[Congressional Record Volume 141, Number 160 (Tuesday, October 17, 1995)]
[Extensions of Remarks]
[Pages E1961-E1962]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                THE DEMOCRATIC SUBSTITUTE FOR H.R. 2425

                                 ______


                            HON. SAM GIBBONS

                               of florida

                    in the house of representatives

                        Tuesday, October 17, 1995

  Mr. GIBBONS. Mr. Speaker, during the debate on H.R. 2425, the so-
called Medicare Preservation Act, later this week, Representative John 
Dingell and I plan, along with Representative Jim McDermott, and 
others, to offer a substitute that takes the steps needed to assure 
solvency for Medicare for the next decade--through 2006. Instead of 
cutting $270 billion out of Medicare as the Republicans have proposed 
to finance their tax breaks for the wealthy, our Democratic plan 
reduces Medicare by $90 billion--and achieves solvency through 2006.
  To assure an informed debate, I want to share a copy of the summary 
of the Gibbons-Dingell substitute. The legislative language of the 
substitute is published in the amendments section of today's Record. 
The summary follows:

                   A Democratic Medicare Reform Plan


  a balanced package of reforms to make medicare solvent for the next 
                             decade (2006)

                     The Gibbons-Dingell substitute

                Peace of Mind for Medicare Beneficiaries

       Assurance that Medicare--as you know it now--will be there 
     when you need it.
       Expanded choice of providers and plans.
       A freeze in the part B premium.
       Reduced copayments for outpatient services.
       New preventive benefits--payment for more frequent 
     mammographies, colorectal screening, pap smears, and diabetes 
     screening.
       Quality standards for nursing homes.

               Reasonable Provider Reductions and Reforms

       Modest reductions in hospital payments.
       Protection for hospitals that serve the uninsured in urban 
     and rural areas.
       Reduced funds for hospital construction.
       A new graduate medical education trust fund.
       Limits on physician reimbursement.

                   Other ``Good Government'' Reforms

       A prospective payment system for home health services.
       Reformed nursing home reimbursement.
       Tough fraud and abuse prevention.
       Aggressive pursuit of payment by private insurers, to 
     assure Medicare is the payer of last resort.
       A commission on the long-term solvency of Medicare.
       Total savings: $90 billion.


                        detailed specifications

        Subtitle  A.  Provisions  relating  to  Medicare part A

             A. Reasonable Hospital Reductions and Reforms

       Medicare is the single largest insurer in the United States 
     today. Reductions in payments to providers under Medicare 
     must be carefully planned and implemented to avoid severe 
     negative consequences for Medicare beneficiaries and the 
     American taxpayer. Excessive reductions in hospital costs--
     like those proposed by the Republican majority--could be 
     counter-productive, negatively affecting the quality of care, 
     reducing access to care, and resulting in higher costs for 
     the private sector. Little would be accomplished by 
     unnecessarily blunt reductions in Medicare payments to 
     hospitals. Our most vulnerable hospitals--those who serve a 
     large share of the 40 million Americans who are uninsured--
     would carry an unfair burden.
       Under this Democratic plan, reasonable reductions would be 
     made in hospital payments. Furthermore, there would be no 
     reductions in payments made to compensate hospitals that care 
     for a disproportionate share (DSH) of the uninsured. In 
     addition, funding for DSH hospitals, now paid to HMO's, would 
     be paid directly to these high-indigent care hospitals.
       Specifically, the substitute would:
       1. Make modest hospital payment reductions with special 
     protections for vulnerable rural hospitals.--Hospital 
     payments would be limited to market basket minus one in FY 
     '96 through FY '02 except that the rural hospital update 
     would be set at 0.5 percent in each of these years.
       2. Reduce payments for hospital capital (construction) 
     expenses, given excess capacity.--All hospital capital 
     payments would be reduced by 10 percent (including PPS-exempt 
     hospitals) through 2002.
       3. Retarget outlier payments.--The indirect medical 
     education and disproportionate share hospital add-on payment 
     would be eliminated for outlier cases.

