[Congressional Record Volume 145, Number 22 (Monday, February 8, 1999)]
[Senate]
[Pages S1376-S1378]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERREY (for himself, Mr. Bond, Mr. Kennedy, Mr. Gorton, 
        Mr. Graham, Mr. DeWine, Mr. Moynihan, Mr. Durbin, Mr. Inouye, 
        Mr. Mack, and Mrs. Murray):
  S. 391. A bill to provide for payments to children's hospitals that 
operate graduate medical education programs; to the Committee on 
Finance.


        CHILDREN'S HOSPITALS EDUCATION AND RESEARCH ACT OF 1999

 Mr. KERREY. Mr. President, I am pleased to introduce this 
proposal to provide critical support to teaching programs at free-
standing children's hospitals. I am also honored to be joined by 
Senators Bond, Kennedy, Durbin, DeWine, Moynihan, Graham, Gorton, 
Inouye, Mack, and Murray as original cosponsors. And I am gratified to 
note that the President's budget submission for FY 2000 also includes 
funding for teaching programs at these hospitals.
  Children's hospitals play an important role in our nation's health 
care system. They combine high-quality clinical care, a vibrant 
teaching mission and leading pediatric biomedical research within their 
walls. They provide specialized regional services, including complex 
care to chronically ill children, and serve as safety-net providers to 
low-income children.
  Teaching is an inherent component of these hospitals' day-to-day 
operations. These hospitals train twenty-nine percent of the nation's 
pediatricians, and the majority of America's pediatric specialists. 
Pediatric residents develop the skills they need to care for our 
nation's children at these institutions.
  In addition, these hospitals effectively combine the joint missions 
of teaching and research. Scientific discovery depends on the strong 
academic focus of teaching hospitals. The teaching environment attracts 
academics devoted to research. It attracts the volume and spectrum of 
complex cases needed for clinical research. And the teaching mission 
creates the intellectual environment necessary to test the conventional 
wisdom of day-to-day health care and foster the questioning that leads 
to breakthroughs in research. Because these hospitals combine research 
and teaching in a clinical setting, these breakthroughs can be rapidly 
translated into patient care.
  Children's hospitals have contributed to advances in virtually every 
aspect of pediatric medicine. Thanks to research efforts at these 
hospitals, children can survive once-fatal diseases such as polio, grow 
and thrive with disabilities such as cerebral palsy, and overcome 
juvenile diabetes to become self-supporting adults.
  Through patient care, teaching and research, these hospitals 
contribute to our communities in many ways. However, their training 
programs--and their ability to fulfill their critical role in America's 
health care system--are being gradually undermined by dwindling 
financial support. Maintaining a vibrant teaching and research program 
is more expensive than simply providing patient care. The nation's 
teaching hospitals have historically relied on additional support--
support beyond the cost of clinical care itself--in order to finance 
their teaching programs. Today, competitive market pressures provide 
little incentive for private payers to contribute towards teaching 
costs. At the same time, the increased use of managed care plans within 
the Medicaid program has decreased the availability of teaching dollars 
through Medicaid. Therefore, Medicare's support for graduate medical 
education is more important than ever.
  Independent children's hospitals, however, serve an extremely small 
number of Medicare patients. Therefore, they do not receive Medicare 
graduate medical education payments to support their teaching 
activities. The most significant source of graduate medical education 
financing is, in large part, not available to these hospitals.
  This proposal will address, for the short-term, this unintended 
consequence of current public policy. It will provide time-limited 
support to help children's hospitals train tomorrow's pediatricians, 
investigate new treatments and pursue pediatric biomedical research. It 
will establish a four-year fund, which will provide children's 
hospitals with Federal teaching payments that are based on their per 
resident costs and the complexity of their patient population. Total 
spending over four years will be less than a billion dollars.
  This proposal does not solve the fundamental dilemma of how to cover 
the cost of training our nation's doctors. Congress has charged the 
Bipartisan Commission on the Future of Medicare with developing 
recommendations on this important question--and Congress has directed 
the Commission to examine teaching support for children's hospitals 
within these recommendations. I believe the Commission's recommendation 
will recognize the need to include children's hospitals within the 
framework of graduate medical education. But in the meantime, this 
proposal provides the support these hospitals need until these broader 
questions are answered and addressed.
  All American families have great dreams for their children. These 
hopes include healthy, active, happy childhoods, so they seek the best 
possible health care for their children. And when these dreams are 
threatened by a critical illness, they seek the expertise of highly-
trained pediatricians and pediatric specialists, and rely on the 
research discoveries fostered by children's hospitals. All families 
deserve a chance at the American dream. Through this legislation, we 
will help children's hospitals--hospitals such as Children's Hospital 
in Omaha, Boys' Town, St. Louis Children's Hospital, Children's 
Hospital in Boston, Children's Hospital in Seattle+ and others--train 
the doctors and do the research necessary to fulfill this dream. 
Through this legislation, Congress will be doing its part to help 
American families work towards a successful future.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 391

       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 ``Children's Hospitals 
     Education and Research Act of 1999''.

