[Congressional Record Volume 143, Number 23 (Thursday, February 27, 1997)]
[Senate]
[Pages S1735-S1736]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JEFFORDS (for himself, Mr. Kennedy, Mr. Chafee, Ms. 
        Mikulski, Ms. Collins, Mrs. Murray, Mr. Dodd, Mr. Hollings, Mr. 
        Glenn and Mr. Reed):
  S. 369. A bill to amend section 1128B of the Social Security Act to 
repeal the criminal penalty for fraudulent disposition of assets in 
order to obtain medicaid benefits added by section 217 of the Health 
Insurance Portability and Accountability Act of 1996; to the Committee 
on Finance.


     HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT AMENDMENTS

  Mr. JEFFORDS. Mr. President, I am on the floor today to introduce 
legislation that will repeal section 217 of the Health Insurance 
Portability and Accountability Act [HIPAA]. As enacted last year, this 
provision for the first time creates Federal criminal penalties for 
elders who transfer their assets and who subsequently apply for 
Medicaid but are deemed ineligible for nursing home benefits.
  I believe the goal to stop fraud and abuse in the Medicaid Program is 
laudable and must be pursued. However, there is a growing consensus 
that section 217 is a vague, unenforceable, criminal sanction 
misdirected at the elderly. It is unduly threatening to the Nation's 
senior citizens. We are sending the wrong message by implying there is 
something wrong or illegal with obtaining sound financial advice and 
estate planning to legitimately protect the assets that senior citizens 
have spent a lifetime accruing.
  During a recent hearing before the Committee on Labor and Human 
Resources, on the implementation of HIPAA, several concerns were raised 
about this issue. Ms. Gail Shearer, the director of health policy 
analysis of the Consumers Union, testified that section 217 was 
``leading to considerable alarm among seniors'' and that she was 
``deeply troubled by the prospect of HIPAA leading to the transfer of 
elderly nursing home residents from their nursing home to prison.''
  At that same hearing, Mr. Bruce Vladek, the administrator of the 
Health Care Financing Administration, pointed out that there is no 
evidence that large numbers of the elderly are impoverishing themselves 
to become Medicaid eligible. He expressed his belief that a few people 
doing something egregious can create the perception of a widespread 
problem. It is especially unclear how pervasive this practice is, 
particularly in light of actions already taken by Congress to curb 
these asset transfers.
  Repeal of section 217 would not affect several other restrictions now 
on the books designed to close loopholes and stop the inappropriate 
transfer of assets. People found to have transferred nonexempt assets 
within a look-back period are determined ineligible and denied Medicaid 
nursing home assistance for the period over which their assets would 
have paid. The look-back period for asset transfers is 36 months, with 
a 60-month period for trusts. States are also required to establish 
estate recovery programs to compensate for nursing home services paid 
for by the Medicaid Program.
  There is no systematic study that has determined or recommended that 
the addition of criminal sanctions to the penalties which already exist 
are necessary to address inappropriate asset transfers by the elderly. 
In the absence of a demonstrated need for criminal penalties, we 
believe that section 217 holds the potential to do more harm than good.
  No one really wants to send Granny to jail. In fact, it has been 
reported that the intended targets of section 217 are those who have 
created a cottage industry, and made substantial sums of money, from 
advising the elderly on how to transfer their assets to become Medicaid 
eligible. Ironically, section 217 has had the opposite effect. Recent 
newspaper ads placed by these advisers from Portland, ME, to Phoenix, 
AZ, now use this very law to drum up business. The bold-print headlines 
of these ads read:

       Sneaky New Law Buried in the Health Insurance Bill Can Put 
     Unsuspecting Seniors and Retirees Behind Bars!, and You Only 
     Have Until December 31st, 1996, To Avoid Making the Mistake 
     That Could Toss You in Jail . . . Congress' Sneaky New Law Is 
     the Most Vicious Attack on Retirees Yet!

  Mr. President, fraud and abuse in the Medicaid Program must not be 
tolerated, and taxpayers should not have to pay nursing home bills for 
persons who have the wherewithal to pay for their own care. But neither 
should confusing, unenforceable laws be in place that impose Federal 
criminal penalties on elderly individuals where there is no clear 
understanding of what does and what does not constitute a criminal 
activity.
  Organizations urging repeal of the provision include: the American 
Association of Retired Persons, the Alzheimer's Association, the 
Leadership Council on Aging--a group of more than 40 national 
organizations in the field of aging--and the American Bar Association.
  I believe that we in the Congress owe it to our senior citizens to 
stop their needless anxiety over this misdirected, confusing law. We 
need to repeal section 217. I urge my colleagues to join me in 
repealing this unnecessary and unworkable law.
  Mr. President, I ask unanimous-consent that the text of the bill be 
printed in the Record.

[[Page S1736]]

  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 369

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

     SECTION 1. REPEAL OF CRIMINAL PENALTY FOR FRAUDULENT 
                   DISPOSITION OF ASSETS IN ORDER TO OBTAIN 
                   MEDICAID BENEFITS.

       (a) Repeal.--Section 1128B(a) of the Social Security Act 
     (42 U.S.C. 1320a-7b(a)), as amended by section 217 of the 
     Health Insurance Portability and Accountability Act of 1996 
     (Public Law 104-191; 110 Stat. 2008), is amended--
       (1) by adding ``or'' at the end of paragraph (4);
       (2) by striking ``or'' at the end of paragraph (5) and 
     inserting a comma; and
       (3) by striking paragraph (6).
       (b) Effective Date.--The amendments made by subsection (a) 
     take effect as if included in the enactment of the Health 
     Insurance Portability and Accountability Act of 1996 (Public 
     Law 104-191; 110 Stat. 1936).
  Mr. KENNEDY. Mr. President, I commend Senator Jeffords for his 
leadership on this legislation and I am honored to join him on it. Our 
bill repeals the criminal penalties enacted last year for disposing of 
assets in order to obtain Medicaid benefits.
  We all agree that Medicaid must be free of fraud and abuse. No one 
should be able to game the system by giving away their assets just to 
qualify for Medicaid, a program intended to help the truly needy.
  The criminal penalties enacted last year was a mistake and should 
never have been enacted. They are poorly drafted, and will have 
unintended consequences that penalize senior citizens unfairly. Indeed, 
this provision could frighten the most needy elderly away from seeking 
the care they need, while doing little to deter and punish those who 
defraud the system.
  No serious study has defined abusive transfers of assets as a 
significant problem, or recommended criminalizing an action that is 
already prohibited and penalized in other ways. If middle and upper 
income families are transferring assets to qualify for Medicaid, it 
should be the topic of congressional hearings and investigation, so 
that we can evaluate the scope of the problem and develop an 
appropriate response. In the meantime, seniors should not be terrorized 
with threats of jail merely for seeking nursing home care.
  The current debate over this issue reveals a much larger problem--the 
need for better coverage of long-term care, so that those requiring 
long nursing home stays don't have to sacrifice their life savings to 
pay for their care.
  There is broad bipartisan support in Congress for repeal of this 
provision. The White House supports repeal. Advocacy groups for the 
elderly support repeal. I urge Congress to act quickly on this 
legislation, and provide peace of mind to senior citizens across the 
country who feel unfairly threatened by current law.
                                 ______