[Congressional Record Volume 141, Number 162 (Thursday, October 19, 1995)]
[House]
[Pages H10333-H10455]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      ANNOUNCEMENT BY THE CHAIRMAN

  The CHAIRMAN. The Chair would like to take the time to remind Members 
that it is not appropriate to wear or display badges while engaging in 
debate.
  Mr. ARCHER. Mr. Chairman, I yield 3 minutes to the gentleman from 
Louisiana [Mr. McCrery], a valuable member of the Subcommittee on 
Health.
  Mr. McCRERY. Mr. Chairman, as this chart shows, spending on the 
Medicare system has skyrocketed since 1970. Here we are today and 
Members can see, if nothing is done, it goes off the chart.
  In 1970, Medicare spent about $8 billion; in 1994, Medicare spending 
was about $165 billion. That is an increase of almost 2,100 percent in 
just 14 years. In the part B side alone, growth rates have been so 
rapid that outlays of the program have increased 40 percent per 
enrollee just in the past 5 years. More alarming is that Medicare 
spending is projected to explode to over $350 billion in 2002. Clearly, 
this is an unsustainable trend and one that neither seniors nor younger 
Americans working to support themselves and their families can be asked 
to underwrite.
  The financial crisis in the Medicare program is not a short-term cash 
flow problem, as the Democrats would like the American people to 
believe. The trustees of the Medicare trust fund, three of whom are 
President Clinton's own Cabinet members, said in their report on the 
HI, or part A, trust fund, ``The trust fund fails to meet the trustee's 
test of long range close actuarial balance by an extremely wide 
margin.'' Further, the same trustees said in their report on the SMI 
trust fund, the part B trust fund, ``while in balance on an annual 
basis, shows a rate of growth of costs which is clearly 
unsustainable.''

  The public trustees of the Medicare program were very clear when they 
said, ``The Medicare Program is clearly unsustainable in its present 
form.''
  The Democrats in the past have ignored the long-range spending 
problem of the Medicare Program. Their solution has been to continually 
raise taxes on working Americans, and that is still their solution.
  In the years since the enactment of Medicare, the maximum taxable 
amount has been raised 23 times. Two years ago, the Congress, then 
controlled by Democrats, raised taxes, Medicare taxes again. All that 
did was just put another financial burden on the taxpayers and put off 
the financial crisis in the trust fund for just a few months. Clearly, 
raising taxes yet again on the American people is not the answer.
  The Medicare Preservation Act, on the other hand, addresses the out-
of-control spending in the Medicare Program by opening up the private 
health care market to the senior population. By harnessing some of the 
innovative cost effective and high quality private sector health care 
delivery options, Medicare beneficiaries will not only have a choice in 
their health care coverage for the first time, but the Government will 
also be able to rein in out-of-control Medicare spending. It is a win/
win situation.
  The Republican plan provides security for not only today's seniors 
but also lays the groundwork for the retirement of my generation, and 
it does it without increasing the tax burden on working people.
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from Pennsylvania [Mr. Klink].
  Mr. KLINK. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  I would like to begin by yielding to the gentleman from Ohio [Mr. 
Brown].
  Mr. BROWN of Ohio. Mr. Chairman, the previous speaker, under the 
Gingrich Medicare plan, the hospitals in and around the district of the 
gentleman from Louisiana [Mr. McCrery], will lose $158 million over the 
next 7 years under the Gingrich Medicare cut plan.

[[Page H 10334]]

  Mr. KLINK. Mr. Chairman, I thank the gentleman for that input. Here 
is the chart which actually shows the reduction in Medicare spending 
per beneficiary under the House Republican plan. I have to get this 
straight. When is a cut not a cut?
  Last year when we were trying to do health care, every Republican on 
the Committee on Ways and Means signed a letter which said, ``the 
additional massive cuts in reimbursement to providers proposed in this 
bill''--the Clinton bill--``will reduce the quality of care for the 
Nation's elderly.'' That was $168 billion versus $70 billion now.
  The current chairman of the Committee on Ways and Means made the 
statement, ``I just don't believe that the quality of care and 
availability of care can survive these additional cuts.'' Now they are 
saying that these are not cuts. It is cuts in the rate of growth. Were 
you lying to us now or are you lying to us then?
  Mr. ARCHER. Mr. Chairman, I yield myself such time as I may consume.
  I resent the fact that the gentleman implied that I have lied. No. 1, 
that does not belong on this floor. But the gentleman, as usual, has 
not given the factual information.
  The plan that I made those comments on cut $490 billion out of 
Medicare and Medicaid. Without transforming Medicare, without giving 
other options, without including true savings in the cost drivers. That 
was a totally different time, a totally different program. But it cuts 
$490 billion out of Medicare and Medicaid.
  Mr. Chairman, I reserve the balance of my time.
  Mr. GIBBONS. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Georgia [Mr. Lewis].
  Mr. LEWIS of Georgia. Mr. Chairman, I thank the gentleman for 
yielding time to me.
  Mr. Chairman, I rise today in strong opposition to the Republican 
Medicare plan. I rise to tell you there is another way, a better way. 
We Democrats have a plan. We save the Medicare trust fund, and we do it 
without hurting the poor, the sick, and the elderly.
  How can we do it? We can do it because we do not pay for tax breaks 
for the rich. There is only so much money--you can either use it to 
help the sick and the elderly or you can give it to the rich. My 
Republican colleagues may say whatever they wish, but the truth is that 
these very large--these huge Medicare cuts are needed to pay for their 
tax breaks for the rich.
  The Republicans say they want to help Medicare. But what they do is 
different. Thirty years ago, the Democrats created Medicare and the 
Republicans voted against it.
  Two years ago, Democrats passed a bill that helped the Medicare trust 
fund. Every Republican voted no.
  Earlier this year. the Republicans took $87 billion from the Medicare 
trust fund. Today, they want to cut an additional $270 billion.
  They voted against Medicare 30 years ago, and they are voting against 
it again today. My colleagues, actions speak louder than words, and the 
Republican actions are loud and clear.
  The Republicans did not want Medicare 30 years ago and they want to 
dismantle it now.
  I do not believe that we must destroy Medicare to save it. Democrats 
do not raise premiums for seniors. Democrats ensure that Medicare is 
there for our families, for our children, for our grandchildren, and 
their children.
  Under their plan, the Republicans eliminate nursing home standards. 
Poor seniors lose help for copayments and deductibles.
  Under the Republican plan, the rich get tax cuts, and our Nation's 
elderly and hard-working families get higher Medicare bills. It's a 
scam, a sham, and a shame. I know it. You know it. Now the American 
people know it.
  Mr. Chairman, on this day, October 19, let the word go forth from 
this place into every State, every city, every town, every village, 
every hamlet that it was the Republicans who voted to cut Medicare--
they voted to cut Medicare by $270 billion in order to give a $245 
billion tax break to the wealthy. The Republican plan is too much, too 
radical, too extreme.
  We have more than a legislative responsibility to oppose this 
Republican plan. We have a mandate, a mission, and a moral obligation 
to protect Medicare.
  This vote--this debate is about something much bigger than one vote. 
It is bigger than one bill. It is about two contracts, the Republican 
contact with the rich, and the Democratic contract with the American 
people--Medicare. Medicare is a contract--a sacred trust with our 
Nation's seniors and our Nation's hard-working families.
  My fellow Americans, remember--it was the Democrats who found the 
courage and the strength to provide health care to our seniors, and it 
is the Democrats who will preserve it for unborn generations.
  We must not and will not break the contract with America's seniors 
and families. I urge my colleagues to support the Democratic 
alternative and oppose the Republican plan to cut Medicare.
  Mr. ARCHER. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, the facts have already been presented to this 
committee. Medicare increases per beneficiary go from $4,800 to $6,700 
per year. The total aggregate increase in medical expenditures 
increases $1.4 trillion under our plan over the next 7 years. But only 
in Washington can an increase be called a cut.
  Mr. BLILEY. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Pennsylvania [Mr. Greenwood].
  Mr. GREENWOOD. Mr. Chairman, earlier this year we got some very bad 
news for Americans and senior citizens. The trustees of the Medicare 
funds told us that under all sets of assumptions the fund goes 
bankrupt, and it goes bankrupt in 7 years. Taking our responsibility 
very seriously, we Republicans went to work.
  We gathered with senior citizens, with experts from around the 
country, and we said, what can we do? Is there any good news? Can we 
fix the situation? We found good news. We found that health insurance 
costs for working people, not retired people, were going down. 
Inflation rates at 10.5 percent in Medicare are killing it.

                              {time}  1230

  The private sector using intelligent new programs have brought the 
inflation rate down below to virtually zero. We said the good news is 
this. We can preserve Medicare, we can preserve fee-for-service options 
for everyone who wants to stay that way, but we have new and exciting 
options.
  Mr. Chairman, my mother and father have chosen the managed-care 
option. They love it. They save $1,000 a year each because they no 
longer buy MediGap insurance. They have new prescription drug benefits. 
They get all of the referrals they want. They are delighted.
  This plan is very straightforward. We preserve fee-for-service, we 
increase the per beneficiary expenditure from $4,800 a year to $6,700 a 
year, and for those seniors who want new choices, we have excellent new 
choices in managed care. This is a spectacular bill. Americans will be 
proud of it. Senior citizens love it. Vote ``yes.''
  Mr. DINGELL. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Oregon [Mr. Wyden].
  (Mr. WYDEN asked and was given permission to revise and extend his 
remarks.)
  Mr. WYDEN. Mr. Chairman, our Nation needs----
  Mr. STARK. Mr. Chairman, will the gentleman yield?
  Mr. WYDEN. I yield to the gentleman from California.
  Mr. STARK. Mr. Chairman, I wish to inform the gentleman that in the 
district of the gentleman from Pennsylvania [Mr. Greenwood] there will 
be $128 cut from hospitals over the next 7 years.
  Mr. WYDEN. Mr. Chairman, our Nation needs bipartisan reform of 
Medicare, but instead today's bill will deliver a nationwide Medicare 
migraine. Instead of listening to our seniors, and our families, and to 
the inspector general, this is a cut first, ask questions later 
Medicare initiative, and the fraud section is a metaphor for the whole 
bill. Instead of legislation to protect seniors and taxpayers, it 
protects the crooks and the thieves. Instead of improving access to 
health care, it provides a freeway to fraud, and, my colleagues, think 
of the words of the nonpartisan fraud-buster at the Office of the 
Inspector General who said that this bill will cripple, it will 
cripple, efforts to bring justice. 

[[Page H 10335]]

  Let me tell my colleagues it is possible to develop 21st century 
Medicare that works for seniors and taxpayers. Reject this bill and 
come with me to Oregon because I will show each of you programs that 
protect seniors, hold down costs, and insure that we have a path to the 
21st century. We can do this job right. We can do it in a bipartisan 
way. But let us listen to our seniors and our taxpayers.
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished 
gentlewoman from Oregon [Ms. Furse].
  Ms. FURSE. Mr. Chairman, I thank the gentleman for yielding this time 
to me.
  I have here a list of words that I am told the Republicans were asked 
to use in this debate, words like historic, successful, saves. Well, 
there was a historic event 30 years ago. The Democrats in this House 
passed Medicare. Not one Republican voted for it.
  Successful? Well, yes. This bill successfully guts Medicare.
  Saves? Well, yes. This bill saves the promised tax breaks for the 
rich.
  Mr. Chairman, also on this list it says we should say the Democrats 
are scaring 85-year-olds. Mr. Chairman, as a member of the committee, I 
know that it was the Republicans who ordered the arrest of 85-year-olds 
who came to the committee. They came there. They came to ask the 
committee what is going to happen to our Medicare protection. They were 
Americans. It is a disgrace that they were arrested.
  I think there is a word that is not on this list, Mr. Chairman, and 
that word is shame.
  Mr. BLILEY. Mr. Chairman, I yield myself 30 seconds to respond.
  Mr. Chairman, the rules of this House are explicit. The chairman of 
any committee is required to preserve order, and when citizens of any 
persuasion, any age, come in, refuse to obey the orders of this House, 
the chairman has no choice but to have them escorted out of the room.
  Mr. Chairman, that is exactly what happened in the Committee on 
Commerce, and that is what we had to do regrettably, but that is the 
truth.
  Mr. DINGELL. Mr. Chairman, I yield myself 15 seconds.
  Mr. Chairman, I love my dear friend from Virginia, but I notice he 
did nothing when a bunch of people came in and dumped bags of mail from 
dead men, from people who were not supporting the legislation in 
question, and some of which were addressed ``contributor.'' Our 
Republican colleagues have a great sensitivity about the senior 
citizens, but none whatsoever about rascality by high-paid lobbyists.
  Mr. BLILEY. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, the organization that disrupted that meeting, I would 
like the Record to show, 96 percent of those funds come from the public 
treasury. The person who was the ringleader was a paid staff person.
  Mr. Chairman, I yield 2 minutes to the gentleman from Florida [Mr. 
Bilirakis].
  (Mr. BILIRAKIS asked and was given permission to revise and extend 
his remarks.)
  Mr. BILIRAKIS. Mr. Chairman, I will use the word ``shame.'' Shame on 
those politicians who over the years, not just now, use scare tactics 
and misinformation to frighten our senior citizens all in the interests 
of getting votes through fear. These actions are unconscionable.
  Only the most affluent retirees are having their part B premiums 
raised substantially. We are not raising Medicare copayments or 
deductibles. We will not be reducing services or benefits--our 
legislation ensures that the core services in the current Medicare 
Program will be retained and must be offered to all beneficiaries.
  I also want to make it clear that no one will be forced into HMO's. 
If Medicare beneficiaries wish to keep the current fee-for-service 
benefit where they have complete choice of their doctor, they will be 
permitted to do so. If beneficiaries want to enroll in an HMO which 
might include additional health benefits, or some other Medicare-plus 
plan, they can do so. It will be their choice. Under our proposal, 
coverage will be assured to all senior citizens, regardless of prior 
health history or age.
  From the beginning of this effort, I have insisted that protecting 
beneficiaries was an essential part of any Medicare report effort. I 
represent a congressional district that has one of the highest 
percentages of senior citizens in the country. I also worked for years 
as an attorney and a community volunteer with many retirees. Recently, 
I myself, reached Medicare age.
  This bill is the product of listening and learning. It is a product 
of many discussions with people who had real life, day to day 
experiences with the Medicare Program. It protects our current 
beneficiaries while ensuring that Medicare will exist for future 
beneficiaries.
  In a recent Washington Post article, Robert Samuelson said it well 
when he stated that ``Republicans occupy the high moral ground and the 
low political ground. They have raised critical questions at the risk 
of political suicide.''
  And, knowing that, Republicans still believe it is our responsibility 
to show pure guts and courage to save Medicare for our seniors, their 
children, and grandchildren. We have taken on the task of protecting 
and preserving Medicare because it is our moral responsibility, not 
because of political necessity. We have taken the higher ground and 
this is ground that I am proud to stand on.
  Mr. WAXMAN. Mr. Chairman, I yield 2 minutes to the gentleman from 
Texas [Mr. Bryant] and I ask him if he would yield back to me 15 
seconds.
  Mr. BRYANT of Texas. I yield to the gentleman from California.
  Mr. WAXMAN. Mr. Chairman, I just want to comment on the statement 
made by the previous gentleman. He claimed we are not cutting benefits, 
we are not going to make people pay for benefits for their health care. 
How are we getting $270 billion in Medicare cuts and the AMA supports 
the bill? Something just does not add up.
  Mr. BRYANT of Texas. Mr. Chairman, the gentleman's logic is 
impeccable. I would point out that the losses to hospitals in and 
around the district of the gentleman from Florida [Mr. Bilirakis] are 
going to be $210 million over the next 7 years, and my colleague says 
there are no cuts. His folks are going to feel them.
  The fact of the matter is, Mr. Bilirakis, as chairman of the 
Subcommittee on Health, my colleague and his Republican friends ought 
to be working on the fact that health care costs are rising. Instead my 
colleague is working on cutting health care insurance that elderly 
people use to cope with health care costs. That is the problem.
  The fact of the matter is it is not a secret that my colleague's 
party philosophically does not believe Medicare is the appropriate role 
of government, and yet he comes in here and tells us they are not 
cutting it. Mr. Chairman, my colleague has gotten power, and now he is 
cutting it. He boasts throughout the land he is cutting government, but 
today, as he takes $270 billion out of the program that insures the 
health needs of seniors, he says he is not cutting it.
  Only in Washington would anybody believe that, Mr. Archer.
  I would point out that with regard to these cuts, Mr. Chairman, the 
gentleman from Texas [Mr. Archer] and I are pretty much both in the 
same situation. In Harris County, TX, we are talking about $2.4 billion 
in cuts between 1996 and the year 2002 according to the Health Care 
Finance Administration.
  Now my colleagues asked for facts, There is facts. Dallas County, 
$1.6 billion in cuts between 1996 and the year 2002. Why? To pay for 
tax cuts for wealthy people out of the hides of elderly people who are 
not going to be able to pay their medical bills because they have cut 
their insurance.
  Mr. ARCHER. Mr. Chairman, I yield myself such times as I may consume 
very simply to say that once again we are back into the same rhetoric. 
There will be increases for hospitals across this country. Those 
increases have already been demonstrated by the facts.
  Only in Washington can a Member of Congress stand up and call 
increases a cut.
  Mr. Chairman, I yield 2 minutes to the gentleman from Michigan [Mr. 
Camp], a respected member of the committee.
  (Mr. CAMP asked and was given permission to revise and extend his 
remarks.)
  Mr. CAMP. Mr. Chairman, I thank the distinguished gentleman from 

[[Page H 10336]]
  Texas [Mr. Archer] for yielding this time to me, and I rise today in 
support of the Medicare Preservation Act because it officially ends the 
policy of just raise taxes.
  Mr. Chairman, some who oppose our program have called it extreme. 
What is extreme is that year after year the Democrat's answer to the 
Medicare crisis has been to raise taxes. Almost every year, Democrats 
dug deeper into the pockets of working Americans just to get through 
the next election. And in 1993, they even raised taxes on seniors 
citizens.

  Nine times, since 1965, the Medicare Board of Trustees has stated 
that Medicare was in severe financial trouble and needed reform. What 
was the Democrats answer? Raise taxes. Just throw more money at it to 
get through the next election.
  Since 1965, Democrats raised the payroll tax on working Americans 
eight times, over 450 percent. They raised the earnings subject to tax 
for Medicare 10 times, an increase of over 2000 percent. Then they 
raised taxes on Federal and State employees, and, when they still 
needed more, in 1993, they raised taxes on American seniors who had 
already paid their fair share into the program. Now, a senior earning 
just $34,000 pays not half of their Social Security in taxes but 85 
percent. And now even the President admits taxes were raised too much 
in 1993.
  Mr. Chairman, that is extreme.
  Could we put the Medicare crisis off a few years if we raise taxes 
again? Sure we could.
  Could we avoid the vicious attacks by special interest groups if we 
didn't reform the system? Sure.
  But we are not going to do that. We are going to preserve, protect 
and strengthen Medicare not to get through the next election, but for 
the next generation. We will ensure the solvency of this program. We 
will increase benefits. We will maintain the current premium rate and 
for the first time in the history of Medicare, we will give seniors the 
right to choose the health care plan that best suits their health 
needs.
  Mr. BLILEY. Mr. Chairman, I yield 5 minutes to the gentleman from 
Florida [Mr. Stearns].
  Mr. STEARNS. Mr. Chairman, I would like to have a colloquy, if I 
could, with the gentleman from Pennsylvania. Both he and I have worked 
hard in our districts getting the message out how important it is to 
look at this program because it is going bankrupt, and we want to offer 
them choices, much like the choices that the gentleman and I have. 
Perhaps many Members do not know that a large number of the Federal 
employees are retired and they have choices, HMO's, PPO's, and all 
these other things. Let us talk, for example, about a widow whose $600-
a-month pension is too low to pay for this expensive part C medigap 
insurance and whose biggest problem is that she cannot afford the 
deductible portion of her doctor's bill.

                              {time}  1245

  So what happens, she does not go to take care of herself. Now, what 
would we have under this program with our HMO's and PPO's and the 
PSN's? I mean, even a $5 doctor bill is something that she would be 
concerned about. You might want to amplify on that.
  Mr. GREENWOOD. If the gentleman will yield, the option that would be 
very attractive for the constituent in your district that you just have 
described would be a managed care option. Most of the managed care 
companies have told us that, and they are already doing this in many 
areas of the country, that they will offer managed care plans in which 
there is no requirement whatsoever to pay Medigap insurance. So that 
$1,000 a year that she may be paying now toward her Medigap insurance 
would disappear. Suddenly she would gain new benefits. She would 
probably gain a prescription drug benefit. She may get an improved 
dental or vision benefit. She would no longer have that out-of-pocket 
cost at all and still be able to go to her doctors within her network 
whenever she chooses. She would, I think, would welcome this change 
very much and be far better off and have more money left over in her 
budget at the end of each month.
  Mr. STEARNS. Is it not a point of fact that all the people in this 
room have the Federal employee health benefit program, and is it not a 
point of fact that people on this side are in HMO's, in fact, there are 
Members of Congress who have retired who are in health management 
organizations and they are not picketing and screaming and worried? 
Because actually what we are trying to do is develop a program for 
Medicare that is much like the First Lady and the President has and all 
of us have, which basically says that health management organizations 
might work for some people. It should be a choice, and surely if it is 
good enough for Members of Congress, these same choices should be 
available for the seniors. So I think that is what you are saying for 
this particular woman in Florida who is on a very small pension every 
month. This would be a possible choice for her. You might want to just 
amplify on that, because I know you have toured, like I have, many 
health maintenance organizations, talked to the seniors, and for some 
of them they are very happy.
  There are people that have high monthly drug costs, and the HMO is 
paying for that, and it is paying for their deductible. So that surely 
that is an approach we should not rule out by keeping the one 
warehouse, one-size-fits-all program we now have. Surely moving it to 
what we have in the Federal employee health benefits program is a step 
forward.
  Mr. GREENWOOD. The fact of the matter is 9 percent of seniors in this 
country already have chosen the option of receiving their Medicare 
benefits through managed care. That number is growing rapidly because 
you know how seniors will get together and talk and compare notes, and 
when one learns from the other that they have a new prescription drug 
program benefit, they say, ``How do I get that,'' and they make the 
choice.
  One of the things about this debate that has been interesting to me 
is you and I and Members of this side of the aisle know our friends on 
the other side of the aisle will spend all day, as they have spent the 
last 6 or 7 months, scaring senior citizens that all of these terrible 
things are going to befall them.
  The fact of the matter is that we are confident today, we are 
confident because we know when the political dust settles, when this 
plan is finally signed into law, that the senior citizens will then, 
beginning in January, have these new options. They will see, my 
goodness, their copays did not go up, deductibles did not go up, their 
Social Security check, even with part B deduction, is bigger than it 
was this year. They will then thank us. Once this debate is over, we 
think we will be able to say we told you so.

  Mr. STEARNS. Is it not also true, if they want to remain in Medicare 
as it is right now, they can still do that? They still have that 
choice?
  Mr. GREENWOOD. Absolutely. That is the beauty part. We have made 
certain from day one there is the fee-for-service option will always be 
available to every single senior citizen in America that wants to keep 
it. Those that may be a little too old for change, do not like to 
change, can keep their fee-for-service and enjoy the kind of Medicare 
that they have grown to enjoy these past years.
  Mr. GIBBONS. Mr. Chairman, I yield myself 30 seconds.
  I know the two gentlemen who just had this colloquy on the floor are 
sincere. But last year I checked all of the Medicare policies of every 
Member in Congress here. Ninety-nine percent of us have fee-for-
service. Ninety-nine percent of us have fee-for-service, and all of 
those, all of those that have fee-for-service have abortion benefits in 
our medical care policies. You know, those are in the records of the 
House. Go check them.


                         parliamentary inquiry

  Mr. THOMAS. Mr. Chairman, I have a parliamentary inquiry.
  The CHAIRMAN. The gentleman will state his parliamentary inquiry.
  Mr. THOMAS. Mr. Chairman, is it against the rules to wear slogans, 
buttons, while addressing the Committee of the Whole, and did the 
Chairman not already indicate what the rules are?
  The CHAIRMAN. The gentleman is correct.
  Mr. STUPAK. Mr. Chairman, I yield 90 seconds to the gentleman from 
New York [Mr. Manton].
  Mr. MANTON. Mr. Chairman, at the outset, I yield to the gentleman 
from Michigan [Mr. Stupak].
  Mr. STUPAK. Mr. Chairman, I just wanted to point out the last speaker 
in 

[[Page H 10337]]
the well down here, the gentleman from Florida [Mr. Stearns], his 
district will lose $154 million over the next 7 years if this 
Republican plan goes through, just to give a tax break to the rich.
  I am more concerned about the State of Michigan where the gentleman 
from Michigan [Mr. Camp] spoke in which in his district the hospitals 
will lose $125 million between now and 2002 just to pay for this tax 
break for the rich. Being from Michigan, I am very concerned about 
that.
  Mr. MANTON. Mr. Chairman, I rise in strong opposition to this 
draconian plan to slash $270 billion from Medicare. This so-called 
Medicare preservation plan will seriously threaten the integrity of the 
program and inflict undue pain on America's elderly.
  Under this bill, the elderly will suffer an increase in their 
premiums and a decrease in the quality of their health care services. 
Quite simply, you are asking seniors to pay a lot more, but expect a 
lot less.
  And last night, Mr. Chairman, in one final act of cruelty, the 
majority included a provision to deny anti-nausea drugs for 
chemotherapy patients. How can you possibly justify denying basic 
dignity and comfort to those in the twilight of their life, who are 
fighting for that very life.
  Speaking out against this outrageous proposal is not a matter of 
demagoguery, its a matter of duty. Duty to the senior citizens we 
represent.
  Oppose this legislation.
  Mr. ARCHER. Mr. Chairman, I yield 30 seconds to the gentleman from 
Louisiana [Mr. McCrery].
  Mr. McCRERY. Mr. Chairman, the gentleman stated something that is 
just incorrect, and it has been stated in the media some. We are not 
denying payments for anti-nausea drugs for cancer patients. The fact is 
that we will continue to pay for the intravenous drug that people, the 
cancer patients, use to fight nausea.
  Mr. BLILEY. Mr. Chairman, I yield 4 minutes to the gentleman from 
Pennsylvania [Mr. Greenwood].
  Mr. GREENWOOD. Mr. Chairman, I yield to the gentleman from New York 
[Mr. Paxon] for a question.
  Mr. PAXON. Mr. Chairman, I have many constituents back in western New 
York, in the Buffalo and Rochester, Finger Lakes areas, that are 
concerned about catastrophic costs in health care. How would medical 
savings accounts help those with recurring health problems pay for 
these catastrophic expenses?
  Mr. GREENWOOD. The medical savings account is a new component of 
Medicare that we have included in this reform. Those seniors who choose 
it would have deposited into their medical savings account a number of 
dollars that would average about $5,000 across the Nation; the first 
portion of that deposit would be used to buy catastrophic or major 
medical insurance that would cover them above he deductible. Then the 
senior gets to use what is left in the account for his or her medical 
benefits, go to whatever doctor or hospital he or she wants. Once the 
deductible is reached, then in a year in which that particular 
individual has high costs, then the medical, the catastrophic, coverage 
would kick in and they would have no more out-of-pocket costs 
whatsoever.
  In a year in which she was particularly healthy, managed her costs 
and did not go to a doctor very often, she would be able to keep the 
balance in the medical savings account. It is a good opportunity for 
savings for those seniors.
  Mr. PAXON. I would make a comment. My parents are both retired. Both 
have had catastrophic health care concerns. Of course, this would be 
very important to them.
  I also want to make the point Medicare is important to them today, 
too. They want to see Medicare protected and strengthened. It is their 
health care needs. It concerns me deeply. If their Medicare is not safe 
and secure, they have to turn to the family to help. We want to make 
certain for them and all of the constituents this plan is preserved and 
protected for the coming years.
  Mr. FRISA. Mr. Chairman, will the gentleman yield?
  Mr. GREENWOOD. I yield to the gentleman from New York.
  Mr. FRISA. Mr. Chairman, I just wanted to, if we could, because this 
is such a serious issue, it is an important one for our senior 
citizens. My folks are both retired and are counting on Medicare being 
there throughout their retirement, and they are happy that we are 
taking the opportunity to make Medicare safe and sound and better for 
all of us.
  So I would like to ask the gentleman, are there going to be increased 
funds for seniors under the Republican plan?
  Mr. GREENWOOD. Well, of course, there are. Despite all of the 
rhetoric to the contrary, we are actually taking, right now, we are 
spending on average $4,800 per each beneficiary in the Medicare 
Program. Our plan increases that about 5 percent each year for a 40-
percent increase over the next 7 years. So 7 years from now we will be 
spending $6,700 for beneficiaries. It is a huge increase.
  What we are doing is bringing down the unsustainable inflation rate 
which is bankrupting the system.
  Mr. FRISA. In other words, and I think this is very important, 
despite the rhetoric, it is really not truthful. We are saying the 
average senior citizen will be getting an extra 100 $20-bills spent on 
their medical behalf. So there is more money being spent for senior 
citizens under the Republican plan.
  It is absolutely incredible, I think you would agree, that my 
colleagues on the other side of the aisle are trying to say that 100 
additional $20-bills for our senior citizens is a cut. It is absolutely 
incredible.
  I thank the gentleman for explaining that and making it clear to the 
American people and, most importantly, to our senior citizens that the 
Republicans, by providing a $2,000-per-beneficiary increase is what is 
going to save Medicare for our seniors so they can feel that it is safe 
and sound and better for them.
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from Florida [Mr. Deutsch].
  Mr. DEUTSCH. Mr. Chairman, you know, sometimes we can make 
complicated issues simple. If we are saving $270 billion and there are 
37.6 million beneficiaries, this is what it is going to cost each 
Medicare beneficiary in America, whether in terms of direct out-of-
pocket expenses or not.
  There is another chart which I think is probably the best chart and 
the clearest and most factual, and if we can focus in on this so people 
watching can see, my Republican colleagues have said we have to do 
something, there is this incredible crisis, the trust fund is gong to 
go bankrupt in 7 years.
  Well, the Medicare Program has existed for 30 years. Twelve of those 
thirty years there was a shorter life expectancy than 7 years that 
exists today, and we did incremental changes. We fixed it.
  It is a flat-out lie that this is unprecedented. It is a flat-out lie 
that $270 billion needs to be cut. It is a flat-out lie that choice 
will be available for Medicare beneficiaries.
  Mr. GIBBONS. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Tennessee [Mr. Clement].
  (Mr. CLEMENT asked and was given permission to revise and extend his 
remarks.)
  Mr. CLEMENT. Mr. Chairman, I rise in opposition to the Republican 
Medicare reform plan and ask my colleagues to support the Dingell-
Gibbons substitute.
  Mr. Chairman, when President Lyndon Johnson began the Medicare 
Program in 1965, less than half of all seniors had health insurance. It 
was understood that the elderly had declining resources, costly health 
care needs, and few insurers willing to sell them coverage. Since its 
creation, the Medicare Program has been a great success. Today, 99 
percent of senior citizens and a substantial proportion of the disabled 
are covered by Medicare. It has contributed to reducing poverty among 
the elderly and causing the life expectancy rate in America to exceed 
that of every country in the world except Japan. Medicare is fulfilling 
its mission.
  Let me review briefly the two areas of the Medicare Program. Part A 
of Medicare is financed by the hospital insurance trust fund, which 
comes primarily from the hospital insurance or Medicare payroll tax 
contributions paid by employers, employees, and self-employed 
individuals. Medicare part A will pay for inpatient hospital care, 
skilled nursing facilities, home health care, and hospice services. It 
is the trust fund of part A which the Medicare trustees say is 
``severely out of financial balance'' and must receive ``prompt, 
effective, 

[[Page H 10338]]
and decisive action'' from Congress to restore the stability of the 
program.
  The second aspect of the Medicare Program is part B, the 
supplementary medical insurance trust fund. Part B is optional, and 
primarily finances physician and hospital outpatient services. Part B 
is financed by premium payments from enrollees and by general revenue 
funds from the Federal Government. The part B premium is currently 
$46.10 monthly or 31.5 percent of total costs of Medicare, and the 
budget of 1993 would bring the premium down to 25 percent of total 
costs from 1996 to 1998. Beneficiaries are responsible for an annual 
deductible of $100 and coinsurance, usually a 20-percent copayment. The 
part B trust fund is not in financial crisis, though only because it is 
financed partially by the general fund which is experiencing runaway 
health care costs and driving up the deficit of the U.S. Government.
  Let me be clear that I do not believe Medicare is out of control or 
too generous as some have stated. In truth, Medicare pays only 45 
percent of the Nation's health care bill for the elderly, and it is 
less generous than 85 percent of private health insurance plans.
  The problems we are facing with Medicare today are primarily 
external, not internal. Though some problems do exist internally such 
as fraud and abuse, most of the factors which bring us to the present 
crisis are external. Let me share a few with you.
  First, the primary threat to Medicare is its rising costs which are 
consequently driving up the Federal deficit at alarming rates. The 
ability of any reform proposal must be measured by the following 
yardstick if we are to balance the budget and get our financial house 
in order: Does the reform measure control the costs of Medicare? Over 
the past 20 years the cost of the Medicare Program has increased an 
average of 15 percent a year. In this year alone, Medicare will account 
for 11.6 percent of all Federal spending. This will rise to 18.5 
percent by 2005 if costs are not controlled.
  Another factor which threatens the future of Medicare is the growing 
number of senior citizens in America. The Baby Boomers will begin 
retiring shortly after 2010, and recent years have seen a dramatic 
increase in life expectancy. During the 30-year period from 1990 to 
2020, the growth rate of the senior citizen population will be double 
the growth rate of the total U.S. population. This means that those 
receiving Medicare benefits will outnumber those employees and 
employers paying into Medicare.
  Among other contributors to the rising cost of Medicare are the high 
cost of advanced medical technologies, the rapid increase in procedures 
by doctors after a fee schedule was imposed by Medicare, the fee-for-
service arrangement which gives no cost-saving incentives to providers 
or patients, and the rise of Medicare fraud and abuse. All these 
factors, some of which I applaud such as life expectancy and miraculous 
technology, have brought us to this present moment of crisis.
  Before looking at the specific proposals to reform Medicare, I wish 
to suggest the values which I believe should drive any attempt at 
reform. I believe you will agree with me. These values are:
  First, ensuring that every dollar saved from Medicare goes directly 
toward strengthening the part A trust fund and eliminating the Federal 
deficit;
  Second, making the trust fund sound for the short term and the long 
term;
  Third, protecting beneficiaries from dramatically increased costs and 
reduced access to care;
  Fourth, improving patient choice without coercion or compromising the 
quality of care;
  Fifth, reasonable sacrifice by all while ensuring the quality and 
viability of provider services for all Americans.
  Let us now turn to a quick overview of the two major proposals now 
before the Congress, one from each party. First, let's look at the 
Republican plan to reform Medicare.
  The Republicans, in their noble effort to balance the Federal budget 
and reduce the deficit, agreed to a fiscal year 1996 budget resolution 
which would reduce the rate of increase in Medicare spending by $270 
billion by the year 2002, bringing its rate of growth down from its 
current 10 percent a year to about 6 percent a year.
  The most important innovation in the Republican proposal is a feature 
which would allow Medicare beneficiaries to opt for a wide range of 
privately run health plans, with the Government paying the premium. The 
plan would provide an incentive for beneficiaries to choose an option 
that is less costly, such as managed care or preferred provider groups, 
while allowing those who want to stay in the traditional fee-for-
service style Medicare Program to do so. However, the Republican plan 
would force many low-income seniors out of the traditional program 
because of the high cost of staying in the fee-for-service as compared 
to other options. The Dingell-Gibbons substitute, which I will support 
today, allows seniors to move into managed care and rewards this cost-
saving sacrifice without punishing those who wish to stay in 
traditional fee-for-service programs.
  Another set of cost-saving provisions in the Republican plan would 
reduce the growth of fees paid to hospitals, doctors, and other care 
providers by an estimated $110 billion over 7 years. The Democratic and 
Republican plans both rely heavily on reductions in the increase of 
payments to providers, but the Republican plan also contains a look 
back provision which I oppose that would balance the budget on the 
backs of providers if the projected cost savings are not realized. This 
will only mean that doctors and hospitals will begin turning down 
Medicare patients, leading to a national health care travesty.
  Both Democratic and Republican plans also contain provisions to 
eliminate excessive fraud and abuse within the Medicare Program. The 
Congressional Budget Office estimates that at least $20 billion could 
be saved over 7 years by reducing fraud and abuse in the Medicare 
Program. I believe it is wrong to raise premiums for seniors until the 
cheats and ripoff artists are weeded out of Medicare. The Democratic 
plan makes significant headway toward reducing fraud, but the 
Republican plan will repeal existing statutes that keep doctors from 
preying on their patients for their own financial self-interests.
  These measures, and others, are slated to ensure the viability of the 
Medicare part A trust fund. Let us turn to part B for a moment. I 
remind you that the primary reason to reform part B is to reduce the 
growth in the Federal deficit, not to build up the part A trust fund 
which receives its revenues from elsewhere. The Republicans choose to 
deal with the rising cost of part B by keeping the part B premium at 
31.5 percent of total cost rather than at 25 percent as now planned. 
This means a doubling of Medicare part B premiums by 2002, increasing 
from $46.10 now to approximately $104 in 2002. While I do not oppose a 
sensible increase in premiums, I believe this increase is out of reach 
for many low-income seniors. I support the Democratic plan which would 
permanently maintain premiums at 25 percent of total cost.
  As you can see, many of the aims and methods are the same in the two 
plans. But the details differ at significant points, particularly with 
regard to how much of the burden seniors are asked to bear.
  I would like to sum up the Medicare debate as I see it. First, I 
support many of the reforms both sides support including incentives for 
entering managed care, slowing the increase in provider payments, and 
eliminating fraud and abuse. These are all contained in the Democratic 
substitute which I am supporting.
  Let me share with you my disagreements with both plans, Democratic 
and Republican. Too often Democrats have sat on the sidelines this year 
while the Super Bowl is being played on the field--we have offered more 
critique than solutions. While this may be a good political stunt, it 
is not responsible nor respectful of our Nation's senior citizens or 
our children who will bear the cost of the Medicare Program if we do 
nothing. But I have not been content to sit on the sidelines. Before 
this debate even began, I stepped out in support of health care reform 
bill this year that would have made many of the adjustments we are now 
discussing. Even today, I would have preferred to have voted for the 
coalition substitute which would have dealt with part A and part B. But 
the Republicans in the Rules Committee would not allow this bill to 
come to the House floor for a vote. So, today I will choose between the 
better of two evils and support the Democratic substitute.

  I sharply disagree with Republicans at one major point. Earlier this 
year, the Republicans voted for a $245 billion tax cut which gives over 
50 percent of the cut to those who make over $100,000 a year. It is any 
wonder then that Republicans now need to save $270 billion from the 
Medicare Program to pay for these tax cuts. I believe a tax cut of this 
magnitude at this time is irresponsible, especially when the majority 
of the tax cut goes to wealthy Americans. This translates into the 
outrageous premium and deductible increases Republicans now propose.
  The seniors in my district are telling me, ``Congressman, I don't 
mind sacrificing some benefits and bearing some of the financial burden 
of the Medicare Program to ensure the viability of the trust fund. But 
it seems to me that the Republicans are asking us to bear most of the 
burden for this reform, and it is not fair.'' I've been hearing a lot 
of people at home saying that they are beginning to think that GOP 
stands for Get the Old People party. I am not so sure they are wrong.
  The Greek word for crisis is krisis. The Greeks used this word to 
point to a critical moment in time when the road ahead would either 
mean a time of devastation or a time of great opportunity. This is a 
time of krisis. The decisions Congress make at this time will mean a 
future of prosperity and health security for all Americans, or it will 
mean a bleak future 

[[Page H 10339]]
of prosperity and health care for only the privileged few. I believe 
this is the time of great opportunity, and together we will forge out a 
Medicare Program that will provide the best health care for our 
Nation's elderly for decades to come.
  Mr. GIBBONS. Mr. Chairman, I yield 30 seconds to the gentleman from 
Wisconsin [Mr. Kleczka].
  Mr. KLECZKA. Mr. Chairman, the previous speaker indicated we are 
going to be giving all of this cash to senior citizens under the 
Republican plan.
  What he did not tell the seniors that are watching today is we are 
going to double your premiums in part B; all right. The Senate 
provisions provides more copays, more out-of-pocket-expenses.
  Seniors, this is what you are getting: Nothing.
  Mr. GIBBONS. Mr. Chairman, I yield 2 minutes to the gentleman from 
Massachusetts [Mr. Neal].
  Mr. NEAL of Massachusetts. Mr. Chairman, the Massachusetts Hospital 
Association and the gentleman from Massachusetts [Mr. Torkildsen] have 
rejected the Republican Medicare bill. The MHA says the spending 
reductions in these proposals are too fast, too deep, and would 
jeopardize the ability of Massachusetts hospitals to provide quality 
health care to patients and communities.
  Health care in Massachusetts is world-class. When Raisa Gorbachev and 
Elizabeth Dole, and as I learned yesterday, when Chairman Solomon, of 
the Committee on Rules, all were ill, they came to Massachusetts.

                              {time}  1300

  If the Medicare bill was a good bill, would not the Massachusetts 
teaching hospitals, with the renowned reputation that they have earned 
over many years, take the lead and endorse the bill? We trust these 
hospitals with our lives. We should also trust their assessment of the 
Republican Medicare bill.
  The Gingrich Medicare cuts are simply too large for hospitals to 
absorb. Cuts of this magnitude will damage the quality of health care 
in America, especially for senior citizens and future generations. We 
should be investing, and not cutting research and education.
  These outlandish cuts to hospitals will cause massive job loss across 
this country. The people hurt most by these cuts will be the hard 
working men and women of America, all so that a tax cut can be given to 
wealthy Americans who have not even asked for it. It is just not right.
  Mr. DINGELL. Mr. Chairman, I yield 1\1/2\ minutes to the 
distinguished gentleman from New Mexico [Mr. Richardson].
  (Mr. RICHARDSON asked and was given permission to revise and extend 
his remarks.)
  Mr. BROWN of Ohio. Mr. Chairman, will the gentleman yield?
  Mr. RICHARDSON. I yield to the gentleman from Ohio.
  Mr. BROWN of Ohio. Mr. Chairman, under the Gingrich Medicare plan, 
the hospitals in and around the district of the gentleman from New York 
[Mr. Paxon] will lose $64 million over the next several years to give 
tax breaks to the wealthy. Under the Gingrich Medicare plan, the 
district of the gentleman from New York [Mr. Frisa] will lose $262 
million, again to give tax breaks to the wealthiest people in this 
country that do not need it.
  Mr. RICHARDSON. Mr. Chairman, reclaiming my time, I want to talk 
about the effect of this plan on rural hospitals. That is what I 
represent. On Indian reservations throughout the State of New Mexico 
and many States in this country, rural health care will be devastated. 
Rural hospitals will close under this plan. In no way are they going to 
get more funds and resources.
  Now, this is according to the American Hospital Association. The 
typical rural hospital will lose $5 million in Medicare funding over 7 
years, and that means many of them are going to close. In my own 
district, the average senior lives on $800 a month, and paying $92 a 
month in premiums and unlimited out-of-pocket expenses is going to be 
devastating.
  Rural Medicare patients are going to lose access to doctors. 
America's rural areas are going to need at least 5,000 more primary 
care physicians to have the same access to those that accept Medicare. 
The American Medical Association says cuts in Medicare are so severe 
they will unquestionably cause some rural physicians to leave Medicare.
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from Ohio [Mr. Brown].
  Mr. BROWN of Ohio. Mr. Chairman, I appreciate the gentleman yielding 
time.
  Mr. Chairman, we have listened to the Republicans talk over and over 
about what a great plan this is, how it expands choice. The fact is 
senior citizens in this country now have full choice with Medicare. 
Yes, under the Gingrich plan seniors will have their choice of a plan, 
but they lose their choice of doctor.
  The Gingrich plan gives physicians financial incentives, the New York 
Times calls it ``bribes for doctors,'' to move out of traditional fee-
for-service into HMO's. Medicare beneficiaries therefore will be pushed 
out of traditional fee-for-service and forced into HMO's, forced into 
managed care.
  This is purely and simply a political payoff to big insurance 
companies. We know it, Newt Gingrich knows it, the Republicans know it, 
and the American people know it.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from New 
York [Mr. Houghton], a respected member of the Committee on Ways and 
Means.
  (Mr. HOUGHTON asked and was given permission to revise and extend his 
remarks.)
  Mr. HOUGHTON. Mr. Chairman, there is a lot of emotion in this issue, 
and I can understand it. It is a very important issue. I always think 
of what Wilbur Mills said, that there are probably more votes changed 
in the House Chapel than there are on the House floor.
  I am not going to try to convince anybody, but I am just going to 
tell you where I am coming from. The gentleman from Ohio [Mr. Brown] 
has thrown around a lot of numbers is terms of how many cuts will be in 
people's hospitals. I would question those numbers. I have seen those 
numbers myself as far as my own district is concerned and I question 
the authenticity of them.
  Second, I think the issue is are we going to face up to this thing or 
not? Everybody agrees we should. The President agrees, the Democrats 
agree, the Republicans agree. How are we going to do it? It is a matter 
in terms of timing and numbers.
  Also, there always is a better way. I can devise a better way. I am 
not sure this plan is exactly the way I want, but it is a good plan.
  The next point is that there are no eternal fixes for the Medicare 
problem. We never can go asleep. We are always going to have to be on 
top of this thing. The question is are we going to have a short-term or 
longer term approach to this thing.
  Let me talk a little bit about cuts. If I spend $1 today and I spend 
90 cents 7 years from now, that is a cut. If I spend $1 today and I 
spend $1.45 7 years from now, that is not a cut. Those are the 
relationships we are talking about.
  Let me talk a little bit about taxes. I did not vote for a tax cut. I 
did not think it was appropriate, I did not think it was the right 
timing. However, the Republican Party has felt that is important, the 
President has felt that is important, the gentleman from Missouri [Mr. 
Gephardt], the minority leader, has felt that is important. It is a 
fact we deal with everyday. Why can we not get together; why can we 
not, if our philosophy is the same, do something which is important as 
far as this overall Medicare issue is concerned?
  Mr. GIBBONS. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Indiana [Mr. Jacobs].
  Mr. BROWN of Ohio. Mr. Chairman, will the gentleman yield?
  Mr. JACOBS. I yield to the gentleman from Ohio.
  Mr. BROWN of Ohio. Mr. Chairman, the gentleman from New York [Mr. 
Houghton] mentioned he has other figures and he did not believe these 
figures. Under the Gingrich Medicare plan, the hospitals in and around 
the gentleman's district, my friend from New York, will lose $167 
million over the next 7 years.
  I would ask if he would come back in the well and perhaps tell us 
what the numbers he has that are different from 

[[Page H 10340]]
the numbers that we have been recounting, because we have heard no 
debate or no questioning of those numbers.
  Mr. JACOBS. Mr. Chairman, reclaiming my time, speaking of numbers, 
the proponents of this measure cite approvingly the trustees' report 
that there will be a shortfall in the next 7 years in Medicare part A, 
and that is the truth. But it is not all the truth.
  The rest of the trustees' report states how much that shortfall is, 
$90 billion. So if you accept approvingly the one part, you should 
accept approvingly the other; $90 billion is considerably less than 
$270 billion. I wonder anyone remembers the city of Bentre in Vietnam. 
That is the one that was wiped out, every lock, stock, horse carriage, 
human being, and building, the Army major declaring it became necessary 
to destroy it in order to save it.
  My father used to say that in politics you can get people to eat the 
pudding, but you cannot get them to read the recipe. Today we are 
talking the recipe. We will see how the pudding tastes.
  Mr. DINGELL. Mr. Chairman, I yield 2 minutes to the distinguished 
gentlewoman from California [Ms. Eshoo].
  Ms. ESHOO. Mr. Chairman, today the Gingrich Republicans are being 
encouraged to use certain words, probably put together by some PR 
agency or PR person, to describe their Medicare plan, words like 
``historic, serious, and long-term.''
  Well, in some ways, I could not agree with them more. Their plan is 
historic because it marks the end of a 30-year commitment to provide 
our seniors with health care. It is serious. It is radical surgery, 
because it places the lives and well-being of 37 million Americans at 
risk. And it is long-term because it will tear holes in our social 
safety net that will remain for many years to come.
  It ``saves, preserves, and protects,'' not Medicare, but $245 billion 
in tax breaks that no one is asking for. It ``protects the right to 
stay with your doctor,'' but only if you are able to pay more for the 
privilege. It ``protects the right to choose,'' only if your choices 
are slim and none. It is ``responsible,'' but only if you are a member 
of the AMA. It is ``innovative and bold,'' inasmuch as it breaks new 
ground for being cruel to seniors. It is ``the right thing to do,'' but 
only if your parents did not raise you to know any better.
  Mr. Chairman, the Republican Medicare plan is all these words and one 
more, disgraceful, and I urge my colleagues to defeat it so that we can 
go on and make America a stronger, better, and more gentle Nation.
  Mr. GIBBONS. Mr. Chairman, I yield 3 minutes to the gentleman from 
Washington [Mr. McDermott].
  Mr. McDERMOTT. Mr. Chairman, like the gentleman from New York [Mr. 
Houghton], I wish that this debate would be about substance and we 
could actually talk about what is going to happen. We can argue about 
$90 billion or $270 billion, but the real issue here is what is 
happening to the health security of senior citizens.
  Right now, senior citizens in this country get enough money to buy a 
program that covers what they need. And the Republicans are saying that 
in the first year, 1996, in the dark bar, we are going to give them 
enough to buy exactly what they have today. By the year 2000, you can 
see that the dark bar does not go as high as the CBO says an equivalent 
health plan is going to cost. The difference is $1,100. That is the 
national average.
  Now, if you are from California and watching this, you are going to 
need another $1,200. If you are from New York, you are going to need 
another $1,100. If you are from Texas, you are only going to need $994. 
Ask yourself where those senior citizens are going to come up with that 
extra $1,100 to buy the same thing they have today.
  Every time the Republicans use the word, ``choice,'' listen to that 
and say to yourself ``voucher.'' They are putting my father and my 
mother, my father 90, my mother 86, and everybody else's grandparents 
and parents, out on the street with a voucher. They call it choice. We 
are going to let you choose anything you want. But if you do not have 
the money, if that voucher only buys 75 percent of what it buys today, 
who will make it up? The kids will make it up.
  This is the hidden agenda here. They are shoving that $1,000, they 
will not say it is cuts and I will not say it is cuts, they are shoving 
that additional $1,000 into their kids.
  If you happen to be out there watching this or if Members are on this 
floor and happen to have a kid in college, you know what tuition does 
to you. To have your parents show up at the same time and say, ``well, 
I cannot afford it. It is not paid for by my health insurance,'' for 
the first time in 30 years, people my age, 58 and down, are going to 
have to think about how they make up that difference for their parents.
  One can talk about $90 billion and actuarials and all the rest of 
this stuff. There is 96 pages of things where they give away to 
doctors. As a doctor, I am ashamed by the kind of deal they came in and 
cut. When we are cutting money from senior citizens and putting them at 
risk like this, for doctors to come in and negotiate for another $500 
million, is a shame. There is no reason to do that.
  Mr. BLILEY. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Washington [Mr. White].
  Mr. WHITE. Mr. Chairman, I would like to say, first of all, that the 
explanation we just heard from my colleague from the Seattle area, who 
I have a great deal of affection and respect for, is exactly the kind 
of thinking that got us in this mess in the first place. We have been 
doing this for 30 years, and the fact is it is a self-fulfilling 
prophecy.
  If the Government tells you the cost of medical care is going to go 
up 10 percent every year, you can be sure that it will, because people 
who are buying health care or selling health care to the Government are 
going to spend every nickel their customer tells them they are going to 
spend the next year.
  The fact is we have to exercise some control at the Federal 
Government level to control these costs. Otherwise, they will be out of 
control forever and that is the reason we find ourselves in this 
situation. We have to fix this program. Otherwise, it is going to go 
bankrupt.

                              {time}  1315

  I want to say one other word about the Seattle area because it is 
very important. Seattle is an urban community and yet it is one of the 
healthiest communities in the Nation. It is also one where we have one 
of the most efficient health care systems in the Nation.
  Why is that, Mr. Chairman? It is because in Seattle we essentially 
invented the managed care program. Under managed care individuals get 
to sign up in a program that looks out for your health over the long-
term basis. Instead of trying to cure diseases as they come up, it 
actually prevents individuals from getting sick in the first place. A 
lot of people in the Seattle area have found that to be a good idea.
  One of the great things about this bill is that it tries to do for 
the rest of the Nation what we have done very successfully in Seattle 
by having the option to take managed care instead of the fee-for-
service program. We have been able to keep the costs down across the 
board, and that is what this bill will do for the entire country.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes and 30 seconds to the 
gentleman from Ohio [Mr. Portman], another respected member of the 
Committee on Ways and Means.
  Mr. PORTMAN. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  We have heard a lot today from the other side of the aisle about how 
the increases in spending in our Medicare plan will not keep up with 
the private sector growth. We just heard from the gentleman from 
Washington [Mr. McDermott]. I wish his chart were still up. Maybe it 
can be put up again. It might be useful to have it. It is just not 
accurate. It is not accurate.
  The charts we just saw from the gentleman compares apples to oranges. 
It is full of unknowns. It is full of false assumptions. Let me give 
Members a couple.
  First of all, the Medicare figures are per beneficiary. The private 
sector figures are not per beneficiary. How can we compare those two? 
The private sector figures are, thus, inflated.
  Second, the Medicare figures the Democrats use do not include a lot 
of other costs, including administrative costs. It is comparing apples 
to oranges.
  Here is a better chart that illustrates clearly what the gentleman 
from New 

[[Page H 10341]]
York [Mr. Houghton] and others have been trying to explain, which is 
that under this bill before us Medicare spending actually goes up. 
Guess what? It actually keeps pace with the private sector. It will be 
higher than the private sector 7 years from now as it is today.
  This chart compares apples to apples. It compares what employers will 
pay per employee for health care in the private sector to what the 
government will pay per beneficiary under the Medicare Preservation 
Act. It clearly shows that, even when we assume a growth rate of 7 
percent, as the gentleman from Washington did, Medicare will still pay 
more in each year through the year 2002 than we pay in the private 
sector. In fact, that 7 percent private sector health care figure is 
inflated.
  I will give Members a couple of reasons it is. First, the private 
health care cost increases have been far lower over recent years than 7 
percent. The administration's own Department of Labor tells us last 
year health care costs were nationally at about 4.5 percent.
  Mr. Chairman, we have seen reports recently, including a story in the 
Washington Post of just a couple weeks ago, which indicates that recent 
surveys, comprehensive surveys have shown us that for the first time in 
10 years health care costs nationally are below inflation.
  All this, incidentally, was included in a recent CBO report that I 
would encourage everyone to read. The point is that the private sector 
numbers are nowhere near that 7 percent. But even when we include the 7 
percent numbers, the Medicare spending continues to be higher than the 
private sector spending.
  This is a generous program, folks. What we have come up with is a 
very generous plan. It is a responsible approach to a very real 
problem. I would encourage all Members to support the Republican plan.
  Mr. BLILEY. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Illinois [Mr. Hastert].
  (Mr. HASTERT asked and was given permission to revise and extend his 
remarks.)
  Mr. HASTERT. Mr. Chairman, the question before us today is simple. Do 
we give seniors more choices or do we choose, do we choose, to let 
Medicare go bankrupt without any choices for anybody at all?
  Under the Republican plan to save Medicare, seniors get more choices. 
One new choice, for instance, that is not offered today is preferred 
provider organizations. Many Americans are familiar with this option. 
In fact, it is available under the congressional medical insurance 
plan.
  Mr. Chairman, under a preferred provider organization or PPO, seniors 
are part of a managed care plan but they can see any doctor they want, 
even a doctor outside the network through a point of service 
arrangement. That means if my father, who lives in Illinois, wants to 
see a cataract specialist at the Mayo Clinic, he would be able to do 
that and still receive his health care coverage.
  All I want to emphasize is one important point; that under the 
Republican plan PPO's are required to take any senior who wants to sign 
up. If an individual happens to be diagnosed with cancer and wants to 
enroll in a PPO offered in their area, they have that option under this 
bill. Nobody can keep them out. They have to accept all comers.
  Under the current Medicare system, PPO's are not available. Under the 
Medicare reform plan, PPO's are an option under this plan.
  Mr. GIBBONS. Mr. Chairman, I yield 30 seconds to the gentleman from 
Maryland [Mr. Cardin].
  Mr. CARDIN. Mr. Chairman, we seem to have a debate over what is a 
cut. My constituents define it this way. If they are asked to pay more 
to get the same benefits, it is a cut. If they are receiving moneys 
that will not buy the same amount of service 7 years from now, and they 
are expected to put more money in their pocket in order to pay for 
those services, it is a cut.
  The chart shown by the gentleman from Ohio [Mr. Portman] shows what 
the per cost is per person. Yes, it costs less to provide for people 
under 65 than over 65, because people over 65 use more health care. 
This bill is a cut.
  Mr. DINGELL. Mr. Chairman, I yield 30 seconds to the distinguished 
gentleman from Ohio [Mr. Brown].
  Mr. BROWN of Ohio. Mr. Chairman, I thank my friend for yielding me 
time, and I offer my condolences to my friend from Washington State 
about the Seattle Mariners.
  More importantly, Mr. Chairman, I offer my condolences to the elderly 
in his district who will suffer some $31 million in cuts in services to 
them; and to the gentleman from Ohio [Mr. Portman], in his district, 
$67 million in the next 7 years will be taken from the elderly in the 
Cincinnati area; and the gentleman from Illinois [Mr. Hastert], in his 
district, some $143 million will be taken from the elderly in that 
area.
  Mr. DINGELL. Mr. Chairman, I yield such time as he may consume to the 
gentleman from West Virginia [Mr. Rahall].
  (Mr. RAHALL asked and was given permission to revise and extend his 
remarks.)
  Mr. RAHALL. Mr. Chairman, I rise in opposition to the so-called 
Republican Medicare plan.
  Mr. Chairman, I rise today in total opposition to the so-called 
Medicare Reform bill before the House.
  Mr. Chairman, H.R. 2425 is a little bit like topsy--it grows, and 
grows and grows. The bill before us is nearly 1,000 pages long--and few 
of us have had a chance to read it, much less understand it. But from 
what we've heard since the secrecy on details of the Republican plan 
was lifted, it's enough to put fear and trembling in the hearts of 
every senior citizen in the United States for decades to come.
  Mr. Chairman, 380,239 of Americans on Medicare live in the State of 
West Virginia--my State. How many of them will be disenfranchised, when 
they lose $1.5 billion and more in Medicare payments under this bill? 
How many will become more seriously ill, or even die, as a result of 
denied health services under Medicare? The Republicans say: They don't 
know, and they don't care--all they know is they need to find $245 
billion in a hurry, and Medicare is one of the biggest piggy banks 
around.
  Mostly, what we don't understand is why it is necessary to take these 
drastic actions in a program that is not insolvent, and according to 
the trustees report, wasn't in danger of becoming insolvent for another 
7 years? This 7-year window gives us plenty of time to work out ways in 
which to keep the program solvent as we have done since 1970 when the 
first trustees report came out--giving us only a 2-year window in which 
to bring solvency back to Medicare. For every year since, Congress has 
responded to the trustees report, and has never failed to assure 
continued solvency for Medicare.
  The Medicare actuaries have stated, over and over again, that in 
order to bring solvency back to the Medicare Program now, we need only 
cut $89 billion from the Program. Why then the unprecedented, 
frightening cut of three times that amount?
  H.R. 2425 calls for a cut of $270 billion in the program, supposedly 
in order to save it. Save it for whom? We believe, based on the 
evidence before us, that this $270 billion is necessary so that 
Republicans can award tax cuts for those who don't need it--and most 
wouldn't even want it if it disenfranchised the elderly.
  This bill, if allowed to pass, will increase senior's Medicare 
premiums from today's $46 a month to more than $90 a month by 2002. It 
will force seniors off their current fee for service plan into managed 
care plans, where they will have no choice of physician or hospital. 
Under managed care, seniors will be unable to call 911 for an ambulance 
in an emergency--not unless someone somewhere in a new managed care 
bureaucracy preapproves the emergency.
  Emergencies don't often happen during office hours where the 
preapproval comes from--and in my experience, when a person has an 
emergency, they are not inclined to call a business office for 
preapproval--they are more than prone to calling 911. Not allowed under 
this Medicare reform proposal. If a senior goes to the emergency room 
or calls an ambulance without managed care preapproval--even if it 
turns out to be a costly heart attack--that senior will be presented a 
bill for those costs--and required to pay them out of their own 
pockets.
  If a senior needs home care which, today, costs seniors nothing in 
copayments under Medicare, that senior will in the future be forced to 
pay 20 percent of home care costs. Pretty tough on seniors on low, 
fixed incomes who are already struggling with decisions about whether 
to heat, or eat--or whether they can pay for their prescription drugs 
and still buy groceries.
  And for those seniors not yet old enough for Medicare coverage--not 
yet 65 years of age--it gets worse--for in future they will have to 
wait a little longer--until they are age 67.

[[Page H 10342]]

  Mr. Chairman, let me repeat that, the Medicare cuts for my State of 
West Virginia will be more than $1.5 billion. Currently, West 
Virginia's 380,239 seniors who are enrolled in Medicare live 
predominantly in rural areas--54 percent of them. By living in rural 
areas, they are already limited with respect to access to health care 
providers of facilities. Cuts in Medicare reimbursement to hospitals 
located in rural areas is expected to cause many of them to close--
further limiting rural West Virginia seniors' access to hospital care.
  Seniors in West Virginia can expect to pay from $535 to over $1,000 
in additional out of pocket expenses for less coverage and fewer 
services than they get from Medicare today. The current deductible is 
expected to go from the current $100 to $150 next year, and above $150 
between now and 2002.
  My West Virginia seniors can't afford additional premiums, additional 
deductibles, additional costs of 20 percent for home care, or to lose 
access to their own physician, hospital, and emergency response 
ambulances.
  I am appalled at the mean-spiritedness of H.R. 2425, Mr. Chairman. I 
am appalled that anyone would treat our seniors as tiresome old people 
not important enough for their Government to champion their health care 
needs. These seniors have lived and worked long, hard lives, giving to 
society at large, to their own communities, end up being tossed out of 
their health care system--too poor and too disenfranchised to have 
their Government look after their health needs.
  Mr. Chairman, we may not have the votes to defeat this measure, but 
we can and we will continue to tell our seniors that the $270 billion 
cut wasn't necessary--because the Medicare trustees stated plainly that 
only about $89 billion would be necessary to ensure its solvency for 
the next decade--at least to 2006.
  Mr. DINGELL. Mr. Chairman, I yield 1\1/2\ minutes to the 
distinguished gentleman from Illinois [Mr. Rush].
  Mr. RUSH. Mr. Chairman, I want to thank the gentleman for yielding me 
time.
  Mr. Chairman, it was bad enough that Republicans last year voted 
unanimously to reject legislation providing Americans with the health 
security that every other advanced Nation in the world provides to its 
citizens, leaving 41 million of our fellow citizens without health 
care. This year the Republicans want to cut $182 billion out of 
Medicaid with a big, big chunk of those savings coming from 
disproportionate share payments under that program. And now Republicans 
want to cut Medicare so that hospitals cannot keep their doors open.
  Mr. Chairman, let me ask the Republicans how on Earth they expect 
these hospitals to survive. On air? How do they think they will be able 
to continue to provide services to 41 million uninsured Americans if 
they cut off all sources of support for them. These hospitals are 
already in serious financial trouble before all of these additional 
costs even hit them. They have the lowest margins of revenue over costs 
of any type of hospital, a full 25 percent below the average. They have 
the highest number of hospitals of any type with overall negative 
margins. They have physical plants which average more than 25 years in 
asset age as compared to 7 years for other hospitals.
  Mr. Chairman, cutting these hospitals is the last place we should 
consider rather than the first place we should consider.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
the State of Washington [Ms. Dunn], a respected member of the Committee 
on Ways and Means.
  Ms. DUNN of Washington. Mr. Chairman, like many seniors in my 
district, my own parents sometimes have been frightened by the rhetoric 
that has been generated in this debate. I rise today to clear away some 
of that emotionalism, perhaps to set the record straight, and to 
reassure my parents in Bellevue, WA, and seniors around the country.
  Mr. Chairman, if I we able to speak to them for a few minutes today 
this is what I would tell them:

       Mother and Dad, our Medicare plan will preserve your right 
     to stay in the current Medicare. You can stay in the system 
     just as it is, if you want to. That is a fact. You can also 
     choose one of the new options, every one of which will be 
     very clearly explained to you. But the truth is that nobody 
     will be forced out of traditional Medicare. If you wish to 
     remain in traditional Medicare, fee-for-service, traditional 
     service, if you want to keep your current doctor with no 
     change to a doctor you do not know or do not want, you can do 
     that. That is a guarantee, and the Federal Government will 
     continue to provide two-thirds of your part B premiums. There 
     will be no increase in your copayments, there will be no 
     increase in your deductibles and there will be no decrease in 
     your benefits.

  Mr. Chairman. I also want to assure seniors that nobody will be 
forced into HMOs or forced to go to a doctor that they do not know. 
Managed care is just one of several options we provide in our Medicare 
Preservation Act.
  Over the past several months, I have talked to constituents who deal 
with the Medicare system every single day. Throughout those talks I 
have been guided by several principles that my folks and seniors around 
the country are looking for in Medicare reform. They want Medicare 
saved for their children and for their grandchildren. They want the 
problem solved, not just postponed, and they want to choose for 
themselves among the plans and the doctors they know. This is my 
promise, my commitment to the seniors of today.
  Mr. GIBBONS. Mr. Chairman, I yield such time as he may consume to the 
gentleman from California [Mr. Lantos].
  (Mr. LANTOS asked and was given permission to revise and extend his 
remarks.)
  Mr. LANTOS. Mr. Chairman, I strongly oppose this economically 
bankrupt proposal that will damage seniors and children.
  Today, the House is considering the so-called Medicare Preservation 
Act. Naming it does not make it so. We could just as well call this 
legislation the End of Medicare as We Know It Act.
  One of my favorite stories about Joseph Stalin relates to his 
manipulative use of labels. He designated the Soviet satellites of 
Eastern Europe ``People's Democracies.'' The label did not make these 
enslaved countries either democratic or popular.
  When the Soviet-dominated international Communist movement wanted a 
snappy title for its newspaper, Stalin came up with a real show-
stopper. The newspaper was called: For a Lasting Peace, For a People's 
Democracy. The strategy was simple--make capitalists mouth a Communist 
political slogan when they quoted the newspaper. The Soviet Union and 
its affiliated Communist parties were hardly committed to peace or 
democracy, but the slogan got considerable mileage.
  Today, Mr. Chairman, we have the same type of subterfuge being 
carried out by the majority in this body. They have given this economic 
monstrosity a politically correct title, ``The Medicare Preservation 
Act of 1995''. This legislation will neither preserve nor protect 
Medicare. It will simply strip away benefits to America's most 
vulnerable and voiceless citizens of our country in order to pay for an 
outrageously large tax break for the wealthiest individuals.
  I have several names to propose for the legislation that we are 
considering today, Mr. Chairman.
  First of all, this could be called ``The Robin Hood in Reverse Act of 
1995.'' It clearly deserves that title. It robs the poor to give to the 
rich. A $270 billion cut is unnecessary to save Medicare. Democratic 
alternatives--the one we are permitted to consider today as well as 
others that should be considered--would keep Medicare solvent without 
imposing a huge burden on our senior citizens. The reason we have this 
economically irresponsible legislation is so the Republicans can offer 
a $245 billion tax cut to the wealthy.
  Second, we could call this legislation Bash the Seniors Act of 1995. 
Premiums for our senior citizens will increase by some $400. Since a 
third of all seniors barely get by on their monthly Social Security 
checks, this Republican legislation will force seniors to choose 
between health care and food, or between health care and heat, or 
between health care and rent.
  Third, we could logically call this The Them That Has Gets Even More 
Act of 1995. While our low-income seniors--those in the sunset of their 
lives--will be forced to dig deeper in their meager resources. 
Meanwhile, those earning over $100,000 a year will receive half of the 
Republican tax break. Furthermore the wealthiest 1 percent of Americans 
will get an average tax break of $19,000. Those who need this tax break 
least are the ones who get the most, while costs for our seniors are 
increased. 

[[Page H 10343]]

  Mr. Chairman, I could continue with a number of other titles for this 
legislation, all of which would more accurately describe the impact of 
this ill-named, ill-conceived, ill-considered sell out of our senior 
citizens for the benefit of special interests.
  My point is clear. This is poor legislation. It should be rejected. I 
urge my colleagues to repudiate this ill-named bill.
  Mr. GIBBONS. Mr. Chairman, I yield 3 minutes and 30 seconds to the 
gentleman from Michigan [Mr. Levin].
  (Mr. LEVIN asked and was given permission to revise and extend his 
remarks.)
  Mr. LEVIN. Mr. Chairman, I just want to explain, so that everybody 
understands, why this is such an extreme proposal.
  The gentleman from Washington [Mr. McDermott] referred to this chart. 
And what it does is to show how the projected or the capped 
expenditures on Medicare are below the projected rate of inflation. 
Now, those numbers do not come from the gentleman from Washington. They 
do not come from Democrats. They come from CBO, which is essentially 
controlled by the Republicans. And there is nothing that the gentleman 
from Ohio [Mr. Portman], or anybody else can say that changes that.
  Mr. Chairman, this resolution assumes an inflation rate under 4.9 
percent. Under 5 percent--4.9. The CBO figure is 7.1. And that is why, 
as the gentleman from Washington [Mr. McDermott] says, we end up with 
this gap of $1,000 per beneficiary in the year 2002.
  The gentlewoman from Connecticut [Mrs. Johnson] asked where are the 
changes in benefits? The answer is, as the gentleman from Washington 
[Mr. McDermott] said, when we have a $1,000 shortfall, something has to 
give. And who is going to give are hospitals who are underfunded, who 
are, in turn, going to either shift it to the private sector, or are 
going to close emergency rooms, or who will have to cut benefits. That 
is the problem.
  Now, Mr. Chairman, I want us to refer to history. My friend, the 
gentleman from Texas [Mr. Archer], does not like me to quote his 
previous statement. I understand that. ``Make no mistake about it,'' he 
said just a year ago, ``for the elderly in this country, these cuts are 
going to devastate their program under Medicare.''
  Our Medicare cuts in the resolution about which he was talking were 
$168 billion, and most of that was plowed back into the Medicare 
System. Here we have a proposal for $270 billion, and what they are 
saying is it is going to save Medicare. We need to save Medicare from 
the Republican majority of the House of Representatives.
  Mr. Chairman, I want to read from the gentleman's minority views, if 
the gentleman does not like my reference to his words.

                              {time}  1330

  This is the minority views about our Medicare proposal, which is much 
less and most of it plowed back into the system. And I quote,

       For more than a decade, Congress has cut back on payments 
     to doctors and hospitals until they no longer cover the costs 
     for Medicare patients, and the additional massive cuts in 
     reimbursement to providers proposed in this bill will reduce 
     the quality of care for the Nation's elderly.

  Mr. Chairman, will reduce the quality of care, the gentleman was 
saying, for the Nation's elderly. There will be no place else to shift.
  I do not expect the Republicans to eat their words in public, but we 
are not going to let them gobble up Medicare on this day, October 1995.
  Mr. ARCHER. Mr. Chairman, it is sad that we have to replow this 
ground. The gentleman from Michigan [Mr. Levin] misspoke. The gentleman 
knows it.
  Mr. Chairman, we were not dealing with a Government takeover of the 
entire health care system in this country. My remarks, and our minority 
views, were directed toward that. But as a part of that overall health 
care program, CBO scored the cuts in Medicare and Medicaid at $490 
billion. That was intolerable. It was intolerable, particularly 
independent of any transformation of Medicare to make it more 
efficient.
  So once again, Mr. Chairman, the gentleman has taken this completely 
out of context.
  Mr. GIBBONS. Mr. Chairman, I yield 30 seconds to the gentleman from 
Michigan [Mr. Levin].
  Mr. LEVIN. Mr. Chairman, let me read some of the gentleman's specific 
words a year ago. ``Make no mistake about it. For the elderly in this 
country, these cuts are going to devastate their program under 
Medicare.''
  Mr. Chairman, the gentleman from Texas [Mr. Archer] is moving in a 
180-degree different direction. The reason for it is because my 
colleagues on the other side have got a $245 billion tax cut for very 
wealthy families, and they have to find a way to pay for it, and it is 
on the backs of the seniors of this country. That is not fair.
  Mr. BLILEY. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Georgia, [Mr. Norwood].
  Mr. NORWOOD. Mr. Chairman, I know this debate must be very difficult 
on our seniors trying to determine what is fact and what is not. It is 
particularly difficult with so much misinformation coming out on this 
floor. But before the gentleman from Ohio [Mr. Brown] has an 
opportunity to talk about the hospitals in the 10th District of 
Georgia, I want the gentleman to know that those hospitals are having 
increased funding each year over the next 7 years. I would like for the 
gentleman to also know that for the first time in history of this 
government, we are giving the hospitals the opportunity to lower their 
cots by repealing very, very difficult and expensive rules and 
regulations, tort reform, and antitrust legislation.
  Mr. Chairman, giving senior Americans the option to choose from among 
the many new health care plans is the absolute key to saving Medicare. 
I want to talk just about one of those options: Provider Sponsored 
Networks, PSN's.
  Mr. Chairman, I have a message to my mother-in-law: If you like 
traditional Medicare, you can continue to choose it just like you have 
it today. Part A, part B, Medigap; can you keep it just like you have 
got it, if you would like to do that. But, I would like for you to 
consider one of these excellent choices known as Provider Sponsored 
Networks.
  Mr. Chairman, they are locally organized care networks formed by 
doctors and hospitals. They will provide coordinated care that allow 
the providers to achieve the efficiencies and cost controls that have 
been forbidden by laws in years past.
  Mr. DINGELL. Mr. Chairman, I yield 15 seconds to the gentleman from 
Florida [Mr. Deutsch].
  Mr. DEUTSCH. Mr. Chairman, let me just point out that under the 
Gingrich Medicare plan, the hospitals in and around the district of the 
gentleman from Georgia [Mr. Norwood] would lose $232 million over the 
next 7 years to pay for the program and tax cuts for the very rich in 
this country.
  Mr. GIBBONS. Mr. Chairman, I would yield myself 30 seconds to respond 
to the gentleman.
  Mr. Chairman, I would respond to the gentleman that he better tell 
his mother-in-law the whole truth. There will not be any fee-for-
service, because under the Archer bill, the Gingrich bill, it will be 
abolished, because the Secretary of Health and Human Services must take 
all the cuts in this bill out of fee-for-service. So, she may look for 
it, but it just will not be there.
  Mr. DINGELL. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Massachusetts [Mr. Markey].
  Mr. MARKEY. Mr. Chairman, not since the feudal days of lords and 
serfs has such an effective system of transfer of wealth from the poor 
and giving it to the rich been enacted.
  Mr. Chairman, the trustees of Medicare said that part A is $90 
billion in arrears over the next 10 years. The Democratic substitute 
solves that problem. The Republican substitute solves that problem and 
then takes out an additional $180 billion more than is needed.
  Now, listen to this. Of the 37 million Americans on Medicare, 11 
million of them are widows living on an income of $8,000 a year or 
less. Under the Republican proposal, those 11 million widows, by the 
year 2002, each year will have their Medicare part B premiums go up 
$300 to $400 a year.
  Mr. Chairman, in that same year, those who make more than $350,000 a 

[[Page H 10344]]
  year will get a $19,000 tax break. It takes 60 widows paying $300 to 
$400 a year more to give a tax break into the pockets of the wealthy 
making $350,000 a year.
  Mr. Chairman, under the Republican plan, the rich get rich and the 
poor get poorer, and that is wrong. Just plain wrong. We have a better 
country than that.
  There is no uniform sacrifice here. The contract with the country 
club that the Republicans signed a year ago on the steps of the Capitol 
requires the poor in this country to be tipped upside down. GOP used to 
stand for ``Grand Old Party.'' Today, it stands for ``Get Old People.''
  Mr. BLILEY. Mr. Chairman, I yield 1 minute to the gentleman from Ohio 
[Mr. Oxley].
  (Mr. OXLEY asked and was given permission to revise and extend his 
remarks.)
  Mr. OXLEY. Mr. Chairman, we have heard today about many of the 
improvements that this bill makes to the Medicare Program. Foremost 
among these is what we call the seamless web. Today, millions of 
retirees are forced by rigid and antiquated Medicare rules to disenroll 
from their employer's health plan--even if the coverage they receive 
was better than that provided by Medicare. Just because you retire 
shouldn't mean that you have to give up the coverage you're used to--
but today, that's the case. Under the bill, your 65th birthday doesn't 
have to be the day you give up your association or employer coverage. 
This bill frees retirees from this unreasonable and counterproductive 
requirement. Under our plan, retirees can remain in their preretirement 
health plan, so long as it meets important Medicare standards. In fact, 
this bill allows members of associations and labor unions to maintain 
their current coverage even after they retire. Why do we feel it is so 
important to create this seamless web? Because Medicare should create 
opportunities--not obstacles--to better health care coverage and 
greater senior satisfaction.
  Mr. DINGELL. Mr. Chairman, I yield 15 seconds to the gentleman from 
New Jersey [Mr. Pallone].
  Mr. PALLONE. Mr. Chairman, I wanted to point out that under the 
Gingrich Medicare plan, the hospitals in and around the district of the 
gentleman from Ohio [Mr. Oxley] will lose $144 million over the next 7 
years.
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from Texas [Mr. Doggett].
  Mr. DOGGETT. Mr. Chairman, today if an elderly American wants quality 
health care, all they need is this. Even if they are not an American 
hero, like the gentleman from Florida [Mr. Gibbons] who has this 
Medicare card, they are going to get quality health care the way 
seniors have for the last three decades.
  But, Mr. Chairman, after Speaker Gingrich and his cohorts finish 
today paying for their tax cut to the rich, this is the plan that they 
will have. This is the new Medicare maze that our Republican colleagues 
present. They have got one bureaucracy after another.
  Mr. Chairman, we have a lot of new commissions. A baby boom 
commission. We have got boxes. We have got arrows. We have got quite a 
new organization of the health care system that for those seniors who 
could not decide today whether they were getting a cut or increase are 
going to need to go back from their retirement to get a doctorate to 
figure out how they are going to get health care.
  Mr. Chairman, there is one thing that is certain: These red arrows 
coming from the plan to pay for a tax cut for the wealthy, out of the 
hide of the seniors of this country.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Texas, Mr. Sam Johnson, a true American hero, a respected member of the 
Committee on Ways and Means.
  Mr. SAM JOHNSON of Texas. Mr. Chairman, unlike my friend, the 
gentleman from Texas [Mr. Doggett], we are not interested in the next 
election; we are interested in the future of America.
  Mr. Chairman, Republicans have faced the challenge head on. We have 
addressed a broken system. Instead of scaring seniors and ignoring the 
problem, we have worked with seniors and produced a solution. Most 
importantly, we have not allowed Democrat scare tactics and politics as 
usual to keep us from doing what is right for America.
  Mr. Chairman, I plan to choose a medical savings account. I just 
turned 65, and now I do have a Medicare card. I am thankful that this 
bill will allow me to get out of the inefficient system of 1965 and 
into a program and choose an option that is better suited for me 30 
years later in 1995.
  Mr. Chairman, with a medical savings option, I will get a high-
deductible insurance policy and a cash deposit in a medical savings 
account to cover a significant portion of the deductible. There are no 
copayments. I am empowered to make my own decisions concerning my 
health care without the interference of a middle man. I can be a cost-
conscious consumer and, with others, fundamentally empower and change 
the health care delivery systems in America.
  The accounts are available for all qualified medical expenses; a 
great advantage over the current system. There are many other options, 
but no one is going to be forced into any particular plan. In the true 
American spirit, we know that people want different choices and this 
bill makes those choices available.
  Mr. Chairman, this is a vote to save Medicare and give seniors a 
choice.
  Mr. BILIRAKIS. Mr. Chairman, I yield 1 minute to the gentleman from 
Ohio [Mr. Gillmor].
  Mr. GILLMOR. Mr. Chairman, I wanted to take a few moments to 
highlight one of the innovative additions to the Medicare system in 
H.R. 2425: the incentive it provides for citizens to expose and attack 
Medicare fraud and abuse. I am also pleased by the legislation's 
measures that implement stiff new criminal penalties. For those 
convicted of Federal health care fraud, embezzlement or false billings, 
the legislation provides for up to 10 years in prison. There is no 
limit placed on the penalty's prison term if such a criminal violation 
should result in bodily injury.
  Until now, Medicare beneficiaries have participated in a system that 
simply did not provide adequate enforcement mechanisms or adequate 
civil or criminal penalties. Without these, we have lacked an effective 
deterrent to waste. Fraud and abuse continues to rob the system and the 
taxpayers that finance it.
  The Medicare Preservation Act, through innovative and focused task 
forces, financial incentives that empower seniors, and stronger 
criminal and civil penalties, unequivocally acknowledges and addresses 
these problems. The current Medicare system is losing 10 cents on the 
dollar to waste, fraud, and abuse--$50 million every day that could 
have and should be used for patient care. Let the word go out to those 
who would bilk the Medicare system--once this bill is passed, 
enforcement is innovative and it is real. Barney Fife has his walking 
papers, and the terminator is on the job.

                              {time}  1345

  Mr. DINGELL. Mr. Chairman, could we have a recapitulation of the 
time?
  The CHAIRMAN. The gentleman from Texas [Mr. Archer] has 17 minutes 
remaining, the gentleman from Florida [Mr. Gibbons] has 17 minutes 
remaining, the gentleman from Florida [Mr. Bilirakis] for the gentleman 
from Virginia [Mr. Bliley] has 18 minutes remaining, and the gentleman 
from Michigan [Mr. Dingell] has 18\1/2\ minutes remaining.
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished 
gentlewoman from Arkansas [Mrs. Lincoln].
  (Mrs. LINCOLN asked and was given permission to revise and extend his 
remarks.)
  Mrs. LINCOLN. Mr. Chairman, I thank the gentleman for yielding time 
to me.
  The people of the First District of Arkansas sent me here to put 
people above politics. Unfortunately, here today we have got both sides 
who really seem more interested in making campaign commercials rather 
than good policy. One cuts too much and the other does not do enough.
  What the American people do not know is that there is a proposal out 
there that we have not been allowed to bring to the floor that actually 
makes good common sense, reasonable policy. The Republican bill will 
close the doors of rural hospitals. The Republican bill will penalize 
the rural areas by cutting 

[[Page H 10345]]
fee-for-service, when we cannot afford managed care without 
infrastructure. The Republican bill will dig into the pockets of senior 
citizens. The Democratic bill has missed the opportunities to restore 
complete dignity and solvency of Medicare while balancing the budget.
  I came here to preserve the dignity of senior citizens who depend on 
Medicare and to restore the faith of the young people who are paying 
now into the system but will not use this program for decades. This is 
not the democratic process that I learned in civics class, and it is no 
wonder that the American people are frustrated.
  Mr. ARCHER. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Pennsylvania [Mr. Clinger].
  (Mr. CLINGER asked and was given permission to revise and extend his 
remarks.)
  Mr. CLINGER. Mr. Chairman, I rise in strong support of this bill.
  Mr. Chairman, I rise in support of H.R. 2425, the Medicare 
Preservation Act. I did not, however, arrive at my decision to support 
the bill easily or without hesitation. As someone who represents a very 
rural district with an aged population, I am keenly aware of the 
importance of Medicare in meeting the health care needs of older 
Americans.
  Last spring, the Board of Trustees for the Medicare Trust Fund warned 
in its 1995 annual report that the hospital insurance, part A portion 
of the Medicare Trust Fund will start going bankrupt beginning as early 
as next year and will run out of money by 2002. The Board of Trustees 
for the Medicare Trust Fund, which is a bi-partisan panel that includes 
three of President Clinton's Cabinet secretaries, state clearly in the 
report that the Federal Government has no authority to pay hospital 
bills if funds in the part A trust fund are depleted. What is more, the 
Medicare part B trust fund, which pays for physician and outpatient 
services, is also in financial trouble and needs to be addressed. 
Without significant reform, part B expenses are projected to double by 
2002.
  The reason for the imbalance between what Medicare takes in and what 
it pays out is that the Medicare Program is growing at an unsustainable 
rate of 10.5 percent, more than twice the rate of increase for private 
health care spending, which is 4.4 percent. Controlling this excessive 
growth rate is the necessary, responsible, and moral thing to do.
  When I learned of Medicare's financial outlook, I conducted a survey 
of the Pennsylvanians I represent. By an overwhelming number, my 
constituents agree that Congress should act promptly to preserve and 
protect this vital insurance program, which serves nearly 36 million 
Americans, but should do so in a responsible manner that goes after 
fraud and abuse and addresses rural concerns. Mr. Chairman, I believe 
that this legislation, though it is not any easy fix, achieves these 
crucial goals while ensuring that Medicare will be preserved for future 
generations.
  First, I want to clarify the impact this legislation will have on 
seniors. Beneficiaries will see no increase in their copayments or 
deductibles and will continue to pay 31.5 percent of the part B 
premium, as they do today. In fact, out-of-pocket costs for seniors 
will be just $4 more each month in 2002 than under President Clinton's 
plan. And Medicare will be preserved for the next generation, not just 
for the next election.
  Despite all the rhetoric during this debate that Republicans are 
cutting Medicare, spending per beneficiary will increase from $4,800 
next year to $6,700 in 2002 under H.R. 2425. Furthermore, we have spent 
$844 billion on Medicare over the past 7 years, and under this 
legislation we will spend $1.6 trillion over the next 7 years--an 
increase of $742 billion. Only in Washington can a spending increase be 
called a cut.
  What is more, seniors will be offered more choices of health care 
plans, in addition to traditional Medicare. Under the bill, a 
MedicarePlus program will be established to allow beneficiaries to 
enroll in a range of private or employer-based health plans, including 
managed-care plans, traditional fee-for-service plans, high deductible 
insurance/medical savings accounts, or so-called provider-sponsored 
networks [PSN's] formed by health care providers. In some cases, these 
plans could mean more or better benefits for seniors, such as free 
eyeglasses or prescription drug benefits. However, none will be forced 
to change plans or change doctors under the bill. These fundamental 
reforms will not only provide beneficiaries with a broader range of 
health care choices but will also strengthen the existing Medicare 
Program.
  I am very encouraged by other provisions in the bill as well. H.R. 
2425 will reform medical malpractice law by establishing uniform 
standards for health care liability actions and capping non-economic 
damages at $250,000 in a particular case. The bill also establishes a 
commission to recommend long-term structural changes to preserve and 
protect Medicare when the Baby Boom generation begins retiring in 2010. 
Finally, this legislation contains a lock-box mechanism that places all 
savings from part B into a Medicare preservation trust fund and 
prohibits any transfers to pay for future tax cuts.
  Throughout the debate, I have heard a lot of misinformation that 
Republicans are trying to push Medicare reforms through Congress 
without sufficient hearings. That is simply not true. The Medicare 
Preservation Act is the culmination of months of hearings by the House 
Committees on Ways and Means and Commerce, who have jurisdiction over 
the Medicare Program. Altogether, these committees held nearly 30 
hearings throughout the summer and into the fall to find ways to 
control Medicare's unsustainable growth rate, make the program more 
efficient, and offer seniors more choices in the type of coverage they 
receive.
  During that time, I, too, have been studying this issue and actively 
seeking feedback from my constituents. In addition to the thousands of 
survey forms, letters and phone calls on Medicare I have received from 
constituents, I have visited senior centers and met with hospital 
administrators in my area of Pennsylvania to discuss proposals to 
preserve and protect the Medicare Program. Here in Washington, I have 
met with the House Rural Health Care Task Force to discuss the impact 
of Medicare reform proposals on rural areas, and I have heard regularly 
from such organizations as the Hospital Association of Pennsylvania, 
the American Association of Retired Persons [AARP], and the Seniors 
Coalition.
  One key aspect of the Medicare Preservation Act that I particularly 
want to make note of is the bill's provisions combating fraud and 
abuse. The Government Reform and Oversight Committee, which I chair, 
has held a series of hearings to examine the problem of waste and fraud 
in the Medicare and Medicaid programs. As I learned at the hearings, 
the General Accounting Office [GAO] estimates that these programs will 
lose approximately $26 billion this year alone to fraudulent 
activities. Without question, waste, fraud, and abuse drive up the cost 
of these programs and make it increasingly difficult not only for 
Medicare beneficiaries, but for all individuals to afford quality 
health care.

  As a result of these hearings, I helped introduce legislation to 
crack down on the problem of waste and fraud in the Medicare and 
Medicaid programs. This legislation, the Health Care Fraud and Abuse 
Prevention Act, H.R. 2326, contains substantive measures that will 
serve as a valuable deterrent against health care fraud.
  The Medicare Preservation Act strengthens Federal efforts to combat 
fraud and abuse in the Medicare program by creating new criminal 
penalties for those who fraudulently abuse the Medicare program, 
providing monetary incentives for individuals who report a violation 
that results in savings in the program, doubling sanctions for filing 
false claims or committing fraud, and authorizing funding to bolster 
the Health and Human Services Inspector General's anti-fraud efforts 
and payment safeguard activities.
  I am very pleased that the Medicare Preservation Act addresses this 
serious issue and incorporates some of the tough, anti-fraud provisions 
contained in the Health Care Fraud and Abuse Prevention Act. Indeed, 
these anti-fraud measures are long overdue and will create significant 
savings in the Medicare program. Furthermore, I pledge to continue 
working with my colleagues on the Government Reform and Oversight 
Committee to carry on the effort to crack down on health care fraud and 
abuse.
  Another area of the legislation that has been of particular concern 
to me throughout this process--along with my colleagues on the Rural 
Health Care Task Force--is Medicare's payment rate to Medicare 
contractors, known as the average adjusted per capita cost [AAPCC] 
rate. One of the primary structural reforms contained in the Medicare 
Preservation Act is the establishment of Medicare-plus organizations.
  The AAPCC is based on a complex formula which determines Medicare's 
payment rate to certain types of plans that will be offered under the 
Medicare-plus program, specifically, health maintenance organizations 
[HMOs], provider-sponsored networks, and medical savings accounts. 
However, because the AAPCC formula is tied to Medicare utilization, 
which is typically lower in rural areas, wide geographic disparities 
have arisen between rural and urban communities. This variation makes 
it economically impossible for Medicare to offer choices to 
beneficiaries in many rural areas.
  Five counties in my part of Pennsylvania have payment rates that are 
below the national average, which directly impacts the ability of HMOs 
and PSNs to operate in these 

[[Page H 10346]]
counties. Although the bill, as originally drafted, made adjustments 
that began to correct the disparity, the changes did not go far enough 
and would have failed to lift payment rates to a sufficient level.
  Fortunately, after much deliberation with the Republican leadership 
and the drafters of the bill, my colleagues on the Rural Health Care 
Task Force and I were successful in negotiating substantive 
improvements to the AAPCC formula. I feel confident these changes will 
put my district on a more level playing field with urban areas and will 
ensure that rural America won't be left behind. Rural America should be 
allowed to participate in the new range of choices that will be created 
under the Medicare Preservation Act and be part of the 21st Century 
Government.
  Despite this positive change, there are still areas in the bill that 
I feel could be improved, including the level of hospital 
reimbursements--namely the Prospective Payment System update factor, 
disproportionate share payments, and inpatient capital, the timing of 
Graduate Medical Education Trust Fund payments to academic health 
centers, and the treatment of ancillary services provided in skilled 
nursing facilities, which, under the bill, will be subject to routine 
service costs.
  In the end, I remain strongly supportive of the fundamental goal of 
saving Medicare for current and future beneficiaries; we simply cannot 
afford to do nothing. The Medicare Preservation Act ensures the 
solvency of the Medicare system without jeopardizing the medical 
coverage seniors need and addresses Medicare's long-term solvency by 
putting the structural changes in place that will enable Congress to 
address the ``Baby Boom'' generation's entrance into retirement. I 
firmly believe that the Medicare Preservation Act is the only plan that 
will accomplish these goals.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Minnesota [Mr. Ramstad], another respected member of the Committee on 
Way and Means.
  Mr. RAMSTAD. Mr. Chairman, I rise today in strong support of freedom 
of choice for America's seniors in their health plans. Why should not 
America's seniors have the same choice in health care plans as every 
other American? All of us know that most Americans secure their health 
care coverage through their employers. They have a vast variety of 
health plans from which to choose. How many choices do America's 
seniors have under Medicare? Only two: fee-for-service and traditional 
HMOs.
  Now, with all respect to my friends from Massachusetts, no Sate is 
more advanced in their innovative health care, quality of health care 
and innovative health care choices than the good State of Minnesota. 
Minnesotans have a vast array of health care choices, ranging from 
traditional indemnity plans, to points of service plans, to HMOs. It is 
reasonable to expect then that seniors in Minnesota would have a 
similar range of choices. But how many choices to Minnesota's seniors 
have under Medicare? Only two: fee-for-service or traditional HMOs.
  I have heard from countless seniors who want the opportunity to 
choose their own health plan. These seniors are fully capable of 
choosing from a variety of health plans to get the coverage that best 
fits their needs. Mr. Chairman, the seniors of America deserve nothing 
less than freedom of choice. We have heard today from opponents of 
saving Medicare, of this legislation here today to give seniors 
choices, that seniors will be forced to join HMOs. Nonsense. Under our 
bill, what happens to seniors is they can remain in the current fee-
for-service system.
  Mr. Chairman, we have also heard that benefits offered to enrollees 
in Medicare Plus plans would not compare favorably to those in 
traditional fee-for-service plans. That is also nonsense. The same 
benefits or better benefits will be available for seniors.
  Vote for freedom of choice. Vote for the Medicare Preservation Act.
  Mr. GIBBONS. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Pennsylvania [Mr. Coyne].
  (Mr. COYNE asked and was given permission to revise and extend his 
remarks.)
  Mr. COYNE. Mr. Chairman, I rise in opposition to the Republican plan.
  Mr. Chairman, I rise to oppose this legislation. The Republican 
Medicare reform bill will undoubtedly be adopted by this body today, 
but I strongly believe that the policy decisions that are reflected in 
this legislation are unnecessarily harsh, unprincipled, and unwise.
  The $270 billion in Medicare cuts contained in this legislation are 
not necessary to keep the Medicare trust fund solvent for the next 10 
years. In fact, less than $100 billion in cuts are needed to meet that 
goal. Significant long-term changes will be necessary in order to 
address the impact that the baby boom generation will have on the 
Medicare system, but such major changes should be addressed in a more 
thorough, thoughtful manner than that which has characterized the 
process by which this legislation was developed.
  I believe that the so-called Medicare Preservation Act is 
unprincipled because its primary goal is not, in fact, the preservation 
of the Medicare system. The real objective of this legislation is 
clearly to produce savings in order to balance the budget and finance 
the Republican tax cut. If anyone doubts that, they should carefully 
consider the fact that the proposal to cut $370 billion out of Medicare 
grew out of Republican efforts to pay for the Contract With America's 
tax cuts--not the Republicans' concern over the future of this vital 
program.
  I believe that this legislation is unwise because it ignores much of 
our past experience with the Nation's health care system. For example 
this legislation would repeal Federal nursing home standards that were 
enacted in 1987. These standards were not established on some whim; 
they were adopted in response to reports of unacceptable conditions in 
nursing homes across the country. It is reasonable to assume that 
absent these standards, such conditions will return. Another example is 
the repeal of the ban on physician referrals to labs in which they have 
financial interests. Such referrals increased Medicare costs 
unnecessarily prior to the imposition of the ban, and there is little 
reason to believe that lifting the ban now will have some other effect. 
Finally, while the legislation contains a useful provision that allows 
physicians to establish organizations to compete for business with 
HMOs, the bill exempts these physician-sponsored organizations from the 
State licensing requirements that other health care providers have to 
meet, and it exempts them from the balance billing restrictions that 
apply to other providers. State licensing protects the quality of care 
that patients receive, and balance bill restrictions ensure that 
patients benefit from the purchasing power wielded by the Federal 
Government. Exempting physician-sponsored organizations from these 
requirements is unwise because it creates an uneven playing field for 
different competing providers--and because it could allow inadequate 
regulation of an industry with tremendous potential for fraud and 
abuse.
  Every member of Congress understands that Medicare must be reformed 
in order to keep program costs under control. Where Democrats disagree 
with the Republican majority is on what reforms are necessary to keep 
Medicare solvent, and on whether Medicare beneficiaries should be 
forced to bear the triple burden of Medicare reform, balancing the 
Federal budget, and paying for a tax cut for the affluent as well. I 
urge my colleagues to vote this proposal down, and to work on a 
bipartisan solution to the problems confronting Medicare.
  Mr. DINGELL. Mr. Chairman, I yield such time as she may consume to 
the distinguished gentlewoman from Ohio [Ms. Kaptur].
  (Ms. KAPTUR asked and was given permission to revise and extend her 
remarks.)
  Ms. KAPTUR. Mr. Chairman, I thank the gentleman and rise in 
opposition to this Republican plan under which the seniors in our 
community alone will lose over $377 million over the next 7 years.
  I rise today in opposition to the bill before us and to raise serious 
concerns with the manner in which H.R. 2425, the Medicare Preservation 
Act, has been railroaded through the House of Representatives. 
Literally millions of citizens in our country depend on Medicare as 
their lifeline. These 36 million older and disabled people receive 
medical insurance through this program. Congress must proceed carefully 
before taking any action that will affect the lives and futures of 
millions of our families and their loved ones. Cutting $270 billion 
from Medicare and then transferring that money for tax cuts to the rich 
is absolutely wrong.


                                 timing

  On Friday, September 29, legislation was officially introduced to 
reform Medicare. What did the leadership of the House do next? Did it 
hold comprehensive hearings on the most sweeping changes to Medicare 
since its inception 30 years ago? No--they allowed only 1 day of 
hearings before their bill was distributed to Members and left town, 
only to return on October 9 and proceed with marking up the bill. No 
senior citizens were even invited to testify.
  The committees marked up around the clock until Wednesday October 11. 
Mr. Chairman, the legislative process used to move this bill has been a 
disgrace. This Congress has spent 48 days holding hearings on 

[[Page H 10347]]
Whitewater, Ruby Ridge--we even spent an afternoon debating snails--but 
they could not manage to hold more than 1 day of hearings on Medicare.
  The very people who will be most affected by these cuts, our Nation's 
seniors, have been subject to arrest and silenced as the leadership 
rushed this bill through committees. Could we not have allowed just 1 
day to hear their concerns? With $136 billion in the current Medicare 
part A trust fund there are funds to meet obligations for 7 years. We 
know we must act, but why the rush?
  Members, especially those not on the committees of jurisdiction such 
as myself, have been given very little time to review these sweeping 
changes. This is not the way to legislate. We have disenfranchised the 
American public by not allowing their elected representatives to do 
their job--to analyze and make an informed vote on Medicare reform. And 
the American people have been barred from testifying, and senior 
citizens in the hearing room were even arrested.


                      republican plan and tax cuts

  Mr. Chairman, this past weekend I met with our community's health 
advisory group, a bipartisan group of citizens from my district 
representing health professions, businesses, labor, retirees, 
insurance, hospitals, and all health professions. The group was charged 
with analyzing the Medicare trustees report and the Medicare 
Preservation Act.
  The consensus of the group was that these Medicare cuts are 
draconian. Any changes in Medicare should be used only for the 
preservation of Medicare and should not be used to provide a tax cut 
for the wealthy. Our health advisory group stated that they would not 
operate a business the way this bill has been considered and that the 
Congress is making too many changes too fast. The members of the group 
also stated emphatically that this is absolutely the wrong time to be 
discussing a tax cut whose beneficiaries are primarily the wealthier 
among us, with those in upper incomes emphasizing that it is right that 
they pay their fair share.
  Our health advisory group suggests a short-term solution must address 
waste, fraud, and abuse, spiraling health costs of prescription drugs, 
labs, equipment, doctor and hospital fees, home health care, vision and 
dental care, and durable medical equipment. New ways to fix the long-
term financing of Medicare must also be explored including the high 
cost of pharmaceuticals and private insurance. Research and development 
of drugs is a cost of doing business and should not be passed on the 
consumers in the form of higher prescription drug prices. A national 
commission must be set up for this purpose of developing a long-term 
solvency plan for the Medicare Program beyond 2010.
  The trustees report has been cited as the reason reform is needed. I 
agree. Medicare is facing a short-term financing crisis in the part A 
hospital insurance [HI] trust fund which we must solve this year and a 
long-term crisis which needs much more careful consideration. However 
the plan before us cuts $270 billion from Medicare when the trustees 
only call for $90 billion in savings. In addition, the plan before us 
doubles part B premiums and we all know that not one dime of that money 
will go to the HI trust fund cited in the trustees report. Where is all 
this money going? To a balanced budget? No. It is being used to pay for 
a $245 billion tax cut for the privileged few in our society.
  I cannot and will not vote for a bill which provides a tax cut to the 
wealthy on the backs of our senior citizens.


                            fraud and abuse

  As I visit the senior centers of my district one message resonates. 
It is time to cut fraud and abuse. Find your savings by hiring more 
investigators to crack down on the crooks in the system, do not make 
cuts at the expense of seniors. Isn't it ironic that the majority 
passed legislation earlier this year that would eliminate 72 fraud and 
abuse inspectors at HHS Office of the Inspector General. The plan 
before us actually weakens the ability of HHS to detect waste, fraud, 
and abuse. In fact, the HHS Inspector General June Gibbs Brown states 
that this bill would:
  Make the existing civil monetary penalty and antikickback laws 
considerably more lenient and place an insurmountable burden of proof 
on the Government to punish illegal kickbacks;
  Relieve providers of the legal duty to use reasonable diligence for 
insuring that the claims they submit to Medicare and Medicaid are true 
and accurate;
  Create new exemptions to the law which could be exploited by those 
who wish to pay rewards or incentives to physicians for the referral of 
patients; and divert to private contractors scare resources currently 
devoted to law enforcement against fraud and abuse.
  In conclusion, let us take our time and truly study the changes that 
are needed to provide both long-and short-term solutions to our system 
of Medicare financing. Let me quote from the book ``Intensive Care'', 
``The health care system in the U.S. is far too complicated for anyone 
or any group to claim that a single reform plan is the solution to the 
crisis. Rather than taking a huge first step with a new untested 
system, wouldn't it make sense to pilot test a number of proposals? 
This is the only reasonable method to determine what works and what 
doesn't work. The danger with scrapping any old system of any kind is 
that a new system may not be any better.''
  Mr. Chairman, let us heed this advice. Send this bill back to the 
committees of jurisdiction and let us do this reform in a reasoned, 
bipartisan manner.
  Mr. GIBBONS. Mr. Chairman, I yield 2 minutes to the gentleman from 
Michigan [Mr. Conyers] who is the ranking Democrat on the Committee on 
the Judiciary, which, unfortunately, waived all chances of 
participating in this debate today through its chairman's actions.
  (Mr. CONYERS asked and was given permission to revise and extend his 
remarks.)
  Mr. CONYERS. Mr. Chairman, before I talk about the antifraud and 
antitrust provisions, let me point out that the medical malpractice 
provisions in this bill for the first time tells the States that the 
Big Brother Federal Government is going to preempt them in the area of 
medical malpractice, and the provisions are a gift for the 
irresponsible and the reckless.
  Take the case of Mr. King, who recently lost the wrong leg in an 
amputation in one of the worst medical malpractice cases in recent 
times. He would have been forced to face an absolute cap on pain and 
suffering at $250,000 even though he could face excruciating pain and 
suffering for every day for the remainder of his life. Yet a CEO who 
could not perform his job because of the same exact injury would face 
no such cap.
  Similarly, with this bill the House Republican leadership is saying 
that the woman who loses her reproductive capacity as a result of 
medical malpractice would have her damages capped at $250,000. Does 
anyone here believe that a woman's reproductive capacity is worth a 
mere $250,000?
  Now, on antitrust and fraud, there is more. Under the False Claims 
Act that allowed whistleblowers to sue for those who defraud taxpayers, 
we gutted, it has been taken out by the Republicans. That provision has 
returned $1 billion to the Government in savings from fraud, waste, and 
abuse, $1 billion. This bill will gut that law.
  I am saying to my colleagues, do not be fooled by this phony new 
health care. The Committee on the Judiciary has not had a second's 
worth of hearings on any of these antitrust, antifraud provisions.
  Mr. BLILEY. Mr. Chairman, I yield 1 minute to the gentleman from 
Georgia [Mr. Deal].
  Mr. DEAL of Georgia. Mr. Chairman, like many of my colleagues, I held 
meetings with my constituents this summer about Medicare. The No. 1 
complaint that most senior citizens had was the amount of money that 
was being spent for services that were not rendered, for overcharges 
for drugs and supplies, and for general waste. They are angry, and well 
they should be, when they see Medicare paying $2 for an aspirin, $12 
for a box of Kleenex, and thousands of dollars for services that were 
unnecessary or never delivered.
  We must stop these abuses of the status quo. They are costing at 
least 10 cents out of every Medicare dollar, $50 million a day, that 
will amount to $1.3 trillion over the next 7 years.
  Can we do better than that? Of course we can, if we let our senior 
citizens have a part in pointing out these abuses. They know better 
than a government bureaucrat what services and supplies they receive. 
They are tired of being told not to worry about the fraud since 
Medicare is paying for it. They know, even if some in government don't, 
that it is their tax money that is being wasted.
  This bill gives Medicare recipients a voice in the process. These are 
men and women who lived through the Depression, fought in the World 
Wars, and built this Nation by hard work and sacrifice. If they are 
empowered rather than victimized, they will help eliminate the thieves 
and con artists who cheat Medicare out of $50 million every day.
  Let us pass this bill and stop this outrage.
  Mr. GIBBONS. Mr. Chairman, I yield myself such time as I may consume.

[[Page H 10348]]

  The gentleman just does not know what he is talking about. We pay 
hospitals based on a capitated basis. We do not pay hospitals for all 
that foolishness that the gentleman just read off. I do not know where 
he got that information.
  Mr. BLILEY. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Georgia [Mr. Deal].
  Mr. DEAL of Georgia. Mr. Chairman, it is very clear that there are 
those who wish to try to defend the status quo. We are here to change 
the status quo and do something about these problems.
  Mr. DINGELL. Mr. Chairman, I yield 30 seconds to the distinguished 
gentleman from Illinois [Mr. Rush].
  Mr. RUSH. Mr. Chairman, under the Gingrich Medicare plan, the 
hospitals in and around the district of the gentleman from Georgia [Mr. 
Deal] will lose approximately $159 million over the next 7 years.
  Last week, in the Committee on Commerce, the Republicans delivered 
thousands of bogus letters. The seniors of my district and my State 
requested that I deliver a symbol of their true feelings regarding the 
Republican Medicare plan, a cut of pure grade bologna.
  Mr. BLILEY. Mr. Chairman, I yield 1 minute to the gentleman from 
Colorado [Mr. Schaefer].
  (Mr. SCHAEFER asked and was given permission to revise and extend his 
remarks.)
  Mr. SCHAEFER. Mr. Chairman, I rise in strong support of the Medicare 
Preservation Act. This well thought-out package takes an important step 
towards ensuring the solvency of Medicare for today's beneficiaries and 
for generations to come.
  In addition to the numerous hearings the Ways and Means and Commerce 
Committees held on saving Medicare, we all got an earful of advice 
during our respective town meetings. At my town meetings, many good 
suggestions were put forward. However, more than anything else, seniors 
asked that we vigorously attack the waste, fraud, and abuse that now 
plagues the system.
  Senior citizens I have talked with routinely witness overbilling and 
needless tests. ``Don't worry,'' some say. ``Medicare will pay it.'' 
Unfortunately, seniors know it is they, their children and 
grandchildren who really foot the bill.
  There are many steps the Medicare Preservation Act takes to combat 
waste, fraud, and abuse. None is more basic and makes more sense than 
simply doubling the monetary fines for defrauding the system. The money 
collected through these fines will be immediately recommitted to pursue 
additional anti-fraud efforts.
  Mr. Chairman, this legislation will literally save Medicare from 
ruin. Rooting out the waste, fraud, and abuse is an important piece of 
the overall package. I urge all of my colleagues to join this important 
effort.
  Mr. DINGELL. Mr. Chairman, I yield 2 minutes to the distinguished 
gentlewoman from Illinois [Mrs. Collins].
  (Mrs. COLLINS of Illinois asked and was given permission to revise 
and extend her remarks.)
  Mrs. COLLINS of Illinois. Mr. Chairman, I rise in opposition to H.R. 
2425, the ``Get Old People, Gingrich Republican, Put The Hurt on 
Seniors, Medicare Destruction Act of 1995.'' This bill is nothing more 
than a mean-spirited attempt by the majority to destroy the basic 
health care rights all older Americans now enjoy in order to give tax 
breaks to their wealthy, big business, special interest buddies. Never 
in all my time in Congress have I witnessed a greater legislative 
travesty than the ill-conceived proposal we have before us today.
  To begin with, the rule we just considered stifles any amount of 
reasonable debate on this legislation. For instance, with the exception 
of pap smear testing, this bill eliminates quality assurance guarantees 
that are now in place for patients who have diagnostic or other types 
of testing done in their doctor's office laboratories.
  It probably should not be surprising that the Republican Medicare 
proposal--which bends so close to special interests and tilts so far 
from the best interests of America's senior citizens--would eliminate 
requirements for quality and accuracy of laboratory tests. This, like 
the Republicans' blatant and cruel elimination of national standards 
for nursing homes, is one more way of saying to the ill, the infirmed 
and the aged: you're on your own--good luck!
  Where is the rationale for eliminating quality standards for 
cholesterol tests, colon and prostate cancer screening, needle biopsies 
to detect precancerous conditions, glucose monitoring and so on? There 
isn't any!
  Equally disturbing is the fact that this Republican bill places a 
seven-year freeze on Medicare payments to providers of durable medical 
equipment such as wheel chairs, electric beds, walkers and, yes, even 
oxygen. Now this freeze is at a time when more and more Americans are 
aging and the need will be greater.
  This freeze will cause severe disruptions in the health care and 
quality of life for sick and/or infirmed Americans who need their 
wheelchairs and walkers to get around more easily, electrical beds to 
rest comfortably and oxygen to breath effectively. By putting a freeze 
on oxygen, the Republicans are literally taking the breath of life out 
of the bodies of old folk. Only God has that right.
  Mr. Chairman, I heard a Member a few minutes ago say that he was glad 
that he had made 65 and qualifies for Medicare. A lot of people qualify 
for Medicare who do not make $133,000 a year, as he does. And not only 
that, people who use facilities like wheelchairs and the like were 
among those who are thrown out of the committee by the Republican side 
in the Committee on Commerce: Julia Searles, 75; Joseph Rourke, 90 
years old; Theresa McKenna, 68 years old; Bert Seidman, Loretta Adkins, 
Cecelia Banks, Doretha Beverly, Barbara Greenwell, Gladys Lyles, 
Roberta Saxton, Annie Earl, Marie Roots, Lilly Valentine, Gertrude 
Snead, Ruth Thorn, Edna Custis, all over age 69 who do not make 
$133,000 a year.
  Mr. Chairman, the 7-year freeze on DME payments once again 
demonstrates the lengths to which the Republicans have been driven by 
adopting an arbitrary cut of $270 billion in Medicare so that they 
finance a tax cut for the rich.
  In an attempt to protect these Medicare beneficiaries, I attempted to 
offer amendments to restore these provisions. Unfortunately, the 
Republicans would not let me.
  Let me also address the blatantly undemocratic process by which this 
proposal, which will directly impact the health and well-being of 37 
million older Americans and nearly every family in the Nation, has been 
brought forth. Not one public hearing has been held in which the 
legislative specifics of the drastic Medicare changes we are about to 
act on were in plain view. This is appalling and flies in the face of 
the legislative process.
  After flagrantly spending the taxpayer's time and money without a 
second thought to conduct 28 days of hearings on Whitewater, 10 days of 
hearings on Waco, and 8 days of hearings on Ruby Ridge, it is crystal 
clear that the Republican party has put partisan politics above the 
public interest.
  The fact that Democrats had to convene hearings on the lawn of the 
Capitol in order to provide a public forum to examine the GOP plan is 
compelling evidence, in and of itself, that the Speaker and his troops 
know that their proposals cannot stand up to public scrutiny. Moreover, 
it speaks volumes to the enormous disconnect that exists between the 
Republican party and the rights and needs of older Americans today.
  Such a disconnect became extremely apparent on October 11, when 13 
seniors, some of whom were over 90 years old and relegated to wheel 
chairs, came to ask questions about the Republican Medicare proposal 
prior to markup by the Commerce Committee. They were promptly arrested 
and hauled off to jail at the direction of the committee chairman!
  During the Democratic ``lawn'' hearings, however, we helped answer 
the question, just what does the Republican Medicare proposal do? It 
charges seniors more for medical care, medicine, wheelchairs and 
medical devices. It forces seniors to abandon their own doctors for 
some uncharted course through the HMO system. It takes $270 billion in 
Medicare funding away from seniors, doctors, and hospitals all to pay 
for tax cuts for the wealthy. In short, it devastates the health care 
program upon which so many millions of Americans have come to rely.
  Among the many witnesses were several of my constituents from Chicago 
who testified about the devastating consequences of the GOP so-called 
reforms.
  Dr. William Troyer, director of External Services for the University 
of Illinois at Chicago Medical Center, an academic health center which 
houses the Nation's largest medical school and serves thousands of 7th 
District residents, gave a bleak view of the future under Republican 
Medicare changes. To quote Dr. Troyer, ``a gradual weakening and 
eventual demise'' of UIC Medical Center will  

[[Page H 10349]]

result from the more than $7 billion in cuts to direct and indirect 
medical education funding proposed by the GOP.
  Following Dr. Troyer, Mr. Lacy Thomas, chief financial officer of the 
Cook County Bureau of Health Services, was equally dismal in his 
predictions. As a safety net provider for the disadvantaged and 
underserved in Chicago, the Bureau will be unable to deliver basic care 
for this population due to the total elimination of assistance to non-
U.S. medical graduates--graduates which comprise nearly 40 percent of 
Chicago Medical Society physicians. In addition, $8 billion in 
reductions for disproportionate share payments to hospitals serving the 
indigent, such as Cook County, will only serve to exacerbate the pain 
felt by these patients.
  Yet, I believe the most compelling testimony came from Ms. Irene 
Nelson, a senior from Chicago, who spoke eloquently regarding her fears 
of the Republican Medicare cuts. She stated,

       It is obvious to me that the people who are making these 
     decisions are completely out of touch with the daily 
     struggles of senior citizens like me. I wonder if any of 
     these people have ever been forced to decide between eating, 
     heating, and paying that outstanding medical. I doubt it very 
     much! But that is what I, and many other seniors out there, 
     will be forced to do if the Republicans are allowed to cut 
     Medicare.

  Mr. Chairman, it is of extreme importance that the American people 
are provided with this information on the Republican plan to gut 
Medicare in the dark of night and leave our Nation's seniors holding 
the bag.
  After promising to balance the Federal budget in 7 years, increase 
military spending, and provide hefty tax cuts to the richest Americans 
in the country, the GOP is looking for a magic potion to fund these big 
promises.
  Unfortunately, the Republicans seem to think Medicare is going to be 
the cure-all. In pushing a package of the deepest Medicare cuts in the 
program's 30-year history, $270 billion, the GOP wants to immediately 
increase the cost of Medicare to the average senior citizen by nearly 
$1,000, and force many to give up their own doctors.
  This is bad policymaking and bad medicine for senior citizens.
  In my State of Illinois, the proposed cuts will eliminate health care 
coverage outright for more than 58,000 individuals with disabilities 
over the next 7 years. In addition, 23,000 senior citizens will lose 
coverage.
  Out-of-pocket costs will increase by an average of $3,500 over the 
next 7 years for each of Illinois' 1.62 million Medicare recipients. 
Further, Illinois will be denied $6.2 billion in Federal health care 
assistance over the next 7 years.
  I am outraged at the efforts of the GOP to gut this essential program 
for no reason other than to pay for $245 billion in tax cuts for the 
rich. It is unnecessary, it is outrageous, it is wrong.
  As the saying goes, ``You can fool some people some of the time, but 
you can't fool all the people all of the time.'' The vast majority of 
the American people are not fooled Mr. Chairman. Pass these Medicare 
cuts and you will discover that cold, hard fact pretty darn quick.
  I urge my colleagues to vote ``no'' on H.R. 2425. Let's not take the 
``care'' out of Medicare.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Florida [Mr. Shaw], a respected member of the Committee on Ways and 
Means, the chairman of the Subcommittee on Human Resources.
  (Mr. SHAW asked and was given permission to revise and extend his 
remarks.)
  Mr. SHAW. Mr. Chairman, I rise today in support of the Medicare 
Preservation Act, and to deliver to this legislative body a message 
from my senior constituents in south Florida. Stop the fraudulent and 
abusive practices against the Medicare system. Do something about it, 
and just stop it.
  On September 6, I mailed a letter to all of my constituents who 
qualify for Medicare which explained the problems that face the 
Medicare program. In this letter I asked for their input on how to 
preserve the system. To my surprise, over 90 percent of those who 
responded said that Congress must stop the fraud and abuse that they 
feel is widespread. Just listen to what is going on out there.
  On September 22, I received a letter from Mrs. Jack Barnett, whose 
husband at one time was the chief of surgery at his hospital in New 
Jersey. Today Dr. Barnett is an invalid living with his wife in 
Hollywood, FL. Mrs. Barnett noticed last year that they were receiving 
billing statements for feeding tubes which Dr. Barnett never used. The 
company charging for these services received $2,765, $3,870, and $4,411 
from Medicare. Mrs. Barnett asked her husband's nurse if she had ever 
seen anything like this before, and when the nurse saw the name of the 
company, she stated that two of her other patients were billed for the 
same thing by the same company.
  Mrs. Audrey Vitolo of Deerfield Beach, FL was charged $600 for a 
simple blood test. Medicare paid the bill. She told me she felt 
victimized.
  Mr. Ted Murphy of Fort Lauderdale, FL, was charged $10,000 for a 
simple operation on his eye lid. Even though this was an outpatient 
procedure, Medicare paid the bill. He told me that he complained to the 
hospital, but no action was taken.
  Mr. Chairman, I want my constituents to know that their message came 
through loud and clear, and that Congress today is taking serious steps 
to stop fraud and abuse.
  This Medicare bill will make it a Federal offense to engage in fraud, 
theft, embezzlement, false statement, bribery, graft, and illegal 
remunerations, including kickbacks. Civil penalties have been doubled 
and incentives have been added to encourage people to report cases of 
fraud and abuse.
  First, the Secretary of the Department of Health and Human Services 
will be required to alert beneficiaries of instances of fraud and abuse 
against the program. A toll-free number will be established to report 
cases of fraud and abuse. Also, at the request of any person, the 
Secretary will publish a special fraud alert, which notifies the public 
of practices that are suspect.
  Second, a beneficiary incentive program will be established where 
individuals who report cases of fraud and abuse can share the amount 
collected against those who are fined. Just think of the power of this 
provision, Mr. Chairman. There are currently 37 million Americans in 
the Medicare program. This means there are 37 million potential private 
attorney generals to help stop fraudulent and abusive practices. I know 
this will please many of my constituents, especially the Simons of 
Hallandale, FL, who wrote to me recently to inform me that they saved 
Medicare $4,000 by reporting suspect billing practices of their doctor.
  Third, under this legislation, direct spending for Medicare-related 
activities of the inspector general of the Department of Health and 
Human Services will significantly increase. These activities include: 
First, prosecuting Medicare-related matters through criminal, civil, 
and administrative proceeding; second, conducting investigations 
relating to the Medicare program; third, performing financial and 
performance audits of programs and operations relating to the Medicare 
program; fourth, performing inspections and other evaluations relating 
to the Medicare program; and fifth, conducting provider and consumer 
education activities regarding Medicare fraud and abuse.
  I want to stress to my constituents that this legislation is not a 
paper tiger. This bill provides serious money to stop fraud and abuse: 
At least $430 million in 1996; $490 million in 1997; $550 million in 
1998; $620 million in 1999; $670 million in the year 2000; $690 million 
in 2001; and $710 million in 2002. This is a serious financial 
commitment that the Congressional Budget Office said will save Medicare 
money.
  Finally, this bill establishes a health care anti-fraud task force. 
This task force will be a coordinated effort by the Department of 
Justice to prosecute health care fraud offenses.
  Mr. Chairman, the Medicare Preservation Act is the toughest, most 
serious attempt this Congress has ever taken to stop fraud and abuse in 
the Medicare program. I am proud to have contributed to the effort to 
address the issue of fraud and abuse, and I know when my constituents 
learn of their new rights under the Medicare program, they will be 
proud of this Congress too. I urge my colleagues to vote for this most 
important legislation. Vote to preserve and strengthen Medicare.

                              {time}  1400

  Mr. GIBBONS. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Ohio [Mr. Sawyer].
  (Mr. SAWYER asked and was given permission to revise and extend his 
remarks.)
  Mr. SAWYER. Mr. Chairman, today, Congress is debating cuts to the 
Medicare program.
  As the post-war generation ages and their parents outlive all 
previous generations, we 

[[Page H 10350]]
are facing the largest elderly population in our Nation's history and, 
therefore, the largest Medicare beneficiary population. Our national 
policies must reflect this changing reality. As we seek ways to balance 
the Federal budget, we must also continue investing in our Nation's 
future--including ensuring that both current and future retirees will 
have the resources they need to survive.
  However, the Republican Medicare proposal would cut benefits for 
current retirees, those who no longer have the opportunity to prepare 
for their retirement, in order to increase discretionary spending for 
current working age people. This type of policy perpetuates the 
generation battle for my pot of money. Instead, we need to work 
together to find ways to reduce the deficit, ensure the stability of 
Medicare, and invest in the future.
  We also have to learn from our history. As a nation, America cannot 
afford to return to the bad old days before the Medicare program was 
created. Medicare has helped secure our Nation's seniors against the 
threat of poverty and has limited the high costs of emergency and non-
insured health care. Medicare has allowed our Nation's elderly to take 
care of their own health needs, regain self-respect, and, in turn, 
remain active members of society.
  I support efforts that enable us to extend the life of the Medicare 
program which has been so important to the health of many older 
Americans. That is why I have supported the Democratic alternative 
which ensures the solvency of the Medicare trust fund through 2006--the 
same as the Republican proposal--without making harmful and excessive 
cuts to the Medicare program.
  The American health care system, despite its shortcomings, is the 
envy of the world. Medicare has opened the door for many Americans to 
quality health care. The Republican proposal will undermine the 
graduate medical education program, and hurt urban and rural hospitals 
which are already struggling to remain open. Finally, the Republican 
proposal will mean that premiums will double in 7 years, meaning that 
for the poorest of the elderly, health care will continue to absorb 
more and more of their living costs.
  The Republican Medicare bill is simply bad policy. It pits one 
generation against another, rich against poor, Democrats against 
Republicans. The Republican Medicare bill does not invest in our 
future, nor does it help current retirees.
  I urge my colleagues to vote against this bill.
  Mr. GIBBONS. Mr. Chairman, I yield such time as he may consume to the 
gentleman from New Mexico [Mr. Pastor].
  (Mr. PASTOR asked and was given permission to revise and extend his 
remarks.)
  Mr. PASTOR. Mr. Chairman, as we consider this sweeping piece of 
legislation today, let us at least make an attempt to honestly describe 
what is being proposed. To begin, we are reducing Medicare payments to 
hospitals and doctors. Secondly, we are increasing the premiums paid by 
beneficiaries. And, although we are considering some modest changes in 
how health services will be provided, the fact that Medicare payments 
are being cut and premiums are being increased remain the most salient 
features of the legislation. This is what most alarms me about this 
proposal.
  While the public is being told we need to make these changes in order 
to save the system, the fact of the matter is that the proposed cuts 
far exceed the amount needed. It is part A of Medicare which is 
scheduled to become insolvent by the year 2002 and its $90 billion 
which is needed to avoid this catastrophe. Yet, the combined cuts in 
payments to doctors and hospitals surpasses this figure. More startling 
is the fact the premium increases, which have nothing to do with 
keeping part A of Medicare solvent, will further reduce Medicare costs. 
The combined cuts, premium increases, and other changes to the system 
will reduce Medicare by $270 billion over 7 years. This leaves a large 
gap of $180 billion.
  Even a simple examination of this proposal yields numerous questions. 
Why are we proposing to wreck havoc in rural America by jeopardizing 
the delivery of health care there; Why are we proposing to increase 
premiums for beneficiaries, many of whom will only be able to make 
these payments through great personal sacrifice; and, why are we moving 
to undermine public hospitals?
  There are only two answers that are readily discernible. One is that 
excessive Medicare cuts facilitate a cut in taxes further down the 
road; the other is that these cuts could allow the budget deficit to be 
reduced by some factor. While I could support both tax and budget 
reductions, I cannot support such an effort under these circumstances. 
Why would we want to jeopardize the welfare of our senior citizens to 
either give more money to wealthier individuals or to reduce a budget 
deficit? Are there not more equitable approaches we could follow to 
achieve these goals?
  I would propose that, foremost, we consider sacrosanct the welfare of 
those who have made significant, lifetime contributions to this nation. 
Whatever approach we use to stimulate investment in this country should 
not be done on the backs of our senior citizens. Our budget deficit is 
real. Yet how can we in good conscience engage in this wholesale attack 
against senior citizens when other, more measured alternatives remain 
at our disposal? Let us make an honest effort to address our budget 
deficit problem without strangling our most vulnerable citizens. And, 
let us consider policies which stimulate economic activity without 
exacerbating our deficit.
  Mr. GIBBONS. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Illinois [Mr. Poshard].
  (Mr. POSHARD asked and was given permission to revise and extend his 
remarks.)
  Mr. POSHARD. Mr. Chairman, due to the concerns I have regarding the 
future of our rural health care system and the people who depend on 
those facilities, I rise in strong opposition to the bill, H.R. 2425.
  It is difficult to misread the conclusions contained in the report of 
the Entitlement Reform Commission, which states that without 
fundamental change, our entire Federal budget will be consumed by 
entitlements and interest on the debt by the year 2012. That means none 
of the tax money sent to Washington will be available for national 
defense, our transportation system, education, law enforcement, science 
or space, national parks or any of the other functions of government 
which operate with discretionary funds. It will all be committed to 
interest on the debt and entitlement spending.
  Doing nothing is not an option. But doing the wrong thing is no 
better. Today we face a trio of choices concerning the future of 
Medicare and our prospects for balancing the budget.
  The Board of Trustees of the Medicare Hospital Insurance Trust Fund 
indicate that we have traditionally maintained a 10- to 12-year balance 
in the fund, and, currently, we are only 6 years from going broke. We 
are obligated to take action to ensure the solvency of the fund.
  By most estimates, we could control the growth of Medicare spending 
over the next 7 years by about $90 billion and protect the integrity of 
the fund by extending its balance to 10 years solvency. But that course 
ignores the fundamental problem that entitlement spending must be 
further contained if we are going to meet our balanced budget goal.
  Our second option, which I have voted for and will continue to 
support, is to control Medicare growth by $170 billion over the next 7 
years. That would secure the trust fund and contribute the necessary 
cost controls which, when combined with the rest of the coalition 
budget, would bring us to balance in 7 years. We must do both of those 
things--preserve Medicare for our seniors, and balance the budget on 
behalf of future generations of our sons and daughters.
  The third option, which is before us today, takes $270 billion out of 
the Medicare Program. It will stabilize the trust fund and put us on a 
7-year path toward a balanced budget. But it also takes $100 billion 
more out of Medicare than is necessary to achieve financial solvency of 
the Medicare trust fund and to balance the budget. This additional $100 
billion, coming directly from Medicare, will be used to help finance a 
$245 billion tax cut for some of the wealthiest people in America.
  As Cochair of the Rural Health Care Coalition, I have long been 
concerned with preserving an adequate and affordable health care system 
for people in rural areas such as the 19th district of Illinois, which 
I am privileged to represent. The approach being advanced today 
encourages health maintenance organizations to provide Medicare 
services, an approach which may work well in urban areas but will never 
adequately serve the rural people of this country. Why would a health 
care provider establish a system in a rural area where the monthly 
payment is approximately $300 when it receives nearly $500 for 
providing similar services in a more urban area?
  This week, the Illinois Hospital and HealthSystems Association wrote 
me a letter which states:

       IHHA continues to be strongly opposed to the magnitude of 
     Medicare reductions that are contained in this proposal. The 
     House measure calls for approximately $76 billion in Medicare 
     reductions to be achieved by reducing payments to hospitals. 
     Of this total, reductions to Illinois hospitals would be $3.5 
     billion. For the hospitals in your district, the reductions 
     amount to $119 million.

