17 and 18 of this title.

‘Sec. 1816. Guaranteed funding of Federal costs

    ‘(a) The Secretary of the Treasury shall deposit into the Veterans Health Plan Fund on the first day of each fiscal-year quarter, from amounts not otherwise appropriated, the amount certified to the Secretary of the Treasury under subsection (b) with respect to that quarter.

    ‘(b) Not later than 30 days before the beginning of each fiscal-year quarter, the Secretary of Veterans Affairs shall certify to the Secretary of the Treasury the amount determined for that quarter under this subsection.

      ‘(1) The amount to be certified to the Secretary of the Treasury for any fiscal-year quarter shall be the amount equal to--

        ‘(A) the product of--

          ‘(i) the projected number of veterans who qualify as entitled under section 1805(a)(1) of this title and have a service-connected disability rated at 50 percent plus the projected number of veterans who qualify as entitled under section 1805(a)(2)-(a)(9) of this chapter; and

          ‘(ii) the capitated enrollment amount for such categories of veterans; plus

        ‘(B) the product of--

          ‘(i) the projected number of veterans who qualify as entitled under section 1805(a)(1) of this title and have a compensable service-connected disability rated at less than 50 percent; and

          ‘(ii) the capitated enrollment amount for such category of veterans; plus

        ‘(C) the product of--

          ‘(i) the projected number of other veterans who will receive care and services under the provisions of chapters 17 and 18 of this title at no charge to the individual or to a provider other than the Department; and

          ‘(ii) the capitated enrollment amount for such categories of veterans; plus

        ‘(D) the product of--

          ‘(i) the projected number of veterans’ dependents who qualify for care under section 1803 of this title; and

          ‘(ii) the capitated enrollment amount for such category of veterans’ dependents.

      ‘(2) In setting the capitated enrollment amounts described in paragraph (1), the Secretary shall deduct any amount collected for such care from any party, including amounts recovered from other agencies of the Federal Government.

      ‘(3) The Secretary shall adjust future certifications under this subsection to take account of differences between actual and projected numbers of qualified veterans and veterans’ dependents.

    ‘(c) The initial capitated enrollment amounts described in subsection (b) shall be determined by the Secretary using the most recent cost data available as of the time of the determination, adjusted for inflation to the date of the determination based upon the medical care consumer price index calculated by the Bureau of Labor statistics, and taking into account--

      ‘(1) the annual, fully-allocated cost incurred under prior law in providing care and services at no charge to veterans and veterans’ dependents;

      ‘(2) an estimate of the annual, fully-allocated cost to provide the care and services required by this chapter to be furnished at no charge to veterans and veterans’ dependents, including an estimate of projected utilization; and

      ‘(3) an estimate of the annual, fully-allocated cost to provide a premium discount to veterans who qualify as entitled under section 1805(a)(1) of this title and who choose under section 1806(b)(2)(B) of this title to purchase the comprehensive benefits package established in section 1808 of this title, including an estimate of projected utilization.

    ‘(d) For each fiscal year after the initial capitated enrollment amounts are established, the capitated enrollment amounts described in subsection (b) shall be determined by the Secretary using the most recent cost data available as of the time of the determination, adjusted for inflation to the date of the determination based upon the medical care consumer price index calculated by the Bureau of Labor statistics, and taking into account--

      ‘(1) the annual, fully-allocated cost to provide the care and services required by (this chapter) to be furnished at no charge to veterans and veterans’ dependents, including an estimate of projected utilization; and

      ‘(2) for purposes of calculating the capitated enrollment amount in subsection (b)(1)(B), the annual, fully-allocated cost to provide a premium discount under the terms set forth in section 1806(f) of this title to veterans who qualify as entitled under section 1805(a)(1) of this title and who choose under section 1806(b)(2)(B) of this title to purchase the comprehensive benefits package established in section 1808 of this title, including an estimate of projected utilization.

    ‘(e) The Secretary shall include in the calculation of the capitated annual enrollment amounts the cost of carrying out the prosthetic and other medical research functions of the Department.

‘Sec. 1817. Resource allocation

    ‘(a) The Secretary shall allocate at least 75 percent of amounts deposited in the Veterans Health Plan Fund to the Veterans Health Plan or Department facility that provided the care or services for which payment was made. In carrying out this subsection, the Secretary is authorized to create regional revolving health plan funds for each Veterans Health Plan or Department facility.

    ‘(b) The Secretary shall establish procedures for utilizing not more than 25 percent of the amounts deposited in the Veterans Health Plan Fund to operate and maintain the veterans health system and to ensure that Department resources and health care services are allocated in a reasonable, efficient, and equitable manner throughout the United States.

    ‘(c) A Veterans Health Plan may retain 100 percent of the proceeds of any contract with non-Department entities for the use of or access to Department health care facilities, equipment, or personnel under a medical resource-sharing agreement. This subsection does not apply to contracts for services rendered to veterans under the provisions of this chapter.

‘SUBCHAPTER VI--DELIVERY OF HEALTH CARE SERVICES

‘Sec. 1818. Responsibilities of the Secretary of Veterans Affairs

    ‘(a)(1) The Secretary shall administer the veterans health system through use of the model of medical practice known as ‘managed care’. In implementing a managed care system, the Secretary shall, to the extent possible--

      ‘(A) shift the focus of health care provided by the veterans health system to primary care;

      ‘(B) established enhanced quality assurance mechanisms; and

      ‘(C) establish utilization review procedures to prevent inefficient practices.

