[Congressional Record (Bound Edition), Volume 145 (1999), Part 13]
[Senate]
[Pages 18225-18244]
[From the U.S. Government Publishing Office, www.gpo.gov]



          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. WELLSTONE (for himself, Mr. Kennedy, Mr. Inouye, Mr. 
        Daschle, and Mr. Moynihan):
  S. 1447. A bill to amend the Public Health Service Act, Employee 
Retirement Income Security Act of 1974, and the Internal Revenue Code 
of 1986 to provide for nondiscriminatory coverage for substance abuse 
treatment service under private group and individual health coverage; 
to the Committee on Health, Education, Labor, and Pensions.


 fairness in treatment--the drug and alcohol addiction recovery act of 
                                  1999

 Mr. WELLSTONE. Mr. President, I rise today to introduce 
legislation that will ensure that private health insurance companies 
cover the costs for drug and alcohol addiction treatment services at 
the same level that they pay for treatment for other diseases. The 
purpose of this bill is to end discrimination in insurance coverage for 
drug and alcohol addiction treatment. This bill, entitled Fairness in 
Treatment: The Drug and Alcohol Addiction Recovery Act of 1999, offers 
the necessary provisions to provide this assurance.
  For too long, the problem of drug and alcohol addiction has been 
viewed as a moral issue, rather than as a disease. Too often, a cloak 
of secrecy has surrounded this problem, causing people who have this 
disease to feel ashamed and afraid to seek treatment for their symptoms 
for fear that they will be seen as admitting to a moral failure, or a 
weakness in character. We have all seen portrayals of alcoholics and 
addicts that are intended to be humorous or derogatory, and only 
reinforce the biases against people who have problems with drug and 
alcohol addiction. I cannot imagine this type of portrayal of someone 
who has another kind of chronic illness, a heart problem, or who 
happens to carry a gene that predisposes them to diabetes.
  It has been shown that some forms of addiction have a genetic basis, 
and yet we still try to deny the serious medical nature of this 
disease. We think of those with this disease as somehow different from 
us. We forget that someone who has a problem with drugs or alcohol can 
look just like the person we see in the mirror, or the person who is 
sitting next to us at work or on the subway, or like someone in our own 
family. In fact, it is likely that most of us know someone who has 
experienced drug and alcohol addiction, within our families or our 
circle of friends or coworkers.
  Alcoholism and drug addiction are painful, private struggles with 
staggering public costs. A study prepared by The Lewin Group for the 
National Institute on Drug Abuse and the National Institute on Alcohol 
Abuse and Alcoholism, estimated that the total economic cost of alcohol 
and drug abuse to be $246 billion for 1992. Of this cost, $98 billion 
was due to drug addiction to illicit drugs and other drugs taken for 
non-medical purposes. This estimate includes addiction treatment and 
prevention costs, as well as costs associated with related illnesses, 
reduced job productivity or lost earnings, and other costs to society 
such as crime and social welfare programs. The study also determined 
that these costs are borne primarily by governments (46 percent), 
followed by those who abuse drugs and members of their households

[[Page 18226]]

(44 percent). According to this same study, private health and life 
insurance companies bear only 3.2 percent of the costs of drug abuse 
and 10.2 percent of the costs of alcohol abuse.
  The health effects resulting from alcohol addiction can be very 
serious, even fatal. A 1996 article in Scientific American estimated 
that excessive alcohol consumption causes more than 100,000 deaths in 
the U.S. each year. Of these deaths, twenty-four per cent are due to 
drunken driving, eleven percent are homicides, and eight percent are 
suicides. Alcohol contributes to cancers of the esophagus, larynx, and 
oral cavity, which account for seventeen percent of these deaths. 
Strokes related to alcohol use account for another nine percent of 
deaths. Alcohol causes several other ailments, such as cirrhosis of the 
liver. These ailments account for eighteen percent of the deaths.
  We know that addiction to alcohol and other drugs contribute to other 
problems as well. Addictive substances have the potential for 
destroying the person who is addicted, their family, and their other 
relationships. We know, for example, that fetal alcohol syndrome is the 
leading known cause of mental retardation. If the woman who was 
addicted to alcohol could receive proper treatment, fetal alcohol 
syndrome for her baby would be 100 percent preventable, and more than 
12,000 infants born in the U.S. each year would not suffer from fetal 
alcohol syndrome, with its irreversible physical and mental damage. We 
know too of the devastation caused by addiction when violence between 
people is one of the consequences. A 1998 SAMHSA report outlined the 
links between domestic violence and substance abuse. We know from 
clinical reports that 25-50% of men who commit acts of domestic 
violence also have substance abuse problems. The report recognized the 
link between the victim of abuse and use of alcohol and drugs, and 
recommended that after the woman's safety has been addressed, the next 
step would be to help with providing treatment for her addiction as a 
step toward independence and health, and toward the prevention of the 
consequences for the children who suffer the same abuse either 
directly, or indirectly by witnessing spousal violence.
  People who have the disease of addiction can be found throughout our 
society. According to the 1997 National Household Survey on Drug Abuse 
published by SAMHSA, nearly 73 percent of all illegal drug users in the 
United States are employed. This number represents 6.7 million full-
time workers and 1.6 million part-time workers. Although many of these 
workers could and should have insurance benefits that would cover 
treatment for this disease, they do not.
  In addition to the health problems resulting from the failure to 
treat the illness, there are other serious consequences affecting the 
workplace, such as lost productivity, high employee turnover, low 
employee morale, mistakes, accidents, and increased worker's 
compensation insurance and health insurance premiums--all results of 
untreated addiction problems. Whether you are a corporate CEO or a 
small business owner, there are simple, effective steps that can be 
taken--including providing insurance coverage for this disease, ready 
access to treatment, and workplace policies that support treatment--
that can reduce these human and economic costs.
  We know from the outstanding research conducted at NIH, through the 
National Institute on Drug Abuse and the National Institute on Alcohol 
Abuse and Alcoholism, that treatment for drug and alcohol addiction can 
be effective. That is the major finding from a NIDA-sponsored 
nationwide study of drug abuse treatment outcomes. The Drug Abuse 
Treatment Outcome Study (DATOS) tracked 10,000 people in nearly 100 
treatment programs in 11 cities who entered treatment for addiction 
between 1991 and 1993. Results showed that for all four treatment types 
studied, there were reductions in the use of cocaine, heroin, and 
marijuana after treatment. Moreover, treatment resulted in other 
positive changes in behavior, such as fewer psychological symptoms and 
increased work productivity.
  We must do more to prevent this illness and to treat those who are 
addicted to drugs and alcohol. Over the past few years, the principle 
of parity in insurance coverage for alcohol and drug rehabilitation and 
treatment has received the strong support of the White House, ONDCP 
Director General Barry McCaffrey, Former Surgeon General C. Everett 
Koop, Former President and Mrs. Gerald Ford, the U.S. Conference of 
Mayors, Kaiser Permanente Health Plans, and many leading figures in 
medicine, business, government, journalism, and entertainment who have 
successfully fought the battle of addiction with the help of treatment. 
Hearings held last year by the Senate Appropriations Committee and the 
Committee on Health, Education, Labor, and Pensions highlighted the 
recent major advances in scientific information about the disease; the 
biological causes of addiction; the effectiveness and low cost of 
treatment; and many painful, personal stories of people, including 
children, who have been denied treatment.
  We know that the failure of insurance companies to provide treatment 
can sometimes have devastating results. The New York Times recently 
highlighted the tragic suicide of a young man who desperately sought 
inpatient treatment care for his drug addiction and fought for 8 months 
to have the plan authorize the treatment that was in fact included in 
as part of his benefits. The authorization came through--but too late--
he had died three weeks earlier from a drug overdose. This kind of 
denial of care for addiction treatment is not at all unique--the 1998 
Hay Group Report on Employer Health Care Dollars Spent on Substance 
Abuse showed that from 1988 through 1998 the value of substance abuse 
treatment benefits decreased by 74.5%, as compared to a 11.5% decrease 
for overall health care benefits.
  Addiction to alcohol and drugs is a disease that affects the brain, 
the body, and the spirit. We must provide adequate opportunities for 
the treatment of addiction in order to help those who are suffering and 
to prevent the health and social problems that it causes. This 
legislation will take an important step in this direction by requiring 
that health insurance plans eliminate discrimination for addiction 
treatment. The costs for this are very low. A 1999 study by the Rand 
Corporation found that the cost to managed care health plans is now 
only about $5 per person per year for unlimited substance abuse 
treatment benefits to employees of big companies. A 1997 Milliman and 
Robertson study found that complete substance abuse treatment parity 
would increase per capita health insurance premiums by only one half of 
one percent, or less than $1 per member per month--without even 
considering any of the obvious savings that will result from treatment. 
Several studies have shown that for every $1 spent on treatment, more 
than $7 is saved in other health care expenses, and that these savings 
are in addition to the financial and other benefits of increased 
productivity, as well as participation in family and community life. 
Providing treatment for addiction also saves millions of dollars in the 
criminal justice system. But for treatment to be effective and helpful 
throughout our society all systems of care--including private insurance 
plans--must share this responsibility.
  This legislation does not mandate that health insurers offer 
substance addiction treatment benefits. What it does is prohibit 
discrimination by health plans who offer substance addiction treatment 
from placing unfair and life-threatening limitations on caps, access, 
or financial requirements for addiction treatment that are different 
from other medical and surgical services.
  We must move forward now to vigorously address the serious and life-
threatening problem of drug and alcohol addiction in our country. It is 
long past time that insurance companies do their fair share in bearing 
the responsibility for treating this disease.
  I ask that the full text of the bill be printed in the Record.
  The bill follows:

[[Page 18227]]



                                S. 1447

       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 ``Fairness in Treatment: The 
     Drug and Alcohol Addiction Recovery Act of 1999''.

     SEC. 2. PARITY IN SUBSTANCE ABUSE TREATMENT BENEFITS.

       (a) Group Health Plans.--
       (1) Public health service act amendments.--
       (A) In general.--Subpart 2 of part A of title XXVII of the 
     Public Health Service Act (42 U.S.C. 300gg-4 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 2707. PARITY IN THE APPLICATION OF TREATMENT 
                   LIMITATIONS AND FINANCIAL REQUIREMENTS TO 
                   SUBSTANCE ABUSE TREATMENT BENEFITS.