  As the specifics of this proposal became clear, I traveled my 
district to listen to the people who run the hospitals and clinics and 
the patients who depend on them to maintain their quality of life. One 
after another, hospital administrators in my district told me of the 
hundreds of thousands of dollars they would lose under this plan. Rural 
hospitals are valuable not only for their vital health care services, 
but for providing some of the best paying jobs in 

[[Page H 10351]]
our communities. They cannot be allowed to dry up and blow away, 
leaving people wanting for medical care.
  Mr. Chairman, we cannot continue the Medicare System as it presently 
exists which today stands near bankruptcy. We should and must consider 
asking seniors who are financially secure to pay more for their share 
of the Medicare Program. I am on record supporting a bill which would 
means test Medicare premiums for higher income individuals to make the 
system more fair.
  We cannot simply make the short term fix to sustain the trust fund. 
It is equally irresponsible to cut the Medicare Program to pay for a 
tax cut which Republican analysts admit will add $95 billion to the 
national debt. Both courses of action are wrong.
  Let us come together as a deliberative body to secure the trust fund, 
balance the budget, and put our country in a position to care for its 
people and compete in the international marketplace in the coming 
century. We can do better for all generations of Americans, and I stand 
ready to work with anyone of any party to make better choices than the 
one before us today.
  It is unfortunate that the leadership of both parties will not allow 
the moderate Democrat proposal to come forward on this floor for a 
vote. This proposal is the best option available because it 
accomplishes both a balanced budget and a fiscally sound Medicare trust 
fund, but does not overreach by downsizing Medicare another $100 
billion for fund a tax cut which is unnecessary.
  My hope will be that this sensible approach to fiscal responsibility 
will be allowed next week in the reconciliation bill and that 
eventually this Congress will achieve the middle ground that is 
necessary to solve these problems.
  Mr. GIBBONS. Mr. Chairman, I yield 30 seconds to the gentleman from 
Wisconsin [Mr. Kleczka].
  Mr. KLECZAK. Mr. Chairman, last year the Democrats had a proposal to 
extend the solvency of Medicare by cutting $168 billion in the program. 
The speaker who just addressed us from Florida indicated to the 
committee at that time, ``We have here in this bill the seeds of 
destruction of Medicare. Let's not destroy a health care program in 
this country that we know works well and that our seniors are depending 
on it.'' Now he comes to the floor supporting a bill cutting $270 
billion.
  Mr. Chairman, I guess those seeds have germinated.
  Mr. DINGELL. Mr. Chairman, I yield 30 seconds to the distinguished 
gentleman from Pennsylvania [Mr. Klink].
  Mr. KLINK. Mr. Chairman, we are hearing about this bill cutting 
waste, fraud, and abuse. It is odd that the GAO, the Department of 
Justice, and the HHS Office of Inspector General all have very grave 
concerns about what this bill does to provisions in the Medicare bill 
that would allow them to do law enforcement. In fact, if my colleagues 
like waste, fraud, and abuse, which we all agree now account for about 
10 percent of all that is spent on Medicare and Medicaid, my colleagues 
are going to love this bill because it makes the health care waste 
fraud a growth industry and a new way of life for a lot of Willie 
Suttons.
  Mr. BLILEY. Mr. Chairman, I yield 3 minutes to the gentleman from 
Illinois [Mr. Hyde], chairman of the Committee on the Judiciary.
  (Mr. HYDE asked and was given permission to revise and extend his 
remarks.)
  Mr. HYDE. Mr. Chairman, I rise in strong support of H.R. 2425, the 
Medicare Preservation Act of 1995.
  Mr. Chairman, there is no question that reform of the Medicare 
Program is imperative if it is to survive. But its mere survival is not 
the goal of this legislation: What we seek is to preserve Medicare by 
keeping it solvent while strengthening and improving the coverage and 
options it provides to this Nation's elderly. We must not squander this 
opportunity to deal comprehensively with the multitude of issues which 
bear on the efficient delivery of health care in this country.
  As the chairman of the Committee on the Judiciary, I would like to 
point out some particularly important provisions contained in this bill 
that fall within our Committee's jurisdiction. Specifically, the bill 
contains provisions designed to facilitate the operation of the revised 
Medicare Program--notably, health care liability reform, antitrust 
relief for provider service networks, and an antitrust exemption for 
medical self-policing entities. The combined effect of these changes 
will provide a fertile environment for the delivery of Medicare 
services in a manner which maximizes consumer choice. Liability reform 
will generally decrease the cost of providing health care services, and 
eliminate many of the frivolous lawsuits which are clogging our courts. 
Antitrust relief for provider service networks, or PSN's, will increase 
competition for contracts under the Medicare system, thereby increasing 
choice and decreasing costs. Providing an antitrust exemption to 
medical self-regulatory entities will encourage physicians and 
hospitals to police themselves, and will contribute to a reduction in 
malpractice, fraud, and abuse.


                      health care liability reform

  Our health care system is clearly being burdened by a number of cost-
based pressures. One of these costs is the threat of liability suits 
facing medical practitioners and health care providers and the large 
dollar amounts they are forced to spend to protect themselves against 
these legal actions.
  The average physician has a 40-percent chance of being sued at some 
time in his or her career. This increases to 52 percent for surgeons 
and to 78 percent obstetricians. The estimate is that medical 
malpractice premiums now total $10 billion annually. The average annual 
medical premium for a doctor specializing in obstetrics in some urban 
areas now exceeds $100,000 a year.
  Many liability cases brought against doctors are frivolous. In fact, 
two out of three medical liability claims are closed without any 
payment to the claimant, but only after large legal and administrative 
fees have already been incurred.
  Further, the increasing insurance premiums for malpractice coverage 
represent only a part of this problem. The estimates are that the costs 
of defensive medicine run from $20 to $25 billion a year.
  Numerous other entities in addition to doctors and hospitals such as 
pharmaceutical manufacturers and those that manufacture medical devices 
or provide blood or tissue services are also impacted by the same 
liability concerns. Finally, as we move more and more into a managed 
care system, the scope of third-party liability is also a matter of 
increasing concern.
  There is no question but that our health care system is seriously 
burdened by both the threat, and the reality, of liability suits facing 
medical practitioners and health care providers. The Health Care 
Liability Reform legislation that is included in this bill will solve 
this serious national problem.


      easing of antitrust barriers for physician service networks

  Provider service networks--those composed of doctors, hospitals, and 
other entities who actually deliver health care services--are 
potentially vigorous competitors for Medicare beneficiaries. The 
benefits to the Medicare Program of their participation would be lower 
costs and higher quality of care than in nonprovider sponsored health 
plans. Costs would be lower because contracting with a PSN instead of 
an insurer could eliminate a layer of profit and overhead. Quality 
would be higher because providers, and particularly physicians, would 
have direct control over medical decision-making. Arguably, physicians 
and other providers are better qualified than insurers to strike the 
balance between conserving costs and meeting the needs of the patient.

  There are obstacles, however, to the formation of PSN's. One of the 
most serious is the application of the antitrust laws to such groups in 
a manner which does not allow the network to engage in joint pricing 
agreements, regardless of whether its effect on competition is positive 
rather than negative.
  Antitrust law prohibits agreements among competitors that fix prices 
or allocate markets. Such agreements are per se illegal. Where 
competitors economically integrate in a joint venture, however, 
agreements on prices or other terms of competition that are reasonably 
necessary to accomplish to procompetitive benefits of the integration 
are not necessarily unlawful. Price setting conduct by these joint 
ventures should be evaluated under the rule of reason, that is, on the 
basis of its reasonableness, taking into account all relevant factors 
affecting competition.
  Current Department of Justice-Federal Trade Commission guidelines 
require that a physician group share substantial financial risk before 
being considered a joint venture and thus eligible for rule of reason 
analysis. Their definition of substantial financial risk is too rigid, 
thereby eliminating from the market PSN's which would provide an 
expanded set of consumer choices and increase competition in the market 
for health care services.

[[Page H 10352]]

  The proposed legislation overcomes this barrier by mandating that the 
conduct of an organization meeting the criteria of a provider service 
network be judged under the rule of reason. The result will be to 
permit a case by case determination as to whether the conduct of that 
PSN would be procompetitive, and thus permissible under the antitrust 
laws. It is important to understand, however, that this is not an 
exemption from the antitrust laws. In no event would providers be 
allowed to set prices or control markets so as to injure competition.
  Only an organization meeting specified criteria would qualify for 
this more liberal, rule of reason consideration. The network must have 
in place written programs for quality assurance, utilization review, 
coordination of care, and resolution of patient grievances and 
complaints. It must contract as a group, and mandate that all providers 
forming part of the group be accountable for provision of the services 
for which the organization has contracted.


        antitrust exemption for medical self-regulatory entities

  Standard setting is a cooperative activity engaged in by the 
providers of health care services in this country. Those entities have 
a long history of protecting the public with standards for medical 
education, professional ethics, and specialty certification. These 
activities have increasingly been challenged under the antitrust laws 
in recent years, typically by those who fail to meet the standards. 
Congress attempted to address this problem with the Health Care Quality 
Improvement Act of 1986, 42 U.S.C. Sec. 11101 et seq., which provided 
antitrust protection for peer review actions conducted in good faith. 
While beneficial, this law shifted the debate in antitrust litigation 
over peer review to whether the participants acted in good faith and 
has not served to stem the tide of antitrust law suits.
  The medical self-regulatory entity exemption included in our 
legislation would bar antitrust suits against medical self-regulatory 
entities that develop or enforce medical standards. This would include 
activities such as accreditation of health care providers and medical 
education programs and institutions, technology assessment and risk 
management, development and implementation of practice guidelines and 
parameters, and official peer review proceedings. The exemption would 
cover suits against individual members of the groups which undertake 
these activities as well as the organizational entity on whose behalf 
they act.

  The scope of this antitrust protection is not absolute, however, 
Activities by a medical self-regulatory body that are conducted for 
purposes of financial gain or which would interfere with the provision 
of health care services of a provider who is not a member of the 
profession that sets the standard would not be covered or exempted by 
this legislation.
  Mr. Chairman, H.R. 2425 represents a historic step forward in 
improving the delivery of health care in America. It deserves the 
support of every Member of this body.
  Mr. DINGELL. Mr. Chairman, I yield 30 seconds to the gentleman from 
Michigan [Mr. Conyers].
  Mr. CONYERS. Mr. Chairman, I say to the gentleman, great statement. 
The gentleman's district loses in hospital fees $260 million. The legal 
news points out doctors mop up on medical malpractice reform, and you 
have not had 1 minute's hearing on medical malpractice reform. The 
Judiciary Committee was cut out.
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from New York [Mr. Towns].
  Mr. TOWNS. Mr. Chairman, make no mistake about it. What we are doing 
here today is applying a $270 billion meat-ax approach to a $90 billion 
problem merely to pay for a $245 billion tax cut for the wealthy.
  Let me say that I know my colleagues want to help their rich friends, 
but let me say to the Republicans, Please find another way to help your 
friends. Do not do it on the backs of senior citizens, those that have 
worked all their lives to come to this point now and to be told we are 
going to cut, cut, cut, cut.
  Let me just talk about two lies here very quickly. No. 1 is that we 
are going to go after fraud and abuse. My colleagues are not going 
after fraud and abuse; they are cutting half of the people that is 
supposed to go find fraud and abuse. How are they going after it if 
they eliminate half of the people that are supposed to look for it? And 
the last one is choice. The biggest lie of all is choice. If they do 
not have the resources, they have no choice.
  Mr. GIBBONS. Mr. Chairman, I yield 3 minutes to the gentleman from 
New York [Mr. Rangel].
  (Mr. RANGEL asked and was given permission to revise and extend his 
remarks.)
  Mr. RANGEL. Like so many of my friends here, Mr. Chairman, I am sick 
and tired of these Republicans being beat up on really. Most of the 
chairmen and certainly the committee people have nothing to do with 
this. Someone told them that they had to find a $245 billion tax cut. 
Do my colleagues think these people, kind and gentle as they are, will 
be going after housing, and job training, and lunch programs? No, it is 
not their fault.
  And let us get another thing straight about this $270 billion cut. It 
is a savings; do my colleagues not get it? What it means is that, as we 
find U.S. population growing and people getting older, and becoming 
more ill, and having to see more doctors and more hospitals, we are 
going to give them some more money. So who the heck is saying that they 
are not giving more? What they are not doing is taking care of those 
older people the way they should be taken care of because they have 
decided to legislate the rate of inflation.
  Now another thing which we have to understand is that we want to save 
money by taking these old folks off of this fee-for-service, seeing 
their own doctor business. Cannot my colleagues not understand that? We 
have these private organizations. They meet every month. Most of them 
are Republican, but what has that got to do with it? When they are 
there, they do not have meetings asking how many lives did we save. 
They want to know many bucks did we make. Now the quicker we get people 
off of these expensive doctors, because now it is costing us $3 billion 
more, these doctors are a lot of money, as my colleagues know; ask 
them, they can tell us how much they want; and get them on these 
programs where we can ration the care, then it is not really cutting 
services. It is not really cutting money, it is cutting the services, 
and so do not call that a cut.
  Now some may say, Well, how are these old people going to shop 
around, feeble as they are in wheelchairs, and find one of these for-
profit organizations to give them care? My Democratic friends, I want 
them to know they can stay in the program they are in. They can stay 
there, and it is discriminatory if one of these for-profits do not let 
them in.
  Now there is a problem. There is nothing in the law that says these 
for-profits have to go in communities where there is sick people. There 
is nothing in here that says they have to go to the rural areas, there 
is nothing in here that says they have to go to the inner city, and why 
should they? They are in the business of making money. There are sick 
people in these communities, and we have to avoid it, but the meanest 
thing of all, my Republican friends, and I wish they could help me to 
explain this, is that for years we have known when one works and they 
have no insurance, when someone is poor and they have no coverage, they 
go to the public hospitals. I ask, why did you hit them so hard? Mr. 
Chairman, that is where people have no place else to go.
  Mr. ARCHER. Mr. Chairman, I yield 3 minutes to the gentlewoman from 
Connecticut [Mrs. Johnson], chairman of the Subcommittee on Oversight 
of the Committee on Ways and Means who has given so much of her time 
and her knowledge in developing this plan.
  Mrs. JOHNSON of Connecticut. Mr. Chairman, the goal of this bill is 
very simple. It is to preserve Medicare for current retirees and for 
future retirees. Why do we want to do this? Because the twin pillars of 
retirement security for American seniors are Social Security and 
Medicare, and believe me, when the Trustees of Medicare say next year 
they are going to pay out more money than they are going to take in and 
in 5 years after that they are going to use up all their savings and be 
broke, I think that is a crisis. I think that is a problem. I think 
delaying addressing that problem is going to make it harder, not 
easier.
  So I am proud to support a bill that says simply we have a crisis, 
that to preserve Medicare we have to fix it, and we can do it. It is 
actually not very hard. It means reducing the rate of growth in 
Medicare from 10 percent down to 6.5 percent.
  Why do we think we can do this? Because the private sector has 
already reduced the rate of health care cost growth to 3 percent. We 
can preserve Medicare by reducing its growth rate to twice that of the 
private sector. We 

[[Page H 10353]]
can do that, and we can do that in a way that opens up new 
opportunities for seniors because Medicare is an old-fashioned program 
that does not provide prescription drugs nor cover prevention, all of 
which can save money.
  Right in Boston today we have two plans open to Medicare seniors 
offering all Medicare services, prescription drugs, and a number of 
other services, for zero premium. That is a zero-premium choice.

                              {time}  1415

  That means for the same dollar we are investing into Medicare, these 
folks in Boston, our senior citizens, are going to get choices that buy 
better than Medicare benefits. That is what this is all about. It is 
about controlling costs in Medicare by opening up to seniors the kinds 
of plans that in the private sector have preserved benefits and reduce 
the rate of medical inflation in this country.
  And how do we get the $270 billion? This is how we get it. We reduce 
the rate of growth in hospital reimbursement rates and doctor 
reimbursement rates so they go up 6.5 percent instead of 10 percent. 
You Democrats keep jumping up and saying ``We are cutting funding to 
hospitals''. Mr. Chairman, I ask Members to ask their kids if they can 
pay more than the 19 percent of payroll that they are now paying for 
Social Security and Medicare so we can let those hospitals grow at 10 
percent instead of 6.5 percent. Ask them that. They will tell us they 
cannot afford it.
  Yes, we can guarantee Medicare to our seniors by slowing the rate of 
growth in reimbursements to hospitals and physicians, and by getting 
tough on fraud and abuse. Incidentally, if the Members on that side of 
the aisle do not like our fraud and abuse provisions, why didn't they 
propose tougher laws when they were in the majority for 40 years?
  We get $2 billion more in revenues from our fraud and abuse 
provisions because we are tougher than we have been in the past. So, 
the $270 billion comes from slowing the rate of growth in 
reimbursements to doctors and hospitals, cracking down on fraud and 
abuse and, yes, requiring seniors to continue paying premiums to cover 
31 percent, just what they are paying today, and, though the Members on 
that side never mentioned it, in our plan requiring rich seniors to pay 
more. We are proud of our plan. It preserves Medicare and protects 
seniors.
  Mr. GIBBONS. Mr. Chairman, I yield 1 minute and 30 seconds to the 
gentlewoman from Florida [Mrs. Meek].
  (Mrs. MEEK of Florida asked and was given permission to revise and 
extend her remarks.)
  Mrs. MEEK of Florida. Mr. Chairman, who do the Republicans think they 
are, the Oracle of Adelphi? They have just put a bill together where 
they arbitrarily set interest? They look forward to the year 2002, and 
they have said how much money people are going to make. They have set 
the inflationary rate. Who are they, the Oracle? They cannot do that.
  What they have done here by setting those unofficial rates, they have 
cheated the senior citizens of this country. My Medicare card is 
shivering in my pocket when I sit here and listen to some of this, 
because what they are doing is fooling the senior citizens. They say to 
me, ``Don't scare them.'' I need to scare them and say, ``Look out, it 
is coming.'' I ask the Members, would they know a hurricane is coming 
and not do anything about it?
  I am saying, and all over this country I will continue to say that 
they are not telling the full truth to these senior citizens. Mr. 
Chairman, the honorable gentleman from Pennsylvania [Mr. Greenwood] 
this morning said, and also my sister here who is a health care expert, 
bringing down the inflation rate. Who told them they can do that? They 
do not know what is going to happen. I rebut that stand very much, 
because they cannot do that.
  I can tell Members how many of them are going to be hurting when they 
get back home. People back home do not know they are up here 
pontificating. They do not know that. But when they get back there and 
they look at how their hospitals are going broke, they are going to 
come to them and say, ``What gives here? How can you be the Oracle at 
Delphi?''
  Mr. UPTON. Mr. Chairman, I yield 2 minutes to the gentleman from 
Oklahoma [Mr. Coburn].
  (Mr. COBURN asked and was given permission to revise and extend his 
remarks.)
  Mr. COBURN. Mr. Chairman, many of the people of this country sent new 
representatives to this Congress, representatives that have a basis of 
experience.
  As a practicing physician who continues to care for Medicare patients 
and Medicaid patients, whose practice was made of a majority of 
Medicaid and Medicare patients, I have truthfully and honestly looked 
at this bill. This bill is going to save Medicare. It is not perfect, 
but it does the things that we need to do to preserve this program. To 
do otherwise, to put a band-aid on it, is wrong.
  I want to share with the Members for a moment what happened and what 
we have done by changing some of the system. Not long ago, in the late 
1980s, a program called the Clinical Laboratory Improvement Act was 
introduced. The effect of the act is that you can have a pregnancy test 
at home using technology today that the Federal Government says your 
doctor is not capable of using unless approved by the Government.
  As a result of that, what we see is that 30 percent of the doctors, 
and mainly in rural America, are still testing, 54 percent of the 
doctors stopped some form of testing because of this law. Seven percent 
dropped tests for other reasons, and 9 percent of the rural doctors in 
this country quit testing completely.
  The fact is we had a well-intentioned plan. There were problems with 
pap smears in this country, but there were not that kind of problems. 
Now what we do is we have patients paying two and three times for the 
same testing, waiting 2 and 3 days to get the same results back. CLIA 
was well-intended. It has now been changed. We will have quality 
because we are going to trust our caregivers to give us quality.
  Mr. GIBBONS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I would ask the gentleman, how many 65-year-old older 
women in his district were pregnant last year? How many 65-year-old 
women, older women, were pregnant in his district last year?
  Mr. DINGELL. Mr. Chairman, I yield 30 seconds to the distinguished 
gentleman from Pennsylvania [Mr. Klink].
  Mr. KLINK. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  Mr. Chairman, I just wanted to say that under the Gingrich Medicare 
plan, medical providers and hospitals around the district of the 
gentlewomen from Connecticut [Mrs. Johnson], and she spoke just a few 
moments ago, are going to lose $129 million over the next 7 years. That 
is what I call choice under the Gingrich Medicare programs. The doctors 
and hospitals are going to lose $152 million. That is choice.
  Janis Joplin, if she were alive, would say freedom is just another 
word for being forced to choose between your doctor, who will leave the 
traditional Medicare plan, and whatever else you are going to do.
  Mr. DINGELL. Mr. Chairman, I yield 1\1/2\ minutes to the 
distinguished gentleman from Maryland [Mr. Hoyer].
  Mr. GIBBONS. Mr. Chairman, I yield 30 seconds to the gentleman from 
Maryland.
  The CHAIRMAN. The gentleman from Maryland [Mr. Hoyer] is recognized 
for 2 minutes.
  (Mr. HOYER asked and was given permission to revise and extend his 
remarks.)
  Mr. HOYER. Mr. Chairman, we had the opportunity to see a tape from a 
consultant to a Republican meeting. The consultant said ``Use soothing 
words for your radical change. Tell them you are saving Medicare. Tell 
them you are giving them choices. Express moderation in your radicalism 
and swear that the $270 billion cut in Medicare has nothing to do with 
the $245 billion cut in taxes,'' and hope that the public is lulled 
into apathy.
  So we hear on this floor talk by our Republican colleagues of 
preserving and reforming a health care system that 93 percent of them 
opposed in 1965. Beware, the wolf in sheep's clothing. Beware those who 
want to save that which they eschew. Beware those who want to come from 
the majority party in Washington and help you.
  Mr. Chairman, if we pass this bill today, before too long Medicare 
for 

[[Page H 10354]]
millions and millions of Americans will become Medigone. Oppose this 
Republican medical killing proposal.
  Mr. BLIILEY. Mr. Chairman, I yield 1 minute to the gentleman from 
California [Mr. Bilbray].
  Mr. BILBRAY. Mr. Chairman, not too long ago I got a call from a 
senior citizen in my county about the fact that she was billed for two 
mammograms. When she confronted the billing agent on it, they assured 
her that she was wrong and she was just a senior, just a senior and did 
not understand. The mistake is the seniors understand. This women 
pointed out that it was physically impossible for her to have two 
mammograms, because she had had surgery 2 years before, and when this 
billing agent found out about their mistake, the comment was ``Well, it 
is not your money, ma'am. Why are you worried about it?''
  For too long, people have been saying to the seniors ``It is not your 
money, do not worry about it.'' The seniors care. In this bill, we are 
going to fight fraud by creating a neighborhood watch strategy for 
fighting Medicare fraud. We are going to allow the seniors to 
participate, not only in choosing their program for their health care, 
but also participate in fighting fraud.
  Mr. Chairman, I strongly support this concept, because I think if we 
really want to be serious about fighting fraud, then have the guts to 
allow the seniors to participate in these programs and approve this 
bill.
  Mr. Chairman, I rise in opposition to the Medicare package before us 
today.
  The Republicans have proposed cutting $270 billion out of the 
Medicare system.
  They did not choose $270 billion because it is needed to save the 
trust fund, or because there is $270 billion worth of waste, fraud, and 
abuse in the system, or because cutting $270 billion will improve 
seniors' health.
  They chose $270 billion because they have a huge fiscal hole to 
fill--a hole created by an unnecessary and irresponsible tax cut for 
the wealthy.
  The Republicans have committed to balancing the budget, increasing 
spending on defense, and cutting taxes.
  If revenues are going down by $245 billion, and you're going to 
balance the budget, you've got to raid the bank somewhere else.
  That somewhere else is Medicare.
  The Republican plan is not driven by a desire to save Medicare.
  Ninety-three percent of Republicans voted against the Medicare 
Program at its creation.
  Ninety-nine percent of House Republicans voted to cut more than $280 
billion out of the program in 1995.
  This Republican plan is a stake in the heart of the medical insurance 
program 37 million seniors from all walks of life rely on for their 
health security.
  The Republican plan will increase charges to seniors with an average 
income of $13,000 per year so that people with incomes of $350,000 per 
year can get a $20,000 dollar tax cut.
  I don't think that's fair, and I don't believe it's right.
  The Republican plan will undermine Medicare in other ways as well.
  Medicare-plus Programs will be allowed to cherry-pick low risk 
seniors, leaving traditional Medicare subject to the higher costs of 
adverse selection.
  The plan creates incentives for doctors and hospitals to leave 
traditional Medicare for Medicare-plus options that permit them to 
charge seniors higher fees--creating the probability that seniors who 
cannot afford higher Medicare-plus charges will be unable to find 
doctors and hospitals willing to treat them.
  And, the plan actually weakened sanctions against waste, fraud and 
abuse.
  I believe that we need to take steps to fix what's broken with 
Medicare.
  We must crack down on the waste, fraud, and abuse.
  I know that seniors are willing to bear their fair share of the costs 
of balancing the Federal budget for our children and grandchildren.
  But this debate is not about fixing what's wrong.
  It's not about changing the parts of Medicare that don't make sense.
  It's about charging seniors more for health care.
  It's about giving seniors less for their Medicare dollars.
  And it's about filling the tax cut hole.
  I urge my colleagues to vote ``no'' on the Republican Medicare plan.


                         parliamentary inquiry

  Mr. THOMAS. Mr. Chairman, I would ask the Chair, what are the rules 
in terms of sloganeering, buttons worn on the floor when participating 
in debate?
  The CHAIRMAN. The Chair has already stated that wearing badges on the 
floor while participating in debate is against the rules of the House.
  Mr. DINGELL. Mr. Chairman, I will take it off, and I will be 
delighted to give it to the gentleman from California. It will benefit 
him highly.
   Mr. Chairman, I yield 15 seconds to the distinguished gentleman from 
New Jersey [Mr. Pallone].
  Mr. PALLONE. Mr. Chairman, I thank the gentleman for yielding time to 
me.
   Mr. Chairman, I just wanted to point out that under the Gingrich 
Medicare plan, the hospitals in and around the district of the 
gentleman from California, [Mr. Bilbray] will lose $345 million over 
the next 7 years in order to pay for a tax cut for the rich.
  Mr. DINGELL. Mr. Chairman, I yield such time as she may consume to 
the gentlewoman from California [Ms. Lofgren].
  (Ms. LOFGREN asked and was given permission to revise and extend her 
remarks.)
  Ms. LOFGREN. Mr. Chairman, I oppose the bill.
   Mr. Chairman, I rise today on the behalf of the thousands of senior 
citizens, parents, children, women, hospitals, doctors, nurses, health-
care providers and workers who live in my district and have written to 
me, talked to me and pleaded with Congress to stop these ill-conceived 
cuts to Medicare.
  Thirty years ago the Congress made a promise to the American people. 
That promise was a bold commitment to entitle older Americans, poor 
children, families, and the disabled to health coverage through the 
Medicaid and Medicare Programs. Today, our new Republican leaders are 
turning their backs on that promise.

  Why? The facts are that they cut Medicare so deep to pay for their 
tax breaks. American seniors will be forced to pay more out of their 
pockets, will have less choice in selecting their own doctor and will 
receive a lower quality of service, so that the Republicans can use 
savings for a tax cut.
  None of the $270 billion that the Republicans are cutting out of the 
Medicare Program will go back into the Medicare trust fund--not one 
cent. It will all go back into the general Treasury. The Republican 
lockbox is a gimmick. It does not change the fact that the cuts are 
there to be counted in determining whether the budget is balanced and 
you can't give those tax breaks, and balance the budget--not without 
cuts. Did the Republicans cut defense to pay for their tax break? No, 
they cut Medicare and Medicaid.
  The Medicare trustees say that the proposed cuts are more than three 
times greater than the $89 billion recommended to keep the Medicare 
trust fund solvent. I doesn't take a Ph.D. in mathematics to figure out 
that the $270 billion in Medicare cuts will cover the cost of the $245 
billion tax break.
  When I came to Congress in January as a freshman Member of Congress, 
I expected Congress to take care in passing laws. Not in this Congress. 
The Medicare cuts that are before the House today got 1 day of 
hearings--1 day. And, the committee members didn't even have the real 
bill in front of them before the hearing started. Today we have 1 day 
of debate, with no amendments allowed, on the basic health care program 
relied on by millions of Americans. We spent all of yesterday on the 
floor of the House talking about fish--seems to me we could have waited 
to deal with fish and used at least part of that time to deliberate on 
the fate of American's seniors.
  The impact on the State of California will be large. California will 
lose $27.5 billion in Medicare funding over 7 years. California will 
lose $816 million next year alone and the losses will only increase as 
each year passes. The combined potential loss in Federal health care 
spending in California over 7 years will be at least $44.1 billion. In 
1996 California will lose $1.5 billion in Federal health care spending 
and the loss per year will increase every year after 1996 reaching a 
whopping loss of $12.1 billion in 2002. To put this in perspective, the 
State of California's entire budget for this fiscal year was $42 
billion. The personal cost for Seniors in my State will be high. They 
can expect their premiums to double by the year 2002. Let me repeat 
that: California seniors will pay double what they are paying now in 
just 6 short years. And Medicare spending per beneficiary will be cut 
by $1,700 by the year 2002.

  In my district in Santa Clara County, CA the effects of these cuts 
will be profound. By the year 2002, Santa Clara County's Medicare  

[[Page H 10355]]

loss will be $1.2 billion. Next year alone, Santa Clara will loss $33.4 
million in Federal Medicare money. I was a Santa Clara County 
supervisor for 14 years and I can tell you from experience the 
ramifications of these cuts will be far-reaching. Counties and 
hospitals will be forced to thin the health care soup. Costs will be 
shifted and care will jeopardized. Patients in other insurance programs 
will feel it--their costs are likely to go up or coverage down.
  I have received letters from both private and public hospitals in my 
district that tell me they do not know how they will be able to cover 
the Medicare losses. Public hospitals form the backbone of the safety 
net in most counties. They provide substantial amounts of care to low-
income populations and the uninsured. They rely heavily on Medicaid and 
Medicare to pay for that care. These hospitals also provide wide range 
of regional and community services that are often not otherwise 
available, such as trauma care, children's specialty services, spinal 
cord injury rehabilitation and burn care. Medicaid and Medicare ensure 
that these hospitals remain financially viable to provide these much 
needed services. In California the number of people who rely on public 
hospitals is growing. And, growing along with it at an even more 
alarming rate is the number of uninsured people.
  While the financial side of these cuts is important, the human 
question of serving people in need is paramount. On behalf of all of 
those people who live in the 16th district of California who have taken 
the time to write, to call and to speak up against these cuts, I ask my 
colleagues here in Congress, not to turn your back on this American 
promise. Don't turn your back on America's seniors and uninsured. It 
isn't too late to say: ``this goes too far.''
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from Virginia [Mr. Sisisky].
  (Mr. SISISKY asked and was given permission to revise and extend his 
remarks.)
  Mr. SISISKY. Mr. Chairman, I have just completed, 7 weeks ago, an 
operation for rectal cancer. I was able to afford the prescreening of 
that, even though I am on Medicare, but I found out today that it is 
not even included in this bill. How can we be uncompassionate for 
people who cannot afford to get these examinations? It just seems to me 
that that is one of the things that should be included. Mr. Chairman, I 
do not need 30 seconds more to say that I do not believe in attacking, 
and doing this from the Democrats or Republicans, but just from utter 
compassion for people, I promise the Members, to get that examination, 
they do not have to worry about fraud and abuse then. Nobody will ask 
and beg for that examination, I promise that. But for goodness sakes, 
care about people who do need that examination.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Illinois [Mr. Crane], chairman of the Subcommittee on 
Trade of the the Committee on Ways and Means.
  Mr. CRANE. Mr. Chairman, there was an interesting cartoon in 
yesterday's newspaper that perhaps not everybody in our listening or 
viewing audience saw. It had this patient lying in bed in a hospital on 
a life support system, and at the foot of the bed he was identified as 
Medicare, and there were two Republican elephants there that were 
dressed in doctor's attire and they said, ``He needs immediate surgery 
to survive,'' and the nurse was behind the two elephants and she was 
standing in front of the Jackass and a man who occupies the other end 
of Pennsylvania Avenue, and said ``No, no, the family insists, no 
surgery. They believe in faith healing.'' I think it pretty well 
describes so much of the rhetoric that has been going on here in this 
debate. We got from the administration's trustees the death sentence. 
They handed down the death sentence on the fate of Medicare.

                              {time}  1430

  It required some kind of immediate attention. Now, to be sure, we 
could have enacted blood transfusions out of my children and my 
grandchildren by tripling their taxes as a way of addressing this 
problem. But there are more efficient ways and ways that employ certain 
options that have been prevalent in the private sector all along, and 
that is guaranteeing people more choice and more control over their own 
medical coverage.
  The fact of the matter is I am confident that the Republican approach 
can address this problem and simultaneously hold those escalating costs 
on an annual basis to just a little more than 2 percent than the 
escalating costs in the private sector. That is not too much to expect.
  The fact of the matter is this is long overdue legislation. It is a 
shame we waited until the 11th hour to finally take a look at it, but I 
support H.R. 2425. I urge all of you too.
  Mr. GIBBONS. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Massachusetts [Mr. Olver].
  (Mr. OLVER asked and was given permission to revise and extend his 
remarks.)
  Mr. OLVER. Mr. Chairman, I rise in opposition to this legislation.,
  Mr. Chairman, today the Republican Party takes on the onus for 
dismantling Medicare, the health care guarantee within Social Security.
  And you can bet the Republican Party has its sights on dismantling 
Social Security as well.
  And to what end? To create a comprehensive health care system which 
80 percent of Americans want? No.
  To serve extremists in the Republican Party.
  To serve the insurance companies and the American Medical 
Association.
  The Republican Party in cutting $270 billion from health care for 
American retirees to give $245 billion in tax cuts.
  More than half of the tax cut goes to fat cats already making over 
$100,000 per year--while 75 percent of the people taking Medicare cuts 
to pay for that tax cut live on less than $20,000 per year.
  The Republican Party is taking health care dollars from low- and 
middle-income retired Americans to give billions to insurance companies 
and the already wealthy.
  You can bet Americans will remember next November.
  Mr. GIBBONS. Mr. Chairman, I yield such time as he may consume to the 
gentleman from North Carolina [Mr. Watt].
  (Mr. WATT of North Carolina asked and was given permission to revise 
and extend his remarks.)
  Mr. WATT of North Carolina. Mr. Chairman, I rise in strong opposition 
to the scam on the senior citizens of America.
  Mr. GIBBONS. Mr. Chairman, I yield such time as he may consume to the 
gentleman from California [Mr. Dixon].
  (Mr. DIXON asked and was given permission to revise and extend his 
remarks.)
  Mr. DIXON. Mr. Chairman, I rise in opposition to this bill.
  Mr. Chairman, I rise today in strong opposition to the Medicare 
Preservation Act of 1995 (H.R. 2425), a bill which cuts $270 billion 
from the Medicare Program over the next 7 years. This bill would make 
these cuts by substantially increasing out-of-pocket costs for 
beneficiaries and reducing the payments to health care providers, which 
has serious implications for the quality of care our seniors deserve.
  Under this bill, beneficiaries face a retirement plagued by higher 
health costs. The bill permanently increases the beneficiary's portion 
of the Medicare part B premium to 31.5 percent, resulting in a $48 
billion increase in costs over 7 years.
  Hospitals and other health care institutions, already facing severe 
budget constraints, would face a $70 billion cut in Medicare payments. 
Roughly half would come from a reduction in the inflation adjustment 
received by hospitals. Skilled nursing facilities would find themselves 
$10 billion poorer. Hospitals which treat a disproportionate share of 
low-income beneficiaries get their funding cut twice. One cut will come 
from the inflation adjustment and another cut will come from a 
reduction in funds from the disproportionate share program [DSH] by $9 
billion.
  Health care providers participating in traditional Medicare would 
face an extra hit from the so-called failsafe provision. This provision 
would require the Secretary of Health and Human Services to further 
reduce payments to doctors and hospitals if Medicare spending exceeds 
the targets for a given year.

  These reductions would apply only to traditional Medicare and are 
estimated to result in an additional $31 billion in cuts. The failsafe 
provisions clearly demonstrate the bias against the traditional 
Medicare fee-for-service system, on which the vast majority of 
beneficiaries now rely.
  Until very recently, doctors would have faced nearly $55 billion in 
cuts. However, the Republicans made a last minute change in calculating 
payments to physicians to secure the endorsement of their bill from the 
American Medical Association [AMA].
  Another enticement for doctors is the bill's arbitrary limits on the 
recovery of damages in malpractice suits. Such a provision has nothing 
to do with Medicare and does not belong in the measure. It is shameful 
that the GOP would commingle the cost of delivering health care with 
tort reform. 

[[Page H 10356]]

  We know that Medicare's insolvency must be addressed. We also know 
that it is not necessary to do so by cutting $270 billion from the 
program. Treasury Secretary Robert Rubin--one of the Medicare 
trustees--wrote to Speaker Gingrich to let him know that $270 billion 
in cuts are not necessary to keep the program solvent. Also, the 
Republicans have admitted that their bill will only keep Medicare 
solvent until 2006. That is the same length of time that the Democratic 
alternative, which cuts only $90 billion, would keep Medicare solvent.
  Why are the Republicans recommending these Medicare cuts? Because 
they need to find $245 billion to pay for their tax cut proposal--most 
of which benefits corporations and higher income Americans.
  The American people want a different approach--one which ensures 
Medicare's solvency but without jeopardizing the quality of care that 
Medicare beneficiaries currently receive. The alternative offered by 
Democrats on the Ways and Means Committee would make smaller reductions 
in the Medicare Program without raising premiums. However, the 
alternative was rejected by the Ways and Means Committee Republicans.

  It is ironic that the Republicans named their bill the Medicare 
Preservation Act. It should be renamed the Medicare Devastation Act. 
This bill jeopardizes the health care of beneficiaries and places a 
heavy burden on health care providers. We should not be making deep 
cuts in Medicare to pay for tax cuts. America's seniors deserve better.
  Vote ``no'' on the Medicare Preservation Act.
  Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentleman from 
Tennessee [Mr. Ford].
  Mr. FORD. Mr. Chairman, under the Gingrich Medicare plan, the 
hospitals in and around the district of the gentleman from Illinois 
[Mr. Crane], who spoke earlier, will lose about $67 million over the 
next 7 years.
  Mr. Chairman, I have been receiving calls all afternoon in my office 
with this debate being heard throughout America. People are saying: 
``Please, do not vote for the Gingrich Medicare plan.''
  I am not going to vote for that plan today. I want my constituents to 
know that.
  In my district alone, I say to the gentleman from Texas [Mr. Archer], 
hospitals in my area will lose $457 million over the next 7 years. 
There are clear winners and losers in this Gingrich Medicare plan. The 
losers are the elderly and the hospitals throughout America.
  Those winners are the health insurance industry, and naturally we 
know those who will receive the huge tax breaks.
  There will be a substitute that will come soon to this bill that 
Democrats will being solvency to the Medicare plan only with $90 
billion, and not the $270 billion under the Gingrich plan.
  Mr. BLILEY. Mr. Chairman, could I inquire how much time remains?
  The CHAIRMAN. The gentleman from Texas has 8 minutes remaining, the 
gentleman from Florida has 8\1/2\ minutes remaining, the gentleman from 
Virginia [Mr. Bliley] has 10 minutes remaining, and the gentleman from 
Michigan [Mr. Dingell] has 9\1/4\ minutes remaining.
  Mr. BLILEY. Mr. Chairman, do I have the right to close for the 
Committee on Commerce?
  The CHAIRMAN. The gentleman from Virginia is reserving the right to 
close.
  Mr. BLILEY. Mr. Chairman, I yield 2 minutes to the gentleman from 
Connecticut [Mr. Franks].
  Mr. FRANKS of Connecticut. Mr. Chairman, in the 103d Congress, all 
parties involved in the delivery of health care services as well as 
those receiving care recognized that change was in order. However, the 
public said ``no'' to the radical government takeover Clinton plan and 
``yes'' to a market-driven system.
  Now in the 104th Congress, we are attempting to address the 
unacceptable double-digit growth of Medicare which would lead to its 
bankruptcy. Our plan provides health care security for today and 
tomorrow's seniors. It does so without increasing the tax burden on 
families and without increasing copays or deductibles for seniors.
  Like in the general population, Mr. Chairman, Medicare-plus will 
allow seniors to choose from a variety of plans. If seniors would like 
to stay in the traditional Medicare plan, they can. Our plan will help 
end waste, fraud, and abuse in our current system. It offers regulatory 
relief to help curb the growth of health care costs.
  We also protect the quality of health care for the future by 
protecting and strengthening our teaching hospitals. It should be 
noted, Mr. Chairman, that better managing the services would not mean 
lesser services. It would mean doing things better and smarter.
  We have incentives in our plan to encourage all involved in Medicare 
to play a role in better managing each dollar spent on health care.
  The Democrats would like to give the public the impression that they 
have the market cornered on compassion. Oh, how wrong. Oh, how wrong.
  A variety of plans will give us competition and will thus increase 
the likelihood of a more efficient system.
  Mr. DINGELL. Mr. Chairman, I yield myself 15 seconds.
  I note for the record that, under the Gingrich Medicare plan, 
hospitals in and around the district of my good friend, the gentleman 
from Connecticut [Mr. Franks], in Waterbury, CT, will lose $211.8 
million over the next 7 years so the rich can get a tax cut.
  Mr. Chairman, I yield 1 minute to the distinguished gentlewoman from 
Colorado [Mrs. Schroeder].
  Mrs. SCHROEDER. Mr. Chairman, I just came to say we now know what 
this is all about. The Speaker said the crown jewel is going to be the 
tax cut, the tax cut for the parade of millionaires we have seen going 
in and out of his office recouping what they have invested in GOPAC and 
everything else.
  As I hear people from this side of the aisle coming down and saying, 
``Trust us, we are so compassionate,'' the reason we do not trust you 
is that you were not for this program to begin with. You waved the 
trustees' report around as to why you had to cut this, not the tax cut, 
but the trustees. But you will not wave your 961-page bill past the 
trustees to see if they fixed it. No; no; no.
  We fix it as much as you fix it. We do what they do about fixing. You 
go on to raid it. You do not really like that. You do not really like 
people pointing that out.
  You also turn on the fraud faucet, as the Attorney General said. That 
is why we do not trust you, and that is why this is a tragic day 
because you are unraveling social Medicare as we know it and Medicaid 
as we know it, and you know it.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Nebraska [Mr. Christensen], another respected member of the Committee 
on Ways and Means.
  Mr. CHRISTENSEN. Mr. Chairman, 30 years ago Medicare, when it was 
started, was estimated to cost, in 1995, $9 billion. The people who 
were operating the Government back then miscalculated a little bit. 
Today it costs $178 billion, a $169 billion miscalculation, a 
miscalculation that has caused an incredible stress upon the system, a 
miscalculation that the Medicare trustees said would bankrupt the 
system in the year 2002, and that we were given the choice of whether 
we should let it go bankrupt or whether we should try to save it.
  Since working on this plan for the last 8 months, I am proud to say 
this plan is going to offer a lot of choices. It is going to offer 
choices to my 84-year-old grandmother. It is going to offer choices to 
my soon-to-be 65-year-old father. It is going to give him the 
opportunity, as he lives in rural America, to get into a medical 
savings account. It is also going to give him the opportunity and 
choice to get into a provider-sponsored network.
  He thinks he can manage his money better than the Federal Government 
can.
  I am proud this plan is going to save Medicare for whose who want to 
remain in the current Medicare system and offer choices for those who 
want to get into new Medicare, Medicare-plus. This is a good plan.
  I urge strong support for passage of the Medicare Preservation Act.
  Mr. GIBBONS. Mr. Chairman, I yield 30 seconds to the gentleman from 
New York [Mr. Engel].
  Mr. ENGEL. Mr. Chairman, this sign says it all. Shame on Newt 
Gingrich and the Republicans for what they are doing to senior citizens 
in this country. Shame on them for what they are doing to people who 
have worked hard all of their lives.
  At least our Republican colleagues have been somewhat consistent. 
This  

[[Page H 10357]]

bill came out of the Committee on Ways and Means. They certainly found 
many ways to be mean to senior citizens in this country.
  Our colleagues talk about choice, our Republican colleagues. The only 
choice senior citizens are going to have under this legislation is 
whether or not to buy dog food to eat because that is all they will be 
able to afford after they get through paying for health care under this 
bill.
  Shame, this bill ought to be rejected.
  Mr. BLILEY. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Texas [Mr. Fields].
  (Mr. FIELDS of Texas asked and was given permission to revise and 
extend his remarks.)
  Mr. FIELDS of Texas. Mr. Chairman, facts should be important in this 
debate.
  Mr. Chairman, when most Americans who are in managed care plans go to 
the doctor, it costs $10. However, Medicare recipients, such as my 
mother and grandmother, pay the first $100 and then 20 percent of the 
remainder. When most Americans go to the hospital, they pay $35 a day. 
Seniors, on the other hand, pay a $716 deductible for the first 60 days 
and then $179 for every day afterwards. That is because while most 
Americans have a choice, seniors, choices are made for them by 
Washington bureaucrats.
  So after months of hearings and careful study, we will vote today on 
legislation that will not only ensure the long-term fiscal health of 
Medicare, but also create choice by providing options for senior 
citizens. This bill moves the decision-making down the Potomac River, 
outside of the beltway and into the hands of people like my mother and 
my grandmother.
  The Medicare Preservation Act of 1995 offers seniors the opportunity 
to continue participating in the existing ``fee for service'' system, 
if they want to. However, it will give them much greater choice. 
Seniors will have the chance to opt into HMO's or to buy private health 
insurance policies.
  They will be able to select the medical system that best suits their 
needs; that saves them money; that provides the most benefits for the 
lowest cost.
  This bill creates tax-free ``medisave'' accounts that provide seniors 
incentives to shop around for the most cost-effective care and to 
reward seniors who maintain healthy habits. This bill will also help 
retirees maintain previously held employer-provided health coverage.
  Finally, according to one study, if Medicare is not reformed soon, 
the average increase in cost per household, in my district alone, 
initially will be $1,541. Therefore, I urge my colleagues to pass H.R. 
2425 because under this bill, seniors, like my mother and grandmother, 
are winners.
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from California [Mr. Miller].
  Mr. MILLER of California. Mr. Chairman, Members of the House, it is a 
good thing my colleague, the gentleman from Texas [Mr. Fields], has 
hospitals that charge $35 a day, because they are going to lose $102 
million, and so that is about all they are going to be able to provide 
is $35 worth of service.
   Mr. Chairman, and Members of the House, today the Gingrich 
Republicans snatched from the elderly of this country the finest health 
care system in the world, the most comprehensive health care system in 
the world, that gives the finest quality of health care in the world, 
and they do so not to strengthen that system, not to preserve that 
system, they do so simply to snatch over $200 million in excess cuts to 
provide a tax cut to the wealthiest.
  This day is the day that a system that has been built up to provide 
security and protection for America's elderly, for the people who built 
this Nation and fought its wars, this is the day we start to shred that 
system, and in a matter of years it will not be whether they force you 
out of the system, there will be no system that people have come to 
expect in this country.
  Mr. GIBBONS. Mr. Chairman, I yield 30 seconds to the gentleman from 
New Jersey [Mr. Menendez].
  (Mr. MENENDEZ asked and was given permission to revise and extend his 
remarks.)
  Mr. MENENDEZ. Mr. Chairman, I hope my New Jersey Republican 
colleagues will remember that not only will we be hurting New Jersey 
senior citizens who will pay $1,000 for the privilege of getting less 
but we will lose $14 billion, $7 billion from Medicare, $7 billion from 
Medicaid. That is not right. It is wrong. It is not necessary, and 
there is not one New Jersey Representative who can stand on this floor 
and in good conscience vote for this package. This is not the Medicare 
Preservation Act. It is the Medicare Destruction Act, and New Jersey is 
one of the prime targets.
  Mr. Chairman, I rise today in strong opposition to devastating 
Medicare. Common sense dictates that taking $270 billion out of your 
account--and telling you that you will be better off--just does not 
make sense. If this bill passes, it will hurt Americans of all ages. 
Seniors will be hurt because they will have less choice in their health 
care. They will be hurt because they will pay over $1,000 more by the 
year 2002. To remain in Medicare as they know it, they will be forced 
to pay substantially higher prices than they do today. Their children 
will be hurt because they will be expected to step in and help their 
older parents meet these rising Medicare and nursing home expenses, at 
the same time they're trying to send their kids to school.
  If this bill passes, our hospitals will be severely impacted. I hope 
my New Jersey colleagues remember that Medicare provides 45 percent of 
all hospital revenues--76 of our New Jersey hospitals will be on a 
critical list.
  Many of those hospitals receive over 65 percent of their revenue from 
Medicare; and, if this bill passes, they may be forced to consolidate, 
offer fewer services, or even close. Any of those options adversely 
impact everyone in the community; not just seniors. And everyone will 
suffer because of the reduced health care delivery systems available to 
them.
  This bill is not a Medicare Preservation Act. It's the Medicare 
Destruction Act. Thirty years ago, 93 percent of all Republicans voted 
against Medicare--trying to kill it before it was born--now they're 
trying to kill it again. The $452 billion savings attained at the 
expense of our older Americans, our poor women and children and even 
the working children of senior citizens will be used to pay for a $245 
billion tax cut which benefits a minority of wealthy Americans. It is 
not fair, it is not right, it is not necessary. We should vote ``no.''

                              {time}  1445

  Mr. GIBBONS. Mr. Chairman, I yield 2 minutes to the gentleman from 
Massachusetts [Mr. Neal].
  Mr. NEAL of Massachusetts. Mr. Chairman, this Republican Medicare 
bill is a direct assault upon hospitals across America. The bill 
includes the largest cuts in the history of Medicare, and do not kid 
yourself, they are aimed at our hospitals.
  Do not be fooled by this rhetoric. The Gingrich Medicare bill does 
much more than tinker around the edges with the way hospitals are 
reimbursed. These Republican Medicare cuts jeopardize the ability of 
hospitals to continue to provide quality care.
  Republicans say that the cuts to hospitals included within this bill 
are just reductions in growth. This is simply not true. The Republican 
Medicare bill will bring real pain to many hospitals across America. 
This bill could include outright cuts to many hospitals, hospitals that 
are already vulnerable and in difficult financial situations.
  We have the luxury in this Congress today of looking at Medicare in a 
vacuum. Hospitals do not have this luxury. When drastic cuts to 
Medicare disproportionate share and teaching hospitals are coupled with 
outlandish Medicaid cuts that are coming, our Nation's hospitals are 
going to be left out to dry. Public hospitals, community hospitals, and 
old urban hospitals, disproportionate share hospitals and teaching 
hospitals, they simply cannot absorb the cuts of this magnitude, as 
Republicans naively suggest.
  The Medicare bill will damage the quality of care that our hospitals 
enjoy. It is that simple. Vote against this ill-conceived, unwarranted, 
and unwise attack.
  Mr. ARCHER. Mr. Chairman, I yield myself 1 minute.
  Mr. Chairman, a great deal of information has been presented today. 
Some numbers have been called cuts, some have been called increases. I 
think it is important that we focus on why this difference occurs.
  The hospitals will get an increase in every year under our plan, 
compared to the previous year, but the Democrats call those cuts, 
because they are using the CBO projections that assume that health care 
costs are going to go up at over 10 percent per year. That projection 
is unsustainable. We all know that.

[[Page H 10358]]

  But if we take anything off of that unsustainable increase, they call 
it a cut. If we increase above today's level of expenditure and above 
the rate of inflation, they still call that a cut. As I have said 
earlier, only in Washington is an increase, because of this phony 
projection, called a cut. We are not cutting hospitals, we are 
increasing them at a slower rate.
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the gentleman from 
Texas, Mr. Gene Green.
  (Mr. GENE GREEN of Texas asked and was given permission to revise and 
extend his remarks.)
  Mr. GENE GREEN of Texas. Mr. Chairman, it is a sad day that the House 
is about to pass this crown jewel of the contract which slashes a $270 
billion from Medicare in order to pay for a budget busting $245 billion 
tax cut.
  The bill that is about to be passed by Speaker Gingrich and the 
Republican majority will add hundreds of dollars every year to seniors' 
out-of-pocket medical costs and force seniors to give up their life-
long doctors, without saving Medicare past the year 2006 and without 
cutting, in fact increasing the problems, of fraud, abuse, and waste.
  This bill is about as much designed to save Medicare as the grim reap 
is designed to bring happiness to our lives.
  Mr. Chairman, I urge everyone to continue this fight. The decision 
today is just round one. The Democrats will continue to fight this 
extreme bill if it is enacted. The senior citizens in my district and 
around our country deserve better. I hope the Senate will change it. If 
not, I pray the President will veto it.
  Mr. BLILEY. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Michigan [Mr. Upton] who was so helpful in helping us revise the 
AAPC formula.
  Mr. UPTON. Mr. Chairman, days like today we need to think about the 
reasons why we are here. Are we here to talk about problems or are we 
here to solve them? The current Medicare Program today is going 
bankrupt. You know that, and we know that. Can you imagine the answer 
to the question in the next decade if today we shirk our responsibility 
from saving Medicare from going bankrupt, what seniors will say about 
this Congress? ``What the hell happened when you all saw the writing on 
the wall? What did you do?''
  Two years ago there was a lot of talk about the Clinton health care 
plan, and the more that folks heard about it, the more they did not 
like it, and it never even came up for a vote. Today, as I have met 
with hundreds and hundreds of seniors and many of my providers, I 
realize that the more folks understand this bill, knowing that the 
alternative is either doubling the FICA tax or letting Medicare go 
belly up, the more they like the idea of themselves choosing the plan 
that fits their needs best. The right to choose, with knowledge that 
they can keep Medicare the way they have it now, without a reduction in 
benefits, will always remain as an option.
  Mr. Chairman, I do not ever want to look in the eyes of one of my 
seniors and say ``Medicare went bankrupt on my watch.''
  Mr. DINGELL. Mr. Chairman, I yield myself 15 seconds to note that the 
hospitals of my friend, the gentleman from Michigan [Mr. Upton], under 
the Republican bill will lose $211 million over the next 7 years so we 
can give a tax cut to the rich.
  Mr. GIBBONS. Mr. Chairman, I yield myself 30 seconds.
  Mr. Chairman, I sat through a number of hearings with the gentleman 
from Texas [Mr. Archer] and heard him make the same speech. I have 
listened to him all day make the same speech. He says there are not any 
cuts in his bill. I do not know which one it is in, the one he 
introduced the other day of the one he introduced last night, but the 
CBO just gave a scoring table on his bill, whichever one it is, and 
says it cuts $270 billion. Now, somebody is stretching the truth.
  Mr. BLILEY. Mr. Chairman, I yield 2 minutes to the gentleman from 
Iowa [Mr. Ganske].
  Mr. GANSKE. Mr. Chairman, everybody in this Chamber cares deeply 
about the health care of our senior citizens. Prior to last November, I 
was a doctor taking care of Medicare patients, and I too am especially 
concerned about this issue. Which is why I am going to support the 
Medicare Preservation Act.
  Mr. Chairman, for many years the Health Care Financing Administration 
has been tightening the tourniquet on health care by price controls, 
and bureaucratic paperwork, and regulations. If we do nothing 
substantive and structural, then you will see much more of the same, 
and no longterm solution to explosive costs. A tourniquet too tight can 
cause gangrene.
  This bill makes an honest effort to provide structural changes that 
will allow seniors to choose options in which they will be able to make 
decisions, in consultation with their doctor, about their health care, 
rather than having that decision made by a faceless Government 
bureaucrat.
  The question, Mr. Chairman, is not whether decisions are going to 
have to be made, the question is who is going to make that choice--the 
Government or the patient?
  I have devoted a great deal of thought to this bill and I have 
studied and read it. This bill is not exactly the way I would have 
written it, but many thoughtful people have worked on this bill and I 
hasten to add that I am under no illusion that my solutions are the 
only way to achieve a good end.
  However this bill does have provisions in it for patient protections 
that I have worked with many Members on, it does start to address the 
inequity in geographic variations of reimbursement that exist under the 
current system, it does offer choices to Medicare recipients that they 
don't currently have, and it is much better than the fiscal band-aid 
that has been proposed by my Democratic colleagues across the aisle.
  Mr. Chairman, I want my former patients and, now my senior citizen 
constituents, to have good health care. Our final vote on this measure 
will probably be after a Presidential veto and then an agreement 
between the President and Congress. If at that time, I am not happy 
with a plan that protects our senior citizens' health care than I will 
vote accordingly. Unfortunately, I don't have a crystal ball. For 
today, I vote for the bill because it is moving in the right direction.
  Mr. GIBBONS. Mr. Chairman, I yield 30 seconds to the gentleman from 
California [Mr. Waxman].
  Mr. WAXMAN. Mr. Chairman, the preceding speaker talked about the 
decisions that have to be made and who will make those decisions. I 
would submit if people are herded into HMO's because they really have 
no other choice, because they cannot afford anything else, the 
decisions will be made by a bureaucrat in an HMO that wants to maximize 
the profit for the HMO. That is not the way the decisions for health 
care should be made in this country.
  Mr. DINGELL. Mr. Chairman, I yield 15 seconds to the distinguished 
gentleman from Ohio [Mr. Brown].
  Mr. BROWN of Ohio. Mr. Chairman, the previous speaker, the gentleman 
from Iowa [Mr. Ganske], my friend on the Committee on Commerce, his 
hospitals in and around his district will lose $241 million over the 
next 7 years because of the Gingrich Medicare cuts.
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished 
gentlewoman from Connecticut [Ms. DeLauro].
  Ms. DeLAURO. Mr. Chairman, Hubert Humphrey remarked in 1977:

       It was once said that the moral test of government is how 
     that government treats those who are in the dawn of life, the 
     children, those who are in the twilight of life, the elderly, 
     and those who are in the shadows of life, the sick, the 
     needy, and the handicapped.

  Mr. Chairman, this Republican controlled House miserably fails that 
moral test. I stand here in this Chamber ashamed, ashamed that my 
Republican colleagues are trading, trading the health security of our 
Nation's elderly for a tax break for the rich.
  They talk about attacking fraud and abuse in the system, but it is 
bogus, for the Republican plan turns back the clock on statutes to 
combat fraud and abuse. They repeal the laws that prohibits fraudulent 
practices, like prohibitions on doctors who refer patients to providers 
that they or a family member personally profit from.
  The Washington Post says it best, ``Gingrich Places Low Priority on 
Medicare Crooks.''
  Mr. GIBBONS. Mr. Chairman, I yield myself 15 seconds.
  Mr. Chairman, I know since there are no cuts in this bill and 
everything is an 

[[Page H 10359]]
increase, I know the gentleman from Texas [Mr. Archer], will be sad to 
learn that the Texas Medical Center in Houston will lose $500 million, 
$500 million.
  Mr. Chairman, I yield 1 minute to the gentleman from Maryland [Mr. 
Cardin].
  Mr. CARDIN. Mr. Chairman, let me correct some of the misstatements 
that have been made by my colleagues on the other side of the aisle.
  First, it has been said that our beneficiaries will not have to pay 
anymore because we are just continuing the current law. That is not 
correct. According to the Congressional Budget Office, ``It would 
increase the portion of costs borne by beneficiaries through premiums 
relative to current law.''
  Under the bill before us, the premium increase goes up to $87 a month 
for part B. Under the bill that we will be bringing forward as a 
substitute, it is $30 a month less. That is $360 a year. For seniors 
who on average have a modest income, that is a lot of money.
  Second, CBO has estimated seniors will have to pay an extra $1,000 a 
year in order to be able to maintain the same benefits. When it costs 
you more to maintain the same benefits, it is a cut.
  Let me quote finally from the Washington Post. You have quoted the 
Washington Post before the plan was unveiled. The Washington Post said, 
``It is not clear that Government contributions would any longer even 
pay for basic insurance.''
  Mr. DINGELL. Mr. Chairman, I yield such time as he may consume to the 
distinguished gentleman from Texas [Mr. Edwards].
  (Mr. EDWARDS asked and was given permission to revise and extend his 
remarks.)
  Mr. EDWARDS. Mr. Chairman, I rise in opposition to this unfair, 
hastily put together legislation.
  Mr. DINGELL. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Rhode Island [Mr. Reed].
  (Mr. REED asked and was given permission to revise and extend his 
remarks.)
  Mr. REED. Mr. Chairman, I rise in opposition to the Republican 
proposal.
  For more than 30 years, the Medicare and Medicaid programs have 
exemplified our national commitment to care for seniors, disabled 
Americans, and low-income Americans. In essence, it is the tangible 
evidence that, in the most affluent and productive country in the 
world, we would not let millions of Americans suffer because they were 
too old, too poor, or too ill to fend for themselves, Because of our 
investments in Medicare and Medicaid, we have also created the most 
sophisticated and highest quality health care system in the world.
  But today, Republicans will begin their all-out assault on these 
programs by cutting the Medicare program by $270 billion. These cuts 
represent the most sweeping changes in the Medicare program since its 
establishment in 1965. And let me be clear, these cuts are not about 
reforming the Medicare program--it is about tax cuts for wealthy 
Americans and an arbitrary march to a seven year deficit reduction 
target. These cuts are three times more than any estimate of what is 
necessary to make Medicare solvent.
  Treasury Secretary Robert Rubin, managing trustee of the Medicare 
Trust Fund, has recently stated that ``no member of Congress should 
vote for the $270 billion in cuts believing that reductions of this 
size have been recommended by the Medicare trustees or that such 
reductions are needed now to prevent an imminent funding crisis. That 
would be factually incorrect''.
  Here is why the Republican cuts in Medicare are not about reforming 
the system and are about paying for a tax cut for the rich and a forced 
march to deficit reduction. The Medicare Part A Trust Fund is not faced 
with an unprecedented and immediate crisis. The trustees are required 
by law to report each year on the status of the Part A Trust. The 
trustees have on eight previous occasions warned that the Trust Fund 
would be insolvent within seven years. On each of these occasions, the 
Congress and the president--without alarmist predictions of collapse--
took appropriate action to protect the fund.
  Republican proposals go far beyond the Part A Trust Fund and also 
reach into the Part B Trust Fund. Their plan calls for about $170 
billion in cuts to Part A of Medicare, which funds hospitalization, and 
about $100 billion in cuts to Part B, which pays for doctor visits and 
ancillary services. The Part A Trust is financed by employer and 
employee contributions, and ``savings'' will be retained by the Trust. 
However, since the federal deficit is calculated by including the 
surplus of the Part A Trust, these savings will be used to fund the tax 
cut and mask deficits in other public accounts. Part B is funded by 
premiums paid by the elderly and the Treasury. Savings here will 
directly rebound to tax cuts and deficit reduction.
  And the cuts we will vote on today are not only about senior citizens 
paying more for less health care; the cuts are also about straining the 
intergenerational benefit of the Medicare program. When Congress passed 
the Medicare program in 1965, we assured working families that they 
would not have to choose between investing in their children and caring 
for their elderly parents when they became old and frail. I have heard 
from many middle-aged working parents in my district who are afraid of 
what these Medicare cuts will mean for their families--How will they 
find the means to ensure that their parents receive quality health care 
in their old age? How will they choose between their parents and their 
children? Surely this is not reform.
  This bill also repeals the current prohibition against physician 
self-referral. These laws provide vital protections for consumers. It 
has been well documented that physician self-referral leads to 
excessive utilization, fraud and abuse, and drives up the cost of 
health care. The Congressional Budget Office estimates that these 
changes to the physician self-referral laws will cost Medicare an 
additional $400 million over the next 7 years--$400 million in patient 
abuse in over-testing and over-referring!
  Republicans claim that this bill will give seniors more choices. 
However, the real truth is that the Republicans will squeeze down so 
hard on payments to health plans that beneficiaries are likely to pay 
higher premiums to get the same or fewer benefits. That is not what I 
would characterize as more choices.
  This bill also represents the possible dismantling of my state's 
medical education infrastructure. As a result of the proposed cuts in 
the Medicare program, Rhode Island alone will lose $20 million (10%) of 
its medical education budget each year. This bill does nothing to 
rationalize the graduate medication education system financed through 
Medicare; rather, it simply guts GME which will translate into a 
reduction in the quality of health care and reduced access for many 
citizens as teaching hospitals close and downsize.
  The Republican proposal that this House will vote on today will 
increase costs for health coverage for seniors, reduce quality and 
access, and burden working parents. But most importantly, this bill 
represents nothing less than a betrayal of the trust of the people of 
this country and a reversal of a generation of guaranteed health care 
for the elderly.

                              {time}  1500

  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the gentleman from 
Pennsylvania [Mr. Holden].
  Mr. HOLDEN. Mr. Chairman, the Gingrich Medicare plan will have a 
devastating effect on health care for citizens in Pennsylvania. I spent 
the summer talking to my hospital administrators and they tell me that 
currently they are reimbursed $1.01 for every dollar of services they 
provide to a Medicare patient. Under the Gingrich plan they will be 
reimbursed $.88 for every dollar of services they provide.
  There are two choices that our hospitals are going to be left with: 
Cost shift on to employers and working families who are paying 
premiums, or reduce services for senior citizens. This plan is 
unacceptable.
  Mr. Chairman, the American people cannot be fooled. The American 
people know that the Medicare trustees have called for $90 billion to 
make the system solvent to the year 2006. The Democratic plan does 
that. And the American people also know that the Republican plan only 
puts in $90 billion to make the plan solvent to 2006, and the rest of 
the money is being used for a tax break and to balance the budget on 
the backs of senior citizens. That is wrong.
  Mr. GIBBONS. Mr. Chairman, I yield myself 1 minute.
  Mr. Chairman, I apologize to everyone that this debate has been so 
hurried, but it is not my fault. Mr. Gingrich prescribed the time we 
would have on this debate. Yesterday he gave the House 4 hours to talk 
about shrimp. Yesterday, Mr. Gingrich gave the House 4 hours to talk 
about shrimp. Today he gave us 3 hours to talk about the benefits of 40 
million Americans, the most fragile of our Americans, too, by the way. 
So much for Republican priorities and for Mr. Gingrich's concern about 
people versus shrimp.
  Mr. Chairman, this is a horrible piece of legislation. We know most 
of the Medicare people are not sick. Ninety percent of them are not 
sick. We only 

[[Page H 10360]]
spend about $1,300 apiece on them. The Republican bill takes all that 
money, gives it to the insurance companies, the medical savings 
accounts, and leaves Medicare with all of the sick people. It will ruin 
Medicare as it now is.
  Mr. DINGELL. Mr. Chairman, may I discuss how many speakers we have 
remaining. I know the gentleman from Texas has said he has one, the 
gentleman from Virginia has indicated he has one, and I am not certain 
how many my good friend from Florida has.
  Mr. GIBBONS. I have one more, Mr. Chairman; it is for the minority 
leader, and I will yield him the balance of my time.
  Mr. DINGELL. Mr. Chairman, I have a similar situation.
  Mr. Chairman, I yield such time as he may consume to the gentleman 
from Illinois [Mr. Costello].
  (Mr. COSTELLO asked and was given permission to revise and extend his 
remarks.)
  Mr. COSTELLO. Mr. Chairman, I rise in opposition to the bill.
  Mr. Chairman, I rise today in opposition to the Medicare Preservation 
Act. For the 30 years since it was signed into law, Medicare has been 
the primary source of health care coverage for Americans 65 and older. 
Today, I fear, we are going to put the security of our seniors' health 
care in jeopardy.
  This bill cuts $270 billion out of the Medicare Program over 7 years. 
Two hundred and seventy billion dollars can only come from one of two 
places: Cuts to seniors or cuts to providers. Either way, my district 
loses. People lose. Mr. Chairman, I held Medicare forums with each of 
the hospitals in my district. All of them, without exception, said $270 
billion cuts would be disastrous to their facilities. At least two 
hospitals will close. A hospital in East St. Louis is the only health 
facility in the area that provides obstetric care. What will happen if 
there is no where in the city to deliver babies? The hospitals in the 
12th District of Illinois have already streamlined operations. They 
have cut staff and services. They feel additional cuts will be so 
detrimental to services, they would rather close than compromise 
quality of care. Is this what we've come to--forcing hospitals to close 
and threatening the health and safety of entire communities to pay for 
a tax cut?
  If $270 billion does not come from providers, seniors are going to 
feel the burden of ``slowing the growth in Medicare spending.'' Haven't 
we asked enough of our senior citizens? Mr. Chairman, I support a 
balanced budget. In fact, I voted for the balanced budget 
constitutional amendment. However, if we are serious about balancing 
our budget, we should not be talking about a huge tax cut which clearly 
is going to benefit the very wealthy in our society.
  If we are serious about reforming Medicare, we should be engaging in 
open debate about how to keep Medicare solvent into the next century. 
It is hypocrisy to call for a $245 billion tax break while cutting 
Medicare by $270 billion. Granted, there are major problems with the 
Medicare Program. However, Medicare is no closer to going broke than it 
has been the nine times in the past that we have faced similar solvency 
issues. Medicare will be at a zero balance in 2002, with a debt the 
following year, if adjustments are not made. However, the President's 
Medicare Board of Trustees shows that only $79 billion is needed to 
keep the trust fund solvent. That means we are looking at $181 billion 
in unnecessary cuts. That $181 billion could go a long way in 
protecting seniors from increased premiums or cuts in services.
  Mr. DINGELL. Mr. Chairman, I yield 1 minute to the distinguished 
gentleman from California [Mr. Waxman].
  Mr. WAXMAN. Mr. Chairman, today we are discussing only the Medicare 
bill. We talked about it in terms of the relationship to the tax bill 
that is coming up next week. I want to mention the relationship between 
Medicare and Medicaid, which is coming up next week.
  Mr. Chairman, we have no program to protect seniors when they become 
so frail that they require nursing home care. We have relied on 
Medicaid to take care of that. But next week the Medicaid program is 
going to be repealed and there will be no guarantee of a person in a 
nursing home getting coverage after they spend every cent they own. 
There will be no protection for the spouse of that nursing home 
resident or the children of that nursing home resident or the lien to 
be put on the home.
  There will be no protection in the standards of care that will be 
given in that nursing home because all of that law has been repealed 
under the bill passed out of the Committee on Commerce.
  Mr. Chairman, we should not think of Medicare alone, we should think 
of it in the context of the tax cut the money from Medicare will pay 
for and the other undercutting of services for the elderly under 
Medicaid.
  Mr. GIBBONS. Mr. Chairman, may I inquire of the Chair how much time I 
have officially remaining?
  The CHAIRMAN. The gentleman from Florida [Mr. Gibbons] has 2\1/4\ 
minutes remaining, the gentleman from Texas [Mr. Archer] has 5 minutes 
remaining, the gentleman from Virginia [Mr. Bliley] has 3 minutes 
remaining, and the gentleman from Michigan [Mr. Dingell] has 2\1/2\ 
minutes remaining.
  Mr. DINGELL. Mr. Chairman, I note we have, I think on this side, 
about 2\1/2\ minutes each, something like about 4, 4\1/2\ minutes, but 
my good friends over there have 8 minutes.
  Mr. ARCHER. Mr. Chairman, my understanding of the agreement is they 
will reduce their time to one speaker, we will then use our last 
speaker, their speaker will then speak, and then the gentleman from 
Virginia [Mr. Bliley] will close.
  The CHAIRMAN. Is that the understanding of the gentleman from 
Michigan?
  Mr. DINGELL. Mr. Chairman, I am not quite sure I understand what was 
said. I note they have 8 minutes over there and we have something like 
4.
  The CHAIRMAN. My understanding is the gentleman from Texas [Mr. 
Archer] will yield his 5 minutes to his speaker, then the gentleman 
from Michigan [Mr. Dingell] and the gentleman from Florida [Mr. 
Gibbons] will each yield their 2-plus minutes to the minority leader, 
and then the closing debate will be by the gentleman from Virginia [Mr. 
Bliley].
  The CHAIRMAN. The gentleman from Texas [Mr. Archer] is recognized.
  Mr. ARCHER. Mr. Chairman, I yield 5 minutes to the gentleman from 
California [Mr. Thomas], chairman of the Health Subcommittee of the 
Committee on Ways and Means, a gentleman who has contributed massively 
in the development of this plan.
  (Mr. THOMAS asked and was given permission to revise and extend his 
remarks.)
  Mr. THOMAS. First of all, I want to thank my colleagues, Mr. 
Chairman, for allowing me to be part of a majority that has rejected 
politics as usual. What we have heard today from the minority was a lot 
of sloganeering, figurative and literal baloney, and that what we 
propose to do is, in fact, bold and innovative. And I think those are 
appropriate words, but I also believe it is radical.
  Mr. Chairman, what we propose to do is to not follow the politics as 
usual solution. What is the politics as usual solution? Fix Medicare 
until the next election.
  When the Democrats were in the majority that is exactly what they 
did. In the last 10 years, between 1985 and today, the Democrats fixed 
Medicare over and over again. Six times the Democrats either raised the 
payroll tax or raised wages subject to the payroll tax. That is how 
they fixed Medicare. And in 1993, they even blew the lid off of wages. 
There is no limit to the payroll tax being applied to wages today 
thanks to the solutions offered by the former majority. This new 
majority will not buy that approach. Quick fixes are out. Real 
solutions are in.
  Mr. Chairman, this is a quote from President Clinton, and it is up 
there because I, frankly, admire that he had the guts to say it. I 
counted over 100 times the Democrats went to the well and said cut. Is 
it because they just do not get it or is it because this is more of the 
demagoguery and the sloganeering? Even the President of the United 
States admits that when we slow the growth of Medicare, we do not cut 
it, we slow the growth of Medicare.
  Mr. Chairman, what we do is slow the growth of Medicare. That is how 
we make the savings. We do not stay at a 10\1/2\ percent increase 
because it will go bankrupt if we do. Hospital spending goes up under 
our program. It does not go up as fast as it was going to go up, but 
$652 billion will be spent between now and 2002 on hospitals.
  Physicians: Payments to physicians go up every year. Not a cut, but a 
reduction in growth. In fact, over those 7 years, more than $315 
billion will be paid for physician services under the 

[[Page H 10361]]
Medicare program proposed by the Republicans, and every year those 
payments grow larger.
  Mr. Chairman, in home health care, the same thing. Every year the 
payments go up. More than $150 billion over the next 7 years. And every 
year the payment to the home health care industry will go up. We are 
not making cuts, folks, we are slowing the growth.

  Mr. Chairman, there has been a lot said about changes, and frankly, 
this is one of the more exciting parts about the Republican program. 
What we are doing is opening up the Medicare program to the choices 
available to more and more Americans today. The Medicare savings 
accounts, the provider sponsored organizations, the seamless coverage 
that has been discussed will be available so that individuals can go 
from the workplace to the rocking chair and not have to change or look 
for a new kind of a health care program. The coordinated health care 
programs will be expanded and improved.
  This is what we will get under the Republican program to preserve 
Medicare. This is what is offered now. This is what seniors will have 
available: Prescription drugs, routine physicals, the cancer physical 
that was discussed. Seniors will have available eye exams, lenses, ear 
exams, hearing aids, and dental coverage. That is available today and 
it will be available under the new program.
  Mr. Chairman, let us talk about eliminating fraud and abuse. We find 
it. We double the civil penalties. We establish new criminal penalties, 
and, more important, we have already passed medical malpractice. We did 
that in March.
  Here is the bottom line. What do we get for the money out of the 
Republican program? A sound program until 2010. We are in the black, or 
the blue, if you will, until 2010. The Republican program gets us clear 
to the baby boomer generation. The Democratic program has a $300 
billion deficit in the same time.
  Mr. Chairman, let us focus on seniors, but let us remember people who 
are paying their taxes now want a program as well. The Republican 
program preserves, protects, and makes sure that Medicare is available 
for those who pay the bills today.
  Mr. DINGELL. Mr. Chairman, I yield the balance of my time to the 
distinguished gentleman from Missouri, [Mr. Gephardt], the minority 
leader.
  Mr. GIBBONS. Mr. Chairman, I yield the balance of my time to the 
gentleman from Missouri [Mr. Gephardt], and say that he has, for years, 
toiled on this problem. He was a member of the Health Subcommittee of 
the Committee on Ways and Means, and I can personally remember his long 
and effective work on this program.
  Mr. GEPHARDT. Mr. Chairman, I want to first congratulate the ranking 
member of the Committee on Ways and Means and of the Committee on 
Commerce and their colleagues on the committees for the great work that 
they have done in working on this issue. But I rise today with sadness 
and almost disbelief of what I am afraid is about to happen to what I 
believe to be the most important program, the most important help that 
the people of our country have enjoyed now for over 30 years.
  I say to the Members that this is the kind of vote that comes once in 
a generation, maybe once in a career, about the very future of one of 
the most important efforts that our country has ever made.
  Mr. Chairman, the cuts, the changes, the modifications that are 
called for in Medicare, and Medicaid next week, are the largest changes 
in these great health care programs that have ever been called for, by 
far. If they were being made because they were necessary to balance the 
budget, that would be one thing; if they were being made to save 
Medicare, that would be another thing; but, in my opinion, if we look 
at these changes and then we look at the amounts of money that are 
projected to be saved and then we look at the tax break, which is 
included in the very same budget, no matter how people may try to 
separate the issues, we will see that the reason for these deep, 
severe, damaging cuts in Medicare are to pay for a tax break for the 
wealthiest Americans.
  Mr. Chairman, I would ask us to just imagine, just think in our minds 
of two individuals, two families, if you will. Think first of a frail 
85-year-old woman, who, undoubtedly, lives in your district, and I know 
lives in mine.

                              {time}  1515

  Think of an 85-year-old who today lives on their Social Security, 
maybe $7,000, $8,000, $9,000 a year. That is all the income they have. 
My colleagues on the other side may not think that $45 a month is a big 
deal out of their Social Security check to pay the increased premium, 
but to them, they are already counting every penny, every month, in 
order to get by.
  Mr. Chairman, I have met seniors who have a $3,000 prescription drug 
bill now that comes out of that $9,000 a year. They are counting every 
penny every month. The change that is being called for here will ask 
them to pay $40 or $45 additional a month that will come out of their 
Social Security check. Tell them that this is not a big deal.
  It would be one thing if that were to balance the budget or to save 
Medicare. But think about the other person. The family making $500,000 
a year that, for the Republican tax break, will get over $19,000 a year 
in the tax break. It is wrong by anybody's light to take $400 a year 
from somebody who is 85 and frail and living on 9 grand a year and give 
it to somebody who is making a half a million dollars a year. That 
is precisely what this budget is calling for.

  Mr. Chairman, that is not all. When we make cuts this deep in 
Medicare and Medicaid, we close 25 percent of the health facilities in 
this country. The ones that will be closed are the ones we can least 
afford to close; the ones in the inner city, the ones in the rural 
areas where people already have a lack of health care facilities.
  Yes, medical education will be affected. Medicare and Medicaid now 
pay over 60 percent of the costs of medical education. In an intensely 
competitive world, private health insurance will pay less and less and 
less of medical education. So, the Government is the only entity that 
will do this.
  Mr. Chairman, I have told this story many times. My son was diagnosed 
with terminal cancer in 1972 at the age of 2. We were devastated. The 
next morning, a young resident showed up bright-eyed and bushy-tailed 
at 7 o'clock in the morning. He met my wife and I, and he said:

       I know you are devastated, but I stayed up half the night 
     on the computer and I found a therapy that I think might, do 
     not get your hopes up, but it might save his life. We are 
     going to try.

  Let me tell my colleagues something. That day we needed that doctor 
and we needed those ideas. We needed good medical education. We needed 
the quality of this health care system. And I am telling my colleagues 
today, if these cuts are made this deeply, the medical education that 
has been the bright light of this health care system through our entire 
lives will be ripped apart.
  Mr. Chairman, I say to the ladies and the gentleman of the House, 
this vote is a vote of conscience. It is a vote of values. It is a vote 
of what is right and wrong. And I ask my colleagues before they deliver 
this vote today, to examine their consequences, because if we do what 
is wrong instead of what is right, in the days ahead every time you 
face a senior citizen who is trying to scrape it out on $8,000 or 
$9,000 a year, my colleagues are going to know that they voted to make 
life harder for them.
  Every time my colleagues pass a health clinic or a rural hospital 
that has been closed, they are going to turn their back on that. And 
every time they meet somebody's family who had somebody who died 
because of the lack of medical education, they will know we did the 
wrong thing.
  Mr. Chairman, I say to my colleagues, do the right thing today and 
refuse to go along with this program which is not being done for the 
right reasons, but for the wrong.
  Mr. BLILEY. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Virginia [Mr. Goodlatte].
  (Mr. GOODLATTE asked and was given permission to revise and extend 
his remarks.)
  Mr. GOODLATTE. Mr. Chairman, I rise in strong support of the Medicare 
Preservation Act of 1995.
  This historic legislation will preserve, protect, and strengthen this 
vital lifeline to our senior citizens.

[[Page H 10362]]

  Mr. Chairman, today we are voting on a realistic solution to a crisis 
situation. America's seniors, families, doctors, and employers all 
agree that Medicare is broken and this legislation fixes it.
  By saving Medicare from bankruptcy, we ensure that the program will 
be there to serve the health needs of seniors. We are giving seniors 
the choice in selecting the best health care plan for their needs, 
including the right to keep the same Medicare coverage and doctors they 
have now. Finally, we are guaranteeing Medicare's solvency well into 
the next century so that the program can serve future generations of 
seniors.
  Contrary to all of the talk about cuts in Medicare, spending per 
person will actually increase by nearly $2,000--from $4,800 today to 
$6,700 in 2002. Total Medicare spending increases by 54 percent from 
$178 billion this year to $274 billion in 2002. Leave it to the big 
spenders here in Washington to call such increases cuts.
  Choice is a key part of this Medicare legislation. Those who want to 
stay with their current Medicare plan can do so. No one will be forced 
to change coverage or doctors.
  Seniors will have the option to choose from additional health care 
plans under Medicare-plus. Options will include coordinated care plans, 
a physician service organization, or a MediSave account.
  These plans are required to offer at least as good a benefit package 
as Medicare does now. Some of these new plans actually offer more 
benefits, such as prescription drug and eyeglass coverage which are not 
available under Medicare. They also can reduce out-of-pocket costs and 
eliminate the need for MediGap insurance that costs $750 to $1,200 a 
year.
  Today, seniors pay 31.5 percent of part B costs and taxpayers pay the 
remaining 68.5 percent. That rate will not change. Premiums, therefore, 
will go up only because the cost of the program rises. The only 
exception will be for affluent seniors who will be asked to pay more.
  By 2002, part B premiums will be $87 per month instead of the $46.10 
per month today. Under President Clinton's budget, which does not offer 
a plan to preserve Medicare, monthly premiums would increase to $83 per 
month. That is only a $4 a month difference--which is not too much to 
pay to help save the Medicare Program.
  The bill provides fair but limited increases in spending on hospital 
and doctor services. Health care providers will have to manage under 
funding limits and compete in the marketplace on the basis of price and 
quality.
  There will be a Medicare preservation trust fund created within the 
part B Medicare Program to ensure that senior's premiums go to save 
Medicare and are not used for other purposes such as tax cuts.
  Mr. Chairman, we must not miss this opportunity to offer security for 
seniors and save Medicare for the next generation. I urge my colleagues 
to vote in favor of the Medicare Preservation Act.
  Mr. BLILEY. Mr. Chairman, I yield myself the balance of my time.
  Mr. Chairman, for the 6 months that have followed the Medicare 
trustee's report, we have held a national debate on the question of how 
best to save Medicare from bankruptcy. We took the trustee's report to 
the American people and we asked them for their best advice. We 
listened. We listened to our friends and neighbors in thousands of town 
hall meetings from coast to coast.
  We listened in 40 congressional hearings this summer, 10 of them in 
my committee alone; more hearings in my committee on Medicare than the 
other side held in the last 6 years combined. We heard 70 witnesses who 
gave thousands of pages of testimony. We listened to the views of 
Americans of every political stripe.
  We did a computerized search of articles on Medicare, just since the 
beginning of the year. There were more than 11,000 articles on Medicare 
this year in the major newspapers alone.
  We listened and we learned. We learned that as good a program as 
Medicare is, as important as this program has become to America's 
seniors, there is still plenty of room for improvement.
  We learned from health care managers in the private sector how new 
managed care options can help hold down costs and give beneficiaries 
better quality care. We learned from experts in health planning about 
the value of medical savings accounts.
  Throughout the process, there emerged a national consensus that 
Medicare can indeed be preserved. In fact, that it can be improved 
considerably in the process. But, something else happened as well, 
because during this 6 months, America has seen the difference between 
the two major political parties.
  Mr. Chairman, while we were risking our careers to save Medicare, our 
opponents were frightening senior citizens. We developed a plan to save 
Medicare. They pulled neckties and broke glasses and stormed out of 
congressional hearings.
  Last week in my committee, they used senior citizens as props to 
disrupt a plan to save Medicare for 37 million Americans. Today, as we 
discussed our plan, they have given us 3 hours of excuses, 3 hours of 
politics, 3 hours of hysterics.
  Mr. Chairman, I would say: There you have it, America. In 3 very 
revealing hours, the crystallization of the differences between us. On 
the one hand, political courage, accountability, leadership in solving 
a crisis. On the other hand, excuses, distortions, overstatements, 
misstatements, fear.
  Mr. Chairman, I used to be a Democrat. It is sad for me to see a 
once-great political party reduced to this.
  Mr. EVANS. Mr. Chairman, do not let anyone fool you. This proposal is 
not about saving Medicare, it is about giving tax breaks to businesses 
and wealthy Americans.
  It pays for a $245 billion tax break for the rich by breaking seniors 
backs. It makes health care less accessible and more expensive. It will 
close hospitals and other health facilities. And it will cost thousands 
of Americans their jobs.
  The Republican proposal cuts $270 billion from Medicare and deprives 
millions of seniors health care when they need it the most.
  It will force our parents and grandparents to choose between medical 
care, food, and shelter. It will force hospitals and providers around 
the Nation to curtail services or close for good.
  It will roll back efforts to crack down on waste, fraud, and abuse. 
It will lead to lower the quality of care, increase patient abuse, and 
cost the Medicare program over $1 billion.
  These cuts are cruel. The deficit should not be lowered at the 
expense of the elderly. Seniors should not have to suffer in order to 
give tax breaks to the rich.
  For over 30 years, Medicare has protected the health and financial 
security of millions of Americans. These men and women did not work for 
decades and pay their taxes just to have the rug pulled out from under 
them as they prepared to retire. The Republican proposal would do just 
that. It would decrease the value of seniors' savings and seriously 
drop their quality of life.
  Seniors deserve more respect than this. They should be able to enjoy 
their later years. They should not worry about whether they can afford 
health care.
  Thousands of my constituents have told me to oppose the Republican 
proposal. They do not want to pay more for less. They do not want to 
give a $245 billion tax cut to wealthy Americans. They know that this 
proposal will hurt them, their families, and the country.
  I oppose this bill and ask you to do so as well.
  Mr. DICKS. Mr. Chairman, I strongly oppose H.R. 2425, Medicare 
legislation which I fear will hurt far too many Americans--literally 
making senior citizens less healthy and less financially well off than 
they are today under the current Medicare program.
  Over the years here in the House, I have found that it is necessary 
to put major legislation like this into better focus by concentrating 
on how it will impact those people who will be affected. By cutting 
$270 billion from Medicare, this bill will hurt many of the people I 
have come to know representing the 6th District of Washington State.
  And like most Americans, this drastic cut in Medicare spending will 
affect my family. My parents have been retired for years, still living 
in my hometown of Bremerton. And like most Americans their age, they 
depend on Medicare to live a healthy and productive retirement. But 
because they are middle class--like most people in the district I 
represent and throughout America--the large increase in out-of-pocket 
costs will lower their living standard, I cannot help but take it 
personally that the Republican majorities in Congress want to lower my 
parents living standard in order to pay for a huge tax cut that is 
really not necessary.
  Over and over today we have heard the false charge that those of us 
who vote against this legislation are against Medicare reform. That is 
not true. I support the Democratic alternative plan, which shores up 
Medicare's financial health without increasing costs for beneficiaries. 
This Democratic alternative cuts Medicare spending by just one-third of 
the GOP's $270 billion of cuts. The simple fact is that the House 
leadership needs the whole $270 billion in Medicare cuts in order to 
pay for their huge tax cut.

[[Page H 10363]]

  As we here in Congress ask the American people to roll up their 
sleeves for deficit reduction, it is absolutely unfair to make middle-
class retirees on Medicare pay for this tax cut. For that reason, I 
oppose this Medicare legislation.
  Mr. STOKES. Mr. Chairman, today, the House is debating H.R. 2425, the 
Medicare Preservation Act of 1995. I am strongly opposed to H.R. 2425, 
and I plan to vote for its defeat. In my opinion, the legislation 
represents a full attack on the health of our Nation's elderly 
population.
  H.R. 2425 slashes $270 billion from health care services for the 
elderly. We know that to achieve this enormous reduction, health care 
premiums for seniors will double. Also removed from the bill are 
limitations on the amount that doctors and hospitals can charge 
patients. I am also opposed to the bill because it opens the door for 
fraud and abuse. Current provisions that are designed to prevent kick-
backs and provide accurate billing are repealed. This provision alone 
will cost American citizens over $1 billion.
  Mr. Speaker, the enactment of H.R. 2425, the Medicare Preservation 
Act of 1995, would be devastating to seniors throughout America. In my 
home State of Ohio, 1.6 million Medicare beneficiaries would suffer 
from reduced benefits and a lower quality of life. Earlier today, while 
our Republican colleagues were pushing to gut the Medicare program, a 
non-profit research organization, Speak Out! USA, sponsored a special 
Medicare hearing with testimony from all 50 States. I was honored to 
attend this important hearing where Medicare beneficiaries and their 
families testified about their experience with Medicare and concerns 
about proposed cuts in the program.
  Mr. Chairman, I applaud Speak Out! USA for putting a human face on 
the Medicare debate. It would be impossible to hear from senior 
citizens who have real life experience with Medicare and then enter 
this Chamber and vote to demolish the program. One of the witnesses at 
the Speak Out! USA hearing was Bishop Marvin Johnson, a resident of my 
congressional district. Bishop Johnson is a minister of the Good 
Sheppard Divine Spiritual Temple in Cleveland. He is confined to a 
wheelchair and began receiving Medicare disability payments for 
diabetic ulcers on his feet in 1992. Bishop Johnson's testimony was 
very moving and to the point. It served as an important reminder of the 
people we are pledged to represent as Members of this body. As we 
debate the Medicare issue, I want to share his testimony with my 
colleagues.

   Testimony of Bishop Marvin Johnson, Good Shepard Divine Spiritual 
                                 Temple


               Speak Out! USA Special Hearing on Medicare

       I would be on the streets if it were not for Medicare. I 
     pay for my own medication from my Social Security check. I 
     don't have family to help me. My diabetic condition keeps me 
     from working and I am forced to live on full-time disability. 
     I came to Washington to tell our elected officials to save 
     the Medicare Program. If the Nation's poor don't have 
     Medicare, many people will not be able to go to the hospital 
     when they are sick. Without Medicare, I would not be able to 
     buy insurance for myself.
       Through the Medicare Program, I receive quality care from 
     the Visiting Nurse Association. If the Medicare Program is 
     gutted, I have nowhere to turn for health care.
  Mr. ACKERMAN. Mr. Chairman, it is not quite Halloween but the 
majority is already playing trick or trick.
  In the spirit of the season, the Republicans are about to commit the 
Medicare massacre. My colleagues on the other side would have us 
believe that Medicare is in some unprecedented state of crisis and that 
without their meat cleavers and chain saws the program will cease to 
exist.
  In fact, most of their bill's Medicare cuts will not be dedicated to 
the so-called trust fund crisis, not one penny of the cuts the bill 
makes in Medicare part B, and not one penny of the increases in part B 
premiums paid by beneficiaries will go into the trust fund--the only 
part of Medicare that needs propping up.
  The trick, Mr. Chairman, is that the bill will force seniors and 
doctors out of fee-for-service medicine by arbitrarily limiting the 
growth in Medicare, as people live longer, not for reasons of health 
care policy, but simply to meet budget targets. In addition, the bill's 
failsafe mechanism, this gimmick that automatically reduces payments if 
the targets are not met, only cuts from the fee-for-service portion of 
Medicare, not from the HMO's.
  The bill also allows doctors, for the first time, to ``balance bill'' 
senior citizens for the difference between what Medicare pays and the 
providers' actual costs.
  The other trick, according to our Republican colleagues, is that they 
are protecting the solvency of Medicare for future generations. But as 
we all know, the bill cuts three times the amount the Medicare trustees 
say is necessary.
  In reality, the Republican bill extends the solvency of the trust 
fund until 2006. Precisely where we would be if we adopted the 
trustees', and not the Republicans' level of cuts.
  Mr. Chairman, the trick under the Republican Medicare plan is that 
seniors will pay more and get less. The treat--I guess will have to 
wait until next year.
  Mr. VENTO. Mr. Chairman, I rise today in opposition to H.R. 2425, a 
bill which will radically change the nature of health care in the 
United States, decimating seniors' health care security.
  Medicare is one of our Nation's most successful programs. It was 
established over 30 years ago as a national commitment to assuring 
seniors health care coverage. Before it was enacted in 1965, only 46 
percent of seniors had health coverage. Today 99 percent of seniors are 
assured of access to health care. Medicare is an intergenerational 
contract between working Americans and seniors, and it represents a 
commitment from our Federal Government that seniors should not have to 
choose between buying food or going to the doctor.
  Medicare has served America's senior citizens well for 30 years. Most 
seniors are not well off. Under Medicare, seniors have complete freedom 
to select the health care plan of their choice, with guaranteed 
coverage. Now Republicans want to slash Medicare. They say that they 
are doing this to save the Medicare trust fund. Well, Medicare is in 
danger, because the Republicans are in control. The changes they are 
proposing are going to cost Medicare three times what is needed to 
extend the trust fund solvency to the year 2006. The trustees of the 
Medicare trust fund have stated that it would take approximately $90 
billion to shore up the Medicare system for 10 years, but Republicans 
want to cut $270 billion to achieve the same objective. Ironically, the 
Democratic plan offered during Committee consideration of this bill 
actually extends the trust fund solvency to the same year, 2006, as the 
Republican plan, while only cutting about $90 billion. The truth is 
that Republicans are searching for a way to finance their budget 
priorities, and are using Medicare cuts as a cash honey pot to pay for 
a $245 billion tax break for wealthier people and increased military 
spending, not for helping the Medicare trust fund or the American 
health care system.
  We all know that some improvements need to be made in the Medicare 
Program. After all, the health care laws have been constantly evolving 
for decades. For instance, I hear from seniors all of the time about 
the high cost of prescription drugs. A sound outpatient prescription 
drug benefit should be part of Medicare. Certainly we need to crack 
down on fraud and abuse within the system so that crucial health care 
dollars aren't going down the drain. Ironically, however, the 
Republicans cut money for inspectors of waste, fraud and abuse in the 
fiscal year 1996 appropriations bill, and this Medicare bill will make 
it more difficult to curb fraud and abuse by changing the standard for 
making sure Medicare claims are accurate, and repealing the 1987 laws 
governing nursing homes.
  In the process of bleeding the Medicare trust fund, the Republican 
scheme is going to destroy seniors' health care security. Under this 
bill, overall Medicare spending will be cut by $6,795 per senior over 
the next 7 years, meaning that in 2002 there will be $1,747 less in 
Medicare dollars per senior in that year itself.
  This Republican Medicare cut scheme will increase seniors' monthly 
premiums by $53.5 billion over 7 years--this means an individual senior 
will pay approximately $490 more per year in premiums by 2002. This 
amount will be doubled for married couples. This is a lot of money 
considering that 80 percent of Medicare beneficiaries earn less than 
$25,000 a year, and none of the premiums go into the Medicare trust 
fund, but are a part of the general revenue bottom line instead. Once 
again this illustrates the true impact of the GOP efforts--financing 
their priority which is a tax break for the wealthy.
  The Republicans are going to cut $150 billion from payments to 
providers. There is not one hospital in this country that won't be 
affected by this drastic cut. This, combined with the proposed Medicaid 
cuts in the GOP budget plan, mean that hospitals will be forced to shut 
down, or try to make up the difference in cost by increasing and 
shifting health care costs onto Americans of all ages. Hospitals may 
well start to turn away Medicare and Medicaid patients, just as some 
physicians do already today.
  Another disturbing part of the Republican proposal is the ``look 
back'' proposal where Republicans say they will make unspecified cuts 
in the future. When Republicans say ``look back'' seniors should ``look 
out.'' The GOP's so-called safety valve provides compliance with their 
scheme to cut Medicare, but no safety, no security, and no health care 
for Medicare recipients.
  Provisions of the Republican scheme will fundamentally restructure 
Medicare, shifting seniors out of fee-for-service care by putting 
resources into other untried and untested 

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forms of care such as medical savings accounts and provider-sponsored 
organizations, therefore making traditional fee-for-service care so 
prohibitively expensive for most seniors as to eliminate the option. 
Ironically, the new medical savings accounts will actually cost 
Medicare money, with estimates ranging to $15 billion over 7 years, as 
more trust funds are passed out to healthy seniors who may not even 
need medical care, draining the funds which cost taxpayers billions. 
Provider-sponsored organizations will be exempt from State financial 
and consumer protection requirements, which insurers and HMOs have to 
comply with, meaning that provider-sponsored organizations will not be 
put on a level playing field with these other providers. This is a 
prescription for problems, not health care policy.
  We also need to look at what Republicans are doing for Medicaid, the 
companion health care program which helps so many seniors get access to 
nursing home care. They are going to turn over complete control of this 
program to the States, stripping away mandates that guarantee coverage 
to children, the elderly, and the disabled. The Republican Medicaid 
scheme cuts the program by $182 billion in 7 years, a 20-percent 
reduction, and abolishes the entitlement status and State maintenance 
of effort. Minnesota was one of the biggest losers in the restructuring 
of the House Medicaid formula and is going to lose $3.4 billion over 
the next 7 years under the House plan. This is a cut of over 21 
percent.

  These changes will affect every person in this Nation, whether 
indirectly through their health care costs increases due to the rising 
number of uninsured people, or directly if they have to deal with the 
cutbacks in their coverage or their parents', spouse's or child's 
coverage.
  The problems we face with health care demand a response, but a long 
term solution requires more than slashing health care coverage. The 
need remains not to consider Medicare and Medicaid in a vacuum, but to 
address the health care system as a whole. The trustees of the Medicare 
trust fund strongly oppose the Republican plan because the extensive 
cuts go far beyond program reform or deficit reduction.
  What a difference a year makes. Last fall 1994, the Congress was 
struggling to expand health care to those without Medicare, Medicaid or 
private coverage. There were over 40 million uninsured Americans from 
working families then and the number has risen by 1.4 million more in 
the past year. Today Congress isn't even addressing the issue of those 
without health care, but pulling back and punching holes in the 
American health care programs, Medicare and Medicaid, that help people. 
What a shame and what a disgrace that the modest programs that provide 
dignity to the elderly and the disabled, and compassion and empathy for 
those without means, in fact 16 million children, are being bled for 
priorities that place tax breaks for the wealthy ahead of health care 
for the needy.
  At the Democrats' hearings on the Capitol lawn and at public meetings 
in Minnesota, I've learned anew from a broad spectrum of people who 
will be hurt by the GOP policy path. Not only from doctors and 
hospitals, but from seniors who rely on them for their health care 
security. One senior at the hearing gave these words of wisdom, 
``Seniors weren't born yesterday. They know what before you sign any 
policy, you read the fine print.'' Well, I urge my colleagues to look 
at the fine print of the Republican plan and see the bottom line which 
is that seniors and Americans of all ages are going to pay more for 
less.
  Medicare represents our Nation at it's best. It represents the desire 
on the part of the people to pull together and care for those who 
otherwise might not have enough resources to have access to health 
care. Instead of building upon this success, by responsibility managing 
Medicare and expanding health care coverage to all Americans, this 
Republican bill rolls back the progress that has been made. I urge my 
colleagues to vote against the Republican plan.
  Mr. SKAGGS. Mr. Chairman, this Republican Medicare bill is tragic 
almost any way you look at it. It's tragic because it will make life 
harder for many older Americans in order to make life easier for a few 
who are already financially comfortable. And it's tragic because we're 
missing an opportunity for genuine reform.
  Medicare is in need of corrective surgery. This bill instead 
prescribes amputation.
  By any reasonable assessment, Medicare has been a resounding success. 
Since it was signed into law by President Johnson in 1965, the system 
has dramatically improved the lives of millions and millions of older 
Americans and their families.
  Before the system was created, over half of all seniors had no health 
insurance at all, and largely because of that problem, one-third lived 
in poverty. Today, thanks to Medicare, virtually all seniors have 
insurance, and less than 13 percent live below the poverty line.
  That's hardly the outcome Republicans predicted. In 1965, 93 percent 
of Republicans in Congress voted against creating the system in the 
first place, because it was, they said, socialized medicine.
  Thirty years later, the Medicare system remains essentially a 
private, market-oriented system. It's substantially less bureaucratic 
than the private sector system of health insurance--about 2 percent of 
Medicare goes toward administrative costs versus anywhere from 6 to 25 
percent in the private health insurance market. Every American agrees 
Medicare must be maintained and must be put on a sound financial 
footing.
  Medicare does face some serious actuarial problems. Medicare costs 
have been rising along with the skyrocketing cost of all health care. 
Those cost increases have outpaced revenue increases, so that the part 
A trust fund, which pays primarily for hospital coverage, needs to be 
shored up.
  According to the Medicare trustees, the Part A trust fund faces a 
shortfall over the next several years of about $90 billion. Other more 
pessimistic analyses range up to $130 billion. So, we need to find $90 
billion in savings or additional revenue to keep part A solvent.
  But it is clear this is not the problem the Republican majority is 
trying to solve.

  No, the Republicans set out to reach two other goals; first, to cut 
taxes, mostly for the wealthy; and second, to balanced the budget in 7 
years. To make this math work, and given other priorities, they close 
to reduce Medicare spending by $270 billion, or two to three times 
what's necessary to deal with the Part A trust fund problem.
  In other words, the size of the Medicare reductions wasn't driven by 
the health-care needs of seniors or the fiscal needs of the Medicare 
trust fund, but by the political agenda of the Republican majority.
  In fact, the first Medicare action taken by the Republicans was last 
spring, in the $354 billion tax cut bull they pushed through. And 
ironically, it was designed to make Medicare's financial problems 
worse. How? By draining $36 billion in revenue out of the Medicare Part 
A trust fund. To offset that action, Republicans now have to make 
larger cuts in the hospital insurance program than otherwise necessary. 
These additional cuts will, inevitably, result in a lower quality of 
care for seniors.
  The Republican plan also raises the premiums that help fund Part B of 
Medicare, which primarily pays doctors' bills. They're also trying hard 
to get seniors to opt out of the Medicare program altogether. By 
reducing spending on part B, which is paid for by general tax revenue, 
the GOP frees more money to funnel into tax breaks for people making 
over $100,000. And, of course, the savings from those moves won't do a 
thing for the insolvency problem in part A, which is the illness 
they're purporting to treat.
  It's perfectly clear what's happening. The Republicans need to 
squeeze money out of the Medicare program to provide a promised $245 
billion tax break--the crown jewel of the so- called Contract With 
America--to some of the wealthiest people and corporations in the 
country. And, to add insult to injury, the Speaker of the House has 
been busy cutting backroom deals in a desperate attempt to get this 
travesty to pass.
  First, he bought the AMA's endorsement with concessions they wanted. 
Then, astoundingly, he decided to loosen the rules on Medicare fraud. 
Rather than making things tougher on those who cheat the system, and 
drive up costs, the Speaker will make fraud and abuse easier--just to 
win the support of powerful interest groups.
  Let me stipulate: much more needs to be done to assure the long-term 
sustainability of Medicare than just fixing the part A trust fund 
shortfall. We need to ask those beneficiaries who can pay more for 
their care to do so. We need to tackle the systemic failings in the 
overall health insurance and to rein in costs.
  But these matters ought to be addressed on their merits, and in the 
context of health care reform generally, not as mere mans to the end of 
a tax cut we can't now afford.
  So it is, as my Republican colleagues have claimed, a historic day. 
Thirty years ago, Republicans voted in large numbers against Medicare. 
They will do so again today.
  Older Americans, who have worked hard, and played by the rules, and 
paid into the system for a generation, deserve better from us. I urge 
my colleagues to vote against the bill.
  Mr. SERRANO. Mr. Chairman, I rise in strong and determined opposition 
to H.R. 2425, the Medicare so-called Preservation Act of 1995.
  H.R. 2425 is a very bad bill. It comes to the floor after a very 
flawed process and under artificial time limits imposed by the 
Republicans to prevent full and free discussion of the issues.
  H.R. 2425 is driven by the Republicans' draconian budget, which means 
it is based on very bad numbers, not on any understanding of health 
care in this country. It will have far-reaching, negative impacts on 
most Americans.

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  H.R. 2425 would cut $270 billion in future Medicare spending. That is 
three times the size of any previous provision to address the Hospital 
Insurance Trust Fund's solvency. Yet it will extend the HI Trust Fund's 
year of exhaustion only to 2006--the same year the Democrats' much more 
modest proposal, based on the Medicare trustees' recommendations would.
  The balance of the $270 billion does nothing to shore up the HI Trust 
Fund, but, instead, makes possible $245 Billion in unnecessary tax cuts 
aimed at the wealthiest--more than half the tax break goes to people 
making over $100 thousands a year.
  Seniors would pay twice the current part B premium in 2002, as well 
as higher deductible and copayments.
  Cost growth would be held below the growth in private sector health 
spending. Seniors who have greater health needs than the working 
population, would be forced to pay much more, particularly as fewer 
providers would be willing to accept rock-bottom Medicare reimbursement 
rates, and protections from balance billing would be repealed. 
Otherwise, seniors would have to give up their choice of doctors and 
accept second-class health care in underfunded managed care plans.
  Hospitals are already reeling from changes in the health care 
industry; the hits they would take in reduced payments for graduate 
medical education, bad debt, disproportionate low-income patient load, 
and the like, would put many hospitals, particularly the public 
hospitals that serve the poorest populations and our great teaching 
hospitals, at great risk of closing.
  Special deals for various portions of the health care industry would 
weaken consumer protections and make it much harder to combat Medicare 
fraud and abuse, kickbacks, and other anticompetitive behavior.
  Meanwhile, medical research and the care provided by specialized 
institutions such as our children's hospitals are very much at risk.
  The process, too, is very bad. Medicare is being rushed to the floor 
without full consideration by all the committees with jurisdiction. The 
Judiciary Committee majority actually waived--just gave away--its 
jurisdiction over crucial changes in medical malpractice, antitrust 
rules, the False Claims Act, and antikickback penalties. That is just 
not right.
  Nor should the House consider Medicare apart from the rest of 
reconciliation, just so the Republicans can try to convince the 
American people that there is no relationship between Medicare cuts and 
tax cuts for the wealthy.
  Under a fair and open process, this House would consider and amend 
all parts of reconciliation--the inexplicable tax increases on the 
working poor, the unnecessary tax cuts for the wealthy, the dangerous 
attack on workers' pension funds, the reckless spending cuts across the 
budget, as well as the excessive cuts and changes in Medicare and 
Medicaid--together.
  The House should be able to consider the cumulative impacts of all 
the changes and make necessary adjustments. American's so-called 
sandwich generation, for instance, as a result of reconciliation, will 
find themselves pressed harder and harder, helping their parents with 
higher Medicare premiums and other health care costs while dealing with 
cuts in their children's student aid.
  Because of the close relationship between Medicare and Medicaid, the 
House should be able to consider--and, where necessary, do something 
about--the impacts on each of changes in the other as well as the 
cumulative effects of changes to both.
  What will be the combined impact of Medicare and Medicaid cuts on our 
health system?
  A report by Barents Group LLC prepared for the Greater New York 
Hospital Association estimates that, over 7 years, New York City 
residents will pay $2 billion in excess part B premiums; and hospitals 
and long-term-care facilities together will lose more than $24 billion. 
By 2002, job loss will total 140,000, of which 112,000 will be in 
health care sector.
  The Healthcare Association of New York State estimates that the 16th 
district will lose over $2 billion and nearly 11,000 health care jobs. 
Individual hospitals will lose hundreds of millions of dollars.
  And what would be the impact on Medicare if a State, given authority 
to set Medicaid eligibility and coverage and a shrinking pot of 
Medicaid dollars, decides it cannot afford to fund long-term care? 
Under the proposed caps on Medicare spending, how will Medicare cover 
the much more expensive hospitalization that will surely result?
  What recourse will seniors have if a State decides not to fully cover 
the Medicare premiums, deductibles, and copayments of the elderly poor? 
Their coverage would effectively be ended, and it is unlikely that 
managed care plans will have sufficient enrollment capacity soon enough 
or in enough places to meet the needs of all seniors who need low-cost 
health care.
  I believe the House ought to be able to consider situations like 
this, but separating consideration of Medicare from Medicaid by nearly 
a week will make it impossible.
  Mr. Chairman, there is much more I could say in opposition to this 
bill, but I will not go on. I simply urge my Republican colleagues to 
come to their senses and support the Democratic alternative, which 
extends Medicare's life just as long as H.R. 2425 without all the other 
harmful baggage. At a minimum, I urge all my colleagues to oppose this 
dangerous, ill-considered bill.
  Mr. EVERETT. Mr. Chairman, I rise today in strong support of the 
Medicare Preservation Act. Yes, reforming Medicare is intimidating. 
Yes, maintaining the status quo is easier. Well, my constituents did 
not send me up here to take the easy way out, but to make hard choices 
in the best interest of the second district of Alabama and for this 
country's future.
  I believe that there is nothing more abhorrent than using the power 
of this institution to terrify the elderly, the disabled, and the poor. 
But, the House Democrats are doing just that. While they are well aware 
that the Medicare Program is in a state of crisis, they continue to 
spout fear rhetoric. We all know, and even Democrats cannot deny, that 
Medicare is growing at over 10 percent every year. In order to sustain 
this rate of growth. Congress would be forced to cripple working 
Americans by raising the payroll tax by 44 percent. The only other 
alternative would be to allow Medicare outlays to reach 100 percent of 
Federal revenues by the year 2030 and bankrupt the entire country.
  The Republican Party has a plan to save, preserve, and improve 
Medicare for today's beneficiaries and for future generations. The 
Medicare Preservation Act offers seniors the same cost effective 
choices for quality health care available to younger Americans, but 
develops innovative ways to save health care dollars; all while still 
delivering the best health care to all Americans without cutting a 
single dollar to beneficiaries. Let me make that clear, regardless of 
Democrat's demagoguery, there are no cuts in this legislation, Mr. 
Speaker.
  Medicare payments will increase at a high rate of 6.5 percent 
allowing for a $2,000 increase from the current $4,800 today to $6,700 
in 2002, for every single beneficiary. Correct me if I am wrong, but a 
$2,000 increase is not a cut in any teacher's math class. Currently, 
Medicare recipients pay 31.5 percent of their Medicare part B premium. 
Under the MPA, traditional Medicare recipients will continue to pay 
31.5 percent of their Medicare part B premium. The MPA does not include 
changes to the deductible or the co-payment. Again, how can this mean 
that seniors pay more? The truth of the matter is that because the 
Medicare Program is a 30-year-old dinosaur, seniors actually pay more 
money in traditional Medicare for fewer services than their children 
and grandchildren do in the health care open market.
  This historic legislation empowers seniors by offering choices 
through MedicarePlus coverage which includes coordinated care preferred 
provider organizations, local union or association policies, HMO's, 
private fee-for-service, medical saving's accounts, or continuing 
traditional Medicare. Most of these choices are currently available for 
every other American. Why should senior citizens continue to get the 
short end of the stick? The MPA goes a step further and opens the 
health care playing field to hospital and doctor coordinated 
organizations who can network to offer direct medical care to 
beneficiaries saving the cost of a middleman. Since hospitals are 
burdened with a large portion of the Medicare payment reimbursement 
savings, creating provider service organizations [PSO's] will allay 
some of their burden while opening up a whole new choice for direct 
medical care.
  Medical savings account [MSA's] will allow seniors who choose this 
option to completely control how their Medicare contribution and out-
of-pocket money is spent. They will receive their Medicare contribution 
each year in one sum which will be deposited into their medical savings 
account. They can then choose a high deductible policy which best fits 
their needs, maintaining at least 60 percent of the cost of the 
deductible in their MSA at all times. They can then use the balance of 
their MSA for doctor's visits, prescription drugs, eyeglasses or other 
medical-related expenses. If they are hospitalized the MSA pays for 
the  

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deductible and then insurance pays for the rest. If money is left over 
in the MSA at the end of the year, the money belongs to the senior and 
can be used for any purpose or can be rolled over into the next year's 
MSA.
  MPA not only keeps the Medicare Program healthy into the 21st 
century, but finally gives seniors the power and choices they deserve. 
The legislation also includes long awaited liability reforms, strong 
incentives for combating fraud and abuse, and many other reforms which 
will only improve the Medicare health care delivery program. The 
amazing thing about this is that the MPA does not cut a single dollar 
from a beneficiary check, nor does it ask seniors to pay a single 
dollar more than they now pay. Again, in simple language, there are not 
cuts to beneficiaries in this bill, Mr. Speaker.
  Mr. Chairman, we must all take the responsibility for protecting and 
caring for our grandparents and parents and of those disabled either 
physically, emotionally, or financially. But, we also have a 
responsibility to our younger taxpayers who are not only future 
beneficiaries of Medicare, but the future of this country. At this 
point they are paying 68.5 percent of the Medicare part B premium. Like 
most seniors, they simply cannot afford to pay more. Private health 
care organizations have been successful in the last several years at 
finding savings by actively seeking new and innovative ways to deliver 
the quality health care that Americans expect and deserve. The 
Republican Medicare Preservation Act accomplishes this same goal for 
America's seniors.
  In support of the Medicare Preservation Act, I challenge Democrats to 
quit their scare tactics and join Republicans as we get down to the 
business of saving Medicare today and protecting and preserving the 
program into the 21st century.
  Mr. GEJDENSEN. Mr. Chairman, I rise today to express my strong 
opposition to Newt Gingrich's bill to cut the Medicare Program by $270 
billion in order to pay for a tax break to the wealthy.
  Contrary to their recent pronouncements that the cuts in H.R. 2425 
are necessary to save Medicare, it is clear that the Republicans do not 
want to save the Medicare system. They want to eliminate it. In fact, 
they have a longstanding record of opposing the program. In 1965, 93 
percent of Republicans voted against the bill which established 
Medicare.
  Throughout the years, the trustees have predicted imminent bankruptcy 
for the program. And, every time, Democrats have taken the steps 
necessary to keep this pay-as-you-go system solvent. In 1970, the trust 
fund was supposed to go broke in 1972. In 1972, it was to be bankrupt 
in 1976. In 1993, the trustees reported that the trust fund would go 
broke in 1999. However, thanks to reforms in the system enacted as part 
of the Omnibus Budget Reconciliation Act of 1993 [OBRA #93], the life 
of Medicare was extended until 2002. OBRA 93 passed the House of 
Representatives without one Republican vote. Where were Newt Gingrich 
and his friends then?
  Earlier this year, the Medicare trustees reported that the Medicare 
part A trust fund needed $90 billion in cuts to remain solvent for the 
next decade. For that reason, I will vote for the Democratic 
alternative which saves exactly that amount. Nevertheless, Newt 
Gringrich and his loyal followers in Congress have crafted a bill to 
cut the program by almost three times the amount necessary. Why?--to 
pay for tax cut for wealthy Americans.
  The Republican plan reduces Medicare spending by $270 billion, but 
increases beneficiary cost-sharing by $55 billion by raising monthly 
premiums. Under the proposal, the premium will rise from the current 
$46.10 to $87 in 2002. These figures are in direct contrast to the 
alternatives. Under the Democratic alternative, the premium will 
increase to only $58 in the same year. If current law were continued, 
the premium would increase to $61.
  In addition, the majority's ill-advised proposal will result in 
seniors losing the ability to choose their own doctors. Proponents of 
this measure contend that beneficiaries will have unlimited choice, but 
the bill provides financial and other incentives to entice physicians 
to accept only MedicarePlus enrollees. Therefore, if a doctor decides 
to stop participating in the traditional fee-for-service Medicare, his 
or her patients are essentially left with no choice at all.
  IN short, the Republicans' priorities are reversed. Their Medicare 
plan helps the greedy at the expense of the needy. That is simply wrong 
and I will vote against this shortsighted and punitive legislation. I 
urge my colleagues to do the same.
  Mr. COLLINS of Georgia. Mr. Chairman, over the past several months I 
have held many townhall meetings for the purpose of listening and 
learning about Medicare from the people of Georgia's Third 
Congressional District. I have met with groups of senior citizens, 
physicians, and hospital administrators to better understand their 
concerns about the current Medicare insurance program.
  I have learned from senior citizens of their fear of losing their 
Medicare insurance. They have shared with me their concerns about 
excessive fees charged by doctors and hospitals. They have brought me 
copies of complicated doctor and hospital bills they have received. 
They are frustrated with these billing procedures. Our seniors are 
concerned over excessive charges and fraudulent use of their Medicare 
insurance money.
  I learned of the frustrations of doctors and hospitals that try to 
provide health care to Medicare patients under intrusive regulations 
and complicated reimbursement rules that have been forced onto them by 
past Congresses. They also shared their concerns about excessive 
testing and the overpracticing of health care due to the fear of 
lawsuits. Doctors and hospitals are frustrated because they are not 
allowed to legally discuss the delivery of health care within a 
community because of antitrust laws.
  Mr. Chairman, in simple terms, the people of Georgia's Third District 
know and understand this Congress must address the problems within the 
Medicare insurance program such as overcharging, waste, and fraud. They 
also understand that in 1996, the Medicare insurance trust fund will 
begin paying out more money than the trust fund collects from payroll 
taxes deducted from each and every paycheck earned by the working 
people of this country.
  But, Mr. Chairman, I am not the only Member of Congress who has 
listened and learned. The message I heard from the people of my 
district can be repeated by almost every Member of this House of 
Representatives who heard the same concerns in meetings held throughout 
their districts and out across our great Nation.
  As a result of these meetings, the Republican Members of the House of 
Representatives have written, and now passed, the Medicare Preservation 
Act [MPA]. The MPA saves Medicare by addressing the very areas of 
concern voiced by those who depend on Medicare to pay for the cost of 
their health care.
  Mr. Chairman, I read a speech not long ago which was given by the CEO 
of the Chrysler Corp., Mr. Eaton. In his speech he referred to a period 
of time some 15 years ago when the Japanese were taking over a large 
portion of the American automobile market.
  The Japanese were beating the domestic automakers in the area of 
quality and price, very similar to the way the private health care 
industry is beating today's Government-run Medicare Program in quality 
and price.
  What did the big three U.S. automakers do? They looked at the process 
of how they were manufacturing cars. They pulled together supervisors, 
union leaders, consumer groups, dealers, and anyone who they thought 
might have valuable input in how to change the process of 
manufacturing.
  As a direct result of changing the process, the quality of their 
products has increased two and one-half times and they are building the 
same number of cars with half the work force.
  Mr. Chairman, the process of Medicare is what the MPA changes.
  Let's look first at who will be covered by Medicare under the MPA. 
Everyone. That's right everyone who receives Medicare today. I will say 
it again--everyone--each and every individual who is eligible for 
Medicare today will remain in the Medicare insurance program. Each and 
every individual who will become eligible for Medicare in the future 
will be covered under Medicare when they reach the Medicare age. No 
one--not one senior or disabled person will be mandated to leave the 
current Medicare insurance program.
  Mr. Chairman, the American people are now hearing a great deal of 
rhetoric about how the Republicans are ending Medicare. Some special 
interest groups, and even some of our own colleagues in Congress, are 
engaging in scare tactics and giving false, misleading information 
about our plan. Well that is just what it is: Rhetoric. The truth is--
the Medicare Preservation Act does not and will not end Medicare. In 
fact Mr. Speaker, the MPA does not cut--I repeat--does not cut Medicare 
benefits.
  Well, if MPA does not cut Medicare, how do we plan to save $270 
billion over 7 years at an average of $36.5 billion per year? The 
answer is we are making the changes our senior citizens requested to 
make. And by making those changes the taxpayers will spend $270 billion 
less than will be necessary under the current Medicare insurance 
program.
  Mr. Chairman, we have a choice--either we correct the major problems 
within the Medicare process or we raise taxes on every working person 
in the Nation. In the past, raising taxes has been Congress' answer to 
fixing Medicare. In fact, the payroll tax and the income base have been 
raised 23 times over the past 31 years to fund runaway cost in the 
Medicare system.
  But raising taxes decreases a family's income, increases the cost of 
consumer goods and services, and increases the cost of living for 
everyone, including seniors, who are on Medicare and a fixed income. 
Rather than raising taxes again, Republicans have chosen 

[[Page H 10367]]

to fix Medicare, according to what our senior citizens have requested. 
Let's take a quick look at some of the changes our seniors have 
suggested.
  First, we are reducing the growth of excessive payments to doctors 
and hospitals. The Medicare Preservation Act consolidates a clumsy 
multiple layer reimbursement process which is unfair to general 
practitioners and very favorable to specialized medicine practitioners. 
It also simplifies the reimbursement process in a more fair and 
equitable manner.
  The Medicare Preservation Act will simplify hospital bills so those 
insured by Medicare will better understand the billing process while at 
the same time reducing the growth of reimbursements for hospital care. 
One of the real problems with many hospitals is the lack of utilization 
of the entire facility or low occupancy rates. Yet many hospitals 
continue to build and add on to their hospital.
  Have you ever wondered why? One reason is a part of the Medicare 
reimbursement for hospital care is based on the capital investment of 
the hospital. In other words the more the hospital makes capital 
investment, the more reimbursement they get from Medicare. Well the 
Medicare Preservation Act will slow down the unnecessary building by 
reducing the reimbursement based on capital investment. This should 
have been done many years ago.
  Mr. Chairman, back during the late 1970's I served as chairman of the 
board of commissioners for a rural county in Georgia. The county has a 
Hill-Burton Hospital and the local government was responsible for 
keeping the doors open. Our hospital was losing money and had a high 
account receivable owed to it by Medicare.
  As one who was responsible for the people's tax dollars, I paid a 
visit to the Blue Cross-Blue Shield insurance company and asked why 
they had not fully reimbursed the hospital for the bills submitted. 
They looked in the file and said, ``we are discounting your bills 
because you are not charging us enough.'' I could not believe what I 
had heard. Our hospital was being penalized by Medicare rules because 
we were not charging enough for our hospital care. It is no wonder 
Medicare has had money problems for a long time.
  Mr. Chairman, if we are reducing doctor and hospital reimbursements, 
we also must help them reduce their cost of operation or we may 
discourage them from serving the Medicare insured. We are reducing 
their costs by including in the Medicare Preservation Act a provision 
commonly known as malpractice reform.
  Today, doctors and hospitals pay ridiculously high premiums for 
malpractice insurance and most feel they have to practice defensive 
medicine to avoid lawsuits. Both the cost of the insurance and the 
overpracticing of medicine have led to higher costs for health care.
  Additionally, the Medicare Preservation Act includes an antitrust 
provision so doctors and hospitals can legally discuss better ways to 
deliver health care to a community. It is just plain common sense to 
allow providers this flexibility.
  Another good idea included in the Medicare Preservation Act is to 
purchase the necessary equipment to better track how much we pay 
doctors and hospitals for health care delivered to each Medicare 
insured beneficiary. You would think this would have already been 
done--it only makes good business sense to keep up with your accounts 
payable. But at this point nothing surprises me about how the current 
Medicare insurance program is operated.
  Next we heard what folks were saying about waste, fraud, and abuse. 
Therefore the Medicare Preservation Act includes several provisions to 
eliminate waste, fraud, and abuse. Provisions such as:
  One, requiring the Secretary of Health and Human Services to alert 
individuals entitled to Medicare of scams aimed at ripping off Medicare 
and providing a tollfree number to report such scams.
  Two, rewarding beneficiaries who report huge illegal charges and 
rewarding them for good ideas which save Medicare dollars and improves 
the program. This will be a good incentive for those who are covered by 
Medicare to help keep down program costs and report fraud and abuse.
  Three, a voluntary disclosure program for doctors who may have 
unintentionally overcharged for Medicare services. There is no such 
provision in current law.
  Fourth, heavy fines on doctors who commit fraud against Medicare.
  Five, a Medicare integrity program whereby the Secretary can contract 
with private concerns to review activities of doctors, audit the cost 
reports, determine whether Medicare should or should not have paid for 
services charged, and gives the Secretary the authority to collect 
overcharges.
  Six, establish within the Department of Justice an antifraud task 
force.
  Third, the Medicare Preservation Act establishes a trust fund for 
medical education. Currently teaching hospitals receive additional 
reimbursement money to help pay for medical education; again increasing 
the cost of Medicare.
  Fourth, the Medicare Preservation Act establishes a baby boomer 
commission. This commission will begin now to look ahead for ideas of 
how to best ensure that Medicare will be there for those Americans born 
during or after World War II. In the past Congress has waited until a 
crisis occurs before taking an action. This commission will change that 
precedent. It is a very needed provision because when the baby boomers 
reach Medicare age there will only be 2.5 workers per Medicare insured, 
compared to today where there are 3.3 workers per Medicare recipient.

  Fifth, there is a provision requiring a look-back commission to 
review the Medicare Preservation Act changes and how they are working. 
This will give Congress an idea of just what affect Medicare reform has 
on the cost of Medicare and recommendations for any necessary 
corrections needed to protect benefits.
  Mr. Chairman, many of our seniors are worried about whether 
copayments or their hospital deductible will be increased under the 
Medicare Preservation Act. The answer is no. I will repeat the answer, 
no--capital NO--no.
  The question has also been asked, will my part B premium increase? 
The answer is: The part B premium deducted from Social Security checks 
will remain at the current 31.5-percent level. This is different from 
the Democrats substitute which would have dropped the part B premium 
deduction to 25 percent. Under the Medicare Preservation Act, those 
individuals insured by Medicare who have an annual income of $75,000; 
and for those couples that earn $125,000, their part B premium will 
increase gradually to a point they could pay for the whole premium.
  Mr. Chairman, there are a lot of misleading comments about what 
happens to the money saved by passing the Medicare Preservation Act. 
What will happen to those dollars? First of all the hospital trust 
fund, which pays for part A Medicare insurance, will continue to 
collect the payroll taxes needed to sustain itself. Second, the fewer 
dollars needed to subsidize the part B insurance, less general fund 
dollars, will be needed to pay for Medicare. Of course, Mr. Speaker, as 
you know the general fund is already overdrawn by some $5 trillion.
  There are the changes to the current Medicare insurance program. 
However, there are other options for health care which will be 
available under the Medicare Preservation Act known as MedicarePlus 
plans. These new MedicarePlus options include: One, provider-sponsored 
organizations; two, medical savings accounts; and three, health 
maintenance organizations.
  Each new option is a marketplace program. Each option will be 
completely voluntary. No one insured by Medicare will be required to 
select one of these options. The success of these options will be 
determined by the marketplace according to the quality of care 
provided, and the fees charged for the care provided. If an individual 
is not satisfied with either the quality of care or the price charged, 
they will have the ability to go back to the current Medicare system.
  Mr. Chairman, the Medicare Preservation Act is a good idea. It is a 
plan which I fully believe will ensure that Medicare will be there for 
me 14 years from now when I become eligible for Medicare insurance.
  Mr. HORN. Mr. Chairman, we have endured a great deal of campaign 
rhetoric regarding the Republican tax cut proposal and its alleged 
affects on the reforms we offer today to Medicare. I would like to 
refute the well-choreographed Democratic attempt to sideline a valiant 
effort to save Medicare.
  The Republican plan to strengthen and save Medicare has nothing to do 
with the tax cut proposed for working families. When we passed the 
revenue bill in the House we had already made the spending cuts to 
permit a tax reduction. And they know that. There is a gap as wide as 
the Grand Canyon between what they know and what they say.
  Even if the budget were balanced, Medicare would still have to be 
saved from bankruptcy. The President claims that, ``not 1 red cent of 
the money being paid by seniors will go to the trust fund. It will go 
to fund a tax cut that is too big.'' The President is wrong. He ought 
to read the law. Under current law, premiums and payroll taxes paid 
into the Medicare trust funds can only be used for the Medicare 
program. This is true for both the trust fund that pays hospital 
expenses, part A, and the trust fund that pays physician and other 
expenses, part B. As the Medicare trustees stated in their April 1995 
report: ``The assets of the trust fund may not be used for any other 
purpose.''
  Now let us address the so-called tax cuts for the rich. The House 
Budget Committee estimated that 74 percent of the $500-per-child family 
tax credit will go to families making less than $75,000 per year. The 
4.7 million working families earning $25,000 a year and below will no 
longer pay any Federal income taxes; families earning between $25,000 
and $30,000 will 

[[Page H 10368]]
have 48 percent of their Federal tax liability wiped out; although 
families with incomes of $100,000 will only have their Federal taxes 
reduced by 5 percent.
  President Clinton penalized seniors with a retirement income above 
$34,000 by imposing higher taxes on them in his 1993 tax bill. The 
Republican Contract with American legislation provides tax relief to 
senior citizens by phasing out the President's 1993 Social Security 
benefits tax. We also help seniors who continue to work after turning 
65 by raising the earnings limit. If you continue to work and earn more 
than $11,280 after turning 65, you currently are hit with a tax on your 
Social Security benefits. I think seniors who desire to work should be 
encouraged to work, not punished with lost benefits. Our revenue 
proposal raised this earnings limit from $11,280 to $30,000. Is a 
senior earning $30,000 rich? I do not think so.