    ‘(2) The Secretary shall organize veterans hospitals and other veterans health care facilities and services into Veterans Health Plans. Each Veterans Health Plan may cross State lines and more than one Veterans Health Plan may exist within a

State. The Secretary shall establish procedures to ensure portability of coverage throughout the veterans health system.

    ‘(3) The Secretary shall establish standards for the operation of Veterans Health Plans. Such standards shall--

      ‘(A) require the directors of Veterans Health Plans to provide to veterans access to the full range of basic, comprehensive, and supplemental health care services set forth in sections 1807, 1808, and 1809 of this title under the terms and conditions established in this chapter; and

      ‘(B) require the directors of Veterans Health Plans to establish quality control procedures, including--

        ‘(i) the establishment of procedures to assure that the care and services provided to enrollees shall be rendered under reasonable standards of quality of care, consistent with prevailing professionally recognized standards of medical practice;

        ‘(ii) the establishment of an ongoing internal quality assurance program to monitor and evaluate health care services, including primary and specialist physician services, and ancillary and preventive health care services across all institutional and non-institutional settings; such program shall include, at a minimum, a written statement of goals and objectives that emphasize improved health status in evaluating the quality of care rendered to enrollees, a written quality assurance plan describing the structure and process of quality assurance activities, confidentiality policies and procedures, a system of evaluation activities, a system for credentialing providers and performing peer review activities, and a statement of the duties and responsibilities of physicians responsible for quality assurance activities;

        ‘(iii) the establishment of procedures for recording the proceedings of formal quality assurance program activities and maintaining documentation in a confidential manner; and

        ‘(iv) the use and maintenance of an adequate patient record system that will facilitate documentation and retrieval of clinical information for evaluating continuity and coordination of patient care and assessing the quality of health and medical care provided to enrollees.

    ‘(4) The Secretary shall ensure that the payment schedules established under this chapter, including schedules for premiums, copayments, deductibles, and coinsurance, are uniform throughout the veterans health system, except that differences among payment schedules shall be permitted at the Secretary’s discretion based upon (1) the type of benefits package, whether basic, comprehensive, or supplemental, as established in sections 1807, 1808, and 1809 of this title; (2) the status of the veteran or veteran’s dependent receiving the care and services provided under this chapter; and (3) the type of coverage, whether individual or family.

    ‘(5) The Secretary may not wholly merge a Veterans Health Plan with any non-Department health care provider, network, plan; or system.

    ‘(b) In order to carry out the provisions of the chapter and notwithstanding any other provision of law, the Secretary may--

      ‘(1) plan and implement administrative reorganization, consolidation, elimination or redistribution of offices, facilities, functions, or activities of the Department, including the veterans health system and Department facilities--

        ‘(A) without regard to section 501 of this title; and

        ‘(B) upon a determination by the Secretary that such reorganization, consolidation, elimination, or redistribution is cost-effective, is in the best interests of veterans served by the veterans health system, and is necessary for the provision of care and services under this chapter in a timely and efficient manner; and

      ‘(2)(A) without regard to laws or regulations pertaining to competitive procedures or personnel preferences or priorities, establish alternative personnel systems or procedures for personnel at facilities operating as or with a Veterans Health Plan; and

      ‘(B) without regard to section 8110(c) of this title, enter into agreements for direct patient care services, such as nursing or other services, regardless of whether such services were previously performed by Federal employees.

    ‘(c)(1) Notwithstanding any law or regulation pertaining to competitive procedures, acquisition procedures or policies, source preferences or priorities, or bid protests, the Secretary shall have the authority to enter into agreements with non-Department health care plans, insurers, health care providers, health care professionals, health care facilities, medical equipment suppliers, and related entities, to furnish or obtain the health care and medical resources needed to ensure that the full range of basic, comprehensive, and supplemental benefits set forth in sections 1807, 1808, and 1809 of this title is available in each Veterans Health Plan.

    ‘(2) The Secretary shall establish procedures and guidance for Veterans Health Plans regarding such agreements, including procedures and guidance for determining and periodically adjusting the amount paid to each provider of services with respect to the services provided by it.

    ‘(3) The Secretary shall maintain full legal and ethical responsibility for treatment outcomes and quality of contracted care.

    ‘(d) The Secretary and the directors of the Veterans Health Plans may contract with outside employers to provide health care services to employees who are otherwise eligible for care and services under this chapter in accordance with the terms and conditions set forth in this chapter. In carrying out this subsection, the secretary shall establish procedures to ensure that employers make payments to Veterans Health Plans on behalf of eligible veteran employees in the same manner as such employers make payments to other health care providers and insurers on behalf of other employees.

    ‘(e)(1) The Secretary shall assist Veterans Health Plans in establishing billing offices and related administrative resources necessary to collect payment from enrollees, third-party payers, including federally-administered health programs, individuals obtaining fee-for-service care in a Veterans Health Plan, and others.

    ‘(2) In order to provide for the administration of benefits under this chapter with maximum efficiency and convenience for individuals receiving benefits under this chapter and for providers of services, the Secretary may enter into agreements for the provision of administrative services to Veterans Health Plan. Such administrative services may include (A) determination of the rates and payments to be made to providers of services and other persons; (B) receipt, disbursement, and accounting for funds in making such payments; and (C) conducting such audits of the records of providers of services as may be necessary to assure that proper payments are made.