                        B. Nursing Home Reforms

       The Republican majority has proposed to reduce payments for 
     skilled nursing facilities by $10 billion over seven years, 
     through untested limits on payments that could place patients 
     with complex needs at risk of inadequate services or, even 
     worse, encourage facilities to avoid patients with greater 
     resource needs.
       The Republican majority also proposes to eliminate the 
     current nursing home reform standards, leaving elderly 
     nursing home patients and their families without protections 
     that have improved the quality of life for millions of 
     nursing home residents. The regulations--which the Republican 
     majority wants to repeal--have resulted in fewer hospital 
     visits and healthier nursing home residents, more complete 
     and reliable medical records, a significant improvement in 
     patient well-being, and savings to Medicare of $2 billion 
     since the regulations took effect.
       This Democratic plan would retain these essential 
     protections for Medicare beneficiaries in nursing homes. In 
     addition, this substitute would revamp the nursing facility 
     reimbursement system by taking the following steps:
       1. Extend the skilled nursing facility (SNF) cost limits.--
     The OBRA '93 SNF cost limits would be extended.
       2. Establish a prospective payment system to control 
     costs.--Beginning in FY 1997, routine costs would be paid in 
     accordance with a prospective payment system established by 
     the Secretary. Payments under the system would be determined 
     on a per diem basis and would equal 112 percent of the mean 
     per diem routine costs in a base year for freestanding 
     skilled nursing facilities located in the same region. These 
     limits would be determined separately for urban and rural 
     facilities; hospital-based facilities would be held harmless. 
     Beginning in FY 1998, all costs for skilled nursing 
     facilities would be paid based upon the prospective payment 
     system.
       3. Reform SNF transfer policies.--End gaming of discharge 
     status by hospitals who also have their own nursing home 
     unit. Patients transferred from a hospital to a SNF unit of 
     the hospital would be classified as a transfer and not as a 
     discharge. Patients discharged to home health services would 
     still be classified as a discharge.

           Subtitle B. Provisions relating to Medicare part B

                      A. Physician Payment Reforms

       Efforts to control Medicare spending require that limits be 
     placed on reimbursements to all providers, including 
     physicians. Since the nation's doctors have been supportive 
     of the reforms included in HR 2425, this substitute includes 
     those reforms with very slight modifications.
       To control Medicare spending on physician payments, this 
     Democratic plan adopts the recommendations of the Physician 
     Payment Review Commission. This means that on January 1, 
     1996, the fee schedule conversion factor for all three 
     categories of service--primary care, surgery, and all other 
     services--would be set to a uniform $34.60. Three separate 
     expenditure targets are retained, however, for determining 
     updates in future years for each category.
       In addition, the upward bias in the current Medicare Volume 
     Performance System (MVPS) is corrected by assuring that the 
     targets are cumulative--the MVPS bonuses and penalties apply 
     for only one year, and are not built into the base-year 
     spending target. Adjustments to the annual updates are also 
     limited.

            B. Reforms in Payments for Other Health Services

       The Republican majority has proposed an unprecedented 
     seven-year freeze on payments for clinical laboratory 
     services, durable medical equipment, and ambulatory surgery, 
     raising questions about whether these providers will, in the 
     future, continue to serve Medicare beneficiaries. In 
     addition, the Republican majority curtails the steady 
     progress Democrats have made, over the past decade, in 
     improving preventive benefits; under the Republican plan, no 
     new preventive benefits are offered, despite strong evidence 
     that the basic Medicare benefit package needs improvement in 
     this area.
       This Democratic substitute offers a package of shared 
     sacrifice combined with modest program improvements. It 
     would:
       1. Impose a two-year freeze.--Fee schedules for clinical 
     labs, durable medical equipment, and ambulatory surgery would 
     be frozen for two years.
       2. Eliminate excessive beneficiary copayments for 
     outpatient services by correcting the payment formula.--The 
     hospital outpatient department formula driven overpayment 
     would be eliminated, on a budget-neutral basis, as the 
     savings would be returned to the beneficiaries to reduce the 
     effective beneficiary co-payment.
       3. Add new services to prevent cancer and complications 
     from diabetes.--Medicare's preventive benefits would be 
     improved to more quickly detect breast, cervical and colon 
     cancer by increasing the mammography scheudle and providing 
     payment for colorectal screening, pap smears, and pelvic 
     examinations. In addition, payment would be authorized for 
     diabetes outpatient self-management services and for blood-
     testing strips for individuals with diabetes.
     