  Mr. Chairman, what the naysayers do not want to admit is that the 
Republican proposal to save Medicare is a viable plan not only for 
those who currently depend on its services but also for the generations 
to follow.
  Mr. Chairman, 30 years ago as the legislative assistant to Senator 
Thomas H. Kuchel, the Republican Whip/deputy leader of the Senate, I 
was part of the working group that met with key Members of the Johnson 
administration to put together what became known as Medicare. I have 
been a strong supporter of Medicare over the three decades since that 
time.
  Today, we are preserving, strengthening, and saving Medicare from 
bankruptcy. We have provided much improved choices for all senior 
citizens. The result is a much improved Medicare which will meet the 
needs of the current and future generations of older Americans.
  Vote for the Medicare Preservation Act of 1995. History will prove we 
did the right thing.
  Mr. FAZIO of California. Mr. Chairman, we are not talking today about 
Medicare preservation--we are talking about Medicare decimation. The 
Republican Medicare proposal flunks the test by which we judge sensible 
health policy. On all counts, it fails to measure up to the standards 
that the American people demand and deserve. It reflects not the 
informed consensus of the millions of seniors who depend on Medicare, 
but the arbitrary will of a handful of Republican leaders.
  Health policy experts agree that this plan will actually end up 
hurting seniors, not helping them. At the expense of Medicare 
beneficiaries, primarily seniors on fixed incomes, this Medicare plan 
lines the pockets of special interests. And the scope of the plan--far 
exceeding what is necessary to shore-up the Medicare trust fund well 
into the next century--is a dead-giveaway that the cuts are, in fact, 
simply a vehicle to finance tax cuts for people who don't need them.
  This so-called Medicare Preservation Act isn't about making Medicare 
more efficient. It's not about working with seniors and health policy 
experts to craft sensible reforms that guarantee our seniors the safety 
and security they deserve.
  This plan is about one thing. It is about squeezing the people in the 
middle, and the people who have worked hard and paid into Medicare all 
their lives, in order to give the people at the top a $19,000 tax 
break.
  The New York Times, in a recent article, explained exactly how the 
GOP decided to cut $270 billion out of Medicare. It's not pretty. In 
fact, it's more bad math and good government. Essentially, they set 
themselves a 7 year timeline for reaching a balanced budget. An 
admirable goal. But, then they insisted on a $245 billion tax cut. What 
Newt Gingrich called the crown jewel of the Republican agenda, turns 
out to be a combination of tax credits and tax cuts that help the 
richest 1 percent. Then, they turned their sights on discretionary 
spending, squeezing as much as they could out of programs that help 
kids, families, and the underprivileged.
  Left with a $270 billion shortfall, they devised a last-minute plan 
to squeeze exactly that amount out of Medicare.
  Coincidence, conspiracy, or incompetence? Regardless, the true losers 
are the 37 million seniors who depend on Medicare--the real crown jewel 
of our 30 year commitment to quality health care.
  Just over 3 weeks ago, Democrats here in Congress decided we'd had 
enough Enough bad math, enough bad policy, enough disregard, on the 
GOP's part, for open debate and free discussion.

  We staged our own series of hearings to evaluate the elements of the 
Republican proposal. We invited health care providers, Medicare 
beneficiaries, and health policy experts to present their views in the 
court of public opinion, right here in the shadow of the Capitol. In 
some ways, I regret that we had to step outside the convention and 
custom of the House, and away from a committee system that I respect, 
to conduct these hearings.
  But, as I listened to these witnesses, I felt, at last, that we had 
begun the real public dialog. In some cases, we heard the views of 
people who had been shut out of the official debate--shut out of the 
single day of Republican-led hearings in the Ways and Means Committee.
  I have also been listening to seniors in my district, hearing about 
how this Medicare decimation proposal would be devastating to them. It 
is estimated that this plan will cost seniors $400 a year more in 
premiums costs. This may not sound like much to the people who are 
benefiting from the tax breaks in the overall budget package. But keep 
in mind that more than half our seniors have no pension income other 
than a Social Security check and half of these seniors get less than 
$7,000 a year.
  These are not just faceless statistics. Listen to the words of Mary 
Hopkins, a Medicare recipient who lives in my district in Carmichael, 
CA.

       My husband's employer went bankrupt, wiping out all his 
     benefits. He now works part time at McDonald's to make ends 
     meet.
       I suffer from arthritis, asthma, and a heart condition, so 
     I am taking a lot of medication and see my doctor at least 
     every 3 months.
       I am very concerned about how I would pay for any increase 
     in my copayments for Medicare service. There is no room in 
     our budget for any further medical expenses, so we would have 
     to go on welfare. Where are the savings there?

  While I believe this plan to cut Medicare will be bad for hundreds of 
thousands of people like Mary Hopkins, I know it will be even worse for 
rural residents. My district in northern California encompasses many 
rural areas and small towns. The fragile economies of rural areas often 
mean many residents have little or no insurance, making it difficult 
for these communities to attract and keep doctors and maintain local 
hospitals.
  There is no question that there is an excess of hospital beds in some 
communities and that some hospitals could be closed. The problem with 
this plan is that, as a result of these drastic cuts, the wrong 
hospitals will end up closing. Hospitals in many of the smaller 
communities in my district are in precarious financial situations, and 
if they close, there may not be another facility for 75 miles.
  When I visited with the head of one of these hospitals in my district 
his message was clear. Ed Bland of Colusa Hospital said simply, ``When 
you put everyone on a starvation diet, the small and the weak die 
first.''
  This Medicare plan, combined with the unprecedented Medicaid cuts 
that are also proposed, will be a one-two punch to rural residents. Out 
of the patients the hospitals in my area serve, approximately 43 
percent receive Medicare reimbursed service and 17 percent Medicaid 
reimbursed service. On the average, this means a full 60 percent of the 
care these hospitals provide is federally financed care.
  If these Medicare reductions go into effect, hospitals in my district 
alone would have $175 million taken out of their budgets over the next 
7 years. There is no way you could take that much out of our hospital 
budgets without harming the quality of patient care these facilities 
could offer.
  What we have before us is a Medicare decimation act--put Medicare on 
a starvation diet, raise premiums for seniors, drive up their out-of-
pocket costs, bankrupt rural hospitals. All of this to give the 
wealthiest in this country a tax break.
  The alternative to today's Medicare decimation act is a sensible, 
equitable reform plan that does not jeopardize the health and security 
of millions of seniors and their families.
  The Democratic alternative has no premium increases for Medicare 
beneficiaries, expands choices of providers and plans, adds new 
preventive benefits, and implements tougher fraud and abuse standards. 
It reduces Medicare spending by two-thirds less than the Republican 
plan, only $90 billion, but extends the solvency of the trust fund to 
the same year as the Republican plan--2006.
  Let me reinforce this point--the Democratic alternative would 
preserve the Medicare trust fund for until 2006. This is the same exact 
time frame as the Republican's proposal to save Medicare.
  Mr. Chairman, I will not support a plan which claims to save Medicare 
by taking $270 billion out of the program in order to fund $245 billion 
in tax breaks for the wealthy. I urge my colleagues to join me in 
rejecting this Medicare decimation act.
  Mr. MURTHA. Mr. Chairman, we simply cannot solve Medicare in a 
partisan manner, and that's why this is the wrong bill, at the wrong 
time, for the wrong reasons. It's the wrong bill because it increases 
premiums, reduces coverage and reduces choices for older Americans 
while closing rural hospitals--as many as half the hospitals in our 
area would close, according to the Pennsylvania Hospital Association. 
It's the wrong time because we're not in a crisis situation that 
demands the drastic steps contained in this legislation--we have time 
to study the alternatives and develop a bipartisan consensus. And it's 
the wrong reasons because the savings won't go to the Medicare trust 
fund, but instead would go toward a tax cut slanted toward the wealthy. 


[[Page H 10369]]
Let's separate Medicare from the budget-tax cut issue, and work for 
legislation which guarantees that older Americans will continue to have 
access to affordable, quality health care of their choice.
  For the last 30 years, Medicare has worked very well--it's enabled 
senior citizens to get the health care they need without facing 
financial disaster. The backers of this legislation claim we're in a 
crisis situation which demands the drastic steps contained in this 
legislation, but that's simply not true.
  This bill does everything senior citizens don't want--it makes health 
care more expensive, it forces them to go to doctors they don't want, 
and if they need to go to a hospital, it may risk their lives by 
forcing them to travel farther, because according to the Pennsylvania 
Hospital Association, half the hospitals in western Pennsylvania may 
close if this bill is signed into law. And the legislation doesn't do 
what everyone, including seniors, feels is necessary--to guarantee the 
stability of Medicare for more than 10 years.
  The supporters of this legislation should stop worrying so much about 
reaching a certain number for savings and start paying attention to the 
needs of senior citizens. We should take our time and come up with a 
bipartisan solution which starts with addressing the waste, fraud, and 
high administrative costs in the Medicare system. The savings we could 
get from those areas are enough to stabilize Medicare and avoid the 
premium increases and limits on care which are going to penalize older 
Americans.
  Medicare is too important to too many people to be lost in political 
rhetoric. Seniors should feel confident they're receiving the best 
possible care at a cost they can afford. So let's not throw 30 years of 
success away in a panic--let's protect Medicare, and not make it a 
program where only the wealthy can get the best care.
  Ms. WOOLSEY. Mr. Chairman, now is the time to stand up for seniors by 
voting down this plan to raid Medicare to provide tax breaks for 
wealthy special interests. Instead of continued partisan bickering, we 
need a bipartisan effort to save Medicare by eliminating the waste and 
fraud that cost billions each year.
  I come to this floor today as the Representative for Sonoma and Marin 
Counties in California. As I always say to my colleagues, I am so 
fortunate to represent such a concerned and caring constituency.
  For the last several months, I have been speaking to the people in my 
Congressional District. I have been speaking with senior citizens, with 
hospital administrators, with physicians, and with working families. 
Seniors are scared to death because they will have to pay more for less 
at a time when so many are struggling to get by. And families are 
scared to death because they do not understand how they will support 
aging parents and send their kids to college at the same time. The 
people of Sonoma and Marin Counties have spoken loud and clear: they do 
not support $270 billion in Medicare cuts in order to pay for $245 
billion in tax breaks for wealthy special interests.
  The new majority is making the argument that these massive cuts in 
Medicare are needed to save the system. I agree that Medicare and 
Medicaid can be improved, and that Congress should vigorously support 
efforts to make this system better. But I disagree with Speaker 
Gingrich that the way to keep Medicare solvent is to operate on it with 
an axe, instead of a scalpel.
  Speaker Gingrich would like to convince the American public that 
Medicare is in a sudden crisis. However, concerns about the Medicare 
Trust Fund are not new. The Medicare Trustees have on eight previous 
occasions warned that the Trust Fund would be insolvent within 7 years. 
Each time, Congress responded immediately in a bipartisan way to make 
the changes necessary to keep Medicare solvent. However, the cuts 
proposed by Speaker Gingrich go far beyond what is needed to protect 
the Medicare Trust Fund. What is more, since the proposed premium 
increases do not even contribute to the Medicare Trust Fund, it is 
clear that the new majority is increasing premiums only to pay for a 
special interest tax giveaway, not to strengthen Medicare.
  In other words, the Gingrich Medicare plan is a major cut. According 
to the non-partisan Congressional Budget Office, the rate of growth in 
health care spending per person in the private sector over the next 7 
years will be 7.9 percent. The Gingrich Medicare plan, however, brings 
the rate of growth of Medicare spending down to 4.9 percent per 
beneficiary. This means that the Gingrich plan will not keep up with 
the pace of inflation and the growing population of older and disabled 
Americans. As a result, there will be major increases in costs: by the 
year 2002, seniors will spend $400 more in Medicare premiums. Moreover, 
seniors may lose their choice of doctor because they will be forced 
into a Government-mandated managed care plan. In addition, hospitals 
and emergency rooms will be forced to reduce care and many will close. 
Some health care experts predict that up to 25 percent of all hospitals 
could close if Speaker Gingrich's assault on Medicare becomes law.
  But I do support making Medicare stronger. That is why I voted for 
the Democratic substitute to reform Medicare, and am a cosponsor of 
H.R. 2476, the Common Sense Medicare Reform Act.
  The Democratic substitute saves $90 billion over the next 7 years. It 
reduces seniors' premiums, while providing coverage for new benefits 
such as more frequent mammograms, colorectal screenings, Pap smears and 
diabetes screening. The Democratic substitute increases seniors' choice 
of health care coverage, but does not force them to give up their own 
doctors. Under the Democratic substitute, the Medicare program will be 
strong and solvent, and seniors will continue to receive high quality 
care from doctors they know and trust.
  I also support the approach taken in the Common Sense Medicare Reform 
Act, which strengthens Medicare by eliminating real waste, fraud, and 
abuse in the Medicare system. It will also save the amount needed to 
keep Medicare solvent for years to come. This bill will give law 
enforcement more tools to fight Medicare fraud, a crime which harms 
Medicare and the American taxpayer. And this bill, unlike the new 
majority's plan, will require that any funds recovered through cuts or 
savings from waste, fraud, and abuse will be automatically returned to 
the Medicare Trust Fund--not used to pay for a special interest tax 
giveaway.
  In addition, I would also like to raise my objection to the way that 
Speaker Gingrich has conducted the debate on his massive changes to 
Medicare. As someone who believes in the democratic process, I am 
outraged that the new majority only allowed for one day of public 
hearings on this assault on Medicare. As a former Petaluma City Council 
member, I remember that we talked longer and harder about sidewalk 
repairs than the House of Representatives has about an issue which 
affects the health of millions of Americans. This is unfair and 
undemocratic.
  So, I am here to speak out for the people who have been shut out of 
the democratic process by this new majority. These people should not be 
silenced, and they should not see their concerns ignored by a Congress 
bent on pursuing a partisan agenda.
  We would all do better if we listened carefully to those we 
represent. As one man in my district said, ``I worked hard all my life, 
raised ten kids and fought in two wars to live my life in peace. Living 
on only $801 a month, I need all the help I can get.''
  To my colleagues on both sides of the aisle, I would like you to 
remember these words. Think about this man, and the millions of seniors 
just like him all over America who do not deserve second rate medical 
care and who do not deserve to have their pockets picked for a special 
interest tax giveaway. I call on my colleagues to reject this bill, 
take the tax giveaways off the table, and get on with the bipartisan 
job of restoring Medicare's solvency by eliminating rampant waste and 
fraud. Stand up for seniors by voting down this bill.
  Mr. BORSKI. Mr. Chairman, I rise today to denounce the majority's 
plan to cut $270 billion from Medicare and $182 billion from Medicaid 
over the next 7 years in order to pay for $245 billion in tax breaks 
for the wealthy. These excessive cuts are unnecessary and harmful to 
America's senior citizens, working families, and the health care 
industry.
  It is my honor to represent the Third congressional district in 
Pennsylvania, the twentieth oldest congressional district in the 
country. Pennsylvania is the second oldest State in the Nation where 
one out of six residents is a Medicare recipient and one out of seven 
is a Medicaid recipient. In the Third Congressional District, 
approximately 100,000 residents rely on Medicare. Approximately 400,000 
people in Philadelphia rely on Medicaid.
  Not only will the senior citizens in my district suffer, but all 
citizens, our health care system, and the entire Philadelphia economy 
will be endangered by these insidious cuts. Let me give you an example. 
At the Episcopal Hospital in Philadelphia, 88 percent of the people who 
enter the hospital are Medicare or Medicaid beneficiaries. If these 
cuts are approved, I don't know how the Episcopal Hospital will 
survive. Several other hospitals in my district, in other parts of 
Philadelphia, and across the State of Pennsylvania, are on the critical 
list as well. Health care workers--as many as 25,000 in Philadelphia 
and up to 6,000 in the Third District alone, will be at risk of losing 
their jobs. Communities will lose their local hospitals when these 
devastating cuts force them to close their doors. In addition, working 
families will pay more for their own health care as a result of the 
cost shifting which will follow these cuts.
  But none of this deep, human pain seems to matter to this majority. 
In Washington, these days, a chill wind blows over our Nation's senior 
citizens. A lack of compassion fills the air.
  The senior citizens in the Third District, and across the Nation, 
will pay more for their 

[[Page H 10370]]
health care, have less choice regarding their doctor, and receive a 
lower quality of care. Balance billing protection, which prohibits 
health care providers from charging seniors more than 15 percent above 
the Medicare reimbursement rate, will be eliminated. Seniors who enroll 
in HMO's because it has become financially impossible to remain with 
their family doctor will have no protection against additional charges 
once they are locked into an HMO. That's the bad news. There is no good 
news in this Republican plan.
  Now, let me tell you the worst news. Everyone knows that Medicare is 
for our senior citizens and Medicaid is for those who are less 
fortunate. But, what people across America don't realize is that 
Medicaid also pays for the long term care costs of senior citizens. In 
Pennsylvania, 65 percent of all long term care costs are paid for by 
Medicaid. After our seniors have exhausted the savings they have worked 
so hard to accumulate over their lifetime, they go on Medicaid to 
receive the nursing home care they so desperately need. With the costs 
for a modest nursing home averaging about $4,000 a month, it is easy to 
understand how typical Philadelphia seniors could easily drain their 
savings in a short time. After these savings are depleted, Medicaid 
provides seniors with a safety net. As a result of these cuts, this 
safety net is now gone. The guarantee that Medicaid will cover Medicare 
costs for poor senior citizens is now gone. Some laws that enable the 
Government to stop fraud, waste, and abuse are now gone.
  These exorbitant and heartless cuts are not designed to fix or save 
Medicare. They are being enacted in order to give $245 billion in tax 
breaks to the country's wealthiest individuals. Despite all the 
rhetoric from the majority, one fact is clear: The savings from the 
Medicare cuts will not go back into the Medicare trust fund. They will 
pay for tax breaks for the wealthy. Our senior citizens on fixed 
incomes cannot afford these increased costs. The Medicare system can 
not afford these excessive cuts.
  I have traveled my district and asked hundreds and hundreds of my 
constituents if they support $270 billion in Medicare cuts and $182 
billion in Medicaid cuts in order to provide $245 billion in tax breaks 
for the wealthiest in our country. The answer is always the same--no.
  I will vote against this mean-spirited legislation and I urge my 
colleagues to do the same.
  Ms. HARMAN. Mr. Chairman, on behalf of hundreds of seniors in the 
36th District of California with whom I met over the course of this 
debate, I rise in strong opposition to this bill that would decimate 
Medicare, our most successful Federal program.
  For more than 30 years, Medicare has guaranteed health care coverage 
for seniors--99 percent of whom are now covered--and it has 
dramatically reduced poverty among seniors, from 33 percent in 1965 
before Medicare's creation to 13 percent today.
  I have carefully read the Medicare trustees report. I agree that 
Medicare must be reformed. We must extend the solvency of the part A 
trust fund and take steps to control Medicare's high rate of growth--10 
percent a year--to save Medicare for today's seniors and for 
generations to come.
  Unfortunately, Washington is at it again playing politics. Members 
from both sides of the aisle have been more concerned with pointing 
fingers at the other rather than engaging in substantive discussion of 
real solutions to address the rapidly rising costs of Medicare.
  I would like to share with my colleagues what I have learned from my 
constituents, and tell you some of their personal stories. I have been 
greatly impressed by their understanding of the changes being proposed 
and their ideas about how to reform Medicare.
  The plan before us is not Medicare reform--it is Medicare 
destruction. The bill cuts Medicare by $270 billion over 7 years even 
though the Medicare trustees have stated that cuts of about $90 billion 
will extend the life of the part A trust fund to 2006.
  My constituents have asked: ``why does the Gingrich plan cut Medicare 
by $180 billion more than what the trustees say is necessary?'' To 
them, the reason is clear: To pay for an ill-timed tax cut. They want 
the focus on saving Medicare and balancing the budget--not on cutting 
taxes. ``We can't afford a tax cut now,'' wrote Glenda Masek. ``And I'm 
a registered Republican,'' she added.
  Many seniors recognize the financial problems facing Medicare and 
express a fervent desire for reforms. Some seniors told me they are 
willing to pay slightly higher premiums and deductibles, as long as the 
increases are fair. ``Some of us can afford to pay a little more,'' 
Irwin Gerst acknowledges. ``But many seniors are on fixed incomes and 
so any increases should be minimal and gradual and not used to offset 
tax cuts.''

  Like these individuals, I cannot support a proposal that will take 
money out of the pockets of Medicare beneficiaries who have an average 
income of $13,000 a year. Under the bill before us beneficiaries' 
monthly premiums will rise to $87 by 2002, as compared to $61 under 
current law, and $1,700 less will be spent per beneficiary. These 
figures translate into higher costs for less care.
  Not all my constituents can afford the increases:
  One San Pedro senior, Katie Brazerich, pleads: ``Please don't cut my 
Medicare benefits and raise my premiums. Every single dollar is needed 
to help with my living expenses. There isn't any extra left for me to 
cut.''
  ``Don't bankrupt us just because we are living longer,'' comments her 
neighbor.
  ``These cuts are cruel,'' Lillian Watson observes.
  Joyce Short, a 75-year-old Westchester resident told me, ``I paid 
into it [Medicare] all my life, and now I need it.''
  Another, 71-year-old Mary Ford, fears she will be put out in the 
street. ``I have been diagnosed with Lupus and probably will be 
completely bankrupt if these cutbacks go through. We are the same 
Americans who went through the Depression.''
  I support expanding choices for Medicare beneficiaries. While the 
bill purports to do this, a choice is not a choice when it becomes too 
expensive and when doctors move elsewhere. What supporters of the so-
called choices in this bill do not mention is that under their plan, 
beneficiaries will no longer have extra billing protection. This means 
health care providers can charge seniors above what Medicare reimburses 
for the same services they receive without additional charge under 
Medicare today. Fear of extra billing will drive seniors out of fee-
for-service arrangements.
  ``I don't want to be forced into an HMO,'' Virginia Balesteri told 
me. ``And I don't want my children to have to take care of us.''
  These Americans want the right to choose their doctors. If premiums 
are such that they cannot afford fee-for-service plans, that choice is 
effectively taken away.
  I have also heard countless stories of waste, fraud, and abuse within 
the Medicare system. Seniors have told me about receiving bills for 
services they did not receive. When they questioned the bills, they 
were told by Medicare administrators that it was easier and cheaper to 
just pay. ``If I ran my business like those Medicare folks,'' one told 
me, ``I'd be going broke, too.''
  To counter fraud, one group of seniors in my district has suggested 
an incentive program for reporting abuses. Others suggested making 
Medicare billing easier for consumers to understand. They explained 
that people need to know exactly what the doctors and hospital are 
charging to make sure that those tests and services were received--and 
necessary. I agree that legislative change is necessary to crack down 
on waste, fraud, and abuse, and a bipartisan approach is essential.
  Health care reform is essential. But the reform must help seniors, 
one of our most vulnerable populations. I strongly believe that we can 
make reforms to Medicare that attack fraud and abuse and which lower 
costs.
  I urge my colleagues to vote against the Medicare Preservation Act, 
an oxymoron if there ever was one.
  Mr. BARCIA. Mr. Chairman, when people reach the age of senior 
citizens, their biggest concern is their ability to maintain their 
quality of life. They have worked all their lives. They have 
sacrificed. Many have served in our Nation's Armed Forces. They are 
owed a great debt for their years of contribution.
  I agree that we need to make responsible reductions in the cost of 
the Medicare Program. But we also need to make sure that we maintain a 
viable health care system that provides hospitals, doctors, nurses, and 
the other support mechanisms that people need when their health demands 
it. The bill before today just does not do this.
  The ability to have access to health care is vital for the elderly. 
Last year, many of us heard from our senior citizens who were concerned 
that proposed changes to the health care system would leave them 
without access to their own doctor, would drive up their premiums, 
would force them into managed care systems when they did not want them. 
In my own district, in response to a questionnaire that I sent out last 
year, 43 percent said the choice of their own doctor was the most 
important element of health care. This year, nearly 60 percent of my 
constituents said that they did not want to see HMO's instead of being 
able to choose any doctor. And by a 2-to-1 margin they said that we 
should maintain spending on Medicare and Medicaid, not cut it.
  The Michigan Health and Hospital Association has written to me 
claiming that these anticipated cuts in Medicare and Medicaid will 
probably result in many rural hospitals closing. I have several rural 
counties. How can I go back to my constituents and say I supported a 
proposal that meant that their local hospital was likely to close? 
Where would these people go for treatment, especially in an emergency, 
when the hospital closed? How many doctors would locate in rural areas 
where it would be difficult to get to hospitals where they could 
adequately treat their patients?

[[Page H 10371]]

  Some will say that doctors and patients can go to hospitals in the 
nearest city. Bay Medical Center in Bay City, one place that would be a 
likely alternative, tells me that the cuts in Medicare proposed by this 
bill would mean a loss of $70 million in revenue between now and 2002. 
That is before we add in the impact of the Medicaid proposals we will 
consider next week. Bay Medical Center could be in serious jeopardy if 
these proposals pass. if this hospital were to close, where would my 
constituents who need assistance go?
  Yesterday we spent 4 hours debating shrimp and lobsters. Today we get 
only 3 hours to debate the future of a health care system for millions 
of senior citizens and for millions more who will need to make use of 
that system in the future. We were able to debate thirteen amendments 
for shrimp and lobsters. Today senior citizens will be restricted to 
only one. Earlier this year I celebrated passage of new House rules 
requiring a three-fifths vote to impose any tax increase. If this bill 
does not raise fees--taxes--for our seniors, why must we waive this 
provision? We were sent here to do the people's business, not to give 
greater consideration to shrimp and lobsters, nor to go back on the 
reforms we made at the first available opportunity.

  Mr. Chairman, I cannot support this bill. It jeopardizes health care 
for our seniors. It does not give them the kind of system they want and 
deserve. It is being forced through without adequate review, and it 
breaks our word. Our seniors deserve better. We can and should do 
better.
  Mr. JOHNSON of South Dakota. Mr. Chairman, I rise in strong 
opposition to H.R. 2425, legislation designed to reduce Medicare 
funding by $270 billion over the next 7 years. While I support 
constructive efforts to stabilize the Medicare part A trust fund and 
other efforts to promote administrative efficiencies and 
simplification, the plain fact is that this bill does little to 
strengthen Medicare and is primarily designed to free up $270 billion 
in order to finance the cost of the $245 billion tax cut and $60 
billion defense pork provisions contained in Speaker Gingrich's budget 
reconciliation bill.
  Seniors in South Dakota have always been willing to make some 
adjustments to assist with Federal budget deficit reduction and they 
realize the need for some health care reforms that will slow down the 
growth of health care inflation--but they are also wise and experienced 
enough to know when someone is trying to sell them the Brooklyn Bridge. 
I have been holding town meetings on the Medicare and Medicaid issue 
all around South Dakota, and the bipartisan opposition to H.R. 2425 is 
overwhelming. Seniors want Medicare reforms, but they absolutely do not 
want wealthy special interests laughing at them all the way to the bank 
at their expense.
  Mr. Chairman, I support alternative legislation which is designed to 
stabilize the Medicare part A trust fund and does so in a manner which 
does not raise premiums or reduce benefits to seniors. I cannot and I 
will not, however, support this misdirected, ``Reverse Robin Hood'' 
attack on Medicare and Medicaid.
  Mr. FAWELL. Mr. Chairman, I rise in support of H.R. 2425, the 
Medicare Preservation Act of 1995. In April, the Medicare Board of 
Trustees concluded in their annual report that ``* * * prompt, 
effective and decisive action is necessary'' to avert the projected 
bankruptcy of Medicare by the year 2002. I am pleased that today House 
Republicans are fulfilling their commitment to saving Medicare by 
adopting this legislation.
  The Medicare Preservation Act represents a major overhaul of 
Medicare. The proposal is aimed at preserving, protecting, and 
strengthening Medicare, while empowering seniors to choose the health 
care plan that best suits their needs.
  The principle behind this legislation is choice. The Medicare 
Preservation Act contains an important and innovative feature that will 
give seniors more choice as well as introduce a truly competitive 
framework, called Medicare-plus. Medicare-plus will give beneficiaries 
new options to select from a broader array of privately offered plans, 
with the Government paying the premiums. These plans could include 
private traditional insurance, HMO's, new physician-hospital network--
provider-sponsored organizations--coordinated care, Medisave plans, and 
limited enrollment plans sponsored by unions or trade associations. 
Under Medicare-plus, standard Medicare benefits will be retained so 
that future beneficiaries will be assured that their benefits will not 
be reduced. Moreover, if a health plan can provide Medicare benefits at 
less than the Government contribution, the plan can either provide 
additional benefits or provide a rebate to beneficiaries.
  I want to stress the significance of the provider-sponsored 
organization [PSO] portion of the bill. This area gives recognition to 
the important competitive aspects of having PSO's as a choice option 
for Medicare recipients while also according these entities certain 
Federal protections. In my view, the ability of providers--doctors and 
hospitals--to offer health services directly to Medicare recipients 
adds an extremely important new aspect to the pulsating revolution 
already taking place in the private health care market. In fact, these 
providers are already offering health services to employees covered 
under the Employee Retirement Income Security Act [ERISA] covered plans 
sponsored by employers and unions. Under the PSO option, Medicare 
enrollees also will have the freedom to choose the doctors and 
hospitals they think will provide them the best care at the lowest 
cost. PSO's and similar entities, which continue to drive down the cost 
of private health care, will be an important element of the solution to 
containing Medicare health costs and preserving quality health care.
  The extension of choice of coverage to members of qualified 
associations and Taft-Hartley multiemployer plans is also another key 
element for expanding the choice of Medicare-plus coverage and allowing 
seniors to continue their care under organizations that they looked to 
while working. Moreover, I want to stress that the PSO, qualified 
association, and multiemployer plan options under the bill does not 
amend or modify the Federal preemption framework under ERISA.
  While providing choice in new options for beneficiaries, the bill 
simultaneously allows any Medicare beneficiary to remain in or return 
to the current fee-for-service system where they choose their own 
doctor or hospital. Other priorities of the Medicare Preservation Act 
include: combating Medicare fraud and abuse by rewarding seniors who 
discover and report fraud and abuse; increasing the punishment for 
those engaged in fraud; curtailing malpractice abuse; and, providing 
regulatory relief to improve efficiency and help stem the growth in 
health care costs.
  Mr. Chairman, I urge my colleagues to recognize the Medicare crisis, 
and to support the Medicare Preservation Act. Only by acting now, can 
we preserve, protect, and strengthen Medicare for generations to come.
  Mr. WELDON of Pennsylvania. Mr. Chairman, we have heard in this 
debate on the floor today and over the past few months an unrelenting 
barrage of denial, disinformation, distortion, and demagoguery from the 
Democratic Party on the subject of Medicare. That's why it is no wonder 
so many senior citizens have expressed concerns about this bill.
  Denial, because the nonpartisan Medicare Board of Trustees, which 
includes three members of President Clinton's own Cabinet, issued a 
report in April stating that the Hospital Insurance trust fund will be 
able to pay benefits for only about 7 more years. The trustees said 
that even under the best estimates, if nothing is done, the trust fund 
will be exhausted by 2002. Yet the Democrats deny there is a problem 
and say do nothing.
  Disinformation, because the Democrats speak falsely of massive cuts 
in Medicare, when it can plainly be demonstrated that Medicare spending 
goes up each year under the Medicare Preservation Act, that we will 
spend almost $2,000 more per Medicare beneficiary by 2002 under this 
plan, and that there are no cuts.
  Distortion, because the Democrats want you to believe that these 
supposed cuts, which don't exist, will pay for Republican tax cuts for 
the rich, another figment of the Democrats' imaginations. Yet this bill 
contains a lock-box provision that puts all savings back into Medicare. 
Furthermore, the Republican tax cuts for the middle class--including a 
$500 a year credit per child for working families--has already been 
paid for by other savings in the Republican budget. We did that months 
ago. The Democrats choose to ignore that inconvenient fact.
  Demagoguery, because Democrats have engaged in a conscious effort to 
frighten senior citizens, to scare them into thinking someone is trying 
to take away their benefits. It is absolutely outrageous. They are 
sending videos to senior centers claiming that this bill will ``destroy 
Medicare, not save it.'' This prompted the dean of the University of 
Pennsylvania's Annenberg School of Communications, Kathleen Hall 
Jamieson, quoted in the Philadelphia Inquirer, to state, ``It's 
inappropriate to target a vulnerable population with that kind of 
information.''
  It's far worse than inappropriate. It's offensive to suggest that 
Republicans don't care about seniors, that we want to harm seniors. My 
85-year-old mother relies on Medicare and Medicaid and Social Security 
and I resent having anyone on the other side suggest that I don't care 
about my mother. That my party doesn't care about seniors.
  Despite the distortions, despite the demagogues, despite the bitterly 
partisan rhetoric, it is Republicans who are facing up to the problem 
and taking action to save Medicare. The Medicare Preservation Act does 
just what its name says. It preserves Medicare for seniors. It saves 
Medicare for the next generations. It strengthens Medicare for all of 
us. This bill will attack waste, fraud, and abuse. It will give 

[[Page H 10372]]
seniors more health care choices. It does not raise copayments, 
deductibles, or premium rates. The Medicare Preservation Act ensures 
that Medicare will be there well into the future.
  Mr. Chairman, I urge all my colleagues to join in support of this 
bill. It is our responsibility to act. We have to step up to the plate. 
No one else can. We must have the courage to act. Let us do the right 
thing and save Medicare.
  Mrs. CHENOWETH. Mr. Chairman, I rise today to once again remind the 
American people of who has a plan to save Medicare and who doesn't.
  My constituents are understandably concerned over what might happen 
to Medicare. Instead of putting legislation where their mouths are, 
opponents of Republican Medicare reforms have done nothing but use 
inflamed rhetoric to frighten and confuse people. In fact, I've seen 
some newspapers describe it as ``MediScare.''
  I am happy to point out, however, that one of the newspapers in my 
district--the Idaho Statesman out of Boise--recently endorsed the 
Republican Medicare proposal. To quote the Statesman ``GOP-sponsored 
reforms in Congress make a modest beginning at getting Medicare costs 
under control * * * Without their passage, senior citizens won't have a 
viable health-care system.'' I am submitting the Stateman's editorial 
for the Record.
  The problem we are facing is this: If we don't act to strengthen 
Medicare, the benefits available now just won't be there in the future. 
We must not let politics as usual get in the way of protecting the 
security that all Americans should have when they retire. We need to 
keep our eyes on the facts.
  I know I couldn't bear to look at my grandchildren and explain to 
them we had the chance to fix the system in 1995 but didn't.
  Let's stop the bickering and pass Medicare reform now.

               [From the Idaho Statesman, Oct. 11, 1995]

                       Congress Can Trim Medicare

       Public health assistance for billionaires is hardly what 
     Americans had in mind for Medicare when it was created 30 
     years ago. But such unintended consequences are one of the 
     reasons the massive health insurance program is going broke.
       GOP-sponsored reforms in Congress make a modest beginning 
     at getting Medicare costs under control. Lawmakers can also 
     set income limits for recipients or have high-income 
     recipients chip in more for their coverage. They also need to 
     allow recipients to pick private plans as an alternative to 
     the traditional Medicare program.
       Such reforms are necessary because the current program 
     covers virtually every American, not just the needy. For 
     example, when Boise billionaire J.R. Simplot had hip-
     replacement surgery last spring, Medicare covered some of the 
     costs. That simply makes no sense to Simplot or anyone else.
       Congress also needs to get the paperwork under control. 
     Look at what Vice President Al Gore discovered about just one 
     rule of the Health Care Financing Administration, the agency 
     that directs Medicare and Medicaid.
       That one rule generated 11 million forms. Each hospital 
     spend about $22,500 a year filling out those forms--and 
     Medicare is governed by 3,200 pages of federal regulations.
       GOP Medicare reforms are scheduled for a vote next week in 
     the House. A similar bill is pending in the Senate. Without 
     their passage, senior citizens won't have a viable health-
     care system.

  Mrs. COLLINS of Illinois. Mr. Chairman, I rise in opposition to this 
rule and in opposition to the underlying bill, H.R. 2425.
  Democratic Members of Congress and seniors across this Nation 
continue to ask for free and open debate on the extreme and unnecessary 
Medicare cuts that are before this body today. They have yet to be 
heard, let alone answered.
  There were 10 hours of debate on the legislation that established the 
Medicare Program 30 years ago. Today we have half that time on a bill 
to dismantle it. There were 20 hours of debate earlier this year on 
legislation to send U.S. aid overseas. Today we have one-fourth of that 
time to consider ripping $270 billion in health care away from older 
Americans. Where is the logic?
  Last week during markup of H.R. 2425, 13 senior and elderly citizens 
were led out of the Commerce Committee and arrested just because the 
committee chairman and his GOP colleagues were unwilling to answer the 
most basic questions about the consequences of passing the Republican 
Medicare bill. The rule we have before us on this bill continues this 
gag order by denying Members on both sides of the aisle the opportunity 
to participate in a fair and democratic review of H.R. 2425 and to 
offer amendments to this drastic legislation.
  As members of the National Council of Senior Citizens testified 
before Democrats on the Government Reform and Oversight Committee 
yesterday, the flame of democracy continues to be smothered by the 
Gingrich Republicans.
  Yesterday I presented testimony on two amendments before the Rules 
Committee that I believe would improve certain deficiencies of H.R. 
2425. My amendments were not made in order. The Rules Committee didn't 
bother to listen to me, and therefore didn't bother to listen to my 
senior constituents and hundreds of thousands like them around this 
country.
  My amendments are designed to restore current protections for seniors 
who have diagnostic tests performed in a doctors' office and to ensure 
that our elderly continue to have access to durable medical equipment 
such as wheelchairs, electrical beds, walkers, and oxygen.
  My Clinical Laboratory Improvement Act [CLIA] amendment would 
reinstate quality assurance guarantees for patients who have testing 
done in physician office laboratories by striking the provision in the 
bill that eliminates the requirements of CLIA for labs in doctors' 
offices.
  It probably should not be surprising that the Republican Medicare 
proposal--which bends so close to special interests and tilts so far 
from the best interests of America's senior citizens--would eliminate 
requirements for quality and accuracy of laboratory tests. This like 
the Republicans' blatant and cruel elimination of national standards 
for nursing homes, is one more way of saying to Medicare beneficiaries: 
You're on your own--good luck.
  What is the rationale for exempting office labs? What is the 
rationale for exempting one specific test--pap smears--from such labs? 
If it is critically important for doctors' offices to meet quality 
standards for pap smears, why shouldn't those same quality standards be 
met when it comes to cholesterol tests, colon and prostate cancer 
screening, needle biopsies to detect precancerous conditions, and 
glucose monitoring?
  My second amendment would remove the 7-year freeze on payments for 
durable medical equipment [DME].
  H.R. 2425 will cause severe disruptions for seniors and the elderly 
who need their oxygen to breathe, electrical beds, wheelchairs and 
walkers to move about. Without these needed and essential items, 
seniors and the disabled could be forced into potentially life 
threatening situations.
  Unfortunately Mr. Chairman, the Republican leadership just doesn't 
care.
  I urge all my colleagues to vote ``no'' on this rule and ``no'' on 
the bill.
  Mr. KOLBE. Mr. Chairman, today, Congress has a historic opportunity 
to pass legislation that will allow recipients of Medicare--both 
present and future--the freedom to choose their doctors, their health 
plans, and the health care services they decide are appropriate for 
them. It is time we allow Medicare recipients access to the same 
choices in health care that the rest of us have. That is the heart and 
soul of this legislation.
  It's become abundantly clear in the last several months that Medicare 
faces a very real threat of bankruptcy. It is this looming bankruptcy 
of the trust fund that first alerted the country to the need for 
extensive changes if we were to save the Medicare system. What won't 
work is another Band-Aid. Yet, for decades that has been the Democrats' 
only answer to ensure solvency of the Medicare trust fund. The trustees 
themselves have told us it needs a systemic fix to be real. This year, 
once again, the Democrats have proposed the same quick fix solution and 
have failed to deal honestly with the underlying structural problems of 
the Medicare system. By simply reducing payments to hospitals and 
physicians, the Democrats Band-Aid staves off bankruptcy for another 2 
or 3 years. This is simply irresponsible; it's what we've done for too 
long on too many other issues. It's why Medicare faces such a bleak 
future today.
  H.R. 2425 doesn't wait for disaster to wash over us; it takes action 
now to assure the future security of Medicare for seniors. By providing 
fundamental changes to the structure of the program, the Medicare 
Preservation Act will keep Medicare solvent for at least 15 years, 
until the baby boomer generation begins retiring. We freely acknowledge 
that another deeper fix will be required then, but this legislation 
gives us time to see how well free market solutions can work to retain 
health care costs.
  The heart of this legislation is the expansion of Medicare 
beneficiaries choice of health care options. The private health care 
market has demonstrated that health care services can be provided in a 
cost-effective way while maintaining the patient's quality of care. 
Such care is found in alternative health care systems, such as managed 
care system, health maintenance organizations, preferred providers 
organizations and medical savings accounts. Currently, Medicare 
recipients have not had wide access to these options. With passing of 
H.R. 2425 Medicare recipients will not have to rely on a system that is 
a relic of 1965 medicine.
  It is unfortunate that my colleagues across the aisle, do not 
recognize the need for comprehensive reform. Their bill provides no 
security for seniors who rely on Medicare today, because it extends its 
life by only a year or two. It provides even less assurances for future 
seniors who are counting on Medicare to be there for their retirement.

[[Page H 10373]]

  Even if the Medicare trust fund were not facing bankruptcy, this 
legislation would make sense. It allows Medicare recipients access to 
the same range of choices in health care that other Americans have. 
Similar to the Federal Employees Health Benefit Plan, Medicare 
recipients would receive information each year about different health 
care providers and plans in their area. And like other Americans, they 
will be able to choose who provides their health care.
  Arizona has been on the forefront in developing a successful managed 
care market. Over a decade ago, the Arizona Medicaid program, AHCCCS, 
was established as a managed care system. Now, with an extensive 
network of HMO's seniors are enrolling in the same system in increasing 
numbers. They are, by and large, very satisfied with the health care 
services offered by the competing health plans and have found that some 
plans offer services outside the required Medicare services, such as 
eye glasses, lower or no copays for visits and lower prescription drug 
prices. They can compete on these added services because they hold 
costs down on basic services.
  Then there are medical saving accounts--an option not available now 
to any Medicare recipient. This option will allow seniors to buy a high 
deductible, catastrophic policy and pay for out of pocket expenses with 
the cash from their Medicare payment. If they use health care services 
prudently, they can even pocket the excess as income. It turns health 
care consumers into cost-conscious health care purchasers.
  Will these options--and there are others--save money and prevent 
Medicare from going bankrupt? Yes, because private health care is more 
efficient and consumer driven choices more cost effective than a 
government administered one-size-fits-all health care program. Medicare 
costs grew at about 10.5 percent last year. But, in the private sector, 
large employers actually saw their cost decrease by 1.1 percent. The 
marketplace can work in health care.
  The Medicare Preservation Act addresses another concern of seniors 
and taxpayers alike by putting in place a systematic program to combat 
fraud and abuse. As Medicare is designed right now, doctors are paid 
for procedures whether or not the patient needs it. That means the 
taxpayer gets ripped off, and the Medicare patient often doesn't get 
the proper care. By allowing providers and hospitals and insurers to 
compete for your business, the system will root our fraud and abuse, 
and will squeeze out waste. Furthermore, seniors who find fraud in 
their bills will be rewarded with a percentage of the money recovered.
  Mr. Chairman, this legislation provides our seniors with health care 
they can trust and believe in. It is not riddled with burdensome 
Federal mandates on providers. As a consequence, it allows physicians 
to do what they do best--provide top quality care for their patients. 
It is about time we allow seniors to have the same type of health care 
as the rest of us have. Let's pass this real Medicare reform.
  Mr. EDWARDS. I come to the well today because, like many Americans, I 
am concerned about fate of the Medicare Program.
  I cannot support Newt Gingrich's plan to cut $270 billion from 
Medicare while offering a hefty tax break to people making over 
$200,000. The Gingrich plan cuts Medicare too deeply and hurts senior 
citizens without really strengthening the program.
  I am not willing to sacrifice the quality of health care for senior 
citizens to pay for Newt Gingrich's $20,000 tax break for individuals 
making over $200,000 a year.
  Seniors will pay more and get less. The cost of health care will 
climb and Medicare benefits won't keep up. Seven years from now seniors 
citizens and health care providers will find themselves in a hole 
because of a tax cut for the wealthy.
  For senior citizens the plan means up to $1,200 in extra out-of-
pocket expenses, limits on their choice of doctors and decreases in 
future benefits.
  Central Texas rural hospital administrators have told me their 
hospitals could close as Medicare payments drop dramatically. Rural 
hospitals in central Texas have a high percentage of Medicare patients 
because of our large population of senior citizens. Some hospitals 
can't keep their doors open with the low level of reimbursement that 
the Gingrich plan offers.
  I oppose the Gingrich Medicare plan because no one really knows what 
is in it. The 968 page Medicare bill landed on my desk Wednesday night 
and was being revised today, the same day I am forced to vote on it. 
Central Texas senior citizens, medical professionals, and taxpayers 
have no idea what is in the bill.
  To railroad legislation through the House that directly affects 37 
million senior citizens and their families is absolutely unfair. To 
pass such legislation before my constituents and American citizens have 
a chance to review it and express their views is irresponsible.
  There is no question that we must reform Medicare to preserve it for 
future senior citizens. I'm willing to make the tough choices to cut 
spending, preserving the program, and balance the budget. However, 
Newt's Medicare plan simply does not pass the fairness test.
  Mr. ALLARD. Mr. Chairman, this year Medicare turned 30, and while it 
has served the country well, it is still running on a 1965 engine.
  In the last 30 years, medical procedures and technology have made 
tremendous advances. Medicare has not. It is out of touch with today's 
health care system. Medicare is like a 1965 car--it looks nice and 
elicits nostalgia, but it gets terrible gas mileage and you're never 
sure how long it will run. Without any reforms, Medicare can run cruise 
control only until the year 2002 before sputtering out of gas.
  Major reforms are needed if Medicare is going to last. First, we have 
to slow the rate of growth in Medicare spending from 10.5 to 6.5 
percent a year. Even with these changes, the average Medicare yearly 
benefits per person will increase from $4,800 this year to $6,700 by 
2002.
  The second step calls for major changes that gives senior Americans 
more flexibility and choices of medical plans to replace the outdated, 
bureaucratic one-size-fits-all plan designed by Congress 30 years ago.
  Medicare recipients should have the same opportunities as other 
Americans to select the health care options that are best for them. The 
Federal Government should stop interfering with the relationship 
between patients and their doctors.
  Unlike President Clinton's 1994 health care reform plan, the Medicare 
Preservation Act will not force anyone to leave the current system, nor 
will it force seniors into mandatory health alliances. Proposed reforms 
will offer Medicare beneficiaries more choices and better benefits than 
they enjoy now.
  Let me review carefully the proposed reforms. First, Medicare would 
continue to be available to any beneficiary, and seniors could keep 
their current coverage. There would be no change in copayments or 
deductibles. Premium rates for Medicare part B would remain at 31.5 
percent of total costs, which would mean an increase of only $4 a month 
above what is scheduled to occur under current law.
  The only exception would be for wealthy seniors: single seniors 
making $75,000 a year or senior couples making $125,000 a year would be 
asked to pay higher part B premiums.
  Average spending per beneficiary would increase by $1,900 over the 
next 7 years. If seniors don't like their current plan, or if they are 
unable to change plans, they would have options. Seniors who do not 
make a choice would be enrolled automatically in the traditional 
Medicare system.
  Second, the Medicare Preservation Act would allow beneficiaries to 
choose several private sector options in a new Medicare Plus plan. 
Every year, beneficiaries would receive information about the approved 
plans available in their area. All they would have to do is check off 
their plan of choice.
  Health plans under this MediChoice option would be selected by the 
seniors, not the Government. Seniors would choose a complete plan with 
its medical providers in return for more benefits. Unlike the 
traditional Medicare, they could choose less out-of-pocket expenses for 
coinsurance and deductibles, outpatient prescriptions drugs, eyeglasses 
and hearing aids.
  A third option would allow seniors to take complete control of their 
health care with MediSave, a kind of medical savings account. The 
Government would pay for a catastrophic illness policy. Seniors would 
draw the remaining balance of their benefits from an account to pay a 
significant portion of their deductible. The high deductible policy 
would have no copayments, limiting seniors' out-of-pocket costs.
  No one would be denied coverage due to illness or preexisting 
conditions. Every plan participating in Medicare must take all 
applicants and allow everyone to stay in a plan as long as they want. 
Seniors would not only keep their health care, but it would be better 
and stable for years.
  I've heard countless horror stories about waste, fraud, and abuse in 
the Medicare system. The act would remedy that in part by rewarding 
recipients who report misuse of traditional Medicare. It also would 
require private Medicare plans to set up a toll-free phoneline to 
receive billing complaints. And it would impose strict penalties on 
anyone who defrauds Medicare. Furthermore, it would compel facilities 
to give patients cost estimates to guard against later bill padding.
  Giving seniors more flexibility and control of their health care is 
critical. Our seniors' future should be controlled by them, not the 
Federal Government. Simply fretting about the system 

[[Page H 10374]]
will not help Medicare survive into the next century.
  When we are engaged in the predictable political wrangling over this 
important issue, we must never lose sight of our ultimate goal: A 
health care system that delivers the best possible service to our 
seniors.
  Mrs. FOWLER. Mr. Chairman, in emergency rooms, medical teams 
frequently have to use what are called heroic measures to resuscitate 
someone who's dying. This week in Congress, we are trying to rescue our 
desperately ill Medicare system, and H.R. 2425 is the heroic measure 
that will save the patient.
  H.R. 2425 clamps down on overpayments, fraud, and abuse. It provides 
new choices for seniors, like medical savings accounts, provider 
service networks, and private health insurance, but not force them into 
change.
  Some have said that Republicans are cutting Medicare to pay for a tax 
cut for the rich. Wrong on both counts. The tax cut was paid for long 
ago--and we are not cutting Medicare. Spending per beneficiary will 
continue to increase by nearly $2,000 per beneficiary over the next 7 
years.
  Scare tactics and lies will not save the Medicare system, but working 
together and passing the Medicare Preservation Act will keep Medicare 
strong and healthy for us and our children.
  Mr. GILMAN. Mr. Chairman, I rise today in support of H.R. 2425, the 
Medicare Preservation Act. I would like to commend the gentleman from 
Texas [Mr. Archer] for introducing this important measure.
  Over the past months, I have heard from many of my constituents 
concerned about cutting the Medicare program. Unfortunately, there have 
been a number of mediscare critics misrepresenting the current Medicare 
reform proposals.
  H.R. 2425 overhauls the current Medicare system and slows its growth 
to achieve a projected $270 billion in savings over 7 years. It limits 
increases in payments to hospitals--except for rural hospitals--to save 
over $130 billion to keep the Medicare part A hospital insurance [HI] 
trust fund solvent until fiscal year 2010. It freezes the part B 
premium at 31.4 percent of program costs and restructures payments to 
providers. Additionally, the bill contains a lock-box mechanism that 
places all savings from part B into a Medicare preservation trust fund 
and prohibits any transfers to pay for future tax cuts.
  In order to clear the record, please bear in mind that H.R. 2425 
contains a number of fundamental reforms to provide beneficiaries with 
a broader range of health care choices and strengthens the existing 
program.
  Specifically, the Medicare reform bill: First, establishes a Medicare 
plus program that allows beneficiaries to enroll in a range of private 
or employer-based health plans, including managed care plans, 
traditional fee-for-service plans, or high deductible insurance/medical 
savings accounts; second, allows health care providers to establish 
provider-sponsored organizations that can offer Medicare plus products; 
third, establishes a Commission to recommend long-term structural 
changes to preserve and protect Medicare when the baby boom generation 
begins retiring in 2010; fourth, strengthens Federal efforts to combat 
fraud and abuse in the Medicare program; fifth, eases or eliminates 
regulations banning physician self-referrals; sixth, reforms medical 
malpractice law; seventh, establishes a prospective payment system for 
home health services; eighth, creates a separate new trust fund, funded 
from both Medicare and the Federal Treasury, to finance teaching 
hospitals and graduate medical education programs; and ninth, creates a 
fail-save budget sequestration mechanism to reduce Medicare fee-for-
service spending if budget targets are not met.
  It is urgent for Congress to address the Medicare crisis. The 
administration's Medicare board of trustees reported on April 3 that 
under current policies, the hospital insurance trust fund--Medicare 
part A--which pays for inpatient hospital care and other related care 
for those age 65 and over as well as the long-term disabled, will be 
bankrupt by the year 2002, unless the system is reformed.
  It is, therefore, critically important that Congress and the 
President take immediate action to preserve, protect, and improve 
Medicare not only for those who rely on the program now, but for those 
of us who expect to begin receiving benefits in the years ahead. One 
thing is certain: doing nothing will guarantee the bankruptcy of the 
program and will lead to a major health care crisis for millions of 
senior citizens.
  Regrettably, practitioners are promoting mediscare rather than trying 
to work with the Congress to preserve, protect, and improve Medicare, 
using the Medicare reform debate as a tool to scare our seniors into 
believing that Medicare spending will be severely cut. On the contrary, 
payments made to help seniors will go up, not down. Medicare spending 
per beneficiary will increase by almost $2,000 from $4,800 to $6,700 
over the next 7 years.
  Although I support H.R. 2425, I do have reservations about the bill. 
I feel that this bill does not help my district hospitals from 
experiencing financial hardship. I hope that as we progress through our 
efforts to reform the ailing Medicare system, we will further look to 
find ways to help hospitals that have received unfair reimbursements 
under the current geographic reclassification regulations.
  Mr. Chairman, whenever Americans have faced a crisis, we have come 
together as a nation to solve our problems. The problems facing 
Medicare are serious, but can be resolved if we keep an open mind and 
are all willing to do our part to protect, preserve, and improve 
Medicare. We must do it for our current recipients and for future 
generations.
  Accordingly, I support H.R. 2425, and urge my colleagues to vote in 
favor of it.
  Mrs. MINK. Mr. Chairman, 30 years ago I had the great privilege of 
voting for the Medicare program. It has changed the character and 
quality of life for all seniors over 65 years of age, and has allowed 
their children to build their lives without the fear of costly 
illnesses of their parents which could consume all their earnings and 
savings. The Medicare program has liberated families and allowed the 
elderly and their children the freedom of knowing that the best health 
care would be made available. It placed the cost of hospital care in 
part A on all the working people and their employers by assessing a 
payroll tax of 1.45 percent on the worker and on the employer. This 
part A is what the trustees report indicated will be in financial 
trouble in the year 2002.
  Let us understand that the Medicare trustees have reported 
previously, eight times in fact, that part A hospital care was in 
fiscal difficulty. And each time the Congress responded and fixed the 
payment structure for the providers. This trustee's report is no 
different. The Congress should not rush to a ``fix'' which will 
jeopardize the health security that has been guaranteed these past 30 
years.
  I say ``rush to a fix'', because that is exactly what has been the 
process followed by the Republican majority. Without a single day of 
hearings by either Committees of jurisdiction this bill is being rammed 
through. No one has read this bill. They could not have, because it was 
only put into final form late last night.
  For all the declamation that the Republicans seek only to ``save'' 
Medicare from bankruptcy, why do we have to vote on a bill that has not 
been read, has not been published for the public to read and comment 
on, and has not been analyzed? The fine print has been written in 
secret with various special interest groups, like the American Medical 
Association.
  The process is outrageous. I could not possibly vote for a bill that 
has not seen the sunshine of public scrutiny.
  The Republican strategy is to seize upon the trustees report as 
though it justifies this radical reversal of guarantees for medical 
care without even one day of hearings. If the Republican majority truly 
believe the course of action they are pursuing is good for the system, 
then they should be willing to allow it to be reviewed, analyzed and 
objectively studied by all parties affected, and not only a select few.
  Second, one of the most serious concerns that I have about the 
estimated cuts of $270 billion is that it will penalize the poorest and 
the sickest of our seniors. These brutal cuts are not needed. They are 
proposed because the Republicans had to come up with ``savings'' in 
Federal spending to balance the budget which they are committed to do 
by the year 2002.
  The reason they had to come up with this large cut in spending in 
Medicare is because the deficit is $245 billion larger than when you 
started. The increase in the deficit by $245 billion is due to your tax 
cuts by this amount. If you cut taxes by $245 billion, obviously you 
have that much less revenues, that much more deficit, and that much 
more red ink.
  In order to cover this loss of revenue the Republican majority had to 
find programs that they could cut in order to have a balanced budget by 
the year 2002. They cut here, and they cut there, but nowhere were 
there funds to cover this enormous tax revenue giveaway. And so their 
budget ax turned to Medicare. It was not to save the solvency of 
Medicare. It was to meet the goal of balancing the budget by the year 
2002. Let no one fool you into thinking that this cut of $270 billion 
in Medicare is needed to ``save'' Medicare from bankruptcy. This 
Medicare cut is to balance the budget deficit because of tax giveaways 
of $245 billion, more than half of which go to persons who have taxable 
incomes in excess of $100,000.
  If the Republican tax plan did not have these $245 billion of tax 
cuts, the budget would have a $245 billion surplus. If the budget had a 
$245 billion surplus there would not be any need to cut Medicare.
  The connection between the tax cut for the very wealthy people and 
the cuts in Medicare funding are directly related. Without the former, 
there would not need to be the latter.

  Third, last year when we were debating the Universal Health Care plan 
for all Americans, 

[[Page H 10375]]
we all knew that with rising health care costs it was imperative that 
we act to rein in these costs. This was the central motivation for the 
President's initiative. We held months of hearings in three committees 
on these proposals. It was fully debated. It failed to pass. No one can 
say that Democrats were blind to the need for reform, the need for 
change, and the need to cut costs of medical care. We are recorded in 
favor of health care reform. But not a reform bill that was written in 
the dark, in secret, without any of us really knowing what the impact 
will be on our elderly, on our existing health care providers, and on 
the quality of health care.
  Fourth, the real cost savings in Medicare is in routing out fraud and 
abuse. This is the place for the Federal Government to move in and 
crack down on the abuse. It has been noted that we could save $80 
billion over a 7-year period if we installed tougher rules and 
regulations to rout out fraud and abuse. Instead we are now advised by 
the Justice Department that indeed the Republican bill will make it 
easier to commit fraud and get away with it. How do we know? No one saw 
the bill to read it until last night. Most of us only saw the bill this 
morning.
  Why are the majority Members of this House afraid to have their ideas 
aired in the open and subject to public scrutiny?
  Fifth, I am very concerned that the rural hospitals and clinics in my 
district will be forced to close. Why can't we have full hearings 
before this catastrophe occurs? I represent rural communities for whom 
life and death depends on the ability of these health facilities to 
survive.
  Sixth, in 1993 the Congress passed a law that said that the cost of 
Medicare part B, doctors and laboratory services, would be paid by 
enrollees at the rate of 25 percent of the costs of the program. The 
Federal Government paid 75 percent of the cost of part B. The 
Republican bill before us today raises this premium charge paid by the 
enrollee to 31.5 percent of the total cost. Without cost controls, this 
means that the amount of money that the enrollee has to pay will rise 
astronomically. If the cost of doctor's care rises, the 31.5 percent 
that has to be paid by the enrollee must also rise. The failure of the 
Republican plan is that it does nothing to curb the rising costs of 
health care.
  Seventh, the Republicans like to argue that they are not cutting 
funding only reducing the percentage of increase. In point of fact the 
Republican plan restricts the growth rate to 4.9 percent whereas the 
private sector estimates the growth rate of costs of health care at 7.1 
percent. That is the major source of cuts. Any time your family budget 
has a 2.2-percent shortfall of earnings you know that you will have to 
cut how you spend. Accordingly under the restrictions of only 4.9 
percent growth in Medicare costs, there is no other conclusion to be 
reached than that benefits will have to be cut and that the 
restrictions will shrink the reimbursements to providers and many 
Medicare beneficiaries will find themselves without any provider at 
all. This unrealistic restriction of the rate of growth is the real 
culprit. More people are going to reach 65 years of age. Health care 
costs are going to rise. A cap on the costs means benefits will have to 
be cut.
  Eighth, as these changes are being made, the possibility that the 
quality of health care will be lowered is great. There will be less 
safeguards. Even under this cloud, the Republican plan enacts limits of 
liability for negligent and faulty medical care. Remember that patient 
who went into the operating room expecting that his left leg would be 
amputated, and woke up in his room with his good right leg gone. His 
left leg was so badly infected that it too had to be amputated, leaving 
him without any legs at all. Do you honestly think that having this 
doctor and hospital pay him $250,000 is adequate compensation for his 
loss? He is elderly and has no economic losses which could be used to 
treble his award. This bill has a $250,000 liability limit. This is 
unfair to the public. It is another reason I cannot vote for this bill.
  From the mail I have received, there are a myriad of other provisions 
in this bill, that require further review. I cannot answer the question 
posed. No one can. It would be irresponsible to vote for this bill.
  This is a day the Republican majority will have to answer for in the 
years ahead. As the tragic consequences enfold over the next 7 years, 
seniors will die before their time, and as rural hospitals close all 
persons living in those areas will die before their time. This is not a 
historic day. It is a sad day in the history of America.
  Mr. EMERSON. Mr. Chairman, the choice before Congress today is clear. 
We can act now to preserve and strengthen Medicare as the President's 
own Medicare Trustees recommend, or we can do nothing and let Medicare 
go bankrupt in less than 7 years. Clearly, it would be the height of 
irresponsibility to let Medicare go broke. We have an absolute 
obligation to America's senior citizens to save Medicare, and I am 
pleased that Congress is working to do just that.
  The Medicare Preservation Act will save Medicare without cutting 
benefits or increasing seniors' out-of-pocket costs. This year, 
Medicare per beneficiary spending averages about $4,800. This amount 
will increase to $6,700 per beneficiary under our plan.
  Much has been made in this debate about process. I believe the 
Medicare Preservation Act is a good example of what the legislative 
process is all about--taking a bill and making it better.
  For example, after meetings and discussions with the leadership, we 
have secured important rural funding changes to better serve rural 
citizens. As a senior member of the Rural Health Care Coalition, I am 
pleased that this Medicare reform package will significantly boost 
Medicare reimbursement rates to rural counties, like those in Southern 
Missouri. We all know that rural America faces unique health care 
challenges, and our plan responds by changing a Medicare reimbursement 
formula to attract more doctors and health care provider options to 
rural areas. Much work remains to be done to improve health care 
quality and access in rural regions, and our Medicare preservation plan 
is a leap in the right direction. I look forward to working with the 
Senate to see that the legislative process continues to move the plan 
to save Medicare forward.
  The Medicare Prevention Act also gets tough on abuse, fraud and waste 
in the Medicare program. Seniors who report a verifiable incident of 
abuse, fraud or waste will receive a financial reward. Criminal and 
civil penalties will also be strengthened for anyone caught defrauding 
Medicare. Cleaning up the program is one of the best ways to save 
Medicare without cutting benefits.
  The Medicare Preservation Act lives up to the obligation we in 
Congress owe to America's seniors. We have a non-negotiable 
responsibility to ensure that Medicare meets the health care needs of 
seniors who have worked hard all of their lives and contributed their 
share for health security. Our plan preserves, protects and strengthens 
Medicare for the next generation, as opposed to the President and his 
liberal allies in Congress, who offer a disingenuous press release to 
Band-Aid Medicare until the next election.
  Mr. OWENS. Mr. Chairman, this bill takes us back to a time when the 
elderly expected to live in poverty sooner or later because of mounting 
health care bills they could ill afford to pay. Thirty years ago, with 
the swipe of a pen, President Johnson erased such fears of 
impoverishment, working with a Democratic Congress to overcome a 
hostile Republican minority. Our Government made a solemn promise to 
our senior citizens back then, but now the new Republican majority is 
proposing to break that contract with our seniors and make them live in 
fear once again.
  The $270 billion that the Republicans propose to cut from Medicare 
will buy them their $245 billion tax cut for the rich, $51 billion of 
which will go directly into the coffers of large corporations. It is 
sad that the Republicans' priorities are so upside down. If they were 
to reduce corporate subsidies by the same percentage as the budget as a 
whole, as called for in the budget resolution, they would need to take 
$122 billion over 7 years from the pockets of the Fortune 500 fat cats 
freeloaders. Obviously, that won't happen.
  Instead, America's seniors will pay $400 more in premiums each year 
by the year 2002. My home State of New York will lose $25 billion--$650 
million from my district alone. And these figures don't even begin to 
tell the horror story that will result from the Medicaid cuts the 
Republicans will inflict upon the American people next week. Those cuts 
will be neatly buried in the budget reconciliation package, as the 
Grand Old Party removes the final shreds of dignity that the poorest of 
the poor have left.
  Deep cuts in Medicare will expel seniors out of nursing homes or 
bankrupt their families who will have to pay for $40,000 a year nursing 
home bills . Not only will seniors be forced to pay more money for 
fewer services, they also will have to give up their own doctors as 
they are herded into HMO's. Finally, many hospital officials have 
predicted that up to 25 percent of all hospitals could close their 
doors because of these Republican Medicare cutbacks.
  Mr. Chairman, I am submitting for the record a chart showing the 
billions of dollars that hospitals, nursing homes, and home health care 
agencies in my district will lose so that my constituents can see the 
negative impact that Republican Medicare and Medicaid cuts will have on 
the quality of health care services they receive.

                                                                        

[[Page H 10376]]
                                 PRELIMINARY ANALYSIS OF THE HOUSE AND SENATE MEDICARE REFORM PROPOSAL ON NEW YORK STATE                                
                                                    [7-YEAR IMPACT 1996 TO 2002--LOSSES IN $MILLIONS]                                                   
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Medicaid-Federal               Medicare             
                                                                                                          funds      -----------------------------------
            District                 Representative     Type of facility        Facility name      ------------------                      Budget cap/  
                                                                                                     House    Senate   House    Senate      lookback    
--------------------------------------------------------------------------------------------------------------------------------------------------------
11..............................  Major R. Owens.....  Hospitals.........  Catholic medical center   $122.9   $136.3    $31.0    $32.7     $6.1 to $16.2
                                                                            (St. Mary's of                                                              
                                                                            Brooklyn division.                                                          
                                                                           HHC (Kings County          376.5    429.1     59.5     50.0       5.3 to 14.0
                                                                            Hospital Center).                                                           
                                                                           Interfaith Medical         114.6    142.6     71.9     56.5       8.5 to 22.5
                                                                            Center (All Divisions).                                                     
                                                                           Kingsbrook Jewish           44.6     38.1     74.4     57.7      10.7 to 28.4
                                                                            Medical Center.                                                             
                                                                           University Hospital of      79.5     77.0     93.1     71.9      11.4 to 30.4
                                                                            Brooklyn.                                                                   
                                                       Nursing homes \1\.  Carlton Nursing Home         8.2      6.4                                    
                                                                            Inc.                                                                        
                                                                           Caton Park Nursing Home      6.8      5.3                                    
                                                                           Center for Nursing &        24.2     18.7                                    
                                                                            Rehabilitation Inc.                                                         
                                                                           Dover Nursing Home.....      2.3      1.7                                    
                                                                           Flatbush Manor Care         12.7      9.8                                    
                                                                            Center.                                                                     
                                                                           Madonna Residence......     17.3     13.3                                    
                                                                           Marcus Garvey Nursing       18.4     14.2                                    
                                                                            Home Company Inc.                                                           
                                                                           NY Congregational Home       4.1      3.1                                    
                                                                            for the Aged.                                                               
                                                                           Oxford Nursing Home....     12.8      9.9                                    
                                                                           Prospect Park Nursing       11.4      8.8                                    
                                                                            Home.                                                                       
                                                                           Rutland Nursing Home        47.9     37.1                                    
                                                                            Co. Inc.                                                                    
                                                       Certified home      Interfaith Med Ctr/          1.0      0.8                                    
                                                        health \1\.         Jewish Hosp Med Ctr of                                                      
                                                                            Brooklyn Home Care                                                          
                                                                            Dept.                                                                       
                                                                           Kingsbrook Jewish            2.9      2.3                                    
                                                                            Medical Center Home                                                         
                                                                            Care Department.                                                            
                                                                           St. Mary's Hospital of      17.0     13.1                                    
                                                                            Brooklyn Inc. Home                                                          
                                                                            Care Department.                                                            
                                                                           The Brooklyn Hospital        3.2      2.5                                    
                                                                            Center Home Health                                                          
                                                                            Services Division.                                                          
                                                                           Visiting Nurse              15.3     11.8                                    
                                                                            Association of                                                              
                                                                            Brooklyn, Inc.                                                              
                                                       Long term home      St. Mary's Hospital of      11.0      8.5                                    
                                                        health \1\.         Brooklyn.                                                                   
                                                                           Visiting Nurse              15.4     11.9                                    
                                                                            Association of                                                              
                                                                            Brooklyn Inc.                                                               
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Insufficient Medicare data to estimate facility-and agency-specific impacts.                                                                        


  Mr. HEINEMAN. Mr. Chairman, I rise today as a 65-year-old citizen on 
Medicare. I speak not only for myself today, but I speak for the 
millions of seniors in our country who depend on Medicare. I also speak 
for my children and grandchildren who will one day need a financially 
sound Medicare system.
  Mr. Chairman, as a senior citizen I have been very disturbed by all 
the rhetoric, scare tactics and fear which have been injected into the 
Medicare debate. People who use these negative tactics are wrong. They 
are not being truthful in addressing the problem we have with Medicare. 
It is a simple fact. In 7 years, in the year 2002, the system will go 
broke unless it is reformed.
  The Medicare Preservation Act will save the Medicare Program $270 
billion--savings which will go directly into the Medicare Program by 
law.
  The President knows the problem. In 1993, Bill Clinton said, and I 
quote ``I will recommend reducing the growth of spending in Medicare 
dramatically and in Medicaid. This will not be a cut. Don't let people 
tell you it is a cut. We simply have to reduce this incredible rate of 
spending to save the system.'' I agree with Bill Clinton--he is right.
  While the House Democratic leadership offered no plan, our Democratic 
colleagues in the other body finally put out their version of a plan to 
reform Medicare. It saves $90 billion. It has one problem--it simply 
delays the date of bankruptcy for 3 years beyond 2002.
  The Medicare Preservation Act will increase per beneficiary spending 
from $4,800 to $6,700 in 2002. Seniors will stay in the current 
Medicare system--with no increases in deductibles or copayments--unless 
they choose MedicarePlus. If a senior chooses MedicarePlus he or she 
will be able to choose from a variety of plans, with different benefit 
options. The Medicare Preservation Act also attacks waste, fraud, and 
abuse and rewards seniors who help weed out fraud.
  Let's stop playing politics with Medicare. It is too important for 
our senior citizens; they deserve better.
  I urge my colleagues on both sides of the aisle to reject the 
rhetoric and start dealing with reality. Vote for H.R. 2425, support 
our senior citizens and save Medicare.

           [From the Raleigh News & Observer, Oct. 16, 1995]

          Democrats Hope That Scaring Granny Will Bring Votes

                          (By Rob Christensen)

       There's a new soap opera on the tube these days: a 
     political commercial paid for by the Teamsters and aimed at 
     Republican Rep. Fred Heineman.
       A middle-aged couple stand in their kitchen, fretting. 
     Hubby says he can't believe how the Republicans want to cut 
     Medicare just to give a tax break to the rich. The Mrs. says 
     she might have to quit her job to take care of Granny if the 
     cuts go through.
       Meanwhile, Granny is eavesdropping in the dining room, an 
     anguished look on her face.
       The commercial nearly brought tears to my eyes. I wanted to 
     reach out, pat her on the arm and say: ``It's all right, 
     Granny. The Democrats will take care of you.''
       The TV ad is part of a national campaign by the Democratic 
     Party and its allies to portray the Republicans in Congress 
     as a group of cold-hearted rich folks who want to deny the 
     elderly crutches and walkers so they can buy a nicer 
     Mercedes.
       The reason for the Democratic public relations blitz is a 
     GOP plan making its way through Congress to reduce projected 
     spending for Medicare by $270 billion during the next seven 
     years.
       At a forum at Durham's Preiss-Steele Place the other day, 
     the Democratic Party rolled out some of its biggest guns to 
     attack the Republican Medicare plan.
       ``Insane,'' Dick Gephardt, the House Democratic leader, 
     said of the GOP Medicare proposal. ``A tax cut for the 
     wealthy,'' said Rep. Eva Clayton. ``Extreme cuts,'' said Rep. 
     Mel Watt.
       To put a nice face on the Democratic attacks, let's call it 
     political hyperbole. It's a good example of why Congress 
     finds it so difficult to balance the federal budget and 
     reduce the huge debt.
       What the Democrats fail to mention is that the Republican 
     plan proposes to INCREASE Medicare, not cut it.
       The GOP plans calls for a slowing of Medicare's annual 
     growth from 10 percent per year to 6.4 percent.
       In 1994, we spent $160 billion on Medicare. If left 
     unchanged, annual Medicare costs are projected to rise to 
     $345 billion by 2002. Under the GOP plan, Medicare spending 
     would increase to $247 billion per year by 2002, an INCREASE 
     of 54 percent.
       Of the $270 billion in Medicare growth reductions in the 
     GOP plan, about $200 billion is designed to limit the growth 
     in payments to hospitals and doctors.
       That's not to say the Republican plan won't cause pain. It 
     will lead to higher premiums, less choice in doctors and 
     other new restrictions on coverage. It could cause hospitals 
     heavily dependent on Medicare and Medicaid to close--
     especially the hospitals serving the poor in inner cities or 
     rural areas.
       But some pain is necessary if we are to stem the tide of 
     red ink and to prevent the Medicare program from growing 
     broke.
       Nearly every serious examination of the federal budget 
     deficit has concluded that we must slow the growth of the 
     huge entitlement programs such as Social Security and 
     Medicare.
       People are living longer. Medicine and medical treatment is 
     becoming more expensive. In 1965, 14 percent of the federal 
     budget went for Social Security and Medicare. Today, it's 
     more than one-third.
       If you rule out a tax increase, the only realistic way to 
     balance the budget is to slow the tremendous growth in such 
     entitlement programs as Medicare, Medicaid and Social 
     Security, said Dick Stubbing, a public policy professor at 
     Duke University and a federal budget expert.
       Scaring Granny has always been a political winner for the 
     Democrats.
       Much of the public has never trusted the Republicans to 
     protect social programs. Social Security and Medicare were 
     passed by Democratic liberals--under the leadership of 
     Franklin Roosevelt and Lyndon Johnson--over the opposition of 
     conservative Republicans who decried such programs as 
     socialism. According to a recent Times-Mirror poll, 45 
     percent of those surveyed trusted the Democrats to reform the 
     Medicare program, while 32 percent trusted the Republicans.
       ``Some who are pushing for current Medicare plan are of the 
     same view as those who fought the creation of Medicare in 
     1965 and in 1995 are trying to deny the comforts our senior 
     citizens,'' Clayton told the Preiss-Steele residents in 
     Durham. ``Should they be trusted? I think not.''
       The Democrats are trying to tie Medicare growth cutbacks to 
     $245 billion in tax cuts the Republicans are pushing. But the 
     proposed tax cuts, which would be like pouring gasoline on 
     the roaring fire of the federal debt, are a separate issue.
       Of course, the Democrats did not invent political 
     demagoguery. Most recently, the Republicans did their part to 
     scare the elderly and everyone else when they distorted the 

[[Page H 10377]]
     Clinton administration's health care proposal.
       But for the moment, it's the Republicans who are trying to 
     do right--and the Democrats who are trying to scare Granny.
                                                                    ____


                  [From the Herald-Sun, Oct. 17, 1995]

                       Give GOP Credit For Ideas

       However much one might quibble with the way the GOP in 
     Congress is bearing down on the Federal deficit, this must be 
     said: At least somebody in Washington is trying to lasso 
     those dollar-gorging entitlement programs.
       Everybody knows that entitlements--Social Security, 
     Medicare, Medicaid and so on--are the arch stones of a 
     balanced budget. Unless these programs are brought under 
     control, they will literally bankrupt the United States. It's 
     that simple, and it's that serious.
       Democrats on Capitol Hill do the country and themselves a 
     disservice by running around and screaming that the GOP in 
     effect plans to cast the elderly loose on ice floes, Fling 
     that $270 billion ``cut'' in Medicare spending over the next 
     seven years out to a chapter of the AARP, and the gasps will 
     come on cue.
       In fact, even under the GOP plan, federal outlays for 
     Medicare and Medicaid are expected to rise through the year 
     2002. However, the rate of increase will be slowed, and 
     that's where much of the projected $270 billion in savings 
     will come from.
       Somehow, this part of the GOP plan never gets beyond the 
     Democrats' gatekeepers.
       This is not to say, though, that the GOP plan is above 
     criticism. Converting Medicaid into a block-grant program for 
     the states is a risky venture, especially for poor states. If 
     the block grant money runs out, the states will have to come 
     up with the balance--not an easy thing to do in North 
     Carolina, Maine, Mississippi, New Mexico and other low-wage 
     states.
       Furthermore, the GOP plan scraps an important law that 
     prohibits physicians from ``double dipping'' their patients. 
     Double-dipping occurs when a physician charges patients for 
     blood work and other tests done at a laboratory in which the 
     physician has a financial stake. The law came about a few 
     years ago in response to widespread abuses in such 
     arrangements, but the GOP promised last week to toss it out 
     in return for the American Medical Association's endorsement 
     of the reform plan.
       If the Democrats have a straight-flying arrow in their 
     quiver, it's their criticism of the GOP's proposed $245 
     billion tax cut. The leadership of both houses of Congress 
     has signed off on the cut. Reducing entitlement spending 
     while cutting taxes has all the flavor of guns and butter. It 
     would be far better to get a grip on entitlement programs, 
     then go for tax cuts.
       As we said, quibbles. The GOP seized the initiative in this 
     struggle a year ago, and seems likely to keep it. The 
     Democrats--yes, there are some still left in Congress--have 
     only themselves to blame for their impotence.
  Mr. HILLEARY. Mr. Chairman I rise in support of H.R. 2425--the 
Medicare Preservation Act and encourage my colleagues to do the same. 
This issue is so important to so many people, it should be above 
partisan politics, misinformation, and lies.
  Throughout this autumn's important debate on how to save Medicare 
from bankruptcy, opponents of the Republican plan have used one--and 
only one--argument against the plan: The Republicans are cutting 
Medicare to pay for tax cuts for the rich. This is the same hollow 
rhetoric, based on class envy, that was soundly rejected at the polls 
in last year's historic elections. And of course, this year's rhetoric 
is just as untrue as it has been in previous years.
  This issue is so important to so many people, it should be above 
partisan politics, misinformation, and lies. But because the American 
people deserve to know what's really going on, it has become necessary 
for Republicans to respond to these false claims.
  Let's analyze the sole argument Democrat critics have used in this 
debate: The Republicans are cutting Medicare to pay for tax cuts for 
the rich. There are three distinct parts to this statement, and all 
three of them are completely false. In this World Series season, they 
hope to convert these pitches into a home run, but all they do is 
strike out. Big Time.
  Pitch 1: ``The Republicans are cutting Medicare . . .'' This is 
simply not true. Any way you slice it, more money will be spent on 
Medicare every single year. If Republican reforms are enacted, overall 
spending will rise from $161 billion this year to $274 billion in 2002. 
The average Medicare recipient will receive $4,800 in benefits this 
year, and the average recipient will receive $6,700 7 years from now.
  What Republicans are doing is containing the current growth rate of 
10.5 percent, which is unsustainable and will bankrupt the Medicare 
system in 7 years. The good news is that we can save the program from 
bankruptcy by limiting growth to approximately 6 percent a year. This 
comes to roughly a 40 percent increase over the next 7 years. Only in 
Washington is a 40-percent spending increase considered a cut. Strike 
One.
  Pitch 2: ``. . . to pay for tax cuts . . .'' The fact is that every 
red cent of Medicare savings will go directly to the Medicare trust 
fund, and not one penny will go to pay for tax cuts of any kind. To 
make this perfectly clear, the Ways and Means Committee adopted a 
lockbox amendment which specifically states that all Medicare savings 
must be used to make the system solvent, and not to pay for tax cuts. 
There is absolutely no link between Republican efforts to save Medicare 
and to lower taxes.
  The House passed its tax reform bill last spring, and every one of 
those cuts were paid for at the time by cutting wasteful spending in 
other areas. Also, even if the budget were already balanced, and the 
tax burden were at an acceptable level, Medicare would still have to be 
saved from bankruptcy. In other words, the Medicare trust fund would be 
broke in 7 years no matter what kind of income tax policy we have. 
Strike Two.
  Pitch 3: ``. . . for the rich.'' By now, it should be clear that 
Republicans are not cutting Medicare, and that Medicare reform is 
unrelated to tax reform. The third piece of misinformation in the 
Democrats' one-sentence Medicare strategy is that our tax reform 
package is geared toward the wealthy.
  The truth is that if the House-passed tax reform bill becomes law, 
the rich will pay a larger share of taxes. According to the Joint 
Economic Committee, the richest 10 percent will pay 48.6 percent of all 
taxes--up from the current 46.6 percent. Moreover, the top 1 percent 
will pay 18.2 percent--up from the currently 18 percent.
  The idea that the Republican tax reform bill unfairly benefits the 
rich is simply ridiculous. The centerpiece of our package is the $500-
per-child tax credit, of which 74 percent of the credit will go to 
families which make less than $75,000 a year. This credit also means 
that families earning less than $25,000 will not pay any Federal taxes, 
and those earning $30,000 will see a 48 percent Federal tax cut.
  Other aspects of our tax package include a capital gains tax cut--77 
percent of beneficiaries will be families that earn less than $75,000, 
a repeal of President Clinton's tax on Social Security benefits, and an 
adoption tax credit to families making less than $60,000 a year.
  Obviously, any claim that Republican middle class tax cuts are aimed 
at the rich is inaccurate to say the least. Moreover, if the Republican 
Medicare reform plan is passed, the wealthiest seniors will have to pay 
a greater percentage of their Medicare premiums, while middle income 
recipients will pay the same share--31.5 percent--that they are paying 
now. Strike Three. This last false claim completes the strikeout in the 
Democrats' attempt to hit a home run with ideas they should have 
retired years ago.
  Perhaps the most destructive result of spreading false information 
and using class warfare tactics is that they purposely divide Americans 
at a time when we need to try to bring people back together. Instead of 
spreading misinformation and envy, we should be having an honest debate 
about how we can make all Americans healthier and more financially 
stable in their old age. Anything less is just plain wrong, and I hope 
that the Clinton Democrats decide to put aside their class warfare and 
join us in an honest debate very soon. I believe this bill is a step in 
the right direction and I'm proud to support it.
  Mr. BUNNING. Mr. Chairman, I rise in support of the Medicare 
Preservation Act. It's a good bill.
  It preserves Medicare--it strengthens Medicare.
  It keeps Medicare from going bankrupt. And best of all it gives 
senior citizens more options--more choices.
  I think you will all agree that Members of the U.S. Congress have a 
pretty good health care system.
  We get a booklet every year that lists the options available to us--
insurance plans or PPO's and HMO's. We get a wide range of choices. We 
can pick a plan that suits our needs and our family's needs. It's a 
pretty good deal.
  I have enrolled in a PPO. I still get to see my family doctor. I show 
him this card and my office visit only costs me $10. And I have this 
other card that I can take to the drug store and pick up my 
prescription medicine and no matter how much it costs, I only pay $10.
  It's a pretty good deal.
  This Medicare reform bill that we are considering today gives the 
senior citizens of our country the same kind of options that Members of 
Congress now have. It will give them the same kind of choices we have.
  That's the beauty of this bill. We save Medicare. We strengthen 
Medicare and on top of it all, we make Medicare better.
  We are going to hear a lot of outrageous rhetoric about how we are 
slashing benefits. That's hogwash. It's political hogwash. And I, for 
one, think that this program is a little too important to play 
political games with.
  This bill is a good bill. It gives senior citizens the same kind of 
health care that Members of Congress enjoy now. That's a pretty good 
deal for everybody.

[[Page H 10378]]

  We don't cut benefits for senior citizens. Our bill doesn't increase 
copayments. It doesn't increase deductibles.
  It increases the average amount of money that Medicare spends on 
every beneficiary by nearly $2,000 over the next 7 years.
  Sure we slow the growth rate. If we don't slow the growth rate of 
Medicare spending, Medicare will bounce over the cliff to bankruptcy in 
just a few years.
  Ten percent growth rates simply cannot be sustained. Everybody knows 
that. And our bill slows the growth rate to 6\1/2\ percent. But that is 
still growth. It is not a cut.
  It is not a cut because we slow the rate of growth in Medicare 
spending by providing more choices, not by cutting benefits.
  By providing more options--more choices--we introduce competition 
into Medicare. We put private sector ideas to work. We inject the free 
enterprise system into the Medicare system. It will make it more 
efficient and more cost-effective.
  At the same time, if someone is happy with Medicare just the way it 
is; if someone is a little nervous about trying something new; if they 
are happy with the traditional fee for service and don't want to 
change, they can keep their existing Medicare plan.
  Our bill doesn't force anybody to change. It doesn't force anyone to 
join an HMO if they don't want to. It doesn't force them to change 
doctors or hospitals or anything. Anyone who likes Medicare just the 
way it is can keep going along just like they have been.
  People like this--people who don't want to change Medicare--should 
like this bill too. It preserves Medicare and traditional fee for 
service for them. It keeps Medicare from going bankrupt.
  We are not in a situation where we can stick our heads in the sand 
and say don't change anything, don't touch Medicare. If we do nothing, 
Medicare will go bankrupt in 7 years.
  President Clinton's appointees who serve as trustees to the Medicare 
trust fund have told us that we need to make changes to keep the 
program solvent. We can't do nothing. Medicare is far too important to 
too many people.
  The Democrats in Congress want to stick their heads in the sand. The 
President wants to stick his head in the sand. They know full well that 
we are doing the right thing. They know full well that Medicare needs 
fixing. But they would rather play political games.
  They know they can win political points by crying wolf, by saying 
that Republicans are cutting Medicare to pay for tax cuts for the rich. 
They know it isn't true but they know they can win points by scaring 
people who are dependent on Medicare.
  Republicans knew there were political risks when we took on this 
task. We knew it was dangerous politically to tackle Medicare's 
problems. It would have been much easier for us to pretend--like the 
President--that Medicare wasn't in that bad of shape.
  It would have been much easier and safer politically to slap a band-
aid on Medicare like the President wanted to do.
  But we didn't take the easy way out. Republicans in Congress stepped 
up to the responsibility of leadership and did the right thing. We 
didn't dodge the issue. And we ended up with a bill that I think is 
about as good as possible.
  It might not be perfect. It makes sweeping changes in a huge program 
and deals with a ton of complex issues. And we might have to go back in 
next year or the year after and fine tune it. But this bill provides a 
good basic foundation for the long term financial health of our 
Medicare Program.
  It preserves Medicare. It strengthens Medicare. It gives senior 
citizens the same kind of choices in health care that Members of 
Congress have. And it makes Medicare more efficient and more cost-
effective.
  I urge my colleagues to support and pass this bill. And I urge the 
President to quit playing politics with the health care of our senior 
citizens and sign this bill when it reaches his desk.
  Ms. SLAUGHTER. Mr. Chairman, I am very concerned that we are being 
forced to vote on this measure--which if enacted would be devastating 
to the health and well-being of our seniors--without adequate time for 
the American public or the Members of this House to study the bill and 
learn exactly how the 37 million people covered by Medicare will be 
affected. Such drastic changes to a system as massive and crucial as 
Medicare cannot be responsibly considered with just 3 hours of floor 
debate.
  We will don't fully understand the consequences of what this bill 
will do, but what little we do know is looking pretty bad. In addition 
to doubling senior's Medicare payments, forcing seniors to give up 
their long-time doctors and shutting millions of infirm Americans out 
of nursing homes, there are some little known provisions that seriously 
and negatively affect the health and well-being of our seniors.
  Take, for example, the bill's provisions to ease the ban on physician 
self-referrals--that is, doctors who refer Medicare patients to labs in 
which they have a financial stake. We have long know that this is a 
situation that is ripe for abuse. In fact, the HH's Office of Inspector 
General found that patients of referring physicians who owned or 
invested in independent clinical labs received 45 percent more services 
than all other Medicare patients in general. And the Consumer 
Federation of America found that doctors with a financial interest in 
labs ordered 34 percent to 95 percent more tests than other physicians. 
And the New England Journal of Medicine reported that doctors who owned 
imaging devices--like MRI's, for example--ordered imaging tests four 
times more often than doctors who did not.
  That's why regulations have been implemented to prohibit doctors from 
sending patients for tests and services from which the doctor would 
profit. The Congressional Budget Office has estimated that easing this 
ban on self-referrals will add another $1.1 billion to the cost of 
Medicare, through excessive and unnecessary testing and services.
  Another provision of this bill that deserves a lot more study and 
discussion is the section which would eliminate most Federal regulation 
of medical laboratories located in doctors' offices. These regulations 
came about after Congress heard horror stories of patients suffering 
and dying as a result of inaccurate lab tests. Most serious were the 
women who died from cervical cancer--a disease that is almost always 
curable if caught early--because their Pap smear test were misread.
  The fight against waste, fraud and abuse has earned bipartisan 
support throughout recent debates on health care financing. But, 
cutting vital regulations without giving serious consideration to the 
affect on the health and well-being of millions of our citizens is 
irresponsible.
  Mr. Chairman, it is ludicrous to rush this enormous and far-reaching 
legislation through the House in the hopes that the public won't be 
quick enough to figure out what's in it. I urge all my colleagues, in 
the name of the 37 million senior citizens we represent, to reject this 
course of action, and vote against this bill.
  Mr. BALLENGER. Mr. Chairman, I rise today to express my support for 
H.R. 2425, the Medicare Preservation Act. Furthermore, I rise to thank 
the Members who understood the urgency of the Medicare Board of 
Trustees report showing that trust fund reserves will be fully depleted 
by 2002 and created a plan to save it. Unfortunately, President Clinton 
has been content to do nothing. I think the message is clear folks--
Medicare is going broke and the Republican leadership has undertaken 
the task of saving it.
  The Republican plan, the Medicare Preservation Act, will not take 
away Medicare but rather will protect, preserve, and strengthen it. We 
are not cutting Medicare, instead, we are allowing Medicare to grow at 
about 6 percent. Under the Republican budget, spending per beneficiary 
will increase from $4,800 to $6,700 over the next 7 years. You will get 
to keep your current doctors, and the Government won't force you into 
any plan that you don't want to be in. This is your right--to a choice 
of doctors, of plans, and to a system that's secure for current and 
future retirees. Each year Medicare beneficiaries will receive a form 
from the Government that lists available plans--traditional Medicare, 
managed care organizations, new groups known as provider sponsored 
networks that will be set up by doctors and hospitals, and medical 
savings accounts, where you purchase a high-deductible policy and the 
Government deposits money to cover that deductible in an interest-
bearing account. If you do nothing, you're automatically enrolled in 
traditional Medicare. If you want another plan, that's up to you.
  Furthermore, to accumulate more savings, the GOP plan would 
eventually end the subsidy that goes to wealthy seniors who choose to 
remain in the traditional Medicare Program. Wealthy beneficiaries--
single people earning more than $75,000 a year and couples earning more 
than $150,000 a year--would pay the total cost of their premiums for 
the doctor portion of Medicare part B. Projected savings would be 
approximately $10 billion.
  Our plan also combats fraud and abuse. As Medicare is designed right 
now, doctors are paid for procedures whether or not the patient needs 
them. That means the taxpayers get ripped off, and the Medicare patient 
doesn't get the best care. By allowing providers, hospitals, and 
insurers to compete for your business, the system will root out fraud 
and abuse and will squeeze out the waste. Seniors who find fraud in 
their bills will be rewarded with a percentage of the money recovered. 
In addition, regulatory relief would allow hospitals serving the same 
geographical areas to jointly plan to provide services and facilities, 
which they are currently precluded from doing by antitrust laws. The 
intent is to prevent a duplication of expensive machines and services 
and to remove the costly use of an insurance company or managed care 
organization as an intermediary. This would help beneficiaries in rural 
areas where there are few managed care groups.

[[Page H 10379]]

  I urge all Members to support the Medicare Preservation Act. With the 
support of the American Medical Association [AMA], the Seniors 
Coalition, U.S. Chambers of Commerce, the National Taxpayers Union, and 
millions of seniors, we are providing Medicare for future generations.
  Mr. COLEMAN. Mr. Chairman, I am privileged to represent El Paso, TX, 
a community of approximately 600,000 people. Of this amount, almost 
60,000 people receive Medicare. In other words, 10 percent of El Paso's 
population is on Medicare. That is a significant number. These are 
significant cuts.
  I regret that the majority has not scheduled more time for hearings 
nor the ability to review the plan. The Democratic leadership has been 
forced to schedule additional days of hearings on the only space 
provided to us, the lawn of the Capitol, so that the American people 
can have a chance to participate in the process that will affect 37 
million of them.
  In fact, this back room dealing on the Medicare plan has gone so far 
as to force senior citizens to stage protests in the Commerce Committee 
and be arrested by the Capitol Police. Also, in an article titled 
``Bribes for Doctors'' the New York Times points out that Speaker 
Gingrich ``brought the American Medical Association behind his Medicare 
reform program last week by handing out three concessions.'' These 
concessions were not given in the light of day after debate. No, they 
were given in a last minute desperate secret attempt to reign the AMA 
in.
  I have had over 500 constituents writing or calling to urge me to 
oppose these cuts. One constituent writes:

       My wish is that the Democratic Party would hammer on the 
     fact that President Clinton wanted health care reform 2 years 
     ago. . . . The Republican Party bombarded the air waves 
     stating that if it was not broken, don't fix it. It's ironic 
     that the moment the Republicans came into office, health 
     [care] had deteriorated so quickly, that now, the Republicans 
     are the only solution to Medicare.

  I could not agree more. Not only has the Republican Party opposed the 
original drafting of this legislation, but they have continued to be 
antagonistic toward its existence for years. Now after providing only 
an outline, we are supposed to realistically debate the Republican 
effort to save Medicare in one day? I have the same trouble believing 
this as my constituent does.
  However, I will limit my comments to the minor details I am aware of 
regarding this plan.


                            part b premiums

  First and foremost is my problem with the increase in part B 
premiums. The plan calls for a continuation of the 31-percent premium 
instead of dropping the level to 25 percent as current law now 
dictates. This allows for an increase of almost $700 a year by 2002.
  Not one penny of this increase will go toward the part A trust fund. 
This increase will only go toward the general fund and can be used to 
balance the budget while giving a $245-billion tax cut to the wealthy.


                                 choice

  The outline states that it offers a choice to seniors in the type of 
health care organization they would like to become a part of without 
limiting their ability to stay in the traditional Medicare program.
  However, the different choices available to seniors have not been 
subjected to a test to determine if they will save any money. And plans 
such as medical savings accounts and HMO's are only viable options for 
wealthy and relatively healthy senior citizens. Therefore, these 
options are only available to the few seniors who fit that description.


                        waste, fraud, and abuse

  Waste, fraud, and abuse is the single biggest concern of my 
constituency regarding Medicare. I have spoken to many El Pasoans and, 
by far, the largest complaint regarding Medicare I have heard is ``Stop 
the waste and fraud and you will find the money to support Medicare.''
  The Republican plan offers only three minor initiatives, a hotline, 
making nursing facilities provide cost estimates, and stiffer penalties 
for those found guilty of fraud.
  Again, there is no estimate on how much these programs will actually 
save and these measures are not comprehensive enough to deal with the 
entrenched problem of fraud and abuse throughout the system.


                   effect on hospitals and providers

  The plan also contains significant changes in assistance to health 
care providers. I had previously sent a letter to El Paso hospitals 
outlining the possible changes that might occur under this plan and 
asked them to illustrate how these changes might effect the day to day 
functioning of their hospitals. I would like to illustrate the 
destructive change this plan would have by reading one of those 
letters:

       Expected Effects to . . . as a Result of Medicare and 
     Medicaid Reductions:
       Staffing:
       If funding is not available, . . . would face the very real 
     possibility of staff reduction by as much as 992 positions 
     during the 7 year period. We would lose $31,982,080 over the 
     next 7-year period for the El Paso economy.
       Clinics:
       Our clinics currently operate five days a week. The 
     reductions would force a 50% cutback in operations to 2.5 
     days a week.
       Reduction in Services.
       The hospital district's mandate is to care for indigent 
     patients and we do not believe that we could eliminate basic 
     services. A reduction in both Medicare and Medicaid dollars 
     would lead to a rationing of resources that would be 
     manifested in a number of ways:
       1. Eliminate Level One Trauma Services;
       2. Reduction of Pharmacy, Physical Therapy and all other 
     outpatient services;
       3. Frequent delays in all inpatient services throughout 
     every area of care.
       4. Elimination of elective cases in the operating room and 
     reserving the operating room for emergencies only. This would 
     lead to less funding support to the rest of the hospital and 
     create a greater need for tax payor [sic] support.
       5. Our current funding for Physician Service totaling 
     $5,000,000 could be reduced by as much as 50% causing us to 
     care for mainly indigent care patients.
       6. Residency Programs: Our current funding of 148 residents 
     would be reduced by as much as 60% or to only 59 residents. 
     This sets the pattern for future physician shortages.
       The above possibilities could eliminate all funded 
     patients, putting greater risk on the tax base. All planned 
     admissions could be delayed and the hospital could become one 
     giant emergency room and triage hospital.

  This is just one example of the type of destructive impact this plan 
would have on our community. I have received similar letters from all 
the other hospitals in El Paso.


                             means testing

  The plan also proposes to charge seniors with incomes over $75,000 
for individuals and $150,000 for couples higher premiums. Again, these 
premiums will not put one penny in the part A trust fund. However, this 
revenue will go directly into the general fund. Means testing in this 
form is unnecessary.


                          fail safe provision

  The entire Republican budget plan rests on their ability to provide 
$270 billion in savings from the Medicare Program. However, the plan 
falls short of these savings by $90 billion. Yesterday, Newt Gingrich 
said he was afraid that his own CBO would substantially underscore the 
savings he believed could be accomplished by using HMO's and other 
provider plans.
  If the CBO cannot come up with the magic numbers Speaker Gingrich 
wants, where do you think they will come from? From the 37 million 
beneficiaries that Medicare now serves.
  Aware that this plan may not total the $270 billion, it includes a 
fail safe provision that will allow future bureaucrats to make 
additional costs.
  This hidden provision subjects beneficiaries to unknown future 
liability. If future decisions expose health care providers to 
additional cuts, they may pass the cost directly to the beneficiary or 
drop out of the program altogether. This would mean that even after 
paying more money for less services this year, seniors would be asked 
to do the sacrifice again, sometime in the next seven years, to achieve 
the same savings the original plan proposed and have a choice of much 
fewer providers.
  This plan is the wrong way to achieve the savings that Medicare 
needs. This plan allows the Republicans to attempt to balance the 
budget while giving a huge tax break to the most wealthy Americans on 
the backs of senior citizens and the disabled. It is wrong.
  Mr. BEREUTER. Mr. Chairman, this Member is pleased that the 
leadership has agreed to improve the AAPCC formula used to determine 
county capitation payments for the MedicarePlus program. This change is 
critically important and will ensure that rural Americans have the same 
access to the options in the MedicarePlus program as citizens in urban 
areas.
  This change will greatly improve the health care options in rural 
areas by creating a formula floor of $300 per month the first year for 
all counties now below that level. It would rise to at least $320 the 
next year. Almost all counties in Nebraska fall in this category. In 
fact, in the 1st Congressional District of Nebraska, 21 out of 25 
counties, including Lancaster County, will benefit because they are now 
well under the $300 county capitation rate.
  This change also rectified the problem experienced in some 
metropolitan areas such as Seattle and Minneapolis whose medical 
communities are more efficient providers of health care than other 
urban areas.
  Mr. Chairman, since this improvement was made in the bill, this 
Member is pleased to support it.
  Ms. BROWN of Florida. Mr. Chairman, the House of Representatives is 
the People's House. We were sent here to Congress with a mission: to 
serve the people. As Members of Congress, we should be listening to our 
constituents and voting against proposals that will devastate our 
seniors.

[[Page H 10380]]

  Here I have hundreds of questionnaires that my constituents signed 
opposing drastic Medicare cuts. During the break, I met with over 3,000 
of my constituents at 14 town meetings and they told me they are 
appalled at the Republican plan to cut Medicare. Oh, did I say CUT? I 
meant GUT.
  Mr. Chairman, the Republican Leadership is unhappy about us using the 
word CUT to describe the Republicans' Medicare plan. Okay, fine. Maybe 
CUT is not quite the right word. Well how about G-U-T? How do you like 
the word GUT? The fact is that Republicans want to destroy Medicare's 
security and leave our seniors stranded to fend for themselves. They 
say they are ``saving'' Medicare.
  Well, I come from Florida where I served for 10 years in the Florida 
House. In Florida we have a saying for that kind of thing, ``That dog 
won't hunt.''
  Thousands of my constituents have told me that they are outraged at 
the Republicans' reverse Robin Hood tactics, stealing from the working 
people and giving tax breaks to the wealthy. As we say in Florida, 
``That dog won't hunt.''
  Two days ago, I spoke to the National Council of Senior Citizens, who 
have been leading the fight against drastic cuts in Medicare. NCSC has 
shown great courage and true leadership in this fight and I want to say 
to them: Thank you. Thank you for your work. Thank you for your 
bravery. And thank you for your commitment to seniors.
  Recently in Washington, NCSC led a rally against Republican Medicare 
cuts by rolling out a giant Trojan Horse representing Republicans' 
empty promises on Medicare.
  And last week, seniors from NCSC came to Congress to protest the fact 
that the Commerce Committee was voting on a Medicare bill without 
having one hearing on it. For that, they were arrested?
  Shame on my Republican colleagues for shutting out seniors from 
Congress--the People's House. As a Democrat who believes in the 
Democratic process, I believe those seniors deserve to be heard, and 
not arrested.
  Seniors are the ones who made this country great, and we owe it to 
them to protect their health care. We should be celebrating and 
embracing our seniors, not stabbing them in the back by taking away 
their health care.
  Mr. KIM. Mr. Chairman, I rise today in support of the Republican plan 
to save Medicare.
  I think everyone would agree that the Medicare program has been an 
enormous success over the past 30 years. Because of Medicare, millions 
of senior citizens have gained access to the health care that they 
otherwise wouldn't have been unable to afford.
  But trouble looms just over the horizon for Medicare. As many people 
have heard by now, the Medicare trustees recently warned that the 
Medicare trust fund is going to be broke by 2002. That would be a 
catastrophe: If the Medicare trust fund is exhausted, the program 
cannot legally continue to provide benefits to senior citizens- leaving 
millions of seniors without needed health care.
  In response, Republicans have put forth a dramatic plan to save 
Medicare from bankruptcy. Unfortunately, many of my Democratic 
colleagues are skeptical of the need for reform. ``We agree the system 
is in trouble,'' my colleagues argue, ``but the Medicare trust fund has 
faced bankruptcy before and the program has survived. Why do we have to 
make sure dramatic changes now?''
  The answer is simple: The current Medicare crisis is of such 
magnitude that it demands a long-term, comprehensive reform of the 
system.
  In the past, Congress has always dealt with Medicare's financial 
problems with short-term, quick fixes. Several times over the past two 
decades, Congress has tinkered with Medicare to shore up the financial 
problems in the program. Usually, these short term solutions involved 
raising payroll taxes, cutting payments to providers, or raising 
premiums and copayments for seniors. And these quick fixes worked, at 
least temporarily. After each one, Medicare was able to limp along for 
a few more years, until the program had to be ``fixed'' again.
  But the day of reckoning has arrived for Medicare. For the first time 
in the program's history, the costs of Medicare are growing so rapidly 
that no amount of ``tinkering'' can make up the difference. If Congress 
does nothing, Medicare spending will nearly double by 2002--growing 
from $160 billion today to $318 billion in just 7 years. And that's 
before the first wave of baby boomers starts to draw benefits from 
Medicare. If left unchecked, such astronomical growth will swamp the 
Medicare program and add trillions of dollars to the national debt.
  Why is Medicare growing so fast? The main problem is that the current 
Medicare program simply does not deliver health care cost effectively. 
While innovations in the private health care market have had some 
success in controlling health care costs, costs in the government-run 
Medicare program have continued to skyrocket. For example, while large 
private insurers cut their health care costs by 1.1 percent last year, 
Medicare costs grew by more than 10 percent. Of course, these results 
should not be shocking: Should we really be surprised that a 
government-run program such as Medicare is characterized by rampant 
inefficiency and skyrocketing costs? I think not.

  To put it simply, Medicare is a 1960's government insurance program 
that simply does not meet the demands of providing health care in the 
1990's. The system needs fundamental reform in order to survive.
  That is why Republicans are proposing the ``Medicare Preservation 
Act''. Our proposal is an attempt to save the Medicare system from 
bankruptcy by making the program more efficient and cost effective. In 
doing so, it would reduce the growth of Medicare by $270 billion over 
the next 7 years?
  So how does our plan reduce the growth of Medicare?
  The plan starts by declaring war on Medicare waste and fraud. Among 
other things, the plan dramatically increases penalties for fraud, 
provides funds for new computer technology that can identify fraudulent 
activities, and sets up procedures for giving cash rewards to seniors 
who report abuse in the Medicare program. The plan also implements 
malpractice reform to eliminate frivolous lawsuits which drive up costs 
for everyone in the system. Finally, our proposal reforms how Medicare 
pays doctors and hospitals to make sure that health care providers 
don't order extra tests or unnecessary procedures simply for financial 
gain.
  The plan also asks doctors, hospitals and seniors each to contribute 
a little toward saving the program. For example, doctors and hospitals 
will continue to see their Medicare payments grow--but not as fast as 
they would under current law. Seniors will be asked to pay a little 
more Part B premiums. Note that even with these premium increases, 
seniors will continue to only pay about 1/3d of the cost of Part B--and 
taxpayers will continue to subsidize 2/3ds of the cost. I think this is 
fair--we cannot force working families, many of whom can't afford 
health insurance themselves, to increase their subsidy of the Part B 
program.
  But our proposal goes much further than just attacking waste and 
limiting the growth of payments to doctors and hospitals. The core of 
the Republican proposal is a truly revolutionary idea: Let seniors have 
the same health insurance choices that their children and grandchildren 
have.
  Under our plan seniors would have three options: First, join a 
private health insurance plan and have Medicare pay the premiums; 
Second, use Medicare dollars to purchase a high-deductible health plan 
and have savings placed in a medical savings account. or Third, stay in 
the current system. So, for example, if you like the health plan you 
have at work, you can keep it when you retire--and Medicare will pay 
the premiums. If you want to join another private insurance plan, you 
can--without being excluded for preexisting conditions. And if you want 
to stay in the current government-run Medicare system, you can do that, 
too. The idea is that, by allowing seniors to join more efficient 
private insurance plans, we can save money and give seniors more health 
care options at the same time.
  In short, the Republican proposal is a fundamental departure from 
past attempts to reform Medicare. Instead of trying to squeeze more 
money out the current system, we are proposing to change the system so 
that it can provide the same benefits for less money. And don't forget: 
Republicans are not proposing to cut Medicare--under our plan, benefits 
will still grow from $4,700 per person today to $6,700 per person in 
2002.
  Unfortunately, opponents of our plan reject the kind of fundamental 
reform Republicans are proposing. They want to tinker with the system 
some more--maybe push Medicare's bankruptcy back a couple of years. The 
problem is, under this approach, we will be right back here in a few 
years, arguing over these same issues. Except, by then, the deficit 
will have grown substantially, the Medicare trust fund will be in even 
worse shape, and--most importantly--the baby boom generation will be 
that much closer to retirement. In fact, a recent study estimated that 
the Medicare reform plan offered by the Democrats would leave Medicare 
$300 billion dollars in debt just as we have to start paying for the 
baby boomers. To me, that's irresponsible.
  Finally, I want to respond to my Democratic colleagues who accuse 
Republicans of cutting Medicare to provide a ``tax cut for the rich''. 
I am here to tell you that nothing could be far- 

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ther from the truth. The fact, is Republicans have already passed more 
than enough spending cuts than are needed to pay for our proposed tax 
cut. The Republican budget resolution--passed last April--contains $622 
billion in non-Medicare spending cuts. That is two-and-a-half times the 
amount of spending cuts needed to pay for tax cuts. And let's look at 
the tax cuts themselves: Is a $500 per-child tax credit a tax cut for 
the rich? Is a $500 tax credit for the care of an elderly relative a 
tax cut for the rich? Is cutting taxes on IRA withdrawals or the sale 
of a home a tax cut for the rich? I think not.
  So let's end this partisan bickering. We must act now to save 
Medicare--while there is still time to engage in rational, thoughtful 
reform of the Medicare system. By making the system work more cost-
effectively, we can preserve, strengthen and simplify Medicare--and 
make sure current and future generations of seniors will have access to 
this vital program. For these reason, I urge my colleagues to support 
the Republican plan to save Medicare.
  Mr. PORTMAN. Mr. Chairman, Medicare's problems are now well known. 
The question is whether official Washington has the courage and 
foresight to fix them. If the partisan bickering continues and nothing 
is done, the Federal program providing health care insurance for 
roughly 33 million seniors and 4 million disabled Americans won't be 
there for anyone.
  We know that skyrocketing medical costs, an aging population and a 
decline in the ratio of workers paying into the system have placed 
Medicare in dire financial straits. We know about the alarming Medicare 
Trustees' report--the Part A Trust Fund--which covers hospital, skilled 
nursing and home health services--starts paying out more than it takes 
in next year and goes broke 6 years later. We also know that Medicare 
offers limited choices to beneficiaries, is rife with fraud and abuse 
and, typical and entitlement programs, lacks a cost control mechanism. 
Such cost increases are simply unsustainable in a program that now 
accounts for over 11 percent of the Federal budget. This has led to 
annual cost increases in excess of 10 percent, at least twice as high 
as private health care costs.
  With all of this knowledge and after more than two dozen public 
hearings and hundreds of town hall meetings, comprehensive Medicare 
reform legislation was introduced in the House at the end of September. 
Democrats have dismissed the plan as a mere means for paying for 
Republican-sponsored tax cuts. This misses the point. The tax relief 
has already been paid for with spending cuts and has nothing to do with 
Medicare reform. Republicans, in turn, are too defensive about the 
politically sensitive task of curbing entitlement spending. Both sides 
need to be honest about the facts, get down to work on the serious 
challenge before them, and stop the political gamesmanship. Here's what 
the proposal just introduced does and doesn't do.
  It does allow beneficiaries to keep their current coverage. If 
someone is currently enrolled in the traditional fee-for-service plan--
which over 90 percent of beneficiaries are--by doing nothing that plan 
is continued. But many will want to change. The innovative aspect of 
the proposal is that it offers seniors choices until now only available 
in the private sector--coordinated care, Medical Savings Accounts and 
provider-sponsored networks, to name a few--and sufficient information 
to make good choices.
  Some may opt for coordinated care to reduce out-of-pocket costs or 
obtain prescription drugs, eyeglasses or other coverage currently 
excluded under Medicare. Others may want to take advantage of a 
Medicare Savings Account where beneficiaries can purchase a high 
deductible, low-cost insurance policy and the government deposits money 
that would have gone toward more traditional Medicare benefits into an 
interest bearing account that can be withdrawn tax-free to cover 
medical expenses.

  Contrary to the heated rhetoric, Medicare is not being ``cut''; 
spending per beneficiary will actually increase under the proposal from 
about $4,800 in 1996 to $6,700 in 2002. Granted, that is not as steep 
an increase as currently projected, but it remains a generous program. 
Moreover, despite claims from the plan's critics, the House proposal 
does not increase copayments or deductibles. Premiums will increase in 
absolute numbers under the House GOP plan, a bit more than they would 
under current law. This is because the proposal locks in today's 
premium of 31.5 percent of the cost of Part B services (doctors visits, 
lab work, etc. . . .), rather than having the percentage paid by 
beneficiaries decrease (and the percentage of the public subsidy 
increase) as it would under current law. As a result, instead of paying 
$61 a month seven years from now as would be the case under current 
law, the amount would be approximately $87 a month. This reflects the 
fact that health care costs will go up in that time period. Most 
seniors I talk to are willing to see this kind of increase if it is 
part of getting the system on its feet.
  Only those better off (individuals with incomes over $75,000 and 
couples with incomes over $125,000) will pay a higher percentage of 
Part B premium costs. Again and again in my town meetings and 
discussions with seniors, I've been impressed with the willingness of 
people to pay a little more if it helps put Medicare back on its feet.
  The proposal also tackles fraud and abuse. Seniors in my District and 
around the country have offered innovative ideas to curb the fraud and 
abuse that adds billions of dollars in health care costs each year. The 
proposal rewards seniors who report fraud to the government and the 
government, in turn, increases penalties for those who defraud the 
system.
  Those who have taken a hard look at the benefits of increased choice 
and competition believe that health care delivery can be improved and 
costs reduced. In conjunction with affluence testing and reduced fraud 
and abuse, many believe that savings will be generated adequate to keep 
the program solvent at least until the baby boom generation begins to 
retire. But they may be wrong. That's why the current plan also builds 
in a ``failsafe'' mechanism, under which government payments to 
providers will be reduced if targets are not met.
  Is this plan perfect? No. It surely can be improved and there ought 
to be a bipartisan effort to do so. But it's the only plan out there 
that seriously addresses Medicare's financial troubles. For the 37 
million Americans in the system and those millions more in years to 
come, let's hope Congress and the White House can get beyond the 
rhetoric and work together to produce a responsible plan that saves 
this vital system. And, in the process, let's hope both sides can be 
more honest with the American public about how that's achieved.
  I urge my colleagues to support this legislation as a responsible 
approach to a very real problem.
  Mr. FOGLIETTA. Mr. Chairman, there has been a lot of talk this year 
about contracts. First, there was the Contract With America. Or as they 
call it in my neighborhood in south Philadelphia, the contract on 
America. There is the contract with the American family.
  Now I studied contracts in law school. A contract is not a very 
complicated thing: you agree to do something for me and I will do 
something for you.
  As we vote on this bill today, let us all think about what our 
parents did for us and for America. The generations of parents who 
stand at risk because of this legislation gave decades of their lives 
at work to raise us, feed us, clothe us, to educate us.
  They fought the Second World War for us, they saved the world from an 
enemy so evil it is unthinkable to consider what would have happened 
without them, our parents.
  After World War II, men and women in this Chamber did a profound 
thing. They created a way for our parents to live out their lives in 
security, in peace, and in health.
  The created the Social Security and Medicare systems.
  These programs represent a covenant among generations. But now we are 
tearing up that contract.
  They are tearing up that contract when they raise premiums on elderly 
Medicare recipients who just cannot afford it, and next week they 
propose to cut Medicare to the bone to pay for a tax cut for the 
wealthiest Americans.
  They are tearing up the contract by pushing people too hard into a 
system that will take their choice away.
  They are tearing up that contract with huge cuts to hospitals and 
doctors and that slam the door on access.
  These are senior citizens who have held up their end of the contract. 
We have to keep our part of the bargain. I urge my colleagues to oppose 
this bill and support the Gibbons-Dingell substitute.
  Mr. CASTLE. Mr. Chairman, I rise in support of the Medicare 
Preservation Act. This is a realistic proposal which addresses the 
serious problem of Medicare's pending bankruptcy. For the last 6 
months, I've traveled throughout Delaware, held town meetings, and 
visited with senior centers to talk about this important program, which 
provides health care for roughly 100,000 aged and disabled Delawareans. 
Delawareans want to know that this critical program will be there for 
them in the future. They recognize that the Government cannot afford to 
continue the Medicare Program as it currently exists.

[[Page H 10382]]

  Medicare, created in 1965, is comprised of two parts, part A and part 
B, which provide hospital coverage and doctor coverage for 99 percent 
of all older Americans. President Clinton's Medicare trustees have 
clearly and succinctly stated that the program is in financial dire 
straits. Why? The Medicare Program grew at a rate of 10.5 percent last 
year--three times that of inflation and twice as much as private sector 
medical costs. Further, the General Accounting Office [GAO] has 
estimated that as much as $44 billion a year is wasted on Medicare and 
Medicaid fraud, and about 30 cents of every dollar is wasted or lost 
due to mismanagement by a Federal agency.
  Thirty-seven million people depend on the Medicare Program, and it is 
frustrating to see the program politicized. No one--not Democrats, not 
Republicans--invented Medicare's financial crisis. The program has been 
heading toward bankruptcy for years. During the last Congress, 
President Clinton created a bipartisan Commission on Entitlement and 
Tax Reform, on which I was selected to serve, to try to transcend 
politics and address entitlement programs in a responsible, bipartisan 
manner.
  In forming the Commission, President Clinton said ``This Commission 
will be asked to grapple with real issues of entitlement reforms. . . . 
This panel, I expect, will ask and answer the tough questions. . . . 
Many regard this as a thankless task. It will not be thankless if it 
gives us a strong and secure and healthy American economy and society 
moving into the 21st Century.'' While the final report to the President 
did not endorse specific proposals to reform entitlement programs, it 
stated ``We must act promptly to address this imbalance between the 
government's promises and its ability to pay.'' However, no further 
action was taken by the Democratic leadership in Congress or the 
President.
  In contrast, Republican leadership in Congress has bravely confronted 
the issue, refusing to be thrown off track by those who are trying to 
turn Medicare reform into a political hot button. The Republican 
proposal recognizes that we simply must control the program's spiraling 
growth rate to guarantee that the program is maintained well into the 
future. The proposal does not bow to the political pressure of those 
who want a feel-good proposal that only scratches the surface of reform 
in order to provide a quick fix until after the next election.
  Having said that, I think it would be naive to throw unconditional 
support behind any proposal that modernizes a 30-year program. 
Reforming Medicare is complicated business, and we do not have crystal 
balls allowing us to predict perfectly the outcome of these bold 
reforms. I do have some reservations about the proposal. For example, I 
am concerned about the potential impact of the ``look back'' provision 
that allows additional savings to come from doctor and hospital 
reimbursement rates if the amount of savings predicted under the bill 
do not measure up. I want to ensure that nursing homes continue to be a 
safe place for our seniors. I want to ensure that some of the 
deregulatory provisions in the bill don't ultimately increase costs, 
like those relating to physician self-referral.
  Given the stakes here, however, the good cannot be set aside while we 
try to achieve the perfect. In its entirety, the proposal is realistic, 
sensible, and fair. The proposal saves Medicare from bankruptcy and 
recognizes that dramatic changes must be made and new options must be 
provided to this important program.
  Next year, the Federal Government starts spending more on Medicare 
than it takes in and in 6 short years, the Medicare Program is 
insolvent. Under the Republican plan, Medicare is preserved until 2010, 
benefits will continue to grow and patient choice is not only 
maintained--it is expanded. Older Americans receiving Medicare can stay 
in the current system, with their current doctor, without having to 
choose another health care plan. Or, they can choose a private sector 
plan that offers more benefits, like prescription drugs or eyeglasses 
or put their funds into a medical savings account.
  Under the Republican plan, there are no cuts in spending--spending 
goes up 40 percent over 7 years, with per beneficiary spending 
increasing from $4,800 today to $6,700 in 2002; there is no increase in 
Medicare copayments; there is no increase in Medicare deductibles; and 
there is no change in the current rate of Medicare premiums. Today and 
tomorrow, premiums are 31.5 percent of Medicare part B costs. They will 
continue to be calculated that way.
  In addition, the bill cracks down on waste, fraud, and abuse that 
pervades the current system, enacts tough malpractice reforms to end 
runaway spending and frivolous lawsuits, and allows doctors and 
hospitals to join hands in providing health care in a provider network 
arrangement. Lastly, the Medicare Preservation Act clearly states that 
the savings from slowing Medicare's growth rate must go back into the 
health care system in a lock box and cannot be used for any other 
purpose.
  Enacting a bold Medicare preservation plan is not only absolutely 
necessary; it is the responsible action and the least we can do for the 
37 million Americans who depend upon Medicare now and for the millions 
of Americans who will depend upon Medicare in the future.
  Mrs. THURMAN. Mr. Chairman, I rise today to express my opposition to 
the Republican plan to cut Medicare to finance a $245 billion tax cut 
for the wealthy. Under the Republican plan, Florida will lose $28 
billion from Medicare. As a result, my constituents will play higher 
premiums, face uncertainty about their ability to stay with trusted 
doctors, and lose their sense of health care security.
  Republicans have promised a utopian world of free choice and complete 
access to services. But, there is no choice when cuts in the fee-for-
service program force seniors into health maintenance organizations. 
And there is no quality service when our health care system for the 
elderly is cut to free up money for tax cuts. Paying more for the same 
service is a cut, and the Republicans know it.
  We need to stand up for the seniors of America. Seniors were forcibly 
silenced during the so-called debate on this issue in committee. When 
we tried to expose the Republicans plan for what it is, we were shut 
out of hearings and forced to meet on the Capitol lawn. It is our 
obligation, as representatives of all citizens, including the most 
vulnerable, to speak out and vote against these drastic cuts.
  Mr. LATHAM. Mr. Chairman, I rise to support the Medicare Preservation 
Act.
  Medicare has successfully provided basic health care for our Nation's 
senior citizens. However, the Medicare Program is sick, very sick. 
According to President Clinton's own advisors, the Medicare system will 
face bankruptcy in the next decade if fundamental reforms do not take 
place. If the program goes broke, seniors will lose their Medicare 
hospital coverage.
  During the Medicare reform debate, I have worked to ensure that four 
goals are achieved. First, the long-term integrity of the Medicare 
system must be preserved for present and future retirees. Second, 
lower-income seniors must be protected from cost increases that they 
cannot afford. Third, Medicare reforms should provide more competition 
and consumer choice, not more Government control. And finally, the huge 
reimbursement discrepancy between rural and urban counties must be 
fairly adjusted. I am proud to say that the Medicare Preservation Act 
meets these goals.
  The Medicare Preservation Act will ensure that every Medicare 
recipient will continue to receive affordable, high quality health care 
now and in the future. Medicare spending will increase from $4,800 to 
$6,700 per person over the next 7 years. Seniors will have more health 
care options including traditional fee-for-service Medicare, managed 
care plans, and medical savings accounts. Finally, the increase in per 
capita payments for rural counties will ensure that seniors who live in 
rural communities will have the same health care options as their 
friends in urban areas.
  The Medicare Preservation Act strengthens Medicare for the 21st 
century. I strongly urge my colleagues to support passage of the H.R. 
2425.
  Mr. KLECZKA. Mr. Chairman, today the new Republican majority has 
demonstrated that their position on Medicare has not changed in 30 
years. In 1965, Democrats enacted the Medicare Program amidst 
Republican opposition. and today, despite the overwhelming success of 
this program, Republicans have voted to undermine it. I am not 
surprised that the GPO has voted to make unprecedented cuts in this 
critical health care program, after all, they have never consistently 
supported Medicare. But to take $270 billion out of a program that 
protects senior citizens in order to pay for tax cuts and to balance 
the budget--this is simply extreme.
  Republicans claim these cuts are to strengthen the trust fund, which 
according to the Medicare trustees is expected to become insolvent 7 
years from now, in 2002. But in the last 20 years the trustees have 
projected that the fund would be insolvent in 7 years or less at least 
nine times. In fact, just last year, the trust fund was projected to 
become insolvent in the year 2001--7 years out. Yet my Republican 
colleagues said nothing. In fact, the only provision proposed to date 
by the Republican majority that has a measurable impact on the trust 
fund actually takes more than $87 billion out of the fund over the next 
10 years! For 30 years it has been up to the Democrats to protect and 
preserve Medicare. It looks as if it will be up to us for the next 30 
as well.
  In their new found concern about the Medicare trust fund, the GOP 
plan cuts the program by $270 billion over 7 years. And their plan does 
extend the life of the trust fund to the year 2006. However, what they 
don't tell you is that the Medicare actuaries estimate that only $90 
billion is needed to extend the trust fund to that year. What are they 
doing 

[[Page H 10383]]
with the balance of the money? They are using it to pay for tax cuts 
and deficit reduction.
  In contrast, the Democrats have introduced alternative plans that 
achieve the same level of solvency that the Republican plan achieves, 
but at only a third of the cost. These proposals reduce Medicare 
expenditures by only $90 billion over 7 years and still assure that the 
trust fund remains solvent for the next 10 years. Because every penny 
of this $90 billion is targeted to the trust fund, we are able to 
strengthen the fund without weakening the program for current 
beneficiaries.
  The Democratic substitute contains a series of responsible reforms 
combined with modest improvements that put beneficiaries first. This 
alternative does not increase premiums, copayments or deductibles. In 
fact, the plan even eliminates excessive copayments that beneficiaries 
currently pay for hospital outpatient services. Moreover, Medicare's 
current limits on balance billing are retained, essential protections 
for Medicare beneficiaries in nursing homes are preserved, and tough 
laws against fraud and abuse remain on the books.
  The Democratic bill updates Medicare benefits to prevent cancer and 
complications from diabetes including colorectal screening, pap smears, 
pelvic examinations, and increased coverage of breast cancer screening. 
Also, payment would be authorized for diabetes outpatient self-
management services and for blood-testing strips for individuals with 
diabetes.
  Our plan also offers expanded choice of providers and plans, 
permitting beneficiaries to enroll in preferred provider organizations 
[PPO], point-of-service [POS] plans and provider service organizations 
in addition to the current fee-for-service and HMO options. But unlike 
the Republican bill, our reform proposal also ensures that these new 
options are real choices. Plans must honor limits on balanced billing 
and they are paid adequately in order to shield beneficiaries from 
additional out-of-pocket costs.
  Certainly, efforts to control spending require that some limits be 
places on reimbursements to all providers, including physicians. Since 
the American Medical Association has been so supportive of the GOP 
plan, the Democratic alternative largely mirrors the Republican 
proposal with respect to payment reforms. Special caution is taken with 
reductions in payments to hospitals. Excessive cuts in hospitals, like 
those proposed by the majority, could be counter productive, negatively 
affecting the quality of care, reducing access to care and resulting in 
higher costs for the private sector. The alternative plans includes 
reasonable reductions in hospital payments but also safeguards 
hospitals that serve the uninsured in rural and urban areas.
  I urge my Republican colleagues to stop marching blindly for just one 
moment to consider this worthy, thoughtful alternative. If your goal is 
to preserve the trust fund, this alternative plan accomplishes that 
goal. If you want to strengthen the Medicare program and bring it into 
the twentieth century, this plan gets there. If instead, you wish to 
pursue this scorched earth policy in order to balance the budget and 
pay for tax cuts, then you have that option before you today. But at 
least stop long enough to think about what it is that you want to 
achieve.
  It dismays me that we have come this far in the process and are left 
with a Republican plan or the Democratic alternative. It did not have 
to come down to this. Democrats on the Ways and Means Committee and on 
the Commerce Committee attempted to work with Republicans to add these 
protections included in the Democratic alternative to the Republican 
plan and to improve the GOP proposal. Ways and Means Democrats offered 
more than 35 constructive amendments to the Republican bill. Of these, 
only four were accepted by the Republican majority.
  Today we will not have the opportunity to present constructive 
amendments because the rule is closed. But they cannot hide from their 
agenda. Republicans on the Ways and Means Committee voted in lockstep 
to reject an amendment to extend basic consumer protections to Medicare 
beneficiaries who choose managed care plans. They opposed an amendment, 
offered by myself, to safeguard beneficiaries from a practice called 
balance billing in which the patient is expected to pay the difference 
between what the doctor charges and what Medicare pays. Republican 
members voted against an amendment that would have restored funding for 
inner city and rural hospitals who serve the uninsured, and rejected an 
amendment to retain the current standards for nursing homes. They also 
voted against amendments to increase screening for breast and cervical 
cancer, rejected amendments to provide coverage for colorectal and 
prostate cancer screening, and turned back an amendment to provide 
better coverage for diabetics.
  These are just some of the proposals on which the Republicans have 
gone on record. But today is the day to keep score. Today we each have 
a choice--to support senior citizens or to support tax cuts for wealthy 
Americans. I urge my colleagues to not take lightly this decision.
  Mr. MFUME. Mr. Chairman, I rise today in opposition to H.R. 2425, the 
Medicare Preservation Act. This bill makes the most sweeping changes in 
the Medicare Program since its establishment in 1965. Since assuming 
control of Congress this January, House and Senate Republicans have 
been pushing for passage of the deepest package of Medicare cuts in the 
program's 30-year history. These changes will increase the cost of 
Medicare to the average senior citizen by nearly $1,000 and force many 
to give up their own doctors. According to the American Association of 
Retired Persons, the Republican Medicare cuts would be ``the end of 
Medicare as we know it.''
  There is much in the bill that concerns me and my constituents. 
However, the provisions of this bill to change nursing home standards 
have raised the ire of many others. H.R. 2425 repeals current federal 
standards for nursing homes participating in the Medicare Program and 
replaces them with a requirement that nursing homes be State certified.
  Many of my elderly constituents and their families recall the days 
when some nursing homes were little more than abusive prisons for 
America's seniors. They are not impressed by this so-called 
preservation effort.
  Why the assault on Medicare? Why propose deep and potentially 
devastating cuts in a program that is a contract between Government and 
seniors who have paid into the program all their lives? Some 
Republicans will say that they are trying to save the program from 
bankruptcy. Others will say they need to raid Medicare to balance the 
budget (although at the same time they are proposing huge tax breaks 
for the wealthiest Americans). What are the real answers?
  In understanding this latest attack on Medicare, I believe it is 
important to look beyond the latest conservative rhetoric about 
Medicare and examine the record instead. The fact is, since the 1950's, 
the GOP has consistently opposed even the creation of Medicare. Many of 
the party's prominent leaders voted against Medicare when it was first 
established in 1965. And current party leaders have repeatedly attacked 
Medicare and Social Security.
  If the Republican Party had been in the majority in 1965, Medicare 
simply would not exist. A full 93 percent of House Republicans voted 
against Medicare when it was introduced. In fact, the Republicans voted 
overwhelmingly against the creation of Medicare on three other 
occasions in the early 1960's.

