[Congressional Record Volume 147, Number 92 (Thursday, June 28, 2001)]
[Senate]
[Pages S7107-S7109]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRAHAM (for himself, Mr. Chafee, Mr. Conrad, Mrs. Lincoln, 
        Mr. Miller, Mr. Rockefelelr, Mr. Bingaman, Mr. Kerry, and Mr. 
        Carper):
  S. 1135. A bill to amend title XVII of the Social Security Act to 
provide comprehensive reform of the Medicare program, including the 
provision of coverage of outpatient prescription drugs under such 
program; to the Committee on Finance.
  Mr. GRAHAM. Mr. President, I rise today joined by my colleagues to 
introduce the Medicare Reform Act of 2001.
  Today we are in the midst of a major health-care debate on the 
Patients' Bill of Rights. This crucial bill should be the beginning, 
not end, of reform in the health care system. Now we need to take this 
momentum and turn to Medicare reform.
  Reform is not a word to be tossed around lightly. When we bat around 
the term Medicare reform, this is what we need to be talking about, 
ideas that go to the very heart of the existing Medicare program and 
reform it.
  The Medicare Reform Act offers such ideas. It keeps what is best 
about Medicare intact. Under this bill the program will remain, as it 
has always been, reliable and affordable. But the Medicare Reform Act 
also does just what it says. It reforms the program to reflect new 
realities both scientific and economic, that the program's creators 
could not possibly have planned for in 1965.
  One of these realities is that prescription drugs are a crucial part 
of any modern health care regime. In fact it is unthinkable that 
prescription drugs would be excluded if Medicare were created today.
  The Medicare Reform Act offers a benefit that, like the existing 
Medicare program, is both affordable and available for all seniors, 
regardless of income. The benefit also harnesses the power of today's 
competitive health care marketplace to keep costs down and offer 
seniors choices.
  Perhaps most importantly, the benefit offered by the Medicare Reform 
Act has no gaps, no caps and no gimmicks.
  This is our line-in-the-sand.
  Other plans being discussed have major gaps.
  Let's look at one: the bill the House Republicans passed last year 
offers seniors a benefit of a scant $1,050-a year.

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Once they hit that cap, coverage stops. It picks up again only if the 
beneficiary spends $6,000 a year.
  Imagine this scenario: An 85-year-old woman pays her monthly 
prescription drug premium. For the first 6 months of the year, she goes 
to the drugstore each month to pick up her cholesterol medication and 
pays $25.
  But then she comes to the 7th month, and has hit her benefit cap. Now 
she has to pay $50 for the same prescription. She's still paying her 
premium, but she's getting no benefit. Under this benefit, Medicare 
says ``Sorry. Can't help. Come see me if you have a catastrophe.''
  I call plans like this donuts, substance around the edges, giant hole 
in the middle. I also call them pointless. Who needs insurance you 
can't be sure of?
  No caps, no gaps, no gimmicks. That is set in stone. What is not set 
is stone is the exact level of the coinsurance or deductible. We're 
going to be listening to seniors as we move toward a markup, and if we 
hear they would prefer a lower premium in exchange for higher cost-
sharing, we can turn those dials, as long as it's within the parameter 
of $300 billion.
  In structure, the Medicare Reform Act represents a true compromise. 
It takes the best ideas of all engaged in this issue.
  One school of thought has been that the private sector is best 
equipped to offer an affordable prescription drug benefit.
  We agree, up to a point. We do not believe that private insurers 
should assume all of the risk for this benefit. We do not believe this 
because private insurers have told us they want no part of this type of 
system. And we know that we can pass all the laws we want, but we can't 
make private companies take on Medicare patients.
  Rather than foreign the private sector to attempt to do something 
they do not want to do, we take advantage of the fact that we already 
have an efficient, workable mechanism in place. That mechanism is the 
pharmacy benefit manager of PBM. These businesses operate successfully 
today in every ZIP code of the country. They are in a perfect position 
to manage the Medicare prescription drug benefit--and to offer seniors 
a choice.
  The Medicare Reform Act would allow multiple PBMs in each geographic 
region to administer, manage and deliver the prescription drug benefit. 
They would be allowed to use all of the methods they use currently in 
the private sector to provide benefits economically, including the use 
of formularies, preferred pharmacy networks, and generic drug 
substitution. Additionally, PBMs would be allowed to use mechanisms to 
encourage beneficiaries to select cost-effective drugs, including the 
use of disease management and therapeutic interchange programs.
  Beneficiareis in every part of the country would have access to 
coverage provided by PBMs that would not assume full insurance risk for 
drug costs. In this way, adverse selection and inappropriate incentives 
would be avoided.
  However, to ensure that PBMs pursue and are held accountable for high 
quality beneficiary services, improved health outcomes, and managing 
costs, we require PBMs to put a substantial portion of their management 
fees at risk for their performance. Performance goals would include 
price discounts and generic substitution rates, timely action with 
regard to appeals, sustained pharmacy network access and notifications 
to avoid adverse drug reactions.

