[Congressional Record Volume 147, Number 27 (Monday, March 5, 2001)]
[Senate]
[Pages S1818-S1827]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. MURKOWSKI (for himself, Mr. Kerry, Mr. Kyl, Mr. Smith of
New Hampshire, Mr. Helms, Mr. Reid, Mrs. Lincoln, and Mr.
Hagel):
S. 452. A bill to amend title XVIII of the Social Security Act to
ensure that the Secretary of Health and Human Services provides
appropriate guidance to physicians, providers of services, and
ambulance providers that are attempting to properly submit claims under
the medicare program to ensure that the Secretary does not target
inadvertent billing errors; to the Committee on Finance.
Mr. MURKOWSKI. Mr. President, right now, all across America, Medicare
beneficiaries are seeking medical care from a flawed health care
system. Reduced benefit packages, ever escalating costs, and limited
access in rural areas are just a few of the problems our system faces
on a daily basis. For these reasons, Congress must continue to move
towards the modernization of Medicare. But as we address the needs of
beneficiaries, we must not turn our back upon the very providers that
seniors rely upon for their care.
Who are providers? They are the physicians, the hospitals, the
nursing homes, and others who deliver quality care to our needy
Medicare population. They are the backbone of our complex health care
network. When our nation's seniors need care, it is the provider who
heals, not the health insurer, and certainly not the federal
government.
But more, and more often, seniors are being told by providers that
they don't accept Medicare. This is becoming even more common in rural
areas, where the number of physicians is limited and access to quality
care is extremely restricted. Quite simply, beneficiaries are being
told that their insurance is simply not wanted. Why? Well it's not as
simple as low reimbursement rates. In fact it's much more complex.
The infrastructure that manages the Medicare program, the Health Care
Financing Administration, HCFA, and its network of contractors, have
built up a system designed to block care and micro-manage independent
practices. Providers simply cannot afford to keep up with the seemingly
endless number of complex, redundant, and unnecessary regulations. And
if providers do participate? Well, a simple administrative error in
submitting a claim could subject them to heavy-handed audits and the
financial devastation of their practice. Should we force providers to
choose between protecting their practice and caring for seniors?
I believe the answer is no. For this reason, I am introducing the
``Medicare Education and Regulatory Fairness Act of 2001.'' Co-
sponsored by Senators Kerry, Kyl, Helms, Reid, Lincoln, Hagel, and Bob
Smith, this legislation will restore fairness to the Medicare system.
It will allow providers to practice medicine without fearing the
threats, intimidation, and aggressive tactics of a faceless
bureaucratic machine.
Most importantly, this bill will reform the flawed appeals process
within HCFA. Currently, a provider who allegedly has received an
overpayment is forced to choose between three options: admit the
overpayment, submit additional information to mitigate the charge, or
appeal the decision. However, providers who choose to submit
[[Page S1819]]
additional evidence must subject their entire practice to review and
waive their appeal rights. That's right--to submit additional evidence
you must waive your right to an appeal!
And what is the result of this maddening system that runs contrary to
our nation's history of fair and just administrative decisions? Often,
providers are intimidated into accepting the arbitrary decision of an
auditor employed by a HCFA contractor. Sometimes, they are even forced
to pull out of the Medicare program. In the end, our senior population
suffers.
I was particularly heartened to see that our new President agrees
with the spirit of this bill. In his recent budget, the administration
stated that the ``current system is too complex, too centralized, and
becoming more so each year. Burdensome regulations and other central
directives force providers to take time away from patients to comply
with excessive and complex paperwork.'' I completely agree.
Under my bill, providers will be allowed to retain their appeal
rights should they choose to first submit additional evidence to
mitigate the charge. Many providers receive an overpayment as the
result of a simple administrative mistake. For cases not involving
fraud, a provider will be able to return that overpayment within twelve
months without fear of prosecution. This is a common sense approach,
and will not lead to any additional costs to the Medicare system.
To bring additional fairness to the system, my bill will prohibit the
retroactive application of regulations, and allow providers to
challenge the constitutionality of HCFA regulations. Further, it will
prohibit the crippling recovery of overpayments during an appeal, and
bar the unfair method of withholding valid future payments to recover
past overpayments. These common sense measures maintain the financial
viability of medical practices during the resolution of payment
controversies, and restore fundamental fairness to the dispute
resolution procedures existing within HCFA.
Like many of our nation's problems, the key to improvement is found
in education. For this reason, I have included language that stipulates
that at least 10 percent of the Medicare Integrity Program funds, and
two percent of carrier funds, must be devoted to provider education
programs. Providers cannot be expected to comply with the endless
number of Medicare regulations if they are not shown how to submit
clean claims. We must ensure that providers are given the information
needed to eliminate future billing errors, and improve the
responsiveness of HCFA.
It is with the goal of protecting our Medicare population, and the
providers who tend care, that leads me to introduce the ``Medicare
Education and Regulatory Fairness Act of 2001.'' This bill will ensure
that providers are treated with the respect that they deserve, and that
Medicare beneficiaries aren't told that their health insurance isn't
wanted. We owe it to our nation's seniors. I urge immediate action on
this worthy bill.
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. 452
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.
(a) Short Title.--This Act may be cited as the ``Medicare
Education and Regulatory Fairness Act of 2001''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.
TITLE I--REGULATORY REFORM
Sec. 101. Prospective application of certain regulations.
Sec. 102. Requirements for judicial and regulatory challenges of
regulations.
Sec. 103. Prohibition of recovering past overpayments by certain means.
Sec. 104. Prohibition of recovering past overpayments if appeal
pending.
Sec. 105. Prohibition of random prepayment audits.
Sec. 106. Exception on prohibition of waiving medicare copayment.
Sec. 107. Effective date.
TITLE II--APPEALS PROCESS REFORMS
Sec. 201. Construction of hearing rights related to decisions to deny
or not renew a physician enrollment agreement.
Sec. 202. Reform of post-payment audit process.
Sec. 203. Definitions relating to physicians, providers of services,
and providers of ambulance services.
Sec. 204. Right to appeal on behalf of deceased beneficiaries.
Sec. 205. Effective date.
TITLE III--EDUCATION COMPONENTS
Sec. 301. Designated funding levels for physician and provider
education.
Sec. 302. Information requests.
TITLE IV--SUSTAINABLE GROWTH RATE REFORMS
Sec. 401. Inclusion of regulatory costs in the calculation of the
sustainable growth rate.
TITLE V--POLICY DEVELOPMENT REGARDING E&M GUIDELINES
Sec. 501. Policy development regarding E&M Documentation Guidelines.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Congress should focus more resources on and work with
physicians and health care providers to combat fraud in the
medicare program.
(2) The overwhelming majority of physicians and other
providers in the United States are law-abiding citizens who
provide important services and care to patients each day.
(3) Physicians and other providers of services that
participate in the medicare program often have trouble wading
through a confusing and sometimes even contradictory maze of
medicare regulations. Keeping track of the morass of medicare
regulations detracts from the time that physicians have to
treat patients.
(4) Due to the overly complex nature of medicare
regulations and the risk of being the subject of an
aggressive government investigation, many physicians are
leaving the medicare program, limiting the number of medicare
patients they see, or refusing to accept new medicare
patients at all. If this trend continues, health care for the
millions of patients nationwide who depend on medicare will
be seriously compromised. Congress has an obligation to
prevent this from happening.
(5) Regulatory fairness for physicians and providers as
well as increased access to education about medicare
regulations are necessary to preserve the integrity of our
health care system and provide for the health of our
population.
SEC. 3. DEFINITIONS.
In this Act:
(1) Billing.--The term ``billing'' includes any requirement
related to the content and timing of an order for care or a
plan of treatment by a physician, a provider of service, or a
provider of ambulance services.
(2) Carrier.--The term ``carrier'' means a carrier (as
defined in section 1842(f) of the Social Security Act (42
U.S.C. 1395u(f))) with a contract under title XVIII of such
Act to administer benefits under part B of such title.
(3) Extrapolation.--The term ``extrapolation'' has the
meaning given such term in section 1861(ww)(1) of the Social
Security Act (as added by section 203(a)).
(4) Fiscal intermediary.--The term ``fiscal intermediary''
means a fiscal intermediary (as defined in section 1816(a) of
the Social Security Act (42 U.S.C. 1395h(a))) with an
agreement under section 1816 of such Act to administer
benefits under part A or B of such title.
(5) HCFA.--The term ``HCFA'' means the Health Care
Financing Administration.
(6) Medicare program.--The term ``medicare program'' means
the health benefits program under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.).
(7) Physician.--The term ``physician'' has the meaning
given such term in section 1861(r) of the Social Security Act
(42 U.S.C. 1395x(r)).
(8) Prepayment review.--The term ``prepayment review'' has
the meaning given such term in section 1861(ww)(2) of the
Social Security Act (as added by section 203(a)).
