[Congressional Record Volume 153, Number 190 (Wednesday, December 12, 2007)]
[Senate]
[Pages S15248-S15250]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself, Mrs. Dole, Mr. Durbin, Mrs. 
        Feinstein, Ms. Stabenow, Mr. Salazar, Mr. Kerry, Mr. Brown, 
        Mrs. McCaskill, Mr. Schumer, Mrs. Boxer, Mr. Levin, Mr. Bayh, 
        Mr. Burr, Mr. Martinez, Mrs. Clinton, Mr. Pryor, Mr. Leahy, 
        Mrs. Lincoln, Mrs. Hutchison, Mr. Chambliss, Mr. Rockefeller, 
        Mr. Isakson, and Mr. Bond):
  S. 2460. A bill to extend by one year the moratorium on 
implementation of a rule relating to the Federal-State financial 
partnership under Medicaid and the State Children's Health Insurance 
Program and on finalization of a rule regarding graduate medical 
education under Medicaid and to include a moratorium on the 
finalization of the outpatient Medicaid rule making similar changes; to 
the Committee on Finance.
  Mr. BINGAMAN. Mr. President, I rise today with my colleagues Senators 
Dole, Durbin, Feinstein, Stabenow, Salazar, Kerry, Brown, McCaskill, 
Schumer, Boxer, Levin, Bayh, Burr, Martinez, Clinton, Pryor, Leahy, 
Lincoln, Hutchison, Chambliss, Rockefeller, and Isakson to introduce 
legislation vitally important to the ability of our States to continue 
to fund their Medicaid programs and ensure access to health care 
services for low-income constituents. The legislation would extend the 
existing 1 year moratorium for an additional year on a

[[Page S15249]]

CMS rule limiting Medicaid payments to public and teaching hospitals as 
well as the ability of States to fund critical healthcare programs for 
rural residents such as through Sole Community Hospital programs.
  On January 18, 2007, the Centers for Medicare and Medicaid Services, 
CMS, published a proposed rule entitled ``Medicaid Program; Cost Limit 
for Providers Operated by Units of Government and Provisions to Ensure 
the Integrity of Federal- State-Financial Partnership'' that would make 
sweeping changes to public and other safety net provider payment and 
financing arrangements with State Medicaid programs. The proposed rule 
would: impose a cost limit on Medicaid payments to public and other 
safety net providers; impose a new Federal definition of public 
provider status; and, greatly restrict the sources of non-Federal share 
funding through intergovernmental transfers, IGTs, and certified public 
expenditures, CPEs.
  National advocates report that over 400 comment letters were 
submitted to CMS on the proposed rule, none of which expressed support 
for the rule and the overall majority of which called for its 
withdrawal. In addition, a budget neutral reserve fund to block this 
regulation was introduced by me and approved by the Senate this year.
  CMS subsequently issued an additional regulation that would force 
billions of dollars in additional Medicaid payment reductions to 
teaching hospitals, many of whom are public hospitals, hampering the 
ability of those providers to provide essential services including the 
education of the next generation of medical professionals despite a 
shortage of medical professionals. The proposed regulations would cut 
at least $5 billion in Medicaid funding for safety net hospitals 
nationwide over 5 years--weakening their effectiveness for all of us 
and jeopardizing the health of millions of vulnerable children and 
families.
  In response to these rules, 66 Senators and 283 Members of the House 
have gone on record in opposition to the rules since they were released 
earlier this year. This includes a majority of the Finance Committee 
including Senators: Roberts, Snowe, Smith, Rockefeller, Kerry, 
Bingaman, Salazar, Stabenow, Wyden, Lincoln, Schumer, and Cantwell.
  Furthermore, Congress showed its strong opposition to the rules by 
including a one-year moratorium in the recent supplemental 
appropriations bill, P.L. 110-28. The moratorium prohibits 
implementation of the rules for one year from the date of enactment of 
the supplemental. The supplemental was negotiated extensively by 
Congress and the White House and a deal was reached on May 23. On May 
25--the day the President signed the supplemental, and the moratorium, 
into law--the administration put the final rule on display and 
published it in the Federal Register on May 29. The most damaging 
components of the proposed rule remain in the final rule, including 
Medicaid cuts limiting public and other safety net providers to cost.
  Since then, CMS has issued a third rule of major concern to public 
and teaching hospitals. On September 28, 2007, CMS released a new 
proposed rule governing the calculation of the Medicaid outpatient 
upper payment limit, UPL. Many believe this action was in violation of 
the current moratorium enacted by Congress. For example, the outpatient 
regulation would exclude GME costs from the calculation of the Medicaid 
Outpatient UPL for all hospitals and would also eliminate many 
ancillary services from the UPL calculation for all-inclusive rate 
providers.
  Major Medicaid reforms require a congressional role. By rushing to 
publish a final regulation, CMS has disregarded congressional 
opposition and attempted to usurp Congress's role. In addition, the 
status quo is now the administration's new policy, not what existed 
when Congress was in the process of enacting the moratorium. CMS's 
action requires states to prepare for implementation of the regulation 
and expend administrative resources to do so--all of this before 
Congress has the opportunity to address the key policy issues contained 
in the regulation.
  I urge my colleagues to join me in supporting this important 
legislation.
  Mr. President, I ask unanimous consent that the text of the bill and 
letters of support be printed in the Record.
  There being no objection, the material was ordered to printed in the 
Record, as follows:

                                S. 2460

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. EXTENSION OF MORATORIUM ON IMPLEMENTATION OF RULE 
                   RELATING TO THE FEDERAL-STATE FINANCIAL 
                   PARTNERSHIP UNDER MEDICAID AND SCHIP AND ON 
                   FINALIZATION OF A RULE RELATING TO THE 
                   TREATMENT OF GRADUATE MEDICAL EDUCATION UNDER 
                   MEDICAID; MORATORIUM ON THE FINALIZATION OF THE 
                   OUTPATIENT MEDICAID RULE MAKING SIMILAR CHANGE.

       (a) Findings.--Congress makes the following findings:
       (1) A proposed rule was published on January 18, 2007, on 
     pages 2236 through 2248 of volume 72, Federal Register, and a 
     rule purporting to finalize that rule was published on May 
     29, 2007, on pages 29748 through 29836 of volume 72, Federal 
     Register (relating to parts 433, 447, and 457 of title 42, 
     Code of Federal Regulations). This rule would significantly 
     change the Federal-State financial partnership under the 
     Medicaid and the State Children's Health Insurance Programs 
     by--
       (A) imposing a cost limit on payments made under such 
     programs to governmentally operated providers;
       (B) limiting the permissible sources of the non-Federal 
     shares required under such programs and the types of entities 
     permitted to contribute to such shares; and
       (C) imposing new requirements on participating providers 
     and States under such programs.
       (2) A proposed rule was published on May 23, 2007, on pages 
     28930 through 28936 of volume 72, Federal Register (relating 
     to parts 438 and 447 of title 42, Code of Federal 
     Regulations) that would significantly change the scope of 
     permissible payments under Medicaid by removing the ability 
     for States to make payments related to graduate medical 
     education.
       (3) Permitting these rules to take effect would drastically 
     alter the Federal-State financial partnership in Medicaid and 
     the State Children's Health Insurance Programs, undermine the 
     discretion traditionally accorded States, and have a negative 
     impact on States, providers, and beneficiaries in the 
     following manner:
       (A) Implementation of the rule regarding the Federal-State 
     financial partnership would force billions of dollars of 
     payment reductions, thus hampering the ability of impacted 
     providers to provide essential services including allowing 
     those providers to be ready and available for emergency 
     situations and to provide care to the increasing numbers of 
     uninsured.
       (B) Implementation of the rule regarding graduate medical 
     education would force billions of dollars in payment 
     reductions to teaching hospitals, thus hampering the ability 
     of those providers to provide essential services including 
     the education of the next generation of medical professionals 
     despite a shortage of medical professionals.
       (4) By including a one-year moratorium in the U.S. Troop 
     Readiness, Veterans' Care, Katrina Recovery, and Iraq 
     Accountability Appropriations Act of 2007, Congress intended 
     to forestall administrative action to allow itself time to 
     assess the proposals and consider alternatives that would not 
     negatively impact States, providers, and beneficiaries.
       (5) After Congressional approval of the moratorium 
     contained in the U.S. Troop Readiness, Veterans' Care, 
     Katrina Recovery, and Iraq Accountability Appropriations Act 
     of 2007, the Centers for Medicare & Medicaid Services on May 
     25, 2007, submitted for publication its final rule, which was 
     not significantly different from the January proposed 
     regulation.
       (6) The publication of a final rule in May regarding the 
     Federal-State financial partnership was not anticipated by 
     Congress and accelerates the negative impact on States, 
     providers, and beneficiaries, thus undermining the intent of 
     the moratorium passed by Congress.
       (7) The publication of a proposed rule in May regarding 
     graduate medical education was not anticipated by Congress 
     and undermines the intent of the moratorium passed by 
     Congress.
       (8) A proposed rule was published on September 28, 2007, on 
     pages 55158 through 55166 of volume 72, Federal Register 
     (relating to parts 440 and 447 of title 42, Code of Federal 
     Regulations) that would significantly change the scope of 
     permissible payments under Medicaid by redefining outpatient 
     hospital services and dictating methodologies for calculation 
     of the outpatient services upper payment limit.
       (9) Congress did not anticipate continued changes after the 
     moratorium to reduce state flexibility to make adequate 
     Medicaid payments.
       (10) Expansion and extension of the moratorium is necessary 
     to effectuate Congressional intent.
       (b) Extension of Prohibition.--Section 7002(a)(1) of the 
     U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and 
     Iraq Accountability Appropriations Act of 2007 (Public Law 
     110-28) is amended--
       (1) by striking ``1 year'' and inserting ``2 years'',

