Congressional Record, Volume 143 Issue 25 (Monday, March 3, 1997)

[Congressional Record Volume 143, Number 25 (Monday, March 3, 1997)]
[Senate]
[Pages S1828-S1843]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. CONRAD (for himself, Mr. Kerrey, Mr. Harkin, Mr.
Wellstone, Mr. Baucus, Mr. Cochran and Mr. Inouye):
S. 385. A bill to provide reimbursement under the Medicare Program
for telehealth services, and for other purposes; to the Committee on
Finance.

THE COMPREHENSIVE TELEHEALTH ACT OF 1997

Mr. CONRAD. Mr. President, today, I am pleased to be joined by
Senator Kerrey, Senator Harkin, Senator Wellstone, Senator Baucus,
Senator Cochran, and Senator Inouye to introduce legislation to help
improve health care delivery in rural and underserved communities
throughout America through the use of telecommunications and telehealth
technology.
Telehealth encompasses a wide variety of technologies, ranging from
the telephone to high-technology equipment that enables a surgeon to
perform surgery from thousands of miles away. It includes interactive
video equipment, fax machines and computers along with satellites and
fiber optics. These technologies can be used to diagnose patients,
deliver care, transfer health data, read x-rays, provide consultation,
and educate health professionals. Telehealth also includes the
electronic storage and transmission of personally identifiable health
information, such as medical records, test results, and insurance
claims.
The promise of telehealth is becoming increasingly apparent.
Throughout the country, providers are experimenting with a variety of
telehealth approaches in an effort to improve access to quality medical
and other health-related services. Those programs are demonstrating
that telecommunications technology can alleviate the constraints of
time and distance, as well as the cost and inconvenience of
transporting patients to medical providers. Many approaches show
promising results in reducing health care costs and bringing adequate
care to all Americans. For the first time, technological advances and
the development of a national information infrastructure give
telehealth the potential to overcome barriers to health care services
for rural Americans and afford them the access that most Americans take
for granted. But it is clear that our Nation must do more to integrate
telehealth into our overall health care delivery infrastructure.
Because I believe telehealth holds incredible promise for rural
America, I formed the Ad Hoc Steering Committee on Telemedicine and
Health Care Informatics to explore telehealth and related issues in
1994. The purpose of the steering committee, which includes telehealth
experts from government, private industry, and the health care
professions, is to evaluate Federal policies on telehealth and how to
use telecommunications technology more effectively to increase access
to health care throughout America.
Throughout the last few years, as the steering committee held
meetings and policy forums, it became increasingly apparent that there
is enormous energy and financial effort being devoted to telehealth
today, both by government and private industry.
Because so many rural and underserved communities lack the ability to
attract and support a wide variety of health care professionals and
services, it is important to find a way to bring the most important
medical services into those communities. Telehealth provides an
important part of the answer. It helps bring services to remote areas
in a quick, cost-effective manner, and can enable patients to avoid
traveling long distances in order to receive health care treatment.
Telehealth is already making a difference in my State. The University
of North Dakota has a fiber optic two-way audio and video interactive
network that has been used to train students in areas like social work
and medical technology. Recently, I had the opportunity to spend some
time with two of the premier telehealth systems in the State of North
Dakota. I was amazed at the capabilities of these systems. They
currently supply speciality care to rural North Dakota clinics, manage
chronic disease, lower administrative costs, and reduce the isolation
felt by rural and frontier practitioners.
Because telehealth is in many respects an emerging health care
application, it is particularly important to constructively capitalize
on efforts like these. My proposal attempts to facilitate this in a
number of ways.
The first element of my proposal builds on current demonstration
projects to require the Health Care Financing Administration to put in
place a reimbursement system for telehealth activities under Medicare.
Medicare reimbursement policy is an essential component of helping to
integrate telehealth into the health care infrastructure, and must be
explored. It is particularly important in rural areas, where many
hospitals do as much as 80 percent of their business with Medicare
patients. While rural areas are the most in need of telehealth
services, I also realize there are other groups that would greatly
benefit from an expansion of this service. That is why I am also asking
the Secretary of Health and Human Services to submit a report that will
examine the impact of expanding telehealth reimbursement for nonrural
Medicare beneficiaries who are home-bound or nursing home-bound and for
whom being transferred for health care services imposes a serious
hardship.

The second element of this proposal asks the Secretary of Health and
Human Services to submit a report to

[[Page S1829]]

the Congress on the status of efforts to ease licensing burdens on
practitioners who cross State lines in the course of supplying
telehealth services. Currently, consultation by almost any licensed
health professional in this situation requires that the practitioner be
licensed in both States.
In talking with telehealth providers in my State, and with experts on
the ad hoc committee, I have been told repeatedly that this is one of
the most significant barriers to developing broad integrated telehealth
systems. More importantly, they tell me States have actively been using
licensure to close their borders to innovative telehealth practice. In
the past 2\1/2\ years, 11 States have taken legislative action to
ensure that out-of-State practitioners must be fully licensed in their
State in order to provide telehealth services, even if they are fully
licensed in their own State. During a recent discussion with a
telehealth practitioner from my home State of North Dakota, I was told
about a group of telehealth specialists who, among their small group
practice, were licensed in more than 30 different States. That means
they pay 30 different fees, are responsible for 30 different continuing
education requirements, and are overseen by 30 different regulatory
bodies. This is a costly and burdensome procedure for many
practitioners, but the burden falls particularly heavily on rural
practitioners, who face long travel times to acquire continuing
education, and who frequently run on lower profit margins than urban
practitioners.
While I am not prepared at this time to propose that the Federal
Government get involved with professional licensure, I have asked the
Secretary to study the issue and report to Congress yearly on the
status of efforts by States and other interested organizations to
address this issue. This will allow us to reach out to the States and
work together to find solutions to cross-State licensure concerns. As
part of this report, I have asked the Secretary to make recommendations
to Congress, if appropriate, about possible Federal action to lower the
licensure barrier.
A third element of my proposal involves coordination of the Federal
telehealth effort. Vice President Gore has been making outstanding
contributions in the area of the information super- highway. The
Department of Health and Human Services, in large part at the urging of
the Vice President, has created an informal interagency task force that
is examining our Federal agency telehealth efforts. This group recently
completed a report on telehealth that highlights current Federal
activities and also provides a thorough examination of many of the
important issues in telehealth.
My bill attempts to use that task force to inventory Federal activity
on telehealth and related technology, determine what applications have
been found successful, and recommend an overall Federal policy approach
to telehealth. Many departments and agencies of the Federal Government
are engaged in telehealth activity, including the Veterans'
Administration, Department of Defense, Department of Agriculture,
Office of Rural Health Policy, and many others. The more these agencies
work together to coordinate the Federal effort and consolidate Federal
resources, the more effective the Federal Government will be in
contributing to telehealth in a positive way. I believe this is
especially important in light of the recent GAO report calling for an
expanded role for this group and more coordination of telehealth issues
across the Federal agencies. The efforts of this group, along with the
ongoing activities of the congressional ad hoc steering committee, will
provide a renewed focus for telehealth across the Federal Government.
Such coordination will also help protect the American taxpayer from
unnecessary duplication of effort.
The fourth part of my proposal helps communities build homegrown
telehealth networks. It attempts both to build a telehealth
infrastructure and foster rural economic development and incorporates
many of the most important lessons learned from other grant projects
and studies on telehealth from across the Federal Government.

Clearly, the scarcity of resources in many rural communities requires
that the coordination and use of those resources be maximized. My bill
encourages cooperation by various local entities in an effort to help
build sustainable telehealth programs in rural communities. It plants
seed money to encourage health care providers to join with other
segments of the community to jointly use telecommunications resources.
Using a unique loan forgiveness program, it rewards telehealth systems
that supply appropriate, high-quality care while reducing overall
health care costs.
Most importantly, it does not create a system where various
technological approaches are imposed upon communities. Rather it
enables potential grantees to determine user-friendly approaches that
work best for them. This homegrown approach to developing user-friendly
telehealth systems, as well as the preference for coordinating
resources within communities, will help ensure the long-term viability
of such programs after the grant expires.
Mr. President, my proposal is a sound first step in our national
efforts to integrate telecommunications technology into the rapidly
evolving health care delivery system. This bill is very similar to
legislation, S. 2171 I introduced late in the 104th Congress. I am very
encouraged by the positive feedback I have received from telehealth
networks across the country. Over the past few months, I have attempted
to reach out to different groups and incorporate their ideas into this
proposal. As a result, I have made several changes in the bill that I
believe will make this a stronger proposal. But, as with any complex
issue, I understand that some may prefer different approaches. By
introducing this legislation early in the 105th Congress, I hope to
send a message to all interested parties that now is the time to come
forward with creative solutions to these important issues. It is my
hope that comprehensive telehealth legislation can be attached to any
Medicare reform legislation enacted in this Congress so we can improve
access to needed health care services for rural and underserved
populations.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 385

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the
``Comprehensive Telehealth Act of 1997''.
(b) Table of Contents.--The table of contents for this Act
is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.

TITLE I--MEDICARE REIMBURSEMENT FOR TELEHEALTH SERVICES

Sec. 101. Medicare reimbursement for telehealth services.

TITLE II--TELEHEALTH LICENSURE

Sec. 201. Initial report to Congress.
Sec. 202. Annual report to Congress.

TITLE III--PERIODIC REPORTS TO CONGRESS FROM THE JOINT WORKING GROUP ON
TELEHEALTH

Sec. 301. Joint working group on telehealth.

TITLE IV--DEVELOPMENT OF TELEHEALTH NETWORKS

Sec. 401. Development of telehealth networks.
Sec. 402. Administration.
Sec. 403. Guidelines.
Sec. 404. Authorization of appropriations.

SEC. 2. FINDINGS AND PURPOSES.

(a) Findings.--The Congress finds the following:
(1) Hospitals, clinics, and individual health care
providers are critically important to the continuing health
of rural populations and the economic stability of rural
communities.
(2) Rural communities are underserved by specialty health
care providers.
(3) Telecommunications technology has made it possible to
provide a wide range of health care services, education, and
administrative services between health care providers,
patients, and administrators across State lines.
(4) The delivery of health services by licensed health care
providers is a privilege and the licensure of health care
providers and the ability to discipline such providers is
necessary for the protection of citizens and for the public
interest, health, welfare, and safety.
(5) The licensing of health care providers to provide
telehealth services has a significant impact on interstate
commerce and any unnecessary barriers to the provision of
telehealth services across State lines should be eliminated.
(6) Rapid advances in the field of telehealth give Congress
a need for current information and updates on recent
developments in telehealth research, policy, technology, and
the use of this technology to

[[Page S1830]]

supply telehealth services to rural and underserved areas.
(7) Telehealth networks can provide hospitals, clinics,
health care providers, and patients in rural and underserved
communities with access to specialty care, continuing
education, and can act to reduce the isolation from other
professionals that these health care providers sometimes
experience.
(8) In order for telehealth systems to continue to benefit
rural and underserved communities, the medicare program under
title XVIII of the Social Security Act (42 U.S.C. 1395 et
seq.) must reimburse the provision of health care services
from remote locations via telecommunications.
(b) Purposes.--The purposes of this Act are as follows:
(1) To mandate that the Health Care Financing
Administration reimburse the provision of clinical health
services via telecommunications.
(2) To determine if States are making progress in
facilitating the provision of telehealth services across
State lines.
(3) To create a coordinating entity for Federal telehealth
research, policy, and program initiatives that reports to
Congress annually.
(4) To encourage the development of rural telehealth
networks that supply appropriate, cost-effective care, and
that contribute to the economic health and development of
rural communities.
(5) To encourage research into the clinical efficacy and
cost-effectiveness of telehealth diagnosis, treatment, or
education on individuals, health care providers, and health
care networks.

SEC. 3. DEFINITIONS.

In this Act:
(1) Health care provider.--The term ``health care
provider'' means anyone licensed or certified under State law
to provide health care services who is operating within the
scope of such license.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
TITLE I--MEDICARE REIMBURSEMENT FOR TELEHEALTH SERVICES

SEC. 101. MEDICARE REIMBURSEMENT FOR TELEHEALTH SERVICES.

