[Congressional Record Volume 145, Number 68 (Wednesday, May 12, 1999)]
[Senate]
[Pages S5166-S5169]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MOYNIHAN (for himself, Mr. Breaux, Mr. Daschle, Mr. 
        Santorum, Mr. Durbin, Mr. Schumer, Mr. Kerry, Mr. Specter, Mr. 
        Conrad, Mr. Baucus, Mr. Chafee, Mr. Kerrey, and Mr. Cleland):
  S. 1025. A bill to amend title XVIII of the Social Security Act to 
ensure the proper payment of approved nursing and allied health 
education programs under the medicare program; to the Committee on 
Finance.


       nursing and allied health payment improvement act of 1999

 Mr. MOYNIHAN. Mr. President, today I am introducing three 
bills that will provide much needed financial support for America's 144 
accredited medical schools and 1,250 graduate medical education (GME) 
teaching institutions. These institutions are national treasures; they 
are the very best in the world. Yet today they find themselves in a 
precarious financial situation as market forces reshape the health care 
delivery system in the United States.
  The growth of managed for-profit care combined with GME payment 
reductions under the Balanced Budget Act of 1997 (BBA) have put these 
hospitals in dire financial straits. Hospitals are losing money--
millions of dollars every year. And these losses are projected to 
increase, as additional scheduled Medicare payment reductions are 
phased in. Many of the teaching hospitals that we know and depend on 
today may not survive--including those in my state of New York--if 
these additional GME payment reductions are not repealed.
  To ensure that this precious public resource is maintained and the 
United States continues to lead the world in the quality of its health 
care system, the three bills I am introducing today --the Graduate 
Medical Education Payment Restoration Act of 1999, the Managed Care 
Fair Payment Act of 1999, and the Nursing and Allied Health Payment 
Improvement Act of 1999--will provide critically required funding for 
teaching hospitals.
  Everyone in America benefits from the research and medical education 
conducted in our medical schools and affiliated teaching hospitals. 
They are what economists call public goods --something that benefits 
everyone but which is not provided for by market forces alone. Think of 
an army. Or a dam.
  The Medicare program is the nation's largest explicit financier of 
GME, with annual payments of about $7 billion. In the past, other 
payers of health care have also contributed to the costs of GME. 
However, in an increasingly competitive managed care health care 
system, these payments are being squeezed out.
  Earlier this year, I reintroduced the Medical Education Trust Fund 
Act of 1999. This legislation requires the public sector, through the 
Medicare and Medicaid programs, and the private sector, through an 
assessment on health insurance premiums, to contribute broad-based and 
equitable financial support for graduate medical education. I hope that 
one day Congress will see the wisdom of enacting such a measure. 
However, our teaching hospitals need help now.
  We are in the midst of a great era of discovery in medical science. 
It is certainly no time to close medical schools. This great era of 
medical discovery is occurring right here in the United States, not in 
Europe like past ages of scientific discovery. And it is centered in 
New York City.
  It started in the late 1930s. Before then, the average patient was 
probably as well off, perhaps better, out of a hospital as in one. 
Progress since that point sixty years ago has been remarkable. The last 
few decades have brought us images of the inside of the human body 
based on the magnetic resonance of bodily tissues; laser surgery; micro 
surgery for reattaching limbs; and organ transplantation, among other 
wonders. Physicians are now working on a gene therapy that might 
eventually replace bypass surgery. One can hardly imagine what might be 
next--but we do know that much of it will be discovered in the course 
of ongoing research activities in our teaching hospitals and medical 