  Their arguments were extreme then and they're extreme now. In 1965 
they called Medicare ``socialized medicine'' and claimed it would 
``impair the quality of health care, retard the advancement of medicine 
and displace private insurance.'' Nevertheless, Medicare passed, and 
for many years was widely hailed, even by Republicans, as a triumph of 
government.
  Despite the doomsday predictions 30 years ago, Medicare has 
dramatically improved the health and welfare of American seniors and 
ensured that the elderly will never again have to choose between health 
care and food or rent.
  Ironically, one of the reasons we even have a debate about reforming 
Medicare is because of its profound success. Americans are living 
longer and more productive lives. That means many more reach an age 
where greater health problems can emerge. We should not use the success 
of Medicare as a reason to recklessly cut the program.
  The Medicare Preservation Act being voted on today does not preserve 
Medicare. Rather, it will violate the compact made with American's 
elderly over 30 years ago. This bill will push patients into managed 
care; provide obstacles for Medicare beneficiaries to find a physician 
willing to provide them care because of lower reimbursement rates; 
double Part B premiums for seniors living on a fixed income by the year 
2002; close inner-city and rural hospitals which are already on the 
brink of bankruptcy and give a few bad doctors an open license to 
provide shoddy treatment since patients would no longer be able to rely 
on the court system for redress. Additionally this bill would repeal 
balance billing requirements for some categories of beneficiaries; 
encourage doctors to perform unnecessary tests--increasing overall 
health care costs--and allow them to refer patients to facilities they 
have a financial stake in; and increase costs by allowing healthier, 
younger seniors to opt out of Medicare through Medical Savings Accounts 
while leaving sicker and older patients in traditional Medicare.
  The Republican cuts in Medicare are misguided and faulty. They go way 
beyond what is reasonable or necessary to maintain the solvency of the 
program. And when you strip away the rhetoric, all that remains is a 
huge tax break for the wealthy. They need a way to pay for their 
trickle-down tax break, and they believe they can pull it out of the 
pockets of 

[[Page H 10384]]
struggling seniors. America's seniors were told that their deepest 
beliefs in fairness, personal responsibility, social duty and 
contribution to society would be rewarded if they trusted Congress with 
their health care. Now Congress is using Medicare cuts to pay for a tax 
break for the wealthy.
  Despite the feel-good rhetoric, the reality is that Medicare has been 
moved into the bulls-eye of the GOP target for massive cuts. When you 
look at the shotgun of this crew and the other targets of the 
conservatives--student aid, summer jobs, Federal workers--it looks less 
like responsible budget cutting and more like a drive-by shooting.
  Mr. EWING. Mr. Chairman, the Medicare Board of Trustees reported last 
spring that ``The Medicare Trust Fund continues to be severely out of 
balance and is projected to be exhausted in 7 years.'' This report was 
signed by, among others, President Clinton's Secretary of the Treasury, 
his Secretary of Labor, and his Secretary of Health and Human Services.
  Mr. Chairman, I am proud to stand up in support of legislation which 
will provide a long-term solution to the financial problems in the 
Medicare Program and guarantee that the program will be available for 
senor citizens well into the next century. In addition, this 
legislation will provide senior citizens with more choices in their 
health care decisions, while guaranteeing that senior citizens in 
Medicare now may remain in the program and keep their current doctor 
and hospital if they choose. This bill provides for an increase of 
Medicare spending from $4,800 per person now to $6,700 per person over 
the next 7 years, while at the same time guaranteeing the solvency of 
Medicare. I am proud to support legislation which protects and 
preserves Medicare without changing Medicare benefits, does not 
increase deductibles, and does not change co-payments.
  I would like to commend the Republican leadership for agreeing to 
alterations in the legislation which will guarantee a minimum Medicare 
reimbursement level for rural counties which for years have received 
substantially less than more populous areas. This agreement will make 
the Medicare program more fair than it has been for seniors who live in 
rural America, while at the same time providing an incentive for HMO's 
and managed care programs to expand their services into rural America. 
This will provide seniors in rural areas more choice in their health 
care decisions.
  It is extremely unfortunate that some have decided to play politics 
with Medicare by scaring senior citizens into thinking that their 
benefits will be cut by this legislation. It is unconscionable. Senior 
citizens deserve to live with the security that Medicare will continue 
to be there for them when they need it, and they should not be the 
subject of partisan politics.
  This legislation simply controls the rate of growth of Medicare, 
which has been growing more than 10 percent every year, much higher 
than inflation. Spending on the program will continue to increase, only 
at a more controlled rate. The bill accomplishes this objective by 
maintaining premiums at the current 31 percent level (rather than 
decreasing as scheduled), reducing waste and fraud in Medicare, and 
encouraging managed care without forcing anyone into it.
  Senior citizens don't want a band-aid solution to the pending 
bankruptcy of Medicare. They want a long-term solution which guarantees 
that Medicare will be there for them. This legislation does just that.
  Mr. GALLEGLY. Mr. Chairman, I rise in support of H.R. 2425, the 
Medicare Preservation Act of 1995.
  Mr. Chairman, when the majority in the Congress first took up the 
challenge of a potentially bankrupt Medicare System as presented by the 
Board of Trustees, I wanted to ensure that any reforms we initiated 
achieved two goals: first, the reforms must make the trust fund solvent 
as far into the future as possible; and second, none of the reforms 
could result in any degradation of current health services now enjoyed 
by those covered by the Medicare System.
  In the days and weeks leading to today's vote on the Medicare 
Preservation Act of 1995, literally thousands of constituents contacted 
me to discuss this legislation and to voice their specific questions/
concerns. As I began to research and consider the proposed reforms, 
their questions became my questions and I realized I could not in good 
faith cast my vote before I had all the answers.
  One of the things they wanted to know was whether the new plan would 
allow beneficiaries to remain in the traditional Medicare System. The 
answer, of course, is absolutely. Only Medicare beneficiaries who 
choose to participate in one of the new MedicarePlus options will 
change plans.
  Some were concerned by reports that the Republican plan was 
``cutting'' Medicare benefits. Was this true? Were we cutting Medicare? 
The answer was absolutely not. The plan we adopted today significantly 
increases Medicare spending. Under the Medicare Preservation Act of 
1995, average spending per beneficiary in California goes from $5,821 
to $8,139 over the next seven years--an increase of more than $2,300.
  Many of those who contacted me had been exposed to the false and 
inflammatory reports that the money we were saving by reforming 
Medicare would be used toward deficit reduction or tax cuts. In fact, 
nothing could be further from the truth. Any savings realized through 
our reform of Medicare must stay in Medicare. Period.
  A final concern many seniors expressed to me was whether the quality 
of the care they currently receive would decline under a reformed 
Medicare. Well, I can report that--at a bare minimum--seniors under 
this plan will be guaranteed the same benefits they have now, no matter 
what specific plan they choose. At the same time, many seniors will be 
able to select a plan that may offer something they do not currently 
receive, whether it be prescription drugs, eyeglasses, or better 
hospital care. The bottom line is that the quality of benefits in all 
cases will measure up to yesterday's Medicare and, in many cases, will 
improve.
  These were the kinds of things I needed to know before casting my 
vote today in favor of the Medicare Preservation Act of 1995. Like many 
of my constituents--and colleagues--I was concerned about the rhetoric 
and misinformation swirling around this issue prior to the vote. 
However, once I had the facts at my disposal I saw only one appropriate 
course. That course was supporting a reformed Medicare System which 
increases benefits, expands the options to beneficiaries, and is 
structured in such a way that it will survive far into the future.
  H.R. 2425, the Medicare Preservation Act of 1995, accomplishes all of 
these goals while retaining the essential elements of traditional 
Medicare. I truly believe that we have done the right thing today in 
adopting these reforms. We have taken a program that was failing, a 
program on track to consume itself and we have given it new life. We 
rose above the scare tactics and sound bites aimed at preventing us 
from having the courage to do the right thing and we did the right 
thing.
  I am proud to have had a hand in bringing about these badly needed 
reforms, and I look forward to celebrating the positive impact our 
action today will have on current and future Medicare beneficiaries.
  Mr. HALL of Ohio. Mr. Chairman, today we are debating H.R. 2425, the 
so-called Medicare Preservation Act. Who can be opposed to preserving a 
program on which more than 37 million Americans are dependent? 
Unfortunately, the bill does not live up to its title.
  Its supporters claim that unless action is taken, the part A trust 
fund will be bankrupt in the year 2002. However, all that this bill 
does is to move the date of insolvency back to the third quarter of 
2006 according to actuaries at the Health Care Financing 
Administration. At what cost?
  The part B premium will rise by an estimated 89 percent. Payments to 
hospitals will be cut, especially to hospitals that provide a 
disproportional share of care to indigent patients and teaching 
hospitals, and as a result, many hospitals will be forced to close. 
Payments for home health care will be reduced which will lead to more 
people being placed in nursing homes, but payments for nursing homes 
will also be reduced.
  This is a bill to cut $270 billion from the growth of the Medicare 
Program over the next 7 years, far more than is needed to keep the 
program solvent. As painful as the cuts in the bill are, the program 
changes in the bill are even worse.
  The bill is predicated on beneficiaries moving into managed care 
plans such as health maintenance organizations. It also provides for 
establishing medical savings account plans with high deductibles. These 
accounts could be used for medical services not currently covered by 
Medicare. These options are all right for people who are basically 
healthy, but they will have a devastating impact on those who are not. 
Plans will vigorously compete for those in the first group; but the 
others will be left behind in traditional fee-for-service plans. As 
more and more healthy people leave these traditional plans, premiums 
will skyrocket, which in turn will increase the exodus.
  I believe a compromise Medicare bill can be passed, but in crafting 
this bill, the majority party did not seek input from this side of the 
aisle. They did not seek input from the public at large by conducting 
committee hearings. A small group of Members wrote the bill and changes 
were made at the behest of certain interest groups. This is not the way 
to legislate.
  Mr. OLVER. Mr. Chairman, today the Republican Party takes on the onus 
for dismantling Medicare, the health care guarantee within Social 
Security.
  And you can bet the Republican Party has its sights on dismantling 
Social Security as well.

[[Page H 10385]]

  And to what end? To create a comprehensive health care system which 
80 percent of Americans want? No.
  To serve extremists in the Republican Party.
  To serve the insurance companies and the American Medical 
Association.
  The Republican Party is cutting $270 billion from health care for 
American retirees to give $245 billion in tax cuts.
  More than half of the tax cut goes to fat cats already making over 
$100,000 per year--while 75 percent of the people taking Medicare cuts 
to pay for that tax cut live on less than $20,000 per year.
  The Republican Party is taking health care dollars from low- and 
middle-income retired Americans to give billions to insurance companies 
and the already wealthy.
  You can bet Americans will remember next November.
  Mr. MILLER of Florida. Mr. Chairman, I would like to insert the 
following letter, polling results, and testimony on the Medicare 
Preservation Act by the U.S. Chamber of Commerce into the Congressional 
Record.

                                         U.S. Chamber of Commerce,
                                 Washington, DC, October 18, 1995.
     Members of the U.S. House of Representatives:
       The Chamber urges your support for H.R. 2425, the Medicare 
     Preservation Act. Because of the importance of this issue to 
     our members and the budget reconciliation measure, the 
     Chamber will include this vote in its annual How They Voted 
     vote ratings. For your information, I have included the 
     results of a recent poll taken among Chamber members 
     concerning elements of Medicare reform which reflects 
     overwhelming support for this legislation.
       Medicare is clearly in a state of crisis. Over the past 
     five years, the program has grown at a staggering annual rate 
     averaging 10\1/2\ percent. Immediately ahead of us is a 
     seismic demographic shift: the ratio of taxpayers to Medicare 
     beneficiaries is declining rapidly--from about four to one 
     today, to only two to one in the next fifty years. The 
     program as currently structured simply cannot survive.
       Just as clearly, the failed Medicare reform approaches of 
     the past will fail to measure up to this crisis and will 
     threaten both business and the economy. Since 1970, Congress 
     has raised payroll taxes over 20 times and the Medicare 
     Trustee's 1995 Report pointed out that payroll taxes would 
     have to be raised by another 1.3 to 3.5 percentage points to 
     bring the system into balance. When you consider that many 
     small and medium size businesses already pay more in payroll 
     taxes than income taxes and that payroll taxes must be paid 
     regardless of economic conditions, it becomes clear why 
     Medicare requires solutions other than tax increases.
       We believe the long-term solution to Medicare's problem is 
     comprehensive reform that increases competition while 
     restraining the growth in spending. Competition will help 
     bring prices down and will provide secure and expanded 
     benefits for seniors. The Medicare Preservation Act is a bold 
     means of securing the solvency of the Medicare Trust Fund and 
     setting Medicare on a secure path for the future.
       We urge your support for the Medicare Preservation Act 
     during its consideration on the House floor and throughout 
     debate on the budget reconciliation measure.
           Sincerely,
     R. Bruce Josten.
                                                                    ____


          U.S. Chamber of Commerce--Medicare FAX Poll Results

       On October 11, 1995, the U.S. Chamber surveyed 9,700 
     business, chamber and association members on their attitudes 
     concerning Medicare reform and specific reform elements. 
     Responses to the Chamber survey (nearly 10 percent responded, 
     68.9% of which employ fewer than 50 workers) indicated strong 
     support for market-oriented Medicare reform comparable to the 
     House and Senate Majority plans for Medicare reform. The 
     complete survey and results are provided below.
       Medicare is ``severely out of financial balance and the 
     Trustees believe that . . . prompt, effective and decisive 
     action is necessary.''
       Medicare reform has become a focal point of the budget 
     debate. Medicare--the national health insurance program for 
     seniors--will run out of money in seven years, according to 
     the system's trustees. Spending on Medicare and other 
     entitlements threatens to crowd out all other budget 
     priorities and increase the budget deficit.
       Previous approaches to Medicare reform have failed to slow 
     Medicare's growth. Worse, these approaches have increased the 
     burden on businesses and their employees through higher 
     payroll taxes and higher insurance premiums.
       Since 1970, Congress has raised payroll taxes over 20 times 
     and the Trustee's Report pointed out that payroll taxes would 
     have to be raised by another 1.3 to 3.5 percentage points to 
     bring the system into balance. When you consider that many 
     small and medium size businesses already pay more in payroll 
     taxes than income taxes and that payroll taxes must be paid 
     regardless of economic conditions, it becomes clear why 
     Medicare requires solutions other than tax increases.
       We need your help. Please review the following questions on 
     Medicare reform and FAX back your answers by close of 
     business October 16.
       1. Medicare should be modernized by adopting the market-
     based strategies private employers and health plans are using 
     successfully to improve health care quality and control 
     costs. These strategies include improving the quality of care 
     provided to enrollees, increasing enrollee choice by 
     expanding health plan options, and reducing the rate of 
     growth of Medicare spending.
       Agree, 98.9 percent; Disagree, 0.6 percent.
       2. Two competing approaches to Medicare reform have emerged 
     in Congress. One more limited approach addresses the Medicare 
     Part A trust fund, delaying insolvency for an additional two 
     years through $89 billion in Medicare Part A trust fund, 
     delaying insolvency for an additional two years through $89 
     billion in Medicare savings, primarily from reducing the rate 
     of growth in Medicare payments to providers A second approach 
     is more comprehensive in nature, addressing both Medicare 
     part A (hospital bills) and Part B (doctors bills). Medicare 
     Part A would be protected at least an additional 10 years 
     through $270 billion in Medicare savings achieved through 
     increased competition and reducing the rate of growth in 
     Medicare payments to providers. Which approach would you 
     favor?
       Limited, 4.3 percent; Comprehensive, 94.6 percent.
       3. Do you favor or oppose the following elements of 
     Medicare reform?
       a. Provide seniors choices between competing health plans 
     including existing fee-for-service benefits.
       Favor, 97.4 percent; Oppose, 1.6 percent.
       b. Contain Medicare spending by increasing competition and 
     reducing the rate of growth in Medicare payments.
       Favor, 97.4 percent; Oppose 2.9 percent.
       c. Increase managed care options for seniors.
       favor, 93.8 percent; Oppose, 43.3 percent.
       d. Provide seniors a medical savings account option.
       Favor, 88.2 percent; Oppose, 7.3 percent.
       e. Allow provider groups (i.e., doctors and hospitals) to 
     offer health coverage (similar to managed care networks) 
     directly to seniors--a new proposal known as provider 
     sponsored networks or PSNs.
       Favor, 91.9 percent; Oppose, 5.7 percent.
       f. Require managed care plans to provide out-of-network 
     benefits at a higher cost to the beneficiary.
       Favor, 72.4 percent; Oppose, 18.2 percent.
       4. For purposes of tabulation: type of organization: 
     Business, 93.2 percent; Chamber, 4.3 percent; Other, 2.0 
     percent. Approximate number of employees: under 10, 29.4 
     percent; 10-49, 39.5 percent; 50-99, 12.5 percent; 100-249, 
     8.6 percent; 250-499, 3.7 percent; 500-4,999, 3.7 percent; 
     5,000 +, 1.4 percent.

     [From the U.S. Chamber of Commerce, Economic Policy Division]

          The Medicare Crisis: The Tax Solution Is No Solution

       The only solution detailed by the Medicare Board of 
     Trustees for achieving financial balance in Medicare Part A 
     is to raise taxes. Unfortunately, this is no solution at all. 
     Higher taxes will rob working individuals of their hard-won 
     dollars, significantly increase costs on small and large 
     businesses alike and bring the economy to the brink of 
     recession.
       The Trustees calculate that balancing the Medicare trust 
     fund for the next 75 years requires us to immediately hike 
     the Medicare payroll tax from 2.90% to 6.42%. While the tax 
     increase may seem to amount to only a few percentage points, 
     it amounts to hundreds of dollars to the typical worker, 
     thousands of dollars to the small business, and billions of 
     dollars for the economy. Analysis by the Economic Policy 
     Division of the U.S. Chamber of Commerce suggests the 
     following impacts on individuals, businesses and the economy:
       For a worker making $30,000 a year, total Medicare payroll 
     taxes paid would jump to $1,926 from the current $870.
       A small business employing 25 such workers would be liable 
     for an additional $13,200 tax payment per year.
       When aggregated across the entire economy, the effect would 
     be to lower real GDP by $179.4 billion within two years and 
     hold GDP about $95 billion lower 10 years later. This amount 
     to a 3.1% decline in GDP in the short run. With economic 
     growth projected to average less than 3% over the next five 
     years, this decline could easily result in a recession.
       These results are even more startling when you consider 
     that they represent an optimistic evaluation, not a worst-
     case scenario.

             overview of medicare: why reform is necessary

       Medicare is a nationwide health insurance program for older 
     Americans and certain disabled persons. It is composed of two 
     parts: Part A, the hospital insurance (HI) program, and Part 
     B, the supplementary medical insurance (SMI) program.
       Part A covers expenses for the first sixty days of 
     inpatient care less a deductible ($716 in 1995) for those age 
     65 and older and for the long-term disabled. It also covers 
     skilled nursing care, home health care and hospice care. The 
     HI program is financed primarily by payroll taxes. Employees 
     and employers each pay 1.45% of taxable earnings, while self-
     employed persons pay 2.90%. In 1994, the HI earnings caps 
     were eliminated, meaning that the HI tax applies to all 
     payroll earnings.
       Part B is a voluntary program which pays for physicians' 
     services, outpatient hospital services, and other medical 
     expenses for persons aged 65 and over and for the long-term 

[[Page H 10386]]
     disabled. It generally pays 80% of the approved amount for covered 
     services in excess of an annual deductible ($100). About a 
     quarter of the funding comes from monthly premiums ($46.10 in 
     1995); the remainder comes from general tax revenues and 
     interest.
       Medicare is not a means-tested program. That is, income is 
     not a factor in determining an individual's eligibility or, 
     for Part B, premium levels. Age is the primary eligibility 
     criteria, with the program also extending to qualified 
     disabled individuals younger than 65.
       Over the years, tax revenues for Medicare Part A have 
     exceeded disbursements, and so the remaining revenues have 
     been credited to the Medicare HI Trust Fund. At the end of 
     1994, the trust fund held $132.8 billion.

                       conclusion of the trustees

       Each year, trustees of Medicare's Hospital Insurance Trust 
     Fund analyze the current status and the long-term outlook for 
     the trust fund, and their findings are published in an annual 
     report. The 1995 edition, issued in April, demonstrated that 
     the Medicare system is in serious financial trouble. The 
     program's six trustees--four of whom are Clinton appointees 
     (cabinet secretaries Robert Rubin, Robert Reich and Donna 
     Shalala, and commissioner of Social Security, Shirley 
     Chater)--reported the following conclusions:
       Based on the financial projections developed for this 
     report, the Trustees apply an explicit test of short-range 
     financial adequacy. The HI trust fund fails this test by a 
     wide margin. In particular, the trust fund is projected to 
     become insolvent within the next 6 to 11 years . . . (HI 
     Annual Report, pg. 2)
       Under the Trustees' intermediate assumptions, the present 
     financing schedule for the HI program is sufficient to ensure 
     the payment of benefits only over the next 7 years (pg. 3)
       The program is severely out of financial balance and 
     substantial measures will be required to increase revenues 
     and/or reduce expenditures. (pg. 18)
       . . . the HI program is severely out of financial balance 
     and the Trustees believe that the Congress must take timely 
     action to establish long-term financial stability for the 
     program. (pg. 28)
       The Trustees believe that prompt, effective and decisive 
     action is necessary (pg. 28)
       The same set of Trustees also oversees the Medicare Part B 
     program. In their 1995 Annual Report, they wrote: ``Although 
     the SMI program (Medicare Part B) is currently actuarially 
     sound, the Trustees note with great concern the past and 
     projected rapid growth in the cost of the program. . . Growth 
     rates have been so rapid that outlays of the program have 
     increased 53% in the aggregate and 40% per enrollee in the 
     last 5 years.'' (SMI Annual Report, pg. 3). ``The Trustees 
     believe that prompt, effective and decisive action is 
     necessary.'' (pg. 3)
       Obviously, the Trustees believe that the Medicare program 
     deserves our careful, immediate attention. The following 
     pages present the figures that led the Trustees to their 
     conclusions.

                      where medicare stands today

       Medicare is a huge federal program. In 1994: Medicare 
     expenditures reached $160 billion, just over half the size of 
     Social Security; Expenditures grew 11.4% from 1993; Eleven 
     cents of every dollar spent by the federal government went to 
     Medicare; Medicare represented one-fifth of total entitlement 
     spending.
       Between 1990 and 1994, Medicare grew at a 10.4% average 
     annual rate, almost three times the 3.6% average inflation 
     rate over the same period and twice the 5.1% average annual 
     growth of the economy as a whole.

                    medicare and the federal budget

       Medicare spending must be addressed as part of the solution 
     to balancing the federal budget. That's because spending on 
     federal entitlements--such as Medicare, Medicaid and Social 
     Security--soared 8.4% annually on average between 1990 and 
     1994. Spending on discretionary, annually appropriated 
     programs--such as defense, education and infrastructure--
     increased 2.2%, which is less than the rate of inflation. 
     Coming decades will see even more pressure for entitlement 
     growth, as the leading edge of the Baby Boom generation 
     reaches 65 in 2011.
       Entitlements are not only the fastest growing portion of 
     the federal budget, they're already its largest component, as 
     shown in the accompanying chart. Just over half of all 
     federal expenditures is spent on entitlements; only a third 
     go to discretionary programs. If we are going to balance the 
     federal budget--and keep it in balance over the long term--
     entitlement reform must be part of the solution

               where medicare is headed if we do nothing

       Under current law, Medicare is projected by the 
     Congressional Budget Office to grow at a 10.4% average annual 
     rate over the next seven years. In 2002, the CBO projects 
     Medicare spending will reach $344 billion, claiming almost 16 
     cents of every dollar spent by the federal government.
       Moreover, beginning next year, Medicare HI expenditures 
     will exceed the program's revenues. The HI Trust fund, which 
     at year-end 1994 held $132.8 billion, will have to be tapped 
     to cover the projected $867 million difference.
       However, according to the Trustees' Annual Report, this 
     shortfall isn't temporary. Instead, it will balloon to be 
     about seven times larger in 1997, which is just the 
     following year, and more than twenty times larger by 1999. 
     Under assumptions reflecting the most likely demographic 
     and economic trends. 1996 will be the first year of 
     hemorrhage that will deplete the entire trust fund by 
     2002--just seven years away. The optimistic set of 
     assumptions buys us only a little time, with trust fund 
     depletion projected in 2006. Under the pessimistic 
     scenario, the fund is exhausted as early as 2001. In other 
     words, within the next 6 to 11 years, it's virtually 
     certain that Medicare will be insolvent--unless we take 
     action.
       The danger of inaction was made clear last winter when the 
     President's Bipartisan Commission on Entitlement and Tax 
     Reform, chaired by Sen. Bob Kerrey and then-Sen. John 
     Danforth, issued its final report. The focus of the report 
     was to look not years ahead, but decades ahead to assess the 
     impact of federal budget trends. The report is sobering: 
     Under current trends, virtually all federal government 
     revenues are absorbed by entitlement spending and net 
     interest by 2010, as shown in Chart 2. Deficit-financing will 
     be required to cover almost all of the discretionary 
     programs, including defense, health research, the FBI, 
     support for education, and the federal judicial system.
       Ten years later, the situation is worse. Growth in 
     entitlements is so explosive that not only would the 
     government have to borrow to pay for discretionary expenses, 
     it would have to borrow funds to pay the lion's share of 
     interest payments on the national debt.
     
[[Page H 10387]]


                   medicare's impact on the pay stub

       In addition to detailing the projected dissipation of Trust 
     Fund under current law, the Trustees' Report also describes 
     the measures that would be necessary to shore up the trust 
     fund over the next 25, 50 and 75 years. If the expenditure 
     formulas are not altered, then preserving the trust fund can 
     only be done through increases in the payroll tax or 
     additional subsidies from general revenues. Table 1 
     illustrates the payroll tax increases that would be necessary 
     to balance the trust fund.

                              current law

       Currently, the combined (employee and employer) Medicare 
     tax rate is 2.90%, applied to all payroll earnings. A worker 
     earning $30,000 a year in salary or wages, for instance, is 
     directly taxed 1.45%, or $435 annually, for Medicare Part A, 
     the hospital insurance program. Employers then match that 
     payment with another $435, resulting in $870 of tax revenue 
     earmarked for the Medicare HI trust fund generated by having 
     that worker on the payroll.
       The Medicare contributions from both the worker and firm 
     don't stop there, however. Because two-thirds of Medicare 
     Part B (SMI) is financed through general revenues (the other 
     third coming from Medicare premiums and interest), a portion 
     of the worker's and the firm's general income taxes are also 
     financing Medicare. The Trustees reported that $36.2 billion 
     of general funds were used to pay Medicare Part B claims in 
     1994.

                               TABLE 1.--MEDICARE HOSPITAL INSURANCE PAYROLL TAXES                              
----------------------------------------------------------------------------------------------------------------
                                                         To balance the HI trust fund over the next--           
                                   Current  --------------------------------------------------------------------
                                     law            25 yrs.                50 yrs.                75 yrs.       
                                   employee --------------------------------------------------------------------
                                     plus    Additional   Total HI  Additional   Total HI  Additional   Total HI
                                   employer      tax        tax         tax        tax         tax        tax   
----------------------------------------------------------------------------------------------------------------
Tax rates (pct.)................       2.90        1.33       4.23        2.68       5.58        3.52       6.42
Pct. increase over current law..  .........  ..........       45.9  ..........       92.4  ..........      121.4
Payroll earnings:                                                                                               
  $10,000.......................       $290        $133       $423        $268       $558        $352       $642
  20,000........................        580         266        846         536      1,116         704      1,284
  30,000........................        870         399      1,269         804      1,674       1,056      1,926
  40,000........................      1,160         532      1,692       1,072      2,232       1,408      2,568
  50,000........................      1,450         665      2,115       1,340      2,790       1,760      3,210
  60,000........................      1,740         798      2,538       1,608      3,348       2,112      3,852
  70,000........................      2,030         931      2,961       1,876      3,906       2,464      4,494
  80,000........................      2,320       1,064      3,384       2,144      4,464       2,816      5,136
  90,000........................      2,610       1,197      3,807       2,412      5,022       3,168      5,778
  100,000.......................      2,900       1,330      4,230       2,680      5,580       3,520      6,420
----------------------------------------------------------------------------------------------------------------
Source (for all tables): 1995 Annual Report of the Board of Trustees. Medicare Hospital Insurance Trust Fund.   
  Table 1.D3, page 22, Calculations and macroeconomics simulations by the U.S. Chamber of Commerce.             

       To Balance the Medicare HI Trust Fund for the Next 25 Years 
     (through 2019): According to the Trustees' analysis, the 
     hospital insurance payroll tax would have to rise from 2.90% 
     to 4.23% (a 46% increase) to keep the HI trust fund in 
     balance for the next 25 years. Further, the increase would 
     have to be made immediately and maintained through the entire 
     25-year period.
       For our $30,000/year worker for whom $870 is currently 
     provided to Medicare HI, this increase means an additional 
     tax of $399, bringing total annual hospital insurance payroll 
     taxes to $1,269. And that's before any other federal and 
     state payroll taxes (such as unemployment insurance and 
     Social Security) or federal and state income taxes.
       However, even this increase in payroll taxes still leaves 
     the trust fund exhausted in 2019, with the oldest of the baby 
     boomers just shy of reaching their life expectancy. Because 
     of this demographic bulge, balancing the HI trust fund over a 
     longer period would require even higher payroll taxes.
       To Balance the Medicare Trust Fund for the Next 50 Years 
     (through 2044): Balancing the trust fund over the next fifty 
     years--a span long enough to see most of the Baby Boomers 
     through their lifetimes--would require virtually doubling the 
     hospital insurance payroll tax from 2.90% to 5.58%. The 
     increase would have to be made immediately and remain 
     permanent through the entire 50-year period. Again, for the 
     worker earning $30,000 a year, the total HI payroll tax rises 
     from $870 to $1,674, an increase of 92.4%.
       To Balance the Medicare Trust Fund for the Next 75 Years 
     (through 2069): Balancing the trust fund over the next 
     seventy-five years--roughly through the life expectancy of an 
     individual born this year, and the usual period for long-term 
     fiscal solvency--would require an immediate boost in the 
     Medicare tax rate of 121.4%, from 2.90% to 6.42%. Total HI 
     payroll taxes for a worker earning $30,000 a year would rise 
     from $870 to $1,926.

                     medicare's impact on business

       Because it's levied on employment levels, not income, the 
     payroll tax due remains the same through both good and bad 
     economic times. This feature accentuates the pain of a 
     downturn on employers, who need to pay the tax regardless of 
     profitability. Consequently, relative to the income tax, a 
     payroll tax can be particularly punishing to start-up firms 
     or companies trying to weather a drop in business.
       Table 2 shows the liability for Medicare HI payroll taxes 
     that would be faced by firms of various sizes. Total 
     liability is shown under current law and under the three tax 
     rates computed by the Trustees to bring the HI trust fund in 
     balance over periods of 25, 50 and 75 years.
       For instance, a 25-person firm where the average worker 
     earns $20,000 per year is currently liable for a $7,250 tax 
     payment for the Medicare HI program (for their contribution, 
     the workers themselves would be taxed an identical amount). 
     To balance the trust fund over the next 25 years, the 
     combined employee and employer tax rate would have to rise 
     from the current 2.90% to 4.23%. Assuming that the liability 
     continues to be evenly split between the employee and 
     employer, the firm will face an HI payroll tax of about 2.11% 
     per worker. For our 25-person firm, the total HI payroll tax 
     would rise from $7,250 to $10,575 per year.

                                                                                                                

[[Page H 10388]]
                 TABLE 2.--MEDICARE HOSPITAL INSURANCE PAYROLL TAX ANNUAL EMPLOYER TAX LIABILITY                
                                                  [In dollars]                                                  
----------------------------------------------------------------------------------------------------------------
                                                                Number of employees--                           
                                    ----------------------------------------------------------------------------
                                         5          10         25         50        100        500       1,000  
----------------------------------------------------------------------------------------------------------------
Average salary: $20,000:                                                                                        
  Current law......................      1,450      2,900      7,250     14,500     29,000    145,000    290,000
To balance Medicare HI over the                                                                                 
 next:                                                                                                          
  25 yrs...........................      2,115      4,230     10,575     21,150     42,300    211,500    423,000
  50 yrs...........................      2,790      5,580     13,950     27,900     55,800    279,000    558,000
  75 yrs...........................      3,210      6,420     16,050     32,100     64,200    321,000    642,000
Average salary: $30,000:                                                                                        
  Current law......................      2,175      4,350     10,875     21,750     43,500    217,500    435,000
To balance Medicare HI over the                                                                                 
 next:                                                                                                          
  25 yrs...........................      3,173      6,345     15,862     31,725     63,450    317,250    634,500
  50 yrs...........................      4,185      8,370     20,925     41,850     83,700    418,500    837,000
  75 yrs...........................      4,815      9,630     24,075     48,150     96,300    481,500    963,000
----------------------------------------------------------------------------------------------------------------



                    medicare's impact on the economy

       Raising payroll taxes to keep the Medicare Hospital 
     Insurance trust fund afloat imposes substantial burdens on 
     both workers and firms. To measure what that means for the 
     economy as a whole, we conducted several policy simulations 
     using the highly respected Washington University Macro Model 
     from Laurence H. Meyer & Associates of St. Louis, MO.
       The results are striking: The economy would suffer through 
     sharply slower economic growth and higher unemployment in the 
     near term. Over a longer period, the economy is saddled with 
     a permanent loss of production and employment. As shown in 
     Tables 3 and 4, the degree of severity for GDP and employment 
     depends upon the increase in Medicare taxes enacted.
       The tables compare each of three alternative tax 
     simulations specified in the Trustees' Annual Report to 
     LHM&A's June 1995 baseline forecast. To demonstrate the 
     policy change working its way through the economy, we display 
     the results for three of the ten years of our simulation: 
     1997, 2000 and 2004. This gives us snapshots of he short-
     term, intermediate-term and long-term impacts on economic 
     output and employment. In each case, the imposition of the 
     Medicare payroll tax increase takes place in the fourth 
     quarter of 1995.

                                   TABLE 3.--IMPACT ON GROSS DOMESTIC PRODUCT                                   
                         [Balancing the HI Trust Fund Through Raising Payroll Tax Rates]                        
----------------------------------------------------------------------------------------------------------------
                                                  Difference from baseline in    Pct difference from baseline in
                                      Required    given year, billions of 1987          given year (pct.)       
    Yrs to balance HI trust fund      Medicare              dollars             --------------------------------
                                      tax rate ---------------------------------                                
                                       (pct.)      1997       2000       2004       1997       2000       2004  
----------------------------------------------------------------------------------------------------------------
25 Yrs.............................       4.23      -68.4      -30.1      -36.1       -1.2       -0.5       -0.5
50 Yrs.............................       5.58     -137.1      -60.5      -72.1       -2.4       -1.0       -1.1
75 Yrs.............................       6.42     -179.4      -79.4      -95.6      -3.16       -1.3       -1.4
----------------------------------------------------------------------------------------------------------------

       As shown in Table 3, if the government imposed the most 
     modest payroll tax increase--enough to keep the Medicare 
     trust fund in balance for the next 25 years--production in 
     the economy would be 1.2%, or almost $70 billion, lower in 
     1997 than it would have been otherwise. By 2000, the 
     percentage-point gap between the alternative closes to within 
     0.5% of the baseline level of production, but that distance 
     is maintained even ten years after the tax increase took 
     effect.
       The short-term loss in output translates into 1.2 million 
     fewer jobs relative to what we would have had otherwise, as 
     shown in Table 4. While this decline to about 1% of the 
     economy's jobs, moderates over time, the economy appears to 
     have lost over 0.5% of its jobs permanently.
       Of course, all of this economic turbulence puts the 
     Medicare HI trust fund in actuarial balance for only the next 
     25 years. To generate long-term actuarial balance for the 
     full 75-year period, the Medicare payroll tax rate would have 
     to jump form 2.90% to 6.42%, triggering even stronger 
     economic impacts than those described above. Production in 
     the economy would be about 3% lower in 1997 than it would 
     have been otherwise, with the long-term loss in output 
     projected at 1.5%. Over 3 million jobs would be eliminated in 
     1997 relative to the baseline, with a projected permanent 
     loss of about 1.5% of total employment over the long term.

                                         TABLE 4.--IMPACT ON EMPLOYMENT                                         
                         [Balancing the HI Trust Fund Through Raising Payroll Tax Rates]                        
----------------------------------------------------------------------------------------------------------------
                                      Required    Difference from baseline in        Percent difference from    
                                      Medicare    given year, millions of jobs    baseline in given year (pct.) 
    Yrs to balance HI trust fund      tax rate -----------------------------------------------------------------
                                       (pct.)      1997       2000       2004       1997       2000       2004  
----------------------------------------------------------------------------------------------------------------
25 Yrs.............................       4.23       -1.2       -0.6       -0.8       -0.9       -0.4       -0.6
50 Yrs.............................       5.58       -2.4       -1.2       -1.6       -1.9       -0.9       -1.2
75 Yrs.............................       6.42       -3.2       -1.5       -2.2       -2.5       -1.2       -1.5
----------------------------------------------------------------------------------------------------------------

       As dramatic as these figures are, there's good reason to 
     believe that they are optimistic estimates. Because the macro 
     model used in these simulations treats the Medicare payroll 
     tax like the Social Security payroll tax, the increases in 
     the tax rates apply only to the first $61,200 earned (in 
     1995, and rising afterwards). That is, the model is not 
     picking up the economic impact of applying the higher tax 
     rates to incomes over the taxable base. Thus, these results 
     should be considered a minimum measure of the economic impact 
     of raising Medicare payroll taxes. Attempts to account for 
     this problem yield significantly greater job loss and lower 
     GDP. These results are available from the Economic Policy 
     Division of the U.S. Chamber of Commerce.
       It is important to note that, even with the set of numbers 
     presented here with its inherent bias toward underestimating 
     the economic impact, we can see that using payroll taxes to 
     balance the Medicare trust fund imposes severe costs on the 
     U.S. economy. These results clearly indicate that the 
     Medicare problem must be solved by fundamental program 
     reform, not tax increases.
  Mr. BLILEY. Mr. Chairman, I yield back the balance of my time.
  The CHAIRMAN (Mr. Linder). All time for general debate has expired.
  Pursuant to the rule, an amendment in the nature of a substitute 
consisting of the text of H.R. 2485, modified by the amendment printed 
in House Report 104-282, is adopted and the bill, as amended, is 
considered as an original bill for the purpose of further amendment and 
is considered read.
  The text of the amendment in the nature of a substitute, as modified, 
is as follows:
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. PURPOSE.

       The purpose of this Act is to reform the medicare program, 
     in order to preserve and protect the financial stability of 
     the program.
                           TITLE XV--MEDICARE

     SEC. 15000. SHORT TITLE OF TITLE; AMENDMENTS AND REFERENCES 
                   TO OBRA; TABLE OF CONTENTS OF TITLE.

       (a) Short Title.--This title may be cited as the ``Medicare 
     Preservation Act of 1995''.
       (b) Amendments to Social Security Act.--Except as otherwise 
     specifically provided, whenever in this title an amendment is 
     expressed in terms of an amendment to or repeal of a section 
     or other provision, the reference shall be considered to be 
     made to that section or other provision of the Social 
     Security Act.
       (c) References to OBRA.--In this title, the terms ``OBRA-
     1986'', ``OBRA-1987'', ``OBRA-1989'', ``OBRA-1990'', and 
     ``OBRA-1993'' refer to the Omnibus Budget Reconciliation Act 
     of 1986 (Public Law 99-509), the Omnibus Budget 
     Reconciliation Act of 1987 (Public Law 100-203), the Omnibus 
     Budget Reconciliation Act of 1989 (Public Law 101-239), the 
     Omnibus Budget Reconciliation Act 

[[Page H 10389]]
     of 1990 (Public Law 101-508), and the Omnibus Budget Reconciliation Act 
     of 1993 (Public Law 103-66), respectively.
       (d) Table of Contents of Title.--The table of contents of 
     this title is as follows:

Sec. 15000. Short title of title; amendments and references to OBRA; 
              table of contents of title.

                    Subtitle A--MedicarePlus Program

          Part 1--Increasing Choice Under the Medicare Program

Sec. 15001. Increasing choice under medicare.
Sec. 15002. MedicarePlus program.

             ``Part C--Provisions Relating to MedicarePlus

``Sec. 1851. Requirements for MedicarePlus organizations; high 
              deductible/medisave products.
``Sec. 1852. Requirements relating to benefits, provision of services, 
              enrollment, and premiums.
``Sec. 1853. Patient protection standards.
``Sec. 1854. Provider-sponsored organizations.
``Sec. 1855. Payments to MedicarePlus organizations.
``Sec. 1856. Establishment of standards for MedicarePlus organizations 
              and products.
``Sec. 1857. MedicarePlus certification.
``Sec. 1858. Contracts with MedicarePlus organizations.''
Sec. 15003. Duplication and coordination of medicare-related products.
Sec. 15004. Transitional rules for current medicare HMO program.

    Part 2--Special Rules for MedicarePlus Medical Savings Accounts

Sec. 15011. MedicarePlus MSA's.
Sec. 15012. Certain rebates excluded from gross income.

      Part 3--Special Antitrust Rule for Provider Service Networks

Sec. 15021. Application of antitrust rule of reason to provider service 
              networks.

                          Part 4--Commissions

Sec. 15031. Medicare Payment Review Commission.
Sec. 15032. Commission on the Effect of the Baby Boom Generation on the 
              Medicare Program.
Sec. 15033. Change in appointment of Administrator of HCFA.

Part 5--Treatment of Hospitals Which Participate in Provider-Sponsored 
                             Organizations

Sec. 15041. Treatment of hospitals which participate in provider-
              sponsored organizations.

                 Subtitle B--Preventing Fraud and Abuse

                       Part 1--General Provisions

Sec. 15101. Increasing awareness of fraud and abuse.
Sec. 15102. Beneficiary incentive programs.
Sec. 15103. Intermediate sanctions for medicare health maintenance 
              organizations.
Sec. 15104. Voluntary disclosure program.
Sec. 15105. Revisions to current sanctions.
Sec. 15106. Direct spending for anti-fraud activities under medicare.
Sec. 15107. Permitting carriers to carry out prior authorization for 
              certain items of durable medical equipment.
Sec. 15108. National Health Care Anti-Fraud Task Force.
Sec. 15109. Study of adequacy of private quality assurance programs.
Sec. 15110. Penalty for false certification for home health services.
Sec. 15111. Pilot projects.

                   Part 2--Revisions to Criminal Law

Sec. 15121. Definition of Federal health care offense.
Sec. 15122. Health care fraud.
Sec. 15123. Theft or embezzlement.
Sec. 15124. False statements.
Sec. 15125. Bribery and graft.
Sec. 15126. Illegal remuneration with respect to health care benefit 
              programs.
Sec. 15127. Obstruction of criminal investigations of health care 
              offenses.
Sec. 15128. Civil penalties for violations of Federal health care 
              offenses.
Sec. 15129. Injunctive relief relating to health care offenses.
Sec. 15130. Authorized investigative demand procedures.
Sec. 15131. Grand jury disclosure.
Sec. 15132. Miscellaneous amendments to title 18, United States Code.

                     Subtitle C--Regulatory Relief

              Part 1--Physician Ownership Referral Reform

Sec. 15201. Repeal of prohibitions based on compensation arrangements.
Sec. 15202. Revision of designated health services subject to 
              prohibition.
Sec. 15203. Delay in implementation until promulgation of regulations.
Sec. 15204. Exceptions to prohibition.
Sec. 15205. Repeal of reporting requirements.
Sec. 15206. Preemption of State law.
Sec. 15207. Effective date.

                Part 2--Other Medicare Regulatory Relief

Sec. 15211. Repeal of Medicare and Medicaid Coverage Data Bank.
Sec. 15212. Clarification of level of intent required for imposition of 
              sanctions.
Sec. 15213. Additional exception to anti-kickback penalties for managed 
              care arrangements.
Sec. 15214. Solicitation and publication of modifications to existing 
              safe harbors and new safe harbors.
Sec. 15215. Issuance of advisory opinions under title XI.
Sec. 15216. Prior notice of changes in billing and claims processing 
              requirements for physicians' services.

               Part 3--Promoting Physician Self-Policing

Sec. 15221. Exemption from antitrust laws for certain activities of 
              medical self-regulatory entities.

                  Subtitle D--Medical Liability Reform

                       Part 1--General Provisions

Sec. 15301. Federal reform of health care liability actions.
Sec. 15302. Definitions.
Sec. 15303. Effective date.

      Part 2--Uniform Standards for Health Care Liability Actions

Sec. 15311. Statute of limitations.
Sec. 15312. Calculation and payment of damages.
Sec. 15313. Alternative dispute resolution.

     Subtitle E--Teaching Hospitals and Graduate Medical Education

  Part 1--Teaching Hospital and Graduate Medical Education Trust Fund

Sec. 15401. Establishment of Fund; payments to teaching hospitals.

 ``TITLE XXII--TEACHING HOSPITAL AND GRADUATE MEDICAL EDUCATION TRUST 
                                  FUND

                    ``Part A--Establishment of Fund

``Sec. 2201. Establishment of Fund.

                ``Part B--Payments to Teaching Hospitals

                  ``Subpart 1--Requirement of Payments

``Sec. 2211. Formula payments to teaching hospitals.

  ``Subpart 2--Amount Relating to Indirect Costs of Graduate Medical 
                               Education

``Sec. 2221. Determination of amount relating to indirect costs.
``Sec. 2222. Indirect costs; special rules regarding determination of 
              hospital-specific percentage.
``Sec. 2223. Indirect costs; alternative payments regarding teaching 
              hospitals in certain States.

   ``Subpart 3--Amount Relating to Direct Costs of Graduate Medical 
                               Education

``Sec. 2231. Determination of amount relating to direct costs.
``Sec. 2232. Direct costs; special rules regarding determination of 
              hospital-specific percentage.
``Sec. 2233. Direct costs; authority for payments to consortia of 
              providers.
``Sec. 2234. Direct costs; alternative payments regarding teaching 
              hospitals in certain States.

                    ``Subpart 4--General Provisions

``Sec. 2241. Adjustments in payment amounts.''

                 Part 2--Amendments to Medicare Program

Sec. 15411. Transfers to Teaching Hospital and Graduate Medical 
              Education Trust Fund.
Sec. 15412. Modification in payment policies regarding graduate medical 
              education.

  Part 3--Reform of Federal Policies Regarding Teaching Hospitals and 
                       Graduate Medical Education

Sec. 15421. Establishment of advisory panel for recommending policies.

                        ``Part C--Other Matters

``Sec. 2251. Advisory Panel on Reform in Financing of Teaching 
              Hospitals and Graduate Medical Education.''

           Subtitle F--Provisions Relating to Medicare Part A

                           Part 1--Hospitals


          SUBPART A--GENERAL PROVISIONS RELATING TO HOSPITALS

Sec. 15501. Reductions in inflation updates for PPS hospitals.
Sec. 15502. Reductions in disproportionate share payment adjustments.
Sec. 15503. Payments for capital-related costs for inpatient hospital 
              services.
Sec. 15504. Reduction in adjustment for indirect medical education.
Sec. 15505. Treatment of PPS-exempt hospitals.
Sec. 15506. Reduction in payments to hospitals for enrollees' bad 
              debts.
Sec. 15507. Permanent extension of hemophilia pass-through.
Sec. 15508. Conforming amendment to certification of Christian Science 
              providers.


           SUBPART B--PROVISIONS RELATING TO RURAL HOSPITALS

Sec. 15511. Sole community hospitals.
Sec. 15512. Clarification of treatment of EAC and RPC hospitals.
Sec. 15513. Establishment of rural emergency access care hospitals.
Sec. 15514. Classification of rural referral centers.
Sec. 15515. Floor on area wage index.

             Part 2--Payments to Skilled Nursing Facilities

Sec. 15521. Payments for routine service costs. 

[[Page H 10390]]

Sec. 15522. Incentives for cost effective management of covered non-
              routine services.
Sec. 15523. Payments for routine service costs.
Sec. 15524. Reductions in payment for capital-related costs.
Sec. 15525. Treatment of items and services paid for under part B.
Sec. 15526. Certification of facilities meeting revised nursing home 
              reform standards.
Sec. 15527. Medical review process.
Sec. 15528. Report by Medicare Payment Review Commission.
Sec. 15529. Effective date.

         Part 3--Clarification of Credits to Part A Trust Fund

Sec. 15531. Clarification of amount of taxes credited to Federal 
              Hospital Insurance Trust Fund.

           Subtitle G--Provisions Relating to Medicare Part B

                        Part 1--Payment Reforms

Sec. 15601. Payments for physicians' services.
Sec. 15602. Elimination of formula-driven overpayments for certain 
              outpatient hospital services.
Sec. 15603. Payments for durable medical equipment.
Sec. 15604. Reduction in updates to payment amounts for clinical 
              diagnostic laboratory tests.
Sec. 15605. Extension of reductions in payments for costs of hospital 
              outpatient services.
Sec. 15606. Freeze in payments for ambulatory surgical center services.
Sec. 15607. Rural emergency access care hospitals.
Sec. 15608. Ensuring payment for physician and nurse for jointly 
              furnished anesthesia services.
Sec. 15609. Statewide fee schedule area for physicians' services.
Sec. 15609A. Establishment of fee schedule for ambulance services.
Sec. 15609B. Standards for physical therapy services furnished by 
              physicians.

                         Part 2--Part B Premium

Sec. 15611. Extension of part B premium.
Sec. 15612. Income-related reduction in medicare subsidy.

       Part 3--Administration and Billing of Laboratory Services

Sec. 15621. Administrative simplification for laboratory services.
Sec. 15622. Restrictions on direct billing for laboratory services.

        Part 4--Quality Standards for Durable Medical Equipment

Sec. 15631. Recommendations for quality standards for durable medicare 
              equipment.

       Subtitle H--Provisions Relating to Medicare Parts A and B

                Part 1--Payment for Home Health Services

Sec. 15701. Payment for home health services.
Sec. 15702. Maintaining savings resulting from temporary freeze on 
              payment increases for home health services.
Sec. 15703. Extension of waiver of presumption of lack of knowledge of 
              exclusion from coverage for home health agencies.
Sec. 15704. Report on recommendations for payments and certification 
              for home health services of Christian Science providers.
Sec. 15705. Extension of period of home health agency certification.

             Part 2--Medicare Secondary Payer Improvements

Sec. 15711. Extension and expansion of existing requirements.
Sec. 15712. Improvements in recovery of payments.
Sec. 15713. Prohibiting retroactive application of policy regarding 
              ESRD beneficiaries enrolled in primary plans.

                            Part 3--Failsafe

Sec. 15721. Failsafe budget mechanism.

                 Part 4--Administrative Simplification

Sec. 15731. Standards for medicare information transactions and data 
              elements.

           Part 5--Other Provisions Relating to Parts A and B

Sec. 15741. Clarification of medicare coverage of items and services 
              associated with certain medical devices approved for 
              investigational use.
Sec. 15742. Additional exclusion from coverage.
Sec. 15743. Competitive bidding for certain items and services.
Sec. 15744. Disclosure of criminal convictions relating to provision of 
              home health services.
Sec. 15745. Requiring renal dialysis facilities to make services 
              available on a 24-hour basis.

                   Subtitle I--Clinical Laboratories

Sec. 15801. Exemption of physician office laboratories.

Subtitle J--Lock-Box Provisions for Medicare Part B Savings from Growth 
                               Reductions

Sec. 15901. Establishment of Medicare Growth Reduction Trust Fund for 
              Part B savings.

                    Subtitle A--MedicarePlus Program

          PART 1--INCREASING CHOICE UNDER THE MEDICARE PROGRAM

                           Subtitle A, Part 1

     SEC. 15001. INCREASING CHOICE UNDER MEDICARE.

       (a) In General.--Title XVIII is amended by inserting after 
     section 1804 the following new section:


                   ``providing for choice of coverage

       ``Sec. 1805. (a) Choice of Coverage.--
       ``(1) In general.--Subject to the provisions of this 
     section, every individual who is entitled to benefits under 
     part A and enrolled under part B shall elect to receive 
     benefits under this title through one of the following:
       ``(A) Through fee-for-service system.--Through the 
     provisions of parts A and B.
       ``(B) Through a medicareplus product.--Through a 
     MedicarePlus product (as defined in paragraph (2)), which may 
     be--
       ``(i) a high deductible/medisave product (and a 
     contribution into a MedicarePlus medical savings account 
     (MSA)),
       ``(ii) a product offered by a provider-sponsored 
     organization,
       ``(iii) a product offered by an organization that is a 
     union, Taft-Hartley plan, or association, or
       ``(iv) a product providing for benefits on a fee-for-
     service or other basis.
       ``(2) Medicareplus product defined.--For purposes this 
     section and part C, the term `MedicarePlus product' means 
     health benefits coverage offered under a policy, contract, or 
     plan by a MedicarePlus organization (as defined in section 
     1851(a)) pursuant to and in accordance with a contract under 
     section 1858.
       ``(3) Terminology relating to options.--For purposes of 
     this section and part C--
       ``(A) Non-medicareplus option.--An individual who has made 
     the election described in paragraph (1)(A) is considered to 
     have elected the `Non-MedicarePlus option'.
       ``(B) Medicareplus option.--An individual who has made the 
     election described in paragraph (1)(B) to obtain coverage 
     through a MedicarePlus product is considered to have elected 
     the `MedicarePlus option' for that product.
       ``(b) Special Rules.--
       ``(1) Residence requirement.--Except as the Secretary may 
     otherwise provide, an individual is eligible to elect a 
     MedicarePlus product offered by a MedicarePlus organization 
     only if the organization in relation to the product serves 
     the geographic area in which the individual resides.
       ``(2) Affiliation requirements for certain products.--
       ``(A) In general.--Subject to subparagraph (B), an 
     individual is eligible to elect a MedicarePlus product 
     offered by a limited enrollment MedicarePlus organization (as 
     defined in section 1852(c)(4)(E)) only if--
       ``(i) the individual is eligible under section 1852(c)(4) 
     to make such election, and
       ``(ii) in the case of a MedicarePlus organization that is a 
     union sponsor or a Taft-Hartley sponsor (as defined in 
     section 1852(c)(4)), the individual elected under this 
     section a MedicarePlus product offered by the sponsor during 
     the first enrollment period in which the individual was 
     eligible to make such election with respect to such sponsor.
       ``(B) No reelection after disenrollment for certain 
     products.--An individual is not eligible to elect a 
     MedicarePlus product offered by a MedicarePlus organization 
     that is a union sponsor or a Taft-Hartley sponsor if the 
     individual previously had elected a MedicarePlus product 
     offered by the organization and had subsequently discontinued 
     to elect such a product offered by the organization.
       ``(3) Special rule for certain annuitants.--An individual 
     is not eligible to elect a high deductible/medisave product 
     if the individual is entitled to benefits under chapter 89 of 
     title 5, United States Code, as an annuitant or spouse of an 
     annuitant.
       ``(c) Process for Exercising Choice.--
       ``(1) In general.--The Secretary shall establish a process 
     through which elections described in subsection (a) are made 
     and changed, including the form and manner in which such 
     elections are made and changed. Such elections shall be made 
     or changed only during coverage election periods specified 
     under subsection (e) and shall become effective as provided 
     in subsection (f).
       ``(2) Expedited implementation.--The Secretary shall 
     establish the process of electing coverage under this section 
     during the transition period (as defined in subsection 
     (e)(1)(B)) in such an expedited manner as will permit such an 
     election for MedicarePlus products in an area as soon as such 
     products become available in that area.
       ``(3) Coordination through medicareplus organizations.--
       ``(A) Enrollment.--Such process shall permit an individual 
     who wishes to elect a MedicarePlus product offered by a 
     MedicarePlus organization to make such election through 
     the filing of an appropriate election form with the 
     organization.
       ``(B) Disenrollment.--Such process shall permit an 
     individual, who has elected a MedicarePlus product offered by 
     a MedicarePlus organization and who wishes to terminate such 
     election, to terminate such election through the filing of an 
     appropriate election form with the organization.
       ``(4) Default.--
       ``(A) Initial election.--

[[Page H 10391]]

       ``(i) In general.--Subject to clause (ii), an individual 
     who fails to make an election during an initial election 
     period under subsection (e)(1) is deemed to have chosen the 
     Non-MedicarePlus option.
       ``(ii) Seamless continuation of coverage.--The Secretary 
     shall establish procedures under which individuals who are 
     enrolled with a MedicarePlus organization at the time of the 
     initial election period and who fail to elect to receive 
     coverage other than through the organization are deemed to 
     have elected an appropriate MedicarePlus product offered by 
     the organization.
       ``(B) Continuing periods.--An individual who has made (or 
     deemed to have made) an election under this section is 
     considered to have continued to make such election until such 
     time as--
       ``(i) the individual changes the election under this 
     section, or
       ``(ii) a MedicarePlus product is discontinued, if the 
     individual had elected such product at the time of the 
     discontinuation.
       ``(5) Agreements with commissioner of social security to 
     promote efficient administration.--In order to promote the 
     efficient administration of this section and the MedicarePlus 
     program under part C, the Secretary may enter into an 
     agreement with the Commissioner of Social Security under 
     which the Commissioner performs administrative 
     responsibilities relating to enrollment and disenrollment in 
     MedicarePlus products under this section.
       ``(d) Provision of Beneficiary Information to Promote 
     Informed Choice.--
       ``(1) In general.--The Secretary shall provide for 
     activities under this subsection to disseminate broadly 
     information to medicare beneficiaries (and prospective 
     medicare beneficiaries) on the coverage options provided 
     under this section in order to promote an active, informed 
     selection among such options. Such information shall be made 
     available on such a timely basis (such as 6 months before the 
     date an individual would first attain eligibility for 
     medicare on the basis of age) as to permit individuals to 
     elect the MedicarePlus option during the initial election 
     period described in subsection (e)(1).
       ``(2) Use of nonfederal entities.--The Secretary shall, to 
     the maximum extent feasible, enter into contracts with 
     appropriate non-Federal entities to carry out activities 
     under this subsection.
       ``(3) Specific activities.--In carrying out this 
     subsection, the Secretary shall provide for at least the 
     following activities in all areas in which MedicarePlus 
     products are offered:
       ``(A) Information booklet.--
       ``(i) In general.--The Secretary shall publish an 
     information booklet and disseminate the booklet to all 
     individuals eligible to elect the MedicarePlus option under 
     this section during coverage election periods.
       ``(ii) Information included.--The booklet shall include 
     information presented in plain English and in a standardized 
     format regarding--

       ``(I) the benefits (including cost-sharing) and premiums 
     for the various MedicarePlus products in the areas involved;
       ``(II) the quality of such products, including consumer 
     satisfaction information; and
       ``(III) rights and responsibilities of medicare 
     beneficiaries under such products.

       ``(iii) Periodic updating.--The booklet shall be updated on 
     a regular basis (not less often than once every 12 months) to 
     reflect changes in the availability of MedicarePlus products 
     and the benefits and premiums for such products.
       ``(B) Toll-free number.--The Secretary shall maintain a 
     toll-free number for inquiries regarding MedicarePlus options 
     and the operation of part C.
       ``(C) General information in medicare handbook.--The 
     Secretary shall include information about the MedicarePlus 
     option provided under this section in the annual notice of 
     medicare benefits under section 1804.
       ``(e) Coverage Election Periods.--
       ``(1) Initial choice upon eligibility to make election.--
       ``(A) In general.--In the case of an individual who first 
     becomes entitled to benefits under part A and enrolled under 
     part B after the beginning of the transition period (as 
     defined in subparagraph (B)), the individual shall make the 
     election under this section during a period (of a duration 
     and beginning at a time specified by the Secretary) at the 
     first time the individual both is entitled to benefits under 
     part A and enrolled under part B. Such period shall be 
     specified in a manner so that, in the case of an individual 
     who elects a MedicarePlus product during the period, coverage 
     under the product becomes effective as of the first date on 
     which the individual may receive such coverage.
       ``(B) Transition period defined.--In this subsection, the 
     term `transition period' means, with respect to an individual 
     in an area, the period beginning on the first day of the 
     first month in which a MedicarePlus product is first made 
     available to individuals in the area and ending with the 
     month preceding the beginning of the first annual, 
     coordinated election period under paragraph (3).
       ``(2) During transition period.--Subject to paragraph (6)--
       ``(A) Continuous open enrollment into a medicare-plus 
     option.--During the transition period, an individual who is 
     eligible to make an election under this section and who has 
     elected the non-MedicarePlus option may change such election 
     to a MedicarePlus option at any time.
       ``(B) Open disenrollment before end of transition period.--
       ``(i) In general.--During the transition period, an 
     individual who has elected a MedicarePlus option for a 
     MedicarePlus product may change such election to another 
     MedicarePlus product or to the non-MedicarePlus option.
       ``(ii) Special rule.--During the transition period, an 
     individual who has elected a high deductible/medisave product 
     may not change such election to a MedicarePlus product that 
     is not a high deductible/medisave product unless the 
     individual has had such election in effect for 12 months.
       ``(3) Annual, coordinated election period.--
       ``(A) In general.--Subject to paragraph (5), each 
     individual who is eligible to make an election under this 
     section may change such election during annual, coordinated 
     election periods.
       ``(B) Annual, coordinated election period.--For purposes of 
     this section, the term `annual, coordinated election period' 
     means, with respect to a calendar year (beginning with 1998), 
     the month of October before such year.
       ``(C) Medicareplus health fair during october, 1996.--In 
     the month of October, 1996, the Secretary shall provide for a 
     nationally coordinated educational and publicity campaign to 
     inform individuals, who are eligible to elect MedicarePlus 
     products, about such products and the election process 
     provided under this section (including the annual, 
     coordinated election periods that occur in subsequent years).
       ``(4) Special 90-day disenrollment option.--
       ``(A) In general.--In the case of the first time an 
     individual elects a MedicarePlus option (other than a high 
     deductible/medisave product) under this section, the 
     individual may discontinue such election through the filing 
     of an appropriate notice during the 90-day period beginning 
     on the first day on which the individual's coverage under the 
     MedicarePlus product under such option becomes effective.
       ``(B) Effect of discontinuation of election.--An individual 
     who discontinues an election under this paragraph shall be 
     deemed at the time of such discontinuation to have elected 
     the Non-MedicarePlus option.
       ``(5) Special election periods.--An individual may 
     discontinue an election of a MedicarePlus product offered by 
     a MedicarePlus organization other than during an annual, 
     coordinated election period and make a new election under 
     this section if--
       ``(A) the organization's or product's certification under 
     part C has been terminated or the organization has terminated 
     or otherwise discontinued providing the product;
       ``(B) in the case of an individual who has elected a 
     MedicarePlus product offered by a MedicarePlus organization, 
     the individual is no longer eligible to elect the product 
     because of a change in the individual's place of residence or 
     other change in circumstances (specified by the Secretary, 
     but not including termination of membership in a qualified 
     association in the case of a product offered by a qualified 
     association or termination of the individual's enrollment on 
     the basis described in clause (i) or (ii) section 
     1852(c)(3)(B));
       ``(C) the individual demonstrates (in accordance with 
     guidelines established by the Secretary) that--
       ``(i) the organization offering the product substantially 
     violated a material provision of the organization's contract 
     under part C in relation to the individual and the product; 
     or
       ``(ii) the organization (or an agent or other entity acting 
     on the organization's behalf) materially misrepresented the 
     product's provisions in marketing the product to the 
     individual; or
       ``(D) the individual meets such other conditions as the 
     Secretary may provide.
       ``(6) Special rule for high deductible/medisave products.--
     Notwithstanding the previous provisions of this subsection, 
     an individual may elect a high deductible/medisave product 
     only during an annual, coordinated election period described 
     in paragraph (3)(B) or during the month of October, 1996.
       ``(f) Effectiveness of Elections.--
       ``(1) During initial coverage election period.--An election 
     of coverage made during the initial coverage election period 
     under subsection (e)(1)(A) shall take effect upon the date 
     the individual becomes entitled to benefits under part A and 
     enrolled under part B, except as the Secretary may provide 
     (consistent with section 1838) in order to prevent 
     retroactive coverage.
       ``(2) During transition; 90-day disenrollment option.--An 
     election of coverage made under subsection (e)(2) and an 
     election to discontinue a MedicarePlus option under 
     subsection (e)(4) at any time shall take effect with the 
     first calendar month following the date on which the election 
     is made.
       ``(3) Annual, coordinated election period and medisave 
     election.--An election of coverage made during an annual, 
     coordinated election period (as defined in subsection 
     (e)(3)(B)) in a year or for a high deductible/medisave 
     product shall take effect as of the first day of the 
     following year.
       ``(4) Other periods.--An election of coverage made during 
     any other period under subsection (e)(5) shall take effect in 
     such manner as the Secretary provides in a manner consistent 
     (to the extent practicable) 

[[Page H 10392]]
     with protecting continuity of health benefit coverage.
       ``(g) Effect of Election of MedicarePlus Option.--Subject 
     to the provisions of section 1855(f), payments under a 
     contract with a MedicarePlus organization under section 
     1858(a) with respect to an individual electing a MedicarePlus 
     product offered by the organization shall be instead of the 
     amounts which (in the absence of the contract) would 
     otherwise be payable under parts A and B for items and 
     services furnished to the individual.
       ``(h) Administration.--
       ``(1) In general.--This part and sections 1805 and 1876 
     shall be administered through an operating division (A) that 
     is established or identified by the Secretary in the 
     Department of Health and Human Services, (B) that is separate 
     from the Health Care Financing Administration, and (C) the 
     primary function of which is the administration of this part 
     and such sections. The director of such division shall be of 
     equal pay and rank to that of the individual responsible for 
     overall administration of parts A and B.
       ``(2) Transfer authority.--The Secretary shall transfer 
     such personnel, administrative support systems, assets, 
     records, funds, and other resources in the Health Care 
     Financing Administration to the operating division referred 
     to in paragraph (1) as are used in the administration of 
     section 1876 and as may be required to implement the 
     provisions referred to in such paragraph promptly and 
     efficiently.''.

     SEC. 15002. MEDICAREPLUS PROGRAM.

       (a) In General.--Title XVIII is amended by redesignating 
     part C as part D and by inserting after part B the following 
     new part:

             ``Part C--Provisions Relating to MedicarePlus


``requirements for medicareplus organizations; high deductible/medisave 
                                products

       ``Sec. 1851. (a) MedicarePlus Organization Defined.--In 
     this part, subject to the succeeding provisions of this 
     section, the term `MedicarePlus organization' means a public 
     or private entity that is certified under section 1857 as 
     meeting the requirements and standards of this part for such 
     an organization.
       ``(b) Organized and Licensed Under State Law.--
       ``(1) In general.--A MedicarePlus organization shall be 
     organized and licensed under State law to offer health 
     insurance or health benefits coverage in each State in which 
     it offers a MedicarePlus product.
       ``(2) Exception for union and taft-hartley sponsors.--
     Paragraph (1) shall not apply to an MedicarePlus 
     organization that is a union sponsor or a Taft-Hartley 
     sponsor (as defined in section 1852(c)(4)).
       ``(3) Exception for provider-sponsored organizations.--
     Paragraph (1) shall not apply to a MedicarePlus organization 
     that is a provider-sponsored organization (as defined in 
     section 1854(a)) except to the extent provided under section 
     1857(c).
       ``(4) Exception for qualified associations.--Paragraph (1) 
     shall not apply to a MedicarePlus organization that is a 
     qualified association (as defined in section 1852(c)(4)(C)).
       ``(c) Prepaid Payment.--A MedicarePlus organization shall 
     be compensated (except for deductibles, coinsurance, and 
     copayments) for the provision of health care services to 
     enrolled members by a payment which is paid on a periodic 
     basis without regard to the date the health care services are 
     provided and which is fixed without regard to the frequency, 
     extent, or kind of health care service actually provided to a 
     member.
       ``(d) Assumption of Full Financial Risk.--The MedicarePlus 
     organization shall assume full financial risk on a 
     prospective basis for the provision of the health care 
     services (other than hospice care) for which benefits are 
     required to be provided under section 1852(a)(1), except that 
     the organization--
       ``(1) may obtain insurance or make other arrangements for 
     the cost of providing to any enrolled member such services 
     the aggregate value of which exceeds $5,000 in any year,
       ``(2) may obtain insurance or make other arrangements for 
     the cost of such services provided to its enrolled members 
     other than through the organization because medical necessity 
     required their provision before they could be secured through 
     the organization,
       ``(3) may obtain insurance or make other arrangements for 
     not more than 90 percent of the amount by which its costs for 
     any of its fiscal years exceed 115 percent of its income for 
     such fiscal year, and
       ``(4) may make arrangements with physicians or other health 
     professionals, health care institutions, or any combination 
     of such individuals or institutions to assume all or part of 
     the financial risk on a prospective basis for the provision 
     of basic health services by the physicians or other health 
     professionals or through the institutions.
     In the case of a MedicarePlus organization that is a union 
     sponsor (as defined in section 1852(c)(4)(A)), Taft-Hartley 
     sponsor (as defined in section 1852(c)(4)(B)), a qualified 
     association (as defined in section 1852(c)(4)(C)), this 
     subsection shall not apply with respect to MedicarePlus 
     products offered by such organization and issued by an 
     organization to which subsection (b)(1) applies or by a 
     provider-sponsored organization (as defined in section 
     1854(a)).
       ``(e) Provision Against Risk of Insolvency.--
       ``(1) In general.--Each MedicarePlus organization shall 
     meet standards under section 1856 relating to the financial 
     solvency and capital adequacy of the organization. Such 
     standards shall take into account the nature and type of 
     MedicarePlus products offered by the organization.
       ``(2) Treatment of union and taft-hartley sponsors.--An 
     entity that is a union sponsor or a Taft-Hartley sponsor is 
     deemed to meet the requirement of paragraph (1).
       ``(3) Treatment of certain qualified associations.--An 
     entity that is a qualified association is deemed to meet the 
     requirement of paragraph (1) with respect to MedicarePlus 
     products offered by such association and issued by an 
     organization to which subsection (b)(1) applies or by a 
     provider-sponsored organization.
       ``(f) High Deductible/Medisave Product Defined.--
       ``(1) In general.--In this part, the term `high deductible/
     medisave product' means a MedicarePlus product that--
       ``(A) provides reimbursement for at least the items and 
     services described in section 1852(a)(1) in a year but only 
     after the enrollee incurs countable expenses (as specified 
     under the product) equal to the amount of a deductible 
     (described in paragraph (2));
       ``(B) counts as such expenses (for purposes of such 
     deductible) at least all amounts that would have been payable 
     under parts A and B or by the enrollee if the enrollee had 
     elected to receive benefits through the provisions of such 
     parts; and
       ``(C) provides, after such deductible is met for a year and 
     for all subsequent expenses for benefits referred to in 
     subparagraph (A) in the year, for a level of reimbursement 
     that is not less than--
       ``(i) 100 percent of such expenses, or
       ``(ii) 100 percent of the amounts that would have been paid 
     (without regard to any deductibles or coinsurance) under 
     parts A and B with respect to such expenses,
     whichever is less. Such term does not include the 
     MedicarePlus MSA itself or any contribution into such 
     account.
       ``(2) Deductible.--The amount of deductible under a high 
     deductible/medisave product--
       ``(A) for contract year 1997 shall be not more than 
     $10,000; and
       ``(B) for a subsequent contract year shall be not more than 
     the maximum amount of such deductible for the previous 
     contract year under this paragraph increased by the national 
     average per capita growth rate under section 1855(c)(3) for 
     the year.
     If the amount of the deductible under subparagraph (B) is not 
     a multiple of $50, the amount shall be rounded to the nearest 
     multiple of $50.
       ``(g) Organizations Treated as MedicarePlus Organizations 
     During Transition.--Any of the following organizations shall 
     be considered to qualify as a MedicarePlus organization for 
     contract years beginning before January 1, 1998:
       ``(1) Health maintenance organizations.--An organization 
     that is organized under the laws of any State and that is a 
     qualified health maintenance organization (as defined in 
     section 1310(d) of the Public Health Service Act), an 
     organization recognized under State law as a health 
     maintenance organization, or a similar organization regulated 
     under State law for solvency in the same manner and to the 
     same extent as such a health maintenance organization.
       ``(2) Licensed insurers.--An organization that is organized 
     under the laws of any State and--
       ``(A) is licensed by a State agency as an insurer for the 
     offering of health benefit coverage, or
       ``(B) is licensed by a State agency as a service benefit 
     plan,
     but only for individuals residing in an area in which the 
     organization is licensed to offer health insurance coverage.
       ``(3) Current risk-contractors.--An organization that is an 
     eligible organization (as defined in section 1876(b)) and 
     that has a risk-sharing contract in effect under section 1876 
     as of the date of the enactment of this section.
       ``(h) MediGrant Demonstration Projects.--The Secretary 
     shall provide, in at least 10 States, for demonstration 
     projects which would permit MediGrant programs under title 
     XXI to be treated as MedicarePlus organizations under this 
     part for individuals who are qualified to elect the 
     MedicarePlus option and who eligible to receive medical 
     assistance under the MediGrant program, for the purpose of 
     demonstrating the delivery of primary, acute, and long-term 
     care through an integrated delivery network which emphasizes 
     noninstitutional care.


``requirements relating to benefits, provision of services, enrollment, 
                              and premiums

       ``Sec. 1852. (a) Benefits Covered.--
       ``(1) In general.--Except as provided in section 1851(f)(1) 
     with respect to high deductible/medisave products, each 
     MedicarePlus product offered under this part shall provide 
     benefits for at least the items and services for which 
     benefits are available under parts A and B consistent with 
     the standards for coverage of such items and services 
     applicable under this title.
       ``(2) Organization as secondary payer.--Notwithstanding any 
     other provision of law, a MedicarePlus organization may (in 
     the case of the provision of items and services to an 
     individual under this part under circumstances in which 
     payment under this 

[[Page H 10393]]
     title is made secondary pursuant to section 1862(b)(2)) charge or 
     authorize the provider of such services to charge, in 
     accordance with the charges allowed under such law or 
     policy--
       ``(A) the insurance carrier, employer, or other entity 
     which under such law, plan, or policy is to pay for the 
     provision of such services, or
       ``(B) such individual to the extent that the individual has 
     been paid under such law, plan, or policy for such services.
       ``(3) Satisfaction of requirement.--A MedicarePlus product 
     (other than a high deductible/medisave product) offered by a 
     MedicarePlus organization satisfies paragraph (1) with 
     respect to benefits for items and services if the following 
     requirements are met:
       ``(A) Fee for service providers.--In the case of benefits 
     furnished through a provider that does not have a contract 
     with the organization, the product provides for at least the 
     dollar amount of payment for such items and services as would 
     otherwise be provided under parts A and B.
       ``(B) Participating providers.--In the case of benefits 
     furnished through a provider that has such a contract, the 
     individual's liability for payment for such items and 
     services does not exceed (after taking into account any 
     deductible, which does not exceed any deductible under parts 
     A and B) the lesser of the following:
       ``(i) Non-medicareplus liability.--The amount of the 
     liability that the individual would have had (based on the 
     provider being a participating provider) if the individual 
     had elected the non-MedicarePlus option.
       ``(ii) Medicare coinsurance applied to product payment 
     rates.--The applicable coinsurance or copayment rate (that 
     would have applied under the non-MedicarePlus option) of the 
     payment rate provided under the contract.
       ``(b) Antidiscrimination.--A MedicarePlus organization may 
     not deny, limit, or condition the coverage or provision of 
     benefits under this part based on the health status, claims 
     experience, receipt of health care, medical history, or lack 
     of evidence of insurability, of an individual.
       ``(c) Guaranteed Issue and Renewal.--
       ``(1) In general.--Except as provided in this subsection, a 
     MedicarePlus organization shall provide that at any time 
     during which elections are accepted under section 1805 with 
     respect to a MedicarePlus product offered by the 
     organization, the organization will accept without 
     restrictions individuals who are eligible to make such 
     election.
       ``(2) Priority.--If the Secretary determines that a 
     MedicarePlus organization, in relation to a MedicarePlus 
     product it offers, has a capacity limit and the number of 
     eligible individuals who elect the product under section 1805 
     exceeds the capacity limit, the organization may limit the 
     election of individuals of the product under such section but 
     only if priority in election is provided--
       ``(A) first to such individuals as have elected the product 
     at the time of the determination, and
       ``(B) then to other such individuals in such a manner that 
     does not discriminate among the individuals (who seek to 
     elect the product) on a basis described in subsection (b).
       ``(3) Limitation on termination of election.--
       ``(A) In general.--Subject to subparagraph (B), a 
     MedicarePlus organization may not for any reason terminate 
     the election of any individual under section 1805 for a 
     MedicarePlus product it offers.
       ``(B) Basis for termination of election.--A MedicarePlus 
     organization may terminate an individual's election under 
     section 1805 with respect to a MedicarePlus product it offers 
     if--
       ``(i) any premiums required with respect to such product 
     are not paid on a timely basis (consistent with standards 
     under section 1856 that provide for a grace period for late 
     payment of premiums),
       ``(ii) the individual has engaged in disruptive behavior 
     (as specified in such standards), or
       ``(iii) the product is terminated with respect to all 
     individuals under this part.
     Any individual whose election is so terminated is deemed to 
     have elected the Non-MedicarePlus option (as defined in 
     section 1805(a)(3)(A)).
       ``(C) Organization obligation with respect to election 
     forms.--Pursuant to a contract under section 1858, each 
     MedicarePlus organization receiving an election form under 
     section 1805(c)(2) shall transmit to the Secretary (at such 
     time and in such manner as the Secretary may specify) a copy 
     of such form or such other information respecting the 
     election as the Secretary may specify.
       ``(4) Special rules for limited enrollment medicareplus 
     organizations.--
       ``(A) Unions.--
       ``(i) In general.--Subject to subparagraph (D), a union 
     sponsor (as defined in clause (ii)) shall limit eligibility 
     of enrollees under this part for MedicarePlus products it 
     offers to individuals who are members of the sponsor and 
     affiliated with the sponsor through an employment 
     relationship with any employer or are the spouses of such 
     members.
       ``(ii) Union sponsor.--In this part and section 1805, the 
     term `union sponsor' means an employee organization in 
     relation to a group health plan that is established or 
     maintained by the organization other than pursuant to a 
     collective bargaining agreement.
       ``(B) Taft-hartley sponsors.--
       ``(i) In general.--Subject to subparagraph (D), a 
     MedicarePlus organization that is a Taft-Hartley sponsor (as 
     defined in clause (ii)) shall limit eligibility of enrollees 
     under this part for MedicarePlus products it offers to 
     individuals who are entitled to obtain benefits through such 
     products under the terms of an applicable collective 
     bargaining agreement.
       ``(ii) Taft-hartley sponsor.--In this part and section 
     1805, the term `Taft-Hartley sponsor' means, in relation to a 
     group health plan that is established or maintained by two or 
     more employers or jointly by one or more employers and one or 
     more employee organizations, the association, committee, 
     joint board of trustees, or other similar group of 
     representatives of parties who establish or maintain the 
     plan.
       ``(C) Qualified associations.--
       ``(i) In general.--Subject to subparagraph (D), a 
     MedicarePlus organization that is a qualified association (as 
     defined in clause (iii)) shall limit eligibility of 
     individuals under this part for products it offers to 
     individuals who are members of the association (or who are 
     spouses of such individuals).
       ``(ii) Limitation on termination of coverage.--Such a 
     qualifying association offering a MedicarePlus product to an 
     individual may not terminate coverage of the individual on 
     the basis that the individual is no longer a member of the 
     association except pursuant to a change of election during an 
     open election period occurring on or after the date of the 
     termination of membership.
       ``(iii) Qualified association.--In this part and section 
     1805, the term `qualified association' means an association, 
     religious fraternal organization, or other organization 
     (which may be a trade, industry, or professional association, 
     a chamber of commerce, or a public entity association) that 
     the Secretary finds--

       ``(I) has been formed for purposes other than the sale of 
     any health insurance and does not restrict membership based 
     on the health status, claims experience, receipt of health 
     care, medical history, or lack of evidence of insurability, 
     of an individual,
       ``(II) does not exist solely or principally for the purpose 
     of selling insurance, and
       ``(III) has at least 1,000 individual members or 200 
     employer members.

     Such term includes a subsidiary or corporation that is wholly 
     owned by one or more qualified organizations.
       ``(D) Limitation.--Rules of eligibility to carry out the 
     previous subparagraphs of this paragraph shall not have the 
     effect of denying eligibility to individuals on the basis of 
     health status, claims experience, receipt of health care, 
     medical history, or lack of evidence of insurability.
       ``(E) Limited enrollment medicare- plus organization.--In 
     this part and section 1805, the term `limited enrollment 
     MedicarePlus organization' means a MedicarePlus organization 
     that is a union sponsor, a Taft-Hartley sponsor, or a 
     qualified association.
       ``(F) Employer, etc.--In this paragraph, the terms 
     `employer', `employee organization', and `group health plan' 
     have the meanings given such terms for purposes of part 6 of 
     subtitle B of title I of the Employee Retirement Income 
     Security Act of 1974.
       ``(d) Submission and Charging of Premiums.--
       ``(1) In general.--Each MedicarePlus organization shall 
     file with the Secretary each year, in a form and manner and 
     at a time specified by the Secretary--
       ``(A) the amount of the monthly premiums for coverage under 
     each MedicarePlus product it offers under this part in each 
     payment area (as determined for purposes of section 1855) in 
     which the product is being offered; and
       ``(B) the enrollment capacity in relation to the product in 
     each such area.
       ``(2) Amounts of premiums charged.--The amount of the 
     monthly premium charged by a MedicarePlus organization for a 
     MedicarePlus product offered in a payment area to an 
     individual under this part shall be equal to the amount (if 
     any) by which--
       ``(A) the amount of the monthly premium for the product for 
     the period involved, as established under paragraph (3) and 
     submitted under paragraph (1), exceeds
       ``(B)(i) \1/12\ of the annual MedicarePlus capitation rate 
     specified in section 1855(b)(2) for the area and period 
     involved, or (ii) in the case of a high deductible/medisave 
     product, the monthly adjusted MedicarePlus capitation rate 
     specified in section 1855(b)(1) for the individual and period 
     involved.
       ``(3) Uniform premium.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the premiums charged by a MedicarePlus organization under 
     this part may not vary among individuals who reside in the 
     same payment area.
       ``(B) Exception for high deductible/medisave products.--A 
     MedicarePlus organization shall establish premiums for any 
     high deductible/medisave product it offers in a payment area 
     based on each of the risk adjustment categories established 
     for purposes of determining the amount of the payment to 
     MedicarePlus organizations under section 1855(b)(1) and using 
     the identical demographic and other adjustments among such 
     categories as are used for such purposes.
       ``(4) Terms and conditions of imposing premiums.--Each 
     MedicarePlus organization shall permit the payment of monthly 
     premiums on a monthly basis and may terminate election of 
     individuals for a MedicarePlus product for failure to make 

[[Page H 10394]]
     premium payments only in accordance with subsection (c)(3)(B).
       ``(5) Relation of premiums and cost-sharing to benefits.--
     In no case may the portion of a MedicarePlus organization's 
     premium rate and the actuarial value of its deductibles, 
     coinsurance, and copayments charged (to the extent 
     attributable to the minimum benefits described in subsection 
     (a)(1) and not counting any amount attributable to balance 
     billing) to individuals who are enrolled under this part with 
     the organization exceed the actuarial value of the 
     coinsurance and deductibles that would be applicable on the 
     average to individuals enrolled under this part with the 
     organization (or, if the Secretary finds that adequate data 
     are not available to determine that actuarial value, the 
     actuarial value of the coinsurance and deductibles applicable 
     on the average to individuals in the area, in the State, or 
     in the United States, eligible to enroll under this part with 
     the organization, or other appropriate data) and entitled to 
     benefits under part A and enrolled under part B if they were 
     not members of a MedicarePlus organization.
       ``(e) Requirement for Additional Benefits, Part B Premium 
     Discount Rebates, or Both.--
       ``(1) Requirement.--
       ``(A) In general.--Each MedicarePlus organization (in 
     relation to a MedicarePlus product it offers) shall provide 
     that if there is an excess amount (as defined in subparagraph 
     (B)) for the product for a contract year, subject to the 
     succeeding provisions of this subsection, the organization 
     shall provide to individuals such additional benefits (as the 
     organization may specify), a monetary rebate (paid on a 
     monthly basis) of the part B monthly premium, or a 
     combination thereof, in a total value which is at least equal 
     to the adjusted excess amount (as defined in subparagraph 
     (C)).
       ``(B) Excess amount.--For purposes of this paragraph, the 
     `excess amount', for an organization for a product, is the 
     amount (if any) by which--
       ``(i) the average of the capitation payments made to the 
     organization under this part for the product at the beginning 
     of contract year, exceeds
       ``(ii) the actuarial value of the minimum benefits 
     described in subsection (a)(1) under the product for 
     individuals under this part, as determined based upon an 
     adjusted community rate described in paragraph (5) (as 
     reduced for the actuarial value of the coinsurance and 
     deductibles under parts A and B).
       ``(C) Adjusted excess amount.--For purposes of this 
     paragraph, the `adjusted excess amount', for an organization 
     for a product, is the excess amount reduced to reflect any 
     amount withheld and reserved for the organization for the 
     year under paragraph (3).
       ``(D) No application to high deductible/medisave product.--
     Subparagraph (A) shall not apply to a high deductible/
     medisave product.
       ``(E) Uniform application.--This paragraph shall be applied 
     uniformly for all enrollees for a product in a service area.
       ``(F) Construction.--Nothing in this subsection shall be 
     construed as preventing a MedicarePlus organization from 
     providing health care benefits that are in addition to the 
     benefits otherwise required to be provided under this 
     paragraph and from imposing a premium for such additional 
     benefits.
       ``(2) Limitation on amount of part b premium discount 
     rebate.--In no case shall the amount of a part B premium 
     discount rebate under paragraph (1)(A) exceed, with respect 
     to a month, the amount of premiums imposed under part B (not 
     taking into account section 1839(b) (relating to penalty for 
     late enrollment) or 1839(h) (relating to affluence testing)), 
     for the individual for the month. Except as provided in the 
     previous sentence, a MedicarePlus organization is not 
     authorized to provide for cash or other monetary rebates as 
     an inducement for enrollment or otherwise.
       ``(3) Stabilization fund.--A MedicarePlus organization may 
     provide that a part of the value of an excess actuarial 
     amount described in paragraph (1) be withheld and reserved in 
     the Federal Hospital Insurance Trust Fund and in the Federal 
     Supplementary Medical Insurance Trust Fund (in such 
     proportions as the Secretary determines to be appropriate) by 
     the Secretary for subsequent annual contract periods, to the 
     extent required to stabilize and prevent undue fluctuations 
     in the additional benefits and rebates offered in those 
     subsequent periods by the organization in accordance with 
     such paragraph. Any of such value of amount reserved which is 
     not provided as additional benefits described in paragraph 
     (1)(A) to individuals electing the MedicarePlus product in 
     accordance with such paragraph prior to the end of such 
     periods, shall revert for the use of such trust funds.
       ``(4) Determination based on insufficient data.--For 
     purposes of this subsection, if the Secretary finds that 
     there is insufficient enrollment experience (including no 
     enrollment experience in the case of a provider-sponsored 
     organization) to determine an average of the capitation 
     payments to be made under this part at the beginning of a 
     contract period, the Secretary may determine such an average 
     based on the enrollment experience of other contracts entered 
     into under this part.
       ``(5) Adjusted community rate.--
       ``(A) In general.--For purposes of this subsection, subject 
     to subparagraph (B), the term `adjusted community rate' for a 
     service or services means, at the election of a MedicarePlus 
     organization, either--
       ``(i) the rate of payment for that service or services 
     which the Secretary annually determines would apply to an 
     individual electing a MedicarePlus product under this part if 
     the rate of payment were determined under a `community rating 
     system' (as defined in section 1302(8) of the Public Health 
     Service Act, other than subparagraph (C)), or
       ``(ii) such portion of the weighted aggregate premium, 
     which the Secretary annually estimates would apply to such an 
     individual, as the Secretary annually estimates is 
     attributable to that service or services,
     but adjusted for differences between the utilization 
     characteristics of the individuals electing coverage under 
     this part and the utilization characteristics of the other 
     enrollees with the organization (or, if the Secretary finds 
     that adequate data are not available to adjust for those 
     differences, the differences between the utilization 
     characteristics of individuals selecting other MedicarePlus 
     coverage, or individuals in the area, in the State, or in the 
     United States, eligible to elect MedicarePlus coverage under 
     this part and the utilization characteristics of the rest of 
     the population in the area, in the State, or in the United 
     States, respectively).
       ``(B) Special rule for provider-sponsored organizations.--
     In the case of a MedicarePlus organization that is a 
     provider-sponsored organization, the adjusted community rate 
     under subparagraph (A) for a MedicarePlus product may be 
     computed (in a manner specified by the Secretary) using data 
     in the general commercial marketplace or (during a transition 
     period) based on the costs incurred by the organization in 
     providing such a product.
       ``(f) Rules Regarding Physician Participation.--
       ``(1) Procedures.--Each MedicarePlus organization shall 
     establish reasonable procedures relating to the participation 
     (under an agreement between a physician and the organization) 
     of physicians under MedicarePlus products offered by the 
     organization under this part. Such procedures shall include--
       ``(A) providing notice of the rules regarding 
     participation,
       ``(B) providing written notice of participation decisions 
     that are adverse to physicians, and
       ``(C) providing a process within the organization for 
     appealing adverse decisions, including the presentation of 
     information and views of the physician regarding such 
     decision.
       ``(2) Consultation in medical policies.--A MedicarePlus 
     organization shall consult with physicians who have entered 
     into participation agreements with the organization regarding 
     the organization's medical policy, quality, and medical 
     management procedures.
       ``(3) Limitations on physician incentive plans.--
       ``(A) In general.--Each MedicarePlus organization may not 
     operate any physician incentive plan (as defined in 
     subparagraph (B)) unless the following requirements are met:
       ``(i) No specific payment is made directly or indirectly 
     under the plan to a physician or physician group as an 
     inducement to reduce or limit medically necessary services 
     provided with respect to a specific individual enrolled with 
     the organization.
       ``(ii) If the plan places a physician or physician group at 
     substantial financial risk (as determined by the Secretary) 
     for services not provided by the physician or physician 
     group, the organization--

       ``(I) provides stop-loss protection for the physician or 
     group that is adequate and appropriate, based on standards 
     developed by the Secretary that take into account the number 
     of physicians placed at such substantial financial risk in 
     the group or under the plan and the number of individuals 
     enrolled with the organization who receive services from the 
     physician or the physician group, and

       ``(II) conducts periodic surveys of both individuals 
     enrolled and individuals previously enrolled with the 
     organization to determine the degree of access of such 
     individuals to services provided by the organization and 
     satisfaction with the quality of such services.

       ``(iii) The organization provides the Secretary with 
     descriptive information regarding the plan, sufficient to 
     permit the Secretary to determine whether the plan is in 
     compliance with the requirements of this subparagraph.
       ``(B) Physician incentive plan defined.--In this paragraph, 
     the term `physician incentive plan' means any compensation 
     arrangement between a MedicarePlus organization and a 
     physician or physician group that may directly or indirectly 
     have the effect of reducing or limiting services provided 
     with respect to individuals enrolled with the organization 
     under this part.
       ``(4) Limitation on provider indemnification.--A 
     MedicarePlus organization may not provide (directly or 
     indirectly) for a provider (or group of providers) to 
     indemnify the organization against any liability resulting 
     from a civil action brought by or on behalf of an enrollee 
     under this part for any damage caused to the enrollee by the 
     organization's denial of medically necessary care.
       ``(5) Exception for certain fee-for-service plans.--The 
     previous provisions of this subsection shall not apply in the 
     case of a MedicarePlus organization in relation to a 
     MedicarePlus product if the organization 

[[Page H 10395]]
     does not have agreements between physicians and the organization for 
     the provision of benefits under the product.
       ``(g) Provision of Information.--A MedicarePlus 
     organization shall provide the Secretary with such 
     information on the organization and each MedicarePlus product 
     it offers as may be required for the preparation of the 
     information booklet described in section 1805(d)(3)(A).
       ``(h) Coordinated Acute and Long-term Care Benefits Under a 
     MedicarePlus Product.--Nothing in this part shall be 
     construed as preventing a State from coordinating benefits 
     under its MediGrant program under title XXI with those 
     provided under a MedicarePlus product in a manner that 
     assures continuity of a full-range of acute care and long-
     term care services to poor elderly or disabled individuals 
     eligible for benefits under this title and under such 
     program.
       ``(i) Transitional File and Use for Certain Requirements.--
       ``(1) In general.--In the case of a MedicarePlus product 
     proposed to be offered before the end of the transition 
     period (as defined in section 1805(e)(1)(B)), by a 
     MedicarePlus organization described in section 1851(g)(3) or 
     by a MedicarePlus organization with a contract in effect 
     under section 1858, if the organization submits complete 
     information to the Secretary regarding the product 
     demonstrating that the product meets the requirements and 
     standards under subsections (a), (d), and (e) (relating to 
     benefits and premiums), the product shall be deemed as 
     meeting such requirements and standards under such 
     subsections unless the Secretary disapproves the product 
     within 60 days after the date of submission of the complete 
     information.
       ``(2) Construction.--Nothing in paragraph (1) shall be 
     construed as waiving the requirement of a contract under 
     section 1858 or waiving requirements and standards not 
     referred to in paragraph (1).


                     ``patient protection standards

       ``Sec. 1853. (a) Disclosure to Enrollees.--A MedicarePlus 
     organization shall disclose in clear, accurate, and 
     standardized form, information regarding all of the following 
     for each MedicarePlus product it offers:
       ``(1) Benefits under the MedicarePlus product offered, 
     including exclusions from coverage and, if it is a high 
     deductible/medisave product, a comparison of benefits under 
     such a product with benefits under other MedicarePlus 
     products.
       ``(2) Rules regarding prior authorization or other review 
     requirements that could result in nonpayment.
       ``(3) Potential liability for cost-sharing for out-of-
     network services.
       ``(4) The number, mix, and distribution of participating 
     providers.
       ``(5) The financial obligations of the enrollee, including 
     premiums, deductibles, co-payments, and maximum limits on 
     out-of-pocket losses for items and services (both in and out 
     of network).
       ``(6) Statistics on enrollee satisfaction with the product 
     and organization, including rates of reenrollment.
       ``(7) Enrollee rights and responsibilities, including the 
     grievance process provided under subsection (f).
       ``(8) A statement that the use of the 911 emergency 
     telephone number is appropriate in emergency situations and 
     an explanation of what constitutes an emergency situation.
       ``(9) A description of the organization's quality assurance 
     program under subsection (d).

     Such information shall be disclosed to each enrollee under 
     this part at the time of enrollment and at least annually 
     thereafter.
       ``(b) Access to Services.--
       ``(1) In general.--A MedicarePlus organization offering a 
     MedicarePlus product may restrict the providers from whom the 
     benefits under the product are provided so long as--
       ``(A) the organization makes such benefits available and 
     accessible to each individual electing the product within the 
     product service area with reasonable promptness and in a 
     manner which assures continuity in the provision of benefits;
       ``(B) when medically necessary the organization makes such 
     benefits available and accessible 24 hours a day and 7 days a 
     week;
       ``(C) the product provides for reimbursement with respect 
     to services which are covered under subparagraphs (A) and (B) 
     and which are provided to such an individual other than 
     through the organization, if--
       ``(i) the services were medically necessary and immediately 
     required because of an unforeseen illness, injury, or 
     condition, and
       ``(ii) it was not reasonable given the circumstances to 
     obtain the services through the organization; and
       ``(D) coverage is provided for emergency services (as 
     defined in paragraph (4)) without regard to prior 
     authorization or the emergency care provider's contractual 
     relationship with the organization.
       ``(2) Minimum payment levels where providing point-of-
     service coverage.--If a MedicarePlus product provides 
     benefits for items and services (not described in paragraph 
     (1)(C)) through a network of providers and also permits 
     payment to be made under the product for such items and 
     services not provided through such a network, the payment 
     level under the product with respect to such items and 
     services furnished outside the network shall be at least 70 
     percent (or, if the effective cost-sharing rate is 50 
     percent, at least 40 percent) of the lesser of--
       ``(A) the payment basis (determined without regard to 
     deductibles and cost-sharing) that would have applied for 
     such items and services under parts A and B, or
       ``(B) the amount charged by the entity furnishing such 
     items and services.
       ``(3) Protection of enrollees for certain emergency 
     services.--
       ``(A) Participating providers.--In the case of emergency 
     services described in subparagraph (C) which are furnished by 
     a participating physician or provider of services to an 
     individual enrolled with a MedicarePlus organization under 
     this section, the applicable participation agreement is 
     deemed to provide that the physician or provider of services 
     will accept as payment in full from the organization for such 
     emergency services described in subparagraph (C) the amount 
     that would be payable to the physician or provider of 
     services under part B and from the individual under such 
     part, if the individual were not enrolled with such an 
     organization under this part.
       ``(B) Nonparticipating providers.--In the case of emergency 
     services described in subparagraph (C) which are furnished by 
     a nonparticipating physician, the limitations on actual 
     charges for such services otherwise applicable under part B 
     (to services furnished by individuals not enrolled with a 
     MedicarePlus organization under this section) shall apply in 
     the same manner as such limitations apply to services 
     furnished to individuals not enrolled with such an 
     organization.
       ``(C) Emergency services described.--The emergency services 
     described in this subparagraph are emergency services which 
     are furnished to an enrollee of a MedicarePlus organization 
     under this part by a physician or provider of services that 
     is not under a contract with the organization.
       ``(D) Exception for certain fee-for-service plans.--The 
     previous provisions of this paragraph shall not apply in the 
     case of a MedicarePlus organization in relation to a 
     MedicarePlus product if the organization does not have 
     agreements between physicians and the organization for the 
     provision of benefits under the product.
       ``(4) Definition of emergency services.--In this 
     subsection, the term `emergency services' means, with respect 
     to an individual enrolled with an organization, covered 
     inpatient and outpatient services that--
       ``(A) are furnished by an appropriate source other than the 
     organization,
       ``(B) are needed immediately because of an injury or sudden 
     illness, and
       ``(C) are needed because the time required to reach the 
     organization's providers or suppliers would have meant risk 
     of serious damage to the patient's health.
       ``(c) Confidentiality and Accuracy of Enrollee Records.--
     Each MedicarePlus organization shall establish procedures--
       ``(1) to safeguard the privacy of individually identifiable 
     enrollee information, and
       ``(2) to maintain accurate and timely medical records for 
     enrollees.
       ``(d) Quality Assurance Program.--
       ``(1) In general.--Each MedicarePlus organization must have 
     arrangements, established in accordance with regulations of 
     the Secretary, for an ongoing quality assurance program for 
     health care services it provides to such individuals.
       ``(2) Elements of program.--The quality assurance program 
     shall--
       ``(A) stress health outcomes;
       ``(B) provide for the establishment of written protocols 
     for utilization review, based on current standards of medical 
     practice;
       ``(C) provide review by physicians and other health care 
     professionals of the process followed in the provision of 
     such health care services;
       ``(D) monitors and evaluates high volume and high risk 
     services and the care of acute and chronic conditions;
       ``(E) evaluates the continuity and coordination of care 
     that enrollees receive;
       ``(F) has mechanisms to detect both underutilization and 
     overutilization of services;
       ``(G) after identifying areas for improvement, establishes 
     or alters practice parameters;
       ``(H) takes action to improve quality and assesses the 
     effectiveness of such action through systematic follow-up;
       ``(I) makes available information on quality and outcomes 
     measures to facilitate beneficiary comparison and choice of 
     health coverage options (in such form and on such quality and 
     outcomes measures as the Secretary determines to be 
     appropriate);
       ``(J) is evaluated on an ongoing basis as to its 
     effectiveness; and
       ``(K) provide for external accreditation or review, by a 
     utilization and quality control peer review organization 
     under part B of title XI or other qualified independent 
     review organization, of the quality of services furnished by 
     the organization meets professionally recognized standards of 
     health care (including providing adequate access of enrollees 
     to services).
       ``(3) Exception for certain fee-for-service plans.--
     Paragraph (1) and subsection (c)(2) shall not apply in the 
     case of a MedicarePlus organization in relation to a 
     MedicarePlus product to the extent the organization provides 
     for coverage of benefits without restrictions relating to 
     utilization and without regard to whether the provider has a 
     contract or other arrangement with the plan for the provision 
     of such benefits.
       ``(4) Treatment of accreditation.--The Secretary shall 
     provide that a MedicarePlus 

[[Page H 10396]]
     organization is deemed to meet the requirements of paragraphs (1) and 
     (2) of this subsection and subsection (c) if the organization 
     is accredited (and periodically reaccredited) by a private 
     organization under a process that the Secretary has 
     determined assures that the organization meets standards that 
     are no less stringent than the standards established under 
     section 1856 to carry out this subsection and subsection (c).
       ``(e) Coverage Determinations.--
       ``(1) Decisions on nonemergency care.--A MedicarePlus 
     organization shall make determinations regarding 
     authorization requests for nonemergency care on a timely 
     basis, depending on the urgency of the situation.
       ``(2) Appeals.--
       ``(A) In general.--Appeals from a determination of an 
     organization denying coverage shall be decided within 30 days 
     of the date of receipt of medical information, but not later 
     than 60 days after the date of the decision.
       ``(B) Physician decision on certain appeals.--Appeal 
     decisions relating to a determination to deny coverage based 
     on a lack of medical necessity shall be made only by a 
     physician.
       ``(C) Emergency cases.--Appeals from such a determination 
     involving a life-threatening or emergency situation shall be 
     decided on an expedited basis.
       ``(f) Grievances and Appeals.--
       ``(1) Grievance mechanism.--Each MedicarePlus organization 
     must provide meaningful procedures for hearing and resolving 
     grievances between the organization (including any entity 
     or individual through which the organization provides 
     health care services) and enrollees under this part.
       ``(2) Appeals.--An enrollee with an organization under this 
     part who is dissatisfied by reason of the enrollee's failure 
     to receive any health service to which the enrollee believes 
     the enrollee is entitled and at no greater charge than the 
     enrollee believes the enrollee is required to pay is 
     entitled, if the amount in controversy is $100 or more, to a 
     hearing before the Secretary to the same extent as is 
     provided in section 205(b), and in any such hearing the 
     Secretary shall make the organization a party. If the amount 
     in controversy is $1,000 or more, the individual or 
     organization shall, upon notifying the other party, be 
     entitled to judicial review of the Secretary's final decision 
     as provided in section 205(g), and both the individual and 
     the organization shall be entitled to be parties to that 
     judicial review. In applying sections 205(b) and 205(g) as 
     provided in this subparagraph, and in applying section 205(l) 
     thereto, any reference therein to the Commissioner of Social 
     Security or the Social Security Administration shall be 
     considered a reference to the Secretary or the Department of 
     Health and Human Services, respectively.
       ``(3) Independent review of certain coverage denials.--The 
     Secretary shall contract with an independent, outside entity 
     to review and resolve appeals of denials of coverage related 
     to urgent or emergency services with respect to MedicarePlus 
     products.
       ``(4) Coordination with secretary of labor.--The Secretary 
     shall consult with the Secretary of Labor so as to ensure 
     that the requirements of this subsection, as they apply in 
     the case of grievances referred to in paragraph (1) to which 
     section 503 of the Employee Retirement Income Security Act of 
     1974 applies, are applied in a manner consistent with the 
     requirements of such section 503.
       ``(g) Information on Advance Directives.--Each MedicarePlus 
     organization shall meet the requirement of section 1866(f) 
     (relating to maintaining written policies and procedures 
     respecting advance directives).
       ``(h) Approval of Marketing Materials.--
       ``(1) Submission.--Each MedicarePlus organization may not 
     distribute marketing materials unless--
       ``(A) at least 45 days before the date of distribution the 
     organization has submitted the material to the Secretary for 
     review, and
       ``(B) the Secretary has not disapproved the distribution of 
     such material.
       ``(2) Review.--The standards established under section 1856 
     shall include guidelines for the review of all such material 
     submitted and under such guidelines the Secretary shall 
     disapprove such material if the material is materially 
     inaccurate or misleading or otherwise makes a material 
     misrepresentation.
       ``(3) Deemed approval (1-stop shopping).--In the case of 
     material that is submitted under paragraph (1)(A) to the 
     Secretary or a regional office of the Department of Health 
     and Human Services and the Secretary or the office has not 
     disapproved the distribution of marketing materials under 
     paragraph (1)(B) with respect to a MedicarePlus product in an 
     area, the Secretary is deemed not to have disapproved such 
     distribution in all other areas covered by the product and 
     organization.
       ``(4) Prohibition of certain marketing practices.--Each 
     MedicarePlus organization shall conform to fair marketing 
     standards in relation to MedicarePlus products offered under 
     this part, included in the standards established under 
     section 1856. Such standards shall include a prohibition 
     against an organization (or agent of such an organization) 
     completing any portion of any election form under section 
     1805 on behalf of any individual.


                   ``provider-sponsored organizations

       ``Sec. 1854. (a) Provider-Sponsored Organization Defined.--
       ``(1) In general.--In this part, the term `provider-
     sponsored organization' means a public or private entity that 
     (in accordance with standards established under subsection 
     (b)) is a provider, or group of affiliated providers, that 
     provides a substantial proportion (as defined by the 
     Secretary under such standards) of the health care items and 
     services under the contract under this part directly through 
     the provider or affiliated group of providers.
       ``(2) Substantial proportion.--In defining what is a 
     `substantial proportion' for purposes of paragraph (1), the 
     Secretary--
       ``(A) shall take into account the need for such an 
     organization to assume responsibility for a substantial 
     proportion of services in order to assure financial stability 
     and the practical difficulties in such an organization 
     integrating a very wide range of service providers; and
       ``(B) may vary such proportion based upon relevant 
     differences among organizations, such as their location in an 
     urban or rural area.
       ``(3) Affiliation.--For purposes of this subsection, a 
     provider is `affiliated' with another provider if, through 
     contract, ownership, or otherwise--
       ``(A) one provider, directly or indirectly, controls, is 
     controlled by, or is under common control with the other,
       ``(B) each provider is a participant in a lawful 
     combination under which each provider shares, directly or 
     indirectly, substantial financial risk in connection with 
     their operations,
       ``(C) both providers are part of a controlled group of 
     corporations under section 1563 of the Internal Revenue Code 
     of 1986, or
       ``(D) both providers are part of an affiliated service 
     group under section 414 of such Code.
       ``(4) Control.--For purposes of paragraph (3), control is 
     presumed to exist if one party, directly or indirectly, owns, 
     controls, or holds the power to vote, or proxies for, not 
     less than 51 percent of the voting rights or governance 
     rights of another.
       ``(b) Process for Establishing Standards for Provider-
     Sponsored Organizations.--For process of establishing of 
     standards for provider-sponsored organizations, see section 
     1856(c).
       ``(c) Process for State Certification of Provider-Sponsored 
     Organizations.--For process of State certification of 
     provider-sponsored organizations, see section 1857(c).
       ``(d) Preemption of State Insurance Licensing 
     Requirements.--
       ``(1) In general.--This section supersedes any State law 
     which--
       ``(A) requires that a provider-sponsored organization meet 
     requirements for insurers of health services or health 
     maintenance organizations doing business in the State with 
     respect to initial capitalization and establishment of 
     financial reserves against insolvency, or
       ``(B) imposes requirements that would have the effect of 
     prohibiting the organization from complying with the 
     applicable requirements of this part,

     insofar as such the law applies to individuals enrolled with 
     the organization under this part.
       ``(2) Exception.--Paragraph (1) shall not apply with 
     respect to any State law to the extent that such law provides 
     standards or requirements, or provides for enforcement 
     thereof, so as to meet the requirements of section 1857(c)(2) 
     with respect to approval by the Secretary of State 
     certification requirements thereunder.
       ``(3) Construction.--Nothing in this subsection shall be 
     construed as affecting the operation of section 514 of the 
     Employee Retirement Income Security Act of 1974.


                ``payments to medicareplus organizations

       ``Sec. 1855. (a) Payments.--
       ``(1) In general.--Under a contract under section 1858 the 
     Secretary shall pay to each MedicarePlus organization, with 
     respect to coverage of an individual under this part in a 
     payment area for a month, an amount equal to the monthly 
     adjusted MedicarePlus capitation rate (as provided under 
     subsection (b)) with respect to that individual for that 
     area.
       ``(2) Annual announcement.--The Secretary shall annually 
     determine, and shall announce (in a manner intended to 
     provide notice to interested parties) not later than 
     September 7 before the calendar year concerned--
       ``(A) the annual MedicarePlus capitation rate for each 
     payment area for the year, and
       ``(B) the factors to be used in adjusting such rates under 
     subsection (b) for payments for months in that year.
       ``(3) Advance notice of methodological changes.--At least 
     45 days before making the announcement under paragraph (2) 
     for a year, the Secretary shall provide for notice to 
     MedicarePlus organizations of proposed changes to be made in 
     the methodology or benefit coverage assumptions from the 
     methodology and assumptions used in the previous announcement 
     and shall provide such organizations an opportunity to 
     comment on such proposed changes.
       ``(4) Explanation of assumptions.--In each announcement 
     made under paragraph (2) for a year, the Secretary shall 
     include an explanation of the assumptions (including any 
     benefit coverage assumptions) and changes in methodology used 
     in the announcement in sufficient detail so that MedicarePlus 
     organizations can compute monthly adjusted MedicarePlus 
     capitation rates for classes of individuals located in each 
     payment area which is in whole or in 

[[Page H 10397]]
     part within the service area of such an organization.
       ``(b) Monthly Adjusted MedicarePlus Capitation Rate.--
       ``(1) In general.--For purposes of this section, the 
     `monthly adjusted MedicarePlus capitation rate' under this 
     subsection, for a month in a year for an individual in a 
     payment area (specified under paragraph (3)) and in a class 
     (established under paragraph (4)), is \1/12\ of the annual 
     MedicarePlus capitation rate specified in paragraph (2) for 
     that area for the year, adjusted to reflect the actuarial 
     value of benefits under this title with respect to 
     individuals in such class compared to the national average 
     for individuals in all classes.
       ``(2) Annual medicareplus capitation rates.--For purposes 
     of this section, the annual MedicarePlus capitation rate for 
     a payment area for a year is equal to the annual MedicarePlus 
     capitation rate for the area for the previous year (or, in 
     the case of 1996, the average annual per capita rate of 
     payment described in section 1876(a)(1)(C) for the area for 
     1995) increased by the per capita growth rate for that area 
     and year (as determined under subsection (c)).
       ``(3) Payment area defined.--In this section, the term 
     `payment area' means a county (or equivalent area specified 
     by the Secretary), except that in the case of the population 
     group described in paragraph (5)(C), the payment area shall 
     be each State.
       ``(4) Classes.--
       ``(A) In general.--For purposes of this section, the 
     Secretary shall define appropriate classes of enrollees, 
     consistent with paragraph (5), based on age, gender, welfare 
     status, institutionalization, and such other factors as the 
     Secretary determines to be appropriate, so as to ensure 
     actuarial equivalence. The Secretary may add to, modify, or 
     substitute for such classes, if such changes will improve the 
     determination of actuarial equivalence.
       ``(B) Research.--The Secretary shall conduct such research 
     as may be necessary to provide for greater accuracy in the 
     adjustment of capitation rates under this subsection. Such 
     research may include research into the addition or 
     modification of classes under subparagraph (A). The Secretary 
     shall submit to Congress a report on such research by not 
     later than January 1, 1997.
       ``(5) Division of medicare population.--In carrying out 
     paragraph (4) and this section, the Secretary shall recognize 
     the following separate population groups:
       ``(A) Aged.--Individuals 65 years of age or older who are 
     not described in subparagraph (C).
       ``(B) Disabled.--Disabled individuals who are under 65 
     years of age and not described in subparagraph (C).
       ``(C) Individuals with end stage renal disease.--
     Individuals who are determined to have end stage renal 
     disease.
       ``(c) Per Capita Growth Rates.--
       ``(1) For 1996.--
       ``(A) In general.--For purposes of this section and subject 
     to subparagraph (B), the per capita growth rates for 1996, 
     for a payment area assigned to a service utilization cohort 
     under subsection (d), shall be the following:
       ``(i) Lowest service utilization cohort.--For areas 
     assigned to the lowest service utilization cohort, 9.0 
     percent plus the additional percent provided under 
     subparagraph (B)(ii).
       ``(ii) Lower service utilization cohort.--For areas 
     assigned to the lower service utilization cohort, 8.0 
     percent.
       ``(iii) Median service utilization cohort.--For areas 
     assigned to the median service utilization cohort, 5.1 
     percent.
       ``(iv) Higher service utilization cohort.--For areas 
     assigned to the higher service utilization cohort, 4.7 
     percent.
       ``(v) Highest service utilization cohort.--For areas 
     assigned to the highest service utilization cohort, 4.0 
     percent.
       ``(B) Budget neutral adjustment.--In order to assure that 
     the total capitation payments under this section during 1996 
     are the same as the amount such payments would have been if 
     the per capita growth rate for all such areas for 1996 were 
     equal to the national average per capita growth rate, 
     specified in paragraph (3) for 1996, the Secretary shall 
     adjust the per capita growth rates for payment areas as 
     follows:
       ``(i) Increase up to floor.--First, such additional percent 
     increase as may be necessary to assure that the annual 
     MedicarePlus capitation rate for each payment area is at 
     least 12 times $300 for 1996.
       ``(ii) Residual increase to lowest service utilization 
     cohort.--Next, for payment areas assigned to the lowest 
     service utilization cohort, such additional percent increase 
     as will assure that the total capitation payments under this 
     section during 1996 are the same as the amount such payments 
     would have been if the per capita growth rate for all such 
     areas for 1996 were equal to the national average per 
     capita growth rate. The increase under this clause may 
     apply to a payment area described in clause (i) and shall 
     be applied after the increase provided under such clause.
       ``(2) For subsequent years.--
       ``(A) In general.--For purposes of this section and subject 
     to subparagraphs (B) and (C), the Secretary shall compute a 
     per capita growth rate for each year after 1996, for each 
     payment area as assigned to a service utilization cohort 
     under subsection (d), consistent with the following rules:
       ``(i) Median service utilization cohort set at national 
     average per capita growth rate.--The per capita growth rate 
     for areas assigned to the median service utilization cohort 
     for the year shall be the national average per capita growth 
     rate for the year (as specified under paragraph (3)), subject 
     to subparagraph (C).
       ``(ii) Highest service utilization cohort set at 75 percent 
     of national average per capita growth rate.--The per capita 
     growth rate for areas assigned to the highest service 
     utilization cohort for the year shall be 75 percent of the 
     national average per capita growth rate for the year.
       ``(iii) Lowest service utilization cohort set at 187.5 
     percent of national average per capita growth rate.--The per 
     capita growth rate for areas assigned to the lowest service 
     utilization cohort for the year shall be 187.5 percent of the 
     national average per capita growth rate for the year, subject 
     to subparagraph (C).
       ``(iv) Lower service utilization cohort set at 150 percent 
     of national average per capita growth rate.--

       ``(I) In general.--Subject to subclause (II), the per 
     capita growth rate for areas assigned to the lower service 
     utilization cohort for the year shall be 150 percent of the 
     national average per capita growth rate for the year.
       ``(II) Adjustment.--If the Secretary has established under 
     clause (v) the per capita growth rate for areas assigned to 
     the higher service utilization cohort for the year at 75 
     percent of the national average per capita growth rate, the 
     Secretary may provide for a reduced per capita growth rate 
     under subclause (I) to the extent necessary to comply with 
     subparagraph (B).

       ``(v) Higher service utilization cohort.--The per capita 
     growth rate for areas assigned to the higher service 
     utilization cohort for the year shall be such percent (not 
     less than 75 percent) of the national average per capita 
     growth rate, as the Secretary may determine consistent with 
     subparagraph (B).
       ``(B) Average per capita growth rate at national average to 
     assure budget neutrality.--The Secretary shall compute per 
     capita growth rates for a year under subparagraph (A) (before 
     the application of subparagraph (C)) in a manner so that the 
     weighted average per capita growth rate for all areas for the 
     year (weighted to reflect the number of medicare 
     beneficiaries in each area) is equal to the national average 
     per capita growth rate under paragraph (3) for the year.
       ``(C) Final adjustment of growth rates.--After computing 
     per capita growth rates under the previous provisions of this 
     paragraph for a year, the Secretary shall--
       ``(i) reduce the per capita growth rate for areas assigned 
     to the median service utilization cohort by the ratio of .1 
     to 5.3;
       ``(ii) if the year is 1997, increase per capita growth 
     rates for payment areas to the extent necessary to assure 
     that the annual MedicarePlus capitation rate for each payment 
     area for such year is at least 12 times $320; and
       ``(iii) adjust (consistent with clause (ii)) the per capita 
     growth rate for areas assigned to the lowest service 
     utilization cohort by such proportion as the Secretary 
     determines will result in no net increase in outlays 
     resulting from the application of this subparagraph for the 
     year involved.''; and
       ``(3) National average per capita growth rates.--In this 
     subsection, the `national average per capita growth rate' 
     for--
       ``(A) 1996 is 5.3 percent,
       ``(B) 1997 is 3.8 percent,
       ``(C) 1998 is 4.6 percent,
       ``(D) 1999 is 4.3 percent,
       ``(E) 2000 is 3.8 percent,
       ``(F) 2001 is 5.5 percent,
       ``(G) 2002 is 5.6 percent, and
       ``(H) each subsequent year is 5.0 percent.
       ``(d) Assignment of Payment Areas to Service Utilization 
     Cohorts.--
       ``(1) In general.--For purposes of determining per capita 
     growth rates under subsection (c) for areas for a year, the 
     Secretary shall assign each payment area to a service 
     utilization cohort (based on the service utilization index 
     value for that area determined under paragraph (2)) as 
     follows:
       ``(A) Lowest service utilization cohort.--Areas with a 
     service utilization index value of less than .80 shall be 
     assigned to the lowest service utilization cohort.
       ``(B) Lower service utilization cohort.--Areas with a 
     service utilization index value of at least .80 but less than 
     .90 shall be assigned to the lower service utilization 
     cohort.
       ``(C) Median service utilization cohort.--Areas with a 
     service utilization index value of at least .90 but less than 
     1.10 shall be assigned to the median service utilization 
     cohort.
       ``(D) Higher service utilization cohort.--Areas with a 
     service utilization index value of at least 1.10 but less 
     than 1.20 shall be assigned to the higher service utilization 
     cohort.
       ``(E) Highest service utilization cohort.--Areas with a 
     service utilization index value of at least 1.20 shall be 
     assigned to the highest service utilization cohort.
       ``(2) Determination of service utilization index values.--
     In order to determine the per capita growth rate for a 
     payment area for each year (beginning with 1996), the 
     Secretary shall determine for such area and year a service 
     utilization index value, which is equal to--
       ``(A) the annual MedicarePlus capitation rate under this 
     section for the area for the year in which the determination 
     is made (or, in the case of 1996, the average annual per 

[[Page H 10398]]
     capita rate of payment (described in section 1876(a)(1)(C)) for the 
     area for 1995); divided by
       ``(B) the input-price-adjusted annual national MedicarePlus 
     capitation rate (as determined under paragraph (3)) for that 
     area for the year in which the determination is made.
       ``(3) Determination of input-price-adjusted rates.--
       ``(A) In general.--For purposes of paragraph (2), the 
     `input-price-adjusted annual national MedicarePlus capitation 
     rate' for a payment area for a year is equal to the sum, for 
     all the types of medicare services (as classified by the 
     Secretary), of the product (for each such type) of--
       ``(i) the national standardized MedicarePlus capitation 
     rate (determined under subparagraph (B)) for the year,
       ``(ii) the proportion of such rate for the year which is 
     attributable to such type of services, and
       ``(iii) an index that reflects (for that year and that type 
     of services) the relative input price of such services in the 
     area compared to the national average input price of such 
     services.

     In applying clause (iii), the Secretary shall, subject to 
     subparagraph (C), apply those indices under this title that 
     are used in applying (or updating) national payment rates for 
     specific areas and localities.
       ``(B) National standardized medicareplus capitation rate.--
     In this paragraph, the `national standardized MedicarePlus 
     capitation rate' for a year is equal to--
       ``(i) the sum (for all payment areas) of the product of (I) 
     the annual MedicarePlus capitation rate for that year for the 
     area under subsection (b)(2), and (II) the average number of 
     medicare beneficiaries residing in that area in the year; 
     divided by
       ``(ii) the total average number of medicare beneficiaries 
     residing in all the payment areas for that year.
       ``(C) Special rules for 1996.--In applying this paragraph 
     for 1996--
       ``(i) medicare services shall be divided into 2 types of 
     services: part A services and part B services;
       ``(ii) the proportions described in subparagraph (A)(ii) 
     for such types of services shall be--

       ``(I) for part A services, the ratio (expressed as a 
     percentage) of the average annual per capita rate of payment 
     for the area for part A for 1995 to the total average annual 
     per capita rate of payment for the area for parts A and B for 
     1995, and
       ``(II) for part B services, 100 percent minus the ratio 
     described in subclause (I);

       ``(iii) for the part A services, 70 percent of payments 
     attributable to such services shall be adjusted by the index 
     used under section 1886(d)(3)(E) to adjust payment rates for 
     relative hospital wage levels for hospitals located in the 
     payment area involved;
       ``(iv) for part B services--

       ``(I) 66 percent of payments attributable to such services 
     shall be adjusted by the index of the geographic area factors 
     under section 1848(e) used to adjust payment rates for 
     physicians' services furnished in the payment area, and
       ``(II) of the remaining 34 percent of the amount of such 
     payments, 70 percent shall be adjusted by the index described 
     in clause (iii);

       ``(v) the index values shall be computed based only on the 
     beneficiary population described in subsection (b)(5)(A).

     The Secretary may continue to apply the rules described in 
     this subparagraph (or similar rules) for 1997.
       ``(e) Payment Process.--
       ``(1) In general.--Subject to subsection (f), the Secretary 
     shall make monthly payments under this section in advance and 
     in accordance with the rate determined under subsection (a) 
     to the plan for each individual enrolled with a MedicarePlus 
     organization under this part.
       ``(2) Adjustment to reflect number of enrollees.--
       ``(A) In general.--The amount of payment under this 
     subsection may be retroactively adjusted to take into account 
     any difference between the actual number of individuals 
     enrolled with an organization under this part and the number 
     of such individuals estimated to be so enrolled in 
     determining the amount of the advance payment.
       ``(B) Special rule for certain enrollees.--
       ``(i) In general.--Subject to clause (ii), the Secretary 
     may make retroactive adjustments under subparagraph (A) to 
     take into account individuals enrolled during the period 
     beginning on the date on which the individual enrolls with a 
     MedicarePlus organization under a product operated, 
     sponsored, or contributed to by the individual's employer or 
     former employer (or the employer or former employer of the 
     individual's spouse) and ending on the date on which the 
     individual is enrolled in the organization under this part, 
     except that for purposes of making such retroactive 
     adjustments under this subparagraph, such period may not 
     exceed 90 days.
       ``(ii) Exception.--No adjustment may be made under clause 
     (i) with respect to any individual who does not certify that 
     the organization provided the individual with the disclosure 
     statement described in section 1853(a) at the time the 
     individual enrolled with the organization.
       ``(f) Special Rules for Individuals Electing High 
     Deductible/Medisave Product.--
       ``(1) In general.--In the case of an individual who has 
     elected a high deductible/medisave product, notwithstanding 
     the preceding provisions of this section--
       ``(A) the amount of the payment to the MedicarePlus 
     organization offering the high deductible/medisave product 
     shall not exceed the premium for the product, and
       ``(B) subject to paragraph (2), the difference between the 
     amount of payment that would otherwise be made and the amount 
     of payment to such organization shall be made directly into a 
     MedicarePlus MSA established (and, if applicable, designated) 
     by the individual under paragraph (2).
       ``(2) Establishment and designation of medicareplus medical 
     savings account as requirement for payment of contribution.--
     In the case of an individual who has elected coverage under a 
     high deductible/medisave product, no payment shall be made 
     under paragraph (1)(B) on behalf of an individual for a month 
     unless the individual--
       ``(A) has established before the beginning of the month (or 
     by such other deadline as the Secretary may specify) a 
     MedicarePlus MSA (as defined in section 137(b) of the 
     Internal Revenue Code of 1986), and
       ``(B) if the individual has established more than one 
     MedicarePlus MSA, has designated one of such accounts as the 
     individual's MedicarePlus MSA for purposes of this part.

     Under rules under this section, such an individual may change 
     the designation of such account under subparagraph (B) for 
     purposes of this part.
       ``(3) Lump sum deposit of medical savings account 
     contribution.--In the case of an individual electing a high 
     deductible/medisave product effective beginning with a month 
     in a year, the amount of the contribution to the MedicarePlus 
     MSA on behalf of the individual for that month and all 
     successive months in the year shall be deposited during that 
     first month. In the case of a termination of such an election 
     as of a month before the end of a year, the Secretary shall 
     provide for a procedure for the recovery of deposits 
     attributable to the remaining months in the year.
       ``(g) Payments From Trust Fund.--The payment to a 
     MedicarePlus organization under this section for individuals 
     enrolled under this part with the organization, and payments 
     to a MedicarePlus MSA under subsection (f)(1)(B), shall be 
     made from the Federal Hospital Insurance Trust Fund and the 
     Federal Supplementary Medical Insurance Trust Fund in such 
     proportion as the Secretary determines reflects the 
     relative weight that benefits under part A and under part 
     B represents of the actuarial value of the total benefits 
     under this title.
       ``(h) Special Rule for Certain Inpatient Hospital Stays.--
     In the case of an individual who is receiving inpatient 
     hospital services from a subsection (d) hospital (as defined 
     in section 1886(d)(1)(B)) as of the effective date of the 
     individual's--
       ``(1) election under this part of a MedicarePlus product 
     offered by a MedicarePlus organization--
       ``(A) payment for such services until the date of the 
     individual's discharge shall be made under this title through 
     the MedicarePlus product or Non-MedicarePlus option (as the 
     case may be) elected before the election with such 
     organization,
       ``(B) the elected organization shall not be financially 
     responsible for payment for such services until the date 
     after the date of the individual's discharge, and
       ``(C) the organization shall nonetheless be paid the full 
     amount otherwise payable to the organization under this part; 
     or
       ``(2) termination of election with respect to a 
     MedicarePlus organization under this part--
       ``(A) the organization shall be financially responsible for 
     payment for such services after such date and until the date 
     of the individual's discharge,
       ``(B) payment for such services during the stay shall not 
     be made under section 1886(d) or by any succeeding 
     MedicarePlus organization, and
       ``(C) the terminated organization shall not receive any 
     payment with respect to the individual under this part during 
     the period the individual is not enrolled.