(a) In General.--Not later than July 1, 1998, the Secretary
shall make payments from the Federal Supplementary Medical
Insurance Trust Fund under part B of title XVIII of the
Social Security Act (42 U.S.C. 1395j et seq.) in accordance
with the methodology described in subsection (b) for
professional consultation via telecommunications systems with
an individual or entity furnishing a service for which
payment may be made under such part to a beneficiary under
the medicare program residing in a rural area (as defined in
section 1886(d)(2)(D) of such Act (42 U.S.C.
1395ww(d)(2)(D))) or an underserved area, notwithstanding
that the individual health care provider providing the
professional consultation is not at the same location as the
individual furnishing the service to that beneficiary.
(b) Methodology for Determining Amount of Payments.--Taking
into account the findings of the report required under
section 192 of the Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-191; 110 Stat.
1988), the findings of the report required under paragraph
(c), and any other findings related to the clinical efficacy
and cost-effectiveness of telehealth applications, the
Secretary shall establish a methodology for determining the
amount of payments made under subsection (a), including the
cost of the consultation service, a reasonable overhead
adjustment, and a malpractice risk adjustment.
(c) Supplemental Report.--Not later than January 1, 1998,
the Secretary shall submit a report to Congress which shall
contain a detailed analysis of--
(1) how telemedicine and telehealth systems are expanding
access to health care services;
(2) the clinical efficacy and cost-effectiveness of
telemedicine and telehealth applications;
(3) the quality of telemedicine and telehealth services
delivered; and
(4) the reasonable cost of telecommunications charges
incurred in practicing telemedicine and telehealth in rural,
frontier, and underserved areas.
(d) Expansion of Telehealth Services for Certain Medicare
Beneficiaries.--
(1) In general.--Not later than January 1, 1999, the
Secretary shall submit a report to Congress that examines the
possibility of making payments from the Federal Supplementary
Medical Insurance Trust Fund under part B of title XVIII of
the Social Security Act (42 U.S.C. 1395j et seq.) for
professional consultation via telecommunications systems with
an individual or entity furnishing a service for which
payment may be made under such part to a beneficiary
described in paragraph (2), notwithstanding that the
individual health care provider providing the professional
consultation is not at the same location as the individual
furnishing the service to that beneficiary.
(2) Beneficiary described.--A beneficiary described in this
paragraph is a beneficiary under the medicare program who
does not reside in a rural area (as so defined) or an
underserved area, who is home-bound or nursing home-bound,
and for whom being transferred for health care services
imposes a serious hardship.
(3) Report.--The report described in paragraph (1) shall
contain a detailed statement of the potential costs to the
medicare program under title XVIII of that Act of making the
payments described in that paragraph using various
reimbursement schemes.
TITLE II--TELEHEALTH LICENSURE

SEC. 201. INITIAL REPORT TO CONGRESS.

Not later than January 1, 1998, the Secretary shall prepare
and submit to the appropriate committees of Congress a report
concerning--
(1) the number, percentage and types of health care
providers licensed to provide telehealth services across
State lines, including the number and types of health care
providers licensed to provide such services in more than 3
States;
(2) the status of any reciprocal, mutual recognition, fast-
track, or other licensure agreements between or among various
States;
(3) the status of any efforts to develop uniform national
sets of standards for the licensure of health care providers
to provide telehealth services across State lines;
(4) a projection of future utilization of telehealth
consultations across State lines;
(5) State efforts to increase or reduce licensure as a
burden to interstate telehealth practice; and
(6) any State licensure requirements that appear to
constitute unnecessary barriers to the provision of
telehealth services across State lines.

SEC. 202. ANNUAL REPORT TO CONGRESS.

(a) In General.--Not later than January 1, 1999, and each
July 1 thereafter, the Secretary shall prepare and submit to
the appropriate committees of Congress, an annual report on
relevant developments concerning the matters referred to in
paragraphs (1) through (6) of section 201.
(b) Recommendations.--If, with respect to a report
submitted under subsection (a), the Secretary determines that
States are not making progress in facilitating the provision
of telehealth services across State lines by eliminating
unnecessary requirements, adopting reciprocal licensing
arrangements for telehealth services, implementing uniform
requirements for telehealth licensure, or other means, the
Secretary shall include in the report recommendations
concerning the scope and nature of Federal actions required
to reduce licensure as a barrier to the interstate provision
of telehealth services.
TITLE III--PERIODIC REPORTS TO CONGRESS FROM THE JOINT WORKING GROUP ON
TELEHEALTH

SEC. 301. JOINT WORKING GROUP ON TELEHEALTH.

(a) In General.--
(1) Redesignation.--The Joint Working Group on
Telemedicine, established by the Secretary, shall hereafter
be known as the ``Joint Working Group on Telehealth'' with
the chairperson being designated by the Director of the
Office of Rural Health Policy.
(2) Mission.--The mission of the Joint Working Group on
Telehealth is--
(A) to identify, monitor, and coordinate Federal telehealth
projects, data sets, and programs,
(B) to analyze--
(i) how telehealth systems are expanding access to health
care services, education, and information,
(ii) the clinical, educational, or administrative efficacy
and cost-effectiveness of telehealth applications, and
(iii) the quality of the services delivered, and
(C) to make further recommendations for coordinating
Federal and State efforts to increase access to health
services, education, and information in rural and underserved
areas.
(3) Periodic reports.--The Joint Working Group on
Telehealth shall report not later than January 1 of each year
(beginning in 1998) to Congress on the status of the Group's
mission and the state of the telehealth field generally.
(b) Report Specifics.--The annual report required under
subsection (a)(3) shall provide--
(1) an analysis of--
(A) how telehealth systems are expanding access to health
care services,
(B) the clinical efficacy and cost-effectiveness of
telehealth applications,
(C) the quality of telehealth services delivered,
(D) the Federal activity regarding telehealth, and
(E) the progress of the Joint Working Group on Telehealth's
efforts to coordinate Federal telehealth programs; and
(2) recommendations for a coordinated Federal strategy to
increase health care access through telehealth.
(c) Termination.--The Joint Working Group on Telehealth
shall terminate immediately after the annual report filed not
later than January 1, 2002.
(d) Authorization of Appropriations.--There are authorized
to be appropriated such sums as are necessary for the
operation of the Joint Working Group on Telehealth on and
after the date of the enactment of this Act.
TITLE IV--DEVELOPMENT OF TELEHEALTH NETWORKS

SEC. 401. DEVELOPMENT OF TELEHEALTH NETWORKS.

(a) In General.--The Secretary, acting through the Director
of the Office of Rural Health Policy (of the Health Resources
and Services Administration), shall provide financial
assistance (as described in subsection (b)(1)) to recipients
(as described in

[[Page S1831]]

subsection (c)(1)) for the purpose of expanding access to
health care services for individuals in rural and frontier
areas through the use of telehealth.
(b) Financial Assistance.--
(1) In general.--Financial assistance shall consist of
grants or cost of money loans, or both.
(2) Form.--The Secretary shall determine the portion of the
financial assistance provided to a recipient that consists of
grants and the portion that consists of cost of money loans
so as to result in the maximum feasible repayment to the
Federal Government of the financial assistance, based on the
ability to repay of the recipient and full utilization of
funds made available to carry out this title.
(3) Loan forgiveness program.--
(A) Establishment.--With respect to cost of money loans
provided under this section, the Secretary shall establish a
loan forgiveness program under which recipients of such loans
may apply to have all or a portion of such loans forgiven.
(B) Requirements.--A recipient described in subparagraph
(A) that desires to have a loan forgiven under the program
established under such paragraph shall--
(i) within 180 days of the end of the loan cycle, submit an
application to the Secretary requesting forgiveness of the
loan involved;
(ii) demonstrate that the recipient has a financial need
for such forgiveness;
(iii) demonstrate that the recipient has met the quality
and cost-appropriateness criteria developed under
subparagraph (C); and
(iv) provide any other information determined appropriate
by the Secretary.
(C) Criteria.--As part of the program established under
subparagraph (A), the Secretary shall establish criteria for
determining the cost-effectiveness and quality of programs
operated with loans provided under this section.
(c) Recipients.--
(1) Application.--To be eligible to receive a grant or loan
under this section an entity described in paragraph (2)
shall, in consultation with the State office of rural health
or other appropriate State entity, prepare and submit to the
Secretary an application, at such time, in such manner, and
containing such information as the Secretary may require,
including--
(A) a description of the anticipated need for the grant or
loan;
(B) a description of the activities which the entity
intends to carry out using amounts provided under the grant
or loan;
(C) a plan for continuing the project after Federal support
under this section is ended;
(D) a description of the manner in which the activities
funded under the grant or loan will meet health care needs of
underserved rural populations within the State;
(E) a description of how the local community or region to
be served by the network or proposed network will be involved
in the development and ongoing operations of the network;
(F) the source and amount of non-Federal funds the entity
would pledge for the project; and
(G) a showing of the long-term viability of the project and
evidence of health care provider commitment to the network.

The application should demonstrate the manner in which the
project will promote the integration of telehealth in the
community so as to avoid redundancy of technology and achieve
economies of scale.
(2) Eligible entities.--An entity described in this
paragraph is a hospital or other health care provider in a
health care network of community-based health care providers
that includes at least--
(A) two of the following:
(i) community or migrant health centers;
(ii) local health departments;
(iii) nonprofit hospitals;
(iv) private practice health professionals, including rural
health clinics;
(v) other publicly funded health or social services
agencies;
(vi) skilled nursing facilities;
(vii) county mental health and other publicly funded mental
health facilities; and
(viii) providers of home health services; and
(B) one of the following, which must demonstrate use of the
network for purposes of education and economic development
(as required by the Secretary):
(i) public schools;
(ii) public library;
(iii) universities or colleges;
(iv) local government entity; or
(v) local nonhealth-related business entity.

An eligible entity may include for-profit entities so long as
the network grantee is a nonprofit entity.
(d) Priority.--The Secretary shall establish procedures to
prioritize financial assistance under this title considering
whether or not the applicant--
(1) is a health care provider in a rural health care
network or a health care provider that proposes to form such
a network, and the majority of the health care providers in
such a network are located in a medically underserved, health
professional shortage areas, or mental health professional
shortage areas;
(2) can demonstrate broad geographic coverage in the rural
areas of the State, or States in which the applicant is
located;
(3) proposes to use Federal funds to develop plans for, or
to establish, telehealth systems that will link rural
hospitals and rural health care providers to other hospitals,
health care providers and patients;
(4) will use the amounts provided for a range of health
care applications and to promote greater efficiency in the
use of health care resources;
(5) can demonstrate the long-term viability of projects
through use of local matching funds (cash or in-kind);
(6) can demonstrate financial, institutional, and community
support for the long-term viability of the network; and
(7) can demonstrate a detailed plan for coordinating system
use by eligible entities so that health care services are
given a priority over non-clinical uses.
(e) Maximum Amount of Assistance to Individual
Recipients.--The Secretary may establish the maximum amount
of financial assistance to be made available to an individual
recipient for each fiscal year under this title, and
establish the term of the loan or grant, by publishing notice
of the maximum amount in the Federal Register.
(f) Use of Amounts.--
(1) In general.--Financial assistance provided under this
title shall be used--
(A) with respect to cost of money loans, to encourage the
initial development of rural telehealth networks, expand
existing networks, or link existing networks together; and
(B) with respect to grants, as described in paragraph (2).
(2) Grants and loans.--The recipient of a grant or loan
under this title may use financial assistance received under
such grant or loan for the acquisition of telehealth
equipment and modifications or improvements of
telecommunications facilities including--
(A) the development and acquisition through lease or
purchase of computer hardware and software, audio and video
equipment, computer network equipment, interactive equipment,
data terminal equipment, and other facilities and equipment
that would further the purposes of this section;
(B) the provision of technical assistance and instruction
for the development and use of such programming equipment or
facilities;
(C) the development and acquisition of instructional
programming;
(D) demonstration projects for teaching or training medical
students, residents, and other health professions students in
rural training sites about the application of telehealth;
(E) transmission costs, maintenance of equipment, and
compensation of specialists and referring health care
providers;
(F) development of projects to use telehealth to facilitate
collaboration between health care providers;
(G) electronic archival of patient records;
(H) collection and analysis of usage statistics and data
that can be used to document the cost effectiveness of the
telehealth services; or
(I) such other uses that are consistent with achieving the
purposes of this section as approved by the Secretary.
(3) Expenditures in rural areas.--In awarding a grant or
cost of money loan under this section, the Secretary shall
ensure that not less than 50 percent of the grant or loan
award is expended in a rural area or to provide services to
residents of rural areas.
(g) Prohibited Uses.--Financial assistance received under
this section may not be used for any of the following:
(1) To build or acquire real property.
(2) Expenditures to purchase or lease equipment to the
extent the expenditures would exceed more than 40 percent of
the total grant funds.
(3) To purchase or install transmission equipment (such as
laying cable or telephone lines, microwave towers, satellite
dishes, amplifiers, and digital switching equipment).
(4) For construction, except that such funds may be
expended for minor renovations relating to the installation
of equipment.
(5) Expenditures for indirect costs (as determined by the
Secretary) to the extent the expenditures would exceed more
than 20 percent of the total grant funds.
(h) Matching Requirement for Grants.--The Secretary may not
make a grant to an entity State under this section unless
that entity agrees that, with respect to the costs to be
incurred by the entity in carrying out the program for which
the grant was awarded, the entity will make available
(directly or through donations from public or private
entities) non-Federal contributions (in-cash or in-kind) in
an amount equal to not less than 50 percent of the Federal
funds provided under the grant.

SEC. 402. ADMINISTRATION.

(a) Nonduplication.--The Secretary shall ensure that
facilities constructed using financial assistance provided
under this title do not duplicate adequate established
telehealth networks.
(b) Loan Maturity.--The maturities of cost of money loans
shall be determined by the Secretary, based on the useful
life of the facility being financed, except that the loan
shall not be for a period of more than 10 years.
(c) Loan Security and Feasibility.--The Secretary shall
make a cost of money loan only if the Secretary determines
that the security for the loan is reasonably adequate and
that the loan will be repaid within the period of the loan.
(d) Coordination With Other Agencies.--The Secretary shall
coordinate, to the extent practicable, with other Federal and
State

[[Page S1832]]

agencies with similar grant or loan programs to pool
resources for funding meritorious proposals in rural areas.
(e) Informational Efforts.--The Secretary shall establish
and implement procedures to carry out informational efforts
to advise potential end users located in rural areas of each
State about the program authorized by this title.