    ‘(f) The Secretary shall establish criteria and application procedures for qualification of veterans as entitled under section 1805(a)(8) of this title. The Secretary shall consider the relationship of the cost of the catastrophic illness or injury to the veteran’s income. A veteran whose annual income, after payment for the catastrophic illness or injury, is, or would be, at or below the applicable levels specified for provision of care at no cost to veterans under chapter 17 of this title, shall be qualified as entitled under this subsection. The Secretary shall establish guidelines for evaluating on an annual basis the continuing need for an individual’s entitled status under this subsection. The Secretary may use the authority provided under section 6103 of the Internal Revenue Code to verify the income of any veteran making an application under this subsection.

    ‘(g) The Secretary may carry out promotional, advertising, and marketing activities to inform veterans, veterans’ dependents, and others of the care and services available in Veterans Health Plans and facilities of the Department operating as or within the veterans health system.

    ‘(h) The Secretary may delegate to a director of a Veterans Health Plan the authority provided to the Secretary under subsections (c), (d), (e), and (g).

‘Sec. 1819. Responsibilities of Veterans Health Plans and Veterans Health Plan Directors

    ‘(a) Veterans Health Plan directors must enroll all veterans and veterans’ dependents in accordance with the provisions of this chapter--

      ‘(1) without engaging in practices that have the effect of attracting or limiting enrollees on the basis of personal characteristics such as preexisting health conditions, health status, anticipated needs for health care, age, occupation, race, national origin, sex, language, socioeconomic status, or disability;

      ‘(2) without imposing waiting periods before coverage begins;

      ‘(3) without denying or delaying coverage based upon pre-existing conditions.

    ‘(b) For the purpose of carrying out the provisions of this chapter, Veterans Health Plan directors may, subject to procedures established by the Secretary and without regard to laws or regulations pertaining to competitive procedures, acquisition procedures or policies, source preferences or priorities, or bid protests--

      ‘(1) enter into agreements with health care plans, insurers, health care providers, health care facilities, and medical equipment suppliers to furnish or obtain any health care or medical resource; and

      ‘(2) enter into contracts for the procurement of any item commercially available at a cost of less than $300,000.

    ‘(c) Whenever necessary to carry out the provisions of this chapter, Veterans Health Plan directors may--

      ‘(1) without regard to laws or regulations pertaining to competitive procedures or personnel preferences or priorities, establish alternative personnel systems or procedures for personnel at facilities operating as or with a Veterans Health Plan; and

      ‘(2) without regard to section 8110(c) of this title, enter into contracts for direct patient care services, such as nursing or other services, regardless of whether such services were previously performed by Federal employees.

‘SUBCHAPTER VII--STATE HEALTH CARE SYSTEMS

‘Sec. 1820. State health care reform

    ‘A Veterans Health Plan shall be considered a qualified provider or carrier under any State health care reform plan, law, or regulation.

‘Sec. 1821. Applicability of State law

    ‘(a) The provisions of this chapter and the provisions of any contract entered into under this chapter, relating to the nature or extent of coverage or benefits, including payments with respect to benefits, shall supersede and preempt any State law or local law, or any regulation issued thereunder, that relates to health insurance or health plans to the extent that such law or regulations is inconsistent with such provisions of this chapter.

    ‘(b) The Secretary may require Veterans Health Plans to follow any State or local law or regulation as described in subsection (a) upon a finding that application of such law or regulation is in the best interests of individuals enrolled in the Veterans Health Plan, or will assist the Veterans Health Plan in achieving or maintaining a competitive position within the State or locality.

‘SUBCHAPTER VIII--GENERAL PROVISIONS

‘Sec. 1822. Budget reporting requirements

    ‘The Secretary shall submit to Congress within one year of the effective date of this chapter and annually thereafter, a report on--

      ‘(1) total expenditures under this chapter;

      ‘(2) the fully-allocated cost to the Government to provide care and services at no charge to entitled veterans;

      ‘(3) the fully-allocated cost to the Government to provide care and services at no charge to eligible veterans;

      ‘(4) the fully-allocated cost to the Government to provide care and services at no charge to veterans’ dependents;

      ‘(5) the amount of--

        ‘(A) premiums, cost-sharing payments and other payments received from individuals provided services under this chapter;

        ‘(B) payments from federally-administered health programs and other Federal agencies or departments;

        ‘(C) payments from third-party insurance plans;

        ‘(D) payments from medical resource-sharing arrangements; and

        ‘(E) any other payments made to the Department for services rendered under Veterans Health Plans and the veterans health system.

‘Sec. 1823. General Definitions

    ‘For the purposes of chapters 17 and 18 of this title--

      ‘(1) The term fully-allocated cost means that level of expenses which represents the sum of variable costs incurred in providing health care services plus an appropriate allocation of fixed expenses incurred in administering and maintaining the veterans health system.

      ‘(2) The term medical resource sharing agreement means medical resources (whether equipment, space, or personnel) which, because of cost, limited availability, or unusual nature, are either unique in the medical community or are subject to maximum utilization only through mutual use.

      ‘(3) The term Veterans Health Plan means a plan that provides the health care benefits contained in the basic, comprehensive, and supplemental benefits packages established in sections 1807, 1808, and 1809 of this title, respectively, subject to the terms and conditions set forth in chapters 17 and 18 of this title.