schools. That is a process which is of necessity unplanned, even 
random--but which regularly produces medical breakthroughs. To cite 
just a few examples:
  At Memorial Sloan-Kettering Cancer Center, the world renowned 
teaching hospital in New York City, researchers in 1998 discovered 
among many other things a surgical biopsy technique that can predict 
whether breast cancer has spread to surrounding lymph node tissue. This 
technique will spare 60,000 to 80,000 patients each year from having to 
undergo surgical removal of their lymph nodes.
  In 1997, at Mount Sinai-NYU Medical Center, it was discovered that 
malignant brain tumors in young children can be eradicated through the 
use of high-dose chemotherapy and stem-cell transplants.
  And in May of last year, a doctor at Children's Hospital in Boston 
created a global media sensation with his discovery that a combination 
of the drugs endostatin and angiostatin appeared to cure cancer in mice 
by cutting off the supply of blood to tumors. Although the efficacy of 
this therapy in humans is not yet known, the research holds great 
promise that a cure for cancer may actually be within reach. And it was 
discovered in a teaching hospital.
  The Graduate Medical Education Payment Restoration Act, with a total 
of 15 cosponsors, will freeze the current schedule of BBA reductions to 
the indirect portion of GME funding. Congressman Rangel today is 
introducing a similar bill in the House. Under the BBA, the indirect 
payment adjustor is scheduled to be reduced from 7.7 percent to 5.5 
percent by FY 2001. This bill will maintain the current payment 
adjustor at its current level of 6.5 percent, thereby rolling back 
about half of the indirect GME funding cuts in the BBA. In total, this 
provision restores about $3 billion over 5 years and $8 billion over 10 
years in indirect GME funding for teaching hospitals.
  The Managed Care Fair Payment Act, with nine cosponsors, will 
redirect more than $2.5 billion over 5 years of Medicare 
Disproportionate Share Hospital (DSH) funds from the Medicare managed 
care payment rates to the more than 1,900 hospitals that qualify for 
DSH funding. Congressman Rangel introduced a similar bill in the House 
this past March. More than two-thirds of teaching hospitals also 
qualify for DSH funds. Under the current payment method, payments to 
managed care plans include these DSH funds, but unfortunately, these 
funds are not necessarily passed-on to DSH hospitals. Managed care 
plans often do not contract with DSH hospitals, and when they do the 
negotiated payment rates often do not include these DSH payments. Like 
GME funding under current law, this bill would carve out DSH funds from 
the managed care rates and require the Health Care Financing 
Administration to pass them on directly to qualifying hospitals.
  The third bill I am introducing today, which has 13 cosponsors, is 
the Nursing and Allied Health Payment Improvement Act. This bill was 
introduced by Congressmen Crane and Bentsen on April 20 of this year. 
While Congress in the BBA of 1997 recognized the need to carve-out GME 
funding from managed care rates, it unintentionally did not carve out 
the funding for the training of nurses and allied health professionals. 
Like DSH funds, without the carve-out, funding for these education 
programs is unlikely to reach the more than 700 hospitals that provide 
training to these vitally important health professionals. This bill 
seeks to correct this problem by carving out the funding for the 
training of nurses and other allied health professionals and directing 
them to the hospitals that provide these training programs.
  Combined, these three bills will strengthen our nation's teaching 
hospitals and ensure that the United States will continue to be in the 
forefront of developing new cures, new medical technology, and training 
of the worlds finest medical professionals. Without these bills, the 
state of our nation's teaching hospitals and the delivery of health 
care will remain in jeopardy.
  I ask that the text of the bills, along with two articles from the 
New York Times, be included in the Record.
  The material follows:

                                S. 1023

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

[[Page S5167]]

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Graduate Medical Education 
     Payment Restoration Act of 1999''.

     SEC. 2. TERMINATION OF MULTIYEAR REDUCTION OF INDIRECT 
                   GRADUATE MEDICAL EDUCATION PAYMENTS.

       Section 1886(d)(5)(B)(ii) of the Social Security Act (42 
     U.S.C. 1395ww(d)(5)(B)(ii)) is amended--
       (1) by adding ``and'' at the end of subclause (II); and
       (2) by striking subclauses (III), (IV), and (V) and 
     inserting the following:

       ``(III) on or after October 1, 1998, `c' is equal to 
     1.6.''.
                                  ____


                                S. 1024

       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 ``Managed Care Fair Payment 
     Act of 1999''.

     SEC. 2. CARVING OUT DSH PAYMENTS FROM PAYMENTS TO 
                   MEDICARE+CHOICE ORGANIZATIONS AND PAYING THE 
                   AMOUNTS DIRECTLY TO DSH HOSPITALS ENROLLING 
                   MEDICARE+CHOICE ENROLLEES.

       (a) In General.--Section 1853(c)(3) of the Social Security 
     Act (42 U.S.C. 1395w-23(c)(3)) is amended--
       (1) in subparagraph (A), by striking ``subparagraph (B)'' 
     and inserting ``subparagraphs (B) and (D)'';
       (2) by redesignating subparagraph (D) as subparagraph (E); 
     and
       (3) by inserting after subparagraph (C) the following:
       ``(D) Removal of payments attributable to disproportionate 
     share payments from calculation of adjusted average per 
     capita cost.--
       ``(i) In general.--In determining the area-specific 
     Medicare+Choice capitation rate under subparagraph (A) for a 
     year (beginning with 2001), the annual per capita rate of 
     payment for 1997 determined under section 1876(a)(1)(C) shall 
     be adjusted, subject to clause (ii), to exclude from the rate 
     the additional payments that the Secretary estimates were 
     made during 1997 for additional payments described in section 
     1886(d)(5)(F).
       ``(ii) Treatment of payments covered under state hospital 
     reimbursement system.--To the extent that the Secretary 
     estimates that an annual per capita rate of payment for 1997 
     described in clause (i) reflects payments to hospitals 
     reimbursed under section 1814(b)(3), the Secretary shall 
     estimate a payment adjustment that is comparable to the 
     payment adjustment that would have been made under clause (i) 
     if the hospitals had not been reimbursed under such 
     section.''.
       (b) Additional Payments for Managed Care Enrollees.--
     Section 1886(d)(5)(F) of the Social Security Act (42 U.S.C. 
     1395ww(d)(5)(F)) is amended--
       (1) in clause (ii), by striking ``clause (ix)'' and 
     inserting ``clauses (ix) and (x)''; and
       (2) by adding at the end the following:
       ``(x)(I) For portions of cost reporting periods occurring 
     on or after January 1, 2001, the Secretary shall provide for 
     an additional payment amount for each applicable discharge of 
     any subsection (d) hospital that is a disproportionate share 
     hospital (as described in clause (i)).
       ``(II) For purposes of this clause, the term `applicable 
     discharge' means the discharge of any individual who is 
     enrolled with a Medicare+Choice organization under part C.
       ``(III) The amount of the payment under this clause with 
     respect to any applicable discharge shall be equal to the 
     estimated average per discharge amount (as determined by the 
     Secretary) that would otherwise have been paid under this 
     subparagraph if the individual had not been enrolled as 
     described in subclause (II).
       ``(IV) The Secretary shall establish rules for an 
     additional payment amount for any hospital reimbursed under a 
     reimbursement system authorized under section 1814(b)(3) if 
     such hospital would qualify as a disproportionate share 
     hospital under clause (i) were it not so reimbursed. Such 
     payment shall be determined in the same manner as the amount 
     of payment is determined under this clause for 
     disproportionate share hospitals.''.
                                  ____


                                S. 1025

       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 ``Nursing and Allied Health 
     Payment Improvement Act of 1999''.

     SEC. 2. EXCLUSION OF NURSING AND ALLIED HEALTH EDUCATION 
                   COSTS IN CALCULATING MEDICARE+CHOICE PAYMENT 
                   RATE.

       (a) Excluding Costs in Calculating Payment Rate.--
       (1) In general.--Section 1853(c)(3)(C)(i) of the Social 
     Security Act (42 U.S.C. 1395w-23(c)(3)(C)(i)) is amended--
       (A) by striking ``and'' at the end of subclause (I);
       (B) by striking the period at the end of subclause (II) and 
     inserting ``, and''; and
       (C) by adding at the end the following new subclause:

       ``(III) for costs attributable to approved nursing and 
     allied health education programs under section 1861(v).''.

