[Congressional Record Volume 148, Number 126 (Tuesday, October 1, 2002)]
[Senate]
[Pages S9715-S9717]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself and Mr. Grassley):
  S. 3018. A bill to amend title XVIII of the Social Security Act to 
enhance beneficiary access to quality health care services under the 
medicare program, and for other purposes; read the first time.
  Mr. BAUCUS. Mr. President, I rise today, along with Senator Grassley, 
to introduce the ``Beneficiary Access to Care and Medicare Equity 
Act.'' This legislation is critical to ensuring access to quality, 
affordable health care for the 40 million Medicare beneficiaries 
nationwide.
  Medicare is one of America's great success stories. Since its 
inception 36 years ago, Medicare has provided millions of elderly and 
disabled Americans with insurance coverage they would not have 
otherwise had. When Medicare was enacted, about half of America's 
elderly lacked health insurance. Now nearly all are covered by 
Medicare.
  Over the past three decades, Medicare has undergone significant 
changes, including changes in the way that health care providers are 
reimbursed. In response to rising Medicare expenditures, Congress has 
responded with complex cost-containment mechanisms: diagnosis related 
groups, or DRGs, for hospital inpatient services in the early 1980s, a 
fee schedule for physicians' services in 1989. And in 1997, Congress 
passed the Balanced Budget Act, which mandated prospective payment 
systems for hospital outpatient departments, home health agencies, and 
skilled nursing facilities. Gradually, Medicare has changed from a 
cost-based system to one of prospective, flat-rate payment.
  The significant changes in payment policy have resulted in a few 
bumps along the way, particularly those enacted as part of the Balanced 
Budget Act of 1997. The BBA was a well-intended attempt to get our 
Nation's fiscal house in order and extend the life of the Medicare 
trust fund. And in that regard, the goal of the legislation was 
achieved. Solvency of the Part A Trust Fund was extended by almost 30 
years. But in some instances, the BBA cuts went too far.
  In such cases, these cuts threatened to reduce Medicare and Medicaid 
beneficiaries' access to quality medical care and services. Congress 
responded by passing the Balanced Budget Refinement Act, BBRA, of 1999 
and the Beneficiary Improvement and Protection Act, BIPA, of 2000. I 
was proud to play a role in both of these bills, including help for 
rural areas, which were disproportionately affected by the BBA.
  Despite the policies and payment changes enacted as part of BBRA and 
BIPA, we still find that in some cases more improvements and 
adjustments are needed. And that is why Senator Grassley and I are 
introducing this bill today.
  So what does this bill do? Most importantly, this bill would restore 
payments to physicians, which were cut in 2002 by about five percent. 
Under the Medicare fee schedule, payment for physician services depends 
on several factors, including the growth in medical inflation, 
performance of the American economy, and changes in law and regulation.
  Also central to the calculation of payments are estimates by the 
Centers for Medicare and Medicaid Services, or CMS, which was formerly 
known as the Health Care Financing Administration, of the numbers of 
Medicare beneficiaries in traditional fee-for-service Medicare. Largely 
because of significant estimation errors and a weakened economy, 
physicians under Medicare experienced an average payment reduction of 
five percent in 2002. If Congress does not act to fix the system, 
further large cuts are forecast for the coming years. And the potential 
consequences of inaction are serious.
  According to a 30-State survey by the Medicare Rights Center, 
Medicare beneficiaries in 15 states and the District of Columbia are 
already having trouble finding a physician who accepts new Medicare 
patients. And researchers from the Center for Studying Health System 
Change have found that the percentage of Medicare beneficiaries who 
reported delaying or not getting necessary physician care rose from 9.1 
percent in 1997 to 11 percent in 2001. The study also showed that of 
the near-elderly, patients between 50 and 64, 18.4 percent experienced 
difficulty in seeing a physician in 2001, up from 15.2 percent in 1997.
  This bill would provide positive payment updates to the physician fee 
schedule over the next three years, representing a dramatic turnaround 
in Medicare physician payments. It would also modify the formula that 
is used to increase payments each year, the so-called SGR, which most 
physicians have learned to view with uncertainty and distrust.
  While this proposal on physician updates represents progress, I 
acknowledge that it is imperfect, producing large reductions in 
Medicare physician payments in 2006 and beyond. I am committed to 
working with my colleagues in the Congress and the Administration to 
find a more reasonable solution.