   ``establishment of standards for medicare-plus organizations and 
                                products

       ``Sec. 1856. (a) Standards Applicable to State-Regulated 
     Organizations and Products.--
       ``(1) Recommendations of naic.--The Secretary shall request 
     the National Association of Insurance Commissioners to 
     develop and submit to the Secretary, not later than 12 months 
     after the date of the enactment of the Medicare Preservation 
     Act of 1995, proposed standards consistent with the 
     requirements of this part for MedicarePlus organizations 
     (other than union sponsors, Taft-Hartley sponsors, and 
     provider-sponsored organizations) and MedicarePlus products 
     offered by such organizations, except that such proposed 
     standards may relate to MedicarePlus organizations that are 
     qualified associations only with respect to MedicarePlus 
     products offered by them and only if such products are issued 
     by organizations to which section 1851(b)(1) applies.
       ``(2) Review.--If the Association submits such standards on 
     a timely basis, the Secretary shall review such standards to 
     determine if the standards meet the requirements of the part. 
     The Secretary shall complete the review of the standards not 
     later than 90 days after the date of their submission. The 
     Secretary shall promulgate such proposed 

[[Page H 10399]]
     standards to apply to organizations and products described in paragraph 
     (1) except to the extent that the Secretary modifies such 
     proposed standards because they do not meet such 
     requirements.
       ``(3) Failure to submit.--If the Association does not 
     submit such standards on a timely basis, the Secretary shall 
     promulgate such standards by not later than the date the 
     Secretary would otherwise have been required to promulgate 
     standards under paragraph (2).
       ``(4) Use of interim rules.--For the period in which this 
     part is in effect and standards are being developed and 
     established under the preceding provisions of this 
     subsection, the Secretary shall provide by not later than 
     June 1, 1996, for the application of such interim standards 
     (without regard to any requirements for notice and public 
     comment) as may be appropriate to provide for the expedited 
     implementation of this part. Such interim standards shall not 
     apply after the date standards are established under the 
     preceding provisions of this subsection.
       ``(b) Union and Taft-Hartley Sponsors, Qualified 
     Associations, and Products.--
       ``(1) In general.--The Secretary shall develop and 
     promulgate by regulation standards consistent with the 
     requirements of this part for union and Taft-Hartley 
     sponsors, for qualified associations, and for MedicarePlus 
     products offered by such organizations (other than 
     MedicarePlus products offered by qualified associations that 
     are issued by organizations to which section 1851(b)(1) 
     applies).
       ``(2) Consultation with labor.--The Secretary shall consult 
     with the Secretary of Labor with respect to such standards 
     for such sponsors and products.
       ``(3) Timing.--Standards under this subsection shall be 
     promulgated at or about the time standards are promulgated 
     under subsection (a).
       ``(c) Establishment of Standards for Provider-Sponsored 
     Organizations.--
       ``(1) In general.--The Secretary shall establish, on an 
     expedited basis and using a negotiated rulemaking process 
     under subchapter 3 of chapter 5 of title 5, United States 
     Code, standards that entities must meet to qualify as 
     provider-sponsored organizations under this part.
       ``(2) Publication of notice.--In carrying out the 
     rulemaking process under this subsection, the Secretary, 
     after consultation with the National Association of Insurance 
     Commissioners, the American Academy of Actuaries, 
     organizations representative of medicare beneficiaries, and 
     other interested parties, shall publish the notice provided 
     for under section 564(a) of title 5, United States Code, by 
     not later than 45 days after the date of the enactment of 
     Medicare Preservation Act of 1995.
       ``(3) Target date for publication of rule.--As part of the 
     notice under paragraph (2), and for purposes of this 
     subsection, the `target date for publication' (referred to in 
     section 564(a)(5) of such title) shall be September 1, 1996.
       ``(4) Abbreviated period for submission of comments.--In 
     applying section 564(c) of such title under this subsection, 
     `15 days' shall be substituted for `30 days'.
       ``(5) Appointment of negotiated rulemaking committee and 
     facilitator.--The Secretary shall provide for--
       ``(A) the appointment of a negotiated rulemaking committee 
     under section 565(a) of such title by not later than 30 days 
     after the end of the comment period provided for under 
     section 564(c) of such title (as shortened under paragraph 
     (4)), and
       ``(B) the nomination of a facilitator under section 566(c) 
     of such title by not later than 10 days after the date of 
     appointment of the committee.
       ``(6) Preliminary committee report.--The negotiated 
     rulemaking committee appointed under paragraph (5) shall 
     report to the Secretary, by not later than June 1, 1996, 
     regarding the committee's progress on achieving a concensus 
     with regard to the rulemaking proceeding and whether such 
     consensus is likely to occur before one month before the 
     target date for publication of the rule. If the committee 
     reports that the committee has failed to make significant 
     progress towards such consensus or is unlikely to reach such 
     consensus by the target date, the Secretary may terminate 
     such process and provide for the publication of a rule under 
     this subsection through such other methods as the 
     Secretary may provide.
       ``(7) Final committee report.--If the committee is not 
     terminated under paragraph (6), the rulemaking committee 
     shall submit a report containing a proposed rule by not later 
     than one month before the target publication date.
       ``(8) Interim, final effect.--The Secretary shall publish a 
     rule under this subsection in the Federal Register by not 
     later than the target publication date. Such rule shall be 
     effective and final immediately on an interim basis, but is 
     subject to change and revision after public notice and 
     opportunity for a period (of not less than 60 days) for 
     public comment. In connection with such rule, the Secretary 
     shall specify the process for the timely review and approval 
     of applications of entities to be certified as provider-
     sponsored organizations pursuant to such rules and consistent 
     with this subsection.
       ``(9) Publication of rule after public comment.--The 
     Secretary shall provide for consideration of such comments 
     and republication of such rule by not later than 1 year after 
     the target publication date.
       ``(10) Process for approval of applications for 
     certification.--
       ``(A) In general.--The Secretary shall establish a process 
     for the receipt and approval of applications of entities for 
     certification as provider-sponsored organizations under this 
     part. Under such process, the Secretary shall act upon a 
     complete application submitted within 60 days after the date 
     it is received.
       ``(B) Circulation of proposed application form.--By March 
     1, 1996, the Secretary, after consultation with the 
     negotiated rulemaking committee, shall circulate a proposed 
     application form that could be used by entities considering 
     becoming certified as a provider-sponsored organization under 
     this part.
       ``(d) Coordination Among Final Standards.--In establishing 
     standards (other than on an interim basis) under the previous 
     provisions of this section, the Secretary shall seek to 
     provide for consistency (as appropriate) across the different 
     types of MedicarePlus organizations, in order to promote 
     equitable treatment of different types of organizations and 
     consistent protection for individuals who elect products 
     offered by the different types of MedicarePlus organizations.
       ``(e) Use of Current Standards for Interim Standards.--To 
     the extent practicable and consistent with the requirements 
     of this part, standards established on an interim basis to 
     carry out requirements of this part may be based on currently 
     applicable standards, such as the rules established under 
     section 1876 (as in effect as of the date of the enactment of 
     this section) to carry out analogous provisions of such 
     section or standards established or developed for application 
     in the private health insurance market.
       ``(f) Application of New Standards to Entities With a 
     Contract.--In the case of a MedicarePlus organization with a 
     contract in effect under this part at the time standards 
     applicable to the organization under this section are 
     changed, the organization may elect not to have such changes 
     apply to the organization until the end of the current 
     contract year (or, if there is less than 6 months remaining 
     in the contract year, until 1 year after the end of the 
     current contract year).
       ``(g) Relation to State Laws.--The standards established 
     under this section shall supersede any State law or 
     regulation with respect to MedicarePlus products which are 
     offered by MedicarePlus organizations and are issued by 
     organizations to which section 1851(b)(1) applies, to the 
     extent such law or regulation is inconsistent with such 
     standards.


                     ``medicare-plus certification

       ``Sec. 1857. (a) State Certification Process for State-
     Regulated Organizations.--
       ``(1) Approval of state process.--The Secretary shall 
     approve a MedicarePlus certification and enforcement program 
     established by a State for applying the standards established 
     under section 1856 to MedicarePlus organizations (other than 
     union sponsors, Taft-Hartley sponsors, and provider-sponsored 
     organizations) and MedicarePlus products offered by such 
     organizations if the Secretary determines that the program 
     effectively provides for the application and enforcement of 
     such standards in the State with respect to such 
     organizations and products. Such program shall provide for 
     certification of compliance of MedicarePlus organizations and 
     products with the applicable requirements of this part not 
     less often than once every 3 years.
       ``(2) Effect of certification under state process.--A 
     MedicarePlus organization and MedicarePlus product offered by 
     such an organization that is certified under such program is 
     considered to have been certified under this subsection with 
     respect to the offering of the product to individuals 
     residing in the State.
       ``(3) User fees.--The State may impose user fees on 
     organizations seeking certification under this subsection in 
     such amounts as the State deems sufficient to finance the 
     costs of such certification. Nothing in this paragraph shall 
     be construed as restricting a State's authority to impose 
     premium taxes, other taxes, or other levies.
       ``(4) Review.--The Secretary periodically shall review 
     State programs approved under paragraph (1) to determine if 
     they continue to provide for certification and enforcement 
     described in such paragraph. If the Secretary finds that a 
     State program no longer so provides, before making a final 
     determination, the Secretary shall provide the State an 
     opportunity to adopt such a plan of correction as would 
     permit the State program to meet the requirements of 
     paragraph (1). If the Secretary makes a final determination 
     that the State program, after such an opportunity, fails to 
     meet such requirements, the provisions of subsection (b) 
     shall apply to MedicarePlus organizations and products in the 
     State.
       ``(5) Effect of no state program.--Beginning on the date 
     standards are established under section 1856, in the case of 
     organizations and products in States in which a certification 
     program has not been approved and in operation under 
     paragraph (1), the Secretary shall establish a process for 
     the certification of MedicarePlus organizations (other than 
     union sponsors, Taft-Hartley sponsors, and provider-sponsored 
     organizations) and products of such organizations as meeting 
     such standards.
       ``(6) Publication of list of approved state programs.--The 
     Secretary shall publish (and periodically update) a list of 
     those State programs which are approved for purposes of this 
     subsection.

[[Page H 10400]]

       ``(b) Federal Certification Process for Union Sponsors, 
     Taft-Hartley Sponsors, and Provider-Sponsored 
     Organizations.--
       ``(1) Establishment.--The Secretary shall establish a 
     process for the certification of union sponsors, Taft-Hartley 
     sponsors, and provider-sponsored organizations and 
     MedicarePlus products offered by such sponsors and 
     organizations as meeting the applicable standards established 
     under section 1856.
       ``(2) Involvement of secretary of labor.--Such process 
     shall be established and operated in cooperation with the 
     Secretary of Labor with respect to union sponsors and Taft-
     Hartley sponsors.
       ``(3) Use of state licensing and private accreditation 
     processes.--
       ``(A) In general.--The process under this subsection shall, 
     to the maximum extent practicable, provide that MedicarePlus 
     organizations and products that are licensed or certified 
     through a qualified private accreditation process that the 
     Secretary finds applies standards that are no less stringent 
     than the requirements of this part are deemed to meet the 
     corresponding requirements of this part for such an 
     organization or product.
       ``(B) Periodic accreditation.--The use of an accreditation 
     under subparagraph (A) shall be valid only for such period as 
     the Secretary specifies.
       ``(4) User fees.--The Secretary may impose user fees on 
     entities seeking certification under this subsection in such 
     amounts as the Secretary deems sufficient to finance the 
     costs of such certification.
       ``(c) Certification of Provider-Sponsored Organizations by 
     States.--
       ``(1) In general.--The Secretary shall establish a process 
     under which a State may propose to provide for certification 
     of entities as meeting the requirements of this part to be 
     provider-sponsored organizations.
       ``(2) Conditions for approval.--The Secretary may not 
     approve a State program for certification under paragraph (1) 
     unless the Secretary determines that the certification 
     program applies standards and requirements that are identical 
     to the standards and requirements of this part and the 
     applicable provisions for enforcement of such standards and 
     requirements do not result in a lower level or quality of 
     enforcement than that which is otherwise applicable under 
     this title.
       ``(d) Notice to Enrollees in Case of Decertification.--If a 
     MedicarePlus organization or product is decertified under 
     this section, the organization shall notify each enrollee 
     with the organization and product under this part of such 
     decertification.
       ``(e) Qualified Associations.--In the case of MedicarePlus 
     products offered by a MedicarePlus organization that is a 
     qualified association (as defined in section 1854(c)(4)(C)) 
     and issued by an organization to which section 1851(b)(1) 
     applies or by a provider-sponsored organization (as defined 
     in section 1854(a)), nothing in this section shall be 
     construed as limiting the authority of States to regulate 
     such products.


              ``contracts with medicareplus organizations

       ``Sec. 1858. (a) In General.--The Secretary shall not 
     permit the election under section 1805 of a MedicarePlus 
     product offered by a MedicarePlus organization under this 
     part, and no payment shall be made under section 1856 to an 
     organization, unless the Secretary has entered into a 
     contract under this section with an organization with respect 
     to the offering of such product. Such a contract with an 
     organization may cover more than one MedicarePlus product. 
     Such contract shall provide that the organization agrees to 
     comply with the applicable requirements and standards of this 
     part and the terms and conditions of payment as provided for 
     in this part.
       ``(b) Minimum Enrollment Requirements.--
       ``(1) In general.--Subject to paragraphs (1) and (2), the 
     Secretary may not enter into a contract under this section 
     with a MedicarePlus organization (other than a union sponsor 
     or Taft-Hartley sponsor) unless the organization has at least 
     5,000 individuals (or 1,500 individuals in the case of an 
     organization that is a provider-sponsored organization) who 
     are receiving health benefits through the organization, 
     except that the standards under section 1856 may permit the 
     organization to have a lesser number of beneficiaries (but 
     not less than 500 in the case of an organization that is a 
     provider-sponsored organization) if the organization 
     primarily serves individuals residing outside of urbanized 
     areas.
       ``(2) Exception for high deductible/medisave product.--
     Paragraph (1) shall not apply with respect to a contract that 
     relates only to a high deductible/medisave product.
       ``(3) Allowing transition.--The Secretary may waive the 
     requirement of paragraph (1) during the first 3 contract 
     years with respect to an organization.
       ``(c) Contract Period and Effectiveness.--
       ``(1) Period.--Each contract under this section shall be 
     for a term of at least one year, as determined by the 
     Secretary, and may be made automatically renewable from term 
     to term in the absence of notice by either party of intention 
     to terminate at the end of the current term.
       ``(2) Termination authority.--In accordance with procedures 
     established under subsection (h), the Secretary may at any 
     time terminate any such contract or may impose the 
     intermediate sanctions described in an applicable paragraph 
     of subsection (g) on the MedicarePlus organization if the 
     Secretary determines that the organization--
       ``(A) has failed substantially to carry out the contract;
       ``(B) is carrying out the contract in a manner inconsistent 
     with the efficient and effective administration of this part;
       ``(C) is operating in a manner that is not in the best 
     interests of the individuals covered under the contract; or
       ``(D) no longer substantially meets the applicable 
     conditions of this part.
       ``(3) Effective date of contracts.--The effective date of 
     any contract executed pursuant to this section shall be 
     specified in the contract, except that in no case shall a 
     contract under this section which provides for coverage under 
     a high deductible/medisave account be effective before 
     January 1997 with respect to such coverage.
       ``(4) Previous terminations.--The Secretary may not enter 
     into a contract with a MedicarePlus organization if a 
     previous contract with that organization under this section 
     was terminated at the request of the organization within the 
     preceding five-year period, except in circumstances which 
     warrant special consideration, as determined by the 
     Secretary.
       ``(5) No contracting authority.--The authority vested in 
     the Secretary by this part may be performed without regard to 
     such provisions of law or regulations relating to the making, 
     performance, amendment, or modification of contracts of the 
     United States as the Secretary may determine to be 
     inconsistent with the furtherance of the purpose of this 
     title.
       ``(d) Protections Against Fraud and Beneficiary 
     Protections.--
       ``(1) Inspection and audit.--Each contract under this 
     section shall provide that the Secretary, or any person or 
     organization designated by the Secretary--
       ``(A) shall have the right to inspect or otherwise evaluate 
     (i) the quality, appropriateness, and timeliness of services 
     performed under the contract and (ii) the facilities of the 
     organization when there is reasonable evidence of some need 
     for such inspection, and
       ``(B) shall have the right to audit and inspect any books 
     and records of the MedicarePlus organization that pertain (i) 
     to the ability of the organization to bear the risk of 
     potential financial losses, or (ii) to services performed or 
     determinations of amounts payable under the contract.
       ``(2) Enrollee notice at time of termination.--Each 
     contract under this section shall require the organization to 
     provide (and pay for) written notice in advance of the 
     contract's termination, as well as a description of 
     alternatives for obtaining benefits under this title, to each 
     individual enrolled with the organization under this part.
       ``(3) Disclosure.--
       ``(A) In general.--Each MedicarePlus organization shall, in 
     accordance with regulations of the Secretary, report to the 
     Secretary financial information which shall include the 
     following:
       ``(i) Such information as the Secretary may require 
     demonstrating that the organization has a fiscally sound 
     operation.
       ``(ii) A copy of the report, if any, filed with the Health 
     Care Financing Administration containing the information 
     required to be reported under section 1124 by disclosing 
     entities.
       ``(iii) A description of transactions, as specified by the 
     Secretary, between the organization and a party in interest. 
     Such transactions shall include--

       ``(I) any sale or exchange, or leasing of any property 
     between the organization and a party in interest;
       ``(II) any furnishing for consideration of goods, services 
     (including management services), or facilities between the 
     organization and a party in interest, but not including 
     salaries paid to employees for services provided in the 
     normal course of their employment and health services 
     provided to members by hospitals and other providers and by 
     staff, medical group (or groups), individual practice 
     association (or associations), or any combination thereof; 
     and
       ``(III) any lending of money or other extension of credit 
     between an organization and a party in interest.

     The Secretary may require that information reported 
     respecting an organization which controls, is controlled by, 
     or is under common control with, another entity be in the 
     form of a consolidated financial statement for the 
     organization and such entity.
       ``(B) Party in interest defined.--For the purposes of this 
     paragraph, the term `party in interest' means--
       ``(i) any director, officer, partner, or employee 
     responsible for management or administration of a 
     MedicarePlus organization, any person who is directly or 
     indirectly the beneficial owner of more than 5 percent of the 
     equity of the organization, any person who is the beneficial 
     owner of a mortgage, deed of trust, note, or other interest 
     secured by, and valuing more than 5 percent of the 
     organization, and, in the case of a MedicarePlus organization 
     organized as a nonprofit corporation, an incorporator or 
     member of such corporation under applicable State corporation 
     law;
       ``(ii) any entity in which a person described in clause 
     (i)--

       ``(I) is an officer or director;
       ``(II) is a partner (if such entity is organized as a 
     partnership);

[[Page H 10401]]

       ``(III) has directly or indirectly a beneficial interest of 
     more than 5 percent of the equity; or
       ``(IV) has a mortgage, deed of trust, note, or other 
     interest valuing more than 5 percent of the assets of such 
     entity;

       ``(iii) any person directly or indirectly controlling, 
     controlled by, or under common control with an organization; 
     and
       ``(iv) any spouse, child, or parent of an individual 
     described in clause (i).
       ``(C) Access to information.--Each MedicarePlus 
     organization shall make the information reported pursuant to 
     subparagraph (A) available to its enrollees upon reasonable 
     request.
       ``(4) Loan information.--The contract shall require the 
     organization to notify the Secretary of loans and other 
     special financial arrangements which are made between the 
     organization and subcontractors, affiliates, and related 
     parties.
       ``(e) Additional Contract Terms.--The contract shall 
     contain such other terms and conditions not inconsistent with 
     this part (including requiring the organization to provide 
     the Secretary with such information) as the Secretary may 
     find necessary and appropriate.
       ``(f) Intermediate Sanctions.--
       ``(1) In general.--If the Secretary determines that a 
     MedicarePlus organization with a contract under this 
     section--
       ``(A) fails substantially to provide medically necessary 
     items and services that are required (under law or under the 
     contract) to be provided to an individual covered under the 
     contract, if the failure has adversely affected (or has 
     substantial likelihood of adversely affecting) the 
     individual;
       ``(B) imposes premiums on individuals enrolled under this 
     part in excess of the premiums permitted;
       ``(C) acts to expel or to refuse to re-enroll an individual 
     in violation of the provisions of this part;
       ``(D) engages in any practice that would reasonably be 
     expected to have the effect of denying or discouraging 
     enrollment (except as permitted by this part) by eligible 
     individuals with the organization whose medical condition or 
     history indicates a need for substantial future medical 
     services;
       ``(E) misrepresents or falsifies information that is 
     furnished--
       ``(i) to the Secretary under this part, or
       ``(ii) to an individual or to any other entity under this 
     part;
       ``(F) fails to comply with the requirements of section 
     1852(f)(3); or
       ``(G) employs or contracts with any individual or entity 
     that is excluded from participation under this title under 
     section 1128 or 1128A for the provision of health care, 
     utilization review, medical social work, or administrative 
     services or employs or contracts with any entity for the 
     provision (directly or indirectly) through such an excluded 
     individual or entity of such services;
     the Secretary may provide, in addition to any other remedies 
     authorized by law, for any of the remedies described in 
     paragraph (2).
       ``(2) Remedies.--The remedies described in this paragraph 
     are--
       ``(A) civil money penalties of not more than $25,000 for 
     each determination under paragraph (1) or, with respect to a 
     determination under subparagraph (D) or (E)(i) of such 
     paragraph, of not more than $100,000 for each such 
     determination, plus, with respect to a determination under 
     paragraph (1)(B), double the excess amount charged in 
     violation of such paragraph (and the excess amount charged 
     shall be deducted from the penalty and returned to the 
     individual concerned), and plus, with respect to a 
     determination under paragraph (1)(D), $15,000 for each 
     individual not enrolled as a result of the practice involved,
       ``(B) suspension of enrollment of individuals under this 
     part after the date the Secretary notifies the organization 
     of a determination under paragraph (1) and until the 
     Secretary is satisfied that the basis for such determination 
     has been corrected and is not likely to recur, or
       ``(C) suspension of payment to the organization under this 
     part for individuals enrolled after the date the Secretary 
     notifies the organization of a determination under paragraph 
     (1) and until the Secretary is satisfied that the basis for 
     such determination has been corrected and is not likely to 
     recur.
       ``(3) Other intermediate sanctions.--In the case of a 
     MedicarePlus organization for which the Secretary makes a 
     determination under subsection (c)(2) the basis of which is 
     not described in paragraph (1), the Secretary may apply the 
     following intermediate sanctions:
       ``(A) civil money penalties of not more than $25,000 for 
     each determination under subsection (c)(2) if the deficiency 
     that is the basis of the determination has directly adversely 
     affected (or has the substantial likelihood of adversely 
     affecting) an individual covered under the organization's 
     contract;
       ``(B) civil money penalties of not more than $10,000 for 
     each week beginning after the initiation of procedures by the 
     Secretary under subsection (h) during which the deficiency 
     that is the basis of a determination under subsection (c)(2) 
     exists; and
       ``(C) suspension of enrollment of individuals under this 
     part after the date the Secretary notifies the organization 
     of a determination under subsection (c)(2) and until the 
     Secretary is satisfied that the deficiency that is the basis 
     for the determination has been corrected and is not likely to 
     recur.
       ``(4) Procedures for imposing sanctions.--The provisions of 
     section 1128A (other than subsections (a) and (b)) shall 
     apply to a civil money penalty under paragraph (1) or (2) in 
     the same manner as they apply to a civil money penalty or 
     proceeding under section 1128A(a).
       ``(g) Procedures for Imposing Sanctions.--The Secretary may 
     terminate a contract with a MedicarePlus organization under 
     this section or may impose the intermediate sanctions 
     described in subsection (f) on the organization in accordance 
     with formal investigation and compliance procedures 
     established by the Secretary under which--
       ``(1) the Secretary provides the organization with the 
     opportunity to develop and implement a corrective action plan 
     to correct the deficiencies that were the basis of the 
     Secretary's determination under subsection (c)(2);
       ``(2) the Secretary shall impose more severe sanctions on 
     organizations that have a history of deficiencies or that 
     have not taken steps to correct deficiencies the Secretary 
     has brought to their attention;
       ``(3) there are no unreasonable or unnecessary delays 
     between the finding of a deficiency and the imposition of 
     sanctions; and
       ``(4) the Secretary provides the organization with 
     reasonable notice and opportunity for hearing (including the 
     right to appeal an initial decision) before imposing any 
     sanction or terminating the contract.''.
       (b) Conforming References to Previous Part C.--Any 
     reference in law (in effect before the date of the enactment 
     of this Act) to part C of title XVIII of the Social Security 
     Act is deemed a reference to part D of such title (as in 
     effect after such date).
       (c) Use of Interim, Final Regulations.--In order to carry 
     out the amendment made by subsection (a) in a timely manner, 
     the Secretary of Health and Human Services may promulgate 
     regulations that take effect on an interim basis, after 
     notice and pending opportunity for public comment.
       (d) Advance Directives.--Section 1866(f) (42 U.S.C. 
     1395cc(f)) is amended--
       (1) in paragraph (1)--
       (A) by inserting ``1853(g),'' after ``1833(s),'', and
       (B) by inserting ``, MedicarePlus organization,'' after 
     ``provider of services'', and
       (2) by adding at the end the following new paragraph:
       ``(4) Nothing in this subsection shall be construed to 
     require the provision of information regarding assisted 
     suicide, euthanasia, or mercy killing.''.
       (e) Conforming Amendment.--Section 1866(a)(1)(O) (42 U.S.C. 
     1395cc(a)(1)(O)) is amended by inserting before the semicolon 
     at the end the following: ``and in the case of hospitals to 
     accept as payment in full for inpatient hospital services 
     that are emergency services (as defined in section 
     1853(b)(4)) that are covered under this title and are 
     furnished to any individual enrolled under part C with a 
     MedicarePlus organization which does not have a contract 
     establishing payment amounts for services furnished to 
     members of the organization the amounts that would be made as 
     a payment in full under this title if the individuals were 
     not so enrolled''.

     SEC. 15003. DUPLICATION AND COORDINATION OF MEDICARE-RELATED 
                   PRODUCTS.

       (a) Treatment of Certain Health Insurance Policies as 
     Nonduplicative.--
       (1) In general.--Effective as if included in the enactment 
     of section 4354 of the Omnibus Budget Reconciliation Act of 
     1990, section 1882(d)(3)(A) (42 U.S.C. 1395ss(d)(3)(A)) is 
     amended--
       (A) by amending clause (i) to read as follows:
       ``(i) It is unlawful for a person to sell or issue to an 
     individual entitled to benefits under part A or enrolled 
     under part B of this title or electing a MedicarePlus product 
     under section 1805--
       ``(I) a health insurance policy (other than a medicare 
     supplemental policy) with knowledge that the policy 
     duplicates health benefits to which the individual is 
     otherwise entitled under this title or title XIX,
       ``(II) in the case of an individual not electing a 
     MedicarePlus product, a medicare supplemental policy with 
     knowledge that the individual is entitled to benefits under 
     another medicare supplemental policy, or
       ``(III) in the case of an individual electing a 
     MedicarePlus product, a medicare supplemental policy with 
     knowledge that the policy duplicates health benefits to which 
     the individual is otherwise entitled under this title or 
     under another medicare supplemental policy.'';
       (B) in clause (iii), by striking ``clause (i)'' and 
     inserting ``clause (i)(II)''; and
       (C) by adding at the end the following new clauses:
       ``(iv) For purposes of this subparagraph a health insurance 
     policy shall be considered to `duplicate' benefits under this 
     title only when, under its terms, the policy provides 
     specific reimbursement for identical items and services to 
     the extent paid for under this title, and a health insurance 
     policy providing for benefits which are payable to or on 
     behalf of an individual without regard to other health 
     benefit coverage of such individual is not considered to 
     `duplicate' any health benefits under this title.
       ``(v) For purposes of this subparagraph, a health insurance 
     policy (or a rider to an insurance contract which is not a 
     health insurance policy), including a policy (such as a long-
     term care insurance contract described in section 7702B(b) of 
     the Internal Revenue Code of 1986, as added by the Contract 
     with America Tax Relief Act of 1995 (H.R. 1215)) 

[[Page H 10402]]
     providing benefits for long-term care, nursing home care, home health 
     care, or community-based care, that coordinates against or 
     excludes items and services available or paid for under this 
     title and (for policies sold or issued after January 1, 1996) 
     that discloses such coordination or exclusion in the policy's 
     outline of coverage, is not considered to `duplicate' health 
     benefits under this title. For purposes of this clause, the 
     terms `coordinates' and `coordination' mean, with respect to 
     a policy in relation to health benefits under this title, 
     that the policy under its terms is secondary to, or 
     excludes from payment, items and services to the extent 
     available or paid for under this title.
       ``(vi) Notwithstanding any other provision of law, no 
     criminal or civil penalty may be imposed at any time under 
     this subparagraph and no legal action may be brought or 
     continued at any time in any Federal or State court if the 
     penalty or action is based on an act or omission that 
     occurred after November 5, 1991, and before the date of the 
     enactment of this clause, and relates to the sale, issuance, 
     or renewal of any health insurance policy during such period, 
     if such policy meets the requirements of clause (iv) or (v).
       ``(vii) A State may not impose, with respect to the sale or 
     issuance of a policy (or rider) that meets the requirements 
     of this title pursuant to clause (iv) or (v) to an individual 
     entitled to benefits under part A or enrolled under part B or 
     enrolled under a MedicarePlus product under part C, any 
     requirement based on the premise that such a policy or rider 
     duplicates health benefits to which the individual is 
     otherwise entitled under this title.''.
       (2) Conforming amendments.--Section 1882(d)(3) (42 U.S.C. 
     1395ss(d)(3)) is amended--
       (A) in subparagraph (B), by inserting ``(including any 
     MedicarePlus product)'' after ``health insurance policies'';
       (B) in subparagraph (C)--
       (i) by striking ``with respect to (i)'' and inserting 
     ``with respect to'', and
       (ii) by striking ``, (ii) the sale'' and all that follows 
     up to the period at the end; and
       (C) by striking subparagraph (D).
       (3) Medicareplus products not treated as medicare 
     supplementary policies.--Section 1882(g) (42 U.S.C. 
     1395ss(g)) is amended by inserting ``a MedicarePlus product 
     or'' after ``and does not include''
       (4) Report on duplication and coordination of health 
     insurance policies that are not medicare supplemental 
     policies.--Not later than 3 years after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services shall prepare and submit to Congress a report on the 
     advisability and feasibility of restricting the sale to 
     medicare beneficiaries of health insurance policies that 
     duplicate (within the meaning of section 1882(d)(3)(A) of the 
     Social Security Act) other health insurance policies that 
     such a beneficiary may have. In preparing such report, the 
     Secretary shall seek the advice of the National Association 
     of Insurance Commissioners and shall take into account the 
     standards established under section 1807 of the Social 
     Security Act for the electronic coordination of benefits.
       (b) Additional Rules Relating to Individuals Enrolled in 
     MedicarePlus Products.--Section 1882 (42 U.S.C. 1395ss) is 
     further amended by adding at the end the following new 
     subsection:
       ``(u)(1) Notwithstanding the previous provisions of this 
     section, the following provisions shall not apply to a health 
     insurance policy (other than a medicare supplemental policy) 
     provided to an individual who has elected the MedicarePlus 
     option under section 1805:
       ``(A) Subsections (o)(1), (o)(2), (p)(1)(A)(i), (p)(2), 
     (p)(3), (p)(8), and (p)(9) (insofar as they relate to 
     limitations on benefits or groups of benefits that may be 
     offered).
       ``(B) Subsection (r) (relating to loss-ratios).
       ``(2)(A) It is unlawful for a person to sell or issue a 
     policy described in subparagraph (B) to an individual with 
     knowledge that the individual has in effect under section 
     1805 an election of a high deductible/medisave product.
       ``(B) A policy described in this subparagraph is a health 
     insurance policy that provides for coverage of expenses that 
     are otherwise required to be counted toward meeting the 
     annual deductible amount provided under the high deductible/
     medisave product.''.

     SEC. 15004. TRANSITIONAL RULES FOR CURRENT MEDICARE HMO 
                   PROGRAM.

       (a) Transition From Current Contracts.--
       (1) Limitation on new contracts.--
       (A) No new risk-sharing contracts after new standards 
     established.--The Secretary of Health and Human Services (in 
     this section referred to as the ``Secretary'') shall not 
     enter into any risk-sharing contract under section 1876 of 
     the Social Security Act with an eligible organization for any 
     contract year beginning on or after the date standards for 
     MedicarePlus organizations and products are first established 
     under section 1856(a) of such Act with respect to 
     MedicarePlus organizations that are insurers or health 
     maintenance organizations unless such a contract had been in 
     effect under section 1876 of such Act for the organization 
     for the previous contract year.
       (B) No new cost reimbursement contracts.--The Secretary 
     shall not enter into any cost reimbursement contract under 
     section 1876 of the Social Security Act beginning for any 
     contract year beginning on or after the date of the enactment 
     of this Act.
       (2) Termination of current contracts.--
       (A) Risk-sharing contracts.--Notwithstanding any other 
     provision of law, the Secretary shall not extend or continue 
     any risk-sharing contract with an eligible organization under 
     section 1876 of the Social Security Act (for which a contract 
     was entered into consistent with paragraph (1)(A)) for any 
     contract year beginning on or after 1 year after the date 
     standards described in paragraph (1)(A) are established.
       (B) Cost reimbursement contracts.--The Secretary shall not 
     extend or continue any reasonable cost reimbursement contract 
     with an eligible organization under section 1876 of the 
     Social Security Act for any contract year beginning on or 
     after January 1, 1998.
       (b) Conforming Payment Rates.--
       (1) Risk-sharing contracts.--Notwithstanding any other 
     provision of law, the Secretary shall provide that payment 
     amounts under risk-sharing contracts under section 1876(a) of 
     the Social Security Act for months in a year (beginning with 
     January 1996) shall be computed--
       (A) with respect to individuals entitled to benefits under 
     both parts A and B of title XVIII of such Act, by 
     substituting payment rates under section 1855(a) of such Act 
     for the payment rates otherwise established under section 
     1876(a) of such Act, and
       (B) with respect to individuals only entitled to benefits 
     under part B of such title, by substituting an appropriate 
     proportion of such rates (reflecting the relative proportion 
     of payments under such title attributable to such part) for 
     the payment rates otherwise established under section 1876(a) 
     of such Act.
     For purposes of carrying out this paragraph for payment for 
     months in 1996, the Secretary shall compute, announce, and 
     apply the payment rates under section 1855(a) of such Act 
     (notwithstanding any deadlines specified in such section) in 
     as timely a manner as possible and may (to the extent 
     necessary) provide for retroactive adjustment in payments 
     made not in accordance with such rates.
       (2) Cost contracts.--Notwithstanding any other provision of 
     law, the Secretary shall provide that payment amounts under 
     cost reimbursement contracts under section 1876(a) of the 
     Social Security Act shall take into account adjustments 
     in payment amounts made in parts A and B of title XVIII of 
     such Act pursuant to the amendments made by this title.
       (c) Elimination of 50:50 Rule.--
       (1) In general.--Section 1876 (42 U.S.C. 1395mm) is amended 
     by striking subsection (f).
       (2) Conforming amendments.--Section 1876 is further 
     amended--
       (A) in subsection (c)(3)(A)(i), by striking ``would result 
     in failure to meet the requirements of subsection (f) or'', 
     and
       (B) in subsection (i)(1)(C), by striking ``(e), and (f)'' 
     and inserting ``and (e)''.
       (3) Effective date.--The amendments made by this section 
     shall apply to contract years beginning on or after January 
     1, 1996.

    PART 2--SPECIAL RULES FOR MEDICAREPLUS MEDICAL SAVINGS ACCOUNTS

     SEC. 15011. MEDICAREPLUS MSA'S.

       (a) In General.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to amounts 
     specifically excluded from gross income) is amended by 
     redesignating section 137 as section 138 and by inserting 
     after section 136 the following new section:

     ``SEC. 137. MEDICAREPLUS MSA'S.

       ``(a) Exclusion.--Gross income shall not include any 
     payment to the MedicarePlus MSA of an individual by the 
     Secretary of Health and Human Services under section 
     1855(f)(1)(B) of the Social Security Act.
       ``(b) MedicarePlus MSA.--For purposes of this section--
       ``(1) Medicareplus msa.--The term `MedicarePlus MSA' means 
     a trust created or organized in the United States exclusively 
     for the purpose of paying the qualified medical expenses of 
     the account holder, but only if the written governing 
     instrument creating the trust meets the following 
     requirements:
       ``(A) Except in the case of a trustee-to-trustee transfer 
     described in subsection (d)(4), no contribution will be 
     accepted unless it is made by the Secretary of Health and 
     Human Services under section 1855(f)(1)(B) of the Social 
     Security Act.
       ``(B) The trustee is a bank (as defined in section 408(n)), 
     an insurance company (as defined in section 816), or another 
     person who demonstrates to the satisfaction of the Secretary 
     that the manner in which such person will administer the 
     trust will be consistent with the requirements of this 
     section.
       ``(C) No part of the trust assets will be invested in life 
     insurance contracts.
       ``(D) The assets of the trust will not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       ``(E) The interest of an individual in the balance in his 
     account is nonforfeitable.
       ``(F) Trustee-to-trustee transfers described in subsection 
     (d)(4) may be made to and from the trust.
       ``(2) Qualified medical expenses.--
       ``(A) In general.--The term `qualified medical expenses' 
     means, with respect to an account holder, amounts paid by 
     such holder--
       ``(i) for medical care (as defined in section 213(d)) for 
     the account holder, but only to the extent such amounts are 
     not compensated for by insurance or otherwise, or

[[Page H 10403]]

       ``(ii) for long-term care insurance for the account holder.
       ``(B) Health insurance may not be purchased from account.--
     Subparagraph (A)(i) shall not apply to any payment for 
     insurance.
       ``(3) Account holder.--The term `account holder' means the 
     individual on whose behalf the MedicarePlus MSA is 
     maintained.
       ``(4) Certain rules to apply.--Rules similar to the rules 
     of subsections (g) and (h) of section 408 shall apply for 
     purposes of this section.
       ``(c) Tax Treatment of Accounts.--
       ``(1) In general.--A MedicarePlus MSA is exempt from 
     taxation under this subtitle unless such MSA has ceased to be 
     a MedicarePlus MSA by reason of paragraph (2). 
     Notwithstanding the preceding sentence, any such MSA is 
     subject to the taxes imposed by section 511 (relating to 
     imposition of tax on unrelated business income of charitable, 
     etc. organizations).
       ``(2) Account assets treated as distributed in the case of 
     prohibited transactions or account pledged as security for 
     loan.--Rules similar to the rules of paragraphs (2) and (4) 
     of section 408(e) shall apply to MedicarePlus MSA's, and any 
     amount treated as distributed under such rules shall be 
     treated as not used to pay qualified medical expenses.
       ``(d) Tax Treatment of Distributions.--
       ``(1) Inclusion of amounts not used for qualified medical 
     expenses.--No amount shall be included in the gross income of 
     the account holder by reason of a payment or distribution 
     from a MedicarePlus MSA which is used exclusively to pay the 
     qualified medical expenses of the account holder. Any amount 
     paid or distributed from a MedicarePlus MSA which is not so 
     used shall be included in the gross income of such holder.
       ``(2) Penalty for distributions not used for qualified 
     medical expenses if minimum balance not maintained.--
       ``(A) In general.--The tax imposed by this chapter for any 
     taxable year in which there is a payment or distribution from 
     a MedicarePlus MSA which is not used exclusively to pay the 
     qualified medical expenses of the account holder shall be 
     increased by 50 percent of the excess (if any) of--
       ``(i) the amount of such payment or distribution, over
       ``(ii) the excess (if any) of--

       ``(I) the fair market value of the assets in the 
     MedicarePlus MSA as of the close of the calendar year 
     preceding the calendar year in which the taxable year begins, 
     over
       ``(II) an amount equal to 60 percent of the deductible 
     under the high deductible/medisave product covering the 
     account holder as of January 1 of the calendar year in which 
     the taxable year begins.

       ``(B) Exceptions.--Subparagraph (A) shall not apply if the 
     payment or distribution is made on or after the date the 
     account holder--
       ``(i) becomes disabled within the meaning of section 
     72(m)(7), or
       ``(ii) dies.
       ``(C) Special rules.--For purposes of subparagraph (A)--
       ``(i) all MedicarePlus MSA's of the account holder shall be 
     treated as 1 account,
       ``(ii) all payments and distributions not used exclusively 
     to pay the qualified medical expenses of the account holder 
     during any taxable year shall be treated as 1 
     distribution, and
       ``(iii) any distribution of property shall be taken into 
     account at its fair market value on the date of the 
     distribution.
       ``(3) Withdrawal of erroneous contributions.--Paragraphs 
     (1) and (2) shall not apply to any payment or distribution 
     from a MedicarePlus MSA to the Secretary of Health and Human 
     Services of an erroneous contribution to such MSA and of the 
     net income attributable to such contribution.
       ``(4) Trustee-to-trustee transfers.--Paragraphs (1) and (2) 
     shall not apply to any trustee-to-trustee transfer from a 
     MedicarePlus MSA of an account holder to another MedicarePlus 
     MSA of such account holder.
       ``(5) Coordination with medical expense deduction.--For 
     purposes of section 213, any payment or distribution out of a 
     MedicarePlus MSA for qualified medical expenses shall not be 
     treated as an expense paid for medical care.
       ``(e) Treatment of Account After Death of Account Holder.--
       ``(1) Treatment if designated beneficiary is spouse.--
       ``(A) In general.--In the case of an account holder's 
     interest in a MedicarePlus MSA which is payable to (or for 
     the benefit of) such holder's spouse upon the death of such 
     holder, such MedicarePlus MSA shall be treated as a 
     MedicarePlus MSA of such spouse as of the date of such death.
       ``(B) Special rules if spouse not medicare eligible.--If, 
     as of the date of such death, such spouse is not entitled to 
     benefits under title XVIII of the Social Security Act, then 
     after the date of such death--
       ``(i) the Secretary of Health and Human Services may not 
     make any payments to such MedicarePlus MSA, other than 
     payments attributable to periods before such date,
       ``(ii) in applying subsection (b)(2) with respect to such 
     MedicarePlus MSA, references to the account holder shall be 
     treated as including references to any dependent (as defined 
     in section 152) of such spouse and any subsequent spouse of 
     such spouse, and
       ``(iii) in lieu of applying subsection (d)(2), the rules of 
     section 220(f)(2) shall apply.
       ``(2) Treatment if designated beneficiary is not spouse.--
     In the case of an account holder's interest in a MedicarePlus 
     MSA which is payable to (or for the benefit of) any person 
     other than such holder's spouse upon the death of such 
     holder--
       ``(A) such account shall cease to be a MedicarePlus MSA as 
     of the date of death, and
       ``(B) an amount equal to the fair market value of the 
     assets in such account on such date shall be includible--
       ``(i) if such person is not the estate of such holder, in 
     such person's gross income for the taxable year which 
     includes such date, or
       ``(ii) if such person is the estate of such holder, in such 
     holder's gross income for last taxable year of such holder.
       ``(f) Reports.--
       ``(1) In general.--The trustee of a MedicarePlus MSA shall 
     make such reports regarding such account to the Secretary and 
     to the account holder with respect to--
       ``(A) the fair market value of the assets in such 
     MedicarePlus MSA as of the close of each calendar year, and
       ``(B) contributions, distributions, and other matters,
     as the Secretary may require by regulations.
       ``(2) Time and manner of reports.--The reports required by 
     this subsection--
       ``(A) shall be filed at such time and in such manner as the 
     Secretary prescribes in such regulations, and
       ``(B) shall be furnished to the account holder--
       ``(i) not later than January 31 of the calendar year 
     following the calendar year to which such reports relate, and
       ``(ii) in such manner as the Secretary prescribes in such 
     regulations.''
       (b) Exclusion of MedicarePlus MSA's From Estate Tax.--Part 
     IV of subchapter A of chapter 11 of such Code is amended by 
     adding at the end the following new section:

     ``SEC. 2057. MEDICAREPLUS MSA'S.

       ``For purposes of the tax imposed by section 2001, the 
     value of the taxable estate shall be determined by deducting 
     from the value of the gross estate an amount equal to the 
     value of any MedicarePlus MSA (as defined in section 137(b)) 
     included in the gross estate.''
       (c) Tax on Prohibited Transactions.--
       (1) Section 4975 of such Code (relating to tax on 
     prohibited transactions) is amended by adding at the end of 
     subsection (c) the following new paragraph:
       ``(4) Special rule for medicareplus msa's.--An individual 
     for whose benefit a MedicarePlus MSA (within the meaning of 
     section 137(b)) is established shall be exempt from the tax 
     imposed by this section with respect to any transaction 
     concerning such account (which would otherwise be taxable 
     under this section) if, with respect to such transaction, the 
     account ceases to be a MedicarePlus MSA by reason of the 
     application of section 137(c)(2) to such account.''
       (2) Paragraph (1) of section 4975(e) of such Code is 
     amended to read as follows:
       ``(1) Plan.--For purposes of this section, the term `plan' 
     means--
       ``(A) a trust described in section 401(a) which forms a 
     part of a plan, or a plan described in section 403(a), which 
     trust or plan is exempt from tax under section 501(a),
       ``(B) an individual retirement account described in section 
     408(a),
       ``(C) an individual retirement annuity described in section 
     408(b),
       ``(D) a medical savings account described in section 
     220(d),
       ``(E) a MedicarePlus MSA described in section 137(b), or
       ``(F) a trust, plan, account, or annuity which, at any 
     time, has been determined by the Secretary to be described in 
     any preceding subparagraph of this paragraph.''
       (d) Failure To Provide Reports on MedicarePlus MSA's.--
       (1) Subsection (a) of section 6693 of such Code (relating 
     to failure to provide reports on individual retirement 
     accounts or annuities) is amended to read as follows:
       ``(a) Reports.--
       ``(1) In general.--If a person required to file a report 
     under a provision referred to in paragraph (2) fails to file 
     such report at the time and in the manner required by such 
     provision, such person shall pay a penalty of $50 for each 
     failure unless it is shown that such failure is due to 
     reasonable cause.
       ``(2) Provisions.--The provisions referred to in this 
     paragraph are--
       ``(A) subsections (i) and (l) of section 408 (relating to 
     individual retirement plans),
       ``(B) section 220(h) (relating to medical savings 
     accounts), and
       ``(C) section 137(f) (relating to MedicarePlus MSA's).''
       (2) The section heading for section 6693 of such Code is 
     amended to read as follows:

     ``SEC. 6693. FAILURE TO FILE REPORTS ON INDIVIDUAL RETIREMENT 
                   PLANS AND CERTAIN OTHER TAX-FAVORED ACCOUNTS; 
                   PENALTIES RELATING TO DESIGNATED NONDEDUCTIBLE 
                   CONTRIBUTIONS.''

       (e) Clerical Amendments.--
       (1) The table of sections for part III of subchapter B of 
     chapter 1 of such Code is amended by striking the last item 
     and inserting the following:

``Sec. 137. MedicarePlus MSA's.
``Sec. 138. Cross references to other Acts.''

       (2) The table of sections for part 1 of subchapter B of 
     chapter 68 of such Code is amended by striking the item 
     relating to 

[[Page H 10404]]
     section 6693 and inserting the following new item:

``Sec. 6693. Failure to file reports on individual retirement plans and 
              certain other tax-favored accounts; penalties relating to 
              designated nondeductible contributions.''

       (3) The table of sections for part IV of subchapter A of 
     chapter 11 of such Code is amended by adding at the end the 
     following new item:

``Sec. 2057. MedicarePlus MSA's.''

       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 15012. CERTAIN REBATES EXCLUDED FROM GROSS INCOME.

       (a) In General.--Section 105 of the Internal Revenue Code 
     of 1986 (relating to amounts received under accident and 
     health plans) is amended by adding at the end the following 
     new subsection:
       ``(j) Certain Rebates Under Social Security Act.--Gross 
     income does not include any rebate received under section 
     1852(e)(1)(A) of the Social Security Act during the taxable 
     year.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to amounts received after the date of the 
     enactment of this Act.

      PART 3--SPECIAL ANTITRUST RULE FOR PROVIDER SERVICE NETWORKS

     SEC. 15021. APPLICATION OF ANTITRUST RULE OF REASON TO 
                   PROVIDER SERVICE NETWORKS.

       (a) Rule of Reason Standard.--In any action under the 
     antitrust laws, or under any State law similar to the 
     antitrust laws--
       (1) the conduct of a provider service network in 
     negotiating, making, or performing a contract (including the 
     establishment and modification of a fee schedule and the 
     development of a panel of physicians), to the extent such 
     contract is for the purpose of providing health care services 
     to individuals under the terms of a MedicarePlus PSO product, 
     and
       (2) the conduct of any member of such network for the 
     purpose of providing such health care services under such 
     contract to such extent,
     shall not be deemed illegal per se. Such conduct shall be 
     judged on the basis of its reasonableness, taking into 
     account all relevant factors affecting competition, including 
     the effects on competition in properly defined markets.
       (b) Definitions.--For purposes of subsection (a):
       (1) Antitrust laws.--The term ``antitrust laws'' has the 
     meaning given it in subsection (a) of the first section of 
     the Clayton Act (15 U.S.C. 12), except that such term 
     includes section 5 of the Federal Trade Commission Act (15 
     U.S.C. 45) to the extent that such section 5 applies to 
     unfair methods of competition.
       (2) Health care provider.--The term ``health care 
     provider'' means any individual or entity that is engaged in 
     the delivery of health care services in a State and that is 
     required by State law or regulation to be licensed or 
     certified by the State to engage in the delivery of such 
     services in the State.
       (3) Health care service.--The term ``health care service'' 
     means any service for which payment may be made under a 
     MedicarePlus PSO product including services related to the 
     delivery or administration of such service.
       (4) Medicareplus program.--The term ``MedicarePlus 
     program'' means the program under part C of title XVIII of 
     the Social Security Act.
       (5) Medicareplus pso product.--The term ``MedicarePlus PSO 
     product'' means a MedicarePlus product offered by a provider-
     sponsored organization under part C of title XVIII of the 
     Social Security Act.
       (6) Provider service network.--The term ``provider service 
     network'' means an organization that--
       (A) is organized by, operated by, and composed of members 
     who are health care providers and for purposes that include 
     providing health care services,
       (B) is funded in part by capital contributions made by the 
     members of such organization,
       (C) with respect to each contract made by such organization 
     for the purpose of providing a type of health care service to 
     individuals under the terms of a MedicarePlus PSO product--
       (i) requires all members of such organization who engage in 
     providing such type of health care service to agree to 
     provide health care services of such type under such 
     contract,
       (ii) receives the compensation paid for the health care 
     services of such type provided under such contract by such 
     members, and
       (iii) provides for the distribution of such compensation,
       (D) has established, consistent with the requirements of 
     the MedicarePlus program for provider-sponsored 
     organizations, a program to review, pursuant to written 
     guidelines, the quality, efficiency, and appropriateness of 
     treatment methods and setting of services for all health care 
     providers and all patients participating in such product, 
     along with internal procedures to correct identified 
     deficiencies relating to such methods and such services,
       (E) has established, consistent with the requirements of 
     the MedicarePlus program for provider-sponsored 
     organizations, a program to monitor and control utilization 
     of health care services provided under such product, for the 
     purpose of improving efficient, appropriate care and 
     eliminating the provision of unnecessary health care 
     services,
       (F) has established a management program to coordinate the 
     delivery of health care services for all health care 
     providers and all patients participating in such product, for 
     the purpose of achieving efficiencies and enhancing the 
     quality of health care services provided, and
       (G) has established, consistent with the requirements of 
     the MedicarePlus program for provider-sponsored 
     organizations, a grievance and appeal process for such 
     organization designed to review and promptly resolve 
     beneficiary or patient grievances and complaints.
     Such term may include a provider-sponsored organization.
       (7) Provider-sponsored organization.--The term ``provider-
     sponsored organization'' means a MedicarePlus organization 
     under the MedicarePlus program that is a provider-sponsored 
     organization (as defined in section ____ of the Social 
     Security Act).
       (8) State.--The term ``State'' has the meaning given it in 
     section 4G(2) of the Clayton Act (15 U.S.C. 15g(2)).
       (c) Issuance of Guidelines.--Not later than 120 days after 
     the date of the enactment of this Act, the Attorney General 
     and the Federal Trade Commission shall issue jointly 
     guidelines specifying the enforcement policies and analytical 
     principles that will be applied by the Department of Justice 
     and the Commission with respect to the operation of 
     subsection (a).

                          PART 4--COMMISSIONS

     SEC. 15031. MEDICARE PAYMENT REVIEW COMMISSION.

       (a) In General.--Title XVIII, as amended by section 
     15001(a), is amended by inserting after section 1805 the 
     following new section:


                  ``medicare payment review commission

       ``Sec. 1806. (a) Establishment.--There is hereby 
     established the Medicare Payment Review Commission (in this 
     section referred to as the `Commission').
       ``(b) Duties.--
       ``(1) General duties and reports.--
       ``(A) In general.--The Commission shall review, and make 
     recommendations to Congress concerning, payment policies 
     under this title.
       ``(B) Annual reports.--By not later than June 1 of each 
     year, the Commission shall submit a report to Congress 
     containing an examination of issues affecting the medicare 
     program, including the implications of changes in health care 
     delivery in the United States and in the market for health 
     care services on the medicare program.
       ``(C) Additional reports.--The Commission may submit to 
     Congress from time to time such other reports as the 
     Commission deems appropriate. By not later than May 1, 1997, 
     the Commission shall submit to Congress a report on the 
     matter described in paragraph (2)(G).
       ``(D) Secretarial response in rulemaking.--The Secretary 
     shall respond to recommendations of the Commission in notices 
     of rulemaking proceedings under this title.
       ``(2) Specific duties relating to medicareplus program.--
     Specifically, the Commission shall review, with respect to 
     the MedicarePlus program under part C--
       ``(A) the appropriateness of the methodology for making 
     payment to plans under such program, including the making of 
     differential payments and the distribution of differential 
     updates among different payment areas);
       ``(B) the appropriateness of the mechanisms used to adjust 
     payments for risk and the need to adjust such mechanisms to 
     take into account health status of beneficiaries;
       ``(C) the implications of risk selection both among 
     MedicarePlus organizations and between the MedicarePlus 
     option and the non-MedicarePlus option;
       ``(D) in relation to payment under part C, the development 
     and implementation of mechanisms to assure the quality of 
     care for those enrolled with MedicarePlus organizations;
       ``(E) the impact of the MedicarePlus program on access to 
     care for medicare beneficiaries;
       ``(F) the feasibility and desirability of extending the 
     rules for open enrollment that apply during the transition 
     period to apply in each county during the first 2 years in 
     which MedicarePlus products are made available to individuals 
     residing in the county; and
       ``(G) other major issues in implementation and further 
     development of the MedicarePlus program.
       ``(3) Specific duties relating to the failsafe budget 
     mechanism.--Specifically, the Commission shall review, with 
     respect to the failsafe budget mechanism described in section 
     1895--
       ``(A) the appropriateness of the expenditure projections by 
     the Secretary under section 1895(c) for each medicare sector;
       ``(B) the appropriateness of the growth factors for each 
     sector and the ability to take into account substitution 
     across sectors;
       ``(C) the appropriateness of the mechanisms for 
     implementing reductions in payment amounts for different 
     sectors, including any adjustments to reflect changes in 

[[Page H 10405]]
     volume or intensity resulting for any payment reductions;
       ``(D) the impact of the mechanism on provider participation 
     in parts A and B and in the MedicarePlus program; and
       ``(E) the appropriateness of the medicare benefit budget 
     (under section 1895(c)(2)(C) of the Social Security Act), 
     particularly for fiscal years after fiscal year 2002.
       ``(4) Specific duties relating to the fee-for-service 
     system.--Specifically, the Commission shall review payment 
     policies under parts A and B, including--
       ``(A) the factors affecting expenditures for services in 
     different sectors, including the process for updating 
     hospital, physician, and other fees,
       ``(B) payment methodologies; and
       ``(C) the impact of payment policies on access and quality 
     of care for medicare beneficiaries.
       ``(5) Specific duties relating to interaction of payment 
     policies with health care delivery generally.--Specifically 
     the Commission shall review the effect of payment policies 
     under this title on the delivery of health care services 
     under this title and assess the implications of changes in 
     the health services market on the medicare program.
       ``(c) Membership.--
       ``(1) Number and appointment.--The Commission shall be 
     composed of 15 members appointed by the Comptroller General.
       ``(2) Qualifications.--The membership of the Commission 
     shall include individuals with national recognition for their 
     expertise in health finance and economics, actuarial science, 
     health facility management, health plans and integrated 
     delivery systems, reimbursement of health facilities, 
     allopathic and osteopathic physicians, and other providers of 
     services, and other related fields, who provide a mix of 
     different professionals, broad geographic representation, and 
     a balance between urban and rural representatives, including 
     physicians and other health professionals, employers, third 
     party payors, individuals skilled in the conduct and 
     interpretation of biomedical, health services, and health 
     economics research and expertise in outcomes and 
     effectiveness research and technology assessment. Such 
     membership shall also include representatives of consumers 
     and the elderly.
       ``(3) Considerations in initial appointment.--To the extent 
     possible, in first appointing members to the Commission the 
     Comptroller General shall consider appointing individuals who 
     (as of the date of the enactment of this section) were 
     serving on the Prospective Payment Assessment Commission or 
     the Physician Payment Review Commission.
       ``(4) Terms.--
       ``(A) In general.--The terms of members of the Commission 
     shall be for 3 years except that the Comptroller General 
     shall designate staggered terms for the members first 
     appointed.
       ``(B) Vacancies.--Any member appointed to fill a vacancy 
     occurring before the expiration of the term for which the 
     member's predecessor was appointed shall be appointed only 
     for the remainder of that term. A member may serve after the 
     expiration of that member's term until a successor has taken 
     office. A vacancy in the Commission shall be filled in the 
     manner in which the original appointment was made.
       ``(5) Compensation.--While serving on the business of the 
     Commission (including traveltime), a member of the Commission 
     shall be entitled to compensation at the per diem equivalent 
     of the rate provided for level IV of the Executive Schedule 
     under section 5315 of title 5, United States Code; and while 
     so serving away from home and member's regular place of 
     business, a member may be allowed travel expenses, as 
     authorized by the Chairman of the Commission. Physicians 
     serving as personnel of the Commission may be provided a 
     physician comparability allowance by the Commission in the 
     same manner as Government physicians may be provided such an 
     allowance by an agency under section 5948 of title 5, United 
     States Code, and for such purpose subsection (i) of such 
     section shall apply to the Commission in the same manner as 
     it applies to the Tennessee Valley Authority. For purposes of 
     pay (other than pay of members of the Commission) and 
     employment benefits, rights, and privileges, all personnel of 
     the Commission shall be treated as if they were employees of 
     the United States Senate.
       ``(6) Chairman; vice chairman.--The Comptroller General 
     shall designate a member of the Commission, at the time of 
     appointment of the member, as Chairman and a member as Vice 
     Chairman for that term of appointment.
       ``(7) Meetings.--The Commission shall meet at the call of 
     the Chairman.
       ``(d) Director and Staff; Experts and Consultants.--Subject 
     to such review as the Comptroller General deems necessary to 
     assure the efficient administration of the Commission, the 
     Commission may--
       ``(1) employ and fix the compensation of an Executive 
     Director (subject to the approval of the Comptroller General) 
     and such other personnel as may be necessary to carry out its 
     duties (without regard to the provisions of title 5, United 
     States Code, governing appointments in the competitive 
     service);
       ``(2) seek such assistance and support as may be required 
     in the performance of its duties from appropriate Federal 
     departments and agencies;
       ``(3) enter into contracts or make other arrangements, as 
     may be necessary for the conduct of the work of the 
     Commission (without regard to section 3709 of the Revised 
     Statutes (41 U.S.C. 5));
       ``(4) make advance, progress, and other payments which 
     relate to the work of the Commission;
       ``(5) provide transportation and subsistence for persons 
     serving without compensation; and
       ``(6) prescribe such rules and regulations as it deems 
     necessary with respect to the internal organization and 
     operation of the Commission.
       ``(e) Powers.--
       ``(1) Obtaining official data.--The Commission may secure 
     directly from any department or agency of the United States 
     information necessary to enable it to carry out this section. 
     Upon request of the Chairman, the head of that department or 
     agency shall furnish that information to the Commission on an 
     agreed upon schedule.
       ``(2) Data collection.--In order to carry out its 
     functions, the Commission shall collect and assess 
     information to--
       ``(A) utilize existing information, both published and 
     unpublished, where possible, collected and assessed either by 
     its own staff or under other arrangements made in accordance 
     with this section,
       ``(B) carry out, or award grants or contracts for, original 
     research and experimentation, where existing information is 
     inadequate, and
       ``(C) adopt procedures allowing any interested party to 
     submit information for the Commission's use in making reports 
     and recommendations.
       ``(3) Access of gao to information.--The Comptroller 
     General shall have unrestricted access to all deliberations, 
     records, and data of the Commission, immediately upon 
     request.
       ``(4) Periodic audit.--The Commission shall be subject to 
     periodic audit by the General Accounting Office.
       ``(f) Authorization of Appropriations.--
       ``(1) Request for appropriations.--The Commission shall 
     submit requests for appropriations in the same manner as the 
     Comptroller General submits requests for appropriations, but 
     amounts appropriated for the Commission shall be separate 
     from amounts appropriated for the Comptroller General.
       ``(2) Authorization.--There are authorized to be 
     appropriated such sums as may be necessary to carry out the 
     provisions of this section. 60 percent of such appropriation 
     shall be payable from the Federal Hospital Insurance Trust 
     Fund, and 40 percent of such appropriation shall be payable 
     from the Federal Supplementary Medical Insurance Trust 
     Fund.''.
       (b) Abolition of ProPAC and PPRC.--
       (1) Propac.--
       (A) In general.--Section 1886(e) (42 U.S.C. 1395ww(e)) is 
     amended--
       (i) by striking paragraphs (2) and (6); and
       (ii) in paragraph (3), by striking ``(A) The Commission'' 
     and all that follows through ``(B)''.
       (B) Conforming amendment.--Section 1862 (42 U.S.C. 1395y) 
     is amended by striking ``Prospective Payment Assessment 
     Commission'' each place it appears in subsection (a)(1)(D) 
     and subsection (i) and inserting ``Medicare Payment Review 
     Commission''.
       (2) PPRC.--
       (A) In general.--Title XVIII is amended by striking section 
     1845 (42 U.S.C. 1395w-1).
       (B) Conforming amendments.--
       (i) Section 1834(b)(2) (42 U.S.C. 1395m(b)(2)) is amended 
     by striking ``Physician Payment Review Commission'' and 
     inserting ``Medicare Payment Review Commission''.
       (ii) Section 1842(b) (42 U.S.C. 1395u(b)) is amended by 
     striking ``Physician Payment Review Commission'' each place 
     it appears in paragraphs (9)(D) and (14)(C)(i) and inserting 
     ``Medicare Payment Review Commission''.
       (iii) Section 1848 (42 U.S.C. 1395w-4) is amended by 
     striking ``Physician Payment Review Commission'' and 
     inserting ``Medicare Payment Review Commission'' each place 
     it appears in paragraph (2)(A)(ii), (2)(B)(iii), and (5) of 
     subsection (c), subsection (d)(2)(F), paragraphs (1)(B), (3), 
     and (4)(A) of subsection (f), and paragraphs (6)(C) and 
     (7)(C) of subsection (g).
       (c) Effective Date; Transition.--
       (1) In general.--The Comptroller General shall first 
     provide for appointment of members to the Medicare Payment 
     Review Commission (in this subsection referred to as 
     ``MPRC'') by not later than March 31, 1996.
       (2) Transition.--Effective on a date (not later than 30 
     days after the date a majority of members of the MPRC have 
     first been appointed, the Prospective Payment Assessment 
     Commission (in this subsection referred to as ``ProPAC'') and 
     the Physician Payment Review Commission (in this subsection 
     referred to as ``PPRC''), and amendments made by subsection 
     (b), are terminated. The Comptroller General, to the maximum 
     extent feasible, shall provide for the transfer to the MPRC 
     of assets and staff of ProPAC and PPRC, without any loss of 
     benefits or seniority by virtue of such transfers. Fund 
     balances available to the ProPAC or PPRC for any period shall 
     be available to the MPRC for such period for like purposes.
       (3) Continuing responsibility for reports.--The MPRC shall 
     be responsible for the preparation and submission of reports 
     required by law to be submitted (and which have not been 
     submitted by the date of establishment of the MPRC) by the 
     ProPAC and PPRC, and, for this purpose, any reference in law 
     to either such Commission is 

[[Page H 10406]]
     deemed, after the appointment of the MPRC, to refer to the MPRC.

     SEC. 15032. COMMISSION ON THE EFFECT OF THE BABY BOOM 
                   GENERATION ON THE MEDICARE PROGRAM.

       (a) Establishment.--There is established a commission to be 
     known as the Commission on the Effect of the Baby Boom 
     Generation on the Medicare Program (in this section referred 
     to as the ``Commission'').
       (b) Duties.--
       (1) In general.--The Commission shall--
       (A) examine the financial impact on the medicare program of 
     the significant increase in the number of medicare eligible 
     individuals which will occur beginning approximately during 
     2010 and lasting for approximately 25 years, and
       (B) make specific recommendations to the Congress 
     respecting a comprehensive approach to preserve the medicare 
     program for the period during which such individuals are 
     eligible for medicare.
       (2) Considerations in making recommendations.--In making 
     its recommendations, the Commission shall consider the 
     following:
       (A) The amount and sources of Federal funds to finance the 
     medicare program, including the potential use of innovative 
     financing methods.
       (B) The most efficient and effective manner of 
     administering the program, including the appropriateness of 
     continuing the application of the failsafe budget mechanism 
     under section 1895 of the Social Security Act for fiscal 
     years after fiscal year 2002 and the appropriate long-term 
     growth rates for contributions electing coverage under 
     MedicarePlus under part C of title XVIII of such Act.
       (C) Methods used by other nations to respond to comparable 
     demographic patterns in eligibility for health care benefits 
     for elderly and disabled individuals.
       (D) Modifying age-based eligibility to correspond to 
     changes in age-based eligibility under the OASDI program.
       (E) Trends in employment-related health care for retirees, 
     including the use of medical savings accounts and similar 
     financing devices.
       (c) Membership.--
       (1) Appointment.--The Commission shall be composed of 15 
     members appointed as follows:
       (A) The President shall appoint 3 members.
       (B) The Majority Leader of the Senate shall appoint, after 
     consultation with the minority leader of the Senate, 6 
     members, of whom not more than 4 may be of the same political 
     party.
       (C) The Speaker of the House of Representatives shall 
     appoint, after consultation with the minority leader of the 
     House of Representatives, 6 members, of whom not more than 4 
     may be of the same political party.
       (2) Chairman and vice chairman.--The Commission shall elect 
     a Chairman and Vice Chairman from among its members.
       (3) Vacancies.--Any vacancy in the membership of the 
     Commission shall be filled in the manner in which the 
     original appointment was made and shall not affect the power 
     of the remaining members to execute the duties of the 
     Commission.
       (4) Quorum.--A quorum shall consist of 8 members of the 
     Commission, except that 4 members may conduct a hearing under 
     subsection (e).
       (5) Meetings.--The Commission shall meet at the call of its 
     Chairman or a majority of its members.
       (6) Compensation and reimbursement of expenses.--Members of 
     the Commission are not entitled to receive compensation for 
     service on the Commission. Members may be reimbursed for 
     travel, subsistence, and other necessary expenses incurred in 
     carrying out the duties of the Commission.
       (d) Staff and Consultants.--
       (1) Staff.--The Commission may appoint and determine the 
     compensation of such staff as may be necessary to carry out 
     the duties of the Commission. Such appointments and 
     compensation may be made without regard to the provisions of 
     title 5, United States Code, that govern appointments in the 
     competitive services, and the provisions of chapter 51 and 
     subchapter III of chapter 53 of such title that relate to 
     classifications and the General Schedule pay rates.
       (2) Consultants.--The Commission may procure such temporary 
     and intermittent services of consultants under section 
     3109(b) of title 5, United States Code, as the Commission 
     determines to be necessary to carry out the duties of the 
     Commission.
       (e) Powers.--
       (1) Hearings and other activities.--For the purpose of 
     carrying out its duties, the Commission may hold such 
     hearings and undertake such other activities as the 
     Commission determines to be necessary to carry out its 
     duties.
       (2) Studies by gao.--Upon the request of the Commission, 
     the Comptroller General shall conduct such studies or 
     investigations as the Commission determines to be necessary 
     to carry out its duties.
       (3) Cost estimates by congressional budget office.--
       (A) Upon the request of the Commission, the Director of the 
     Congressional Budget Office shall provide to the Commission 
     such cost estimates as the Commission determines to be 
     necessary to carry out its duties.
       (B) The Commission shall reimburse the Director of the 
     Congressional Budget Office for expenses relating to the 
     employment in the office of the Director of such additional 
     staff as may be necessary for the Director to comply with 
     requests by the Commission under subparagraph (A).
       (4) Detail of federal employees.--Upon the request of the 
     Commission, the head of any Federal agency is authorized to 
     detail, without reimbursement, any of the personnel of such 
     agency to the Commission to assist the Commission in carrying 
     out its duties. Any such detail shall not interrupt or 
     otherwise affect the civil service status or privileges of 
     the Federal employee.
       (5) Technical assistance.--Upon the request of the 
     Commission, the head of a Federal agency shall provide such 
     technical assistance to the Commission as the Commission 
     determines to be necessary to carry out its duties.
       (6) Use of mails.--The Commission may use the United States 
     mails in the same manner and under the same conditions as 
     Federal agencies and shall, for purposes of the frank, be 
     considered a commission of Congress as described in 
     section 3215 of title 39, United States Code.
       (7) Obtaining information.--The Commission may secure 
     directly from any Federal agency information necessary to 
     enable it to carry out its duties, if the information may be 
     disclosed under section 552 of title 5, United States Code. 
     Upon request of the Chairman of the Commission, the head of 
     such agency shall furnish such information to the Commission.
       (8) Administrative support services.--Upon the request of 
     the Commission, the Administrator of General Services shall 
     provide to the Commission on a reimbursable basis such 
     administrative support services as the Commission may 
     request.
       (9) Acceptance of donations.--The Commission may accept, 
     use, and dispose of gifts or donations of services or 
     property.
       (10) Printing.--For purposes of costs relating to printing 
     and binding, including the cost of personnel detailed from 
     the Government Printing Office, the Commission shall be 
     deemed to be a committee of the Congress.
       (f) Report.--Not later than May 1, 1997, the Commission 
     shall submit to Congress a report containing its findings and 
     recommendations regarding how to protect and preserve the 
     medicare program in a financially solvent manner until 2030 
     (or, if later, throughout the period of projected solvency of 
     the Federal Old-Age and Survivors Insurance Trust Fund). The 
     report shall include detailed recommendations for appropriate 
     legislative initiatives respecting how to accomplish this 
     objective.
       (g) Termination.--The Commission shall terminate 60 days 
     after the date of submission of the report required in 
     subsection (f).
       (h) Authorization of Appropriations.--There are authorized 
     to be appropriated $1,500,000 to carry out this section. 
     Amounts appropriated to carry out this section shall remain 
     available until expended.

     SEC. 15033. CHANGE IN APPOINTMENT OF ADMINISTRATOR OF HCFA.

       (a) In General.--Section 1117 (42 U.S.C. 1317) is amended 
     by striking ``President by and with the advice and consent of 
     the Senate'' and inserting ``Secretary of Health and Human 
     Services''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act 
     and shall apply to Administrators appointed on or after the 
     date of the enactment of this Act.

PART 5--TREATMENT OF HOSPITALS WHICH PARTICIPATE IN PROVIDER-SPONSORED 
                             ORGANIZATIONS

     SEC. 15041. TREATMENT OF HOSPITALS WHICH PARTICIPATE IN 
                   PROVIDER-SPONSORED ORGANIZATIONS.

       (a) In General.--Section 501 of the Internal Revenue Code 
     of 1986 (relating to exemption from tax on corporations, 
     certain trusts, etc.) is amended by redesignating subsection 
     (n) as subsection (o) and by inserting after subsection (m) 
     the following new subsection:
       ``(n) Treatment of Hospitals Participating in Provider-
     Sponsored Organizations.--An organization shall not fail to 
     be treated as organized and operated exclusively for a 
     charitable purpose for purposes of subsection (c)(3) solely 
     because a hospital which is owned and operated by such 
     organization participates in a provider-sponsored 
     organization (as defined in section 1854(a)(1) of the Social 
     Security Act), whether or not the provider-sponsored 
     organization is exempt from tax. For purposes of subsection 
     (c)(3), any person with a material financial interest in such 
     a provider-sponsored organization shall be treated as a 
     private shareholder or individual with respect to the 
     hospital.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.
                 Subtitle B--Preventing Fraud and Abuse

                       PART 1--GENERAL PROVISIONS

     SEC. 15101. INCREASING AWARENESS OF FRAUD AND ABUSE.

       (a) Beneficiary Outreach Efforts.--The Secretary of Health 
     and Human Services (acting through the Administrator of the 
     Health Care Financing Administration and the Inspector 
     General of the Department of Health and Human Services) shall 
     make ongoing efforts (through public service announcements, 
     publications, and other appropriate methods) to alert 
     individuals entitled to benefits under the medicare program 
     of the existence of fraud and abuse committed 

[[Page H 10407]]
     against the program and the costs to the program of such fraud and 
     abuse, and of the existence of the toll-free telephone line 
     operated by the Secretary to receive information on fraud and 
     abuse committed against the program.
       (b) Clarification of Requirement to Provide Explanation of 
     Medicare Benefits.--The Secretary shall provide an 
     explanation of benefits under the medicare program with 
     respect to each item or service for which payment may be made 
     under the program which is furnished to an individual, 
     without regard to whether or not a deductible or coinsurance 
     may be imposed against the individual with respect to the 
     item or service.
       (c) Provider Outreach Efforts; Publication of Fraud 
     Alerts.--
       (1) Special fraud alerts.--
       (A) In general.--
       (i) Request for special fraud alerts.--Any person may 
     present, at any time, a request to the Secretary to issue and 
     publish a special fraud alert.
       (ii) Special fraud alert defined.--In this section, a 
     ``special fraud alert'' is a notice which informs the public 
     of practices which the Secretary considers to be suspect or 
     of particular concern under the medicare program or a State 
     health care program (as defined in section 1128(h) of the 
     Social Security Act).
       (B) Issuance and publication of special fraud alerts.--
       (i) Investigation.--Upon receipt of a request for a special 
     fraud alert under subparagraph (A), the Secretary shall 
     investigate the subject matter of the request to determine 
     whether a special fraud alert should be issued. If 
     appropriate, the Secretary (in consultation with the Attorney 
     General) shall issue a special fraud alert in response to the 
     request. All special fraud alerts issued pursuant to this 
     subparagraph shall be published in the Federal Register.
       (ii) Criteria for issuance.--In determining whether to 
     issue a special fraud alert upon a request under subparagraph 
     (A), the Secretary may consider--

       (I) whether and to what extent the practices that would be 
     identified in the special fraud alert may result in any of 
     the consequences described in 15214(b); and
       (II) the extent and frequency of the conduct that would be 
     identified in the special fraud alert.

       (2) Publication of all hcfa fraud alerts in federal 
     register.--Each notice issued by the Health Care Financing 
     Administration which informs the public of practices which 
     the Secretary considers to be suspect or of particular 
     concern under the medicare program or a State health care 
     program (as defined in section 1128(h) of the Social Security 
     Act) shall be published in the Federal Register, without 
     regard to whether or not the notice is issued by a regional 
     office of the Health Care Financing Administration.

     SEC. 15102. BENEFICIARY INCENTIVE PROGRAMS.

       (a) Program to Collect Information on Fraud and Abuse.--
       (1) Establishment of program.--Not later than 3 months 
     after the date of the enactment of this Act, the Secretary of 
     Health and Human Services (hereinafter in this subtitle 
     referred to as the ``Secretary'') shall establish a program 
     under which the Secretary shall encourage individuals to 
     report to the Secretary information on individuals and 
     entities who are engaging or who have engaged in acts or 
     omissions which constitute grounds for the imposition of a 
     sanction under section 1128, section 1128A, or section 1128B 
     of the Social Security Act, or who have otherwise engaged in 
     fraud and abuse against the medicare program for which there 
     is a sanction provided under law. The program shall 
     discourage provision of, and not consider, information which 
     is frivolous or otherwise not relevant or material to the 
     imposition of such a sanction.
       (2) Payment of portion of amounts collected.--If an 
     individual reports information to the Secretary under the 
     program established under paragraph (1) which serves as the 
     basis for the collection by the Secretary or the Attorney 
     General of any amount of at least $100 (other than any amount 
     paid as a penalty under section 1128B of the Social Security 
     Act), the Secretary may pay a portion of the amount collected 
     to the individual (under procedures similar to those 
     applicable under section 7623 of the Internal Revenue Code of 
     1986 to payments to individuals providing information on 
     violations of such Code).
       (b) Program To Collect Information on Program Efficiency.--
       (1) Establishment of program.--Not later than 3 months 
     after the date of the enactment of this Act, the Secretary 
     shall establish a program under which the Secretary shall 
     encourage individuals to submit to the Secretary suggestions 
     on methods to improve the efficiency of the medicare program.
       (2) Payment of portion of program savings.--If an 
     individual submits a suggestion to the Secretary under the 
     program established under paragraph (1) which is adopted by 
     the Secretary and which results in savings to the program, 
     the Secretary may make a payment to the individual of such 
     amount as the Secretary considers appropriate.

     SEC. 15103. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH 
                   MAINTENANCE ORGANIZATIONS.

       (a) Application of Intermediate Sanctions for Any Program 
     Violations.--
       (1) In general.--Section 1876(i)(1) (42 U.S.C. 
     1395mm(i)(1)) is amended by striking ``the Secretary may 
     terminate'' and all that follows and inserting the following: 
     ``in accordance with procedures established under paragraph 
     (9), the Secretary may at any time terminate any such 
     contract or may impose the intermediate sanctions described 
     in paragraph (6)(B) or (6)(C) (whichever is applicable) on 
     the eligible organization if the Secretary determines that 
     the organization--
       ``(A) has failed substantially to carry out the contract;
       ``(B) is carrying out the contract in a manner inconsistent 
     with the efficient and effective administration of this 
     section;
       ``(C) is operating in a manner that is not in the best 
     interests of the individuals covered under the contract; or
       ``(D) no longer substantially meets the applicable 
     conditions of subsections (b), (c), and (e).''.
       (2) Other intermediate sanctions for miscellaneous program 
     violations.--Section 1876(i)(6) (42 U.S.C. 1395mm(i)(6)) is 
     amended by adding at the end the following new subparagraph:
       ``(C) In the case of an eligible organization for which the 
     Secretary makes a determination under paragraph (1) the basis 
     of which is not described in subparagraph (A), the Secretary 
     may apply the following intermediate sanctions:
       ``(i) civil money penalties of not more than $25,000 for 
     each determination under paragraph (1) if the deficiency that 
     is the basis of the determination has directly adversely 
     affected (or has the substantial likelihood of adversely 
     affecting) an individual covered under the organization's 
     contract;
       ``(ii) civil money penalties of not more than $10,000 for 
     each week beginning after the initiation of procedures by the 
     Secretary under paragraph (9) during which the deficiency 
     that is the basis of a determination under paragraph (1) 
     exists; and
       ``(iii) suspension of enrollment of individuals under this 
     section after the date the Secretary notifies the 
     organization of a determination under paragraph (1) and until 
     the Secretary is satisfied that the deficiency that is the 
     basis for the determination has been corrected and is not 
     likely to recur.''.
       (3) Procedures for imposing sanctions.--Section 1876(i) (42 
     U.S.C. 1395mm(i)) is amended by adding at the end the 
     following new paragraph:
       ``(9) The Secretary may terminate a contract with an 
     eligible organization under this section or may impose the 
     intermediate sanctions described in paragraph (6) on the 
     organization in accordance with formal investigation and 
     compliance procedures established by the Secretary under 
     which--
       ``(A) the Secretary provides the organization with the 
     opportunity to develop and implement a corrective action plan 
     to correct the deficiencies that were the basis of the 
     Secretary's determination under paragraph (1);
       ``(B) the Secretary shall impose more severe sanctions on 
     organizations that have a history of deficiencies or that 
     have not taken steps to correct deficiencies the Secretary 
     has brought to their attention;
       ``(C) there are no unreasonable or unnecessary delays 
     between the finding of a deficiency and the imposition of 
     sanctions; and
       ``(D) the Secretary provides the organization with 
     reasonable notice and opportunity for hearing (including the 
     right to appeal an initial decision) before imposing any 
     sanction or terminating the contract.''.
       (4) Conforming amendments.--(A) Section 1876(i)(6)(B) (42 
     U.S.C. 1395mm(i)(6)(B)) is amended by striking the second 
     sentence.
       (B) Section 1876(i)(6) (42 U.S.C. 1395mm(i)(6)) is further 
     amended by adding at the end the following new subparagraph:
       ``(D) The provisions of section 1128A (other than 
     subsections (a) and (b)) shall apply to a civil money penalty 
     under subparagraph (A) or (B) in the same manner as they 
     apply to a civil money penalty or proceeding under section 
     1128A(a).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to contract years beginning on or 
     after January 1, 1996.

     SEC. 15104. VOLUNTARY DISCLOSURE PROGRAM.

       Title XI (42 U.S.C. 1301 et seq.) is amended by inserting 
     after section 1128B the following new section:


              ``voluntary disclosure of acts or omissions

       ``Sec. 1129. (a) Establishment of Voluntary Disclosure 
     Program.--Not later than 3 months after the date of the 
     enactment of this section, the Secretary shall establish a 
     program to encourage individuals and entities to voluntarily 
     disclose to the Secretary information on acts or omissions of 
     the individual or entity which constitute grounds for the 
     imposition of a sanction described in section 1128, 1128A, or 
     1128B.
       ``(b) Effect of Voluntary Disclosure.--If an individual or 
     entity voluntarily discloses information with respect to an 
     act or omission to the Secretary under subsection (a), the 
     following rules shall apply:
       ``(1) The Secretary may waive, reduce, or otherwise 
     mitigate any sanction which would otherwise be applicable to 
     the individual or entity under section 1128, 1128A, or 1128B 
     as a result of the act or omission involved.
       ``(2) No qui tam action may be brought pursuant to chapter 
     37 of title 31, United States Code, against the individual or 
     entity with respect to the act or omission involved.''.
     
[[Page H 10408]]


     SEC. 15105. REVISIONS TO CURRENT SANCTIONS.

       (a) Doubling the Amount of Civil Monetary Penalties.--The 
     maximum amount of civil monetary penalties specified in 
     section 1128A of the Social Security Act or under title XVIII 
     of such Act (as in effect on the day before the date of the 
     enactment of this Act) shall, effective for violations 
     occurring after the date of the enactment of this Act, be 
     double the amount otherwise provided as of such date.
       (b) Establishment of Minimum Period of Exclusion for 
     Certain Individuals and Entities Subject to Permissive 
     Exclusion.--Section 1128(c)(3) (42 U.S.C. 1320a-7(c)(3)) is 
     amended by adding at the end the following new subparagraphs:
       ``(D) In the case of an exclusion of an individual or 
     entity under paragraph (1), (2), or (3) of subsection (b), 
     the period of the exclusion shall be 3 years, unless the 
     Secretary determines in accordance with regulations that a 
     shorter period is appropriate because of mitigating 
     circumstances or that a longer period is appropriate because 
     of aggravating circumstances.
       ``(E) In the case of an exclusion of an individual or 
     entity under subsection (b)(4) or (b)(5), the period of the 
     exclusion shall not be less than the period during which the 
     individual's or entity's license to provide health care is 
     revoked, suspended, or surrendered, or the individual or the 
     entity is excluded or suspended from a Federal or State 
     health care program.
       ``(F) In the case of an exclusion of an individual or 
     entity under subsection (b)(6)(B), the period of the 
     exclusion shall be not less than 1 year.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to acts or omissions occurring on or 
     after January 1, 1996.

     SEC. 15106. DIRECT SPENDING FOR ANTI-FRAUD ACTIVITIES UNDER 
                   MEDICARE.

       (a) Establishment of Medicare Integrity Program.--Title 
     XVIII is amended by adding at the end the following new 
     section:


                      ``medicare integrity program

       ``Sec. 1893. (a) Establishment of Program.--There is hereby 
     established the Medicare Integrity Program (hereafter in this 
     section referred to as the `Program') under which the 
     Secretary shall promote the integrity of the medicare program 
     by entering into contracts in accordance with this section 
     with eligible private entities to carry out the activities 
     described in subsection (b).
       ``(b) Activities Described.--The activities described in 
     this subsection are as follows:
       ``(1) Review of activities of providers of services or 
     other individuals and entities furnishing items and services 
     for which payment may be made under this title (including 
     skilled nursing facilities and home health agencies), 
     including medical and utilization review and fraud review 
     (employing similar standards, processes, and technologies 
     used by private health plans, including equipment and 
     software technologies which surpass the capability of the 
     equipment and technologies used in the review of claims under 
     this title as of the date of the enactment of this section).
       ``(2) Audit of cost reports.
       ``(3) Determinations as to whether payment should not be, 
     or should not have been, made under this title by reason of 
     section 1862(b), and recovery of payments that should not 
     have been made.
       ``(4) Education of providers of services, beneficiaries, 
     and other persons with respect to payment integrity and 
     benefit quality assurance issues.
       ``(c) Eligibility of Entities.--An entity is eligible to 
     enter into a contract under the Program to carry out any of 
     the activities described in subsection (b) if--
       ``(1) the entity has demonstrated capability to carry out 
     such activities;
       ``(2) in carrying out such activities, the entity agrees to 
     cooperate with the Inspector General of the Department of 
     Health and Human Services, the Attorney General of the United 
     States, and other law enforcement agencies, as appropriate, 
     in the investigation and deterrence of fraud and abuse in 
     relation to this title and in other cases arising out of such 
     activities;
       ``(3) the entity's financial holdings, interests, or 
     relationships will not interfere with its ability to perform 
     the functions to be required by the contract in an effective 
     and impartial manner; and
       ``(4) the entity meets such other requirements as the 
     Secretary may impose.
       ``(d) Process for Entering Into Contracts.--The Secretary 
     shall enter into contracts under the Program in accordance 
     with such procedures as the Secretary may by regulation 
     establish, except that such procedures shall include the 
     following:
       ``(1) The Secretary shall determine the appropriate number 
     of separate contracts which are necessary to carry out the 
     Program and the appropriate times at which the Secretary 
     shall enter into such contracts.
       ``(2) The provisions of section 1153(e)(1) shall apply to 
     contracts and contracting authority under this section, 
     except that competitive procedures must be used when entering 
     into new contracts under this section, or at any other time 
     considered appropriate by the Secretary.
       ``(3) A contract under this section may be renewed without 
     regard to any provision of law requiring competition if the 
     contractor has met or exceeded the performance requirements 
     established in the current contract.
       ``(e) Limitation on Contractor Liability.--The Secretary 
     shall by regulation provide for the limitation of a 
     contractor's liability for actions taken to carry out a 
     contract under the Program, and such regulation shall, to the 
     extent the Secretary finds appropriate, employ the same or 
     comparable standards and other substantive and procedural 
     provisions as are contained in section 1157.
       ``(f) Transfer of Amounts to Medicare Anti-Fraud and Abuse 
     Trust Fund.--For each fiscal year, the Secretary shall 
     transfer from the Federal Hospital Insurance Trust Fund and 
     the Federal Supplementary Medical Insurance Trust Fund to the 
     Medicare Anti-Fraud and Abuse Trust Fund under subsection (g) 
     such amounts as are necessary to carry out the activities 
     described in subsection (b). Such transfer shall be in an 
     allocation as reasonably reflects the proportion of such 
     expenditures associated with part A and part B.
       ``(g) Medicare Anti-Fraud and Abuse Trust Fund.--
       ``(1) Establishment.--
       ``(A) In general.--There is hereby established in the 
     Treasury of the United States the Anti-Fraud and Abuse Trust 
     Fund (hereafter in this subsection referred to as the `Trust 
     Fund'). The Trust Fund shall consist of such gifts and 
     bequests as may be made as provided in subparagraph (B) and 
     such amounts as may be deposited in the Trust Fund as 
     provided in subsection (f), paragraph (3), and title XI.
       ``(B) Authorization to accept gifts and bequests.--The 
     Trust Fund is authorized to accept on behalf of the United 
     States money gifts and bequests made unconditionally to the 
     Trust Fund, for the benefit of the Trust Fund or any activity 
     financed through the Trust Fund.
       ``(2) Investment.--
       ``(A) In general.--The Secretary of the Treasury shall 
     invest such amounts of the Fund as such Secretary determines 
     are not required to meet current withdrawals from the Fund in 
     government account serial securities.
       ``(B) Use of income.--Any interest derived from investments 
     under subparagraph (A) shall be credited to the Fund.
       ``(3) Amounts deposited into trust fund.--In addition to 
     amounts transferred under subsection (f), there shall be 
     deposited in the Trust Fund--
       ``(A) that portion of amounts recovered in relation to 
     section 1128A arising out of a claim under title XVIII as 
     remains after application of subsection (f)(2) (relating to 
     repayment of the Federal Hospital Insurance Trust Fund or the 
     Federal Supplementary Medical Insurance Trust Fund) of that 
     section, as may be applicable,
       ``(B) fines imposed under section 1128B arising out of a 
     claim under this title, and
       ``(C) penalties and damages imposed (other than funds 
     awarded to a relator or for restitution) under sections 3729 
     through 3732 of title 31, United States Code (pertaining to 
     false claims) in cases involving claims relating to programs 
     under title XVIII, XIX, or XXI.
       ``(4) Direct appropriation of funds to carry out program.--
       ``(A) In general.--There are appropriated from the Trust 
     Fund for each fiscal year such amounts as are necessary to 
     carry out the Medicare Integrity Program under this section, 
     subject to subparagraph (B).
       ``(B) Amounts specified.--The amount appropriated under 
     subparagraph (A) for a fiscal year is as follows:
       ``(i) For fiscal year 1996, such amount shall be not less 
     than $430,000,000 and not more than $440,000,000.
       ``(ii) For fiscal year 1997, such amount shall be not less 
     than $490,000,000 and not more than $500,000,000.
       ``(iii) For fiscal year 1998, such amount shall be not less 
     than $550,000,000 and not more than $560,000,000.
       ``(iv) For fiscal year 1999, such amount shall be not less 
     than $620,000,000 and not more than $630,000,000.
       ``(v) For fiscal year 2000, such amount shall be not less 
     than $670,000,000 and not more than $680,000,000.
       ``(vi) For fiscal year 2001, such amount shall be not less 
     than $690,000,000 and not more than $700,000,000.
       ``(vii) For fiscal year 2002, such amount shall be not less 
     than $710,000,000 and not more than $720,000,000.
       ``(5) Annual report.--The Secretary shall submit an annual 
     report to Congress on the amount of revenue which is 
     generated and disbursed by the Trust Fund in each fiscal 
     year.''.
       (b) Elimination of FI and Carrier Responsibility for 
     Carrying Out Activities Subject to Program.--
       (1) Responsibilities of fiscal intermediaries under part 
     a.--Section 1816 (42 U.S.C. 1395h) is amended by adding at 
     the end the following new subsection:
       ``(l) No agency or organization may carry out (or receive 
     payment for carrying out) any activity pursuant to an 
     agreement under this section to the extent that the activity 
     is carried out pursuant to a contract under the Medicare 
     Integrity Program under section 1893.''.
       (2) Responsibilities of carriers under part b.--Section 
     1842(c) (42 U.S.C. 1395u(c)) is amended by adding at the end 
     the following new paragraph:
       ``(6) No carrier may carry out (or receive payment for 
     carrying out) any activity pursuant to a contract under this 
     subsection to the extent that the activity is carried out 
     pursuant to a contract under the Medicare Integrity Program 
     under section 1893.''.

[[Page H 10409]]

       (c) Conforming Amendment.--Section 1128A(f)(3) (42 U.S.C. 
     1320a-7a(f)(3)) is amended by striking ``as miscellaneous 
     receipts of the Treasury of the United States'' and inserting 
     ``in the Anti-Fraud and Abuse Trust Fund established under 
     section 1893(g)''.
       (d) Direct Spending for Medicare-Related Activities of 
     Inspector General.--Section 1893, as added by subsection (a), 
     is amended by adding at the end the following new subsection:
       ``(h) Direct Spending for Medicare-Related Activities of 
     Inspector General.--
       ``(1) In general.--There are appropriated from the Federal 
     Hospital Insurance Trust Fund and the Federal Supplementary 
     Medical Insurance Trust Fund to the Inspector General of the 
     Department of Health and Human Services for each fiscal year 
     such amounts as are necessary to enable the Inspector General 
     to carry out activities relating to the medicare program (as 
     described in paragraph (2)), subject to paragraph (3).
       ``(2) Activities described.--The activities described in 
     this paragraph are as follows:
       ``(A) Prosecuting medicare-related matters through 
     criminal, civil, and administrative proceedings.
       ``(B) Conducting investigations relating to the medicare 
     program.
       ``(C) Performing financial and performance audits of 
     programs and operations relating to the medicare program.
       ``(D) Performing inspections and other evaluations relating 
     to the medicare program.
       ``(E) Conducting provider and conumer education activities 
     regarding the requirements of this title.
       ``(3) Amounts specified.--The amount appropriated under 
     paragraph (1) for a fiscal year is as follows:
       ``(A) For fiscal year 1996, such amount shall be 
     $130,000,000.
       ``(B) For fiscal year 1997, such amount shall be 
     $181,000,000.
       ``(C) For fiscal year 1998, such amount shall be 
     $204,000,000.
       ``(D) For each subsequent fiscal year, the amount 
     appropriated for the previous fiscal year, increased by the 
     percentage increase in aggregate expenditures under this 
     title for the fiscal year involved over the previous fiscal 
     year.
       ``(4) Allocation of payments among trust funds.--The 
     appropriations made under paragraph (1) shall be in an 
     allocation as reasonably reflects the proportion of such 
     expenditures associated with part A and part B.''.

     SEC. 15107. PERMITTING CARRIERS TO CARRY OUT PRIOR 
                   AUTHORIZATION FOR CERTAIN ITEMS OF DURABLE 
                   MEDICAL EQUIPMENT.

       (a) In General.--Section 1834(a)(15) (42 U.S.C. 
     1395m(a)(15)), as amended by section 135(b) of the Social 
     Security Act Amendments of 1994, is amended by adding at the 
     end the following new subparagraphs:
       ``(D) Application by carriers.--A carrier may develop (and 
     periodically update) a list of items under subparagraph (A) 
     and a list of suppliers under subparagraph (B) in the same 
     manner as the Secretary may develop (and periodically update) 
     such lists.
       ``(E) Waiver of publication requirement.--A carrier may 
     make an advance determination under subparagraph (C) with 
     respect to an item or supplier on a list developed by the 
     Secretary or the carrier without regard to whether or not the 
     Secretary has promulgated a regulation with respect to the 
     list, except that the carrier may not make such an advance 
     determination with respect to an item or supplier on a list 
     until the expiration of the 30-day period beginning on the 
     date the Secretary or the carrier places the item or supplier 
     on the list.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the enactment of the 
     Social Security Act Amendments of 1994.

     SEC. 15108. NATIONAL HEALTH CARE ANTI-FRAUD TASK FORCE.

       (a) Establishment.--The Attorney General, in consultation 
     with the Secretary of Health and Human Services, shall 
     establish a national health care anti-fraud task force (in 
     this section referred to as the ``task force''). The Attorney 
     General shall establish the task force within 120 days after 
     the date of the enactment of this Act.
       (b) Composition.--The task force shall include 
     representatives of Federal agencies involved in the 
     investigation and prosecution of persons violating laws 
     relating to health care fraud and abuse, including at least 
     one representative from each of the following agencies:
       (1) The Department of Justice and the Federal Bureau of 
     Investigation.
       (2) The Department of Health and Human Services and the 
     Office of the Inspector General within the Department.
       (3) The office in the Department of Defense responsible for 
     administration of the CHAMPUS program.
       (4) The Department of Veterans' Affairs.
       (5) The United States Postal Inspection Service.
       (6) The Internal Revenue Service.
     The Attorney General (or the designee of the Attorney 
     General) shall serve as chair of the task force.
       (c) Duties.--The task force shall coordinate Federal law 
     enforcement activities relating to health care fraud and 
     abuse in order to better control fraud and abuse in the 
     delivery of health care in the United States. Specifically, 
     the task force shall coordinate activities--
       (1) in order to assure the effective targeting and 
     investigation of persons who organize, direct, finance, or 
     otherwise knowingly engage in health care fraud, and
       (2) in order to assure full and effective cooperation 
     between Federal and State agencies involved in health care 
     fraud investigations.
       (d) Staff.--Each member of the task force who represents an 
     agency shall be responsible for providing for the detail 
     (from the agency) of at least one full-time staff person to 
     staff the task force. Such detail shall be without change in 
     salary, compensation, benefits, and other employment-related 
     matters.

     SEC. 15109. STUDY OF ADEQUACY OF PRIVATE QUALITY ASSURANCE 
                   PROGRAMS.

       (a) In General.--The Administrator of the Health Care 
     Financing Administration (acting through the Director of the 
     Office of Research and Demonstrations) shall enter into an 
     agreement with a private entity to conduct a study during the 
     5-year period beginning on the date of the enactment of this 
     Act of the adequacy of the quality assurance programs and 
     consumer protections used by the MedicarePlus program under 
     part C of title XVIII of the Social Security Act (as inserted 
     by section 15002(a)), and shall include in the study an 
     analysis of the effectiveness of such programs in protecting 
     plan enrollees against the risk of insufficient provision of 
     benefits which may result from utilization controls.
       (b) Report.--Not later than 6 months after the conclusion 
     of the 5-year period described in subsection (a), the 
     Administrator shall submit a report to Congress on the study 
     conducted under subsection (a).

     SEC. 15110. PENALTY FOR FALSE CERTIFICATION FOR HOME HEALTH 
                   SERVICES.

       (a) In General.--Section 1128A(b) (42 U.S.C. 1320a-7a(b)) 
     is amended by adding at the end the following new paragraph:
       ``(3)(A) Any physician who executes a document described in 
     subparagraph (B) with respect to an individual knowing that 
     all of the requirements referred to in such subparagraph are 
     not met with respect to the individual shall be subject to a 
     civil monetary penalty of not more than the greater of--
       ``(i) $5,000, or
       ``(ii) three times the amount of the payments under title 
     XVIII for home health services which are made pursuant to 
     such certification.
       ``(B) A document described in this subparagraph is any 
     document that certifies, for purposes of title XVIII, that an 
     individual meets the requirements of section 1814(a)(2)(C) or 
     1835(a)(2)(A) in the case of home health services furnished 
     to the individual.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to certifications made on or after the date of 
     the enactment of this Act.

     SEC. 15111. PILOT PROJECTS.

       The Secretary of Health and Human Services shall establish 
     and operate 5 pilot projects (in various geographic regions 
     of the United States) under which the Secretary shall 
     implement innovative approaches to monitor payment claims 
     under the medicare program to detect those claims that are 
     wasteful or fraudulent.

                   PART 2--REVISIONS TO CRIMINAL LAW

     SEC. 15121. DEFINITION OF FEDERAL HEALTH CARE OFFENSE.

       (a) In General.--Chapter 2 of title 18, United States Code, 
     is amended by adding at the end the following:

     ``Sec. 24. Definition of Federal health care offense

       ``(a) As used in this title, the term `Federal health care 
     offense' means--
       ``(1) a violation of, or criminal conspiracy to violate 
     section 226, 227, 669, 1035, 1347, or 1518 of this title;
       ``(2) a violation of, or criminal conspiracy to violate 
     section 1128B of the Social Security Act (42 U.S.C. 1320a-
     7b);
       ``(3) a violation of, or criminal conspiracy to violate 
     section 201, 287, 371, 664, 666, 1001, 1027, 1341, 1343, or 
     1954 of this title, if the violation or conspiracy relates to 
     a health care benefit program;
       ``(4) a violation of, or criminal conspiracy to violate 
     section 501 or 511 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1131 or 29 U.S.C. 1141), if the 
     violation or conspiracy relates to a health care benefit 
     program;
       ``(5) the commission of, or attempt to commit, an act which 
     constitutes grounds for the imposition of a penalty under 
     section 303 of the Federal Food, Drug, and Cosmetic Act, if 
     the act or attempt relates to a health care benefit program; 
     or
       ``(6) a violation of, or criminal conspiracy to violate, 
     section 3 of the Anti-Kickback Act of 1986 (41 U.S.C. 53), if 
     the violation or conspiracy relates to a health care benefit 
     program.
       ``(b) As used in this title, the term `health care benefit 
     program' has the meaning given such term in section 1347(b) 
     of this title.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 2 of title 18, United States Code, is 
     amended by inserting after the item relating to section 23 
     the following new item:

``24. Definition relating to Federal health care offense defined.''.

     SEC. 15122. HEALTH CARE FRAUD.

       (a) In General.--Chapter 63 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 1347. Health care fraud

       ``(a) Whoever, having devised or intending to devise a 
     scheme or artifice, commits or 

[[Page H 10410]]
     attempts to commit an act in furtherance of or for the purpose of 
     executing such scheme or artifice--
       ``(1) to defraud any health care benefit program; or
       ``(2) to obtain, by means of false or fraudulent pretenses, 
     representations, or promises, any of the money or property 
     owned by, or under the custody or control of, any health care 
     benefit program,

     shall be fined under this title or imprisoned not more than 
     10 years, or both. If the violation results in serious bodily 
     injury (as defined in section 1365 of this title), such 
     person shall be fined under this title or imprisoned not more 
     than 20 years, or both; and if the violation results in 
     death, such person shall be fined under this title, or 
     imprisoned for any term of years or for life, or both.
       ``(b) As used in this section, the term `health care 
     benefit program' means any public or private plan or contract 
     under which any medical benefit, item, or service is provided 
     to any individual, and includes any individual or entity who 
     is providing a medical benefit, item, or service for which 
     payment may be made under the plan or contract.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 63 of title 18, United States Code, is 
     amended by adding at the end the following:

``1347. Health care fraud.''

     SEC. 15123. THEFT OR EMBEZZLEMENT.

       (a) In General.--Chapter 31 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 669. Theft or embezzlement in connection with health 
       care

       ``(a) Whoever embezzles, steals, or otherwise without 
     authority willfully and unlawfully converts to the use of any 
     person other than the rightful owner, or intentionally 
     misapplies any of the moneys, funds, securities, premiums, 
     credits, property, or other assets of a health care benefit 
     program, shall be fined under this title or imprisoned not 
     more than 10 years, or both.
       ``(b) As used in this section, the term `health care 
     benefit program' has the meaning given such term in section 
     1347(b) of this title.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 31 of title 18, United States Code, is 
     amended by adding at the end the following:

``669. Theft or embezzlement in connection with health care.''.

     SEC. 15124. FALSE STATEMENTS.

       (a) In General.--Chapter 47 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 1035. False statements relating to health care matters

       ``(a) Whoever, in any matter involving a health care 
     benefit program, knowingly and willfully falsifies, conceals, 
     or covers up by any trick, scheme, or device a material fact, 
     or makes any false, fictitious, or fraudulent statements or 
     representations, or makes or uses any false writing or 
     document knowing the same to contain any false, fictitious, 
     or fraudulent statement or entry, shall be fined under this 
     title or imprisoned not more than 5 years, or both.
       ``(b) As used in this section, the term `health care 
     benefit program' has the meaning given such term in section 
     1347(b) of this title.''.
       ``(b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 47 of title 18, United States Code, is 
     amended by adding at the end the following new item:

``1035. False statements relating to health care matters.''.

     SEC. 15125. BRIBERY AND GRAFT.

       (a) In General.--Chapter 11 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 226. Bribery and graft in connection with health care

       ``(a) Whoever--
       ``(1) directly or indirectly, corruptly gives, offers, or 
     promises anything of value to a health care official, or 
     offers or promises to give anything of value to any other 
     person, or attempts to violate this subsection, with intent--
       ``(A) to influence any of the health care official's 
     actions, decisions, or duties relating to a health care 
     benefit program;
       ``(B) to influence such an official to commit or aid in the 
     committing, or collude in or allow, any fraud, or make 
     opportunity for the commission of any fraud, on a health care 
     benefit program; or
       ``(C) to induce such an official to engage in any conduct 
     in violation of the lawful duty of such official; or
       ``(2) being a health care official, directly or indirectly, 
     corruptly demands, seeks, receives, accepts, or agrees to 
     accept anything of value personally or for any other person 
     or entity, the giving of which violates paragraph (1) of this 
     subsection, or attempts to violate this subsection,

     shall be fined under this title or imprisoned not more than 
     15 years, or both.
       ``(b) Whoever--
       ``(1) otherwise than as provided by law for the proper 
     discharge of any duty, directly or indirectly gives, offers, 
     or promises anything of value to a health care official, for 
     or because of any of the health care official's actions, 
     decisions, or duties relating to a health care benefit 
     program, or attempts to violate this subsection; or
       ``(2) being a health care official, otherwise than as 
     provided by law for the proper discharge of any duty, 
     directly or indirectly, demands, seeks, receives, accepts or 
     agrees to accept anything of value personally or for any 
     other person or entity, the giving of which violates 
     paragraph (1) of this subsection, or attempts to violate this 
     subsection.

     shall be fined under this title, or imprisoned not more than 
     2 years, or both.
       ``(c) As used in this section--
       ``(1) the term `health care official'' means--
       ``(A) an administrator, officer, trustee, fiduciary, 
     custodian, counsel, agent, or employee of any health care 
     benefit program;
       ``(B) an officer, counsel, agent, or employee, of an 
     organization that provides services under contract to any 
     health care benefit program; or
       ``(C) an official, employee, or agent of an entity having 
     regulatory authority over any health care benefit program; 
     and
       ``(2) the term `health care benefit program' has the 
     meaning given such term in section 1347(b) of this title.''.
       (b) Clerical Amendment.--The table of chapters at the 
     beginning of chapter 11 of title 18, United States Code, is 
     amended by adding at the end the following new item:

``226. Bribery and graft in connection with health care.''.

     SEC. 15126. ILLEGAL REMUNERATION WITH RESPECT TO HEALTH CARE 
                   BENEFIT PROGRAMS.

       (a) In General.--Chapter 11 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 227. Illegal remuneration with respect to health care 
       benefit programs

       ``(a) Whoever knowingly and willfully solicits or receives 
     any remuneration (including any kickback, bribe, or rebate) 
     directly or indirectly, overtly or covertly, in cash or in 
     kind--
       ``(1) in return for referring any individual to a person 
     for the furnishing or arranging for the furnishing of any 
     item or service for which payment may be made in whole or in 
     part by any health care benefit program; or
       ``(2) in return for purchasing, leasing, ordering, or 
     arranging for or recommending purchasing, leasing, or 
     ordering any good, facility, service, or item for which 
     payment may be made in whole or in part by any health care 
     benefit program, or attempting to do so,

     shall be fined under this title or imprisoned for not more 
     than 5 years, or both.
       ``(b) Whoever knowingly and willfully offers or pays any 
     remuneration (including any kickback, bribe, or rebate) 
     directly or indirectly, overtly, or covertly, in cash or in 
     kind to any person to induce such person--
       ``(1) to refer an individual to a person for the furnishing 
     or arranging for the furnishing of any item or service for 
     which payment may be made in whole or in part by any health 
     benefit program; or
       ``(2) to purchase, lease, order, or arrange for or 
     recommend purchasing, leasing, or ordering any good, 
     facility, service, or item for which payment may be made in 
     whole or in part by any health benefit program or attempts to 
     do so,

      shall be fined under this title or imprisoned for not more 
     than 5 years, or both.
       ``(c) Subsections (a) and (b) shall not apply to--
       ``(1) a discount or other reduction in price obtained by a 
     provider of services or other entity under a health care 
     benefit program if the reduction in price is properly 
     disclosed and appropriately reflected in the costs claimed or 
     charges made by the provider or entity under a health care 
     benefit program;
       ``(2) any amount paid by an employer to an employee (who 
     has a bona fide employment relationship with such employer) 
     for employment in the provision of covered items or services 
     if the amount of the remuneration under the arrangement is 
     consistent with the fair market value of the services and is 
     not determined in a manner that takes into account (directly 
     or indirectly) the volume or value of any referrals;
       ``(3) any amount paid by a vendor of goods or services to a 
     person authorized to act as a purchasing agent for a group of 
     individuals or entities who are furnishing services 
     reimbursed under a health care benefit program if--
       ``(A) the person has a written contract, with each such 
     individual or entity, which specifies the amount to be paid 
     the person, which amount may be a fixed amount or a 
     percentage of the value of the purchases made by each such 
     individual or entity under the contract, and
       ``(B) in the case of an entity that is a provider of 
     services (as defined in section 1861(u) of the Social 
     Security Act, the person discloses (in such form and manner 
     as the Secretary of Health and Human Services requires) to 
     the entity and, upon request, to the Secretary the amount 
     received from each such vendor with respect to purchases 
     made by or on behalf of the entity;
       ``(4) a waiver of any coinsurance under part B of title 
     XVIII of the Social Security Act by a federally qualified 
     health care center with respect to an individual who 
     qualifies for subsidized services under a provision of the 
     Public Health Service Act; and
       ``(5) any payment practice specified by the Secretary of 
     Health and Human Services in regulations promulgated pursuant 
     to section 14(a) of the Medicare and Medicaid Patient and 
     Program Protection Act of 1987.
       ``(d) Any person injured in his business or property by 
     reason of a violation of this section or section 226 of this 
     title may sue there 

[[Page H 10411]]
     for in any appropriate United States district court and shall recover 
     threefold the damages such person sustains and the cost of 
     the suit, including a reasonable attorney's fee.
       ``(e) As used in this section, `health care benefit 
     program' has the meaning given such term in section 1347(b) 
     of this title.''.
       ``(b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 11 of title 18, United States Code, is 
     amended by adding at the end the following:

``227. Illegal remuneration with respect to health care benefit 
              programs.''.

       (c) Conforming Amendment.--Section 1128B of the Social 
     Security Act (42 U.S.C. 1320a--7b) is amended by striking 
     subsection (b).

     SEC. 15127. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF HEALTH 
                   CARE OFFENSES.

       ``(a) In General.--Chapter 73 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 1518. Obstruction of criminal investigations of health 
       care offenses

       ``(a) Whoever willfully prevents, obstructs, misleads, 
     delays or attempts to prevent, obstruct, mislead, or delay 
     the communication of information or records relating to a 
     violation of a health care offense to a criminal investigator 
     shall be fined under this title or imprisoned not more than 5 
     years, or both.
       ``(b) As used in this section the term `health care 
     offense' has the meaning given such term in section 24 of 
     this title.
       ``(c) As used in this section the term `criminal 
     investigator' means any individual duly authorized by a 
     department, agency, or armed force of the United States to 
     conduct or engage in investigations for prosecutions for 
     violations of health care offenses.''.
       ``(b) ``Clerical Amendment.--The table of sections at the 
     beginning of chapter 73 of title 18, United States Code, is 
     amended by adding at the end the following new item:

``1518. Obstruction of criminal investigations of health care 
              offenses.''.

     SEC. 15128. CIVIL PENALTIES FOR VIOLATIONS OF FEDERAL HEALTH 
                   CARE OFFENSES.

       (a) In General.--Chapter 63 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 1348. Civil penalties for violations of Federal health 
       care offenses

       ``The Attorney General may bring a civil action in the 
     appropriate United States district court against any person 
     who engages in conduct constituting a violation of Federal 
     health care offense, as that term is defined in section 24 of 
     this title and, upon proof of such conduct by a preponderance 
     of the evidence, such person shall be subject to a civil 
     penalty of not more than $50,000 for each violation or the 
     amount of compensation or proceeds which the person received 
     or offered for the prohibited conduct, whichever amount is 
     greater. The imposition of a civil penalty under this section 
     does not preclude any other criminal or civil statutory, 
     common law, or administrative remedy, which is available by 
     law to the United States or any other person.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     63 of title 18, United States Code, is amended by adding at 
     the end the following item:

``1348. Civil penalties for violations of Federal health care 
              offenses.''.

     SEC. 15129. INJUNCTIVE RELIEF RELATING TO HEALTH CARE 
                   OFFENSES.

       Section 1345(a)(1) of title 18, United States Code, is 
     amended--
       (1) by striking ``or'' at the end of subparagraph (A);
       (2) by inserting ``or'' at the end of subparagraph (B); and
       (3) by adding at the end the following:
       ``(C) committing or about to commit a Federal health care 
     offense (as defined in section 24 of this title).''.

     SEC. 15130. AUTHORIZED INVESTIGATIVE DEMAND PROCEDURES.

       (a) In General.--Chapter 233 of title 18, United States 
     Code, is amended by adding after section 3485 the following:

     ``Sec. 3486. Authorized investigative demand procedures

       ``(a) Authorization.--(1) In any investigation relating to 
     functions set forth in paragraph (2), the Attorney General or 
     the Director of the Federal Bureau of Investigation or their 
     designees may issue in writing and cause to be served a 
     summons compelling the attendance and testimony of witnesses 
     and requiring the production of any records (including any 
     books, papers, documents, electronic media, or other objects 
     or tangible things), which may be relevant to an authorized 
     law enforcement inquiry, that a person or legal entity may 
     possess or have care, custody, or control. The attendance of 
     witnesses and the production of records may be required from 
     any place in any State or in any territory or other place 
     subject to the jurisdiction of the United States at any 
     designated place of hearing; except that a witness shall not 
     be required to appear at any hearing more than 500 miles 
     distant from the place where he was served with a subpoena. 
     Witnesses summoned under this section shall be paid the same 
     fees and mileage that are paid witnesses in the courts of the 
     United States. A summons requiring the production of records 
     shall describe the objects required to be produced and 
     prescribe a return date within a reasonable period of time 
     within which the objects can be assembled and made 
     available.
       ``(2) Investigative demands utilizing an administrative 
     summons are authorized for:
       ``(A) Any investigation with respect to any act or activity 
     constituting an offense involving a Federal health care 
     offense as that term is defined in section 24 of title 18, 
     United States Code.
       ``(B) Any investigation, with respect to violations of 
     sections 1073 and 1074 of title 18, United States Code, or in 
     which an individual has been lawfully charged with a Federal 
     offense and such individual is avoiding prosecution or 
     custody or confinement after conviction of such offense or 
     attempt.
       ``(b) Service.--A subpoena issued under this section may be 
     served by any person designated in the subpoena to serve it. 
     Service upon a natural person may be made by personal 
     delivery of the subpoena to him. Service may be made upon a 
     domestic or foreign corporation or upon a partnership or 
     other unincorporated association which is subject to suit 
     under a common name, by delivering the subpoena to an 
     officer, to a managing or general agent, or to any other 
     agent authorized by appointment or by law to receive service 
     to process. The affidavit of the person serving the subpoena 
     entered on a true copy thereof by the person serving it shall 
     be proof of service.
       ``(c) Enforcement.--In the case of contumacy by or refusal 
     to obey a subpoena issued to any person, the Attorney General 
     may invoke the aid of any court of the United States within 
     the jurisdiction of which the investigation is carried on or 
     of which the subpoenaed person is an inhabitant, or in which 
     he carries on business or may be found, to compel compliance 
     with the subpoena. The court may issue an order requiring the 
     subpoenaed person to appear before the Attorney General to 
     produce records, if so ordered, or to give testimony touching 
     the matter under investigation. Any failure to obey the order 
     of the court may be punished by the court as a contempt 
     thereof. All process in any such case may be served in any 
     judicial district in which such person may be found.
       ``(d) Immunity From Civil Liability.--Notwithstanding any 
     Federal, State, or local law, any person, including officers, 
     agents, and employees, receiving a summons under this 
     section, who complies in good faith with the summons and thus 
     produces the materials sought, shall not be liable in any 
     court of any State or the United States to any customer or 
     other person for such production or for nondisclosure of that 
     production to the customer.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 223 of title 18, United States Code, is 
     amended by inserting after the item relating to section 3485 
     the following new item:

``3486. Authorized investigative demand procedures.''.

       (c) Conforming Amendment.--Section 1510(b)(3)(B) of title 
     18, United States Code, is amended by inserting ``or a 
     Federal Bureau of Investigation summons (issued under section 
     3486 of title 18),'' after ``subpoena''.

     SEC. 15131. GRAND JURY DISCLOSURE.

       Section 3322 of title 18, United States Code, is amended--
       (1) by redesignating subsections (c) and (d) as subsection 
     (d) and (e), respectively; and
       (2) by inseritng after subsection (b) the following:
       ``(c) A person who is privy to grand jury information 
     concerning a health care offense--
       ``(1) received in the course of duty as an attorney for the 
     Government; or
       ``(2) disclosed under rule 6(e)(3)(A)(ii) of the Federal 
     Rules of Criminal Procedure;

     may disclose that information to an attorney for the 
     Government to use in any civil investigation or proceeding 
     related to a Federal health care offense (as defined in 
     section 24 of this title).''.

     SEC. 15132. MISCELLANEOUS AMENDMENTS TO TITLE 18, UNITED 
                   STATES CODE.

       (a) Laundering of Monetary Instruments.--Section 1956(c)(7) 
     of title 18, United States Code, is amended by adding at the 
     end thereof the following:
       ``(F) Any act or activity constituting an offense involving 
     a Federal health care offense as that term is defined in 
     section 24 of title 18, United States Code.''.
       (b) Enhanced Penalties.--Section 2326(2) of title 18, 
     United States Code, is amended by striking ``sections that--
     '' and inserting ``or in the case of a Federal health care 
     offense as that term is defined in section 24 of this title, 
     that--''.
       (c) Authorization for Interception of Wire, Oral, or 
     Electronic Communications.--Section 2516(1)(c) of title 18, 
     United States Code is amended--
       (1) by inserting ``section 226 (bribery and graft in 
     connection with health care), section 227 (illegal 
     remunerations)'' after ``section 224 (bribery in sporting 
     contests),''; and
       (2) by inserting ``section 1347 (health care fraud)'' after 
     ``section 1344 (relating to bank fraud),''.
       (d) Definitions.--Section 1961(1) of title 18, United 
     States Code, is amended--
       (1) by inserting ``sections 226 and 227 (relating to 
     bribery and graft, and illegal remuneration in connection 
     with health care)'' after ``section 224 (relating to sports 
     bribery),'';
       (2) by inserting ``section 669 (relating to theft or 
     embezzlement in connection with health care)'' after 
     ``section 664 (relating to embezzlement from pension and 
     welfare funds),''; and
       (3) by inserting ``section 1347 (relating to health care 
     fraud)'' after ``section 1344 (relating to financial 
     institution fraud),''.

[[Page H 10412]]

       (e) Criminal Forfeiture.--Section 982(a) of title 18, 
     United States Code, is amended by adding at the end the 
     following new paragraph:
       ``(6) The court in imposing sentence on a person convicted 
     of a Federal health care offense as defined in section 24 of 
     this title, shall order that the offender forfeit to the 
     United States any real or personal property constituting or 
     derived from proceeds that the offender obtained directly or 
     indirectly as the result of the offense.''.
       (f) Rewards for Information Leading to Prosecution and 
     Conviction.--Section 3059(c)(1) of title 18, United States 
     Code, is amended by inserting ``or furnishes information 
     unknown to the Government relating to a possible prosecution 
     of a Federal health care offense as defined in section 24 of 
     this title, which results in a conviction'' before the period 
     at the end.

                     Subtitle C--Regulatory Relief

              PART 1--PHYSICIAN OWNERSHIP REFERRAL REFORM

     SEC. 15201. REPEAL OF PROHIBITIONS BASED ON COMPENSATION 
                   ARRANGEMENTS.

       (a) In General.--Section 1877(a)(2) (42 U.S.C. 
     1395nn(a)(2)) is amended by striking ``is--'' and all 
     that follows through ``equity,'' and inserting the 
     following: ``is (except as provided in subsection (c)) an 
     ownership or investment interest in the entity through 
     equity,''.
       (b) Conforming Amendments.--Section 1877 (42 U.S.C. 1395nn) 
     is amended as follows:
       (1) In subsection (b)--
       (A) in the heading, by striking ``to Both Ownership and 
     Compensation Arrangement Prohibitions'' and inserting ``Where 
     Financial Relationship Exists''; and
       (B) by redesignating paragraph (4) as paragraph (7).
       (2) In subsection (c)--
       (A) by amending the heading to read as follows: ``Exception 
     for Ownership or Investment Interest in Publicly Traded 
     Securities and Mutual Funds''; and
       (B) in the matter preceding paragraph (1), by striking 
     ``subsection (a)(2)(A)'' and inserting ``subsection (a)(2)''.
       (3) In subsection (d)--
       (A) by striking the matter preceding paragraph (1);
       (B) in paragraph (3), by striking ``paragraph (1)'' and 
     inserting ``paragraph (4)''; and
       (C) by redesignating paragraphs (1), (2), and (3) as 
     paragraphs (4), (5), and (6), and by transferring and 
     inserting such paragraphs after paragraph (3) of subsection 
     (b).
       (4) By striking subsection (e).
       (5) In subsection (f)(2)--
       (A) in the matter preceding paragraph (1), by striking 
     ``ownership, investment, and compensation'' and inserting 
     ``ownership and investment'';
       (B) in paragraph (2), by striking ``subsection (a)(2)(A)'' 
     and all that follows through ``subsection (a)(2)(B)),'' and 
     inserting ``subsection (a)(2),''; and
       (C) in paragraph (2), by striking ``or who have such a 
     compensation relationship with the entity''.
       (6) In subsection (h)--
       (A) by striking paragraphs (1), (2), and (3);
       (B) in paragraph (4)(A), by striking clauses (iv) and (vi);
       (C) in paragraph (4)(B), by striking ``rules.--'' and all 
     that follows through ``(ii) Faculty'' and inserting ``rules 
     for faculty''; and
       (D) by adding at the end of paragraph (4) the following new 
     subparagraph:
       ``(C) Member of a group.--A physician is a `member' of a 
     group if the physician is an owner or a bona fide employee, 
     or both, of the group.''.

     SEC. 15202. REVISION OF DESIGNATED HEALTH SERVICES SUBJECT TO 
                   PROHIBITION.

       (a) In General.--Section 1877(h)(6) (42 U.S.C. 
     1395nn(h)(6)) is amended by striking subparagraphs (B) 
     through (K) and inserting the following:
       ``(B) Parenteral and enteral nutrients, equipment, and 
     supplies.
       ``(C) Magnetic resonance imaging and computerized 
     tomography services.
       ``(D) Outpatient physical or occupational therapy 
     services.''.
       (b) Conforming Amendments.--
       (1) Section 1877(b)(2) (42 U.S.C. 1395nn(b)(2)) is amended 
     in the matter preceding subparagraph (A) by striking 
     ``services'' and all that follows through ``supplies)--'' and 
     inserting ``services--''.
       (2) Section 1877(h)(5)(C) (42 U.S.C. 1395nn(h)(5)(C)) is 
     amended--
       (A) by striking ``, a request by a radiologist for 
     diagnostic radiology services, and a request by a radiation 
     oncologist for radiation therapy,'' and inserting ``and a 
     request by a radiologist for magnetic resonance imaging or 
     for computerized tomography'', and
       (B) by striking ``radiologist, or radiation oncologist'' 
     and inserting ``or radiologist''.

     SEC. 15203. DELAY IN IMPLEMENTATION UNTIL PROMULGATION OF 
                   REGULATIONS.

       (a) In General.--Section 13562(b) of OBRA-1993 (42 U.S.C. 
     1395nn note) is amended--
       (1) in paragraph (1), by striking ``paragraph (2)'' and 
     inserting ``paragraphs (2) and (3)''; and
       (2) by adding at the end the following new paragraph:
       ``(3) Promulgation of regulations.--Notwithstanding 
     paragraphs (1) and (2), the amendments made by this section 
     shall not apply to any referrals made before the effective 
     date of final regulations promulgated by the Secretary of 
     Health and Human Services to carry out such amendments.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect as if included in the enactment of OBRA-
     1993.

     SEC. 15204. EXCEPTIONS TO PROHIBITION.

       (a) Revisions to Exception for In-office Ancillary 
     Services.--
       (1) Repeal of site-of-service requirement.--Section 1877 
     (42 U.S.C. 1395nn) is amended--
       (A) by amending subparagraph (A) of subsection (b)(2) to 
     read as follows:
       ``(A) that are furnished personally by the referring 
     physician, personally by a physician who is a member of the 
     same group practice as the referring physician, or personally 
     by individuals who are under the general supervision of the 
     physician or of another physician in the group practice, 
     and'', and
       (B) by adding at the end of subsection (h) the following 
     new paragraph:
       ``(7) General supervision.--An individual is considered to 
     be under the `general supervision' of a physician if the 
     physician (or group practice of which the physician is a 
     member) is legally responsible for the services performed by 
     the individual and for ensuring that the individual meets 
     licensure and certification requirements, if any, applicable 
     under other provisions of law, regardless of whether or not 
     the physician is physically present when the individual 
     furnishes an item or service.''.
       (2) Clarification of treatment of physician owners of group 
     practice.--Section 1877(b)(2)(B) (42 U.S.C. 1395nn(b)(2)(B)) 
     is amended by striking ``physician or such group practice'' 
     and inserting ``physician, such group practice, or the 
     physician owners of such group practice''.
       (3) Conforming amendment.--Section 1877(b)(2) (42 U.S.C. 
     1395nn(b)(2)) is amended by amending the heading to read as 
     follows: ``Ancillary services furnished personally or through 
     group practice.--''.
       (b) Clarification of Exception for Services Furnished in a 
     Rural Area.--Paragraph (5) of section 1877(b) (42 U.S.C. 
     1395nn(b)), as transferred by section 15201(b)(3)(C), is 
     amended by striking ``substantially all'' and inserting ``not 
     less than 75 percent''.
       (c) Revision of Exception for Certain Managed Care 
     Arrangements.--Section 1877(b)(3) (42 U.S.C. 1395nn(b)(3)) is 
     amended--
       (1) in the heading by inserting ``managed care 
     arrangements'' after ``Prepaid plans'';
       (2) in the matter preceding subparagraph (A), by striking 
     ``organization--'' and inserting ``organization, directly or 
     through contractual arrangements with other entities, to 
     individuals enrolled with the organization--'';
       (3) in subparagraph (A), by inserting ``or part C'' after 
     ``section 1876'';
       (4) by striking ``or'' at the end of subparagraph (C);
       (5) by striking the period at the end of subparagraph (D) 
     and inserting a comma; and
       (6) by adding at the end the following new subparagraphs:
       ``(E) with a contract with a State to provide services 
     under the State plan under title XIX (in accordance with 
     section 1903(m)) or a State MediGrant plan under title XXI; 
     or
       ``(F) which is a MedicarePlus organization under part C or 
     which provides or arranges for the provision of health care 
     items or services pursuant to a written agreement between the 
     organization and an individual or entity if the written 
     agreement places the individual or entity at substantial 
     financial risk for the cost or utilization of the items or 
     services which the individual or entity is obligated to 
     provide, whether through a withhold, capitation, incentive 
     pool, per diem payment, or any other similar risk arrangement 
     which places the individual or entity at substantial 
     financial risk.''.
       (d) New Exception for Shared Facility Services.--
       (1) In general.--Section 1877(b) (42 U.S.C. 1395nn(b)), as 
     amended by section 15201(b)(3)(C), is amended--
       (A) by redesignating paragraphs (4) through (7) as 
     paragraphs (5) through (8); and
       (B) by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) Shared facility services.--In the case of a 
     designated health service consisting of a shared facility 
     service of a shared facility--
       ``(A) that is furnished--
       ``(i) personally by the referring physician who is a shared 
     facility physician or personally by an individual directly 
     employed or under the general supervision of such a 
     physician,
       ``(ii) by a shared facility in a building in which the 
     referring physician furnishes substantially all of the 
     services of the physician that are unrelated to the 
     furnishing of shared facility services, and
       ``(iii) to a patient of a shared facility physician; and
       ``(B) that is billed by the referring physician or a group 
     practice of which the physician is a member.''.
       (2) Definitions.--Section 1877(h) (42 U.S.C. 1395nn(h)), as 
     amended by section 15201(b)(6), is amended by inserting 
     before paragraph (4) the following new paragraph:
       ``(1) Shared facility related definitions.--
       ``(A) Shared facility service.--The term `shared facility 
     service' means, with respect to a shared facility, a 
     designated health service furnished by the facility to 
     patients of shared facility physicians.

[[Page H 10413]]

       ``(B) Shared facility.--The term `shared facility' means an 
     entity that furnishes shared facility services under a shared 
     facility arrangement.
       ``(C) Shared facility physician.--The term `shared facility 
     physician' means, with respect to a shared facility, a 
     physician (or a group practice of which the physician is a 
     member) who has a financial relationship under a shared 
     facility arrangement with the facility.
       ``(D) Shared facility arrangement.--The term `shared 
     facility arrangement' means, with respect to the provision of 
     shared facility services in a building, a financial 
     arrangement--
       ``(i) which is only between physicians who are providing 
     services (unrelated to shared facility services) in the same 
     building,
       ``(ii) in which the overhead expenses of the facility are 
     shared, in accordance with methods previously determined by 
     the physicians in the arrangement, among the physicians in 
     the arrangement, and
       ``(iii) which, in the case of a corporation, is wholly 
     owned and controlled by shared facility physicians.''.
       (e) New Exception for Services Furnished in Communities 
     With No Alternative Providers.--Section 1877(b) (42 U.S.C. 
     1395nn(b)), as amended by section 15201(b)(3)(C) and 
     subsection (d)(1), is amended--
       (1) by redesignating paragraphs (5) through (8) as 
     paragraphs (6) through (9); and
       (2) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) No alternative providers in area.--In the case of a 
     designated health service furnished in any area with respect 
     to which the Secretary determines that individuals residing 
     in the area do not have reasonable access to such a 
     designated health service for which subsection (a)(1) does 
     not apply.''.
       (f) New Exception for Services Furnished in Ambulatory 
     Surgical Centers.--Section 1877(b) (42 U.S.C. 1395nn(b)), as 
     amended by section 15201(b)(3)(C), subsection (d)(1), and 
     subsection (e)(1), is amended--
       (1) by redesignating paragraphs (6) through (9) as 
     paragraphs (7) through (10); and
       (2) by inserting after paragraph (5) the following new 
     paragraph:
       ``(6) Services furnished in ambulatory surgical centers.--
     In the case of a designated health service furnished in an 
     ambulatory surgical center described in section 
     1832(a)(2)(F)(i).''.
       (g) New Exception for Services Furnished in Renal Dialysis 
     Facilities.--Section 1877(b) (42 U.S.C. 1395nn(b)), as 
     amended by section 15201(b)(3)(C), subsection (d)(1), 
     subsection (e)(1), and subsection (f), is amended--
       (1) by redesignating paragraphs (7) through (10) as 
     paragraphs (8) through (11); and
       (2) by inserting after paragraph (6) the following new 
     paragraph:
       ``(7) Services furnished in renal dialysis facilities.--In 
     the case of a designated health service furnished in a renal 
     dialysis facility under section 1881.''.
       (h) New Exception for Services Furnished in a Hospice.--
     Section 1877(b) (42 U.S.C. 1395nn(b)), as amended by section 
     15201(b)(3)(C), subsection (d)(1), subsection (e)(1), 
     subsection (f), and subsection (g), is amended--
       (1) by redesignating paragraphs (8) through (11) as 
     paragraphs (9) through (12); and
       (2) by inserting after paragraph (7) the following new 
     paragraph:
       ``(8) Services furnished by a hospice program.--In the case 
     of a designated health service furnished by a hospice program 
     under section 1861(dd)(2).''.
       (i) New Exception for Services Furnished in a Comprehensive 
     Outpatient Rehabilitation Facility.--Section 1877(b) (42 
     U.S.C. 1395nn(b)), as amended by section 15201(b)(3)(C), 
     subsection (d)(1), subsection (e)(1), subsection (f), 
     subsection (g), and subsection (h), is amended--
       (1) by redesignating paragraphs (9) through (12) as 
     paragraphs (10) through (13); and
       (2) by inserting after paragraph (8) the following new 
     paragraph:
       ``(9) Services furnished in a comprehensive outpatient 
     rehabilitation facility.--In the case of a designated health 
     service furnished in a comprehensive outpatient 
     rehabilitation facility (as defined in section 
     1861(cc)(2)).''.
       (i) Definition of Referral.--Section 1877(h)(5)(A) (42 
     U.S.C. 1395nn(h)(5)(A)) is amended--
       (1) by striking ``an item or service'' and inserting ``a 
     designated health service'', and
       (2) by striking ``the item or service'' and inserting ``the 
     designated health service''.

     SEC. 15205. REPEAL OF REPORTING REQUIREMENTS.