SEC. 403. GUIDELINES.

Not later than 180 days after the date of enactment of this
Act, the Secretary shall issue guidelines to carry out this
title.

SEC. 404. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated to carry out this
title, $25,000,000 for fiscal year 1998, and such sums as may
be necessary for each of the fiscal years 1999 through
2004.
______

By Mr. WYDEN:
S. 386. A bill to amend title XVIII of the Social Security Act to
protect and improve the Medicare Program, and for other purposes; to
the Committee on Finance.

THE MEDICARE MODERNIZATION AND PATIENT PROTECTION ACT OF 1997

Mr. WYDEN. Mr. President, as this Congress moves forward to
strengthen and secure the Medicare Program for future generations,
three issues are crystal clear.
First, we must have the political will to modernize Medicare to
reflect both the quality and the efficiency of private health care
plans now serving most working Americans, and in particular the Federal
Employees Health Benefits Program which many Members of Congress, their
staff and families, and other Federal employees enjoy.
Second, we must maintain our commitment to current and future
Medicare beneficiaries by preserving a basic, high-quality portfolio of
health services for all enrollees, irrespective of their income, where
they live, or their particular health circumstances.
Third, we must begin the transformation of Medicare financial
foundations in a way that is first fair to all beneficiaries, and
second insures that Medicare will be there for our children and their
children, and that it will not bust the Federal budget in the bargain.
I believe that the legislation I introduce, today, The Medicare
Modernization and Patient Protection Act of 1997, meets all three of
these primary goals. While fully preserving traditional, fee-for-
service Medicare, this legislation also will create an array of new,
high-quality, cost-efficient health plans for Medicare beneficiaries,
and offer those enrollees positive incentives to try them. It will
provide new protections and consumer rights to Medicare beneficiaries
in capitated health plans. It will mandate new penalties and
enforcement mechanisms to eradicate fraud and abuse now stripping
billions of dollars per year from the program. And it will create new
support systems for some of Medicare's most desperately ill and poor
beneficiaries, and their families.
Finally, through new cost-conscious management systems and a firm
fiscal control mechanism, this plan will reduce Medicare cost growth by
approximately $100 billion over the next 5 years, and with financial
constraints that will continue to control runaway spending growth after
fiscal year 2002.
The Medicare Modernization and Patient Protection Act will offer
seniors more health plan choices by eliminating the huge variability in
capitated payments to health plans in counties around the nation. At
the same time, it will raise the minimum payment to 80 percent of the
national average payment, leveraging higher reimbursements and I
believe more plan offerings in up to 20 percent of our counties.
This proposal also establishes an outlier fund, an account fueled by
withholding up to five percent of payments to Medicare health
maintenance organizations. Medicare managers would have discretion to
withhold those payments from plans which are being over-compensated by
the HMO payment formula, and disburse those funds in the form of extra
payments to plans which have avoided risk selection in their
beneficiary recruitment and as a result are providing services to
sicker enrollees with above-average health care costs. Compared to the
meat-cleaver approach of reducing all plan payments from the current 95
percent of local average health care costs, to 90 percent, this is a
surgical solution to two significant Medicare managed care plan
problems: (a) plan overpayments and (b) plans which avoid enrolling
older, frailer beneficiaries because they cut profit margins.
At the end of the year, any funds remaining in this account would be
rolled back into the Medicare hospital insurance budget.
At the same time, this bill reforms current rules for Medicare
supplemental insurance, or Medigap policies, requiring that such
policies must be issued to any eligible beneficiary at any time. This
change will encourage more seniors to try capitated plans, because they
know the Medigap safety net always will be available to them.
Seniors would be protected from unfair denial of service decision and
other health plan abuses through a strengthened and streamlined appeals
process. Also, seniors would receive more informative and easily
comparable information on health plans in their communities, and
through the mail on a regular basis through annual enrollment fairs.
The legislation also would require the collection of customer service
and satisfaction data, and performance information to be used in
qualitative analysis by Medicare to produce published report cards on
plan performance, and help consumers make kitchen-table assessments of
their plan options.
By Federal statute, plans also would be barred from muzzling doctors
and other health care practitioners in their conversations with
patients about their medical condition and all treatments appropriate
to their case.
New criminal and civil penalties are created for practitioners and
plans who rip off the system.
Programs for hospice care, Alzheimer's respite care, and prospective
payment for both home care and skilled nursing care are added to
Medicare. The legislation requires Medicare to study and make
recommendations on the more extensive and appropriate use of community
pharmacy, telemedicine and so-called social health maintenance
organization plans for dual eligibles in its portfolio of services to
beneficiaries.
The fiscal integrity portion of this bill would set overall part A
and part B spending limits for each of the next 5 years. These overall
spending limits would include target spending allotments for each of
the several major areas of Medicare activity: doctors, hospitals,
diagnostic services, nursing homes, and the like.
Typically, Medicare has sought to control costs in these areas in the
past by rolling back reimbursement rates for goods and services.
Providers, however, have watered down Medicare's attempts at thrift by
increasing volume in the face of lower per-service payments. Too often
this has led to waste and inefficiency, with providers ordering
procedures and services that beneficiaries really don't need, crippling
Medicare with unnecessarily high costs.
With $100 billion in cumulative savings expected in 5 years, my
proposal would require that Medicare practitioners live within the
budget's ceiling by mandating reduced reimbursements if cumulative
billings otherwise would bust an individual service sector's annual
spending plan.
Despite these restraints, Medicare fee-for-service providers will
enjoy generally healthy annual increases under this proposal.
Beneficiaries should see no change in the level or quality of care they
receive. Expensive, unnecessary care, however, could be sharply
curtailed.
Mr. President, I believe that this Congress should not as a first
step relinquish Medicare restructuring to a special commission. I think
most of us have an acute awareness of what is needed to fix the program
for the long term. Some steps will be harder than others. But as the
old Chinese proverb reminds us, a trip of a thousand miles begins with
the first step.
I hope my colleagues will agree with me that the Medicare
Modernization and Patient Protection Act is that good first step, and
join with me in co-sponsoring this legislation.
Mr. President, I ask unanimous consent that additional material be
printed in the Record.

[[Page S1833]]

The Medicare Modernization and Patient Protection Act of 1997--Section-
by-Section Analysis

title i: promoting competition, quality, and beneficiary choice in
medicare

Section 1: Short title; table of contents, definitions.
Section 2: Findings
Section 101: Establishment of Plan Inprovement and
Competition Office
Subsection (a), establishes an office within Health Care
Financing Administration to carry out several of the pro-
quality, pro-consumer mandates of the legislation.
Subsection (b), defines duties.
Subsection 102: HMO and Competitive Pricing Demonstration
Projects
Subsection (a), directs the Secretary to conduct
demonstration projects for competitive bidding between HMO
contractors in counties in which the AAPCC rate is 120
percent of the national average AAPCC rate, or higher.
Subsection (b), directs reports to Congress.
Subsection (c), waives certain requirements under the
Social Security Act.
Subsection (d), requires that the projects be conducted
within existing department funding.
Subsection 103: Medigap amendments
Subsection (a), guarantees issues of Medicare supplemental
insurance regardless of preexisting health conditions.
Subsection also requires community rating of Medigap
policies. Further, this subsection guarantees offer of
Medigap coverage to persons who leave Medicare risk plans for
any one of several reasons, including voluntary disenrollment
at any time during the first 12 months of enrollment in a
risk plan (and had not been in a risk plan, earlier).
Subsection (b), limits exclusion from coverage due to pre-
existing health conditions.
Subsection (c), clarifies non-discrimination requirements
during initial enrollment periods.
Subsection (d), extends the six-month initial enrollment
period to non-elderly Medicare beneficiaries.
Subsection (e), sets effective dates.
Subsection (f), defines transition rules including a
directive that the National Association of Insurance
Commissioners amend its Model Regulation to reflect Medicare
supplemental insurance policy changes required by the
section.

title ii: increasing medicare coverage options

Subtitle A: Risk Plan Improvements

Section 201: Changes in medicare managed care program
Subsection (a), HMO payments, amends the current formula
for determining local HCFA annual reimbursement rate
increases for persons insured by risk-sharing plans providing
both Part A and Part B benefits (Medicare Risk plans). The
reformulation would, beginning in 1998, set a new minimum
payment ``floor'' requiring that HCFA pay no plan less than
80 percent of the national average for payments to all plans
in 1997. For each community, payment increases in subsequent
years would be determined by selecting the highest figure
from three alternative formulas; (1) 102 percent of the
previous year's rate, (2) in 1999, 80 percent of the 1998
national average, and in 2000 and in subsequent years
increasing the rate by the previous year's national average
growth rate for Medicare managed care plan reimbursements, or
(3) an increase determined by a ``melded'' rate of local and
national managed care average reimbursements, according to
the following formula:
1998: area specific percentage of increase is determined by
the sum of 80 percent of the local average increase in the
average adjusted per capita cost (AAPCC) in previous year,
and 20 percent of the national AAPCC increase.
1999: area specific percentage determined by the sum of 75
percent of the local AAPCC increase in the previous year, and
25 percent of the national AAPCC increase.
2000: area specific percentage determined by the sum of 70
percent of local AAPCC increase in previous year, and 30
percent of the national AAPCC increase.
2001: area specific percentage determined by the sum of 65
percent of the local AAPCC increase in previous year, and 35
percent of the national AAPCC increase.
2002: area specific percentage determined by the sum of 60
percent of the local AAPCC increase in previous year, and 40
percent of the national AAPCC increase.
2003, and in each subsequent year: area specific percentage
determined by the sum of 60 percent of the local AAPCC
increase in previous year, and 40 percent of the national
AAPCC increase.
This section also contains certain budgetary protections
for beneficiaries receiving treatment for end-stage renal
disease, and for high-cost-growth metropolitan counties.
Subsection (b) creates additional quality standards for
section 1876(c)(6) of the Act, requiring Medicare managed
care plans to meet new standards established by the Secretary
of HHS in consultation with private accreditation
organizations, and addressing such issues as ongoing quality
assurance programs stressing (1) health outcomes, and (2)
providing review by physicians and other certified health
professionals.
Plans meeting these additional standards may waive the
requirement of at least 50 percent non-Medicare beneficiary
enrollment for participation as a Medicare Risk contractor.
Subsection (c) requires coordinated enrollment and
disenrollment periods for Medicare managed care plans,
similar to so-called ``open season'' periods for Federal
Employee Health Benefit Program plans.
Subsection (d) sets service area requirements for
participating plans, including requirements that plans
provide enrollment within all of a metropolitan statistical
area if such organization provides enrollment in any part of
the metropolitan area. Some limited exclusions may be
allowed.
Subsection (e) provides other enhanced enrollee protections
involving provision of emergency room care and services,
renal dialysis, and reimbursement of services outside the
plan's services area (specific to renal disease).
Subsection (f) allows the Secretary in certain instances to
make additional payments to plans insuring certain
individuals, for reasonable costs related to anomalies in
specific service areas.
Subsection (g) provides for intermediate sanctions against
plans for program violations, short of termination. These
intermediate sanctions may include civil penalties of not
more than $25,000 per offense, and suspension of new
enrollment. The section also provides for reasonable notice
to the organization and a right of appeal.
Subsection (h) requires that Medicare managed care plans
must submit to standardized quality review through
independent organizations to determine and demonstrate that
they have maintained the new, higher quality performance
levels required under this legislation. The section also
requires a review of plans' quality performance by the U.S.
General Accounting Office, no later than July 1998.
Subsection (i) sets an effective date for Section 101 as
the contract years beginning with 1998.
Section 202: Quality report cards and comparative reports
Subsection (a) requires that beginning in calendar year
1998, the Secretary will begin distribution of quality report
cards to beneficiaries on eligible managed care plans and on
Medicare supplemental policies, including a comparison of
benefits, costs and quality indicators developed under this
section.
Subsection (b) directs the Secretary to develop quality
indicators on (1) disenrollents statistics, (2) care
outcomes, (3) population health status, (4) appropriateness
of care, (5) consumer satisfaction, (6) access to care,
including waiting time for scheduled appointments and access
to emergency room care, and (7) preventative care programs.
Subsection (c) directs the Secretary to develop
standardized reports comparing plans on the basis of (1)
monthly premiums, (2) choice of doctors, (3) choice of
hospitals, (4) service area, (5) emergency room care
coverage, (6) hospital charges, (7) physician charges, (8)
prescription drug coverage, (9) ambulance coverage, (10)
coverage of routine eye exams and eyeglasses, (11) coverage
of skilled nursing facilities and home health care, (12)
coverage of hearing exams and hearing aids, (13) coverage of
mental health therapy, (14) the number of beneficiaries in
the plan, and several other indicators of plan coverage.
Subsection (d) requires that plans divulge to the Secretary
information required to complete this comparative analysis.
The Secretary also is empowered to collect, on a pro rata
basis, costs from plans to carry out the requirements of this
section.
Subsection (e), definitions.
Section 203: Preemption of state laws restricting managed
care
Subsection (a) preempts states from establishing care
mandates for health insurance coverage in Medicare.
Subsection (b) preempts state laws restricting managed care
arrangements. This preemption would lift state laws which (1)
prohibit or limit carriers from offering incentives to
enrollees to use services of participating providers, (2)
prohibit or limit carriers from limiting services to
participating providers, and other state restrictions on
managed care plans.
This subsection also includes a number of definitions.
Subsection (c) preempts state laws restricting utilization
review programs. However, the section specifies that this
preemption exempts laws preventing denial of lifesaving
medical treatment pending transfer of enrollees to another
health care provider.
Subsection (d), effective date, January 1, 1998.
Section 204: Appeals
Subsection (a) requires all Medicare Risk contractors to
designate an independent ombudsman to assist enrollees in
exercising rights to dispute plan decisions, and in other
grievances.
This section also directs the Secretary to establish no
later than January 1, 1998, an office for the collection of
data one each plan pertaining to decisions on the
disallowance of services to beneficiaries, in full or in
part.
Subsection (b) requires that plans provide enrollees with
clear and understandable description of grievance and appeal
procedures.
Subsection (c) creates an expedited HCFA grievance and
appeals procedure.
Section 205: Medicare HMO Enrollment Fair
Subsection (a), mandates that the Secretary require and
coordinate annual enrollment fairs in each Medicare payment
area to inform beneficiaries of plans offered by health care
organizations.

