[Congressional Record Volume 148, Number 133 (Thursday, October 10, 2002)]
[Senate]
[Pages S10378-S10379]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRAHAM (for himself and Mr. Gramm):
  S. 3098. A bill to amend title XVIII of the Social Security Act to 
establish a program for the competitive acquisition of items and 
services under the medicare program; to the Committee on Finance.
  Mr. GRAHAM. Mr. President, I rise today with my friend and colleague 
from Texas, Mr. Gramm, to introduce the Medicare Competition 
Acquisition Act of 2002.
  Today, we are faced with the reality that the Medicare program must 
be reformed for the 21st Century. In the 37 years since Medicare was 
created, several medical advances have been achieved. It is time to 
reap the full benefits of those advances and shift the focus of the 
Medicare program to one that promotes wellness. For that, a 
prescription drug benefit is mandatory. It is the single most important 
reform we can make to Medicare.
  However, the absence of a prescription drug benefit for America's 
seniors is not the only archaic aspect of the Medicare program. 
Congress has required Medicare to use an arbitrary method of payment 
for certain items and services, which costs the program and its 
beneficiaries much more than it should.
  We think America's seniors deserve better. They deserve to pay fair 
market price for high-quality medical products instead of being subject 
to an outdated fee schedule that often reflects unreasonably high 
markups above actual cost.
  The Medicare Competitive Acquisition Act applies high-quality 
standards and fiscal discipline to the Medicare program. Under this 
bill, Medicare will be able to use the same competitive tools the 
private sector has in place to control costs, while maintaining 
beneficiary access to quality medical supplies and services. This 
proposal was included in President Bush's fiscal year 2003 budget, and 
the Clinton Administration long advocated this fiscally responsible, 
high quality approach to improve Medicare.
  Several studies by the United States General Accounting Office (GAO) 
and the Department of Health and Human Services, HHS, Inspector General 
indicate that the Medicare program and Medicare beneficiaries have been 
paying far too much for some medical equipment and supplies. Take pre-
fabricated orthotics, for example. The most recent GAO data available 
indicates that the Medicare allowance for a pre-fabricated, self-
adjusting hand/wrist brace is more than 140% higher than its average 
retail price. For an intermittent urinary catheter, the difference 
between the Medicare allowance and the average retail price is 93 
percent.
  The Congressional Budget Office estimates that our bill will save 
Medicare $1.8 billion over 5 years and $6.9 billion over 10 years. This 
means savings for beneficiaries of $450 million over 5 years and $1.72 
billion over 10 years.
  I was pleased that the Balanced Budget Act of 1997 included a 
modified version of my competitive bidding proposal. It gave HHS the 
authority to conduct competitive bidding demonstrations for Medicare 
Part B items and services other than physician services. The Medicare 
Competitive Acquisition Act builds upon successful demonstration 
projects in Polk County, Florida and San Antonio, Texas by allowing the 
HHS Secretary to establish a competitive bidding system for durable 
medical equipment and supplies in appropriate parts of the country.
  I want to thank my colleague from the great State of Georgia, Mr. 
Cleland, for his leadership on this issue. The Senator not only helped 
us develop significant beneficiary protections, he worked to ensure 
flexibility for rural areas. Senator Cleland was also instrumental in 
our request for a GAO study on the introduction of new and innovative 
medical equipment and supplies to the Medicare market.
  The Medicare Competitive Acquisition Act allows the Centers for 
Medicare and Medicaid Services, CMS, to award contracts to multiple 
suppliers in each region in order to enhance beneficiary freedom of 
choice and promote quality among competitors. The number of suppliers 
selected will be based on product demand, the number of suppliers 
selected will be based on product

[[Page S10379]]

demand, the number of suppliers who bid and the service capacity of 
bidding suppliers. This ensures that the number of suppliers selected 
will be more than sufficient to supply a given area and that 
beneficiaries will have access to the products and services they need. 
CMS will have the authority to replace any winning supplier whose 
product or service quality deteriorates after the contract is awarded.
  Small businesses are vital to the success of competitive bidding. In 
both rounds of the Polk County demonstration, small businesses received 
12 of the 16 willing contracts. In the San Antonio demonstration, they 
received 40 of the 51 winning contracts.
  To ensure a level playing field in the future, we continue small 
business protections implemented under the demonstration by CMS. For 
example, we give suppliers the option to bid for a portion of an 
expansion area as opposed to having to bid for an entire expansion 
area. We also allow suppliers to bid for only one or a few product 
categories in a competitive acquisition area as opposed to having to 
bid for all of the product categories in a particular area.
  The introduction of competitive bidding into the Medicare program 
will not only ensure beneficiary access to high-quality medical 
equipment and supplies, it will also reduce fraud and abuse. Suppliers 
who are under sanctions for fraud and abuse will be ineligible to 
participate in the bidding process. On-site reviews will be conducted 
prior to awarding contracts, ensuring that the suppliers are valid and 
operating businesses.
  Contrary to what the nay-sayers will tell you, competitive bidding 
for durable medical equipment and suppliers has nothing to do with 
cutting services to beneficiaries or lowering quality standards. It has 
everything to do with improving access to high-quality medical 
equipment for America's seniors in a cost-effective manner.
  As we search for ways to secure Medicare for the long term, we must 
take prudent steps to improve the efficiency of the program. 
Implementation of competitive bidding for certain Part B items and 
services is one way in which Congress can show that we are serious 
about preserving the integrity of Medicare.
  I urge the Senate to support this measure.
                                 ______