      ‘(4) The term veterans health system includes all medical and health care facilities, personnel, and operations under the jurisdiction of the Secretary or under contract with the Department to provide medical and health care services to veterans and veterans dependents under the provisions of chapters 17 and 18 of this title.’.

SEC. 5. TECHNICAL AND CONFORMING AMENDMENTS TO CHAPTER 17 OF TITLE 38, UNITED STATES CODE.

    (a) DEPENDENTS RECEIVING MEDICAL SERVICES- Section 1701 of title 38, United Stats Code, is amended in subsection (6)(B)--

      (1) by striking, in the last sentence, ‘the last section of’; and

      (2) by striking, in the last sentence, ‘(b)’ after ‘1713’.

    (b) EXTENSION OF CONTRACTING AUTHORITY- Section 1703 of title 38, United States Code, is amended--

      (1) in subsection (a)--

        (A) by striking ‘When Department facilities are not capable of furnishing economical hospital care or medical services because of geographical inaccessibility or are not capable of furnishing the care or services required,’ and beginning the sentence with ‘The Secretary’;

        (B) by striking ‘following’ and inserting ‘health care services provided under chapters 17 and 18 of this title’; and

        (C) by striking paragraphs (1) through (8);

      (2) in subsection (b)--

        (A) by striking ‘In the case of any veteran for whom’ and inserting ‘Where’; and

        (B) by striking ‘a provision of’; and

      (3) in subsection (c), by striking ‘this section, sections 1712A, 1720, 1720A, and 1732’ and inserting ‘chapters 17 and 18’.

    (c) DELETION OF CONFLICTING HOSPITAL CARE, DENTAL CARE AND REIMBURSEMENT PROVISIONS- Section 1710 of title 38, United States Code, is amended--

      (1) by striking, in the catchline, ‘hospital,’ and the comma after ‘nursing home’;

      (2) in subsection (a)(1), by striking ‘shall furnish hospital care, and’;

      (3) in subsection (a)(2), by striking ‘hospital care and’;

      (4) in subsection (a)(3)--

        (A) by striking ‘hospital care and’; and

        (B) by striking ‘may furnish such hospital care in accordance with section 1703 of this title and’;

      (5) in subsection (c)--

        (A) by striking, in the first sentence, ‘hospital care or’, ‘facilities’, and ‘in addition to treatment incident to the disability for which such veteran is hospitalized,’;

        (B) by striking ‘The Secretary may furnish dental services’ and all that follows:

      (6) in the last sentence of subsection (e)(1)(A)(ii), by striking ‘hospital care and’;

      (7) in subsection (e)(1)(B), by striking ‘hospital care and’;

      (8) in subsection (e)(1)(C), by striking ‘hospital care and’;

      (9) in subsection (e)(2), by striking ‘Hospital and’;

      (10) in subsection (e)(3)--

        (A) by striking ‘Hospital and’; and

        (B) by striking ‘and medical services’;

      (11) in subsection (f)(1), by striking ‘hospital care or’;

      (12) in the first sentence of subsection (f)(2), by striking ‘hospital care or’;

      (13) in subsection (f)(2)(A)(i), by inserting ‘under chapters 17 and 18’ before the semicolon;

      (14) in subsection (f)(2)(B), by striking ‘$10 for every day the veteran receives hospital care and’;

      (15) by striking all of subsection (f)(3)(A) and redesignating subparagraph (B) as subparagraph (A);

      (16) in subsection (f)(3)(C), by redesignating subsection (C) and (B);

      (17) in subsection (f)(3)(B)(i) (as redesignated by paragraph (16) of this section)--

        (A) by striking ‘inpatient Medicare’; and

        (B) by striking ‘this subsection and’ and inserting ‘section 1811(a) or section 1812(f) of this title, or’;

      (18) in subsection (f)(3)(B)(ii) (as redesignated by paragraph (16) of this section)--

        (A) by striking ‘subparagraph (A)(ii) of this paragraph’ and inserting ‘section 1811(a) or section 1812(f) of this title’; and

        (B) by striking ‘inpatient Medicare’ and inserting ‘required’;

      (19) in subsection (f)(3)(D)--

        (A) by redesignating subparagraph (D) as subparagraph (C);

        (B) by striking, in the first sentence, ‘this section’ and inserting ‘chapter 18 of this title’;

      (20) in subsection (f)(3)(E)--

        (A) by redesignating subparagraph (E) as subparagraph (D);

        (B) by inserting ‘section 1811(a) or section 1812(f) for hospital care furnished under chapter 18 or under’ before ‘this subsection for’;

        (C) by striking ‘hospital care or’ before ‘nursing home care furnished under this section’;

        (D) by striking ‘under section 1712(a) of this title’;

        (E) by striking ‘this subsection’ after ‘total amount paid by the veteran under’ and inserting ‘section 1811(a) or section 1812(f) of this title’;

        (F) by inserting ‘under this subsection for’ before ‘nursing home care furnished during that period’; and

        (G) by striking ‘under section 1712(f) of this title’;

      (21) in subsection (f)(3)(F)--

        (A) by redesignating subparagraph (F) as subparagraph (E);

        (B) by inserting ‘section 1811(a) or section 1812(f) of this title or under’ before ‘this subsection’; and

        (C) by striking ‘or section 1712(f) of this title’; and

      (22) by striking all of subsection (f)(4) and redesignating paragraph (5) as paragraph (4).