       Section 1877 (42 U.S.C. 1395nn) is amended--
       (1) by striking subsection (f); and
       (2) by striking subsection (g)(5).

     SEC. 15206. PREEMPTION OF STATE LAW.

       Section 1877 (42 U.S.C. 1395nn) is amended by adding at the 
     end the following new subsection:
       ``(i) Preemption of State Law.--This section preempts State 
     law to the extent State law is inconsistent with this 
     section.''.

     SEC. 15207. EFFECTIVE DATE.

       Except as provided in section 15203(b), the amendments made 
     by this part shall apply to referrals made on or after August 
     14, 1995, regardless of whether or not regulations are 
     promulgated to carry out such amendments.

                PART 2--OTHER MEDICARE REGULATORY RELIEF

     SEC. 15211. REPEAL OF MEDICARE AND MEDICAID COVERAGE DATA 
                   BANK.

       (a) In General.--Section 1144 (42 U.S.C. 1320b-14) is 
     repealed.
       (b) Conforming Amendments.--
       (1) Medicare.--Section 1862(b)(5) (42 U.S.C. 1395y(b)(5)) 
     is amended--
       (A) in subparagraph (B), by striking ``under--'' and all 
     that follows through the end and inserting ``subparagraph (A) 
     for purposes of carrying out this subsection.'', and
       (B) in subparagraph (C)(i), by striking ``subparagraph 
     (B)(i)'' and inserting ``subparagraph (B)''.
       (2) Medicaid.--Section 1902(a)(25)(A)(i) (42 U.S.C. 
     1396a(a)(25)(A)(i)) is amended by striking ``including the 
     use of'' and all that follows through ``any additional 
     measures''.
       (3) ERISA.--Section 101(f) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1021(f)) is repealed.
       (4) Data matches.--Section 552a(a)(8)(B) of title 5, United 
     States Code, is amended--
       (A) by adding ``; or'' at the end of clause (v),
       (B) by striking ``or'' at the end of clause (vi), and
       (C) by striking clause (vii).

     SEC. 15212. CLARIFICATION OF LEVEL OF INTENT REQUIRED FOR 
                   IMPOSITION OF SANCTIONS.

       (a) Clarification of Level of Knowledge Required for 
     Imposition of Civil Monetary Penalties.--
       (1) In general.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)) 
     is amended--
       (A) in paragraphs (1) and (2), by inserting ``knowingly'' 
     before ``presents'' each place it appears; and
       (B) in paragraph (3), by striking ``gives'' and inserting 
     ``knowingly gives or causes to be given''.
       (2) Definition of standard.--Section 1128A(i) (42 U.S.C. 
     1320a-7a(i)) is amended by adding at the end the following 
     new paragraph:
       ``(6) The term `should know' means that a person, with 
     respect to information--
       ``(A) acts in deliberate ignorance of the truth or falsity 
     of the information; or
       ``(B) acts in reckless disregard of the truth or falsity of 
     the information,
     and no proof of specific intent to defraud is required.''.
       (b) Clarification of Effect and Application of Safe Harbor 
     Exceptions.--For purposes of section 1128B(b)(3) of the 
     Social Security Act, the specification of any payment 
     practice in regulations promulgated pursuant to section 14(a) 
     of the Medicare and Medicaid Program and Patient Protection 
     Act of 1987 is--
       (1) solely for the purpose of adding additional exceptions 
     to the types of conduct which are not subject to an anti-
     kickback penalty under such section and not for the purpose 
     of limiting the scope of such exceptions; and
       (2) for the purpose of prescribing criteria for qualifying 
     for such an exception notwithstanding the intent of the party 
     involved.
       (c) Limiting Imposition of Anti-kickback Penalties to 
     Actions With Significant Purpose to Induce Referrals.--
     Section 1128B(b)(2) (42 U.S.C. 1320a-7b(b)(2)) is amended in 
     the matter preceding subparagraph (A) by striking ``to 
     induce'' and inserting ``for the significant purpose of 
     inducing''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to acts or omissions occurring on or after 
     January 1, 1996.

     SEC. 15213. ADDITIONAL EXCEPTION TO ANTI-KICKBACK PENALTIES 
                   FOR MANAGED CARE ARRANGEMENTS.

       (a) In General.--Section 1128B(b)(3) (42 U.S.C. 1320a-
     7b(b)(3)) is amended--
       (1) by striking ``and'' at the end of subparagraph (D);
       (2) by striking the period at the end of subparagraph (E) 
     and inserting ``; and''; and
       (3) by adding at the end the following new subparagraph:
       ``(F) any remuneration between an organization and an 
     individual or entity providing services pursuant to a written 
     agreement between the organization and the individual or 
     entity if the organization is a MedicarePlus organization 
     under part C of title XVIII or if the written agreement 
     places the individual or entity at substantial financial risk 
     for the cost or utilization of the items or services which 
     the individual or entity is obligated to provide, whether 
     through a withhold, capitation, incentive pool, per diem 
     payment, or any other similar risk arrangement which places 
     the individual or entity at substantial financial risk.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to acts or omissions occurring on or after 
     January 1, 1996.

     SEC. 15214. SOLICITATION AND PUBLICATION OF MODIFICATIONS TO 
                   EXISTING SAFE HARBORS AND NEW SAFE HARBORS.

       (a) In General.--
       (1) Solicitations.--Not later than January 1, 1996, and not 
     less than annually thereafter, the Secretary of Health and 
     Human Services shall publish a notice in the Federal Register 
     soliciting proposals, which will be accepted during a 60-day 
     period, for--
       (A) modifications to existing safe harbors issued pursuant 
     to section 14(a) of the Medicare and Medicaid Patient and 
     Program Protection Act of 1987;
       (B) additional safe harbors specifying payment practices 
     that shall not be treated as a criminal offense under section 
     1128B(b) of the Social Security Act and shall not serve as 
     the basis for an exclusion under section 1128(b)(7) of such 
     Act; and
       (C) special fraud alerts to be issued pursuant to section 
     15101(c).

[[Page H 10414]]

       (2) Publication of proposed modifications and proposed 
     additional safe harbors.--Not later than 120 days after 
     receiving the proposals described in subparagraphs (A) and 
     (B) of paragraph (1), the Secretary, after considering such 
     proposals in consultation with the Attorney General, shall 
     publish in the Federal Register proposed modifications to 
     existing safe harbors and proposed additional safe harbors, 
     if appropriate, with a 60-day comment period. After 
     considering any public comments received during this period, 
     the Secretary shall issue final rules modifying the existing 
     safe harbors and establishing new safe harbors, as 
     appropriate.
       (3) Report.--The Inspector General shall, in an annual 
     report to Congress or as part of the year-end semiannual 
     report required by section 5 of the Inspector General Act of 
     1978, describe the proposals received under subparagraphs (A) 
     and (B) of paragraph (1) and explain which proposals were 
     included in the publication described in paragraph (2), which 
     proposals were not included in that publication, and the 
     reasons for the rejection of the proposals that were not 
     included.
       (b) Criteria for Modifying and Establishing Safe Harbors.--
     In modifying and establishing safe harbors under subsection 
     (a)(2), the Secretary may consider the extent to which 
     providing a safe harbor for the specified payment practice 
     may result in any of the following:
       (1) An increase or decrease in access to health care 
     services.
       (2) An increase or decrease in the quality of health care 
     services.
       (3) An increase or decrease in patient freedom of choice 
     among health care providers.
       (4) An increase or decrease in competition among health 
     care providers.
       (5) An increase or decrease in the cost to health care 
     programs of the Federal Government.
       (6) An increase or decrease in the potential 
     overutilization of health care services.
       (7) Any other factors the Secretary deems appropriate in 
     the interest of preventing fraud and abuse in health care 
     programs of the Federal Government.

     SEC. 15215. ISSUANCE OF ADVISORY OPINIONS UNDER TITLE XI.

       (a) In General.--Title XI (42 U.S.C. 1301 et seq.), as 
     amended by section 15104(a), is amended by inserting after 
     section 1129 the following new section:


                          ``advisory opinions

       ``Sec. 1130. (a) Issuance of Advisory Opinions.--The 
     Secretary shall issue written advisory opinions as provided 
     in this section.
       ``(b) Matters Subject to Advisory Opinions.--The Secretary 
     shall issue advisory opinions as to the following matters:
       ``(1) What constitutes prohibited remuneration within the 
     meaning of section 1128B(b).
       ``(2) Whether an arrangement or proposed arrangement 
     satisfies the criteria set forth in section 1128B(b)(3) for 
     activities which do not result in prohibited remuneration.
       ``(3) Whether an arrangement or proposed arrangement 
     satisfies the criteria which the Secretary has established, 
     or shall establish by regulation for activities which do not 
     result in prohibited remuneration.
       ``(4) What constitutes an inducement to reduce or limit 
     services to individuals entitled to benefits under title 
     XVIII or title XIX or title XXI within the meaning of section 
     1128B(b).
       ``(5) Whether any activity or proposed activity constitutes 
     grounds for the imposition of a sanction under section 1128, 
     1128A, or 1128B.
       ``(c) Matters Not Subject to Advisory Opinions.--Such 
     advisory opinions shall not address the following matters:
       ``(1) Whether the fair market value shall be, or was paid 
     or received for any goods, services or property.
       ``(2) Whether an individual is a bona fide employee within 
     the requirements of section 3121(d)(2) of the Internal 
     Revenue Code of 1986.
       ``(d) Effect of Advisory Opinions.--
       ``(1) Binding as to secretary and parties involved.--Each 
     advisory opinion issued by the Secretary shall be binding as 
     to the Secretary and the party or parties requesting the 
     opinion.
       ``(2) Failure to seek opinion.--The failure of a party to 
     seek an advisory opinion may not be introduced into evidence 
     to prove that the party intended to violate the provisions of 
     sections 1128, 1128A, or 1128B.
       ``(e) Regulations.--
       ``(1) In general.--Not later than 180 days after the date 
     of the enactment of this section, the Secretary shall issue 
     regulations to carry out this section. Such regulations shall 
     provide for--
       ``(A) the procedure to be followed by a party applying for 
     an advisory opinion;
       ``(B) the procedure to be followed by the Secretary in 
     responding to a request for an advisory opinion;
       ``(C) the interval in which the Secretary shall respond;
       ``(D) the reasonable fee to be charged to the party 
     requesting an advisory opinion; and
       ``(E) the manner in which advisory opinions will be made 
     available to the public.
       ``(2) Specific contents.--Under the regulations promulgated 
     pursuant to paragraph (1)--
       ``(A) the Secretary shall be required to respond to a party 
     requesting an advisory opinion by not later than 30 days 
     after the request is received; and
       ``(B) the fee charged to the party requesting an advisory 
     opinion shall be equal to the costs incurred by the Secretary 
     in responding to the request.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to requests for advisory opinions made on or 
     after January 1, 1996.

     SEC. 15216. PRIOR NOTICE OF CHANGES IN BILLING AND CLAIMS 
                   PROCESSING REQUIREMENTS FOR PHYSICIANS' 
                   SERVICES.

       Except as may be specifically provided by Congress, the 
     Secretary of Health and Human Services may not implement any 
     change in the requirements imposed on the billing and 
     processing of claims for payment for physicians' services 
     under part B of the medicare program unless the Secretary 
     notifies the individuals furnishing such services of the 
     change not later than 120 days before the effective date of 
     the change.

               PART 3--PROMOTING PHYSICIAN SELF-POLICING

     SEC. 15221. EXEMPTION FROM ANTITRUST LAWS FOR CERTAIN 
                   ACTIVITIES OF MEDICAL SELF-REGULATORY ENTITIES.

       (a) Exemption Described.--An activity relating to the 
     provision of health care services shall be exempt from the 
     antitrust laws, and any State law similar to the antitrust 
     laws, if the activity is within the safe harbor described in 
     subsection (b).
       (b) Safe Harbor for Activities of Medical Self-Regulatory 
     Entities.--
       (1) In general.--The safe harbor referred to in subsection 
     (a) is, subject to paragraph (2), any activity of a medical 
     self-regulatory entity relating to standard setting or 
     standard enforcement activities that are designed to promote 
     the quality of health care services provided to patients.
       (2) Exception.--No activity of a medical self-regulatory 
     entity may be deemed to fall under the safe harbor 
     established under paragraph (1) if the activity--
       (A) is conducted for purposes of financial gain, or
       (B) interferes with the provision of health care services 
     by any health care provider who is not a member of the 
     specific profession which is subject to the authority of the 
     medical self-regulatory entity.
       (c) Definitions.--For purposes of this section:
       (1) Antitrust laws.--The term ``antitrust laws'' has the 
     meaning given it in subsection (a) of the first section of 
     the Clayton Act (15 U.S.C. 12(a)), except that such term 
     includes section 5 of the Federal Trade Commission Act (15 
     U.S.C. 45) to the extent such section applies to unfair 
     methods of competition.
       (2) Health benefit plan.--The term ``health benefit plan'' 
     means--
       (A) a hospital or medical expense incurred policy or 
     certificate,
       (B) a hospital or medical service plan contract,
       (C) a health maintenance subscriber contract,
       (D) a multiple employer welfare arrangement or employee 
     benefit plan (as defined under the Employee Retirement Income 
     Security Act of 1974), or
       (E) a MedicarePlus product (offered under part C of title 
     XVIII of the Social Security Act),

     that provides benefits with respect to health care services.
       (3) Health care service.--The term ``health care service'' 
     means any service for which payment may be made under a 
     health benefit plan including services related to the 
     delivery or administration of such service.
       (4) Medical self-regulatory entity.--The term ``medical 
     self-regulatory entity'' means a medical society or 
     association, a specialty board, a recognized accrediting 
     agency, or a hospital medical staff, and includes the 
     members, officers, employees, consultants, and volunteers or 
     committees of such an entity.
       (5) Health care provider.--The term ``health care 
     provider'' means any individual or entity that is engaged in 
     the delivery of health care services in a State and that is 
     required by State law or regulation to be licensed or 
     certified by the State to engage in the delivery of such 
     services in the State.
       (6) Standard setting or standard enforcement activities.--
     The term ``standard setting or standard enforcement 
     activities'' means--
       (A) accreditation of health care practitioners, health care 
     providers, medical education institutions, or medical 
     education programs,
       (B) technology assessment and risk management activities,
       (C) the development and implementation of practice 
     guidelines or practice parameters, or
       (D) official peer review proceedings undertaken by a 
     hospital medical staff (or committee thereof) or a medical 
     society or association for purposes of evaluating the 
     professional conduct or quality of health care provided by a 
     medical professional.
                  Subtitle D--Medical Liability Reform

                       PART 1--GENERAL PROVISIONS

     SEC. 15301. FEDERAL REFORM OF HEALTH CARE LIABILITY ACTIONS.

       (a) Applicability.--This subtitle shall apply with respect 
     to any health care liability action brought in any State or 
     Federal court, except that this subtitle shall not apply to--
       (1) an action for damages arising from a vaccine-related 
     injury or death to the extent that title XXI of the Public 
     Health Service Act applies to the action, or

[[Page H 10415]]

       (2) an action under the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1001 et seq.).
       (b) Preemption.--This subtitle shall preempt any State law 
     to the extent such law is inconsistent with the limitations 
     contained in this subtitle. This subtitle shall not preempt 
     any State law that provides for defenses or places 
     limitations on a person's liability in addition to those 
     contained in this subtitle or otherwise imposes greater 
     restrictions than those provided in this subtitle.
       (c) Effect on Sovereign Immunity and Choice of Law or 
     Venue.--Nothing in subsection (b) shall be construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by any State under any provision of law;
       (2) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (3) affect the applicability of any provision of the 
     Foreign Sovereign Immunities Act of 1976;
       (4) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or a citizen of a foreign 
     nation; or
       (5) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss a claim of a 
     foreign nation or of a citizen of a foreign nation on the 
     ground of inconvenient forum.
       (d) Amount in Controversy.--In an action to which this 
     subtitle applies and which is brought under section 1332 of 
     title 28, United States Code, the amount of noneconomic 
     damages or punitive damages, and attorneys' fees or costs, 
     shall not be included in determining whether the matter in 
     controversy exceeds the sum or value of $50,000.
       (e) Federal Court Jurisdiction Not Established on Federal 
     Question Grounds.--Nothing in this subtitle shall be 
     construed to establish any jurisdiction in the district 
     courts of the United States over health care liability 
     actions on the basis of section 1331 or 1337 of title 28, 
     United States Code.

     SEC. 15302. DEFINITIONS.

       As used in this subtitle:
       (1) Actual damages.--The term ``actual damages'' means 
     damages awarded to pay for economic loss.
       (2) Alternative dispute resolution system; adr.--The term 
     ``alternative dispute resolution system'' or ``ADR'' means a 
     system established under Federal or State law that provides 
     for the resolution of health care liability claims in a 
     manner other than through health care liability actions.
       (3) Claimant.--The term ``claimant'' means any person who 
     brings a health care liability action and any person on whose 
     behalf such an action is brought. If such action is brought 
     through or on behalf of an estate, the term includes the 
     claimant's decedent. If such action is brought through or on 
     behalf of a minor or incompetent, the term includes the 
     claimant's legal guardian.
       (4) Clear and convincing evidence.--The term ``clear and 
     convincing evidence'' is that measure or degree of proof that 
     will produce in the mind of the trier of fact a firm belief 
     or conviction as to the truth of the allegations sought to be 
     established. Such measure or degree of proof is more than 
     that required under preponderance of the evidence but less 
     than that required for proof beyond a reasonable doubt.
       (5) Collateral source payments.--The term ``collateral 
     source payments'' means any amount paid or reasonably likely 
     to be paid in the future to or on behalf of a claimant, or 
     any service, product, or other benefit provided or reasonably 
     likely to be provided in the future to or on behalf of a 
     claimant, as a result of an injury or wrongful death, 
     pursuant to--
       (A) any State or Federal health, sickness, income-
     disability, accident or workers' compensation Act;
       (B) any health, sickness, income-disability, or accident 
     insurance that provides health benefits or income-disability 
     coverage;
       (C) any contract or agreement of any group, organization, 
     partnership, or corporation to provide, pay for, or reimburse 
     the cost of medical, hospital, dental, or income disability 
     benefits; and
       (D) any other publicly or privately funded program.
       (6) Drug.--The term ``drug'' has the meaning given such 
     term in section 201(g)(1) of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 321(g)(1)).
       (7) Economic loss.--The term ``economic loss'' means any 
     pecuniary loss resulting from injury (including the loss of 
     earnings or other benefits related to employment, medical 
     expense loss, replacement services loss, loss due to death, 
     burial costs, and loss of business or employment 
     opportunities), to the extent recovery for such loss is 
     allowed under applicable State law.
       (8) Harm.--The term ``harm'' means any legally cognizable 
     wrong or injury for which punitive damages may be imposed.
       (9) Health benefit plan.--The term ``health benefit plan'' 
     means--
       (A) a hospital or medical expense incurred policy or 
     certificate,
       (B) a hospital or medical service plan contract,
       (C) a health maintenance subscriber contract, or
       (D) a MedicarePlus product (offered under part C of title 
     XVIII of the Social Security Act),
     that provides benefits with respect to health care services.
       (10) Health care liability action.--The term ``health care 
     liability action'' means a civil action brought in a State or 
     Federal court against a health care provider, an entity which 
     is obligated to provide or pay for health benefits under any 
     health benefit plan (including any person or entity acting 
     under a contract or arrangement to provide or administer any 
     health benefit), or the manufacturer, distributor, supplier, 
     marketer, promoter, or seller of a medical product, in which 
     the claimant alleges a claim (including third party claims, 
     cross claims, counter claims, or distribution claims) based 
     upon the provision of (or the failure to provide or pay for) 
     health care services or the use of a medical product, 
     regardless of the theory of liability on which the claim is 
     based or the number of plaintiffs, defendants, or causes of 
     action.
       (11) Health care liability claim.--The term ``health care 
     liability claim'' means a claim in which the claimant alleges 
     that injury was caused by the provision of (or the failure to 
     provide) health care services.
       (12) Health care provider.--The term ``health care 
     provider'' means any person that is engaged in the delivery 
     of health care services in a State and that is required by 
     the laws or regulations of the State to be licensed or 
     certified by the State to engage in the delivery of such 
     services in the State.
       (13) Health care service.--The term ``health care service'' 
     means any service for which payment may be made under a 
     health benefit plan including services related to the 
     delivery or administration of such service.
       (14) Medical device.--The term ``medical device'' has the 
     meaning given such term in section 201(h) of the Federal 
     Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)).
       (15) Noneconomic damages.--The term ``noneconomic damages'' 
     means damages paid to an individual for pain and suffering, 
     inconvenience, emotional distress, mental anguish, loss of 
     consortium, injury to reputation, humiliation, and other 
     nonpecuniary losses.
       (16) Person.--The term ``person'' means any individual, 
     corporation, company, association, firm, partnership, 
     society, joint stock company, or any other entity, including 
     any governmental entity.
       (17) Product seller.--
       (A) In general.--Subject to subparagraph (B), the term 
     ``product seller'' means a person who, in the course of a 
     business conducted for that purpose--
       (i) sells, distributes, rents, leases, prepares, blends, 
     packages, labels, or is otherwise involved in placing, a 
     product in the stream of commerce, or
       (ii) installs, repairs, or maintains the harm-causing 
     aspect of a product.
       (B) Exclusion.--Such term does not include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services in any case in 
     which the sale or use of a product is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who--

       (I) acts in only a financial capacity with respect to the 
     sale of a product; or
       (II) leases a product under a lease arrangement in which 
     the selection, possession, maintenance, and operation of the 
     product are controlled by a person other than the lessor.

       (18) Punitive damages.--The term ``punitive damages'' means 
     damages awarded against any person not to compensate for 
     actual injury suffered, but to punish or deter such person or 
     others from engaging in similar behavior in the future.
       (19) State.--The term ``State'' means each of the several 
     States, the District of Columbia, Puerto Rico, the Virgin 
     Islands, Guam, American Samoa, the Northern Mariana Islands, 
     and any other territory or possession of the United States.

     SEC. 15303. EFFECTIVE DATE.

       This subtitle will apply to any health care liability 
     action brought in a Federal or State court and to any health 
     care liability claim subject to an alternative dispute 
     resolution system, that is initiated on or after the date of 
     enactment of this subtitle, except that any health care 
     liability claim or action arising from an injury occurring 
     prior to the date of enactment of this subtitle shall be 
     governed by the applicable statute of limitations provisions 
     in effect at the time the injury occurred.

      PART 2--UNIFORM STANDARDS FOR HEALTH CARE LIABILITY ACTIONS

     SEC. 15311. STATUTE OF LIMITATIONS.

       A health care liability action may not be brought after the 
     expiration of the 2-year period that begins on the date on 
     which the alleged injury that is the subject of the action 
     was discovered or should reasonably have been discovered, but 
     in no case after the expiration of the 5-year period that 
     begins on the date the alleged injury occurred.

     SEC. 15312. CALCULATION AND PAYMENT OF DAMAGES.

       (a) Treatment of Noneconomic Damages.--
       (1) Limitation on noneconomic damages.--The total amount of 
     noneconomic damages that may be awarded to a claimant for 
     losses resulting from the injury which is the subject of a 
     health care liability action may not exceed $250,000, 
     regardless of the number of parties against whom the action 
     is brought or the number of actions brought with respect to 
     the injury.
       (2) Joint and several liability.--In any health care 
     liability action brought in State or Federal court, a 
     defendant shall be liable 

[[Page H 10416]]
     only for the amount of noneconomic damages attributable to such 
     defendant in direct proportion to such defendant's share of 
     fault or responsibility for the claimant's actual damages, as 
     determined by the trier of fact. In all such cases, the 
     liability of a defendant for noneconomic damages shall be 
     several and not joint.
       (b) Treatment of Punitive Damages.--
       (1) General rule.--Punitive damages may, to the extent 
     permitted by applicable State law, be awarded in any health 
     care liability action for harm in any Federal or State court 
     against a defendant if the claimant establishes by clear and 
     convincing evidence that the harm suffered was the result of 
     conduct--
       (A) specifically intended to cause harm, or
       (B) conduct manifesting a conscious, flagrant indifference 
     to the rights or safety of others.
       (2) Proportional awards.--The amount of punitive damages 
     that may be awarded in any health care liability action 
     subject to this subtitle shall not exceed 3 times the amount 
     of damages awarded to the claimant for economic loss, or 
     $250,000, whichever is greater. This paragraph shall be 
     applied by the court and shall not be disclosed to the jury.
       (3) Applicability.--This subsection shall apply to any 
     health care liability action brought in any Federal or 
     State court on any theory where punitive damages are 
     sought. This subsection does not create a cause of action 
     for punitive damages. This subsection does not preempt or 
     supersede any State or Federal law to the extent that such 
     law would further limit the award of punitive damages.
       (4) Bifurcation.--At the request of any party, the trier of 
     fact shall consider in a separate proceeding whether punitive 
     damages are to be awarded and the amount of such award. If a 
     separate proceeding is requested, evidence relevant only to 
     the claim of punitive damages, as determined by applicable 
     State law, shall be inadmissible in any proceeding to 
     determine whether actual damages are to be awarded.
       (5) Drugs and devices.--
       (A) In general.--(i) Punitive damages shall not be awarded 
     against a manufacturer or product seller of a drug or medical 
     device which caused the claimant's harm where--
       (I) such drug or device was subject to premarket approval 
     by the Food and Drug Administration with respect to the 
     safety of the formulation or performance of the aspect of 
     such drug or device which caused the claimant's harm, or the 
     adequacy of the packaging or labeling of such drug or device 
     which caused the harm, and such drug, device, packaging, or 
     labeling was approved by the Food and Drug Administration; or
       (II) the drug is generally recognized as safe and effective 
     pursuant to conditions established by the Food and Drug 
     Administration and applicable regulations, including 
     packaging and labeling regulations.
       (ii) Clause (i) shall not apply in any case in which the 
     defendant, before or after premarket approval of a drug or 
     device--
       (I) intentionally and wrongfully withheld from or 
     misrepresented to the Food and Drug Administration 
     information concerning such drug or device required to be 
     submitted under the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 301 et seq.) or section 351 of the Public Health 
     Service Act (42 U.S.C. 262) that is material and relevant to 
     the harm suffered by the claimant, or
       (II) made an illegal payment to an official or employee of 
     the Food and Drug Administration for the purpose of securing 
     or maintaining approval of such drug or device.
       (B) Packaging.--In a health care liability action for harm 
     which is alleged to relate to the adequacy of the packaging 
     or labeling of a drug which is required to have tamper-
     resistant packaging under regulations of the Secretary of 
     Health and Human Services (including labeling regulations 
     related to such packaging), the manufacturer or product 
     seller of the drug shall not be held liable for punitive 
     damages unless such packaging or labeling is found by the 
     court by clear and convincing evidence to be substantially 
     out of compliance with such regulations.
       (c) Periodic Payments for Future Losses.--
       (1) General rule.--In any health care liability action in 
     which the damages awarded for future economic and noneconomic 
     loss exceeds $50,000, a person shall not be required to pay 
     such damages in a single, lump-sum payment, but shall be 
     permitted to make such payments periodically based on when 
     the damages are found likely to occur, as such payments are 
     determined by the court.
       (2) Finality of judgment.--The judgment of the court 
     awarding periodic payments under this subsection may not, in 
     the absence of fraud, be reopened at any time to contest, 
     amend, or modify the schedule or amount of the payments.
       (3) Lump-sum settlements.--This subsection shall not be 
     construed to preclude a settlement providing for a single, 
     lump-sum payment.
       (d) Treatment of Collateral Source Payments.--
       (1) Introduction into evidence.--In any health care 
     liability action, any defendant may introduce evidence of 
     collateral source payments. If any defendant elects to 
     introduce such evidence, the claimant may introduce evidence 
     of any amount paid or contributed or reasonably likely to be 
     paid or contributed in the future by or on behalf of the 
     claimant to secure the right to such collateral source 
     payments.
       (2) No subrogation.--No provider of collateral source 
     payments shall recover any amount against the claimant or 
     receive any lien or credit against the claimant's recovery or 
     be equitably or legally subrogated the right of the claimant 
     in a health care liability action.
       (3) Application to settlements.--This subsection shall 
     apply to an action that is settled as well as an action that 
     is resolved by a fact finder.

     SEC. 15313. ALTERNATIVE DISPUTE RESOLUTION.

       Any ADR used to resolve a health care liability action or 
     claim shall contain provisions relating to statute of 
     limitations, non-economic damages, joint and several 
     liability, punitive damages, collateral source rule, and 
     periodic payments which are identical to the provisions 
     relating to such matters in this subtitle.
     Subtitle E--Teaching Hospitals and Graduate Medical Education

  PART 1--TEACHING HOSPITAL AND GRADUATE MEDICAL EDUCATION TRUST FUND

     SEC. 15401. ESTABLISHMENT OF FUND; PAYMENTS TO TEACHING 
                   HOSPITALS.

       The Social Security Act (42 U.S.C. 300 et seq.) is amended 
     by adding after title XXI the following title:

 ``TITLE XXII--TEACHING HOSPITAL AND GRADUATE MEDICAL EDUCATION TRUST 
                                  FUND

                    ``Part A--Establishment of Fund

     ``SEC. 2201. ESTABLISHMENT OF FUND.

       ``(a) In General.--There is established in the Treasury of 
     the United States a fund to be known as the Teaching Hospital 
     and Graduate Medical Education Trust Fund (in this title 
     referred to as the `Fund'), consisting of amounts 
     appropriated to the Fund in subsection (d) and subsection 
     (e)(3), amounts transferred to the Fund under section 
     1886(j), and such gifts and bequests as may be deposited in 
     the Fund pursuant to subsection (f). Amounts in the Fund are 
     available until expended.
       ``(b) Expenditures From Fund.--Amounts in the Fund are 
     available to the Secretary for making payments under section 
     2211.
       ``(c) Accounts in Fund.--There are established within the 
     Fund the following accounts:
       ``(1) The Indirect-Costs Medical Education Account.
       ``(2) The Medicare Direct-Costs Medical Education Account.
       ``(3) The General Direct-Costs Medical Education Account.
       ``(d) General Transfers to Fund.--
       ``(1) In general.--For fiscal year 1997 and each subsequent 
     fiscal year, there are appropriated to the Fund (effective on 
     the applicable date under paragraph (2)), out of any money in 
     the Treasury not otherwise appropriated, the following 
     amounts (as applicable to the fiscal year involved):
       ``(A) For fiscal year 1997, $1,300,000,000.
       ``(B) For fiscal year 1998, $1,500,000,000.
       ``(C) For fiscal year 1999, $2,300,000,000.
       ``(D) For fiscal year 2000, $3,100,000,000.
       ``(E) For fiscal year 2001, $3,600,000,000.
       ``(F) For fiscal year 2002, $4,000,000,000.
       ``(G) For fiscal year 2003 and each subsequent fiscal year, 
     the greater of the amount appropriated for the preceding 
     fiscal year or an amount equal to the product of--
       ``(i) the amount appropriated for the preceding fiscal 
     year; and
       ``(ii) 1 plus the percentage increase in the nominal gross 
     domestic product for the one-year period ending upon July 1 
     of such preceding fiscal year.
       ``(2) Effective date for annual appropriation.--For 
     purposes of paragraph (1) (and for purposes of section 
     2221(a)(1), and subsections (b)(1)(A) and (c)(1)(A) of 
     section 2231)), the applicable date for a fiscal year is the 
     first day of the fiscal year, exclusive of Saturdays, 
     Sundays, and Federal holidays.
       ``(3) Allocation among certain accounts.--Of the amount 
     appropriated in paragraph (1) for a fiscal year--
       ``(A) there shall be allocated to the Indirect-Costs 
     Medical Education Account the percentage determined under 
     paragraph (4)(B); and
       ``(B) there shall be allocated to the General Direct-Costs 
     Medical Education Account the percentage determined under 
     paragraph (4)(C).
       ``(4) Determination of percentages.--The Secretary of 
     Health and Human Services, acting through the Administrator 
     of the Health Care Financing Administration, shall determine 
     the following:
       ``(A) The total amount of payments that were made under 
     subsections (d)(5)(B) and (h) of section 1886 for fiscal year 
     1994.
       ``(B) The percentage of such total that was constituted by 
     payments under subsection (d)(5)(B) of such section.
       ``(C) The percentage of such total that was constituted by 
     payments under subsection (h) of such section.
       ``(e) Investment.--
       ``(1) In general.--The Secretary of the Treasury shall 
     invest such amounts of the Fund as such Secretary determines 
     are not required to meet current withdrawals from the Fund. 
     Such investments may be made only in interest-bearing 
     obligations of the United States. For such purpose, such 
     obligations may be acquired on original issue at the issue 
     price, or by purchase of outstanding obligations at the 
     market price.
       ``(2) Sale of obligations.--Any obligation acquired by the 
     Fund may be sold by the Secretary of the Treasury at the 
     market price.

[[Page H 10417]]

       ``(3) Availability of income.--Any interest derived from 
     obligations acquired by the Fund, and proceeds from any sale 
     or redemption of such obligations, are hereby appropriated to 
     the Fund.
       ``(f) Acceptance of Gifts and Bequests.--The Fund may 
     accept on behalf of the United States money gifts and 
     bequests made unconditionally to the Fund for the benefit of 
     the Fund or any activity financed through the Fund.

                ``Part B--Payments to Teaching Hospitals

                  ``Subpart 1--Requirement of Payments

     ``SEC. 2211. FORMULA PAYMENTS TO TEACHING HOSPITALS.

       ``(a) In General.--Subject to subsection (d), in the case 
     of each teaching hospital that in accordance with subsection 
     (b) submits to the Secretary a payment document for fiscal 
     year 1997 or any subsequent fiscal year, the Secretary shall 
     make payments for the year to the teaching hospital for the 
     costs of operating approved medical residency training 
     programs. Such payments shall be made from the Fund, and the 
     total of the payments to the hospital for the fiscal year 
     shall equal the sum of the following:
       ``(1) An amount determined under section 2221 (relating to 
     the indirect costs of graduate medical education).
       ``(2) An amount determined under section 2231 (relating to 
     the direct costs of graduate medical education).
       ``(b) Payment Document.--For purposes of subsection (a), a 
     payment document is a document containing such information as 
     may be necessary for the Secretary to make payments under 
     such subsection to a teaching hospital for a fiscal year. The 
     document is submitted in accordance with this subsection if 
     the document is submitted not later than the date specified 
     by the Secretary, and the document is in such form and is 
     made in such manner as the Secretary may require. The 
     Secretary may require that information under this subsection 
     be submitted to the Secretary in periodic reports.
       ``(c) Administrator of Programs.--This part, and the 
     subsequent parts of this title, shall be carried out by the 
     Secretary acting through the Administrator of the Health Care 
     Financing Administration.
       ``(d) Special Rules.--
       ``(1) Authority regarding payments to consortia of 
     providers.--In the case of payments under subsection (a) that 
     are determined under section 2231:
       ``(A) The requirement under such subsection to make the 
     payments to teaching hospitals is subject to the authority of 
     the Secretary under section 2233(a) to make payments to 
     qualifying consortia.
       ``(B) If the Secretary authorizes such a consortium for 
     purposes of section 2233(a), subsections (a) and (b) of this 
     section apply to the consortium to the same extent and in the 
     same manner as the subsections apply to teaching hospitals.
       ``(2) Certain hospitals.--Paragraph (1) of subsection (a) 
     is subject to sections 2222 and 2223 of subpart 2. Paragraph 
     (2) of subsection (a) is subject to sections 2232 through 
     2234 of subpart 3.
       ``(e) Approved Medical Residency Training Program.--For 
     purposes of this title, the term `approved medical residency 
     training program' has the meaning given such term in section 
     1886(h)(5)(A).

  ``Subpart 2--Amount Relating to Indirect Costs of Graduate Medical 
                               Education

     ``SEC. 2221. DETERMINATION OF AMOUNT RELATING TO INDIRECT 
                   COSTS.

       ``(a) In General.--For purposes of section 2211(a)(1), the 
     amount determined under this section for a teaching hospital 
     for a fiscal year is the product of--
       ``(1) the amount in the Indirect-Costs Medical Education 
     Account on the applicable date under section 2201(d) (once 
     the appropriation under such section is made); and
       ``(2) the percentage determined for the hospital under 
     subsection (b).
       ``(b) Hospital-Specific Percentage.--
       ``(1) In general.--For purposes of subsection (a)(2), the 
     percentage determined under this subsection for a teaching 
     hospital is the mean average of the respective percentages 
     determined under paragraph (3) for each fiscal year of the 
     applicable period (as defined in paragraph (2)), adjusted by 
     the Secretary (upward or downward, as the case may be) on a 
     pro rata basis to the extent necessary to ensure that the sum 
     of the percentages determined under this paragraph for all 
     teaching hospitals is equal to 100 percent. The preceding 
     sentence is subject to sections 2222 and 2223.
       ``(2) Applicable period regarding relevant data; fiscal 
     years 1992 through 1994.--For purposes of this part, the term 
     `applicable period' means the period beginning on the first 
     day of fiscal year 1992 and continuing through the end of 
     fiscal year 1994.
       ``(3) Respective determinations for fiscal years of 
     applicable period.--For purposes of paragraph (1), the 
     percentage determined under this paragraph for a teaching 
     hospital for a fiscal year of the applicable period is the 
     percentage constituted by the ratio of--
       ``(A) the total amount of payments received by the hospital 
     under section 1886(d)(5)(B) for discharges occurring during 
     the fiscal year involved; to
       ``(B) the sum of the respective amounts determined under 
     subparagraph (A) for the fiscal year for all teaching 
     hospitals.
       ``(c) Availability of Data.--If a teaching hospital 
     received the payments specified in subsection (b)(3)(A) 
     during the applicable period but a complete set of the 
     relevant data is not available to the Secretary for purposes 
     of determining an amount under such subsection for the fiscal 
     year involved, the Secretary shall for purposes of such 
     subsection make an estimate on the basis of such data as are 
     available to the Secretary for the applicable period.

     ``SEC. 2222. INDIRECT COSTS; SPECIAL RULES REGARDING 
                   DETERMINATION OF HOSPITAL-SPECIFIC PERCENTAGE.

       ``(a) Special Rule Regarding Fiscal Years 1995 and 1996.--
       ``(1) In general.--In the case of a teaching hospital whose 
     first payments under section 1886(d)(5)(B) were for 
     discharges occurring in fiscal year 1995 or in fiscal year 
     1996 (referred to in this subsection individually as a `first 
     payment year'), the percentage determined under paragraph (2) 
     for the hospital is deemed to be the percentage applicable 
     under section 2221(b) to the hospital, except that the 
     percentage under paragraph (2) shall be adjusted in 
     accordance with section 2221(b)(1) to the extent determined 
     by the Secretary to be necessary with respect to a sum that 
     equals 100 percent.
       ``(2) Determination of percentage.--For purposes of 
     paragraph (1), the percentage determined under this paragraph 
     for a teaching hospital is the percentage constituted by the 
     ratio of the amount determined under subparagraph (A) to the 
     amount determined under subparagraph (B), as follows:
       ``(A)(i) If the first payment year for the hospital is 
     fiscal year 1995, the amount determined under this 
     subparagraph is the total amount of payments received by the 
     hospital under section 1886(d)(5)(B) for discharges occurring 
     during fiscal year 1995.
       ``(ii) If the first payment year for the hospital is fiscal 
     year 1996, the amount determined under this subparagraph is 
     an amount equal to an estimate by the Secretary of the total 
     amount of payments that would have been paid to the hospital 
     under section 1886(d)(5)(B) for discharges occurring during 
     fiscal year 1995 if such section, as in effect for fiscal 
     year 1996, had applied to the hospital for discharges 
     occurring during fiscal year 1995.
       ``(B)(i) If the first payment year for the hospital is 
     fiscal year 1995, the amount determined under this 
     subparagraph is the aggregate total of the payments received 
     by teaching hospitals under section 1886(d)(5)(B) for 
     discharges occurring during fiscal year 1995.
       ``(ii) If the first payment year for the hospital is fiscal 
     year 1996--
       ``(I) the Secretary shall make an estimate in accordance 
     with subparagraph (A)(ii) for all teaching hospitals; and
       ``(II) the amount determined under this subparagraph is the 
     sum of the estimates made by the Secretary under subclause 
     (I).
       ``(b) New Teaching Hospitals.--
       ``(1) In general.--Subject to paragraph (4), in the case of 
     a teaching hospital that did not receive payments under 
     section 1886(d)(5)(B) for any of the fiscal years 1992 
     through 1996, the percentage determined under paragraph (3) 
     for the hospital is deemed to be the percentage applicable 
     under section 2221(b) to the hospital, except that the 
     percentage under paragraph (3) shall be adjusted in 
     accordance with section 2221(b)(1) to the extent determined 
     by the Secretary to be necessary with respect to a sum that 
     equals 100 percent.
       ``(2) Designated fiscal year regarding data.--The 
     determination under paragraph (3) of a percentage for a 
     teaching hospital described in paragraph (1) shall be made 
     for the most recent fiscal year for which the Secretary has 
     sufficient data to make the determination (referred to in 
     this subsection as the `designated fiscal year').
       ``(3) Determination of percentage.--For purposes of 
     paragraph (1), the percentage determined under this paragraph 
     for the teaching hospital involved is the percentage 
     constituted by the ratio of the amount determined under 
     subparagraph (A) to the amount determined under subparagraph 
     (B), as follows:
       ``(A) The amount determined under this subparagraph is an 
     amount equal to an estimate by the Secretary of the total 
     amount of payments that would have been paid to the hospital 
     under section 1886(d)(5)(B) for the designated fiscal year if 
     such section, as in effect for the first fiscal year for 
     which payments pursuant to this subsection are to be made to 
     the hospital, had applied to the hospital for the designated 
     fiscal year.
       ``(B) The Secretary shall make an estimate in accordance 
     with subparagraph (A) for all teaching hospitals. The amount 
     determined under this subparagraph is the sum of the 
     estimates made by the Secretary under the preceding sentence.
       ``(4) Limitation.--This subsection does not apply to a 
     teaching hospital described in paragraph (1) if the hospital 
     is in a State for which a demonstration project under section 
     1814(b)(3) is in effect.
       ``(c) Consolidations and Mergers.--In the case of two or 
     more teaching hospitals that have each received payments 
     pursuant to section 2221 for one or more fiscal years and 
     that undergo a consolidation or merger, the percentage 
     applicable to the resulting teaching hospital for purposes of 
     section 2221(b) is the sum of the respective percentages that 
     would have applied pursuant to such section if the hospitals 
     had not undergone the consolidation or merger.
     
[[Page H 10418]]


     ``SEC. 2223. INDIRECT COSTS; ALTERNATIVE PAYMENTS REGARDING 
                   TEACHING HOSPITALS IN CERTAIN STATES.

       ``(a) In General.--In the case of a teaching hospital in a 
     State for which a demonstration project under section 
     1814(b)(3) is in effect, this section applies in lieu of 
     section 2221. For purposes of section 2211(a)(1), the amount 
     determined for such a teaching hospital for a fiscal year is 
     the product of--
       ``(1) the amount in the Indirect-Costs Medical Education 
     Account for the fiscal year pursuant to the allocation under 
     section 2201(d)(3)(A) for the year; and
       ``(2) the percentage determined under subsection (b) for 
     the hospital.
       ``(b) Determination of Percentage.--For purposes of 
     subsection (a)(2):
       ``(1) The Secretary shall make an estimate of the total 
     amount of payments that would have been received 
     under section 1886(d)(5)(B) by the hospital involved with 
     respect to each of the fiscal years of the applicable 
     period if such section (as in effect for such fiscal 
     years) had applied to the hospital for such years.
       ``(2) The percentage determined under this subsection for 
     the hospital for a fiscal year is a mean average percentage 
     determined for the hospital in accordance with the 
     methodology of section 2221(b)(1), except that the estimate 
     made by the Secretary under paragraph (1) of this subsection 
     for a fiscal year of the applicable period is deemed to be 
     the amount that applies for purposes of section 2221(b)(3)(A) 
     for such year.
       ``(c) Rule Regarding Payments From Certain Amounts.--In the 
     case of a teaching hospital described in subsection (a), this 
     section does not authorize any payment to the hospital from 
     amounts transferred to the Fund under section 1886(j).
       ``(d) Adjustment Regarding Payments to Other Hospitals.--In 
     the case of a fiscal year for which payments pursuant to 
     subsection (a) are made to one or more teaching hospitals, 
     the following applies:
       ``(1) The Secretary shall determine a percentage equal to 
     the sum of the respective percentages determined for the 
     hospitals under subsection (b).
       ``(2) The Secretary shall determine an amount equal to the 
     product of--
       ``(A) the percentage determined under paragraph (1); and
       ``(B) the amount in the Indirect-Costs Medical Education 
     Account for the fiscal year pursuant to the transfer under 
     section 1886(j)(1).
       ``(3) The Secretary shall, for each hospital (other than 
     hospitals described in subsection (a)), make payments to the 
     hospital in amounts whose sum for the fiscal year is equal to 
     the product of--
       ``(A) the amount determined under paragraph (2); and
       ``(B) the percentage that applies to the hospital for 
     purposes of section 2221(b), except that such percentage 
     shall be adjusted in accordance with the methodology of 
     section 2221(b)(1) to the extent determined by the Secretary 
     to be necessary with respect to a sum that equals 100 
     percent.

   ``Subpart 3--Amount Relating to Direct Costs of Graduate Medical 
                               Education

     ``SEC. 2231. DETERMINATION OF AMOUNT RELATING TO DIRECT 
                   COSTS.

       ``(a) In General.--For purposes of section 2211(a)(2), the 
     amount determined under this section for a teaching hospital 
     for a fiscal year is the sum of--
       ``(1) the amount determined under subsection (b) (relating 
     to the General Direct-Costs Medical Education Account); and
       ``(2) the amount determined under subsection (c) (relating 
     to the Medicare Direct-Costs Medical Education Account).
       ``(b) Payment From General Account.--
       ``(1) In general.--For purposes of subsection (a)(1), the 
     amount determined under this subsection for a teaching 
     hospital for a fiscal year is the product of--
       ``(A) the amount in the General Direct-Costs Medical 
     Education Account on the applicable date under section 
     2201(d) (once the appropriation under such section is made); 
     and
       ``(B) the percentage determined for the hospital under 
     paragraph (2).
       ``(2) Hospital-specific percentage.--
       ``(A) In general.--For purposes of paragraph (1)(B), the 
     percentage determined under this paragraph for a teaching 
     hospital is the mean average of the respective percentages 
     determined under subparagraph (B) for each fiscal year of the 
     applicable period (as defined in section 2221(b)(2)), 
     adjusted by the Secretary (upward or downward, as the case 
     may be) on a pro rata basis to the extent necessary to ensure 
     that the sum of the percentages determined under this 
     subparagraph for all teaching hospitals is equal to 100 
     percent. The preceding sentence is subject to sections 2232 
     through 2234.
       ``(B) Respective determinations for fiscal years of 
     applicable period.--For purposes of subparagraph (A), the 
     percentage determined under this subparagraph for a teaching 
     hospital for a fiscal year of the applicable period is the 
     percentage constituted by the ratio of--
       ``(i) the total amount of payments received by the hospital 
     under section 1886(h) for cost reporting periods beginning 
     during the fiscal year involved; to
       ``(ii) the sum of the respective amounts determined under 
     clause (i) for the fiscal year for all teaching hospitals.
       ``(3) Availability of data.--If a teaching hospital 
     received the payments specified in paragraph (2)(B)(i) during 
     the applicable period but a complete set of the relevant data 
     is not available to the Secretary for purposes of determining 
     an amount under such paragraph for the fiscal year involved, 
     the Secretary shall for purposes of such paragraph make an 
     estimate on the basis of such data as are available to the 
     Secretary for the applicable period.
       ``(c) Payment From Medicare Account.--
       ``(1) In general.--For purposes of subsection (a)(2), the 
     amount determined under this subsection for a teaching 
     hospital for a fiscal year is the product of--
       ``(A) the amount in the Medicare Direct-Costs Medical 
     Education Account on the applicable date under section 
     2201(d) (once the appropriation under such section is made); 
     and
       ``(B) the percentage determined for the hospital under 
     paragraph (2) for the fiscal year.
       ``(2) Hospital-specific percentage.--For purposes of 
     paragraph (1)(B), the percentage determined under this 
     subsection for a teaching hospital for a fiscal year is the 
     percentage constituted by the ratio of--
       ``(A) the estimate made by the Secretary for the hospital 
     for the fiscal year under section 1886(j)(2)(B); to
       ``(B) the sum of the respective estimates referred to in 
     subparagraph (A) for all teaching hospitals.

     ``SEC. 2232. DIRECT COSTS; SPECIAL RULES REGARDING 
                   DETERMINATION OF HOSPITAL-SPECIFIC PERCENTAGE.

       ``(a) Special Rule Regarding Fiscal Years 1995 and 1996.--
       ``(1) In general.--In the case of a teaching hospital whose 
     first payments under section 1886(h) were for the cost 
     reporting period beginning in fiscal year 1995 or in fiscal 
     year 1996 (referred to in this subsection individually as a 
     `first payment year'), the percentage determined under 
     paragraph (2) for the hospital is deemed to be the percentage 
     applicable under section 2231(b)(2) to the hospital, except 
     that the percentage under paragraph (2) shall be adjusted in 
     accordance with section 2231(b)(2)(A) to the extent 
     determined by the Secretary to be necessary with respect to a 
     sum that equals 100 percent.
       ``(2) Determination of percentage.--For purposes of 
     paragraph (1), the percentage determined under this paragraph 
     for a teaching hospital is the percentage constituted by the 
     ratio of the amount determined under subparagraph (A) to the 
     amount determined under subparagraph (B), as follows:
       ``(A)(i) If the first payment year for the hospital is 
     fiscal year 1995, the amount determined under this 
     subparagraph is the total amount of payments received by 
     the hospital under section 1886(h) for cost reporting 
     periods beginning in fiscal year 1995.
       ``(ii) If the first payment year for the hospital is fiscal 
     year 1996, the amount determined under this subparagraph is 
     an amount equal to an estimate by the Secretary of the total 
     amount of payments that would have been paid to the hospital 
     under section 1886(h) for cost reporting periods beginning in 
     fiscal year 1995 if such section, as in effect for fiscal 
     year 1996, had applied to the hospital for fiscal year 1995.
       ``(B)(i) If the first payment year for the hospital is 
     fiscal year 1995, the amount determined under this 
     subparagraph is the aggregate total of the payments received 
     by teaching hospitals under section 1886(h) for cost 
     reporting periods beginning in fiscal year 1995.
       ``(ii) If the first payment year for the hospital is fiscal 
     year 1996--
       ``(I) the Secretary shall make an estimate in accordance 
     with subparagraph (A)(ii) for all teaching hospitals; and
       ``(II) the amount determined under this subparagraph is the 
     sum of the estimates made by the Secretary under subclause 
     (I).
       ``(b) New Teaching Hospitals.--
       ``(1) In general.--Subject to paragraph (4), in the case of 
     a teaching hospital that did not receive payments under 
     section 1886(h) for any of the fiscal years 1992 through 
     1996, the percentage determined under paragraph (3) for the 
     hospital is deemed to be the percentage applicable under 
     section 2231(b)(2) to the hospital, except that the 
     percentage under paragraph (3) shall be adjusted in 
     accordance with section 2231(b)(2)(A) to the extent 
     determined by the Secretary to be necessary with respect to a 
     sum that equals 100 percent.
       ``(2) Designated fiscal year regarding data.--The 
     determination under paragraph (3) of a percentage for a 
     teaching hospital described in paragraph (1) shall be made 
     for the most recent fiscal year for which the Secretary has 
     sufficient data to make the determination (referred to in 
     this subsection as the `designated fiscal year').
       ``(3) Determination of percentage.--For purposes of 
     paragraph (1), the percentage determined under this paragraph 
     for the teaching hospital involved is the percentage 
     constituted by the ratio of the amount determined under 
     subparagraph (A) to the amount determined under subparagraph 
     (B), as follows:
       ``(A) The amount determined under this subparagraph is an 
     amount equal to an estimate by the Secretary of the total 
     amount of payments that would have been paid to the hospital 
     under section 1886(h) for the designated fiscal year if such 
     section, as in effect for the first fiscal year for which 
     payments pursuant to this subsection are to be made to the 
     hospital, had applied to the hospital for cost reporting 
     periods beginning in the designated fiscal year.
       ``(B) The Secretary shall make an estimate in accordance 
     with subparagraph (A) for all 

[[Page H 10419]]
     teaching hospitals. The amount determined under this subparagraph is 
     the sum of the estimates made by the Secretary under the 
     preceding sentence.
       ``(4) Limitation.--This subsection does not apply to a 
     teaching hospital described in paragraph (1) if the hospital 
     is in a State for which a demonstration project under section 
     1814(b)(3) is in effect.
       ``(c) Consolidations and Mergers.--In the case of two or 
     more teaching hospitals that have each received payments 
     pursuant to section 2231 for one or more fiscal years and 
     that undergo a consolidation or merger, the percentage 
     applicable to the resulting teaching hospital for purposes of 
     section 2231(b) is the sum of the respective percentages that 
     would have applied pursuant to such section if the hospitals 
     had not undergone the consolidation or merger.

     ``SEC. 2233. DIRECT COSTS; AUTHORITY FOR PAYMENTS TO 
                   CONSORTIA OF PROVIDERS.

       ``(a) In General.--In lieu of making payments to teaching 
     hospitals pursuant to section 2231, the Secretary may make 
     payments under this section to consortia that meet the 
     requirements of subsection (b).
       ``(b) Qualifying Consortium.--For purposes of subsection 
     (a), a consortium meets the requirements of this subsection 
     if the consortium is in compliance with the following:
       ``(1) The consortium consists of an approved medical 
     residency training program and one or more of the following 
     entities:
       ``(A) Schools of allopathic medicine or osteopathic 
     medicine.
       ``(B) Teaching hospitals.
       ``(C) Other approved medical residency training programs.
       ``(D) Federally qualified health centers.
       ``(E) Medical group practices.
       ``(F) Managed care entities.
       ``(G) Entities furnishing outpatient services.
       ``(H) Such other entities as the Secretary determines to be 
     appropriate.
       ``(2) The members of the consortium have agreed to 
     participate in the programs of graduate medical education 
     that are operated by the entities in the consortium.
       ``(3) With respect to the receipt by the consortium of 
     payments made pursuant to this section, the members of the 
     consortium have agreed on a method for allocating the 
     payments among the members.
       ``(4) The consortium meets such additional requirements as 
     the Secretary may establish.
       ``(c) Payments From Accounts.--
       ``(1) In general.--Subject to subsection (d), the total of 
     payments to a qualifying consortium for a fiscal year 
     pursuant to subsection (a) shall be the sum of--
       ``(1) the aggregate amount determined for the teaching 
     hospitals of the consortium pursuant to paragraph (1) of 
     section 2231(a); and
       ``(2) an amount determined in accordance with the 
     methodology that applies pursuant to paragraph (2) of such 
     section, except that the estimate used for purposes of 
     subsection (c)(2)(A) of such section shall be the estimate 
     made for the consortium under section 1886(j)(2)(C)(ii).
       ``(d) Limitation on Aggregate Total of Payments to 
     Consortia.--The aggregate total of the amounts paid under 
     subsection (c)(2) to qualifying consortia for a fiscal year 
     may not exceed the sum of--
       ``(1) the aggregate total of the amounts that would have 
     been paid under section 2231(c) for the fiscal year to the 
     teaching hospitals of the consortia if the hospitals had not 
     been participants in the consortia; and
       ``(2) an amount equal to 1 percent of the amount that 
     applies under section 2231(c)(1)(A) for the fiscal year 
     (relating to the Medicare Direct-Costs Medical Education 
     Account).
       ``(e) Definition.--For purposes of this title, the term 
     `qualifying consortium' means a consortium that meets the 
     requirements of subsection (b).

     ``SEC. 2234. DIRECT COSTS; ALTERNATIVE PAYMENTS REGARDING 
                   TEACHING HOSPITALS IN CERTAIN STATES.

       ``(a) In General.--In the case of a teaching hospital in a 
     State for which a demonstration project under section 
     1814(b)(3) is in effect, this section applies in lieu of 
     section 2231. For purposes of section 2211(a)(2), the amount 
     determined for a teaching hospital for a fiscal year is 
     the product of--
       ``(1) the amount in the General Direct-Costs Medical 
     Education Account on the applicable date under section 
     2201(d) (once the appropriation under such section is made); 
     and
       ``(2) the percentage determined under subsection (b) for 
     the hospital.
       ``(b) Determination of Percentage.--For purposes of 
     subsection (a)(2):
       ``(1) The Secretary shall make an estimate of the total 
     amount of payments that would have been received under 
     section 1886(h) by the hospital involved with respect to each 
     of the fiscal years of the applicable period if such section 
     (as in effect for such fiscal years) had applied to the 
     hospital for such years.
       ``(2) The percentage determined under this subsection for 
     the hospital for a fiscal year is a mean average percentage 
     determined for the hospital in accordance with the 
     methodology of section 2231(b)(2)(A), except that the 
     estimate made by the Secretary under paragraph (1) of this 
     subsection for a fiscal year of the applicable period is 
     deemed to be the amount that applies for purposes of section 
     2231(b)(2)(B)(i) for such year.
       ``(c) Rule Regarding Payments From Certain Amounts.--In the 
     case of a teaching hospital described in subsection (a), this 
     section does not authorize any payment to the hospital from 
     amounts transferred to the Fund under section 1886(j).

                    ``Subpart 4--General Provisions

     ``SEC. 2241. ADJUSTMENTS IN PAYMENT AMOUNTS.

       ``(a) Collection of Data on Accuracy of Estimates.--The 
     Secretary shall collect data on whether the estimates made by 
     the Secretary under section 1886(j) for a fiscal year were 
     substantially accurate.
       ``(b) Adjustments.--If the Secretary determines under 
     subsection (a) that an estimate for a fiscal year was not 
     substantially accurate, the Secretary shall, for the first 
     fiscal year beginning after the Secretary makes the 
     determination--
       ``(1) make adjustments accordingly in transfers to the Fund 
     under section 1886(j); and
       ``(2) make adjustments accordingly in the amount of 
     payments to teaching hospitals pursuant to 2231(c) (or, as 
     applicable, to qualifying consortia pursuant to section 
     2233(c)(2)).''.

                 PART 2--AMENDMENTS TO MEDICARE PROGRAM

     SEC. 15411. TRANSFERS TO TEACHING HOSPITAL AND GRADUATE 
                   MEDICAL EDUCATION TRUST FUND.

       Section 1886 (42 U.S.C. 1395ww) is amended--
       (1) in subsection (d)(5)(B), in the matter preceding clause 
     (i), by striking ``The Secretary shall provide'' and 
     inserting the following: ``For discharges occurring on or 
     before September 30, 1996, the Secretary shall provide'';
       (2) in subsection (h)--
       (A) in paragraph (1), in the first sentence, by striking 
     ``the Secretary shall provide'' and inserting ``the Secretary 
     shall, subject to paragraph (6), provide''; and
       (B) by adding at the end the following paragraph:
       ``(6) Limitation.--
       ``(A) In general.--The authority to make payments under 
     this subsection applies only with respect to cost reporting 
     periods ending on or before September 30, 1996, except as 
     provided in subparagraph (B).
       ``(B) Rule regarding portion of last cost reporting 
     period.--In the case of a cost reporting period that extends 
     beyond September 30, 1996, payments under this subsection 
     shall be made with respect to such portion of the period as 
     has lapsed as of such date.
       ``(C) Rule of construction.--This paragraph may not be 
     construed as authorizing any payment under section 1861(v) 
     with respect to graduate medical education.''; and
       (3) by adding at the end the following subsection:
       ``(j) Transfers to Teaching Hospital and Graduate Medical 
     Education Trust Fund.--
       ``(1) Indirect costs of medical education.--
       ``(A) In general.--From the Federal Hospital Insurance 
     Trust Fund, the Secretary shall, for fiscal year 1997 and 
     each subsequent fiscal year, transfer to the Indirect-Costs 
     Medical Education Account (under section 2201) an amount 
     determined by the Secretary in accordance with subparagraph 
     (B).
       ``(B) Determination of amounts.--The Secretary shall make 
     an estimate for the fiscal year involved of the nationwide 
     total of the amounts that would have been paid under 
     subsection (d)(5)(B) to hospitals during the fiscal year if 
     such payments had not been terminated for discharges 
     occurring after September 30, 1996. For purposes of 
     subparagraph (A), the amount determined under this 
     subparagraph for the fiscal year is the estimate made by the 
     Secretary under the preceding sentence.
       ``(2) Direct costs of medical education.--
       ``(A) In general.--From the Federal Hospital Insurance 
     Trust Fund and the Federal Supplementary Medical Insurance 
     Trust Fund, the Secretary shall, for fiscal year 1997 and 
     each subsequent fiscal year, transfer to the Medicare Direct-
     Costs Medical Education Account (under section 2201) the sum 
     of--
       ``(i) an amount determined by the Secretary in accordance 
     with subparagraph (B); and
       ``(ii) as applicable, an amount determined by the Secretary 
     in accordance with subparagraph (C)(ii).
       ``(B) Determination of amounts.--For each hospital (other 
     than a hospital that is a member of a qualifying consortium 
     referred to in subparagraph (C)), the Secretary shall make an 
     estimate for the fiscal year involved of the amount that 
     would have been paid under subsection (h) to the hospital 
     during the fiscal year if such payments had not been 
     terminated for cost reporting periods ending on or before 
     September 30, 1996. For purposes of subparagraph (A)(i), the 
     amount determined under this subparagraph for the fiscal year 
     is the sum of all estimates made by the Secretary under the 
     preceding sentence.
       ``(C) Estimates regarding qualifying consortia.--If the 
     Secretary elects to authorize one or more qualifying 
     consortia for purposes of section 2233(a), the Secretary 
     shall carry out the following:
       ``(i) The Secretary shall establish a methodology for 
     making payments to qualifying consortia with respect to the 
     reasonable direct costs of such consortia in carrying out 

[[Page H 10420]]
     programs of graduate medical education. The methodology shall be the 
     methodology established in subsection (h), modified to the 
     extent necessary to take into account the participation in 
     such programs of entities other than hospitals.
       ``(ii) For each qualifying consortium, the Secretary shall 
     make an estimate for the fiscal year involved of the amount 
     that would have been paid to the consortium during the fiscal 
     year if, using the methodology under clause (i), payments had 
     been made to the consortium for the fiscal year as 
     reimbursements with respect to cost reporting periods. For 
     purposes of subparagraph (A)(ii), the amount determined under 
     this clause for the fiscal year is the sum of all 
     estimates made by the Secretary under the preceding 
     sentence.
       ``(D) Allocation between funds.--In providing for a 
     transfer under subparagraph (A) for a fiscal year, the 
     Secretary shall provide for an allocation of the amounts 
     involved between part A and part B (and the trust funds 
     established under the respective parts) as reasonably 
     reflects the proportion of direct graduate medical education 
     costs of hospitals associated with the provision of services 
     under each respective part.
       ``(3) Applicability of certain amendments.--Amendments made 
     to subsection (d)(5)(B) and subsection (h) that are effective 
     on or after October 1, 1996, apply only for purposes of 
     estimates under paragraphs (1) and (2) and for purposes of 
     determining the amount of payments under 2211. Such 
     amendments do not require any adjustment to amounts paid 
     under subsection (d)(5)(B) or (h) with respect to fiscal year 
     1996 or any prior fiscal year.
       ``(4) Relationship to certain demonstration projects.--In 
     the case of a State for which a demonstration project under 
     section 1814(b)(3) is in effect, the Secretary, in making 
     determinations of the rates of increase under such section, 
     shall include all amounts transferred under this subsection. 
     Such amounts shall be so included to the same extent and in 
     the same manner as amounts determined under subsections 
     (d)(5)(B) and (h) were included in such determination under 
     the provisions of this title in effect on September 30, 
     1996.''.

     SEC. 15412. MODIFICATION IN PAYMENT POLICIES REGARDING 
                   GRADUATE MEDICAL EDUCATION.

       (a) Indirect Costs of Medical Education; Applicable 
     Percentage.--
       (1) Modification regarding 5.6 percent.--Section 
     1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii)) is 
     amended--
       (A) by striking ``on or after October 1, 1988,'' and 
     inserting ``on or after October 1, 1999,''; and
       (B) by striking ``1.89'' and inserting ``1.38''.
       (2) Special rule regarding fiscal years 1996 through 1998; 
     modification regarding 6 percent.--Section 1886(d)(5)(B)(ii), 
     as amended by paragraph (1), is amended by adding at the end 
     the following: ``In the case of discharges occurring on or 
     after October 1, 1995, and before October 1, 1999, the 
     preceding sentence applies to the same extent and in the same 
     manner as the sentence applies to discharges occurring on or 
     after October 1, 1999, except that the term `1.38' is deemed 
     to be `1.48'.''.
       (3) Conforming amendment relating to determination of 
     standardized amounts.--Section 1886(d)(2)(C)(i) (42 U.S.C. 
     1395ww(d)(2)(C)(i)) is amended by striking ``1985'' and 
     inserting the following: ``1985, but (for discharges 
     occurring after September 30, 1995) not taking into account 
     any reductions in such costs resulting from the amendments 
     made by section 15412(a) of the Medicare Preservation Act of 
     1995''.
       (b) Direct Costs of Medical Education.--
       (1) Limitation on number of full-time-equivalent 
     residents.--Section 1886(h)(4) (42 U.S.C. 1395ww(h)(4)) is 
     amended by adding at the end the following new subparagraph:
       ``(F) Limitation on number of residents for certain fiscal 
     years.--
       ``(i) In general.--Such rules shall provide that for 
     purposes of a cost reporting period beginning on or after 
     October 1, 1995, and on or before September 30, 2002, the 
     number of full-time-equivalent residents determined under 
     this paragraph with respect to an approved medical residency 
     training program may not exceed the number of full-time-
     equivalent residents with respect to the program as of August 
     1, 1995 (except that this subparagraph applies only to 
     approved medical residency training programs in the fields of 
     allopathic medicine and osteopathic medicine).
       ``(ii) Disposition of unused residency positions.--In the 
     case of a cost reporting period to which the limitation under 
     clause (i) applies, if for such a period the number of full-
     time-equivalent residents determined under this paragraph 
     with respect to an approved medical residency training 
     program is less than the maximum number applicable to the 
     program under such clause, the Secretary may authorize for 
     one or more other approved medical residency training 
     programs offsetting increases in the respective maximum 
     numbers that otherwise would be applicable under such clause 
     to the programs. In authorizing such increases with respect 
     to a cost reporting period, the Secretary shall ensure that 
     the national total of the respective maximum numbers 
     determined under such clause with respect to approved medical 
     residency training programs is not exceeded.''.
       (2) Exclusion of residents after initial residency 
     period.--Section 1886(h)(4)(C) (42 U.S.C. 1395ww(h)(4)(C)) is 
     amended to read as follows:
       ``(C) Weighting factors for residents.--Effective for cost 
     reporting periods beginning on or after October 1, 1997, such 
     rules shall provide that, in the calculation of the number of 
     full-time-equivalent residents in an approved residency 
     program, the weighting factor for a resident who is in the 
     initial residency period (as defined in paragraph (5)(F)) is 
     1.0 and the weighting factor for a resident who has completed 
     such period is 0.0. (In the case of cost reporting periods 
     beginning before October 1, 1997, the weighting factors that 
     apply in such calculation are the weighting factors that were 
     applicable under this subparagraph on the day before the date 
     of the enactment of the Medicare Preservation Act of 
     1995.)''.
       (3) Reductions in payments for alien residents.--Section 
     1886(h)(4) (42 U.S.C. 1395ww(h)(4)), as amended by paragraph 
     (1), is amended by adding at the end the following new 
     subparagraph:
       ``(G) Special rules for alien residents.--In the case of 
     individuals who are not citizens or nationals of the United 
     States, aliens lawfully admitted to the United States for 
     permanent residence, aliens admitted to the United States as 
     refugees, or citizens of Canada, in the calculation of the 
     number of full-time-equivalent residents in an approved 
     medical residency program, the following rules shall apply 
     with respect to such individuals who are residents in the 
     program:
       ``(i) For a cost reporting period beginning during fiscal 
     year 1996, for each such individual the Secretary shall apply 
     a weighting factor of .75.
       ``(ii) For a cost reporting period beginning during fiscal 
     year 1997, for each such individual the Secretary shall apply 
     a weighting factor of .50.
       ``(iii) For a cost reporting period beginning during fiscal 
     year 1998 or any subsequent fiscal year, for each such 
     individual the Secretary shall apply a weighting factor of 
     .25.''.
       (4) Effective date.--Except as provided otherwise in this 
     subsection (or in the amendments made by this subsection), 
     the amendments made by this subsection apply to hospital cost 
     reporting periods beginning on or after October 1, 1995.

  PART 3--REFORM OF FEDERAL POLICIES REGARDING TEACHING HOSPITALS AND 
                       GRADUATE MEDICAL EDUCATION

     SEC. 15421. ESTABLISHMENT OF ADVISORY PANEL FOR RECOMMENDING 
                   POLICIES.

       Title XXII of the Social Security Act, as added by section 
     15401, is amended by adding at the end the following part:

                        ``Part C--Other Matters

     ``SEC. 2251. ADVISORY PANEL ON REFORM IN FINANCING OF 
                   TEACHING HOSPITALS AND GRADUATE MEDICAL 
                   EDUCATION.

       ``(a) Establishment.--The Chair of the Medicare Payment 
     Review Commission under section 1806 shall establish a 
     temporary advisory panel to be known as the Advisory Panel on 
     Financing for Teaching Hospitals and Graduate Medical 
     Education (in this section referred to as the `Panel').
       ``(b) Duties.--The Panel shall develop recommendations on 
     whether and to what extent Federal policies regarding 
     teaching hospitals and graduate medical education should be 
     reformed, including recommendations regarding the following:
       ``(1) The financing of graduate medical education, 
     including consideration of alternative broad-based sources of 
     funding for such education.
       ``(2) The financing of teaching hospitals, including 
     consideration of the difficulties encountered by such 
     hospitals as competition among health care entities 
     increases. Matters considered under this paragraph shall 
     include consideration of the effects on teaching hospitals of 
     the method of financing used for the MedicarePlus program 
     under part C of title XVIII.
       ``(3) The methodology for making payments for graduate 
     medical education, and the selection of entities to receive 
     the payments. Matters considered under this paragraph shall 
     include the following:
       ``(A) The methodology under part B for making payments from 
     the Fund, including the use of data from the fiscal years 
     1992 through 1994, and including the methodology that applies 
     with respect to consolidations and mergers of participants in 
     the program under such part and with respect to the inclusion 
     of additional participants in the program.
       ``(B) Issues regarding children's hospitals, and approved 
     medical residency training programs in pediatrics.
       ``(C) Whether and to what extent payments are being made 
     (or should be made) for graduate training in the various 
     nonphysician health professions.
       ``(4) Federal policies regarding international medical 
     graduates.
       ``(5) The dependence of schools of medicine on service-
     generated income.
       ``(6) The effects of the amendments made by section 15412 
     of the Medicare Preservation Act of 1995, including adverse 
     effects on teaching hospitals that result from modifications 
     in policies regarding international medical graduates.
       ``(7) Whether and to what extent the needs of the United 
     States regarding the supply of physicians will change during 
     the 10-year period beginning on October 1, 1995, and whether 
     and to what extent any such changes will have significant 
     financial effects on teaching hospitals.
       ``(8) The appropriate number and mix of residents.

[[Page H 10421]]

       ``(c) Composition.--Not later than three months after being 
     designated as the initial chair of the Medicare Payment 
     Review Commission, the Chair of the Commission shall appoint 
     to the Panel 19 individuals who are not members of the 
     Commission, who are not officers or employees of the United 
     States, and who possess expertise on matters on which the 
     Panel is to make recommendations under subsection (b). Such 
     individuals shall include the following:
       ``(1) Deans from allopathic and osteopathic schools of 
     medicine.
       ``(2) Chief executive officers (or equivalent 
     administrative heads) from academic health centers, 
     integrated health care systems, approved medical residency 
     training programs, and teaching hospitals that sponsor 
     approved medical residency training programs.
       ``(3) Chairs of departments or divisions from allopathic 
     and osteopathic schools of medicine, schools of dentistry, 
     and approved medical residency training programs in oral 
     surgery.
       ``(4) Individuals with leadership experience from each of 
     the fields of advanced practice nursing, physician 
     assistants, and podiatric medicine.
       ``(5) Individuals with substantial experience in the study 
     of issues regarding the composition of the health care 
     workforce of the United States.
       ``(6) Individuals with expertise on the financing of health 
     care.
       ``(7) Representatives from health insurance organizations 
     and health plan organizations.
       ``(d) Relationship of Panel to Medicare Payment Review 
     Commission.--From amounts appropriated under subsection (n), 
     the Medicare Payment Review Commission shall provide for the 
     Panel such staff and administrative support (including 
     quarters for the Panel) as may be necessary for the Panel to 
     carry out the duties under subsection (b).
       ``(e) Chair.--The Panel shall designate a member of the 
     Panel to serve as the Chair of the Panel.
       ``(f) Meetings.--The Panel shall meet at the call of the 
     Chair or a majority of the members, except that the first 
     meeting of the Panel shall be held not later than three 
     months after the date on which appointments under subsection 
     (c) are completed.
       ``(g) Terms.--The term of a member of the Panel is the 
     duration of the Panel.
       ``(h) Vacancies.--
       ``(1) In general.--A vacancy in the membership of the Panel 
     does not affect the power of the remaining members to carry 
     out the duties under subsection (b). A vacancy in the 
     membership of the Panel shall be filled in the manner in 
     which the original appointment was made.
       ``(2) Incomplete term.--If a member of the Panel does not 
     serve the full term applicable to the member, the individual 
     appointed to fill the resulting vacancy shall be appointed 
     for the remainder of the term of the predecessor of the 
     individual.
       ``(i) Compensation; Reimbursement of Expenses.--
       ``(1) Compensation.--Members of the Panel shall receive 
     compensation for each day (including traveltime) engaged in 
     carrying out the duties of the Committee. Such compensation 
     may not be in an amount in excess of the daily equivalent of 
     the annual maximum rate of basic pay payable under the 
     General Schedule (under title 5, United States Code) for 
     positions above GS-15.
       ``(2) Reimbursement.--Members of the Panel may, in 
     accordance with chapter 57 of title 5, United States Code, be 
     reimbursed for travel, subsistence, and other necessary 
     expenses incurred in carrying out the duties of the Panel.
       ``(j) Consultants.--The Panel may procure such temporary 
     and intermittent services of consultants under section 
     3109(b) of title 5, United States Code, as the Panel may 
     determine to be useful in carrying out the duties under 
     subsection (b). The Panel may not procure services under this 
     subsection at any rate in excess of the daily equivalent of 
     the maximum annual rate of basic pay payable under the 
     General Schedule for positions above GS-15. Consultants under 
     this subsection may, in accordance with chapter 57 of title 
     5, United States Code, be reimbursed for travel, 
     subsistence, and other necessary expenses incurred for 
     activities carried out on behalf of the Panel pursuant to 
     subsection (b).
       ``(k) Powers.--
       ``(1) In general.--For the purpose of carrying out the 
     duties of the Panel under subsection (b), the Panel may hold 
     such hearings, sit and act at such times and places, take 
     such testimony, and receive such evidence as the Panel 
     considers appropriate.
       ``(2) Obtaining official information.--Upon the request of 
     the Panel, the heads of Federal agencies shall furnish 
     directly to the Panel information necessary for the Panel to 
     carry out the duties under subsection (b).
       ``(3) Use of mails.--The Panel may use the United States 
     mails in the same manner and under the same conditions as 
     Federal agencies.
       ``(l) Reports.--
       ``(1) First interim report.--Not later than one year after 
     the date of the enactment of the Medicare Preservation Act of 
     1995, the Panel shall submit to the Congress a report 
     providing the recommendations of the Panel regarding the 
     matters specified in paragraphs (1) through (4) of subsection 
     (b).
       ``(2) Second interim report.--Not later than 2 years after 
     the date of enactment specified in paragraph (1), the Panel 
     shall submit to the Congress a report providing the 
     recommendations of the Panel regarding the matters specified 
     in paragraphs (5) and (6) of subsection (b).
       ``(3) Final report.--Not later than 3 years after the date 
     of enactment specified in paragraph (1), the Panel shall 
     submit to the Congress a final report providing the 
     recommendations of the Panel under subsection (b).
       ``(m) Duration.--The Panel terminates upon the expiration 
     of the 180-day period beginning on the date on which the 
     final report under subsection (l)(3) is submitted to the 
     Congress.
       ``(n) Authorization of Appropriations.--
       ``(1) In general.--Subject to paragraph (2), for the 
     purpose of carrying out this section, there are authorized to 
     be appropriated such sums as may be necessary for each of the 
     fiscal years 1996 through 1999.
       ``(2) Limitation.--The authorization of appropriations 
     established in paragraph (1) is effective only with respect 
     to appropriations made from allocations under section 302(b) 
     of the Congressional Budget Act of 1974--
       ``(A) for the Subcommittee on Labor, Health and Human 
     Services, and Education, Committee on Appropriations of the 
     House of Representatives, in the case of any bill, 
     resolution, or amendment considered in the House; and
       ``(B) for the Subcommittee on Labor, Health and Human 
     Services, and Education, Committee on Appropriations of the 
     Senate, in the case of any bill, resolution, or amendment 
     considered in the Senate.''.
           Subtitle F--Provisions Relating to Medicare Part A

                           PART 1--HOSPITALS

          Subpart A--General Provisions Relating to Hospitals

     SEC. 15501. REDUCTIONS IN INFLATION UPDATES FOR PPS 
                   HOSPITALS.

       Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)) is 
     amended by striking subclauses (XI), (XII), and (XIII) and 
     inserting the following:
       ``(XI) for fiscal year 1996, the market basket percentage 
     increase minus 2.5 percentage points for hospitals in all 
     areas,
       ``(XII) for each of the fiscal years 1997 through 2002, the 
     market basket percentage increase minus 2.0 percentage points 
     for hospitals in all areas, and
       ``(XIII) for fiscal year 2003 and each subsequent fiscal 
     year, the market basket percentage increase for hospitals in 
     all areas.''.

     SEC. 15502. REDUCTIONS IN DISPROPORTIONATE SHARE PAYMENT 
                   ADJUSTMENTS.

       (a) In General.--Section 1886(d)(5)(F) (42 U.S.C. 
     1395ww(d)(5)(F)) is amended--
       (1) in clause (ii), by striking ``The amount'' and 
     inserting ``Subject to clause (ix), the amount''; and
       (2) by adding at the end the following new clause:
       ``(ix) In the case of discharges occurring on or after 
     October 1, 1995, the additional payment amount otherwise 
     determined under clause (ii) shall be reduced as follows:
       ``(I) For discharges occurring on or after October 1, 1995, 
     and on or before September 30, 1996, by 20 percent.
       ``(II) For discharges occurring on or after October 1, 
     1996, and on or before September 30, 1997, by 25 percent.
       ``(III) For discharges occurring on or after October 1, 
     1997, by 30 percent.''.
       (b) Conforming Amendment Relating to Determination of 
     Standardized Amounts.--Section 1886(d)(2)(C)(iv) (42 U.S.C. 
     1395ww(d)(2)(C)(iv)) is amended by striking the period at the 
     end and inserting the following: ``, and the Secretary shall 
     not take into account any reductions in the amount of such 
     additional payments resulting from the amendments made by 
     section 15502(a) of the Medicare Preservation Act of 1995.''.

     SEC. 15503. PAYMENTS FOR CAPITAL-RELATED COSTS FOR INPATIENT 
                   HOSPITAL SERVICES.

       (a) Reduction in Payments for PPS Hospitals.--
       (1) Continuation of current reductions.--Section 
     1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended in the 
     second sentence--
       (A) by striking ``through 1995'' and inserting ``through 
     2002''; and
       (B) by inserting after ``10 percent reduction'' the 
     following: ``(or a 15 percent reduction in the case of 
     payments during fiscal years 1996 through 2002)''.
       (2) Reduction in base payment rates.--Section 1886(g)(1)(A) 
     (42 U.S.C. 1395ww(g)(1)(A)) is amended by adding at the end 
     the following new sentence: ``In addition to the reduction 
     described in the preceding sentence, for discharges occurring 
     after September 30, 1995, the Secretary shall reduce by 7.47 
     percent the unadjusted standard Federal capital payment rate 
     (as described in 42 CFR 412.308(c), as in effect on the date 
     of the enactment of the Medicare Preservation Act of 1995) 
     and shall reduce by 8.27 percent the unadjusted hospital-
     specific rate (as described in 42 CFR 412.328(e)(1), as in 
     effect on such date of enactment).''.
       (b) Reduction in Payments for PPS-Exempt Hospitals.--
     Section 1886(g) (42 U.S.C. 1395ww(g)) is amended by adding at 
     the end the following new paragraph:
       ``(4)(A) Except as provided in subparagraph (B), in 
     determining the amount of the payments that may be made under 
     this title with respect to all the capital-related costs of 
     inpatient hospital services furnished during fiscal years 
     1996 through 2002 of a hospital which is not a subsection (d) 
     hospital or a subsection (d) Puerto Rico hospital, the 
     Secretary shall reduce the amounts of such payments otherwise 
     determined under this title by 15 percent.

[[Page H 10422]]

       ``(B) Subparagraph (A) shall not apply to payments with 
     respect to the capital-related costs of any hospital that is 
     a sole community hospital (as defined in subsection 
     (d)(5)(D)(iii) or a rural primary care hospital (as defined 
     in section 1861(mm)(1)).''.
       (c) Hospital-Specific Adjustment for Capital-Related Tax 
     Costs.--Section 1886(g)(1) (42 U.S.C. 1395ww(g)(1)) is 
     amended--
       (1) by redesignating subparagraph (C) as subparagraph (D), 
     and
       (2) by inserting after subparagraph (B) the following:
       ``(C)(i) For discharges occurring after September 30, 1995, 
     such system shall provide for an adjustment in an amount 
     equal to the amount determined under clause (iv) for capital-
     related tax costs for each hospital that is eligible for such 
     adjustment.
       ``(ii) Subject to clause (iii), a hospital is eligible for 
     an adjustment under this subparagraph, with respect to 
     discharges occurring in a fiscal year, if the hospital--
       ``(I) is a hospital that may otherwise receive payments 
     under this subsection,
       ``(II) is not a public hospital, and
       ``(III) incurs capital-related tax costs for the fiscal 
     year.
       ``(iii)(I) In the case of a hospital that first incurs 
     capital-related tax costs in a fiscal year after fiscal year 
     1992 because of a change from nonproprietary to proprietary 
     status or because the hospital commenced operation after such 
     fiscal year, the first fiscal year for which the hospital 
     shall be eligible for such adjustment is the second full 
     fiscal year following the fiscal year in which the hospital 
     first incurs such costs.
       ``(II) In the case of a hospital that first incurs capital-
     related tax costs in a fiscal year after fiscal year 1992 
     because of a change in State or local tax laws, the first 
     fiscal year for which the hospital shall be eligible for such 
     adjustment is the fourth full fiscal year following the 
     fiscal year in which the hospital first incurs such costs.
       ``(iv) The per discharge adjustment under this clause shall 
     be equal to the hospital-specific capital-related tax costs 
     per discharge of a hospital for fiscal year 1992 (or, in the 
     case of a hospital that first incurs capital-related tax 
     costs for a fiscal year after fiscal year 1992, for the first 
     full fiscal year for which such costs are incurred), updated 
     to the fiscal year to which the adjustment applies. Such per 
     discharge adjustment shall be added to the Federal capital 
     rate, after such rate has been adjusted as described in 42 
     CFR 412.312 (as in effect on the date of the enactment of the 
     Medicare Preservation Act of 1995), and before such rate is 
     multiplied by the applicable Federal rate percentage.
       ``(v) For purposes of this subparagraph, capital-related 
     tax costs include--
       ``(I) the costs of taxes on land and depreciable assets 
     owned by a hospital (or related organization) and used for 
     patient care,
       ``(II) payments in lieu of such taxes (made by hospitals 
     that are exempt from taxation), and
       ``(III) the costs of taxes paid by a hospital (or related 
     organization) as lessee of land, buildings, or fixed 
     equipment from a lessor that is unrelated to the hospital (or 
     related organization) under the terms of a lease that 
     requires the lessee to pay all expenses (including mortgage, 
     interest, and amortization) and leaves the lessor with an 
     amount free of all claims (sometimes referred to as a `net 
     net net' or `triple net' lease).
     In determining the adjustment required under clause (i), the 
     Secretary shall not take into account any capital-related tax 
     costs of a hospital to the extent that such costs are based 
     on tax rates and assessments that exceed those for similar 
     commercial properties.
       ``(vi) The system shall provide that the Federal capital 
     rate for any fiscal year after September 30, 1995, shall be 
     reduced by a percentage sufficient to ensure that the 
     adjustments required to be paid under clause (i) for a fiscal 
     year neither increase nor decrease the total amount that 
     would have been paid under this system but for the payment of 
     such adjustments for such fiscal year.''.
       (d) Revision of Exceptions Process Under Prospective 
     Payment System for Certain Projects.--
       (1) In general.--Section 1886(g)(1) (42 U.S.C. 
     1395ww(g)(1)), as amended by subsection (c), is amended--
       (A) by redesignating subparagraph (D) as subparagraph (E), 
     and
       (B) by inserting after subparagraph (C) the following:
       ``(D) The exceptions under the system provided by the 
     Secretary under subparagraph (B)(iii) shall include the 
     provision of exception payments under the special exceptions 
     process provided under 42 CFR 412.348(g) (as in effect on 
     September 1, 1995), except that the Secretary shall revise 
     such process as follows:
       ``(i) A hospital with at least 100 beds which is located in 
     an urban area shall be eligible under such process without 
     regard to its disproportionate patient percentage under 
     subsection (d)(5)(F) or whether it qualifies for additional 
     payment amounts under such subsection.
       ``(ii) The minimum payment level for qualifying hospitals 
     shall be 85 percent.
       ``(iii) A hospital shall be considered to meet the 
     requirement that it completes the project involved no later 
     than the end of the hospital's last cost reporting period 
     beginning after October 1, 2001, if--
       ``(I) the hospital has obtained a certificate of need for 
     the project approved by the State or a local planning 
     authority, and
       ``(II) by September 1, 1995, the hospital has expended on 
     the project at least $750,000 or 10 percent of the estimated 
     cost of the project.
       ``(iv) The amount of the exception payment made shall not 
     be reduced by any offsetting amounts.''.
       (2) Conforming amendment.--Section 1886(g)(1)(B)(iii) (42 
     U.S.C. 1395ww(g)(1)(B)(iii)) is amended by striking ``may 
     provide'' and inserting ``shall provide (in accordance with 
     subparagraph (D))''.

     SEC. 15504. REDUCTION IN ADJUSTMENT FOR INDIRECT MEDICAL 
                   EDUCATION.

       For provisions modifying medicare payment policies 
     regarding graduate medical education, see part 2 of subtitle 
     E.

     SEC. 15505. TREATMENT OF PPS-EXEMPT HOSPITALS.

       (a) Updates.--Section 1886(b)(3)(B)(ii)(V) (42 U.S.C. 
     1395ww(b)(3)(B)(ii)(V)) is amended by striking ``thorugh 
     1997'' and inserting ``through 2002''.
       (b) Rebasing for Certain Long-Term Care Hospitals.--
       (1) In general.--Section 1886(b)(3) (42 U.S.C. 
     1395ww(b)(3)) is amended--
       (A) in subparagraph (A), by striking ``and (E)'' and 
     inserting ``(E), and (F)'';
       (B) in subparagraph (B)(ii), by striking ``(A) and (E)'' 
     and inserting ``(A), (E), and (F)''; and
       (C) by adding at the end the following new subparagraph:
       ``(F)(i) In the case of a qualified long-term care hospital 
     (as defined in clause (ii)), the term `target amount' means--
       ``(I) with respect to the first 12-month cost reporting 
     period in which this subparagraph is applied to the hospital, 
     the allowable operating costs of inpatient hospital services 
     (as defined in subsection (a)(4)) recognized under this title 
     for the hospital for the 12-month cost reporting period 
     beginning during fiscal year 1991; or
       ``(II) with respect to a later cost reporting period, the 
     target amount for the preceding cost reporting period, 
     increase by the applicable percentage increase under 
     subparagraph (B)(ii) for that later cost reporting period.
       ``(ii) In clause (i), a `qualified long-term care hospital' 
     means, with respect to a cost reporting period, a hospital 
     described in clause (iv) of subsection (d)(1)(B) during 
     fiscal year 1995 for which the hospital's allowable operating 
     costs of inpatient hospital services recognized under this 
     title for each of the two most recent previous 12-month cost 
     reporting periods exceeded the hospital's target amount 
     determined under this paragraph for such cost reporting 
     periods, if the hospital--
       ``(I) has a disproportionate patient percentage during such 
     cost reporting period (as determined by the Secretary under 
     subsection (d)(5)(F)(vi) as if the hospital were a subsection 
     (d) hospital) of at least 25 percent, or
       ``(II) is located in a State for which no payment is made 
     under the State plan under title XIX for days of inpatient 
     hospital services furnished to any individual in excess of 
     the limit on the number of days of such services furnished to 
     the individual for which payment may be made under this 
     title.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to discharges occurring during cost reporting 
     periods beginning on or after October 1, 1995.
       (c) Treatment of Certain Long-Term Care Hospitals Located 
     Within Other Hospitals.--
       (1) In general.--Section 1886(d)(1)(B) (42 U.S.C. 
     1395ww(d)(1)(B)) is amended in the matter following clause 
     (v) by striking the period and inserting the following: ``, 
     or a hospital classified by the Secretary as a long-term care 
     hospital on or before September 30, 1995, and located in the 
     same building as, or on the same campus as, another 
     hospital.''.
       (2) Study by review commission.--Not later than 12 months 
     after the date a majority of the members of the Medicare 
     Payment Review Commission are first appointed, the Commission 
     shall submit a report to Congress containing recommendations 
     for appropriate revisions in the treatment of long-term care 
     hospitals located in the same building as or on the same 
     campus as another hospital for purposes of section 1886 of 
     the Social Security Act.
       (3) Effective date.--The amendment made by paragraph (1) 
     shall apply to discharges occurring on or after October 1, 
     1995.
       (d) Study of Prospective Payment System for Rehabilitation 
     Hospitals and Units.--
       (1) In general.--After consultation with the Prospective 
     Payment Assessment Commission, providers of rehabilitation 
     services, and other appropriate parties, the Secretary of 
     Health and Human Services shall submit to Congress, by not 
     later than June 1, 1996, a report on the advisability and 
     feasibility of providing for payment based on a prospective 
     payment system for inpatient services of rehabilitation 
     hospitals and units under the medicare program.
       (2) Items included.--The report shall include the 
     following:
       (A) The available and preferred systems of classifying 
     rehabilitation patients relative to duration and intensity of 
     inpatient services, including the use of functional-related 
     groups (FRGs).
       (B) The means of calculating medicare program payments to 
     reflect such patient requirements.
       (C) Other appropriate adjustments which should be made, 
     such as for geographic variations in wages and other costs 
     and outliers.

[[Page H 10423]]

       (D) A timetable under which such a system might be 
     introduced.
       (E) Whether such a system should be applied to other types 
     of providers of inpatient rehabilitation services.

     SEC. 15506. REDUCTION IN PAYMENTS TO HOSPITALS FOR ENROLLEES' 
                   BAD DEBTS.

       (a) In General.--Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(T)(i) In determining such reasonable costs for 
     hospitals, the amount of bad debts otherwise treated as 
     allowable costs which are attributable to the deductibles and 
     coinsurance amounts under this title shall be reduced by--
       ``(I) 75 percent for cost reporting periods beginning 
     during fiscal year 1996,
       ``(II) 60 percent for cost reporting periods beginning 
     during fiscal year 1997, and
       ``(III) 50 percent for subsequent cost reporting periods.
       ``(ii) Clause (i) shall not apply with respect to bad debt 
     of a hospital described in section 1886(d)(1)(B)(iv) if the 
     debt is attributable to uncollectable deductible and 
     coinsurance payments owed by individuals enrolled in a State 
     plan under title XIX or under the MediGrant program under 
     title XXI.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to hospital cost reporting periods beginning on 
     or after October 1, 1995.

     SEC. 15507. PERMANENT EXTENSION OF HEMOPHILIA PASS-THROUGH.

       Effective as if included in the enactment of OBRA-1989, 
     section 6011(d) of such Act (as amended by section 13505 of 
     OBRA-1993) is amended by striking ``and shall expire 
     September 30, 1994''.

     SEC. 15508. CONFORMING AMENDMENT TO CERTIFICATION OF 
                   CHRISTIAN SCIENCE PROVIDERS.

       (a) Hospitals.--Section 1861(e) (42 U.S.C. 1395x(e)) is 
     amended in the sixth sentence by inserting after 
     ``Massachusetts,'' the following: ``or by the Commission for 
     Accreditation of Christian Science Nursing Organizations/
     Facilities, Inc.,''.
       (b) Skilled Nursing Facilities.--Section 1861(y)(1) is 
     amended by inserting after ``Massachusetts,'' the following: 
     ``or by the Commission for Accreditation of Christian Science 
     Nursing Organizations/Facilities, Inc.,''.

           Subpart B--Provisions Relating to Rural Hospitals

     SEC. 15511. SOLE COMMUNITY HOSPITALS.

       (a) Update.--Section 1886(b)(3)(B)(iv) (42 U.S.C. 
     1395ww(b)(3)(B)(iv)) is amended--
       (A) in subclause (III), by striking ``and'' at the end; and
       (B) by striking subclause (IV) and inserting the following:
       ``(IV) for each of the fiscal years 1996 through 2000, the 
     market basket percentage increase minus 1 percentage points, 
     and
       ``(V) for fiscal year 2001 and each subsequent fiscal year, 
     the applicable percentage increase under clause (i).''.
       (b) Study of Impact of Sole Community Hospital 
     Designations.--
       (1) Study.--The Medicare Payment Review Commission shall 
     conduct a study of the impact of the designation of hospitals 
     as sole community hospitals under the medicare program on the 
     delivery of health care services to individuals in rural 
     areas, and shall include in the study an analysis of the 
     characteristics of the hospitals designated as such sole 
     community hospitals under the program.
       (2) Report.--Not later than 12 months after the date a 
     majority of the members of the Commission are first 
     appointed, the Commission shall submit to Congress a report 
     on the study conducted under paragraph (1).

     SEC. 15512. CLARIFICATION OF TREATMENT OF EAC AND RPC 
                   HOSPITALS.

       Paragraphs (1)(A)(i) and (2)(A)(i) of section 1820(i) (42 
     U.S.C. 1395i-4(i)) are each amended by striking the semicolon 
     at the end and inserting the following: ``, or in a State 
     which the Secretary finds would receive a grant under such 
     subsection during a fiscal year if funds were appropriated 
     for grants under such subsection for the fiscal year;''.

     SEC. 15513. ESTABLISHMENT OF RURAL EMERGENCY ACCESS CARE 
                   HOSPITALS.

       (a) In General.--Section 1861 (42 U.S.C. 1395x) is amended 
     by adding at the end the following new subsection:

  ``Rural Emergency Access Care Hospital; Rural Emergency Access Care 
                           Hospital Services

       ``(oo)(1) The term `rural emergency access care hospital' 
     means, for a fiscal year, a facility with respect to which 
     the Secretary finds the following:
       ``(A) The facility is located in a rural area (as defined 
     in section 1886(d)(2)(D)).
       ``(B) The facility was a hospital under this title at any 
     time during the 5-year period that ends on the date of the 
     enactment of this subsection.
       ``(C) The facility is in danger of closing due to low 
     inpatient utilization rates and operating losses, and the 
     closure of the facility would limit the access to emergency 
     services of individuals residing in the facility's service 
     area.
       ``(D) The facility has entered into (or plans to enter 
     into) an agreement with a hospital with a participation 
     agreement in effect under section 1866(a), and under such 
     agreement the hospital shall accept patients transferred to 
     the hospital from the facility and receive data from and 
     transmit data to the facility.
       ``(E) There is a practitioner who is qualified to provide 
     advanced cardiac life support services (as determined by the 
     State in which the facility is located) on-site at the 
     facility on a 24-hour basis.
       ``(F) A physician is available on-call to provide emergency 
     medical services on a 24-hour basis.
       ``(G) The facility meets such staffing requirements as 
     would apply under section 1861(e) to a hospital located in a 
     rural area, except that--
       ``(i) the facility need not meet hospital standards 
     relating to the number of hours during a day, or days during 
     a week, in which the facility must be open, except insofar as 
     the facility is required to provide emergency care on a 24-
     hour basis under subparagraphs (E) and (F); and
       ``(ii) the facility may provide any services otherwise 
     required to be provided by a full-time, on-site dietitian, 
     pharmacist, laboratory technician, medical technologist, or 
     radiological technologist on a part-time, off-site basis.
       ``(H) The facility meets the requirements applicable to 
     clinics and facilities under subparagraphs (C) through (J) of 
     paragraph (2) of section 1861(aa) and of clauses (ii) and 
     (iv) of the second sentence of such paragraph (or, in the 
     case of the requirements of subparagraph (E), (F), or (J) of 
     such paragraph, would meet the requirements if any reference 
     in such subparagraph to a `nurse practitioner' or to `nurse 
     practitioners' were deemed to be a reference to a `nurse 
     practitioner or nurse' or to `nurse practitioners or 
     nurses'); except that in determining whether a facility meets 
     the requirements of this subparagraph, subparagraphs (E) and 
     (F) of that paragraph shall be applied as if any reference to 
     a `physician' is a reference to a physician as defined in 
     section 1861(r)(1).
       ``(2) The term `rural emergency access care hospital 
     services' means the following services provided by a rural 
     emergency access care hospital and furnished to an individual 
     over a continuous period not to exceed 24 hours (except that 
     such services may be furnished over a longer period in the 
     case of an individual who is unable to leave the hospital 
     because of inclement weather):
       ``(A) An appropriate medical screening examination (as 
     described in section 1867(a)).
       ``(B) Necessary stabilizing examination and treatment 
     services for an emergency medical condition and labor (as 
     described in section 1867(b)).''.
       (b) Requiring Rural Emergency Access Care Hospitals To Meet 
     Hospital Anti-Dumping Requirements.--Section 1867(e)(5) (42 
     U.S.C. 1395dd(e)(5)) is amended by striking ``1861(mm)(1))'' 
     and inserting ``1861(mm)(1)) and a rural emergency access 
     care hospital (as defined in section 1861(oo)(1))''.
       (c) Reference to Payment Provisions Under Part B.--For 
     provisions relating to payment for rural emergency access 
     care hospital services under part B, see section 15607.
       (d) Effective Date.--The amendments made by this section 
     shall apply to fiscal years beginning on or after October 1, 
     1995.

     SEC. 15514. CLASSIFICATION OF RURAL REFERRAL CENTERS.

       (a) Prohibiting Denial of Request for Reclassification on 
     Basis of Comparability of Wages.--
       (1) In general.--Section 1886(d)(10)(D) (42 U.S.C. 
     1395ww(d)(10)(D)) is amended--
       (A) by redesignating clause (iii) as clause (iv); and
       (B) by inserting after clause (ii) the following new 
     clause:
       ``(iii) Under the guidelines published by the Secretary 
     under clause (i), in the case of a hospital which is 
     classified by the Secretary as a rural referral center under 
     paragraph (5)(C), the Board may not reject the application of 
     the hospital under this paragraph on the basis of any 
     comparison between the average hourly wage of the hospital 
     and the average hourly wage of hospitals in the area in which 
     it is located.''.
       (2) Effective date.--Notwithstanding section 
     1886(d)(10)(C)(ii) of the Social Security Act, a hospital may 
     submit an application to the Medicare Geographic 
     Classification Review Board during the 30-day period 
     beginning on the date of the enactment of this Act requesting 
     a change in its classification for purposes of determining 
     the area wage index applicable to the hospital under section 
     1886(d)(3)(D) of such Act for fiscal year 1997, if the 
     hospital would be eligible for such a change in its 
     classification under the standards described in section 
     1886(d)(10)(D) (as amended by paragraph (1)) but for its 
     failure to meet the deadline for applications under section 
     1886(d)(10)(C)(ii).
       (b) Continuing Treatment of Previously Designated 
     Centers.--Any hospital classified as a rural referral center 
     by the Secretary of Health and Human Services under section 
     1886(d)(5)(C) of the Social Security Act for fiscal year 1994 
     shall be classified as such a rural referral center for 
     fiscal year 1996 and each subsequent fiscal year.

     SEC. 15515. FLOOR ON AREA WAGE INDEX.

       (a) In General.--For purposes of section 1886(d)(3)(E) of 
     the Social Security Act for discharges occurring on or after 
     October 1, 1995, the area wage index applicable under such 
     section to any hospital which is not located in a rural 
     area (as defined in section 1886(d)(2)(D) of such Act) may 
     not be less than the average of the area wage indices 
     applicable under such section to hospitals located in 
     rural areas in the State in which the hospital is located.

[[Page H 10424]]

       (b) Budget-Neutrality in Implementation.--The Secretary of 
     Health and Human Services shall adjust the area wage indices 
     referred to in subsection (a) for hospitals not described in 
     such subsection in a manner which assures that the aggregate 
     payments made under section 1886(d) of the Social Security 
     Act in a fiscal year for the operating costs of inpatient 
     hospital services are not greater or less than those which 
     would have been made in the year if this section did not 
     apply.

             PART 2--PAYMENTS TO SKILLED NURSING FACILITIES

     SEC. 15521. PAYMENTS FOR ROUTINE SERVICE COSTS.

       (a) Clarification of Definition of Routine Service Costs.--
     Section 1888 (42 U.S.C. 1395yy) is amended by adding at the 
     end the following new subsection:
       ``(e) For purposes of this section, the `routine service 
     costs' of a skilled nursing facility are all costs which are 
     attributable to nursing services, room and board, 
     administrative costs, other overhead costs, and all other 
     ancillary services (including supplies and equipment), 
     excluding costs attributable to covered non-routine services 
     subject to payment limits under section 1888A.''.
       (b) Conforming Amendment.--Section 1888 (42 U.S.C. 1395yy) 
     is amended in the heading by inserting ``and certain 
     ancillary'' after ``service''.

     SEC. 15522. INCENTIVES FOR COST EFFECTIVE MANAGEMENT OF 
                   COVERED NON-ROUTINE SERVICES.

       (a) In General.--Title XVIII is amended by inserting after 
     section 1888 the following new section:


   ``incentives for cost-effective management of covered non-routine 
                 services of skilled nursing facilities

       ``Sec. 1888A. (a) Definitions.--For purposes of this 
     section:
       ``(1) Covered non-routine services.--The term `covered non-
     routine services' means post-hospital extended care services 
     consisting of any of the following:
       ``(A) Physical or occupational therapy or speech-language 
     pathology services, or respiratory therapy, including 
     supplies and support services incident to such services and 
     therapy.
       ``(B) Prescription drugs.
       ``(C) Complex medical equipment.
       ``(D) Intravenous therapy and solutions (including enteral 
     and parenteral nutrients, supplies, and equipment).
       ``(E) Radiation therapy.
       ``(F) Diagnostic services, including laboratory, radiology 
     (including computerized tomography services and imaging 
     services), and pulmonary services.
       ``(2) SNF market basket percentage increase.--The term `SNF 
     market basket percentage increase' for a fiscal year means a 
     percentage equal to the percentage increase in routine 
     service cost limits for the year under section 1888(a).
       ``(3) Stay.--The term `stay' means, with respect to an 
     individual who is a resident of a skilled nursing facility, a 
     period of continuous days during which the facility provides 
     extended care services for which payment may be made under 
     this title with respect to the individual during the 
     individual's spell of illness.
       ``(b) New Payment Method for Covered Non-Routine 
     Services.--
       ``(1) In general.--Subject to subsection (c), a skilled 
     nursing facility shall receive interim payments under this 
     title for covered non-routine services furnished to an 
     individual during a cost reporting period beginning during a 
     fiscal year (after fiscal year 1996) in an amount equal to 
     the reasonable cost of providing such services in accordance 
     with section 1861(v). The Secretary may adjust such payments 
     if the Secretary determines (on the basis of such estimated 
     information as the Secretary considers appropriate) that 
     payments to the facility under this paragraph for a cost 
     reporting period would substantially exceed the cost 
     reporting period limit determined under subsection (c)(1)(B).
       ``(2) Responsibility of skilled nursing facility to manage 
     billings.--
       ``(A) Clarification relating to part a billing.--In the 
     case of a covered non-routine service furnished to an 
     individual who (at the time the service is furnished) is a 
     resident of a skilled nursing facility who is entitled to 
     coverage under section 1812(a)(2) for such service, the 
     skilled nursing facility shall submit a claim for payment 
     under this title for such service under part A (without 
     regard to whether or not the item or service was furnished by 
     the facility, by others under arrangement with them made by 
     the facility, under any other contracting or consulting 
     arrangement, or otherwise).
       ``(B) Part b billing.--In the case of a covered non-routine 
     service (other than a portable X-ray or portable 
     electrocardiogram treated as a physician's service for 
     purposes of section 1848(j)(3)) furnished to an individual 
     who (at the time the service is furnished) is a resident of a 
     skilled nursing facility who is not entitled to coverage 
     under section 1812(a)(2) for such service but is entitled to 
     coverage under part B for such service, the skilled nursing 
     facility shall submit a claim for payment under this title 
     for such service under part B (without regard to whether or 
     not the item or service was furnished by the facility, by 
     others under arrangement with them made by the facility, 
     under any other contracting or consulting arrangement, or 
     otherwise).
       ``(C) Maintaining records on services furnished to 
     residents.--Each skilled nursing facility receiving payments 
     for extended care services under this title shall document on 
     the facility's cost report all covered non-routine services 
     furnished to all residents of the facility to whom the 
     facility provided extended care services for which payment 
     was made under part A during a fiscal year (beginning with 
     fiscal year 1996) (without regard to whether or not the 
     services were furnished by the facility, by others under 
     arrangement with them made by the facility, under any other 
     contracting or consulting arrangement, or otherwise).
       ``(c) Reconciliation of Amounts.--
       ``(1) Limit based on per stay limit and number of stays.--
       ``(A) In general.--If a skilled nursing facility has 
     received aggregate payments under subsection (b) for covered 
     non-routine services during a cost reporting period beginning 
     during a fiscal year in excess of an amount equal to the cost 
     reporting period limit determined under subparagraph (B), the 
     Secretary shall reduce the payments made to the facility with 
     respect to such services for cost reporting periods beginning 
     during the following fiscal year in an amount equal to such 
     excess. The Secretary shall reduce payments under this 
     subparagraph at such times and in such manner during a fiscal 
     year as the Secretary finds necessary to meet the requirement 
     of this subparagraph.
       ``(B) Cost reporting period limit.--The cost reporting 
     period limit determined under this subparagraph is an amount 
     equal to the product of--
       ``(i) the per stay limit applicable to the facility under 
     subsection (d) for the period; and
       ``(ii) the number of stays beginning during the period for 
     which payment was made to the facility for such services.
       ``(C) Prospective reduction in payments.--In addition to 
     the process for reducing payments described in subparagraph 
     (A), the Secretary may reduce payments made to a facility 
     under this section during a cost reporting period if the 
     Secretary determines (on the basis of such estimated 
     information as the Secretary considers appropriate) that 
     payments to the facility under this section for the period 
     will substantially exceed the cost reporting period limit for 
     the period determined under this paragraph.
       ``(2) Incentive payments.--
       ``(A) In general.--If a skilled nursing facility has 
     received aggregate payments under subsection (b) for covered 
     non-routine services during a cost reporting period beginning 
     during a fiscal year in an amount that is less than the 
     amount determined under paragraph (1)(B), the Secretary shall 
     pay the skilled nursing facility in the following fiscal year 
     an incentive payment equal to 50 percent of the difference 
     between such amounts, except that the incentive payment may 
     not exceed 5 percent of the aggregate payments made to the 
     facility under subsection (b) for the previous fiscal year 
     (without regard to subparagraph (B)).
       ``(B) Installment incentive payments.--The Secretary may 
     make installment payments during a fiscal year to a skilled 
     nursing facility based on the estimated incentive payment 
     that the facility would be eligible to receive with respect 
     to such fiscal year.
       ``(d) Determination of Facility Per Stay Limit.--
       ``(1) Limit for fiscal year 1997.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the Secretary shall establish separate per stay limits for 
     hospital-based and freestanding skilled nursing facilities 
     for the 12-month cost reporting period beginning during 
     fiscal year 1997 that are equal to the sum of--
       ``(i) 50 percent of the facility-specific stay amount for 
     the facility (as determined under subsection (e)) for the 
     last 12-month cost reporting period ending on or before 
     September 30, 1994, increased (in a compounded manner) by the 
     SNF market basket percentage increase for fiscal years 1995 
     through 1997; and
       ``(ii) 50 percent of the average of all facility-specific 
     stay amounts for all hospital-based facilities or all 
     freestanding facilities (whichever is applicable) during the 
     cost reporting period described in clause (i), increased (in 
     a compounded manner) by the SNF market basket percentage 
     increase for fiscal years 1995 through 1997.
       ``(B) Facilities not having 1994 cost reporting period.--In 
     the case of a skilled nursing facility for which payments 
     were not made under this title for covered non-routine 
     services for the last 12-month cost reporting period ending 
     on or before September 30, 1994, the per stay limit for the 
     12-month cost reporting period beginning during fiscal year 
     1997 shall be twice the amount determined under subparagraph 
     (A)(ii).
       ``(2) Limit for subsequent fiscal years.--The per stay 
     limit for a skilled nursing facility for a 12-month cost 
     reporting period beginning during a fiscal year after fiscal 
     year 1997 is equal to the per stay limit established under 
     this subsection for the 12-month cost reporting period 
     beginning during the previous fiscal year, increased by the 
     SNF market basket percentage increase for such subsequent 
     fiscal year minus 2 percentage points.
       ``(3) Rebasing of amounts.--
       ``(A) In general.--The Secretary shall provide for an 
     update to the facility-specific amounts used to determine the 
     per stay limits under this subsection for cost reporting 
     periods beginning on or after October 1, 1999, and every 2 
     years thereafter.

[[Page H 10425]]

       ``(B) Treatment of facilities not having rebased cost 
     reporting periods.--Paragraph (1)(B) shall apply with respect 
     to a skilled nursing facility for which payments were not 
     made under this title for covered non-routine services for 
     the 12-month cost reporting period used by the Secretary to 
     update facility-specific amounts under subparagraph (A) in 
     the same manner as such paragraph applies with respect to a 
     facility for which payments were not made under this title 
     for covered non-routine services for the last 12-month cost 
     reporting period ending on or before September 30, 1994.
       ``(e) Determination of Facility-Specific Stay Amounts.--The 
     `facility-specific stay amount' for a skilled nursing 
     facility for a cost reporting period is the sum of--
       ``(1) the average amount of payments made to the facility 
     under part A during the period which are attributable to 
     covered non-routine services furnished during a stay; and
       ``(2) the Secretary's best estimate of the average amount 
     of payments made under part B during the period for covered 
     non-routine services furnished to all residents of the 
     facility to whom the facility provided extended care services 
     for which payment was made under part A during the period 
     (without regard to whether or not the services were furnished 
     by the facility, by others under arrangement with them made 
     by the facility, under any other contracting or consulting 
     arrangement, or otherwise), as estimated by the Secretary.
       ``(f) Intensive Nursing or Therapy Needs.--
       ``(1) In general.--In applying subsection (b) to covered 
     non-routine services furnished during a stay beginning during 
     a cost reporting period beginning during a fiscal year to a 
     resident of a skilled nursing facility who requires intensive 
     nursing or therapy services, the per stay limit determined 
     for the fiscal year under the methodology for such resident 
     shall be the per stay limit developed under paragraph (2) 
     instead of the per stay limit determined under subsection 
     (d)(1)(A).
       ``(2) Per stay limit for intensive need residents.--Not 
     later than June 30, 1996, the Secretary, after consultation 
     with the Medicare Payment Review Commission and skilled 
     nursing facility experts, shall develop and publish a 
     methodology for determining on an annual basis a per stay 
     limit for residents of a skilled nursing facility who require 
     intensive nursing or therapy services.
       ``(3) Budget neutrality.--The Secretary shall adjust 
     payments under subsection (b) in a manner that ensures that 
     total payments for covered non-routine services under this 
     section are not greater or less than total payments for such 
     services would have been but for the application of paragraph 
     (1).
       ``(g) Special Treatment for Medicare Low Volume Skilled 
     Nursing Facilities.--This section shall not apply with 
     respect to a skilled nursing facility for which payment is 
     made for routine service costs during a cost reporting period 
     on the basis of prospective payments under section 1888(d).
       ``(h) Exceptions and Adjustments to Limits.--
       ``(1) In general.--The Secretary may make exceptions and 
     adjustments to the cost reporting limits applicable to a 
     skilled nursing facility under subsection (c)(1)(B) for a 
     cost reporting period, except that the total amount of any 
     additional payments made under this section for covered non-
     routine services during the cost reporting period as a result 
     of such exceptions and adjustments may not exceed 5 percent 
     of the aggregate payments made to all skilled nursing 
     facilities for covered non-routine services during the cost 
     reporting period (determined without regard to this 
     paragraph).
       ``(2) Budget neutrality.--The Secretary shall adjust 
     payments under subsection (b) in a manner that ensures that 
     total payments for covered non-routine services under this 
     section are not greater or less than total payments for such 
     services would have been but for the application of paragraph 
     (1).
       ``(i) Special Rule for X-Ray Services.--Before furnishing a 
     covered non-routine service consisting of an X-ray service 
     for which payment may be made under part A or part B to a 
     resident, a skilled nursing facility shall consider whether 
     furnishing the service through a provider of portable X-ray 
     service services would be appropriate, taking into account 
     the cost effectiveness of the service and the convenience to 
     the resident.''.
       (b) Conforming Amendment.--Section 1814(b) (42 U.S.C. 
     1395f(b)) is amended in the matter preceding paragraph (1) by 
     striking ``1813 and 1886'' and inserting ``1813, 1886, 1888, 
     and 1888A''.

     SEC. 15523. PAYMENTS FOR ROUTINE SERVICE COSTS.

       (a) Maintaining Savings Resulting From Temporary Freeze on 
     Payment Increases.--
       (1) Basing updates to per diem cost limits on limits for 
     fiscal year 1993.--
       (A) In general.--The last sentence of section 1888(a) (42 
     U.S.C. 1395yy(a)) is amended by inserting before the period 
     at the end the following: ``(except that such updates may not 
     take into account any changes in the routine service costs of 
     skilled nursing facilities occurring during cost reporting 
     periods which began during fiscal year 1994 or fiscal year 
     1995)''.
       (B) No exceptions permitted based on amendment.--The 
     Secretary of Health and Human Services shall not consider the 
     amendment made by subparagraph (A) in making any adjustments 
     pursuant to section 1888(c) of the Social Security Act.
       (2) Payments determined on prospective basis.--Any change 
     made by the Secretary of Health and Human Services in the 
     amount of any prospective payment paid to a skilled nursing 
     facility under section 1888(d) of the Social Security Act for 
     cost reporting periods beginning on or after October 1, 1995, 
     may not take into account any changes in the costs of 
     services occurring during cost reporting periods which began 
     during fiscal year 1994 or fiscal year 1995.
       (b) Establishment of Schedule for Making Adjustments to 
     Limits.--Section 1888(c) (42 U.S.C. 1395yy(c)) is amended by 
     striking the period at the end of the second sentence and 
     inserting ``, and may only make adjustments under this 
     subsection with respect to a facility which applies for an 
     adjustment during an annual application period established by 
     the Secretary.''.
       (c) Limitation on Aggregate Increase in Payments Resulting 
     From Adjustments to Limits.--Section 1888(c) (42 U.S.C. 
     1395yy(c)) is amended--
       (1) by striking ``(c) The Secretary'' and inserting 
     ``(c)(1) Subject to paragraph (2), the Secretary''; and
       (2) by adding at the end the following new paragraph:
       ``(2) The Secretary may not make any adjustments under this 
     subsection in the limits set forth in subsection (a) for a 
     cost reporting period beginning during a fiscal year to the 
     extent that the total amount of the additional payments made 
     under this title as a result of such adjustments is greater 
     than an amount equal to--
       ``(A) for cost reporting periods beginning during fiscal 
     year 1997, the total amount of the additional payments made 
     under this title as a result of adjustments under this 
     subsection for cost reporting periods beginning during fiscal 
     year 1996 increased by the SNF market basket percentage 
     increase (as defined in section 1888A(e)(3)) for fiscal year 
     1997; and
       ``(B) for cost reporting periods beginning during a 
     subsequent fiscal year, the amount determined under this 
     paragraph for the previous fiscal year increased by the SNF 
     market basket percentage increase for such subsequent fiscal 
     year.''.
       (d) Imposition of Limits For All Cost Reporting Periods.--
     Section 1888(a) (42 U.S.C. 1395yy(a)) is amended in the 
     matter preceding paragraph (1) by inserting after ``extended 
     care services'' the following: ``(for any cost reporting 
     period for which payment is made under this title to the 
     skilled nursing facility for such services)''.

     SEC. 15524. REDUCTIONS IN PAYMENT FOR CAPITAL-RELATED COSTS.

       Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)), as amended by 
     section 15506, is amended by adding at the end the following 
     new subparagraph:
       ``(U) Such regulations shall provide that, in determining 
     the amount of the payments that may be made under this title 
     with respect to all the capital-related costs of skilled 
     nursing facilities, the Secretary shall reduce the amounts of 
     such payments otherwise established under this title by 15 
     percent for payments attributable to portions of cost 
     reporting periods occurring during fiscal years 1996 through 
     2002.''.

     SEC. 15525. TREATMENT OF ITEMS AND SERVICES PAID FOR UNDER 
                   PART B.

       (a) Requiring Payment for All Items and Services To Be Made 
     to Facility.--
       (1) In general.--The first sentence of section 1842(b)(6) 
     (42 U.S.C. 1395u(b)(6)) is amended--
       (A) by striking ``and (D)'' and inserting ``(D)''; and
       (B) by striking the period at the end and inserting the 
     following: ``, and (E) in the case of an item or service 
     (other than physicians' services and other than a portable X-
     ray or portable electrocardiogram treated as a physician's 
     service for purposes of section 1848(j)(3)) furnished to an 
     individual who (at the time the item or service is furnished) 
     is a resident of a skilled nursing facility, payment shall be 
     made to the facility (without regard to whether or not the 
     item or service was furnished by the facility, by others 
     under arrangement with them made by the facility, or 
     otherwise).''.
       (2) Exclusion for items and services not billed by 
     facility.--Section 1862(a) (42 U.S.C. 1395y(a)) is amended--
       (A) by striking ``or'' at the end of paragraph (14);
       (B) by striking the period at the end of paragraph (15) and 
     inserting ``; or''; and
       (C) by inserting after paragraph (15) the following new 
     paragraph:
       ``(16) where such expenses are for covered non-routine 
     services (as defined in section 1888A(a)(1)) (other than a 
     portable X-ray or portable electrocardiogram treated as a 
     physician's service for purposes of section 1848(j)(3)) 
     furnished to an individual who is a resident of a skilled 
     nursing facility and for which the claim for payment under 
     this title is not submitted by the facility.''.
       (3) Conforming amendment.--Section 1832(a)(1) (42 U.S.C. 
     1395k(a)(1)) is amended by striking ``(2);'' and inserting 
     ``(2) and section 1842(b)(6)(E);''.
       (b) Reduction in Payments for Items and Services Furnished 
     by or Under Arrangements With Facilities.--Section 1861(v)(1) 
     (42 U.S.C. 1395x(v)(1)), as amended by sections 15506 and 
     15524, is amended by adding at the end the following new 
     subparagraph:
       ``(V) In the case of an item or service furnished by a 
     skilled nursing facility (or by others under arrangement with 
     them made 

[[Page H 10426]]
     by a skilled nursing facility) for which payment is made under part B 
     in an amount determined in accordance with section 
     1833(a)(2)(B), the Secretary shall reduce the reasonable cost 
     for such item or service otherwise determined under clause 
     (i)(I) of such section by 5.8 percent for payments 
     attributable to portions of cost reporting periods occurring 
     during fiscal years 1996 through 2002.''.

     SEC. 15526. CERTIFICATION OF FACILITIES MEETING REVISED 
                   NURSING HOME REFORM STANDARDS.

       (a) In General.--Section 1819(a)(3) (42 U.S.C. 1395i-
     3(a)(3)) is amended to read as follows:
       ``(3)(A) is certified by the Secretary as meeting the 
     standards established under subsection (b), or (B) is a 
     State-certified facility (as defined in subsection (d)).''.
       (b) Requirements Described.--Section 1819 (42 U.S.C. 1395i-
     3) is amended by striking subsections (b) through (i) and 
     inserting the following:
       ``(b) Standards for and Certification of Facilities.--
       ``(1) Standards for facilities.--
       ``(A) In general.--The Secretary shall provide for the 
     establishment and maintenance of standards consistent with 
     the contents described in subparagraph (B) for skilled 
     nursing facilities which furnish services for which payment 
     may be made under this title.
       ``(B) Contents of standards.--The standards established for 
     facilities under this paragraph shall contain provisions 
     relating to the following items:
       ``(i) The treatment of resident medical records.
       ``(ii) Policies, procedures, and bylaws for operation.
       ``(iii) Quality assurance systems.
       ``(iv) Resident assessment procedures, including care 
     planning and outcome evaluation.
       ``(v) The assurance of a safe and adequate physical plant 
     for the facility.
       ``(vi) Qualifications for staff sufficient to provide 
     adequate care.
       ``(vii) Utilization review.
       ``(viii) The protection and enforcement of resident rights 
     described in subparagraph (C).
       ``(C) Resident rights described.--The resident rights 
     described in this subparagraph are the rights of residents to 
     the following:
       ``(i) To exercise the individual's rights as a resident of 
     the facility and as a citizen or resident of the United 
     States.
       ``(ii) To receive notice of rights and services.
       ``(iii) To be protected against the misuse of resident 
     funds.
       ``(iv) To be provided privacy and confidentiality.
       ``(v) To voice grievances.
       ``(vi) To examine the results of inspections under the 
     certification program.
       ``(vii) To refuse to perform services for the facility.
       ``(viii) To be provided privacy in communications and to 
     receive mail.
       ``(ix) To have the facility provide immediate access to any 
     resident by any representative of the certification program, 
     the resident's individual physician, the State long term care 
     ombudsman, and any person the resident has designated as a 
     visitor.
       ``(x) To retain and use personal property.
       ``(xi) To be free from abuse, including verbal, sexual, 
     physical and mental abuse, corporal punishment, and 
     involuntary seclusion.
       ``(xii) To be provided with prior written notice of a 
     pending transfer or discharge.
       ``(D) Requiring notice and comment.--The standards 
     established for facilities under this paragraph may only take 
     effect after the Secretary has provided the public with 
     notice and an opportunity for comment.
       ``(2) Certification program.--
       ``(A) In general.--The Secretary shall provide for the 
     establishment and operation of a program consistent with the 
     requirements of subparagraph (B) for the certification of 
     skilled nursing facilities which meet the standards 
     established under paragraph (1) and the decertification of 
     facilities which fail to meet such standards.
       ``(B) Requirements for program.--In addition to any other 
     requirements the Secretary may impose, in establishing and 
     operating the certification program under subparagraph (A), 
     the Secretary shall ensure the following:
       ``(i) The Secretary shall ensure public access (as defined 
     by the Secretary) to the certification program's evaluations 
     of participating facilities, including compliance records and 
     enforcement actions and other reports by the Secretary 
     regarding the ownership, compliance histories, and services 
     provided by certified facilities.
       ``(ii) Not less often than every 4 years, the Secretary 
     shall audit its expenditures under the program, through an 
     entity designated by the Secretary which is not affiliated 
     with the program, as designated by the Secretary.
       ``(c) Intermediate Sanction Authority.--
       ``(1) Authority.--In addition to any other authority, where 
     the Secretary determines that a nursing facility which is 
     certified for participation under this title (whether 
     certified by the Secretary as meeting the standards 
     established under subsection (b) or a State-ceritified 
     facility) no longer or does not substantially meet the 
     requirements for such a facility under this title as 
     specified under subsection (b) and further determines that 
     the facility's deficiencies--
       ``(A) immediately jeopardize the health and safety of its 
     residents, the Secretary shall at least provide for the 
     termination of the facility's certification for participation 
     under this title, or
       ``(B) do not immediately jeopardize the health and safety 
     of its residents, the Secretary may, in lieu of providing for 
     terminating the facility's certification for participation 
     under the plan, provide lesser sanctions including one that 
     provides that no payment will be made under this title with 
     respect to any individual admitted to such facility after a 
     date specified by the Secretary.
       ``(2) Notice.--The Secretary shall not make such a decision 
     with respect to a facility until the facility has had a 
     reasonable opportunity, following the initial determination 
     that it no longer or does not substantially meet the 
     requirements for such a facility under this title, to correct 
     its deficiencies, and, following this period, has been given 
     reasonable notice and opportunity for a hearing.
       ``(3) Effectiveness.--The Secretary's decision to deny 
     payment may be made effective only after such notice to the 
     public and to the facility as may be provided for by the 
     Secretary, and its effectiveness shall terminate (A) when 
     the Secretary finds that the facility is in substantial 
     compliance (or is making good faith efforts to achieve 
     substantial compliance) with the requirements for such a 
     facility under this title, or (B) in the case described in 
     paragraph (1)(B), with the end of the eleventh month 
     following the month such decision is made effective, 
     whichever occurs first. If a facility to which clause (B) 
     of the previous sentence applies still fails to 
     substantially meet the provisions of the respective 
     section on the date specified in such clause, the 
     Secretary shall terminate such facility's certification 
     for participation under this title effective with the 
     first day of the first month following the month specified 
     in such clause.
       ``(d) State-Certified Facility Defined.--In subsection (a), 
     a `State-certified facility' means a facility licensed or 
     certified as a skilled nursing facility by the State in which 
     it is located, or a facility which otherwise meets the 
     requirements applicable to providers of nursing facility 
     services under the State plan under title XIX or the 
     MediGrant program under title XXI.''.
       (c) Conforming Amendments.--(1) Section 1861(v)(1)(E) (42 
     U.S.C. 1395x(v)(1)(E)) is amended by striking the second 
     sentence.
       (2) Section 1864 (42 U.S.C. 1395aa) is amended by striking 
     subsection (d).
       (3) Section 1866(f)(1) (42 U.S.C. 1395cc(f)(1)) is amended 
     by striking ``1819(c)(2)(E),''.
       (4) Section 1883(f) (42 U.S.C. 1395tt(f)) is amended--
       (A) in the second sentence, by striking ``such a hospital'' 
     and inserting ``a hospital which enters into an agreement 
     with the Secretary under this section''; and
       (B) by striking the first sentence.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to cost reporting periods beginning 
     on or after October 1, 1995.

     SEC. 15527. MEDICAL REVIEW PROCESS.

       In order to ensure that medicare beneficiaries are 
     furnished appropriate extended care services, the Secretary 
     of Health and Human Services shall establish and implement a 
     thorough medical review process to examine the effects of the 
     amendments made by this part on the quality of extended care 
     services furnished to medicare beneficiaries. In developing 
     such a medical review process, the Secretary shall place a 
     particular emphasis on the quality of non-routine covered 
     services for which payment is made under section 1888A of the 
     Social Security Act.

     SEC. 15528. REPORT BY MEDICARE PAYMENT REVIEW COMMISSION.

       Not later than October 1, 1997, the Medicare Payment Review 
     Commission shall submit to Congress a report on the system 
     under which payment is made under the medicare program for 
     extended care services furnished by skilled nursing 
     facilities, and shall include in the report the following:
       (1) An analysis of the effect of the methodology 
     established under section 1888A of the Social Security Act 
     (as added by section 15522) on the payments for, and the 
     quality of, extended care services under the medicare 
     program.
       (2) An analysis of the advisability of determining the 
     amount of payment for covered non-routine services of 
     facilities (as described in such section) on the basis of the 
     amounts paid for such services when furnished by suppliers 
     under part B of the medicare program.
       (3) An analysis of the desirability of maintaining separate 
     limits for hospital-based and freestanding facilities in the 
     costs of extended care services recognized as reasonable 
     under the medicare program.
       (4) An analysis of the quality of services furnished by 
     skilled nursing facilities.
       (5) An analysis of the adequacy of the process and 
     standards used to provide exceptions to the limits described 
     in paragraph (3).

     SEC. 15529. EFFECTIVE DATE.

       Except as otherwise provided in this part, the amendments 
     made by this part shall apply to services furnished during 
     cost reporting periods (or portions of cost reporting 
     periods) beginning on or after October 1, 1996.
     
[[Page H 10427]]


         PART 3--CLARIFICATION OF CREDITS TO PART A TRUST FUND

     SEC. 15531. CLARIFICATION OF AMOUNT OF TAXES CREDITED TO 
                   FEDERAL HOSPITAL INSURANCE TRUST FUND.

       Section 121(e)(1)(B) of the Social Security Amendments of 
     1983 (Public Law 98-21) is amended by adding at the end the 
     following: ``The Secretary of the Treasury shall carry out 
     this subparagraph without regard to any amendments to this 
     subsection or to section 86 of the Internal Revenue Code of 
     1986 which take effect on or after January 1, 1994.''.
           Subtitle G--Provisions Relating to Medicare Part B

                        PART 1--PAYMENT REFORMS

     SEC. 15601. PAYMENTS FOR PHYSICIANS' SERVICES.

