[Congressional Record Volume 143, Number 80 (Tuesday, June 10, 1997)]
[Senate]
[Pages S5444-S5464]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. MOYNIHAN (for himself and Mr. Sarbames):
S. 863. A bill to authorize the Government of India to establish a
memorial to honor Mahatma Gandhi in the District of Columbia; to the
Committee on Energy and Natural Resources.
Legislation to Establish Mahatma Gandhi Memorial
Mr. MOYNIHAN. Mr. President, I rise to introduce a bill to authorize
the placement of a statue of Mohandas Karamchand Gandhi --Mahatma
Gandhi--on Federal land across the street from the Indian embassy in
Washington DC. The Government of India has offered a statue of Gandhi
as a gift to the United States. In order to place it on Federal land,
an act of Congress is required. This bill will fulfill just that
purpose, and I thank the Senator from Florida [Mr. Mack] and the
Senator from Maryland, [Mr. Sarbanes] for joining me in this endeavor.
India is currently celebrating the 50th anniversary of its
independence. Authorizing the placement of a statue of Mahatma Gandhi,
often called the father of the Indian nation, would serve as a fitting
tribute to Indian democracy which has survived--in fact, thrived--
despite enormous challenges, and a symbol of the growing strength of
the bonds between our two countries.
It is particularly appropriate that a statue of Mahatma Gandhi be
selected for this purpose. The effects of his non-
[[Page S5445]]
violent actions and the philosophy which guided them were not limited
to his country, nor his time. His influence in the United States was
most notably felt in the civil rights movement, but has also infused
all levels of our society.
If I may invade ever so slightly the privacy of the President's
luncheon table, in May 1994, Mr. Clinton had as his guest the
distinguished Prime Minister of India, Mr. P.V. Narasimha Rao, who in
his youth was a follower of Mahatma Gandhi. In a graceful passage,
Prime Minister Rao related how it came to pass that Mahatma Gandhi,
caught up in the struggle for fair treatment to the Indian community in
South Africa, and in consequence in jail, read Thoreau's essay on
``Civil Disobedience'' which confirmed his view that an honest man is
duty-bound to violate unjust laws. He took this view home with him, and
in the end the British raj gave way to an independent Republic of
India. Then Martin Luther King, Jr., repatriated the idea and so began
the great civil rights movement of this century.
Dr. Martin Luther King, Jr., has written of the singular influence
Gandhi's message of nonviolent resistance had on him when he first
learned of it while studying at Crozier Theological Seminary in
Philadelphia. He would later describe that influence in his first book,
``Stride Toward Freedom'':
As I read I became deeply fascinated by [Gandhi's]
philosophy of non-violent resistance . . . as I delved deeper
into the philosophy of Gandhi, my skepticism concerning the
power of love gradually diminished, and I came to see its
potency in the area of social reform . . . prior to reading
Gandhi, I had concluded that the love ethics of Jesus were
only effective in individual relationships . . . but after
reading Gandhi, I saw how utterly mistaken I was.
. . . It was in this Gandhian emphasis on love and non-
violence that I discovered the method for social reform that
I had been seeking for so many months . . . I came to feel
that this was the only morally and practically sound method
open to oppressed people in their struggle for freedom . . .
this principle became the guiding light of our movement.
Christ furnished the spirit and motivation and Gandhi
furnished the method.
Martin Luther King, Jr., believed that Gandhi's philosophy of
nonviolent resistance was the guiding light of the American civil
rights movement. As Dr. King wrote, ``Gandhi furnished the message.'' A
statue of Gandhi, given as a gift from the Government of India, on a
small plot of Federal land along Massachusetts Avenue, in front of the
Indian Embassy, will stand not only as a tribute to the shared values
of the two largest democracies in the world but will also pay tribute
to the lasting influence of Gandhian thought on the United States. An
influence that is so pervasive that when the President and the Prime
Minister of India meet at the White House for lunch, a half-century
after Gandhi's death, it is no surprise that he should be a topic of
conversation.
______
By Mr. CHAFEE (for himself, Mr. Breaux, Mr. Kerrey, and Mr.
Conrad):
S. 864. A bill to amend title XIX of the Social Security Act to
improve the provision of managed care under the Medicaid Program; to
the Committee on Finance.
The Medicaid Managed Care Act of 1997
Mr. CHAFEE. Mr. President, I am pleased today to introduce The
Medicaid Managed Care Act of 1997. This legislation meets two very
important objectives in the Medicaid Program. First, it gives States
the additional flexibility they need to administer the Medicaid Program
by allowing them to enroll Medicaid beneficiaries into managed care
Programs. Second, the bill sets Federal standards for managed care to
ensure that Medicaid patients receive the same quality of care as those
patients who are enrolled in private managed care plans.
Under our legislation, States could require Medicaid patients to
enroll in managed care plans without going through the lengthy and
cumbersome process of applying to the Secretary of Health and Human
Services for a waiver of current Medicaid regulations. In exchange for
this important flexibility, States will have to meet a set of minimum
Federal standards to ensure that Medicaid patients continue to receive
quality care.
For example, States would be required to offer patients a choice of
at least two health plans. Plans would be required to meet certain
standards of access to care, quality, and solvency. These standards are
especially important given recent problems in States that have set up
Medicaid managed care programs under the waiver process. In some
instances, plans have failed to contract with enough providers to serve
the Medicaid population. Some have been permitted to operate under
standards that are lower than commercial insurers are required to meet,
and others have used fraudulent marketing practices to entice Medicaid
patients to sign up with their plans. These actions have resulted in
patients being denied medically necessary services, and have resulted
in States and the Federal Government paying for care that was never
given.
Considering these abuses, why should we allow Medicaid managed care
at all? Because managed care, if implemented correctly, can vastly
improve the quality of health care provided to low-income families. In
today's fee-for-service program, patients face myriad problems. Some
are forced to get care in hospital emergency rooms because they cannot
find a private physician willing or able to accept Medicaid's low
payment rates. Those who do have access to providers often must wait
for hours in clinics which are overcrowded and understaffed. And,
sadly, they often do not have access to primary and preventive care
services which would have prevented them from becoming ill to begin
with.
Medicaid managed care, if done well, provides regular prenatal care
to assure that children are born healthy. These plans provide coverage
for check-ups and immunizations to prevent serious illnesses. And they
give patients a medical home--a provider they know they can go to if
they are sick, or a number to call if they have questions.
Medicaid managed care also has the potential of benefiting our
overall health care system by providing access to primary care
providers rather than forcing patients to make costly and unnecessary
visits to hospital emergency rooms. It gives providers the opportunity
to catch and treat, or prevent, costly health problems.
Mr. President, we have worked very hard to ensure that this
legislation strikes an appropriate balance between the needs of
Medicaid beneficiaries and the managed care companies. I want to thank
Senators Breaux and Kerrey who helped craft this legislation and are
original cosponsors. I also want to thank the many advocacy
organizations for their input and support. And I also want to thank
some of the managed care organizations who worked with us. I am
especially pleased that some of these organizations, such as the HMO
Group which is an alliance of health maintenance organizations have
endorsed this legislation. Their support is critical to the success of
Medicaid managed care.
I ask unanimous consent that the text of the legislation be included
in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 864
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; AMENDMENTS TO THE
SOCIAL SECURITY ACT.
(a) Short Title.--This Act may be cited as the ``Medicaid
Managed Care Improvement Act of 1997''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents; amendments to the Social
Security Act.
Sec. 2. Improvements in medicaid managed care program.
``Part B--Provisions Relating to Managed Care
``Sec. 1941. Beneficiary choice; enrollment.
``Sec. 1942. Beneficiary access to services generally.
``Sec. 1943. Beneficiary access to emergency care.
``Sec. 1944. Other beneficiary protections.
``Sec. 1945. Assuring quality care.
``Sec. 1946. Protections for providers.
``Sec. 1947. Assuring adequacy of payments to medicaid managed care
organizations and entities.
``Sec. 1948. Fraud and abuse.
``Sec. 1949. Sanctions for noncompliance by managed care entities.
``Sec. 1950. Definitions; miscellaneous provisions.''
[[Page S5446]]
Sec. 3. Studies and reports.
Sec. 4. Conforming amendments.
Sec. 5. Effective date; status of waivers.
(c) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this Act an amendment is
expressed in terms of an amendment to or repeal of a section
or other provision, the reference shall be considered to be
made to that section or other provision of the Social
Security Act.
SEC. 2. IMPROVEMENTS IN MEDICAID MANAGED CARE PROGRAM.
Title XIX is amended--
(1) by inserting after the title heading the following:
``Part A--General Provisions''; and
(2) by adding at the end the following new part:
``Part B--Provisions Relating to Managed Care
``SEC. 1941. BENEFICIARY CHOICE; ENROLLMENT.
``(a) State Options for Enrollment of Beneficiaries in
Managed Care Arrangements.--
``(1) In general.--Subject to the succeeding provisions of
this part and notwithstanding paragraphs (1), (10)(B), and
(23)(A) of section 1902(a), a State may require an individual
who is eligible for medical assistance under the State plan
under this title and who is not a special needs individual
(as defined in subsection (e)) to enroll with a managed care
entity (as defined in section 1950(a)(1)) as a condition of
receiving such assistance (and, with respect to assistance
furnished by or under arrangements with such entity, to
receive such assistance through the entity), if the following
provisions are met:
``(A) Entity meets requirements.--The entity meets the
applicable requirements of this part.
``(B) Contract with state.--The entity enters into a
contract with the State to provide services for the benefit
of individuals eligible for benefits under this title under
which prepaid payments to such entity are made on an
actuarially sound basis. Such contract shall specify benefits
the provision (or arrangement) for which the entity is
responsible.
``(C) Choice of coverage.--
``(i) In general.--The State permits an individual to
choose a managed care entity from managed care organizations
and primary care case providers who meet the requirements of
this part but not less than from--
``(I) 2 medicaid managed care organizations,
``(II) a medicaid managed care organization and a primary
care case management provider, or
``(III) a primary care case management provider as long as
an individual may choose between 2 primary care case
managers.
``(ii) State option.--At the option of the State, a State
shall be considered to meet the requirements of clause (i) in
the case of an individual residing in a rural area, if the
State--
``(I) requires the individual to enroll with a medicaid
managed care organization or primary care case management
provider if such organization or entity permits the
individual to receive such assistance through not less than 2
physicians or case managers (to the extent that at least 2
physicians or case managers are available to provide such
assistance in the area), and
``(II) permits the individual to obtain such assistance
from any other provider in appropriate circumstances (as
established by the State under regulations of the Secretary).
``(D) Changes in enrollment.--The State provides the
individual with the opportunity to change enrollment among
managed care entities once annually and notifies the
individual of such opportunity not later than 60 days prior
to the first date on which the individual may change
enrollment, permits individuals to change their enrollment
for cause at any time and without cause at least every 12
months, and allows individuals to disenroll without cause
within 90 days of notification of enrollment.
``(E) Enrollment priorities.--The State establishes a
method for establishing enrollment priorities in the case of
a managed care entity that does not have sufficient capacity
to enroll all such individuals seeking enrollment under which
individuals already enrolled with the entity are given
priority in continuing enrollment with the entity.
``(F) Default enrollment process.--The State establishes a
default enrollment process which meets the requirements
described in paragraph (2) and under which any such
individual who does not enroll with a managed care entity
during the enrollment period specified by the State shall be
enrolled by the State with such an entity in accordance with
such process.
``(G) Sanctions.--The State establishes the sanctions
provided for in section 1949.
``(2) Default enrollment process requirements.--The default
enrollment process established by a State under paragraph
(1)(F)--
``(A) shall provide that the State may not enroll
individuals with a managed care entity which is not in
compliance with the applicable requirements of this part;
``(B) shall provide (consistent with subparagraph (A)) for
enrollment of such an individual with a medicaid managed care
organization--
``(i) first, that maintains existing provider-individual
relationships or that has entered into contracts with
providers (such as Federally qualified health centers, rural
health clinics, hospitals that qualify for disproportionate
share hospital payments under section 1886(d)(5)(F), and
hospitals described in section 1886(d)(1)(B)(iii)) that have
traditionally served beneficiaries under this title, and
``(ii) lastly, if there is no provider described in clause
(i), in a manner that provides for an equitable distribution
of individuals among all qualified managed care entities
available to enroll individuals through such default
enrollment process, consistent with the enrollment capacities
of such entities;
``(C) shall permit and assist an individual enrolled with
an entity under such process to change such enrollment to
another managed care entity during a period (of at least 90
days) after the effective date of the enrollment; and
``(D) may provide for consideration of factors such as
quality, geographic proximity, continuity of providers, and
capacity of the plan when conducting such process.
``(b) Reenrollment of Individuals Who Regain Eligibility.--
``(1) In general.--If an individual eligible for medical
assistance under a State plan under this title and enrolled
with a managed care entity with a contract under subsection
(a)(1)(B) ceases to be eligible for such assistance for a
period of not greater than 2 months, the State may provide
for the automatic reenrollment of the individual with the
entity as of the first day of the month in which the
individual is again eligible for such assistance, and may
consider factors such as quality, geographic proximity,
continuity of providers, and capacity of the plan when
conducting such reenrollment.
``(2) Conditions.--Paragraph (1) shall only apply if--
``(A) the month for which the individual is to be
reenrolled occurs during the enrollment period covered by the
individual's original enrollment with the managed care
entity;
``(B) the managed care entity continues to have a contract
with the State agency under subsection (a)(1)(B) as of the
first day of such month; and
``(C) the managed care entity complies with the applicable
requirements of this part.
``(3) Notice of reenrollment.--The State shall provide
timely notice to a managed care entity of any reenrollment of
an individual under this subsection.
``(c) State Option of Minimum Enrollment Period.--
``(1) In general.--In the case of an individual who is
enrolled with a managed care entity under this part and who
would (but for this subsection) lose eligibility for benefits
under this title before the end of the minimum enrollment
period (defined in paragraph (2)), the State plan under this
title may provide, notwithstanding any other provision of
this title, that the individual shall be deemed to continue
to be eligible for such benefits until the end of such
minimum period, but, except for benefits furnished under
section 1902(a)(23)(B), only with respect to such benefits
provided to the individual as an enrollee of such entity.
``(2) Minimum enrollment period defined.--For purposes of
paragraph (1), the term `minimum enrollment period' means,
with respect to an individual's enrollment with an entity
under a State plan, a period, established by the State, of
not more than 6 months beginning on the date the individual's
enrollment with the entity becomes effective, except that a
State may extend such period for up to a total of 12 months
in the case of an individual's enrollment with a managed care
entity (as defined in section 1950(a)(1)) so long as such
extension is done uniformly for all individuals enrolled with
all such entities.
``(d) Other Enrollment-Related Provisions.--
``(1) Nondiscrimination.--A managed care entity may not
discriminate on the basis of health status or anticipated
need for services in the enrollment, reenrollment, or
disenrollment of individuals eligible to receive medical
assistance under a State plan under this title or by
discouraging enrollment (except as permitted by this section)
by eligible individuals.
``(2) Termination of enrollment.--
``(A) In general.--The State, enrollment broker, and
managed care entity (if any) shall permit an individual
eligible for medical assistance under the State plan under
this title who is enrolled with the entity to terminate such
enrollment for cause at any time, and without cause during
the 90-day period beginning on the date the individual
receives notice of enrollment and at least every 12 months
thereafter, and shall notify each such individual of the
opportunity to terminate enrollment under these conditions.
``(B) Fraudulent inducement or coercion as grounds for
cause.--For purposes of subparagraph (A), an individual
terminating enrollment with a managed care entity on the
grounds that the enrollment was based on fraudulent
inducement or was obtained through coercion or pursuant to
the imposition against the managed care entity of the
sanction described in section 1949(b)(3) shall be considered
to terminate such enrollment for cause.
``(C) Notice of termination.--
``(i) Notice to state.--
``(I) By individuals.--Each individual terminating
enrollment with a managed care entity under subparagraph (A)
shall do so by
[[Page S5447]]
providing notice of the termination to an office of the State
agency administering the State plan under this title, the
State or local welfare agency, or an office of a managed care
entity.
``(II) By organizations.--Any managed care entity which
receives notice of an individual's termination of enrollment
with such entity through receipt of such notice at an office
of a managed care entity shall provide timely notice of the
termination to the State agency administering the State plan
under this title.
``(ii) Notice to plan.--The State agency administering the
State plan under this title or the State or local welfare
agency which receives notice of an individual's termination
of enrollment with a managed care entity under clause (i)
shall provide timely notice of the termination to such
entity.
``(3) Provision of information.--
``(A) In general.--Each State, enrollment broker, or
managed care organization shall provide all enrollment
notices and informational and instructional materials in a
manner and form which may be easily understood by enrollees
of the entity who are eligible for medical assistance under
the State plan under this title, including enrollees and
potential enrollees who are blind, deaf, disabled, or cannot
read or understand the English language.
``(B) Information to health care providers, enrollees, and
potential enrollees.--Each medicaid managed care organization
shall--
``(i) upon request, make the information described in
section 1945(e)(1)(A)available to enrollees and potential
enrollees in the organization's service area; and
``(ii) provide to enrollees and potential enrollees
information regarding all items and services that are
available to enrollees under the contract between the State
and the organization that are covered either directly or
through a method of referral and prior authorization.
``(e) Special Needs Individuals Described.--In this part,
the term `special needs individual' means any of the
following individuals:
``(1) Special needs child.--An individual who is under 19
years of age who--
``(A) is eligible for supplemental security income under
title XVI;
``(B) is described under section 501(a)(1)(D);
``(C) is a child described in section 1902(e)(3);
``(D) is receiving services under a program under part B or
part E of title IV; or
``(E) is not described in any preceding subparagraph but is
otherwise considered a child with special health care needs
who is adopted, in foster care, or otherwise in an out-of-
home placement.
``(2) Homeless individuals.--An individual who is homeless
(without regard to whether the individual is a member of a
family), including--
``(A) an individual whose primary residence during the
night is a supervised public or private facility that
provides temporary living accommodations; or
``(B) an individual who is a resident in transitional
housing.
``(3) Migrant agricultural workers.--A migratory
agricultural worker or a seasonal agricultural worker (as
such terms are defined in section 330(g)(3) of the Public
Health Service Act), or the spouse or dependent of such a
worker.
``(4) Indians.--An Indian (as defined in section 4(c) of
the Indian Health Care Improvement Act (25 U.S.C. 1603(c))).
``(5) Medicare beneficiaries.--A qualified medicare
beneficiary (as defined in section 1905(p)(1)) or an
individual otherwise eligible for benefits under title XVIII.
``(6) Disabled individuals.--Individuals who are disabled
(as determined under section 1614(a)(3)).
``(7) Persons with aids or hiv infection.--An individual
with acquired immune deficiency syndrome (AIDS) or who has
been determined to be infected with the HIV virus.
``SEC. 1942. BENEFICIARY ACCESS TO SERVICES GENERALLY.