[[Page S1834]]

Subtitle B: Maintaining Fee-for-Service Program

Section 211: Failsafe budget mechanism
Subsection (a) requires payment adjustments to achieve
specified Medicare targets. Sets annualized, five-year
spending targets for Medicare, Parts A and B, according to
budget estimated under Clinton Administration plan.
Includes a ``fail-safe'' budget mechanism allowing the
Secretary to undertake proportional reductions in provider
reimbursements if spending targets otherwise would be
exceeded by billing volume.
Section 212: Maintenance of part B premium at current
percentage of part B program costs
Subsection (a) maintains monthly premium setting formula at
the current percentage of actual Part B program costs.
Subsection (b) sets effective date, applying to premiums
paid for months beginning with January 1997.

title iii--promotion of programs of all-inclusive care for the elderly
(pace) and of social health maintenance organizations (shmos)

Section 301: Definitions
Section 302: Expanding the availability of qualified
organizations for frail elderly community projects
(program of all-inclusive care for the elderly (pace))
Subsection (a) directs the Secretary to establish PACE
provider status for public or nonprofit organizations to
provide comprehensive health care services, on a capitated
basis, to frail elderly patients who are at risk of
institutionalization in skilled nursing facilities, and who
would qualify for benefits under both Medicare and Medicaid.
Such organizations would qualify for three-year periods, with
re-qualification procedures. Requirements for assuming
financial risk are specified.
The subsection, the Secretary would be required to act on
applications within 90 days.
Subsection (b) provides for terms and conditions of
approval, equivalent to those contained in conditions of
approval for an On Lok waiver, section 603C of the Social
Security Amendments of 1983, as extended by OBRA 1985. The
section also defines other entry requirements, and certain
responsibilities of the Secretary to assure quality and
feasibility of the plan.
Subsection (c) defines eligibility for participation by
PACE plans.
Subsection (d) sets reimbursement to the organization
through a capitation basis.
Subsection (e) applies Section 302 statutes to plans
currently operating under an On Lok waiver.
Subsection (f) applies current Social Security Act statutes
relating to income and resources of institutionalized spouses
to any individual receiving services from an organization
operating as a PACE provider.
Subsection (g) allows participating plans to also offer
services to frail populations other than the elderly, except
where the Secretary finds provision of such services may
impair the ability of the organization's performance as a
SHMO.
Section 303: Application of spousal impoverishment rules
Applies protections against spousal impoverishment to
couples receiving services through PACE organizations.
Section 304: Permitting expansion and making permanent SHMO
waivers
The section lifts limitations on how many SHMOs may be
approved by the Secretary, as well as limitations on how many
individuals may be enrolled in any such project.
Section 305: Repeals; effective date; and application to
existing waivers
Subsection (a) repeals certain federal statues which are
non-conforming to the intent and purpose of this legislation.
Subsection (b) requires that the Secretary within nine
months of enactment make effective interim final regulations
on the provisions of this title. Until then, all existing
PACE providers and OnLok waivers will remain in effect. After
implementation of new regulations, SHMOs which at that point
have completed three years of activity will attain PACE
provider status without need for reapplication.
Demonstration sites operating less than three years will be
accorded PACE provider status, but will be required to
undergo annual review for three years.

title IV--Other Medicare Changes

Section 401: Application of competitive acquisition process
for part B Items and services
Subsection (a) authorizes the Secretary to describe
appropriate competitive acquisition procedures for awarding
contracts for items or services. Selected areas of
acquisition to be governed by competitive bidding will be
left to the Secretary's discretion. The section applies to
the acquisition of durable medical equipment, clinical lab
services, prosthetic devices, diagnostic tests, surgical
dressings, and other items and services which may be
identified by the Secretary.
Section 401 sets a number of requirements to assure the
health and safety of Medicare beneficiaries.
Subsection (b) sets limitations and requirements with
respect to exclusive and non-exclusive competitions.
Subsection (c) sets an effective date of January 1, 1997.
Section 402: Simpler procedure for inherent reasonableness
determinations
Subsection (a) and Subsection (b) revise, strike or extend
existing status to reform Medicare acquisitions procedures
for both goods and services, and improve efficiency within
those activities.
Subsection (c) makes those changes effective on January 1,
1997.
Section 403: Promoting advanced directives
Subsection (a) requires that persons who have executed
advanced directives are ensured that such documents are
included in hospital medical charts.
Subsection (b) would require development and dissemination
of standard national forms by the Secretary.
Subsection (c) encourages health plans in Medicare to
encourage use of advanced directive forms through education
and dissemination of promotional material.
Subsection(d) directs the Secretary to develop and
implement a promotional campaign with respect to advanced
directives.
Section 404: Antifraud efforts
Subsection (a) increases penalties for Medicare fraud, and
includes definitions.
Subsection (b) establishes new definitions of punishable
offenses.
Subsection (c) requires a study on standardization of
claims administration focused on determining the feasibility
and desirability of establishing a standardized Medicare
claims administration process, implementing other measures to
improve record keeping, and taking other appropriate steps to
reduce waste, fraud and abuse in making payments in the
Medicare program.
Subsection (d) directs the Commission on Reinventing
Government to report to Congress on the effectiveness of
current efforts to combat waste, fraud and abuse in Medicare,
and whether these efforts would be enhanced by establishing a
coordinated, all-payer, multijurisdiction antifraud program.
Section 405: Hospice benefits
Subsection (a) restrucutes the benefit period for hospice
care, extending such benefits to an unlimited number of 60-
day periods. This section includes a number of conforming
amendments.
Subsection (b) provides new language for reimbursement of
related services including ambulance, diagnostic tests,
chemotherapy and radiation therapy within the hospice
environment.
Subsection (c) allows for contracting with independent
physicians and physician groups for hospice care services.
Subsection (d) waives certain staffing requirements.
Subsection (e) limits liability of beneficiaries and
providers with regard to certain hospice coverage denials.
Subsection (f) extends the period for a physician to
medically certify an individual's terminal illness.
Subsection (g) sets effective date.
Section 406: Study providing pharmacy services to medicare
beneficiaries
Subsection (a), directs the Secretary to identify cost
savings which may be achieved through expanding the role of
pharmacy services under the program.
Subsection (b) describes services which should be analyzed
in the study.
Subsection (c) and (d), require development of
recommendations and a report to Congress.
Section 407: Respite Benefit
Subsection (a) describes entitlement structure for service
not exceeding 32 each year.
Subsection (b) further describes conditions and limitations
on payment.
Subsection (c) definitions.
Subsection (d) defines payments from supplementary
insurance trust fund for individuals with only hospital
insurance coverage.
Subsection (e) effective date.

Title v--prospective payment for home health services

Section 501. Payment for home health services
Subsection (a) amends the Social Security Act to mandate
that home health services be reimbursed through a prospective
payment system. This provision describes discrete areas of
services.
(b) directs establishment of a per visit rate for home care
services.
(c) sets aggregate limits for services and for patients.
(d) sets a medical review process for the system of
payments described in the act, and supervision to insure that
individuals receive appropriate care.
(e) provides for adjustments to payments and for the
tracking of patients who may switch home health agencies.
This section also provides for monitoring features that
determine changes in the quality and level of health care.
The provision also requires that the Secretary report
annually to Congress regarding recommendations for ensuring
access to appropriate home health services.
(f) provides for payment to Christian Science providers.
(g) requires an annual report to Congress during the first
three years of this payment plan by the Medicare Prospective
Payment Review Commission on the effectiveness of the payment
methodology.
(h) mandates development of an ``episodic'' prospective
payment system for home health care.
(i) requires the Secretary to develop a data base upon
which managers may develop a fair and accurate case mix
adjustor as required elsewhere in this act for the
determination of prospective payment.
Subsection (b) appeals process.
Subsection (c) sunsets reasonable cost limitation.

[[Page S1835]]

Subsection (d) effective date.
Section 502. Review by peer review organization of home
health services
Subsection (a) requires utilization and quality review of
home health services by an appropriate peer review
organization. These reviews would occur under conditions
including a health agency's determination that a patient did
not meet conditions for care, that the patient no longer
requires care, that the patient's level of care is
inconsistent with the prescription of the attending
physician.
This provision also requires written notification to the
patient by the agency and the peer review organization.
Subsection (b) describes hearing rights.
Section 503. Retroactive reinstatement of presumptive waiver
of liability.
Reconciles OBRA 1986 and other statutes to allow
implementation of prospective payment for home health
services.

title vi: prospective payment system for nursing facilities

Section 601: Definitions for acuity payment, aggregated
resident invoice, allowable costs, case mix weight and other
items to be cited in the determination of prospective
payment.
Section 602: Sets payment objectives, including maintaining
a fair and equitable balance between cost containment and
quality of care.
Section 603: Defines powers and duties of the Secretary.
Section 604: Reconciles provisions of this title with the
Social Security Act.
Section 605: Establishes a resident classification system
to be used to adjust payment rates to practical care
requirements.
Section 606: Establishes a ``cost-center'' system for
establishing appropriate reimbursement to facilities based on
overhead expenses and general operating costs.
Section 607: Resident assessment. Requires facilities to
assess needs of each resident in accordance with the
reimbursement requirements of the title.
Section 608: Establishes a system for formulating per diem
rates of reimbursement for enrolled residents.
Section 609: Establishes a per diem reimbursement system
for compensating facility administrative and general costs.
Section 610: Establishes payment system for fee-for-service
ancillary costs.
Section 611: Provides for reimbursement of selected
ancillary services and other costs.
Section 612: Establishes per diem payment for property
costs related to rentals required by facilities.
Section 613: Creates a procedure for mid-year rate
adjustments.
Section 614: Creates payment rate exceptions for new and
low-volume nursing facilities.
Section 615: Creates a process for appealing decisions by
HCFA regarding payments in the amount of $10,000 or more.
Section 616: Phases in prospective payment for skilled
nursing facilities over a three-year period. First year would
have payments based on 25 percent of new system, 75 percent
of old system. Second year goes to a 50-50 split. Third year
is 75 percent new system, 25 percent old system. Fourth year
fully exercises all payment requirements under the title.

title vii: telemedicine

Section 701: Internet access for health care providers for
rural areas.
Subsection (a) amends the Communications Act of 1934 by
adding minimum requirements for Internet access for health
care providers for rural areas. Requires carriers to provide
access ``necessary for the provision of health care
services'' and at rates described in the title. Sets
threshold requirements for infrastructure and bandwidth, to
be determined by ``commission.''
Subsection (b) definitions.
Subsection (c) conforming amendments.
Section 702: Establishes a congressional Commission on
Telemedicine to undertake requirements of the title.
Subsection (a) defines membership, term of office, payment.
Subsection (b) describe duties, including ``a thorough
study and develop(ment) of recommendations on all matters
relating to which Telemedicine service should be covered
under Medicare.''
Title also requires a report on these issues not later than
one year following enactment.
Subsection (c) through (f) describe powers, personnel,
termination and appropriations for the commission.
______

By Mr. HATCH (for himself, Mr. Baucus, Mr. Nickles, Mr. Breaux,
Mr. Gorton, Mrs. Feinstein, Mrs. Murray, and Mrs. Boxer):
S. 387. a bill to amend the Internal Revenue Code of 1986 to provide
equity to exports of software; to the Committee on Finance.