     SEC. 2. PROGRAM OF PAYMENTS TO CHILDREN'S HOSPITALS THAT 
                   OPERATE GRADUATE MEDICAL EDUCATION PROGRAMS.

       (a) Payments.--
       (1) In general.--The Secretary shall make payments under 
     this section to each children's hospital for each hospital 
     cost reporting period under the medicare program beginning in 
     or after fiscal year 2000 and before fiscal year 2004 for 
     the--
       (A) direct expenses associated with operating approved 
     medical residency training programs; and
       (B) indirect expenses associated with the treatment of more 
     severely ill patients and the additional costs related to the 
     teaching of residents.
       (2) Payment amounts.--Subject to paragraph (3), the 
     following amounts shall be payable under this section to a 
     children's hospital for a cost reporting period described in 
     paragraph (1):

[[Page S1377]]

       (A) Direct expenses.--The amount determined under 
     subsection (b) for direct expenses described in paragraph 
     (1)(A).
       (B) Indirect expenses.--The amount determined under 
     subsection (c) for indirect expenses described in paragraph 
     (1)(B)
       (3) Capped amount.--
       (A) In general.--The payments to children's hospitals 
     established in this subsection for cost reporting periods 
     ending in any fiscal year shall not exceed the funds 
     appropriated under subsection (e) for that fiscal year.
       (B) Pro rata reductions of payments for direct expenses.--
     If the Secretary determines that the amount of funds 
     appropriated under subsection (e)(1) for cost reporting 
     periods ending in any fiscal year is insufficient to provide 
     the total amount of payments otherwise due for such periods, 
     the Secretary shall reduce each of the amounts payable under 
     this section pursuant to paragraph (2)(A) for such period on 
     a pro rata basis to reflect such shortfall.
       (b) Amount of Payment for Direct Medical Education.--
       (1) In general.--The amount determined under this 
     subsection for payments to a children's hospital for direct 
     expenses relating to approved medical residency training 
     programs for a cost reporting period beginning in or after 
     fiscal year 2000 and before fiscal year 2004 is equal to the 
     product of--
       (A) the updated per resident amount for direct medical 
     education, as determined under paragraph (2), for the cost 
     reporting period; and
       (B) the number of full-time equivalent residents in the 
     hospital's approved medical residency training programs (as 
     determined under section 1886(h)(4) of the Social Security 
     Act (42 U.S.C. 1395ww(h)(4))) for the cost reporting period.
       (2) Updated per resident amount for direct medical 
     education.--The updated per resident amount for direct 
     medical education for a hospital for a cost reporting period 
     ending in a fiscal year is an amount equal to the per 
     resident amount for cost reporting periods ending during 
     fiscal year 1999 for the hospital involved (as determined by 
     the Secretary using the methodology described in section 
     1886(h)(2)(E)) of such Act (42 U.S.C. 1395ww(h)(2)(E))) 
     increased by the percentage increase in the Consumer Price 
     Index for All Urban Consumers (United States city average) 
     from fiscal year 1999 through the fiscal year involved.
       (c) Amount of Payment for Indirect Medical Education.--
       (1) In general.--The amount determined under this 
     subsection for payments to a children's hospital for indirect 
     expenses associated with the treatment of more severely ill 
     patients and the additional costs related to the teaching of 
     residents for a cost reporting period beginning in or after 
     fiscal year 2000 and before fiscal year 2004 is equal to an 
     amount determined appropriate by the Secretary.
       (2) Factors.--In determining the amount under paragraph 
     (1), the Secretary shall--
       (A) take into account variations in case mix among 
     children's hospitals and the number of full-time equivalent 
     residents in the hospitals' approved medical residency 
     training programs for the cost reporting period; and
       (B) assure that the aggregate of the payments for indirect 
     expenses associated with the treatment of more severely ill 
     patients and the additional costs related to the teaching of 
     residents under this section in a fiscal year are equal to 
     the amount appropriated for such expenses in such year under 
     subsection (e)(2).
       (d) Making of Payments.--
       (1) Interim payments.--The Secretary shall estimate, before 
     the beginning of each cost reporting period for a hospital 
     for which the payments may be made under this section, the 
     amounts of the payments for such period and shall (subject to 
     paragraph (2)) make the payments of such amounts in 26 equal 
     interim installments during such period.
       (2) Withholding.--The Secretary shall withhold up to 25 
     percent from each interim installment paid under paragraph 
     (1).
       (3) Reconciliation.--At the end of each such period, the 
     hospital shall submit to the Secretary such information as 
     the Secretary determines to be necessary to determine the 
     percent (if any) of the total amount withheld under paragraph 
     (2) that is due under this section for the hospital for the 
     period. Based on such determination, the Secretary shall 
     recoup any overpayments made, or pay any balance due. The 
     amount so determined shall be considered a final intermediary 
     determination for purposes of applying section 1878 of the 
     Social Security Act (42 U.S.C. 1395oo) and shall be subject 
     to review under that section in the same manner as the amount 
     of payment under section 1886(d) of such Act (42 U.S.C. 
