[Congressional Record Volume 146, Number 100 (Thursday, July 27, 2000)]
[Senate]
[Pages S7784-S7786]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      SENATE DEMOCRATS BBA REFINEMENT AND ACCESS TO CARE PROPOSAL

  Mr. DASCHLE. Mr. President, the Balanced Budget Act of 1997 made some 
positive changes and contributed to our current $2.2 trillion on-budget 
surplus.
  Some of the BBA policies, however, cut providers and services far 
more consequentially than was ever anticipated, and that has created 
extraordinary problems for health care providers all over the country.
  I have been hearing from providers in South Dakota about the burdens 
that BBA created now for almost 3 years.
  Just this week, community leaders in Sturgis, SD, have been meeting 
to decide the fate of an important clinic we have there. The 
administrators in Sturgis say the cuts we made in 1997 mean that they 
have been losing money every year. We may actually see the clinic close 
as a result. That clinic is not alone. There are clinics, there are 
hospitals, there are providers throughout my State and throughout the 
country who are facing the same fiscal demise if something is not done. 
And their demise spells problems for the people who depend on them for 
care.
  Last year, we made the first step. Thanks to a united Democratic 
effort, we put forth a bill largely endorsed by our colleagues on both 
sides of the aisle and passed the first installment of relief from the 
BBA. It was an effort to try to stave off further closings and 
financial harm to critical community health care facilities. We didn't 
go far enough. Communities are still struggling in spite of our best 
effort last year.
  Senate Democrats believe that we cannot ignore the crisis this year 
either. We need to act to ensure that beneficiary access to quality 
health care remains, regardless of circumstances, regardless of 
geography, regardless of whether we are talking about a rural area or 
an inner city.
  I want to thank Senator Patrick Moynihan, our ranking member, Senator 
Max Baucus, and so many other members of the Senate Democratic Caucus 
and the Finance Committee for their leadership in developing the 
response to this crisis that we will be introducing shortly upon our 
return.
  The Senate Democrats, under their leadership, are now proposing a 
package of payment adjustments and other improvements to beneficiary 
access that total $80 billion over 10 years.
  This $80 billion will be used to help stabilize hospitals, home 
health agencies, hospices, nursing homes, clinics, Medicare+Choice 
plans, and other providers.
  Our plan pays special attention to rural providers, which serve a 
larger proportion of Medicare beneficiaries and are more adversely 
impacted by reductions in the Medicare payment.
  It includes targeted relief for teaching hospitals that train our 
health providers and conduct cutting-edge research.
  And it includes improvements to Medicaid that could mean 
significantly improved access to health care for a number of uninsured 
people.
  The proposal also includes improvements that directly help 
beneficiaries.
  Senate Democrats continue to believe that passage of an affordable, 
voluntary, meaningful Medicare prescription drug benefit is of highest 
priority.
  We will continue to press for passage of a prescription drug benefit 
in September as we fight for the important provisions in this proposal.
  I ask unanimous consent that our proposal outline be printed in the 
Record, which goes through in some detail each of the areas that we 
hope to address, why we hope to address them, and the reasons we are 
addressing them in the bill that we will be introducing immediately 
upon our return from the August recess.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

Senate Democrats' BBA Refinement and Access to Care Proposal, July 27, 
                                  2000