       ``(a) In General.--In the case of a group health plan (or 
     health insurance coverage offered in connection with such a 
     plan) that provides both medical and surgical benefits and 
     substance abuse treatment benefits, the plan or coverage 
     shall not impose treatment limitations or financial 
     requirements on the substance abuse treatment benefits unless 
     similar limitations or requirements are imposed for medical 
     and surgical benefits.
       ``(b) Construction.--Nothing in this section shall be 
     construed--
       ``(1) as requiring a group health plan (or health insurance 
     coverage offered in connection with such a plan) to provide 
     any substance abuse treatment benefits; or
       ``(2) to prevent a group health plan or a health insurance 
     issuer offering group health insurance coverage from 
     negotiating the level and type of reimbursement with a 
     provider for care provided in accordance with this section.
       ``(c) Small Employer Exemption.--
       ``(1) In general.--This section shall not apply to any 
     group health plan (and group health insurance coverage 
     offered in connection with a group health plan) for any plan 
     year of a small employer.
       ``(2) Small employer.--For purposes of paragraph (1), the 
     term `small employer' means, in connection with a group 
     health plan with respect to a calendar year and a plan year, 
     an employer who employed an average of at least 2 but not 
     more than 25 employees on business days during the preceding 
     calendar year and who employs at least 2 employees on the 
     first day of the plan year.
       ``(3) Application of certain rules in determination of 
     employer size.--For purposes of this subsection:
       ``(A) Application of aggregation rule for employers.--Rules 
     similar to the rules under subsections (b), (c), (m), and (o) 
     of section 414 of the Internal Revenue Code of 1986 shall 
     apply for purposes of treating persons as a single employer.
       ``(B) Employers not in existence in preceding year.--In the 
     case of an employer which was not in existence throughout the 
     preceding calendar year, the determination of whether such 
     employer is a small employer shall be based on the average 
     number of employees that it is reasonably expected such 
     employer will employ on business days in the current calendar 
     year.
       ``(C) Predecessors.--Any reference in this subsection to an 
     employer shall include a reference to any predecessor of such 
     employer.
       ``(d) Separate Application to Each Option Offered.--In the 
     case of a group health plan that offers a participant or 
     beneficiary two or more benefit package options under the 
     plan, the requirements of this section shall be applied 
     separately with respect to each such option.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Treatment limitation.--The term `treatment 
     limitation' means, with respect to benefits under a group 
     health plan or health insurance coverage, any day or visit 
     limits imposed on coverage of benefits under the plan or 
     coverage during a period of time.
       ``(2) Financial requirement.--The term `financial 
     requirement' means, with respect to benefits under a group 
     health plan or health insurance coverage, any deductible, 
     coinsurance, or cost-sharing or an annual or lifetime dollar 
     limit imposed with respect to the benefits under the plan or 
     coverage.
       ``(3) Medical or surgical benefits.--The term `medical or 
     surgical benefits' means benefits with respect to medical or 
     surgical services, as defined under the terms of the plan or 
     coverage (as the case may be), but does not include substance 
     abuse treatment benefits.
       ``(4) Substance abuse treatment benefits.--The term 
     `substance abuse treatment benefits' means benefits with 
     respect to substance abuse treatment services.
       ``(5) Substance abuse treatment services.--The term 
     `substance abuse services' means any of the following items 
     and services provided for the treatment of substance abuse:
       ``(A) Inpatient treatment, including detoxification.
       ``(B) Non-hospital residential treatment.
       ``(C) Outpatient treatment, including screening and 
     assessment, medication management, individual, group, and 
     family counseling, and relapse prevention.
       ``(D) Prevention services, including health education and 
     individual and group counseling to encourage the reduction of 
     risk factors for substance abuse.
       ``(6) Substance abuse.--The term `substance abuse' includes 
     chemical dependency.
       ``(f) Notice.--A group health plan under this part shall 
     comply with the notice requirement under section 713(f) of 
     the Employee Retirement Income Security Act of 1974 with 
     respect to the requirements of this section as if such 
     section applied to such plan.''.
       (B) Conforming amendment.--Section 2723(c) of the Public 
     Health Service Act (42 U.S.C. 300gg-23(c)) is amended by 
     striking ``section 2704'' and inserting ``sections 2704 and 
     2707''.
       (2) ERISA amendments.--
       (A) In general.--Subpart B of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1185 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 714. PARITY IN THE APPLICATION OF TREATMENT 
                   LIMITATIONS AND FINANCIAL REQUIREMENTS TO 
                   SUBSTANCE ABUSE TREATMENT BENEFITS.

       ``(a) In General.--In the case of a group health plan (or 
     health insurance coverage offered in connection with such a 
     plan) that provides both medical and surgical benefits and 
     substance abuse treatment benefits, the plan or coverage 
     shall not impose treatment limitations or financial 
     requirements on the substance abuse treatment benefits unless 
     similar limitations or requirements are imposed for medical 
     and surgical benefits.
       ``(b) Construction.--Nothing in this section shall be 
     construed--
       ``(1) as requiring a group health plan (or health insurance 
     coverage offered in connection with such a plan) to provide 
     any substance abuse treatment benefits; or
       ``(2) to prevent a group health plan or a health insurance 
     issuer offering group health insurance coverage from 
     negotiating the level and type of reimbursement with a 
     provider for care provided in accordance with this section.
       ``(c) Small Employer Exemption.--
       ``(1) In general.--This section shall not apply to any 
     group health plan (and group health insurance coverage 
     offered in connection with a group health plan) for any plan 
     year of a small employer.
       ``(2) Small employer.--For purposes of paragraph (1), the 
     term `small employer' means, in connection with a group 
     health plan with respect to a calendar year and a plan year, 
     an employer who employed an average of at least 2 but not 
     more than 25 employees on business days during the preceding 
     calendar year and who employs at least 2 employees on the 
     first day of the plan year.
       ``(3) Application of certain rules in determination of 
     employer size.--For purposes of this subsection:
       ``(A) Application of aggregation rule for employers.--Rules 
     similar to the rules under subsections (b), (c), (m), and (o) 
     of section 414 of the Internal Revenue Code of 1986 shall 
     apply for purposes of treating persons as a single employer.
       ``(B) Employers not in existence in preceding year.--In the 
     case of an employer which was not in existence throughout the 
     preceding calendar year, the determination of whether such 
     employer is a small employer shall be based on the average 
     number of employees that it is reasonably expected such 
     employer will employ on business days in the current calendar 
     year.
       ``(C) Predecessors.--Any reference in this subsection to an 
     employer shall include a reference to any predecessor of such 
     employer.
       ``(d) Separate Application to Each Option Offered.--In the 
     case of a group health plan that offers a participant or 
     beneficiary two or more benefit package options under the 
     plan, the requirements of this section shall be applied 
     separately with respect to each such option.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Treatment limitation.--The term `treatment 
     limitation' means, with respect to benefits under a group 
     health plan or health insurance coverage, any day or visit 
     limits imposed on coverage of benefits under the plan or 
     coverage during a period of time.
       ``(2) Financial requirement.--The term `financial 
     requirement' means, with respect to benefits under a group 
     health plan or health insurance coverage, any deductible, 
     coinsurance, or cost-sharing or an annual or lifetime dollar 
     limit imposed with respect to the benefits under the plan or 
     coverage.
       ``(3) Medical or surgical benefits.--The term `medical or 
     surgical benefits' means benefits with respect to medical or 
     surgical services, as defined under the terms of the plan or 
     coverage (as the case may be), but does not include substance 
     abuse treatment benefits.
       ``(4) Substance abuse treatment benefits.--The term 
     `substance abuse treatment benefits' means benefits with 
     respect to substance abuse treatment services.
       ``(5) Substance abuse treatment services.--The term 
     `substance abuse services' means any of the following items 
     and services provided for the treatment of substance abuse:

[[Page 18228]]

       ``(A) Inpatient treatment, including detoxification.
       ``(B) Non-hospital residential treatment.
       ``(C) Outpatient treatment, including screening and 
     assessment, medication management, individual, group, and 
     family counseling, and relapse prevention.
       ``(D) Prevention services, including health education and 
     individual and group counseling to encourage the reduction of 
     risk factors for substance abuse.
       ``(6) Substance abuse.--The term `substance abuse' includes 
     chemical dependency.
       ``(f) Notice Under Group Health Plan.--The imposition of 
     the requirements of this section shall be treated as a 
     material modification in the terms of the plan described in 
     section 102(a)(1), for purposes of assuring notice of such 
     requirements under the plan; except that the summary 
     description required to be provided under the last sentence 
     of section 104(b)(1) with respect to such modification shall 
     be provided by not later than 60 days after the first day of 
     the first plan year in which such requirements apply.''.
       (B) Conforming amendments.--
       (i) Section 731(c) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1191(c)) is amended by 
     striking ``section 711'' and inserting ``sections 711 and 
     714''.
       (ii) Section 732(a) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1191a(a)) is amended by 
     striking ``section 711'' and inserting ``sections 711 and 
     714''.
       (iii) The table of contents in section 1 of the Employee 
     Retirement Income Security Act of 1974 is amended by 
     inserting after the item relating to section 713 the 
     following new item:

``Sec. 714. Parity in the application of treatment limitations and 
              financial requirements to substance abuse treatment 
              benefits.''.

       (3) Internal revenue code amendments.--
       (A) In general.--Subchapter B of chapter 100 of the 
     Internal Revenue Code of 1986 is amended by inserting after 
     section 9812, the following:

     ``SEC. 9813. PARITY IN THE APPLICATION OF TREATMENT 
                   LIMITATIONS AND FINANCIAL REQUIREMENTS TO 
                   SUBSTANCE ABUSE TREATMENT BENEFITS.