``(a) Access to Services.--
``(1) In general.--Each managed care entity shall provide
or arrange for the provision of all medically necessary
medical assistance under this title which is specified in the
contract entered into between such entity and the State under
section 1941(a)(1)(B) for enrollees who are eligible for
medical assistance under the State plan under this title.
``(2) Primary-care-provider-to-enrollee ratio and maximum
travel time.--Each such entity shall assure adequate access
to primary care services by meeting standards, established by
the Secretary, relating to the maximum ratio of enrollees
under this title to full-time-equivalent primary care
providers available to serve such enrollees and to maximum
travel time for such enrollees to access such providers. The
Secretary may permit such a maximum ratio to vary depending
on the area and population served. Such standards shall be
based on standards commonly applied in the commercial market,
commonly used in accreditation of managed care organizations,
and standards used in the approval of waiver applications
under section 1115, and shall be consistent with the
requirements under section 1876(c)(4)(A).
``(b) Obstetrical and Gynecological Care.--
``(1) In general.--A managed care entity may not require
prior authorization by the individual's primary care provider
or otherwise restrict the individual's access to
gynecological and obstetrical care provided by a
participating provider who specializes in obstetrics and
gynecology to the extent such care is otherwise covered, and
may treat the ordering of other obstetrical and gynecological
care by such a participating provider as the prior
authorization of the primary care provider with respect to
such care under the coverage.
``(2) Construction.--Nothing in paragraph (1)(B)(ii) shall
waive any requirements of coverage relating to medical
necessity or appropriateness with respect to coverage of
gynecological care so ordered.
``(c) Specialty Care.--
``(1) Referral to specialty care for enrollees requiring
treatment by specialists.--
``(A) In general.--In the case of an enrollee under a
managed care entity and who has a condition or disease of
sufficient seriousness and complexity to require treatment by
a specialist, the entity shall make or provide for a referral
to a specialist who is available and accessible to provide
the treatment for such condition or disease.
``(B) Specialist defined.--For purposes of this subsection,
the term `specialist' means, with respect to a condition, a
health care practitioner, facility, or center (such as a
center of excellence) that has adequate expertise through
appropriate training and experience (including, in the case
of a child, an appropriate pediatric specialist) to provide
high quality care in treating the condition.
``(C) Care under referral.--Care provided pursuant to such
referral under subparagraph (A) shall be--
``(i) pursuant to a treatment plan (if any) developed by
the specialist and approved by the entity, in consultation
with the designated primary care provider or specialist and
the enrollee (or the enrollee's designee), and
``(ii) in accordance with applicable quality assurance and
utilization review standards of the entity.
Nothing in this subsection shall be construed as preventing
such a treatment plan for an enrollee from requiring a
specialist to provide the primary care provider with regular
updates on the specialty care provided, as well as all
necessary medical information.
``(D) Referrals to participating providers.--An entity is
not required under subparagraph (A) to provide for a referral
to a specialist that is not a participating provider, unless
the entity does not have an appropriate specialist that is
available and accessible to treat the enrollee's condition
and that is a participating provider with respect to such
treatment.
``(E) Treatment of nonparticipating providers.--If an
entity refers an enrollee to a nonparticipating specialist,
services provided pursuant to the approved treatment plan
shall be provided at no additional cost to the enrollee
beyond what the enrollee would otherwise pay for services
received by such a specialist that is a participating
provider.
``(2) Specialists as primary care providers.--
``(A) In general.--A managed care entity shall have a
procedure by which a new enrollee upon enrollment, or an
enrollee upon diagnosis, with an ongoing special condition
(as defined in subparagraph (C)) may receive a referral to a
specialist for such condition who shall be responsible for
and capable of providing and coordinating the enrollee's
primary and specialty care. If such an enrollee's care would
most appropriately be coordinated by such a specialist, the
entity shall refer the enrollee to such specialist.
``(B) Treatment as primary care provider.--Such specialist
shall be permitted to treat the enrollee without a referral
from the enrollee's primary care provider and may authorize
such referrals, procedures, tests, and other medical services
as the enrollee's primary care provider would otherwise be
permitted to provide or authorize, subject to the terms of
the treatment plan (referred to in paragraph (1)(C)(i)).
``(C) Ongoing special condition defined.--In this
paragraph, the term `special condition' means a physical and
mental condition or disease that--
``(i) is life-threatening, degenerative, or disabling, and
``(ii) requires specialized medical care over a prolonged
period of time.
``(D) Terms of referral.--The provisions of subparagraphs
(C) through (E) of paragraph (1) shall apply with respect to
referrals under subparagraph (A) of this paragraph in the
same manner as they apply to referrals under paragraph
(1)(A).
``(3) Standing referrals.--
``(A) In general.--A managed care entity shall have a
procedure by which an enrollee who has a condition that
requires ongoing care from a specialist may receive a
standing referral to such specialist for treatment of such
condition. If the issuer, or the primary care provider in
consultation with the medical director of the entity and the
specialist (if any), determines that such a standing referral
is appropriate, the entity shall make such a referral to such
a specialist.
``(B) Terms of referral.--The provisions of subparagraphs
(C) through (E) of paragraph (1) shall apply with respect to
referrals under subparagraph (A) of this paragraph in the
same manner as they apply to referrals under paragraph
(1)(A).
``(d) Timely Delivery of Services.--Each managed care
entity shall respond to requests from enrollees for the
delivery of medical assistance in a manner which--
[[Page S5448]]
``(1) makes such assistance--
``(A) available and accessible to each such individual,
within the area served by the entity, with reasonable
promptness and in a manner which assures continuity; and
``(B) when medically necessary, available and accessible 24
hours a day and 7 days a week; and
``(2) with respect to assistance provided to such an
individual other than through the entity, or without prior
authorization, in the case of a primary care case management
provider, provides for reimbursement to the individual (if
applicable under the contract between the State and the
entity) if--
``(A) the services were medically necessary and immediately
required because of an unforeseen illness, injury, or
condition and meet the requirements of section 1943; and
``(B) it was not reasonable given the circumstances to
obtain the services through the entity, or, in the case of a
primary care case management provider, with prior
authorization.
``(e) Internal Grievance Procedure.--Each medicaid managed
care organization shall establish an internal grievance
procedure under which an enrollee who is eligible for medical
assistance under the State plan under this title, or a
provider on behalf of such an enrollee, may challenge the
denial of coverage of or payment for such assistance.
``(f) Information on Benefit Carve Outs.--Each managed care
entity shall inform each enrollee, in a written and prominent
manner, of any benefits to which the enrollee may be entitled
to medical assistance under this title but which are not made
available to the enrollee through the entity. Such
information shall include information on where and how such
enrollees may access benefits not made available to the
enrollee through the entity.
``(g) Due Process Requirements for Managed Care Entities.--
``(1) Denial of or unreasonable delay in determining
coverage as grounds for hearing.--If a managed care entity
(or entity acting an agreement with a managed care entity)--
``(A) denies coverage of or payment for medical assistance
with respect to an enrollee who is eligible for such
assistance under the State plan under this title; or
``(B) fails to make any eligibility or coverage
determination sought by an enrollee or, in the case of a
medicaid managed care organization, by a participating health
care provider or enrollee, in a timely manner, depending upon
the urgency of the situation,
the enrollee or the health care provider furnishing such
assistance to the enrollee (as applicable) may obtain a fair
hearing before, and shall be provided a timely decision by,
the State agency administering the State plan under this
title in accordance with section 1902(a)(3). Such decisions
shall be rendered as soon as possible in accordance with the
medical exigencies of the cases, and in no event later than
72 hours in the case of hearings on decisions regarding
urgent care and 5 days in the case of all other hearings.
``(2) Completion of internal grievance procedure.--Nothing
in this subsection shall require completion of an internal
grievance procedure if the procedure does not provide for
timely review of health needs considered by the enrollee's
health care provider to be of an urgent nature or is not
otherwise consistent with the requirements for such
procedures under section 1876(c).
``(h) Demonstration of Adequate Capacity and Services.--
``(1) In general.--Subject to paragraph (3), each medicaid
managed care organization shall provide the State and the
Secretary with adequate assurances (as determined by the
Secretary) that the organization, with respect to a service
area--
``(A) has the capacity to serve the expected enrollment in
such service area;
``(B) offers an appropriate range of services for the
population expected to be enrolled in such service area,
including transportation services and translation services
consisting of the principal languages spoken in the service
area;
``(C) maintains a sufficient number, mix, and geographic
distribution of providers of services included in the
contract with the State to ensure that services are available
to individuals receiving medical assistance and enrolled in
the organization to the same extent that such services are
available to individuals enrolled in the organization who are
not recipients of medical assistance under the State plan
under this title;
``(D) maintains extended hours of operation with respect to
primary care services that are beyond those maintained during
a normal business day;
``(E) provides preventive and primary care services in
locations that are readily accessible to members of the
community;
``(F) provides information concerning educational, social,
health, and nutritional services offered by other programs
for which enrollees may be eligible; and
``(G) complies with such other requirements relating to
access to care as the Secretary or the State may impose.
``(2) Proof of adequate primary care capacity and
services.--Subject to paragraph (3), a medicaid managed care
organization that contracts with a reasonable number of
primary care providers (as determined by the Secretary) and
whose primary care membership includes a reasonable number
(as so determined) of the following providers will be deemed
to have satisfied the requirements of paragraph (1):
``(A) Rural health clinics, as defined in section
1905(l)(1).
``(B) Federally-qualified health centers, as defined in
section 1905(l)(2)(B).
``(C) Clinics which are eligible to receive payment for
services provided under title X of the Public Health Service
Act.
``(3) Sufficient providers of specialized services.--
Notwithstanding paragraphs (1) and (2), a medicaid managed
care organization may not be considered to have satisfied the
requirements of paragraph (1) if the organization does not
have a sufficient number (as determined by the Secretary) of
providers of specialized services, including perinatal and
pediatric specialty care, to ensure that such services are
available and accessible.
``(i) Compliance With Certain Maternity and Mental Health
Requirements.--Each medicaid managed care organization shall
comply with the requirements of subpart 2 of part A of title
XXVII of the Public Health Service Act insofar as such
requirements apply with respect to a health insurance issuer
that offers group health insurance coverage.
``(j) Treatment of Children With Special Health Care
Needs.--
``(1) In general.--In the case of an enrollee of a managed
care entity who is a child described in section 1941(e)(1) or
who has special health care needs (as defined in paragraph
(3))--
``(A) if any medical assistance specified in the contract
with the State is identified in a treatment plan prepared for
the enrollee by a program described in subsection (c)(1) or
paragraph (3), the managed care entity shall provide (or
arrange to be provided) such assistance in accordance with
the treatment plan either--
``(i) by referring the enrollee to a pediatric health care
provider who is trained and experienced in the provision of
such assistance and who has a contract with the managed care
entity to provide such assistance; or
``(ii) if appropriate services are not available through
the managed care entity, permitting such enrollee to seek
appropriate specialty services from pediatric health care
providers outside of or apart from the managed care entity;
and
``(B) the managed care entity shall require each health
care provider with whom the managed care entity has entered
into an agreement to provide medical assistance to enrollees
to furnish the medical assistance specified in such
enrollee's treatment plan to the extent the health care
provider is able to carry out such treatment plan.
``(2) Prior authorization.--An enrollee referred for
treatment under paragraph (1)(A)(i), or permitted to seek
treatment outside of or apart from the managed care entity
under paragraph (1)(A)(ii) shall be deemed to have obtained
any prior authorization required by the entity.
``(3) Child with special health care needs.--For purposes
of paragraph (1), a child has special health care needs if
the child is receiving services under--
``(A) a program administered under part B or part H of the
Individuals with Disabilities Education Act; or
``(B) any other program for children with special health
care needs identified by the Secretary.
``SEC. 1943. BENEFICIARY ACCESS TO EMERGENCY CARE.
``(a) Prohibition of Certain Restrictions on Coverage of
Emergency Services.--
``(1) In general.--If a managed care entity provides any
benefits under a State plan with respect to emergency
services (as defined in paragraph (2)(B)), the entity shall
cover emergency services furnished to an enrollee--
``(A) without the need for any prior authorization
determination,
``(B) subject to paragraph (3), whether or not the
physician or provider furnishing such services is a
participating physician or provider with respect to such
services, and
``(C) subject to paragraph (3), without regard to any other
term or condition of such coverage (other than an exclusion
of benefits).
``(2) Emergency services; emergency medical condition.--For
purposes of this section--
``(A) Emergency medical condition based on prudent
layperson.--The term `emergency medical condition' means a
medical condition manifesting itself by acute symptoms of
sufficient severity (including severe pain) such that a
prudent layperson, who possesses an average knowledge of
health and medicine, could reasonably expect the absence of
immediate medical attention to result in--
``(i) placing the health of the individual (or, with
respect to a pregnant woman, the health of the woman or her
unborn child) in serious jeopardy,
``(ii) serious impairment to bodily functions, or
``(iii) serious dysfunction of any bodily organ or part.
``(B) Emergency services.--The term `emergency services'
means--
``(i) a medical screening examination (as required under
section 1867) that is within the capability of the emergency
department of a hospital, including ancillary services
routinely available to the emergency department, to evaluate
an emergency medical condition (as defined in subparagraph
(A)), and
``(ii) within the capabilities of the staff and facilities
available at the hospital, such further medical examination
and treatment as
[[Page S5449]]
are required under section 1867 to stabilize the patient.
``(C) Trauma and burn centers.--The provisions of clause
(ii) of subparagraph (B) apply to a trauma or burn center, in
a hospital, that--
``(i) is designated by the State, a regional authority of
the State, or by the designee of the State, or
``(ii) is in a State that has not made such designations
and meets medically recognized national standards.
``(3) Application of network restriction permitted in
certain cases.--
``(A) In general.--Except as provided in subparagraph (B),
if a managed care entity in relation to benefits provided
under this title denies, limits, or otherwise differentiates
in benefits or payment for benefits other than emergency
services on the basis that the physician or provider of such
services is a nonparticipating physician or provider, the
entity may deny, limit, or differentiate in coverage or
payment for emergency services on such basis.
``(B) Network restrictions not permitted in certain
exceptional cases.--The denial or limitation of, or
differentiation in, coverage or payment of benefits for
emergency services under subparagraph (A) shall not apply in
the following cases:
``(i) Circumstances beyond control of enrollee.--The
enrollee is unable to go to a participating hospital for such
services due to circumstances beyond the control of the
enrollee (as determined consistent with guidelines and
subparagraph (C)).
``(ii) Likelihood of an adverse health consequence based on
layperson's judgment.--A prudent layperson possessing an
average knowledge of health and medicine could reasonably
believe that, under the circumstances and consistent with
guidelines, the time required to go to a participating
hospital for such services could result in any of the adverse
health consequences described in a clause of subsection
(a)(2)(A).
``(iii) Physician referral.--A participating physician or
other person authorized by the plan refers the enrollee to an
emergency department of a hospital and does not specify an
emergency department of a hospital that is a participating
hospital with respect to such services.
``(C) Application of `beyond control' standards.--For
purposes of applying subparagraph (B)(i), receipt of
emergency services from a nonparticipating hospital shall be
treated under the guidelines as being `due to circumstances
beyond the control of the enrollee' if any of the following
conditions are met:
``(i) Unconscious.--The enrollee was unconscious or in an
otherwise altered mental state at the time of initiation of
the services.
``(ii) Ambulance delivery.--The enrollee was transported by
an ambulance or other emergency vehicle directed by a person
other than the enrollee to the nonparticipating hospital in
which the services were provided.
``(iii) Natural disaster.--A natural disaster or civil
disturbance prevented the enrollee from presenting to a
participating hospital for the provision of such services.
``(iv) No good faith effort to inform of change in
participation during a contract year.--The status of the
hospital changed from a participating hospital to a
nonparticipating hospital with respect to emergency services
during a contract year and the entity failed to make a good
faith effort to notify the enrollee involved of such change.
``(v) Other conditions.--There were other factors (such as
those identified in guidelines) that prevented the enrollee
from controlling selection of the hospital in which the
services were provided.
``(b) Assuring Coordinated Coverage of Maintenance Care and
Post-Stabilization Care.--
``(1) In general.--In the case of an individual who is
enrolled with a managed care entity and who has received
emergency services pursuant to a screening evaluation
conducted (or supervised) by a treating physician at a
hospital that is a nonparticipating provider with respect to
emergency services, if--
``(A) pursuant to such evaluation, the physician identifies
post-stabilization care (as defined in paragraph (3)(B)) that
is required by the enrollee,
``(B) the coverage through the entity under this title
provides benefits with respect to the care so identified and
the coverage requires (but for this subsection) an
affirmative prior authorization determination as a condition
of coverage of such care, and
``(C) the treating physician (or another individual acting
on behalf of such physician) initiates, not later than 30
minutes after the time the treating physician determines that
the condition of the enrollee is stabilized, a good faith
effort to contact a physician or other person authorized by
the entity (by telephone or other means) to obtain an
affirmative prior authorization determination with respect to
the care,
then, without regard to terms and conditions specified in
paragraph (2) the entity shall cover maintenance care (as
defined in paragraph (3)(A)) furnished to the enrollee during
the period specified in paragraph (4) and shall cover post-
stabilization care furnished to the enrollee during the
period beginning under paragraph (5) and ending under
paragraph (6).
``(2) Terms and conditions waived.--The terms and
conditions (of coverage) described in this paragraph that are
waived under paragraph (1) are as follows:
``(A) The need for any prior authorization determination.
``(B) Any limitation on coverage based on whether or not
the physician or provider furnishing the care is a
participating physician or provider with respect to such
care.
``(C) Any other term or condition of the coverage (other
than an exclusion of benefits and other than a requirement
relating to medical necessity for coverage of benefits).
``(3) Maintenance care and post-stabilization care
defined.--In this subsection:
``(A) Maintenance care.--The term `maintenance care' means,
with respect to an individual who is stabilized after
provision of emergency services, medically necessary items
and services (other than emergency services) that are
required by the individual to ensure that the individual
remains stabilized during the period described in paragraph
(4).
``(B) Post-stabilization care.--The term `post-
stabilization care' means, with respect to an individual who
is determined to be stable pursuant to a medical screening
examination or who is stabilized after provision of emergency
services, medically necessary items and services (other than
emergency services and other than maintenance care) that are
required by the individual.
``(4) Period of required coverage of maintenance care.--The
period of required coverage of maintenance care of an
individual under this subsection begins at the time of the
request (or the initiation of the good faith effort to make
the request) under paragraph (1)(C) and ends when--
``(A) the individual is discharged from the hospital;
``(B) a physician (designated by the managed care entity
involved) and with privileges at the hospital involved
arrives at the emergency department of the hospital and
assumes responsibility with respect to the treatment of the
individual; or
``(C) the treating physician and the entity agree to
another arrangement with respect to the care of the
individual.
``(5) When post-stabilization care required to be
covered.--
``(A) When treating physician unable to communicate
request.--If the treating physician or other individual makes
the good faith effort to request authorization under
paragraph (1)(C) but is unable to communicate the request
directly with an authorized person referred to in such
paragraph within 30 minutes after the time of initiating such
effort, then post-stabilization care is required to be
covered under this subsection beginning at the end of such
30-minute period.