  Aside from physician payments, this legislation addresses a number of 
other important Medicare reimbursement issues, many of which are set to 
take effect today, October 1. The bill will

[[Page S9716]]

completely eliminate the 15 percent cut in home health payments. It 
will forestall large cuts to indirect medical education, so critical to 
the well-being of our nation's teaching hospitals. And the bill will 
continue additional payments to nursing homes to help them hire more 
staff to care for patients.

  It should come as no surprise that another priority of mine, and 
Senator Grassley's, is ensuring that rural areas are treated on par 
with their urban counterparts. I represent a state with a population 
density of about six people per square mile where patients and 
providers are often separated by vast distances. The current Medicare 
payment structure does not adequately account for the unique 
circumstances and challenges of providing medical care in such areas, 
where economies of scale often make systems like prospective payment 
unworkable.
  That's why I was proud to help write the Sole Community Hospital law 
in the early 1980s and the Critical Access Hospital, CAH, program in 
1997. Based on the Montana Medical Assistance Facility program, or MAF, 
the CAH concept has been a lifeline for over 600 rural communities 
nationwide, allowing hospitals that might have otherwise closed to stay 
open. This bill makes a number of important changes to the CAH program, 
including a provision allowing greater flexibility in the use of acute 
care and swing beds, as well as reauthorization of the Rural Hospital 
Flexibility Grant Program, which assists facilities in making the 
switch to CAH status.
  Aside from Critical Access Hospitals, this legislation makes a number 
of other important changes to bring Medicare equity to rural America. 
By making the Medicare Incentive Payment Program, MIPP, automatic, 
physicians can more easily receive their 10 percent bonus for 
practicing in health professional shortage areas. And by setting a 
floor for the physician work component of Medicare's geographic cost 
index, payments to rural physicians will be raised.
  This bill also puts rural and urban areas on a more level playing 
field with respect to non-CAH hospital payments. It equalizes the base 
payment rate for all PPS hospitals, eliminating the differential in the 
so-called ``standardized amount,'' which systematically pays rural 
areas less than large urban ones. And it makes Disproportionate Share 
Hospital, DSH, payments more equitable by allowing rural facilities to 
receive increased payments for treating indigent patients.
  Many of these provisions are based on the work and recommendations of 
the Medicare Payment Advisory Commission, MedPAC, in their report on 
rural Medicare policy. That report included telling statistics, and 
reinforced what I hear from my constituents on a regular basis: 
Medicare payment policy disadvantages rural areas and changes are 
needed. For example, in 1999, overall Medicare margins for rural 
hospitals with 50 beds or less were negative 5.4 percent, worse than 
any other category of hospital. And total margins for these hospitals 
are also the lowest, at 1.7 percent in 1999, compared to 3.6 percent 
for all hospitals. Clearly Congress has work to do to ensure greater 
geographic equity in Medicare payment, and this bill makes great 
strides to that end.
  In addition to many reimbursement changes, this legislation contains 
important relief for providers struggling with Medicare's regulatory 
framework. Many of these regulatory relief provisions were contained in 
legislation I wrote with Senators Kerry, Murkowski and Grassley last 
year. Among other things, these provisions will: ensure that CMS 
answers questions posed by health care providers in a timely manner; 
give additional appeals rights to providers, so that they receive fair 
treatment for honest billing mistakes; and ensure that CMS demands on 
providers to return overpayments are reasonable and do not force small 
providers to declare bankruptcy.
  In addition to Medicare provisions, this legislation addresses many 
critical issues related to Medicaid and the State Children's Health 
Insurance Program. The bill provides $5 billion in fiscal relief to 
states struggling with tight Medicaid budgets and nearly $3 billion to 
help safety net hospitals continue to provide critical health care 
services to low-income Americans. The bill also ensures the continued 
success of the S-CHIP program by giving States more time to spend their 
S-CHIP allotments and ensuring that as many children as possible are 
covered.
  The bill provides immediate, temporary fiscal relief to states in two 
ways: by giving states a temporary increase in their Medicaid match 
rate, or FMAP; and by increasing funding for the Social Services Block 
Grant. Taken together, these two approaches will help alleviate the 
pressure on states to cut programs that serve low income families, 
children, seniors and the disabled.