[[Page S15250]]

       (2) by inserting ``or (D)'' after ``described in 
     subparagraph (A)'' in subparagraph (B);
       (3) by striking ``or'' at the end of subparagraph (B);
       (4) by striking the period at the end of subparagraph (C) 
     and inserting ``; or''; and
       (5) by inserting at the end the following:
       ``(D) finalize or otherwise implement provisions contained 
     in the proposed rule published on September 28, 2007, on 
     pages 55158 through 55166 of volume 72, Federal Register 
     (relating to parts 440 and 447 of title 42, Code of Federal 
     Regulations).''.
                                  ____



                                                  U.S. Senate,

                                   Washington, DC, March 16, 2007.
     Hon. Michael O. Leavitt,
     Secretary, U.S. Department of Health and Human Services, 
         Washington, DC.
       Dear Secretary Leavitt: We are writing to express our 
     strong opposition to the Medicaid changes contained in the 
     Proposed Rule CMS-2258-P, which was issued on January 18, 
     2007, As you know, bipartisan objections to the changes 
     called for in this proposed rule have been raised by Congress 
     and our nation's Governors since 2005. We urge you to 
     withdraw this rule immediately.
       The Medicaid program is the foundation of our health care 
     safety net. As our nation's largest insurer, it provides 
     access to meaningful and affordable health care for more than 
     50 million people. It also keeps hospitals, doctors, nursing 
     homes, and clinics operating in our communities. Without this 
     critical source of funding, many providers would not be able 
     to afford to offer high-quality health care, especially in 
     rural areas.
       Since its enactment in 1965, Medicaid has been a federal-
     state partnership. The federal government has worked together 
     with the states to ensure health care coverage and access for 
     the most vulnerable Americans--children, pregnant women, the 
     elderly and the disabled. This shared responsibility has been 
     paramount, with states implementing the program within broad 
     federal guidelines.
       The new proposed rule would usurp state flexibility and 
     fundamentally alter the nature of state funding for the 
     Medicaid program. We are particularly concerned with three 
     aspects of the proposed rule: (1) the new definition of a 
     ``unit of government;'' (2) the restrictions placed on 
     states' ability to fund their share of Medicaid expenditures; 
     and (3) the ``cost'' limit imposed on Medicaid provider 
     payments. We are also alarmed by CMS' refusal to provide any 
     state-specific data on the impact of this proposed rule, 
     which we believe could be much greater than a $5 billion 
     reduction in federal Medicaid spending.
       The new definition of a ``unit of government'' contained in 
     the proposed rule is at odds with the definition adopted by 
     Congress in Title XIX (Section 1903(w)(7)(G)), as described 
     in House Report 102-310. The proposed rule adopts a federal 
     definition in which only those governmental entities with 
     taxing authority would be deemed governmental enough to 
     contribute to the non-federal share of Medicaid expenditures. 
     This is not what Congress intended. The statutory definition 
     of a ``unit of government'' respects the fundamental right of 
     states to establish subdivisions to suit their needs and best 
     carry out governmental functions. In the case of Medicaid, 
     federal law grants states the authority and flexibility to 
     provide health care through the most efficient and effective 
     methods possible. In most states, this means that state 
     university hospitals, public nursing homes, school-based 
     health centers, and other providers become an essential part 
     of the governmental health care infrastructure. We believe 
     the narrow definition of ``unit of government'' proposed by 
     this new rule would lead to substantial cuts for 
     public providers and limit access to the vital health care 
     services that millions of Americans depend upon.