``(B) When able to communicate request, and no timely
response.--
``(i) In general.--If the treating physician or other
individual under paragraph (1)(C) is able to communicate the
request within the 30-minute period described in subparagraph
(A), the post-stabilization care requested is required to be
covered under this subsection beginning 30 minutes after the
time when the entity receives the request unless a person
authorized by the entity involved communicates (or makes a
good faith effort to communicate) a denial of the request for
the prior authorization determination within 30 minutes of
the time when the entity receives the request and the
treating physician does not request under clause (ii) to
communicate directly with an authorized physician concerning
the denial.
``(ii) Request for direct physician-to-physician
communication concerning denial.--If a denial of a request is
communicated under clause (i), the treating physician may
request to communicate respecting the denial directly with a
physician who is authorized by the entity to deny or affirm
such a denial.
``(C) When no timely response to request for physician-to-
physician communication.--If a request for physician-to-
physician communication is made under subparagraph (B)(ii),
the post-stabilization care requested is required to be
covered under this subsection beginning 30 minutes after the
time when the entity receives the request from a treating
physician unless a physician, who is authorized by the entity
to reverse or affirm the initial denial of the care,
communicates (or makes a good faith effort to communicate)
directly with the treating physician within such 30-minute
period.
``(D) Disagreements over post-stabilization care.--If,
after a direct physician-to-physician communication under
subparagraph (C), the denial of the request for the post-
stabilization care is not reversed and the treating physician
communicates to the entity involved a disagreement with such
decision, the post-stabilization care requested is required
to be covered under this subsection beginning as follows:
``(i) Delay to allow for prompt arrival of physician
assuming responsibility.--If the issuer communicates that a
physician (designated by the entity) with privileges at the
hospital involved will arrive promptly (as determined under
guidelines) at the emergency department of the hospital in
order to assume responsibility with respect to the treatment
of the enrollee involved, the required coverage of the post-
stabilization care begins after the passage of such time
period as would allow the prompt arrival of such a physician.
``(ii) Other cases.--If the entity does not so communicate,
the required coverage of
[[Page S5450]]
the post-stabilization care begins immediately.
``(6) No requirement of coverage of post-stabilization care
if alternate plan of treatment.--
``(A) In general.--Coverage of post-stabilization care is
not required under this subsection with respect to an
individual when--
``(i) subject to subparagraph (B), a physician (designated
by the entity involved) and with privileges at the hospital
involved arrives at the emergency department of the hospital
and assumes responsibility with respect to the treatment of
the individual; or
``(ii) the treating physician and the entity agree to
another arrangement with respect to the post-stabilization
care (such as an appropriate transfer of the individual
involved to another facility or an appointment for timely
followup treatment for the individual).
``(B) Special rule where once care initiated.--Required
coverage of requested post-stabilization care shall not end
by reason of subparagraph (A)(i) during an episode of care
(as determined by guidelines) if the treating physician
initiated such care (consistent with a previous paragraph)
before the arrival of a physician described in such
subparagraph.
``(7) Construction.--Nothing in this subsection shall be
construed as--
``(A) preventing a managed care entity from authorizing
coverage of maintenance care or post-stabilization care in
advance or at any time; or
``(B) preventing a treating physician or other individual
described in paragraph (1)(C) and such an entity from
agreeing to modify any of the time periods specified in
paragraphs (5) as it relates to cases involving such persons.
``(c) Information on Access to Emergency Services.--A
managed care entity, to the extent the entity offers health
insurance coverage, shall provide education to enrollees on--
``(1) coverage of emergency services (as defined in
subsection (a)(2)(B)) by the entity in accordance with the
provisions of this section,
``(2) the appropriate use of emergency services, including
use of the 911 telephone system or its local equivalent,
``(3) any cost sharing applicable to emergency services,
``(4) the process and procedures of the plan for obtaining
emergency services, and
``(5) the locations of--
``(A) emergency departments, and
``(B) other settings,
in which participating physicians and hospitals provide
emergency services and post-stabilization care.
``(d) General Definitions.--For purposes of this section:
``(1) Cost sharing.--The term `cost sharing' means any
deductible, coinsurance amount, copayment or other out-of-
pocket payment (other than premiums or enrollment fees) that
a managed care entity issuer imposes on enrollees with
respect to the coverage of benefits.
``(2) Good faith effort.--The term `good faith effort' has
the meaning given such term in guidelines and requires such
appropriate documentation as is specified under such
guidelines.
``(3) Guidelines.--The term `guidelines' means guidelines
established by the Secretary after consultation with an
advisory panel that includes individuals representing
emergency physicians, managed care entities, including at
least one health maintenance organization, hospitals,
employers, the States, and consumers.
``(4) Prior authorization determination.--The term `prior
authorization determination' means, with respect to items and
services for which coverage may be provided by a managed are
entity, a determination (before the provision of the items
and services and as a condition of coverage of the items and
services under the coverage) of whether or not such items and
services will be covered under the coverage.
``(5) Stabilize.--The term `to stabilize' means, with
respect to an emergency medical condition, to provide (in
complying with section 1867 of the Social Security Act) such
medical treatment of the condition as may be necessary to
assure, within reasonable medical probability, that no
material deterioration of the condition is likely to result
from or occur during the transfer of the individual from the
facility.
``(6) Stabilized.--The term `stabilized' means, with
respect to an emergency medical condition, that no material
deterioration of the condition is likely, within reasonable
medical probability, to result from or occur before an
individual can be transferred from the facility, in
compliance with the requirements of section 1867 of the
Social Security Act.
``(7) Treating physician.--The term `treating physician'
includes a treating health care professional who is licensed
under State law to provide emergency services other than
under the supervision of a physician.
``SEC. 1944. OTHER BENEFICIARY PROTECTIONS.
``(a) Protecting Enrollees Against the Insolvency of
Managed Care Entities and Against the Failure of the State to
Pay Such Entities.--Each managed care entity shall provide
that an individual eligible for medical assistance under the
State plan under this title who is enrolled with the entity
may not be held liable--
``(1) for the debts of the managed care entity, in the
event of the medicaid managed care organization's insolvency;
``(2) for services provided to the individual--
``(A) in the event of the medicaid managed care
organization failing to receive payment from the State for
such services; or
``(B) in the event of a health care provider with a
contractual or other arrangement with the medicaid managed
care organization failing to receive payment from the State
or the managed care entity for such services; or
``(3) for the debts of any health care provider with a
contractual or other arrangement with the medicaid managed
care organization to provide services to the individual, in
the event of the insolvency of the health care provider.
``(b) Protection of Beneficiaries Against Balance Billing
Through Subcontractors.--
``(1) In general.--Any contract between a managed care
entity that has an agreement with a State under this title
and another entity under which the entity (or any other
entity pursuant to the contract) provides directly or
indirectly for the provision of services to beneficiaries
under the agreement with the State shall include such
provisions as the Secretary may require in order to assure
that the entity complies with balance billing limitations and
other requirements of this title (such as limitation on
withholding of services) as they would apply to the managed
care entity if such entity provided such services directly
and not through a contract with another entity.
``(2) Application of sanctions for violations.--The
provisions of section 1128A(b)(2)(B) and 1128B(d)(1) shall
apply with respect to entities contracting directly or
indirectly with a managed care entity (with a contract with a
State under this title) for the provision of services to
beneficiaries under such a contract in the same manner as
such provisions would apply to the managed care entity if it
provided such services directly and not through a contract
with another entity.
``SEC. 1945. ASSURING QUALITY CARE.
``(a) External Independent Review of Managed Care Entity
Activities.--
``(1) Review of medicaid managed care organization
contract.--
``(A) In general.--Except as provided in paragraph (2),
each medicaid managed care organization shall be subject to
an annual external independent review of the quality outcomes
and timeliness of, and access to, the items and services
specified in such organization's contract with the State
under section 1941(a)(1)(B). Such review shall specifically
evaluate the extent to which the medicaid managed care
organization provides such services in a timely manner.
``(B) Contents of review.--An external independent review
conducted under this subsection shall include--
``(i) a review of the entity's medical care, through
sampling of medical records or other appropriate methods, for
indications of quality of care and inappropriate utilization
(including overutilization) and treatment,
``(ii) a review of enrollee inpatient and ambulatory data,
through sampling of medical records or other appropriate
methods, to determine trends in quality and appropriateness
of care,
``(iii) notification of the entity and the State when the
review under this paragraph indicates inappropriate care,
treatment, or utilization of services (including
overutilization), and
``(iv) other activities as prescribed by the Secretary or
the State.
``(C) Use of protocols.--An external independent review
conducted under this subsection on and after January 1, 1999,
shall use protocols that have been developed, tested, and
validated by the Secretary and that are at least as rigorous
as those used by the National Committee on Quality Assurance
as of the date of the enactment of this section.
``(D) Availability of results.--The results of each
external independent review conducted under this paragraph
shall be available to participating health care providers,
enrollees, and potential enrollees of the medicaid managed
care organization, except that the results may not be made
available in a manner that discloses the identity of any
individual patient.
``(2) Deemed compliance.--
``(A) Medicare organizations.--The requirements of
paragraph (1) shall not apply with respect to a medicaid
managed care organization if the organization is an eligible
organization with a contract in effect under section 1876.
``(B) Private accreditation.--
``(i) In general.--The requirements of paragraph (1) shall
not apply with respect to a medicaid managed care
organization if --
``(I) the organization is accredited by an organization
meeting the requirements described in subparagraph (C)); and
``(II) the standards and process under which the
organization is accredited meet such requirements as are
established under clause (ii), without regard to whether or
not the time requirement of such clause is satisfied.
``(ii) Standards and process.--Not later than 180 days
after the date of the enactment of this section, the
Secretary shall specify requirements for the standards and
process under which a medicaid managed care organization is
accredited by an organization meeting the requirements of
subparagraph (B).
[[Page S5451]]
``(C) Accrediting organization.--An accrediting
organization meets the requirements of this subparagraph if
the organization--
``(i) is a private, nonprofit organization;
``(ii) exists for the primary purpose of accrediting
managed care organizations or health care providers; and
``(iii) is independent of health care providers or
associations of health care providers.
``(3) Review of primary care case management provider
contract.--Each primary care case management provider shall
be subject to an annual external independent review of the
quality and timeliness of, and access to, the items and
services specified in the contract entered into between the
State and the primary care case management provider under
section 1941(a)(1)(B).
``(4) Use of validation surveys.--The Secretary shall
conduct surveys each year to validate external reviews of at
least 5 percent of the number of managed care entities in the
year. In conducting such surveys the Secretary shall use the
same protocols as were used in preparing the external
reviews. If an external review finds that an individual
managed care entity meets applicable requirements, but the
Secretary determines that the entity does not meet such
requirements, the Secretary's determination as to the
entity's noncompliance with such requirements is binding and
supersedes that of the previous survey.
``(b) Federal Monitoring Responsibilities.--The Secretary
shall review the external independent reviews conducted
pursuant to subsection (a) and shall monitor the
effectiveness of the State's monitoring and followup
activities required under section 1942(b)(1). If the
Secretary determines that a State's monitoring and followup
activities are not adequate to ensure that the requirements
of such section are met, the Secretary shall undertake
appropriate followup activities to ensure that the State
improves its monitoring and followup activities.
``(c) Providing Information on Services.--
``(1) Requirements for medicaid managed care
organizations.--
``(A) Information to the state.--Each medicaid managed care
organization shall provide to the State (at least at such
frequency as the Secretary may require), complete and timely
information concerning the following:
``(i) The services that the organization provides to (or
arranges to be provided to) individuals eligible for medical
assistance under the State plan under this title.
``(ii) The identity, locations, qualifications, and
availability of participating health care providers.
``(iii) The rights and responsibilities of enrollees.
``(iv) The services provided by the organization which are
subject to prior authorization by the organization as a
condition of coverage (in accordance with subsection (d)).
``(v) The procedures available to an enrollee and a health
care provider to appeal the failure of the organization to
cover a service.
``(vi) The performance of the organization in serving
individuals eligible for medical assistance under the State
plan under this title.
Such information shall be provided in a form consistent with
the reporting of similar information by eligible
organizations under section 1876.
``(2) Requirements for primary care case management
providers.--Each primary care case management provider
shall--
``(A) provide to the State (at least at such frequency as
the Secretary may require), complete and timely information
concerning the services that the primary care case management
provider provides to (or arranges to be provided to)
individuals eligible for medical assistance under the State
plan under this title;
``(B) make available to enrollees and potential enrollees
information concerning services available to the enrollee for
which prior authorization by the primary care case management
provider is required;
``(C) provide enrollees and potential enrollees information
regarding all items and services that are available to
enrollees under the contract between the State and the
primary care case management provider that are covered either
directly or through a method of referral and prior
authorization; and
``(D) provide assurances that such entities and their
professional personnel are licensed as required by State law
and qualified to provide case management services, through
methods such as ongoing monitoring of compliance with
applicable requirements and providing information and
technical assistance.
``(3) Requirements for both medicaid managed care
organizations and primary care case management providers.--
Each managed care entity shall provide the State with
aggregate encounter data for all items and services,
including early and periodic screening, diagnostic, and
treatment services under section 1905(r) furnished to
individuals under 21 years of age. Any such data provided may
be audited by the State and the Secretary.
``(d) Conditions for Prior Authorization.--Subject to
section 1943, a managed care entity may require the approval
of medical assistance for nonemergency services before the
assistance is furnished to an enrollee only if the system
providing for such approval provides that such decisions are
made in a timely manner, depending upon the urgency of the
situation.
``(e) Patient Encounter Data.--Each medicaid managed care
organization shall maintain sufficient patient encounter data
to identify the health care provider who delivers services to
patients and to otherwise enable the State plan to meet the
requirements of section 1902(a)(27) and shall submit such
data to the State or the Secretary upon request. The medicaid
managed care organization shall incorporate such information
in the maintenance of patient encounter data with respect to
such health care provider.
``(f) Incentives for High Quality Managed Care Entities.--
The Secretary and the State may establish a program to
reward, through public recognition, incentive payments, or
enrollment of additional individuals (or combinations of such
rewards), managed care entities that provide the highest
quality care to individuals eligible for medical assistance
under the State plan under this title who are enrolled with
such entities. For purposes of section 1903(a)(7), proper
expenses incurred by a State in carrying out such a program
shall be considered to be expenses necessary for the proper
and efficient administration of the State plan under this
title.
``SEC. 1946. PROTECTIONS FOR PROVIDERS.
``(a) Information to Health Care Providers.--Each medicaid
managed care organization shall upon request, make the
information described in section 1945(c)(1)(A) available to
participating health care providers.
``(b) Timeliness of Payment.--A medicaid managed care
organization shall make payment to health care providers for
items and services which are subject to the contract under
section 1941(a)(1)(B) and which are furnished to individuals
eligible for medical assistance under the State plan under
this title who are enrolled with the entity on a timely basis
consistent with section 1943 and under the claims payment
procedures described in section 1902(a)(37)(A), unless the
health care provider and the managed care entity agree to an
alternate payment schedule.
``(c) Application of Medicare Prohibition of Restrictions
on Physicians' Advice and Counsel to Enrollees.--A managed
care entity shall comply with the same prohibitions on any
restrictions relating to physicians' advice and counsel to
individuals as apply to eligible organizations under section
1876.
``(d) Physician Incentive Plans.--Each medicaid managed
care organization shall require that any physician incentive
plan covering physicians who are participating in the
medicaid managed care organization shall meet the
requirements of section 1876(i)(8).
``(e) Written Provider Participation Agreements for Certain
Providers.--Each medicaid managed care organization that
enters into a written provider participation agreement with a
provider described in section 1942(h)(2) shall--
``(1) include terms and conditions that are no more
restrictive than the terms and conditions that the medicaid
managed care organization includes in its agreements with
other participating providers with respect to--
``(A) the scope of covered services for which payment is
made to the provider;
``(B) the assignment of enrollees by the organization to
the provider;
``(C) the limitation on financial risk or availability of
financial incentives to the provider;
``(D) accessibility of care;
``(E) professional credentialing and recredentialing;
``(F) licensure;
``(G) quality and utilization management;
``(I) confidentiality of patient records;
``(J) grievance procedures; and
``(K) indemnification arrangements between the
organizations and providers; and
``(2) provide for payment to the provider on a basis that
is comparable to the basis on which other providers are paid.
``(f) Payments to Federally-Qualified Health Centers.--Each
medicaid managed care organization that has a contract under
this title with respect to the provision of services of a
federally qualified health center shall provide, at the
election of such center, that the organization shall provide
payments to such a center for services described in
1905(a)(2)(C) at the rates of payment specified in section
1902(a)(13)(E).
``SEC. 1947. ASSURING ADEQUACY OF PAYMENTS TO MEDICAID
MANAGED CARE ORGANIZATIONS AND ENTITIES.
``(a) Adequate Rates.--As a condition of approval of a
State plan under this title, a State shall find, determine,
and make assurances satisfactory to the Secretary that--
``(1) the rates it pays medicaid managed care organizations
for individuals eligible under the State plan are reasonable
and adequate to assure access to services meeting
professionally recognized quality standards, taking into
account--
``(A) the items and services to which the rate applies,
``(B) the eligible population, and
``(C) the rate the State pays providers for such items and
services;
``(2) the methodology used to adjust the rate adequately
reflects the varying risks associated with individuals
actually enrolling in each medicaid managed care
organization; and
``(3) it will provide for an annual review of the actuarial
soundness of rates by an independent actuary selected by the
Secretary and for a copy of the actuary's report on
[[Page S5452]]
each such review to be transmitted to the State and the
Secretary and made available to the public.
``(b) Annual Reports.--As a condition of approval of a
State plan under this title, a State shall report to the
Secretary, at least annually, on the rates the States pays to
medicaid managed care organizations.
``SEC. 1948. FRAUD AND ABUSE.
``(a) Provisions Applicable to Managed Care Entities.--
``(1) Prohibiting affiliations with individuals debarred by
Federal agencies.--
``(A) In general.--A managed care entity may not
knowingly--
``(i) have a person described in subparagraph (C) as a
director, officer, partner, or person with beneficial
ownership of more than 5 percent of the organization's
equity; or
``(ii) have an employment, consulting, or other agreement
with a person described in such subparagraph for the
provision of items and services that are significant and
material to the organization's obligations under its contract
with the State.
``(B) Effect of noncompliance.--If a State finds that a
managed care entity is not in compliance with clause (i) or
(ii) of subparagraph (A), the State--
``(i) shall notify the Secretary of such noncompliance;
``(ii) may continue an existing agreement with the entity
unless the Secretary (in consultation with the Inspector
General of the Department of Health and Human Services)
directs otherwise; and
``(iii) may not renew or otherwise extend the duration of
an existing agreement with the entity unless the Secretary
(in consultation with the Inspector General of the Department
of Health and Human Services) provides to the State and to
the Congress a written statement describing compelling
reasons that exist for renewing or extending the agreement.