  Although all PBMs would be required to offer the standard benefit at 
a minimum, payments received on the basis of their performance could be 
used to reduce beneficiary cost-sharing or to waive the deductible for 
generic drugs.
  Requiring PBMs to share risk provides a middle ground between 
proposals that have included no risk being assumed by the private 
sector, and proposals that have required the assumption of insurance 
and selection risk for the cost of drugs.
  This arrangement would bring us the benefits of private sector 
competition without the instabilities that would be associated with a 
full risk-bearing model. It would take advantage of the fact that the 
private sector has provided an efficient, workable, stable system for 
the delivery of prescription drugs, and the management of drug costs, 
and would allow beneficiaries to choose between multiple vendors.
  Prescription drugs are not all that is missing from Medicare.
  We live in a world of near miracles. We can stop disease in its 
track. We can keep a health problem from becoming a health crisis. We 
can make the lives our seniors better. We can make their bodies 
stronger. We have the technology.
  It's time to let our seniors have it as well.
  The ``Medicare Reform Act'' would shift the focus of Medicare from 
simply treating illness to promoting wellness.
  Several proven-effective preventive benefits, like cholesterol 
screening and smoking cessation counseling, would be added to package. 
These benefits could save lives.
  We also provide a new process for changes to the preventive benefit 
package. As a member of the Finance Committee, I have sat through 
hours-long discussions on coverage of screening for colorectal cancer. 
I've heard debated the relative benefits of barium x-rays v. 
colonscopies in minute details. I'm not qualified to make these 
decisions. A new ``fast-track'' process would move members of Congress 
out of the picture of making decisions about the clinical and 
scientific merits of different benefits, and move the doctors and 
scientists in.
  The Medicare Reform Act is not just about adding benefits. It's also 
about changing the way we do business.
  We've looked to the private sector for lessons on how to run the fee-
for-service program. We allow Medicare to use the same competitive 
tools insurance companies have in place to control costs. This will 
save the Medicare program money, in contrast to some other competition 
proposals.
  We've looked to the private sector and learned that to serve seniors 
and providers better, we need to make an investment in the program, and 
provide additional administrative funds. Our bill gives the agency 
responsible for these programs the money to truly serve their clients, 
our seniors.
  We've turned again to the medical and scientific experts. We've taken 
the decision about what Medicare should and shouldn't cover out of the 
hands of bureaucrats and given it to independent medical, clinical and 
scientific experts who have the skills to assess new technologies and 
procedures.
  We also need to prepare for the future. The Medicare program is in 
the best shape it has been in over a quarter century. But, the baby-
boomers are going to be joining the program soon.
  We need to begin to fortify the program now, so that we are ready for 
them. Our bill takes modest steps in that direction by indexing the 
Part B deductible to inflation, and providing the Part B premium 
subsidy on a sliding scale basis.
  While I think we need to spend the lion's share of our efforts on 
reforming the part of the program with the lion's share of the 
beneficiaries, we also need to take a close look at the Medicare+Choice 
program. There are several different proposals on the table to replace 
the current payment system with one based on competitive bidding, and 
we face a lot of questions regarding which of the proposals would work 
best.
  In 1997, Senators Breaux and Mack proposed a Medicare Competitive 
Pricing Demonstration Project; the Project was included in the Balanced 
Budget Act. The purpose of the demonstration project was to test a new 
method of paying plans based on a competitive market approach. It has 
not yet been implemented.
  This demonstration project is exactly what we need to learn how to 
design and implement a competitive system. It is not sound to undertake 
a wholesale restructuring of the Medicare+Choice system without knowing 
what would, and would not, work.
  The ``Medicare Reform Act of 2001'' would lay the groundwork for a 
sound, workable, competitive system by moving forward with the 
Demonstration project in the state of Florida.
  Taken together these disparate pieces represent real reform.
  Before the recess, I hope we will have passed legislation to protect 
basic rights of managed-care patients.
  Then we need to pick up that ball and run with it.
  The time is now. The money is there. The plan exists. Our seniors are 
waiting.

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