  The State fiscal relief provision recognizes that States are in the 
midst of their worst fiscal crisis since the early 1990s. States have 
cut their budgets across many programs, from education to health care 
to other social programs. And because Medicaid is one of the largest 
parts of state budgets, Medicaid continues to be a prime target for 
spending cuts.
  According to a recent report from the Kaiser Commission on Medicaid 
and the Uninsured, 45 states took action to reduce their Medicaid 
spending growth in fiscal year 2002, and 41 states are planning further 
reductions in fiscal year 2003. In my own State of Montana, Medicaid 
beneficiaries have been asked to pay a larger share of the costs of 
their coverage, and provider reimbursement rates have been cut.
  These program cuts have come about at the same time that Medicaid 
rolls are increasing due to the recession. As more people lose their 
jobs and health insurance--just yesterday, we learned that in 2001 
another 1.4 million people joined the ranks of the uninsured, many 
become eligible for Medicaid. At the same time, States are forced to 
cut back on this vital safety net program when people need it most. 
This is a vicious cycle that we must help end. If we don't, the 
ultimate result of all this is an increase in the uninsured. Just as we 
saw in the early 1990s.
  The financial crisis facing State Medicaid programs is also felt by 
the facilities that provide care to Medicaid beneficiaries and low-
income insured populations. To ensure that hospitals serving our most 
vulnerable populations can continue providing their vital services, 
this bill eliminates the scheduled reduction in federal Medicaid 
funding for hospitals that serve a disproportionate share of Medicaid 
beneficiaries and low-income, uninsured patients. Without the 
restoration of these DSH funds, safety net hospitals would lose nearly 
$3 billion in federal Medicaid funding over the next three years. 
States with smaller DSH programs will also benefit through this 
legislation, as it provides them with greater resources to serve their 
low-income patients.
  This bill also seeks to continue the unqualified success of the S-
CHIP program by ensuring that S-CHIP funds are used to cover as many 
children as possible, as efficiently and effectively as possible. By 
giving states an additional year to spend funds that would otherwise be 
returned to the Federal Treasury and renewing the ongoing system to 
allocate unspent S-CHIP funds equitably among the States, the 
legislation will help sustain the significant progress S-CHIP has made 
in reducing the ranks of uninsured children. In addition, the new 
caseload stabilization pool will provide additional funds to states 
expected to have insufficient federal funds over the next few years, 
reducing the chance that children will be dropped from the rolls.
  This bill would also make important improvements to the Medicaid and 
S-CHIP waiver process. Medicaid and S-CHIP waivers have become an 
increasingly powerful way for the Secretary of Health and Human 
Services to make changes to crucial health programs without having to 
consult with, or seek legislative change from, the Congress.
  The General Accounting Office recently identified serious problems 
with the current waiver approval process, including a lack of 
accountability in several areas. I am pleased to have worked with 
Senator Grassley to develop legislation that would address the key GAO 
recommendations and begin to restore integrity to the waiver process. 
More specifically, this bill would require that the waiver process be 
more transparent and require public notification when major changes are 
in store.
  Our bill would also prohibit approval of future waivers that would 
take dollars set aside for children's health and

[[Page S9717]]

use them instead on childless adults. Where Congress has set limits on 
the use of federal dollars, waivers should not be used as a back door 
way to get around those limits.
  Without question, the Medicaid and S-CHIP programs are vital 
components of America's health care safety net, and both programs are 
critical to the well-being of thousands in my State. The Billings 
Gazette reported yesterday that about 14,000 of the 18,000 newly-
insured Montanans since 1999 were additions to Montana's Medicaid and 
S-CHIP programs.
  But despite the critical role these programs play, I am not convinced 
that we know enough about our nation's health care safety net. Based on 
legislation I introduced last congress with Senator Grassley, the bill 
we are introducing today would change that, by establishing the Safety 
Net Organizations and Patient Advisory Commission. SNOPAC would be an 
independent and nonpartisan commission charged with the authority to 
oversee all aspects of America's health care safety net, including 
Medicaid and S-CHIP. Based on an Institute of Medicine report, SNOPAC 
will include health care experts from the disparate parts of our safety 
net system, reporting to Congress on recommendations to maintain our 
intact, but endangered, health care safety net.