THE SOFTWARE EXPORT EQUITY ACT

Mr. HATCH. Mr. President, I rise today to introduce the Software
Export Equity Act. I am pleased to be joined in this bipartisan effort
by my colleagues on the Senate Finance Committee, Senators Max Baucus,
Don Nickles, John Breaux, as well as Patty Murray, Slade Gorton, Dianne
Feinstein, and Barbara Boxer. Identical legislation has been introduced
in the House by Representative Jennifer Dunn and a strong bipartisan
group of her House colleagues.
This bill highlights an issue that I have mentioned many times in the
Finance Committee. Currently, the section of the Internal Revenue Code
outlining what qualifies for foreign sales corporation [FSC] treatment
and tax benefits is unclear and has left out software that is exported
overseas. Our bill would clarify the treatment of software.
What is a foreign sales corporation? It is a corporate entity
established by Congress to help facilitate the export of American made
goods to foreign markets. The FSC rules allow a corporation a tax
benefit on a portion of its earnings generated by the sale or lease of
export property. It is consistent with sound U.S. policy to promote
U.S. exports.
When the foreign sales corporation statute was enacted in 1971, the
computer software industry was relatively new. The original FSC statute
was drafted with the intent that only U.S. job-creating property
manufactured or produced in the United States and sold or leased
outside the United States qualifies for export benefits. The FSC rules
are designed to assist U.S. exporters in competing with products made
in other countries that have more favorable rules for taxing exports.
Mr. President, it is in our best interests to encourage the export of
American goods and services. The United States is currently the world
leader in software development, employing approximately 2 million
people in software development jobs. As this industry continues to
grow, much of the expansion of the industry is due to the growth of
exports. However, as the software industry has grown in response to
global markets, the tax laws have not kept up.
Currently, the statute allows films, tapes, records or similar
reproductions to qualify for FSC benefits. However, because of a narrow
interpretation of the FSC rules, software does not generally receive
this export incentive.
Let me provide an example that I have shared before with my
colleagues on the Finance Committee. Suppose you have two CD-ROM's--one
containing a musical recording, the other containing dictionary
software with musical recordings included. The two look the same and
are very similar except for the software. If the you export a master
CD-ROM of the musical recording to another country for reproduction,
the export qualifies for FSC benefits. However, if you export a master
copy of the software CD-ROM with a license to make additional copies,
you will be denied FSC benefits. This is simply wrong and unfair. In an
age where many computer products are multipurpose--with music and
software--this makes no sense.
Now this problem is not beyond repair. The Treasury Department does
not believe that it has the authority to issue regulations to correct
this problem. However, they support the legislative fix I am
introducing today. The FSC statute must be clarified to allow exported
software with the right to reproduce to receive fair and equitable
treatment.
Mr. President, this problem hits home in my State of Utah. There are
a number of software manufacturers in Utah that have developed a
worldwide presence. Watching musical and other intangible items receive
FSC treatment while highly sophisticated software is left out, is
simply discouraging for these sometimes small software companies. This
legislation corrects this inequity and reestablishes our commitment to
promoting American competitiveness.
I am please to introduce the Software Export Equity Act today. I urge
all of my colleagues to support this bipartisan effort and cosponsor
this bill.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 387

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Software Export Equity
Act''.

[[Page S1836]]

SEC. 2. CLARIFICATION OF APPLICATION OF FOREIGN SALES
CORPORATION RULES TO SOFTWARE.

Subparagraph (B) of section 927(a)(2) of the Internal
Revenue Code of 1986 (relating to property excluded from
eligibility as FSC export property) is amended by inserting
``, and software, whether or not patented'' after ``for
commercial or home use''.

Mr. NICKLES. Mr. President, I am pleased to join Senator Hatch,
Senator Baucus, and Senator Breaux in the introduction today of the
Software Export Equity Act, a bill to provide that software exports
receive the same tax treatment as other products made in the United
States. Our bill will help ensure that the U.S. software industry, the
current world leader, maintains their competitive edge.
The Software Export Equity Act simply clarifies that software
produced in the United States for export fully qualifies for foreign
sales corporation [FSC] export incentives the same as most other U.S.
products. The bill proposes no special or unique benefit for the
software industry, just equal and fair treatment under existing law.
The FSC statute and its predecessor, the domestic international sales
corporation statute, were enacted by Congress to help U.S. companies
compete abroad. The FSC statute provides a tax exemption of up to 5
percent of a company's income attributable to export sales of U.S.-made
products. Only those products manufactured or produced in the United
States for export to a foreign market qualify for FSC benefits to
ensure domestic economic growth and job creation.
Unfortunately, the fledgling software industry was not specifically
considered by Congress when the FSC statute was enacted, and subsequent
Treasury Department rules disqualified them for FSC benefits. Indeed,
Treasury's narrow interpretation allows nearly identical products,
exported in an identical manner, such as movies and compact disc
recordings, to fully qualify for FSC benefits, but not software.
Repeated attempts to convince the Treasury Department to modify their
rules have failed, Mr. President, leaving only the alternative of
amending the law. Fortunately, this issue has broad bipartisan support
in the House and Senate and was recently included in President
Clinton's fiscal year 1998 budget request.
Employing over 2 million people and exporting more than $26 billion
in software each year, the U.S. software industry is an important and
growing part of our economy. They lead the world in the development of
innovative products and cutting-edge technology. In today's competitive
global economy, incentives to encourage firms to develop products here
for export abroad are vitally important. The enactment of this
legislation will assure that we provide these incentives to all U.S.
products equally.
I encourage all my colleagues to join us in supporting this
legislation.
Mr. BREAUX. Mr. President, I am pleased today to join Mr. Hatch, Mr.
Nickles, and Mr. Baucus in introducing the Software Export Equity Act.
This legislation is extremely important to maintaining the U.S.
software industry's competitiveness and the growth of high-skilled,
high-paying software industry jobs in the United States. The Software
Export Equity Act has broad bipartisan support and was included in the
fiscal year 1998 budget that the President submitted to Congress. I
urge my colleagues to join with us in support of swift enactment of
this legislation.
The U.S. software industry is a vital and growing part of the U.S.
economy, creating many new high-paying, high technology jobs in the
United States. Much of the expansion of the software industry is due to
the growth of export sales. The Software Export Equity Act clarifies
the application of the foreign sales corporation [FSC] rules to exports
of U.S. software.
The FSC rules were enacted to address the competitive disadvantages
faced by U.S. exporters vis-a-vis exports from other countries that
have more favorable tax systems, particularly those that effectively
exempt export sales from home country tax. The goal of the FSC
provisions was to prevent manufacturing and production jobs from moving
out of the United States. Unfortunately, a narrow IRS interpretation of
these rules precludes exports of U.S. software from fully qualifying
for the FSC incentive. I am very concerned that this problem could
cause U.S. software companies to begin examining such options as moving
high-skilled, high-paying software development jobs overseas where
highly skilled labor is available at much lower wages. The FSC
incentive will help offset higher U.S. labor costs by providing
benefits on the export of products developed in the United States.
Moreover, there is no justification to deny U.S. software exports the
FSC incentive. Virtually every other U.S. exporter fully qualifies for
these incentives. I believe it is vital to quickly enact legislation
that would clarify these rules to reflect the Congress' intent with
respect to software, not only to protect U.S. software development
jobs, but also to preserve ownership of this technology in the United
States.
Mr. BAUCUS. Mr. President, I am pleased today to join Senator Hatch
in cosponsoring the Software Export Equity Act. I believe the continued
vitality of the U.S. software industry is extremely important to the
U.S. economy. The Software Export Equity Act will not only help us to
retain high-paying U.S. software development jobs with successful U.S.
software companies, but also will help smaller U.S. software companies
to enter the export market by helping to offset the high costs of
exporting.
The Software Export Equity Act ensures that U.S. software exports
qualify for the benefits of the foreign sales corporation [FSC] rules,
which are very important to maintaining a high level of U.S. exports.
The foreign sales corporation rules were enacted to provide an
incentive for U.S. companies to manufacture their products in the
United States for export overseas, thus retaining U.S. development and
manufacturing jobs. It is clearly as important to Congress to retain
U.S. software development jobs, which are among the highest paying jobs
in the United States, as it is to retain other manufacturing and
development jobs. Nonetheless, the IRS has questioned the application
of the FSC rules to software because independent software products did
not exist when this incentive was originally enacted in 1971. Our tax
laws must keep up with changes in technology and recognize that FSC
rules should apply to software.
This legislation is about fairness, but more importantly, this
legislation is about jobs and preserving the ownership of technology in
the United States. The Department of Commerce estimates that every $1
billion of export trade is worth domestic jobs. Today there are nearly
600,000 U.S. employees working directly in the software industry, with
at least another 1.5 million software developers employed in related
industries. These are high-paying jobs, with average compensation in
1992 of $55,000 per employee. The Software Export Equity Act will
prevent U.S. software companies from moving those high-paying software
development jobs overseas, where highly skilled labor is available for
much lower wages. The Software Export Equity Act will also help smaller
software companies to enter the export market by helping to offset the
high cost of exporting, which was one of the principal purposes for
creating the FSC rules. FSC treatment is as important to exports of
software as it is to exports of other U.S. products that are clearly
covered by these rules.
Finally, the Software Export Equity Act will protect U.S. ownership
of technology. If software development jobs were moved outside the
United States, ownership of the technology created would also move
outside the United States. Today the software industry has revenues of
$200 billion a year and a growth rate of 13 percent per year. To lose
U.S. ownership of the future of this industry would mean not only a
tremendous direct loss to the GDP, but also would mean a loss of the
spillover benefits that U.S.-developed technology has on other U.S.
industries. In summary, the loss of ownership of this technology would
be devastating to the growth potential of the U.S. economy.
I appreciate the fact that the administration supports our position
and has recommended FSC treatment for computer software in the budget.
Enactment of this legislation will make that recommendation reality. I
urge my colleagues to join Senators Hatch, Breaux, Nickles, and myself
in support of swift action on the Software Export Equity Act.

[[Page S1837]]

Mr. GORTON. Mr. President, I am pleased to join Senator Hatch
today in introducing the Software Export Equality Act. In 1971,
Congress created foreign service corporations [FSC] in order to
encourage U.S. exports and increase U.S. competitiveness in the
international marketplace. Under current law, FSC legislation gives
U.S. manufacturers a tax incentive for exports of domestically produced
goods. Today, virtually every U.S. product manufactured for export
abroad qualifies for FSC benefits. Yet current tax laws continue to
discriminate against one of the America's fastest growing exports:
software.
Due to the IRS's narrow interpretation of FSC rules, the software
industry is precluded from qualifying for any FSC benefits despite the
fact that approximately 85 percent of products sold by U.S. software
companies are developed in the United States and it currently ranks
seventh in U.S. industry exports. This bill will clarify that computer
software qualifies as export property and is eligible for FSC benefits.
Continuing to deny the benefits of FSC rules to the software industry
is not only unfair, it poses a serious impediment to the
competitiveness of U.S. manufactured software.
Software is one of the America's fastest growing industries, with
revenues of more than $200 billion and a growth rate of 13 percent per
year on average. As the world leader in software development, the
United States is home to more than 8,000 software companies that
provide, directly and indirectly, millions of high-paying, high-skilled
American jobs in many States.
Software is a vital and growing part of many State economies,
including my own State of Washington. In Washington State, the software
industry accounted for $3.5 billion worth, and 12 percent, of
Washington State exports and employed over 22,509 people in 1995.
Microsoft, the State's largest software producer, alone supported 1.5
percent of the State's economy in 1995. But these impressive numbers do
not even take into account the significant impact the numerous small
and middle-sized software companies that make up the majority in
Washington State have on the State's economy.
The worldwide market for software is exploding and global competition
is quickly on the rise. In this increasingly competitive world economy,
incentives to encourage firms to develop and export from the United
States are more important than ever to job creation and economic
stability. This bill provides a simpe way to ensure the U.S. software
industry remains the world leader in software manufacturing and
American software jobs are protected.
I encourage my colleagues to join me in support of this very
important legislation and urge its quick passage in the Senate.
______

By Mr. LUGAR:
S. 388. A bill to amend the Food Stamp Act of 1977 to assist States
in implementing a program to prevent prisoners from receiving food
stamps; to the Committee on Agriculture, Nutrition, and Forestry.

FOOD STAMP ACT AMENDMENTS

Mr. LUGAR. Mr. President, I rise today to introduce a bill
that will stop prisoners from getting food stamp benefits. My bill will
assist States in implementing a program to ensure that prisoners are
not counted as members or heads of food stamp households, thus either
increasing the households' benefits or allowing an individual to
illegally receive benefits in the prisoner's name.
I was disturbed to read in the newspaper about a draft General
Accounting Office report showing over $3 million in food stamp benefits
being overpaid to households in which a member has been incarcerated.
Current law prohibits prisoners from receiving food stamp benefits and
requires that households notify their local welfare office of any
changes in the makeup of the household. I am concerned to see that
there is a breakdown in the system, allowing millions of dollars to be
paid out illegally.
Briefings by USDA's Food and Consumer Service and the General
Accounting Office have confirmed that although a few States are
performing computer matches of data on States' food stamp participants
and verified inmates, most are not. All States should be doing these
computer matches. This bill requires the Secretary of Agriculture to
collect information from States already doing computer matches to
prevent prisoners from receiving food stamp benefits, then evaluate,
summarize, and disseminate this information to all States not later
than 180 days after the bill's enactment. The Secretary must then
provide the States with technical assistance to implement a computer
matching system.
The problem of prisoners illegally receiving Federal benefits is not
limited to the Food Stamp Program. Another recently released General
Accounting Office report shows that the Social Security Administration
has made erroneous payments to prisoners who were incarcerated in the
jail system at the time of the study. In response to this study, the
Personal Responsibility and Work Opportunity Act of 1996 included
language authorizing the Commissioner of the Social Security
Administration to enter into agreements with institutions to prevent
these erroneous payments. We should make a similar effort to prevent
these erroneous payments in the Food Stamp program.
The Food Stamp Program provides a safety net for millions of people.
We cannot allow fraud and abuse to undermine the Food Stamp Program.
Integrity is essential to ensure a program that can serve those in
need. It is Congress' responsibility to play a role in ending fraud and
abuse in all federally funded programs. This legislation is an
important step in ending fraud and abuse in the Food Stamp Program.
I urge my colleagues to support this legislation.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 388

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. DENIAL OF FOOD STAMPS FOR PRISONERS.
Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020) is
amended by adding at the end the following:
``(q) Denial of Food Stamps for Prisoners.--
``(1) Collection and dissemination of information.--Not
later than 180 days after the date of enactment of this
subsection, the Secretary shall--
``(A) collect information on policies and procedures used
by States that conduct computer matches or other systems to
prevent prisoners from receiving food stamp benefits; and
``(B) evaluate, summarize, and disseminate to each State
the information collected under paragraph (1) that describes
the best practices of the States (including information
related to verifying prisoners' social security numbers with
the Social Security Administration).
``(2) Assistance to states.--The Secretary shall assist
States, to the extent practicable, in implementing a system
to conduct computer matches or other systems to prevent
prisoners from receiving food stamp benefits.''.
______

By Mr. ABRAHAM (for himself, Mr. Bond, Mr. Nickles, Mr.
Hutchinson, Mr. Helms and Mr. Sessions):
S. 389. A bill to improve congressional deliberation on proposed
Federal private sector mandates, and for other purposes.

