[Congressional Record Volume 151, Number 141 (Monday, October 31, 2005)]
[Senate]
[Pages S12065-S12073]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
DEFICIT REDUCTION OMNIBUS RECONCILIATION ACT OF 2005
The PRESIDING OFFICER. The Senator is correct. Under the previous
order, the hour of 4 o'clock having arrived, the Senate will proceed to
consideration of S. 1932, which the clerk will report.
The legislative clerk read as follows:
A bill (S. 1932) to provide for reconciliation pursuant to
section 202(a) of the concurrent resolution on the budget for
fiscal year 2006 (H. Con. Res. 95).
Mr. GREGG. Mr. President, I ask unanimous consent that the presence
and use of small electronic calculators be permitted in this Chamber
during consideration of S. 1932.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GREGG. Mr. President, I ask unanimous consent that time spent in
quorum calls requested during consideration of S. 1932 be equally
divided between the majority and minority managers of the bill.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GREGG. Mr. President, at this point we turn to what is one of the
more significant pieces of legislation to come before the Senate and
the Congress during this session of the Senate. We always hear that.
Whatever legislation comes to the Congress, they always say, Well, it
is a significant piece of legislation--and it is. There is very little
that he we do that cannot have that identification. But this one is a
little unique because for the first time in 8 years under Republican
leadership, this Congress will, if we are successful in passing this
bill, conferencing it and then sending it on to the President, reduce
the deficit of the United States through addressing what is the most
significant item of spending in the Federal budget--mandatory programs.
This is a major effort. As I said, it has not occurred in 8 years. The
last time it happened was in the mid-1990s, and it has not occurred
because people did not want to do it. It did not occur because it is
not an easy thing to do. It is not easy to control the rate of the
growth of the Federal Government, and it is not easy to control the
growth of mandatory entitlement programs which is what this bill does.
So it is an important step in the direction of fiscal responsibility,
and it is one which I am very proud to have the opportunity to bring
here to the floor as chairman of the Budget Committee.
[[Page S12066]]
Let me explain quickly what the problem is so that people will
understand the scope and concern of the issue of mandatory spending
because it is going to impact not only America today but, more
importantly, it is going to affect our children and our children's
children if we do not do something positive in the area of trying to
control Federal spending on mandatory programs.
Mandatory programs are programs which people have a right to. In
other words, if you were in the military and are a veteran, you have
entitlement to certain benefits. If you are at a certain income level
in this country, you have a right to certain benefits. If you are a
student going to college and you meet certain income levels, you have a
right to certain types of benefits. If you are a senior citizen in this
country today, you have a right to certain benefits under the Medicare
Program and the Medicaid Program, depending on your income level, and
those payments have to be made.
In other words, mandatory programs are programs where there is no
discretion. The Federal Government has to pay out a certain amount of
money because the law says that if a person meets a certain set of
criteria, then that person has a right to the support of that program.
Mandatory programs used to be a small percentage of the Federal
Government, but today they have grown--and this has occurred over the
last 20 years, actually in the post-1970 period--to be the largest part
of the Federal Government.
This chart reflects that. Back in 1975, mandatory programs
represented a very small percentage. They are the orange bar here.
Discretionary programs--let me explain discretionary programs. They
are programs which are funded every year. Those are the ones you think
of relative to Government, such as national defense, education,
cleaning up the environment. That is called a discretionary program.
Every year the Government makes a decision, under the appropriations
bill process, that we are going to spend this much on foreign aid; we
are going this spend this much on defending our country; we are going
to spend this much on homeland security; we are going to spend this
much on education.
That is a discretionary program. We can change that every year.
Nobody has a right to that money. Mandatory programs, as I said, people
have a right to the program. So as we see the orange bar, in 1985, it
was 45 percent of the Federal Government, discretionary being the
balance. So there was an equal split between discretionary and
mandatory. But you see that by today's accounting, mandatory programs
represent approximately 56 percent of the Federal budget, the largest
item in the Federal budget, and they are growing. In fact, this chart
shows it rather dramatically. So that by the year 2015, they will be 62
percent of the Federal budget and essentially absorbing most of the
Federal spending.
What is the practical implication of that? Well, it means that if we
are going to discipline ourselves as a government, we have to be
willing to look at mandatory programs. The only way you can look at
mandatory programs is through something called the reconciliation
process. That is what we have in the Chamber today, a bill which
controls the amount of spending the Federal Government does in the
mandatory area and therefore reduces the debt if it reduces that
spending.
Why is it important to do this? Well, I mentioned the major programs
in the mandatory area involve mostly health care and people who are
retired: Social Security, Medicare, and Medicaid. And as a quirk of
fate, there is this population group called the postwar baby boom
generation, which is the largest generation in the history of our
Government. This group has changed the country in every 10-year period.
It has impacted the way the Nation lives. In the 1950s, we had to build
a huge number of schools to meet the needs of this generation. In the
1960s, this generation had a huge impact on civil rights and women and,
of course, in the Vietnam debate. In 1970s and 1980s and 1990s, this
generation has been the most productive generation in the history of
our country because it is the largest and also the best educated over
that period and as a result has caused our country to obtain huge
wealth, and we as a nation have been very prosperous as a result of
this generation putting its oars in the water.
But now this generation, the baby boom generation, is moving toward
retirement and moving toward retirement rather quickly. By 2008,
members of this generation will start to retire, and by 2030 this
generation will, for all intents and purposes, be retired. And the
effect of this huge generation retiring is it is going to put massive
demands on people who are working; in other words, our children, my
children, children of the baby boom generation, and their children are
going to have to pay taxes to support the retirement benefits of this
massive generation.
To try to put it into perspective, in 1950, there were about 16
people working for every 1 person retired. Today, there are about 3\1/
2\ people working for every 1 person retired. By the time we hit the
year 2030, there will only be 2 people working for every person
retiring in this country because the baby boom generation is huge.
What is the impact on our Federal Treasury but more especially on the
taxing of our children and our children's children when this happens?
This chart, in red, shows it most dramatically. These are the three
programs in the Federal Government--Social Security, Medicare, and
Medicaid--and the spending they absorb.
Now, historically, Federal spending, the amount spent by the Federal
Government, has averaged about 20 percent of the gross national product
for a long time. That is the blue line here. And you can see that back
in 1980, Social Security, Medicare, and Medicaid took up about 8
percent of the gross national product, and the balance was taken up in
the Federal spending on national defense and other items.
Today, that number has gone up so that it represents about 10 percent
of the gross national product being absorbed by Social Security,
Medicare, and Medicaid. But as you can see from this chart, by about
the year 2030, when this baby boom generation is fully retired, these
three programs alone--Social Security, Medicare, and Medicaid--will use
up all the revenues of the Federal Government--all of them. They will
represent, in spending, 20 percent of gross national product.