``(C) Persons described.--A person is described in this
subparagraph if such person--
``(i) is debarred, suspended, or otherwise excluded from
participating in procurement activities under the Federal
acquisition regulation or from participating in
nonprocurement activities under regulations issued pursuant
to Executive Order 12549; or
``(ii) is an affiliate (within the meaning of the Federal
acquisition regulation) of a person described in subparagraph
(A).
``(2) Restrictions on marketing.--
``(A) Distribution of materials.--
``(i) In general.--A managed care entity may not distribute
directly or through any agent or independent contractor
marketing materials within any State--
``(I) without the prior approval of the State; and
``(II) that contain false or materially misleading
information.
``(ii) Consultation in review of market materials.--In the
process of reviewing and approving such materials, the State
shall provide for consultation with a medical care advisory
committee.
``(iii) Prohibition.--The State may not enter into or renew
a contract with a managed care entity for the provision of
services to individuals enrolled under the State plan under
this title if the State determines that the entity
distributed directly or through any agent or independent
contractor marketing materials in violation of clause (i).
``(B) Service market.--A managed care entity shall
distribute marketing materials to the entire service area of
such entity.
``(C) Prohibition of tie-ins.--A managed care entity, or
any agency of such entity, may not seek to influence an
individual's enrollment with the entity in conjunction with
the sale of any other insurance.
``(D) Prohibiting marketing fraud.--Each managed care
entity shall comply with such procedures and conditions as
the Secretary prescribes in order to ensure that, before an
individual is enrolled with the entity, the individual is
provided accurate oral and written and sufficient information
to make an informed decision whether or not to enroll.
``(E) Prohibition of cold call marketing.--Each managed
care entity shall not, directly or indirectly, conduct door-
to-door, telephonic, or other `cold call' marketing of
enrollment under this title.
``(b) Provisions Applicable Only to Medicaid Managed Care
Organizations.--
``(1) State conflict-of-interest safeguards in medicaid
risk contracting.--A medicaid managed care organization may
not enter into a contract with any State under section
1941(a)(1)(B) unless the State has in effect conflict-of-
interest safeguards with respect to officers and employees of
the State with responsibilities relating to contracts with
such organizations or to the default enrollment process
described in section 1941(a)(1)(F) that are at least as
effective as the Federal safeguards provided under section 27
of the Office of Federal Procurement Policy Act (41 U.S.C.
423), against conflicts of interest that apply with respect
to Federal procurement officials with comparable
responsibilities with respect to such contracts.
``(2) Requiring disclosure of financial information.--In
addition to any requirements applicable under section
1902(a)(27) or 1902(a)(35), a medicaid managed care
organization shall--
``(A) report to the State (and to the Secretary upon the
Secretary's request) such financial information as the State
or the Secretary may require to demonstrate that--
``(i) the organization has the ability to bear the risk of
potential financial losses and otherwise has a fiscally sound
operation;
``(ii) the organization uses the funds paid to it by the
State and the Secretary for activities consistent with the
requirements of this title and the contract between the State
and organization; and
``(iii) the organization does not place an individual
physician, physician group, or other health care provider at
substantial risk (as determined by the Secretary) for
services not provided by such physician, group, or health
care provider, by providing adequate protection (as
determined by the Secretary) to limit the liability of such
physician, group, or health care provider, through measures
such as stop loss insurance or appropriate risk corridors;
``(B) agree that the Secretary and the State (or any person
or organization designated by either) shall have the right to
audit and inspect any books and records of the organization
(and of any subcontractor) relating to the information
reported pursuant to subparagraph (A) and any information
required to be furnished under section paragraphs (27) or
(35) of section 1902(a);
``(C) make available to the Secretary and the State a
description of each transaction described in subparagraphs
(A) through (C) of section 1318(a)(3) of the Public Health
Service Act between the organization and a party in interest
(as defined in section 1318(b) of such Act);
``(D) agree to make available to its enrollees upon
reasonable request--
``(i) the information reported pursuant to subparagraph
(A); and
``(ii) the information required to be disclosed under
sections 1124 and 1126;
``(E) comply with subsections (a) and (c) of section 1318
of the Public Health Service Act (relating to disclosure of
certain financial information) and with the requirement of
section 1301(c)(8) of such Act (relating to liability
arrangements to protect members); and
``(F) notify the Secretary of loans and other special
financial arrangements which are made between the
organization and subcontractors, affiliates, and related
parties.
Each State is required to conduct audits on the books and
records of at least 1 percent of the number of medicaid
managed care organizations operating in the State.
``(3) Adequate provision against risk of insolvency.--
``(A) Establishment of standards.--The Secretary shall
establish standards, including appropriate equity standards,
under which each medicaid managed care organization shall
make adequate provision against the risk of insolvency.
``(B) Consideration of other standards.--In establishing
the standards described in subparagraph (A), the Secretary
shall consider solvency standards applicable to eligible
organizations with a risk-sharing contract under section
1876.
``(C) Model contract on solvency.--At the earliest
practicable time after the date of enactment of this section,
the Secretary shall issue guidelines concerning solvency
standards for risk contracting entities and subcontractors of
such risk contracting entities. Such guidelines shall take
into account characteristics that may differ among risk
contracting entities including whether such an entity is at
risk for inpatient hospital services.
``(4) Requiring report on net earnings and additional
benefits.--Each medicaid managed care organization shall
submit a report to the State and the Secretary not later than
12 months after the close of a contract year containing the
most recent audited financial statement of the organization's
net earnings and consistent with generally accepted
accounting principles.
``(c) Disclosure of Ownership and Related Information.--
Each medicaid managed care organization shall provide for
disclosure of information in accordance with section 1124.
``(d) Disclosure of Transaction Information.--
``(1) In general.--Each medicaid managed care organization
which is not a qualified health maintenance organization (as
defined in section 1310(d) of the Public Health Service Act)
shall report to the State and, upon request, to the
Secretary, the Inspector General of the Department of Health
and Human Services, and the Comptroller General a description
of transactions between the organization and a party in
interest (as defined in section 1318(b) of such Act),
including the following transactions:
``(A) Any sale or exchange, or leasing of any property
between the organization and such a party.
``(B) Any furnishing for consideration of goods, services
(including management services), or facilities between the
organization and such a party, but not including salaries
paid to employees for services provided in the normal course
of their employment.
``(C) Any lending of money or other extension of credit
between the organization and such a party.
The State or Secretary may require that information reported
respecting a organization which controls, or is controlled
by, or is under common control with, another entity be in the
form of a consolidated financial statement for the
organization and such entity.
``(2) Each such organization shall make the information
reported pursuant to paragraph (1) available to its enrollees
upon reasonable request.
``(e) Contract Oversight.--
[[Page S5453]]
``(1) In general.--The Secretary must provide prior review
and approval for contracts under this part with a medicaid
managed care organization providing for expenditures under
this title in excess of $1,000,000.
``(2) Inspector general review.--As part of such approval
process, the Inspector General in the Department of Health
and Human Services, effective October 1, 1997, shall make a
determination (to the extent practicable) as to whether
persons with an ownership interest (as defined in section
1124(a)(3)) or an officer, director, agent, or managing
employee (as defined in section 1126(b)) of the organization
are or have been described in subsection (a)(1)(C) based on a
ground relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct or
obstruction of an investigation.
``(f) Limitation on Availability of FFP for Use of
Enrollment Brokers.--Amounts expended by a State for the use
an enrollment broker in marketing managed care entities to
eligible individuals under this title shall be considered,
for purposes of section 1903(a)(7), to be necessary for the
proper and efficient administration of the State plan but
only if the following conditions are met with respect to the
broker:
``(1) The broker is independent of any such entity and of
any health care providers (whether or not any such provider
participates in the State plan under this title) that provide
coverage of services in the same State in which the broker is
conducting enrollment activities.
``(2) No person who is an owner, employee, consultant, or
has a contract with the broker either has any direct or
indirect financial interest with such an entity or health
care provider or has been excluded from participation in the
program under this title or title XVIII or debarred by any
Federal agency, or subject to a civil money penalty under
this Act.
``(g) Use of Unique Physician Identifier for Participating
Physicians.--Each medicaid managed care organization shall
require each physician providing services to enrollees
eligible for medical assistance under the State plan under
this title to have a unique identifier in accordance with the
system established under section 1173(b).
``(h) Secretarial Recovery of FFP for Capitation Payments
for Insolvent Managed Care Entities.--The Secretary shall
provide for the recovery and offset against amount owed a
State under section 1903(a)(1) an amount equal to the amounts
paid to the State, for medical assistance provided under such
section for expenditures for capitation payments to a managed
care entity that becomes insolvent, for services contracted
for with, but not provided by, such organization.
``SEC. 1949. SANCTIONS FOR NONCOMPLIANCE BY MANAGED CARE
ENTITIES.
``(a) Use of Intermediate Sanctions by the State To Enforce
Requirements.--Each State shall establish intermediate
sanctions, which may include any of the types described in
subsection (b) other than the termination of a contract with
a managed care entity, which the State may impose against a
managed care entity with a contract under section
1941(a)(1)(B) if the entity --
``(1) fails substantially to provide medically necessary
items and services that are required (under law or under such
entity's contract with the State) to be provided to an
enrollee covered under the contract;
``(2) imposes premiums or charges on enrollees in excess of
the premiums or charges permitted under this title;
``(3) acts to discriminate among enrollees on the basis of
their health status or requirements for health care services,
including expulsion or refusal to reenroll an individual,
except as permitted by this part, or engaging in any practice
that would reasonably be expected to have the effect of
denying or discouraging enrollment with the entity by
eligible individuals whose medical condition or history
indicates a need for substantial future medical services;
``(4) misrepresents or falsifies information that is
furnished--
``(A) to the Secretary or the State under this part; or
``(B) to an enrollee, potential enrollee, or a health care
provider under such sections; or
``(5) fails to comply with the requirements of section
1876(i)(8) or this part.
``(b) Intermediate Sanctions.--The sanctions described in
this subsection are as follows:
``(1) Civil money penalties as follows:
``(A) Except as provided in subparagraph (B), (C), or (D),
not more than $25,000 for each determination under subsection
(a).
``(B) With respect to a determination under paragraph (3)
or (4)(A) of subsection (a), not more than $100,000 for each
such determination.
``(C) With respect to a determination under subsection
(a)(2), double the excess amount charged in violation of such
subsection (and the excess amount charged shall be deducted
from the penalty and returned to the individual concerned).
``(D) Subject to subparagraph (B), with respect to a
determination under subsection (a)(3), $15,000 for each
individual not enrolled as a result of a practice described
in such subsection.
``(2) The appointment of temporary management to oversee
the operation of the medicaid-only managed care entity upon a
finding by the State that there was continued egregious
behavior by the plan and to assure the health of the entity's
enrollees, if there is a need for temporary management
while--
``(A) there is an orderly termination or reorganization of
the managed care entity; or
``(B) improvements are made to remedy the violations found
under subsection (a), except that temporary management under
this paragraph may not be terminated until the State has
determined that the managed care entity has the capability to
ensure that the violations shall not recur.
``(3) Permitting individuals enrolled with the managed care
entity to terminate enrollment without cause, and notifying
such individuals of such right to terminate enrollment.
``(4) Suspension of default or all enrollment of
individuals under this title after the date the Secretary or
the State notifies the entity of a determination of a
violation of any requirement of this part.
``(5) Suspension of payment to the entity under this title
for individuals enrolled after the date the Secretary or
State notifies the entity of such a determination and until
the Secretary or State is satisfied that the basis for such
determination has been corrected and is not likely to recur.
``(c) Treatment of Chronic Substandard Entities.--In the
case of a managed care entity which has repeatedly failed to
meet the requirements of sections 1942 through 1946, the
State shall (regardless of what other sanctions are provided)
impose the sanctions described in paragraphs (2) and (3) of
subsection (b).
``(d) Authority To Terminate Contract.--In the case of a
managed care entity which has failed to meet the requirements
of this part, the State shall have the authority to terminate
its contract with such entity under section 1941(a)(1)(B) and
to enroll such entity's enrollees with other managed care
entities (or to permit such enrollees to receive medical
assistance under the State plan under this title other than
through a managed care entity).
``(e) Availability of Sanctions to the Secretary.--
``(1) Intermediate sanctions.--In addition to the sanctions
described in paragraph (2) and any other sanctions available
under law, the Secretary may provide for any of the sanctions
described in subsection (b) if the Secretary determines that
a managed care entity with a contract under section
1941(a)(1)(B) fails to meet any of the requirements of this
part.
``(2) Denial of payments to the state.--The Secretary may
deny payments to the State for medical assistance furnished
under the contract under section 1941(a)(1)(B) for
individuals enrolled after the date the Secretary notifies a
managed care entity of a determination under subsection (a)
and until the Secretary is satisfied that the basis for such
determination has been corrected and is not likely to recur.
``(f) Due Process for Managed Care Entities.--
``(1) Availability of hearing prior to termination of
contract.--A State may not terminate a contract with a
managed care entity under section 1941(a)(1)(B) unless the
entity is provided with a hearing prior to the termination.
``(2) Notice to enrollees of termination hearing.--A State
shall notify all individuals enrolled with a managed care
entity which is the subject of a hearing to terminate the
entity's contract with the State of the hearing and that the
enrollees may immediately disenroll with the entity without
cause.
``(3) Other protections for managed care entities against
sanctions imposed by state.--Before imposing any sanction
against a managed care entity other than termination of the
entity's contract, the State shall provide the entity with
notice and such other due process protections as the State
may provide, except that a State may not provide a managed
care entity with a pre-termination hearing before imposing
the sanction described in subsection (b)(2).
``(4) Imposition of civil monetary penalties by
secretary.--The provisions of section 1128A (other than
subsections (a) and (b)) shall apply with respect to a civil
money penalty imposed by the Secretary under subsection
(b)(1) in the same manner as such provisions apply to a
penalty or proceeding under section 1128A.
``SEC. 1950. DEFINITIONS; MISCELLANEOUS PROVISIONS.
``(a) Definitions.--For purposes of this title:
``(1) Managed care entity.--The term `managed care entity'
means--
``(A) a medicaid managed care organization; or
``(B) a primary care case management provider.
``(2) Medicaid managed care organization.--The term
`medicaid managed care organization' means a health
maintenance organization, an eligible organization with a
contract under section 1876, a provider sponsored network or
any other organization which is organized under the laws of a
State, has made adequate provision (as determined under
standards established for purposes of eligible organizations
under section 1876 and through its capitalization or
otherwise) against the risk of insolvency, and provides or
arranges for the provision of one or more items and services
to individuals eligible for medical assistance under the
State plan under this title in accordance with a contract
with the State under section 1941(a)(1)(B).
``(3) Primary care case management provider.--
[[Page S5454]]
``(A) In general.--The term `primary care case management
provider' means a health care provider that--
``(i) is a physician, group of physicians, a Federally-
qualified health center, a rural health clinic, or an entity
employing or having other arrangements with physicians that
provides or arranges for the provision of one or more items
and services to individuals eligible for medical assistance
under the State plan under this title in accordance with a
contract with the State under section 1941(a)(1)(B);
``(ii) receives payment on a fee-for-service basis (or, in
the case of a Federally-qualified health center or a rural
health clinic, on a reasonable cost per encounter basis) for
the provision of health care items and services specified in
such contract to enrolled individuals;
``(iii) receives an additional fixed fee per enrollee for a
period specified in such contract for providing case
management services (including approving and arranging for
the provision of health care items and services specified in
such contract on a referral basis) to enrolled individuals;
and
``(iv) is not an entity that is at risk.
``(B) At risk.--In subparagraph (A)(iv), the term `at risk'
means an entity that--
``(i) has a contract with the State under which such entity
is paid a fixed amount for providing or arranging for the
provision of health care items or services specified in such
contract to an individual eligible for medical assistance
under the State plan and enrolled with such entity,
regardless of whether such items or services are furnished to
such individual; and
``(ii) is liable for all or part of the cost of furnishing
such items or services, regardless of whether such cost
exceeds such fixed payment.''.
SEC. 3. STUDIES AND REPORTS.
(a) Report on Public Health Services.--
(1) In general.--Not later than January 1, 1998, the
Secretary of Health and Human Services (in this section
referred to as the ``Secretary'') shall report to the
Committee on Finance of the Senate and the Committee on
Commerce of the House of Representatives on the effect of
managed care entities (as defined in section 1950(a)(1) of
the Social Security Act) on the delivery of and payment for
the services traditionally provided through providers
described in section 1941(a)(2)(B)(i) of such Act.
(2) Contents of report.--The report referred to in
subsection (a) shall include--
(A) information on the extent to which enrollees with
eligible managed care entities seek services at local health
departments, public hospitals, and other facilities that
provide care without regard to a patient's ability to pay;
(B) information on the extent to which the facilities
described in such subsection provide services to enrollees
with eligible managed care entities without receiving
payment;
(C) information on the effectiveness of systems implemented
by facilities described in such subsection for educating such
enrollees on services that are available through eligible
managed care entities with which such enrollees are enrolled;
(D) to the extent possible, identification of the types of
services most frequently sought by such enrollees at such
facilities; and
(E) recommendations about how to ensure the timely delivery
of the services traditionally provided through providers
described in section 1941(a)(2)(B)(i) of the Social Security
Act to enrollees of managed care entities and how to ensure
that local health departments, public hospitals, and other
facilities are adequately compensated for the provision of
such services to such enrollees.
(b) Report on Payments to Hospitals.--
(1) In general.--Not later than October 1 of each year,
beginning with October 1, 1998, the Secretary and the
Comptroller General shall analyze and submit a report to the
Committee on Finance of the Senate and the Committee on
Commerce of the House of Representatives on rates paid for
hospital services under managed care entities under contracts
under section 1941(a)(1)(B) of the Social Security Act.
(2) Contents of report.--The information in the report
described in paragraph (1) shall--
(A) be organized by State, type of hospital, type of
service, and
(B) include a comparison of rates paid for hospital
services under managed care entities with rates paid for
hospital services furnished to individuals who are entitled
to benefits under a State plan under title XIX of the Social
Security Act and are not enrolled with such entities.
(c) Reports by States.--Each State shall transmit to the
Secretary, at such time and in such manner as the Secretary
determines appropriate, the information on hospital rates
submitted to such State under section 1947(b)(2) of such Act.
(d) Independent Study and Report on Quality Assurance and
Accreditation Standards.--The Institute of Medicine of the
National Academy of Sciences shall conduct a study and
analysis of the quality assurance programs and accreditation
standards applicable to managed care entities operating in
the private sector or to such entities that operate under
contracts under the medicare program under title XVIII of the
Social Security Act to determine if such programs and
standards include consideration of the accessibility and
quality of the health care items and services delivered under
such contracts to low-income individuals.
SEC. 4. CONFORMING AMENDMENTS.
(a) Repeal of Current Requirements.--
(1) In general.--Except as provided in paragraph (2),
section 1903(m) (42 U.S.C. 1396b(m)) is repealed on the date
of the enactment of this Act.