(9) Provider of services.--The term ``provider of
services'' has the meaning given such term in section 1861(u)
of the Social Security Act (42 U.S.C. 1395x(u)).
(10) Provider of ambulance services.--The term ``provider
of ambulance services'' means a provider of ambulance
services described in section 1861(s)(7) of the Social
Security Act (42 U.S.C. 1395x(s)(7)).
(11) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
TITLE I--REGULATORY REFORM
SEC. 101. PROSPECTIVE APPLICATION OF CERTAIN REGULATIONS.
Section 1871(a) of the Social Security Act (42 U.S.C.
1395hh(a)) is amended by adding at the end the following new
paragraphs:
``(3) Any regulation described under paragraph (2) shall
not take effect earlier than the effective date of the final
regulation. Any regulation described under such paragraph
that applies to an agency action, including any agency
determination, shall only apply as that regulation is in
effect at the time that agency action is taken.
``(4) The Secretary shall issue a final rule within 12
months of the date of publication
[[Page S1820]]
of an interim final rule. Such final rule shall provide
responses to comments submitted in response to the interim
final rule. Such final rule shall not establish or change a
legal standard not raised in the interim final rule unless a
new 60-day comment period is provided.
``(5) Carriers, fiscal intermediaries, and States pursuant
to an agreement under section 1864 shall not apply new policy
guidances or policy changes retroactively to services
provided before the date the new policy was issued.''.
SEC. 102. REQUIREMENTS FOR JUDICIAL AND REGULATORY CHALLENGES
OF REGULATIONS.
(a) Right To Challenge Constitutionality and Statutory
Authority of HCFA Regulations.--Section 1872 of the Social
Security Act (42 U.S.C. 1395ii) is amended to read as
follows:
``application of certain provisions of title ii
``Sec. 1872. Subject to subparagraphs (A), (B), (D), and
(E) of section 1848(i)(1), the provisions of sections 206 and
216(j), and of subsections (a), (d), (e), (h), (i), (j), (k),
and (l) of section 205, shall also apply with respect to this
title to the same extent as they are applicable with respect
to title II, except that--
``(1) in applying such provisions with respect to this
title, any reference therein to the Commissioner of Social
Security or the Social Security Administration shall be
considered a reference to the Secretary or the Department of
Health and Human Services, respectively; and
``(2) section 205(h) shall not apply with respect to any
action brought against the Secretary under section 1331,
1346, 1361, or 2201 of title 28, United States Code,
regardless of whether such action is unrelated to a specific
determination of the Secretary, that challenges--
``(A) the constitutionality of any provision of this title;
``(B) the constitutionality of substantive or interpretive
rules of general applicability issued by the Secretary to
carry out this title'';
``(C) the Secretary's statutory authority to promulgate
such substantive or interpretive rules of general
applicability; or
``(D) a finding of good cause under subparagraph (B) of the
third sentence of section 553(b)(3) of title 5, United States
Code, if used in the promulgation of such substantive or
interpretive rules of general applicability.''.
(b) Administrative and Judicial Review of Secretary
Determinations.--Section 1866(h) of the Act (42 U.S.C.
1395cc(h)) is amended--
(1) in paragraph (1), by striking ``(1)'' and all that
follows and inserting the following: ``(1) Except as provided
in paragraph (3), an institution or agency dissatisfied with
a determination by the Secretary that it is not a provider of
services or with a determination described in subsection
(b)(2) (regardless of whether such determination has been
made by the Secretary or by a State pursuant to an agreement
entered into with the Secretary under section 1864 and
regardless of whether the Secretary has imposed or may impose
a remedy, penalty, or other sanction on the institution or
agency in connection with such determination) shall be
entitled to a hearing thereon by the Secretary (after
reasonable notice) to the same extent as is provided in
section 205(b), and to judicial review of the Secretary's
final decision after such hearing as is provided in section
205(g), except that, in so applying such sections and in
applying section 205(l) thereto, any reference therein to the
Commissioner of Social Security or the Social Security
Administration shall be considered a reference to the
Secretary or the Department of Health and Human Services,
respectively, and such hearings are subject to the deadlines
specified in paragraph (2)f.'';
(2) by redesignating paragraph (2) as paragraph (3);
(3) by inserting after paragraph (1) the following new
paragraph:
``(2)(A)(i) Except as provided in clause (ii), an
administrative law judge shall conduct and conclude a hearing
on a determination described in subsection (b)(2) and render
a decision on such hearing by not later than the end of the
90-day period beginning on the date a request for hearing has
been timely filed.
``(ii) The 90-day period under clause (i) shall not apply
in the case of a motion or stipulation by the party
requesting the hearing to waive such period.
``(B) The Department Appeals Board of the Department of
Health and Human Services shall conduct and conclude a review
of the decision on a hearing described in subparagraph (A)
and make a decision or remand the case to the administrative
law judge for reconsideration by not later than the end of
the 90-day period beginning on the date a request for review
has been timely filed.
``(C) In the case of a failure by an administrative law
judge to render a decision by the end of the period described
in subparagraph (A)(i), the party requesting the hearing may
request a review by the Departmental Appeals Board of the
Departmental of Health and Human Services, notwithstanding
any requirements for a hearing for purposes of the party's
right to such a review.
``(D) In the case of a request described in subparagraph
(D), the Departmental Appeals Board shall review the case de
novo. In the case of the failure of the Departmental Appeals
Board to render a decision on such hearing by not later than
the end of the 60-day period beginning on the date a request
for such a Department Appeals Board hearing has been filed,
the party requesting the hearing may seek judicial review of
the Secretary's decision, notwithstanding any requirements
for a hearing for purposes of the party's right to such
review.
``(E) In the case of a request described in subparagraph
(D), the court shall review the case de novo.''; and
(4) by adding at the end the following new paragraph:
``(4) An institution or agency dissatisfied with a finding
or determination by the Secretary, or by a State pursuant to
an agreement under section 1864, that the institution of
agency if out of compliance with any standard or condition of
participation under this title (except a determination
described in subsection (b)(2)) shall be entitled to a formal
review or reconsideration of the finding or determination, in
accordance with the regulations prescribed by the Secretary,
prior to the imposition of any remedy, penalty, corrective
action, or other sanction in connection with the finding or
determination.''.
SEC. 103. PROHIBITION OF RECOVERING PAST OVERPAYMENTS BY
CERTAIN MEANS.
(a) In General.--Subject to section 104 and except as
provided in subsection (b) and notwithstanding sections
1815(a), 1842(b), and 1861(v)(1)(A)(ii) of the Social
Security Act (42 U.S.C. 1395g(a), 1395u(a), and
1395x(v)(1)(A)(ii)), or any other provision of law, for
purposes of applying sections 1842(b)(3)(B)(ii),
1866(a)(1)(B)(ii), 1870, and 1893 of such Act (42 U.S.C.
1395u(b)(3)(B)(ii), 1395cc(a)(1)(B)(ii), 1395gg, and 1395ddd)
to pending and future audits, the Secretary shall give a
physician, provider of services, or provider of ambulance
services the option of entering into an arrangement to offset
alleged overpayments against future payments or entering into
a repayment plan with its carrier or fiscal intermediary to
recoup such an overpayment. Under such an arrangement or
plan, a physician, provider of services, or provider of
ambulance services shall have up to 3 years to offset or
repay the overpayment if the amount of such overpayment
exceeds $5,000.
(b) Exception.--This section shall not apply to cases in
which the Secretary finds clear and convincing evidence of
fraud or similar fault on the part of the physician, provider
of services, or provider of ambulance services or in the case
of overpayments for which an offset arrangement is in place
as of the date of the enactment of this Act.
SEC. 104. PROHIBITION OF RECOVERING PAST OVERPAYMENTS IF
APPEAL PENDING.
Notwithstanding any provision of law, for purposes of
applying sections 1842(b)(3)(B)(ii), 1866(a)(1)(B)(ii), 1870,
and 1893 of the Social Security Act (42 U.S.C.
1395u(b)(3)(B)(ii), 1395cc(a)(1)(B)(ii), 1395gg, and
1395ddd), the Secretary may not take any action (or authorize
any other person, including any fiscal intermediary, carrier,
and contractor under section 1893 of such Act (42 U.S.C.
1395ddd)) to recoup an overpayment or to impose a penalty
during the period in which a physician, provider of services,
or provider of ambulance services is appealing a
determination that such an overpayment has been made or the
amount of the overpayment.
SEC. 105. PROHIBITION OF RANDOM PREPAYMENT AUDITS.
Carriers may not, prior to paying a claim under the
medicare program, demand the production of records or
documentation absent cause.
SEC. 106. EXCEPTION ON PROHIBITION OF WAIVING MEDICARE
COPAYMENT.