The practical implications of that are that you will have no money
available for national defense, for education, for environmental
cleanup, for all the different things you would like to do--for
veterans affairs--because these three spending programs--Social
Security, Medicare, and Medicaid--will essentially be absorbing 20
percent of the gross national product, unless--unless--you want to
dramatically increase the taxes on our children so that they actually
end up paying more than 20 percent of gross national product in taxes
or you are willing to slash programs and the benefits going to seniors.
Neither of those options are very attractive, to say the least. If
you look in the outyears, you see that these programs continue to
accelerate even faster, so that by the year 2050, these programs are
actually absorbing almost 30 percent of the gross national product. So
we have to address this.
Well, it is similar to that old television ad that used to be aired.
There was an oil filter ad that said: You can pay me now or pay me
later, and if you pay me later, it is going to cost a heck of a lot
more. You can replace the oil filter today for $14 or a year from now
or in 6 months you are going to have to replace the engine in your car
for $2,500. You have the choice.
We can act now and do some constructive and conscientious things to
try to bring under control the rate of growth of entitlement spending,
mandatory spending, that red line there, or we can bury our heads in
the sand and say those are our children's problems, and they are going
to have to pay our retirement benefits; we are not going to worry about
them.
Well, the Republican Congress and the President have decided it is
not good policy to pass this problem on to our children and it is not
fair and it is not right. So we produced a budget this year which, as I
mentioned, for the first time in 8 years has moved into the sacred
ground of trying to address controlling the rate of growth of mandatory
spending and thus reducing the size of the Federal deficit. It has been
[[Page S12067]]
complicated, it has been difficult, but we have made progress, and we
now have in the Chamber this bill which does some very constructive
things in this area.
The bill itself represents about $71 billion, in gross terms, in
reducing deficit spending over the next 5 years. However, because we
felt there were some initiatives which needed to be taken in moving
forward to make these savings and to accomplish this deficit reduction,
because we felt there should also be initiatives to move forward, the
net number in this bill of actual deficit reduction is about $29
billion.
You may say, and some of our commentators have said: Well, it is not
enough. This is small potatoes. Let me begin by saying, in New
Hampshire, $39 billion is not small potatoes. I don't think it is
anywhere in the United States, except in Washington. And more
importantly, if you don't move forward with this attempt, you are
essentially doing nothing, which means you have made no effort in the
area of deficit reduction and no effort in the area of getting our
spending under control.
Now, why do we net out about $30 billion of new spending in this
effort? As I mentioned, the total bill is about 71 and the spending
reduction is about 39. Well, there are two major initiatives in this
bill which account for most of the initial spending. The first is that
the majority of the money from each one of the subcommittees--I should
explain this quickly. Each committee in the Congress was asked to save
a certain amount of money in their area of responsibility. The Finance
Committee was asked to save $10 billion, the Agriculture Committee was
asked to save $3 billion, the Education and Labor Committee was asked
to save $13 billion. The Education and Labor Committee, in reaching its
savings target, decided to reduce corporate subsidies that benefit
people who lend money to students. Basically, they took a policy
position that the corporate subsidies were too high in this area.
In doing that, they felt that some of the savings from reducing those
corporate subsidies should flow to students. So under the leadership of
Chairman Enzi, there is essentially a major new push for funding
programs that assist low-income students, low-income students who need
assistance to go to college. That is good policy. We know that our
country, if it is going to be competitive as we move into this century,
has to be smarter, brighter, and more capable than the rest of the
world, and the way you do that is by giving people the opportunity to
go to college, no matter what their income levels are, and we give them
an incentive to do that so they can be creative, imaginative, better
educated and thus pursue better careers. And that is what we want,
better careers for people. It creates jobs and opportunity throughout
this country when we do that. So the HELP Committee--Health, Education,
Labor, and Pensions Committee--came back with a program which had the
$13 billion of savings in it, most of it through reducing corporate
subsidies, lender corporate subsidies, and at the same time put a
significant amount of new dollars, about $11 billion, into helping
students, low-income students especially, go to college.
The second major initiative is in the area of trying to keep doctors
engaged in the Medicare Program. We know we have a lot of doctors who
don't believe they are adequately compensated under Medicare and, as a
result, are less inclined to see patients.
The most important thing a patient needs if they are on Medicare is
to see a doctor. That is fundamental to Medicare. There was a
glidepath--it wasn't a glidepath; I guess it was a glidepath, it was
coming down--to cut by 4.5 percent the salaries of doctors
participating in Medicare. The chairman of the Finance Committee,
Chairman Grassley, in a very foresighted decision, said that is not
going to work because that means patients won't have access to doctors
because doctors won't be treating patients if they have that sort of
financial detriment placed on their back.
Basically, in his bill, he has saved significant dollars in the area
of health care. He has put a considerable amount of those dollars into
the effort to keep doctors whole. There is no big increase in here for
doctors, but basically they are at a freeze level. I guess it is a 1-
percent increase, in fact, and that means we will have more access for
people, patients will have more opportunity to see people they need to
see when they are sick. That is an important initiative.
All the spending--almost all the spending; I can't say all--almost
all the spending programs in this bill, to the extent there are
spending programs in this bill, are focused on low- and moderate-income
people--in fact, almost entirely low and moderate efforts to give
people more access to health care and students more access to college
education.
That being added up, we now have on the floor a $35 billion deficit
reduction package. That is a major step forward. On top of that, there
are major initiatives in this bill to address the pension issue. We
know we have a serious problem coming at us in these areas: Medicare,
Medicaid, and Social Security, but running right along with that, as
one might expect, is a huge problem coming at us in the private pension
area.
The pension guarantee fund, which essentially is a fund for when a
company goes bankrupt--and we certainly are hearing a lot about that
recently with our airlines--rather than allowing that company to
completely wipe out that pension plan and all the people who worked for
that company all their lives wake up one morning and find out they
don't have a pension, even though they paid into it for years, this
Pension Benefit Guaranty Corporation guarantees a certain percentage of
that pension will be paid--not all of it but a percentage of it.
Because there have been so many bankruptcies and because we have had
such a huge pressure on old-line industries in this country who had
defined benefit plans, the Pension Benefit Guaranty Corporation is
looking at a $30 billion to $50 billion deficit, which means it cannot
meet its liabilities, which means, once again, at risk are even the
slimmed-down pensions which come to people who find their pensions in
the Pension Benefit Guaranty Corporation.
So in this bill there is an attempt to move toward solvency in that
corporation, and that is good policy. Again, that came out of Senator
Enzi's proposals, and he should be congratulated for it. His committee
ended up with the largest lift, so to say, in this effort, and they did
an excellent job in meeting that requirement.
This is a very balanced bill, the bottom line of which is very
simple: We are going to reduce the deficit by $35 billion in 5 years
and that, quite honestly, translates--this is a big delta into the
outyears--even into significantly more money as we move into the next 5
years.
This is a significant step forward in the area of fiscal discipline.
It is something that needs to be done in this country, and it is
something this Republican Congress has been willing to step up to try
to do.
