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U.S. Code as of:
01/19/04
Section 1395b-1. Incentives for economy while maintaining or improving quality in provision of health services
(a) Grants and contracts to develop and engage in experiments and
demonstration projects
(1) The Secretary of Health and Human Services is authorized,
either directly or through grants to public or private agencies,
institutions, and organizations or contracts with public or private
agencies, institutions, and organizations, to develop and engage in
experiments and demonstration projects for the following purposes:
(A) to determine whether, and if so which, changes in methods
of payment or reimbursement (other than those dealt with in
section 222(a) of the Social Security Amendments of 1972) for
health care and services under health programs established by
this chapter, including a change to methods based on negotiated
rates, would have the effect of increasing the efficiency and
economy of health services under such programs through the
creation of additional incentives to these ends without adversely
affecting the quality of such services;
(B) to determine whether payments for services other than those
for which payment may be made under such programs (and which are
incidental to services for which payment may be made under such
programs) would, in the judgment of the Secretary, result in more
economical provision and more effective utilization of services
for which payment may be made under such program, where such
services are furnished by organizations and institutions which
have the capability of providing -
(i) comprehensive health care services,
(ii) mental health care services (as defined by section
2691(c) )1(! of this title),
(iii) ambulatory health care services (including surgical
services provided on an outpatient basis), or
(iv) institutional services which may substitute, at lower
cost, for hospital care;
(C) to determine whether the rates of payment or reimbursement
for health care services, approved by a State for purposes of the
administration of one or more of its laws, when utilized to
determine the amount to be paid for services furnished in such
State under the health programs established by this chapter,
would have the effect of reducing the costs of such programs
without adversely affecting the quality of such services;
(D) to determine whether payments under such programs based on
a single combined rate of reimbursement or charge for the
teaching activities and patient care which residents, interns,
and supervising physicians render in connection with a graduate
medical education program in a patient facility would result in
more equitable and economical patient care arrangements without
adversely affecting the quality of such care;
(E) to determine whether coverage of intermediate care facility
services and homemaker services would provide suitable
alternatives to posthospital benefits presently provided under
this subchapter; such experiment and demonstration projects may
include:
(i) counting each day of care in an intermediate care
facility as one day of care in a skilled nursing facility, if
such care was for a condition for which the individual was
hospitalized,
(ii) covering the services of homemakers for a maximum of 21
days, if institutional services are not medically appropriate,
(iii) determining whether such coverage would reduce
long-range costs by reducing the lengths of stay in hospitals
and skilled nursing facilities, and
(iv) establishing alternative eligibility requirements and
determining the probable cost of applying each alternative, if
the project suggests that such extension of coverage would be
desirable;
(F) to determine whether, and if so which type of, fixed price
or performance incentive contract would have the effect of
inducing to the greatest degree effective, efficient, and
economical performance of agencies and organizations making
payment under agreements or contracts with the Secretary for
health care and services under health programs established by
this chapter;
(G) to determine under what circumstances payment for services
would be appropriate and the most appropriate, equitable, and
noninflationary methods and amounts of reimbursement under health
care programs established by this chapter for services, which are
performed independently by an assistant to a physician, including
a nurse practitioner (whether or not performed in the office of
or at a place at which such physician is physically present), and
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(i) which such assistant is legally authorized to perform by
the State or political subdivision wherein such services are
performed, and
(ii) for which such physician assumes full legal and ethical
responsibility as to the necessity, propriety, and quality
thereof;
(H) to establish an experimental program to provide day-care
services, which consist of such personal care, supervision, and
services as the Secretary shall by regulation prescribe, for
individuals eligible to enroll in the supplemental medical
insurance program established under part B of this subchapter and
subchapter XIX of this chapter, in day-care centers which meet
such standards as the Secretary shall by regulation establish;
(I) to determine whether the services of clinical psychologists
may be made more generally available to persons eligible for
services under this subchapter and subchapter XIX of this chapter
in a manner consistent with quality of care and equitable and
efficient administration;
(J) to develop or demonstrate improved methods for the
investigation and prosecution of fraud in the provision of care
or services under the health programs established by this
chapter; and
(K) to determine whether the use of competitive bidding in the
awarding of contracts, or the use of other methods of
reimbursement, under part B of subchapter XI of this chapter
would be efficient and effective methods of furthering the
purposes of that part.
For purposes of this subsection, "health programs established by
this chapter" means the program established by this subchapter and
a program established by a plan of a State approved under
subchapter XIX of this chapter.
(2) Grants, payments under contracts, and other expenditures made
for experiments and demonstration projects under paragraph (1)
shall be made in appropriate part from the Federal Hospital
Insurance Trust Fund (established by section 1395i of this title)
and the Federal Supplementary Medical Insurance Trust Fund
(established by section 1395t of this title) and from funds
appropriated under subchapter XIX of this chapter. Grants and
payments under contracts may be made either in advance or by way of
reimbursement, as may be determined by the Secretary, and shall be
made in such installments and on such conditions as the Secretary
finds necessary to carry out the purpose of this section. With
respect to any such grant, payment, or other expenditure, the
amount to be paid from each of such trust funds (and from funds
appropriated under such subchapter XIX of this chapter) shall be
determined by the Secretary, giving due regard to the purposes of
the experiment or project involved.
(b) Waiver of certain payment or reimbursement requirements; advice
and recommendations of specialists preceding experiments and
demonstration projects
In the case of any experiment or demonstration project under
subsection (a) of this section, the Secretary may waive compliance
with the requirements of this subchapter and subchapter XIX of this
chapter insofar as such requirements relate to reimbursement or
payment on the basis of reasonable cost, or (in the case of
physicians) on the basis of reasonable charge, or to reimbursement
or payment only for such services or items as may be specified in
the experiment; and costs incurred in such experiment or
demonstration project in excess of the costs which would otherwise
be reimbursed or paid under such subchapters may be reimbursed or
paid to the extent that such waiver applies to them (with such
excess being borne by the Secretary). No experiment or
demonstration project shall be engaged in or developed under
subsection (a) of this section until the Secretary obtains the
advice and recommendations of specialists who are competent to
evaluate the proposed experiment or demonstration project as to the
soundness of its objectives, the possibilities of securing
productive results, the adequacy of resources to conduct the
proposed experiment or demonstration project, and its relationship
to other similar experiments and projects already completed or in
process.
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