       (2) Effective date.--The amendments made by paragraph (1) 
     apply in determining the annual per capita rate of payment 
     for years beginning with 2001.
       (b) Payment to Hospitals of Nursing and Allied Health 
     Education Program Costs for Medicare+Choice Enrollees.--
     Section 1861(v)(1) of such Act (42 U.S.C. 1395x(v)(1)) is 
     amended by adding at the end the following new subparagraph:
       ``(V) In determining the amount of payment to a hospital 
     for portions of cost reporting periods occurring on or after 
     January 1, 2001, with respect to the reasonable costs for 
     approved nursing and allied health education programs, 
     individuals who are enrolled with a Medicare+Choice 
     organization under part C shall be treated as if they were 
     not so enrolled.''.
                                  ____


                 [From the New York Times, May 6, 1999]

         Teaching Hospitals Battling Cutbacks in Medicare Money

                          (By Carey Goldberg)

       BOSTON, May 5--Normally, the great teaching hospitals of 
     this medical Mecca carry an air of whitecoated, best-in-the-
     world arrogance, the kind of arrogance that comes of 
     collecting Nobels, of snaring more Federal money for medical 
     research than hospitals anywhere else, of attracting patients 
     from the four corners of the earth.
       But not lately. Lately, their chief executives carry an air 
     of pleading and alarm. They tend to cross the edges of their 
     palms in an X that symbolizes the crossing of rising costs 
     and dropping payments, especially Medicare payments. And to 
     say they simply cannot go on losing money this way and remain 
     the academic cream of American medicine.
       Dr. Mitchell T. Rabkin, chief executive emeritus of Beth 
     Israel Hospital, says, ``Everyone's in deep yogurt.''
       The teaching hospitals here and elsewhere have never been 
     immune from the turbulent change sweeping American health 
     care--from the expansion of managed care to spiraling drug 
     prices to the fierce fights for survival and shotgun 
     marriages between hospitals with empty beds and flabby 
     management.
       But they are contending that suddenly, in recent weeks, a 
     Federal cutback in Medicare spending has begun putting such a 
     financial squeeze on them that it threatens their ability to 
     fulfill their special missions: to handle the sickest 
     patients, to act as incubators for new cures, to treat 
     poor people and to train budding doctors.
       The budget hemorrhaging has hit at scattered teaching 
     hospitals across the country, from San Francisco to 
     Philadelphia. New York's clusters of teaching hospitals are 
     among the biggest and hardest hit, the Greater New York 
     Hospital Association says. It predicts that Medicare cuts 
     will cost the state's hospitals $5 billion through 2002 and 
     force the closing of money-losing departments and whole 
     hospitals.
       Dr. Samuel O. Thier, president of the group that owns 
     Massachusetts General Hospital, says, ``We've got a problem, 
     and you've got to nip it in the bud, or else you're going to 
     kill off some of the premier institutions in the country.''
       Here in Boston, with its unusual concentration of academic 
     medicine and its teaching hospitals affiliated with the 
     medical schools of Harvard, Tufts and Boston Universities, 
     the cuts are already taking a toll in hundreds of eliminated 
     jobs and pockets of miserable morale.
       Five of Boston's top eight private employers are teaching 
     hospitals, Mayor Thomas M. Menino notes. And if five-year 
     Medicare cuts totaling an estimated $1.7 billion for 
     Massachusetts hospitals continue, Mayor Menino says, ``We'll 
     have to lay off thousands of people, and that's a big hit on 
     the city of Boston.''
       Often, analysts say, hospital cut-backs, closings and 
     mergers make good economic sense, and some dislocation and 
     pain are only to be expected, for all the hospitals' tendency 
     to moan about them. Some critics say the hospitals are partly 
     to fault, that for all their glittery research and 
     credentials, they have not always been efficiently managed.
       ``A lot of teaching hospitals have engaged in what might be 
     called self-sanctification--`We're the greatest hospitals in 
     the world and no one can do it better or for less'--and that 
     may or may not be true,'' said Alan Sager, a health-care 
     finance expert at the Boston University School of Public 
     Health.
       But the hospital chiefs argue that they have virtually no 
     fat left to cut, and warn that their financial problems may 
     mean that the smartest edge of American medicine will get 
     dumbed down.
       With that message, they have been lobbying Congress in 
     recent weeks to reconsider the cuts that they say have turned 
     their financial straits from tough to intolerable.
       ``Five years from now, the American people will wake up and 
     find their clinical research is second rate because the big 
     teaching hospitals are reeling financially,'' said Dr. David 
     G. Nathan, president of the Dana-Farber Cancer Institute 
     here.
       In a half-dozen interviews, around the Boston medical-
     industrial complex known as the Longwood Medical Center and 
     Academic Area and elsewhere, hospital executives who normally 
     compete and squabble all espoused one central idea: teaching 
     hospitals are special, and that specialness costs money.
       Take the example of treating heart-disease patients, said 
     Dr. Michael F. Collins, president and chief executive of 
     Caritas Christi Health Care System, a seven-hospital group 
     affiliated with Tufts.