       The Balanced Budget Act (BBA) of 1997 made some important 
     changes in Medicare payment policy, improved health care 
     coverage, and contributed to our current period of budget 
     surpluses through significant cost savings in Medicare. CBO 
     originally estimated Medicare spending cuts at $112 billion 
     over 5 years. Some of the policies enacted in the BBA, 
     however, cut payments to providers more significantly than 
     expected--in some cases more than double the expected 
     amount--and threaten the survival of institutions and 
     services vital to seniors and their communities throughout 
     the country. Senate Democrats believe that, in light of the 
     projected $2.2 trillion on-budget surplus over the next 10 
     years and the problems facing vital health care services, the 
     Congress should enact a significant package of BBA 
     adjustments and beneficiary protections. Senate Democrats 
     therefore propose a package of payment adjustments and access 
     to care provisions amounting to $80 billion over 10 years.
       Hospitals. A significant portion of the BBA spending 
     reductions have impacted hospitals. According to MedPAC, 
     ``Hospitals' financial status deteriorated significantly in 
     1998 and 1999,'' the years following enactment of BBA. The 
     Senate Democrats' BBA refinement proposal addresses the most 
     pressing problems facing hospitals by:
       Adjusting inpatient payments to keep up with increases in 
     hospital costs, an improvement that will help hospitals.
       Preventing further reductions in payment rates for vital 
     teaching hospitals--which are on the cutting edge of medical 
     research and provide essential care to a large proportion of 
     indigent patients. Support for medical training and research 
     at independent children's hospitals is also included in the 
     Democratic proposal.
       Targeting additional relief to rural hospitals (Critical 
     Access Hospitals, Medicare Dependent Hospitals, and Sole 
     Community Hospitals) and making it easier for them to qualify 
     for disproportionate share payments under Medicare.
       Providing additional support for hospitals with a 
     disproportionate share of indigent patients.
       Home Health. The BBA his home health agencies particularly 
     hard. Home health spending dropped 45 percent between 1997 
     and 1999, while the number of home health agencies declined 
     by more than 2000 over that period. MedPAC has cautioned 
     against implementing next year the scheduled 15% reduction in 
     payments. The Senate Democrats' BBA refinement proposal:
       Prevents further reductions in home health payments, takes 
     into consideration the highest cost cases, and addresses the 
     special needs of rural home health agencies.
       Improves payments for medical equipment.
       Rural. Rural providers serve a larger proportion of 
     Medicare beneficiaries and are more adversely affected by 
     reductions in Medicare payments. The proposal addresses the 
     unique situation faced in rural areas through a number of 
     measures, including establishing a capital loan fund to 
     improve infrastructure of small rural facilities, providing 
     assistance to develop technology related to new prospective 
     payment systems, creating bonus payments for providers who 
     serve independent hospitals, and ensuring rural facilities 
     can continue to offer quality lab services to beneficiaries.
       Hospice. Payments to hospices have not kept up with the 
     cost of providing care because of the cost of prescription 
     drugs, the therapies now used in end-of-life care, as well as 
     decreasing lengths of stay. Hospice base rates have not been 
     increased since 1989. The Senate Democrats' BBA Refinement 
     proposal provides additional funding for hospice services to 
     account for their increasing costs.

[[Page S7785]]

       Nursing Homes. The BBA was expected to reduce payments to 
     nursing homes by about $9.5 billion. The actual reduction in 
     payments to SNFs over the period is expected to be 
     significantly larger. A significant number of skilled nursing 
     providers have gone into bankruptcy in the past two years. 
     The Senate Democrats' BBA Refinement proposal:
       Allows nursing home payments to keep up with increases in 
     costs.
       Further delays caps on the amount of therapy a patient can 
     receive.
       Medicare+Choice. Senate Democrats are committed to ensuring 
     that appropriate payments are made to Medicare+Choice plans. 
     In addition, for beneficiaries who have lost Medicare+Choice 
     plans in their area, Senate Democrats have included 
     provisions that strengthen fee-for-service Medicare and 
     assist beneficiaries in the period immediately following loss 
     of service.
       Other Provisions. Access to other types of care and 
     services are adversely affected by existing policy. The 
     Senate Democrats' proposal will address high priority issues, 
     including adequate payment for dialysis to assure access to 
     quality care for end stage renal disease (ESRD) patients, 
     training of geriatricians, and others.
       Beneficiary Improvements. In addition to ensuring access to 
     vital health care providers, the proposal includes 
     refinements to Medicare that directly help beneficiaries. 
     Senate Democrats continue to believe that passage of a 
     universal, affordable, voluntary, and meaningful Medicare 
     prescription drug benefit is of highest priority. Other 
     improvements for beneficiaries include:
       Lowering beneficiary coinsurance in hospital outpatient 
     departments more quickly.
       Removing current restrictions on payment for 
     immunosuppressive drugs for organ transplant patients.
       Allowing beneficiaries to return to the same nursing home 
     after a hospital stay.
       Medicaid and SCHIP. Improvements to the BBA as well as to 
     immigration and welfare reform legislation that passed in 
     1996 could mean significantly improved access to health care 
     for a number of uninsured people. Improvements in the 
     proposal include:
       Giving states the option to cover legal immigrant children 
     and pregnant women.
       Improving eligibility and enrollment processes in SCHIP and 
     Medicaid.
       Extending and improving the Transitional Medical Assistance 
     program for people who leave welfare for work.
       Giving states grants to develop home and community based 
     services for beneficiaries who would otherwise be in nursing 
     homes.
       Creating a new payment system for Community Health Centers 
     to ensure they remain a strong, viable component of our 
     health care safety net.

