[Congressional Record (Bound Edition), Volume 145 (1999), Part 12]
[Senate]
[Pages 17472-17476]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 17472]]

          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Ms. COLLINS (for herself, Mr. DeWine, and Mr. Smith of 
        Oregon):
  S. 1412. A bill to amend the Internal Revenue Code of 1986 to limit 
the reporting requirements regarding higher education tuition and 
related expenses, and for other purposes; to the Committee on Finance.


                 HIGHER EDUCATION REPORTING RELIEF ACT

  Ms. COLLINS. Mr. President, today I rise to introduce The Higher 
Education Reporting Relief Act of 1999, which will reduce the 
burdensome reporting requirements placed on educational institutions by 
the Hope Scholarship and Lifetime Learning Tax Credits. I am pleased to 
be joined by my principal cosponsor, Senator DeWine, who has been a 
leader on this and many other education issues, and by one colleague 
Senator Gordon Smith, who shares our concern for the reporting burden 
we are placing on our institutions of higher education.
  When Congress created the Hope Scholarship and the Lifetime Learning 
Tax Credits, it unfortunately imposed a burdensome and costly reporting 
requirement on our universities, colleges and proprietary schools. If 
implemented, the regulations will require schools to provide the IRS 
with information on their students that is difficult to obtain, 
including the taxpayer identification number of the individual who will 
actually claim the tax credit generated by the student. In many cases, 
this individual will not be the student but rather his or her parent or 
parents.
  In the words of the President of the University of Maine at 
Farmington:

       At a time when we are working to increase access and to 
     contain college costs, new government reporting requirements 
     are working against us. We will need to add personnel, not in 
     support of our educational functions but to comply with new 
     IRS regulations. This is not sensible and it is definitely 
     not in the interests of the people we are here to serve.