       (a) Replacement of Volume Performance Standard With 
     Sustainable Growth Rate.--Section 1848(f) (42 U.S.C. 1395w-
     4(f)) is amended to read as follows:
       ``(f) Sustainable Growth Rate.--
       ``(1) Specification of growth rate.--
       ``(A) Fiscal year 1996.--The sustainable growth rate for 
     all physicians' services for fiscal year 1996 shall be equal 
     to the product of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     change in the medicare economic index for 1996 (described in 
     the fourth sentence of section 1842(b)(3)) (divided by 100),
       ``(ii) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in the average number of individuals 
     enrolled under this part (other than private plan enrollees) 
     from fiscal year 1995 to fiscal year 1996,
       ``(iii) 1 plus the Secretary's estimate of the projected 
     percentage growth in real gross domestic product per capita 
     (divided by 100) from fiscal year 1995 to fiscal year 1996, 
     plus 2 percentage points, and
       ``(iv) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in expenditures for all physicians' 
     services in fiscal year 1996 (compared with fiscal year 1995) 
     which will result from changes in law, determined without 
     taking into account estimated changes in expenditures due to 
     changes in the volume and intensity of physicians' services 
     or changes in expenditures resulting from changes in the 
     update to the conversion factor under subsection (d),
     minus 1 and multiplied by 100.

       ``(B) Subsequent fiscal years.--The sustainable growth rate 
     for all physicians' services for fiscal year 1997 and each 
     subsequent fiscal year shall be equal to the product of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     change in the medicare economic index for the fiscal year 
     involved (described in the fourth sentence of section 
     1842(b)(3)) (divided by 100),
       ``(ii) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in the average number of individuals 
     enrolled under this part (other than private plan 
     enrollees) from the previous fiscal year to the fiscal 
     year involved,
       ``(iii) 1 plus the Secretary's estimate of the projected 
     percentage growth in real gross domestic product per capita 
     (divided by 100) from the previous fiscal year to the fiscal 
     year involved, plus 2 percentage points, and
       ``(iv) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in expenditures for all physicians' 
     services in the fiscal year (compared with the previous 
     fiscal year) which will result from changes in law (including 
     changes made by the Secretary in response to section 1895), 
     determined without taking into account estimated changes in 
     expenditures due to changes in the volume and intensity of 
     physicians' services or changes in expenditures resulting 
     from changes in the update to the conversion factor under 
     subsection (d)(3),

     minus 1 and multiplied by 100.
       ``(2) Exclusion of services furnished to private plan 
     enrollees.--In this subsection, the term `physicians' 
     services' with respect to a fiscal year does not include 
     services furnished to an individual enrolled under this part 
     who has elected to receive benefits under this title for the 
     fiscal year through a MedicarePlus product offered under part 
     C or through enrollment with an eligible organization with a 
     risk-sharing contract under section 1876.''.
       (b) Establishing Update to Conversion Factor to Match 
     Spending Under Sustainable Growth Rate.--
       (1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is 
     amended--
       (A) by striking paragraph (2);
       (B) by amending paragraph (3) to read as follows:
       ``(3) Update.--
       ``(A) In general.--Subject to subparagraph (E), for 
     purposes of this section the update for a year (beginning 
     with 1997) is equal to the product of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     increase in the medicare economic index (described in the 
     fourth sentence of section 1842(b)(3)) for the year (divided 
     by 100), and
       ``(ii) 1 plus the Secretary's estimate of the update 
     adjustment factor for the year (divided by 100),

     minus 1 and multiplied by 100.
       ``(B) Update adjustment factor.--The `update adjustment 
     factor' for a year is equal to the quotient of--
       ``(i) the difference between (I) the sum of the allowed 
     expenditures for physicians' services furnished during each 
     of the years 1995 through the year involved and (II) the sum 
     of the amount of actual expenditures for physicians' services 
     furnished during each of the years 1995 through the previous 
     year; divided by
       ``(ii) the Secretary's estimate of allowed expenditures for 
     physicians' services furnished during the year.
       ``(C) Determination of allowed expenditures.--For purposes 
     of subparagraph (B), allowed expenditures for physicians' 
     services shall be determined as follows (as estimated by the 
     Secretary):
       ``(i) In the case of allowed expenditures for 1995, such 
     expenditures shall be equal to actual expenditures for 
     services furnished during the 12-month period ending with 
     June of 1995.
       ``(ii) In the case of allowed expenditures for 1996 and 
     each subsequent year, such expenditures shall be equal to 
     allowed expenditures for the previous year, increased by the 
     sustainable growth rate under subsection (f) for the fiscal 
     year which begins during the year.
       ``(D) Determination of actual expenditures.--For purposes 
     of subparagraph (B), the amount of actual expenditures for 
     physicians' services furnished during a year shall be equal 
     to the amount of expenditures for such services during the 
     12-month period ending with June of the previous year.
       ``(E) Restriction on variation from medicare economic 
     index.--
       ``(i) In general.--Notwithstanding the amount of the update 
     adjustment factor determined under subparagraph (B) for a 
     year, the update in the conversion factor under this 
     paragraph for the year may not be--

       ``(I) greater than 103 percent of 1 plus the Secretary's 
     estimate of the percentage increase in the medicare economic 
     index (described in the fourth sentence of section 
     1842(b)(3)) for the year (divided by 100); or
       ``(II) less than the applicable percentage limit of 1 plus 
     the Secretary's estimate of the percentage increase in the 
     medicare economic index (described in the fourth sentence of 
     section 1842(b)(3)) for the year (divided by 100).

       ``(ii) Applicable percentage limit.--In clause (i)(II), the 
     `applicable percentage limit' for a year is--

       ``(I) for 1997, 93 percent;
       ``(II) for 1998, 92.25 percent; and
       ``(III) for 1999 and each succeeding year, 92 percent.''; 
     and

       (C) by adding at the end the following new paragraph:
       ``(4) Reporting requirements.--
       ``(A) In general.--Not later than November 1 of each year 
     (beginning with 1996), the Secretary shall transmit to the 
     Congress a report that describes the update in the conversion 
     factor for physicians' services (as defined in subsection 
     (f)(3)(A)) in the following year.
       ``(B) Commission review.--The Medicare Payment Review 
     Commission shall review the report submitted under 
     subparagraph (A) for a year and shall submit to the Congress, 
     by not later than December 1 of the year, a report containing 
     its analysis of the conversion factor for the following 
     year.''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to physicians' services furnished on or after 
     January 1, 1996.
       (c) Establishment of Single Conversion Factor for 1996.--
       (1) In general.--Section 1848(d)(1) (42 U.S.C. 1395w-
     4(d)(1)) is amended--
       (A) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (B) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Special rule for 1996.--For 1996, the conversion 
     factor under this subsection shall be $35.42 for all 
     physicians' services.''.
       (2) Conforming amendments.--Section 1848 (42 U.S.C. 1395w-
     4), as amended by paragraph (1), is amended--
       (A) by striking ``(or factors)'' each place it appears in 
     subsection (d)(1)(A) and (d)(1)(D)(ii);
       (B) in subsection (d)(1)(A), by striking ``or updates'';
       (C) in subsection (d)(1)(D)(ii), by striking ``(or 
     updates)''; and
       (D) in subsection (i)(1)(C), by striking ``conversion 
     factors'' and inserting ``the conversion factor''.

     SEC. 15602. ELIMINATION OF FORMULA-DRIVEN OVERPAYMENTS FOR 
                   CERTAIN OUTPATIENT HOSPITAL SERVICES.

       (a) Ambulatory Surgical Center Procedures.--Section 
     1833(i)(3)(B)(i)(II) (42 U.S.C. 1395l(i)(3)(B)(i)(II)) is 
     amended--
       (1) by striking ``of 80 percent''; and
       (2) by striking the period at the end and inserting the 
     following: ``, less the amount a provider may charge as 
     described in clause (ii) of section 1866(a)(2)(A).''.
       (b) Radiology Services and Diagnostic Procedures.--Section 
     1833(n)(1)(B)(i)(II) (42 U.S.C. 1395l(n)(1)(B)(i)(II)) is 
     amended--
       (1) by striking ``of 80 percent''; and
       (2) by striking the period at the end and inserting the 
     following: ``, less the amount a provider may charge as 
     described in clause (ii) of section 1866(a)(2)(A).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to services furnished during portions of cost 
     reporting periods occurring on or after October 1, 1995.

     SEC. 15603. PAYMENTS FOR DURABLE MEDICAL EQUIPMENT.

       (a) Reduction in Payment Amounts for Items of Durable 
     Medical Equipment.--
       (1) Freeze in update for covered items.--Section 
     1834(a)(14) (42 U.S.C. 1395m(a)(14)) is amended--
       (A) by striking ``and'' at the end of subparagraph (A);
       (B) in subparagraph (B)--

[[Page H 10428]]

       (i) by striking ``a subsequent year'' and inserting ``1993, 
     1994, and 1995'', and
       (ii) by striking the period at the end and inserting a 
     semicolon; and
       (C) by adding at the end the following:
       ``(C) for each of the years 1996 through 2002, 0 percentage 
     points; and
       ``(D) for a subsequent year, the percentage increase in the 
     consumer price index for all urban consumers (U.S. urban 
     average) for the 12-month period ending with June of the 
     previous year.''.
       (2) Update for orthotics and prosthetics.--Section 
     1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is amended--
       (A) by striking ``and'' at the end of clause (iii);
       (B) by redesignating clause (iv) as clause (v); and
       (C) by inserting after clause (iii) the following new 
     clause:
       ``(iv) for each of the years 1996 through 2002, 1 percent, 
     and''.
       (b) Oxygen and Oxygen Equipment.--Section 1834(a)(9)(C) (42 
     U.S.C. 1395m(a)(9)(C)) is amended--
       (1) by striking ``and'' at the end of clause (iii);
       (2) in clause (iv)--
       (A) by striking ``a subsequent year'' and inserting ``1993, 
     1994, and 1995'', and
       (B) by striking the period at the end and inserting a 
     semicolon; and
       (3) by adding at the end the following new clauses:
       ``(v) in 1996, is 80 percent of the national limited 
     monthly payment rate computed under subparagraph (B) for the 
     item for the year; and
       ``(vi) in a subsequent year, is the national limited 
     monthly payment rate computed under subparagraph (B) for the 
     item for the year.''.
       (c) Payment for Upgraded Durable Medical Equipment.--
     Section 1834(a) (42 U.S.C. 1395m(a)) is amended by inserting 
     after paragraph (15) the following new paragraph:
       ``(16) Payment for certain upgraded items.--
       ``(A) Individual's right to choose upgraded item.--
     Notwithstanding any other provision of this title, effective 
     on the date on which the Secretary issues regulations under 
     subparagraph (C), payment may be made under this part for an 
     upgraded item of durable medical equipment in the same manner 
     as payment may be made for a standard item of durable medical 
     equipment.
       ``(B) Payments to supplier.--In the case of the purchase or 
     rental of an upgraded item under subparagraph (A)--
       ``(i) the supplier shall receive payment under this 
     subsection with respect to such item as if such item were a 
     standard item; and
       ``(ii) the individual purchasing or renting the item shall 
     pay the supplier an amount equal to the difference between 
     the supplier's charge and the amount under clause (i).
     In no event may the supplier's charge for an upgraded item 
     exceed the applicable fee schedule amount (if any) for such 
     item.
       ``(C) Consumer protection safeguards.--The Secretary shall 
     issue regulations providing for consumer protection standards 
     with respect to the furnishing of upgraded equipment under 
     subparagraph (A). Such regulations shall provide for--
       ``(i) full disclosure by the supplier of the availability 
     and price of standard items and proof of receipt of such 
     disclosure information by the beneficiary before the 
     furnishing of the upgraded item;
       ``(ii) conditions of participation for suppliers of 
     upgraded items, including conditions relating to billing 
     procedures;
       ``(iii) sanctions (including exclusion) of suppliers who 
     are determined to have engaged in coercive or abusive 
     practices; and
       ``(iv) such other safeguards as the Secretary determines 
     are necessary.''.
       (d) Payment Freeze for Parenteral and Enteral Nutrients, 
     Supplies, and Equipment.--In determining the amount of 
     payment under part B of title XVIII of the Social Security 
     Act with respect to parenteral and enteral nutrients, 
     supplies, and equipment during each of the years 1996 through 
     2002, the charges determined to be reasonable with respect to 
     such nutrients, supplies, and equipment may not exceed the 
     charges determined to be reasonable with respect to such 
     nutrients, supplies, and equipment during 1993.

     SEC. 15604. REDUCTION IN UPDATES TO PAYMENT AMOUNTS FOR 
                   CLINICAL DIAGNOSTIC LABORATORY TESTS.

       (a) Change in Update.--Section 1833(h)(2)(A)(ii)(IV) (42 
     U.S.C. 1395l(h)(2)(A)(ii)(IV)) is amended by striking ``1994 
     and 1995'' and inserting ``1994 through 2002''.
       (b) Lowering Cap on Payment Amounts.--Section 1833(h)(4)(B) 
     (42 U.S.C. 1395l(h)(4)(B)) is amended--
       (1) in clause (vi), by striking ``and'' at the end;
       (2) in clause (vii)--
       (A) by inserting ``and before January 1, 1997,'' after 
     ``1995,'', and
       (B) by striking the period at the end and inserting ``, 
     and''; and
       (3) by adding at the end the following new clause:
       ``(viii) after December 31, 1996, is equal to 65 percent of 
     such median.''.

     SEC. 15605. EXTENSION OF REDUCTIONS IN PAYMENTS FOR COSTS OF 
                   HOSPITAL OUTPATIENT SERVICES.

       (a) Reduction in Payments for Capital-Related Costs.--
     Section 1861(v)(1)(S)(ii)(I) (42 U.S.C. 
     1395x(v)(1)(S)(ii)(I)) is amended by striking ``through 
     1998'' and inserting ``through 2002''.
       (b) Reduction in Payments for Other Costs.--Section 
     1861(v)(1)(S)(ii)(II) (42 U.S.C. 1395x(v)(1)(S)(ii)(II)) is 
     amended by striking ``through 1998'' and inserting ``through 
     2002''.

     SEC. 15606. FREEZE IN PAYMENTS FOR AMBULATORY SURGICAL CENTER 
                   SERVICES.

       The Secretary of Health and Human Services shall not 
     provide for any inflation update in the payment amounts under 
     subparagraphs (A) and (B) of section 1833(i)(2) of the Social 
     Security Act for any of the fiscal years 1996 through 2002.

     SEC. 15607. RURAL EMERGENCY ACCESS CARE HOSPITALS.

       (a) Coverage Under Part B.--Section 1832(a)(2) (42 U.S.C. 
     1395k(a)(2)) is amended--
       (1) by striking ``and'' at the end of subparagraph (I);
       (2) by striking the period at the end of subparagraph (J) 
     and inserting ``; and''; and
       (3) by adding at the end the following new subparagraph:
       ``(K) rural emergency access care hospital services (as 
     defined in section 1861(oo)(2)).''.
       (b) Payment Based on Payment for Outpatient Rural Primary 
     Care Hospital Services.--
       (1) In general.--Section 1833(a)(6) (42 U.S.C. 1395l(a)(6)) 
     is amended by striking ``services,'' and inserting ``services 
     and rural emergency access care hospital services,''.
       (2) Payment methodology described.--Section 1834(g) (42 
     U.S.C. 1395m(g)) is amended--
       (A) in the heading, by striking ``Services'' and inserting 
     ``Services and Rural Emergency Access Care Hospital 
     Services''; and
       (B) by adding at the end the following new sentence: ``The 
     amount of payment for rural emergency access care hospital 
     services provided during a year shall be determined using the 
     applicable method provided under this subsection for 
     determining payment for outpatient rural primary care 
     hospital services during the year.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after October 1, 
     1995.

     SEC. 15608. ENSURING PAYMENT FOR PHYSICIAN AND NURSE FOR 
                   JOINTLY FURNISHED ANESTHESIA SERVICES.

       (a) Payment for Jointly Furnished Single Case.--
       (1) Payment to physician.--Section 1848(a)(4) (42 U.S.C. 
     1395w-4(a)(4)) is amended by adding at the end the following 
     new subparagraph:
       ``(C) Payment for single case.--Notwithstanding section 
     1862(a)(1)(A), with respect to physicians' services 
     consisting of the furnishing of anesthesia services for a 
     single case that are furnished jointly with a certified 
     registered nurse anesthetist, if the carrier determines that 
     the use of both the physician and the nurse anesthetist to 
     furnish the anesthesia service was not medically necessary, 
     the fee schedule amount for the physicians' services shall be 
     equal to 50 percent (or 55 percent, in the case of services 
     furnished during 1996 or 1997) of the fee schedule amount 
     applicable under this section for anesthesia services 
     personally performed by the physician alone (without regard 
     to this subparagraph). Nothing in this subparagraph may be 
     construed to affect the application of any provision of law 
     regarding balance billing.''.
       (2) Payment to crna.--Section 1833(l)(4)(B) (42 U.S.C. 
     1395l(l)(4)(B)) is amended by adding at the end the following 
     new clause:
       ``(iv) Notwithstanding section 1862(a)(1)(A), in the case 
     of services of a certified registered nurse anesthetist 
     consisting of the furnishing of anesthesia services for a 
     single case that are furnished jointly with a physician, if 
     the carrier determines that the use of both the physician and 
     the nurse anesthetist to furnish the anesthesia service was 
     not medically necessary, the fee schedule amount for the 
     services furnished by the certified registered nurse 
     anesthetist shall be equal to 50 percent (or 40 percent, in 
     the case of services furnished during 1996 or 1997) of the 
     fee schedule amount applicable under section 1848 for 
     anesthesia services personally performed by the physician 
     alone (without regard to this clause).''.
       (b) Effective Date.--The amendments made by subsections (a) 
     shall apply to services furnished on or after July 1, 1996.

     SEC. 15609. STATEWIDE FEE SCHEDULE AREA FOR PHYSICIANS' 
                   SERVICES.

       (a) In General.--Notwithstanding section 1848(j)(2) of the 
     Social Security Act, in the case of the State of Wisconsin, 
     the Secretary of Health and Human Services shall treat the 
     State as a single fee schedule area for purposes of 
     determining the fee schedule amount (as referred to in 
     section 1848(a) of such Act) for physicians' services (as 
     defined in section 1848(j)(3) of such Act) under part B of 
     the medicare program.
       (b) Budget-Neutrality.--Notwithstanding any provision of 
     part B of title XVIII of the Social Security Act, the 
     Secretary shall carry out subsection (a) in a manner that 
     ensures that total payments for physicians' services (as so 
     defined) furnished by physicians in Wisconsin during a year 
     are not greater or less than total payments for such services 
     would have been but for this section.
       (c) Construction.--Nothing in this section shall be 
     construed as limiting the availability (to the Secretary, the 
     appropriate agency or organization with a contract under 
     section 1842 of such Act, or physicians in the State of 
     Wisconsin) of otherwise applicable 

[[Page H 10429]]
     administrative procedures for modifying the fee schedule area or areas 
     in the State after implementation of subsection (a).
       (d) Effective Date.--This section shall apply with respect 
     to physicians' services furnished on or after January 1, 
     1997.

     SEC. 15609A. ESTABLISHMENT OF FEE SCHEDULE FOR AMBULANCE 
                   SERVICES.

       (a) Payment in Accordance With Fee Schedule.--Section 
     1833(a)(1) (42 U.S.C. 1395l(a)(1)) is amended--
       (1) by striking ``and (P)'' and inserting ``(P)''; and
       (2) by striking the semicolon at the end and inserting the 
     following: ``, and (Q) with respect to ambulance service, the 
     amounts paid shall be 80 percent of the lesser of the actual 
     charge for the services or the amount determined by a fee 
     schedule established by the Secretary for the purposes of 
     this subparagraph (in accordance with section 15608(b) of the 
     Medicare Preservation Act);''.
       (b) Requirements for Establishment of Fee Schedule.--
       (1) In general.--The Secretary of Health and Human Services 
     shall establish the fee schedule for ambulance services under 
     section 1833(a)(1)(Q) of the Social Security Act (as added by 
     subsection (a)) through a negotiated rulemaking process 
     described in title 5, United States Code, and in accordance 
     with the requirements of this subsection.
       (2) Considerations.--In establishing the fee schedule for 
     ambulance services, the Secretary shall--
       (A) establish mechanisms to control increases in 
     expenditures for ambulance services under part B of the 
     medicare program which fairly reflect the changing nature of 
     the ambulance service industry;
       (B) establish definitions for ambulance services which 
     promote efficiency and link payments (including fees for 
     assessment and treatment services) to the type of service 
     provided;
       (C) take into account regional differences which affect 
     cost and productivity, including differences in the costs of 
     resources and the costs of uncompensated care;
       (D) apply dynamic adjustments to payment rates to account 
     for inflation, demographic changes in the population of 
     medicare beneficiaries, and changes in the number of 
     providers of ambulance services participating in the medicare 
     program; and
       (E) phase in the application of the payment rates under the 
     fee schedule in an efficient and fair manner.
       (3) Savings.--In establishing the fee schedule for 
     ambulance services, the Secretary shall--
       (A) ensure that the aggregate amount of payments made for 
     ambulance services under part B of the medicare program 
     during 1998 does not exceed the aggregate amount of payments 
     which would have been made for such services under part B of 
     the program during 1998 if the amendments made by this 
     section were not in effect; and
       (B) set the payment amounts provided under the fee schedule 
     for services furnished in 1999 and each subsequent year at 
     amounts equal to the payment amounts under the fee schedule 
     for service furnished during the previous year, increased by 
     the percentage increase in the consumer price index for all 
     urban consumers (U.S. city average) for the 12-month period 
     ending with June of the previous year.
       (4) Consultation.--In establishing the fee schedule for 
     ambulance services, the Secretary shall consult regularly 
     with the American Ambulance Association, the National 
     Association of State Medical Directors, and other national 
     organizations representing individuals and entities who 
     furnish or regulate ambulance services, and shall share with 
     such associations and organizations the data and data 
     analysis used in establishing the fee schedule, including 
     data on variations in payments for ambulance services under 
     part B of the medicare program for years prior to 1998 among 
     geographic areas and types of ambulance service providers.
       (c) Effective Date.--The amendment made by subsection (a) 
     and the fee schedule described in subsection (b) shall apply 
     to ambulance services furnished on or after January 1, 1998.

     SEC. 15609B. STANDARDS FOR PHYSICAL THERAPY SERVICES 
                   FURNISHED BY PHYSICIANS.

       (a) Application of Standards for Other Providers of 
     Physical Therapy Services to Services Furnished by 
     Physicians.--Section 1862(a) (42 U.S.C. 1395y(a)), as amended 
     by section 15525(a)(2), is amended--
       (1) by striking ``or'' at the end of paragraph (15);
       (2) by striking the period at the end of paragraph (16) and 
     inserting ``; or''; and
       (3) by inserting after paragraph (16) the following new 
     paragraph:
       ``(17) in the case of physicians' services under section 
     1848(j)(3) consisting of outpatient physical therapy services 
     or outpatient occupational therapy services, which are 
     furnished by a physician who does not meet the requirements 
     applicable under section 1861(p) to a clinic or 
     rehabilitation agency furnishing such services.''.
       (b) Conforming Amendment.--Section 1848(j)(3) (42 U.S.C. 
     1395w-4(j)(3)) is amended by inserting ``(subject to section 
     1862(a)(17))'' after ``(2)(D)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to services furnished on or after January 1, 
     1996.

                         PART 2--PART B PREMIUM

     SEC. 15611. EXTENSION OF PART B PREMIUM.

       (a) In General.--Section 1839(e)(1) (42 U.S.C. 1395r(e)(1)) 
     is amended--
       (1) in subparagraph (A)--
       (A) by striking ``and prior to January 1999'', and
       (B) by inserting ``(or, if higher, the percent described in 
     subparagraph (C))'' after ``50 percent''; and
       (2) by adding at the end the following new subparagraph:
       ``(C) For purposes of subparagraph (A), the percent 
     described in this subparagraph is the ratio (expressed as a 
     percentage) of the monthly premium established under this 
     section for months in 1995 to the monthly actuarial rate for 
     enrollees age 65 and over applicable to such months (as 
     specified in the most recent report of the Board of Trustees 
     of the Federal Supplementary Medical Insurance Trust Fund 
     published prior to the date of the enactment of the Medicare 
     Preservation Act of 1995).''.
       (b) Effective Date.--The amendments made by subsection (a) 
     apply to premiums for months beginning with January 1996.

     SEC. 15612. INCOME-RELATED REDUCTION IN MEDICARE SUBSIDY.

       (a) In General.--Section 1839 (42 U.S.C. 1395r) is amended 
     by adding at the end the following:
       ``(h)(1) Notwithstanding the previous subsections of this 
     section, in the case of an individual whose modified adjusted 
     gross income for a taxable year ending with or within a 
     calendar year (as initially determined by the Secretary in 
     accordance with paragraph (3)) exceeds the threshold amount 
     described in paragraph (5)(B), the Secretary shall increase 
     the amount of the monthly premium for months in the calendar 
     year by an amount equal to the difference between--
       ``(A) 200 percent of the monthly actuarial rate for 
     enrollees age 65 and over as determined under subsection 
     (a)(1) for that calendar year; and
       ``(B) the total of the monthly premiums paid by the 
     individual under this section (determined without regard to 
     subsection (b)) during such calendar year.
       ``(2) In the case of an individual described in paragraph 
     (1) whose modified adjusted gross income exceeds the 
     threshold amount by less than $25,000, the amount of the 
     increase in the monthly premium applicable under paragraph 
     (1) shall be an amount which bears the same ratio to the 
     amount of the increase described in paragraph (1) (determined 
     without regard to this paragraph) as such excess bears to 
     $25,000. In the case of a joint return filed under section 
     6013 of the Internal Revenue Code of 1986 by spouses both of 
     whom are enrolled under this part, the previous sentence 
     shall be applied by substituting `$50,000' for `$25,000'. The 
     preceding provisions of this paragraph shall not apply to any 
     individual whose threshold amount is zero.
       ``(3) The Secretary shall make an initial determination of 
     the amount of an individual's modified adjusted gross income 
     for a taxable year ending with or within a calendar year for 
     purposes of this subsection as follows:
       ``(A) Not later than October 1 of the year preceding the 
     year, the Secretary shall provide notice to each individual 
     whom the Secretary finds (on the basis of the individual's 
     actual modified adjusted gross income for the most recent 
     taxable year for which such information is available or other 
     information provided to the Secretary by the Secretary of the 
     Treasury) will be subject to an increase under this 
     subsection that the individual will be subject to such an 
     increase, and shall include in such notice the Secretary's 
     estimate of the individual's modified adjusted gross income 
     for the year.
       ``(B) If, during the 30-day period beginning on the date 
     notice is provided to an individual under subparagraph (A), 
     the individual provides the Secretary with information on 
     the individual's anticipated modified adjusted gross 
     income for the year, the amount initially determined by 
     the Secretary under this paragraph with respect to the 
     individual shall be based on the information provided by 
     the individual.
       ``(C) If an individual does not provide the Secretary with 
     information under subparagraph (B), the amount initially 
     determined by the Secretary under this paragraph with respect 
     to the individual shall be the amount included in the notice 
     provided to the individual under subparagraph (A).
       ``(4)(A) If the Secretary determines (on the basis of final 
     information provided by the Secretary of the Treasury) that 
     the amount of an individual's actual modified adjusted gross 
     income for a taxable year ending with or within a calendar 
     year is less than or greater than the amount initially 
     determined by the Secretary under paragraph (3), the 
     Secretary shall increase or decrease the amount of the 
     individual's monthly premium under this section (as the case 
     may be) for months during the following calendar year by an 
     amount equal to \1/12\ of the difference between--
       ``(i) the total amount of all monthly premiums paid by the 
     individual under this section during the previous calendar 
     year; and
       ``(ii) the total amount of all such premiums which would 
     have been paid by the individual during the previous calendar 
     year if the amount of the individual's modified adjusted 
     gross income initially determined under paragraph (3) were 
     equal to the actual amount of the individual's modified 
     adjusted gross income determined under this paragraph.
       ``(B) In the case of an individual who is not enrolled 
     under this part for any calendar 

[[Page H 10430]]
     year for which the individual's monthly premium under this section for 
     months during the year would be increased pursuant to 
     subparagraph (A) if the individual were enrolled under this 
     part for the year, the Secretary may take such steps as the 
     Secretary considers appropriate to recover from the 
     individual the total amount by which the individual's monthly 
     premium for months during the year would have been increased 
     under subparagraph (A) if the individual were enrolled under 
     this part for the year.
       ``(C) In the case of a deceased individual for whom the 
     amount of the monthly premium under this section for months 
     in a year would have been decreased pursuant to subparagraph 
     (A) if the individual were not deceased, the Secretary shall 
     make a payment to the individual's surviving spouse (or, in 
     the case of an individual who does not have a surviving 
     spouse, to the individual's estate) in an amount equal to the 
     difference between--
       ``(i) the total amount by which the individual's premium 
     would have been decreased for all months during the year 
     pursuant to subparagraph (A); and
       ``(ii) the amount (if any) by which the individual's 
     premium was decreased for months during the year pursuant to 
     subparagraph (A).
       ``(5) In this subsection, the following definitions apply:
       ``(A) The term `modified adjusted gross income' means 
     adjusted gross income (as defined in section 62 of the 
     Internal Revenue Code of 1986)--
       ``(i) determined without regard to sections 135, 911, 931, 
     and 933 of such Code, and
       ``(ii) increased by the amount of interest received or 
     accrued by the taxpayer during the taxable year which is 
     exempt from tax under such Code.
       ``(B) The term `threshold amount' means--
       ``(i) except as otherwise provided in this paragraph, 
     $75,000,
       ``(ii) $125,000, in the case of a joint return (as defined 
     in section 7701(a)(38) of such Code), and
       ``(iii) zero in the case of a taxpayer who--
       ``(I) is married at the close of the taxable year but does 
     not file a joint return (as so defined) for such year, and
       ``(II) does not live apart from his spouse at all times 
     during the taxable year.''.
       (b) Conforming Amendment.--Section 1839(f) (42 U.S.C. 
     1395r(f)) is amended by striking ``if an individual'' and 
     inserting the following: ``if an individual (other than an 
     individual subject to an increase in the monthly premium 
     under this section pursuant to subsection (h))''.
       (c) Reporting Requirements for Secretary of the Treasury.--
       (1) In general.--Subsection (l) of section 6103 of the 
     Internal Revenue Code of 1986 (relating to confidentiality 
     and disclosure of returns and return information) is amended 
     by adding at the end the following new paragraph:
       ``(15) Disclosure of return information to carry out 
     income-related reduction in medicare part b premium.--
       ``(A) In general.--The Secretary may, upon written request 
     from the Secretary of Health and Human Services, disclose to 
     officers and employees of the Health Care Financing 
     Administration return information with respect to a taxpayer 
     who is required to pay a monthly premium under section 1839 
     of the Social Security Act. Such return information shall be 
     limited to--
       ``(i) taxpayer identity information with respect to such 
     taxpayer,
       ``(ii) the filing status of such taxpayer,
       ``(iii) the adjusted gross income of such taxpayer,
       ``(iv) the amounts excluded from such taxpayer's gross 
     income under sections 135 and 911,
       ``(v) the interest received or accrued during the taxable 
     year which is exempt from the tax imposed by chapter 1 to the 
     extent such information is available, and
       ``(vi) the amounts excluded from such taxpayer's gross 
     income by sections 931 and 933 to the extent such information 
     is available.
       ``(B) Restriction on use of disclosed information.--Return 
     information disclosed under subparagraph (A) may be used by 
     officers and employees of the Health Care Financing 
     Administration only for the purposes of, and to the extent 
     necessary in, establishing the appropriate monthly premium 
     under section 1839 of the Social Security Act.''
       (2) Conforming amendment.--Paragraphs (3)(A) and (4) of 
     section 6103(p) of such Code are each amended by striking 
     ``or (14)'' each place it appears and inserting ``(14), or 
     (15)''.
       (d) Effective Date.--The amendments made by subsections (a) 
     and (b) shall apply to the monthly premium under section 1839 
     of the Social Security Act for months beginning with January 
     1997.

       PART 3--ADMINISTRATION AND BILLING OF LABORATORY SERVICES

     SEC. 15621. ADMINISTRATIVE SIMPLIFICATION FOR LABORATORY 
                   SERVICES.

       (a) In General.--Not later than 1 year after the date of 
     the enactment of this Act, the Secretary of Health and Human 
     Services (in accordance with the process described in 
     subsection (b)) shall adopt uniform coverage, administration, 
     and payment policies for clinical diagnostic laboratory tests 
     under part B of the medicare program.
       (b) Process for Adoption of Policies.--The Secretary shall 
     adopt uniform policies under subsection (a) in accordance 
     with the following process:
       (1) The Secretary shall select from carriers with whom the 
     Secretary has a contract under part B during 1995 15 medical 
     directors, who will meet and develop recommendations for such 
     uniform policies. The medical directors selected shall 
     represent various geographic areas and have a varied range of 
     experience in relevant medical fields, including pathology 
     and clinical laboratory practice.
       (2) The medical directors selected under paragraph (1) 
     shall consult with independent experts in each major 
     discipline of clinical laboratory medicine, including 
     clinical laboratory personnel, bioanalysts, pathologists, and 
     practicing physicians. The medical directors shall also 
     solicit comments from other individuals and groups who wish 
     to participate, including consumers and other affected 
     parties. This process shall be conducted as a negotiated 
     rulemaking under title 5, United States Code.
       (3) Under the negotiated rulemaking, the recommendations 
     for uniform policies shall be designed to simplify and reduce 
     unnecessary administrative burdens in connection with the 
     following:
       (A) Beneficiary information required to be submitted with 
     each claim.
       (B) Physicians' obligations regarding documentation 
     requirements and recordkeeping.
       (C) Procedures for filing claims and for providing 
     remittances by electronic media.
       (D) The performance of post-payment review of test claims.
       (E) The prohibition of the documentation of medical 
     necessity except when determined to be appropriate after 
     identification of aberrant utilization pattern through 
     focused medical review.
       (F) Beneficiary responsibility for payment.
       (4) During the pendency of the adoption by the Secretary of 
     the uniform policies, fiscal intermediaries and carriers 
     under the medicare program may not implement any new 
     requirement relating to the submission of a claim for 
     clinical diagnostic laboratory tests retroactive to January 
     1, 1995, and carriers may not initiate any new coverage, 
     administrative, or payment policy unless the policy promotes 
     the goal of administrative simplification of requirements 
     imposed on clinical laboratories in accordance with the 
     Secretary's promulgation of the negotiated rulemaking.
       (5) Not later than 6 months after the date of the enactment 
     of this Act, the medical directors shall submit their 
     recommendations to the Secretary, and the Secretary shall 
     publish the recommendations and solicit public comment using 
     negotiated rulemaking in accordance with title 5, United 
     States Code. The Secretary shall publish final uniform 
     policies for coverage, administration, and payment of claims 
     for clinical diagnostic laboratory tests, effective after the 
     expiration of the 180-day period which begins on the date of 
     publication.
       (6) After the publication of the final uniform policies, 
     the Secretary shall implement identical uniform documentation 
     and processing policies for all clinical diagnostic 
     laboratory tests paid under the medicare program through 
     fiscal intermediaries or carriers.
       (c) Optional Selection of Single Carrier.--Effective for 
     claims submitted after the expiration of the 90-day period 
     which begins on the date of the enactment of this Act, an 
     independent laboratory may select a single carrier for the 
     processing of all of its claims for payment under part B of 
     the medicare program, without regard to the location where 
     the laboratory or the patient or provider involved resides or 
     conducts business. Such election of a single carrier shall be 
     made by the clinical laboratory and an agreement made between 
     the carrier and the laboratory shall be forwarded to the 
     Secretary of Health and Human Services. Nothing in this 
     subsection shall be construed to require a laboratory to 
     select a single carrier under this subsection.

     SEC. 15622. RESTRICTIONS ON DIRECT BILLING FOR LABORATORY 
                   SERVICES.

       (a) Requirement for Direct Billing.--Section 1833(h) (42 
     U.S.C. 1395l(h)) is amended by adding at the end the 
     following new paragraph:
       ``(7)(A) Effective for services furnished on or October 1, 
     1996, an individual or entity that performs clinical 
     laboratory diagnostic tests shall not present or cause to be 
     presented a claim, bill, or demand for payment to any person, 
     other than the individual receiving such services or the 
     health plan designated by such person, except that (i) in the 
     case of a test performed by one laboratory at the request of 
     another laboratory, which meets the requirements of clause 
     (i), (ii), or (iii) of paragraph (5)(A), payment may be made 
     to the requesting laboratory, and (ii) the Secretary may by 
     regulation establish appropriate exceptions to the 
     requirement of this subparagraph.
       ``(B)(i) Any person that collects any amounts that were 
     billed in violation of paragraph (7)(A) above shall be liable 
     for such amounts to the person from whom such amounts were 
     collected.
       ``(ii) Any person that furnishes clinical laboratory 
     services for which payment is made under paragraph (1)(D)(i) 
     or paragraph (2)(D)(i) that knowingly violates subparagraph 
     (A) is subject to a civil money penalty of not more than 
     $10,000 for each such violation. The provisions of section 
     1128A (other than subsections (a) and (b)) shall apply to a 
     civil money penalty under this paragraph in the same manner 
     as such provisions apply 

[[Page H 10431]]
     with respect to a penalty or proceeding under section 1128A(a).
       ``(iii)(I) Any individual or entity that the Secretary 
     determines has repeatedly violated subparagraph (A) may be 
     excluded from participation in any Federal health care 
     program. The provisions of section 1128A (other than 
     subsections (a) and (b)) shall apply to an exclusion under 
     this paragraph in the same manner as such provisions apply 
     with respect to a penalty or proceeding under section 
     1128A(a).
       ``(II) The provisions of section 1128(e) of the Social 
     Security Act shall apply to any exclusion under clause 
     (iii)(I) in the same manner as such provisions apply to a 
     proceeding under section 1128.
       ``(iv) If the Secretary finds, after a reasonable notice 
     and opportunity for a hearing, that a laboratory which holds 
     a certificate pursuant to section 353 of the Public Health 
     Service Act has on a repeated basis violated subparagraph 
     (A), the Secretary may suspend, revoke, or limit such 
     certification in accordance with the procedures established 
     in section 353(k) of Public Health Service Act.
       ``(C) For purposes of this paragraph, the following 
     definitions shall apply:
       ``(i) The term `Federal health care program' means--
       ``(I) any plan or program that provides health benefits, 
     whether directly, through insurance, or otherwise, which is 
     funded, in whole or in part, by the United States Government; 
     or
       ``(II) any State health care program, as defined in section 
     1128(h).
       ``(ii) The term `health plan' means any hospital or medical 
     service policy or certificate, hospital or medical service 
     plan contract, or health maintenance organization contract 
     offered by an insurer, except that such term does not include 
     any of the following:
       ``(I) Coverage only for accident, dental, vision, 
     disability income, or long-term care insurance, or any 
     combination thereof.
       ``(II) Medicare supplemental health insurance.
       ``(III) Coverage issued as a supplement to liability 
     insurance.
       ``(IV) Liability insurance, including general liability 
     insurance and automobile liability insurance.
       ``(V) Worker's compensation or similar insurance.
       ``(VI) Automobile medical-payment insurance.
       ``(VII) Coverage for a specified disease or illness.
       ``(VIII) A hospital or fixed indemnity policy.
       (b) Look Back Provisions to Assure Savings.--
       (1) In general.--Section 1833(h)(4)(B) (42 U.S.C. 
     1395l(h)(4)(B)), as amended by section 15604(b), is amended--
       (A) in clause (vii), by striking ``and'' at the end;
       (B) in clause (viii)--
       (i) by inserting ``and before January 1, 2000,'' after 
     ``1996,'', and
       (ii) by striking the period at the end and inserting ``, 
     and''; and
       (C) by adding at the end the following new clause:
       ``(ix) after December 31, 1999, is equal to such percentage 
     of such median as the Secretary establishes under paragraph 
     (8)(B), or, if the Secretary does not act under paragraph 
     (8)(B), is equal to 65 percent of such median.''.
       (2) Process for reductions.--Section 1833(h) (42 U.S.C. 
     1395l(h)), as amended by subsection (a), is amended by adding 
     at the end the following new paragraph:
       ``(8)(A) On July 31, 1999, the Secretary shall estimate--
       ``(i) the amount of expenditures under this section for 
     clinical diagnostic laboratory tests which will be made in 
     the period from January 1, 1997, through September 30, 2002, 
     and
       ``(ii) the amount of expenditures which would have been 
     made under this section for clinical diagnostic laboratory 
     tests in the period from January 1, 1997, through September 
     30, 2002, if paragraph (7) had not been enacted.
       ``(B) If the amount estimated under subparagraph (A)(i) is 
     greater than 97 percent of the amount estimated under 
     subparagraph (A)(ii), the Secretary shall establish a 
     limitation amount under paragraph (4)(B)(ix) such that, when 
     such limitation amount is considered, the amount estimated 
     under subparagraph (A)(i) is 97 percent of the amount 
     estimated under subparagraph (A)(ii).
       ``(C) The Director of the Congressional Budget Office 
     (hereafter in this subparagraph referred to as the 
     `Director') shall--
       ``(i) independently estimate the amounts specified in 
     subparagraph (A) and compute any limitation amount required 
     under subparagraph (B), and
       ``(ii) submit a report on such estimates and computation to 
     Congress not later than August 31, 1999.
     The Secretary shall provide the Director with such data as 
     the Director reasonably requires to prepare such estimates 
     and computation.''.

        PART 4--QUALITY STANDARDS FOR DURABLE MEDICAL EQUIPMENT

     SEC. 15631. RECOMMENDATIONS FOR QUALITY STANDARDS FOR DURABLE 
                   MEDICARE EQUIPMENT.

       (a) Appointment of Task Force by Secretary.--
       (1) In general.--The Secretary of Health and Human Services 
     shall establish a broadly based task force to develop 
     recommendations for quality standards for durable medical 
     equipment under part B of the medicare program.
       (2) Composition.--The task force shall include individuals 
     selected by the Secretary from representatives of suppliers 
     of items of durable medical equipment under part B, 
     consumers, and other users of such equipment. In appointing 
     members, the Secretary shall assure representation from 
     various geographic regions of the United States.
       (3) No compensation for service.--Members of the task force 
     shall not receive any compensation for service on the task 
     force.
       (4) Termination.--The task force shall terminate 30 days 
     after it submits the report described in subsection (b).
       (b) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the task force established under 
     subsection (a) shall submit to the Secretary its 
     recommendations for quality standards for durable medicare 
     equipment under part B of the medicare program.
       Subtitle H--Provisions Relating to Medicare Parts A and B

               PART 1--PAYMENTS FOR HOME HEALTH SERVICES

     SEC. 15701. PAYMENT FOR HOME HEALTH SERVICES.

       (a) In General.--Title XVIII (42 U.S.C. 1395 et seq.), as 
     amended by section 15106, is amended by adding at the end the 
     following new section:


                   ``payment for home health services

       ``Sec. 1894. (a) In General.--
       ``(1) Per visit payments.--Subject to subsection (c), the 
     Secretary shall make per visit payments beginning with fiscal 
     year 1997 to a home health agency in accordance with this 
     section for each type of home health service described in 
     paragraph (2) furnished to an individual who at the time the 
     service is furnished is under a plan of care by the home 
     health agency under this title (without regard to whether or 
     not the item or service was furnished by the agency or by 
     others under arrangement with them made by the agency, or 
     otherwise).
       ``(2) Types of services.--The types of home health services 
     described in this paragraph are the following:
       ``(A) Part-time or intermittent nursing care provided by or 
     under the supervision of a registered professional nurse.
       ``(B) Physical therapy.
       ``(C) Occupational therapy.
       ``(D) Speech-language pathology services.
       ``(E) Medical social services under the direction of a 
     physician.
       ``(F) To the extent permitted in regulations, part-time or 
     intermittent services of a home health aide who has 
     successfully completed a training program approved by the 
     Secretary.
       ``(b) Establishment of Per Visit Rate for Each Type of 
     Services.--
       ``(1) In general.--The Secretary shall, subject to 
     paragraph (3), establish a per visit payment rate for a home 
     health agency in an area for each type of home health service 
     described in subsection (a)(2). Such rate shall be equal to 
     the national per visit payment rate determined under 
     paragraph (2) for each such type, except that the labor-
     related portion of such rate shall be adjusted by the area 
     wage index applicable under section 1886(d)(3)(E) for the 
     area in which the agency is located (as determined without 
     regard to any reclassification of the area under section 
     1886(d)(8)(B) or a decision of the Medicare Geographic 
     Classification Review Board or the Secretary under section 
     1886(d)(10) for cost reporting periods beginning after 
     October 1, 1995).
       ``(2) National per visit payment rate.--The national per 
     visit payment rate for each type of service described in 
     subsection (a)(2)--
       ``(A) for fiscal year 1997, is an amount equal to the 
     national average amount paid per visit under this title to 
     home health agencies for such type of service during the most 
     recent 12-month cost reporting period ending on or before 
     June 30, 1994, increased (in a compounded manner) by the home 
     health market basket percentage increase for fiscal years 
     1995, 1996, and 1997; and
       ``(B) for each subsequent fiscal year, is an amount equal 
     to the national per visit payment rate in effect for the 
     preceding fiscal year, increased by the home health market 
     basket percentage increase for such subsequent fiscal year 
     minus 2 percentage points.
       ``(3) Rebasing of rates.--The Secretary shall provide for 
     an update to the national per visit payment rates under this 
     subsection for cost reporting periods beginning not later 
     than the first day of the fifth fiscal year which begins 
     after fiscal year 1997, and not later than every 5 years 
     thereafter, to reflect the most recent available data.
       ``(4) Home health market basket percentage increase.--For 
     purposes of this subsection, the term `home health market 
     basket percentage increase' means, with respect to a fiscal 
     year, a percentage (estimated by the Secretary before the 
     beginning of the fiscal year) determined and applied with 
     respect to the types of home health services described in 
     subsection (a)(2) in the same manner as the market basket 
     percentage increase under section 1886(b)(3)(B)(iii) is 
     determined and applied to inpatient hospital services for the 
     fiscal year.
       ``(c) Per Episode Limit.--
       ``(1) Aggregate limit.--
       ``(A) In general.--Except as provided in paragraph (2), a 
     home health agency may not receive aggregate per visit 
     payments under 

[[Page H 10432]]
     subsection (a) for a fiscal year in excess of an amount equal to the 
     sum of the following products determined for each case-mix 
     category for which the agency receives payments:
       ``(i) The number of episodes of each case-mix category 
     during the fiscal year; multiplied by
       ``(ii) the per episode limit determined for such case-mix 
     category for such fiscal year.
       ``(B) Establishment of per episode limits.--
       ``(i) In general.--The per episode limit for a fiscal year 
     for any case-mix category for the area in which a home health 
     agency is located is equal to--

       ``(I) the mean number of visits for each type of home 
     health service described in subsection (a)(2) furnished 
     during an episode of such case-mix category in such area 
     during fiscal year 1994, adjusted by the case-mix adjustment 
     factor determined in clause (ii) for the fiscal year 
     involved; multiplied by
       ``(II) the per visit payment rate established under 
     subsection (b) for such type of home health service for the 
     fiscal year for which the determination is being made.

       ``(ii) Case mix adjustment factor.--For purposes of clause 
     (i), the case-mix adjustment factor for a year is the factor 
     determined by the Secretary to assure that aggregate payments 
     for home health services under this section during the year 
     will not exceed the payment for such services during the 
     previous year as a result of changes in the number and type 
     of home health visits within case-mix categories over the 
     previous year.
       ``(iii) Rebasing of per episode amounts.--Beginning with 
     fiscal year 1999 and every 2 years thereafter, the Secretary 
     shall revise the mean number of home health visits determined 
     under clause (i)(I) for each type of home health service 
     visit described in subsection (a)(2) furnished during an 
     episode in a case-mix category to reflect the most recently 
     available data on the number of visits.
       ``(iv) Determination of applicable area.--For purposes of 
     determining per episode limits under this subparagraph, the 
     area in which a home health agency is considered to be 
     located shall be such area as the Secretary finds appropriate 
     for purposes of this subparagraph.
       ``(C) Case-mix category.--For purposes of this paragraph, 
     the term `case-mix category' means each of the 18 case-mix 
     categories established under the Phase II Home Health Agency 
     Prospective Payment Demonstration Project conducted by the 
     Health Care Financing Administration. The Secretary may 
     develop an alternate methodology for determining case-mix 
     categories.
       ``(D) Episode.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `episode' means the continuous 120-day period that--

       ``(I) begins on the date of an individual's first visit for 
     a type of home health service described in subsection (a)(2) 
     for a case-mix category, and
       ``(II) is immediately preceded by a 60-day period in which 
     the individual did not receive visits for a type of home 
     health service described in subsection (a)(2).

       ``(ii) Treatment of episodes spanning cost reporting 
     periods.--The Secretary shall provide for such rules as the 
     Secretary considers appropriate regarding the treatment of 
     episodes under this paragraph which begin during a cost 
     reporting period and end in a subsequent cost reporting 
     period.
       ``(E) Exemptions and exceptions.--The Secretary may provide 
     for exemptions and exceptions to the limits established under 
     this paragraph for a fiscal year as the Secretary deems 
     appropriate, to the extent such exemptions and exceptions do 
     not result in greater payments under this section than the 
     exemptions and exceptions provided under section 
     1861(v)(1)(L)(ii) in fiscal year 1994, increased by the home 
     health market basket percentage increase for the fiscal year 
     involved (as defined in subsection (b)(4)).
       ``(2) Reconciliation of amounts.--
       ``(A) Overpayments to home health agencies.--Subject to 
     subparagraph (B), if a home health agency has received 
     aggregate per visit payments under subsection (a) for a 
     fiscal year in excess of the amount determined under 
     paragraph (1) with respect to such home health agency for 
     such fiscal year, the Secretary shall reduce payments under 
     this section to the home health agency in the following 
     fiscal year in such manner as the Secretary considers 
     appropriate (including on an installment basis) to recapture 
     the amount of such excess.
       ``(B) Exception for home health services furnished over a 
     period greater than 165 days.--
       ``(i) In general.--For purposes of subparagraph (A), the 
     amount of aggregate per visit payments determined under 
     subsection (a) shall not include payments for home health 
     visits furnished to an individual on or after a continuous 
     period of more than 165 days after an individual begins an 
     episode described in subsection (c)(1)(D) (if such period is 
     not interrupted by the beginning of a new episode).
       ``(ii) Requirement of certification.--Clause (i) shall not 
     apply if the agency has not obtained a physician's 
     certification with respect to the individual requiring such 
     visits that includes a statement that the individual requires 
     such continued visits, the reason for the need for such 
     visits, and a description of such services furnished during 
     such visits.
       ``(C) Share of savings.--
       ``(i) Bonus payments.--If a home health agency has received 
     aggregate per visit payments under subsection (a) for a 
     fiscal year in an amount less than the amount determined 
     under paragraph (1) with respect to such home health agency 
     for such fiscal year, the Secretary shall pay such home 
     health agency a bonus payment equal to 50 percent of the 
     difference between such amounts in the following fiscal year, 
     except that the bonus payment may not exceed 5 percent of the 
     aggregate per visit payments made to the agency for the year.
       ``(ii) Installment bonus payments.--The Secretary may make 
     installment payments during a fiscal year to a home health 
     agency based on the estimated bonus payment that the agency 
     would be eligible to receive with respect to such fiscal 
     year.
       ``(d) Medical Review Process.--The Secretary shall 
     implement a medical review process (with a particular 
     emphasis on fiscal years 1997 and 1998) for the system of 
     payments described in this section that shall provide an 
     assessment of the pattern of care furnished to individuals 
     receiving home health services for which payments are made 
     under this section to ensure that such individuals receive 
     appropriate home health services. Such review process shall 
     focus on low-cost cases described in subsection (e)(3) and 
     cases described in subsection (c)(2)(B) and shall require 
     recertification by intermediaries at 30, 60, 90, 120, and 165 
     days into an episode described in subsection (c)(1)(D).
       ``(e) Adjustment of Payments To Avoid Circumvention of 
     Limits.--
       ``(1) In general.--The Secretary shall provide for 
     appropriate adjustments to payments to home health agencies 
     under this section to ensure that agencies do not circumvent 
     the purpose of this section by--
       ``(A) discharging patients to another home health agency or 
     similar provider;
       ``(B) altering corporate structure or name to avoid being 
     subject to this section or for the purpose of increasing 
     payments under this title; or
       ``(C) undertaking other actions considered unnecessary for 
     effective patient care and intended to achieve maximum 
     payments under this title.
       ``(2) Tracking of patients that switch home health agencies 
     during episode.--
       ``(A) Development of system.--The Secretary shall develop a 
     system that tracks home health patients that receive home 
     health services described in subsection (a)(2) from more than 
     1 home health agency during an episode described in 
     subsection (c)(1)(D).
       ``(B) Adjustment of payments.--The Secretary shall adjust 
     payments under this section to each home health agency that 
     furnishes an individual with a type of home health service 
     described in subsection (a)(2) to ensure that aggregate 
     payments on behalf of such individual during such episode do 
     not exceed the amount that would be paid under this section 
     if the individual received such services from a single home 
     health agency.
       ``(3) Low-cost cases.--The Secretary shall develop a system 
     designed to adjust payments to a home health agency for a 
     fiscal year to eliminate any increase in growth of the 
     percentage of low-cost episodes for which home health 
     services are furnished by the agency over such percentage 
     determined for the agency for the 12-month cost reporting 
     period ending on June 30, 1994. The Secretary shall define a 
     low-cost episode in a manner that provides that a home health 
     agency has an incentive to be cost efficient in delivering 
     home health services and that the volume of such services 
     does not increase as a result of factors other than patient 
     needs.
       ``(f) Report by Medicare Payment Review Commission.--During 
     the first 3 years in which payments are made under this 
     section, the Medicare Payment Review Commission shall 
     annually submit a report to Congress on the effectiveness of 
     the payment methodology established under this section that 
     shall include recommendations regarding the following:
       ``(1) Case-mix and volume increases.
       ``(2) Quality monitoring of home health agency practices.
       ``(3) Whether a capitated payment for home care patients 
     receiving care during a continuous period exceeding 165 days 
     is warranted.
       ``(4) Whether public providers of service are adequately 
     reimbursed.
       ``(5) The adequacy of the exemptions and exceptions to the 
     limits provided under subsection (c)(1)(E).
       ``(6) The appropriateness of the methods provided under 
     this section to adjust the per episode limits and annual 
     payment updates to reflect changes in the mix of services, 
     number of visits, and assignment to case categories to 
     reflect changing patterns of home health care.
       ``(7) The geographic areas used to determine the per 
     episode limits.
       ``(g) No Effect on Non-Medicare Services.--Nothing in this 
     section may be construed to affect the provision of or 
     payment for home health services for which payment is not 
     made under this title.''.
       (b) Payment for Prosthetics and Orthotics Under Part A.--
     Section 1814(k) (42 U.S.C. 1395f(k)) is amended--
       (1) by inserting ``and prosthetics and orthotics'' after 
     ``durable medical equipment''; and
       (2) by inserting ``and 1834(h), respectively'' after 
     ``1834(a)(1)''.
       (c) Conforming Amendments.--

[[Page H 10433]]

       (1) Payments under part a.--Section 1814(b) (42 U.S.C. 
     1395f(b)), as amended by section 15522(b), is amended in the 
     matter preceding paragraph (1) by striking ``1888 and 1888A'' 
     and inserting ``1888, 1888A, and 1894''.
       (2) Treatment of items and services paid under part b.--
       (A) Payments under part b.--Section 1833(a)(2) (42 U.S.C. 
     1395l(a)(2)) is amended--
       (i) by amending subparagraph (A) to read as follows:
       ``(A) with respect to home health services--
       ``(i) that are a type of home health service described in 
     section 1894(a)(2), and which are furnished to an individual 
     who (at the time the item or service is furnished) is under a 
     plan of care of a home health agency, the amount determined 
     under section 1894; or
       ``(ii) that are not described in clause (i) (other than a 
     covered osteoporosis drug) (as defined in section 1861(kk)), 
     the lesser of--

       ``(I) the reasonable cost of such services, as determined 
     under section 1861(v), or

       ``(II) the customary charges with respect to such 
     services;''.

       (ii) by striking ``and'' at the end of subparagraph (E);
       (iii) by adding ``and'' at the end of subparagraph (F); and
       (iv) by adding at the end the following new subparagraph:
       ``(G) with respect to items and services described in 
     section 1861(s)(10)(A), the lesser of--
       ``(i) the reasonable cost of such services, as determined 
     under section 1861(v), or
       ``(ii) the customary charges with respect to such services,

     or, if such services are furnished by a public provider of 
     services, or by another provider which demonstrates to the 
     satisfaction of the Secretary that a significant portion of 
     its patients are low-income (and requests that payment be 
     made under this provision), free of charge or at nominal 
     charges to the public, the amount determined in accordance 
     with section 1814(b)(2);''.
       (B) Requiring payment for all items and services to be made 
     to agency.--
       (i) In general.--The first sentence of section 1842(b)(6) 
     (42 U.S.C. 1395u(b)(6)), as amended by section 15525(a)(1), 
     is amended--

       (I) by striking ``and (E)'' and inserting ``(E)''; and
       (II) by striking the period at the end and inserting the 
     following: ``, and (F) in the case of types of home health 
     services described in section 1894(a)(2) furnished to an 
     individual who (at the time the item or service is furnished) 
     is under a plan of care of a home health agency, payment 
     shall be made to the agency (without regard to whether or not 
     the item or service was furnished by the agency, by others 
     under arrangement with them made by the agency, or 
     otherwise).''.

       (ii) Conforming amendment.--Section 1832(a)(1) (42 U.S.C. 
     1395k(a)(1)), as amended by section 15525(a)(3), is amended 
     by striking ``section 1842(b)(6)(E);'' and inserting 
     ``subparagraphs (E) and (F) of section 1842(b)(6);''.
       (C) Exclusions from coverage.--Section 1862(a) (42 U.S.C. 
     1395y(a)), as amended by section 15525(a)(2) and section 
     15609B(a), is amended--
       (i) by striking ``or'' at the end of paragraph (16);
       (ii) by striking the period at the end of paragraph (17) 
     and inserting ``; or''; and
       (iii) by adding at the end the following new paragraph:
       ``(18) where such expenses are for home health services 
     furnished to an individual who is under a plan of care of the 
     home health agency if the claim for payment for such services 
     is not submitted by the agency.''.
       (3) Sunset of reasonable cost limitations.--Section 
     1861(v)(1)(L) (42 U.S.C. 1395x(v)(1)(L)) is amended by adding 
     at the end the following new clause:
       ``(iv) This subparagraph shall apply only to services 
     furnished by home health agencies during cost reporting 
     periods ending on or before September 30, 1996.''.
       (d) Limitation on Part A Coverage.--
       (1) In general.--Section 1812(a)(3) (42 U.S.C. 1395d(a)(3)) 
     is amended by striking the semicolon and inserting ``for up 
     to 165 days during any spell of illness;''.
       (2) Conforming amendment.--Section 1812(b) (42 U.S.C. 
     1395d(b)) is amended--
       (A) by striking ``or'' at the end of paragraph (2),
       (B) by striking the period at the end of paragraph (3) and 
     inserting ``; or'', and
       (C) by adding at the end the following new paragraph:
       ``(4) home health services furnished to the individual 
     during such spell after such services have been furnished to 
     the individual for 165 days during such spell.''.
       (3) Exclusion of additional part b costs from determination 
     of part b monthly premium.--Section 1839(a) (42 U.S.C. 
     1395r(a)) is amended--
       (A) in the second sentence of paragraph (1), by striking 
     ``enrollees.'' and inserting ``enrollees (except as provided 
     in paragraph (5)).''; and
       (B) by adding at the end the following new paragraph:
       ``(5) In estimating the benefits and administrative costs 
     which will be payable from the Federal Supplementary Medical 
     Insurance Trust Fund for a year (beginning with 1996), the 
     Secretary shall exclude an estimate of any benefits and costs 
     attributable to home health services for which payment would 
     have been made under part A during the year but for paragraph 
     (4) of section 1812(b).''.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to spells of illness beginning on or after 
     October 1, 1995.
       (e) Effective Date.--Except as provided in subsection 
     (d)(4), the amendments made by this section shall apply to 
     cost reporting periods beginning on or after October 1, 1996.

     SEC. 15702. MAINTAINING SAVINGS RESULTING FROM TEMPORARY 
                   FREEZE ON PAYMENT INCREASES FOR HOME HEALTH 
                   SERVICES.

       (a) Basing Updates to Per Visit Cost Limits on Limits for 
     Fiscal Year 1993.--Section 1861(v)(1)(L)(iii) (42 U.S.C. 
     1395x(v)(1)(L)(iii)) is amended by adding at the end the 
     following sentence: ``In establishing limits under this 
     subparagraph, the Secretary may not take into account any 
     changes in the costs of the provision of services furnished 
     by home health agencies with respect to cost reporting 
     periods which began on or after July 1, 1994, and before July 
     1, 1996.''.
       (b) No Exceptions Permitted Based on Amendment.--The 
     Secretary of Health and Human Services shall not consider the 
     amendment made by subsection (a) in making any exemptions and 
     exceptions pursuant to section 1861(v)(1)(L)(ii) of the 
     Social Security Act.

     SEC. 15703. EXTENSION OF WAIVER OF PRESUMPTION OF LACK OF 
                   KNOWLEDGE OF EXCLUSION FROM COVERAGE FOR HOME 
                   HEALTH AGENCIES.

       Section 9305(g)(3) of OBRA-1986, as amended by section 
     426(d) of the Medicare Catastrophic Coverage Act of 1988 and 
     section 4207(b)(3) of OBRA-1990 (as renumbered by section 
     160(d)(4) of the Social Security Act Amendments of 1994), is 
     amended by striking ``December 31, 1995'' and inserting 
     ``September 30, 1996''.

     SEC. 15704. REPORT ON RECOMMENDATIONS FOR PAYMENTS AND 
                   CERTIFICATION FOR HOME HEALTH SERVICES OF 
                   CHRISTIAN SCIENCE PROVIDERS.

       Not later than July 1, 1996, the Secretary of Health and 
     Human Services shall submit recommendations to Congress 
     regarding an appropriate methodology for making payments 
     under the medicare program for home health services furnished 
     by Christian Science providers who meet applicable 
     requirements of the First Church of Christ, Scientist, 
     Boston, Massachusetts, and appropriate criteria for the 
     certification of such providers for purposes of the medicare 
     program.

     SEC. 15705. EXTENSION OF PERIOD OF HOME HEALTH AGENCY 
                   CERTIFICATION.

       Section 1891(c)(2)(A) (42 U.S.C. 1395bbb(c)(2)(A)) is 
     amended--
       (1) by striking ``15 months'' and inserting ``36 months''; 
     and
       (2) by striking the second sentence and inserting the 
     following: ``The Secretary shall establish a frequency for 
     surveys of home health agencies within this 36-month interval 
     commensurate with the need to assure the delivery of quality 
     home health services.''.

             PART 2--MEDICARE SECONDARY PAYER IMPROVEMENTS

     SEC. 15711. EXTENSION AND EXPANSION OF EXISTING REQUIREMENTS.

       (a) Data Match.--
       (1) Section 1862(b)(5)(C) (42 U.S.C. 1395y(b)(5)(C)) is 
     amended by striking clause (iii).
       (2) Section 6103(l)(12) of the Internal Revenue Code of 
     1986 is amended by striking subparagraph (F).
       (b) Application to Disabled Individuals in Large Group 
     Health Plans.--
       (1) In general.--Section 1862(b)(1)(B) (42 U.S.C. 
     1395y(b)(1)(B)) is amended--
       (A) in clause (i), by striking ``clause (iv)'' and 
     inserting ``clause (iii)'',
       (B) by striking clause (iii), and
       (C) by redesignating clause (iv) as clause (iii).
       (2) Conforming amendments.--Paragraphs (1) through (3) of 
     section 1837(i) (42 U.S.C. 1395p(i)) and the second sentence 
     of section 1839(b) (42 U.S.C. 1395r(b)) are each amended by 
     striking ``1862(b)(1)(B)(iv)'' each place it appears and 
     inserting ``1862(b)(1)(B)(iii)''.
       (c) Expansion of Period of Application to Individuals With 
     End Stage Renal Disease.--Section 1862(b)(1)(C) (42 U.S.C. 
     1395y(b)(1)(C)) is amended--
       (1) in the first sentence, by striking ``12-month'' each 
     place it appears and inserting ``24-month'', and
       (2) by striking the second sentence.

     SEC. 15712. IMPROVEMENTS IN RECOVERY OF PAYMENTS.

       (a) Permitting Recovery Against Third Party Administrators 
     of Primary Plans.--Section 1862(b)(2)(B)(ii) (42 U.S.C. 
     1395y(b)(2)(B)(ii)) is amended--
       (1) by striking ``under this subsection to pay'' and 
     inserting ``(directly, as a third-party administrator, or 
     otherwise) to make payment'', and
       (2) by adding at the end the following: ``The United States 
     may not recover from a third-party administrator under this 
     clause in cases where the third-party administrator would not 
     be able to recover the amount at issue from the employer or 
     group health plan for whom it provides administrative 
     services due to the insolvency or bankruptcy of the employer 
     or plan.''.
       (b) Extension of Claims Filing Period.--Section 
     1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)) is amended by adding 
     at the end the following new clause:
       ``(v) Claims-filing period.--Notwithstanding any other time 
     limits that may exist for 

[[Page H 10434]]
     filing a claim under an employer group health plan, the United States 
     may seek to recover conditional payments in accordance with 
     this subparagraph where the request for payment is submitted 
     to the entity required or responsible under this subsection 
     to pay with respect to the item or service (or any portion 
     thereof) under a primary plan within the 3-year period 
     beginning on the date on which the item or service was 
     furnished.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after the 
     date of the enactment of this Act.

     SEC. 15713. PROHIBITING RETROACTIVE APPLICATION OF POLICY 
                   REGARDING ESRD BENEFICIARIES ENROLLED IN 
                   PRIMARY PLANS.

       For purposes of carrying out section 1862(b)(1)(C) of the 
     Social Security Act, the Secretary of Health and Human 
     Services shall apply the policy directive issued by the 
     Administrator of the Health Care Financing Administration on 
     April 24, 1995, only with respect to items and services 
     furnished on or after such date.

                            PART 3--FAILSAFE

     SEC. 15721. FAILSAFE BUDGET MECHANISM.

       (a) In General.--Title XVIII, as amended by sections 
     15106(a) and 15701(a), is amended by adding at the end the 
     following new section:


                      ``failsafe budget mechanism

       ``Sec. 1895. (a) Requirement of Payment Adjustments to 
     Achieve Medicare Budget Targets.--If the Secretary determines 
     under subsection (e)(3)(C) before a fiscal year (beginning 
     with fiscal year 1998) that--
       ``(1) the fee-for-service expenditures (as defined in 
     subsection (f)) for a sector of medicare services (as defined 
     in subsection (b)) for the fiscal year, will exceed
       ``(2) the allotment specified under subsection (c)(2) for 
     such fiscal year (taking into account any adjustment in the 
     allotment under subsection (h) for that fiscal year),

     then, notwithstanding any other provision of this title, 
     there shall be an adjustment (consistent with subsection (d)) 
     in applicable payment rates or payments for items and 
     services included in the sector in the fiscal year so that 
     such expenditures for the sector for the year will be reduced 
     by 133\1/3\ percent of the amount of such excess.
       ``(b) Sectors of Medicare Services Described.--
       ``(1) In general.--For purposes of this section, items and 
     services included under each of the following subparagraphs 
     shall be considered to be a separate `sector' of medicare 
     services:
       ``(A) Inpatient hospital services.
       ``(B) Home health services.
       ``(C) Extended care services (for inpatients of skilled 
     nursing facilities).
       ``(D) Hospice care.
       ``(E) Physicians' services (including services and supplies 
     described in section 1861(s)(2)(A)) and services of other 
     health care professionals (including certified registered 
     nurse anesthetists, nurse practitioners, physician 
     assistants, and clinical psychologists) for which separate 
     payment is made under this title.
       ``(F) Outpatient hospital services and ambulatory facility 
     services.
       ``(G) Durable medical equipment and supplies, including 
     prosthetic devices and orthotics.
       ``(H) Diagnostic tests (including clinical laboratory 
     services and x-ray services).
       ``(I) Other items and services.
       ``(2) Classification of items and services.--The Secretary 
     shall classify each type of items and services covered and 
     paid for separately under this title into one of the sectors 
     specified in paragraph (1). After publication of such 
     classification under subsection (e)(1), the Secretary is not 
     authorized to make substantive changes in such 
     classification.
       ``(c) Allotment.--
       ``(1) Allotments for each sector.--For purposes of this 
     section, subject to subsection (h)(1), the allotment for a 
     sector of medicare services for a fiscal year is equal to the 
     product of--
       ``(A) the total allotment for the fiscal year established 
     under paragraph (2), and
       ``(B) the allotment proportion (specified under paragraph 
     (3)) for the sector and fiscal year involved.
       ``(2) Total allotment.--
       ``(A) In general.--For purposes of this section, the total 
     allotment for a fiscal year is equal to--
       ``(i) the medicare benefit budget for the fiscal year (as 
     specified under subparagraph (B)), reduced by
       ``(ii) the amount of payments the Secretary estimates will 
     be made in the fiscal year under the MedicarePlus program 
     under part C.

     In making the estimate under clause (ii), the Secretary shall 
     take into account estimated enrollment and demographic 
     profile of individuals electing MedicarePlus products.
       ``(B) Medicare benefit budget.--For purposes of this 
     subsection, subject to subparagraph (C), the `medicare 
     benefit budget'--
       ``(i) for fiscal year 1997 is $208.0 billion;
       ``(ii) for fiscal year 1998 is $217.1 billion;
       ``(iii) for fiscal year 1999 is $228.4 billion;
       ``(iv) for fiscal year 2000 is $246.4 billion;
       ``(v) for fiscal year 2001 is $265.5 billion;
       ``(vi) for fiscal year 2002 is $288.0 billion; and
       ``(vii) for a subsequent fiscal year is equal to the 
     medicare benefit budget under this subparagraph for the 
     preceding fiscal year increased by the product of (I) 1.05, 
     and (II) 1 plus the annual percentage increase in the average 
     number of medicare beneficiaries from the previous fiscal 
     year to the fiscal year involved.
       ``(3) Medicare allotment proportion defined.--
       ``(A) In general.--For purposes of this section and with 
     respect to a sector of medicare services for a fiscal year, 
     the term `medicare allotment proportion' means the ratio of--
       ``(i) the baseline-projected medicare expenditures (as 
     determined under subparagraph (B)) for the sector for the 
     fiscal year, to
       ``(ii) the sum of such baseline expenditures for all such 
     sectors for the fiscal year.
       ``(B) Baseline-projected medicare expenditures.--In this 
     paragraph, the `baseline, projected medicare expenditures' 
     for a sector of medicare services--
       ``(i) for fiscal year 1996 is equal to fee-for-service 
     expenditures for such sector during fiscal year 1995, 
     increased by the baseline annual growth rate for such sector 
     of medicare services for fiscal year 1996 (as specified in 
     table in subparagraph (C)); and
       ``(ii) for a subsequent fiscal year is equal to the 
     baseline-projected medicare expenditures under this 
     subparagraph for the sector for the previous fiscal year 
     increased by the baseline annual growth rate for such sector 
     for the fiscal year involved (as specified in such table).
       ``(C) Baseline annual growth rates.--The following table 
     specifies the baseline annual growth rates for each of the 
     sectors for different fiscal years:


----------------------------------------------------------------------------------------------------------------
                                                         Baseline annual growth rates for fiscal year--         
                                               -----------------------------------------------------------------
         ``For the following sector--                                                                  2002 and 
                                                  1996     1997     1998     1999     2000     2001   thereafter
----------------------------------------------------------------------------------------------------------------
(A) Inpatient hospital services...............     5.7%     5.6%     6.0%     6.1%     5.7%     5.5%       5.2% 
(B) Home health services......................    17.2%    15.1%    11.7%     9.1%     8.4%     8.1%       7.9% 
(C) Extended care services....................    19.7%    12.3%     9.3%     8.7%     8.6%     8.4%       8.0% 
(D) Hospice care..............................    32.0%    24.0%    18.0%    15.0%    12.0%    10.0%       9.0% 
(E) Physicians' services......................    12.4%     9.7%     8.7%     9.0%     9.3%     9.6%      10.1% 
(F) Outpatient hospital services..............    14.7%    13.9%    14.5%    15.0%    14.1%    13.9%      14.0% 
(G) Durable medical equipment and supplies....    16.1%    15.5%    13.7%    12.4%    13.2%    13.9%      14.5% 
(H) Diagnostic tests..........................    13.1%    11.3%    11.0%    11.4%    11.4%    11.5%      11.9% 
(I) Other items and services..................    11.2%    10.2%    10.9%    12.0%    11.6%    11.6%      11.8% 
----------------------------------------------------------------------------------------------------------------

       ``(d) Manner of Payment Adjustment.--
       ``(1) In general.--Subject to the succeeding provisions of 
     this subsection, the Secretary shall apply a payment 
     reduction for a sector for a fiscal year in such a manner as 
     to--
       ``(A) make a change in payment rates (to the maximum extent 
     practicable) at the time payment rates are otherwise changed 
     or subject to change for that fiscal year; and
       ``(B) provide for the full appropriate adjustment so that 
     the fee-for-service expenditures for the sector for the 
     fiscal year will approximate (and not exceed) the allotment 
     for the sector for the fiscal year.
       ``(2) Taking into account volume and cash flow.--In 
     providing for an adjustment in payments under this subsection 
     for a sector for a fiscal year, the Secretary shall take into 
     account (in a manner consistent with actuarial projections)--
       ``(A) the impact of such an adjustment on the volume or 
     type of services provided in such sector (and other sectors), 
     and
       ``(B) the fact that an adjustment may apply to items and 
     services furnished in a fiscal year (payment for which may 
     occur in a subsequent fiscal year),

     in a manner that is consistent with assuring that total fee-
     for-services expenditures for each sector for the fiscal year 
     will not exceed the allotment under subsection (c)(1) for 
     such sector for such year.
       ``(3) Proportionality of reductions within a sector.--In 
     making adjustments under this subsection in payment for items 
     and services included within a sector of medicare services 
     for a fiscal year, the Secretary shall provide for such an 
     adjustment that results (to the maximum extent feasible) in 
     the 

[[Page H 10435]]
     same percentage reductions in aggregate Federal payments under parts A 
     and B for the different classes of items and services 
     included within the sector for the fiscal year.
       ``(4) Application to payments made based on prospective 
     payment rates determined on a fiscal year basis.--
       ``(A) In general.--In applying subsection (a) with respect 
     to items and services for which payment is made under part A 
     or B on the basis of rates that are established on a 
     prospective basis for (and in advance of) a fiscal year, the 
     Secretary shall provide for the payment adjustment under such 
     subsection through an appropriate reduction in such rates 
     established for items and services furnished (or, in the case 
     of payment for operating costs of inpatient hospital services 
     of subsection (d) hospitals and subsection (d) Puerto Rico 
     hospitals (as defined in paragraphs (1)(B) and (9)(A) of 
     section 1886(d)), discharges occurring) during such year.
       ``(B) Description of application to specific services.--The 
     payment adjustment described in subparagraph (A) applies for 
     a fiscal year to at least the following:
       ``(i) Update factor for payment for operating costs of 
     inpatient hospital services of pps hospitals.--To the 
     computation of the applicable percentage increase specified 
     in section 1886(d)(3)(B)(i) for discharges occurring in the 
     fiscal year.
       ``(ii) Home health services.--To the extent payment amounts 
     for home health services are based on per visit payment rates 
     under section 1894, to the computation of the increase in the 
     national per visit payment rates established for the year 
     under section 1894(b)(2)(B).
       ``(iii) Hospice care.--To the update of payment rates for 
     hospice care under section 1814(i) for services furnished 
     during the fiscal year.
       ``(iv) Update factor for payment of operating costs of 
     inpatient hospital services of pps-exempt hospitals.--To the 
     computation of the target amount under section 1886(b)(3) for 
     discharges occurring during the fiscal year.
       ``(v) Covered non-routine services of skilled nursing 
     facilities.--To the computation of the facility per stay 
     limits for the year under section 1888A(d) for covered non-
     routine services of a skilled nursing facility (as described 
     in such section).
       ``(5) Application to payments made based on prospective 
     payment rates determined on a calendar year basis.--
       ``(A) In general.--In applying subsection (a) for a fiscal 
     year with respect to items and services for which payment is 
     made under part A or B on the basis of rates that are 
     established on a prospective basis for (and in advance of) a 
     calendar year, the Secretary shall provide for the payment 
     adjustment under such subsection through an appropriate 
     reduction in such rates established for items and services 
     furnished at any time during such calendar year as follows:
       ``(i) For fiscal year 1997, the reduction shall be made for 
     payment rates during calendar year 1997 in a manner so as to 
     achieve the necessary payment reductions for such fiscal year 
     for items and services furnished during the first 3 quarters 
     of calendar year 1997.
       ``(ii) For a subsequent fiscal year, the reduction shall be 
     made for payment rates during the calendar year in which the 
     fiscal year ends in a manner so as to achieve the necessary 
     payment reductions for such fiscal year for items and 
     services furnished during the first 3 quarters of the 
     calendar year, but also taking into account the payment 
     reductions made in the first quarter of the fiscal year 
     resulting from payment reductions made under this paragraph 
     for the previous calendar year.
       ``(iii) Payment rate reductions effected under this 
     subparagraph for a calendar year and applicable to the last 3 
     quarters of the fiscal year in which the calendar year ends 
     shall continue to apply during the first quarter of the 
     succeeding fiscal year.
       ``(B) Application in specific cases.--The payment 
     adjustment described in subparagraph (A) applies for a fiscal 
     year to at least the following:
       ``(i) Update in conversion factor for physicians' 
     services.--To the computation of the conversion factor under 
     subsection (d) of section 1848 used in the fee schedule 
     established under subsection (b) of such section, for items 
     and services furnished during the calendar year in which the 
     fiscal year ends.
       ``(ii) Payment rates for other health care professionals.--
     To the computation of payments for professional services of 
     certified registered nurse anesthetists under section 
     1833(l), nurse midwives, physician assistants, nurse 
     practitioners and clinical nurse specialists under section 
     1833(r), clinical psychologists, clinical social workers, 
     physical or occupational therapists, and any other health 
     professionals for which payment rates are based (in whole or 
     in part) on payments for physicians' services, for services 
     furnished during the calendar year in which the fiscal year 
     ends.
       ``(iii) Update in lab fee schedule.--To the computation of 
     the fee schedule amount under section 1833(h)(2) for clinical 
     diagnostic laboratory services furnished during the calendar 
     year in which the fiscal year ends.
       ``(iv) Update in reasonable charges for vaccines.--To the 
     computation of the reasonable charge for vaccines described 
     in section 1861(s)(10) for vaccines furnished during the 
     calendar year in which the fiscal year ends.
       ``(v) Durable medical equipment-related items.--To the 
     computation of the payment basis under section 1834(a)(1)(B) 
     for covered items described in section 1834(a)(13), for items 
     furnished during the calendar year in which the fiscal year 
     ends.
       ``(vi) Radiologist services.--To the computation of 
     conversion factors for radiologist services under section 
     1834(b), for services furnished during the calendar year in 
     which the fiscal year ends.
       ``(vii) Screening mammography.--To the computation of 
     payment rates for screening mammography under section 
     1834(c)(1)(C)(ii), for screening mammography performed during 
     the calendar year in which the fiscal year ends.
       ``(viii) Prosthetics and orthotics.--To the computation of 
     the amount to be recognized under section 1834(h) for payment 
     for prosthetic devices and orthotics and prosthetics, for 
     items furnished during the calendar year in which the fiscal 
     year ends.
       ``(ix) Surgical dressings.--To the computation of the 
     payment amount referred to in section 1834(i)(1)(B) for 
     surgical dressings, for items furnished during the calendar 
     year in which the fiscal year ends.
       ``(x) Parenteral and enteral nutrition.--To the computation 
     of reasonable charge screens for payment for parenteral and 
     enteral nutrition under section 1834(h), for nutrients 
     furnished during the calendar year in which the fiscal year 
     ends.
       ``(xi) Ambulance services.--To the computation of limits on 
     reasonable charges for ambulance services, for services 
     furnished during the calendar year in which the fiscal year 
     ends.
       ``(6) Application to payments made based on costs during a 
     cost reporting period.--
       ``(A) In general.--In applying subsection (a) for a fiscal 
     year with respect to items and services for which payment is 
     made under part A or B on the basis of costs incurred for 
     items and services in a cost reporting period, the Secretary 
     shall provide for the payment adjustment under such 
     subsection for a fiscal year through an appropriate 
     proportional reduction in the payment for costs for such 
     items and services incurred at any time during each cost 
     reporting period any part of which occurs during the 
     fiscal year involved, but only (for each such cost 
     reporting period) in the same proportion as the fraction 
     of the cost reporting period that occurs during the fiscal 
     year involved.
       ``(B) Application in specific cases.--The payment 
     adjustment described in subparagraph (A) applies for a fiscal 
     year to at least the following:
       ``(i) Capital-related costs of hospital services.--To the 
     computation of payment amounts for inpatient and outpatient 
     hospital services under sections 1886(g) and 1861(v) for 
     portions of cost reporting periods occurring during the 
     fiscal year.
       ``(ii) Operating costs for pps-exempt hospitals.--To the 
     computation of payment amounts under section 1886(b) for 
     operating costs of inpatient hospital services of PPS-exempt 
     hospitals for portions of cost reporting periods occurring 
     during the fiscal year.
       ``(iii) Direct graduate medical education.--To the 
     computation of payment amounts under section 1886(h) for 
     reasonable costs of direct graduate medical education costs 
     for portions of cost reporting periods occurring during the 
     fiscal year.
       ``(iv) Inpatient rural primary care hospital services.--To 
     the computation of payment amounts under section 1814(j) for 
     inpatient rural primary care hospital services for portions 
     of cost reporting periods occurring during the fiscal year.
       ``(v) Extended care services of a skilled nursing 
     facility.--To the computation of payment amounts under 
     section 1861(v) for post-hospital extended care services of a 
     skilled nursing facility (other than covered non-routine 
     services subject to section 1888A) for portions of cost 
     reporting periods occurring during the fiscal year.
       ``(vi) Reasonable cost contracts.--To the computation of 
     payment amounts under section 1833(a)(1)(A) for organizations 
     for portions of cost reporting periods occurring during the 
     fiscal year.
       ``(vii) Home health services.--Subject to paragraph 
     (4)(B)(ii), for payment amounts for home health services, for 
     portions of cost reporting periods occurring during such 
     fiscal year.
       ``(7) Other.--In applying subsection (a) for a fiscal year 
     with respect to items and services for which payment is made 
     under part A or B on a basis not described in a previous 
     paragraph of this subsection, the Secretary shall provide for 
     the payment adjustment under such subsection through an 
     appropriate proportional reduction in the payments (or 
     payment bases for items and services furnished) during the 
     fiscal year.
       ``(8) Adjustment of payment limits.--The Secretary shall 
     provide for such proportional adjustment in any limits on 
     payment established under part A or B for payment for items 
     and services within a sector as may be appropriate based on 
     (and in order to properly carry out) the adjustment on the 
     amount of payment under this subsection in the sector.
       ``(9) References to payment rates.--Except as the Secretary 
     may provide, any reference in this title (other than this 
     section) to a payment rate is deemed a reference to such a 
     rate as adjusted under this subsection.
       ``(e) Publication of Determinations; Judicial Review.--

[[Page H 10436]]

       ``(1) One-time publication of sectors and general payment 
     adjustment methodology.--Not later than October 1, 1996, the 
     Secretary shall publish in the Federal Register the 
     classification of medicare items and services into the 
     sectors of medicare services under subsection (b) and the 
     general methodology to be used in applying payment 
     adjustments to the different classes of items and services 
     within the sectors.
       ``(2) Inclusion of information in president's budget.--
       ``(A) In general.--With respect to fiscal years beginning 
     with fiscal year 1999, the President shall include in the 
     budget submitted under section 1105 of title 31, United 
     States Code, information on--
       ``(i) the fee-for-service expenditures, within each sector, 
     for the second previous fiscal year, and how such 
     expenditures compare to the adjusted sector allotment for 
     that sector for that fiscal year; and
       ``(ii) actual annual growth rates for fee-for-service 
     expenditures in the different sectors in the second previous 
     fiscal year.
       ``(B) Recommendations regarding growth factors.--The 
     President may include in such budget for a fiscal year 
     (beginning with fiscal year 1998) recommendations regarding 
     percentages that should be applied (for one or more fiscal 
     years beginning with that fiscal year) instead of the 
     baseline annual growth rates under subsection (c)(3)(C). Such 
     recommendations shall take into account medically appropriate 
     practice patterns.
       ``(3) Determinations concerning payment adjustments.--
       ``(A) Recommendations of commission.--By not later than 
     March 1 of each year (beginning with 1997), the Medicare 
     Payment Review Commission shall submit to the Secretary and 
     the Congress a report that analyzes the previous operation 
     (if any) of this section and that includes recommendations 
     concerning the manner in which this section should be applied 
     for the following fiscal year.
       ``(B) Preliminary notice by secretary.--Not later than May 
     15 preceding the beginning of each fiscal year (beginning 
     with fiscal year 1998), the Secretary shall publish in the 
     Federal Register a notice containing the Secretary's 
     preliminary determination, for each sector of medicare 
     services, concerning the following:
       ``(i) The projected allotment under subsection (c) for such 
     sector for the fiscal year.
       ``(ii) Whether there will be a payment adjustment for items 
     and services included in such sector for the fiscal year 
     under subsection (a).
       ``(iii) If there will be such an adjustment, the size of 
     such adjustment and the methodology to be used in making such 
     a payment adjustment for classes of items and services 
     included in such sector.
       ``(iv) Beginning with fiscal year 1999, the fee-for-service 
     expenditures for such sector for the second preceding fiscal 
     year.

     Such notice shall include an explanation of the basis for 
     such determination. Determinations under this subparagraph 
     and subparagraph (C) shall be based on the best data 
     available at the time of such determinations.
       ``(C) Final determination.--Not later than September 1 
     preceding the beginning of each fiscal year (beginning with 
     fiscal year 1998), the Secretary shall publish in the Federal 
     Register a final determination, for each sector of medicare 
     services, concerning the matters described in subparagraph 
     (B) and an explanation of the reasons for any differences 
     between such determination and the preliminary determination 
     for such fiscal year published under subparagraph (B).
       ``(4) Limitation on administrative or judicial review.--
     There shall be no administrative or judicial review under 
     section 1878 or otherwise of--
       ``(A) the classification of items and services among the 
     sectors of medicare services under subsection (b),
       ``(B) the determination of the amounts of allotments for 
     the different sectors of medicare services under subsection 
     (c),
       ``(C) the determination of the amount (or method of 
     application) of any payment adjustment under subsection (d), 
     or
       ``(D) any adjustment in an allotment effected under 
     subsection (h).
       ``(f) Fee-for-Service Expenditures Defined.--In this 
     section, the term `fee-for-service expenditures', for items 
     and services within a sector of medicare services in a fiscal 
     year, means amounts payable for such items and services which 
     are furnished during the fiscal year, and--
       ``(1) includes types of expenses otherwise reimbursable 
     under parts A and B (including administrative costs incurred 
     by organizations described in sections 1816 and 1842) with 
     respect to such items and services, and
       ``(2) does not include amounts paid under part C.
       ``(g) Expedited Process for Adjustment of Sector Growth 
     Rates.--
       ``(1) Optional inclusion of legislative proposal.--The 
     President may include in recommendations under subsection 
     (e)(2)(B) submitted with respect to a fiscal year a specific 
     legislative proposal that provides only for the substitution 
     of percentages specified in the proposal for one or more of 
     the baseline annual growth rates (specified in the table in 
     subsection (c)(3)(C) or in a previous legislative proposal 
     under this subsection) for that fiscal year or any subsequent 
     fiscal year.
       ``(2) Congressional consideration.--
       ``(A) In general.--The percentages contained in a 
     legislative proposal submitted under paragraph (1) shall 
     apply under this section if a joint resolution (described in 
     subparagraph (B)) approving such proposal is enacted, in 
     accordance with the provisions of subparagraph (C), before 
     the end of the 60-day period beginning on the date on which 
     such proposal was submitted. For purposes of applying the 
     preceding sentence and subparagraphs (B) and (C), the days on 
     which either House of Congress is not in session because of 
     an adjournment of more than three days to a day certain shall 
     be excluded in the computation of a period.
       ``(B) Joint resolution of approval.--A joint resolution 
     described in this subparagraph means only a joint resolution 
     which is introduced within the 10-day period beginning on the 
     date on which the President submits a proposal under 
     paragraph (1) and--
       ``(i) which does not have a preamble;
       ``(ii) the matter after the resolving clause of which is as 
     follows: `That Congress approves the proposal of the 
     President providing for substitution of percentages for 
     certain baseline annual growth rates under section 1895 of 
     the Social Security Act, as submitted by the President on 
     ______________.', the blank space being filled in with the 
     appropriate date; and
       ``(iii) the title of which is as follows: `Joint resolution 
     approving Presidential proposal to substitute certain 
     specified percentages for baseline annual growth rates under 
     section 1895 of the Social Security Act, as submitted by the 
     President on ______________.', the blank space being filled 
     in with the appropriate date.
       ``(C) Procedures for consideration of resolution of 
     approval.--Subject to subparagraph (D), the provisions of 
     section 2908 (other than subsection (a)) of the Defense Base 
     Closure and Realignment Act of 1990 shall apply to the 
     consideration of a joint resolution described in subparagraph 
     (B) in the same manner as such provisions apply to a joint 
     resolution described in section 2908(a) of such Act.
       ``(D) Special rules.--For purposes of applying subparagraph 
     (C) with respect to such provisions--
       ``(i) any reference to the Committee on Armed Services of 
     the House of Representatives shall be deemed a reference to 
     an appropriate Committee of the House of Representatives 
     (specified by the Speaker of the House of Representatives at 
     the time of submission of a legislative proposal under 
     paragraph (1)) and any reference to the Committee on Armed 
     Services of the Senate shall be deemed a reference to the 
     Committee on Finance of the Senate;
       ``(ii) any reference to a resolution of which a committee 
     shall be discharged from further consideration shall be 
     deemed to be a reference to the first such resolution 
     introduced; and
       ``(iii) any reference to the date on which the President 
     transmits a report shall be deemed a reference to the date on 
     which the President submits the legislative proposal under 
     paragraph (1).
       ``(h) Look-Back Adjustment in Allotments to Reflect Actual 
     Expenditures.--
       ``(1) In general.--If the Secretary determines under 
     subsection (e)(3)(B) with respect to a particular fiscal year 
     (beginning with fiscal year 1999) that the fee-for-service 
     expenditures for a sector of medicare services for the second 
     preceding fiscal year--
       ``(A) exceeded the adjusted allotment for such sector for 
     such year (as defined in paragraph (2)), then the allotment 
     for the sector for the particular fiscal year shall be 
     reduced by 133\1/3\ percent of the amount of such excess, or
       ``(B) was less than the adjusted allotment for such sector 
     for such year, then the allotment for the sector for the 
     particular fiscal year shall be increased by the amount of 
     such deficit.
       ``(2) Adjusted allotment.--The adjusted allotment under 
     this paragraph for a sector for a fiscal year is--
       ``(A) the amount that would be computed as the allotment 
     under subsection (c) for the sector for the fiscal year if 
     the actual amount of payments made in the fiscal year under 
     the MedicarePlus program under part C in the fiscal year were 
     substituted for the amount described in subsection 
     (c)(2)(A)(ii) for that fiscal year,
       ``(B) adjusted to take into account the amount of any 
     adjustment under paragraph (1) for that fiscal year (based on 
     expenditures in the second previous fiscal year).
       ``(i) Prospective Application of Certain National Coverage 
     Determinations.--In the case of a national coverage 
     determination that the Secretary projects will result in 
     significant additional expenditures under this title (taking 
     into account any substitution for existing procedures or 
     technologies), such determination shall not become effective 
     before the beginning of the fiscal year that begins after the 
     date of such determination and shall apply to contracts under 
     part C entered into (or renewed) after the date of such 
     determination.''.
       (b) Report of Trustees on Growth Rate in Part A 
     Expenditures.--Section 1817 (42 U.S.C. 1395i) is amended by 
     adding at the end the following new subsection:
       ``(k) Each annual report provided in subsection (b)(2) 
     shall include information regarding the annual rate of growth 
     in program expenditures that would be required to maintain 
     the financial solvency of the Trust Fund and the extent to 
     which the provisions of section 1895 restrain the rate of 
     growth of expenditures under this part in order to achieve 
     such solvency.''.
     
[[Page H 10437]]


                 PART 4--ADMINISTRATIVE SIMPLIFICATION

     SEC. 15731. STANDARDS FOR MEDICARE INFORMATION TRANSACTIONS 
                   AND DATA ELEMENTS.

       Title XVIII, as amended by section 15031, is amended by 
     inserting after section 1806 the following new section:


  ``standards for medicare information transactions and data elements

       ``Sec. 1807. (a) Adoption of Standards for Data Elements.--
       ``(1) In general.--Pursuant to subsection (b), the 
     Secretary shall adopt standards for information transactions 
     and data elements of medicare information and modifications 
     to the standards under this section that are--
       ``(A) consistent with the objective of reducing the 
     administrative costs of providing and paying for health care; 
     and
       ``(B) developed or modified by a standard setting 
     organization (as defined in subsection (h)(8)).
       ``(2) Special rule relating to data elements.--The 
     Secretary may adopt or modify a standard relating to data 
     elements that is different from the standard developed by a 
     standard setting organization, if--
       ``(A) the different standard or modification will 
     substantially reduce administrative costs to health care 
     providers and health plans compared to the alternative; and
       ``(B) the standard or modification is promulgated in 
     accordance with the rulemaking procedures of subchapter III 
     of chapter 5 of title 5, United States Code.
       ``(3) Security standards for health information network.--
       ``(A) In general.--Each person, who maintains or transmits 
     medicare information or data elements of medicare information 
     and is subject to this section, shall maintain reasonable and 
     appropriate administrative, technical, and physical 
     safeguards--
       ``(i) to ensure the integrity and confidentiality of the 
     information;
       ``(ii) to protect against any reasonably anticipated--

       ``(I) threats or hazards to the security or integrity of 
     the information; and
       ``(II) unauthorized uses or disclosures of the information; 
     and

       ``(iii) to otherwise ensure compliance with this section by 
     the officers and employees of such person.
       ``(B) Security standards.--The Secretary shall establish 
     security standards and modifications to such standards with 
     respect to medicare information network services, health 
     plans, and health care providers that--
       ``(i) take into account--

       ``(I) the technical capabilities of record systems used to 
     maintain medicare information;
       ``(II) the costs of security measures;
       ``(III) the need for training persons who have access to 
     medicare information; and
       ``(IV) the value of audit trails in computerized record 
     systems; and

       ``(ii) ensure that a medicare information network service, 
     if it is part of a larger organization, has policies and 
     security procedures which isolate the activities of such 
     service with respect to processing information in a manner 
     that prevents unauthorized access to such information by such 
     larger organization.

     The security standards established by the Secretary shall be 
     based on the standards developed or modified by standard 
     setting organizations. If such standards do not exist, the 
     Secretary shall rely on the recommendations of the Medicare 
     Information Advisory Committee (established under subsection 
     (g)) and shall consult with appropriate government agencies 
     and private organizations in accordance with paragraph (5).
       ``(4) Implementation specifications.--The Secretary shall 
     establish specifications for implementing each of the 
     standards and the modifications to the standards adopted 
     pursuant to paragraph (1) or (3).
       ``(5) Assistance to the secretary.--In complying with the 
     requirements of this section, the Secretary shall rely on 
     recommendations of the Medicare Information Advisory 
     Committee established under subsection (g) and shall consult 
     with appropriate Federal and State agencies and private 
     organizations. The Secretary shall publish in the Federal 
     Register the recommendations of the Medicare Information 
     Advisory Committee regarding the adoption of a standard under 
     this section.
       ``(b) Standards for Information Transactions and Data 
     Elements.--
       ``(1) In general.--The Secretary shall adopt standards for 
     transactions and data elements to make medicare information 
     uniformly available to be exchanged electronically, that is--
       ``(A) appropriate for the following financial and 
     administrative transactions: claims (including coordination 
     of benefits) or equivalent encounter information, enrollment 
     and disenrollment, eligibility, premium payments, and 
     referral certification and authorization; and
       ``(B) related to other financial and administrative 
     transactions determined appropriate by the Secretary 
     consistent with the goals of improving the operation of the 
     health care system and reducing administrative costs.
       ``(2) Unique health identifiers.--
       ``(A) Adoption of standards.--The Secretary shall adopt 
     standards providing for a standard unique health identifier 
     for each individual, employer, health plan, and health care 
     provider for use in the medicare information system. In 
     developing unique health identifiers for each health plan and 
     health care provider, the Secretary shall take into account 
     multiple uses for identifiers and multiple locations and 
     specialty classifications for health care providers.
       ``(B) Penalty for improper disclosure.--A person who 
     knowingly uses or causes to be used a unique health 
     identifier under subparagraph (A) for a purpose that is not 
     authorized by the Secretary shall--
       ``(i) be fined not more than $50,000, imprisoned not more 
     than 1 year, or both; or
       ``(ii) if the offense is committed under false pretenses, 
     be fined not more than $100,000, imprisoned not more than 5 
     years, or both.
       ``(3) Code sets.--
       ``(A) In general.--The Secretary, in consultation with the 
     Medicare Information Advisory Committee, experts from the 
     private sector, and Federal and State agencies, shall--
       ``(i) select code sets for appropriate data elements from 
     among the code sets that have been developed by private and 
     public entities; or
       ``(ii) establish code sets for such data elements if no 
     code sets for the data elements have been developed.
       ``(B) Distribution.--The Secretary shall establish 
     efficient and low-cost procedures for distribution (including 
     electronic distribution) of code sets and modifications made 
     to such code sets under subsection (c)(2).
       ``(4) Electronic signature.--
       ``(A) In general.--The Secretary, after consultation with 
     the Medicare Information Advisory Committee, shall promulgate 
     regulations specifying procedures for the electronic 
     transmission and authentication of signatures, compliance 
     with which will be deemed to satisfy Federal and State 
     statutory requirements for written signatures with respect to 
     information transactions required by this section and written 
     signatures on enrollment and disenrollment forms.
       ``(B) Payments for services and premiums.--Nothing in this 
     section shall be construed to prohibit the payment of health 
     care services or health plan premiums by debit, credit, 
     payment card or numbers, or other electronic means.
       ``(5) Transfer of information between health plans.--The 
     Secretary shall develop rules and procedures--
       ``(A) for determining the financial liability of health 
     plans when health care benefits are payable under two or more 
     health plans; and
       ``(B) for transferring among health plans appropriate 
     standard data elements needed for the coordination of 
     benefits, the sequential processing of claims, and other data 
     elements for individuals who have more than one health plan.
       ``(6) Coordination of benefits.--If, at the end of the 5-
     year period beginning on the date of the enactment of this 
     section, the Secretary determines that additional transaction 
     standards for coordinating benefits are necessary to reduce 
     administrative costs or duplicative (or inappropriate) 
     payment of claims, the Secretary shall establish further 
     transaction standards for the coordination of benefits 
     between health plans.
       ``(7) Protection of trade secrets.--Except as otherwise 
     required by law, the standards adopted under this section 
     shall not require disclosure of trade secrets or confidential 
     commercial information by an entity operating a medicare 
     information network.
       ``(c) Timetables for Adoption of Standards.--
       ``(1) Initial standards.--Not later than 18 months after 
     the date of the enactment of this section, the Secretary 
     shall adopt standards relating to the information 
     transactions, data elements of medicare information and 
     security described in subsections (a) and (b).
       ``(2) Additions and modifications to standards.--
       ``(A) In general.--The Secretary shall review the standards 
     adopted under this section and shall adopt additional or 
     modified standards, that have been developed or modified by a 
     standard setting organization, as determined appropriate, but 
     not more frequently than once every 12 months. Any addition 
     or modification to such standards shall be completed in a 
     manner which minimizes the disruption and cost of compliance.
       ``(B) Additions and modifications to code sets.--
       ``(i) In general.--The Secretary shall ensure that 
     procedures exist for the routine maintenance, testing, 
     enhancement, and expansion of code sets.
       ``(ii) Additional rules.--If a code set is modified under 
     this paragraph, the modified code set shall include 
     instructions on how data elements of medicare information 
     that were encoded prior to the modification may be converted 
     or translated so as to preserve the informational value of 
     the data elements that existed before the modification. Any 
     modification to a code set under this paragraph shall be 
     implemented in a manner that minimizes the disruption and 
     cost of complying with such modification.
       ``(d) Requirements for Health Plans.--
       ``(1) In general.--If a person desires to conduct any of 
     the information transactions described in subsection (b)(1) 
     with a health plan as a standard transaction, the health plan 
     shall conduct such standard transaction in a timely manner 
     and the information transmitted or received in connection 
     with such transaction shall be in the form of standard data 
     elements of medicare information.

[[Page H 10438]]

       ``(2) Satisfaction of requirements.--A health plan may 
     satisfy the requirement imposed on such plan under paragraph 
     (1) by directly transmitting standard data elements of 
     medicare information or submitting nonstandard data elements 
     to a medicare information network service for processing into 
     standard data elements and transmission.
       ``(3) Timetables for compliance with requirements.--Not 
     later than 24 months after the date on which standards are 
     adopted under subsections (a) and (b) with respect to any 
     type of information transaction or data element of medicare 
     information or with respect to security, a health plan shall 
     comply with the requirements of this section with respect to 
     such transaction or data element.
       ``(4) Compliance with modified standards.--If the Secretary 
     adopts a modified standard under subsection (a) or (b), a 
     health plan shall be required to comply with the modified 
     standard at such time as the Secretary determines appropriate 
     taking into account the time needed to comply due to the 
     nature and extent of the modification. However, the time 
     determined appropriate under the preceding sentence shall be 
     not earlier than the last day of the 180-day period beginning 
     on the date such modified standard is adopted. The Secretary 
     may extend the time for compliance for small health plans, if 
     the Secretary determines such extension is appropriate.
       ``(e) General Penalty for Failure To Comply With 
     Requirements and Standards.--
       ``(1) General penalty.--
       ``(A) In general.--Except as provided in paragraph (2), the 
     Secretary shall impose on any person that violates a 
     requirement or standard--
       ``(i) with respect to medicare information transactions, 
     data elements of medicare information, or security imposed 
     under subsection (a) or (b); or
       ``(ii) with respect to health plans imposed under 
     subsection (d);
     a penalty of not more than $100 for each such violation of a 
     specific standard or requirement, but the total amount 
     imposed for all such violations of a specific standard or 
     requirement during the calendar year shall not exceed 
     $25,000.
       ``(B) Procedures.--The provisions of section 1128A (other 
     than subsections (a) and (b) and the second sentence of 
     subsection (f)) shall apply to the imposition of a civil 
     money penalty under this paragraph in the same manner as such 
     provisions apply to the imposition of a penalty under such 
     section 1128A.
       ``(C) Denial of payment.--Except as provided in paragraph 
     (2), the Secretary may deny payment under this title for an 
     item or service furnished by a person if the person fails to 
     comply with an applicable requirement or standard for 
     medicare information relating to that item or service.
       ``(2) Limitations.--
       ``(A) Noncompliance not discovered.--A penalty may not be 
     imposed under paragraph (1) if it is established to the 
     satisfaction of the Secretary that the person liable for the 
     penalty did not know, and by exercising reasonable diligence 
     would not have known, that such person failed to comply with 
     the requirement or standard described in paragraph (1).
       ``(B) Failures due to reasonable cause.--
       ``(i) In general.--Except as provided in clause (ii), a 
     penalty may not be imposed under paragraph (1) if--

       ``(I) the failure to comply was due to reasonable cause and 
     not to willful neglect; and
       ``(II) the failure to comply is corrected during the 30-day 
     period beginning on the first date the person liable for the 
     penalty knew, or by exercising reasonable diligence would 
     have known, that the failure to comply occurred.

       ``(ii) Extension of period.--

       ``(I) No penalty.--The period referred to in clause (i)(II) 
     may be extended as determined appropriate by the Secretary 
     based on the nature and extent of the failure to comply.
       ``(II) Assistance.--If the Secretary determines that a 
     health plan failed to comply because such plan was unable to 
     comply, the Secretary may provide technical assistance to 
     such plan during the period described in clause (i)(II). Such 
     assistance shall be provided in any manner determined 
     appropriate by the Secretary.

       ``(C) Reduction.--In the case of a failure to comply which 
     is due to reasonable cause and not to willful neglect, any 
     penalty under paragraph (1) that is not entirely waived under 
     subparagraph (B) may be waived to the extent that the payment 
     of such penalty would be excessive relative to the compliance 
     failure involved.
       ``(f) Effect on State Law.--
       ``(1) General effect.--
       ``(A) General rule.--Except as provided in subparagraph 
     (B), a provision, requirement, or standard under this section 
     shall supersede any contrary provision of State law, 
     including a provision of State law that requires medical or 
     health plan records (including billing information) to be 
     maintained or transmitted in written rather than electronic 
     form.
       ``(B) Exceptions.--A provision, requirement, or standard 
     under this section shall not supersede a contrary provision 
     of State law if the Secretary determines that the provision 
     of State law should be continued for any reason, including 
     for reasons relating to prevention of fraud and abuse or 
     regulation of controlled substances.
       ``(2) Public health reporting.--Nothing in this section 
     shall be construed to invalidate or limit the authority, 
     power, or procedures established under any law providing for 
     the reporting of disease or injury, child abuse, birth, or 
     death, public health surveillance, or public health 
     investigation or intervention.
       ``(g) Medicare Information Advisory Committee.--
       ``(1) Establishment.--There is established a committee to 
     be known as the Medicare Information Advisory Committee (in 
     this subsection referred to as the `committee').
       ``(2) Duties.--The committee shall--
       ``(A) advise the Secretary in the development of standards 
     under this section; and
       ``(B) be generally responsible for advising the Secretary 
     and the Congress on the status and the future of the medicare 
     information network.
       ``(3) Membership.--
       ``(A) In general.--The committee shall consist of 9 members 
     of whom--
       ``(i) 3 shall be appointed by the President;
       ``(ii) 3 shall be appointed by the Speaker of the House of 
     Representatives after consultation with the minority leader 
     of the House of Representatives; and
       ``(iii) 3 shall be appointed by the President pro tempore 
     of the Senate after consultation with the minority leader of 
     the Senate.

     The appointments of the members shall be made not later than 
     60 days after the date of the enactment of this section. The 
     President shall designate 1 member as the Chair.
       ``(B) Expertise.--The membership of the committee shall 
     consist of individuals who are of recognized standing and 
     distinction in the areas of information systems, information 
     networking and integration, consumer health, or health care 
     financial management, and who possess the demonstrated 
     capacity to discharge the duties imposed on the committee.
       ``(C) Terms.--Each member of the committee shall be 
     appointed for a term of 5 years, except that the members 
     first appointed shall serve staggered terms such that the 
     terms of not more than 3 members expire at one time.
       ``(D) Initial meeting.--Not later than 30 days after the 
     date on which a majority of the members have been appointed, 
     the committee shall hold its first meeting.
       ``(4) Reports.--Not later than 1 year after the date of the 
     enactment of this section, and annually thereafter, the 
     committee shall submit to Congress and the Secretary a report 
     regarding--
       ``(A) the extent to which entities using the medicare 
     information network are meeting the standards adopted under 
     this section and working together to form an integrated 
     network that meets the needs of its users;
       ``(B) the extent to which such entities are meeting the 
     security standards established pursuant to this section and 
     the types of penalties assessed for noncompliance with such 
     standards;
       ``(C) any problems that exist with respect to 
     implementation of the medicare information network; and
       ``(D) the extent to which timetables under this section are 
     being met.

     Reports made under this subsection shall be made available to 
     health care providers, health plans, and other entities that 
     use the medicare information network to exchange medicare 
     information.
       ``(h) Definitions.--For purposes of this section:
       ``(1) Code set.--The term `code set' means any set of codes 
     used for encoding data elements, such as tables of terms, 
     enrollment information, and encounter data.
       ``(2) Coordination of benefits.--The term `coordination of 
     benefits' means determining and coordinating the financial 
     obligations of health plans when health care benefits are 
     payable under such a plan and under this title (including 
     under a MedicarePlus product).
       ``(3) Medicare information.--The term `medicare 
     information' means any information that relates to the 
     enrollment of individuals under this title (including 
     information relating to elections of MedicarePlus products 
     under section 1805) and the provision of health benefits 
     (including benefits provided under such products) under this 
     title.
       ``(4) Medicare information network.--The term `medicare 
     information network' means the medicare information system 
     that is formed through the application of the requirements 
     and standards established under this section.
       ``(5) Medicare information network service.--The term 
     `medicare information network service' means a public or 
     private entity that--
       ``(A) processes or facilitates the processing of 
     nonstandard data elements of medicare information into 
     standard data elements;
       ``(B) provides the means by which persons may meet the 
     requirements of this section; or
       ``(C) provides specific information processing services.
       ``(6) Health plan.--The term `health plan' means a plan 
     which provides, or pays the cost of, health benefits. Such 
     term includes the following, or any combination thereof:
       ``(A) Part A or part B of this title, and includes a 
     MedicarePlus product.
       ``(B) The medicaid program under title XIX and the 
     MediGrant program under title XXI.
       ``(C) A medicare supplemental policy (as defined in section 
     1882(g)(1)).
       ``(D) Worker's compensation or similar insurance.
       ``(E) Automobile or automobile medical-payment insurance.

[[Page H 10439]]

       ``(F) A long-term care policy, other than a fixed indemnity 
     policy.
       ``(G) The Federal Employees Health Benefit Plan under 
     chapter 89 of title 5, United States Code.
       ``(H) An employee welfare benefit plan, as defined in 
     section 3(1) of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1002(1)), but only to the extent the plan 
     is established or maintained for the purpose of providing 
     health benefits.
       ``(7) Individually identifiable medicare information.--The 
     term `individually identifiable medicare information' means 
     medicare enrollment information, including demographic 
     information collected from an individual, that--
       ``(A) is created or received by a health care provider, 
     health plan, employer, or medicare information network 
     service, and
       ``(B) identifies an individual.
       ``(8) Standard setting organization.--The term `standard 
     setting organization' means a standard setting organization 
     accredited by the American National Standards Institute.
       ``(9) Standard transaction.--The term `standard 
     transaction' means, when referring to an information 
     transaction or to data elements of medicare information, any 
     transaction that meets the requirements and implementation 
     specifications adopted by the Secretary under subsections (a) 
     and (b).''.

           PART 5--OTHER PROVISIONS RELATING TO PARTS A AND B

     SEC. 15741. CLARIFICATION OF MEDICARE COVERAGE OF ITEMS AND 
                   SERVICES ASSOCIATED WITH CERTAIN MEDICAL 
                   DEVICES APPROVED FOR INVESTIGATIONAL USE.

       (a) Coverage.--Nothing in title XVIII of the Social 
     Security Act may be construed to prohibit coverage under part 
     A or part B of the medicare program of items and services 
     associated with the use of a medical device in the furnishing 
     of inpatient hospital services (as defined for purposes of 
     part A of the medicare program) solely on the grounds that 
     the device is not an approved device, if--
       (1) the device is an investigational device; and
       (2) the device is used instead of an approved device.
       (b) Clarification of Payment Amount.--Notwithstanding any 
     other provision of title XVIII of the Social Security Act, 
     the amount of payment made under the medicare program for any 
     item or service associated with the use of an investigational 
     device in the furnishing of inpatient hospital services (as 
     defined for purposes of part A of the medicare program) may 
     not exceed the amount of the payment which would have been 
     made under the program for the item or service if the item or 
     service were associated with the use of an approved device.
       (c) Definitions.--In this section--
       (1) the term ``approved device'' means a medical device 
     which has been approved for marketing under pre-market 
     approval under the Federal Food, Drug, and Cosmetic Act or 
     cleared for marketing under a 510(k) notice under such Act; 
     and
       (2) the term ``investigational device'' means a medical 
     device (other than a device described in paragraph (1)) which 
     is approved for investigational use under section 520(g) of 
     the Federal Food, Drug, and Cosmetic Act.

     SEC. 15742. ADDITIONAL EXCLUSION FROM COVERAGE.

       (a) In General.--Section 1862(a) (42 U.S.C. 1395y(a)), as 
     amended by section 15525(a)(2), section 15609B(a), and 
     section 15701(c)(2)(C), is amended--
       (1) by striking ``or'' at the end of paragraph (17),
       (2) by striking the period at the end of paragraph (18) and 
     inserting ``; or'', and
       (3) by inserting after paragraph (18) the following new 
     paragraph:
       ``(19) where such expenses are for items or services, or to 
     assist in the purchase, in whole or in part, of health 
     benefit coverage that includes items or services, for the 
     purpose of causing, or assisting in causing, the death, 
     suicide, euthanasia, or mercy killing of a person.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to payment for items and services furnished on or 
     after the date of the enactment of this Act.

     SEC. 15743. COMPETITIVE BIDDING FOR CERTAIN ITEMS AND 
                   SERVICES.

       (a) Establishment of Demonstration.--Not later than 1 year 
     after the date of the enactment of this Act, the Secretary of 
     Health and Human Services shall establish and operate over a 
     2-year period a demonstration project in 2 geographic regions 
     selected by the Secretary under which (notwithstanding any 
     provision of title XVIII of the Social Security Act to the 
     contrary) the amount of payment made under the medicare 
     program for a selected item or service (other than clinical 
     diagnostic laboratory tests) furnished in the region shall be 
     equal to the price determined pursuant to a competitive 
     bidding process which meets the requirements of subsection 
     (b).
       (b) Requirements for Competitive Bidding Process.--The 
     competitive bidding process used under the demonstration 
     project under this section shall meet such requirements as 
     the Secretary may impose to ensure the cost-effective 
     delivery to medicare beneficiaries in the project region of 
     items and services of high quality.
       (c) Determination of Selected Items or Services.--The 
     Secretary shall select items and services to be subject to 
     the demonstration project under this section if the Secretary 
     determines that the use of competitive bidding with respect 
     to the item or service under the project will be appropriate 
     and cost-effective. In determining the items or services to 
     be selected, the Secretary shall consult with an advisory 
     taskforce which includes representatives of providers and 
     suppliers of items and services (including small business 
     providers and suppliers) in each geographic region in which 
     the project will be effective.

     SEC. 15744. DISCLOSURE OF CRIMINAL CONVICTIONS RELATING TO 
                   PROVISION OF HOME HEALTH SERVICES.

       (a) In General.--Section 1891 (42 U.S.C. 1395bbb) is 
     amended by adding at the end the following new subsection:
       ``(g) The Secretary, and each State or local survey agency 
     or other State agency responsible for monitoring compliance 
     of home health agencies with requirements, shall make 
     available, upon request of any person, information the 
     Secretary or agency has on individuals who have been 
     convicted of felonies relating to the provision of home 
     health services.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

     SEC. 15745. REQUIRING RENAL DIALYSIS FACILITIES TO MAKE 
                   SERVICES AVAILABLE ON A 24-HOUR BASIS.

       (a) In General.--Section 1881(b)(1) (42 U.S.C. 
     1395rr(b)(1)) is amended by striking the period at the end 
     and inserting the following: ``, together with a requirement 
     (in the case of a renal dialysis facility) that the facility 
     make institutional dialysis services and supplies available 
     on a 24-hour basis (either directly or through arrangements 
     with providers of services or other renal dialysis facilities 
     that meet the requirements of such subparagraph) and that the 
     facility provide notice informing its patients of the other 
     providers of services or renal dialysis facilities (if any) 
     with whom the facility has made such arrangements.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to items and services furnished on or after 
     January 1, 1996.
                   Subtitle I--Clinical Laboratories

     SEC. 15801. EXEMPTION OF PHYSICIAN OFFICE LABORATORIES.

       Section 353(d) of the Public Health Service Act (42 U.S.C. 
     263a(d)) is amended--
       (1) by redesignating paragraphs (2), (3), and (4) as 
     paragraphs (3), (4), and (5) and by adding after paragraph 
     (1) the following:
       ``(2) Exemption of physician office laboratories.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     a clinical laboratory in a physician's office (including an 
     office of a group of physicians) which is directed by a 
     physician and in which examinations and procedures are either 
     performed by a physician or by individuals supervised by a 
     physician solely as an adjunct to other services provided by 
     the physician's office is exempt from this section.
       ``(B) Exception.--A clinical laboratory described in 
     subparagraph (A) is not exempt from this section when it 
     performs a pap smear (Papanicolaou Smear) analysis.
       ``(C) Definition.--For purposes of subparagraph (A), the 
     term `physician' has the same meaning as is prescribed for 
     such term by section 1861(r) of the Social Security Act (42 
     U.S.C. 1395x(r)).'';
       (2) in paragraph (3) (as so redesignated) by striking 
     ``(3)'' and inserting ``(4)''; and
       (3) in paragraphs (4) and (5) (as so redesignated) by 
     striking ``(2)'' and inserting ``(3)''.
Subtitle J--Lock-Box Provisions for Medicare Part B Savings from Growth 
                               Reductions

     SEC. 15901. ESTABLISHMENT OF MEDICARE GROWTH REDUCTION TRUST 
                   FUND FOR PART B SAVINGS.

       Part B of title XVIII is amended by inserting after section 
     1841 the following new section:


                 ``medicare growth reduction trust fund

       ``Sec. 1841A. (a)(1) There is hereby created on the books 
     of the Treasury of the United States a trust fund to be known 
     as the `Federal Medicare Growth Reduction Trust Fund' (in 
     this section referred to as the `Trust Fund'). The Trust Fund 
     shall consist of such gifts and bequests as may be made as 
     provided in section 201(i)(1) and amounts appropriated under 
     paragraph (2).
       ``(2) There are hereby appropriated to the Trust Fund, out 
     of any amounts in the Treasury not otherwise appropriated, 
     amounts equivalent to 100 percent of the Secretary's estimate 
     of the reductions in outlays under this part that are 
     attributable to the Medicare Preservation Act of 1995. The 
     amounts appropriated by the preceding sentence shall be 
     transferred from time to time (not less frequently than 
     monthly) from the general fund in the Treasury to the Trust 
     Fund.
       ``(3)(A) Subject to subparagraph (B), with respect to 
     monies transferred to the Trust Fund, no transfers, 
     authorizations of appropriations, or appropriations are 
     permitted.
       ``(B) Beginning with fiscal year 2003, the Secretary may 
     expend funds in the Trust Fund to carry out this title, but 
     only to the extent provided by Congress in advance through a 
     specific amendment to this section.
       ``(b) The provisions of subsections (b) through (e) of 
     section 1841 shall apply to the Trust Fund in the same manner 
     as they apply to the Federal Supplementary Medical Insurance 
     Trust Fund, except that the Board of Trustees and Managing 
     Trustee of the 

[[Page H 10440]]
     Trust Fund shall be composed of the members of the Board of Trustees 
     and the Managing Trustee, respectively, of the Federal 
     Supplementary Medical Insurance Trust Fund.''.

  The CHAIRMAN. No further amendment is in order except the amendment 
in the nature of a substitute numbered 2 printed in the designated 
place in the Congressional Record, which may be offered only by the 
gentleman from Missouri [Mr. Gephardt] or his designee, is considered 
read, is debatable for 1 hour, equally divided and controlled by the 
proponent and an opponent of the amendment and is not subject to 
amendment.
  Does the gentleman from Missouri [Mr. Gephardt] choose to control the 
time, or is he designating a Member to do so on his behalf?
  Mr. GIBBONS. Mr. Chairman, I have been designated, along with the 
gentleman from Michigan [Mr. Dingell].
  The CHAIRMAN. Who seeks time in opposition?
  Mr. ARCHER. Mr. Chairman, I seek time in opposition.
  Mr. BLILEY. Mr. Chairman, I seek time in opposition as well.


     amendment in the nature of a substitute offered by mr. gibbons

  Mr. GIBBONS. Mr. Chairman, I offer an amendment in the nature of a 
substitute.
  The CHAIRMAN. The Clerk will designate the amendment in the nature of 
a substitute.
  The text of the amendment in the nature of a substitute is as 
follows:

       Amendment in the nature of a substitute offered by Mr. 
     Gibbons:
       Strike all after the enacting clause and insert the 
     following:
                           TITLE XV--MEDICARE

     SEC. 15000. SHORT TITLE OF TITLE; AMENDMENTS AND REFERENCES 
                   TO OBRA; TABLE OF CONTENTS OF TITLE.

       (a) Short Title.--This title may be cited as the ``Medicare 
     Enhancement Act of 1995''.
       (b) Amendments to Social Security Act.--Except as otherwise 
     specifically provided, whenever in this title an amendment is 
     expressed in terms of an amendment to or repeal of a section 
     or other provision, the reference shall be considered to be 
     made to that section or other provision of the Social 
     Security Act.
       (c) References to OBRA.--In this title, the terms ``OBRA-
     1986'', ``OBRA-1987'', ``OBRA-1989'', ``OBRA-1990'', and 
     ``OBRA-1993'' refer to the Omnibus Budget Reconciliation Act 
     of 1986 (Public Law 99-509), the Omnibus Budget 
     Reconciliation Act of 1987 (Public Law 100-203), the Omnibus 
     Budget Reconciliation Act of 1989 (Public Law 101-239), the 
     Omnibus Budget Reconciliation Act of 1990 (Public Law 101-
     508), and the Omnibus Budget Reconciliation Act of 1993 
     (Public Law 103-66), respectively.
       (d) Table of Contents of Title.--The table of contents of 
     this title is as follows:

           Subtitle A--Provisions Relating to Medicare Part A

Sec. 15001. Reductions in inflation updates for inpatient hospital 
              services.
Sec. 15002. Continuation of current reduction in payments for capital-
              related costs for inpatient hospital services.
Sec. 15003. Elimination of certain additional payments for outlier 
              cases.
Sec. 15004. Clarification of treatment of transfers.
Sec. 15005. Prospective payment for skilled nursing facilities.
Sec. 15006. Maintaining savings resulting from temporary freeze on 
              payment increases for skilled nursing facilities.

           Subtitle B--Provisions Relating to Medicare Part B

Sec. 15101. Payment for physicians' services.
Sec. 15102. Freeze in updates to payment amounts for certain items and 
              services.
Sec. 15103. Reduction in effective beneficiary coinsurance rate for 
              certain hospital outpatient services.
Sec. 15104. Expanding coverage of preventive benefits.
Sec. 15105. Reduction in payment for capital-related costs of hospital 
              outpatient services.
Sec. 15106. Part B premium.
Sec. 15107. Ensuring payment for physician and nurse for jointly 
              furnished anesthesia services.

            Subtitle C--Provisions Relating to Parts A and B

                    Part 1--Medicare Secondary Payor

Sec. 15201. Extension of existing secondary payer requirements.
Sec. 15202. Clarification of time and filing limitations.
Sec. 15203. Clarification of liability of third party-administrators.
Sec. 15204. Clarification of payment amounts to medicare.
Sec. 15205. Conditions for double damages.

           Part 2--Other Provisions Relating to Parts A and B

Sec. 15221. Making additional choices of health plans available to 
              beneficiaries.
Sec. 15222. Teaching hospital and graduate medical education trust 
              fund.
Sec. 15223. Revisions in determination of amount of payment for medical 
              education.
Sec. 15224. Payments for home health services.
Sec. 15225. Requiring health maintenance organizations to cover 
              appropriate range of services.
Sec. 15226. Clarification of medicare coverage of items and services 
              associated with certain medical devices approved for 
              investigational use.
Sec. 15227. Commission on the Future of Medicare and the Protection of 
              the Health of the Nation's Senior Citizens.

                 Subtitle D--Preventing Fraud and Abuse

  Part 1--Amendments to Anti-Fraud and Abuse Provisions Applicable to 
           Medicare, Medicaid, and State Health Care Programs

Sec. 15301. Anti-kickback statutory provisions.
Sec. 15302. Civil money penalties.
Sec. 15303. Private right of action.
Sec. 15304. Amendments to exclusionary provisions in fraud and abuse 
              program.
Sec. 15305. Sanctions against practitioners and persons for failure to 
              comply with statutory obligations relating to quality of 
              care.
Sec. 15306. Revisions to criminal penalties.
Sec. 15307. Definitions.
Sec. 15308. Effective date.

      Part 2--Interpretive Rulings on Kickbacks and Self-referral

Sec. 15311. Establishment of process for issuance of interpretive 
              rulings.
Sec. 15312. Effect of issuance of interpretive ruling.
Sec. 15313. Imposition of fees.

    Part 3--Direct Spending for Anti-Fraud Activities Under Medicare

Sec. 15321. Direct spending for anti-fraud activities under medicare.

   Part 4--Preemption of State Corporate Practice Laws Under Medicare

Sec. 15331. Preemption of State laws prohibiting corporate practice of 
              medicine for purposes of medicare.

            Part 5--Medicare Anti-Fraud and Abuse Commission

Sec. 15341. Establishment of Medicare Anti-Fraud and Abuse Commission.
Sec. 15342. Functions of Commission.
Sec. 15343. Organization and compensation.
Sec. 15344. Staff of Commission.
Sec. 15345. Authority of Commission.
Sec. 15346. Termination.
Sec. 15347. Authorization of appropriations.
           Subtitle A--Provisions Relating to Medicare Part A

     SEC. 15001. REDUCTIONS IN INFLATION UPDATES FOR INPATIENT 
                   HOSPITAL SERVICES.

       (a) PPS Hospitals.--Section 1886(b) (3)(B)(i) (42 U.S.C. 
     1395ww(b)(3)(B)(i)) is amended by striking subclauses (XI), 
     (XII), and (XIII) and inserting the following:
       ``(XI) for each of the fiscal years 1996 through 2002, the 
     market basket percentage increase minus 0.5 percentage point 
     for hospitals located in a rural area and the market basket 
     percentage increase minus 1.0 percentage point for all other 
     hospitals, and
       ``(XII) for fiscal year 2003 and each subsequent fiscal 
     year, the market basket percentage increase for hospitals in 
     all areas.''.
       (b) PPS-Exempt Hospitals.--Section 1886(b)(3)(B)(ii) (42 
     U.S.C. 1395ww(b)(3)(B)(ii)) is amended--
       (1) in subclause (V)--
       (A) by striking ``thorugh 1997'' and inserting ``through 
     1995'', and
       (B) by striking ``and'' at the end;
       (2) by redesignating subclause (VI) as subclause (VII); and
       (3) by inserting after subclause (V) the following new 
     subclause:
       ``(VI) fiscal years 1996 through 2002, is the market basket 
     percentage increase minus 0.5 percentage point for hospitals 
     located in a rural area and the market basket percentage 
     increase minus 1.0 percentage point for all other hospitals, 
     and''.

     SEC. 15002. CONTINUATION OF CURRENT REDUCTION IN PAYMENTS FOR 
                   CAPITAL-RELATED COSTS FOR INPATIENT HOSPITAL 
                   SERVICES.

       (a) Reduction in Payments for PPS Hospitals.--Section 
     1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended in the 
     second sentence by striking ``through 1995'' and inserting 
     ``through 2002''.
       (b) Reduction in Payments for PPS-Exempt Hospitals.--
     Section 1886(g) (42 U.S.C. 1395ww(g)) is amended by adding at 
     the end the following new paragraph:
       ``(4)(A) Except as provided in subparagraph (B), in 
     determining the amount of the payments that may be made under 
     this title with respect to all the capital-related costs of 
     inpatient hospital services furnished during fiscal years 
     1996 through 2002 of a hospital which is not a subsection (d) 
     hospital or a subsection (d) Puerto Rico hospital, the 
     Secretary shall reduce the amounts of such payments otherwise 
     determined under this title by 10 percent.
       ``(B) Subparagraph (A) shall not apply to payments with 
     respect to the capital-related costs of any hospital that is 
     a sole community hospital (as defined in subsection 
     (d)(5)(D)(iii) or a rural primary care hospital (as defined 
     in section 1861(mm)(1)).''.
     
[[Page H 10441]]


     SEC. 15003. ELIMINATION OF CERTAIN ADDITIONAL PAYMENTS FOR 
                   OUTLIER CASES.

       (a) Indirect Medical Education.--Section 
     1886(d)(5)(B)(i)(I) (42 U.S.C. 1395ww(d)(5)(B)(i)(I)) is 
     amended--
       (1) by striking ``the sum of''; and
       (2) by striking ``and the amount paid to the hospital under 
     subparagraph (A)''.
       (b) Disproportionate Share Adjustments.--Section 
     1886(d)(5)(F)(ii)(I) (42 U.S.C. 1395ww(d)(5)(F)(ii)(I)) is 
     amended--
       (1) by striking ``the sum of''; and
       (2) by striking ``and the amount paid to the hospital under 
     subparagraph (A) for that discharge''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to discharges occurring on or after October 1, 
     1995.

     SEC. 15004. CLARIFICATION OF TREATMENT OF TRANSFERS.

       (a) In General.--Section 1886(d)(5)(I) (42 U.S.C. 
     1395ww(d)(5)(I)) is amended by adding at the end the 
     following new clause:
       ``(iii) In making adjustments under clause (i) for transfer 
     cases, the Secretary shall treat as a transfer any transfer 
     to a hospital (without regard to whether or not the hospital 
     is a subsection (d) hospital), a unit thereof, or a skilled 
     nursing facility.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to discharges occurring on or after October 1, 
     1995.

     SEC. 15005. PROSPECTIVE PAYMENT FOR SKILLED NURSING 
                   FACILITIES.