THE MANDATES INFORMATION ACT OF 1997

Mr. ABRAHAM. Mr. President, I rise today to introduce the Mandates
Information Act of 1997. This bill in my view furthers the cause of
careful deliberation in this, the greatest deliberative body in the
world. It will force Members of Congress to carefully consider all
aspects of potential legislation containing mandates affecting
consumers, workers, and small businesses.
I am proud to say that my colleagues and I aided the cause of careful
deliberation during the last Congress. We passed the Unfunded Mandates
Reform Act of 1995. That legislation required the Congressional Budget
Office to make two key estimates with respect to any bill reported out
of committee: First, whether the bill contains intergovernmental
mandates with an annual cost of $50 million or more; and, second,
whether the bill contains private sector mandates with an annual cost
of $100 million or more. The 1995 act also established a point of order
against bills meeting the $50 million

[[Page S1838]]

cost threshold for intergovernmental mandates. Although the point of
order can be waived by a simple majority vote, it encourages Congress
to think carefully before imposing new intergovernmental mandates.
The 1995 act did not apply its point of order to private sector
mandates. This was understandable, given the bill's focus on
intergovernmental mandates. But States and localities are not alone in
being affected by Federal mandates. Consumers, workers, and small
businesses also are affected when the Federal Government passes along
the costs of its policies. This is why the Mandates Information Act of
1997 will apply a point of order to bills meeting the $100 million cost
threshold for private sector mandates, while also directing the CBO to
prepare a ``Consumer, Worker, and Small Business Impact Statement'' for
any bill reported out of committee.
These reforms are necessary in my view, Mr. President, because the
1995 act, while effective in its chosen sphere of intergovernmental
mandates, does not contain the necessary mechanisms to force Congress
to think seriously about the wisdom of proposed mandates on the private
sector. This leaves our private sector faced with the same dilemma once
faced by our States and localities: Congress does not give full
consideration to the costs its mandates impose. Focusing almost
exclusively on the benefits of unfunded mandates, Congress pays little
heed to, and sometimes seems unaware of, the burden that unfunded
mandates impose on the very groups they are supposed to help.
Unfunded mandate costs by definition do not show up on Congress'
balance ledger. But, as President Clinton's Deputy Treasury Secretary
Lawrence Summers has written, ``[t]here is no sense in which benefits
become `free' just because the government mandates'' them. Congress has
merely passed the costs on to someone else.
And that ``someone'' is the American people. As economists from
Princeton's Alan Krueger to John Holohan, Colin Winterbottom, and
Sheila Zedlewski of the Urban Institute agree, the costs of unfunded
mandates on the private sector are primarily borne by three groups:
consumers, workers, and small businesses.
What forms do these costs take? For consumers, mandate costs take the
form of higher prices for goods and services, as unfunded mandates
drive up the cost of labor.
For workers, the costs of unfunded mandates often take the form of
significantly lower wages. According to the Heritage Foundation, a
range of independent studies indicates that some 88 percent of the cost
of private sector mandates are shifted to workers in the form of lower
wages.

And mandates can cause workers to lose their jobs altogether. Faced
with uncontrollable increases in employee costs, our job creators too
often find that they can no longer afford to retain their full
complement of workers. The Clinton health care mandate, for example,
would have resulted in a net loss of between 200,000-500,000 jobs,
according to a study conducted by Professor Krueger.
Small businesses and their potential employees also suffer. Mandates
typically apply only to businesses with at least a certain number of
employees. As a result, small businesses have a powerful incentive not
to hire enough new workers to reach the mandate threshold. As the Wall
Street Journal recently noted, ``The point at which a new [mandate]
kicks in * * * is the point at which the [Chief Financial Officer] asks
`Why grow?' ''
That question is asked by small businesses all over the country, but
let me cite one example from my State. Hasselbring/Clark is an office
equipment supplier in Lansing, MI. Noelle Clark is the firm's treasurer
and secretary. Mindful of the raft of mandates whose threshold is 50
employees, Ms. Clark reports that lately ``we have hired a few temps to
stay under 49.'' Thus, unfunded mandates not only eliminate jobs, but
also prevent jobs from being created.
Much as Members of Congress may wish it were not so, mandates have a
very real cost. This does not mean that all mandates are bad. But it
does mean that Congress should think very carefully about the wisdom of
a proposed mandate before imposing it.
Such careful thinking, Mr. President, is the goal of the Mandates
Information Act of 1997. Just as the Unfunded Mandates Reform Act of
1995 protects State and local governments from hasty decisionmaking
with respect to proposed intergovernmental mandates, the Mandates
Information Act would protect consumers, workers, and small businesses
from hasty decisionmaking with respect to proposed private sector
mandates. It would do so, in essence, by extending the reforms of the
1995 act to private sector mandates.
The bill I introduce today would build on the 1995 act's reforms in
two ways. First, to give Congress more complete information about the
impact of proposed mandates on the private sector, my bill directs CBO
to prepare a ``Consumer, Worker, and Small Business Impact Statement''
for any bill reported out of Committee. This statement would include
analyses of the bill's private sector mandates' effects on the
following: First, consumer prices and [the] actual supply of goods and
services in consumer markets; second, worker wages, worker benefits,
and employment opportunities; and third, the hiring practices,
expansion, and profitability of businesses with 100 or fewer employees.
But providing Congress with more complete information about the
impact of proposed private sector mandates will not guarantee that it
pays any attention to it. This we know from experience. In 1981,
Congress enacted the State and Local Government Cost Estimate Act,
sponsored by Senator Sasser. Pursuant to that act, CBO provided
Congress with estimates of the cost of intergovernmental mandates in
bills reported out of committee. But Congress routinely ignored this
information. It did so because the 1981 act had no enforcement
mechanism to force Congress to consider the CBO estimates. As Senator
Sasser himself explained in introducing a follow-up bill in 1993,
``[t]he problem [with the 1981 act], it has become clear, is that this
yellow caution light has no red light to back it up.''
To supply that ``red light,'' Senator Sasser's Mandate Funding Act of
1993 contained a point of order. Of course, the Unfunded Mandates
Reform Act of 1995 likewise contained a point of order, which is why it
succeeded where Senator Sasser's 1981 act had failed.
The Mandates Information Act of 1997 will provide this red light for
proposed private sector mandates. It contains a point of order against
any bill whose private sector mandates exceed the $100 million
threshold set by the 1995 act. Like the 1995 act's point of order
against intergovernmental mandates, the 1997 bill's point of order can
be waived by a simple majority of Members. Thus it will not stop
Congress from passing bills it wants to pass.
But the point of order will serve a vital purpose. It will ensure
that Congress does not ignore the information contained in the
consumer, worker, and small business impact statement. It will do so by
allowing any Member to focus the attention of the entire House or
Senate on the impact statement for a particular bill.
The Mandates Information Act of 1997 will provide Congress with more
complete information about proposed mandates' effects on consumers,
workers, and small businesses. It will also ensure that Congress
actually considers this information before reaching a judgment about
whether to impose a new mandate. The result, Mr. President, will be
focused, high-quality deliberation on the wisdom of private sector
mandates.
Because of the success of the 1995 act, Congress is now much more
careful to consider the interests of State and local governments in
making decisions about unfunded mandates. But Congress must be just as
careful to consider the interests of consumers, workers, and small
businesses in making such decisions. This bill will ensure that care,
helping produce better legislation; legislation that imposes a lighter
burden on working Americans.
Mr. President, I ask unanimous consent that the following sample of
letters from small business groups supporting the bill be introduced in
the Record, along with a list of groups that have expressed their
support for it.
There being no objection, the material was ordered to be printed in
the Record, as follows:

[[Page S1839]]

Organizations Supporting the Mandates Information Act of 1997

national organizations

Chamber of Commerce of the United States; National Association of
Wholesaler-Distributors; National Federation of Independent Businesses;
National Retail Federation; Small Business Survival Committee; National
Restaurant Association; National Association for the Self-Employed.

michigan organizations

Associated Underground Contractors, Inc.; Grand Rapids Area Chamber
of Commerce; Michigan Association of Timbermen; Michigan Chamber of
Commerce; Michigan Farm Bureau Family of Companies; Michigan NFIB;
Michigan Retailers Association; Michigan Soft Drink Association; Small
Business Association of Michigan.
____

National Federation of

Independent Business,

Washington, DC, February 11, 1997.
Hon. Spencer Abraham,
U.S. Senate,
Washington, DC.
Dear Senator Abraham: On behalf of the more than 600,000
members of the National Federation of Independent Business
(NFIB), I want to express support for the Mandate Information
Act of 1997
In 1995 with the passage of the Unfunded Mandates Act,
Congress acknowledged the significant problem that federal
government mandates have on the operation of states and
localities. Government mandates create equally burdensome
problems on the private sector and especially small
employers. These federal mandates discourage small business
start-ups, growth and job creation.
Our members have consistently ranked unreasonable
government regulation as one of their top concerns. The
Mandate Information Act works to address the problem of
federal mandates on small businesses by applying the reforms
put in place by the Unfunded Mandates Act of 1995 for state
and local government to the private sector. This would
require Congress to weigh more carefully the impact of
proposed legislation on small businesses and their employees.
We commend you on your efforts to reduce the government
mandated burdens a small business must shoulder and look
forward to working with you to ensure that this positive
reform becomes law.
Sincerely,

Dan Danner,

Vice President,
Federal Governmental Relations.
____

Chamber of Commerce,

Washington, DC, January 7, 1997.
Hon. Spencer Abraham,
U.S. Senate,
Washington, DC.
Dear Senator Abraham: I am pleased to offer the support of
the U.S. Chamber of Commerce Federation for your proposed
legislation, the Mandates Information Act of 1997.
One of the key success stories of the 104th Congress was
the adoption of bipartisan unfunded mandates reform requiring
Congress to consider the cost and consequences of federal
requirements on state and local government. Another important
component of this law was the requirement that significant
federal mandates on the private sector be measured and made
public. Such mandates have an enormous impact on consumers,
small businesses and workers in the form of higher prices,
fewer jobs, declining good and services and reduced workers
benefits. Moreover, these mandates are likely to escalate as
scarce budgetary resources will place even greater pressure
on utilizing federal regulations as a means of implementing
government programs and initiatives.
[The Mandates Information Act would provide the next
necessary step to promote greater public and congressional
accountability regarding the impact of federal mandates.] It
builds upon the success of the unfunded mandates law by
requiring Congress to have more information on who will be
affected and ultimately pay the costs associated with these
mandates. It would allow Member of Congress to vote on each
mandate--considering not only its benefits but its effect on
the private section as well as the economy, jobs and
consumers.
[It is good government policy for Congress to engage in the
practice of legislating with the necessary information
concerning the impact of their actions. Policymakers have the
responsibility and obligation to make informed decisions and
to be accountable for the consequences of those decisions.]
Such a proposal would help ensure that when resources are
diverted from jobs, wages and families into government rules,
the impact are fully considered.
The U.S. Chamber of Commerce Federation, the world's
largest federation of business, chambers of commerce and
business organizations representing every size and sector of
the nation's economy, looks forward to working with you in
seeking adoption of this common sense, good government
proposal.
Sincerely,
R. Bruce Josten.
____

National Retail Federation,

Washington, DC, February 12, 1997.
Hon. Spencer Abraham,
U.S. Senator,
Washington, DC.
Dear Senator Abraham: On behalf of the National Retail
Federation, the world's largest retail trade association, I
am writing to support your legislation, the Mandates
Information Act of 1997.
Too often Congress passes new mandates on entrepreneurs
without understanding the actual cost. Many times, mandates
look good on paper, but can have a disastrous effect once
implemented. Your legislation will correct that once and for
all.
The costs associated with mandates, as you well know, are
more than direct cash outlays, these costs mean less economic
growth, fewer jobs created and higher costs to consumers.
Congress' worthy goal of balancing the budget, combined with
desires of some to ``deliver more things'' to voters that the
government doesn't have to pay for, will put more pressure
than ever on Members of Congress to burden business.
New mandates automatically won't be stopped, only
automatically considered under this bill. That's right in
line with Main Street. The Abraham legislation assures
retailers and other entrepreneurs that Congress will consider
the impact of proposed mandates set forth in the CBO
Consumer, Worker and Small Business Impact Statement before
they are simply enacted into law.
Again, thank you for your leadership against new mandates.
We look forward to working with you to pass this legislation.
Sincerely,