  I think that her words say it very well.
  Already, the University of Maine System has been forced to spend 
$112,000 to meet the Hope Scholarship reporting requirement, and the 
most burdensome requirements have not yet become mandatory. In total, 
these reporting requirements are estimated to cost America's 
postsecondary educational institutions as much as $125 million. This 
burden does not make sense.
  Last year, by passing the Collins-DeWine amendment to the Internal 
Revenue Service Restructuring and Reform Act, the Senate eliminated one 
of the most difficult reporting requirements. Our amendment freed 
schools from the requirement to report financial aid received by a 
student from a third party and held them responsible for only informing 
the IRS about financial aid that a school actually administered. In 
addition, the conference report on the act recognized the problem faced 
by schools and deferred the implementation of full reporting 
requirements until the IRS had issued final guidelines. Since the final 
reporting requirements have not been issued, this deferral remains in 
effect for tax year 1999.
  The conference report further urged the IRS to modernize its computer 
systems to include the capacity to match a dependent student's taxpayer 
identification number with the return of the person claiming the 
student as a dependent. This is the true answer to this problem. 
Unfortunately, this has not yet been done. If this step is not taken, 
institutions of higher education will be required to provide this 
burdensome & costly information to the IRS--a very difficult process.
  The legislation we introduce today will defer the implementation of 
the reporting requirements for three years--through tax year 2001. 
Further, it will require the IRS to upgrade its data processing systems 
along the lines recommended by the conference report. Today, as I 
mention, the IRS has not done this. The IRS will be required to make 
this change in time for processing tax returns for the year 2002. We 
have included this delay to give the IRS 2 years after it has been 
completed dealing with any data processing problems caused by the year 
2000 problem.
  The rationale for the Hope and the Lifetime Learning credits is to 
make postsecondary education more affordable and therefore more 
accessible. What Congress has given with one hand it has taken away in 
part with its regulatory hand. The cost of conforming to the regulatory 
requirements will inevitably result in increases in tuition, chipping 
away at the benefit of the tax credits. We need to correct this 
problem. The $112,000 that the University of Maine has already been 
forced to spend to comply with the law clearly is going to be passed on 
to the students in increased tuitions.
  Last year, Senator DeWine and I introduced the Higher Education 
Reporting Relief Act that would have completely repealed the reporting 
requirements imposed on educational institutions. Because of the cost 
of that approach, we have reworked last year's bill in a way that will 
accomplish its most important objectives while substantially reducing 
its potential costs to the Treasury. Our legislation would still leave 
a reporting burden on the schools but a much more modest and reasonable 
one that takes into account who is best equipped to report the 
information that the IRS needs to administer the law.
  I hope our colleagues will join us in supporting the Higher Education 
Reporting Relief Act of 1999.
  I yield the reminder of my time to Senator DeWine.
  The PRESIDING OFFICER. The distinguished Senator from Ohio is 
recognized.
  Mr. DeWINE. I am delighted to again join with my distinguished 
colleague from the State of Maine to try to give some relief to 
colleges and universities. As she has pointed out, this burden placed 
by Congress was unintended. I seriously doubt if anyone thought that 
aspect of the legislation through or fully understood what kind of 
costs this would impose on our colleges.
  The Senator has indicated that Maine, for example, has already been 
hit with over $100,000 in costs. We could multiply that around the 
country for every university and every college. This ultimately, of 
course, will go where all costs go, to the students and the parents.
  This is something we should deal with and we should deal with very 
quickly. I join this morning with my colleague from Maine to introduce 
the Higher Education Reporting Relief Act. As she has indicated, this 
is the second time she and I have introduced legislation to provide 
some very much needed paperwork relief for the colleges and 
universities of our country.
  A compromise version of the legislation we introduced last year was 
passed by Congress as part of the IRS reform bill. Senator Collins and 
I are here today to complete that very important work and to do what 
has remained undone from last year.
  As my colleague from Maine has indicated, what prompted the need for 
this legislation was the Hope scholarship and the Lifetime Learning tax 
credit. This legislation required colleges and universities to comply 
with very burdensome and costly regulations. Schools were required to 
issue annual reports to students and the Internal Revenue Service 
detailing the students' tuition payments. The IRS planned to use the 
reports to monitor the eligibility of students who apply for the 
education tax credits. These reporting requirements require colleges 
and universities to spend millions of dollars to implement and 
maintain.
  The legislation Senator Collins and I were able to pass last year 
eliminated many of the most burdensome reporting requirements, yet 
there are burdensome requirements that still remain law. It is time, we 
believe, to finish the job we started last year.
  Our bill will further reduce the reporting requirements by making two 
very commonsense changes to our Tax Code. First, the IRS will be 
prohibited from imposing any new reporting requirements on colleges and 
universities prior to the year 2002. No school of higher education 
should have additional IRS requirements imposed while it is still 
developing its reporting system.

[[Page 17473]]

  Second, the IRS will be required to update its computer system by the 
end of 2002. The IRS computer system would be updated to make it 
capable of matching the IRS taxpayer identification number of the 
student with the person claiming this child as a dependent. This update 
would greatly reduce the reporting burden of the Hope scholarship.
  After this update, when a parent uses the Hope scholarship, the IRS 
will be able to electronically verify that a family was qualified to 
use this deduction. This process will eliminate a great deal of costly 
and time-consuming paperwork for the colleges and universities of our 
Nation. This legislation brings a simple, fair, commonsense solution to 
the unintentional barriers created by the reporting requirements of the 
Hope scholarship and the Lifetime Learning tax credit. It would 
represent significant savings to our colleges and to our universities.
  I certainly hope the Senator from Maine and I will once again be 
successful this year, as we were last year, in bringing relief to 
institutions of higher education. I invite my colleagues in the Senate 
to join as cosponsors.
  I, once again, thank my colleague from Maine for her leadership on 
this legislation. She is a true leader in the area of education and has 
done a great deal of work in this area. This bill is one more example 
of her true understanding of how the real world works--what happens in 
our home States when Congress takes actions that, frankly, result in 
unintended consequences. The unintended consequences in this case are 
added burdens on our colleges, costs that our colleges have to bear, 
costs that our colleges then have to turn around and impose on parents 
and students.
  Again, I thank my colleague from Maine for once again being a true 
leader in this area.
                                 ______
                                 
      By Mr. DURBIN (for himself and Mr. Dorgan):
  S. 1413. A bill to amend the Internal Revenue Code of 1986 to 
increase the deduction from the estate tax for family-owned business 
interest; to the Committee on Finance.