[[Page E 1962]]

       4. Extend limits on payments for outpatient capital 
     expenses.--The current 10 percent capital reduction for 
     hospital outpatient services would be extended.

                   c. Freeze the Beneficiary Premium

       Fully 83 percent of Medicare expenditures are for 
     beneficiaries with incomes of less than $25,000 per year. 
     Clearly, beneficiary premiums and copayments should be 
     increased only as a very last resort. These senior citizens 
     can ill-afford to pay any increase in the part B premium, 
     however small. Under this Democratic plan, Medicare 
     beneficiaries are protected.
       Under current law, the part B beneficiary premium is $46.10 
     for 1995. Under the Democratic plan, the premium will remain 
     the same for 1996. Subsequent premiums would be determined 
     without regard to home health services transferred from Part 
     A to Part B as a result of this proposal. The following chart 
     shows the premium amounts under current law, the Republican 
     proposal (HR 2425), and the Democratic plan:

----------------------------------------------------------------------------------------------------------------
                                                           1995   1996   1997   1998   1999   2000   2001   2002
----------------------------------------------------------------------------------------------------------------
Current law.............................................    $46    $43    $48    $53    $55    $57    $59    $61
Republican plan.........................................     46     53     57     60     64     72     79     88
Democratic substitute...................................     46     46     47     51     53     54     56     58
----------------------------------------------------------------------------------------------------------------

                       D. Anesthesiology Payments

       Payment for anesthesia services would be clarified such 
     that when services are provided jointly by anesthesiologists 
     and by nurse anesthetists, both providers would be 
     reimbursed.

            Subtitle C. Provisions relating to parts A and B

            A. Continue Medicare as the Payer of Last Resort

       When a Medicare beneficiary also has private insurance, 
     Medicare pays only after the other insurer has met its 
     obligations. The authority for this policy is temporary, 
     however, expiring in 1998. This Democratic plan extends the 
     so-called Medicare secondary payer provisions through 2002. 
     In addition, insurers would be required to report on 
     secondary payer status and current rules would be clarified, 
     given recent judicial action.

                      B. Expand Beneficiary Choice

       Medicare beneficiaries currently select either traditional 
     fee-for-service or an HMO for the delivery of their health 
     care. Under this democratic plan, additional managed care 
     choices would be provided, including preferred provider 
     organizations (PPOs), point-of-service (POS) plans, and 
     provider service organizations. Plans could not bar any 
     professional from participating in a plan solely on the 
     basis of their license or certification under State law.

                 C. Improve Graduate Medical Education

       Prudent reforms are needed in Medicare's policies for 
     reimbursing the costs of graduate medical education. Instead, 
     the Republican majority has chosen to slash support for 
     hospitals dedicated to training the next generation of health 
     professionals. Under this Democratic substitute, only the 
     needed reforms would be made. Specifically, the plan would:
       1. Establish a graduate medical education trust fund.--
     Funds would be targeted to teaching hospitals by creating a 
     graduate medical education trust fund. Funds for teaching 
     hospitals, now paid to HMO's, would be deposited into the new 
     graduate medical education trust fund. A commission on 
     graduate medical education would also be established to 
     develop a method for assuring that academic medical centers 
     train the types of physicians that will be required to meet 
     the nation's health needs.
       2. Reform Medicare payments for graduate medical 
     education.--A number of needed improvements would be made in 
     Medicare policies for reimbursing the costs of graduate 
     medical education. Specifically:
       The total number and number of non-primary care residency 
     positions reimbursed under Medicare would be frozen.
       The OBRA '93 freeze on updates for nonprimary care 
     residents would be extended for an additional two years.
       Residents in training beyond their initial residency period 
     would be counted less, for purposes of the indirect medical 
     education adjustment.
       Reimbursement would be made for work performed in non-
     hospital settings for indirect medical education.
       Payments would be authorized for non-hospital settings for 
     residents receiving primary care training when a hospital is 
     not paying the resident's salary.