(a) In General.--Section 1128A(i)(6)(A) of the Social
Security Act (42 U.S.C. 1320a-7a(i)(6)(A)) is amended by
inserting ``, except for written, mailed communication with
existing patients,'' before ``waiver is not''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to communications made on or after the date of
the enactment of this Act.
SEC. 107. EFFECTIVE DATE.
Except as otherwise provided in section 106(b), the
amendments made by this title shall take effect 60 days after
the date of enactment of this Act.
TITLE II--APPEALS PROCESS REFORMS
SEC. 201. CONSTRUCTION OF HEARING RIGHTS RELATED TO DECISIONS
TO DENY OR NOT RENEW A PHYSICIAN ENROLLMENT
AGREEMENT.
Section 1842 of the Social Security Act (42 U.S.C. 1395u)
is amended by adding at the end the following new subsection:
``(u) A carrier decision to deny an initial physician
enrollment application and a carrier decision not to renew a
physician enrollment agreement shall be treated as an initial
determination subject to the same course of appeals as other
initial determinations under section 1869.''.
SEC. 202. REFORM OF POST-PAYMENT AUDIT PROCESS.
(a) Carriers.--Section 1842 of the Social Security Act (42
U.S.C. 1395u), as amended by section 201, is further amended
by adding at the end the following new subsection:
``(v) In carrying out its contract under subsection (b)(3),
with respect to physicians' services or ambulance services,
the carrier shall provide for the recoupment of overpayments
in the following manner:
``(1)(A) During the 1-year period (or 18-month period in
the case of a physician who is in a practice with fewer than
10 full-time
[[Page S1821]]
equivalent employees, including physicians) beginning on the
date on which a physician or provider of ambulance services
receives an overpayment, the physician or provider of
ambulance services may return the overpayment without penalty
or interest to the carrier making such overpayment if--
``(i) the carrier has not requested any relevant record or
file; or
``(ii) the case has not been referred before the date of
repayment to the Department of Justice or the Office of
Inspector General.
``(B) If a physician or provider of ambulance services
returns an overpayment under subparagraph (A), neither the
carrier, contractor under section 1893, nor any law
enforcement agency may begin an investigation or target such
physician or provider of ambulance services based on any
claim associated with the amount the physician or provider of
ambulance services has repaid.
``(2) If a carrier has decided to conduct a post-payment
audit of the physician or provider of ambulance services, the
carrier shall send written notice to the physician or
provider of ambulance services. If the physician or provider
of ambulance services practices in a rural area (as defined
in section 1886(d)(2)(D)), such notice must be sent by
registered mail.
``(3) The carrier or a contractor under section 1893 may
not recoup or offset payment amounts based on extrapolation
(as defined in section 1861(ww)(1)) for the first time that
the physician or provider of ambulance services is alleged as
a result of a post-payment audit to have received an
overpayment.
``(4) As part of any written consent settlement
communication, the carrier or a contractor under section 1893
shall clearly state that the physician or provider of
ambulance services may submit additional information
(including evidence other than medical records) to dispute
the overpayment amount without waiving any administrative
remedy or right to appeal the amount of the overpayment.
``(5)(A) Each consent settlement communication from the
carrier or a contractor under section 1893 shall clearly
state that prepayment review (as defined in section
1861(ww)(2)) may be imposed where the physician or provider
of ambulance services submits an actual or projected
repayment to the carrier or a contractor under section 1893.
Subject to subparagraph (D), any prepayment review shall
cease when the physician or provider of ambulance services
has submitted claims, found by carrier to be covered services
and coded properly for the same services that were the basis
for instituting the prepayment review, in a 180-day period or
after processing claims of at least 75 percent of the volume
of the claims (whichever occurs first) received by the
carrier in the full month preceding the start of the
prepayment review. The 180-day period begins with the date of
the carrier's written notification that the physician or
provider of ambulance services is being placed on prepayment
review.
``(B) Prepayment review may not be applied under this part
as a result of the voluntary submission of a claim or record
under section 1897(b)(2) or as a result of information
provided pursuant to a request under section 302(b) of the
Medicare Education and Regulatory Fairness Act of 2001.
``(C) Carrier prepayment and coverage policies and claims
processing screens used to identify claims for medical review
must be incorporated as part of the education programs on
medicare policy and proper coding made available to
physicians and providers of ambulance services.
``(D) The time and percentage claim limitations in
paragraph (5)(A) shall not apply to cases that have been
referred to the Department of Justice or the Office of the
Inspector General.''.
(b) Fiscal Intermediaries.--Section 1816 of the Social
Security Act (42 U.S.C. 1395h) is amended by adding at the
end the following new subsection:
``(m) In carrying out its agreement under this section,
with respect to payment for items and services furnished
under this part, the fiscal intermediary shall provide for
the recoupment of overpayments in the following manner:
``(1)(A) During the 1-year period beginning on the date on
which a provider of services receives an overpayment, the
provider of services may return the overpayment without
penalty or interest to the fiscal intermediary making such
overpayment if--
``(i) the fiscal intermediary has not requested any
relevant record or file; or
``(ii) the case has not been referred before the date of
repayment to the Department of Justice or the Office of
Inspector General.
``(B) If a provider of services returns an overpayment
under subparagraph (A), neither the fiscal intermediary,
contractor under section 1893, nor any law enforcement agency
may begin an investigation or target such provider of
services based on any claim associated with the amount the
provider of services has repaid.
``(2) If a fiscal intermediary has decided to conduct a
post-payment audit of the provider of services, the fiscal
intermediary shall send written notice to the provider of
services. If the provider of services practices in a rural
area (as defined in section 1886(d)(2)(D)), such notice must
be sent by registered mail.
``(3) The fiscal intermediary or a contractor under section
1893 may not recoup or offset payment amounts based on
extrapolation (as defined in section 1861(ww)(1)) for the
first time that the provider of services is alleged as a
result of a post-payment audit to have received an
overpayment.
``(4) As part of any written consent settlement
communication, the fiscal intermediary or a contractor under
section 1893 shall clearly state that the provider of
services may submit additional information (including
evidence other than medical records) to dispute the
overpayment amount without waiving any administrative remedy
or right to appeal the amount of the overpayment.
``(5)(A) Each consent settlement communication from the
fiscal intermediary or a contractor under section 1893 shall
clearly state that prepayment review (as defined in section
1861(ww)(2)) may be imposed where the provider of services
submits an actual or projected repayment to the fiscal
intermediary or a contractor under section 1893. Subject to
subparagraph (D), any prepayment review shall cease when the
provider of services has submitted claims, found by the
fiscal intermediary to be covered services and coded properly
for the same services that were the basis for instituting the
prepayment review, in a 180-day period or after processing
claims of at least 75 percent of the volume of the claims
(whichever occurs first) received by the fiscal intermediary
in the full month preceding the start of the prepayment
review. The 180-day period begins with the date of the fiscal
intermediary's written notification that the provider of
services is being placed on prepayment review.
``(B) Prepayment review may not be applied under this part
as a result of the voluntary submission of a claim, cost
report, or record under section 1897(b)(2) or as a result of
information provided pursuant to a request under section
302(b) of the Medicare Education and Regulatory Fairness Act
of 2001.
``(C) Fiscal intermediary prepayment and coverage policies
and claims processing screens used to identify claims for
medical review must be incorporated as part of the education
programs on medicare policy and proper coding made available
to providers of services.
``(D) The time and percentage claim limitations in
paragraph (5)(A) shall not apply to cases that have been
referred to the Department of Justice or the Office of the
Inspector General.''.
SEC. 203. DEFINITIONS RELATING TO PHYSICIANS, PROVIDERS OF
SERVICES, AND PROVIDERS OF AMBULANCE SERVICES.
(a) In General.--Section 1861 of the Social Security Act
(42 U.S.C. 1395 et seq.), as amended by section 102(b) and
105(b) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (as enacted into law
by section 1(a)(6) of Public Law 106-554), is amended by
adding at the end the following new subsection:
``Definitions Relating to Physicians, Providers of Services, and
Providers of Ambulance Services
``(ww) For purposes of provisions of this title relating to
physicians, providers of services, and providers of ambulance
services:
``(1) Extrapolation.--The term `extrapolation' means the
application of an overpayment dollar amount to a larger
grouping of claims than those in the audited sample to
calculate a projected overpayment figure.
``(2) Prepayment review.--The term `prepayment review'
means a carrier's and fiscal intermediary's practice of
withholding claim reimbursements from physicians, providers
of services, and providers of ambulance services pending
review of a claim even if the claims have been properly
submitted and reflect medical services provided.''.
SEC. 204. RIGHT TO APPEAL ON BEHALF OF DECEASED
BENEFICIARIES.
Notwithstanding section 1870 of the Social Security Act (42
U.S.C. 1395gg) or any other provision of law, the Secretary
shall permit any physician, provider of services, and
provider of ambulance services to appeal any determination of
the Secretary under the medicare program on behalf of a
deceased beneficiary where no substitute party is available.