    (d) DELETION OF CONFLICTING ELIGIBILITY AND REIMBURSEMENT PROVISIONS; CLARIFICATION OF CERTAIN SPECIALIZED MEDICAL SERVICES- Section 1712 of title 38, United States Code, is amended--

      (1) by striking, in the catchline, ‘outpatient’ and inserting ‘certain medical and dental’ before ‘services’;

      (2) in subsection (a)(1)--

        (A) by striking ‘Except as provided in subsection (b) of this section,’ and beginning the sentence with ‘The Secretary shall’;

        (B) by striking ‘on an ambulatory basis such’ and inserting ‘the’ before ‘medical services’; and

        (C) by inserting ‘set forth in subsection (4) of this paragraph,’ before ‘as the Secretary determines’;

      (3) in subsection (a)(2)--

        (A) by striking ‘on an ambulatory or outpatient basis’; and

        (B) by inserting ‘set forth in subsection (4) of this paragraph,’ before ‘for a purpose described’;

      (4) in subsection (a)(3)--

        (A) by striking ‘on an ambulatory or outpatient basis’; and

        (B) by inserting ‘set forth in subsection (4) of this paragraph,’ before ‘which the Secretary determines’;

      (5) by striking the first sentence of subsection (a)(4), and inserting the following: ‘For purposes of this paragraph, medical services means prosthetic and orthotic services and appliances, including--

        ‘(A) wheelchairs;

        ‘(B) artificial limbs;

        ‘(C) trusses;

        ‘(D) special clothing made necessary by the wearing of prosthetic or orthotic appliances; and

        ‘(E) such similar appliances and related supplies or services as the Secretary determines to be reasonable and necessary.’;

      (6) by striking subsections (a)(5)(A) and (a)(5)(B); and redesignating subsections (a)(6) and (a)(7) as (a)(5) and (a)(6), respectively; and

      (7) by striking subsections (f) and (i).

    (e) EXTENSION OF CONTRACTING AUTHORITY; CONFORMANCE OF ELIGIBILITY AND NOTIFICATION REQUIREMENTS; ELIMINATION OF LIMITATIONS ON FACILITY REORGANIZATION AND CLOSURE- Section 1712A of title 38, United States Code, is amended--

      (1) in subsection (a)(1), by striking ‘, within the limits of Department facilities,’;

      (2) in subsection (b)(1)--

        (A) by striking, in the first sentence, ‘, within the limits of Department facilities,’;

        (B) by striking, in the first sentence, ‘on an outpatient basis under the conditions specified in section 1712(a)(5)(B)’ and inserting ‘in accordance with the criteria established in chapter 18’;

        (C) by striking, in the second sentence, ‘For the purposes of furnishing such mental health services, the counseling’ and inserting ‘Any hospital care and other medical services considered necessary on the basis of the assessment’;

        (D) by striking, in the second and third sentences, ‘considered to have been furnished by the Department as a part of hospital care. Any hospital care and other medical services considered necessary on the basis of the assessment furnished under subsection (a) of this section shall be’;

        (E) by striking ‘this chapter’ and inserting ‘chapter 18’ after ‘eligibility criteria otherwise set forth in; and

        (F) by striking ‘(including the eligibility criteria set forth in section 1711(b) of this title)’.

      (3) in subsection (c)(1), by striking ‘and’ at the end of the paragraph;

      (4) in subsection (c)(2), by striking ‘and’ at the end of the paragraph;

      (5) by inserting after subsection (c)(2) the following paragraph:

      ‘(3) advise such individual of such individual’s eligibility to obtain services pursuant to the provisions of chapter 18.’;

      (6) in subsection (e)(1)--

        (A) by inserting ‘otherwise’ before ‘available to the Secretary’; and

        (B) by striking ‘(under sections 1712(a)(1)(B) and 1703(a)(2) of this title) in furnishing medical services to veterans suffering from total service-connected disabilities’ and inserting ‘under chapters 17 and 18’;

      (7) by striking subsection (e)(3);

      (8) in subsection (g)--

        (A) by striking paragraph (1) and redesignating paragraph (2) as paragraph (1); and

        (B) in paragraph (1)(B)(i)(II) (as redesignated by this paragraph), by striking ‘and’ at the end of the paragraph;

        (C) in paragraph (1)(B)(ii) (as redesignated by this paragraph), by striking the period at the end of the paragraph and inserting ‘; and;

        (D) in paragraph (1)(B) (as redesignated by this paragraph), by inserting a new paragraph (1)(B)(iii) as follows:

          ‘(iii) a national plan for ensuring the continued availability and effective furnishing of readjustment counseling services to eligible veterans needing such services.’;

        (E) by striking paragraphs (3)(A) and (3)(B);

        (F) by redesignating paragraph (3)(c) as paragraph (2);

        (G) in paragraph (2) (as redesignated by this paragraph)--

          (i) by striking ‘(B) after ‘subparagraph’ and inserting ‘(iii)’;

          (ii) by striking ‘center’ and inserting ‘region’; and

          (iii) by redesignating clause ‘(i)’ as paragraph ‘(2)(A)’;

        (H) in paragraph (2)(A) (as redesignated by this paragraph)--

          (i) by striking ‘area served by the center’ and inserting ‘region’;

          (ii) by striking ‘relationships’ and inserting ‘relationship’;

          (iii) by striking ‘such center and the general Department facility’ and inserting ‘Department and contract facilities’;