John J. Motley,

Senior Vice President,
Government and Public Affairs.
____

Michigan Chamber of Commerce,

Lansing, MI, January 31, 1997.
Hon. Spencer Abraham,
U.S. Senate,
Washington, DC.
Dear Spence: Your proposed ``Mandates Information Act of
1997'' is a great idea!
As you know, the Michigan Chamber and many other taxpayer
groups supported--and voters approved--the Headlee Amendment
to the State Constitution in 1978 that required state
mandates on local government to be funded by the State. This
has caused greater legislative and executive branch
evaluation of state program mandates and related costs on
local units of government and resulted in funding of any
mandates by the state. The Michigan Chamber also supported
adoption of unfunded mandates reform during the 104th
Congress.
It's important that Congress now consider protection for
the private sector from new unfunded mandates. Careful
consideration of the impact of federal mandates on state and
local government should be extended to job providers and
consumers.
The Michigan Chamber of Commerce and our 6,500 member firms
are pleased to support this needed legislation.
Sincerely,
Jim Barrett,
President.
____

Small Business

Association of Michigan,

Lansing, MI, January 31, 1997.
Hon. Spencer Abraham,
U.S. Senate, Dirksen Senate Office Building, Washington, DC.
Dear Senator Abraham: The Small Business Association of
Michigan (SBAM is pleased with your decision to introduce the
``Mandates Information Act.'' Your bill will help protect
small businesses from the financial impact of Congressional
mandates.
Congressional mandates imposed on the private sector are
already driving down worker wages, increasing consumer costs
and reducing the availability of goods and services. These
mandates could multiply as a result of the effort for a
balanced budget. As funding becomes increasingly scarce,
advocates of increased government intrusion in the private
sector will try to shift program costs to small businesses in
the form of new mandates.
A key provision of your legislation is the small business
impact statement--to inform Congressional members about
mandates and their impact on the private sector. The bill
will direct the CBO to estimate the impact of a bill's
mandates on consumer cost, worker wages, the availability of
goods and services and small business job creation.
SBAM is Michigan's latest state based small business
association representing 8,000 businesses in all of
Michigan's 83 counties. We look forward to working with you
on this important small business issue.
Sincerely,

Barry S. Cargill,

Vice President,
Government Relations.

Mr. BOND. Mr. President, I rise today in support of the Mandates
Information Act of 1997. I am pleased to be an original cosponsor of
this important legislation, and I applaud my distinguished colleague
from Michigan, Mr. Abraham, for his leadership in this effort.
The bill we are introducing today continues the work begun in the
104th Congress with the enactment of the ``Unfunded Mandates Reform Act
of 1995--the 1995 act--authored by Mr.

[[Page S1840]]

Kempthorne to ensure that Congress is well advised of the cost unfunded
mandates would impose on State and local governments. I was a cosponsor
of the 1995 act, and I believe the time has come for us to expand its
provisions to require similar detailed information and accountability
on unfunded mandates affecting the private sector--so we can protect
consumers, workers, and small businesses.
As chairman of the Senate Committee on Small Business, I am all too
aware of the disproportionate burden Federal regulations impose on our
Nation's small businesses. A 1995 study found that an average firm with
less than 20 employees spent approximately $5,500 per employee in 1992
to comply with Federal regulations--compared with $3,000 per employee
by firms with 500 or more employees. The overall cost to the economy is
between 6 and 9 percent of gross domestic product--between $420-670
billion--in 1995 dollars--in regulatory compliance. Before we permit
the Federal Government to adopt any new mandate that would add to this
burden, the Congress needs to be fully informed of the new costs to be
imposed on the economy so we can make an informed judgment.
The reforms proposed in this bill are needed to ensure that the
Congress gives careful and thoughtful consideration to the impact
unfunded mandates impose on the private sector. The ability of small
businesses to compete and create new jobs can be hindered by unfunded
mandates, we need to be aware of the magnitude of any future adverse
effects. The Committee on Small Business will continue its work to
ensure that the Government's actions here in Washington foster the
growth of small businesses located on Main Street. This bill will help
to ensure that all Members of Congress are equally informed of the
effects a bill would have on the customers, employees, and owners of
America's small businesses, the engine of our Nation's economic growth.
The legislation Senator Abraham and I are introducing today will
ensure that the private sector impact of unfunded mandates is addressed
during deliberations on legislation imposing those mandates. Consumers,
workers, and small businesses will benefit from the reforms to enhance
congressional deliberations on unfunded mandates affecting the private
sector. The Mandates Information Act of 1997 establishes a new
parliamentary point of order against any bill that will impose private
sector mandates exceeding a $100 million cost threshold. The measure
directs the Congressional Budget Office to estimate the impact of the
proposed unfunded mandates on consumer costs, worker wages, and the
availability of goods and services.
As with the Unfunded Mandate Reform Act of 1995, the point of order
authorized by the bill would bar the House or Senate from further
action on a proposed measure unless a majority agrees to move forward
with the initiative. By authorizing a point of order triggered by
private sector impacts, the legislation introduced today puts teeth
into the law to ensure that Congress addresses the costs that would be
imposed by the unfunded mandates on small businesses, consumers, and
workers. This change requires Members of Congress to go on record as
either supporting or opposing an unfunded mandate that would add costs
to the private sector.

With the aid of a consumer, worker, and small business impact
statement, Members of Congress will have the information required to
make an informed decision on the merit of imposing a mandate without
also providing funding for compliance. The impact statement would be
prepared by the Congressional Budget Office--which the bill directs to
estimate the economic impact of a proposed mandate on consumers, wages,
and the availability of goods and services.
All in all, this bill is about good governance. It provides
information to ensure that Congress is fully informed on the impact of
an unfunded mandate on the economy and the private sector in
particular. By tasking the Congressional Budget Office with preparing
an impact statement, the bill also provides important information to
educate Congress on the effect of pending legislation. This, in itself,
is an important step toward ensuring that the needs and concerns of
small businesses, and the workers and customers that depend on small
businesses, are given the attention they deserve by Congress. As with
the Small Business Regulatory Enforcement Fairness Act of 1996--or the
Red-Tape Reduction Act as I prefer to call it--today's bill seeks to
ensure that the Government treats small business fairly. The Mandates
Information Act has the support of the National Federation of
Independent Business, the National Restaurant Association, the U.S.
Chamber of Commerce, the National Retail Association, the National
Association of Wholesaler-Distributors, and the Small Business Survival
Committee--I urge my colleagues to join our efforts to enact this bill
and enhance our efforts to ensure good governance.
______

By Mr. COVERDELL (for himself, Mrs. Feinstein, and Mr. Helms):
S.J. Res. 19. A joint resolution to disapprove the certification of
the President under section 490(b) of the Foreign Assistance Act of
1961 regarding foreign assistance for Mexico during fiscal year 1997;
read the first time.
S.J. Res. 20. A joint resolution to disapprove the certification of
the President under section 490(b) of the Foreign Assistance Act of
1961 regarding foreign assistance for Mexico during fiscal year 1997;
to the Committee on Foreign Relations.
S.J. Res. 21. A joint resolution to disapprove the certification of
the President under section 490(b) of the Foreign Assistance Act of
1961 regarding assistance for Mexico during fiscal year 1997, and to
provide for the termination of the withholding of and opposition to
assistance that results from the disapproval; to the Committee on
Foreign Relations.

DISAPPROVAL LEGISLATION

Mr. COVERDELL. Mr. President, I have introduced today three separate
joint resolutions to disapprove the President's decision to certify
Mexico as fully cooperating in our war on drugs. The first joint
resolution will eventually be placed on the calendar by way of rule XIV
of the Standing Rules of the Senate. The second resolution is identical
to the first joint resolution; however, it will be referred to the
Senate Foreign Relations Committee for their consideration.
Finally, Mr. President, the third joint resolution I have just
introduced would disapprove the President's certification and instead
decertify Mexico but authorize a national interest waiver.
Mr. President, I have been joined today by a coauthor of these
resolutions, Senator Feinstein of California, who will make remarks in
a moment. I will take just a few minutes to visit this subject and then
yield the floor to Senator Feinstein.
First, let me say, Mr. President, that this is a most difficult
issue, and it has very broad ramifications. Mr. President, I stand here
as a friend of Mexico and the Mexican people, but I believe the actions
on the part of the administration were a resounding endorsement of the
status quo. Mr. President, the status quo is unacceptable. The status
quo sees the Government of Mexico under siege by perpetrators of fraud
and corruption and destabilization. Mr. President, the status quo sees
millions of new victims being ravaged by the assault of drugs within
our community. I suspect that the actions on the part of the
administration, of President Clinton, were an effort to be supportive
of President Zedillo. I can understand that, but I believe this
decision to certify without condition, versus to decertify and waive as
our resolution calls for, misleads both nations. It suggests that
things are going along fairly well and we just need to keep doing what
we have been doing.
The President of Mexico himself said the greatest single threat to
the security of his republic are the drug cartels. Mr. President, we
are losing this war. That is what the status quo represents. We are
losing. The people of Mexico are losing through destabilization of
their government at all levels, the American people are losing through
the victimization of millions of American citizens, and the democracies
of the hemisphere are losing because this is a pervasive cloud over our
future as we enter the new century.
All the opportunity one can envision about this hemisphere, the fact
that 40 percent of our trade occurs in this hemisphere, the abounding
opportunities that one can easily look at when

[[Page S1841]]

you see what commerce can produce in the uplifting of all of our
peoples, the single most serious threat to all those opportunities are
the drug cartels. It hangs as a cloud, Mr. President. I believe the
actions on the part of the administration do a disservice to all of our
people on both sides of the border. And I hope that we can come at this
question more honestly and admit that we have deep problems here, and
that the good will that exists between our peoples is vibrant enough
and strong enough that it can face an honest problem head on. No one is
served by sweeping it under the rug for yet another year. Every day
that goes by, we lose a little bit more and we come closer and closer
to a time when this becomes unresolvable.

Mr. President, we will hold hearings on these resolutions in the very
near term. I compliment my colleague from California for her extended
work in this area for a considerable period of time.
At this point, I yield the floor to my colleague from California,
Senator Feinstein.
The PRESIDING OFFICER. The Senator from California is recognized.
Mrs. FEINSTEIN. I thank the Chair and I thank the Senator from
Georgia. I am pleased to join with him in this joint resolution,
disapproving the certification of Mexico.
Mr. President, my disappointment in the administration's decision to
certify Mexico's antidrug efforts last week, I think, was known to all.
I believe that decision was a mistake, and I said so.
The decision to certify Mexico in the face of what I consider to be
an overwhelming lack of cooperation undermines the integrity of the
certification process itself, as well as damaging the credibility of
the United States in our dealings with other countries with whom we
seek cooperation.
I rise today to join with the Senator from Georgia and a number of my
colleagues in introducing this resolution. But I do so with some
regret. I regret the need for the resolution for two reasons. First,
Mexico is a neighbor, a friend, and an ally of our country. Second, I
very much regret the need to disagree with my President on this issue.
I believe he made what he believes to be the right decision, but I
respectfully disagree with him.
Our intention is clear: We believe that the evidence overwhelmingly
supports decertification of Mexico, and then if the President sees fit,
invoking a vital national interest waiver. For that reason, Senator
Coverdell has introduced a second resolution that allows the President
to waive the sanctions on grounds of vital national interest after we
enact our resolution of disapproval.
Last week, a bipartisan group of 39 Senators sent a letter to the
President urging that this be his decision.
I ask unanimous consent that this letter be printed in the Record
following my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mrs. FEINSTEIN. Mr. President, section 490 of the Foreign Assistance
Act requires the President to certify that Mexico has cooperated fully
with the United States, or taken adequate steps on its own to combat
drug trafficking. It's just not tenable to claim that Colombia did not
meet that standard, but Mexico did. Let me read one sentence from the
decertification of Colombia in 1996. It reads:

Critical to the U.S. judgment that the Government of
Colombia did not fully cooperate on counternarcotics in 1995
is the assessment that corruption remains pervasive, despite
the efforts of some dedicated Colombians to root it out.

That is no different from the situation in Mexico today. There are
dedicated efforts in Mexico, but the corruption is pervasive.
I think the events of last week are an example in point.
Just hours before the President's decision on certification of Mexico
was to be announced, Mexican officials were touting the arrest of a
reputed cartel leader, Humberto Garcia Abrego, brother of Juan Garcia
Abrego, who was expelled from Mexico during last year's certification
process.
Then, just a few hours after the decision to certify was announced,
guess what? Garcia Abrego simply walked away from Mexican custody a
free man. The Mexican Attorney General's office claimed responsibility
for setting him free. His release was ``inexplicable,'' they said.
Mr. President, this is just one example of the kind of cooperation
the United States has received. It has tightened up just before
certification and then, just after certification, it's business as
usual.
With 70 percent of the cocaine, a quarter of the heroin, 80 percent
of the marijuana, and 90 percent of the ephedrine used to make
methamphetamine entering the United States from our southern border,
Mexico's drug problem is America's drug problem, and the problem is
getting worse, not better.
Last year at this time, Senator D'Amato and I compiled a list of
actions we considered necessary for the Mexican Government to take in
order to show progress on their antidrug efforts. Regrettably, I
believe the evidence shows there has been little or no progress on
nearly all of the items on this list.