[[Page S5168]]

       In 1988, Dr. Collins said, it was still experimental for 
     doctors to open blocked arteries by passing tiny balloons 
     though them; now, they have a bouquet of expensive new 
     options for those patients, including springlike devices 
     called stents that cost $900 to $1,850 each; tiny rotobladers 
     that can cost up to $1,500, and costly drugs to supplement 
     the reaming that cost nearly $1,400 a patient.
       ``A lot of our scientists are doing research on which are 
     the best catheters and which are the best stents,'' Dr. 
     Collins said. ``And because they're giving the papers on the 
     drug, they're using the drug the day it's approved to be 
     used. Right now it's costing us about $50,000 a month and 
     we're not getting a nickel for it, because our case rates are 
     fixed.''
       Hospital chiefs and doctors also argue that a teaching 
     hospital and its affiliated university are a delicate 
     ecosystem whose production of critical research is at risk.
       ``The grand institutions in Boston that are venerated are 
     characterized by a wildflower approach to invention and the 
     generation of new knowledge,'' said Dr. James Reinertsen, the 
     chief executive of Caregroup, which owns Beth Israel 
     Deaconess Medical Center. ``We don't run our institutions 
     like agribusiness, a massively efficient operation where we 
     direct research and harvest it. It's unplanned to a great 
     extent, and that chaotic fermenting environment is part of 
     what makes the academic health centers what they are.''
       ``There wouldn't have been a plan to do what Judah Folkman 
     has done over the last 20 years,'' Dr. Reinertsen said of the 
     doctor-scientist at Children's Hospital in Boston who has 
     developed a promising approach to curing cancer.
       Federal financing for research is plentiful of late, 
     hospital heads acknowledge. But they point out that the 
     Government expects hospitals to subsidize 10 percent or 15 
     percent of that research, and that they must also provide 
     important support for researchers still too junior to win 
     grants.
       A similar argument for slack in the system comes in 
     connection with teaching. Teaching hospitals are pressing 
     their faculties to take on more patients to bring in more 
     money, said Dr. Daniel D. Federman, dean for medical 
     education of Harvard Medical School. A doctor under pressure 
     to spend time in a billable way, Dr. Federman said, has less 
     time to spend teaching.
       The Boston teaching hospitals generally deny that the money 
     squeeze is affecting patients' care (a denial some patients 
     would question), or students' quality of medical education (a 
     denial some students would question), or research--yet.
       The Boston hospitals' plight may be partly their fault for 
     competing so hard with each other, driving down prices, some 
     analysts say. Though some hospitals have merged in recent 
     years, Boston is still seen as having too many beds, and 
     virtually all hospitals are teaching hospitals here.
       Whatever the causes, said Dr. Stuart Altman, professor of 
     national health policy at Brandeis University and past 
     chairman for 12 years of the committee that advised the 
     Government on Medicare prices, ``the concern is very real.''
       ``What's happened to them is that all of the cards have 
     fallen the wrong way at the same time,'' Dr. Altman said, ``I 
     believe their screams of woe are legitimate.''
       Among the cards that fell wrong, begin with managed care. 
     Massachusetts has an unusually large quotient of patients in 
     managed-care plans. Managed-care companies, themselves 
     strapped, have gotten increasingly tough about how much they 
     will pay.
       Boston had already gone through a spate of fat-trimming 
     hospital mergers, closings and cost cutting in recent years. 
     Add to the troublesome complaints that affect all hospitals: 
     expenses to prepare their computers for 2000, problems 
     getting insurance companies and the Government to pay up, new 
     efforts to defend against accusations of billing fraud.
       But the back-breaking straw, hospital chiefs say, came with 
     Medicare cuts, enacted under the 1997 balanced-budget law, 
     that will cut more each year through 2002. The Association of 
     American Medical Colleges estimates that by then the losses 
     for teaching hospitals could reach $14.7 billion, and that 
     major teaching hospitals will lose about about $150 million 
     each. Nearly 100 teaching hospitals are expected to be 
     running in the red by then, the association said last month.
       For years, teaching hospitals have been more dependent than 
     any others on Medicare. Unlike some other payers, Medicare 
     has compensated them for their special missions--training, 
     sicker patients, indigent care--by paying them extra.
       For reasons yet to be determined, Dr. Altman and others say 
     the Medicare cuts seem to be taking an even greater toll on 
     the teaching hospitals than had been expected. Much has 
     changed since the 1996 numbers on which the cuts are 
     based, hospital chiefs say; and the cuts particularly 
     singled out teaching hospitals, whose profit margins used 
     to look fat.
       Frightening the hospitals still further, President 
     Clinton's next budget proposes even more Medicare cuts.
       Not everyone sympathizes, though. Complaints from hospitals 
     that financial pinching hurts have become familiar refrains 
     over recent years, gaining them a reputation for crying wolf. 
     Critics say the Boston hospitals are whining for more money 
     when the only real fix is broad health-care reform.
       Some propose that the rational solution is to analyze which 
     aspects of the teaching hospitals' work society is willing to 
     pay for, and then abandon the Byzantine Medicare cross-
     subsidies and pay for them straight out, perhaps through a 
     new tax.
       Others question the numbers.
       Whenever hospitals face cuts, Alan Sager of Boston 
     University said, ``they claim it will be teaching and 
     research and free care of the uninsured that are cut first.''
       If the hospitals want more money, Mr. Sager argued, they 
     should allow in independent auditors to check their books 
     rather than asking Congress to rely on a ``scream test.''
       For many doctors at the teaching hospitals, however, the 
     screaming is preventive medicine, meant to save their 
     institutions from becoming ordinary.
       Medical care is an applied science, said Dr. Allan Ropper, 
     chief of neurology at St. Elizabeth's Hospital, and strong 
     teaching hospitals, with their cadres of doctors willing to 
     spend often-unreimbursed time on teaching and research, are 
     essential to helping move it forward.
       ``There's no getting away from a patient and their 
     illness,'' Dr. Ropper said, ``but if all you do is fix the 
     watch, nobody ever builds a better watch. It's a very subtle 
     thing, but precisely because it's so subtle, it's very easy 
     to disrupt.''
                                  ____