              FAMILY-OWNED BUSINESS ESTATE TAX RELIEF ACT

  Mr. DURBIN. Mr. President, I am pleased to be joined by Senator 
Dorgan today introducing legislation which would make it easier for a 
family to hold onto a small business or farm when the head of the 
family passes away. I am especially pleased to be joined by Senator 
Dorgan on this bill as he has been a good friend and colleague for 
almost two decades and a real leader on small business issues since his 
election to Congress in 1980.
  Mr. President, ownership is a powerful force. Anyone who has gone 
from renting to owning a home will tell you how much more work you put 
in as an owner. Suddenly, problems with the plumbing or the roof that 
used to be the landlord's problems are now your problems. Developments 
in the neighborhood take on new meaning and you tend to spend more time 
working with neighbors to figure out ways to make your community 
stronger.
  The trade-off for all this work is that whatever improvements we make 
to our homes and our communities, they're ours. And if our homes 
increase in value, we get to keep the difference.
  The same is true for small businesses and family farms. Most people 
who have gone from being an employee to owning a small business or farm 
will tell you that they work harder as an owner, save more, and take 
more pride in their work. As with homeowners, small businesspeople and 
farmers are willing to put in the extra work it takes to run a business 
because they know it will come back to them in the form of more 
customers and higher profits. It is this industrious spirit that has 
defined our nation for more than two centuries and allowed us to enjoy 
a level of prosperity unknown in any other part of the world, in any 
other era of human history.
  The bill we are introducing today makes a simple change in the tax 
code that will help families pass down the legacy of business ownership 
from one generation to the next.
  Mr. President, the federal estate tax is one of the most 
controversial provisions of the tax code. Whatever the merits or 
shortcomings of the estate tax, I believe most of my colleagues would 
agree that a family should not have to sell a small business or family 
farm just because the head of the family passes away. Unfortunately, 
small business owners face a very real concern that the estate tax may 
force their families to do just that, particularly families whose 
business' principal assets consist of machinery, real estate, 
equipment, and inventory . Those families fortunate enough to avoid 
selling their business or farm are often frustrated by having to 
finance their estate tax burden at the expense of needed investments in 
the business.
  Recognizing this problem, Congress worked on a bipartisan basis in 
1997 to include provisions in the Taxpayer Relief Act which provide 
targeted assistance to estates with family-owned businesses and farms. 
Among its provisions, the Taxpayer Relief Act provided an immediate 
increase in the estate tax exemption from $600,000 to $1.3 million for 
estates with businesses that are kept in the family, and improved the 
terms for installment payments made by estates with businesses by 
reducing the interest rate from 4 percent to 2 percent for the first $1 
million in taxable value of the business in excess of the $1.3 million 
exemption.
  The bill that Senator Dorgan and I are introducing today builds on 
the 1997 Taxpayer Relief Act by simply doubling the $1.3 million 
exemption for family-owned businesses and farms to $2.6 million. This 
new level would mean that a typical business with up to 25 employees 
would face no estate tax liability if the business is kept in the 
family after the owner dies. Somewhat larger businesses would enjoy a 
significant reduction in their estate tax burden.
  Mr. President, we should be doing what we can to promote small 
business and farm ownership in America. This bill does just that by 
simply making it easier for families to continue their tradition of 
small business ownership. I urge all my colleagues to join Senator 
Dorgan and me in supporting this legislation.
  Mr. President, I ask unanimous consent that this bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1413

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

     SECTIOIN 1. INCREASE IN ESTATE TAX DEDUCTION FOR FAMILY-OWNED 
                   BUSINESS INTEREST.