       ``(a) In General.--In the case of a group health plan (or 
     health insurance coverage offered in connection with such a 
     plan) that provides both medical and surgical benefits and 
     substance abuse treatment benefits, the plan or coverage 
     shall not impose treatment limitations or financial 
     requirements on the substance abuse treatment benefits unless 
     similar limitations or requirements are imposed for medical 
     and surgical benefits.
       ``(b) Construction.--Nothing in this section shall be 
     construed--
       ``(1) as requiring a group health plan (or health insurance 
     coverage offered in connection with such a plan) to provide 
     any substance abuse treatment benefits; or
       ``(2) to prevent a group health plan or a health insurance 
     issuer offering group health insurance coverage from 
     negotiating the level and type of reimbursement with a 
     provider for care provided in accordance with this section.
       ``(c) Small Employer Exemption.--
       ``(1) In general.--This section shall not apply to any 
     group health plan (and group health insurance coverage 
     offered in connection with a group health plan) for any plan 
     year of a small employer.
       ``(2) Small employer.--For purposes of paragraph (1), the 
     term `small employer' means, in connection with a group 
     health plan with respect to a calendar year and a plan year, 
     an employer who employed an average of at least 2 but not 
     more than 25 employees on business days during the preceding 
     calendar year and who employs at least 2 employees on the 
     first day of the plan year.
       ``(3) Application of certain rules in determination of 
     employer size.--For purposes of this subsection:
       ``(A) Application of aggregation rule for employers.--Rules 
     similar to the rules under subsections (b), (c), (m), and (o) 
     of section 414 of the Internal Revenue Code of 1986 shall 
     apply for purposes of treating persons as a single employer.
       ``(B) Employers not in existence in preceding year.--In the 
     case of an employer which was not in existence throughout the 
     preceding calendar year, the determination of whether such 
     employer is a small employer shall be based on the average 
     number of employees that it is reasonably expected such 
     employer will employ on business days in the current calendar 
     year.
       ``(C) Predecessors.--Any reference in this subsection to an 
     employer shall include a reference to any predecessor of such 
     employer.
       ``(d) Separate Application to Each Option Offered.--In the 
     case of a group health plan that offers a participant or 
     beneficiary two or more benefit package options under the 
     plan, the requirements of this section shall be applied 
     separately with respect to each such option.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Treatment limitation.--The term `treatment 
     limitation' means, with respect to benefits under a group 
     health plan or health insurance coverage, any day or visit 
     limits imposed on coverage of benefits under the plan or 
     coverage during a period of time.
       ``(2) Financial requirement.--The term `financial 
     requirement' means, with respect to benefits under a group 
     health plan or health insurance coverage, any deductible, 
     coinsurance, or cost-sharing or an annual or lifetime dollar 
     limit imposed with respect to the benefits under the plan or 
     coverage.
       ``(3) Medical or surgical benefits.--The term `medical or 
     surgical benefits' means benefits with respect to medical or 
     surgical services, as defined under the terms of the plan or 
     coverage (as the case may be), but does not include substance 
     abuse treatment benefits.
       ``(4) Substance abuse treatment benefits.--The term 
     `substance abuse treatment benefits' means benefits with 
     respect to substance abuse treatment services.
       ``(5) Substance abuse treatment services.--The term 
     `substance abuse services' means any of the following items 
     and services provided for the treatment of substance abuse:
       ``(A) Inpatient treatment, including detoxification.
       ``(B) Non-hospital residential treatment.
       ``(C) Outpatient treatment, including screening and 
     assessment, medication management, individual, group, and 
     family counseling, and relapse prevention.
       ``(D) Prevention services, including health education and 
     individual and group counseling to encourage the reduction of 
     risk factors for substance abuse.
       ``(6) Substance abuse.--The term `substance abuse' includes 
     chemical dependency.''.
       (B) Conforming amendment.--The table of contents for 
     chapter 100 of the Internal Revenue Code of 1986 is amended 
     by inserting after the item relating to section 9812 the 
     following new item:

``Sec. 9813. Parity in the application of treatment limitations and 
              financial requirements to substance abuse treatment 
              benefits.''.

       (b) Individual Health Insurance.--
       (1) In general.--Part B of title XXVII of the Public Health 
     Service Act (42 U.S.C. 300gg-41 et seq.) is amended by 
     inserting after section 2752 the following:

     ``SEC. 2753. PARITY IN THE APPLICATION OF TREATMENT 
                   LIMITATIONS AND FINANCIAL REQUIREMENTS TO 
                   SUBSTANCE ABUSE BENEFITS.

       ``(a) In General.--The provisions of section 2707 (other 
     than subsection (e)) shall apply to health insurance coverage 
     offered by a health insurance issuer in the individual market 
     in the same manner as it applies to health insurance coverage 
     offered by a health insurance issuer in connection with a 
     group health plan in the small or large group market.
       ``(b) Notice.--A health insurance issuer under this part 
     shall comply with the notice requirement under section 713(f) 
     of the Employee Retirement Income Security Act of 1974 with 
     respect to the requirements referred to in subsection (a) as 
     if such section applied to such issuer and such issuer were a 
     group health plan.''.
       (2) Conforming amendment.--Section 2762(b)(2) of the Public 
     Health Service Act (42 U.S.C. 300gg-62(b)(2)) is amended by 
     striking ``section 2751'' and inserting ``sections 2751 and 
     2753''.
       (c) Effective Dates.--
       (1) In general.--Subject to paragraph (3), the amendments 
     made by subsection (a) shall apply with respect to group 
     health plans for plan years beginning on or after January 1, 
     2000.
       (2) Individual market.--The amendments made by subsection 
     (b) shall apply with respect to health insurance coverage 
     offered, sold, issued, renewed, in effect, or operated in the 
     individual market on or after January 1, 2000.
       (3) Collective bargaining agreements.--In the case of a 
     group health plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified before the date of enactment of 
     this Act, the amendments made subsection (a) shall not apply 
     to plan years beginning before the later of--
       (A) the date on which the last collective bargaining 
     agreements relating to the plan terminates (determined 
     without regard to any extension thereof agreed to after the 
     date of enactment of this Act), or
       (B) January 1, 2000.
     For purposes of subparagraph (A), any plan amendment made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement added by subsection (a) shall not be treated as a 
     termination of such collective bargaining agreement.
       (d) Coordinated Regulations.--Section 104(1) of Health 
     Insurance Portability and Accountability Act of 1996 is 
     amended by striking ``this subtitle (and the amendments made 
     by this subtitle and section 401)'' and inserting ``the 
     provisions of part 7 of subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974, and the provisions of 
     parts A and C of title XXVII of the Public Health Service 
     Act, and chapter 1000 of the Internal Revenue Code of 1986''.

[[Page 18229]]



     SEC. 3. PREEMPTION.

       Nothing in the amendments made by this Act shall be 
     construed to preempt any provision of State law that provides 
     protections to enrollees that are greater than the 
     protections provided under such amendments.
                                 ______
                                 
      By Mr. CONRAD (for himself, Mr. Frist, Mr. Robb, Mr. Inouye, Mr. 
        Thompson, Mr. Murkowski, and Mr. DeWine):
  S. 1449. A bill to amend title XVIII of the Social Security Act to 
increase the payment amount for renal dialysis services furnished under 
the Medicare program; to the Committee on Finance.


            medicare renal dialysis fair payment act of 1999

 Mr. CONRAD. Mr. President, today I am pleased to join Senator 
Frist to introduce the Medicare Renal Dialysis Fair Payment Act of 
1999. This legislation takes important steps to help sustain and 
improve the quality of care for Medicare beneficiaries suffering from 
kidney-failure.
  Nationwide, more than 280,000 Americans live with end-stage renal 
disease (ESRD). In my state of North Dakota, the number of patients 
living with ESRD is relatively small, just over 600 per year. However, 
for these patients, and others across the country, access to dialysis 
treatments means the difference between life and death.
  In 1972, the Congress took important steps to ensure that elderly and 
disabled individuals with kidney-failure receive appropriate dialysis 
care. At that time, Medicare coverage was extended to include dialysis 
treatments for beneficiaries with ESRD.
  Over the last three decades, dialysis facilities have provided 
services to increasing numbers of kidney-failure patients under 
increasingly strict quality standards. However, it has come to my 
attention that reimbursement to dialysis facilities does not reflect 
the more stringent quality requirements placed upon dialysis providers.
  Since 1983, reimbursement to dialysis facilities has actually 
declined. Today, according to the Medicare Payment Advisory Commission 
(MedPAC), dialysis facilities receive on average $122 per treatment, 
compared with $138 per treatment that they received in 1983. Adjusting 
for inflation, this means that dialysis providers are only receiving 
about $42 per treatment (in 1983 dollars) to provide nursing, social 
work and dietitian care, as well as the actual dialysis treatment.
  I am concerned that a continued erosion in Medicare payments to 
dialysis facilities could jeopardize beneficiaries' access to dialysis 
services. According to MedPAC, ``without an increase in the payment 
(i.e. composite rate) the quality of dialysis services may decline. 
Therefore, an update to the composite rate is recommended.'' Further, 
MedPAC has concluded that the majority of dialysis facilities now lose 
money on Medicare reimbursement and the problem is especially acute for 
small, rural, and non-profit dialysis facilities. In my state, we 
simply cannot afford to lose rural providers--including providers of 
dialysis services.
  This legislation will ensure dialysis facilities have the resources 
to continue offering critical dialysis services to individuals with 
kidney failure. I urge my colleagues to support this important 
legislation.
                                 ______
                                 
      By Mr. DODD (for himself and Mr. Lieberman):
  S. 1450. A bill to authorize the Secretary of Transportation to 
convey a National Defense Reserve Fleet vessel to the Glacier Society, 
Inc., of Bridgeport, Connecticut; to the Committee on Commerce, 
Science, and Transportation.