     1395ww(d)) is subject to review under such section.
       (e) Limitation on Expenditures.--
       (1) Direct medical education.--
       (A) In general.--Subject to subparagraph (B), there are 
     hereby appropriated, out of any money in the Treasury not 
     otherwise appropriated, for payments under this section for 
     direct expenses relating to approved medical residency 
     training programs for cost reporting periods beginning in--
       (i) fiscal year 2000, $35,000,000;
       (ii) fiscal year 2001, $95,000,000;
       (iii) fiscal year 2002, $95,000,000; and
       (iv) fiscal year 2003, $95,000,000.
       (B) Carryover of excess.--If the amount of payments under 
     this section for cost reporting periods beginning in fiscal 
     year 2000, 2001, or 2002 is less than the amount provided 
     under this paragraph for such payments for such periods, then 
     the amount available under this paragraph for cost reporting 
     periods beginning in the following fiscal year shall be 
     increased by the amount of such difference.
       (2) Indirect medical education.--There are hereby 
     appropriated, out of any money in the Treasury not otherwise 
     appropriated, for payments under this section for indirect 
     expenses associated with the treatment of more severely ill 
     patients and the additional costs related to the teaching of 
     residents for cost reporting periods beginning in--
       (A) fiscal year 2000, $65,000,000;
       (B) fiscal year 2001, $190,000,000;
       (C) fiscal year 2002, $190,000,000; and
       (D) fiscal year 2003, $190,000,000.
       (f) Relation to Medicare and Medicaid Payments.--
     Notwithstanding any other provision of law, payments under 
     this section to a hospital for a cost reporting period--
       (1) are in lieu of any amounts otherwise payable to the 
     hospital under section 1886(h) or 1886(d)(5)(B) of the Social 
     Security Act (42 U.S.C. 1395ww(h); 1395ww(d)(5)B)) to the 
     hospital for such cost reporting period, but
       (2) shall not affect the amounts otherwise payable to such 
     hospitals under a State medicaid plan under title XIX of such 
     Act (42 U.S.C. 1396 et seq.).
       (g) Definitions.--In this section:
       (1) Approved medical residency training program.--The term 
     ``approved medical residency training program'' has the 
     meaning given such term in section 1886(h)(5)(A) of the 
     Social Security Act (42 U.S.C. 1395ww(h)(5)(A)).
       (2) Children's hospital.--The term ``children's hospital'' 
     means a hospital described in section 1886(d)(1)(B)(iii) of 
     the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)(iii)).
       (3) Direct graduate medical education costs.--The term 
     ``direct graduate medical education costs'' has the meaning 
     given such term in section 1886(h)(5)(C) of the Social 
     Security Act (42 U.S.C. 1395ww(h)(5)(C)).
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
 Mr. KENNEDY. Mr. President, America's children--from the 
smallest premature baby to the tallest teenager--deserve access to 
doctors trained specifically in meeting their health needs. I commend 
Senator Kerrey's leadership in this bipartisan legislation introduced 
today to provide greater support to children's hospitals, so that they 
can continue to train the kinds of doctors that children need.
  In the United States, there are 53 freestanding pediatric hospitals--
less than 1% of all the hospitals in the country. Yet they train more 
than a quarter of all pediatricians and more than half of all pediatric 
specialists. These hospitals also help train other doctors who need 
experience in taking care of children--including family doctors, 
neurologists, and surgeons.
  Children's hospitals typically provide care for the sickest 
children--those whose medical needs are not easily met in the local and 
community hospitals. Patients in children's hospitals include a higher 
percentage of our nation's uninsured children and low-income children. 
These hospitals are the source of many new lifesaving strategies, such 
as treating childhood cancer and helping premature babies to breathe.
  But the ability of children's hospitals to train doctors is in 
increasing jeopardy. Funds for training residents are declining as 
changes take place in the ways we pay for our health care. For most 
hospitals, support for graduate medical education is funded through 
Medicare. But since freestanding children's hospitals treat almost no 
Medicare patients, they receive almost no federal support or other 
support for training their residents.
  Democrats and Republicans recognize that qualified children's 
physicians are needed as much as other types of physicians. Under this 
bill, the Department of Health and Human Services is authorized to 
provide support to freestanding children's hospitals for such training. 
It means that children's hospitals will receive the same level of 
support that this country gives to other teaching hospitals. Under this 
legislation funds will be distributed fairly, by using a formula that 
considers variations across the country in the cost of such training. 
Safeguards are included to guarantee that the dollars are spent only 
when residents are actually trained.
  President Clinton's budget recognizes this high priority. It includes 
a $40 million downpayment until this legislation is enacted.
  I look forward to working with my colleagues and the administration 
to assure early passage of this needed legislation. I commend both the 
President

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and the First Lady for their strong commitment to children and for 
their indispensable leadership on this important issue. Action by 
Congress is needed now. We must work together to make a long-term 
commitment to enable children's hospitals to train the physicians of 
the future to care for children.
                                 ______