  Some will argue that Congress has more pressing Medicare priorities 
to address than restoring payments to health care providers. They argue 
will that before action on a bill concerning Medicare payment policy, 
Congress should debate and enact a solid prescription Medicare drug 
benefit.
  I agree wholeheartedly with the need for a good drug benefit. I have 
worked for years to enact one, and I think that the lack of a drug 
benefit is the greatest deficiency in the Medicare program today. 
Almost 40 percent of seniors currently lack drug coverage. And for 
those who have it, it is often unreliable and unaffordable.
  I did my utmost to pass a drug benefit this year, and I will continue 
my efforts until one is signed into law. But I will not support a 
benefit that is unworkable for Montana. And I will not support reviving 
a prescription drug debate that threatens passage of the important bill 
Senator Grassley and I are introducing today.
  The United States Senate debated Medicare prescription coverage in 
July. We had four votes on four different proposals to establish a drug 
benefit under Medicare. But all of those votes failed. None came close 
to getting the required 60 votes for passage in the Senate.
  Voting again on a prescription drug bill that has not changed 
materially from the proposals we voted on in July is not the way to 
pass a drug benefit. In fact, it's a prescription for legislative 
impasse--on prescription drugs and on provider reimbursement issues.
  For those reasons, I urge my colleagues to support this legislation, 
with the recognition that there are other pressing issues facing the 
Medicare program besides provider payments, but with the acknowledgment 
that maintaining access to health care services is also an important 
goal.
  As Calvin Coolidge once said, ``We cannot do everything at once . . . 
but we can do something at once.'' Today is October 1, and large 
Medicare, Medicaid and S-CHIP payment reductions and changes will go 
into effect. Congress should act as soon as possible to address these 
issues, to get something done, and to ensure access to care for our 
seniors, our children, and our disabled population. This bill is 
necessary, timely and should be considered with expedition. I urge 
Congress and the President to act swiftly on this comprehensive 
legislation and enact it into law.
  Mr. GRASSLEY. Mr. President, I am joining Chairman Baucus today to 
introduce the Beneficiary Access to Care and Medicare Equity Act of 
2002.
  This legislation arrives at an important time for Medicare 
beneficiaries and the providers that care for them: October 1. Many 
provisions of the Medicare law that ensure adequate payment for 
providers, and in turn, beneficiary access to care, expire today. I 
urge the Senate to consider this legislation with all speed, as soon as 
possible.
  Our bill addresses pressing needs. The clock is running out on 
Medicare payments to doctors, who are scheduled for yet another 
reduction in their fees for a second straight year, absent 
Congressional action. Skilled Nursing Facilities also face a major 
reduction in payment today. In other areas facing imminent payment 
cuts, such as home health and hospital services, our bill injects 
financial support that will stabilize these essential services our 
seniors rely on. The legislation also provides billions in aid to State 
governments, many of them facing steep budget deficits, so they can 
meet the needs of citizens who rely on the Medicaid and Children's 
Health Insurance Programs.
  In addition to ensuring continued access to quality care for Medicare 
beneficiaries, our bipartisan Beneficiary Access to Care and Medicare 
Equity Act makes long overdue improvements to health care in rural 
America. Our bill invests in States like Iowa, my home State, where 
small providers that practice efficient medicine are hurt by complex 
payment formulas that favor high-cost care in big cities.
  The formulas also don't recognize special costs faced by smaller, 
more isolated physicians, hospitals and clinics. It obviously doesn't 
make sense to penalize States like Iowa who do more with less. That's 
why I'm so committed to fixing these formulas. The proposal I've put 
together with Senator Baucus would provide a tremendous infusion of 
cash to hard-pressed health care providers across Iowa and to other 
rural States. It takes money to ensure access to care for Iowans, and 
this will help make the federal government part of the solution instead 
of part of the problem.
  Together, Senator Baucus and I have introduced our bill under Rule 
14, which means the bill will be placed directly on the calendar two 
days from now, rather than referred to our own Committee, the Finance 
Committee. We agreed to take this extraordinary step because the Senate 
is basically tied up in knots right now. Well, our message is that 
Medicare fairness is too urgent to let this bill be a victim of 
gridlock. Our action today gives Senate Majority Leader Daschle the 
ability to call the bill up as early as Thursday. In short, there's no 
time to waste.
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