SEC. 205. EFFECTIVE DATE.
The amendments made by this title shall take effect at the
end of the 180-day period beginning on the date of the
enactment of this Act.
TITLE III--EDUCATION COMPONENTS
SEC. 301. DESIGNATED FUNDING LEVELS FOR PHYSICIAN AND
PROVIDER EDUCATION.
(a) Education Programs for Physicians, Providers of
Services, and Providers of Ambulance Services.--Title XVIII
of the Social Security Act (42 U.S.C. 1395 et seq.) is
amended by adding at the end the following new section:
``education programs for physicians, providers of services, and
providers of ambulance services
``Sec. 1897. (a) Education Program Defined.--In this
section, the term `education programs' means programs
undertaken in conjunction with health care associations that
focus on current billing, coding, cost reporting, and
documentation laws, regulations, program memoranda,
instructions to regional offices, and fiscal intermediary and
carrier manual instructions that place special emphasis on
billing, coding, cost reporting, and documentation errors
that the Secretary has found occur frequently and remedies
for these improper billing, coding, cost reporting, and
documentation practices.
[[Page S1822]]
``(b) Conduct of Education Programs.--
``(1) In general.--Carriers, fiscal intermediaries, and
contractors under section 1893 shall conduct education
programs for any physician (or a designee), provider of
services, or provider of ambulance services that submits a
claim or cost report under paragraph (2)(A). Such carriers,
intermediaries, and contractors under section 1893 shall
conduct outreach to specifically contact physicians and their
designees, providers of services, and providers of ambulance
services with fewer than 10 full-time-equivalent employees
(including physicians) to implement education programs
tailored to their education needs and in proximity to their
practices.
``(2) Provider education.--
``(A) Submission of claims, cost reports, and records.--Any
physician, provider of services, or provider of ambulance
services may voluntarily submit any present or prior claim,
cost report, or medical record to the carrier or fiscal
intermediary to determine whether the billing, coding, and
documentation associated with the claim or cost report is
appropriate.
``(B) Prohibition of extrapolation.--No claim submitted
under subparagraph (A) is subject to any type of
extrapolation (as defined in section 1861(ww)(1)).
``(C) Safe harbor.--No submission of a claim, cost report,
or record under this section shall result in the carrier,
fiscal intermediary, a contractor under section 1893, or any
law enforcement agency beginning an investigation or
targeting an investigation based on any claim, cost report,
or record submitted under such subparagraph.
``(3) Treatment of claims.--If the carrier or fiscal
intermediary finds a claim or cost report under paragraph (2)
to be improper, the physician, provider of services, or
provider of ambulance services shall have the following
options:
``(A) Correction of problems.--To correct the
documentation, coding, or billing problem to appropriately
substantiate the claim or cost report and either--
``(i) remit the actual overpayment; or
``(ii) receive the appropriate additional payment from the
carrier or fiscal intermediary.
``(B) Repayment.--To repay the actual overpayment amount if
the service is excluded from medicare coverage under this
title or if adequate documentation does not exist.
``(4) Prohibition of physician and provider of services
tracking.--Carriers, fiscal intermediaries, and contractors
under section 1893 may not use the record of attendance or
information gathered during an education program conducted
under this section or the inquiry regarding claims or cost
reports under paragraph (2)(A) to select, identify, or track
such physician, provider of services, or provider of
ambulance services for the purpose of conducting any type of
audit or prepayment review.''.
(b) Funding of Education Programs.--
(1) Medicare integrity program.--Section 1893(b)(4) of such
Act (42 U.S.C. 1395ddd(b)(4)) is amended by adding at the end
the following new sentence: ``No less than 10 percent of the
program funds shall be devoted to the education programs for
physicians, providers of services, and providers of ambulance
services under section 1897.''.
(2) Carriers.--Section 1842(b)(3)(H) of such Act (42 U.S.C.
1395u(b)(3)(H)) is amended by adding at the end the following
new clause:
``(iii) No less than 2 percent of carrier funds shall be
devoted to the education programs for physicians under
section 1897.''.
(3) Fiscal intermediaries.--Section 1816(b)(1) of such Act
(42 U.S.C. 1395h(b)(1)) is amended--
(A) in subparagraph (A), by striking ``and'' at the end;
(B) in subparagraph (B), by striking ``; and'' and
inserting a comma; and
(C) by adding at the end the following new subparagraph:
``(C) that such agency or organization is using no less
than 1 percent of its funding for education programs for
providers of services and providers of ambulance services
under section 1897.''.
(c) Effective Date.--The amendments made by this section
shall apply to fiscal years beginning after the date of the
enactment of this Act.
SEC. 302. INFORMATION REQUESTS.
(a) Clear, Concise, and Accurate Answers.--Fiscal
intermediaries and carriers shall do their utmost to provide
physicians, providers of services, and providers of ambulance
services with a clear, concise, and accurate answer regarding
billing and cost reporting questions under the medicare
program, and will give their true first and last names to
such physicians, providers of services, and providers of
ambulance services.
(b) Written Requests.--
(1) In general.--The Secretary shall establish a process
under which a physician, provider of services, or provider of
ambulance services may request, free of charge and in writing
from a fiscal intermediary or carrier, assistance in
addressing questions regarding coverage, billing,
documentation, coding, and cost reporting procedures under
the medicare program and then the fiscal intermediary or
carrier shall respond in writing within 30 business days with
the correct substantive or procedural answer.
(2) Use of written statement.--
(A) In general.--Subject to subparagraph (C), a written
statement under paragraph (1) may be used by the physician,
provider of services, or provider of ambulance services who
submitted the information request and submitted claims in
conformance with the answer of the carrier or fiscal
intermediary as proof against a future audit or overpayment
allegation under the medicare program.
(B) Extrapolation prohibition.--Subject to subparagraph
(C), no claim submitted under this section shall be subject
to extrapolation, if the claim adheres to the conditions set
forth in the information response.
(C) Limitation on application.--Subparagraphs (A) and (B)
shall not apply to cases of fraudulent billing.
(3) Safe harbor.--If a physician, provider of services, or
provider of ambulance services requests information under
this subsection, neither the fiscal intermediary, the
carrier, a contractor under section 1893 of the Social
Security Act (42 U.S.C. 1395ddd), nor any law enforcement
agency may begin an investigation or target such physician or
provider based on the request.
(c) Broad Policy Guidance by the Secretary.--The Secretary
shall develop a mechanism to address written questions
regarding medicare policy and regulations, which are
submitted by health care associations. The Secretary shall
issue such answers within 90 calendar days from the date of
the receipt of the question and shall make the responses
available to the public in an indexed, easily accessible
format.
(d) Notice of Changes in Policy.--Carriers and fiscal
intermediaries shall provide written, mailed notice within 30
calendar days to physicians, providers of services, and
providers of ambulance services of all policy or operational
changes to the medicare program. Physicians, providers of
services, and providers of ambulance services shall have not
less than 30 days to comply with such policy changes.
(e) Effective Date.--This section shall take effect 180
days after the date of the enactment of this Act.
TITLE IV--SUSTAINABLE GROWTH RATE REFORMS
SEC. 401. INCLUSION OF REGULATORY COSTS IN THE CALCULATION OF
THE SUSTAINABLE GROWTH RATE.
(a) In General.--Section 1848(f)(2) of the Social Security
Act (42 U.S.C. 1395w-4(f)(2)) is amended--
(1) by redesignating subparagraphs (A) through (D) as
clauses (i) through (iv), respectively;
(2) by striking ``Specification of growth rate.--The
sustainable growth rate'' and inserting ``Specification of
growth rate.--
``(A) In general.--The sustainable growth rate''; and
(3) by adding at the end the following new subparagraphs:
``(B) Inclusion of sgr regulatory costs.--The estimate
established under clause (iv) or any successor thereto shall
include--
``(i) the impact on costs for physicians' services
resulting from regulations implemented by the Secretary
during the year for which the sustainable growth rate is
estimated, including those regulations that may be
implemented during such year; and
``(ii) the costs described in subparagraph (C).
``(C) Inclusion of other regulatory costs.--The costs
described in this subparagraph are per procedure costs
incurred by physicians' practices in complying with
regulations promulgated by the Secretary, regardless of
whether such regulation affects the fee schedule established
under subsection (b)(1).
``(D) Inclusion of costs in regulatory impact analyses.--
With respect to any regulation promulgated that may impose a
regulatory cost described in subparagraph (B)(i) or (C) on a
physician, the Secretary shall include in the regulatory
impact analysis accompanying such regulation an estimate of
any such cost.
``(E) Inclusion of estimated cost on rural physicians.--In
promulgating regulations, the Secretary shall specifically
estimate the costs to rural physicians and physicians
practices in rural areas and the estimated number of hours
needed to comply with the regulation.''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply with respect to any estimate made (or regulation
promulgated) by the Secretary of Health and Human Services on
or after 1 year after the date of enactment of this Act.