(2) Existing contracts.--In the case of any contract under
section 1903(m) of such Act which is in effect on the day
before the date of the enactment of this Act, the provisions
of such section shall apply to such contract until the
earlier of--
(A) the day after the date of the expiration of the
contract; or
(B) the date which is 1 year after the date of the
enactment of this Act.
(b) Federal Financial Participation.--
(1) Clarification of application of ffp denial rules to
payments made pursuant to managed care entities.--Section
1903(i) (42 U.S.C. 1396b(i)) is amended by adding at the end
the following sentence: ``Paragraphs (1)(A), (1)(B), (2),
(5), and (12) shall apply with respect to items or services
furnished and amounts expended by or through a managed care
entity (as defined in section 1950(a)(1)) in the same manner
as such paragraphs apply to items or services furnished and
amounts expended directly by the State.''.
(2) FFP for external quality review organizations.--Section
1903(a)(3)(C) (42 U.S.C. 1396b(a)(3)(C)) is amended--
(A) by inserting ``(i)'' after ``(C)'', and
(B) by adding at the end the following new clause:
``(ii) 75 percent of the sums expended with respect to
costs incurred during such quarter (as found necessary by the
Secretary for the proper and efficient administration of the
State plan) as are attributable to the performance of
independent external reviews of managed care entities (as
defined in section 1950(a)(1)) by external quality review
organizations, but only if such organizations conduct such
reviews under protocols approved by the Secretary and only in
the case of such organizations that meet standards
established by the Secretary relating to the independence of
such organizations from agencies responsible for the
administration of this title or eligible managed care
entities; and''.
(c) Exclusion of Certain Individuals and Entities From
Participation in Program.--Section 1128(b)(6)(C) (42 U.S.C.
1320a-7(b)(6)(C)) is amended--
(1) in clause (i), by striking ``a health maintenance
organization (as defined in section 1903(m))'' and inserting
``a managed care entity, as defined in section 1950(a)(1),'';
and
(2) in clause (ii), by inserting ``section 1115 or'' after
``approved under''.
(d) State Plan Requirements.--Section 1902 (42 U.S.C.
1396a) is amended--
(1) in subsection (a)(30)(C), by striking ``section
1903(m)'' and inserting ``section 1941(a)(1)(B)''; and
(2) in subsection (a)(57), by striking ``hospice program,
or health maintenance organization (as defined in section
1903(m)(1)(A))'' and inserting ``or hospice program'';
(3) in subsection (e)(2)(A), by striking ``or with an
entity described in paragraph (2)(B)(iii), (2)(E), (2)(G), or
(6) of section 1903(m) under a contract described in section
1903(m)(2)(A)'' and inserting ``or with a managed care
entity, as defined in section 1950(a)(1);
(4) in subsection (p)(2)--
(A) by striking ``a health maintenance organization (as
defined in section 1903(m))'' and inserting ``a managed care
entity, as defined in section 1950(a)(1),'';
(B) by striking ``an organization'' and inserting ``an
entity''; and
(C) by striking ``any organization'' and inserting ``any
entity''; and
(5) in subsection (w)(1), by striking ``sections
1903(m)(1)(A) and'' and inserting ``section''.
(e) Payment to States.--Section 1903(w)(7)(A)(viii) (42
U.S.C. 1396b(w)(7)(A)(viii)) is amended to read as follows:
``(viii) Services of a managed care entity with a contract
under section 1941(a)(1)(B).''.
(f) Use of Enrollment Fees and Other Charges.--Section 1916
(42 U.S.C. 1396o) is amended in subsections (a)(2)(D) and
(b)(2)(D) by striking ``a health maintenance organization (as
defined in section 1903(m))'' and inserting ``a managed care
entity, as defined in section 1950(a)(1),'' each place it
appears.
(g) Extension of Eligibility for Medical Assistance.--
Section 1925(b)(4)(D)(iv) (42 U.S.C. 1396r-6(b)(4)(D)(iv)) is
amended to read as follows:
``(iv) Enrollment with managed care entity.--Enrollment of
the caretaker relative and dependent children with a managed
care entity, as defined in section 1950(a)(1), less than 50
percent of the membership (enrolled on a prepaid basis) of
which consists of individuals who are eligible to receive
benefits under this title (other than because of the option
offered under this clause). The option of enrollment under
this clause is in addition to, and not in lieu of, any
enrollment option that the State might offer under
subparagraph (A)(i) with respect to receiving services
through a managed care entity in accordance with part B.''.
(h) Payment for Covered Outpatient Drugs.--Section
1927(j)(1) (42 U.S.C. 1396r-8(j)(1)) is amended by striking
``***Health Maintenance Organizations, including those
organizations that contract under section 1903(m),'' and
inserting ``health maintenance organizations and medicaid
managed care organizations, as defined in section
1950(a)(2),''.
(i) Application of Sanctions for Balanced Billing Through
Subcontractors.--
[[Page S5455]]
(1) Section 1128A(b)(2)(B) (42 U.S.C. 1320a-7a(b)) is amended
by inserting ``, including section 1944(b)'' after ``title
XIX''.
(2) Section 1128B(d)(1) (42 U.S.C. 1320a-7b(d)(1)) is
amended by inserting ``or, in the case of an individual
enrolled with a managed care entity under part B of title
XIX, the applicable rates established by the entity under the
agreement with the State agency under such part'' after
``established by the State''.
(j) Repeal of Certain Restrictions on Obstetrical and
Pediatric Providers.--Section 1903(i) (42 U.S.C. 1396b(i)) is
amended by striking paragraph (12).
(k) Demonstration Projects To Study Effect of Allowing
States To Extend Medicaid Coverage for Certain Families.--
Section 4745(a)(5)(A) of the Omnibus Budget Reconciliation
Act of 1990 (42 U.S.C. 1396a note) is amended by striking
``(except section 1903(m)'' and inserting ``(except part
B)''.
(l) Conforming Amendment for Disclosure Requirements for
Managed Care Entities.--Section 1124(a)(2)(A) (42 U.S.C.
1320a-3(a)(2)(A)) is amended by inserting ``managed care
entity under title XIX,'' after ``renal dialysis facility,''.
(m) Elimination of Regulatory Payment Cap.--The Secretary
of Health and Human Services may not, under the authority of
section 1902(a)(30)(A) of the Social Security Act or any
other provision of title XIX of such Act, impose a limit by
regulation on the amount of the capitation payments that a
State may make to qualified entities under such title, and
section 447.361 of title 42, Code of Federal Regulations
(relating to upper limits of payment: risk contracts), is
hereby nullified.
(n) Continuation of Eligibility.--Section 1902(e) (42
U.S.C. 1396a(e)) is amended by striking paragraph (2) and
inserting the following:
``(2) For provision providing for extended liability in the
case of certain beneficiaries enrolled with managed care
entities, see section 1941(c).''.
(o) Conforming Amendments to Freedom-of-Choice
Provisions.--Section 1902(a)(23) (42 U.S.C. 1396a(a)(23)) is
amended--
(1) in the matter preceding subparagraph (A), by striking
``subsection (g) and in section 1915'' and inserting
``subsection (g), section 1915, and section 1941,''; and
(2) in subparagraph (B), by striking ``a health maintenance
organization, or a'' and inserting ``or with a managed care
entity, as defined in section 1950(a)(1), or''.
SEC. 5. EFFECTIVE DATE; STATUS OF WAIVERS.
(a) Effective Date.--Except as provided in subsection (b),
the amendments made by this Act shall apply to medical
assistance furnished--
(1) during quarters beginning on or after October 1, 1997;
or
(2) in the case of assistance furnished under a contract
described in section 4(a)(2), during quarters beginning after
the earlier of--
(A) the date of the expiration of the contract; or
(B) the expiration of the 1-year period which begins on the
date of the enactment of this Act.
(b) Application to Waivers.--
(1) Existing waivers.--If any waiver granted to a State
under section 1115 or 1915 of the Social Security Act (42
U.S.C. 1315, 1396n) or otherwise which relates to the
provision of medical assistance under a State plan under
title XIX of the such Act (42 U.S.C. 1396 et seq.), is in
effect or approved by the Secretary of Health and Human
Services as of the applicable effective date described in
subsection (a), the amendments made by this Act shall not
apply with respect to the State before the expiration
(determined without regard to any extensions) of the waiver
to the extent such amendments are inconsistent with the terms
of the waiver.
(2) Secretarial evaluation and report for existing waivers
and extensions.--
(A) Prior to approval.--On and after the applicable
effective date described in subsection (a), the Secretary,
prior to extending any waiver granted under section 1115 or
1915 of the Social Security Act (42 U.S.C. 1315, 1396n) or
otherwise which relates to the provision of medical
assistance under a State plan under title XIX of the such Act
(42 U.S.C. 1396 et seq.), shall--
(i) conduct an evaluation of--
(I) the waivers existing under such sections or other
provision of law as of the date of the enactment of this Act;
and
(II) any applications pending, as of the date of the
enactment of this Act, for extensions of waivers under such
sections or other provision of law; and
(ii) submit a report to the Congress recommending whether
the extension of a waiver under such sections or provision of
law should be conditioned on the State submitting the request
for an extension complying with the provisions of part B of
title XIX of the Social Security Act (as added by this Act).
(B) Deemed approval.--If the Congress has not enacted
legislation based on a report submitted under subparagraph
(A)(ii) within 120 days after the date such report is
submitted to the Congress, the recommendations contained in
such report shall be deemed to be approved by the Congress.
______
By Mr. GRAHAM (for himself, Mr. Mack, and Mr. Baucus):
S. 865. A bill to provide for improved coordination, communications,
and enforcement related to health care fraud, waste, and abuse, to
create a point of order against legislation which diverts savings
achieved through medicare waste, fraud, and abuse enforcement
activities for purposes other than improving the solvency of the
Federal hospital insurance trust fund under title XVIII of the Social
Security Act, to ensure the integrity of such trust fund, and for other
purposes; to the Committee on Finance.
the medicare anti-fraud act of 1997
Mr. GRAHAM. Mr. President, I rise today, and join my colleagues,
Senator Mack and Senator Baucus, to introduce timely legislation that
addresses a problem that continues to plague the Medicare Program--
fraud and abuse. The premise of this bill is quite simple: if Congress
is to look for cuts in the Medicare Program, it should begin with
eradicating fraud--for several reasons:
First, we cannot fix Medicare while letting fraud erode the system.
The General Accounting Office estimates that the Medicare waste, fraud,
and abuse ripoff rate is about 10 percent. With fraud pilfering the
health system's resources losses to Medicare and the Federal share of
Medicaid could be $30 billion annually. Using the most conservative of
estimates, we could cover an additional 2 million seniors a year with
funds lost just to Medicare waste, fraud, and abuse.
Mr. President, over the next few weeks, Congress will be ironing out
the details of a historic budget agreement--one which will finally
balance the budget. And both Congress and the President deserve credit
for doing so. However, a balanced budget does not come without some
pain--some consequences. For instance, the Medicare Program will
realize cuts of approximately $115 billion over the next 5 years. We
will be asking our Nation's seniors to share in the sacrifice along
with the rest of the country.
Congress cannot, in good conscience, ask the Medicare Program and its
beneficiaries to accept cuts unless we also work hard to eradicate
fraud and abuse. Passage of the Kennedy-Kassebaum legislation last year
was a step in the right direction. But the cheats and swindlers are
clever at gaming the system. It is a sad fact that there will always be
greedy people looking to take advantage of our Nation's seniors. So it
is imperative that Congress be equally vigilant by cracking down on
fraud wherever possible. Passage of my bill will continue the process
and send this signal to the con artists and thieves: ``Your days are
numbered.''
My legislation is crafted to build on State successes. For instance,
one of the most crucial provisions in my bill, modeled after an
extremely successful Florida Medicaid antifraud program, requires
providers of durable medical equipment, home health, and transportation
services to post a $50,000 surety bond to participate in the Medicare
Program.
While a $50,000 bond is relatively inexpensive to post for scrupulous
contractors, at the cost of between $500 and $1,500, the requirement
has achieved tremendous results in my State. Since implementation of
the surety bond requirement, the fly-by-night providers have scattered
like so many roaches when the lights are turned on.
Durable medical equipment suppliers have dropped by 62 percent, from
4,146 to 1,565; home health agencies have decreased by 41 percent, from
738 to 441; providers of transportation services have disenrolled from
the State's Medicaid Programs in droves--from 1,759 to 742, a drop of
58 percent. Fewer providers bilking the State's Medicaid Program is
projected to save over $192 million over the next 2 years in Florida.
Two years ago I spent a day working in the U.S. attorney's Office in
south Florida. I realized then that it was easier to get a provider
number under Medicare than a personal VISA; easier to get a blank check
paid for by the Treasury than a VISA or MasterCard.
This bill requires individuals to provide their social security
number [SSN] and employer identification number [EIN] to get a Medicare
provider number. This will make it more difficult for swindlers to
enter the program. This bill has several other provisions which are
critical to stemming rampant fraud in the Medicare Program:
My bill would enable State fraud control units, often the first line
in the
[[Page S5456]]
fight against health care fraud, to investigate and prosecute fraud in
Federal health care programs.
It would also prevent providers from discharging Medicare debt by
declaring bankruptcy. The bill would also preclude Medicare swindlers
from transferring their business to a family member in order to
circumvent exclusion from the Medicare Program.
This legislation enacts a broad-based Federal statute aimed at
suppressing Medicare fraud. It enhances the arsenal of weapons to
combat fraud and prescribes stiff penalties against those convicted of
fraud.
At the signing of the Medicare bill in Missouri 30 years ago,
President Johnson said that Medicare had been planted with ``the seed
of compassion and duty which have today flowered into care for the sick
and serenity for the fearful.'' Medicare has lived up to its promise.
But fraud is threatening to compromise the integrity of the system. We
have the prescriptions to combat fraud. Now is the time to employ them
if we want to save the integrity of Medicare.
______
By Mrs. HUTCHISON:
S. 866. A bill to amend title 29, United States Code, to provide that
certain voluntary disclosures of violations of Federal law made as a
result of a voluntary environmental audit shall not be subject to
discovery or admitted into evidence during a judicial or administrative
proceeding, and for other purposes; to the Committee on the Judiciary.
The Environmental Protection Partnership Act
Mrs. HUTCHISON. Mr. President, the title of the bill I send to the
desk is the Environmental Protection Partnership Act of 1997. By
introducing this bill, I am suggesting that the Federal Government take
a cue from the States regarding environmental protection. Many State
governments have passed laws that allow for voluntary audits of
environmental compliance. These laws encourage a company to conduct an
audit of its compliance with environmental laws. By conducting the
audit, the company determines whether it is in compliance with all
environmental laws. If it is not, these state laws allow the company,
without penalty, to correct any violations it finds so it will come
into compliance.
What my bill does is let the Federal Government do the same thing. It
lets the Federal Government say to companies all over America, if you
want to do a voluntary audit for environmental compliance, we are going
to let you do that. We will encourage you but not force you to do it.
And we are not going to come in and threaten you with the hammer of the
EPA if you, in fact, move swiftly to come into compliance when you find
that you are not in compliance.
We think this is the most effective way to clean up the air and
water. Our air and water are invaluable natural resources. They are
cleaner than they have been in 25 years, and we want to keep improving
our efforts to guarantee their protection. This bill will ensure that,
in the same fashion as many States have done. It does not preempt State
law. If State laws are on the books, then the State laws prevail. But
this offers companies all over our country the ability to comply with
Federal standards in a voluntary way, to critically assess their
compliance and not be penalized if they then take action to immediately
come into compliance.
So I am asking that we take up this bill very quickly in committee. I
think through this bill we can do a lot of good for America.
Mr. President, today I introduce legislation that will ensure that we
continue to increase the protection of our environment in the United
States. My bill, the Environmental Protection Partnership Act of 1997,
provides incentives for companies to assess their own environmental
compliance. Rather than playing a waiting game for EPA to find
environmental violations, companies will find--and stop--violations.
Many more violations will be corrected, and many others will be
prevented.
Under my bill, if a company voluntarily completes an environmental
audit--a thorough review of its compliance with environmental laws--the
audit report may not be used against the company in court. The report
can be used in court, however, if the company found violations and did
not promptly make efforts to comply. By extending this privilege, a
company that looks for, finds, and remedies problems will continue this
good conduct, and protect the environment.
In addition, if a company does an audit, and promptly corrects any
violations, the company may choose to disclose the violation to EPA. If
the company does disclose the violation, the company will not be
penalized for the violations. By ensuring companies that they will not
be dragged into court for being honest, the bill encourages companies
to find and fix violations and report them to EPA.
This does not mean that companies that pollute go scot-free. Under
this bill, there is no protection for: willful and intentional
violators; companies that do not promptly cure violations; companies
asserting the law fraudulently; or companies trying to evade an
imminent or ongoing investigation. Further, the bill does not protect
companies that have policies that permit ongoing patterns of violations
of environmental laws. And where a violation results in a continuing
adverse public health or environmental effect, a company may not use
the protections of this law.
Nor does this bill mean that EPA loses any authority to find
violations and punish companies for polluting. EPA retains all its
present authority.
At the same time that EPA retains full authority to enforce
environmental laws, I propose to engage every company voluntarily in
environmental protection by creating the incentive for those companies
to find and cure their own violations. This frees EPA to target its
enforcement dollars on the bad actors--the companies that intentionally
pollute our water and air.
Twenty-one States have already passed audit laws. These States
understand that to truly protect the environment, everyone must
participate. These States have made it possible for companies to want
to be good actors and play an active role in environmental protection.
Texas has an audit law. Hundreds of companies have carried out a
voluntary environmental audit, and after only 18 months, companies had
already reported and corrected 50 violations. Other States report
similar success.
My bill does not mandate that States adopt these policies. It does
not mandate that States amend their laws. Quite the opposite. My bill
specifically does not preempt State law. Therefore, a State may choose
not to enact an audit law, but a company in that State can still
conduct a voluntary audit with respect to Federal environmental law.
Further, in a State with an audit law, a company will be able to
thoroughly review its entire State and Federal compliance, and remedy
any violations it may find. Therefore, my bill supports--but does not
supplant--State efforts by encouraging companies to audit their
compliance with Federal environmental laws as well.
We have made great strides in cleaning up our environment over the
past 30 years. To continue this trend, we need to be preventing
pollution, rather than always reacting to environmental problems after
they occur. Even EPA agrees that to achieve this, companies need to
play an active role in environmental protection. In a recent policy
Statement, EPA pointed out that because Government resources are
limited, maximum compliance cannot be achieved without active efforts
by the regulated community to police themselves. The Environmental
Protection Partnership Act will make companies active partners with EPA
in assuring compliance with environmental laws.
I am very pleased to be working with the majority leader on this
legislation and I hope Members on both sides of the aisle will join me
in this effort to increase environmental protection.