                         D. Home Health Reforms

       Payments for home health services have been one of the 
     fastest growing components of Medicare since the late 1980's. 
     In fact, outlays for home health services more than 
     quintupled between 1987 and 1994. This increase is, in large 
     part, due to a 1989 court decision--Duggan v. Bowen--which 
     liberalized the Medicare benefit and made the denial of home 
     health claims difficult. Clearly, reforms are needed to 
     control the growth in expenditures.
       Under this Democratic substitute, payments for home health 
     would, over time, shift from cost-based retrospective 
     reimbursement, to a prospective payment system. Specifically, 
     the plan would:
       1. Establish a prospective payment system for home health 
     services effective in FY 2000 with the following steps.--
       Impose interim cost limits.--Through the end of FY 1996, 
     the cost limits on home health services would equal to 112 
     percent of the mean labor-related and nonlabor costs per 
     visit of free standing home health agencies.
       Effective October 1, 1996, the cost limits would be reduced 
     to 105 percent of the median costs.
       Effective October 1, 1996, the Secretary would be 
     authorized to establish a TEFRA-limits type system under 
     which each home health agency would be subject to a total 
     dollar cap for each beneficiary per year, based on the lesser 
     of (1) actual costs per visit times the average number of 
     visits per beneficiary in calendar year 1995 (the base year); 
     or (2) the agency-specific per beneficiary limit.
       Extend, through FY 1996, the OBRA '93 freeze on updates.
       Modify payment rules.--Effective for FY 1996, payment to 
     home health agencies would be based on the site where service 
     is rendered, as opposed to the location of the site where the 
     service is billed.
       Establish a prospective payment system.--The Secretary 
     would be authorized to impose a full per episode home health 
     prospective payment system in FY 2000.
       2. Establish a 160-visit limit.--A 160-visit limit would be 
     imposed on home health services under part A of Medicare. 
     Visits beyond the limit would be reimbursed under part B, as 
     in current law.

   E. Commission on the Future of Medicare and the Protection of the 
                       Health of Senior Citizens

       A commission would be established to analyze the health 
     status of the Medicare-eligible population, make 
     recommendations on actions to improve the health of that 
     population, analyze the effects of changes in Medicare on the 
     private health financing system, examine the impact of the 
     increase in the eligible population occurring after 2010, and 
     make recommendations to the Congress on actions to preserve 
     the program during that period.

                            F. Miscellaneous

       Under this Democratic plan, Medicare law could not be 
     construed to prohibit coverage of items and services 
     associated with the use of a medical device in the furnishing 
     of inpatient or outpatient hospital services (including 
     outpatient diagnostic imaging services) on the grounds that 
     the device is not an approved device if it is an 
     investigational device or is used instead of an approved 
     device or a covered procedure.

                 Subtitle D. Preventing fraud and abuse

                      A. Tough Anti-fraud Measures

       This Democratic plan would fill the holes in the Republican 
     fraud detection proposal by strengthening Federal anti-fraud 
     and abuse provisions, requiring HHS to offer interpretive 
     rulings on kick-back and self-referral legislation, and pre-
     emption of State corporate practice laws.

             B. Mandatory Funding for the Inspector General

       The HHS Inspector General (IG) is responsible for Medicare 
     fraud detection, yet this year the Republican majority has 
     proposed to reduce funding for the IG by 6 percent. And, 
     given limited funds, the IG doesn't even maintain a field 
     office in 23 States. Simply put, rhetoric alone won't result 
     in fraud detection--and prosecution. We need an aggressive IG 
     who has the manpower to carry out the threat.
       For that reason, this Democratic plan mandates 
     appropriation of funds from the Medicare trust funds to the 
     HHS Office of the Inspector General. This will assure 
     adequate funds for the IG and a field office in every State. 
     Funding would total $130 million in FY 96, $181 million in FY 
     97, and $204 million in FY 98 with future amounts indexed to 
     total increases in Medicare expenditures.

                     C. Enhanced Payment Safeguards

       This Democratic substitute also mandates appropriation of 
     funds from the Medicare trust funds for enhanced payment 
     safeguard activities by the Health Care Financing 
     Administration and its contractors to crack down on double 
     billing, overcharging, and other abuses. Funding for these 
     payment safeguards would total $430 million in FY 96, $490 
     million in FY 97, $550 million in FY 98, $620 million in FY 
     99, $670 million in FY 00, $690 million in FY 01, and $710 
     million in FY 02.

           D. Commission to Prevent Medicare Fraud and Abuse

       Finally, this Democratic substitute established a temporary 
     ``blue ribbon panel'' to examine the full scope of waste, 
     fraud and abuse in the Medicare system and recommend cost 
     effective remedies. The Commission would hold hearings, take 
     testimony, receive evidence with full subpoena power, and 
     report to Congress within 18 months. The Commission would 
     terminate within 90 days after submission of its report to 
     Congress.

                          ____________________