                 [From the New York Times, May 6, 1999]

                   New York Hospitals Braced for Cuts

                           (By Randy Kennedy)

       The fiscal knife that has begun to cut into teaching 
     hospitals in Boston and other cities has not yet had the same 
     dire effects--layoffs or widespread operating deficits--in 
     hospitals around New York State.
       But hospital executives and health-care experts alike say 
     that if the Federal cuts to Medicare are not softened, the 
     state will lose much more than any other--$5 billion and 
     23,000 medical jobs--by 2002. And they warn that those cuts, 
     a result of the Balanced Budget Act, pose a huge economic 
     threat to New York, which has the nation's greatest 
     concentration of medical schools and teaching hospitals and 
     trains about 15 percent of the nation's medical residents.
       ``The carnage which is created by the Balanced Budget 
     Act,'' said Kenneth Raske, president of the Greater New York 
     Hospital Association, a trade group of 175 hospitals and 
     nursing homes, ``will totally disrupt the health care system 
     in New York when it's fully implemented. It goes at the heart 
     of the infrastructure.''
       The cuts, now in their second year, come at the same time 
     as sharp increases in uninsured patients and the growing 
     dominance of managed care, which have prompted all hospitals 
     in the New York region to brace for what they say will be one 
     of the most difficult fiscal years ever.
       But with critics complaining that New York still has too 
     many hospital beds and administrative fat that should be 
     trimmed, those who run the prestigious teaching hospitals in 
     the city find it hard to make their case that the Medicare 
     cuts put them in real peril.
       ``I know this sounds like wolf, wolf, wolf because of the 
     successes generally in the health care industry,'' said Dr. 
     Spencer Foreman, president of Montefiore Hospital in the 
     Bronx, which lost $24 million in Medicare money in fiscal 
     1999. ``But New York teaching hospitals are in trouble.''
       His own hospital did $750 million in business in 1993 and 
     ended that year with a $3 million profit margin. This year, 
     it will do $1 billion in business and end with a $6 million 
     margin.
       ``Those are supermarket margins,'' Dr. Foreman said, adding 
     that the hospital has ``managed to keep a razor-thin margin 
     every year by every year cutting costs and cutting again.''
       ``But you can only cut so far before things begin to 
     happen,'' he said. ``The industry is touching bottom in a lot 
     of areas, and the difference between profit and loss in this 
     atmosphere is an eyelash. This is not the way normal billion-
     dollar enterprises are conducted.''
       Because the teaching hospitals have traditionally served a 
     high percentage of poor patients, the threat to their future 
     is even more important, Dr. Foreman and others said.
       While he and other teaching hospital administrators avoid 
     talking about it, the only way to keep from going into the 
     red is to cut jobs and either shrink or close money-losing 
     departments--which usually means emergency rooms, outpatients 
     clinics, psychiatric and rehabilitation departments and 
     maternity wards, among others.
       ``The so-called low-hanging fruit has all been picked,'' 
     said Dr. David B. Skinner, the chief executive of New York 
     Presbyterian Hospital, where every department has been asked 
     to cut spending by 5 percent. The Greater New York Hospital 
     Association projects that New York Presbyterian will lose 
     more money over the courts of the Balanced Budget Act than 
     any other American hospital--about $320 million.
       Dr. Skinner said that as the Hospital plans its year 2000 
     budget ``we're going to have to look very closely at staffing 
     ratios.''
       ``Something's got to give here,'' he said. ``You then look 
     at where can you downsize departments that are losing money. 
     And we're looking at that now. I don't want to say which ones 
     because I don't want to unnecessarily panic the troops.''
       While the refrain in health-care politics in New York is 
     usually for hospitals to cry poverty and many experts and 
     budget analysts