       (a) In General.--Section 2057(a)(2) of the Internal Revenue 
     Code of 1986 (relating to maximum deduction) is amended by 
     striking ``$675,000'' and inserting ``$1,975,000''.
       (b) Conforming Amendments.--Section 2057(a)(3)(B) of the 
     Internal Revenue Code of 1986 (relating to coordination with 
     unified credit) is amended by striking ``$675,000'' each 
     place it appears in the text and heading and inserting 
     ``$1,975,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.

  Mr. DORGAN. Mr. President, today I'm pleased to join Senator Durbin 
in introducing estate tax relief legislation to boost immediately to 
$2.6 million the amount of family business assets that can be 
transferred to the next generation without loading up that family 
business with a large tax debt. I feel strongly that we must prevent 
our estate tax laws from hindering the transfer of family farms, 
ranches and other small businesses to the next generation of family 
members who would continue to operate them. We made some important 
changes to the estate tax laws in the last Congress to make it easier 
for children to take over a family business when a parent dies and keep 
the business going. But these changes did not go far enough.
  Family-owned enterprises are a source of social stability and 
cohesion in this country. They generate jobs and wealth. Yet in far too 
many cases, the estate tax laws exert pressure on the children and 
grandchildren who inherit a modestly-sized family business to sell it, 
or a large part of it, to pay off those taxes. Our tax laws should 
encourage enterprises to stay in family ownership, with all the 
benefits that brings

[[Page 17474]]

to our communities and to the nation. Yet frequently today the estate 
tax laws do the opposite.
  Congress took some steps in a major tax bill in 1997, which I 
supported, to enable family farms, ranches, and other small family 
businesses to be passed along to the next generation without being 
loaded up with massive estate tax debt. The 1997 bill changes estate 
taxes in two basic ways. First, the legislation increased the unified 
estate and gift tax exemption from $600,000 to $1 million over a period 
of years. Second, it provided a new exemption from estate taxes for 
qualifying family businesses, valued up to $1.3 million, that are 
passed down to the children and grandchildren who will operate the farm 
or business. This new exclusion is the result of a bipartisan effort in 
Congress to encourage business enterprise that is based on the family 
unit.
  However, Senator Durbin and I believe that the $1.3 million family 
business exclusion needs to be substantially increased, and we suspect 
that a number of our colleagues in the Senate share this view. We are 
proposing such an increase today.
  Our legislation is simple and straightforward. It doubles the dollar 
value from $1.3 million to $2.6 million of a family business that may 
be transferred to inheriting family members without an estate tax 
obligation. This will be a great help to families that want to pass 
along a small business, which might have been the family's major asset 
for decades, to the kids to operate following the death of a parent.
  Estate tax relief for family businesses is not a partisan issue. It 
is important for the survival of our nation's family businesses, and it 
should be a priority for any tax cuts that Congress enacts.
  This is not however a proposal to reduce estate taxes for every rich 
person in America. We see no need to enact a big new benefit for the 
nation's trust fund babies. It should go to where the need is greatest, 
and where the economic and social benefits will be greatest as well. 
That means small family businesses.
  In the end, we hope that some additional estate tax relief will be 
enacted to sustain family-owned businesses and farms, which make up the 
backbone of our economy. We believe that our approach takes a large 
step in that direction. We urge our colleagues to cosponsor this much-
needed legislation.
                                 ______
                                 
      By Mr. MACK:
  S. 1414. A bill to amend title XVIII of the Social Security Act to 
restore access to home health services covered under the Medicare 
Program, and to protect the Medicare Program from financial loss while 
preserving the due process rights of home health agencies to the 
Committee on Finance.


medicare home health beneficiary equity and payment simplification act 
                                of 1999