How has the other side reacted? We are going to hear a lot of people
on the other side say this is a terrible bill because it cuts spending
on the poor while it cuts taxes for the rich. That is the theme on the
other side. It is a little hard to defend that position, quite
honestly, in light of what this bill actually does.
First off, this bill does not cut spending to the poor. To the extent
there is new spending in this bill, it actually assists especially low-
income students. The Medicaid changes are focused primarily on
pharmaceuticals and, in addition, are designed to give Governors much
more flexibility.
I will tell you right now that a Governor who is worth his or her
salt is going to be able to expand--expand--their care to low-income
individuals under these proposals because they will have more
flexibility. You give a good Governor more flexibility and they will
need less dollars to do what they know is right. Because the
stringencies of the Federal Government are so extraordinary, they waste
a tremendous amount of money trying to meet the obligations. But there
are no reductions in this bill toward low-income individuals. The
reductions are focused on the pharmaceutical side. They are focused on
trying to get the Medicaid system under control using good practices of
management, something which I know the other side resists. But that is
the way it works.
[[Page S12068]]
Then there is this concept of there is a tax cut for the rich in
here. First off, this bill has no tax cut in it at all. None. There is
no tax relief in this bill. I wish it did have tax relief, but it has
no tax relief. It cannot have tax relief, and I think this point needs
to be made, and later on I will ask the Parliamentarian for his precise
description of this point. But under this bill, if it has tax relief,
it would mean the second reconciliation bill on tax relief could not be
undertaken, as I understand it, and, therefore, this bill has been
scrubbed of any tax relief activity.
But the other side continues to say it is a tax bill. It is not. This
is an opportunity--an opportunity--for the other side to vote to reduce
the deficit by $39 billion--that is all it is--and to do it in a
responsible way where we expand patients' access to health care, where
we expand student loans, and where we get under control, finally, to
some extent, some of these major entitlement programs, especially in
the pension area, in the education area, and in the Medicaid area--
which leads me to my other point.
We are hearing a lot of crying of wolf from the other side on the tax
relief issue. We are going to hear over and over the refrain: If you
look at the tax bill that is going to come next, $70 billion, there is
actually a net loss to the Treasury of $30 billion or so because this
reduces spending by $39 billion, but the tax bill puts in tax relief of
$70 billion. The next bill, hopefully, will put in tax relief of $70
billion, but let's go to what the items are on that list.
The next bill, the tax bill, is going to have in it a series of items
that expire this year and next. What are the items that expire this
year the other side appears to be opposed to because they say they are
opposed to tax reconciliation? There is this alternative minimum tax.
If we don't put in place relief for the alternative minimum tax, I
think it is something like 8 or 9 or maybe even 20--the number is
huge--million people, middle-income people, will suddenly pay taxes
they did not pay before. It is a tax increase. The other side wants the
increased taxes on those people, I guess. They want to raise the taxes
on 8 to 9, 20 million people.
Next is the research and experimentation tax credit. This is one of
the most important tax credits at the Federal level because it
encourages companies to be creative and, as we know, the reason we are
competitive as a nation is because we create better products and we
have better research, R&D, and that is what creates jobs and careers in
this country. I guess the other side of the aisle wants to eliminate
the R&D tax credit. They want to raise taxes on entrepreneurship and on
creativity.
The next tax that will expire in the next 2 years is the deduction
for teachers' classroom expenses. This is the deduction we give to
teachers who are good enough to, out of their own pocket, buy crayons
for their classrooms; buy books for their classrooms, something they
think their kids need. We decided teachers should have that type of
help.
Not the other side of the aisle. I guess they want to raise taxes on
teachers who do that. They want to raise those taxes.
The deduction for qualified educational expenses, once again, that is
tied to the teachers' classroom expenses.
A deduction for State and local sales taxes--I have to admit, I am
not sympathetic to letting the State and local taxes be deducted
because New Hampshire doesn't have a sales tax. We also don't have an
income tax. If you want to live where somebody knows how to handle
their money, come to New Hampshire. But most of the high-tax States in
this country--Connecticut, Massachusetts, New York, New Jersey,
Illinois, and California--and let me see, how many Republican Senators
are from those States? I can't remember. I don't think there are any.
In all of those States, the sales tax is a huge portion of their
revenue. Yet the other side of the aisle, I guess, does not want people
in those States to be able to deduct their sales tax because they do
not want the next tax reconciliation bill to come through here. Very
ironic. I think it shows the hypocrisy, maybe, of the other side of the
aisle when they come in here claiming they are opposed to the
reconciliation bill when, in fact, the beneficiaries of this
reconciliation bill are going to be the high-tax States, most of whom
are represented by Democratic Members in the Senate. The list goes on.
I hope people, when they hear this constant refrain in grand, large
terms, will ask specific questions: What is that tax you want to raise
on people? What is the tax increase you want to stick people with? Do
you want people to have to pay more because they cannot deduct their
sales tax? Do you want people to pay more because they are stuck with
the alternative minimum tax? Do you want people to pay more because the
teacher bought crayons for the classroom? Those are the questions you
need to ask.
So this proposal coming from the other side is really a straw dog,
and it is a lot of hyperbole. But if you look behind the hyperbole and
ask the substantive question, What are they really proposing, you see
quickly they have no substance to their argument, and that, in fact,
this is their opportunity, if they wish to try to reduce the deficit,
to vote for this bill which cuts the deficit by $39 billion.
We can also ask, Where is the Democratic budget that gives us an
alternative? Have we seen a Democratic budget that has given us an
alternative? We were on the floor for 50 hours, but we never saw a
budget from the Democratic Party. Never. And we are going to be on the
floor for 20 hours with this reconciliation bill. Are we going to see
an alternative bill? I don't think so.
In fact, we put together what the Democratic proposal has been since
we started with the budget program, how much they have proposed in new
spending. You cannot read this. There is so much spending, we couldn't
put it in big letters. We ended up with little letters. You can't read
it because there is so much spending. But it adds up to almost $500
billion of new spending that has been proposed by our colleagues on the
other side of the aisle since January 1, just this year, $500 billion
almost.
So maybe that is their proposal. They never really fleshed this out
in specifics, so we went back and asked-- clearly, if they had their
way, they would probably want to increase spending--what is their
specific proposal to reduce the deficit? What is that specific
proposal? We went back and found out what it was, and here it is. This
is the specific proposal of my colleagues on the other side of the
aisle for reducing the deficit: A blank page. A blank page.
There is going to be a lot of hyperbole in the next few days about
how this bill doesn't do this or how it doesn't do that, but what this
bill does is it reduces the deficit by $39 billion over the next 5
years. That cannot be denied. And the one major vote, the one
opportunity people are going to have in this Senate as a result of the
hard deficit is going to occur when we have final passage of this
deficit reduction bill. We are going to be debating it for 20 hours,
and then, hopefully, we will go to a vote.