                     CONVEYANCE OF THE SHIP GLACIER

 Mr. DODD. Mr. President, I rise today to introduce legislation 
that would save a historic vessel from the scrap heap. The Glacier, a 
310 foot, 8,600 ton icebreaker was commissioned as a vessel of the U.S. 
Navy in 1955. It made 39 trips to the North and South poles; made the 
deepest penetration of the Antarctic by sea in 1961; rescued explorer 
Sir Vivan Fuchs; and was the largest icebreaker of its time. Currently, 
the Glacier is part of the reserve fleet awaiting disposition as scrap 
or transfer to the Glacier Society, a group dedicated to restoring the 
Glacier.
  This bill would simply convey the Glacier from the reserve fleet to 
the Glacier Society. The Society is mainly composed of active and 
retired servicemen who served aboard the Glacier and is headed by Ben 
Koether, one of the ship's former navigators. The group envisions that 
the Glacier will operate as a museum and scientific laboratory. Both in 
port and underway, the Glacier Society hopes to provide hands-on 
training to children and adults while teaching the history of Polar 
exploration.
  By passing the title of the Glacier to the Glacier Society, Congress 
will save taxpayers roughly $200,000 per year, enable the development 
of unique educational opportunities, contribute to the nation's 
maritime heritage and preserve a piece of history. I look forward to 
the day when the Glacier Society's vision for the Glacier is achieved. 
Passage of this bill would be the first step towards realization of 
that vision.
                                 ______
                                 
      By Mr. HARKIN (for himself, Mr. Hollings, Mr. Biden, and Mr. 
        Graham):
  S. 1451. A bill to amend titles XI and XVIII of the Social Security 
Act to improve efforts to combat Medicare fraud, waste, and abuse; to 
the Committee on Finance.


                MEDICARE WASTE TAX REDUCTION ACT OF 1999

  Mr. HARKIN. Mr. President, today I am introducing with Senator 
Hollings, Senator Biden, and Senator Graham an important piece of 
legislation that will help to protect and preserve Medicare. The bill 
is entitled the Medicare Waste Tax Reduction Act of 1999.
  For over ten years now, I have worked to combat fraud, waste and 
abuse in the Medicare program. As Chairman and now Ranking Minority 
Member of the Senate Appropriations Subcommittee with oversight of the 
administration of Medicare, I've held hearing after hearing and 
released report after report documenting the extent of this problem. 
While virtually no one was paying attention to our effort for many 
years, we've succeeded in bringing greater attention and focus to this 
problem in recent years.
  Part of our effort has been to try to quantify the scope of the 
problem. Several years ago, the General Accounting Office reported that 
up to 10 percent of Medicare funds could be lost to fraud, waste and 
abuse each year. Many questioned that estimate as too large. They said 
the problem existed, but it wasn't nearly as big as 10 percent. A few 
years ago, the Inspector General conducted the first-ever detailed 
audit of Medicare payments. That Chief Financial Officer Act audit 
found that fully 14 percent of Medicare payments in 1996, or over $23 
billion, had been made improperly.
  To combat these substantial losses, we have put into place the 
reforms embodied in the Health Insurance Portability Act and the 
Balanced Budget Act. HCFA, the Inspector General and the Justice 
Department also have continued to aggressively use new authority to 
crack down on Medicare fraud, waste, and abuse. As a result, we have 
seen a dramatic decrease in these improper payments. According to the 
most recent Inspector General's report, improper payments had been 
reduced from $23.2 billion in 1996, to $20.3 billion in 1997, to $12.6 
billion in 1998.
  While I am very pleased with the successful efforts so far in 
combating fraud, waste, and abuse, that still amounts to a nearly $13 
billion annual ``waste tax'' on the American people. Now is not the 
time to rest on our laurels. We must now question, what is the best way 
to move forward and further cut this tax. I know there are no ``magic-
wand'' solutions--this is a complex problem with many components. But 
basically, you need four things: well thought out laws, adequate 
resources, effective implementation and the help of seniors and health 
providers. We've made progress on each of these fronts over the last 
couple of years, but much more remains to be done.
  Mr. President, we have many thousands of dedicated health providers

[[Page 18230]]

who work very hard to improve the quality of life for all people. 
Through their efforts, Americans have the best quality health care in 
the world. But, unfortunately, there are a small minority of providers 
who take advantage of our health care system. This legislation is 
directly designed to deal with those situations. Further, it is clear 
that many mispayments to Medicare are the result of a simple lack of 
understanding of our often complex Medicare payment system. This 
legislation also addresses this problem by providing increased 
education and assistance for providers and by reducing the paperwork 
and administrative hassles that can often lead to innocent, but costly, 
billing errors.
  The primary goal of this legislation is simply this--to ensure that 
Medicare pays for all that it should pay for--and only what it should 
pay for.
  The Medicare Waste Tax Reduction Act I am introducing today will take 
a number of important steps to stop the continued ravaging of Medicare.
  This bill for example, would direct HCFA to double and better target 
audits and reviews to detect and discourage mispayments. Currently only 
a tiny fraction of Medicare claims are reviewed before being paid and 
less than 2 percent of providers receive a comprehensive audit 
annually. We must have the ability to separate needed care from bill 
padding and abuse.
  Our bill would also give Medicare the authority to be a more prudent 
purchaser. As passed by the Senate, the Balanced Budget Act gave 
Medicare the authority to quickly reduce Part B payment rates (except 
those made for physician services) it finds to be grossly excessive 
when compared to rates paid by other government programs and the 
private sector. In conference, the provision was limited to reductions 
of no more than 15 percent. This bill would restore the original Senate 
language. In addition, to assure that Medicare gets the price it 
deserves given its status as by far the largest purchaser of medical 
supplies and equipment, Medicare would pay no more than any other 
government program for these items. Finally, overpayments for 
prescription drugs and biologicals would be eliminated by lowering 
Medicare's rate to the lowest of either the actual acquisition cost or 
83% of the wholesale cost.
  Our bill would also give the Secretary of Health and Human Services 
greater flexibility in contracting for claims processing and payment 
functions on behalf of Medicare beneficiaries and providers. It would 
update Medicare contracting procedures and bring it more in line with 
standard contracting procedures already used across the Federal 
Government and therefore allow Medicare the ability to get much better 
value for its contracting dollars.
  The Medicare Waste Tax reduction Act of 1999 would also ensure that 
Medicare does not pay for claims owed by other plans. Too often, 
Medicare pays claims that are owed by private insurers because it has 
no way of knowing a beneficiary is working and has private insurance 
that should pay first. This provision would reduce Medicare losses by 
requiring insurers to report any Medicare beneficiaries they insure. 
Also, Medicare would be given the authority to recover double the 
amount owed by insurers who purposely let Medicare pay claims they 
should have paid.
  Additionally, coordination between Medicare and private insurers 
would be strengthened. Often, those ripping off Medicare are also 
defrauding private health plans. Yet, too little information on fraud 
cases is shared between Medicare and private plans. In order to 
encourage better coordination, health plans and their employees could 
not be held liable for sharing information with Medicare regarding 
health care fraud as long as the information is not false, or the 
person providing the information had no reason to believe the 
information was false.
  Our bill would also expand the Medicare Senior Waste Patrol 
Nationwide. Seniors are our front line of defense against Medicare 
fraud, waste and abuse. However, too often, seniors don't have the 
information they need to detect and report suspected mistakes and 
fraud. By moving the Waste Patrol nationwide, implementing important 
BBA provisions and assuring seniors have access to itemized bills we 
will strike an important blow to Medicare waste.
  Another critical component of any successful comprehensive plan to 
cut the Medicare waste tax is to focus on prevention. Most of our 
efforts now look at finding and rectifying the problems after they 
occur. While this is important and we need to do even more of it, we 
all know that prevention is much more cost effective. The old adage ``A 
stitch in time saves nine'' was never more true. A major component of 
an enhanced prevention effort would be the provision of increased 
assistance and education for providers to comply with Medicare rules.
  Further, a great deal of the mis-payments made by Medicare are the 
result not of fraud or abuse, but of simple misunderstanding of 
Medicare billing rules by providers. Therefore, this bill provides $10 
million a year to fund a major expansion of assistance and education 
for providers on program integrity requirements. This bill would also 
ensure the reduction of paperwork and administrative hassle that could 
prove daunting to providers. Health professionals have to spend too 
much time completing paperwork and dealing with administrative hassles 
associated with Medicare and private health plans. In order to reduce 
this hassle and provide more time for patient care, the Institute of 
Medicine would be charged with developing a comprehensive plan by no 
later than June 1, 2000. Their recommendations are to include the 
streamlining of variations between Medicare and other payers.
  Mr. President, while we have made changes to medicare in attempts to 
extend its solvency thru the next decade, we urgently need to take 
other steps to protect and preserve the program for the long-term. We 
should enact the reforms in this bill to weed out waste, fraud and 
abuse as a first priority in this effort. I urge all my colleagues to 
review this proposal and hope that they will join me in working to pass 
it yet this year.
  Mr President, I also ask unanimous consent that the bill be printed 
in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1451

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Medicare 
     Waste Tax Reduction Act of 1999''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Increased medical reviews and antifraud activities.
Sec. 3. Oversight of home health agencies.
Sec. 4. No markup for drugs or biologicals.
Sec. 5. Ensuring that the medicare program does not reimburse claims 
              owed by other payers.
Sec. 6. Extension of subpoena and injunction authority.
Sec. 7. Civil monetary penalties for services ordered or prescribed by 
              an excluded individual or entity.
Sec. 8. Civil monetary penalties for false certification of eligibility 
              to receive partial hospitalization and hospice services.
Sec. 9. Application of certain provisions of the bankruptcy code.
Sec. 10. Improving private sector coordination in combatting health 
              care fraud.
Sec. 11. Fees for agreements with medicare providers and suppliers.
Sec. 12. Increased medicare compliance, education, and assistance for 
              health care providers.
Sec. 13. Paperwork and administrative hassle reduction.
Sec. 14. Clarification of application of sanctions to Federal health 
              care programs.
Sec. 15. Payments for durable medical equipment.
Sec. 16. Implementation of commercial claims auditing systems.
Sec. 17. Partial hospitalization payment reforms.
Sec. 18. Expansion of medicare senior waste patrol nationwide.
Sec. 19. Application of inherent reasonableness to all part B services 
              other than physicians' services.
Sec. 20. Standards regarding payment for certain orthotics and 
              prosthetics.

[[Page 18231]]

Sec. 21. Increased flexibility in contracting for medicare claims 
              processing.
Sec. 22. Exemption of Inspectors General from Paperwork Reduction Act 
              requirements.

     SEC. 2. INCREASED MEDICAL REVIEWS AND ANTIFRAUD ACTIVITIES.