          (iv) by striking clause (ii); and

          (v) by redesignating clause (iii) as paragraph (2)(B);

        (I) in paragraph (2)(B) (as redesignated by this paragraph)--

          (i) by striking ‘area served by the center’ and inserting ‘region’; and

          (ii) by redesignating clause (iv) as paragraph (2)(C);

        (J) in paragraph (2)(C) (as redesignated by this paragraph)--

          (i) by striking ‘, the center and’; and

          (ii) by striking clauses (v), (vi), (vii), and (viii);

        (K) by inserting paragraph (2)(D) as follows:

        ‘(D) Such other factors as the Secretary determines to be relevant to the evaluation described in subparagraph (B) of this paragraph.’; and

        (L) by deleting paragraphs (4) and (5); and

      (9) by deleting subsection (i).

    (f) USE OF CONTRACT PROVIDERS- Section 1712B of title 38, Untied States Code, is amended by striking ‘facilities’ and inserting ‘resources’.

    (g) CONFORMANCE OF BENEFITS FOR CERTAIN VETERANS’ DEPENDENTS- Section 1713 of title 38, United States Code, is amended--

      (1) in subsection (a), by striking ‘subsection (b) of this section’ and inserting ‘chapter 18’ after ‘the provisions of’; and

      (2) by striking subsection (b).

    (h) CONFORMANCE OF HOSPITAL CARE BY OTHER FEDERAL AGENCIES WITH CHAPTER 18- Section 1716 of title 38, United States Code, is amended by striking ‘this chapter’ and inserting ‘chapters 17 and 18’ after ‘’entitled to hospitalization from the Department under’.

    (i) CONFORMANCE OF ELIGIBILITY REQUIREMENTS FOR HOME HEALTH SERVICES- Section 1717 of title 38, United States Code, is amended in subsection (a)--

      (1) in paragraph (1), by striking ‘As part of medical services furnished to a veteran under section 1712(a) of this title,’ and beginning the sentence with ‘The Secretary may furnish’;

      (2) in paragraph (2)(A), by striking ‘in the case of medical services furnished under paragraph (1) of section 1712(a)’ and inserting ‘for (i) a veteran for a service connected disability (including a disability that was incurred or aggravated in line of duty and for which the veteran was discharged or released from the active military, naval, or air service), (ii) a veteran who qualifies as entitled under section 1805(a)(1) of this title and has a service-connected disability rated at fifty (50) percent or greater, and (iii) a veteran who qualifies as entitled under section 1805(a)(5)’; and

      (3) in paragraph (2)(B), by striking ‘in the case of medical services furnished under any other provision of section 1712’ and inserting ‘for a veteran who qualifies as eligible under section 1805(b)’.

    (j) CONFORMANCE OF ELIGIBILITY REQUIREMENTS FOR THERAPEUTIC AND REHABILITATIVE ACTIVITIES- Section 1718 of title 38, United States Code, is amended by striking subsection (e).

    (k) CONFORMANCE OF NURSING HOME AND ADULT DAY CARE WITH CHAPTER 18 CRITERIA- Section 1720 of title 38, United States Code, is amended--

      (1) in subsection (a)(4), by inserting ‘or who is furnished hospital or domiciliary care by the Secretary under the provisions of chapter 18,’ after ‘Alaska of Hawaii’; and

      (2) in subsection (f)(1)(A)(ii), by striking ‘is eligible for medical services under section 1712(a)(1)(B) of this title’ and inserting ‘qualifies as entitled under section 1805(a)(1) of this title and has a service-connected disability rated at fifty (50) percent or greater’ after ‘a veteran who’.

    (l) CONFORMANCE OF ELIGIBILITY AND NOTIFICATION REQUIREMENTS FOR SUBSTANCE ABUSE TREATMENT; ELIMINATION OF CONTRACTING LIMITATIONS- Section 1720A of title 38, United States Code, is amended--

      (1) in subsection (a)(1), by striking out ‘this chapter’ and inserting ‘chapters 17 and 18’ after ‘medical and rehabilitative services under’;

      (2) in subsection (c)--

        (A) in paragraph (1), by striking out ‘and’ at the end of the paragraph;

        (B) in paragraph (2), by inserting ‘; and’ at the end of the paragraph; and

        (C) by inserting the following new paragraph (3):

      ‘(3) advise such individual of such individual’s eligibility to obtain services pursuant to the provisions of chapter 18 of this title.’; and

      (3) by striking subsections (e) and (g).

    (m) CONFORMANCE WITH CHAPTER 18 BENEFITS; ELIMINATION OF CONTRACTING LIMITATIONS- Section 1720B of title 38, United States Code, is amended--

      (1) in subsection (a), by striking ‘1710’ and inserting ‘1806’ after ‘to receive care under section’; and

      (2) in subsection (b)(2), by striking ‘in a Department facility’.

    (n) ELIMINATION OF CONTRACTING LIMITATIONS; CONFORMANCE WITH CHAPTER 18 BENEFITS- Section 1720D of title 38, United States Code, is amended--

      (1) in subsection (a)(1)(3), by inserting a period after ‘a qualified mental health professional’ and striking out all that follows; and

      (2) in subsection (b)(2)(C), by inserting ‘or chapter 18’ after ‘under this chapter’.