I, again, congratulate all the chairmen of all the different
committees who were able to hit this target in what is a very difficult
time and a very difficult task.
I yield the floor to one of the architects of this bill who did an
extraordinary job, Senator Grassley.
The PRESIDING OFFICER (Mr. Burr). The Senator from Iowa.
Mr. GRASSLEY. Mr. President, I very much thank Senator Judd Gregg,
chairman of the powerful Budget Committee, for his leadership and for
doing what has not been done in this Senate, it is my understanding,
since 1997: We have a budget reconciliation bill that will reduce the
deficit by changing programs that are either appropriated or on
automatic pilot that tend to never get reviewed as often as they should
in order to watch the taxpayers' money wisely.
Senator Gregg's commitment to fiscal discipline has informed and
defined this process, and I am grateful for his efforts.
As he just did, I congratulate the chairmen of seven other
authorizing committees whose titles of this bill, along with the
Finance title that I am going to talk about, comprise this giant
legislation that we call reconciliation that Senator Gregg successfully
reported last week.
[[Page S12069]]
I know that it was not easy for the chairmen of these eight
committees to reach consensus and to move their titles forward. These
chairmen and the members of their committees have every right to be
proud of the work they have done achieving savings but also
implementing policies that will help American workers.
Today, we have saved nearly $40 billion over 5 years--to be more
accurate, $39.1 billion over 5 years--and that is $4.1 billion more
than Congress even directed these committees to do back in April when
the budget was adopted. Considering the 8 years since this has been
done, this is a significant accomplishment and one of which we ought to
be proud.
Many of the proposals in my committee's title, as well as the other
titles of this bill, have bipartisan support. Some of them have been
proposed by the administration in its budget which came out last
February. While I am hopeful that during the debate this week, we will
be able to persuade a number of Democrat Members to vote in favor of
this bill, I recognize that the budget process is often a partisan
exercise and that we will be able to count on few, if any, votes from
the Democrat side of the aisle.
As the chairman of the Senate Budget Committee made very clear with
his chart that was blank, we have not seen a Democrat proposal. Why?
Because they do not want to bite the bullet and do what is hard to
suggest from their point of view--how to reduce the deficit--unless it
might be by raising taxes because often that is their solution, whereas
I myself have never come to the conclusion that the American public is
undertaxed. I never have my taxpayers telling me that they are
undertaxed. The problem of the budget deficit is that Congress
overspends.
In developing my part of this budget reconciliation proposal, I
attempted to address a number of bipartisan priorities. These efforts
were acknowledged by my colleagues during last week's Senate Finance
Committee markup, and I want those members of the Finance Committee to
know that I appreciate their kind words. Rather than having their kind
words, I would rather have had those Democrats vote for this bill
coming out of my committee rather than having it come out on an 11-to-9
partisan vote.
The Finance Committee portion represents nearly a year's worth of
work on behalf of members of my committee and the staffs of the
respective members, as well as committee staff.
The Senate Finance Committee title achieves a net of $10 billion in
savings from Medicare and Medicaid by reducing wasteful spending and by
closing loopholes. The Finance title also targets resources to
preserving and improving Medicaid, the State Children's Health
Insurance Program, and Medicare. In particular, the Medicaid provisions
in the title will also produce additional resources for States in
operating their Medicaid Programs. In so doing, this bill protects
Medicaid benefits for the most vulnerable of our society.
The Senate Finance Committee title cracks down on Medicaid fraud and
abuse by encouraging States to aggressively pursue Medicaid fraud by
implementing in the respective States, beyond the 13 that have done it,
State false claims acts, which in comparable legislation at the Federal
level is the single most important tool that U.S. taxpayers have to
recover the billions of dollars stolen through fraud every year. In
addition, my Finance Committee title requires suppliers that do
business with Medicaid to have a false claims act education program so
that those with evidence of fraud against Medicaid know they may pursue
these claims on behalf of the Government and help to recover stolen
funds. In order to fight Medicaid fraud, the Senate Finance Committee
title dramatically increases resources to fight fraud and abuse in
Medicaid. This then will protect State and Federal budgets and generate
substantial savings from this investment.
My committee's title also achieves savings by helping State Medicaid
Programs obtain millions in payments owed by third-party payers each
year. It also produces savings by ending drug manufacturers' gaming of
the system by closing the authorized generic loophole so that
appropriate rebates are paid to the States.
The Senate Finance Committee title helps preserve services to
beneficiaries by ending overpayments to pharmacies, by reforming the
broken system used to reimburse pharmacists for prescription drugs,
which is based on the flawed average wholesale price formula, costing
taxpayers lots more money than it should. There have been 13 reports in
the last 5 years dealing with an average wholesale price formula done
by the Congressional Budget Office, the Inspector General's Office, and
from the Government Accountability Office, all calling for reforming
the Medicaid pharmacy payment formula and ending overpayment for
prescription drugs. These overpayments have been costing the States, as
well as our Federal Government, billions of dollars needlessly.
The bill also includes provisions to protect rural pharmacies and
encourage greater use of cost-saving generic drugs. In addition, my
portion of this reconciliation bill balances the savings derived from
pharmacy payment reforms with an increase in the rebate paid to State
Medicaid Programs by drug manufacturers from 15.2 percent to 17
percent.
On the Medicare side, the Finance title calls for the phaseout of the
budget neutral modification to the MedicareAdvantage risk adjuster.
This provision will help ensure that the health status risk adjuster
required by the Balanced Budget Act of 1997 meets its objective of
providing accurate payment to plans based on their enrollees' health.
The title also repeals the MedicareAdvantage regional stabilization
fund.
There are concerns about these provisions, and some people have
argued that we should not touch the MedicareAdvantage Program. In
response, I point out that the phaseout of the risk adjuster was
announced three times: first in February in the President's budget;
second, with the 2006 rates; and again in the September CMS factsheet.
So plans submitted their bids knowing full well that the phaseout was
going to happen.
When we worked on the Medicare Modernization Act--and that was in
2003--the idea was that if the funds were not needed, then the dollars
were to be returned to the U.S. Treasury. We have strong regional
preferred provider organization participation. Regional preferred
provider organizations are in 21 out of the 26 regions into which the
country has been divided. Regional preferred provider organizations
have several other safeguards to make sure they are available.
The base MedicareAdvantage rates have been fixed. There are risk
corridors, network adequacy requirements, the essential hospital fund,
and a moratorium on local PPOs. The title does not affect any of these
safeguards, so we feel this money going back to the Federal Treasury
under this bill is the right thing to do.
The Finance Committee title of this bill also preserves access to
health care for seniors in Medicare by providing a 1-percent payment
update to all providers paid under the Medicare physician fee schedule.
This replaces a 4.4-percent payment cut that physicians are scheduled
to receive in 2006 under the existing formula. So we change that
formula to make sure that the 4.4-percent cut does not go through. On
top of that, there is a small increase for our physicians.