       (a) In General.--Section 1893(d) of the Social Security Act 
     (42 U.S.C. 1395ddd(d)) is amended by inserting after 
     paragraph (3) the following:
       ``(4) In the case of fiscal year 2000 and each subsequent 
     fiscal year, procedures to ensure that--
       ``(A) the number of medical reviews, utilization reviews, 
     and fraud reviews in a fiscal year of providers of services 
     and other individuals and entities furnishing items and 
     services for which payment may be made under this title is 
     equal to at least twice the number of such reviews that were 
     conducted in fiscal year 1999;
       ``(B) the number of provider cost reports audited in a 
     fiscal year is equal to at least--
       ``(i) 15 percent of those submitted by a home health agency 
     or a skilled nursing facility; and
       ``(ii) twice the number of such reports that were audited 
     in fiscal year 1999 for those submitted by any other provider 
     of services or any other individual or entity furnishing 
     items and services for which payment may be made under this 
     title; and
       ``(C) in determining which providers of services, 
     individuals, entities, or cost reports to review or audit, 
     priority is placed on providers, individuals, entities, and 
     areas that the Secretary determines are subject to abuse and 
     most likely to result in mispayment or overpayment 
     recoveries.''.
       (b) Increase in Appropriated Amounts for Medicare and 
     Medicaid Activities.--
       (1) In general.--Section 1817(k)(3)(A)(i) of the Social 
     Security Act (42 U.S.C. 1395i(k)(3)(A)(i)) is amended--
       (A) in subclause (II)--
       (i) by striking ``through 2003'' and inserting ``and 
     1999''; and
       (ii) by striking ``and'' at the end;
       (B) by redesignating subclause (III) as subclause (IV); and
       (C) by inserting after subclause (II) the following:
       ``(III) for each of the fiscal years 2000 through 2003, the 
     limit for the preceding fiscal year, increased by 25 percent; 
     and''.
       (2) Activities.--Section 1817(k)(3)(A)(ii) of the Social 
     Security Act (42 U.S.C. 1395i(k)(3)(A)(ii)) is amended--
       (A) in subclause (IV), by striking ``not less than 
     $110,000,000 and not more than $120,000,000'' and inserting 
     ``$160,000,000'';
       (B) in subclause (V), by striking ``not less than 
     $120,000,000 and not more than $130,000,000'' and inserting 
     ``$190,000,000'';
       (C) in subclause (VI), by striking ``not less than 
     $140,000,000 and not more than $150,000,000'' and inserting 
     ``$230,000,000''; and
       (D) in subclause (VII), by striking ``not less than 
     $150,000,000 and not more than $160,000,000'' and inserting 
     ``$260,000,000''.
       (c) Increase in Appropriated Amounts for Medicare Integrity 
     Program.--Section 1817(k)(4) of the Social Security Act (42 
     U.S.C. 1395i(k)(4)(B)) is amended--
       (1) in subparagraph (A), by striking ``such amounts as are 
     necessary to carry out the Medicare Integrity Program under 
     section 1893, subject to subparagraph (B) and to'' and 
     inserting ``the amount appropriated under subparagraph (B), 
     and such amount shall''; and
       (2) in subparagraph (B)--
       (A) in clause (iv), by striking ``such amount shall be not 
     less than $620,000,000 and not more than $630,000,000'' and 
     inserting ``$780,000,000'';
       (B) in clause (v), by striking ``such amount shall be not 
     less than $670,000,000 and not more than $680,000,000'' and 
     inserting ``$830,000,000'';
       (C) in clause (vi), by striking ``such amount shall be not 
     less than $690,000,000 and not more than $700,000,000'' and 
     inserting ``$850,000,000''; and
       (D) in clause (vii), by striking ``such amount shall be not 
     less than $710,000,000 and not more than $720,000,000'' and 
     inserting ``$870,000,000''.

     SEC. 3. OVERSIGHT OF HOME HEALTH AGENCIES.

       (a) Validation Surveys of Home Health Agencies.--Section 
     1891(c) of the Social Security Act (42 U.S.C. 1395bbb(c)) is 
     amended by adding at the end the following:
       ``(3)(A)(i) The Secretary shall conduct onsite surveys of a 
     representative sample of home health agencies in each State, 
     in a sufficient number to allow inferences about the 
     adequacies of each State's surveys conducted under this 
     subsection.
       ``(ii) A survey described in clause (i) shall be conducted 
     by the Secretary within 2 months of the date of the survey 
     conducted by the State and may be conducted concurrently with 
     the State survey.
       ``(iii) In conducting a survey described in clause (i), the 
     Secretary shall use the same survey protocols as the State is 
     required to use under this subsection.
       ``(iv) If, through a State survey, the State has determined 
     that a home health agency is in compliance with the 
     requirements specified in or pursuant to section 1861(o), 
     this section, or this title, but the Secretary determines 
     (after conducting the survey described in clause (i)) that 
     the facility does not meet such requirements, the Secretary's 
     determination as to the facility's noncompliance with such 
     requirements is binding and supersedes that of the State 
     survey.
       ``(B) With respect to each State, the Secretary shall 
     conduct surveys under subparagraph (A) each year with respect 
     to at least 5 percent of the number of home health agencies 
     surveyed by the State in the year, but in no case less than 5 
     home health agencies in the State.
       ``(C) If the Secretary finds, on the basis of such surveys, 
     that a State has failed to perform surveys as required under 
     this subsection or that a State's survey and certification 
     performance otherwise is not adequate, the Secretary shall 
     provide for an appropriate remedy, which may include the 
     training of survey teams in the State.
       ``(D) If the Secretary has reason to question the 
     compliance of a home health agency with any of the 
     requirements specified in or pursuant to section 1861(o), 
     this section, or this title, the Secretary may conduct a 
     survey of the agency and, on the basis of that survey, make 
     independent and binding determinations concerning the extent 
     to which the home health agency meets such requirements.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of enactment of this Act.

     SEC. 4. NO MARKUP FOR DRUGS OR BIOLOGICALS.

       (a) In General.--Section 1842(o) (42 U.S.C. 1395u(o)) is 
     amended to read as follows:
       ``(o)(1) If a physician's, supplier's, or any other 
     person's bill or request for payment for services includes a 
     charge for a drug or biological for which payment may be made 
     under this part and the drug or biological is not paid on a 
     cost or prospective payment basis as otherwise provided in 
     this part, the payment amount established in this subsection 
     for the drug or biological shall be the lowest of the 
     following:
       ``(A) The actual acquisition cost, as defined in paragraph 
     (2), to the person submitting the claim for payment for the 
     drug or biological.
       ``(B) 83 percent of the average wholesale price of such 
     drug or biological, as determined by the Secretary.
       ``(C) For payments for any drug or biological furnished on 
     or after January 1, 2001, the median actual acquisition cost 
     of all claims for payment for such drug or biological for the 
     12-month period beginning July 1, 1999 (and adjusted, as the 
     Secretary determines appropriate, to reflect changes in the 
     cost of such drug or biological due to inflation, and such 
     other factors as the Secretary determines appropriate).
       ``(D) The amount otherwise determined under this part.
       ``(2) For purposes of paragraph (1)(A), the term `actual 
     acquisition cost' means, with respect to such drug or 
     biological, the cost of the drug or biological based on the 
     most economical case size in inventory on the date of 
     dispensing or, if less, the most economical case size 
     purchased within 6 months of the date of dispensing whether 
     or not that specific drug or biological was furnished to an 
     individual whether or not enrolled under this part. Such term 
     includes appropriate adjustments, as determined by the 
     Secretary, for all discounts, rebates, or any other benefit 
     in cash or in kind (including travel, equipment, or free 
     products). The Secretary shall include an additional payment 
     for administrative, storage, and handling costs.
       ``(3)(A) No payment shall be made under this part for any 
     drug or biological to a person whose bill or request for 
     payment for such drug or biological does not include a 
     statement of the person's actual acquisition cost.
       ``(B) A person may not bill an individual enrolled under 
     this part--
       ``(i) any amount other than the payment amount specified in 
     paragraph (1) or (4) (plus any applicable deductible and 
     coinsurance amounts), or
       ``(ii) any amount for such drug or biological for which 
     payment may not be made pursuant to subparagraph (A).
       ``(C) If a person knowingly and willfully in repeated cases 
     bills 1 or more individuals in violation of subparagraph (B), 
     the Secretary may apply sanctions against that person in 
     accordance with subsection (j)(2).
       ``(4) The Secretary may pay a reasonable dispensing fee 
     (less the applicable deductible and coinsurance amounts) for 
     any drug or biological to a licensed pharmacy approved to 
     dispense drugs or biologicals under this part, if payment for 
     such drug or biological is made to the pharmacy.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to drugs or biologicals furnished on or after 
     January 1, 2000.
       (c) Elimination of Report on Average Wholesale Price.--
     Section 4556 of the Balanced Budget Act of 1997 is amended by 
     striking subsection (c).

     SEC. 5. ENSURING THAT THE MEDICARE PROGRAM DOES NOT REIMBURSE 
                   CLAIMS OWED BY OTHER PAYERS.

       (a) Information From Group Health Plans.--Section 1862(b) 
     of the Social Security Act (42 U.S.C. 1395y(b)) is amended by 
     adding at the end the following:
       ``(7) Information from group health plans.--
       ``(A) Provision of information by group health plans.--The 
     administrator of a

[[Page 18232]]

     group health plan that is subject to the requirements of 
     paragraph (1) shall provide the Secretary with the 
     information described in subparagraph (C) for each individual 
     covered under the plan who is entitled to any benefits under 
     this title. Such information shall be provided in such manner 
     and at such times as the Secretary may specify (but in no 
     case more frequently than 4 times per year).
       ``(B) Provision of information by employers and employee 
     organizations.--An employer (or employee organization) that 
     maintains or participates in a group health plan that is 
     subject to the requirements of paragraph (1) shall provide to 
     the administrator of the plan the information described in 
     subparagraph (C) for each individual covered under the plan 
     who is entitled to any benefits under this title. Such 
     information shall be provided in such manner and at such 
     times as the Secretary may specify (but in no case more 
     frequently than 4 times per year).
       ``(C) Information.--The information described in this 
     subparagraph is as follows:
       ``(i) Elements concerning the individual.--

       ``(I) The individual's name.
       ``(II) The individual's date of birth.
       ``(III) The individual's sex.
       ``(IV) The individual's social security insurance number.
       ``(V) The number assigned by the Secretary to the 
     individual for claims under this title.
       ``(VI) The family relationship of the individual to the 
     person who has current or prior employment status with the 
     employer.