  Mr. MACK. Mr. President today I am pleased to join my colleague, Mr. 
Breaux, in sponsoring The Medicare Home Health Beneficiary Equity and 
Payment Simplification Act of 1999.
  This legislation sets forth a fully developed prospective payment 
system for Medicare home health benefits that can be implemented easily 
using currently available data and can be accurately monitored to 
prevent fraud and abuse. Most importantly, the bill restores access to 
covered services for the sickest, most frail Medicare beneficiaries 
while providing incentives for efficient treatment of all patients 
regardless of the acuity of their medical condition.
  The bill provides for a simple four-category prospective payment 
system for home health services (similar to the four-category system 
which has been in place for hospice services since 1983) which is based 
on data from a 1997 study conducted by the Kaiser Family Foundation on 
characteristics of Medicare patients in need of covered home health 
services. The Kaiser Foundation study found that Medicare patients in 
need of home health services historically have fallen into one of the 
following categories:
  1. Post-hospital, short stay beneficiaries
  2. Medically stable, long-stay beneficiaries
  3. Medically complex, long-stay beneficiaries
  4. Medically unstable and complex, extremely high use beneficiaries
  Beneficiaries who meet all eligibility and coverage requirements for 
Medicare will be assigned to the appropriate category by a physician 
who does not have a prohibited relationship with the home health agency 
as defined in the ``Stark II'' law. Beneficiaries who do not clearly 
fit in one of the four categories will be placed in the first, lowest 
rate category.
  Payment rates for each of the categories is the average cost of 
treating patients in that category in 1994 as determined by the Kaiser 
Foundation study. Those rates are adjusted for wage variations in 
different parts of the country and updated by the home health market 
basket for each fiscal year. The Secretary of HHS is given the 
authority to provide additional payments to certain agencies that have 
higher costs due to reasons beyond their control.
  The bill would eliminate the 15% cut in Medicare home health 
reimbursement which is scheduled to go into effect on October 1, 2000. 
The bill would also simplify the reimbursement system by making 
payments based on the location of the agency rather than the residence 
of the patient. The bill is intended to provide a ``fail safe'' 
prospective payment mechanism in the event that HCFA falls behind in 
its schedule to implement a prospective payment system by October 1, 
2000 that can be administered efficiently and monitored effectively.
  I urge my colleagues to join us in co-sponsoring this important piece 
of legislation.
  Mr. President, I ask unanimous consent that a copy of the legislation 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1414

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Home Health 
     Beneficiary Equity and Payment Simplification Act of 1999''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) Research has shown that medicare beneficiaries who are 
     in need of home health services that are covered under the 
     medicare program generally fall into 1 of the 4 following 
     categories:
       (A) Post-hospital, short-stay beneficiaries.
       (B) Medically stable, long-stay beneficiaries.
       (C) Medically complex, long-stay beneficiaries.
       (D) Medically unstable and complex, extremely high-use 
     beneficiaries.
       (2) The interim payment system for home health services 
     under the medicare program, enacted as part of the Balanced 
     Budget Act of 1997 and amended by title V of the Tax and 
     Trade Relief Extension Act of 1998 (contained in Division J 
     of Public Law 105-277), is having the following unintended 
     consequences:
       (A) The sickest, most frail medicare beneficiaries are 
     losing access to medically necessary home health services 
     that are otherwise covered under the medicare program.
       (B) Many high quality, cost-effective home health agencies 
     have had per beneficiary limits under the interim payment 
     system set so low that such agencies are finding it 
     impossible to continue to provide home health services under 
     the medicare program.
       (C) Many home health agencies are being subjected to 
     aggregate per beneficiary limits under the interim payment 
     system that do not accurately reflect the current patient mix 
     of such agencies, thereby making it impossible for such 
     agencies to compete with similarly situated home health 
     agencies.
       (D) Medicare beneficiaries that reside in certain States 
     and regions of the country have far less access to home 
     health services under the medicare program than individuals 
     who have identical medical conditions but reside in other 
     States or regions of the country.
       (E) The health status of home health beneficiaries varies 
     significantly in different regions of the country, creating 
     differing needs for home health services.