The Part B premium is affected due to changes included in the title
that affect Part B spending. While some provisions lower Part B
spending, other provisions increase the spending. However, there is no
effect on the Part B premium paid by our seniors until the year 2007.
It is also important to keep in mind that the Part B premium increase
does not affect low-income beneficiaries. In fact, I worked hard to
extend the QI Program so that Part B premiums would continue to be
covered for these individuals.
Avoiding the physician payment cut has strong support in the Senate.
In July of this year, 89 Senators from both sides of the aisle sent a
letter to the White House Office of Management and Budget calling for
the removal of Part B drugs from the physician payment formula. This
change, which the administration has the authority to make, would
permit Congress to address the longstanding programs with the Medicare
formula for reimbursing physicians.
[[Page S12070]]
Certainly, we are all concerned about any impact on Part B premiums,
but this Senate is almost unanimous in its support of addressing this,
as evidenced by the 89 signatures calling for changes in the formula
that were sent to the administration. To be clear about this, the
changes in the physician fee called for in that letter would also
increase Part B premiums to our senior citizens. It is important that
we take steps to maintain access to physician services in the Medicare
Program. The benefits in Medicare are not worth much if beneficiaries
cannot find a doctor when they need one.
Another important area addressed by the Senate Finance Committee is
long-term care costs. Recognizing that long-term care costs account for
significant spending in the Medicaid Program, this bill makes key
provisions in long-term care for seniors and the disabled. Consistent
with a proposal put forth by President Bush, this bill includes a
``money follows the person'' rebalancing demonstration program. This
program would direct grants to States to increase use of home- and
community-based services rather than institutional care, and it would
eliminate barriers that prevent or restrict the flexible use of
Medicaid funds so that individuals may receive support for long-term
services in a setting of their choice. This is empowering people.
The title also provides new options for private coverage of long-term
care through the long-term care partnerships and promotes the
availability of programs of all-inclusive care for the elderly in rural
areas.
The Finance Committee title also addresses a number of Medicare
priorities while also achieving savings in other areas of Medicare. To
begin, being mindful of the unique needs of rural residents and the
facilities that serve them, the title protects access to Medicare
services for rural beneficiaries.
First, the title would extend the hold-harmless provisions for the
small rural hospitals and sole community hospitals from implementation
of the hospital outpatient prospective payment system.
Second, it would expand coverage of additional preventive benefits
under the Federal qualified health centers.
Third, it would extend the Medicare Dependent Hospital Program, which
provides financial protections to rural hospitals with less than 100
beds that have greater than 60 percent of their patients coming from
Medicare.
Another issue I suspect we will hear a good deal about during this
debate over the next few days is the impact that Hurricane Katrina had
when it devastated hundreds of thousands of our fellow Americans.
The title would provide for a much needed downpayment to those States
that have suffered as a result of Hurricane Katrina. I am committed to
ensuring that the families who have suffered so greatly as a result of
this national tragedy receive the services they need to rebuild their
lives, and the States which have been affected are made whole.
The Finance Committee title of this bill also provides funding to
strengthen and improve the Medicaid and State Children's Health
Insurance Program. As my colleagues know, as many as 23 States are
projected to experience shortfalls in the Children's Health Insurance
Program over the next 2 years. The national total of these State
Children's Health Insurance Program shortfalls is near $1 billion. The
Senate Finance Committee title includes temporary provisions that will
stem these State shortfalls and ensure that States are not forced to
curtail or end their Children's Health Insurance Program coverage for
vulnerable low-income children.
In order to continue to improve the Medicaid and Children's Health
Insurance Programs, the Senate Finance Committee title in this
reconciliation bill also includes outreach and enrollment efforts so
that children eligible for public health assistance receive that
assistance.
This legislation also addresses a fundamental flaw in our current
Medicare payment system. Right now, Medicare payment policies do not
encourage high-quality care. In other words, doctors get the same
reimbursement and hospitals get the same reimbursement whether they are
doing the highest quality of care or whether they do not care, and
people are always going back into the hospital because the job is not
done right the first time. So we have come to the conclusion that we
need to reward quality and we need to provide incentives to invest more
in health care information technology and other efforts that will
improve health care quality.
This reconciliation bill does just that. This bill implements
recommendations from the Institute of Medicine and also from the
Medicare Payment Advisory Commission. These provisions are based on the
bipartisan Medicare Value Purchasing Act, which is S. 1356, introduced
by me and my Democratic colleague, the leader on the other side of the
aisle of the committee, Senator Baucus of Montana. The legislation
creates quality payments under Medicare for physicians and other
providers, including hospitals, health plans, skilled nursing
facilities, home health organizations, and end stage renal disease
facilities.
Finally, the Senate Finance Committee title includes the Family
Opportunity Act. The Family Opportunity Act was motivated by the
circumstances of individual families--the Melissa Arnold family of Iowa
and the Dylan Lee James family. You could say they are representative
of hundreds of thousands of families. Both are families we use as an
example of those who relied on Medicaid health services for their
children with disabilities, and both families ended up risking
eligibility for Medicaid as a result of financial eligibility rules
that continue to create disincentives for parents to work and stay
working and even improve their employment opportunities.
Acute need persists for the Family Opportunity Act. It is just as
important today as it was over the past several years that I have been
fighting to get the Family Opportunity Act law. I have heard from a
number of families in Iowa and across the country, speaking of the
imperative to enact the Family Opportunity Act. They tell me about
their son or daughter or grandchild, and how much they love their child
or grandchild and how important it is to tell their story. They tell
about the illness or disability that their families have been
struggling with for years.
Then they describe how dad and mom could comfortably support their
family but must remain poor, even unemployed, in order that their child
receive the health care coverage they need. These parents want to work
and provide for their families but must put the health care of their
child first.
If we are able to successfully pass the legislation--we have been
able to pass this legislation in the Senate, but it did not get through
the House of Representatives. If we are successful again, we will
achieve important savings that help put our fiscal house in order as
well as preserve benefits and ultimately expand access through the
Family Opportunity Act for families in Iowa and across the Nation.
The Finance Committee title of this bill achieves significant savings
in Medicare and Medicaid by reducing wasteful spending and closing
loopholes. It then directs much of these savings to make improvements
in these programs that expand access to health care services, protect
health care coverage for kids, and protect access to Medicare
beneficiaries.
But the bottom line is more than $10 billion in savings in existing
programs or additional money being recouped from fraud or money coming
in from fees. The bottom line to the Federal deficit is $10 billion.
I have two summaries of the Finance Committee title. I ask unanimous
consent that they be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Summary of Title VI
Title VI of the Deficit Reduction Omnibus Reconciliation
Act of 2005 achieves significant budget savings, slashes
wasteful spending, and targets resources to preserve program
integrity, improve access to health care, and preserve and
protect Medicare and Medicaid.
spending reductions
medicaid
prescription drug payment reforms
Redefines average manufacturer price (AMP) to reflect
discounts and rebates available to retail pharmacies and then
uses that definition for payments to pharmacies and for the
calculation of the best price.