______
By Mr. HARKIN (for himself, Mr. Hutchinson, Mr. Reid, Mr. Bryan
and Mr. Rockefeller):
S. 868. A bill to amend the Social Security Act to prohibit persons
from charging for services or products that the Social Security
Administration and Department of Health and Human Services provide
without charge; to the Committee on Finance.
the Social Security Consumer Protections Act
Mr. HARKIN. Mr. President. Today, I am introducing, on behalf of
myself,
[[Page S5457]]
Senators Hutchinson, Reid, Bryan, and Rockefeller, the Social Security
Consumer Protection Act. This is a simple, commonsense legislation that
will arm consumers with the information they need to protect themselves
from a growing type of consumer scam.
Several years ago Congress took an important step toward stamping out
frauds against older Americans. We passed a law making it illegal for
companies to prey upon senior citizens and others by misrepresenting an
affiliation with Social Security or Medicare. After some delay, the
Social Security inspector general has begun to enforce this important
new consumer protection law. However, we are finding that many scam
artists are squirming through a loophole in the law that allows them to
charge unwitting consumers for services that are available free of
charge from Social Security or Medicare.
A recent investigation by my staff found that unsuspecting
consumers--from new parents to senior citizens--are falling prey to con
artists charging them for services that are available free of charge
from the Social Security Administration. Many of the schemes involve
use of materials and names which mislead consumers into believing that
the scam artists are affiliated with the federal government.
Companies operating under official sounding names like Federal
Document Services, Federal Record Service Corp., National Records
Service, and U.S. Document Services are mailing information to
thousands of unsuspecting Americans, including many Iowans. These
companies are scaring people into remitting a fee to receive basic
Social Security benefits and eligibility information such as a new
Social Security number and card for a baby and changing names upon
marriage or divorce.
We began to look into this problem based on a number of complaints
from Iowans who had received these deceptive mailings. One example was
sent to me by Deb Conlee of Fort Dodge. She received a mailing from a
company called Document Service. The official looking letter starts:
``Read Carefully: Important Facts about your Social Security Card. The
response envelope is stamped ``SSA-7701'' giving the impression that it
is connected with the Social Security Administration. The solicitation
goes on to say that she is required to provide Social Security with any
name change associated with her recent marriage and get a new Social
Security card. It then urges her to send them $14.75 to do this. It
says, ``We urge you to do this immediately to help avoid possible
problems where your Social Security benefits or joint income taxes
might be questioned.''
Ms. Conlee paid $60 to this company and was furious when she learned
that she could have gotten the same services free of charge from Social
Security.
Last year I asked Social Security Commissioner Shirley Chater to
investigate the complaints of Iowans and those of consumers like her.
She responded that the services provided by Document Service ``are
completely unnecessary. Not only do they fail to produce any savings of
time or effort for the customer, they also tend to delay issuance of
the new Social Security card.'' While it is now illegal for a company
to imply any direct connection with Social Security or Medicare in
mailings, it is not illegal to charge for the very same services that
are available at no cost from the government.
So while Congress has acted to try and stop scam artists from trying
to fool people into thinking their business is somehow affiliated with
Social Security, Medicare, or some other government agency, many are
skirting around the edges of this law and are conning consumers into
paying for services that they can get free of charge. Nowhere in any of
the mailings from these outfits that I have reviewed is there any
mention that the services they offer are in fact available to consumers
at no cost from the government.
The Social Security Consumer Protection Act would require that any
such solicitation prominently display the following consumer alert:
``IMPORTANT PUBLIC DISCLOSURE: The product or service described here
and assistance to obtain the product or service is available free of
charge from the Social Security Administration or the Department of
Health and Human Services.'' Armed with this information, consumers
would be able to make informed decisions about where to obtain the
service they need or want. Companies found to be in violation of this
simple requirement would face fines.
Our legislation would not stop the provision of services by private
companies. Rather, it would simply make sure that consumers are fully
informed, so that they can make an informed choice about where and how
they prefer to receive certain services.
These scams must be put to an end. A simple change in the law would
go a long way toward stopping them. The bill we are introducing today
would make such a change without imposing an undue burden on legitimate
businesses or restricting consumer freedom of choice.
Mr. President, this legislation has been endorsed by the National
Committee to Preserve Social Security and Medicare. The National
Committee is an effective and aggressive advocate of the rights of
older Americans. I am pleased to have their endorsement and ask
unanimous consent to include a copy of their letter of support be
printed in the Record.
I urge my colleagues to review this bill and to work with us to
ensure its prompt approval.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
National Committee to Preserve
Social Security and Medicare,
Washington, DC, May 8, 1997.
Hon. Tom Harkin,
U.S. Senate,
Washington, DC.
Dear Senator Harkin: On behalf of the 5.5 million members
and supporters of the National Committee to Preserve Social
Security and Medicare, I am pleased to offer our endorsement
of your legislation, the Social Security Consumer Protection
Act.
Your legislation would require that any business which
solicits direct payment for services which the Social
Security Administration provides free of charge must include
a clear and prominent written disclaimer. Your bill would
also impose new civil and criminal penalties for failure to
comply with its provisions. A growing number of businesses
have emerged across the country which, for a direct fee,
assist individuals who seek to change their names, social
security numbers, or obtain other information relative to
their work record. Unfortunately, some of these enterprises
do not adequately inform would be consumers that they are not
affiliated with the federal government, or that such services
are provided free of charge by the government. As a
consequence, some individuals may be led to believe that they
must pay the fee to obtain these services.
We appreciate your leadership on this important matter.
People should not be coerced to pay twice for services which
are already provided with their hard earned tax dollars.
Sincerely,
Martha A McSteen, President.
______
By Mr. JEFFORDS (for himself, Mr. Kennedy, Mr. Lieberman, Mr.
Torricelli, Mr. Wyden, Mr. Bingaman, Mr. Kerry, Mr. Wellstone,
Mr. Harkin, Ms. Landrieu, Mr. Feingold, Mrs. Murray, Mrs.
Boxer, Mr. Levin, Mr. Sarbanes, Mr. Akaka, Mr. Lautenberg, Mr.
Durbin, Mr. Chafee, Mr. Kohl, Mr. Inouye, Ms. Mikulski, Mr.
Robb, Mr. Moynihan, Mrs. Feinstein, Mr. Dodd, Mr. Reid, Mr.
Leahy, Mr. Bryan, Ms. Moseley-Braun, Mr. Glenn, Mr. Kerrey, Mr.
Reed, Mr. D'Amato, and Mr. Cleland):
S. 869. A bill to prohibit employment discrimination on the basis of
sexual orientation; to the Committee on Labor and Human Resources.
The Employment Non-Discrimination Act of 1997
Mr. JEFFORDS. Mr. President, I am pleased to be here today to
introduce the Employment Non-Discrimination Act of 1997 [ENDA]. As many
of you recall, my colleagues and I introduced similar legislation in
the last Congress. While we were unable to pass ENDA in the last
Congress, I was encouraged that ENDA was only narrowly defeated, by a
vote of 50 to 49. It is my hope that in the 105th Congress, we can
bridge that narrow gap and pass this legislation. By extending to
sexual orientation the same Federal employment discrimination
protections established for race, religion, gender, national origin,
age, and disability, this legislation will further ensure that
principals of equality and opportunity apply to all Americans.
[[Page S5458]]
I believe that all Americans deserve to be judged at work based on
their ability to do their jobs and not their sexual orientation. People
who work hard and perform well should not be kept from leading
productive and responsible lives because of an irrational, non-work-
related prejudice. Unfortunately, many responsible and productive
members of our society face discrimination in their workplaces based on
nothing more than their sexual orientation. Because this insidious
discrimination persists, there is a need for Congress to pass the
Employment Non-Discrimination Act.
Mr. President, the Senate's vote last Congress is no doubt reflective
of the American people's support of the concept behind ENDA. In a
recent poll, 83 percent of the respondents support the passage of a law
extending civil rights and preventing job discrimination against gays
and lesbians. While ENDA will achieve this goal of equal rights for job
opportunities, it does so by not creating any special rights for gays
and lesbians. Specifically, this legislation prohibits preferential
treatment based on sexual orientation. In addition, ENDA does not
require an employer to justify a neutral practice that may have a
statistically disparate impact based on sexual orientation, nor provide
benefits for the same-sex partner of an employee. Rather, it simply
protects a right that should belong to every American, the right to be
free from discrimination at work because of personal characteristics
unrelated to successful performance on the job.
Since ENDA's narrow defeat last September, we have taken a fresh look
at this important legislation in an attempt to allay some of the
concerns raised by ENDA's detractors in the last Congress. I am pleased
to announce that we have made several significant improvements in the
bill.
Our first change is intended to address the concern raised that
employees' privacy rights would be violated if the Equal Employment
Opportunity Commission [EEOC] required employers to provide the
Government with data on the sexual orientation of their employees. As a
result, the bill now prohibits the EEOC from collecting such statistics
and from compelling employers to do so. Opponents of the previous
legislation were also concerned that the EEOC would require employers
who have violated ENDA to hire gay and lesbian employees as part of its
enforcement scheme. To alleviate that possibility, the new legislation
precludes the EEOC from entering into a consent decree that includes
quotas, or gives preferential treatment based on sexual orientation. In
addition, we have narrowed the language of the previous bill so that
only actual paid employees are protected and we have attempted to
ensure that exempted religious organizations from coverage.
In today's global economy, our Nation must take full advantage of
every resource that is at our disposal if we want U.S. companies to
maintain their competitive advantage over their international
competitors. The fact that a majority of Fortune 500 companies have
incorporated many of ENDA's policies, clearly indicates the acceptance
of these changes within the workplace. In fact, it can be stated that
without these American companies, on their own, undertaking these
actions to insure adequate working protections for all of their
employees they would be less competitive and may even be unable to
maintain their existence within this fiercely competitive international
environment.
Mr. President, some concern has been raised by my colleagues that
passing ENDA will create a new wave of litigation. I am proud to say
that my home State of Vermont is one of several States and localities
that have enacted a sexual orientation anti-discrimination law, and it
is no surprise, to me, that the sky has not fallen. Since the enactment
of Vermont's law in 1991 the Vermont Attorney General has initiated
only 17 investigations of alleged sexual orientation discrimination.
Seven are pending at this time. Five have been closed with
determinations that unlawful discrimination cannot be proven to have
occurred. Four have been closed for miscellaneous administrative
reasons, unrelated to the merits of the charge, and one resulted in a
settlement. In addition, I am not aware of a single complaint from
Vermont employers about the enforcement of the State law. However, I do
know that thousands of Vermonters no longer need to live and work in
the shadows. The facts bear out my belief that the effect experienced
in Vermont on litigation has been experienced in other States and the
District of Columbia that have implemented policies similar to the one
of my home State of Vermont.
As I have stated before, success at work should be directly related
to one's ability to do the job, period. The passage of ENDA would be a
significant step toward ensuring the ability of all people, be they
gay, lesbian, or heterosexual, to be fairly judged on their work
product, not on an unrelated personal characteristic. I urge all my
colleagues to join me in supporting this bill.
I ask unanimous consent that a copy of this bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 869
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 ``Employment Non-
Discrimination Act of 1997''.
SEC. 2. PURPOSES.
The purposes of this Act are--
(1) to provide a comprehensive Federal prohibition of
employment discrimination on the basis of sexual orientation;
(2) to provide meaningful and effective remedies for
employment discrimination on the basis of sexual orientation;
and
(3) to invoke congressional powers, including the powers to
enforce the 14th amendment to the Constitution and to
regulate interstate commerce, in order to prohibit employment
discrimination on the basis of sexual orientation.
SEC. 3. DEFINITIONS.
In this Act:
(1) Commission.--The term ``Commission'' means the Equal
Employment Opportunity Commission.
(2) Covered entity.--The term ``covered entity'' means an
employer, employment agency, labor organization, joint labor-
management committee, an entity to which section 717(a) of
the Civil Rights Act of 1964 (42 U.S.C. 2000e-16(a)) applies,
an employing authority to which section 302(a)(1) of the
Government Employee Rights Act of 1991 (2 U.S.C. 1202(a)(1))
applies, or an employing office, as defined in section 101 of
the Congressional Accountability Act of 1995 (2 U.S.C. 1301).
The term ``covered entity'' includes an employing office, as
defined in section 401 of title 3, United States Code.
(3) Employer.--The term ``employer'' means a person engaged
in an industry affecting commerce (as defined in section
701(h) of the Civil Rights Act of 1964 (42 U.S.C. 2000e(h)))
who has 15 or more employees (as defined in section 701(f) of
such Act (42 U.S.C. 2000e(f)) for each working day in each of
20 or more calendar weeks in the current or preceding
calendar year, and any agent of such a person, but such term
does not include a bona fide private membership club (other
than a labor organization) that is exempt from taxation under
section 501(c) of the Internal Revenue Code of 1986.
(4) Employment agency.--The term ``employment agency'' has
the meaning given the term in section 701(c) of the Civil
Rights Act of 1964 (42 U.S.C. 2000e(c)).
(5) Employment or an employment opportunity.--Except as
provided in section 10(a)(1), the term ``employment or an
employment opportunity'' includes job application procedures,
hiring, advancement, discharge, compensation, job training,
or any other term, condition, or privilege of employment, but
does not include the service of a volunteer for which the
volunteer receives no compensation.
(6) Labor organization.--The term ``labor organization''
has the meaning given the term in section 701(d) of the Civil
Rights Act of 1964 (42 U.S.C. 2000e(d)).
(7) Person.--The term ``person'' has the meaning given the
term in section 701(a) of the Civil Rights Act of 1964 (42
U.S.C. 2000e(a)).
(8) Religious organization.--The term ``religious
organization'' means--
(A) a religious corporation, association, or society; or
(B) a school, college, university, or other educational
institution or institution of learning, if--
(i) the institution is in whole or substantial part
controlled, managed, owned, or supported by a religion,
religious corporation, association, or society; or
(ii) the curriculum of the institution is directed toward
the propagation of a religion.
(9) Sexual orientation.--The term ``sexual orientation''
means homosexuality, bisexuality, or heterosexuality, whether
the orientation is real or perceived.
(10) State.--The term ``State'' has the meaning given the
term in section 701(i) of the Civil Rights Act of 1964 (42
U.S.C. 2000e(i)).
SEC. 4. DISCRIMINATION PROHIBITED.
A covered entity shall not, with respect to the employment
or an employment opportunity of an individual--
(1) subject the individual to a different standard or
different treatment, or otherwise
[[Page S5459]]
discriminate against the individual, on the basis of sexual
orientation; or
(2) discriminate against the individual based on the sexual
orientation of a person with whom the individual is believed
to associate or to have associated.
SEC. 5. RETALIATION AND COERCION PROHIBITED.
(a) Retaliation.--A covered entity shall not discriminate
against an individual because the individual opposed any act
or practice prohibited by this Act or because the individual
made a charge, assisted, testified, or participated in any
manner in an investigation, proceeding, or hearing under this
Act.
(b) Coercion.--A person shall not coerce, intimidate,
threaten, or interfere with any individual in the exercise or
enjoyment of, or on account of the individual's having
exercised, enjoyed, assisted in, or encouraged the exercise
or enjoyment of, any right granted or protected by this Act.
SEC. 6. BENEFITS.
This Act does not apply to the provision of employee
benefits to an individual for the benefit of the partner of
the individual.
SEC. 7. NO DISPARATE IMPACT; COLLECTION OF STATISTICS.
(a) Disparate Impact.--The fact that an employment practice
has a disparate impact, as the term ``disparate impact'' is
used in section 703(k) of the Civil Rights Act of 1964 (42
U.S.C. 2000e-2(k)), on the basis of sexual orientation does
not establish a prima facie violation of this Act.
(b) Collection of Statistics.--The Commission shall not
collect statistics on sexual orientation from covered
entities, or compel the collection of such statistics by
covered entities.
SEC. 8. QUOTAS AND PREFERENTIAL TREATMENT PROHIBITED.
(a) Quotas.--A covered entity shall not adopt or implement
a quota on the basis of sexual orientation.
(b) Preferential Treatment.--A covered entity shall not
give preferential treatment to an individual on the basis of
sexual orientation.
(c) Consent Decrees.--The Commission may not enter into a
consent decree that includes a quota, or preferential
treatment to an individual, based on sexual orientation.
SEC. 9. RELIGIOUS EXEMPTION.
(a) In General.--Except as provided in subsection (b), this
Act shall not apply to a religious organization.
(b) Unrelated Business Taxable Income.--This Act shall
apply to employment or an employment opportunity for an
employment position of a covered entity that is a religious
organization, if the duties of the position pertain solely to
activities of the organization that generate unrelated
business taxable income subject to taxation under section
511(a) of the Internal Revenue Code of 1986.
SEC. 10. NONAPPLICATION TO MEMBERS OF THE ARMED FORCES;
VETERANS' PREFERENCES.
(a) Armed Forces.--
(1) Employment or an employment opportunity.--In this Act,
the term ``employment or an employment opportunity'' does not
apply to the relationship between the United States and
members of the Armed Forces.
(2) Armed forces.--In paragraph (1), the term ``Armed
Forces'' means the Army, Navy, Air Force, Marine Corps, and
Coast Guard.
(b) Veterans' Preferences.--This Act does not repeal or
modify any Federal, State, territorial, or local law creating
a special right or preference concerning employment or an
employment opportunity for a veteran.
SEC. 11. CONSTRUCTION.
Nothing in this Act shall be construed to prohibit a
covered entity from enforcing rules regarding nonprivate
sexual conduct, if the rules of conduct are designed for, and
uniformly applied to, all individuals regardless of sexual
orientation.
SEC. 12. ENFORCEMENT.
(a) Enforcement Powers.--With respect to the administration
and enforcement of this Act in the case of a claim alleged by
an individual for a violation of this Act--
(1) the Commission shall have the same powers as the
Commission has to administer and enforce--
(A) title VII of the Civil Rights Act of 1964 (42 U.S.C.
2000e et seq.); or
(B) sections 302 and 304 of the Government Employee Rights
Act of 1991 (2 U.S.C. 1202 and 1220);
in the case of a claim alleged by the individual for a
violation of such title or of section 302(a)(1) of such Act
(2 U.S.C. 1202(a)(1)), respectively;
(2) the Librarian of Congress shall have the same powers as
the Librarian of Congress has to administer and enforce title
VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e et seq.)
in the case of a claim alleged by the individual for a
violation of such title;
(3) the Board (as defined in section 101 of the
Congressional Accountability Act of 1995 (2 U.S.C. 1301))
shall have the same powers as the Board has to administer and
enforce the Congressional Accountability Act of 1995 (2
U.S.C. 1301 et seq.) in the case of a claim alleged by the
individual for a violation of section 201(a)(1) of such Act
(2 U.S.C. 1311(a)(1));
(4) the Attorney General shall have the same powers as the
Attorney General has to administer and enforce--
(A) title VII of the Civil Rights Act of 1964 (42 U.S.C.
