[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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