[[Page S12071]]
Defines weighted average manufacturer price (WAMP) as the
basis of a new payment system for these drugs and for a new
federal upper limit for multiple source drugs.
Clarifies nominal price definition to ensure that sales
made at a nominal price are appropriately included in AMP
calculations.
Creates a new federal upper limit for payments to states
for covered drugs that goes into effect January 1, 2007 (with
a later transition for states without '06 legislative
sessions) of AMP+5% for single source drugs and WAMP-15% for
multi-source drugs.
Includes language that requires states to provide
appropriate dispensing fees to pharmacists and sets factors
upon which they should be based.
Creates an interim payment policy for 2006 capping the
current federal upper limit at 125% of the July 1, 2005 AWP,
WAC, or direct price levels.
-$4.595 billion / 5 years
reform of medicaid asset transfer rules and loopholes
Closes loopholes in current Medicaid law concerning
transfer of assets to limit the circumstances under which
persons may intentionally shelter assets in order to qualify
for Medicaid.
This section includes the following provisions to close
other loopholes that exist in current law:
Requires states to apply partial month penalties.
Requires states to accumulate transfers in computing the
period of ineligibility.
Requires that annuities are treated the same as trusts
under current law.
Requires that certain notes and loans are considered
countable.
Requires private annuities be based on actuarial life
expectancy.
Limits transfers to purchase life estates.
States would be required to provide a notice of the undue
hardship waiver process to any individual applying for
Medicaid who would be subject to a penalty period so they may
request a waiver of the penalty period.
States would be required to provide for a timely process
for determining whether an undue hardship waiver will be
granted, and a process for appeal of an adverse
determination.
-$335 million / 5 years
fraud, waste and abuse
Enhancing third party recovery. The section creates useful
new tools for existing third party recovery programs: (1)
clarifies that PBMs must respond to claims; (2) clarifies
that self-insured plans must turn over eligibility data; and
(3) clarifies that states can recover claims for up to three
years from the date of service.
Limitation on use of contingent fee arrangements. The
section gives the Secretary authority to implement standards
for states in their use of contingent fee contracts.
State False Claims Act. Creates an incentive for states to
implement state False Claims Acts by providing them with an
enhanced FMAP for any settlements reached through a state
False Claims Act.
False Claims Act employee education program as a condition
of participation. Requires employers that do more than $1M
business with Medicaid to have a False Claims Act education
program for their employees.
Prohibition on payments to States for prescriptions drug
claims that have already been submitted and paid. This
section clarifies in statute that pharmacists cannot bill
Medicaid for drugs that have been paid for previously and
restocked.
-$512 million / 5 years
State Financing of Medicaid
MCO Provider Tax Reform
This provision would treat managed care organizations the
same as other providers for purposes of applying current law
on provider taxes. This section permits states that have a
Medicaid-only managed care provider tax to keep it.
-$75 million / 5 years
Targeted Case Management Reforms
The Targeted Case Management provision clarifies the
definition of case management services. The provision
specifies that ``case management services'' include:
assessment activities, the development of a specific care
plan, referral and related activities to help an individual
obtain needed medical, social educational and other services,
monitoring and follow up activities.
Further clarifies that ``case management services'' do not
include the direct delivery of medical, educational, social
or other services, such as: research gathering, assessing
adoption placements, recruiting or interviewing potential
foster care parents, serving legal papers, homes
investigations, and transportation.
-$760 million / 5 years
Drug Rebate and Related Provisions
Close Authorized Generics Loophole
Improved regulation of authorized generic drugs. This
section requires CMS to include the best price of an
authorized generic in the calculation of the best price for
the branded drug.
-$180 million / 5 years
Increase Flat Rebate Amount to 17% in 2006
Increase in rebates for covered outpatient drugs. This
section increases the rebate paid by innovator drug
manufacturers from 15.1% to 17% and on noninnovator drugs
from 11% to 17%.
-$1.400 billion / 5 years
Physician Administered Drugs
Requires the collection and submission of utilization data
for certain physician administered drugs. This section
requires states to begin collecting information on physician
administered drugs for the purpose of insuring the state
receives the proper rebate amount.
-$150 million / 5 years
Subtotal--Medicaid Spending Reductions: -$8.007 billion / 5
years
Page 3 of 13
MEDICARE
PART A
Extend Medicare Bad Debt Policy to Skilled Nursing Facilities
As proposed in the President's FY 2006 budget, this
provision would reduce Medicare's reimbursement of skilled
nursing facility bad debt (unpaid beneficiary co-pays and
deductibles) from 100% to 70% of allowable costs.
Medicare skilled nursing facility bad debt payments have
increased 44% from 1996 to 2000.
Congress provides a 30% reduction in Medicare bad debt
payments to hospitals. This policy would equalize the SNF bad
debt payment rate making it consistent with the bad debt
payment rate for hospitals.
-$250 million / 5 years
Prohibit Physician Self-Referrals to Physician-Owned Limited Service
Hospitals
Prohibits new physician-owned limited service hospitals
from having any ownership or investment interest by
physicians who refer Medicare or Medicaid patients to the
hospital. Confirms that the ``whole hospital'' exception
would not apply to any new physician-owned limited service
hospital effective June 8, 2005.
Physicians are generally prohibited from referring Medicare
and Medicaid patients to facilities in which they have a
financial interest, unless they have an ownership or
investment interest in the whole hospital and not merely a
subdivision of the hospital.
In 2003, Congress established that the ``whole hospital''
exception would not extend to physician-owned limited service
hospitals (hospitals that are primarily engaged in cardiac,
orthopedics or surgical care) for an 18-month period.
Allows existing physician-owned limited service hospitals
to continue operation with certain restrictions.
-$22 million / 5 years
PART B
DME Payment and Maintenance Fee Reforms
Part B of Medicare pays for certain pieces of durable
medical equipment (DME) under a capped rental method.
Medicare currently pays 120% of the purchase price over 15
months.
Suppliers can bill Medicare for maintenance and servicing
(usually 10% of the purchase price) 6 months after the 15
month rental period ends and once every 6 months thereafter.
Suppliers are allowed to bill even if maintenance is not
provided.
This provision would require DME rentals to be purchased
after the 13th month, which would eliminate payments for 2
months and eliminate payments for maintenance and servicing
unless otherwise necessary.
This would reduce the price Medicare pays suppliers from
120% to 105% of the purchase pnce.
-$910 million / 5 years
Part C
Eliminate Budget-Neutrality Modification to Risk Adjusted
Payments to Medicare Advantage Plans
This provision would codify the Administration's proposed
phase-out of its budget neutral modification that undermines
the Medicare Advantage risk-adjusted payment system.
Permits true comparisons based on health status of
beneficiaries enrolled in Medicare Advantage to beneficiaries
enrolled in fee-for-service Medicare.