     SEC. 3. PAYMENTS TO HOME HEALTH AGENCIES UNDER MEDICARE.

       (a) Revision of Prospective Payment System.--
       (1) In general.--Section 1895 of the Social Security Act 
     (42 U.S.C. 1395fff) (as amended by section 5101 of the Tax 
     and Trade Relief Extension Act of 1998 (contained in Division 
     J of Public Law 105-277)) is amended--
       (A) in subsection (a), by striking ``for portions of cost 
     reporting periods occurring on

[[Page 17475]]

     or after October 1, 2000'' and inserting ``for cost reporting 
     periods beginning on or after October 1, 1999''; and
       (B) in subsection (b), by striking the last sentence of 
     paragraph (1) and all that follows and inserting the 
     following:
       ``(2) Payment basis.--
       ``(A) In general.--The prospective payment amount to be 
     paid to a home health agency under this section for all of 
     the home health services (including medical supplies) 
     provided to a beneficiary under this title during the 12-
     month period beginning on the date that such services are 
     first provided by such agency to such beneficiary pursuant to 
     a plan for furnishing such services (and for each subsequent 
     12-month period that services are provided under such plan) 
     shall be an amount equal to the applicable amount specified 
     in subparagraph (B) for the fiscal year in which the 12-month 
     period begins.
       ``(B) Applicable amount.--Subject to subparagraphs (C), 
     (D), and (E) and paragraph (5), for purposes of this 
     subsection, the applicable amount is equal to--
       ``(i) $2,603 for a beneficiary described in subparagraphs 
     (A) and (E) of paragraph (3);
       ``(ii) $3,335 for a beneficiary described in paragraph 
     (3)(B);
       ``(iii) $4,228 for a beneficiary described in paragraph 
     (3)(C); and
       ``(iv) $21,864 for a beneficiary described in paragraph 
     (3)(D).
       ``(C) Annual update.--
       ``(i) In general.--The applicable amount specified in 
     subparagraph (B) shall be adjusted for each fiscal year 
     (beginning with fiscal year 2001) in a prospective manner 
     specified by the Secretary by the home health market basket 
     percentage increase applicable to the fiscal year involved.
       ``(ii) Home health market basket percentage increase.--For 
     purposes of clause (i), the term `home health market basket 
     percentage increase' means, with respect to a fiscal year, a 
     percentage (estimated by the Secretary before the beginning 
     of the fiscal year) determined and applied with respect to 
     the mix of goods and services included in home health 
     services in the same manner as the market basket percentage 
     increase under section 1886(b)(3)(B)(iii) is determined and 
     applied to the mix of goods and services comprising inpatient 
     hospital services for the fiscal year.
       ``(D) Area wage adjustment.--
       ``(i) In general.--The portion of the applicable amount 
     specified in subparagraph (B) (as updated under subparagraph 
     (C)) that the Secretary estimates to be attributable to wages 
     and wage-related costs shall be adjusted for geographic 
     differences in such costs by an area wage adjustment factor 
     for the area in which the home health agency is located.
       ``(ii) Establishment of area wage adjustment factors.--The 
     Secretary shall establish area wage adjustment factors that 
     reflect the relative level of wages and wage-related costs 
     applicable to the furnishing of home health services in a 
     geographic area compared to the national average applicable 
     level. Such factors may be the factors used by the Secretary 
     for purposes of section 1886(d)(3)(E).
       ``(E) Medical supplies.--The applicable amount specified in 
     subparagraph (B) shall be adjusted for each fiscal year 
     (beginning with fiscal year 2001) in a prospective manner 
     specified by the Secretary by the percentage increase (as 
     determined by the Secretary) in the average costs of medical 
     supplies (as described in section 1861(m)(5)) for the fiscal 
     year involved.
       ``(3) Description of beneficiaries.--
       ``(A) Post-hospital, short-stay beneficiary.--A beneficiary 
     described in this subparagraph is a beneficiary under this 
     title who--
       ``(i) has experienced at least one 24-hour hospitalization 
     within the 14-day period immediately preceding the date that 
     the beneficiary is first provided services by the home health 
     agency;
       ``(ii) suffers from 1 or more illnesses or injuries which 
     are post-operative or post-trauma; and
       ``(iii) has a prognosis of a prompt and substantial 
     recovery.
       ``(B) Medically stable, long-stay beneficiary.--A 
     beneficiary described in this subparagraph is a beneficiary 
     under this title who--
       ``(i) has not been admitted to a hospital within the 6-
     month period immediately preceding the date that the 
     beneficiary is first provided services by the home health 
     agency;
       ``(ii) suffers from 1 or more illnesses or injuries 
     requiring acute medical treatment or management in the home; 
     and
       ``(iii) is experiencing 1 or more impairments in activities 
     of daily living.
       ``(C) Medically complex, long-stay beneficiary.--A 