TITLE V--POLICY DEVELOPMENT REGARDING E&M GUIDELINES
SEC. 501. POLICY DEVELOPMENT REGARDING E&M DOCUMENTATION
GUIDELINES.
(a) In General.--HCFA may not implement any new evaluation
and management documentation guidelines (in this section
referred to as ``E&M guidelines'') under the medicare
program, unless HCFA--
(1) has provided for an assessment of the proposed
guidelines by organizations representing physicians;
(2) has established a plan that contains specific goals,
including a schedule, for improving use of such guidelines;
(3) has completed a minimum of 4 pilot projects consistent
with subsection (b) in at least 4 different HCFA regions
administered by 4 different carriers (to be specified by the
Secretary) to test such guidelines; and
(4) finds that the objectives described in subsection (c)
will be met in the implementation of such guidelines.
(b) Pilot Projects.--
(1) Length and consultation.--Each pilot project under this
subsection shall--
[[Page S1823]]
(A) be of sufficient length to allow for preparatory
physician and carrier education, analysis, and use and
assessment of potential E&M guidelines; and
(B) be conducted, throughout the planning and operational
stages of the project, in consultation with organizations
representing physicians.
(2) Peer review pilot projects.--Of the pilot projects
conducted under this subsection--
(A) at least one shall focus on a peer review method by
physicians (not employed by a carrier) which evaluates
medical record information for claims submitted by physicians
identified as statistical outliers relative to definitions
published in the CPT book;
(B) at least one shall be conducted for services furnished
in a rural area (as defined in section 1886(d)(2)(D) of the
Social Security Act, 42 U.S.C. 1395ww(d)(2)(D)); and
(C) at least one shall be conducted in a setting where
physicians bill under physicians services in teaching
settings (described in section 415.150 of title 42, Code of
Federal Regulations).
(3) Banning of targeting of pilot project participants.--
Data collected under this subsection shall not be used as the
basis for overpayment demands or post-payment audits.
(4) Study of impact.--Each pilot project shall examine the
effect of the E&M guidelines on--
(A) different types of physician practices, including those
with few than 10 full-time employees (including physicians);
and
(B) the costs of physician compliance, including education,
implementation, auditing, and monitoring.
(c) Objectives for E&M Guidelines.--The objectives for E&M
guidelines specified in this subsection are as follows
(relative to the E&M guidelines and review policies in effect
as of the date of the enactment of this Act):
(1) Enhancing clinically relevant documentation needed to
code accurately and assess coding levels accurately.
(2) Decreasing the level of non-clinically pertinent and
burdensome documentation time and content in the record.
(3) Increased accuracy by carrier reviewers.
(4) Education of both physicians and reviewers.
(5) Promote appropriate use of E&M codes by physicians and
their staffs.
(6) The extent to which the tested E&M documentation
guidelines substantially adhere to the CPT coding definitions
and rules.
(d) Report on How Met Pilot Project Objectives.--HCFA shall
submit a report to the Committees on Energy and Commerce and
Ways and Means of the House of Representatives, the Committee
on Finance of the Senate, and the Practicing Physicians
Advisory Council, six months after the conclusion of the
pilot projects. Such report shall include the extent to which
the pilot projects met the objectives specified in
subsections (b)(4) and (c).
______
By Mrs. FEINSTEIN:
S. 453. A bill for the relief of Denes and Gyorgyi Fulop; to the
Committee on the Judiciary.
Mrs. FEINSTEIN. Mr. President, I am pleased to offer today,
legislation to provide lawful permanent residence status to Denes and
Gyorgyi Fulop, Hungarian nationals who have lived in California for
more than 18 years. The Fulops are the parents of six United States
citizen children. Today, they face deportation.
The Fulop's story is a compelling one; one I believe merits Congress'
consideration for humanitarian relief. In May of last year, the Fulops
suffered the loss of their eldest child, Robert ``Bobby'' Fulop, an
accomplished 15-year-old teenager who died suddenly of a heart
aneurism. Bobby was considered the shining star in his family. He was
very bright and very helpful to his parents.
That same year the Fulop's six-year-old daughter, Elizabeth, was
diagnosed with moderate pulmonary stenosis, a potentially life-
threatening heart condition. Not long ago, she underwent heart surgery.
I am pleased to report that she is doing much better.
Compounding this unfortunate series of events is the fact that,
today, the Fulops face deportation. They face deportation, in part,
because in 1995 they went back to Hungary and stayed for more than 90
days. Under the pre-1996 immigration laws, their stay in Hungary would
not have been a factor in their deportation and they would have
qualified for adjustment to lawful permanent resident status.
Indeed, in 1996, Mr. and Mrs. Fulop applied to the Immigration and
Naturalization Service, INS, for permanent resident status. The INS did
not interview them until 1998. By the time the INS had processed their
application, the new 1996 immigration laws had taken effect, which
barred from relief long-term resident aliens who traveled outside the
U.S. for more than 90 days.
One cannot help but conclude that had the INS acted on their
application for relief from deportation in a more timely manner, the
Fulops would have qualified for suspension of deportation under the
pre-1996 laws, given that they are long-term residents of the U.S. with
U.S. citizen children.
This is a tragic situation. The rules of the game were changed in the
middle of the Fulop's application for permanent residence, and because
the INS failed to process their application in a timely fashion they
are now facing deportation. The Fulop's children, who are United States
citizens, were not included in the deportation order. But because they
are minors they would likely have to follow their parents to Hungary.
Growing up in the American school system, the Fulop children are not
able to read or write the Hungarian language, and I believe that
forcing them to leave the only country they have known would pose an
extreme hardship for them.
It is my hope that Congress sees fit to provide an opportunity for
this family to remain together in the United States.
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. 453
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. PERMANENT RESIDENT STATUS FOR DENES AND GYORGYI
FULOP.
(a) In General.--Notwithstanding subsections (a) and (b) of
section 201 of the Immigration and Nationality Act, Denes and
Gyorgyi Fulop shall be eligible for issuance of immigrant
visas or for adjustment of status to that of aliens lawfully
admitted for permanent residence upon filing an application
for issuance of immigrant visas under section 204 of such Act
or for adjustment of status to lawful permanent resident.
(b) Adjustment of Status.--If Denes Fulop or Gyorgyi Fulop
enters the United States before the filing deadline specified
in subsection (c), the alien shall be considered to have
entered and remained lawfully and shall, if otherwise
eligible, be eligible for adjustment of status under section
245 of the Immigration and Nationality Act as of the date of
enactment of this Act.
(c) Deadline for Application and Payment of Fees.--
Subsections (a) and (b) shall apply only if the application
for issuance of immigrant visas or the application for
adjustment of status are filed with appropriate fees within 2
years after the date of enactment of this Act.
(d) Reduction of Immigrant Visa Numbers.--Upon the granting
of immigrant visas or permanent residence to Denes and
Gyorgyi Fulop, the Secretary of State shall instruct the
proper officer to reduce by the appropriate number, during
the current or next following fiscal year, the total number
of immigrant visas that are made available to natives of the
country of the aliens' birth under section 203(a) of the
Immigration and Nationality Act or, if applicable, the total
number of immigrant visas that are made available to natives
of the country of the aliens' birth under section 202(e) of
such Act.
______
By Mr. BINGAMAN:
S. 454. A bill to provide permanent funding for the Bureau of Land
Management Payment in Lieu of Taxes Program and for other purposes; to
the Committee on Energy and Natural Resources.
Mr. BINGAMAN. Mr. President, the bill I am introducing today, the
PILT and Refuge Revenue Sharing Permanent Funding Act, deals with an
issue that I believe must be addressed in this Congress. The bill is a
measure to make permanent funding for two important programs managed by
the Department of the Interior: the Payment in Lieu of Taxes Program,
or PILT, in the Bureau of Land Management and the Refuge Revenue
Sharing Program in the Fish and Wildlife Service. Those programs
provide support to local governments in areas in which these two
agencies hold land. Under the authorizations for these programs, the
funds are to be provided as an offset to the local property tax base
lost by virtue of the Federal ownership of these lands.
Federal ownership of lands in the American West, in states like New
Mexico, does not come without its share of burdens for local
governments. If there is a fire or other emergency, they must help
respond. If there is increased traffic to and from the site, they must
maintain the public roads that provide the necessary access to the
public. In enacting the original authorizing legislation, Congress
decided that, as a matter of policy, it was appropriate for the Federal
government
[[Page S1824]]
to bear a fair share in paying for these costs, in lieu of the taxes
that would be levied on any private landowner in these localities.
But in setting up these programs, Congress decided to make them
subject to annual appropriations, either partially, in the case of
Refuge Revenue Sharing, or completely, in the case of PILT. In
retrospect, this was a mistake. The annual appropriations process has
never come even close to providing the funds agreed upon by the
underlying authorizing law. Moreover, the amount made available has
changed significantly from one year to the next, frustrating the
ability of localities to plan effectively for the use of these funds.