2000e et seq.); or
(B) sections 302 and 304 of the Government Employee Rights
Act of 1991 (2 U.S.C. 1202 and 1220);
in the case of a claim alleged by the individual for a
violation of such title or of section 302(a)(1) of such Act
(2 U.S.C. 1202(a)(1)), respectively;
(5) the President, the Commission, and the Merit Systems
Protection Board shall have the same powers as the President,
the Commission, and the Board, respectively, have to
administer and enforce chapter 5 of title 3, United States
Code, in the case of a claim alleged by the individual for a
violation of section 411 of such title;
(6) a court of the United States shall have the same
jurisdiction and powers as the court has to enforce--
(A) title VII of the Civil Rights Act of 1964 (42 U.S.C.
2000e et seq.) in the case of a claim alleged by the
individual for a violation of such title;
(B) sections 302 and 304 of the Government Employee Rights
Act of 1991 (2 U.S.C. 1202 and 1220) in the case of a claim
alleged by the individual for a violation of section
302(a)(1) of such Act (2 U.S.C. 1202(a)(1));
(C) the Congressional Accountability Act of 1995 (2 U.S.C.
1301 et seq.) in the case of a claim alleged by the
individual for a violation of section 201(a)(1) of such Act
(2 U.S.C. 1311(a)(1)); and
(D) chapter 5 of title 3, United States Code, in the case
of a claim alleged by the individual for a violation of
section 411 of such title.
(b) Procedures and Remedies.--The procedures and remedies
applicable to a claim alleged by an individual for a
violation of this Act are--
(1) the procedures and remedies applicable for a violation
of title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e
et seq.) in the case of a claim alleged by the individual for
a violation of such title;
(2) the procedures and remedies applicable for a violation
of section 302(a)(1) of the Government Employee Rights Act of
1991 (2 U.S.C. 1202(a)(1)) in the case of a claim alleged by
the individual for a violation of such section;
(3) the procedures and remedies applicable for a violation
of section 201(a)(1) of the Congressional Accountability Act
of 1995 (2 U.S.C. 1311(a)(1)) in the case of a claim alleged
by the individual for a violation of such section; and
(4) the procedures and remedies applicable for a violation
of section 411 of title 3, United States Code, in the case of
a claim alleged by the individual for a violation of such
section.
(c) Other Applicable Provisions.--With respect to a claim
alleged by a covered employee (as defined in section 101 of
the Congressional Accountability Act of 1995 (2 U.S.C. 1301))
for a violation of this Act, title III of the Congressional
Accountability Act of 1995 (2 U.S.C. 1381 et seq.) shall
apply in the same manner as such title applies with respect
to a claim alleged by such a covered employee for a violation
of section 201(a)(1) of such Act (2 U.S.C. 1311(a)(1)).
SEC. 13. STATE AND FEDERAL IMMUNITY.
(a) State Immunity.--A State shall not be immune under the
11th amendment to the Constitution from an action in a
Federal court of competent jurisdiction for a violation of
this Act.
(b) Remedies Against the United States and the States.--
Notwithstanding any other provision of this Act, in an action
or administrative proceeding against the United States or a
State for a violation of this Act, remedies (including
remedies at law and in equity, and interest) are available
for the violation to the same extent as the remedies are
available for a violation of title VII of the Civil Rights
Act of 1964 (42 U.S.C. 2000e et seq.) by a private entity,
except that--
(1) punitive damages are not available; and
(2) compensatory damages are available to the extent
specified in section 1977A(b) of the Revised Statutes (42
U.S.C. 1981a(b)).
SEC. 14. ATTORNEYS' FEES.
Notwithstanding any other provision of this Act, in an
action or administrative proceeding for a violation of this
Act, an entity described in section 12(a) (other than
paragraph (4) of such section), in the discretion of the
entity, may allow the prevailing party, other than the United
States, a reasonable attorney's fee (including expert fees)
as part of the costs.The United States shall be liable for
the costs to the same extent as a private person.
SEC. 15. POSTING NOTICES.
A covered entity shall post notices for employees,
applicants for employment, and members, to whom the
provisions specified in section 12(b) apply, that describe
the applicable provisions of this Act in the manner
prescribed by, and subject to the penalty provided under,
section 711 of the Civil Rights Act of 1964 (42 U.S.C. 2000e-
10).
SEC. 16. REGULATIONS.
(a) In General.--Except as provided in subsections (b),
(c), and (d), the Commission shall have authority to issue
regulations to carry out this Act.
(b) Librarian of Congress.--The Librarian of Congress shall
have authority to issue regulations to carry out this Act
with respect to employees of the Library of Congress.
(c) Board.--The Board referred to in section 12(a)(3) shall
have authority to issue regulations to carry out this Act, in
accordance with section 304 of the Congressional
Accountability Act of 1995 (2 U.S.C. 1384), with respect to
covered employees, as defined in section 101 of such Act (2
U.S.C. 1301).
(d) President.--The President shall have authority to issue
regulations to carry out this Act with respect to covered
employees, as defined in section 401 of title 3, United
States Code.
[[Page S5460]]
SEC. 17. RELATIONSHIP TO OTHER LAWS.
This Act shall not invalidate or limit the rights,
remedies, or procedures available to an individual claiming
discrimination prohibited under any other Federal law or any
law of a State or political subdivision of a State.
SEC. 18. SEVERABILITY.
If any provision of this Act, or the application of the
provision to any person or circumstance, is held to be
invalid, the remainder of this Act and the application of the
provision to any other person or circumstance shall not be
affected by the invalidity.
SEC. 19. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b), this
Act shall take effect 60 days after the date of enactment of
this Act and shall not apply to conduct occurring before the
effective date.
(b) Presidential Offices.--The second sentence of section
3(2), and sections 12(a)(5), 12(a)(6)(D), 12(b)(4), and
16(d), shall take effect on, and shall not apply to conduct
occurring before, the later of--
(1) October 1, 1997; and
(2) the effective date described in subsection (a).
Mr. LIEBERMAN. Mr. President, I am delighted to join with Senators
Jeffords, Kennedy, and over 30 of our colleagues as an original
cosponsor of this important legislation, the Employment Non-
Discrimination Act of 1997. By guaranteeing that American workers
cannot lose their jobs simply because of their actual or perceived
sexual orientation, this bill would extend the bedrock American values
of fairness and equality to a group of our citizens who too often have
been denied the benefit of those most basic values.
Our Nation's foundational document, the Declaration of Independence,
expressed a vision of our country as one premised upon the essential
equality of all people and upon the recognition that our Creator
endowed all of us with the inalienable rights to life, liberty, and the
pursuit of happiness. Two hundred and twenty years ago, when that
document was drafted, our laws fell far short of implementing the
declaration's ideal. But since that time, we have come ever closer,
extending by law to more and more of our citizens--to African-
Americans, to women, to disabled Americans, to religious minorities,
and to others--a legally enforceable guarantee that, with respect to
their ability to earn a living at least, they will be treated on their
merits and not on characteristics unrelated to their ability to do
their jobs.
It is time to extend that guarantee to gay men and lesbians, who too
often have been subject to incidents of discrimination and denied the
most basic of rights: the right to obtain and maintain a job. A
collection of nearly two dozen studies shows that as many as 46 percent
of gay and lesbian workers have experienced significant discrimination
in the workplace. The fear in which these workers live was clear from a
survey of 1,400 gay men and lesbians in Philadelphia. Seventy-six
percent of the men and 81 percent of the women told those conducting
the survey that they hide their orientation at work out of concern for
their job security. This result, although unfortunate, is not
surprising in light of a University of Maryland study that found gay
men's income to be 11 to 27 percent lower than that of heterosexual
men, thanks to the effects of discrimination.
The toll this discrimination takes extends far beyond its effect on
those individuals who must live in fear and without full employment
opportunities. It also takes an unacceptable toll on America's
definition of itself as a land of equality and opportunity, as a place
where we judge each other on our merits, and as a country that teaches
its children that anyone can succeed here as long as they are willing
to do their job and work hard.
This bill provides for equality and fairness--that and no more. It
says only what we already have said for women, for people of color, and
for others: that you are entitled to have your ability to earn a living
depend only on your ability to do the job and nothing else. In fact,
the bill would even do somewhat less than it does for women and people
of color, because it would not give gay men and women all of the
protections we currently provide to other groups protected under our
civil rights laws.
Mr. President, this bill would bring our Nation one large step closer
to realizing the vision that Thomas Jefferson so eloquently expressed
220 years ago when he wrote that all of us have a right to life,
liberty, and the pursuit of happiness. I urge my colleagues to join me
in supporting this important legislation.
______
By Mr. WELLSTONE:
S. 870. A bill to amend the Federal Food, Drug, and Cosmetic Act to
facilitate the development, approval, and use of medical devices to
maintain and improve the public health and quality of life of
individuals, and for other purposes; to the Committee on Labor and
Human Resources.
THE MEDICAL TECHNOLOGY, PUBLIC HEALTH, AND INNOVATION ACT OF 1997
Mr. WELLSTONE. Mr. President, the legislation that I am introducing
today, the Medical Technology, Public Health and Innovation Act of
1997, takes a significant step toward improving the effectiveness,
timeliness, and predictability of the FDA review process for medical
devices.
It is important that we improve the system for device approval in
order to provide access to optimal technology to American consumers. We
need to do this in order to promote the public health. We must also
maintain protections for consumers, which are provided by the FDA's
oversight of device manufacturing, development, and marketing. This
legislation maintains those protections, while allowing for new
efficiencies within the FDA.
Over the past 2 years, I have met with numerous representatives of
Minnesota's medical device industry, patient advocates, clinicians, and
officials from the FDA, and have concluded that there are indeed steps
that Congress should take to make the regulatory process for medical
devices more efficient. Minnesotans want the FDA not only to protect
public health, but also to promote public health. They want to know not
only that new technologies will be safe, but that they will be
available to them in a timely manner. Many of Minnesota's medical
device manufacturers, researchers, clinicians, and patients in need of
new and improved health care technology have become increasingly
concerned about the regulatory environment at the FDA. While there have
been some improvements in the device review process, there is still a
need to increase communication between the FDA and industry; to
decrease review times; and to have consistency in the review process.
These needs are highlighted by the following example. A plant
operated by a Minnesota-based device company was developing a new
treatment for aortic aneurysms, which would require less invasive
measures than are currently used. The company developed a protocol for
testing its product, submitted the protocol to the FDA and was told by
the reviewer that the protocol was invalid. The reviewer suggested a
different protocol and the company followed it. Upon completion of the
clinical trial, the company submitted the required data to the FDA. The
original reviewer was on an extended leave of absence, so the data went
to a different reviewer. The new reviewer deemed the protocol that was
used to be invalid, and requested a new clinical trial, which basically
followed the protocol that had been rejected by the first reviewer. The
company was forced to do a new trial, which resulted in significant
delays in getting this important product to market for patient use. I
am certain that this is but one of many examples of inconsistently
applied processes that delay the release of life-saving technology
to the consumer.
The technologies that the FDA regulates are changing rapidly. We
cannot afford a regulatory system that is ill-equipped to speed these
advances. As a result, both Congress and the Administration are
reexamining the paradigms that have governed the FDA. Our challenge
will be to define FDA's mission and scope of responsibility, as well as
to give guidance on an appropriate balance between the risks and
rewards of streamlining all aspects of how FDA does its job--including
the approval process for breakthrough products.
The legislation that I am introducing would begin to address these
issues in three important ways:
First, it would enable the FDA to adopt nationally and
internationally recognized performance standards to improve the
transparency and effectiveness of the device review process.
[[Page S5461]]
Resource constraints and the time-consuming rulemaking process have
precluded FDA promulgation of performance standards in the past. This
legislation would allow the FDA, when appropriate, to simply adopt
consensus standards that are already being used by most of the world
and use those standards to assist in determining the safety and
effectiveness of class III medical devices. The FDA could require
additional data from a manufacturer relevant to an aspect of a device
covered by an adopted performance standard if necessary to protect
patient safety. Currently, the lack of clear performance standards for
class III medical devices is a barrier to the improvement of the
quality and timeliness of the premarket approval process.
Second, it would improve communication between the industry and the
FDA and the predictability of the review process. I believe that these
two factors are extremely important. The bill includes provisions for
meetings between the applicant and the FDA to ensure that applicants
are promptly informed of any deficiencies in their application, that
questions that can be answered easily would be addressed right away,
and that applicants would be well informed about the status of their
application. I believe that improving communication between the FDA and
industry would result in greater compliance with regulations and that
this will ultimately benefit consumers and patients.
Third, the legislation would help the FDA focus its resources more
appropriately. PMA supplements or 510(k)'s that relate only to changes
that can be shown to not adversely affect the safety or effectiveness
of the device would not require premarket approval or notification.
Manufacturers would instead make information and data supporting the
change part of the master record at the FDA. In addition the FDA would
be able to exempt from premarket notification requirements those class
II devices for which such requirements are unnecessary to ensure the
public health without first having to go through the time consuming and
bureaucratic process of reclassifying them to class I. The FDA would
also have the option of relying on postmarket controls classifying
devices. Enabling the FDA to focus its attention where the real risks
are will not only streamline the approval process but also benefit
consumers.
I look forward to working with Senator Jeffords, the chairman of the
Labor and Human Resources Committee, and my other colleagues on the
Committee on the concepts included in my proposal. I will work
vigorously to ensure that they are included in FDA legislation
considered by the Senate this year. I look forward to continuing to
work on these issues with Minnesotans. Clearly, there are actions that
Congress can take to improve the FDA without sacrificing the assurance
of safety that all Americans depend on.
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. 870
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND REFERENCE.
(a) Short Title.--This Act may be cited as the ``Medical
Technology, Public Health, and Innovation Act of 1997''.
(b) Reference.--Whenever in this Act an amendment or repeal
is expressed in terms of an amendment to, or a repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provisions of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 321 et seq.)
SEC. 2. FINDINGS; MISSIONS STATEMENT.
(a) Findings.--The Congress finds the following:
(1) While the United States appropriately puts a top
priority on the regulation of medical technologies to ensure
the safety and efficacy of medical technologies that are
introduced into the marketplace, the administration of such
regulatory effort is causing the United States to lose its
leadership role in producing innovative, top-quality medical
devices.
(2) One of the key components of the medical device
regulatory process that contributes to the United States
losing its leadership role in medical device development is
the inordinate amount of time it takes for medical
technologies to be reviewed by the Food and Drug
Administration.
(3) The most important result of the United States losing
its leadership role is that patients in the United States do
not have access to new medical technology in a timely manner.
(4) Delayed patient access to new medical technology
results in lost opportunities to save lives, to reduce
hospitalization and recovery time, and to improve the quality
of life of patients.
(5) The economic benefits of the United States medical
device industry, which is composed principally of smaller
companies, has provided through growth in jobs and global
trade are threatened by the slow and unpredictable regulatory
process at the Food and Drug Administration.
(6) The pace and predictability of the medical device
regulatory process are in part responsible for the increasing
tendency of United States medical device companies to shift
research, product development, and manufacturing offshore, at
the expense of American jobs, patients, and leading edge
clinical research.
(b) Mission Statement.--This legislation seeks to improve
the timeliness, effectiveness, and predictability of the
medical device approval process for the benefit of United
States patients and the United States economy by--
(1) providing for the use of nationally and internationally
recognized performance standards to assist the Food and Drug
Administration in determining the safety and effectiveness of
medical devices;
(2) facilitating communication between medical device
companies and the Food and Drug Administration;
(3) targeting the use of Food and Drug Administration
resources on medical devices that are likely to have serious
adverse health consequences; and
(4) requiring the Food and Drug Administration to determine
the least costly, most efficient approach to reasonably
assuring the safety and effectiveness of devices.
SEC. 3. DEVICE PERFORMANCE STANDARDS.
(A) Alternative Procedure.--Section 514 (21 U.S.C. 360d) is
amended by adding at the end the following:
``recognition of a performance standard
``(c)(1)(A) The Secretary, through publication in the
Federal Register, issue notices identifying and listing
nationally and internationally recognized performance
standards for which persons may provide a certification of a
device's conformity under paragraph (3) in order to meet the
premarket submission requirements or other requirements under
the Act to which the standards are applicable.
``(B) Any person may elect to utilize data other than data
required by the standards described in subparagraph (A) to
meet any requirement under the Act to which the standards are
applicable.
``(2) The Secretary may remove from the list of standards
described in paragraph (1) a standard that the Secretary
determines is no longer appropriate for making determinations
with respect to the regulation of devices.
``(3)(A) A person may provide a certification that a device
conforms to an applicable standard listed under paragraph (1)
to meet the requirements described in paragraph (1) and the
Secretary shall accept such certification.
``(B) The Secretary may, at any time, request a person who
submits a certification described in subparagraph (A) to
submit the data or information that the person relied on in
making the certification.
``(C) A person who submits a certification described in
subparagraph (A) shall maintain the data and information upon
which the certification was made for a period of 2 years
after the submission of the certification or a time equal to
the expected design life of a device, whichever is longer.''.
(b) Section 301.--Section 301 (21 U.S.C. 331) is amended by
adding at the end the following:
``(x) The falsification of a certification submitted under
section 514(c)(3) or the failure or refusal to provide data
or information requested by the Secretary under such
section.''.
(c) Section 501.--Section 501(e) (21 U.S.C. 351(e)) is
amended by striking ``established'' and inserting
``established or listed''.
SEC. 4. PREMARKET APPROVAL.
(a) Application.--Section 515(c) (21 U.S.C. 360e(c)) is
amended--
(1) in paragraph (1)--
(B) in subparagraph (F), by striking ``; and'' and
inserting a semicolon;
(C) in subparagraph (G), by striking ``require.'' and
inserting ``require; and''; and
(D) by adding at the end the following:
``(H) an identifying reference to any performance standard
listed under section 514(c) that is applicable to such
device.
(2) by adding at the end the following:
``(3) The Secretary shall accept historical clinical data
as a control for use in determining whether there is a
reasonable assurance of safety and effectiveness of a device
in a case in which the effects of the progression of a
disease are clearly defined and well understood.
``(4) The Secretary may not require the sponsor of an
application to conduct clinical trials for a device using
randomized controls unless the controls--
``(A) are necessary;
``(B) are scientifically and ethically feasible; and
``(C) other less burdensome controls, such as historical
controls, are not available to permit a determination of a
reasonable assurance of safety and effectiveness.''.
(b) Action on Application.--Section 515(d) (21 U.S.C.
30e(d)) is amended--
[[Page S5462]]
(1) in paragraph (1)(A)--
(A) by striking ``paragraph (2) of this subsection'' each
place it appears and inserting ``paragraph (8)''; and
(B) by adding at the end the following flush paragraph:
``In making a determination to approve or deny an
application, the Secretary shall rely on the conditions of
use proposed in the labeling of device as the basis for
determining whether or not there is a reasonable assurance of
safety and effectiveness. If, based on a fair evaluation of
all material facts, the proposed labeling of the device is
neither false nor misleading in any particular, the Secretary
shall not consider conditions of use not included in such
labeling in making the determination.'';
(3) by redesignating paragraphs (2) and (3) as paragraphs
(8) and (9), respectively; and
(3) by inserting after paragraph (1) the following:
``(2) Each application received under subsection (c) shall
be reviewed in a manner to achieve final action within the
180-day period described in subparagraph (A), and the 180-day
period may not be altered for any reason without the written
consent of an applicant.