     beneficiary described in this subparagraph is a beneficiary 
     under this title who--
       ``(i) has experienced 2 or more hospitalizations or 
     admissions to skilled nursing facilities within the 12-month 
     period immediately preceding the date that the beneficiary is 
     first provided services by the home health agency;
       ``(ii) suffers from 1 or more illnesses or injuries 
     requiring acute medical treatment or management in the home; 
     and
       ``(iii) is experiencing 1 or more impairments in activities 
     of daily living.
       ``(D) Medically unstable and complex, extremely high-use 
     beneficiaries.--A beneficiary described in this subparagraph 
     is a beneficiary under this title who--
       ``(i) has experienced 2 or more hospitalizations or 
     admissions to skilled nursing facilities within the 6-month 
     period immediately preceding the date that the beneficiary is 
     first provided services by the home health agency;
       ``(ii) suffers from 1 or more illnesses or injuries 
     requiring acute medical treatment or management in the home; 
     and
       ``(iii) is experiencing 2 or more impairments in activities 
     of daily living.
       ``(E) Other beneficiaries.--A beneficiary described in this 
     subparagraph is a beneficiary under this title who is not 
     otherwise described in subparagraphs (A) through (D).
       ``(4) Determination.--
       ``(A) In general.--The determination of which of the 
     subparagraphs under paragraph (3) applies to a beneficiary 
     under this title shall be based on the diagnosis and 
     assessment of a physician who shall have no financial 
     relationship with the home health agency that is receiving 
     payments under this title for the provision of home health 
     services to such beneficiary. For purposes of the preceding 
     sentence, any financial relationship shall be determined 
     under rules similar to the rules with respect to referrals 
     under section 1877.
       ``(B) Regulations.--The Secretary shall issues regulations 
     to assist physicians in making the determination described in 
     subparagraph (A).
       ``(5) Additional payment amount.--The Secretary may 
     increase the applicable amount specified in paragraph (2)(B) 
     to be paid to a home health agency if the Secretary 
     determines that such agency is--
       ``(A) experiencing higher than average costs for providing 
     home health services as compared to other similarly situated 
     home health agencies; or
       ``(B) providing home health services that are not reflected 
     in the determination of the applicable amount.
       ``(6) Notice of prospective payment rate.--Not later than 
     July 1 of each year (beginning in 2000), the Secretary shall 
     publish in the Federal Register the applicable amount to be 
     paid to home health agencies for home health services 
     provided to a beneficiary under this title during the fiscal 
     year beginning October 1 of the year.
       ``(7) Proration of prospective payment amounts.--If a 
     beneficiary elects to transfer to, or receive services from, 
     another home health agency within the period covered by the 
     prospective payment amount, the payment shall be prorated 
     between the home health agencies involved.''.
       (2) Conforming amendments.--Section 1895 of the Social 
     Security Act (42 U.S.C. 1395fff) (as amended by section 5101 
     of the Tax and Trade Relief Extension Act of 1998 (contained 
     in Division J of Public Law 105-277)) is amended--
       (A) by amending subsection (c) to read as follows:
       ``(c) Requirement for Payment Information.--With respect to 
     home health services furnished on or after October 1, 1998, 
     no claim for such a service may be paid under this title 
     unless the claim has the unique identifier (provided under 
     section 1842(r)) for the physician who prescribed the 
     services or made the certification described in section 
     1814(a)(2) or 1835(a)(2)(A).''; and
       (B) by striking subsection (d).
       (3) Change in effective date.--Section 4603(d) of the 
     Balanced Budget Act of 1997 (42 U.S.C. 1395fff note) (as 
     amended by section 5101(c)(2) of the Tax and Trade Relief 
     Extension Act of 1998 (contained in Division J of Public Law 
     105-277)) is amended by striking ``October 1, 2000'' and 
     inserting ``October 1, 1999''.
       (4) Elimination of contingency 15 percent reduction.--
     Subsection (e) of section 4603 of the Balanced Budget Act of 
     1997 (42 U.S.C. 1395fff note) is repealed.
       (5) Effective date.--The amendments made by this subsection 
     shall take effect on the date of enactment of this Act.
       (b) Payment Rates Based on Location of Home Health Agency 
     Rather Than Patient.--
       (1) Conditions of participation.--Section 1891 of the 
     Social Security Act (42 U.S.C. 1395bbb) is amended by 
     striking subsection (g).
       (2) Wage adjustment.--Section 1861(v)(1)(L)(iii) (42 U.S.C. 
     1395x(v)(1)(L)(iii)) is amended by striking ``service is 
     furnished'' and inserting ``agency is located''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to services provided on or after October 1, 1999.
                                 ______
                                 