    (o) EXTENSION OF RULEMAKING AUTHORITY TO CHAPTER 18- Section 1721 of title 38, United States Code, is amended by inserting ‘or under a Veterans Health Plan as set forth in chapter 18 of this title’ immediately before the end of the first sentence.

    (p) CONFORMANCE WITH CHAPTER 18 ELIGIBILITY CRITERIA- Section 1722 of title 38, United States Code, is amended--

      (1) in subsection (a), by inserting ‘and 1805(a)(6)’ after ‘section 1710(a)(1)(I); and

      (2) in subsection(f)(3)--

        (A) by striking out ‘section 1710(a) or 1712(f)’ and inserting ‘chapter 17’ after ‘case or services under’; and

        (B) by inserting ‘or the year in which the veteran enrolls in a Veterans Health Plan under chapter 18 of this title’ immediately before the end of the sentence.

    (q) CONFORMANCE OF COPAYMENT REQUIREMENT; RETENTION OF PROCEEDS BY THE DEPARTMENT OF VETERANS AFFAIRS- Section 1722A of title 38, United States Code, is amended--

      (1) in subsection (a)(1)--

        (A) by striking, in the first sentence, ‘shall’ and inserting ‘may’;

        (B) by striking ‘$2’ and inserting ‘a copayment’ after ‘United States’; and

        (C) by striking the second sentence.

      (2) in subsection (a)(2), by inserting ‘fully-allocated’ before ‘cost to the Secretary’; and

      (3) in subsection (b), by striking ‘Medical-Care Cost Recovery Fund’ and inserting ‘Health Plan Fund established under section 1815 of this title’.

    (r) CHAPTER 18 CLOTHING BENEFIT- Section 1723 of title 38, United States Code, is amended by inserting ‘or otherwise receiving care under chapters 17 and 18 of this title,’ after the first comma.

    (s) EXTENSION OF REIMBURSEMENT FOR PERSONAL LOSS TO CONTRACT FACILITIES- Section 1726 of title 38, United States Code, is amended by inserting the following sentence at the end: ‘The Secretary shall include in any contract with a non-Department facility a provision for reimbursement of veterans and their dependents in contracted health care facilities for any loss of personal effects sustained by fire, earthquake, or other natural disaster while such effects were stored in designated locations in such facilities.’.

    (t) CONFORMANCE WITH CHAPTER 18 BENEFITS- Section 1727 of title 38, United States Code, is amended--

      (1) by striking out ‘this chapter’ and inserting ‘chapters 17 and 18’ after ‘provided for in’; and

      (2) by striking out ‘in this chapter’ and inserting ‘therein’ after ‘the service requirements contained’.

    (u) CLARIFICATION OF VETERAN REIMBURSEMENT POLICY- Section 1728 of title 38, United States Code, is amended in subsection (a)--

      (1) by striking ‘entitled to hospital care or medical services under this chapter’ and ‘reimburse veterans’;

      (2) by striking out ‘such’ after ‘reasonable value of’ and inserting ‘hospital’;

      (3) by inserting ‘medical’ before ‘services (including travel’;

      (4) by striking ‘from sources other than the Department’ and inserting ‘beyond payment otherwise required under chapters 17 and 18 of this title’ after ‘have made payment,’; and

      (5) in paragraph (3), by inserting ’, contracted,’ before ‘or other Federal facilities’.

    (v) EXTENSION OF THIRD-PARTY RECOVERY TO CHAPTER 18 SERVICES; REPLACEMENT OF MEDICAL-CARE COST RECOVERY FUND WITH VETERANS HEALTH PLAN FUND; RETENTION OF THIRD-PARTY PAYMENTS BY THE DEPARTMENT OF VETERANS AFFAIRS- Section 1729 of title 38, United States Code, is amended--

      (1) in subsection (a)(1)--

        (A) by inserting ‘or a veteran’s dependent’ before ‘is furnished care’; and

        (B) by striking ‘this chapter’ and inserting ‘chapters 17 and 18’ before ‘for a non-service-connected disability’;

      (2) in subsection (g)--

        (A) by striking paragraph (1) and redesignating paragraph (2) as paragraph (1); and

        (B) in paragraph (1) (as redesignated under this paragraph), by striking ‘Fund’ and inserting ‘Department of Veterans Affairs Health Plan Fund established under section 1815 of this title’; and

        (C) by striking paragraphs (3) and (4).

    (w) CONFORMANCE WITH CHAPTER 18 CRITERIA AND BENEFITS- Section 1741 of title 38, United States Code, is amended--

      (1) in subsection (a)(2), by striking in the last sentence ‘in a Department facility’ and inserting ‘under sections 1710, 1720 and 1809(b) of this title’; and

      (2) in subsection (c)--

        (A) by striking ‘and’ and inserting a comma after ‘sections 1710’; and

        (B) by inserting ‘and 1809(b)’ after ‘1720’.

    (x) EXTENSION OF SICKLE CELL ANEMIA SERVICES TO CHAPTER 18- Section 1751 of title 38, United States Code, is amended by striking ‘chapter’ and inserting ‘title’ after ‘under the provisions of this’.

SEC. 6. TECHNICAL AND CONFORMING AMENDMENTS TO TITLE 38, UNITED STATES CODE.

    (a) CONFORMANCE WITH CHAPTER 18 ELIGIBILITY CRITERIA- Section 106 of title 38, United States Code, is amended, in subsection (b), by striking ‘chapter 17’ and inserting ‘chapters 17 and 18’ after ‘for purposes of determining service-connection of a disability under’.