       ``(ii) Elements concerning the family member with current 
     or prior employment status.--

       ``(I) The name of the person in the individual's family who 
     has current or prior employment status with the employer.
       ``(II) That person's social security insurance number.
       ``(III) The number or other identifier assigned by the plan 
     to that person.
       ``(IV) The periods of coverage for that person under the 
     plan.

       ``(V) The employment status of that person (current or 
     former employee) during those periods of coverage.
       ``(VI) The classes (of that person's family members) 
     covered under the plan.

       ``(iii) Plan elements.--

       ``(I) The items and services covered under the plan.
       ``(II) The name and address to which claims under the plan 
     are to be sent.
       ``(III) The name, address, and tax identification number of 
     the plan sponsor.

       ``(iv) Elements concerning the employer.--

       ``(I) The employer's name.
       ``(II) The employer's address.
       ``(III) The employer identification number of the employer.
       ``(IV) The tax identification number of the employer if 
     different than the number in clause (iii)(III).

       ``(D) Use of identifiers.--The administrator of a group 
     health plan shall utilize a unique identifier for the plan in 
     providing information under subparagraph (A) and in other 
     transactions, as may be specified by the Secretary, related 
     to the provisions of this subsection. The Secretary may 
     provide to the administrator the unique identifier described 
     in the preceding sentence.
       ``(E) Penalty for noncompliance.--Any individual or entity 
     that knowingly and willfully fails to comply with a 
     requirement imposed by this paragraph shall be subject to a 
     civil money penalty not to exceed $1,000 for each incident of 
     such failure. The provisions of section 1128A (other than 
     subsections (a) and (b)) shall apply to a civil money penalty 
     under the previous sentence in the same manner as those 
     provisions apply to a penalty or proceeding under section 
     1128A(a).
       ``(F) Group health plan defined.--In this paragraph, the 
     term `group health plan' has the meaning given such term in 
     paragraph (1)(A)(v).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 2000.

     SEC. 6. EXTENSION OF SUBPOENA AND INJUNCTION AUTHORITY.

       (a) Subpoena Authority.--Section 1128A(j)(1) of the Social 
     Security Act (42 U.S.C. 1320a-7a(j)(1)) is amended by 
     inserting ``and section 1128'' after ``with respect to this 
     section''.
       (b) Injunction Authority.--Section 1128A(k) of the Social 
     Security Act (42 U.S.C. 1320a-7a(k)) is amended by inserting 
     ``or an exclusion under section 1128,'' after ``subject to a 
     civil monetary penalty under this section,''.
       (c) Clarifying Amendments.--
       (1) In general.--Section 1128A(j)(1) of the Social Security 
     Act (42 U.S.C. 1320a-7a(j)(1)) is amended--
       (A) by inserting ``, except that, in so applying such 
     sections, any reference therein to the Commissioner of Social 
     Security or the Social Security Administration shall be 
     considered a reference to the Secretary or the Department of 
     Health and Human Services, respectively'' after ``with 
     respect to title II''; and
       (B) by striking the second sentence.
       (2) Authority.--Section 1128A(j)(2) of the Social Security 
     Act (42 U.S.C. 1320a-7a(j)(2)) is amended to read as follows:
       ``(2) The Secretary may delegate to the Inspector General 
     of the Department of Health and Human Services any or all 
     authority granted under this section or under section 
     1128.''.
       (d) Conforming Amendment.--Section 1128 of the Social 
     Security Act (42 U.S.C. 1320a-7) is amended by adding at the 
     end the following:
       ``(k) For provisions of law concerning the Secretary's 
     subpoena and injunction authority with respect to activities 
     under this section, see subsections (j) and (k) of section 
     1128A.''.

     SEC. 7. CIVIL MONETARY PENALTIES FOR SERVICES ORDERED OR 
                   PRESCRIBED BY AN EXCLUDED INDIVIDUAL OR ENTITY.

       (a) In General.--Section 1128A(a)(1) of the Social Security 
     Act (42 U.S.C. 1320a-7a(a)(1)) is amended--
       (1) in subparagraph (D)--
       (A) by inserting ``, ordered, or prescribed by such 
     person'' after ``other item or service furnished'';
       (B) by inserting ``(pursuant to this title or title 
     XVIII)'' after ``period in which the person was excluded'';
       (C) by striking ``pursuant to a determination by the 
     Secretary'' and all that follows through ``the provisions of 
     section 1842(j)(2)''; and
       (D) by striking ``or'' at the end;
       (2) by redesignating subparagraph (E) as subparagraph (F); 
     and
       (3) by adding after subparagraph (D) the following:
       ``(E) is for a medical or other item or service ordered or 
     prescribed by a person excluded (pursuant to this title or 
     title XVIII) from the program under which the claim was made, 
     and the person furnishing such item or service knows or 
     should know of such exclusion, or''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to claims presented on or after the date of 
     enactment of this Act.

     SEC. 8. CIVIL MONETARY PENALTIES FOR FALSE CERTIFICATION OF 
                   ELIGIBILITY TO RECEIVE PARTIAL HOSPITALIZATION 
                   AND HOSPICE SERVICES.

       (a) In General.--Section 1128A(b)(3) of the Social Security 
     Act (42 U.S.C. 1320a-7a(b)(3)) is amended--
       (1) in subparagraph (A)(ii), by inserting ``, hospice care, 
     or partial hospitalization services'' after ``home health 
     services''; and
       (2) in subparagraph (B), by inserting ``, section 
     1814(a)(7) in the case of hospice care, or section 
     1835(a)(2)(F) in the case of partial hospitalization 
     services'' after ``home health services''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to documents executed on or after the date of 
     enactment of this Act.

     SEC. 9. APPLICATION OF CERTAIN PROVISIONS OF THE BANKRUPTCY 
                   CODE.

       (a) Restricted Applicability of Bankruptcy Stay, Discharge, 
     and Preferential Transfer Provisions to Medicare and Medicaid 
     Debts.--Title XI of the Social Security Act (42 U.S.C. 1301 
     et seq.) is amended by inserting after section 1143 the 
     following:


       ``application of certain provisions of the bankruptcy code

       ``Sec. 1144. (a) Medicare- and Medicaid-Related Actions Not 
     Stayed by Bankruptcy Proceedings.--The commencement or 
     continuation of any action against a debtor under this title, 
     title XVIII, or title XIX (other than an action with respect 
     to health care services provided to the debtor under title 
     XVIII), including any action or proceeding to exclude or 
     suspend the debtor from program participation, assess civil 
     money penalties, recoup or set off overpayments, or deny or 
     suspend payment of claims shall not be subject to the 
     provisions of section 362(a) of title 11, United States Code.
       ``(b) Medicare- and Medicaid-Related Debt Not Dischargeable 
     in Bankruptcy.--A debt owed to the United States or to a 
     State for an overpayment under title XVIII or title XIX 
     (other than an overpayment for health care services provided 
     to the debtor under title XVIII), or for a penalty, fine, or 
     assessment under this title, title XVIII, or title XIX, shall 
     not be dischargeable under any provision of title 11, United 
     States Code.
       ``(c) Repayment of Certain Debts Considered Final.--
     Payments made to repay a debt to the United States or to a 
     State with respect to items or services provided, or claims 
     for payment made, under title XVIII or XIX (including 
     repayment of an overpayment (other than an overpayment for 
     health care services provided to the debtor under title 
     XVIII)), or to pay a penalty, fine, or assessment under this 
     title, title XVIII, or title XIX, shall be considered final 
     and not preferential transfers under section 547 of title 11, 
     United States Code.''.
       (b) Medicare Rules Applicable to Bankruptcy Proceedings.--
     Title XVIII of the Social Security Act (42 U.S.C. 1395 et 
     seq.) is amended by adding at the end the following:


           ``application of provisions of the bankruptcy code

       ``Sec. 1897. (a) Use of Medicare Standards and 
     Procedures.--Notwithstanding any provision of title 11, 
     United States Code, or any other provision of law, in the 
     case of

[[Page 18233]]

     claims by a debtor in bankruptcy for payment under this 
     title, the determination of whether the claim is allowable, 
     and of the amount payable, shall be made in accordance with 
     the provisions of this title and title XI.
       ``(b) Notice to Creditor of Bankruptcy Petitioner.--In the 
     case of a debt owed to the United States with respect to 
     items or services provided, or claims for payment made, under 
     this title (including a debt arising from an overpayment or a 
     penalty, fine, or assessment under title XI or this title), 
     the notices to the creditor of bankruptcy petitions, 
     proceedings, and relief required under title 11, United 
     States Code (including under section 342 of that title and 
     section 2002(j) of the Federal Rules of Bankruptcy 
     Procedure), shall be given to the Secretary. Provision of 
     such notice to a fiscal agent of the Secretary shall not be 
     considered to satisfy this requirement.
       ``(c) Turnover of Property to the Bankruptcy Estate.--For 
     purposes of section 542(b) of title 11, United States Code, a 
     claim for payment under this title shall not be considered to 
     be a matured debt payable to the estate of a debtor until 
     such claim has been allowed by the Secretary in accordance 
     with procedures under this title.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to petitions filed on or after the date of 
     enactment of this Act.

     SEC. 10. IMPROVING PRIVATE SECTOR COORDINATION IN COMBATTING 
                   HEALTH CARE FRAUD.

