[Congressional Record (Bound Edition), Volume 145 (1999), Part 12]
[Senate]
[Pages 16384-16385]
[From the U.S. Government Publishing Office, www.gpo.gov]



                        PATIENTS' BILL OF RIGHTS

  Mr. GRAHAM. Mr. President, I come to the floor to voice my strong 
objection to hidden provisions which were inserted in the so-called 
last amendment during the consideration of the HMO Patients' Bill of 
Rights.
  Last night, at approximately 8 o'clock, an amendment was offered 
which had over 250 pages. It had been represented throughout the debate 
that this amendment would be of a corrective, technical nature. There 
were several statements made on the floor that alterations, which had 
been agreed to verbally, would be incorporated in that final amendment. 
What we find is that quite a different thing has occurred.
  First, I have found that several of the areas in which I had clear 
representations that refinements would be made were not made. In the 
area, for instance, of the emergency room, one of the key issues we 
spent considerable time debating had to do with poststabilization 
coverage. It was my understanding we had arrived at an agreement as to 
how to correct the language which all parties had appeared to agree 
would be an undue restriction on the rights of patients to receive 
proper care in an emergency room. I am sad to have to report that those 
changes were not incorporated in the final version of the legislation.
  I am even more offended by the fact that while the changes we thought 
would be there were, at least in this instance, not obtained, but more 
so there were extraneous issues inserted, issues that had never been 
considered on the floor, never considered by a committee, never debated 
and unknown until they were unearthed, in the case of the issue I was 
to raise on page 252 and 253 of the so-called manager's amendment.
  What is the provision I am so concerned about? It is section 901, 
``Medicare Competitive Pricing Demonstration Project.'' If you want to 
get the full flavor of this, let me just quote:

       (a) Finding.--The Senate finds that implementing 
     competitive pricing in the medicare program . . . of the 
     Social Security Act is an important goal.

  I could not agree more with that statement. So that would cause your 
heart to beat, your level of anticipation to be excited as you want to 
go on to what is the next paragraph that will implement that goal.
  What is the next paragraph? It says: Notwithstanding what has been 
said above, the Secretary of Health and Human Services may not 
implement the Medicare demonstration project on competitive bidding; 
and, furthermore, notwithstanding any other provision, the Secretary of 
Health and Human Services may not implement any other competitive 
pricing project before January 1, 2001.
  An absolute outrage.
  Let me give you a little history of this.
  When the Medicare program began to move beyond fee for service and to 
accept modern ways of health care, it did so in a rather cumbersome 
way. It said that we will reimburse a health maintenance organization 
on a formula; and the formula is 95 percent of the fee for service 
payments to Medicare beneficiaries within that community.
  That may have some superficial rationale, but let me tell you what 
really happens.
  First, if you happen to be in a community that has, for instance, a 
large teaching hospital or other complex medical center that serves a 
larger region, you are going to have high fee-for-service payments 
because of the nature of the health care that is delivered in that 
community. I would imagine that Rochester, MN, is a community that has 
relatively high fee for service because it has that great Mayo Clinic. 
I can tell you that Miami, FL, has high fee-for-service charges because 
it has a number of tertiary care hospitals. So because of that 
aberration that has nothing to do with what an HMO should be 
reimbursed, HMOs in those communities get 95 percent of fee for 
service.
  There were some modifications made of that in the 1997 Balanced 
Budget Act, but the basic principle of a formula-based reimbursement 
which relates back to fee for service is still largely in place.
  There is a second sequence of that in that we have very erratic fee 
levels for HMOs. The community that is immediately adjacent to the high 
fee-for-service community can have very low fee-for-service medicine 
delivered there, and therefore the HMOs get a much lower fee.
  In my State, the differential from the highest to the lowest 
community is probably on the order of at least 100 percent from the 
highest to the lowest community that has an HMO program.
  What is the consequence of that? The consequence of that is reported 
in today's Washington Post on page A-2. I ask unanimous consent to have 
that article printed in the Record immediately following my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 1.)
  Mr. GRAHAM. It states: ``HMOs Will Drop 327,000 Medicare 
Beneficiaries Next Year.''
  We have just spent 4 days of debate on trying to avoid having people 
dropped from their HMOs, and we now have an announcement that just in 
the Medicare program alone--the Medicare program has 39 million 
participants, and approximately 4 million of those are in HMOs--out of 
that relatively small number of HMO beneficiaries, 327,000 are being 
dropped.
  What does it say? It says that of those who are being dropped, 79,000 
will be unable to enroll in another HMO because there are no other HMOs 
in their area.
  When the industry was asked, why is this happening, their answer was: 
The managed care industry says HMOs are pulling out of Medicare because 
the Government isn't paying them enough.
  You would think the industry would therefore want to have an 
alternative system that would provide adequate reimbursement, but not 
excessive reimbursement, and that the place to achieve that is the 
marketplace.
  We heard a lot of talk this week about how we ought to have deference 
to the marketplace. I think what the HMOs want is to have free 
enterprise when it relates to service to the patients, and they want to 
have socialism when it relates to how much revenue they get paid.
  So in 1997, in the face of all of these factors, the Congress, by a 
very strong vote--I think it was 76 votes in the Senate--passed the 
Balanced Budget Act which contained a provision that would actually 
start HMOs toward a competitive bidding process--the same process, 
incidentally, used by many other large HMO users, State and local 
governments, and in the private sector.
  It was started very modestly, with a demonstration plan so that we 
could learn about what was involved in competitive bidding for HMOs. I, 
frankly, thought that was excessive caution, that we could have taken 
advantage of