    (b) EXTENSION OF RECOVERY EXEMPTION TO CHAPTER 18 BENEFITS- Section 2651 of title 38, United States Code, is amended, in subsection (c), by inserting ‘or 18’ after ‘under the provisions of chapter 17’.

    (c) EXTENSION OF CHAPTER 18 BENEFITS TO VETERANS ELIGIBLE FOR TRAINING AND REHABILITATION- Section 3104 of title 38, United States Code, is amended, in subsection (a)(9), by striking ‘chapter 17’ and inserting ‘chapters 17 and 18’ after ‘services described in’.

    (d) CONFORMING REFERENCE TO CHAPTER 18 BENEFITS- Section 3485 of title 38, United States Code, is amended, in subsection (a)(1), by striking ‘chapter 17’ and inserting ‘chapters 17 and 18’ after ‘(C) the provision of hospital and domiciliary care and medical treatment under’.

    (3) FALSE CLAIMS UNDER CHAPTER 18- Section 3803 of title 38, United States Code, is amended, in subsection (c)(2)(C)(viii), by inserting ‘18’ after ‘under chapters 11, 13, 15, 17’ and before ‘and 21’.

    (f) CONFORMING REFERENCE TO CHAPTER 18- Section 3903 of title 38, United States Code, is amended in subsection (e)(1) by inserting ‘or 18’ after ‘eligible for care under chapter 17’.

    (g) RECOVERY OF INTEREST AND OTHER COSTS UNDER CHAPTER 18- Section 5315 of title 38, United States Code, is amended in subsection (a)(2) by striking ‘chapter 17’ and inserting ‘chapters 17 and 18’ after ‘from the provision of care or services under’.

    (h) SUSPENSION OF PENSION REDUCTION FOR VETERANS RECEIVING REHABILITATIVE SERVICES UNDER CHAPTER 18- Section 5503 of title 38, United States Code, is amended in subsection (a)(1)(D) by inserting ‘or 18’ after ‘rehabilitation services, under chapter 17’.

    (i) EXTENSION OF NON-DISCRIMINATION RULE TO CHAPTER 18- Section 7333 of title 38, United States Code, is amended by inserting in subsection (a) ‘or 18’ after ‘under chapter 17’.

    (j) EXTENSION OF CONTRACTING AUTHORITY- Section 8102 of title 38, United States Code, is amended by inserting in subsection (a) ‘or contract for’ after ‘The Secretary shall provide’.

    (k) ELIMINATION OF ACQUISITION RESTRICTIONS- Section 8103 of title 38, United States Code, is amended by striking in subsection (d)(1) ‘of not more than three’ after ‘for the acquisition of’.

    (l) ELIMINATION OF INEFFICIENT OPERATING REQUIREMENTS- Section 8110 of title 38, United States Code, is amended--

      (1) by striking all of subsection (a)(1) and inserting the following:

    ‘(a)(1) The Secretary shall establish the total number of hospital beds and nursing home beds in medical facilities over which the Secretary has direct jurisdiction for the care and treatment of Veterans Health Plan enrollees. The Secretary shall establish the total number of such beds so as to maintain a contingency capacity to assist the Department of Defense in time of war or national emergency to care for the casualties of such war or national emergency. The Secretary shall provide, in such a manner as to ensure the immediate acceptance and timely and complete care of patients, for sufficient beds and other treatment capacities to accommodate, and provide care to, Veterans Health Plan enrollees applying for admission and found to be in need of hospital care or medical services under chapter 17 or 18 of this title.’;

      (2) in subsection (a)(2)--

        (A) by striking ‘maintain the’ and inserting ‘provide’ after ‘The Secretary shall’;

        (B) by striking ‘of all Department medical facilities’ after ‘and treatment capacities’; and

        (C) by striking ‘section 1712 of’ after ‘furnished pursuant to’; and

      (3) by striking paragraph (5).

    (m) ELIMINATION OF INEFFICIENT OPERATING RESTRICTIONS- Section 8111 of title 38, United States Code, is amended by striking in subsection (a) from ‘result (1) in a permanent reduction’ through ‘to be operated and maintained or’ after ‘enter into an agreement that would’ and before ‘in any way subordinate or transfer’.

    (n) ELIMINATION OF RESTRICTIONS ON CONTRACTING AUTHORITY; CHAPTER 18 HOSPITAL SERVICES- Section 8111A of title 38, United States Code, is amended--

      (1) in subsection (b)(2)(A), by striking ‘at a department facility under subsection (f) of section 1712 of this title’ after ‘is receiving medical services’; and

      (2) in subsection (b)(2)(B)--

        (A) by striking in clause (i) ‘section 1710 of’ after ‘hospital care under’; and

        (B) by striking in clause (ii) ‘such section’ and inserting ‘this title’ after ‘for hospital care under’.

    (o) ELIMINATION OF RESTRICTIONS ON CONTRACTING AUTHORITY; PAYMENT PROVISIONS FOR CHAPTER 18 BENEFITS- Section 8153 of title 38, United States Code, is amended--

      (1) by striking subsection (c); and

      (2) by inserting in subsection (d) ‘or 18’ after ‘not eligible for such care or services under chapter 17’.

SEC. 7. EFFECTIVE DATE.

    The provisions of this Act shall take effect two years after the date of the enactment of this Act.