      By Mr. HATCH:
  S. 1415. A bill to amend the Internal Revenue Code of 1986 to provide 
for S corporation reform, and for other purposes; to the Committee on 
Finance.
  Mr. HATCH. Mr. President, today I am introducing legislation that 
would provide critical and direct improvements to the competitiveness 
of the over 2.1 million S corporations nationwide. The vast majority of 
S corporations operate as small businesses. By 1995, they comprised 48 
percent of all

[[Page 17476]]

corporations. In my home state of Utah, S corporations make up half of 
the 21,600 corporations in the state.
  Despite the reforms that were enacted in 1996 and in previous years, 
the tax laws that currently govern S corporations remain too 
restrictive, complex, and burdensome, particularly in comparison with 
the laws that are imposed on other entities. As a result, Mr. 
President, many of these small businesses are unable to attract 
sufficient capital and to grow to their full potential.
  For example, the inability to issue preferred stock denies S 
corporations access to badly needed senior equity. Capital is also 
eliminated by a requirement that prevents straight debt from being 
converted into stock. Substantial reforms need to be enacted to ensure 
better competition for small businesses in today's increasingly 
sophisticated and global economy.
  Mr. President, the current law is threatening the multi-generational 
family business in our country. Law allows only for 75 shareholders 
under an S corporation, and each member of a family is currently 
treated as a single, distinct shareholder. In addition, nonresident 
aliens are not allowed as shareholders. This ban on nonresident alien 
shareholders is an outmoded restriction dating back to the creation of 
Subchapter S. Since that time, partnerships have been allowed to 
involve nonresidential aliens. And, as the economy becomes more global, 
S corporations will be at a disadvantage relative to the more flexible 
partnerships. Mr. President, this bill would eliminate these outdated 
provisions and allow for all family members to be counted as one 
shareholder for purposes of S corporation eligibility, as well as 
permitting nonresident aliens to be shareholders.
  Mr. President, I urge my colleagues to review and support the 
Subchapter S Revision Act. This legislation will help American families 
pass their businesses from one generation to the next and to create a 
level playing field for small business. We should not allow the more 
than 10,000 S corporations in my home state, as well as the many others 
across the country, to be subject to rules and regulations that limit 
their competitiveness. I am looking forward to working with my fellow 
members of the Finance Committee in enacting this bill.
  I ask that a description of the bill's provisions be in included in 
the Record.
  The description follows:

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