  Mr, DASCHLE. Mr. President, I yield the floor.
  Mr. MOYNIHAN. Mr. President, I commend the distinguished Democratic 
Leader Senator Daschle on his statement and join him in supporting the 
Democratic BBA Refinement and Access to Care Proposal. As the Leader 
said, the Balanced Budget Act of 1997 (BBA) has cut Medicare spending 
far more than had been intended. Our Democratic proposal would spend 
$80 billion over 10 years to mitigate the unintended effects of the BBA 
on our nation's health care providers and beneficiaries.
  In particular, I want to highlight that our package would prevent 
further reductions in payments to our Nation's teaching hospitals. The 
BBA, unwisely in my view, enacted a multi-year schedule of cuts in 
payments by Medicare to academic medical centers. These cuts would 
seriously impair the cutting edge research conducted by teaching 
hospitals, as well as impair their ability to train doctors and to 
serve so many of our nation's indigent.
  Last year, in the Balanced Budget Refinement Act (BBRA), we mitigated 
the scheduled reductions in fiscal years 2000 and 2001. The package we 
are proposing today, would cancel any further reductions in what we 
call ``Indirect Medical Education payments,'' thereby restoring nearly 
$7 billion to our Nation's teaching hospitals.
  I have stood before my colleagues on countless number of times to 
bring attention to the financial plight of medical schools and teaching 
hospitals. Yet, I regret that the fate of the 144 accredited medical 
schools and 1416 graduate medical education teaching institutions still 
remains uncertain. The proposals in our Democratic BBA refinement 
package will provide critically needed financing in the short-run. In 
the long-run, we need to restructure the financing of graduate medical 
education along the lines I have proposed in the Graduate Medical 
Education Trust Fund Act that I have introduced in the last 3 
Congresses. That legislation would require the public and private 
sectors to provide support for graduate medical education. More on that 
later.
  My particular interest in this topic goes back to 1994 when the 
Finance Committee took up the President's Health Security Act. As 
Chairman of the Committee I asked Paul Marks, then President of 
Memorial Sloan-Kettering, Cancer Center to arrange a ``seminar'' for me 
on health care issues. We convened on Wednesday, January 19, 1994 in 
the Laurance S. Rockefeller Boardroom at 10 a.m. At about a quarter 
past the hour I was told that the University of Minnesota might have to 
close its medical school.
  Whereupon my education in this began. Minnesota is where the 
Scandinavians (Swedes) settled. They don't close medical schools; they 
open medical schools. What was going on? It was simple enough: managed 
care had reached the high plains. The good folk of Lake Wobegon had 
dutifully signed on, only to learn that market-based health plans do 
not send patients to teaching hospitals, because they cost too much. No 
teaching hospital; ergo no medical school.
  In the Clinton Administration health security plan, they assumed 
health care costs would continue to rise. The Administration's solution 
to this was rationing--cut the number of doctors by one quarter, 
specialists by one-half and so on.
  As I have described elsewhere, a dissenting paper dated April 26, 
1993, by ``Workgroup 12'' of ``Tollgate 5,'' was written by a physician 
in the Veterans' Administration. Workgroup 12 was part of the 500 
person Clinton health care task force. The paper began:

                         FOR OFFICIAL USE ONLY

       Subject: Proposal to cap the total number of graduate 
     physician (resident) entry (PGY-1) training positions in the 
     U.S.A. to 110 percent of the annual number of graduates of 
     U.S. medical schools.
       Issue: Although this proposal has been presented in toll-
     gate documents as the position of Group 12, it is not 
     supported by the majority of the members of Group 12 . . . 
     .
       Reasons not to cap the total number of U.S. residency 
     training positions for physician graduates.
       1. This proposal has been advanced by several Commissions 
     within the last two years as a measure to control the costs 
     of health care. While ostensibly advanced as a man-power 
     policy, its rationale lies in economic policy. Its advocates 
     believe that each physician in America represents a cost 
     center. He not only receives a high personal salary, but is 
     able to generate health care costs by ordering tests, 
     admitting patients to hospitals and performing technical 
     procedures. This thesis may be summarized as: To control 
     costs, control the number of physicians.

  Despite the lack of support for this proposal in the task force, the 
Clinton Administration moved ahead anyway with its workforce proposals. 
In the 1,362 page bill (S. 1775) that I introduced for the Clinton 
Administration, this appeared:

       . . . the National Council [on Graduate Medical Education] 
     shall ensure that, of the class of training participants 
     entering eligible programs for academic year 1998-99 or any 
     subsequent academic year, the percentage of such class that 
     completes eligible programs in primary health care is not 
     less than 55 percent (without regard to the academic year in 
     which the members of the class complete the programs).

  The Clinton Administration also proposed to limit the number of 
residents based on the number of graduates from American medical 
schools. Although there was no explicit cap in the bill that I 
introduced for the Clinton Administration, subsequent legislation, such 
as that offered by Senator Mitchell, included a cap of 110 percent.
  As this was all done in secret--and buried in a 1,362 page bill--
there was no national debate on this Clinton Workforce proposal. When 
all else fails, the press is supposed to step in. It did not. The 1993-
1994 Nexis tabulation for the Times, East Coast and West Coast 
uncovered only 3 articles pertaining to the Clinton workforce proposal 
compared to thousands of articles on health reform.
  Not surprisingly, the Finance Committee went in a different 
direction. Charles J. Fahey, on behalf of the Catholic Health 
Association, told us that we were witnessing the ``commodification of 
medicine.'' Further down the witness table we were told that a spot 
market had developed for bone-marrow transplants in Southern 
California. In other words we need not worry about rising costs, 
competition would depress prices. Indeed, Medicare costs actually 
declined in 1999.
  But take note--there would be side effects. Markets do not provide 
public goods so teaching hospitals would be at risk. Everyone benefits 
from public

[[Page S7786]]

goods but no one has any incentive to pay. It follows that for the most 
part teaching hospitals have to be paid for by the public, indirectly 
through tax exemption or directly through expenditure.
  On June 29, 1994, the Finance Committee Chairman's Mark--as we refer 
to these things--of the Health Security Act provided for a Graduate 
Medical Education and Academic Health Center Trust Fund to be financed 
by a 1.5 percent tax on all private health care premiums. An additional 
levy of .25 percent was added on to pay for medical research as 
proposed by Senator Hatfield. A motion to strike the 1.75 percent 
premium tax failed by 13 votes to 7. And we were not bashful about 
calling this assessment a tax, to wit:

       ``(a) Imposition of Tax.--There is hereby imposed--
       ``(1) on each taxable health insurance policy, a tax equal 
     to 1.75 percent of the premiums received under such policy, 
     and
       ``(2) on each amount received for health-related 
     administrative services, a tax equal to 1.75 percent of the 
     amount so received.
  The bill, as reported out of the Finance Committee, set a goal of 
covering 95 percent of Americans through subsidies to help low-income 
people buy health insurance, as well as reforms in the private health 
insurance market. A National Health Care Commission was to make 
recommendations for reaching:

       95 percent health insurance coverage in community rating 
     areas that have failed to meet that target.