       Section 1888 (42 U.S.C. 1395yy) is amended by adding at the 
     end the following:
       ``(e) Notwithstanding any other provision of this title, 
     the Secretary shall, for cost reporting periods beginning on 
     or after October 1, 1996, provide for payment for routine 
     costs of extended care services in accordance with a 
     prospective payment system established by the Secretary, 
     subject to the limitations in subsections (f) through (h).
       ``(f)(1) The amount of payment under subsection (e) shall 
     be determined on a per diem basis.
       ``(2) The Secretary shall compute the routine costs per 
     diem in a base year (determined by the Secretary) for each 
     skilled nursing facility, and shall update the per diem rate 
     on the basis of a market basket and other factors as the 
     Secretary determines appropriate.
       ``(3) The per diem rate applicable to a skilled nursing 
     facility may not exceed the following limits--
       ``(A) With respect to skilled nursing facilities located in 
     rural areas, the limit shall be equal to 112 percent of the 
     mean per diem routine costs in a base year (determined by the 
     Secretary) for freestanding skilled nursing facilities 
     located in rural areas within the same region, as updated by 
     the same percentage determined under paragraph (2).
       ``(B) With respect to skilled nursing facilities located in 
     urban areas, the limit shall be equal to 112 percent of the 
     mean per diem routine costs in a base year (determined by the 
     Secretary) for freestanding skilled nursing facilities 
     located in urban areas within the same region, updated by the 
     same percentage determined under paragraph (2).
       ``(g) In the case of a hospital-based skilled nursing 
     facility or a skilled nursing facility receiving payment 
     under subsection (d) as of the date of enactment of this 
     provision, the amount of payment to the facility based on 
     application of subsections (e) and (f) may not be less than 
     the per diem rate applicable to the facility for routine 
     costs on the date of enactment of this provision.
       ``(h) Notwithstanding any other provision of this title, 
     the Secretary shall, for cost reporting periods beginning on 
     or after October 1, 1998, provide for payment for all costs 
     of extended care services (including routine service costs, 
     ancillary costs, and capital-related costs) in accordance 
     with a prospective payment system established by the 
     Secretary. The Secretary shall adjust the payment amounts 
     under this subsection in a manner to assure that the 
     aggregate payments made under this subsection in a fiscal 
     year result in a 5 percent reduction (as estimated by the 
     Secretary) in the amount of payments that would otherwise 
     have been made for such fiscal year.
       ``(i) The Secretary may provide for such exceptions as the 
     Secretary determines appropriate to the amount of payment 
     based on application of subsections (e) though (h).''

     SEC. 15006. MAINTAINING SAVINGS RESULTING FROM TEMPORARY 
                   FREEZE ON PAYMENT INCREASES FOR SKILLED NURSING 
                   FACILITIES.

       (a) Basing Updates to Per Diem Cost Limits on Limits for 
     Fiscal Year 1993.--
       (1) In general.--The last sentence of section 1888(a) (42 
     U.S.C. 1395yy(a)) is amended by adding at the end the 
     following: ``(except that such updates may not take into 
     account any changes in the routine service costs of skilled 
     nursing facilities occurring during cost reporting periods 
     which began during fiscal year 1994 or fiscal year 1995).''.
       (2) No exceptions permitted based on amendment.--The 
     Secretary of Health and Human Services shall not consider the 
     amendment made by paragraph (1) in making any adjustments 
     pursuant to section 1888(c) of the Social Security Act.
       (b) Payments Determined on Prospective Basis.--Any change 
     made by the Secretary of Health and Human Services in the 
     amount of any prospective payment paid to a skilled nursing 
     facility under section 1888(d) of the Social Security Act for 
     cost reporting periods beginning on or after October 1, 1995, 
     may not take into account any changes in the costs of 
     services occurring during cost reporting periods which began 
     during fiscal year 1994 or fiscal year 1995.
           Subtitle B--Provisions Relating to Medicare Part B

     SEC. 15101. PAYMENT FOR PHYSICIANS' SERVICES.

       (a) Replacement of Volume Performance Standard With 
     Cumulative Expenditure Target.--Section 1848(f)(2) (42 U.S.C. 
     1395w-4(f)(2)) is amended to read as follows:
       ``(f) Cumulative Expenditure Target.--
       ``(1) Specification of target.--
       ``(A) Fiscal year 1996.--The cumulative expenditure target 
     for all physicians' services and for each category of such 
     services for fiscal year 1996 shall be equal to the product 
     of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     change in the medicare economic index for 1996 (described in 
     the fourth sentence of section 1842(b)(3)) (divided by 100),
       ``(ii) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in the average number of individuals 
     enrolled under this part (other than private plan enrollees) 
     from fiscal year 1995 to fiscal year 1996,
       ``(iii) 1 plus the Secretary's estimate of the projected 
     percentage growth in real gross domestic product per capita 
     (divided by 100) from fiscal year 1995 to fiscal year 1996, 
     plus 2 percentage points, and
       ``(iv) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in expenditures for all physicians' 
     services or of the category of physicians' services in fiscal 
     year 1996 (compared with fiscal year 1995) which will result 
     from changes in law, determined without taking into account 
     estimated changes in expenditures due to changes in the 
     volume and intensity of physicians' services or changes in 
     expenditures resulting from changes in the update to the 
     conversion factor under subsection (d),

     minus 1 and multiplied by 100.
       ``(B) Subsequent fiscal years.--The cumulative expenditure 
     target for all physicians' services and for each category of 
     physicians' services for fiscal year 1997 and each subsequent 
     fiscal year shall be equal to the cumulative expenditure 
     target determined under this paragraph for the previous 
     fiscal year, increased by the product of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     change in the medicare economic index for the fiscal year 
     involved (described in the fourth sentence of section 
     1842(b)(3)) (divided by 100),
       ``(ii) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in the average number of individuals 
     enrolled under this part (other than private plan enrollees) 
     from the previous fiscal year to the fiscal year involved,
       ``(iii) 1 plus the Secretary's estimate of the projected 
     percentage growth in real gross domestic product per capita 
     (divided by 100) from the previous fiscal year to the fiscal 
     year involved, plus 2 percentage points, and
       ``(iv) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in expenditures for all physicians' 
     services or of the category of physicians' services in the 
     fiscal year (compared with the previous fiscal year) which 
     will result from changes in law, determined without taking 
     into account estimated changes in expenditures due to changes 
     in the volume and intensity of physicians' services or 
     changes in expenditures resulting from changes in the update 
     to the conversion factor under subsection (d)(3),

     minus 1 and multiplied by 100.''.
       ``(2) Exclusion of services furnished to private plan 
     enrollees.--In this subsection, the term `physicians' 
     services' with respect to a fiscal year does not include 
     services furnished to an individual enrolled under this part 
     who has elected to receive benefits under this title for the 
     fiscal year through enrollment with an eligible organization 
     with a risk-sharing contract under section 1876.''.
       (b) Establishing Update to Conversion Factor to Match 
     Spending Under Cumulative Expenditure Target.--
       (1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)(3)) 
     is amended--
       (A) by striking paragraph (2);
       (B) by amending paragraph (3) to read as follows:
       ``(3) Update.--
       ``(A) In general.--Subject to subparagraph (E), for 
     purposes of this section the update for a year (beginning 
     with 1997) is equal to the product of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     increase in the medicare economic index (described in the 
     fourth sentence of section 1842(b)(3)) for the year (divided 
     by 100), and
       ``(ii) 1 plus the Secretary's estimate of the update 
     adjustment factor for the year (divided by 100),
     minus 1 and multiplied by 100.
       ``(B) Update adjustment factor.--The `update adjustment 
     factor' for a year for a category of physicians' services is 
     equal to the quotient of--
       ``(i) the difference between (I) the sum of the allowed 
     expenditures for physicians' services in such category 
     furnished during each of the years 1995 through the year 
     involved and (II) the sum of the amount of actual 
     expenditures for physicians' services furnished in such 
     category during each of the years 1995 through the previous 
     year; divided by
       ``(ii) the Secretary's estimate of allowed expenditures for 
     physicians' services in such category furnished during the 
     year.
       ``(C) Determination of allowed expenditures.--For purposes 
     of subparagraph (B), 

[[Page H 10442]]
     allowed expenditures for physicians' services in a category of 
     physicians' services shall be determined as follows (as 
     estimated by the Secretary):
       ``(i) In the case of allowed expenditures for 1995, such 
     expenditures shall be equal to actual expenditures for 
     services furnished during the 12-month period ending with 
     June of 1995.
       ``(ii) In the case of allowed expenditures for 1996 and 
     each subsequent year, such expenditures shall be equal to 
     allowed expenditures for the previous year, increased by the 
     cumulative expenditure target under subsection (f) for the 
     fiscal year which begins during the year.
       ``(D) Determination of actual expenditures.--For purposes 
     of subparagraph (B), the amount of actual expenditures for 
     physicians' services in a category of physicians' services 
     furnished during a year shall be equal to the amount of 
     expenditures for such services during the 12-month period 
     ending with June of the previous year.
       ``(E) Restriction on variation from medicare economic 
     index.--Notwithstanding the amount of the update adjustment 
     factor determined under subparagraph (B) for a year, the 
     update in the conversion factor under this paragraph for the 
     year may not be--
       ``(i) greater than 103 percent of the Secretary's estimate 
     of the percentage increase in the medicare economic index 
     (described in the fourth sentence of section 1842(b)(3)) for 
     the year; or
       ``(ii) less than 92.5 percent of the Secretary's estimate 
     of the percentage increase in the medicare economic index 
     (described in the fourth sentence of section 1842(b)(3)) for 
     the year.''; and
       (C) by adding at the end the following new paragraph:
       ``(4) Reporting requirements.--
       ``(A) In general.--Not later than November 1 of each year 
     (beginning with 1996), the Secretary shall transmit to the 
     Congress a report that describes the update in the conversion 
     factor for physicians' services (as defined in subsection 
     (f)(3)(A)) in the following year.
       ``(B) Commission review.--The Medicare Payment Review 
     Commission shall review the report submitted under 
     subparagraph (A) for a year and shall submit to the Congress, 
     by not later than December 1 of the year, a report containing 
     its analysis of the conversion factor for the following 
     year.''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to physicians' services furnished on or after 
     January 1, 1997.
       (c) Establishment of Single Conversion Factor for 1996.--
     Section 1848(d)(1) (42 U.S.C. 1395w-4(d)(1)) is amended--
       (1) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (2) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Special rule for 1996.--For 1996, the conversion 
     factor under this subsection shall be $34.60 for all 
     physicians' services.''.

     SEC. 15102. FREEZE IN UPDATES TO PAYMENT AMOUNTS FOR CERTAIN 
                   ITEMS AND SERVICES.

       (a) Clinical Diagnostic Laboratory Tests.--Section 
     1833(h)(2)(A)(ii)(IV) (42 U.S.C. 1395l(h)(2)(A)(ii)(IV)) is 
     amended striking ``1994 and 1995'' and inserting ``1994, 
     1995, 1996, and 1997''.
       (b) Durable Medical Equipment.--
       (1) Covered items.--Section 1834(a)(14) (42 U.S.C. 
     1395m(a)(14)) is amended--
       (A) by striking ``and'' at the end of subparagraph (A);
       (B) in subparagraph (B)--
       (i) by striking ``a subsequent year'' and inserting ``1993, 
     1994, and 1995'', and
       (ii) by striking the period at the end and inserting ``; 
     and''; and
       (C) by adding at the end the following:
       ``(C) for 1996 and 1997, 0 percentage points; and
       ``(D) for a subsequent year, the percentage increase in the 
     consumer price index for all urban consumers (U.S. urban 
     average) for the 12-month period ending with June of the 
     previous year.''.
       (2) Orthotics and prosthetics.--Section 1834(h)(4)(A)(iii) 
     (42 U.S.C. 1395m(h)(4)(A)(iii)) is amended by striking ``1994 
     and 1995'' and inserting ``1994, 1995, 1996, and 1997''.
       (c) Ambulatory Surgical Center Services.--The Secretary of 
     Health and Human Services shall not provide for any inflation 
     update in the payment amounts under subparagraphs (A) and (B) 
     of section 1833(i)(2) of the Social Security Act for fiscal 
     years 1996 and 1997.

     SEC. 15103. REDUCTION IN EFFECTIVE BENEFICIARY COINSURANCE 
                   RATE FOR CERTAIN HOSPITAL OUTPATIENT SERVICES.

       (a) In General.--
       (1) Ambulatory surgical center procedures.--Section 
     1833(i)(3)(B)(i)(II) (42 U.S.C. 1395l(i)(3)(B)(i)(II)) is 
     amended--
       (A) by striking ``of 80 percent''; and
       (B) by striking the period at the end and inserting the 
     following: ``, less the amount a provider may charge as 
     described in clause (ii) of section 1866(a)(2)(A).''.
       (2) Radiology services and diagnostic procedures.--Section 
     1833(n)(1)(B)(i)(II) (42 U.S.C. 1395l(n)(1)(B)(i)(II)) is 
     amended--
       (A) by striking ``of 80 percent''; and
       (B) by striking the period at the end and inserting the 
     following: ``, less the amount a provider may charge as 
     described in clause (ii) of section 1866(a)(2)(A).''.
       (b) Reduction in Beneficiary Coinsurance Rate.--Section 
     1866(a)(2) (42 U.S.C. 1395cc(a)(2)) is amended by adding at 
     the end the following new subparagraph:
       ``(E)(i) In the case of services furnished during a year 
     for which the amount of payment under part B is determined 
     under section 1833(i) or section 1833(n), clause (ii) of 
     subparagraph (A) shall be applied by reducing `20 percent' by 
     the percentage established for the year under clause (ii).
       ``(ii) The percentage established for a year under this 
     clause shall be the percentage which, if applied for the 
     year, will result in a reduction in projected total 
     coinsurance payments under part B during the year in an 
     amount equal to the Secretary's estimate of the reduction in 
     expenditures under part B which would have occurred as a 
     result of the enactment of section 15103(a) of the Medicare 
     Enhancement Act of 1995 if this subparagraph were not in 
     effect for the year.
       ``(iii) The Secretary shall establish and publish the 
     percentage established for a year under this clause not later 
     than October 1 preceding the year involved (or not later than 
     December 1, 1995, in the case of the percentage established 
     for 1996).''.
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall apply to services furnished during portions of 
     cost reporting periods occurring on or after January 1, 1996.

     SEC. 15104. EXPANDING COVERAGE OF PREVENTIVE BENEFITS.

       (a) Providing Annual Screening Mammography for Women Over 
     Age 49.--Section 1834(c)(2)(A) (42 U.S.C. 1395m(c)(2)(A)) is 
     amended--
       (1) in clause (iv), by striking ``but under 65 years of 
     age,''; and
       (2) by striking clause (v).
       (b) Coverage of Screening Pap Smear and Pelvic Exams.--
       (1) Coverage of pelvic exam; increasing frequency of 
     coverage of pap smear.--Section 1861(nn) (42 U.S.C. 
     1395x(nn)) is amended--
       (A) in the heading, by striking ``Smear'' and inserting 
     ``Smear; Screening Pelvic Exam'';
       (B) by striking ``(nn)'' and inserting ``(nn)(1)'';
       (C) by striking ``3 years'' and all that follows and 
     inserting ``3 years, or during the preceding year in the case 
     of a woman described in paragraph (3).''; and
       (D) by adding at the end the following new paragraphs:
       ``(2) The term `screening pelvic exam' means an pelvic 
     examination provided to a woman if the woman involved has not 
     had such an examination during the preceding 3 years, or 
     during the preceding year in the case of a woman described in 
     paragraph (3), and includes a clinical breast examination.
       ``(3) A woman described in this paragraph is a woman who--
       ``(A) is of childbearing age and has not had a test 
     described in this subsection during each of the preceding 3 
     years that did not indicate the presence of cervical cancer; 
     or
       ``(B) is at high risk of developing cervical cancer (as 
     determined pursuant to factors identified by the 
     Secretary).''.
       (2) Waiver of deductible.--The first sentence of section 
     1833(b) (42 U.S.C. 1395l(b)), as amended by subsection 
     (a)(2), is amended--
       (A) by striking ``and (5)'' and inserting ``(5)''; and
       (B) by striking the period at the end and inserting the 
     following: ``, and (6) such deductible shall not apply with 
     respect to screening pap smear and screening pelvic exam (as 
     described in section 1861(nn)).''.
       (3) Conforming amendments.--(A) Section 1861(s)(14) (42 
     U.S.C. 1395x(s)(14)) is amended by inserting ``and screening 
     pelvic exam'' after ``screening pap smear''.
       (B) Section 1862(a)(1)(F) (42 U.S.C. 1395y(a)(1)(F)) is 
     amended by inserting ``and screening pelvic exam'' after 
     ``screening pap smear''.
       (c) Coverage of Colorectal Screening.--
       (1) In general.--Section 1834 (42 U.S.C. 1395m) is amended 
     by inserting after subsection (c) the following new 
     subsection:
       ``(d) Frequency and Payment Limits for Screening Fecal-
     Occult Blood Tests, Screening Flexible Sigmoidoscopies, and 
     Screening Colonoscopy.--
       ``(1) Frequency limits for screening fecal-occult blood 
     tests.--Subject to revision by the Secretary under paragraph 
     (4), no payment may be made under this part for a screening 
     fecal-occult blood test provided to an individual for the 
     purpose of early detection of colon cancer if the test is 
     performed--
       ``(A) in the case of an individual under 65 years of age, 
     more frequently than is provided in a periodicity schedule 
     established by the Secretary for purposes of this 
     subparagraph; or
       ``(B) in the case of any other individual, within the 11 
     months following the month in which a previous screening 
     fecal-occult blood test was performed.
       ``(2) Screening flexible sigmoidoscopies.--
       ``(A) Payment amount.--The Secretary shall establish a 
     payment amount under section 1848 with respect to screening 
     flexible sigmoidoscopies provided for the purpose of early 
     detection of colon cancer that is consistent with payment 
     amounts under such section for similar or related services, 
     except that such payment amount shall be established without 
     regard to subsection (a)(2)(A) of such section.
       ``(B) Frequency limits.--Subject to revision by the 
     Secretary under paragraph (4), no payment may be made under 
     this part for a screening flexible sigmoidoscopy provided to 

[[Page H 10443]]
     an individual for the purpose of early detection of colon cancer if the 
     procedure is performed--
       ``(i) in the case of an individual under 65 years of age, 
     more frequently than is provided in a periodicity schedule 
     established by the Secretary for purposes of this 
     subparagraph; or
       ``(ii) in the case of any other individual, within the 59 
     months following the month in which a previous screening 
     flexible sigmoidoscopy was performed.
       ``(3) Screening colonoscopy for individuals at high risk 
     for colorectal cancer.--
       ``(A) Payment amount.--The Secretary shall establish a 
     payment amount under section 1848 with respect to screening 
     colonoscopy for individuals at high risk for colorectal 
     cancer (as determined in accordance with criteria established 
     by the Secretary) provided for the purpose of early detection 
     of colon cancer that is consistent with payment amounts under 
     such section for similar or related services, except that 
     such payment amount shall be established without regard to 
     subsection (a)(2)(A) of such section.
       ``(B) Frequency limit.--Subject to revision by the 
     Secretary under paragraph (4), no payment may be made under 
     this part for a screening colonoscopy for individuals at high 
     risk for colorectal cancer provided to an individual for the 
     purpose of early detection of colon cancer if the procedure 
     is performed within the 47 months following the month in 
     which a previous screening colonoscopy was performed.
       ``(C) Factors considered in establishing criteria for 
     determining individuals at high risk.--In establishing 
     criteria for determining whether an individual is at high 
     risk for colorectal cancer for purposes of this paragraph, 
     the Secretary shall take into consideration family history, 
     prior experience of cancer, a history of chronic digestive 
     disease condition, and the presence of any appropriate 
     recognized gene markers for colorectal cancer.
       ``(4) Revision of frequency.--
       ``(A) Review.--The Secretary shall review periodically the 
     appropriate frequency for performing screening fecal-occult 
     blood tests, screening flexible sigmoidoscopies, and 
     screening colonoscopy based on age and such other factors as 
     the Secretary believes to be pertinent.
       ``(B) Revision of frequency.--The Secretary, taking into 
     consideration the review made under clause (i), may revise 
     from time to time the frequency with which such tests and 
     procedures may be paid for under this subsection.''.
       (2) Conforming amendments.--(A) Paragraphs (1)(D) and 
     (2)(D) of section 1833(a) (42 U.S.C. 1395l(a)) are each 
     amended by striking ``subsection (h)(1),'' and inserting 
     ``subsection (h)(1) or section 1834(d)(1),''.
       (B) Clauses (i) and (ii) of section 1848(a)(2)(A) (42 
     U.S.C. 1395w-4(a)(2)(A)) are each amended by striking ``a 
     service'' and inserting ``a service (other than a screening 
     flexible sigmoidoscopy provided to an individual for the 
     purpose of early detection of colon cancer or a screening 
     colonoscopy provided to an individual at high risk for 
     colorectal cancer for the purpose of early detection of colon 
     cancer)''.
       (C) Section 1862(a) (42 U.S.C. 1395y(a)) is amended--
       (i) in paragraph (1)--
       (I) in subparagraph (E), by striking ``and'' at the end;
       (II) in subparagraph (F), by striking the semicolon at the 
     end and inserting ``, and''; and
       (III) by adding at the end the following new subparagraph:
       ``(G) in the case of screening fecal-occult blood tests, 
     screening flexible sigmoidoscopies, and screening colonoscopy 
     provided for the purpose of early detection of colon cancer, 
     which are performed more frequently than is covered under 
     section 1834(d);''; and
       (ii) in paragraph (7), by striking ``paragraph (1)(B) or 
     under paragraph (1)(F)'' and inserting ``subparagraphs (B), 
     (F), or (G) of paragraph (1)''.
       (d) Prostate Cancer Screening Tests.--
       (1) In general.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) 
     is amended--
       (A) by striking ``and'' at the end of subparagraph (N) and 
     subparagraph (O); and
       (B) by inserting after subparagraph (O) the following new 
     subparagraph:
       ``(P) prostate cancer screening tests (as defined in 
     subsection (oo)); and''.
       (2) Tests described.--Section 1861 (42 U.S.C. 1395x) is 
     amended by adding at the end the following new subsection:

                   ``Prostate Cancer Screening Tests

       ``(oo) The term `prostate cancer screening test' means a 
     test that consists of a digital rectal examination or a 
     prostate-specific antigen blood test (or both) provided for 
     the purpose of early detection of prostate cancer to a man 
     over 40 years of age who has not had such a test during the 
     preceding year.''.
       (3) Payment for prostate-specific antigen blood test under 
     clinical diagnostic laboratory test fee schedules.--Section 
     1833(h)(1)(A) (42 U.S.C. 1395l(h)(1)(A)) is amended by 
     inserting after ``laboratory tests'' the following: 
     ``(including prostate cancer screening tests under section 
     1861(oo) consisting of prostate-specific antigen blood 
     tests)''.
       (4) Conforming amendment.--Section 1862(a) (42 U.S.C. 
     1395y(a)), as amended by subsection (c)(3)(C), is amended--
       (A) in paragraph (1)--
       (i) in subparagraph (F), by striking ``and'' at the end,
       (ii) in subparagraph (G), by striking the semicolon at the 
     end and inserting ``, and'', and
       (iii) by adding at the end the following new subparagraph:
       ``(H) in the case of prostate cancer screening test (as 
     defined in section 1861(oo)) provided for the purpose of 
     early detection of prostate cancer, which are performed more 
     frequently than is covered under such section;''; and
       (B) in paragraph (7), by striking ``or (G)'' and inserting 
     ``(G), or (H)''.
       (e) Diabetes Screening Benefits.--
       (1) Diabetes outpatient self-management training 
     services.--
       (A) In general.--Section 1861(s)(2) (42 U.S.C. 
     1395x(s)(2)), as amended by subsection (d)(1), is amended--
       (i) by striking ``and'' at the end of subparagraph (N);
       (ii) by striking ``and'' at the end of subparagraph (O); 
     and
       (iii) by inserting after subparagraph (O) the following new 
     subparagraph:
       ``(P) diabetes outpatient self-management training services 
     (as defined in subsection (pp)); and''.
       (B) Definition.--Section 1861 (42 U.S.C. 1395x), as amended 
     by subsection (d)(2), is amended by adding at the end the 
     following new subsection:


        ``diabetes outpatient self-management training services

       ``(pp)(1) The term `diabetes outpatient self-management 
     training services' means educational and training services 
     furnished to an individual with diabetes by or under 
     arrangements with a certified provider (as described in 
     paragraph (2)(A)) in an outpatient setting by an individual 
     or entity who meets the quality standards described in 
     paragraph (2)(B), but only if the physician who is managing 
     the individual's diabetic condition certifies that such 
     services are needed under a comprehensive plan of care 
     related to the individual's diabetic condition to provide the 
     individual with necessary skills and knowledge (including 
     skills related to the self-administration of injectable 
     drugs) to participate in the management of the individual's 
     condition.
       ``(2) In paragraph (1)--
       ``(A) a `certified provider' is an individual or entity 
     that, in addition to providing diabetes outpatient self-
     management training services, provides other items or 
     services for which payment may be made under this title; and
       ``(B) an individual or entity meets the quality standards 
     described in this paragraph if the individual or entity meets 
     quality standards established by the Secretary, except that 
     the individual or entity shall be deemed to have met such 
     standards if the individual or entity meets applicable 
     standards originally established by the National Diabetes 
     Advisory Board and subsequently revised by organizations who 
     participated in the establishment of standards by such Board, 
     or is recognized by the American Diabetes Association as 
     meeting standards for furnishing the services.''.
       (C) Consultation with organizations in establishing payment 
     amounts for services provided by physicians.--In establishing 
     payment amounts under section 1848(a) of the Social Security 
     Act for physicians' services consisting of diabetes 
     outpatient self-management training services, the Secretary 
     of Health and Human Services shall consult with appropriate 
     organizations, including the American Diabetes Association, 
     in determining the relative value for such services under 
     section 1848(c)(2) of such Act.
       (2) Blood-testing strips for individuals with diabetes.--
       (A) Including strips as durable medical equipment.--Section 
     1861(n) (42 U.S.C. 1395x(n)) is amended by striking the 
     semicolon in the first sentence and inserting the following: 
     ``, and includes blood-testing strips for individuals with 
     diabetes without regard to whether the individual has Type I 
     or Type II diabetes (as determined under standards 
     established by the Secretary in consultation with the 
     American Diabetes Association);''.
       (2) Payment for strips based on methodology for inexpensive 
     and routinely purchased equipment.--Section 1834(a)(2)(A) (42 
     U.S.C. 1395m(a)(2)(A)) is amended--
       (A) by striking ``or'' at the end of clause (ii);
       (B) by adding ``or'' at the end of clause (iii); and
       (C) by inserting after clause (iii) the following new 
     clause:
       ``(iv) which is a blood-testing strip for an individual 
     with diabetes,''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     January 1, 1996.

     SEC. 15105. REDUCTION IN PAYMENT FOR CAPITAL-RELATED COSTS OF 
                   HOSPITAL OUTPATIENT SERVICES.

       Section 1861(v)(1)(S)(ii)(I) (42 U.S.C. 
     1395x(v)(1)(S)(ii)(I)) is amended by striking ``through 
     1998'' and inserting ``through 2002''.

     SEC. 15106. PART B PREMIUM.

       Section 1839(e)(1) (42 U.S.C. 1395r(e)(1)) is amended--
       (1) in subparagraph (A), by striking ``1995'' and inserting 
     ``1996'', and
       (2) in subparagraph (B)(v), by inserting ``and 1996'' after 
     ``1995''.
     
[[Page H 10444]]


     SEC. 15107. ENSURING PAYMENT FOR PHYSICIAN AND NURSE FOR 
                   JOINTLY FURNISHED ANESTHESIA SERVICES.

       (a) Payment for Jointly Furnished Single Case.--
       (1) Payment to physician.--Section 1848(a)(4) (42 U.S.C. 
     1395w-4(a)(4)) is amended by adding at the end the following 
     new subparagraph:
       ``(C) Payment for single case.--Notwithstanding section 
     1862(a)(1)(A), with respect to physicians' services 
     consisting of the furnishing of anesthesia services for a 
     single case that are furnished jointly with a certified 
     registered nurse anesthetist, if the carrier determines that 
     the use of both the physician and the nurse anesthetist to 
     furnish the anesthesia service was not medically necessary, 
     the fee schedule amount for the physicians' services shall be 
     equal to 50 percent (or 55 percent, in the case of services 
     furnished during 1996 or 1997) of the fee schedule amount 
     applicable under this section for anesthesia services 
     personally performed by the physician alone (without regard 
     to this subparagraph). Nothing in this subparagraph may be 
     construed to affect the application of any provision of law 
     regarding balance billing.''.
       (2) Payment to crna.--Section 1833(l)(4)(B) (42 U.S.C. 
     1395l(l)(4)(B)) is amended by adding at the end the following 
     new clause:
       ``(iv) Notwithstanding section 1862(a)(1)(A), in the case 
     of services of a certified registered nurse anesthetist 
     consisting of the furnishing of anesthesia services for a 
     single case that are furnished jointly with a physician, if 
     the carrier determines that the use of both the physician and 
     the nurse anesthetist to furnish the anesthesia service was 
     not medically necessary, the fee schedule amount for the 
     services furnished by the certified registered nurse 
     anesthetist shall be equal to 50 percent (or 40 percent, in 
     the case of services furnished during 1996 or 1997) of the 
     fee schedule amount applicable under section 1848 for 
     anesthesia services personally performed by the physician 
     alone (without regard to this clause).''.
       (b) Effective Date.--The amendments made by subsections (a) 
     shall apply to services furnished on or after July 1, 1996.
            Subtitle C--Provisions Relating to Parts A and B

                    PART 1--MEDICARE SECONDARY PAYER

     SEC. 15201. EXTENSION OF EXISTING SECONDARY PAYER 
                   REQUIREMENTS.

       (a) Data Match.--
       (1) Section 1862(b)(5)(C) (42 U.S.C. 1395y(b)(5)(C)) is 
     amended by striking clause (iii).
       (2) Section 6103(l)(12) of the Internal Revenue Code of 
     1986 is amended by striking subparagraph (F).
       (b) Application to Disabled Individuals in Large Group 
     Health Plans.--
       (1) In general.--Section 1862(b)(1)(B) (42 U.S.C. 
     1395y(b)(1)(B)) is amended--
       (A) in clause (i), by striking ``clause (iv)'' and 
     inserting ``clause (iii)'',
       (B) by striking clause (iii), and
       (C) by redesignating clause (iv) as clause (iii).
       (2) Conforming amendments.--Paragraphs (1) through (3) of 
     section 1837(i) (42 U.S.C. 1395p(i)) and the second sentence 
     of section 1839(b) (42 U.S.C. 1395r(b)) are each amended by 
     striking ``1862(b)(1)(B)(iv)'' each place it appears and 
     inserting ``1862(b)(1)(B)(iii)''.
       (c) Period of Application to Individuals with End Stage 
     Renal Disease.--Section 1862(b)(1)(C) (42 U.S.C. 
     1395y(b)(1)(C)) is amended--
       (1) in the first sentence, by striking ``12-month'' each 
     place it appears and inserting ``18-month'', and
       (2) by striking the second sentence.

     SEC. 15202. CLARIFICATION OF TIME AND FILING LIMITATIONS.

       (a) In General.--Section 1862(b)(2)(B) (42 U.S.C. 
     1395y(b)(2)(B)) is amended by adding at the end the following 
     new clause:
       ``(v) Time, filing, and related provisions under primary 
     plan.--Requirements under a primary plan as to the filing of 
     a claim, time limitations for the filing of a claim, 
     information not maintained by the Secretary, or notification 
     or pre-admission review, shall not apply to a claim by the 
     United States under clause (ii) or (iii).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     applies to items and services furnished after 1993.

     SEC. 15203. CLARIFICATION OF LIABILITY OF THIRD PARTY-
                   ADMINISTRATORS.

       (a) In General.--Section 1862(b)(2)(B)(ii) (42 U.S.C. 
     1395y(b)(2)(B)(ii)) is amended by inserting ``, or which 
     determines claims under the primary plan'' after ``primary 
     plan''.
       (b) Claims Between Parties Other Than the United States.-- 
     Section 1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)), (as amended 
     by section 15201(a)) is further amended by adding at the end 
     the following new clause:
       ``(vi) Claims between parties other than the United 
     States.--A claim by the United States under clause (ii) or 
     (iii) shall not preclude claims between other parties.''.
       (c) Effective Date.--The amendments made by the previous 
     subsections apply to items and services furnished after 1993.

     SEC. 15204. CLARIFICATION OF PAYMENT AMOUNTS TO MEDICARE.

       (a) In General.--Section 1862(b)(2)(B)(i) (42 U.S.C. 
     1395y(b)(2)(B)(i)) is amended to read as follows:
       ``(i) Repayment required.--

       ``(I) Any payment under this title, with respect to any 
     item or service for which payment by a primary plan is 
     required under the preceding provisions of this subsection, 
     shall be conditioned on reimbursement to the appropriate 
     Trust Fund established by this title when notice or other 
     information is received that payment for that item or service 
     has been or should have been made under those provisions. If 
     reimbursement is not made to the appropriate Trust Fund 
     before the expiration of the 60-day period that begins on the 
     date such notice or other information is received, the 
     Secretary may charge interest (beginning with the date on 
     which the notice or other information is received) on the 
     amount of the reimbursement until reimbursement is made (at a 
     rate determined by the Secretary in accordance with 
     regulations of the Secretary of the Treasury applicable to 
     charges for late payments).
       ``(II) The amount owed by a primary plan under the first 
     sentence of subclause (I) is the lesser of the full primary 
     payment required (if that amount is readily determinable) and 
     the amount paid under this title for that item or service.''.

       (b) Conforming and Technical Amendments.--
       (1) Subparagraphs (A)(i)(I) and (B)(i) of section 
     1862(b)(1) (42 U.S.C. 1395y(b)(1)) are each amended by 
     inserting ``(or eligible to be covered)'' after ``covered''.
       (2) Section 1862(b)(1)(C)(ii) (42 U.S.C. 
     1395y(b)(1)(C)(ii)) is amended by striking ``covered by such 
     plan''.
       (3) The matter in section 1861(b)(2)(A) (42 U.S.C. 
     1395x(b)(2)(A)) preceding clause (i) is amended by striking 
     ``, except as provided in subparagraph (B),''.
       (c) Effective Date.--The amendments made by the previous 
     subsections apply to items and services furnished after 1993.

     SEC. 15205. CONDITIONS FOR DOUBLE DAMAGES.

       (a) In General.--Section 1862(b)(2)(B)(ii) (42 U.S.C. 
     1395y(b)(2)(B)(ii)) is amended--
       (1) by striking ``, in accordance with paragraph (3)(A)'', 
     and
       (2) by inserting ``, unless the entity demonstrates that it 
     did not know, and could not have known, of its obligation to 
     pay'' after ``against that entity''.
       (b) Conforming Amendment.--Section 1862(b)(3)(A) (42 U.S.C. 
     1395y(b)(3)(A)) is amended by striking ``(or appropriate 
     reimbursement)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished after 1993.

           PART 2--OTHER PROVISIONS RELATING TO PARTS A AND B

     SEC. 15221. MAKING ADDITIONAL CHOICES OF HEALTH PLANS 
                   AVAILABLE TO BENEFICIARIES.

       (a) Definition of PPO.--Section 1876 (42 U.S.C. 1395mm) is 
     amended by adding at the end the following new subsection:
       ``(k)(1) A preferred provider organization (as defined in 
     paragraph (2)) shall be considered to be an eligible 
     organization under this section.
       ``(2) In this section, the term `preferred provider 
     organization' means an organization that--
       ``(A) would be an eligible organization (as defined in 
     subsection (b)) if--
       ``(i) clauses (ii) through (iv) of subsection (b)(2)(A) did 
     not apply,
       ``(ii) subsection (b)(2)(C) did not apply, and
       ``(iii) subsection (b)(2)(D) only applied (in the case of 
     services not provided under this title) to the physicians' 
     services the organization provides; and
       ``(B) permits enrollees to obtain benefits through any 
     lawful provider.

     Nothing in subparagraph (B) shall be construed as requiring 
     that the benefits for services provided through providers 
     that do not have a contract with the organization be the same 
     as those for services provided through providers that have 
     such contracts so long as an enrollee's liabilities do not 
     exceed the liabilities that the enrollee would have under 
     parts A and B if the individual were not enrolled under this 
     section.''.
       (b) Partial Risk Payment Methods.--Section 1876 (42 U.S.C. 
     1395mm) is further amended by adding at the end the following 
     new subsection:
       ``(l) Notwithstanding the previous provisions of this 
     section, at the election of an eligible organization the 
     Secretary may establish an alternative partial-risk-sharing 
     mechanism for making payment to the organization under this 
     section. Under such mechanism fee-for-service payments would 
     be made to the organization for some services provided under 
     the contract, under such conditions and subject to such 
     restrictions as the Secretary may determine.''.
       (c) Conforming Amendment.--Section 1876 (42 U.S.C. 1395mm) 
     is further amended--
       (1) in the heading by striking ``Organizations and 
     Competitive Medical Plans'' and inserting ``Organizations, 
     Competitive Medical Plans, and Preferred Provider 
     Organizations'', and
       (2) in subsection (c)(3)(E)(ii), by inserting ``(if any)'' 
     after ``the restrictions''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to contract years beginning on or after January 
     1, 1996.

     SEC. 15222. TEACHING HOSPITAL AND GRADUATE MEDICAL EDUCATION 
                   TRUST FUND.

       (a) Teaching Hospital and Graduate Medical Education Trust 
     Fund.--The Social Security Act (42 U.S.C. 300 et seq.) is 
     amended by adding at the end the following title:
     
[[Page H 10445]]


  ``TITLE XXI--TEACHING HOSPITAL AND GRADUATE MEDICAL EDUCATION TRUST 
                                  FUND

                    ``Part A--Establishment of Fund

     ``SEC. 2101. ESTABLISHMENT OF FUND.

       ``(a) In General.--There is established in the Treasury of 
     the United States a fund to be known as the Teaching Hospital 
     and Graduate Medical Education Trust Fund (in this title 
     referred to as the `Fund'), consisting of amounts transferred 
     to the Fund under subsection (c), amounts appropriated to the 
     Fund pursuant to subsections (d) and (e)(3), and such gifts 
     and bequests as may be deposited in the Fund pursuant to 
     subsection (f). Amounts in the Fund are available until 
     expended.
       ``(b) Expenditures From Fund.--Amounts in the Fund are 
     available to the Secretary for making payments under section 
     2111.
       ``(c) Transfers to Fund.--
       ``(1) In general.--From the Federal Hospital Insurance 
     Trust Fund and the Federal Supplementary Medical Insurance 
     Trust Fund, the Secretary shall, for fiscal year 1996 and 
     each subsequent fiscal year, transfer to the Fund an amount 
     determined by the Secretary for the fiscal year involved in 
     accordance with paragraph (2).
       ``(2) Determination of amounts.--For purposes of paragraph 
     (1), the amount determined under this paragraph for a fiscal 
     year is an estimate by the Secretary of an amount equal to 75 
     percent of the difference between--
       ``(A) the nationwide total of the amounts that would have 
     been paid under section 1876(a)(4) during the year but for 
     the exclusion of medical education payments from the adjusted 
     average per capita cost pursuant to section 
     1876(a)(4)(B)(ii); and
       ``(B) the nationwide total of the amounts paid under 
     section 1876(a)(4) during the year.
       ``(3) Allocation between medicare trust funds.--In 
     providing for a transfer under paragraph (1) for a fiscal 
     year, the Secretary shall provide for an allocation of the 
     amounts involved between part A and part B of title XVIII 
     (and the trust funds established under the respective parts) 
     as reasonably reflects the proportion of payments for the 
     indirect costs of medical education and direct graduate 
     medical education costs of hospitals associated with the 
     provision of services under each respective part.
       ``(d) Authorization of Appropriations.--There are 
     authorized to be appropriated to the Fund such sums as may be 
     necessary for each of the fiscal years 1996 through 2002.
       ``(e) Investment.--
       ``(1) In general.--The Secretary of the Treasury shall 
     invest such amounts of the Fund as such Secretary determines 
     are not required to meet current withdrawals from the Fund. 
     Such investments may be made only in interest-bearing 
     obligations of the United States. For such purpose, such 
     obligations may be acquired on original issue at the issue 
     price, or by purchase of outstanding obligations at the 
     market price.
       ``(2) Sale of obligations.--Any obligation acquired by the 
     Fund may be sold by the Secretary of the Treasury at the 
     market price.
       ``(3) Availability of income.--Any interest derived from 
     obligations acquired by the Fund, and proceeds from any sale 
     or redemption of such obligations, are hereby appropriated to 
     the Fund.
       ``(f) Acceptance of Gifts and Bequests.--The Fund may 
     accept on behalf of the United States money gifts and 
     bequests made unconditionally to the Fund for the benefit of 
     the Fund or any activity financed through the Fund.

                ``Part B--Payments to Teaching Hospitals

     ``SEC. 2111. FORMULA PAYMENTS TO TEACHING HOSPITALS.

       ``(a) In General.--In the case of each teaching hospital 
     that in accordance with subsection (b) submits to the 
     Secretary a payment document for fiscal year 1996 or any 
     subsequent fiscal year, the Secretary shall make payments for 
     the year to the teaching hospital for the direct and indirect 
     costs of operating approved medical residency training 
     programs. Such payments shall be made from the Fund, and 
     shall be made in accordance with a formula established by the 
     Secretary.
       ``(b) Payment Document.--For purposes of subsection (a), a 
     payment document is a document containing such information as 
     may be necessary for the Secretary to make payments under 
     such subsection to a teaching hospital for a fiscal year. The 
     document is submitted in accordance with this subsection if 
     the document is submitted not later than the date specified 
     by the Secretary, and the document is in such form and is 
     made in such manner as the Secretary may require. The 
     Secretary may require that information under this subsection 
     be submitted to the Secretary in periodic reports.''.
       (b) National Advisory Council on Postgraduate Medical 
     Education.--
       (1) In general.--There is established within the Department 
     of Health and Human Services an advisory council to be known 
     as the National Advisory Council on Postgraduate Medical 
     Education (in this title referred to as the ``Council'').
       (2) Duties.--The council shall provide advice to the 
     Secretary on appropriate policies for making payments for the 
     support of postgraduate medical education in order to assure 
     an adequate supply of physicians trained in various 
     specialities, consistent with the health care needs of the 
     United States.
       (3) Composition.--
       (A) In general.--The Secretary shall appoint to the Council 
     15 individuals who are not officers or employees of the 
     United States. Such individuals shall include not less than 1 
     individual from each of the following categories of 
     individuals or entities:
       (i) Organizations representing consumers of health care 
     services.
       (ii) Physicians who are faculty members of medical schools, 
     or who supervise approved physician training programs.
       (iii) Physicians in private practice who are not physicians 
     described in clause (ii).
       (iv) Practitioners in public health.
       (v) Advanced-practice nurses.
       (vi) Other health professionals who are not physicians.
       (vii) Medical schools.
       (viii) Teaching hospitals.
       (ix) The Accreditation Council on Graduate Medical 
     Education.
       (x) The American Board of Medical Specialities.
       (xi) The Council on Postdoctoral Training of the American 
     Osteopathic Association.
       (xii) The Council on Podiatric Medical Education of the 
     American Podiatric Medical Association.
       (B) Requirements regarding representative membership.--To 
     the greatest extent feasible, the membership of the Council 
     shall represent the various geographic regions of the United 
     States, shall reflect the racial, ethnic, and gender 
     composition of the population of the United States, and shall 
     be broadly representative of medical schools and teaching 
     hospitals in the United States.
       (C) Ex officio members; other federal officers or 
     employees.--The membership of the Council shall include 
     individuals designated by the Secretary to serve as members 
     of the Council from among Federal officers or employees who 
     are appointed by the President, or by the Secretary (or by 
     other Federal officers who are appointed by the President 
     with the advice and consent of the Senate). Individuals 
     designated under the preceding sentence shall include each of 
     the following officials (or a designee of the official):
       (i) The Secretary of Health and Human Services.
       (ii) The Secretary of Veterans Affairs.
       (iii) The Secretary of Defense.
       (4) Chair.--The Secretary shall, from among members of the 
     council appointed under paragraph (3)(A), designate an 
     individual to serve as the chair of the council.
       (5) Termination.--The Council terminates December 31, 1999.
       (c) Remove Medical Education and Disproportionate Share 
     Hospital Payments From Calculation of Adjusted Average Per 
     Capita Cost.--
       (1) In general.--Section 1876(a)(4) (42 U.S.C. 
     1395mm(a)(4)) is amended--
       (A) by striking ``(4)'' and inserting ``(4)(A)''; and
       (B) by adding at the end the following new subparagraph:
       ``(B) In determining the adjusted average per capita cost 
     for a contract year under subparagraph (A), the Secretary 
     shall exclude any amounts which the Secretary estimates would 
     be payable under this title during the year for--
       ``(i) payment adjustments under section 1886(d)(5)(F) for 
     hospitals serving a disproportionate share of low-income 
     patients; and
       ``(ii) the indirect costs of medical education under 
     section 1886(d)(5)(B) or for direct graduate medical 
     education costs under section 1886(h).''.
       (2) Payments to hospitals of amounts attributable to dsh.--
     Section 1886 (42 U.S.C. 1395ww) is amended by adding at the 
     end the following new subsection:
       ``(j)(1) In addition to amounts paid under subsection 
     (d)(5)(F), the Secretary is authorized to pay hospitals which 
     are eligible for such payments for a fiscal year supplemental 
     amounts that do not exceed the limit provided for in 
     paragraph (2).
       ``(2) The sum of the aggregate amounts paid pursuant to 
     paragraph (1) for a fiscal year shall not exceed the 
     Secretary's estimate of 75 percent of the amount excluded 
     from the adjusted average per capita cost for the fiscal year 
     pursuant to section 1876(a)(4)(B)(i).''.

     SEC. 15223. REVISIONS IN DETERMINATION OF AMOUNT OF PAYMENT 
                   FOR MEDICAL EDUCATION.

       (a) Indirect Medical Education.--
       (1) In general.--Section 1886(d)(5)(B) (42 U.S.C. 
     1395ww(d)(5)(B)) is amended by adding at the end the 
     following new clauses:
       ``(v) In determining such adjustment with respect to a 
     hospital for discharges occurring on or after October 1, 
     1995, and on or before September 30, 2002--
       ``(I) the total number of interns and residents counted by 
     the Secretary may not exceed the number of interns and 
     residents counted with respect to the hospital as of August 
     1, 1995, and
       ``(II) the number of interns and residents counted by the 
     Secretary who are not primary care residents (as defined in 
     subsection (h)(5)(H)) may not exceed the number of such 
     residents counted with respect to the hospital as of such 
     date.
       ``(vi) In calculating the number of full-time-equivalent 
     interns and residents of a hospital in determining such 
     adjustment with respect to the hospital, the Secretary shall 
     provide for a weighting factor of .50 with respect to each 
     intern and resident who 

[[Page H 10446]]
     is not in an initial residency period (as defined in subsection 
     (h)(5)(F)).''.
       (2) Payment for interns and residents providing off-site 
     services.--Section 1886(d)(5)(B)(iv) (42 U.S.C. 
     1395ww(d)(5)(B)(iv)) is amended by striking ``any entity'' 
     and all that follows through ``and residents)'' and inserting 
     ``any other entity under an agreement with the hospital''.
       (b) Direct Medical Education.--
       (1) Limitation on number of residents.--Section 1886(h)(4) 
     (42 U.S.C. 1395ww(h)(4)) is amended by adding at the end the 
     following new subparagraph:
       ``(F) Limitation on number of residents for certain fiscal 
     years.--Such rules shall provide that for purposes of a cost 
     reporting period beginning on or after October 1, 1995, and 
     on or before September 30, 2002--
       ``(i) the total number of full-time-equivalent residents 
     determined under this paragraph with respect to an approved 
     medical residency training program may not exceed the number 
     of full-time-equivalent residents with respect to the program 
     as of August 1, 1995, and
       ``(ii) the number of full-time-equivalent residents 
     determined under this paragraph with respect to the program 
     who are not primary care residents (as defined in paragraph 
     (5)(H)) may not exceed the number of such residents counted 
     with respect to the program as of such date.''.
       (2) Continuation of freeze on updates to fte resident 
     amounts.--Section 1886(h)(2)(D)(ii) (42 U.S.C. 
     1395ww(h)(2)(D)(ii)) is amended by striking ``fiscal year 
     1994 or fiscal year 1995'' and inserting ``fiscal years 1994, 
     1995, 1996, or 1997''.
       (3) Permitting payment to non-hospital providers.--Section 
     1886 (42 U.S.C. 1395ww) is amended by adding at the end the 
     following new subsection:
       ``(j) Beginning with cost reporting periods beginning on or 
     after July 1, 1996, notwithstanding any other provision of 
     this title, the Secretary may make payments (in such amounts 
     and in such form as the Secretary considers appropriate) to 
     entities other than hospitals for the direct costs of medical 
     education, if such costs are incurred in the operation of an 
     approved medical residency training program described in 
     subsection (h).''.
       (c) Expanding Definition of Primary Care Residents.--
     Section 1886(h)(5)(H) (42 U.S.C. 1395ww(h)(5)(H)) is amended 
     by inserting ``obstetrics and gynecology,'' after ``geriatric 
     medicine,''.
       (d) Effective Date.--Except as provided otherwise in this 
     section (or in the amendments made by this section), the 
     amendments made by this section apply to hospital cost 
     reporting periods beginning on or after October 1, 1995.

     SEC. 15224. PAYMENTS FOR HOME HEALTH SERVICES.

       (a) Reductions in Cost Limits.--Section 1861(v)(1)(L)(i) 
     (42 U.S.C. 1395x(v)(1)(L)(i)) is amended--
       (1) by inserting ``and before October 1, 1996,'' after 
     ``July 1, 1987'' in subclause (III),
       (2) by striking the period at the end of the matter 
     following subclause (III), and inserting ``, and'',
       (3) by adding at the end the following new subclause:

       ``(IV) October 1, 1996, 105 percent of the median of the 
     labor-related and nonlabor per visit costs for free standing 
     home health agencies.''.

       (b) Delay in Updates.--Section 1861(v)(1)(L)(iii) (42 
     U.S.C. 1395x(v)(1)(L)(iii)) is amended by striking ``July 1, 
     1996'' and inserting ``October 1, 1996''.
       (c) Additions to Cost Limits.--Section 1861(v)(1)(L) (42 
     U.S.C. 1395x(v)(1)(L)) is amended by adding at the end the 
     following new clauses:
       ``(iv) For services furnished by home health agencies for 
     cost reporting periods beginning on or after October 1, 1996, 
     the Secretary shall provide for an interim system of limits. 
     Payment shall be the lower of--

       ``(I) costs determined under the preceding provisions of 
     this subparagraph, or
       ``(II) an agency-specific per beneficiary annual limit 
     calculated from the agency's 12-month cost reporting period 
     ending on or after January 1, 1994 and on or before December 
     31, 1994 based on reasonable costs (including non-routine 
     medical supplies), updated by the home health market basket 
     index. The per beneficiary limitation shall be multiplied by 
     the agency's unduplicated census count of Medicare patients 
     for the year subject to the limitation. The limitation shall 
     represent total Medicare reasonable costs divided by the 
     unduplicated census count of Medicare patients.

       ``(v) For services furnished by home health agencies for 
     cost reporting periods beginning on or after October 1, 1996, 
     the following rules shall apply:

       ``(I) For new providers and those providers without a 12-
     month cost reporting period ending in calendar year 1994, the 
     per beneficiary limit shall be equal to the mean of these 
     limits (or the Secretary's best estimates thereof) applied to 
     home health agencies as determined by the Secretary. Home 
     health agencies that have altered their corporate structure 
     or name may not be considered new providers for payment 
     purposes.
       ``(II) For beneficiaries who use services furnished by more 
     than one home health agency, the per beneficiary limitation 
     shall be pro-rated among agencies.

       ``(vi) Home health agencies whose cost or utilization 
     experience is below 125 percent of the mean national or 
     census region aggregate per beneficiary cost or utilization 
     experience for 1994, or best estimates thereof, and whose 
     year-end reasonable costs are below the agency-specific per 
     beneficiary limit, shall receive payment equal to 50 percent 
     of the difference between the agency's reasonable costs and 
     its limit for fiscal years 1996, 1997, 1998, and 1999. Such 
     payments may not exceed 5 percent of an agency's aggregate 
     Medicare reasonable cost in a year.
       ``(vii) Effective January 1, 1997, or as soon as feasible, 
     the Secretary shall modify the agency specific per 
     beneficiary annual limit described in clause (iv) to provide 
     for regional or national variations in utilization. For 
     purposes of determining payment under clause (iv), the limit 
     shall be calculated through a blend of 75 percent of the 
     agency-specific cost or utilization experience in 1994 with 
     25 percent of the national or census region cost or 
     utilization experience in 1994, or the Secretary's best 
     estimates thereof.''.
       (d) Use of Interim Final Regulations.--The Secretary shall 
     implement the payment limits described in section 
     1861(v)(1)(L)(iv) of the Social Security Act by publishing in 
     the Federal Register a notice of interim final payment limits 
     by August 1, 1996 and allowing for a period of public 
     comments thereon. Payments subject to these limits will be 
     effective for cost reporting periods beginning on or after 
     October 1, 1996, without the necessity for consideration of 
     comments received, but the Secretary shall, by Federal 
     Register notice, affirm or modify the limits after 
     considering those comments.
       (e) Studies.--The Secretary shall expand research on a 
     prospective payment system for home health agencies that 
     shall tie prospective payments to an episode of care, 
     including an intensive effort to develop a reliable case mix 
     adjuster that explains a significant amount of the variances 
     in costs. The Secretary shall develop such a system for 
     implementation in fiscal year 2000.
       (f) Payments Determined on Prospective Basis.--Title XVIII 
     is amended by adding at the end the following new section:


             ``Prospective Payment for Home Health Services

       ``Sec. 1893. (a) Notwithstanding section 1861(v), the 
     Secretary shall, for cost reporting periods beginning on or 
     after fiscal year 2000, provide for payments for home health 
     services in accordance with a prospective payment system, 
     which pays home health agencies on a per episode basis, 
     established by the Secretary.
       ``(b) Such a system shall include the following:
       ``(1) Per episode rates under the system shall be 15 
     percent less than those that would otherwise occur under 
     fiscal year 2000 Medicare expenditures for home health 
     services.
       ``(2) All services covered and paid on a reasonable cost 
     basis under the Medicare home health benefit as of the date 
     of the enactment of the Medicare Enhancement Act of 1995, 
     including medical supplies, shall be subject to the per 
     episode amount. In defining an episode of care, the Secretary 
     shall consider an appropriate length of time for an episode 
     the use of services and the number of visits provided within 
     an episode, potential changes in the mix of services provided 
     within an episode and their cost, and a general system design 
     that will provide for continued access to quality services. 
     The per episode amount shall be based on the most current 
     audited cost report data available to the Secretary.
       ``(c) The Secretary shall employ an appropriate case mix 
     adjuster that explains a significant amount of the variation 
     in cost.
       ``(d) The episode payment amount shall be adjusted annually 
     by the home health market basket index. The labor portion of 
     the episode amount shall be adjusted for geographic 
     differences in labor-related costs based on the most current 
     hospital wage index.
       ``(e) The Secretary may designate a payment provision for 
     outliers, recognizing the need to adjust payments due to 
     unusual variations in the type or amount of medically 
     necessary care.
       ``(f) A home health agency shall be responsible for 
     coordinating all care for a beneficiary. If a beneficiary 
     elects to transfer to, or receive services from, another home 
     health agency within an episode period, the episode payment 
     shall be pro-rated between home health agencies.''.
       (g) Limitation on Part A Coverage.--
       (1) In general.--Section 1812(a)(3) (42 U.S.C. 1395d(a)(3)) 
     is amended by striking the semicolon and inserting ``for up 
     to 160 visits during any spell of illness;''.
       (2) Conforming amendment.--Section 1812(b) (42 U.S.C. 
     1395d(b)) is amended--
       (A) by striking ``or'' at the end of paragraph (2),
       (B) by striking the period at the end of paragraph (3) and 
     inserting ``; or'', and
       (C) by adding at the end the following new paragraph:
       ``(4) home health services furnished to the individual 
     during such spell after such services have been furnished to 
     the individual for 160 visits during such spell.''.
       (3) Exclusion of additional part b costs from determination 
     of part b monthly premium.--Section 1839(a) (42 U.S.C. 
     1395r(a)) is amended--
       (A) in the second sentence of paragraph (1), by striking 
     ``enrollees.'' and inserting ``enrollees (except as provided 
     in paragraph (5)).''; and
       (B) by adding at the end the following new paragraph:

[[Page H 10447]]

       ``(5) In estimating the benefits and administrative costs 
     which will be payable from the Federal Supplementary Medical 
     Insurance Trust Fund for a year (beginning with 1996), the 
     Secretary shall exclude an estimate of any benefits and costs 
     attributable to home health services for which payment would 
     have been made under part A during the year but for paragraph 
     (4) of section 1812(b).''.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to spells of illness beginning on or after 
     October 1, 1995.
       (h) Requiring Billing and Payment to be Based on Site Where 
     Service Furnished.--Section 1891 (42 U.S.C. 1395bbb) is 
     amended by adding at the end the following new subsection:
       ``(g) A home health agency shall submit claims for payment 
     for home health services under this title only on the basis 
     of the geographic location at which the service is 
     furnished.''.
       (i) Maintaining Savings Resulting From Temporary Freeze on 
     Payment Increases.--
       (1) Basing updates to per visit cost limits on limits for 
     fiscal year 1993.--Section 1861(v)(1)(L)(iii) (42 U.S.C. 
     1395x(v)(1)(L)(iii)) is amended by adding at the end the 
     following sentence: ``In establishing limits under this 
     subparagraph, the Secretary may not take into account any 
     changes in the costs of the provision of services furnished 
     by home health agencies with respect to cost reporting 
     periods which began on or after July 1, 1994, and before July 
     1, 1996.''.
       (2) No exceptions permitted based on amendment.--The 
     Secretary of Health and Human Services shall not consider the 
     amendment made by paragraph (1) in making any exemptions and 
     exceptions pursuant to section 1861(v)(1)(L)(ii) of the 
     Social Security Act.

     SEC. 15225. REQUIRING HEALTH MAINTENANCE ORGANIZATIONS TO 
                   COVER APPROPRIATE RANGE OF SERVICES.

       (a) In General.--Section 1876(c) (42 U.S.C. 1395mm(c)) is 
     amended by adding at the end the following new paragraph:
       ``(9) The organization shall not deny any health care 
     professionals, based solely on the license or certification 
     as applicable under State law, the ability to participate in 
     providing services covered under the contract under this 
     section, or be reimbursed or indemnified or by a network plan 
     for providing such services under the contract.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to risk-sharing contracts under section 1876 of 
     the Social Security Act which entered into or renewed on or 
     after January 1, 1996.

     SEC. 15226. CLARIFICATION OF MEDICARE COVERAGE OF ITEMS AND 
                   SERVICES ASSOCIATED WITH CERTAIN MEDICAL 
                   DEVICES APPROVED FOR INVESTIGATIONAL USE.

       (a) Coverage.--Nothing in title XVIII of the Social 
     Security Act may be construed to prohibit coverage under part 
     A or part B of the medicare program 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) for which payment may 
     be made under the program solely on the grounds that the 
     device is not an approved device, if--
       (1) the device is an investigational device; and
       (2) the device is used instead of either an approved device 
     or a covered procedure.
       (b) Clarification of Payment Amount.--Notwithstanding any 
     other provision of title XVIII of the Social Security Act, 
     the amount of payment made under the medicare program for any 
     item or service associated with the use of an investigational 
     device in the furnishing of inpatient or outpatient hospital 
     services (including outpatient diagnostic imaging services) 
     for which payment may be made under the program may not 
     exceed the amount of the payment which would have been made 
     under the program for the item or service if the item or 
     service were associated with the use of an approved device or 
     a covered procedure.
       (c) Definitions.--In this section--
       (1) the term ``approved device'' means a medical device (or 
     devices) which has been approved for marketing under pre-
     market approval under the Federal Food, Drug, and Cosmetic 
     Act or cleared for marketing under a 510(k) notice under such 
     Act; and
       (2) the term ``investigational device'' means--
       (A) a medical device or devices (other than a device 
     described in paragraph (1)) approved for investigational use 
     under section 520(g) of the Federal Food, Drug, and Cosmetic 
     Act, or
       (B) an investigational combination product under section 
     503(g) of the Federal Food, Drug, and Cosmetic Act which 
     includes a device (or devices) authorized for use under 
     section 505(i) of such Act.

     SEC. 15227. COMMISSION ON THE FUTURE OF MEDICARE AND THE 
                   PROTECTION OF THE HEALTH OF THE NATION'S SENIOR 
                   CITIZENS.

       (a) Establishment.--There is established a commission to be 
     known as the Commission on the Future of Medicare and the 
     Protection of the Health of the Nation's Senior Citizens (in 
     this section referred to as the ``Commission'').
       (b) Duties.--
       (1) In general.--The Commission shall--
       (A) analyze indicators of the health status of individuals 
     in the United States who are eligible for benefits under the 
     medicare program;
       (B) make specific recommendations on actions which may be 
     taken to improve the medicare program which would promote the 
     health of medicare beneficiaries;
       (C) analyze the effect of changes in the medicare program 
     (including changes in medicare payments) on the access to and 
     delivery of health care services to individuals who are not 
     medicare beneficiaries;
       (D) examine the financial impact on the medicare program of 
     the significant increase in the number of medicare eligible 
     individuals which will occur beginning approximately during 
     2010 and lasting for approximately 25 years, and
       (E) make specific recommendations to the Congress 
     respecting a comprehensive approach to preserve the medicare 
     program for the period during which such individuals are 
     eligible for medicare.
       (2) Considerations in making recommendations.--In making 
     its recommendations, the Commission shall consider the 
     following:
       (A) The amount and sources of Federal funds to finance the 
     medicare program.
       (B) The most efficient and effective manner of 
     administering the program.
       (C) Methods used by other nations to finance the delivery 
     of health care services to their citizens.
       (D) The financial impact on the medicare program of 
     increases in the number of individuals in the United States 
     without health insurance coverage.
       (c) Membership.--
       (1) Appointment.--The Commission shall be composed of 15 
     members appointed as follows:
       (A) The President shall appoint 3 members.
       (B) The Majority Leader of the Senate shall appoint 3 
     members.
       (C) The Minority Leader of the Senate shall appoint 3 
     members.
       (D) The Speaker of the House of Representatives shall 
     appoint 3 members.
       (E) The Minority Leader of the House of Representatives 
     shall appoint 3 members.
       (2) Chairman and vice chairman.--The Commission shall elect 
     a Chairman and Vice Chairman from among its members.
       (3) Vacancies.--Any vacancy in the membership of the 
     Commission shall be filled in the manner in which the 
     original appointment was made and shall not affect the power 
     of the remaining members to execute the duties of the 
     Commission.
       (4) Quorum.--A quorum shall consist of 8 members of the 
     Commission, except that 4 members may conduct a hearing under 
     subsection (e).
       (5) Meetings.--The Commission shall meet at the call of its 
     Chairman or a majority of its members.
       (6) Compensation and reimbursement of expenses.--Members of 
     the Commission are not entitled to receive compensation for 
     service on the Commission. Members may be reimbursed for 
     travel, subsistence, and other necessary expenses incurred in 
     carrying out the duties of the Commission.
       (d) Staff and Consultants.--
       (1) Staff.--The Commission may appoint and determine the 
     compensation of such staff as may be necessary to carry out 
     the duties of the Commission. Such appointments and 
     compensation may be made without regard to the provisions of 
     title 5, United States Code, that govern appointments in the 
     competitive services, and the provisions of chapter 51 and 
     subchapter III of chapter 53 of such title that relate to 
     classifications and the General Schedule pay rates.
       (2) Consultants.--The Commission may procure such temporary 
     and intermittent services of consultants under section 
     3109(b) of title 5, United States Code, as the Commission 
     determines to be necessary to carry out the duties of the 
     Commission.
       (e) Powers.--
       (1) Hearings and other activities.--For the purpose of 
     carrying out its duties, the Commission may hold such 
     hearings and undertake such other activities as the 
     Commission determines to be necessary to carry out its 
     duties.
       (2) Studies by gao.--Upon the request of the Commission, 
     the Comptroller General shall conduct such studies or 
     investigations as the Commission determines to be necessary 
     to carry out its duties.
       (3) Cost estimates by congressional budget office.--
       (A) Upon the request of the Commission, the Director of the 
     Congressional Budget Office shall provide to the Commission 
     such cost estimates as the Commission determines to be 
     necessary to carry out its duties.
       (B) The Commission shall reimburse the Director of the 
     Congressional Budget Office for expenses relating to the 
     employment in the office of the Director of such additional 
     staff as may be necessary for the Director to comply with 
     requests by the Commission under subparagraph (A).
       (4) Detail of federal employees.--Upon the request of the 
     Commission, the head of any Federal agency is authorized to 
     detail, without reimbursement, any of the personnel of such 
     agency to the Commission to assist the Commission in carrying 
     out its duties. Any such detail shall not interrupt or 
     otherwise affect the civil service status or privileges of 
     the Federal employee.
       (5) Technical assistance.--Upon the request of the 
     Commission, the head of a Federal agency shall provide such 
     technical assistance to the Commission as the Commission 
     determines to be necessary to carry out its duties.

[[Page H 10448]]

       (6) Use of mails.--The Commission may use the United States 
     mails in the same manner and under the same conditions as 
     Federal agencies and shall, for purposes of the frank, be 
     considered a commission of Congress as described in section 
     3215 of title 39, United States Code.
       (7) Obtaining information.--The Commission may secure 
     directly from any Federal agency information necessary to 
     enable it to carry out its duties, if the information may be 
     disclosed under section 552 of title 5, United States Code. 
     Upon request of the Chairman of the Commission, the head of 
     such agency shall furnish such information to the Commission.
       (8) Administrative support services.--Upon the request of 
     the Commission, the Administrator of General Services shall 
     provide to the Commission on a reimbursable basis such 
     administrative support services as the Commission may 
     request.
       (9) Acceptance of donations.--The Commission may accept, 
     use, and dispose of gifts or donations of services or 
     property.
       (10) Printing.--For purposes of costs relating to printing 
     and binding, including the cost of personnel detailed from 
     the Government Printing Office, the Commission shall be 
     deemed to be a committee of the Congress.
       (f) Report.--Not later than May 1, 1997, the Commission 
     shall submit to Congress a report containing its findings and 
     recommendations regarding how to protect and preserve the 
     medicare program in a financially solvent manner until 2030 
     (or, if later, throughout the period of projected solvency of 
     the Federal Old-Age and Survivors Insurance Trust Fund). The 
     report shall include detailed recommendations for appropriate 
     legislative initiatives respecting how to accomplish this 
     objective.
       (g) Termination.--The Commission shall terminate 60 days 
     after the date of submission of the report required in 
     subsection (f).
       (h) Authorization of Appropriations.--There are authorized 
     to be appropriated $1,500,000 to carry out this section. 
     Amounts appropriated to carry out this section shall remain 
     available until expended.
                 Subtitle D--Preventing Fraud and Abuse

  PART 1--AMENDMENTS TO ANTI-FRAUD AND ABUSE PROVISIONS APPLICABLE TO 
           MEDICARE, MEDICAID, AND STATE HEALTH CARE PROGRAMS

     SEC. 15301. ANTI-KICKBACK STATUTORY PROVISIONS.

       (a) Revision to Penalties.--
       (1) Permitting secretary to impose civil monetary 
     penalty.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)) is 
     amended--
       (A) by striking ``or'' at the end of paragraphs (1) and 
     (2);
       (B) by striking the semicolon at the end of paragraph (3) 
     and inserting ``; or''; and
       (C) by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) carries out any activity in violation of paragraph 
     (1) or (2) of section 1128B(b);''.
       (2) Description of civil monetary penalty applicable.--
     Section 1128A(a) (42 U.S.C. 1320a-7a(a)) is amended--
       (A) by striking ``given).'' at the end of the first 
     sentence and inserting the following: ``given or, in cases 
     under paragraph (4), $50,000 for each such violation).''; and
       (B) by striking ``claim.'' at the end of the second 
     sentence and inserting the following: ``claim (or, in cases 
     under paragraph (4), damages of not more than three times the 
     total amount of remuneration offered, paid, solicited, or 
     received.''.
       (3) Increase in criminal penalty.--Paragraphs (1) and (2) 
     of section 1128B(b) (42 U.S.C. 1320a-7b(b)) are each 
     amended--
       (A) by striking ``$25,000'' and inserting ``$50,000''; and
       (B) by striking the period at the end and inserting the 
     following: ``, and shall be subject to damages of not more 
     than three times the total remuneration offered, paid, 
     solicited, or received.''.
       (b) Revisions to Exceptions.--
       (1) Exception for discounts.--Section 1128B(b)(3)(A) (42 
     U.S.C. 1320a-7b(b)(3)(A)) is amended by striking ``program;'' 
     and inserting ``program and is not in the form of a cash 
     payment;''.
       (2) Exception for payments to employees.--Section 
     1128B(b)(3)(B) (42 U.S.C. 1320a-7b(b)(3)(B)) is amended by 
     inserting at the end ``if the amount of remuneration under 
     the arrangement is consistent with the fair market value of 
     the services and is not determined in a manner that takes 
     into account (directly or indirectly) the volume or value of 
     any referrals, except that such employee can be paid 
     remuneration in the form of a productivity bonus based on 
     services personally performed by the employee.''.
       (3) Exception for waiver of coinsurance by certain 
     providers.--Section 1128B(b)(3)(D) (42 U.S.C. 1320a-
     7b(b)(3)(D)) is amended to read as follows:
       ``(D) a waiver or reduction of any coinsurance or other 
     copayment if--
       ``(i) the waiver or reduction is made pursuant to a public 
     schedule of discounts which the person is obligated as a 
     matter of law to apply to certain individuals,
       ``(ii) the waiver or reduction is made pursuant to an 
     established program and applies to a defined group of 
     individuals whose incomes do not exceed 150 percent (or such 
     higher percentage as the Secretary may permit) of the 
     official poverty line (as defined by the Office of Management 
     and Budget, and revised annually in accordance with section 
     673(2) of the Omnibus Budget Reconciliation Act of 1981) 
     applicable to a family of the size involved,
       ``(iii) the waiver or reduction of coinsurance is not 
     offered as part of any advertisement or solicitation and the 
     person offering the waiver or reduction determines in good 
     faith that the individual is in financial need,
       ``(iv) the person offering the waiver or reduction fails to 
     collect the coinsurance or other payment after making 
     reasonable collection efforts, or
       ``(v) the waiver or reduction of coinsurance is in 
     accordance with a cost sharing schedule or a supplemental 
     benefit package which may be offered by a managed care plan 
     (as defined in section 1128(j)); and''.
       (4) New exception for capitated payments.--Section 
     1128B(b)(3) (42 U.S.C. 1320a-7b(b)(3)) is amended--
       (A) by striking ``and'' at the end of subparagraph (D);
       (B) by striking the period at the end of subparagraph (E) 
     and inserting ``; and''; and
       (C) by adding at the end the following new subparagraphs:
       ``(F) any reduction in cost sharing or increased benefits 
     given to an individual, any amounts paid to a provider for an 
     item or service furnished to an individual, or any discount 
     or reduction in price given by the provider for such an item 
     or service, if the individual is enrolled with and such item 
     or service is covered under any of the following:
       ``(i) A health plan which is furnishing items or services 
     under a risk-sharing contract under section 1876 or section 
     1903(m).
       ``(ii) A health plan receiving payments on a prepaid basis, 
     under a demonstration project under section 402(a) of the 
     Social Security Amendments of 1967 or under section 222(a) of 
     the Social Security Amendments of 1972; and
       ``(G) any amounts paid to a provider for an item or service 
     furnished to an individual or any discount or reduction in 
     price given by the provider for such an item or service, if 
     the individual is enrolled with and such item or service is 
     covered under a health plan under which the provider 
     furnishing the item or service is paid by the health plan for 
     furnishing the item or service only on a capitated basis 
     pursuant to a written arrangement between the plan and the 
     provider in which the provider assumes financial risk for 
     furnishing the item or service.''.
       (c) Authorization for the Secretary To Issue Regulations.--
     Section 1128B(b) (42 U.S.C. 1320a-7b(b)) is amended by adding 
     at the end the following new paragraph:
       ``(4) The Secretary is authorized to impose by regulation 
     such other requirements as needed to protect against program 
     or patient abuse with respect to any of the exceptions 
     described in paragraph (3).''.
       (d) Clarification of Other Elements of Offense.--Section 
     1128B(b) (42 U.S.C. 1320a-7b(b)) is amended--
       (1) in paragraph (1)(A), by striking ``in return for 
     referring'' and inserting ``to refer'';
       (2) in paragraph (1)(B), by striking ``in return for 
     purchasing, leasing, ordering, or arranging for or 
     recommending'' and inserting ``to purchase, lease, order, or 
     arrange for or recommend''; and
       (3) by adding at the end of paragraphs (1) and (2) the 
     following sentence: ``A violation exists under this paragraph 
     if one or more purposes of the remuneration is unlawful under 
     this paragraph.''.

     SEC. 15302. CIVIL MONEY PENALTIES.

       (a) Prohibition Against Offering Inducements to Individuals 
     Enrolled Under Plans.--
       (1) Offer of remuneration.--Section 1128A(a) (42 U.S.C. 
     1320a-7a(a)), as amended by section 15301(a)(1), is amended--
       (A) by striking ``; or'' at the end of paragraph (3) and 
     inserting a semicolon;
       (B) by striking the semicolon at the end of paragraph (4) 
     and inserting ``; or''; and
       (C) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) offers, pays, or transfers remuneration to any 
     individual eligible for benefits under title XVIII of this 
     Act, or under a State health care program (as defined in 
     section 1128(h)) that such person knows or should know is 
     likely to influence such individual to order or receive from 
     a particular provider, practitioner, or supplier any item or 
     service for which payment may be made, in whole or in part, 
     under title XVIII, or a State health care program, other than 
     to influence an individual enrolled in a managed care plan or 
     a point-of-service plan (as defined in section 1128(j)) to 
     receive benefits under the plan in accordance with 
     established practice patterns for the delivery of medically 
     necessary services;''.
       (2) Remuneration defined.--Section 1128A(i) (42 U.S.C. 
     1320a-7a(i)) is amended by adding at the end the following 
     new paragraph:
       ``(6) The term `remuneration' includes the waiver or 
     reduction of coinsurance amounts, and transfers of items or 
     services for free or for other than fair market value, except 
     that such term does not include the waiver or reduction of 
     coinsurance amounts by a person or entity, if--
       ``(A) the waiver or reduction is made pursuant to a public 
     schedule of discounts which the person is obligated as a 
     matter of law to apply to certain individuals,
       ``(B) the waiver or reduction is made pursuant to an 
     established program and applies to a defined group of 
     individuals whose incomes do not exceed 150 percent (or such 
     higher percentage as the Secretary may permit) of the 
     official poverty line (as defined by the Office of Management 
     and Budget, 

[[Page H 10449]]
     and revised annually in accordance with section 673(2) of the Omnibus 
     Budget Reconciliation Act of 1981) applicable to a family of 
     the size involved,
       ``(C) the waiver or reduction of coinsurance is not offered 
     as part of any advertisement or solicitation and the person 
     offering the waiver or reduction determines in good faith 
     that the individual is in financial need,
       ``(D) the person offering the waiver or reduction fails to 
     collect the coinsurance or other payment after making 
     reasonable collection efforts, or
       ``(E) the waiver or reduction of coinsurance is in 
     accordance with a cost sharing schedule or a supplemental 
     benefit package which may be offered by a managed care plan 
     under section 1128(j).''.
       (b) Additional Offenses.--Section 1128A(a) of such Act, as 
     amended by section 15301(a)(1) and subsection (a)(1), is 
     further amended--
       (1) by striking ``or'' at the end of paragraph (4);
       (2) by striking the semicolon at the end of paragraph (5) 
     and inserting ``; or''; and
       (3) by inserting after paragraph (5) the following new 
     paragraphs:
       ``(6) engages in a practice which has the effect of 
     limiting or discouraging (as compared to other plan 
     enrollees) the utilization of medically necessary health care 
     services covered by law or under the service contract by 
     title XIX or other publicly subsidized patients, including 
     but not limited to differential standards for the location 
     and hours of service offered by providers participating in 
     the plan;
       ``(7) substantially fails to cooperate with a quality 
     assurance program or a utilization review activity; or
       ``(8) engaging in a pattern of failing substantially to 
     provide or authorize medically necessary items and services 
     that are required to be provided to an individual covered 
     under a health plan (as defined in section 1128(j)) or public 
     program for the delivery of or payment for health care items 
     or services, if the failure has adversely affected (or had a 
     substantial likelihood of adversely affecting) the 
     individual;''.
       ``(9) submits false or fraudulent statements, data or 
     information on claims to the Secretary, a State health care 
     agency, or any other Federal, State or local agency charged 
     with implementation or oversight of a health plan or a public 
     program that the person knows or should know is 
     fraudulent;''.
       (c) Modifications of Amounts of Penalties and 
     Assessments.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)), as 
     amended by section 15301(a), subsection (a)(1), and 
     subsection (b), is amended in the matter following paragraph 
     (9)--
       (1) by striking ``$2,000'' and inserting ``$10,000'';
       (2) by inserting after ``under paragraph (4), $50,000 for 
     each such violation'' the following: ``; in cases under 
     paragraph (5), $10,000 for each such offer, payment, or 
     transfer; in cases under paragraphs (6) through (9), an 
     amount not to exceed $10,000 for each such determination by 
     the Secretary''; and
       (3) by striking ``twice the amount'' and inserting ``three 
     times the amount''.
       (d) Interest on Penalties.--Section 1128A(f) (42 U.S.C. 
     1320a-7a(f)) is amended by adding after the first sentence 
     the following: ``Interest shall accrue on the penalties and 
     assessments imposed by a final determination of the Secretary 
     in accordance with an annual rate established by the 
     Secretary under the Federal Claims Collection Act. The rate 
     of interest charged shall be the rate in effect on the date 
     the determination becomes final and shall remain fixed at 
     that rate until the entire amount due is paid. In addition, 
     the Secretary is authorized to recover the costs of 
     collection in any case where the penalties and assessments 
     are not paid within 30 days after the determination becomes 
     final, or in the case of a compromised amount, where payments 
     are more than 90 days past due. In lieu of actual costs, the 
     Secretary is authorized to impose a charge of up to 10 
     percent of the amount of penalties and assessments owed to 
     cover the costs of collection.''.
       (e) Authorization To Act.--
       (1) In general.--The first sentence of section 1128A(c)(1) 
     (42 U.S.C. 1320a-7a(c)(1)) is amended by striking all that 
     follows ``(b)'' and inserting the following: ``unless, within 
     one year after the date the Secretary presents a case to the 
     Attorney General for consideration, the Attorney General 
     brings an action in a district court of the United States.''.
       (2) Effective date.--The amendment made by this paragraph 
     (1) shall apply to cases presented by the Secretary of Health 
     and Human Services for consideration on or after the date of 
     the enactment of this Act.
       (f) Clarification of Penalty Imposed on Excluded Provider 
     Furnishing Services.--Section 1128A(a)(1)(D) (42 U.S.C. 
     1320a-7a(a)(1)(D)) is amended by inserting ``who furnished 
     the service'' after ``in which the person''.

     SEC. 15303. PRIVATE RIGHT OF ACTION.

       Section 1128A (42 U.S.C. 1320a-7a) is amended by adding at 
     the end the following new subsection:
       ``(m)(1) Subject to paragraphs (2) and (3), a carrier 
     offering an insured health plan and the sponsor of a self-
     insured health plan that suffers financial harm as a direct 
     result of the submission of claims by an individual or entity 
     for payment for items and services furnished under the plan 
     which makes the individual or entity subject to a civil 
     monetary penalty under this section may, in a civil action 
     against the individual or entity in the United States 
     District Court, obtain damages against the individual or 
     entity and such equitable relief as is appropriate.
       ``(2) A carrier or sponsor may bring a civil action under 
     this subsection only if the carrier or sponsor provides the 
     Secretary and the Attorney General with written notice of the 
     intent to bring an action under this subsection, the 
     identities of the individuals or entities the carrier or 
     sponsor intends to name as defendants to the action, and all 
     information the carrier or sponsor possesses regarding the 
     activity that is the subject of the action that may 
     materially affect the Secretary's decision to initiate a 
     proceeding to impose a civil monetary penalty under this 
     section against the defendants.
       ``(3) A carrier or sponsor may bring a civil action under 
     this subsection only if any of the following conditions are 
     met:
       ``(A) During the 60-day period that begins on the date the 
     Secretary receives the written notice described in paragraph 
     (2), the Secretary does not notify the carrier or sponsor 
     that the Secretary intends to initiate a proceeding to impose 
     a civil monetary penalty under this section against the 
     defendants.
       ``(B) If the Secretary notifies the carrier or sponsor 
     during the 60-day period described in subparagraph (A) that 
     the Secretary intends to initiate a proceeding to impose a 
     civil monetary penalty under this section against the 
     defendants, the Secretary subsequently notifies the carrier 
     or sponsor that the Secretary no longer intends to initiate 
     such a proceeding against the defendants.
       ``(C) After the expiration of the 2-year period that begins 
     on the date the Secretary notifies the carrier or sponsor 
     that the Secretary intends to initiate a proceeding to impose 
     a civil monetary penalty under this section against the 
     defendants, the Secretary has not made a good faith effort to 
     initiate such a proceeding against the defendants.
       ``(4) No action may be brought under this subsection more 
     than 6 years after the date of the activity with respect to 
     which the action is brought.''.

     SEC. 15304. AMENDMENTS TO EXCLUSIONARY PROVISIONS IN FRAUD 
                   AND ABUSE PROGRAM.

       (a) Mandatory Exclusion of Individual Convicted of Criminal 
     Offense Related to Health Care Fraud.--
       (1) In general.--Section 1128(a) (42 U.S.C. 1320a-7(a)) is 
     amended by adding at the end the following new paragraph:
       ``(3) Felony conviction relating to fraud.--Any individual 
     or entity that has been convicted under Federal or State law, 
     in connection with the delivery of a health care item or 
     service on or after January 1, 1997, or with respect to any 
     act or omission on or after such date in a program operated 
     by or financed in whole or in part by any Federal, State, or 
     local government agency, of a criminal offense consisting of 
     a felony relating to fraud, theft, embezzlement, breach of 
     fiduciary responsibility, or other financial misconduct.''.
       (2) Conforming amendment.--Section 1128(b)(1) (42 U.S.C. 
     1320a-7(b)(1)) is amended--
       (A) in the heading, by striking ``Conviction'' and 
     inserting ``Misdemeanor conviction''; and
       (B) by striking ``criminal offense'' and inserting 
     ``criminal offense consisting of a misdemeanor''.
       (b) Establishment of Minimum Period of Exclusion for 
     Certain Individuals and Entities Subject to Permissive 
     Exclusion From Medicare and State Health Care Programs.--
       (1) In general.--Section 1128(c)(3) (42 U.S.C. 1320a-
     7(c)(3)) is amended by adding at the end the following new 
     subparagraphs:
       ``(D) In the case of an exclusion of an individual or 
     entity under paragraphs (1), (2), or (3) of subsection (b), 
     the period of exclusion shall be a minimum of 3 years, unless 
     the Secretary determines that an alternative period is 
     appropriate because of aggravating or mitigating 
     circumstances.
       ``(E) In the case of an exclusion of an individual or 
     entity under paragraph (4) or (5) of subsection (b), the 
     period of the exclusion shall not be less than the period 
     during which the individual's or entity's license to provide 
     health care is revoked, suspended, or surrendered, or the 
     individual or the entity is excluded or suspended from a 
     Federal or State health care program.
       ``(F) In the case of an exclusion of an individual or 
     entity under subsection (b)(6)(B), the period of the 
     exclusion shall be not less than 1 year.''.
       (2) Conforming amendment.--Section 1128(c)(3)(A) (42 U.S.C. 
     1320a-7(c)(3)(A)) is amended by striking ``subsection 
     (b)(12)'' and inserting ``paragraph (1), (2), (3), (4), 
     (6)(B), or (12) of subsection (b)''.

     SEC. 15305. SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR 
                   FAILURE TO COMPLY WITH STATUTORY OBLIGATIONS 
                   RELATING TO QUALITY OF CARE.

       (a) Minimum Period of Exclusion for Practitioners and 
     Persons Failing To Meet Statutory Obligations.--
       (1) In general.--The second sentence of section 1156(b)(1) 
     (42 U.S.C. 1320c-5(b)(1)) is amended by striking ``may 
     prescribe)'' and inserting ``may prescribe, except that such 
     period may not be less than one year)''.
       (2) Conforming amendment.--Section 1156(b)(2) (42 U.S.C. 
     1320c-5(b)(2)) is amended by striking ``shall remain'' and 
     inserting 

[[Page H 10450]]
     ``shall (subject to the minimum period specified in the second sentence 
     of paragraph (1)) remain''.
       (b) Amount of Civil Money Penalty.--Section 1156(b)(3) (42 
     U.S.C. 1320c-5(b)(3)) is amended by striking ``the actual or 
     estimated cost'' and inserting the following: ``$10,000 for 
     each instance''.
       (c) Repeal of ``Unwilling or Unable'' Condition for 
     Imposition of Sanction.--Section 1156(b)(1) (42 U.S.C. 1320c-
     5(b)(1)) is amended--
       (1) in the second sentence, by striking ``and determines'' 
     and all that follows through ``such obligations,'' and
       (2) by striking the third sentence.

     SEC. 15306. REVISIONS TO CRIMINAL PENALTIES.

       (a) Treble Damages for Criminal Sanctions.--Section 1128B 
     (42 U.S.C. 1320a-7b) is amended by adding at the end the 
     following new subsection:
       ``(f) In addition to the fines that may be imposed under 
     subsection (a) or (c) any individual found to have violated 
     the provisions of any of such subsections may be subject to 
     treble damages.''.
       (b) Identification of Community Service Opportunities.--
     Section 1128B (42 U.S.C. 1320a-7b), as amended by subsection 
     (a), is further amended by adding at the end the following 
     new subsection:
       ``(g) The Secretary shall--
       ``(1) in consultation with State and local health care 
     officials, identify opportunities for the satisfaction of 
     community service obligations that a court may impose upon 
     the conviction of an offense under this section, and
       ``(2) make information concerning such opportunities 
     available to Federal and State law enforcement officers and 
     State and local health care officials.''.

     SEC. 15307. DEFINITIONS.

       Section 1128 (42 U.S.C. 1320a-7) is amended by adding at 
     the end the following new subsection:
       ``(j) Other Definitions Relating to Health Plans.--
       ``(1) Health plan.--The term `health plan' means--
       ``(A) any contract of health insurance, including any 
     hospital or medical service policy or certificate, hospital 
     or medical service plan contract, or health maintenance 
     organization group contract, that is provided by a carrier in 
     a State; or
       ``(B) an employee welfare benefit plan or other arrangement 
     insofar as the plan or arrangement provides health benefits 
     in a State and is funded in a manner other than through the 
     purchase of one or more policies or contracts described in 
     subparagraph (A).
       ``(2) Managed care plan.--The term `managed care plan' 
     means a health plan that provides for items and services 
     covered under the plan primarily through providers in the 
     provider network of the plan.
       ``(3) Point-of-service plan.--The term `point-of-service 
     plan' means a health plan other than a managed care plan that 
     permits an enrollee to receive benefits through a provider 
     network.
       ``(4) Provider network.--The term `provider network' means, 
     with respect to a health plan, providers who have entered 
     into an agreement with the plan under which such providers 
     are obligated to provide items and services covered under the 
     plan to individuals enrolled in the plan.''.

     SEC. 15308. EFFECTIVE DATE.

       The amendments made by this part shall take effect January 
     1, 1997.

      PART 2--INTERPRETIVE RULINGS ON KICKBACKS AND SELF-REFERRAL

     SEC. 15311. ESTABLISHMENT OF PROCESS FOR ISSUANCE OF 
                   INTERPRETIVE RULINGS.

       (a) Establishment.--Not later than 1 year after the date of 
     the enactment of this Act, the Secretary of Health and Human 
     Services (acting through the Inspector General of the 
     Department of Health and Human Services) shall establish a 
     process under which individuals and entities may submit a 
     request to the Secretary for an interpretive ruling regarding 
     the provisions of section 1128B(b) of the Social Security Act 
     or part 3 which relate to kickbacks, bribes, and rebates, or 
     the provisions of section 1877 of the Social Security Act.
       (b) Deadline for Rejection of Request.--If the Secretary of 
     Health and Human Services rejects a request for an 
     interpretive ruling submitted under this section, the 
     Secretary shall notify the individual submitting the request 
     of the rejection not later than 60 days after receiving the 
     request.

     SEC. 15312. EFFECT OF ISSUANCE OF INTERPRETIVE RULING.

       (a) No Legal Effect.--If the Secretary of Health and Human 
     Services issues an interpretive ruling under section 15311, 
     the ruling shall not be binding upon the Secretary, the party 
     requesting the ruling, or any other party.
       (b) Publication of Rulings.--The Secretary of Health and 
     Human Services shall publish each interpretive ruling issued 
     under section 15311 in the Federal Register.

     SEC. 15313. IMPOSITION OF FEES.

       (a) In General.--The Secretary of Health and Human Services 
     shall require an individual or entity requesting an 
     interpretive ruling under section 15311 to submit a fee.
       (b) Amount.--The amount of the fee required under 
     subsection (a) shall be equal to the costs incurred by the 
     Secretary in responding to the request.

    PART 3--DIRECT SPENDING FOR ANTI-FRAUD ACTIVITIES UNDER MEDICARE

     SEC. 15321. DIRECT SPENDING FOR ANTI-FRAUD ACTIVITIES UNDER 
                   MEDICARE.

       Title XVIII (42 U.S.C. 1395 et seq.), as amended by section 
     15224(f), is amended by adding at the end the following new 
     section:


             ``appropriations for combating fraud and abuse

       ``Sec. 1894. (a) Direct Spending for Payment Safeguard 
     Activities.--
       ``(1) In general.--There are appropriated from the Federal 
     Hospital Insurance Trust Fund and the Federal Supplementary 
     Medical Insurance Trust Fund for each fiscal year such 
     amounts as are necessary to carry out the payment safeguard 
     activities described in paragraph (2), subject to paragraph 
     (3).
       ``(2) Activities described.--The payment safeguard 
     activities described in this paragraph are as follows:
       ``(A) Review of activities of providers of services or 
     other individuals and entities furnishing items and services 
     for which payment may be made under this title (including 
     skilled nursing facilities and home health agencies), 
     including medical and utilization review and fraud review.
       ``(B) Audit of cost reports.
       ``(C) Determinations as to whether payment should not be, 
     or should not have been, made under this title by reason of 
     section 1862(b), and recovery of payments that should not 
     have been made.
       ``(D) Education of providers of services, beneficiaries, 
     and other persons with respect to payment integrity and 
     benefit quality assurance issues.
       ``(3) Amounts specified.--The amount appropriated under 
     paragraph (1) for a fiscal year is as follows:
       ``(A) For fiscal year 1996, such amount shall be not less 
     than $430,000,000 and not more than $440,000,000.
       ``(B) For fiscal year 1997, such amount shall be not less 
     than $490,000,000 and not more than $500,000,000.
       ``(C) For fiscal year 1998, such amount shall be not less 
     than $550,000,000 and not more than $560,000,000.
       ``(D) For fiscal year 1999, such amount shall be not less 
     than $620,000,000 and not more than $630,000,000.
       ``(E) For fiscal year 2000, such amount shall be not less 
     than $670,000,000 and not more than $680,000,000.
       ``(F) For fiscal year 2001, such amount shall be not less 
     than $690,000,000 and not more than $700,000,000.
       ``(G) For fiscal year 2002, such amount shall be not less 
     than $710,000,000 and not more than $720,000,000.
       ``(b) Direct Spending for Medicare-Related Activities of 
     Inspector General.--
       ``(1) In general.--There are appropriated from the Federal 
     Hospital Insurance Trust Fund and the Federal Supplementary 
     Medical Insurance Trust Fund to the Inspector General of the 
     Department of Health and Human Services for each fiscal year 
     such amounts as are necessary to enable the Inspector General 
     to carry out activities relating to the medicare program (as 
     described in paragraph (2)), subject to paragraph (3).
       ``(2) Activities described.--The activities described in 
     this paragraph are as follows:
       ``(A) Prosecuting medicare-related matters through 
     criminal, civil, and administrative proceedings.
       ``(B) Conducting investigations relating to the medicare 
     program.
       ``(C) Performing financial and performance audits of 
     programs and operations relating to the medicare program.
       ``(D) Performing inspections and other evaluations relating 
     to the medicare program.
       ``(E) Conducting provider and consumer education activities 
     regarding the requirements of this title.
       ``(3) Amounts specified.--The amount appropriated under 
     paragraph (1) for a fiscal year is as follows:
       ``(A) For fiscal year 1996, such amount shall be 
     $130,000,000.
       ``(B) For fiscal year 1997, such amount shall be 
     $181,000,000.
       ``(C) For fiscal year 1998, such amount shall be 
     $204,000,000.
       ``(D) For each subsequent fiscal year, the amount 
     appropriated for the previous fiscal year, increased by the 
     percentage increase in aggregate expenditures under this 
     title for the fiscal year involved over the previous fiscal 
     year.
       ``(c) Allocation of Payments Among Trust Funds.--The 
     appropriations made under subsection (a) and subsection (b) 
     shall be in an allocation as reasonably reflects the 
     proportion of such expenditures associated with part A and 
     part B.''.

   PART 4--PREEMPTION OF STATE CORPORATE PRACTICE LAWS UNDER MEDICARE

     SEC. 15331. PREEMPTION OF STATE LAWS PROHIBITING CORPORATE 
                   PRACTICE OF MEDICINE FOR PURPOSES OF MEDICARE.

       Title XVIII (42 U.S.C. 1395 et seq.) is amended by adding 
     at the end the following new section:


            ``permitting corporations to serve as providers

       ``Sec. 1893. The Secretary may not refuse to treat any 
     individual or entity as a provider of services under this 
     title or refuse to 

[[Page H 10451]]
     make payment under this title to the individual or entity on the 
     grounds that the individual or entity is prohibited from 
     practicing medicine under a provision of State or local law 
     which prohibits a corporation from practicing medicine.''.

            PART 5--MEDICARE ANTI-FRAUD AND ABUSE COMMISSION

     SEC. 15341. ESTABLISHMENT OF MEDICARE ANTI-FRAUD AND ABUSE 
                   COMMISSION

       (a) In General.--There is established a commission to be 
     known as the ``Medicare Anti-Fraud and Abuse Commission'' (in 
     this title referred to as the ``Commission'').
       (b) Composition.--The Commission shall be composed of 8 
     members as follows:
       (1) Officials.--
       (A) The Secretary of Health and Human Services (or the 
     Secretary's designee).
       (B) The Inspector General of the Department of Health and 
     Human Services (or the Inspector General's designee).
       (C) The Administrator of the Health Care Financing 
     Administration (or the Administrator's designee).
       (2) Public members.--Five members, appointed by the 
     President, of which--
       (A) one shall be a representative of physicians;
       (B) one shall be a representative of hospital 
     administrators;
       (C) one shall be a representative of medicare carriers;
       (D) one shall be a representative of medicare peer review 
     organizations; and
       (E) one shall be a representative of medicare 
     beneficiaries.

     In making appointments under this paragraph of an individual 
     who is a representative of persons or organizations, the 
     President shall consider the recommendations of national 
     organizations that represent such persons or organizations. 
     The President shall report to Congress, within 90 days after 
     the date of the enactment of this Act, the names of the 
     members appointed under this paragraph.
       (c) Terms.--Each member shall be appointed for the life of 
     the Commission. A vacancy in the Commission shall be filled 
     in the manner in which the original appointment was made.

     SEC. 15342. FUNCTIONS OF COMMISSION.

       (a) In General.--The Commission shall--
       (1) investigate the nature, magnitude, and cost of health 
     care fraud and abuse in the medicare program, and
       (2) identify and develop the most effective methods of 
     preventing, detecting, and prosecuting or litigating such 
     fraud and abuse, with particular emphasis on coordinating 
     public and private prevention, detection, and enforcement 
     efforts.
       (b) Particulars.--Among other items, the Commission shall 
     examine at least the following:
       (1) Mechanisms to provide greater standardization of claims 
     administration in order to accommodate fraud prevention and 
     detection.
       (2) Mechanisms to allow more freedom of the medicare 
     program to exchange information for coordinating case 
     development and prosecution or litigation efforts, without 
     undermining patient and provider privacy protections or 
     violating anti-trust laws.
       (3) Criteria for physician referrals to facilities in which 
     they (or family members) have a financial interest.
       (4) The availability of resources to the medicare program 
     to combat fraud and abuse.
       (c) Report.--After approval by a majority vote, a quorum 
     being present, the Commission shall transmit to Congress a 
     report on its activities. The report shall be transmitted not 
     later than 18 months after the date that a majority of the 
     public members of the Commission have been appointed. The 
     report shall contain a detailed statement of the Commission's 
     findings, together with such recommendations as the 
     Commission considers appropriate.

     SEC. 15343. ORGANIZATION AND COMPENSATION.

       (a) Organization.--
       (1) Quorum.--A majority of the members of the Commission 
     shall constitute a quorum but a lesser number may hold 
     hearings.
       (2) Chairman.--The Commission shall elect one of its 
     members to serve as chairman of the Commission.
       (3) Meetings.--The Commission shall meet at the call of the 
     chairman or a majority of its members. Meetings of the 
     Commission are open to the public under section 10(a)(10) of 
     the Federal Advisory Committee Act, except that the 
     Commission may conduct meetings in executive session but only 
     if a majority of the members of the Commission (a quorum 
     being present) approve going into executive session.
       (b) Compensation of Members.--Members of the Commission 
     shall serve without compensation, but shall be reimbursed for 
     travel, subsistence, and other necessary expenses incurred in 
     the performance of their duties as members of the Commission.

     SEC. 15344. STAFF OF COMMISSION.

       (a) In General.--The Commission may appoint and fix the 
     compensation of a staff director and such other additional 
     personnel as may be necessary to enable the Commission to 
     carry out its functions, without regard to the laws, rules, 
     and regulations governing appointment and compensation and 
     other conditions of service in the competitive service.
       (b) Detail of Federal Employees.--Upon request of the 
     chairman, any Federal employee who is subject to such laws, 
     rules, and regulations, may be detailed to the Commission to 
     assist it in carrying out its functions under this title, and 
     such detail shall be without interruption or loss of civil 
     service status or privilege.
       (c) Experts and Consultants.--The Commission may procure 
     temporary and intermittent services under section 3109(b) of 
     title 5, United States Code, but at rates for individuals not 
     to exceed the daily equivalent of 120 percent of the maximum 
     annual rate of basic pay payable for GS-15 of the General 
     Schedule.

     SEC. 15345. AUTHORITY OF COMMISSION.

       (a) Hearings and Sessions.--The Commission may, for the 
     purpose of carrying out this title, hold hearings, sit and 
     act at times and places, take testimony, and receive evidence 
     as the Commission considers appropriate. The Commission may 
     administer oaths or affirmations to witnesses appearing 
     before it.
       (b) Obtaining Official Data.--
       (1) In general.--The Commission may secure directly from 
     any department or agency of the United States information 
     necessary to enable it to carry out this title. Upon request 
     of the chairman of the Commission, the head of that 
     department or agency shall furnish that information to the 
     Commission.
       (2) Access to information.--Information obtained by the 
     Commission is available to the public in the same manner in 
     which information may be made available under sections 552 
     and 552a of title 5, United States Code.
       (c) Gifts, Bequests, and Devises.--The Commission may 
     accept, use, and dispose of gifts, bequests, or devises of 
     services or property for the purpose of aiding or 
     facilitating the work of the Commission.
       (d) Mails.--The Commission may use the United States mails 
     in the same manner and under the same conditions as other 
     departments and agencies of the United States.
       (e) Administrative Support Services.--Upon the request of 
     the Commission, the Administrator of General Services shall 
     provide to the Commission, on a reimbursable basis, the 
     administrative support services necessary for the Commission 
     to carry out its responsibilities under this title.
       (f) Subpoena Power.--
       (1) In general.--The Commission may issue subpoenas 
     requiring the attendance and testimony of witnesses and the 
     production of any evidence relating to any matter which the 
     Commission is authorized to investigate under this title. The 
     attendance of witnesses and the production of evidence may be 
     required from any place within the United States at any 
     designated place of hearing within the United States.
       (2) Failure to obey a subpoena.--If a person refuses to 
     obey a subpoena issued under paragraph (1), the Commission 
     may apply to a United States district court for an order 
     requiring that person to appear before the Commission to give 
     testimony, produce evidence, or both, relating to the matter 
     under investigation. The application may be made within the 
     judicial district where the hearing is conducted or where 
     that person is found, resides, or transacts business. Any 
     failure to obey the order of the court may be punished by the 
     court as civil contempt.
       (3) Service of subpoenas.--The subpoenas of the Commission 
     shall be served in the manner provided for subpoenas issued 
     by a United States district court under the Federal Rules of 
     Civil Procedure for the United States district courts.
       (4) Service of process.--All process of any court to which 
     application is to be made under paragraph (2) may be served 
     in the judicial district in which the person required to be 
     served resides or may be found.

     SEC. 15346. TERMINATION.

       The Commission shall terminate 90 days after the date the 
     report is submitted under section 15342(c).

     SEC. 15347. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to the Commission 
     such sums as are necessary to carry out its functions, to 
     remain available until expended.

  The CHAIRMAN. The Chair would point out that one opponent is all that 
the rule allows. The gentleman from Texas [Mr. Archer] will be 
recognized in opposition.
  Mr. ARCHER. Mr. Chairman, I ask unanimous consent to yield half of my 
time to the gentleman from Virginia [Mr. Bliley] so that he may control 
that time.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Texas?
  There was no objection.
  Mr. GIBBONS. Mr. Chairman, I would ask unanimous consent that I may 
allocate half of my time to the gentleman from Michigan [Mr. Dingell] 
so that he may control that time.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Florida?
  There was no objection.
  The CHAIRMAN. The gentleman from Florida [Mr. Gibbons] is recognized 
for 15 minutes.
  Mr. GIBBONS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, we have completed an historic debate, 3 hours on 
probably 

[[Page H 10452]]
the biggest bill that has been considered by this body in my 33 years. 
Yesterday, we spent not 3 hours, but 4 hours on shrimp. So much for 
priorities. So much for Speaker Gingrich's belief about what is 
important in America.
  Mr. Chairman, we have a substitute. Now I am going to let everybody 
in on a secret. It is not going to be adopted. The Republicans knew 
that when they made it in order. They have all received their marching 
orders. If they vote for this, they get fired. But despite all of that, 
this substitute does the work.
  Mr. Chairman, I yield 5 minutes to the gentleman from Maryland [Mr. 
Cardin].
  (Mr. CARDIN asked and was given permission to revise and extend his 
remarks.)
  Mr. CARDIN. Mr. Chairman, first and foremost the substitute that is 
before us will deal with the solvency of the Medicare trust fund. It 
provides for $90 billion of savings to go into the Medicare trust fund 
providing for solvency to the year 2006. We have followed the 
suggestions of the trustees.
  It is equivalent to the Republican bill in solvency. The Republican 
bill originally was advertised that it was going to go to the year 
2014. They have later changed it to 2010. If we take away the magic 
wand of taking general funds into the trust fund, it is 2006.
  Mr. Chairman, our bill is equivalent to the Republican bill on 
solvency for 10 years. Why do we have in the Republican bill three 
times more cuts in Medicare? It is not needed for the solvency. They do 
not use it for the solvency. It is used for a tax cut, paid for by the 
Medicare beneficiaries.
  Mr. Chairman, they can use all the language they want about lock-
boxes and that we have in the tax bill separate ways to pay for the tax 
bill, but I ask my colleagues to answer a simple question: If we do not 
pass this Medicare bill, the tax bill cannot go into effect, can it? 
Because we must have the savings from this bill in order to finance the 
tax cut.
  Pure and simple, our seniors are being asked to pay for the tax cut. 
The substitute envisions no such thing. As a consequence of these 
draconian cuts, seniors are forced into plans that take away their 
choice. They have to pay more, $1,000 a year, just to maintain the same 
benefits. We have gone through that. If seniors have to pay more for 
the same benefits, it is a cut.
  The Democratic substitute does not do that. The Democratic substitute 
provides for $90 billion of savings to go into the Medicare trust fund 
without jeopardizing our seniors' ability to have affordable health 
care.
  There is no increase, no increase in the premium costs to our 
beneficiaries. Unlike the Republican bill that changes current law and 
allows the Medicare Part B premium to go up to $87 a month, the 
substitute that we are submitting, the premiums would be $30 a month 
less, $360 a year less.
  For seniors who have limited income, who already have the highest 
out-of-pocket costs of any group of Americans, that is a large 
increase. Our substitute does not do that.
  Mr. Chairman, let me talk for a moment to my friends who are part of 
the coalition budget. This substitute is better on deficit reduction, 
because we do not believe in the tax cut. If you add the revenue lost 
to the Treasury by the tax cut of $245 billion to the $90 billion of 
savings that we have in this bill, we get $335 billion in deficit 
reduction compared to $270 on the Republican side.
  We are $65 billion better off, better off on deficit reduction, as a 
result of the substitute that is before you. I would encourage my 
coalition Members to take a look at that particular point.
  We also provide for reform in our substitute. We move forward rather 
than backward on fraud and abuse. We strengthen, not weaken, fraud and 
abuse. We do not weaken the standards for civil penalties that is in 
the Republican bill. We provide additional protection, so that we can 
go after fraud and abuse.
  Do not take the Democrats' word on it. Do not take the Republicans' 
word on it. The inspector general has said, an independent person, that 
the Republican bill threatens the ability to go after fraud and abuse. 
We move forward, not backward, in providing additional benefits to our 
seniors.
  We provide for colorectal screening and annual mammography testing. 
Why? Because medical technology tells us that these tests are needed 
today. If we do not provide these tests, we are moving backward in 
providing seniors the care that they need. Our bill moves forward, not 
backward. Seniors already have too high out-of-pocket costs. They need 
these types of screenings.
  Mr. Chairman, I say to Members that we have a choice before us. We do 
not have to vote for the extreme, mean-spirited Republican approach 
that would slash Medicare in order to pay for tax cuts. We have a 
substitute before us that provides for the solvency of the Medicare 
trust fund, provides for reform in the Medicare system, protects our 
seniors, protects the system, and deals with solvency.
  Mr. Chairman, I urge Members to support the Democrat substitute.

                              {time}  1530

  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
California [Mr. Herger], a respected member of the committee.
  Mr. HERGER. Mr. Chairman, in April, the Medicare trustees stated that 
if nothing was done, Medicare would begin going broke next year, and 
become functionally bankrupt by the year 2002. Mr. Chairman, the 
Republican reforms proposed in the Medicare preservation act will 
preserve, will protect and will strengthen Medicare for future 
generations.
  Mr. Chairman, there are clear and distinct differences between the 
Republican plan that guarantees Medicare's survival and the Democratic 
substitute. While the Republican plan saves Medicare for the next 
generation--the Democrat bill only saves Medicare through the next 
election.
  While the Republican bill fixes Medicare for the long-term without 
increasing co-payments or deductibles, the Democrat substitute is 
nothing more than a band-aid, producing, at best, a short-term solution 
to this gaping problem. In fact, by the time the baby boomers retire, 
the Democrat alternative will have left Medicare with a projected 
deficit of over $300 billion.
  Conversely, the Republican plan is specific and realistic and gives 
seniors the right to choose the Medicare plan that best suits their 
individual health care needs. Seniors will have the right to choose a 
HMO or a medisave account or they have the right to stay where they 
currently are, with their current doctor or hospital.
  The Democrat plan, on the other hand, doesn't give seniors the right 
to choose--trapping them in the same one size fits all program.
  Mr. Chairman, our choice is clear, we can either stay with our 
present broken-down 1965 model Medicare system or we can move ahead to 
a much improved 1995 model. I urge my colleagues to oppose this 
substitute and support the Republican Medicare preservation act.
  Mr. DINGELL. Mr. Chairman, I yield myself 3 minutes.
  Mr. Chairman, my Republican colleagues have made it plain they have a 
low regard for the intellect of the American senior citizens. They 
accuse us of frightening the senior citizens and also the hospitals. 
The hard fact is that the hospitals and the senior citizens have had 
the daylights scared out of them by this Republican plan.
  Because the people, contrary to what might be thought, understand 
what is going on. My Republican colleagues expect seniors to accept an 
absurd declaration that, unless we destroy the Medicare plan now, it 
will destroy itself. What is really very simple here is this: If you 
drop the tax cut for the rich, none of these Medicare cuts are 
necessary.
  Do Democrats want to protect Medicare? Of course. Remember, we 
created it over united Republican opposition. When I was sitting in the 
chair 30 years ago and we passed that legislation, 93 percent of my 
Republican colleagues voted against Medicare.
  Do we wish to protect trust fund soundness? Of course. Now, there is 
a difference. My Republican colleagues accomplish that goal by raising 
senior citizens' taxes through higher premiums, reducing Social 
Security checks from which premiums are deducted, kicking the seniors 
out of their own doctor's office, denying them choice, shoving them 
into HMos which senior citizens do not want, closing 

[[Page H 10453]]
local hospital emergency rooms, repealing nursing home standards that 
protect patients in nursing homes, allowing doctors to perform office 
tests in the office sink, and taking away the right of citizens to 
recover from malpractice.
  They do this also by eliminating statutory protections against fraud 
and abuse. The Secretary of HHS, the Department of Justice and the 
Inspector General all warned that this is a direct consequence of the 
language in this bill.It is not necessary, as the Republicans do, to 
cut the budget of the Inspector General of HHS, who deals with waste, 
fraud and abuse. We Democrats think there is a better way. The 
gentleman from Florida, [Mr. Gibbons], the gentleman from Washington 
[Mr. McDermott], and I offer this substitute to show the way.
  It ensures the solvency of the Medicare part A trust fund for exactly 
the same length of time that the Republican claim for their bill, the 
year 2006. It saves the amount that the trustees tell us needs to be 
saved, $90 billion. It should not and it will not cost the seniors 
more.
  How do we do it? Simple. We are not proposing a tax cut for the rich. 
If we take the tax cut off the table, it is not that difficult. The 
substitute is good. I urge that we follow this course, that we accept 
the leadership of the Democratic proposal on the solvency issue. I am 
happy to offer it with my colleagues, the gentleman from Washington 
[Mr. McDermott and the gentleman from Florida [Mr. Gibbons] and I urge 
support of the amendment.
   Mr. Chairman, the Republicans have made clear in this debate that 
they have a very low regard for the intellect of America's senior 
citizens. They expect seniors to accept without question their absurd 
declaration that unless we destroy the Medicare program now, it will 
destroy itself.
  I say to my Republican colleagues, it's this simple: Drop your tax 
cut for the rich, and none of these Medicare cuts will be necessary.
  Do we want to protect Medicare? Of course we do.
  Do we want to ensure that the trust fund is sound, today, tomorrow, 
and for years to come. Of course we do.
  The Republicans think that to accomplish that goal, they should raise 
seniors' taxes, reduce their Social Security checks, kick them out of 
their own doctors' offices, shove them into HMO's they don't want, 
close their local hospitals, repeal the nursing home standards that 
protect them, allow doctors to perform office tests in the kitchen 
sink, and then take away their right to recover when their doctor 
commits malpractice.
  We think there is a better way.
  Mr. Gibbons, Mr. McDermott, and I are offering this substitute today 
to show the American people that there is a better way. it ensures the 
solvency of the Medicare part A trust fund. It does so for exactly the 
same length of time the Republicans claim for their bill, the year 
2006. And it does so by saving the amount of money that the Medicare 
Trustees tell us needs to be saved: $90 billion. And it won't cost 
seniors more.
  Specifically, this proposal includes: Only modest reductions in 
hospital payments--about half of what the Republican bill cuts--but 
protection for rural and urban hospitals that serve the uninsured; 
tough provisions to enhance prevention, detection, and prosecution of 
fraud and abuse; the nursing home quality standards in current law, 
which the Republicans would repeal.
  Also, fair reductions in physician payments so that the AMA's members 
share the burden, rather than make out like bandits in a back-room 
holdup; reduced copayments for seniors; less than half the Republican 
cuts in home health care; and new preventive services, including more 
frequent mammography, colorectal screening, pap smears, and diabetes 
services.
  How, you may ask, do we pay for this? The answer is simple: We aren't 
the ones proposing a $245 billion tax cut targeted to the rich. If you 
take the tax cut off the table, I say to my Republican colleagues, it's 
really not that difficult.
   Mr. Chairman, this substitute is a good one. It is the right 
approach to the Medicare trust fund solvency issue. I am pleased to 
offer it with Mr. Gibbons and Mr. McDermott. I urge support for the 
amendment.
   Mr. Chairman, before I conclude, I want to express my thanks, and 
the thanks of all the Democratic members of the Commerce Committee, to 
the Democratic staff of the committee--Bridget Taylor, Kay Holcombe, 
Reid Stuntz, Chris Knauer, David Tittsworth, Nick Karamanos, Carla 
Hultberg, Elaine Sheets, Candy Butler, and Sharon Davis. I add our 
thanks to Karen Nelson from the Staff of Subcommittee ranking member 
Henry Waxman, and to the staffs of all the Democratic members of the 
committee.
  I also want to commend the excellent staff of the Ways and Means 
Committee Democrats, with whom we worked closely and cooperatively on 
this bill and this substitute. And of course, I want to thank the 
legislative counsels, Ed Grossman and Noah Wofsy, for their invaluable 
help.
  Mr. BLILEY. Mr. Chairman, I yield myself 3 minutes.
  Before we go too much further, I do want to recognize the long days 
and nights put in by the staff of both the Committee on Commerce and 
the Committee on Ways and Means. I would like to make note of my 
troops, Mary McGrane, Howard Cohen, Melody Harned, Bud Albright, Jon 
Cohrssen, David Lusk, Mike Collins, Eric Bergren and Margaret Daze. We 
could not have made it this far without them.
  Mr. Chairman, my colleagues, including the ranking Member from 
Michigan, talk about being tough on fraud, waste and abuse. Well, I 
would say to the Inspector General or to the Justice Department, to 
HHS, read our bill. Let us compare. Our bill allows $250,000 in 
criminal fines for individuals and $500,000 for corporations. It 
outlaws fraud and provides for fines and prison terms up to life. Their 
bill sets criminal fines at $50,000 maximum. Our bill, false statements 
makes it a felony, 5-year prison term, up to $500,000 fine. Their bill, 
false statements, sets fines at $50,000.
  Our bill, theft, embezzlement makes it a felony, 10-year prison term, 
$500,000 fine. Their bill, no mention.
  Our bill, bribery, graft, 15-year prison term, $500,000 fine. Their 
bill, no mention.
  Obstruction of criminal investigation of health care crime, 5-year 
prison term, $500,000 fine. Their bill, no mention.
  Democrats talk about our bill going light on fraud, and it is just 
plain wrong. Our bill is tough, much tougher than theirs. Once again, 
the Republicans deal with facts. The Democrats' talk does not withstand 
scrutiny.
  Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentlewoman from 
Texas [Ms. Jackson-Lee].
  (Ms. Jackson-Lee asked and was given permission to revise and extend 
her remarks.)
  Ms. JACKSON-LEE. Mr. Chairman, I thank the gentleman from Florida for 
yielding time to me, and I thank the gentleman from Michigan [Mr. 
Dingell].
  I am gratified that we have come today to be realistic about 
Medicare. If I can briefly talk about the facts, this captures the 
Republican plan on Medicare, the locking up of innocent seniors who 
simply came to protest and oppose $270 billion in cuts. They opposed 
the $24 million that Houston-Harris County hospitals will lose over a 
7-year period. They oppose the increase in premiums.
  Maybe I need to tell Members a little story about Ms. McDougall and a 
third grade class. In the class was a group with sweat shirts with R, 
and in the class was a group with sweat shirts with D. A little round-
faced boy looked at the board, and Mrs. McDougall had $270 billion in 
cuts, increased premiums, losing physicians and some of our most needed 
hospitals. She asked the little boy, what does that mean to you? He 
applauded and said, tax cuts for the wealthy. Then she turned and asked 
the little round-faced girl with bright eyes. And she said, it is a 
loss for all America, but, she said, you know what, Mrs. McDougall, we 
are going to fix it.
  That is what the Democrats are going to do. We are going to fix it. 
Vote for the substitute and vote down a disastrous plan for seniors.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Pennsylvania [Mr. English], a valued member of the Committee on Ways 
and Means.
  Mr. ENGLISH of Pennsylvania. Mr. Chairman, Mark Twain once said ``One 
of the most striking differences between a cat and a lie is that a cat 
only has nine lives.'' You have heard and will continue to hear that 
Republicans are cutting Medicare to pay for tax cuts. Members of this 
body who oppose saving Medicare have fabricated the Medicare tax-cut 
connection because it is useful politically.
  Here are the facts: The tax bill approved by the House in April was 
financed on a pay-as-you-go basis. The 

[[Page H 10454]]
tax provisions were paid for before the debate on Medicare reform even 
began. The savings came from welfare reform, lowering discretionary 
spending, and interest savings. We cut spending as we cut taxes and 
everyone here knows it.
  Even so, you will hear that Republicans are cutting Medicare to pay 
for tax cuts.
  Even after the Ways and Means Committee adopted my amendment to 
establish a Medicare lock-box--a Medicare Preservation trust fund--to 
lock in savings from the bill into the Medicare Program. The bill now 
contains my language making it illegal to use Medicare savings for tax 
cuts. Under the English-Whitefield local-box, the savings in Medicare 
will be used only to save Medicare. Most of the Members on the other 
side voted for the similar lock-box Mr. Crapo offered this spring. They 
liked it back then. Even so, you will hear them claim that Republicans 
are cutting Medicare to pay for tax cuts.
  Writing in the Washington Post on October 11, Robert Samuelson noted, 
``To listen to the Democrats, you'd think that every spending cut is 
needed to provide `a tax break for the rich.' Medicare is being cut to 
help the wealthy; so is Medicaid, the school lunch program and welfare. 
The litany is endless. Maybe this makes good rhetoric, but it flunks 
first-grade arithmetic.''
  Mr. Chairman, only one plan saves Medicare, and keeps the savings 
from reform in Medicare. Reject this empty, placebo Band-Aid 
substitute, which doesn't even contain our lock-box protections.
  Mr. BLILEY. Mr. Chairman, I yield 2 minutes to the gentleman from 
Louisiana [Mr. Tauzin].
  (Mr. TAUZIN asked and was given permission to revise and extend his 
remarks.)
  Mr. TAUZIN. Mr. Chairman, I first want to give you some good news. I 
just talked to mom again in her hospital room. She is up on her feet 
and doing much better. She apparently exerted herself too much to the 
senior Olympics last week where she won three medals in the Baton Rouge 
State competition. The third medal was bronze for javelin throwing. So 
do not mess with mom. She is doing fine.
  Let me first of all make it clear that what we are debating now 
finally is their comparison of two alternative plans, which I would 
hope we would have debated all day instead of motives and intentions 
and everything else. We are finally looking at the two alternative 
plans. And the plan we are examining now is a plan that simply says, we 
are going to try to save about $90 billion of waste, fraud, abuse, 
inefficiencies in the Medicare program in order that it not be bankrupt 
as opposed to the plan offered that saves as much as $270 billion out 
of waste, fraud, abuse, and inefficiencies in the program. Why one not 
the other?
  Well, if we only want to Band-Aid the Medicare Program through the 
next election cycle, we have an alternative now we can vote for. If we 
want to fix it permanently, structurally, not for just the election but 
for the generation to follow, if we want to make sure that working 
Americans are not, after this election, taxed by payroll deduction 
increases that could double the payroll tax deduction, if we want to 
avoid that, then we have offered a plan that produces savings for the 
program and solvency for the next generation. That is the choice.

  Even the blue dog Democrats have offered a third alternative which 
unfortunately is not on the floor. They recommended $170 billion in 
savings. President Clinton recommended $192 billion in savings. At 
least we are getting down to it here.
  What is the right number in order to fix the program temporarily or 
permanently?
  We propose a permanent fix. We propose fixing the program so it does 
not go bankrupt, not just for the election but for the next generation.
  Mr. DINGELL. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Michigan [Mr. Stupak].
  Mr. STUPAK. Mr. Chairman, just a speaker or two ago said that he had 
a plan that will cut down on fraud, waste, and abuse and then read a 
list of fines and costs and fines and costs and fines and costs that he 
prevails upon people.
  The problem is, he never gets to the fines and costs because he has 
raised the legal standard that must be met in order to bring any kind 
of a case against someone who is ripping off the system. Having been a 
police officer for 13 years, you try to conduct an investigation, you 
keep putting a hurdle up higher and higher for law enforcement here to 
do their job.

                              {time}  1545

  But my colleagues' answer to fraud and abuse is, ``After you catch 
them we'll put more fines and costs.''
  In the Democratic plans that have been presented, Mr. Chairman, we 
have asked our colleagues to look at things that do not raise the 
standard, but will make it easier to give law enforcement the tools 
they need to crack down on fraud, waste, and abuse; things such as 
putting civil penalties in the antikickback statute, giving subpoena 
power, something very simple. We do not have it under Medicare. Give us 
grand jury investigations; that was denied. Give us competitive bidding 
for durable medical equipment so we are not paying $28 for foam rubber 
mattresses that we can buy downtown for $19.95 or for the oxygen that 
will cost $280 under Medicare that only costs $123 for the VA. Let us 
competitively bid to cut down on the waste, and our colleagues said no. 
There is no provision against bundling. For every time there is a 
medical piece, they add another price to it and put it all together 
bundled up in one big package so they can charge more. That was what we 
saw happening in Medicare.
  The way my colleagues can save this program is by cracking down on 
the fraud, waste, and abuse, but their answer is raise the standards 
for investigation, make it more difficult, make it harder on the 
seniors by putting all that money into fraud, waste, and abuse, and we 
have nothing to show for it.
  Mr. BLILEY. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Kentucky [Mr. Whitfield].
  Mr. WHITFIELD. Mr. Chairman, as my colleagues know, the October 16 
issue of the Wall Street Journal reported that New Yorker Henry 
Sheinkoph would be a key strategist for President Clinton and the 
Democrats in the 1996 election. In this article Mr. Sheinkoph boasts, 
``I subscribe to terror. Terror works because it makes people hate.'' 
Scare tactics are also being used by the national Democratic Party to 
obstruct our efforts to save and strengthen the Medicare system.
  The Democratic Party will not tell us that their part A tax has 
increased 23 times since the inception of this program. The part B 
premium has doubled in the last 8 years.
  Four months ago this Congress passed a long-awaited and needed tax 
reduction for the American people. While it was not a tax reduction for 
the wealthy, it did provide a tax reduction for working men and women 
with children. While we do not apologize for that tax reduction, we 
will not allow savings in the Medicare plan over the next 7 years to be 
used to pay for our tax reductions.
  This bill, the Republican bill, includes a lockbox provision which 
will establish a trust fund. All moneys saved under the plan will be 
appropriated to the trust fund. Money in the fund can only be used to 
provide care for the elderly, and cannot be used for any other purpose.
  The Republican Medicare plan provides comprehensive change for a 
long-term solution. The Democratic plan is a Band-Aid approach that 
cannot and will not provide a long term solution.
  Mr. ARCHER. Mr. Chairman, I yield 3 minutes to the gentleman from 
Connecticut [Mr. Shays], a member of the Committee on the Budget who 
has made a giant contribution over the years toward Medicare reform.
  Mr. SHAYS. Mr. Chairman, I was asking some of my colleagues how are 
we doing. They said we are doing well, but it is tough when people are 
just throwing charges that are not true, and it is tough when the 
charges are not true, and they are not true. But it is easy when we 
have a bill like this to defend. Republicans, be proud of what has been 
done. Be proud of the fact that there are no increases in copayments. 
Be proud of the fact that there are no increases in deductibles. Be 
proud of the fact that you have not increased premiums. They will stay 
at 31\1/2\ percent. In fact, be proud of the fact that in one case we 
did increase 

[[Page H 10455]]
premiums for the most wealthy. The most wealthy are going to have to 
pay more for Medicare part B. If someone is single and making $100,000, 
they will have to pay more for Medicare part B. If someone is married 
and makes over $150,000, they will have to pay more for Medicare part 
B. We are telling the most affluent that they have a rule to play in 
this.
  Mr. Chairman, their bill lets the wealthy get all the benefits the 
poor get. Give me a break.
  When I look at this bill, I know we have three major goals. We are 
going to get our financial house in order. We are going to do that and 
balance our budget. We are going to save our trust funds. We are going 
to protect them, and we are going to preserve them, and we are going to 
strengthen them, and we are also going to change this social, and 
corporate, and farming welfare state into an opportunity society. but 
we are going to save our Medicare trust fund, and how are we going to 
save it? In part because of a strong criminal fraud that we have in our 
bill.
  When my colleagues voted against the rule, they voted against making 
crime in health care a Federal offense because in our rule we make 
health care fraud a Federal offense. We make it a Federal offense not 
just in Government programs, but in private programs as well. Theft and 
embezzlement, a federal offense. False statements, a federal offense. 
Bribe and graft, a Federal offense. Illegal enumerations, Federal 
offense. Obstruction of justice, a Federal offense. My colleagues voted 
against it when they voted against the rule. In our bill, contrary to 
what the previous speaker said, we have injunctive relief, we have 
subpoena power, we have grand jury disclosure. It is in our bill. Read 
it. My colleagues and continually distorting the facts, and, when the 
American people know what we have done, they are going to like it, and 
when I speak to the American people and my constituents, they say why 
would I object to a plan that does not increase copayments, does not 
increase deductible, does not increase my premium, allows me to have 
private care? My colleagues are into the old system. They are not 
giving their constituents choice. We are going what the gentleman from 
Missouri [Mr. Gephardt] did in 1980. He said we should allow people in 
Medicare to get into a private-sector plan. The problem is he is 20 
years later not in step.
  Mr. DINGELL. Mr. Chairman, I yield myself 15 seconds to point out 
that my good friend's district would be cut $251 million between now 
and the year 2002 to give to the wealthy a large and unrequested tax 
cut.
  Mr. Chairman, I yield 1 minute to the gentlewoman from North Carolina 
[Mrs. Clayton].


                      announcement by the chairman

  The CHAIRMAN. The Chair will take this opportunity to remind the 
gentlewoman that wearing of badges is against the House rules.
  Mrs. CLAYTON. Mr. Chairman, I will observe that.


                        parliamentary inquiries

  Mr. THOMAS. Mr. Chairman, I have a parliamentary inquiry.
  The CHAIRMAN. The gentleman will state his parliamentary inquiry.
  Mr. THOMAS. Mr. Chairman, are the wearing of buttons, or 
sloganeering, or communicative badges against the rules of the House?
  The CHAIRMAN. The Chair has stated that on several occasions today.
  Mr. THOMAS. Mr. Chairman, if someone is wearing that when addressing 
the House, they are violating the rules of the House?
  The CHAIRMAN. The are indeed.
  Mr. THOMAS. Mr. Chairman, if they have been informed of that, they 
are, therefore, willfully violating the rules of the House?
  The CHAIRMAN. The Chair just reminds all Members that the rules are 
here to maintain a level of comity in the House and it would be proper 
for all Members to observe the rules.
  Mrs. CLAYTON. Mr. Chairman, let me make a statement.
  Did I not say I would be glad to observe that? Did the Chair not hear 
me? Did anyone else hear me? I said I will be glad to observe that 
rule, so it is not willful.
  Mr. WILLIAMS. Mr. Chairman, I have a parliamentary inquiry.
  The CHAIRMAN. The gentleman will state his parliamentary inquiry.
  Mr. WILLIAMS. Mr. Chairman, would wearing a paper bag over one's head 
violate the same rule of the House?
  The CHAIRMAN. The gentleman knows the answer to that. Let us move on.
  Mr. WILLIAMS. No, the gentleman would not ask the question if he knew 
the answer.
  The CHAIRMAN. The Chair's guess is that the gentleman does know.
  Mr. WILLIAMS. Mr. Chairman, I am not asking for a guess. I am asking 
for a parliamentary ruling. Would wearing a paper bag over one's head, 
as has been done by some of our Republican colleagues in previous 
Congresses, violate the same rule of the House?
  The CHAIRMAN. The Chair would respond by saying that the Chair was 
not here at the time, but the Chair's understanding was that that was 
ruled a breach of decorum at the time, and the Chair promises the 
gentleman that, if he sees anyone with a bag over their head today, he 
will ask them to remove it.
  The Chair recognizes the gentlewoman from North Carolina [Mrs. 
Clayton].
  Mrs. CLAYTON. Mr. Chairman, I have really risen to speak in behalf of 
the amendment, and I do want to say that the Democrats have provided, I 
think, a reasonable alternative, a reasonable plan, that addresses 
saving health care. It also reads for senior citizens. Medicare needs 
to be reformed. Why? Because the trustees said it needed to be reformed 
to make sure there was financial stability.
  But also, since my colleague raised the concern of the badge I was 
wearing, let me tell him why I had worn that badge inadvertently into 
the House and really in error. It was not meant to affront the House. 
But I do want to say it so my colleague understands: ``Shame on you. No 
to the Republican plan.''
  Mr. Chairman, I may not be able to wear that, but I can say it over 
and over again:

       Shame on you, balancing the budget on the most vulnerable 
     people in society. No to any plan that is so atrocious it 
     does not indicate what it would do to poor people, senior 
     citizens, rural communities, and inner cities, and no rule 
     removes that moral obligation for the shame on your 
     conscience.

  The CHAIRMAN. The Committee will rise informally in order that the 
House may receive a message.

                          ____________________