       (a) In General.--Title XI of the Social Security Act (42 
     U.S.C. 1301 et seq.) is amended by inserting after section 
     1157 the following:


``IMPROVING PRIVATE SECTOR COORDINATION IN COMBATTING HEALTH CARE FRAUD

       ``Sec. 1157A. (a) In General.--Notwithstanding any other 
     provision of law, no health plan (as defined in section 
     1128C(c)), issuer of a health plan, or employee of a health 
     plan shall be held liable in any civil action with respect to 
     the provision of information regarding suspected health care 
     fraud, including Federal health care offenses (as defined in 
     section 24(a) of title 18, United States Code) to an 
     applicable individual unless such information is false and 
     the person providing it knew, or had reason to believe, that 
     such information was false.
       ``(b) Applicable Individual.--In subsection (a), the term 
     `applicable individual' means--
       ``(1) a Federal, State, or local law enforcement official 
     responsible for the investigation or prosecution of suspected 
     health care fraud offenses; or
       ``(2) an employee of a health plan or issuer of a health 
     plan.
       ``(c) Attorney's Fees.--Any health plan, issuer of a health 
     plan, or employee of a health plan against whom a civil 
     action is brought, and who is found to be entitled to 
     immunity from liability by reason of this section, shall be 
     entitled to recover reasonable attorney's fees and costs from 
     the person who brought the civil action.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of enactment of this Act.

     SEC. 11. FEES FOR AGREEMENTS WITH MEDICARE PROVIDERS AND 
                   SUPPLIERS.

       (a) Fees Related to Medicare Provider and Supplier 
     Enrollment and Reenrollment.--Section 1866 of the Social 
     Security Act (42 U.S.C. 1395cc) is amended by adding at the 
     end the following:
       ``(j) Enrollment Procedures and Fees.--
       ``(1) Enrollment of individuals and entities that are not 
     providers of services.--The Secretary may establish a 
     procedure for enrollment (and periodic reenrollment) of 
     individuals or entities that are not providers of services 
     subject to the provisions of subsection (a) but that furnish 
     health care items or services under this title.
       ``(2) Fees.--
       ``(A) In general.--The Secretary may impose fees for 
     initiation and renewal of provider agreements under 
     subsection (a) and for enrollment and periodic reenrollment 
     of other individuals and entities furnishing health care 
     items or services under this title under paragraph (1), in 
     amounts up to the full amount which the Secretary reasonably 
     estimates to be sufficient to cover the Secretary's costs 
     related to the process for initiating and reviewing such 
     agreements and enrollments.
       ``(B) Fees credited to special fund in treasury.--Fees 
     collected pursuant to this paragraph shall be credited to a 
     special fund of the United States Treasury, and shall remain 
     available until expended, to the extent and in such amounts 
     as provided in advance in appropriations Acts, for necessary 
     expenses for these purposes, including costs of establishing 
     and maintaining procedures and records systems, processing 
     applications, and conducting background investigations.''.
       (b) Clerical Amendment.--The heading of section 1866 of the 
     Social Security Act (42 U.S.C. 1395cc) is amended to read as 
     follows:


``agreements with providers of services and enrollment of other persons 
                         furnishing services''.

     SEC. 12. INCREASED MEDICARE COMPLIANCE, EDUCATION, AND 
                   ASSISTANCE FOR HEALTH CARE PROVIDERS.

       (a) Development of Plan.--Not later than 6 months after the 
     date of enactment of this Act, the Secretary of Health and 
     Human Services shall, in consultation with health care 
     provider representatives, develop and implement a 
     comprehensive plan of activities to--
       (1) maximize health care provider knowledge of medicare 
     program integrity requirements, including anti-fraud and 
     abuse laws and administrative actions;
       (2) assist health care providers with medicare program 
     integrity compliance, including educating such providers 
     regarding compliance activities and procedures of the Health 
     Care Financing Administration and the Inspector General of 
     the Department of Health and Human Services;
       (3) develop improved computer technology for health care 
     providers to both reduce their administrative hassles and 
     facilitate their compliance with medicare program 
     requirements, including physician evaluation and management 
     guidelines; and
       (4) otherwise improve compliance among health care 
     providers with rules and regulations under the medicare 
     program.
       (b) Funding.--Notwithstanding any other provision of law, 
     of the amounts appropriated under section 1817(k)(4) of the 
     Social Security Act (42 U.S.C. 1395i(k)(4)) for a fiscal 
     year, there shall be made available $10,000,000 in fiscal 
     year 2000 and such sums as are necessary in fiscal years 2001 
     through 2004 to carry out the purposes of this section.

     SEC. 13. PAPERWORK AND ADMINISTRATIVE HASSLE REDUCTION.

       (a) Study by Committee.--
       (1) Establishment.--Not later than 90 days after the date 
     of enactment of this Act, the Secretary of Health and Human 
     Services shall contract with the Institute of Medicine of the 
     National Academy of Sciences to establish a committee to 
     study medicare program administrative requirements that are 
     applicable to health care providers under such program.
       (2) Committee.--The committee described in paragraph (1) 
     shall be composed of--
       (A) at least 9 health care providers who participate in, 
     and have significant experience working with, the medicare 
     program;
       (B) experts in paperwork reduction; and
       (C) beneficiaries under the medicare program or their 
     representatives.
       (b) Recommendations.--The committee described in subsection 
     (a) shall develop recommendations regarding how paperwork and 
     administrative requirements under the medicare program can be 
     minimized in a manner that--
       (1) increases the time health care providers that are 
     subject to such requirements have to spend in direct patient 
     care; and
       (2) maintains medicare program integrity and compliance 
     with anti-fraud and abuse requirements.

     In developing such recommendations, the committee shall seek 
     to streamline variations in administrative and paperwork 
     requirements between the medicare program and other 
     government health programs and private health plans.
       (c) Report.--
       (1) In general.--Not later than June 1, 2000, the committee 
     described in subsection (a) shall submit a report to the 
     Secretary of Health and Human Services, the Committees on 
     Finance and Appropriations of the Senate and the Committees 
     on Ways and Means, Commerce, and Appropriations of the House 
     of Representatives.
       (2) Contents.--The report required under paragraph (1) 
     shall contain a detailed description of the matters studied 
     pursuant to subsection (a) and the recommendations developed 
     pursuant to subsection (b), including such legislation and 
     administrative actions as the committee considers 
     appropriate.
       (d) Authorization of Appropriations.--
       (1) In general.--There are authorized to be appropriated 
     $1,000,000 for fiscal year 2000 to carry out the purposes of 
     this section.
       (2) Availability.--Any sums appropriated under the 
     authorization contained in this subsection shall remain 
     available, without fiscal year limitation, until expended.

     SEC. 14. CLARIFICATION OF APPLICATION OF SANCTIONS TO FEDERAL 
                   HEALTH CARE PROGRAMS.

       (a) Coverage of Employment.--Section 1128 of the Social 
     Security Act (42 U.S.C. 1320a-7) is amended--
       (1) in subsection (a), in the matter preceding paragraph 
     (1), by inserting ``(including employment under)'' after 
     ``participation in''; and
       (2) in subsection (b), in the matter preceding paragraph 
     (1), by inserting ``(including employment under)'' after 
     ``participation in''.
       (b) Application Under Civil Money Penalty Authority.--
     Section 1128A of the Social Security Act (42 U.S.C. 1320a-7a) 
     is amended--
       (1) in subsection (a)(4), by striking ``program under title 
     XVIII or a State health care program'' and inserting 
     ``Federal health care program'' each place it appears;
       (2) in subsection (a)(5)--
       (A) by striking ``title XVIII of this Act, or under a State 
     health care program (as defined in section 1128(h))'' and 
     inserting ``a Federal health care program''; and
       (B) by striking ``title XVIII, or a State health care 
     program (as so defined)'' and inserting ``such program'';
       (3) in the last sentence of subsection (a), by striking 
     ``and to direct the appropriate State

[[Page 18234]]

     agency to exclude the person from participation in any State 
     health care program''; and
       (4) in subsection (h), by striking ``State agency or 
     agencies administering or supervising the administration of 
     State health care programs (as defined in section 1128(h))'' 
     and inserting ``Federal or State agency or agencies 
     administering or supervising the administration of any 
     Federal health care program''.
       (c) Application of Waiver Provisions to Federal Health Care 
     Programs.--Section 1128 of the Social Security Act (42 U.S.C. 
     1320a-7) is amended--
       (1) in subsection (c)(3)(B), by striking ``upon the request 
     of a State'' and inserting ``upon the request of the director 
     of a Federal health care program'';
       (2) in subsection (d)(3)(B)(i)--
       (A) by striking ``State health care program'' and inserting 
     ``Federal health care program''; and
       (B) by striking ``State agency'' and inserting ``Federal or 
     State agency''; and
       (3) in subsection (d)(3)(B)(ii), by striking ``State health 
     care program'' and inserting ``Federal health care program 
     (other than under title XVIII)''.
       (d) Notice Provision Regarding Federal Health Care 
     Programs.--Section 1128 of the Social Security Act (42 U.S.C. 
     1320a-7) is amended--
       (1) in the heading of subsection (d), by striking ``to 
     State Agencies and Exclusion Under State Health Care 
     Programs'' and inserting ``and Exclusion Under Federal Health 
     Care Programs'';
       (2) in subsection (d)(1), by striking ``State'' and 
     inserting ``Federal'';
       (3) in subsection (d)(2)--
       (A) by striking ``State agency'' and inserting ``Federal or 
     State agency'' each place it appears; and
       (B) by striking ``State health care program'' and inserting 
     ``Federal health care program'' each place it appears;
       (4) in subsection (d)(3)(A), by striking ``State'' and 
     inserting ``Federal''; and
       (5) in subsection (g)(3)--
       (A) by striking ``State agency'' and inserting ``Federal or 
     State agency''; and
       (B) by striking ``State health care program'' and inserting 
     ``Federal health care program''.
       (e) Use of Definition of Federal Health Care Program and 
     Treatment of Federal Employees Health Benefits Program as a 
     Federal Health Care Program.--Section 1128B(f) of the Social 
     Security Act (42 U.S.C. 1320a-7b(f)) is amended--
       (1) in the matter preceding paragraph (1), by inserting 
     ``and sections 1128 and 1128A'' after ``this section''; and
       (2) in paragraph (1), by striking ``(other than the health 
     insurance program under chapter 89 of title 5, United States 
     Code)''.
       (f) Authority To Exclude From Federal Health Care Programs 
     Based on PRO Recommendations.--Section 1156(b)(1) of the 
     Social Security Act (42 U.S.C. 1320c-5(b)(1)) is amended--
       (1) in the second sentence, by striking ``eligibility to 
     provide services under this Act on a reimbursable basis'' and 
     inserting ``participation in any Federal health care program 
     (as defined in section 1128B(f))''; and
       (2) in the third sentence, by striking ``eligibility to 
     provide services on a reimbursable basis'' and inserting 
     ``participation in such programs''.
       (g) Effective Date.--
       (1) In general.--Subject to paragraph (2), the amendments 
     made by this section shall take effect on the date of 
     enactment of this Act.
       (2) Convictions under fehbp.--The amendment made by 
     subsection (e)(2) shall apply, with respect to convictions 
     under the health insurance program under chapter 89 of title 
     5, United States Code, to convictions that occur on or after 
     the date of enactment of this Act.