Many of the burdens they face as a result of Federal land ownership
require expenditures and commitments that are long-term. If you want to
have a reasonable system of county roads, you need to have a consistent
multi-year plan. If you want adequate fire protection, you can't be
hiring a dozen new firefighters in one year and firing them the next,
as appropriation levels gyrate up and down.
The Federal government needs to be a better neighbor and a more
reliable partner to local governments in the rural West. Since the
system of meeting our obligations to these localities through the
annual appropriations process has not worked, I am proposing that we
start treating our payments in lieu of taxes in the same way that we
account for incoming tax revenues to the Federal government--on the
mandatory side of the Federal ledger. By making the funding for these
crucial programs full and permanent, we will be keeping the commitments
to rural communities throughout the West made in the original PILT and
Refuge Revenue Sharing authorizing legislation. It's a matter of simple
justice to rural communities. I hope that enacting legislation along
the lines of what I am proposing today will receive high priority in
the next Congress.
I ask unanimous consent that the text 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. 454
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 ``PILT and Refuge Revenue
Sharing Permanent Funding Act''.
SEC. 2. PERMANENT FUNDING FOR PILT AND REFUGE REVENUE
SHARING.
(a) Payments in Lieu of Taxes.--Section 6906 of title 31,
United States Code, is amended to read as follows:
``There is authorized to be appropriated such sums as may
be necessary to the Secretary of the Interior to carry out
this chapter. Beginning in fiscal year 2002 and each year
thereafter, amounts authorized under this chapter shall be
made available to the Secretary of the Interior, out of any
other funds in the Treasury not otherwise appropriated and
without further appropriation, for obligation or expenditure
in accordance with this chapter.''.
(b) Refuge Revenue Sharing.--Section 401(d) of the Act of
June 15, 1935, as amended (16 U.S.C. 715s(d)) (relating to
refuge revenue sharing), is amended by adding at the end
thereof:
``Beginning in fiscal year 2002 and each year thereafter,
such amount shall be made available to the Secretary, out of
any other funds in the Treasury not otherwise appropriated
and without further appropriation, for obligation or
expenditure in accordance with this section.''.
______
By Ms. COLLINS (for herself, Mr. Cleland, Mr. Breaux, Mr. Allard,
Mr. Chafee, Mr. Lieberman, Ms. Landrieu, Mr. Hatch, and Mr.
Hutchinson):
S. 455. A bill to amend the Internal Revenue Code of 1986 to increase
and modify the exclusion relating to qualified small business stock and
for other purposes; to the Committee on Finance.
Ms. COLLINS. Mr. President, the concerns and needs of small
businesses have always been a priority for me. When I talk to small
business owners throughout the State of Maine, I hear over and over
again that they have two major problems: One is the high cost of health
insurance. I will be introducing legislation shortly to try to help
small businesses cope with that issue. The second issue is the need for
more capital to finance their enterprises.
Today, I rise to introduce the Encouraging Investment in Small
Business Act, a bill intended to stimulate private investment in the
entrepreneurs who drive our economy. I am pleased to be joined today by
my good friends and staunch supporters of small business, Senators
Cleland, Breaux, Landrieu, Allard, Chafee, Lieberman, Hutchinson, and
Hatch.
The bill we introduce today will encourage long-term investment in
small and emerging businesses by providing incentives to individuals
who risk investment in such firms. According to the Small Business
Administration, small firms account for three-quarters of our Nation's
employment growth and almost all of our net new jobs. At the same time,
small businesses face unique financing challenges. Simply put,
entrepreneurs need access to more capital to start and to expand their
businesses. As the SBA noted last year, ``Adequate financing for
rapidly growing firms will be America's greatest economic policy
challenge of the new century.''
Just a few months ago, it would have been difficult for us to imagine
that a capital gap could exist in an economy that had experienced such
an unprecedented run of prosperity. Venture capital investments in
emerging firms reached a record $103 billion last year, up 74 percent
from the year before. Yet, there are signs that the rush of funds is
subsiding. Venture capital investment activity decreased by 31 percent
in the fourth quarter of last year, and much of the funds that have
been raised remains uninvested.
More important, venture capital funds tend to gravitate towards
certain types of businesses and geographic regions, and tend to be
invested in increasingly larger amounts, leaving many small business
entrepreneurs frozen out of the capital markets. Internet-related
companies attracted 76 percent of the venture capital invested in the
first three quarters of 2000. And more than two-thirds of all the
venture capital invested in the United States in 1999 went to just five
States. Moreover, the average amount of venture capital invested in
small businesses increased from $6.6 million in 1998 to $13.3 million
in 1999, prompting the SBA to conclude that the needs of many small
businesses for equity financing remain unmet.
The data paint a troubling picture. It is, unfortunately, a familiar
one. Take the example of Vladimir Koulchin, a Russian by birth but a
Mainer in heart and spirit. Vladimir holds a doctorate in biochemistry
and has 25 years of research experience in the field. Six years ago,
Mr. Koulchin moved to Portland, ME, to work for a biotechnology firm
where he became vice president for research and development. This past
fall, with no funding other than his own, he founded Chemogen with the
goal of developing products to diagnose, treat, and prevent
tuberculosis and other dangerous infectious diseases in humans and
animals. Mr. Koulchin told me how difficult it has been to find the
seed and early stage capital he needs to get his promising business off
the ground. He spoke of the relative lack of seed capital in small
markets and the welcome assistance that strong Federal tax incentives
could provide.
Vladimir's experiences are all-too-common. A recent report by the
National Commission on Entrepreneurship presented findings of 18 focus
groups with more than 250 entrepreneurs across the country. According
to the report, the focus groups were ``nearly unanimous in identifying
difficulties in obtaining seed capital investments.''
And although the capital gap is pervasive, it disproportionately
harms women- and minority-owned businesses. The Milken Institute, an
independent economic think tank, concluded in a research report issued
last year that, ``While minority businesses are growing faster than
majority firms in number and revenue, they remain severely constrained
by a lack of access to capital.'' Moreover, women receive only 12
percent of all credit provided to small businesses in the U.S. despite
owning nearly 40 percent of the businesses.
If we want to remain the world's most entrepreneurial country, where
small businesses generate the ideas and create the jobs that fuel our
economy, we must continue to create an environment that nurtures and
supports entrepreneurs.
The legislation we are introducing helps to create a supportive
environment, not by establishing an expensive,
[[Page S1825]]
new Federal program, or adding a complicated new section to our Tax
Code, but rather by simplifying and improving a provision that is
already there. The provision, known as section 1202, was added to the
Internal Revenue Code in 1993 with strong bipartisan support.
Section 1202 allows investors to exclude from taxable income 50
percent of the gain from the sale of qualified small business stock
when the stock is held for at least 5 years. Now, that concept is a
sound one, but unfortunately, section 1202 prescribes a complicated set
of requirements, and its attractiveness has been diminished due to the
fact that when capital gains rates were lowered in 1997, the section
1202 rate remained the same. In addition, the increasing application of
the alternative minimum tax has reduced its value. Indeed, early data
on the use of section 1202 suggests that the alternative minimum tax
has sharply limited its effectiveness.
Our bill restores section 1202 to its original role as a potent
engine of small business capital formation. Our legislation simplifies
section 1202, enhances its incentives, and eliminates the threat that
gains on small business stock will be subject to the alternative
minimum tax. In short, our bill makes a number of commonsense changes
designed to encourage investment in small business.
The Encouraging Investment in Small Business Act is supported by the
National Federation of Independent Business, the National Women's
Business Council, the National Commission On Entrepreneurship, the
Biotechnology Industry Organization, and the Biotechnology Association
Of Maine.
Our legislation would implement changes recommended by a recent
Securities and Exchange Commission forum on small business capital
formation. In sum, our legislation would accommodate the capital-
raising needs of small business, the foundation of our economy.
Mr. President, I ask unanimous consent that a section-by-section
summary of the Encouraging Investment in Small Business Act be printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Encouraging Investment in Small Business Act
Section-by-Section Summary
I. Introduction
The Encouraging Investment in Small Business Act is
intended to stimulate private investment in the entrepreneurs
who drive our economy. The Act will encourage long-term
investment in small and emerging businesses by providing
incentives to investors who risk investment in such firms.
According to the Small Business Administration, small firms
account for three-quarters of our nation's employment growth
and almost all of our net new jobs. Small businesses employ
52 percent of all private workers, provide 51 percent of our
private sector output, and are responsible for a
disproportionate share of innovations. Moreover, small
businesses are avenues of opportunity for women and
minorities, young and elderly workers, and those formerly on
public assistance. Yet entrepreneurs need access to more
capital to start and expand their businesses.