[[Page S5169]]

     to cry hyperbole, experts said yesterday that the teaching 
     hospitals were probably not exaggerating their problems much.
       ``This certainly appears to be putting real strains on 
     teaching hospitals throughout the country and especially in 
     New York,'' said Edward Salsberg, director of the Center for 
     Health Workforce Studies at the State University in Albany. 
     ``They seem to be building a case that this year it is more 
     real than other years.''

 Mr. LEVIN. Mr. President, I am proud to be an original 
cosponsor of the bill introduced today by Senator Moynihan which will 
help to reduce some of the financial strain that teaching hospitals are 
currently experiencing due to Graduate Medical Education (GME) cuts put 
in place under the Balanced Budget Act of 1997 (BBA).
  The teaching hospitals in this nation are the very best in the world. 
There are over 1,200 teaching hospitals in the United States, 57 of 
which are in my own state of Michigan. Although these hospitals are 
providing excellent care while training residents, they are currently 
facing dire financial circumstances brought about by the growth of 
managed care combined with GME payment reductions. Additional Medicare 
payment reductions are currently scheduled to be phased in as per the 
BBA.
  A major teaching hospital in my own state, the Detroit Medical Center 
(DMC), trains over 1,100 residents each year. The DMC stands to lose a 
total of $53.8 million from IME reductions for Fiscal Years 1998-2002. 
It is important that we continue to support the DMC and other teaching 
hospitals, not turn our back on them.
  I believe that the survival of our valuable teaching hospitals is at 
stake if we do not act now which is why I have cosponsored this 
legislation. This bill will freeze the Indirect Medical Education (IME) 
adjustment factor (the IME is the part of the GME payment that reflects 
the higher costs, such as more intensive treatments, of caring for 
patients at teaching hospitals) at the FY 1999 level of 6.5 percent, 
thereby rolling back about half of the IME funding cuts in the BBA. In 
total, this provision restores about $3 billion over 5 years and $8 
billion over 10 years in IME funding for teaching hospitals.
  Our medical schools and affiliated teaching hospitals conduct a great 
deal of the research and medical education which benefits everyone in 
America. The University of Michigan is one of the most prominent 
teaching institutions in the country. The UM is currently doing 
important prostate cancer research while providing health care to 
citizens from every county in the state. It is imperative that we allow 
this research to continue while we are on the verge of new discoveries 
in medical science.
  Mr. President, I hope the Senate will pass this important 
legislation.
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