[Congressional Record Volume 149, Number 21 (Wednesday, February 5, 2003)]
[Senate]
[Pages S1981-S1982]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SMITH (for himself, Mr. Reid, Mr. Wyden, Mr. Ensign, Mrs. 
        Clinton, Mr. Schumer, Mrs. Boxer, Mrs. Feinstein, Ms. Cantwell, 
        and Mrs. Murray):
  S. 306. A bill to amend part C of title XVIII of the Social Security 
Act to consolidate and restate the Federal laws relating to the social 
health maintenance organization projects, to make such projects 
permanent, to require the Medicare Payment Advisory Commission to 
conduct a study on ways to expand such projects, and for other 
purposes; to the Committee on Finance.
  Mr. SMITH. Mr. President, I rise today to introduce a bill that will 
make Medicare's Social Health Maintenance Organization, SHMO, 
demonstration a permanent part of the Medicare+Choice program. In this 
effort, I am joined by my colleagues from Oregon, New York, Arizona, 
California, and Washington.
  The Social HMO demonstration was authorized 18 years ago to test 
models for improving health care for frail seniors, expanding access to 
social and supportive services, and integrating these expanded benefits 
with medical services better. My colleagues and I feel that an 
eighteen-year test is long enough, it is time for this successful 
program to become a permanent choice for Medicare beneficiaries.
  Close to 80 percent of national health care expenditures are for 
people with chronic conditions. Medicare beneficiaries are 
disproportionately affected by chronic illness. About 85 percent of 
people who are 65 and older have one chronic condition, and two thirds 
have two or more. Fully a third of Medicare beneficiaries have four or 
more chronic conditions. This group accounts for more than three 
quarters of all Medicare spending. Yet, despite the predominance of 
chronic illness among seniors, Medicare continues to operate as an 
acute care model. So many of the services that are central to the 
health care needs of seniors are not covered by Medicare, including a 
number of preventive services, care coordination and disease management 
services, and home and community-based support services.
  Social HMOs provide the care coordination and disease management 
services so critically important to frail and at-risk seniors with 
multiple chronic conditions and complex care needs. Social HMOs are 
required to provide expanded care benefits such as prescription drugs, 
ancillary services such as eyeglasses and hearing aids, and community-
based services such as personal care, homemaker services, adult day 
care, meals, and transportation. These services meet the chronic health 
care needs of seniors, helping them remain independent, while reducing 
Medicaid expenditures by avoiding or delaying nursing home placement.
  Several recent studies have shown that Social HMO members are 40 
percent to 50 percent less likely to have long-term nursing home 
placements than similar seniors. Further, in a recent survey of Social 
HMO beneficiaries, over three-quarters of respondents indicated that 
the special services offered by their Social HMO were critical in 
allowing them to continue living at home. Enhanced Social HMO services, 
such as early detection of illness, development of coordinated care 
plans to address problems identified during routine assessments, 
screening, and ongoing monitoring of care, has paid off in improved 
health outcomes for beneficiaries. One study submitted to CMS by the 
University of California at San Francisco and the University of 
Minnesota showed that the Social HMO chronic care interventions 
decreased inpatient hospital and emergency room use up to 57 percent 
and 47 percent, respectively, while improving beneficiaries' functional 
capacity.
  Last year, Medicaid spending increased by over 13 percent. More than 
half of this growth was in programs serving the elderly and disabled. 
At a time when the Federal deficit is increasing and States are facing 
unprecedented budget shortfalls, it is incumbent upon us to take 
measures to reduce, not increase, the Medicaid burden, which 
constitutes a major component of State expenditures.
  My legislation provides a critical opportunity to address the States' 
large and growing fiscal crises. In the short-term we can prevent an 
exacerbation of States' budget woes by making the Social HMOs 
permanent. Preliminary estimates of first year costs for terminating 
the Social HMO program range from about $100 to $300 million for 
increased nursing home and home care expenditures under Medicaid. 
Remember that these estimates relate to only four existing plans 
serving about 110,000 beneficiaries and do not even include 
prescription drugs and other ancillary services provided by the plans. 
Long-term cost savings associated with reduced health care expenditures 
and keeping enrollees from spending down to Medicaid would be even more 
significant--especially if the MedPAC study required by our bill 
validates that these programs are cost-effective and recommends to 
Congress that we expand this option. For states facing huge shortfalls, 
the cost to absorb these SHMO beneficiaries if the program were to 
terminate would be substantial.

[[Page S1982]]

  I am fortunate that one of the four original Social HMOs is in 
Oregon. Senior Advantage II, offered by Kaiser Permanente's Northwest 
Division, currently serves about 4,300 Medicare beneficiaries from 
Salem, OR to Longview, Washington, with its primary service area in 
Portland, OR. Since Kaiser opened its Social HMO program, it has served 
close to 15,000 beneficiaries with its enhanced benefits and special 
geriatric programs, which have led to fewer overall nursing home care 
days and a more consumer-oriented approach to care for frail or ill 
seniors.
  The legislation I am introducing with my distinguished colleagues 
today would make permanent the existing Social HMO plans, like Kaiser, 
and would lay the ground work for evaluating whether to expand and 
replicate this model. Our bill requires the Secretary to conduct a 
comparative study of beneficiary and family member satisfaction to see 
how Social HMOs compare to Medicare + Choice and fee-for-service 
Medicare. It also requires MedPAC to evaluate the cost-effectiveness of 
Social HMOs with respect to reduced nursing home admissions, reduced 
incidence of Medicaid spend-down, and other aspects of the model that 
represent potential cost-savings. If MedPAC finds that Social HMOs are 
cost-effective, it must make recommendations to Congress on expanding 
and replicating this model.
  To ensure that beneficiaries continue to receive the value added they 
have come to enjoy under this program, the Social HMOs must continue to 
provide the expanded benefit package currently offered under this 
legislation. Further, this benefit could not be changed by the 
Secretary without notification of Congress. Finally, to ensure that 
Social HMOs can continue to finance a high level of benefits, any 
changes in plans' existing payments would need to go through a formal 
rulemaking process.
  The Social HMO demonstration project has been re-validated by six 
acts of Congress since its creation. It is time to make this program 
permanent and lend a measure of stability to the plans and 
beneficiaries served by this innovative model. This program represents 
a fiscally sound approach to helping manage the chronic health care 
needs of our nation's seniors, and I urge all of my colleagues to join 
with me and the rest of this bill's cosponsors in support of this 
important legislation.
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