  I might note that the Senate Finance Committee was the only committee 
that reported a bill that was actually taken up on the Floor. However, 
upon taking up the Finance Committee bill, Senate Majority Leader 
George Mitchell offered his own substitute health reform plan which 
became the focus of the ultimately fruitless Senate debate.
  Future prospects, for these fine institutions, are not all that they 
should be. During negotiation of the Balanced Budget Refinement Act of 
1999 Senator Roth and I, with assistance from my good friend 
Congressman Rangel, were able to forestall some of the scheduled deep 
cuts in indirect medical education payments, but, I'm afraid, only 
temporarily.
  There were proposals about--for example by the Bipartisan Commission 
on the Future of Medicare, Chaired by Senator Breaux--that would 
subject Graduate Medical Education payments to the appropriations 
process. Fifty-five of my colleagues, including Senators Stevens and 
Byrd, the Chairman and Ranking Member of the Appropriations Committee, 
joined with me to oppose this approach.
  In a February, 1999 letter, we pointed out the critical role of 
America's teaching hospitals in clinical research and health services 
research.

       Teaching hospitals play a vitally important role in the 
     nation's health care delivery system. In addition to the 
     mission of patient care that all hospitals fulfill, teaching 
     hospitals serve as the pre-eminent setting for the clinical 
     education of physicians and other health professionals. . . . 
     In order to remain the world leader in graduate medical 
     education, we must continue to maintain Medicare's strong 
     commitment to the nation's teaching hospitals.

  I'm happy to report that in the final version of the Commission's 
report, they seem to have relented somewhat recommending that:

       Congress should provide a separate mechanism for continued 
     funding [of Graduate Medical Education] through either a 
     mandatory entitlement or multi-year discretionary 
     appropriation program.

  What is needed is explicit and dedicated funding for these 
institutions, which will ensure that the United States continues to 
lead the world in this era of medical discovery. The Graduate Medical 
Education Trust Fund Act would require that the public sector, through 
the Medicare and Medicaid programs, and the private sector through an 
assessment on health insurance premiums, provide broad-based financial 
support for graduate medical education. The Clinton Administration 
proposed something similar as part of the Health Security Act. Funding 
for Graduate Medical Education would come from Medicare and from 
corporate and regional health alliances--but there was no way anyone 
could have known it as they attempted to trace the flow of money 
between and among these corporate and regional health alliances.
  My bill would roughly double current funding levels for Graduate 
Medical Education and would establish a Medical Education Advisory 
Commission to make recommendations on the operation of the Medical 
Education Trust Fund, on alternative payment sources for funding 
graduate medical education and teaching hospitals, and on policies 
designed to maintain superior research and educational capacities.
  After this year, I will not be there fighting in the last hours of a 
legislative session to preserve funding for Graduate Medical Education. 
The vehicle to preserve that funding, I would maintain, remains the 
trust fund legislation that I first introduced in June 1996.
  As I said at the opening of my statement, I am pleased that the $80 
billion package the Democratic Leader has announced today, would cancel 
scheduled cuts in ``Indirect Medical Education'' payments to our 
Nation's teaching hospitals, restoring about $7 billion over 10 years 
to those institutions. But this is only an interim step. I strongly 
urge that we take the next step which would be to enact my proposal for 
a Medical Education Trust Fund, which would ensure an adequate, stable 
source of funding for these vital institutions.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Montana is recognized for 5 minutes.

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