[Congressional Record Volume 146, Number 126 (Wednesday, October 11, 2000)]
[Senate]
[Pages S10270-S10271]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  MEASURE READ THE FIRST TIME--S. 3187

  Mr. WARNER. Mr. President, I understand that S. 3187 is at the desk, 
and I ask for its first reading.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (S. 3187) to require the Secretary of Health and 
     Human Services to apply aggregate upper payment limits to 
     non-State publicly owned or operated facilities under the 
     medicaid program.

  Mr. WARNER. Mr. President, I now ask for its second reading and 
object to my own request.
  The PRESIDING OFFICER. Objection is heard.
  Mr. ROTH. Mr. President, over the past several months, the Finance 
Committee has been focusing its oversight attention on an urgent 
problem in the Medicaid program related to the use of upper payment 
limits to exploit federal Medicaid spending. The Health Care Financing 
Administration, HCFA, had assured me that it would solve the problem. 
It has not.
  Instead, last week HCFA released a notice of proposed rulemaking that 
sanctions the de facto abuse of this vitally important program--a 
program that provides health care coverage to 40 million low-income 
pregnant women, children, individuals with disabilities, and senior 
citizens. This Administration has failed to live up to its 
responsibility to protect the financial integrity of the Medicaid 
program. Accordingly, I am introducing legislation today to do the 
right thing and stop the draining of potentially tens of billions of 
dollars from this program for our most vulnerable citizens.
  The problem confronting the program is a complicated one. Through the 
inappropriate use of aggregated upper payment limits, some states have 
been using the Medicaid program inappropriately, including for purposes 
such as filling in holes in state budgets. This has turned a program 
intended to provide health insurance coverage to vulnerable populations 
into a bank account for state projects having nothing to do with health 
care.
  In fact, as I examine the current situation I am vividly reminded of 
the Medicaid spending scandals we confronted 10 years ago when 
disproportionate share hospital program dollars were used to build 
roads, bridges and highways. Let me be very clear--this cannot be 
permitted to continue without endangering the program.
  The use of this complicated accounting mechanism may seem dry and 
technical--but let me assure you that the consequences are enormous. If 
unchecked, both the General Accounting Office and the Office of 
Inspector General at the Department of Health and Human Services agree 
that we face a situation that fundamentally undermines the fiscal 
integrity of the Medicaid program and circumvents the traditional 
partnership of financial responsibility shared between the federal and 
state governments.
  I have been advised that what states are doing through upper payment 
limits is technically not illegal. The states are taking advantage of a 
loophole in HCFA regulations. It is time to close that loophole fully.
  We must act because nearly 40 million of the neediest Americans rely 
on Medicaid for needed health care services. It is nothing short of a 
safety net. The program must not be undermined and weakened by clever 
consultants and state budgeters. What looks like loopholes to some are 
holes in Medicaid safety net for 40 million Americans.
  Several months ago, I began working with the Administration to 
respond to this scandal. We must stop it in its tracks--while of course 
at the same time working thoughtfully and carefully with those states 
that have become dependent on the revenues generated through the use of 
upper payment limits to help them transition to

[[Page S10271]]

a more sustainable payment relationship between the state and federal 
government.
  Finally, last week, after repeated delays, this Administration 
released its notice of proposed rulemaking--in a form much weaker than 
it originally intended when I first started working with HCFA on this 
problem last spring. The proposed regulation is inadequate. Instead of 
stopping a burgeoning Medicaid spending scandal, the proposed 
regulation looks the other way and tolerates the abuse of the program.
  The proposed regulation permits facilities to be reimbursed for 
providing services at a rate one and a half times that Medicare would 
have paid for a given service. Then states are free to pocket the 
difference between the payment level and the often much lower Medicaid 
payment rates through intergovernmental transfers. Not only does the 
regulation allow those who are exploiting the program to continue to do 
so, it also invites all others to come in and help themselves. The 
regulation permits the scam to continue while only modestly attempting 
to contain its magnitude.
  Simply containing wasteful spending is not sufficient. The American 
taxpayer who pays the bills should not stand for it, nor should the 
beneficiaries who depend on the program. In fact, the Center on Budget 
and Policy Priorities, whose advocacy on social policy issues is well-
known, agrees that the scam must be shut down or the long-term health 
of the program will be jeopardized.
  Not only does the proposed regulation fail to protect the financial 
integrity of the Medicaid program, it also has a very low probability 
of ever being implemented. There is virtually no chance this 
Administration will be able to finalize the proposed regulation before 
it leaves office in January. Until the regulation is finalized, nothing 
changes. No abuser state has to modify its behavior one bit, and more 
and more states will be under pressure to take advantage of the 
windfall their neighbor states are enjoying. If anything, the White 
House action may spur greater abuse in the Medicaid program.
  The Congressional Budget Office estimates that truly solving the 
problem will save taxpayers $127 billion over the next decade. the 
stakes are high and we owe it to the 40 million Medicaid beneficiaries 
to protect the program so it remains strong and viable for the years to 
come.
  Accordingly, today I am introducing legislation that does what HCFA 
should have done but failed to do. My bill does not sanction abuse--it 
stops it. It closes the loophole, and treats non-state governmental 
facilities the same way state facilities are already treated. For those 
states with upper payment limits approved by HCFA already in place, it 
gives them two years to fully transition into compliance with the law. 
But no longer will schemes to exploit federal funding be tolerated. 
Even if HCFA is willing to look the other way, I am not. We must think 
about the long-term interests of the program and act now to stop the 
abuse. We should save the safety net for those that depend on it and 
save $127 billion over the next decade for he American taxpayer at the 
same time.

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