In 1993, Section 1202 was added to the Internal Revenue
Code in order to encourage investment in small businesses. In
brief, Section 1202 permits non-corporate taxpayers to
exclude from gross income 50% of the gain from the sale or
exchange of qualified small business (``QSB'') stock held for
more than five years. The concept is a sound one. However, in
practice, Section 1202 has proven to be cumbersome to use and
less advantageous than originally intended. As an article in
the December 1998 edition of the Tax Adviser noted, ``Sec.
1202 places numerous and complex requirements on both the QSB
and the shareholder,'' and that the provision ``is no longer
the deal it seemed to be.''
The Encouraging Investment in Small Business Act would
amend Section 1202 to eliminate unnecessary complexity and to
make it a more robust engine of capital formation for small
businesses. As it now stands, the engine needs work. Given
(1) reductions in capital gains rates subsequent to Section
1202's enactment and (2) the fact that more taxpayers are now
subject to the Alternative Minimum tax, Section 1202 is no
longer a viable option in many circumstances it was
originally intended to address. Moreover, Section 1202's
impact will continue to be diluted by a scheduled decrease in
long-term capital gains rates applicable to stock purchased
after 2000 and the probability that still more taxpayers will
be subject to the AMT. To understand the changes the Act
would make, it is first necessary to understand how 1202
currently works.
As noted, Section 1202 imposes numerous restrictions on a
business that seeks to qualify under its provisions. To be a
QSB, a business must be a domestic C corporation with
aggregate gross assets of no greater than $50 million at any
time prior to or immediately after issuing stock. Certain
types of businesses are excluded from QSB status, including
banking, insurance, investing, consulting, law, accounting,
financial services, and farming concerns as well as hotels
and restaurants. Any trade or business that relies on the
reputation or skill of one or more of its employees as its
principal asset also cannot be a QSB.
QSB's must also satisfy an ``active business'' requirement.
This means that, during substantially all of the time the
taxpayer holds the stock, at least 80 percent of the QSB's
gross assets must be used by the corporation in the active
conduct of the qualified trade or business. Assets used in
certain start-up activities or for research, or which are
held as ``reasonably required'' working capital are deemed to
be used in the active conduct of a qualified trade or
business. Two years after a QSB has come into existence, no
more than 50 percent of its assets can qualify as ``active''
by virtue of the Section 1202(e)(6) working capital rule.
As noted, under Section 1202, an individual can exclude
from gross income 50% of any gain from the sale or exchange
of qualified small business stock originally issued after
August 10, 1993 and held for more than five years. Under
Section 1045 of the Code, the taxpayer may roll the gain over
tax-free provided that the taxpayer (1) has held the QSB
stock for more than six months and (2) invests the gain in
other QSB stock within 60 days of the sale. Generally, the
holding period of the stock purchased will include the
holding period of the stock sold.
The maximum amount of a taxpayer's gain eligible for the
Section 1202 exclusion is limited to the greater of $10
million and 10 times the aggregate adjusted bases of the
stock sold. Gains of Section 1202 stock are taxed at the rate
of 28%.
II. Section-by-Section Analysis
Section 1. Short title.
The ``Encouraging Investment in Small Business Act.''
Section 2. Increased Exclusion and Other Modifications
Applicable to Qualified Small Business Stock.
(a) Increased Exclusion.
This provision increases the amount of QSB stock gain that
an individual can exclude from gross income from 50 percent
to 75 percent.
(b) Reduction in Holding Period.
This provision reduces from 5 years to 3 years the period
of time in which an individual must hold QSB stock in order
to qualify for the 75-percent exclusion. Section 1045's
rollover provisions will still apply.
(c) Repeal of Minimum Tax Preference.
This provision strikes Section 57(a)(7), which makes 42
percent of the amount excluded pursuant to Section 1202 a
preference item under the alternative minimum tax. This
change is necessary because the AMT provisions in existing
law effectively eviscerate the benefit of Section 1202 in
certain situations.
Example. Jane buys Section 1202 stock for $2,000. After
five years, she sells the stock for $12,000. Under current
law, she excludes half of her gain and is taxed at 28% on the
other half [.28 $5,000 = $1,400]. Hence, her tax on the gain
is $1,400. However, if Jane is subject to the AMT, she must
pay additional taxes of $588, or 28% of 42% of the excluded
half of the gain. Jane's total tax bill of $1,988 amounts to
an effective rate of 19.9%, or nearly the same as the current
maximum tax rate on long-term capital gains of 20%. Under the
Encouraging Investment in Small Business Act, Jane would be
able to exclude 75% of her gain, would be subject to the 20%
rate that applies to most capital gains, and would not have
to recognize any of the gain as a preference item for AMT
purposes. Hence, her tax bill would be 20% of $2,500, or
$500. Absent the change, Jame would have little incentive to
invest in a qualified small business over any other business,
particularly if she is subject to the AMT. Under the
Encouraging Investment in Small Business Act, Section 1202's
original potent incentives to investors in small businesses
are restored.
(d)(1) Working Capital Limitations.
This provision eases Section 1202(e)'s working capital
restrictions on qualified small businesses. The provision
increases from 2 years to 5 years the time in which assets
that are held for investment by a business can be expected to
be used to finance research or an increase in working capital
needs. In other words, a corporation will be able to hold
assets longer, before eventually using them for research or
to satisfy increased working capital needs, and still meet
the active business requirements of section 1202.
(d)(2) Exception from Redemption Rules Where Business
Purpose.
Currently, the Section 1202 exclusion does not apply to
stock issued by a corporation if the corporation purchases
more than 5 percent of its own stock during the 2-year period
beginning on the date one year before the issuance of its
stock. Under the Encouraging Investment in Small Business
Act, this provision would be waived if the issuing
corporation could establish that the purchase was made for a
business purpose, and not to avoid the provision described
above.
(e) Excluded Qualified Trade or Business.
This provision tightens the language of Section 1202(e)(3),
which excludes certain
[[Page S1826]]
businesses from QSB status. It does so in two ways. First, it
provides that a coproration can be a QSB even if its
principal asset, for a temporary period, is the reputation or
skill of one or more of its employees. Hence, in the case of
a small start-up computer software company, for example, if
its employees engage in consulting work, say, in order to
generate some cash flow while the software is under
development, the company will not be disqualified from QSB
status.
Second, the provision makes it clear that biotechnology and
aquaculture companies are not disqualified from QSB status.
(f) Increase in Cap on Eligible Gain for Joint Returns.
The Encouraging Investment in Small Business Act fixes a
marriage tax penalty provision in Section 1202 by doubling
(to $20,000,000) the maximum amount of eligible gain for
taxpayers filing joint returns.
(g) Decrease in Capital Gains Rate
Section 1202 gains are currently taxed at a rate of 28
percent, which, prior to May 7, 1997, had been the maximum
marginal rate for net capital gains. The Taxpayer Relief Act
of 1997 reduced the maximum capital gain rate for individuals
from 28 percent to 20 percent, but left section 1202 gain
subject to the 28 percent rate. The Encouraging Investment in
Small Business Act would make section 1202 gains subject to
the generally-applicable 20 percent rate.
(h) Increase in Rollover Period for QSB Stock
Currently, a taxpayer can roll over, tax free, gain from
the sale or exchange of QSB stock where the taxpayer uses the
proceeds to purchase other QSB stock within 60 days of the
sale of the original stock. The Encouraging Investment in
Small Business Act would increase the roll over period to 180
days, thus increasing the liquidity of QSB stock. A 180-day
roll over period is also employed in section 1031 of the
Internal Revenue Code for like-kind exchanges.
______
By Ms. SNOWE:
S. 456. A bill to amend title 38, United States Code, to enhance the
assurance of efficiency, quality, and patient satisfaction in the
furnishing of health care to veterans by the Department of Veterans
Affairs, and for other purposes; to the Committee on Veterans' Affairs.
Ms. SNOWE. Mr. President, I rise today to introduce the Veterans
Health Care Quality Assurance Act of 2001.
This legislation contains a number of proposals designed to ensure
that access to high quality medical services for our veterans is not
compromised as the Department of Veterans Affairs, the VA, strives to
increase efficiency in its nationwide network of veterans hospitals.
The VA administers the largest health care network in the U.S.,
including 172 hospitals, 73 home care programs, over 800 community-
based outpatient clinics, and numerous other specialized care
facilities.
Moreover, there are approximately 25 million veterans in the U.S.,
including approximately 19.3 million wartime veterans, and the number
of veterans seeking medical care in VA hospitals is increasing.
The FY2000 VA medical caseload was projected to total approximately
3.8 million, an increase of 185,000 over FY1999. This level is expected
to increase to 3.9 million during FY2001. Furthermore, in FY2001,
outpatient visits to VA facilities are expected to increase by 2.6
million to 40.4 million.
The average age of veterans is increasing as well, and this is
expected to result in additional demands for health care services,
including more frequent and long-term health needs.