Some of these failures are due to inability; others are due simply to
a lack of political will.
For example, some questions: Has Mexico extradited one Mexican
national on outstanding drug charges? The answer is no. I was puzzled
because the Secretary of State, in her statement on certification, made
this statement: ``Mexico has set a precedent by extraditing its own
nationals.'' One might conclude that this includes Mexicans wanted on
drug charges. Yet, to the contrary, both the Department of Justice and
the DEA tell me that not a single Mexican national has been extradited
to this country on drug-related charges.
If the State Department has information that Mexican nationals are
being extradited on drug-related charges--and there are 52 of them on
the extradition list--I ask them now to make that list public. Tell us
which Mexican nationals have been extradited on drug-related charges.
Francisco Arellano-Felix of the notorious Tijuana cartel is currently
in custody in a Mexican prison and wanted on narcotics charges here in
the United States. I say to Mexico, why not show good faith and
extradite him?
Mexican authorities tell us that there has been an agreement in
principle on extraditing Mexican nationals, but there has been no
change in their actions.
Question 2: Has Mexico implemented new laws aimed at curbing the
rampant laundering of drug money? No.
Nearly a year ago, the Mexican Parliament passed criminal money
laundering laws. But the new laws are a far cry from the stronger
legislative action sought by U.S. officials. The new laws do not even
require banks to report large or suspicious currency transactions.
Promises to enact such regulations have, so far, gone unfulfilled.
To my knowledge, not one money exchange house in Mexico has changed
its operations.
Have Mexican authorities significantly increased their seizure rate
of cocaine or their arrest of drug traffickers? Let's take a look at
it. The answer to that clearly is no. Cocaine seizures by Mexico, which
increased slightly last year, are barely half of what was seized in
1993.

Here are seizures in 1993--46.2 tons. Here they are in 1995--22.2
tons. And they are just slightly above that in 1996. Actually, instead
of 22.2 tons, in 1996 they are 23.5.
So that is the record. It has been effectively downhill, and then a
straight line, and a small little jog up.
Let's take a look at drug-related arrests in Mexico. Drug-related
arrests last year are less than half of what they were in 1992. Here
are the figures. In 1992, 27,369; down in 1993; down in 1994; and way
down in 1995, all the way to 9,700. We don't have 1996 on this chart
yet, but the 1996 figures are 11,245. That is a startling drop since
1992.
So here is a country being certified as fully cooperative, and drug
seizures have gone down and drug arrests have gone down in the last 3
years.
One has to ask then: What is ``full cooperation"?
Mr. COVERDELL. Mr. President, will the Senator yield?
Mrs. FEINSTEIN. I certainly will.
Mr. COVERDELL. I have a comment on the statistics just demonstrated,
because I was reading in the New York Times, and they begin the data in
1994.

[[Page S1842]]

So it shows a slight increase. But the dramatic case that the Senator
made is absolutely correct. You have to go back to 1992 and 1993 to see
what really is happening with arrests and seizures of narcotics.
I just point out that it is good that the Senator is making the point
because our adversaries like to start measuring statistics in 1994. We
can't do that.
Mrs. FEINSTEIN. The Senator is correct. I thank him very much for
that comment because he is absolutely right. The jog up is so small
when you compare it with the drop which is so steep and pronounced. So
I thank the Senator very much.
It leads me to the conclusion that the situation with Mexico has
never been worse. DEA has suspended American agents going into Mexico
because, just last month, Mexico forbade United States drug agents from
carrying weapons on the Mexican side of the border.
I understand that there may be some agreement again to enable our
agents to be armed, and then they will go in again. However, it should
be pointed out that death threats against our agents are up.
I would like to ask that all Members, if they would be willing, to
simply read the testimony provided by Thomas Constantine, Administrator
of the Drug Enforcement Administration, before the House Government
Reform and Oversight Committee, the National Security, International
Affairs, and Criminal Justice Subcommittee, last week. It was played
about three times on C-SPAN over the weekend. I heard it. I also read
the remarks. And the remarks are really very, very profound.
In this report, Mr. Constantine points out again:
Since 1993, 23 major drug-related assassinations have taken
place in Mexico. Virtually all of these murders remain
unsolved. Many of them have occurred in Tijuana, or have
involved victims from Tijuana in the last year. Twelve law
enforcement officers, or former officials, have been gunned
down in Tijuana, and the vast majority of the 200 murders in
that city are believed to have been drug related.

The Administrator also points out that of the 1,200 firings firings
of Government officials for corruption made by President Zedillo, no
successful prosecutions of these individuals have ever taken place. So
of the 1,200 Government officials fired for corruption, there has not
been a single successful prosecution.

The arrest last month of Gen. Jesus Gutierrez Rebollo brings, I
think, the level of drug-influenced corruption in Mexico into some
glaring relief. It is frightening. But, as I have pointed out, it is
just the tip of the iceberg.
In September, a federal police commander, Ernesto Ibarra, who had
vowed to take down the Tijuana cartel, was murdered, and some of the
assailants were his own officers.
That should tell us a great deal about the level of corruption.
The celebrated army raid of a wedding last month of the sister of
Amado Carillo-Fuentes, Mexico's most powerful cartel leader, seems to
be an elaborate charade. The raid, which was organized by General
Gutierrez, who we now know was on the Carillo-Fuentes payroll and the
target of the raid, was tipped off in advance and either never did come
to the wedding or escaped. Federal police were found to be protecting
the drug traffickers at that wedding. The federal police were
protecting drug traffickers. I find that just amazing.
As former DEA Administrator Robert Bonner said, ``It would be hard
for anyone to say with a straight face that the Mexican Government is
taking effective action against the major drug traffickers at this
juncture.''
Yet, they were just certified as so doing.
The purpose of section 490 was not to deliver merit badges to nations
whose leaders have good intentions. The world is filled with leaders
who have good intentions. The act was designed to measure uniformly the
actions taken by countries to assist the United States in antidrug
efforts.
Colombia was decertified last year and again this year because their
efforts were ineffectual.
How Mexico cannot be held to the same standards I have a hard time
understanding. To certify Mexico in the face of overwhelming evidence
to the contrary undercuts the certification process.
So I ask all of my colleagues to join the distinguished Senator from
Georgia and myself in voting to disapprove the President's decision on
certification of Mexico but to allow him, if he sees fit, to enact a
national-interest waiver.
Then we should work with the President to devise conditions under
which Mexico would be eligible for recertification.

Exhibit 1

U.S. Senate,

Washington, DC, February 26, 1997.
The President,
The White House, Washington, DC
Dear Mr. President: We are writing to urge you to deny
certification that Mexico has taken sufficient actions to
combat international narcotics trafficking when you report to
Congress on the anti-narcotics efforts of major drug
producing and drug-transit countries. We believe a reasonable
examination of the facts leads to no other decision.
Regrettably, we have concluded that there has been
insufficient progress, or no progress, on a wide range of key
elements of an effective counternarcotics program in Mexico.
Some of these failures are due to inability; others are due
to a lack of political will. But all have set back the urgent
effort to end the plague of drugs on our streets.
We want to bring to your attention a number of the most
significant examples of Mexico's inability and unwillingness
to deal with the drug trafficking problem effectively:
Cartels: There has been little or no effective action taken
against the major drug cartels. The two most powerful--the
Juarez Cartel run by Amado Carillo Fuentes, and the Tijuana
Cartel, run by the Arellano Felix brothers--have hardly been
touched by Mexican law enforcement. Those who have been
arrested, such as Hector Palma, are given light sentences and
allowed to continue to conduct business from jail. As DEA
Administrator Thomas Constantine says, ``The Mexicans are now
the single most powerful trafficking groups''--worse than the
Colombian cartels.
Money Laundering: Last year, the Mexican parliament passed
criminal money laundering laws for the first time, but the
new laws are incomplete and have not yet been properly
implemented. These laws do not require banks to report large
and suspicious currency transactions, or threaten the banks
with sanctions if they fail to comply. Promises to enact such
regulations--which prosecutors need to identify money-
launderers--have so far gone unfulfilled. Mexican officials
said that such regulations would be developed by January,
but they were not produced.
Law Enforcement: While there have been increases in the
amounts of heroin and marijuana seized by Mexican
authorities, cocaine seizures remain low. Although slightly
higher than last year's figures, the 23.6 metric tons seized
in 1996 is barely half of what was seized in 1993. A modest
increase in drug-related arrests brought the total to 11,245
in 1996--less than half of the 1992 figure.
Cooperation with U.S. Law Enforcement: Our own drug
enforcement agents report that the situation on the border
has never been worse. Last month, the Mexican government
forbade U.S. agents to carry weapons on the Mexican side of
the border, putting their lives in grave danger. Recent news
reports indicate that death threats against U.S. narcotics
agents on the border have quadrupled in the past three
months. Some U.S. agents believe that all their cooperative
efforts are undone almost instantly by the corrupt Mexican
agents with whom they work.
Extraditions: Mexico also has made very little progress in
the area of extraditions. In the past year, they have failed
to capture and extradite a single high-ranking member of any
of the major drug cartels. There are 52 outstanding U.S.
extradition requests for drug dealers, and Mexico has failed
to comply with a single one of them. No Mexican national has
ever been extradited to the United States on drug charges. In
the last year, Mexico has fired two directors of its National
Institute to Combat Drugs, one Attorney General, and several
high-ranking officials in the federal police for their
corrupt involvement with the drug lords. We should expect
Mexico to pursue the cartel leaders with the same level of
intensity used to expose and punish corruption by government
officials.
Corruption: Mexico's counternarcotics effort is plagued by
corruption in the government and the national police. Among
the evidence are the eight Mexican prosecutors and law
enforcement officials who have been murdered in Tijuana in
recent months. There has been considerable hope that the
Mexican armed forces would be able to take a more active role
in the counternarcotics effort without the taint of
corruption. But the revelation that Gen. Jesus Gutierrez
Rebollo, Mexico's top counternarcotics official and a 42-year
veteran of the armed forces, had accepted bribes from the
Carillo Fuentes cartel, casts grave doubts upon that hope.
Recent news reports indicate that U.S. law enforcement
officials suspect judges, prosecutors, Transportation
Ministry officials, Naval officers, and Governors of
corruption and actively facilitating the work of drug
traffickers. The National Autonomous University of Mexico
estimates that the drug lords spend $500 million each year to
bribe Mexican officials at all levels, and many consider that
figure to be a gross under-estimation.

[[Page S1843]]

Mr. President, we believe that the evidence is overwhelming
and can lead to no decision other than the decertification of
Mexico. It would send a strong signal to Mexico and the world
that the United States will not tolerate lack of cooperation
in the fight against narcotics, even from our close friends
and allies. Accordingly, we urge you to establish a clear set
of benchmarks by which you will judge if and when to
recertify Mexico for counternarcotics cooperation. These
benchmarks must include, but not be limited to: effective
action to dismantle the major drug cartels and arrest their
leaders; full and ongoing implementation of effective money-
laundering legislation; compliance with all outstanding
extradition requests by the United States; increased
interdiction of narcotics and other controlled substances
flowing across the border by land and sea routes; improved
cooperation with U.S. law enforcement officials including
allowing U.S. agents to resume carrying weapons on the
Mexican side of the border; and a comprehensive program to
identify, weed out, and prosecute corrupt officials at all
levels of the Mexican government, police, and military.
You may feel, as many of us do, that U.S. interests in
Mexico, economic and otherwise, are too extensive to risk the
fall-out that would result from decertification. That is why
Congress included a vital national interest waiver provision
in Section 490 of the Foreign Assistance Act. But other vital
interests are not a valid reason to certify when
certification has not been earned. If you feel that our
interests warrant it, we urge you to use this waiver. But an
honest assessment of Mexico's cooperation on counternarcotics
must fall on the side of decertification.
Sincerely,
Wayne Allard, Jeff Bingaman, Barbara Boxer, John Breaux,
Richard Bryan, Max Cleland, Susan M. Collins, Kent
Conrad, Paul Coverdell, Larry Craig, Alfonse D'Amato,
Pete Domenici, Byron Dorgan, Dick Durbin, Russ
Feingold, Dianne Feinstein, Wendell Ford, Slade Gorton,
Judd Gregg, Chuck Hagel, Jesse Helms, Kay Bailey
Hutchison, Tim Hutchinson, Dirk Kempthorne, Bob Kerrey,
Jon Kyl, Mary Landrieu, Frank Lautenberg, Connie Mack,
Patty Murray, Frank Murkowski, Daniel Patrick Moynihan,
Carol Moseley-Braun, Jack Reed, Harry Reid, Rick
Santorum, Ted Stevens, Robert Torricelli, and Ron
Wyden.

____________________