``(3)(A) Not later than 100 days after the receipt of an
application that has been filed by the Secretary because the
application satisfies the content requirements of subsection
(c)(1), the Secretary shall meet with the applicant and
disclose each deficiency relating to the application that
would preclude approval of the application under paragraph
(1).
``(B) The applicant shall have the right to be informed in
writing with respect to the information communicated to the
applicant during the meeting.
``(4) To permit better treatment or better diagnoses of
life-threatening or irreversibly debilitating diseases or
conditions, the Secretary shall expedite the review for
devices--
``(A) representing breakthrough technologies;
``(B) offering significant advantages over existing
approved alternatives; or
``(C) for which accelerated availability is in the best
interest of the public health.
``(5) The Secretary shall complete the review of all
supplemental applicants to an application approved under
paragraph (1) that do not contain clinical data within 90
days after the receipt of a supplement that has been accepted
for filing.
``(6)(A) A supplemental application shall be required for
any change to a device subject to an approved application
under this subsection if the change affects safety or
effectiveness, unless the change is a modification in a
manufacturing procedure or method of manufacturing and the
holder of an approved application submits a notice to the
Secretary that describes the change and informs the Secretary
that the change has been made under the requirements of
section 520(f).
``(B)(i) In reviewing a supplement to an approved
application for an incremental change to the design of a
device that affects safety or effectiveness, the Secretary
shall approve the supplement if--
``(I) nonclinical data demonstrate that a design
modification creates the intended additional capacity,
function, or performance of the device; and
``(II) clinical data from the approved application and any
supplements to the approved application provide a reasonable
assurance of safety and effectiveness.
``(ii) The Secretary may require, when necessary,
additional clinical data to evaluate the design modification
to provide a reasonable assurance of safety and
effectiveness.
``(7) Any representation in promotional materials for a
device subject to an approved application under this
subsection shall not be subject to premarket approval under
this section, unless such representations establish new
conditions of use. Any representations made in promotional
materials for devices subject to an approved application
shall be supported by appropriate data or information that
can substantiate the representations at the time such
representations are made.''.
(c) Withdrawal or Temporary Suspension of Approval of
Application.--Section 515(e)(1) (21 U.S.C. 360e(1)) is
amended in subparagraph (G) by inserting after the word
``effect'' the words ``or listed.''
SEC. 5. PREMARKET NOTIFICATION.
(a) Exemption of Certain Devices.--Section 510 (21 U.S.C.
360) is amended--
(1) in subsection (k), by striking ``intended for human
use'' and inserting ``intended for human use (except a device
that is classified into class I under section 513 or 520 or a
device that is classified into class II under section 513 or
520, and is exempt from the requirements of this subsection
under subsection (l))'';
(2) by adding at the end of subsection (k) (as amended by
paragraph (1)) the following flush sentence:
``The Secretary shall review the notification required by
this subsection and make a determination under section
513(f)(1)(A) within 90 days after receiving the
notification.''; and
(3) by adding at the end of the following:
``(1)(A) Within 30 days after the date of enactment of this
subsection, the Secretary shall develop and publish in the
Federal Register a list of each type of class II device that
does not require a report under subsection (k) to provide
reasonable assurance of safety and effectiveness. Each type
of class II device identified by the Secretary not to require
the report shall be exempt from the requirement to file a
report under subsection (k) as of the date of the publication
of the list in the Federal Register.
``(B) Beginning on the date that is 1 day after the date of
the publication of a list under this subsection, any person
may petition the Secretary to exempt a type of class II
device from the requirement of subsection (k). The Secretary
shall respond to the petition within 120 days after the
receipt of the petition and determine whether or not to grant
the petition in whole or in part.''.
(b) Special Rule Relating to Exemption of Class I Devices
from 510K Notifications.--The exemption of a class I device
from the notification requirement of section 510(k) shall not
apply to a class I device that is life sustaining or life
saving or that is intended to be implanted into the human
body.
SEC. 6. INVESTIGATIONAL DEVICE EXEMPTION.
(a) Regulations.--Section 520(g) (21 U.S.C. 360j(g)) is
amended--
(1) by redesignating paragraphs (4) and (5) as paragraphs
(5) and (6), respectively; and
(2) by inserting after paragraph (3) the following:
``(4) The Secretary shall, within 120 days after the date
of enactment of this paragraph, by regulation, amending the
content of part 812 of title 21 of the Code of Federal
Regulations, amend the procedures with respect to the
approval of clinical studies under this subsection as
follows:
``(A) The Secretary shall permit the sponsor of an
investigation to meet with the Secretary prior to the
submission of an application to develop a protocol for a
clinical study subject to the regulation and require that the
protocol be agreed upon in writing by the sponsor and the
Secretary.
``(B)(i) The Secretary shall permit developmental changes
to devices in response to information gathered during the
course of an investigation without requiring an additional
approval of an application for an investigational device
exemption, or the approval of a supplement to the
application, if the changes meet the following requirements:
``(I) The changes do not constitute a significant change in
the design of the product or a significant change in basic
principles of operation.
``(II) The changes do not adversely affect patient safety.
``(ii) The Secretary shall require that each such change
shall be documented with information describing the change
and the basis of the sponsor of application for concluding
that the change does not constitute a significant change in
design or operating principles, and that the change does not
adversely affect patient safety.
``(b) Conforming Amendments.--Section 517(a)(7) (21 U.S.C.
360g(a)(7)) is amended--
(1) by striking ``section 520(g)(4)'' and inserting
``section 520(g)(5)''; and
(2) by striking ``section 520(g)(5)'' and inserting
``section 520(g)(6)''.
SEC. 7. PRODUCT REVIEW.
Section 513 (21 U.S.C. 360c) is amended by--
(1) in subsection (a)(3)(A)--
(A) by striking ``including clinical investigations where
appropriate'' and inserting ``including 1 or more clinical
investigations where appropriate'';
(B) by adding at the end the following: ``When evaluating
the type and amount of data necessary to find a reasonable
assurance of device effectiveness for an approval under
section 515, the Secretary shall consider the extent to which
reliance on postmarket controls may contribute to such
assurance and expedite effectiveness determinations without
increasing regulatory burdens on persons who submit
applications under section 515(c).'';
(2) in subsection (a)(3), by adding at the end the
following:
``(C)(i) The Secretary upon the request of any person
intending to submit an application under section 515 shall
meet with the person to determine the type of valid
scientific evidence within the meaning of subparagraphs (A)
and (B) that will be necessary to demonstrate the
effectiveness of a device for the conditions of use proposed
by such person to support an approval of an application.
``(ii) Within 30 days after such meeting, the Secretary
shall specify in writing the type of valid scientific
evidence that will provide a reasonable assurance that a
device is effective under the conditions of use proposed by
the person.
``(iii) Any clinical data, including 1 or more well-
controlled investigations, specified by the Secretary for
demonstrating a reasonable assurance of device effectiveness
shall reflect the Secretary's determination that such data
are necessary to establish device effectiveness and that no
other less burdensome means of evaluating device
effectiveness are available which would have a reasonable
likelihood of resulting in an approval.
``(2) The determination of the Secretary with respect to
the specification of the valid scientific evidence under
clause (ii) shall be binding upon the Secretary, unless such
determination by the Secretary would be contrary to the
public health''; and
(3) in subsection (i), by adding at the end the following:
``(C) to facilitate reviews of reports submitted to the
Secretary under section 510(k), the Secretary shall consider
the extent to which reliance on postmarket controls may
expedite the classification of devices under subsection
(f)(1).
[[Page S5463]]
``(D) Whenever the Secretary requests information to
demonstrate that devices with differing technological
characteristics are substantially equivalent, the Secretary
shall only request information that is necessary to making
substantial equivalence determinations. In making such
requests, the Secretary shall consider the least burdensome
means of demonstrating substantial equivalence and request
information accordingly.
``(E) Any determinations of substantial equivalence by the
Secretary shall be based upon the intended uses proposed in
labeling submitted in a report under section 510(k).
``(F) Any representations made in promotional materials for
devices shall not require a report under section 510(k),
unless such representations establish new intended uses for a
legally marketed device.''.
______
By Mr. NICKLES (for himself, and Mr. Inhofe):
S. 871. A bill to establish the Oklahoma City National Memorial as a
unit of the National Park System; to designate the Oklahoma City
Memorial Trust, and for other purposes; to the Committee on Energy and
Natural Resources.
oklahoma city national memorial act of 1997
Mr. NICKLES. Mr. President, I rise today to introduce legislation
with Senator Inhofe to establish the Oklahoma City National Memorial
and create the Oklahoma City Memorial Trust. The memorial will
commemorate the national tragedy ingrained in all of our minds that
occurred in downtown Oklahoma City at 9:02 a.m. on April 19, 1995, in
which 168 Americans lost their lives and countless thousands more lost
family members and friends.
The Oklahoma City National Memorial, to be established as a unit of
the National Park Service, will serve as a monument to those whose
lives were taken and others will bear the physical and mental scars for
the rest of their days. It will stand as a testament to the hope,
generosity, and courage shown by Oklahomans and fellow Americans across
the country following the Oklahoma City bombing. This will be a place
of remembrance, peace, spirituality, comfort, and learning. The
memorial complex will include a special place for children, 19 of whom
were killed in the blast, to assure them that the world holds far more
good than bad.
The memorial site will encompass the footprint of the Alfred P.
Murrah Federal Building, Fifth Street between Robinson and Harvey, the
site of the Water Resources Building, and the Journal Record Building.
Both Park Service and non-Park Service personnel will staff the
memorial grounds and interpretive center on the site. The Memorial
Trust, comprised of nine unpaid trustees, will administer the
operation, maintenance, management, and interpretation of the memorial.
While the thousands of family members and friends of those killed in
the bombing will forever bear scars of having their loved ones taken
away, the Oklahoma City National Memorial will revere the memory of
those lost and venerate the bonds that drew us all closer together as a
result.
I welcome all Members to cosponsor this important piece of
legislation.
______
By Mr. ASHCROFT:
S. 873. A bill to amend the prohibition of title 18, United States
Code, against financial transactions with state sponsors of
international terrorism; to the Committee on the Judiciary.
the prohibition on financial transactions with countries supporting
terrorism act of 1997
Mr. ASHCROFT. Mr. President, I would like to introduce The
Prohibition on Financial Transactions with Countries Supporting
Terrorism Act of 1997. This legislation will further isolate state
sponsors of international terrorism from the community of responsible
nations. By prohibiting financial transactions between U.S. persons and
such criminal regimes, this bill will also reduce the financial
resources available to terrorist states.
Unfortunately, this is the second time the Senate has had to consider
legislation to prohibit financial transactions with state sponsors of
terrorism. The Anti-terrorism and Effective Death Penalty Act, passed
by Congress and signed into law by the President on April 24, 1996,
contained a similar provision--section 321--which prohibited financial
transactions with state sponsors of terrorism. Unfortunately, the
manner in which the State Department implemented section 321
effectively exempted at least two terrorist States, Sudan and Syria,
from the ban on financial transactions with United States citizens.
The Clinton administration seemingly misinterpreted the clear
language of section 321 which states that:
. . . whoever, being a United States person, knowing or
having reasonable cause to know that a country is designated
. . . as a country supporting international terrorism,
engages in a financial transaction with the government of
that country, shall be fined under this title, imprisoned for
not more than 10 years, or both.
Somehow, our Government read such plain language to permit--not
prohibit--almost all financial transactions with terrorist states. The
only transactions the lawyers down at Foggy Bottom saw fit to prohibit
were financial transactions which might further terrorism within the
United States. The bureaucrats at the State Department evidently feel
that transactions which further terrorism against citizens of foreign
countries or Americans abroad--such as Pan Am flight 103--should not be
targeted by this law.
Mr. President, the Congress of the United States has worked
extensively in a bipartisan manner to provide the legislative tools
needed to defend America and our allies against the rising threat of
international terrorism, and I am sorry that the Senate must now
revisit this antiterrorism legislation to correct the misguided efforts
of this administration to confront and isolate terrorist-supporting
nations in an effective manner.
We no longer live in a cold war world where the threats to our
national security are easily identifiable. The fluid and complex
international environment we face today demands the highest national
security vigilance, the kind of vigilance that appears to be lacking in
the Clinton administration. The administration's abysmal performance in
enforcing United States laws against the proliferation of weapons of
mass destruction by China is now mirrored by the administration's
evisceration of Congress' antiterrorism sanctions. This administration
finds no inconsistency between President Clinton's claim in an August
1996 speech at George Washington University that America ``cannot do
business with * * * terrorists who kill * * * innocent civilians,'' and
the State Department issuing regulations for the Anti-terrorism Act
that same month that permit most business transactions with terrorist
states to continue.
Mr. President, terrorism is no longer a far away phenomenon that
American only risk when traveling abroad. Terrorist violence that
primarily targeted U.S. citizens overseas is now finding its way to
American shores, and the most stringent U.S. antiterrorism policy will
be essential to protect our citizens. State sponsors of terrorism
possess a hatred of global dimensions, and America is one of their
primary targets. Our policies must reflect this understanding.
Mr. President, in the Africa Subcommittee, I have followed closely
the global efforts of one particular country on the list of terrorist
nations. Since democracy was overthrown by a radical Islamic military
coup in 1989, Sudan has quickly joined Iran as the worst of the world's
state sponsors of terrorism. Sudan's Government harbors elements of the
most violent terrorist organizations in the world: Jihad, the Armed
Islamic Group, Hamas, Abu Nidal, Palestinian Islamic Jihad, Hezbollah,
and the Islamic Group all run terrorist training camps in Sudan.
Those groups are responsible for hundreds of terrorist attacks around
the world that have killed thousands of innocent people. Abu Nidal
alone has been responsible for 90 terrorist attacks in 20 countries
which have killed or injured almost 900 people. Jihad is responsible
for the assassination of Egyptian President Anwar Sadat and Jihad's
leader, Sheikh Omar abdel Rahman, is the ideological ringleader of the
terrorists that attacked the World Trade Center and plotted to bomb the
United Nations in New York. Another terrorist organization, the Islamic
Group, regularly targets westerners in Egypt for attack and claims
responsibility for the failed assassination attempt on Egyptian
President Hosni Mubarak during his visit to Ethiopia in 1995. In
addition to harboring such terrorist organizations, Sudan has also
given refuge to some of the
[[Page S5464]]
most notorious individual terrorists in the world, including Imad
Moughniyeh who is believed to be responsible for the 1983 bombing of
the United States Marine barracks in Beirut which killed 241 American
soldiers.
Sudan is not simply a favorite training camp for terrorists, Mr.
President. The Sudanese Government actively supports this terrorist
activity. For instance, Sudan reportedly provided the weapons and
travel documentation for the assassins who attacked President Mubarak
during his Ethiopia visit. Two Sudanese diplomats at the United Nations
in New York conspired to help Jihad terrorists gain access to the U.N.
complex in order to bomb the building.
The conspiracy to bomb the United Nations was just one in a series of
terrorist plots to bomb numerous locations around New York, including
the Lincoln and Holland Tunnels, the George Washington Bridge, and
various U.S. military installations. Five of the twelve defendants
convicted in this series of terrorist plots were Sudanese nationals.
Thankfully, law enforcement authorities thwarted most of these
tragedies before they occurred, but the earlier terrorist attack
against the World Trade Center was carried out by the same broader
terrorism network in New York and killed six people. Those who bombed
the World Trade Center only expressed regret that the twin towers were
not toppled as they had planned, a catastrophe that in an instant could
have resulted in more American casualties than the entire Vietnam war.
Sudan's involvement in the conspiracy to wage an urban war of
terrorism in New York makes it patently clear why our Government has
justifiably designated some nations as state sponsors of terrorism and
has imposed upon them the most severe penalties and sanctions provided
by United States law. I am grateful that America has been relatively
isolated from most of the world's terrorist violence, but just as
terrorists have targeted Americans abroad in the past, they are now
targeting Americans here at home. International terrorism is one of the
great threats to our national security, but unfortunately yet another
example of a national security threat this administration is failing to
forcefully address. By cutting off the flow of financial resources to
these rogue regimes, it will become more difficult for them to seed the
globe with their acts of violent cowardice.
Mr. President, the legislation I am introducing today will
effectively prohibit financial transactions with state sponsors of
terrorism--regardless of whether the terrorist attack occurs within the
United States or abroad. This prohibition is one step in the fight
against international terrorism the administration is evidently
unwilling to take.
An analysis of Sudan's involvement in international terrorism gives
us an idea of the global designs of terrorist states. Business as usual
should not proceed with such regimes, and President Clinton should not
have to be coaxed into aggressively enforcing U.S. antiterrorism law to
isolate these countries. This legislation will diminish the financial
resources available to terrorist states for their campaign of violence
and hatred, and I urge the Senate's prompt consideration and passage of
this bill.
______
By Mr. FAIRCLOTH (for himself and Mr. Shelby):
S. 874. A bill to amend title 31, United States Code, to provide for
an exemption to the requirement that all Federal payments be made by
electronic funds transfer; to the Committee on Finance.
electronic benefits transfer legislation
Mr. FAIRCLOTH. Mr. President, I am pleased to introduce legislation
today that would modify the mandatory EBT legislation that was passed
in 1996.
Mr. President, in 1996, the Congress amended the Federal Financial
Management Act of 1994--as part of the Omnibus Appropriations Act of
1996, Public Law 104-134--to require that all Federal payments after
January 1, 1999, be made by electronic funds transfer.
The legislation I am introducing today would provide an exemption
from that requirement for Social Security and veterans benefits, except
that a recipient may send written notification to the agency head
authorizing that such payments be made electronically. Thus, the
legislation makes it optional for the vast majority of Federal
beneficiaries, particularly retirees.
This would affect nearly 20 million Social Security recipients who
still receive their check through the mail. Also, nearly 40 percent of
veterans benefits are still by mail.
Mr. President, I have found that many retirees are unaware of this
requirement, and do not desire to have their checks electronically
deposited.
Mr. President, these are not welfare checks. The Government should
not force retirees to accept this mandate.
In fact, AARP testified before the House Government Reform and
Oversight Committee last year, stating that ``AARP believes that direct
deposit of federal payments should remain optional for current payment
recipients.'' Further, AARP has found that Social Security recipients
receiving checks by mail were clustered in a handful of States,
including my home State of North Carolina.
Mr. President, many people worked all of their lives for these
benefits. They have the right to receive them. Many people served their
country for these benefits. The very notion that they will be told
where their benefits are being sent is abhorrent. Further, it has even
been suggested that benefits could be withheld if persons do not choose
a bank to receive a check.
Mr. President, this is wrong. I am not opposed to direct deposit, but
I am opposed to it being forced on people. I would urge the Senate to
act soon on this legislation.
____________________