       Similarly, CMS is also singling out public providers by 
     restricting the type of public funds that can be used to 
     finance the state share of Medicaid expenditures. Under the 
     proposed rule, only funding derived from state and local 
     taxes would be allowed to fund the state share. By your 
     agency's own admission, inappropriate federal matching 
     arrangements have been largely eliminated over the last three 
     years through CMS' oversight activities. Given these 
     activities, it is unclear why the new restriction on public 
     funds is necessary or how it will further the overall efforts 
     of CMS to reduce Medicaid fraud and abuse.
       Furthermore, this aspect of the proposed rule also seems to 
     contradict federal law. Section 1902(a)(2) of the Social 
     Security Act allows states to rely on ``local sources'' for 
     up to 60 percent of the non-federal share of program 
     expenditures. Current law does not limit the types of local 
     sources that may be used to only those sources derived from 
     tax revenue. Such a policy shift would hamper states 
     abilities to fund their Medicaid programs, and we question 
     CMS' authority to pursue such a far-reaching policy change.
       Finally, we are concerned about the cost limit imposed on 
     public providers by this proposed rule. Under current 
     regulations, states are permitted to provide Medicaid 
     reimbursement to hospitals and other providers up to the 
     amount that would be payable using Medicare payment policies. 
     The proposed rule would reduce that limit to Medicaid costs 
     for governmental providers only, with no concurrent change 
     for private providers. Public providers, who 
     disproportionately serve the uninsured, should not be subject 
     to a more restrictive cost limit than private providers. Such 
     a reimbursement policy would have an adverse impact on 
     system-wide health care needs, such as trauma care, school-
     based health care and medical education.
       We understand and respect the efforts of CMS to ensure that 
     the Medicaid program is operating on a fiscally sound and 
     responsible basis; however, we believe the proposed rule has 
     gone far beyond what is necessary to secure fiscal integrity. 
     Instead, the proposed rule would undermine both the federal-
     state partnership and the shared goal of ensuring health care 
     coverage and access, which are the hallmarks of the Medicaid 
     program.
       While we are willing to work with you and CMS to strengthen 
     Medicaid, fundamental changes in Medicaid's financing and 
     payment mechanisms as envisioned in this rule can only be 
     adopted by Congress. For this reason, we request that you 
     withdraw the regulation.
       We thank you for your prompt consideration of and attention 
     to this request. We also ask that our comments be placed in 
     the public record of the rulemaking.
           Sincerely,
         Senators John D. Rockefeller, IV, Gordon H. Smith, Jeff 
           Bingaman, Richard Durbin, John Kerry, Barack Obama, 
           Hillary Rodham Clinton, Barbara Boxer, Edward M. 
           Kennedy, Susan Collins, Johnny Isakson, Elizabeth Dole, 
           Kay Bailey Hutchison, Thad Cochran, Pete Domenici, 
           Richard Shelby.
         Senators Ken Salazar, Dianne Feinstein, Bill Nelson, Jim 
           Webb, Debbie Stabenow, Robert Menendez, Evan Bayh, 
           Olympia Snowe, Saxby Chambliss, Richard Burr, Wayne 
           Allard, Christopher Bond, Pat Roberts, John Warner.
         Senators Ron Wyden, Carl Levin, Joseph Lieberman, Sherrod 
           Brown, Charles Schumer, Harry Reid, Joseph Biden, 
           Bernard Sanders, Blanche Lincoln, Mark Pryor, Frank 
           Lautenberg, Russell Feingold, Maria Cantwell, Tom 
           Harkin.
         Senators Daniel Akaka, Barbara Mikulski, Christopher 
           Dodd, Patrick Leahy, Patty Murray, Arlen Specter, 
           Daniel Inouye, Amy Klobuchar, Benjamin Cardin, Claire 
           McCaskill, Jon Tester, Herb Kohl, Robert Casey, Jr., 
           Mary Landrieu, Norm Coleman, Sheldon Whitehouse.
                                 ______