Ensures that underlying BBA-mandated health status based
risk adjusted payment system will produce accurate payments
for a beneficiary with a particular health status who enrolls
in Medicare Advantage.
This provision is consistent with a June 2005 MedPAC
recommendation.
-$6.460 billion / 5 years
Eliminate Regional Medicare Advantage PPO Stabilization Fund
Repeals fund established to promote plan entry and
retention in Medicare Advantage program.
In an August 2005 Fact Sheet on the Medicare Advantage
program, the Centers for Medicare and Medicaid Services
indicated that the program has ``stabilized and flourished.''
As of January 1, 2006, regional Medicare Advantage plans
will be available in 21 out of the 26 Medicare Advantage
regions, indicating that plans are experiencing fewer than
anticipated challenges in entering regions.
Does not affect any other provisions to promote regional
PPOs such as risk-corridors, local PPO moratorium, essential
hospital fund, and network requirements.
This provision is consistent with a June 2005 MedPAC
recommendation.
-$5.440 billion / 5 years
OTHER MEDICARE
Pay for Performance
Requires the Secretary of Health and Human Services to
develop and implement value-based purchasing programs under
Medicare for acute-care hospitals, physicians and
practitioners, Medicare Advantage
[[Page S12072]]
plans, end-stage renal disease (ESRD) providers, home health
agencies, and to take initial steps toward value-based
purchasing for skilled nursing facilities.
Outlines the process and requirements for the development,
implementation, and updating of a Quality Measurement System
that will guide reporting and value-based purchasing
programs.
Principles for Medicare value-based purchasing include:
Building upon existing system and involving all relevant
stakeholders.
A two-phased implementation that first ties Medicare
reimbursement updates to the reporting of quality measures,
and then creates a quality pool to reward providers for
meeting certain thresholds of quality improvement and quality
attainment.
The amount of Medicare payments in the quality pool will
start at 1 % of provider payments scaling up to 2% over a 5-
year period.
Increased transparency and mandatory reporting of quality
data to ensure that beneficiaries and the public have access
to information to help them make informed health care
decisions.
-$4.510 billion / 5 years
Subtotal- Medicare Spending Reductions: -$18.637 billion /
5 years
Subtotal--Gross Spending Reductions: -$26.644 billion / 5
years
PROGRAM IMPROVEMENTS
MEDICAID AND SCHIP
IMPROVED FRAUD AND ABUSE OVERSIGHT
Health Care Fraud and Abuse Control Program/Medicaid Integrity Fund
Under current law, funds from the Health Care Fraud and
Abuse Control (HCFAC) account are used by federal agencies in
their efforts to control fraud and abuse in health care
programs. Funds go to the HHS OIG and to the Department of
Justice. The additional funding provided would be used to
continue efforts to find erroneous and fraudulent uses of
Medicaid and SCHIP funding and provide an increase in audits
and evaluations of state Medicaid programs.
$403 million/5 years
PRESERVING AND IMPROVING ACCESS TO HEALTH CARE
Family Opportunity Act
Under current law, parents of severely disabled children
who work lose Medicaid eligibility for their disabled
children if they have income and resources above the poverty
level.
The Family Opportunity Act, which has broad bipartisan
support, would allow these parents to go to work and earn
above-poverty wages while maintaining health care for their
disabled children.
Key Provisions:
Medicaid ``buy-in'' for disabled children whose family
income or resources are at or below 300% of the poverty level
($58,050.00 for a family of four).
Funds for demonstration projects in 10 states to provide
services to Medicaid enrolled children with psychiatric
disabilities at home, instead of in an institution.
Funds for information and outreach centers to serve
families with disabled children.
Immediate access to Medicaid coverage for those children
who are ``presumed eligible'' for Supplemental Security
Income (SSI).
$872 million/5 years
Addressing SCHIP Shortfalls
Under current law, CMS projects that as many as 23 states
are projected to experience funding shortfalls in their SCHIP
programs over the next 2 years.
Consistent with the SCHIP proposal in the President's
budget, this provision addresses SCHIP shortfalls by
redistributing a portion of these balances from states that
have SCHIP surpluses to states that have SCHIP shortfalls.
Permits states to use up to 10% of their 2006 and 2007
allotments for outreach activities.
Prohibits future SCHIP waivers for non-pregnant adults.
Provides that redistributed funds for shortfall states must
be spent on targeted low-income children in order to receive
the enhanced SCHIP-match. States that wish to use the
redistributed funds for individuals other than targeted low-
income children may do so but at their regular FMAP matching
rate.
Continues authority for certain ``qualifying states'' to
use funds for Medicaid expenses. Qualifying states include:
Connecticut, Hawaii, Maryland, Minnesota, New Hampshire, New
Mexico, Rhode Island, Tennessee, Vermont, Washington and
Wisconsin. Public Laws #108-74 and 108-27 allowed qualifying
states to use up to 20% of the state's 1998-2001 allotments
to pay for Medicaid eligible children above 150% FPL that
were part of a state's Medicaid expansion prior to enactment
of SCHIP. The 1998-2000 allotments ``expired'' in 2004. The
2001 allotments ``expired'' at the end of the FY 2005.
Therefore, currently, no spending under these provisions is
permitted.
``Covering Kids'' which provides $25 million for fiscal
year 2006 for grants to eligible entities to conduct outreach
and enrollment efforts designed to increase enrollment and
participation of eligible children under Medicaid and SCHIP
and promote understanding of the importance of health
insurance coverage for prenatal care and children.
$205 million/5 years
Money Follows the Person Demonstration
Provides for demonstration projects to encourage community
based services to individuals with disabilities rather than
institutional long-term care services.
This provision offers states a financial incentive to
expand the number of individuals who can receive home and
community-based services by providing an enhanced federal
match rate for the cost of service expenditures for one year
for individuals who are relocating from an institution into
the community.
Authorizes grants by HHS to states for the following
purposes:
To increase the use of home and community based services,
rather than institutional services.
Eliminate barriers that prevent or restrict the flexible
use of Medicaid funds to enable individuals to receive
support for appropriate and necessary long term services in
the settings of their choice.
To increase the ability of the State Medicaid program to
assure home and community based long term care services to
eligible individuals, who choose to transition from an
institution to a community setting.
Ensure that procedures are in place to provide quality
assurance for eligible individuals receiving Medicaid home
and community based long term care services and to provide
for continuous quality improvement in such services.
$105 million/5 years
IMPROVED LONG TERM CARE OPTIONS
Expand Long-Term Care Partnership Program
Encourages the purchase of private long term care insurance
by providing persons who have exhausted the benefits of a
private long-term care insurance policy to access Medicaid
under different means-testing requirements. This proposal is
designed to result in savings to the Medicaid program by
delaying the need for Medicaid coverage of long term care
expenses.
Repeals the federal legislative ban on new long-term care
partnership programs to allow any state in the nation the
option of implementing a long term care insurance partnership
program.