[[Page 16385]]

the experience that was already available by many other large users, 
but the thought was, let's go slow, let's do a demonstration project.
  So since 1997, HCFA, the Federal agency with responsibility for 
managing Medicare, has been organizing this demonstration project. They 
selected Kansas City and Phoenix as the two sites for the demonstration 
project. They are about to start, and all of a sudden, on the 252nd 
page of what is supposed to be a corrective manager's amendment, we not 
only bar the demonstration projects that are about to commence but bar 
any other demonstration projects that may be suggested. Yet we started 
with a finding that we support competitive bidding.
  Boy, I tell you, if this is the way they support the principle, you 
do not want them to be your parents and say they are going to give you 
good care.
  Mr. DORGAN. Will the Senator yield for a short question?
  Mr. GRAHAM. Mr. President, I ask unanimous consent for an additional 
5 minutes.
  The PRESIDING OFFICER. The Senator has 28 seconds remaining.
  Mr. GRAHAM. I ask unanimous consent for an additional 5 minutes.
  The PRESIDING OFFICER. If there is no objection.
  Without objection, it is so ordered.
  Mr. DORGAN. I want to inquire. I was unaware that that provision was 
in the package that was presented. Was the Senator from Florida aware, 
did he know of anyone else who was aware of that except perhaps the 
folks who wrote it?
  Mr. GRAHAM. We have not found anybody who was aware of it except some 
diligent soul who actually got to page 252 of the bill sometime late 
last night or this morning and discovered this. I might say, it is very 
difficult to even get copies of this amendment.
  We have known for several years that the HMO industry did not want 
competitive bidding. They like the socialized formula system that 
exists today. They are attempting in any way they can, including this 
stealth attack late last night on page 252, to kill competitive 
bidding.
  Unfortunately, just as with the issue of the HMO bill we have been 
debating, on the issue of patients versus the bottom line of the HMOs, 
the HMOs won in the Patients' Bill of Rights, and they have won again 
by killing competitive bidding. I say they have won. I think it is a 
Pyrrhic victory.
  I think the Senator from North Dakota might recall an event that, as 
Yogi Berra said, it is deja vu all over again. I think it was just 
about 3 years ago, in a similar stealth maneuver, that we discovered 
there was embedded in a large bill a provision that would have given 
the tobacco industry a $50 billion tax break. Once that issue surfaced, 
it could not stand the light of day. It slowly withered, died, and has 
not been resurrected.
  I suggest the light of day will be shed on what the HMO industry has 
done by inserting this amendment on page 252 of a technical amendment, 
the fact they are using this as a means of avoiding the rigors of the 
marketplace, they are using this to avoid a rationalization of the 
compensation that HMOs receive from their patients so that we don't 
continue this pattern of 32,700 people being dropped. I can tell my 
colleagues, most of these people are people who come from rural areas. 
They come from small towns where they don't have high fee-for-service 
medicine. The HMOs want to skim off those areas that have high fee-for-
service, where they can get a formula that results in a very rushed 
reimbursement level. They don't want to provide services, and they 
don't even want to have a competitive bidding process that can arrive 
at what the marketplace says they should be paying for those HMO 
beneficiaries in smaller communities of America.
  What we are seeing, again, is the bottom line winning out over the 
rights, the interests, and the health of patients. We are watching as 
Medicare patients are dumped on the street. Is that the HMO industry's 
idea of reform? It is my idea of a travesty, and it is one that we need 
to bring to the attention of America. And we, as the Senate, need to 
expunge this dark page, page 252, and its companion, page 253, from our 
records. I hope we will, at the first opportunity, do so.
  I thank the Chair.

                               Exhibit 1

               [From the Washington Post, July 16, 1999]

        HMOs Will Drop 327,000 Medicare Beneficiaries Next Year

                        (By David S. Hilzenrath)

       About 327,000 of the 6.2 million Medicare beneficiaries 
     nationwide who belong to HMOs will be abandoned by their 
     health plans next year, the government said yesterday.
       Of those, 79,000 will be unable to enroll in another health 
     maintenance organization as 41 health plans withdraw from the 
     federal health insurance program for the elderly and disabled 
     and another 58 stop serving Medicare beneficiaries in 
     particular areas, according to the agency that runs Medicare.
       Medicare beneficiaries who lose their HMO coverage have two 
     or three alternatives: They can choose another HMO, if one is 
     available; they can revert to standard fee-for-service 
     Medicare coverage; and they can buy ``Medigap'' policies to 
     supplement the standard benefits.
       But there is no guarantee that they can find a Medigap 
     policy with prescription drug coverage, which is one of the 
     main reasons some Medicare beneficiaries choose HMOs.
       In Maryland and Virginia, 33,000 beneficiaries--26.9 
     percent of those with HMO coveage--will lose their current 
     coverage, and 27,000 will be unable to replace it with 
     another HMO.
       An HMO industry group recently predicted that more than 
     250,000 beneficiaries would be affected by the changes, but 
     the Department of Health and Human Services released the 
     final tally based on notices HMOs were required to submit by 
     July 1.
       This year, a larger number of beneficiaries--407,000--were 
     abandoned by their HMOs, but a smaller number--51,000--were 
     left without an HMO option.
       The managed-care industry says HMOs are pulling out of 
     Medicare because the government isn't paying them enough, but 
     the government says the HMOs' actions reflect broader 
     industry trends.

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