The VA is attempting to meet this unprecedented demand for health
care services without substantial increases in funding, largely through
efforts to increase efficiency. Not surprisingly, these seemingly
competing objectives are generating serious concerns about the
possibility that quality of care and/or patient satisfaction are being
sacrificed.
Many VA regional networks and medical center directors report that
timely access to high quality health care is being jeopardized, and
that is why I am introducing the Veterans Health Care Quality Assurance
Act, legislation which seeks to ensure that no veterans' hospital is
targeted unfairly for cuts, and that efforts to ``streamline'' and
increase efficiency are not followed by the unintended consequence of
undermining quality of care or patient satisfaction.
I believe that all veterans hospitals should be held to the same
equitable VA-wide standards, and that quality and satisfaction must be
guaranteed. Toward that end, the Veterans Health Care Quality Assurance
Act calls for audits of every VA hospital every three years. This will
ensure that each facility is subject to an outside, independent review
of its operations on a regular basis, and each audit will include
findings on how to improve services to our veterans.
The legislation will also establish an Office of Quality Assurance
within the VA to ensure that steps taken to increase efficiency in VA
medical programs do not undermine quality or patient satisfaction. This
office will collect and disseminate information on efforts that have
proven to successfully increase efficiency and resource utilization
without undermining quality or patient satisfaction. The director of
this new Office of Quality Assurance should be an advocate for veterans
and would be placed in the appropriate position in the VA command
structure to ensure that he or she is consulted by the VA Secretary and
Under Secretary for Veterans Health on matters that impact quality or
satisfaction.
The bill would require an initial report to Congress within six
months of enactment, which would include a survey of each VA regional
network and a report on each network's efforts to increase efficiency,
as well as an assessment of the extent to which each network and VA
hospital is or is not implementing the same uniform, VA-wide policies
to increase efficiency.
Under the bill's reporting requirement, the VA would also be required
to publish, annually, an overview of VA-wide efficiency goals and
quality/satisfaction standards that each veterans facility should be
held to. Further, the VA would be required to report to Congress on
each hospital's standing in relation to efficiency, quality, and
satisfaction criteria, and how each facility compares to the VA-wide
average.
In an effort to encourage innovation in efforts to increase
efficiency within the agency, the bill would encourage the
dissemination and sharing of information throughout the VA in order to
facilitate implementation of uniform, equitable efficiency standards.
Finally the bill includes provisions calling for sharing of
information on efforts to maximize resources and increase efficiency
without compromising quality of care and patient satisfaction; exchange
and mentoring initiatives among and between networks in order to
facilitate sharing of such information; incentives for networks to
increase efficiency and meet uniform quality/patient satisfaction
targets; and formal oversight by the VA to ensure that all networks are
meeting uniform efficiency criteria and that efforts to increase
efficiency are equitable between networks and medical facilities.
Keeping our promise to our veterans is also an on-going duty. The
debt of gratitude we owe to our veterans can never be fully repaid.
What we can and must do for our veterans is repay the financial debt we
owe to them. Central to that solemn duty is ensuring that the benefits
we promised our veterans when they enlisted are there for them when
they need them.
I consider it a great honor to represent veterans. So many of them
continue to make contributions in our communities upon their transition
from military to civilian life, through youth activities and
scholarships programs, homeless assistance initiatives, efforts to
reach out to fellow veterans in need, and national leadership on issues
of importance to veterans and all Americans. The least we can do is
make good on our promises, such as the promise of access to high
quality health care.
I have nothing but the utmost respect for those who have served their
country, and this legislation is but a small tribute to the men and
women and their families who have served this country with courage,
honor and distinction. They answered the call to duty when their
country needed them, and this is a component of my on-going effort to
ensure that we, as elected officials, answer their call when they need
us.
I urge my colleagues to join me in supporting this legislation.
______
By Ms. SNOWE:
S. 457. A bill to amend title 38, United States Code, to establish a
presumption of service-connection for certain veterans with Hepatitis
C, and for other purposes; to the Committee on Veterans' Affairs.
Ms. SNOWE. Mr. President, I rise today to reintroduce legislation I
first
[[Page S1827]]
introduced in the 105th Congress to address a serious health concern
for veterans specifically the health threat posed by the Hepatitis C
virus.
The legislation I am introducing today would make Hepatitis C a
service-connected condition so that veterans suffering from this virus
can be treated by the VA. The bill will establish a presumption of
service connection for veterans with Hepatitis C, meaning that the
Department of Veterans Affairs will assume that this condition was
incurred or aggravated in military service, provided that certain
conditions are met.
Under this legislation, veterans who received a transfusion of blood
during a period of service before December 31, 1992; veterans who were
exposed to blood during a period of service; veterans who underwent
hemodyalisis during a period of service; veterans diagnosed with
unexplained liver disease during a period of service; veterans with an
unexplained liver dysfunction value or test; or veterans working in a
health care occupation during service, will be eligible for treatment
for this condition at VA facilities.
I have reviewed medical research that suggests many veterans were
exposed to Hepatitis C in service and are now suffering from liver and
other diseases caused by exposure to the virus. I am troubled that many
``Hepatitis C veterans'' are not being treated by the VA because they
can't prove the virus was service connected, despite the fact that
hepatitis C was little known and could not be tested for until
recently.
We are learning that those who served in Vietnam and other conflicts,
tend to have higher than average rates of Hepatitis C. In fact, VA data
shows that about 20 percent of its inpatient population is infected
with the Hepatitis C virus, and some studies have found that 10 percent
of otherwise healthy Vietnam, Veterans are Hepatitis C positive.
Hepatitis C was not isolated until 1989, and the test for the virus
has only been available since 1990. Hepatitis C is a hidden infection
with few symptoms. However, most of those infected with the virus will
develop serious liver disease 10 to 30 years after contracting it. For
many of those infected, Hepatitis C can lead to liver failure,
transplants, liver cancer, and death.
And yet, most people who have Hepatitis C don't even know it--and
often do not get treatment until it's too late. Only five percent of
the estimated four million Americans with hepatitis C know they have
it; yet with new treatments, some estimates indicate that 50 percent
may have the virus eradicated.
Vietnam Veterans in particular are just now starting to learn that
they have liver disease likely caused by Hepatitis C. Early detection
and treatment may help head off serious liver disease for many of them.
However, many veterans with Hepatitis C will not be treated by the VA
because they must meet a standard that is virtually impossible to meet
in order to establish a service connection for their condition--this in
spite of the fact that we now know that many Vietnam-era and other
veterans got this disease serving their country.
Many of my colleagues may be interested to know how veterans were
likely exposed to this virus. Many veterans received blood transfusions
while in Vietnam. This is one of the most common ways Hepatitis C is
transmitted. Medical transmission of the virus through needles and
other medical equipment is also possible in combat. Medical care
providers in the services were likely at increased risk as well, and
may have, in turn, posed a risk to the service members they treated.
Researchers have discovered that Hepatitis C was widespread in
Southeast Asia during the Vietnam war, and that some blood sent from
the U.S. was also infected with the virus. Researchers and veterans
organizations, including the Vietnam Veterans of America, with whom I
worked closely to prepare this legislation, believe that many veterans
were infected after being injured in combat and getting a transfusion
or from working as a medic around combat injuries.
I believe we will actually save money in the long run by testing and
treating this infection early on. The alternative is much more costly
treatment of end-stage liver disease and the associated complications,
or other disorders.
Some will argue that further epidemiologic data is needed to resolve
or prove the issue of service connection. I agree that we have our work
cut out for us, and further study should be done. However, there is
already a substantial body of research on the relationship between
Hepatitis C and military service. While further research is being
conducted, we should not ask those who have already sacrificed so much
for this country to wait--perhaps for years--for the treatment they
deserve.
Former Surgeon General C. Everett Koop, well respected both within
and outside of the medical profession, has said, ``In some studies of
veterans entering the Department of Veterans Affairs health facilities,
half of the veterans have tested positive for HCV. Some of these
veterans may have left the military with HCV infection, while others
may have developed it after their military service. In any event, we
need to detect the treat HCV infection if we are to head off very high
rates of liver disease and liver transplant in VA facilities over the
next decade. I believe this effort should include HCV testing as part
of the discharge physical in the military, and entrance screening for
veterans entering the VA health system.''
Veterans have already fought their share of battles--these men and
women who sacrificed in war so that others could live in peace
shouldn't have to fight again for the benefits and respect they have
earned.
We still have a long way to go before we know how best to confront
this deadly virus. A comprehensive policy to confront such a monumental
challenge can not be established overnight. It will require the long-
term commitment of Congress and the Administration to a serious effort
to address their health concern.
I hope this legislation will be a constructive step in this effort,
and I look forward to working with the Veterans Affairs Committee, the
VA-HUD appropriators, Vietnam Veterans of America and other veterans
groups to meet this emerging challenge.
____________________