Establishes consumer-protections consistent with National
Association of insurance Commissioner recommendations.
Requires the Secretary, in consultation with stakeholders,
to develop standards to permit reciprocity of policies across
states.
Establishes a national clearinghouse for information on
long-term care insurance policies.
$10 million/5 years
Other Provisions
Targeted temporary relief to certain parishes in Louisiana,
counties in Mississippi and Alabama, and the state of Alaska
FMAP (Sec 6032). This section reimburses states at 100% FMAP
for any claims paid on behalf of an individual living in a
specific parish in Louisiana or county in Mississippi and
Alabama the week of August 28, 2005. This increase is
temporary, beginning on August 28, 2005 and ending on May 15,
2006. It also creates a statutory floor for the FMAP for the
state of Alaska at the 2005 FMAP level for 2006 and 2007.
$1.940 billion/5 years
Provides an adjustment to the District of Columbia's DSH
allotment reflective of actual audited base year costs that
all other Medicaid programs now use in their computation.
$100 million/5 years
Provides for podiatrists to be treated as physicians, as is
the case under Medicare. The provision expands the definition
of ``physician services'' under Medicaid to include a doctor
of podiatric medicine with respect to the functions such a
person is legally authorized to perform by the state in which
he/she practices. States would now be required to cover the
medical services of podiatrists.
$55 million/5 years
Provides for a 10-state demonstration project under which
institutions for mental diseases not publicly owned or
operated, would be eligible to receive reimbursement for
Medicaid eligible recipients between the ages of 21-64 for
the sole purpose of stabilizing an emergency medical
condition.
$30 million/5 years
Subtotal Medicaid Spending: $3.722 billion/5 years
MEDICARE
PART A
Rehabilitation 75% Rule
Sets implementation of the ``75% rule,'' which is a
criteria used to determine whether a hospital or unit
qualifies as an inpatient rehabilitation facility (IRF) and
thus for higher Medicare payments, at the 50% level through
June 30, 2007.
Allows facilities more time to comply with the 50%
threshold. Those IRFs that failed to meet the 50% compliance
will be given an additional 6 months to meet this threshold.
If after 6 months the facility remains noncompliant, the
Secretary would revoke the facility's IRF status and collect
any overpayments.
Calls for a study to identify and review the types of
patients, medical conditions and rehabilitation providers
that are unable to meet CMS' qualifications. Establishes a
rehabilitation advisory council to provide advice and
recommendations on the coverage of rehabilitation services
under Medicare.
$105 million/5 years
Extend and Improve Medicare Dependent Hospital (MDH) Program
Extends the Medicare Dependent Hospital (MDH) program,
which was created to provide financial protections to certain
rural
[[Page S12073]]
hospitals with less than 100 beds that have a greater than 60
percent share of Medicare patients, through 2011.
Allows hospitals the option to use 2002 base year costs, in
addition to base year costs from 1982 or 1987.
Improves the blended payment rate by raising it from 50
percent to 75 percent of the difference between prospective
payment system (PPS) payments and cost-based payments.
Removes the 12 percent disproportionate share hospital
(DSH) payment cap for qualifying hospitals.
$14 million/5 years
PART B
Short Term Physician Payment Update
Physician payment updates are determined using the
Sustainable Growth Rate (SGR) formula, which is based on four
factors: .
Medicare Economic Index (MEI)
Number of beneficiaries in Fee-For-Service Medicare
Expenditures due to changes in law or regulations
Growth in real GDP per capita.
Actual spending has been higher than spending projected by
the SGR formula, which will result in negative updates for
the next six years.
Eliminating the SGR formula and adjusting payments for
inflation would cost $154.5 billion over 10 years.
This provision would provide physicians with a positive
1.0% update in 2006.
$10.8 billion/5 years
Therapy Cap Moratorium
In 1997, the BBA created a financial cap on the amount of
money Medicare could spend per beneficiary for outpatient
therapy services.
Two caps were set at $1,500 indexed to the Medicare
Economic Index (MEI); one for physical therapy and speech
language therapy, the other for occupational therapy.
Since 1999, Congress has twice enacted a moratorium on
implementation of the therapy caps. The moratorium is set to
expire in 2006.
This provision would extend the moratorium for one year.
$710 million/5 years
Hold Harmless Payments for Rural Hospital Outpatient Departments
MedPAC has stated that rural hospitals' financial
performance under the outpatient prospective payment system
(OPPS) is expected to decline by 2006.
Hold harmless payments are targeted to rural sole community
hospitals and other rural hospitals with 100 or fewer beds.
The hold harmless policy should be extended because it
targets the specific rural hospitals most affected.
This provision would extend hold-harmless payments under
the OPPS through calendar year 2006.
This provision is consistent with a March 2005 MedPAC
recommendation.
$170 million/5 years
ESRD Composite Update
MedPAC has found beneficiary access to care is good,
provider capacity is increasing, quality is improving, and
provider access to capital is good.
This provision would provide a 1.6% increase in the
composite rate update for 2006, consistent with the update
provided in the MMA.
ESRD facilities will be paid for quality and efficiency
starting in 2007 under the Medicare Value-Based Purchasing
Act.
$520 million/5 years
Expand Availability of PACE in Rural Areas
Establishes site development grants and a technical
assistance program for up to 15 PACE sites in rural areas.
Creates a fund to provide partial reimbursement for
incurred expenditures above a certain level.
$37 million/5 years
International Volunteers
There are several older Americans that volunteer overseas
for programs sponsored by 501(c)(3) organizations.
During this time, volunteers are required to purchase
insurance that provides international health benefits.
Volunteers are also required to pay Medicare Part B
premiums in order to avoid future penalties and delayed
enrollment when they return to the United States.
This provision would waive the Part B late enrollment
penalty and would establish a special enrollment period for
these individuals upon their return to the United States.
$20 million/5 years
Medicare Payment Adjustment to Federal Qualified Health Centers
Federal Qualified Health Centers (FQHCs) are located in
areas where care is needed but scarce.
This provision would allow FQHCs to provide diabetes
outpatient self-management training services and medical
nutrition therapy services.
A health care professional (including registered dietician
or nutrition professional) under contract with the center can
now provide services in an FQHC.
This provision would also allow FQHCs to be eligible for
Health Care for the Homeless grants.
$40 million/5 years
Subtotal Medicare Spending: $12.916 billion/5 years .
Subtotal--Gross Spending: $16.638 billion/5 years
Package Totals
Medicaid: Savings: -$8.007 billion;
Spending: $3.722 billion; Net: -$4.285 billion (Figures are
over five years.)
Medicare: Savings: -$18.637 billion; Spending: $12.916
billion; Net: -$5.721 billion.
Package Net Savings: -$10.006 billion over five years.
Mr. GRASSLEY. Mr. President, I yield the floor. I suggest the absence
of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. GRASSLEY. Mr. President, I ask unanimous consent the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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