     SEC. 15. PAYMENTS FOR DURABLE MEDICAL EQUIPMENT.

       (a) In General.--Section 1834(a)(1) of the Social Security 
     Act (42 U.S.C. 1395m(a)(1)) is amended--
       (1) in subparagraph (B)--
       (A) in clause (i), by striking ``, or'' at the end and 
     inserting a semicolon; and
       (B) by inserting after clause (ii) the following:
       ``(iii) the least expensive amount that the supplier of the 
     item is paid by a Medicare+Choice organization for such item; 
     or
       ``(iv) the least expensive amount that the supplier of the 
     item is paid by any Federal health care program (as defined 
     in section 1128B(f)) for such item;''; and
       (2) by adding at the end the following:
       ``(E) Administrative costs.--
       ``(i) In general.--Except as provided in clause (ii), if--

       ``(I) the payment amount for an item is covered under 
     clauses (iii) or (iv) of subparagraph (B); and
       ``(II) the Secretary determines that the administrative 
     costs associated with billing and receiving reimbursement 
     from the Secretary for the item exceeds the administrative 
     costs associated with providing such item to a 
     Medicare+Choice organization or another Federal health care 
     program (as so defined);

     then the Secretary shall adjust the payment rate for such 
     item to reflect such excess.
       ``(ii) Limitation.--In no case may the payment rate for an 
     item that is adjusted under clause (i) exceed the payment 
     rate for such item determined in clauses (i) and (ii) of 
     subparagraph (B).
       ``(iii) Collection of information.--The Secretary shall 
     collect from durable medical equipment suppliers that receive 
     reimbursement under Federal health care programs (as so 
     defined) such information as the Secretary determines is 
     necessary in order to make the determination described in 
     clause (i)(II).''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to items provided on or after January 1, 2000.

     SEC. 16. IMPLEMENTATION OF COMMERCIAL CLAIMS AUDITING 
                   SYSTEMS.

       (a) Commercial Claims Auditing Systems.--
       (1) In general.--Not later than 90 days after the date of 
     enactment of this Act, the Secretary shall require medicare 
     carriers to use commercial claims auditing systems in the 
     processing of claims under part B of the medicare program 
     under title XVIII of the Social Security Act (42 U.S.C. 1395j 
     et seq.) for the purpose of identifying billing errors and 
     abuses.
       (2) Supplement to other technology.--Commercial claims 
     auditing systems required under paragraph (1) shall be used 
     as a supplement to any other information technology used by 
     medicare carriers in processing claims under the medicare 
     program.
       (3) Uniformity.--In order to ensure uniformity in 
     processing claims under the medicare program, the Secretary 
     may require that medicare carriers utilize 1 or more common 
     commercial claims auditing systems, provided that the 
     selection of such system or systems by the Secretary shall 
     be--
       (A) after due consideration of competing alternative 
     systems; but
       (B) without regard to any provision of law that requires 
     the use of competitive procedures (as defined in section 4 of 
     the Office of Federal Procurement Policy Act (41 U.S.C. 403)) 
     or the publication of notice of proposed procurements.
       (4) Implementation.--Commercial claims auditing systems 
     required under paragraph (1) shall be implemented by all 
     medicare carriers by not later than 180 days after the date 
     of enactment of this Act.
       (b) Minimum Software Requirements.--Any commercial claims 
     auditing system required to be implemented pursuant to 
     subsection (a) shall, at a minimum--
       (1) be a commercial item;
       (2) surpass the capability of systems currently used in the 
     processing of claims under part B of the medicare program; 
     and
       (3) be modifiable to--
       (A) satisfy pertinent statutory requirements of the 
     medicare program; and
       (B) conform to policies of the Secretary regarding claims 
     processing under such program.
       (c) Disclosure.--
       (1) In general.--Except as provided in paragraph (2), 
     notwithstanding any other provision of law, any information 
     technology (or data related thereto) utilized by medicare 
     carriers in establishing a commercial claims auditing system 
     pursuant to subsection (a) shall not be subject to public 
     disclosure.
       (2) Authorized disclosure.--The Secretary may authorize the 
     public disclosure of the information described in paragraph 
     (1) if the Secretary determines that--
       (A) release of such information is in the public interest; 
     and
       (B) the information to be released is not protected from 
     disclosure under section 552(b) of title 5, United States 
     Code.
       (d) Definitions.--In this section--
       (1) Commercial claims auditing system.--The term 
     ``commercial claims auditing system'' means a commercial 
     specialized auditing system that includes edits which 
     identify inappropriately coded health care claims.
       (2) Commercial item.--The term ``commercial item'' has the 
     meaning given such term in section 4 of the Office of Federal 
     Procurement Policy Act (41 U.S.C. 403).
       (3) Information technology.--The term ``information 
     technology'' has the meaning given such term in subparagraphs 
     (A) and (B) of section 5002(3) of the Information Technology 
     Management Reform Act of 1996 (40 U.S.C. 1401(3)), were such 
     information technology to be acquired by an executive agency.
       (4) Medicare carrier.--The term ``medicare carrier'' means 
     an entity that has a contract with the Secretary pursuant to 
     section 1842(a) of the Social Security Act (42 U.S.C. 
     1395u(a)).
       (5) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.

     SEC. 17. PARTIAL HOSPITALIZATION PAYMENT REFORMS.

       (a) Limitation on Location of Provision of Services.--
       (1) In general.--Section 1861(ff)(2) of the Social Security 
     Act (42 U.S.C. 1395x(ff)(2)) is amended in the matter 
     following subparagraph (I)--
       (A) by striking ``and furnished'' and inserting 
     ``furnished''; and
       (B) by inserting ``, and furnished other than in a skilled 
     nursing facility or in an individual's personal residence'' 
     before the period.

[[Page 18235]]

       (2) Effective Date.--The amendments made by paragraph (1) 
     shall apply to partial hospitalization services furnished on 
     or after the first day of the third month beginning after the 
     date of enactment of this Act.
       (b) Qualifications for Community Mental Health Centers.--
     Section 1861(ff)(3)(B) of the Social Security Act (42 U.S.C. 
     1395x(ff)(3)(B)) is amended by striking ``entity'' and all 
     that follows and inserting the following: ``entity that--
       ``(i) provides the mental health services described in 
     paragraph (1) of section 1913(c) of the Public Health Service 
     Act;
       ``(ii) meets applicable licensing or certification 
     requirements for community mental health centers in the State 
     in which it is located; and
       ``(iii) meets such additional standards or requirements as 
     the Secretary may specify to ensure--
       ``(I) the health and safety of individuals being furnished 
     such services;
       ``(II) the effective or efficient furnishing of such 
     services (including protecting against fraud, waste, and 
     abuse); and
       ``(III) the compliance of such entity with the criteria 
     described in such section.''.
       (c) Reenrollment of Providers of CMHC Partial 
     Hospitalization Services.--
       (1) In general.--With respect to each community mental 
     health center that furnishes partial hospitalization services 
     for which payment is made under title XVIII of the Social 
     Security Act, the Secretary of Health and Human Services 
     shall provide for periodic recertification to ensure that the 
     provision of such services complies with section 1913(c) of 
     the Public Health Service Act.
       (2) Deadline for first recertification.--The first 
     recertification under paragraph (1) shall be completed not 
     later than 1 year after the date of enactment of this Act.
       (d) Prospective Payment System for Partial Hospitalization 
     Services.--
       (1) Establishment of system.--Section 1833 of the Social 
     Security Act (42 U.S.C. 1395l) is amended by inserting after 
     subsection (o) the following:
       ``(p)(1) The Secretary may establish by regulation a 
     prospective payment system for partial hospitalization 
     services provided by a community mental health center or by a 
     hospital to its outpatients. The system shall provide for 
     appropriate payment levels for efficient centers and 
     hospitals and take into account payment levels for similar 
     services furnished by other efficient entities.
       ``(2) A prospective payment system established pursuant to 
     paragraph (1) shall provide for payment amounts for--
       ``(A) the first year in which such system applies, at a 
     level so that, as estimated by the Secretary, the total 
     aggregate payments under this part (including payments 
     attributable to deductibles and coinsurance) for such year 
     are not greater than the total aggregate payments that would 
     have otherwise been made under this part if such system had 
     not been implemented (assuming full implementation of the 
     provisions contained in subsections (a) through (c) of 
     section 17 of the Medicare Waste Tax Reduction Act of 1999); 
     and
       ``(B) each subsequent year, in an amount equal to the 
     payment amount provided for under this paragraph for the 
     preceding year updated by the percentage increase in the 
     Consumer Price Index for all urban consumers (all items; 
     United States city average) for the 12-month period ending 
     with September of that preceding year.''.
       (2) Coinsurance.--Section 1866(a)(2)(A) of the Social 
     Security Act (42 U.S.C. 1395cc(a)(2)(A)) is amended by adding 
     at the end the following: ``In the case of services described 
     in section 1832(a)(2)(J), clause (ii) of the first sentence 
     of this subparagraph shall be applied by substituting the 
     payment basis established under section 1833(p) for the 
     reasonable charges.''.
       (3) Conforming amendments.--
       (A) Section 1832(a)(2) of the Social Security Act (42 
     U.S.C. 1395k(a)(2)) is amended--
       (i) in subparagraph (B), by striking ``or subparagraph 
     (I)'' and inserting ``, (I), or (J)''; and
       (ii) in subparagraph (J), by striking ``provided by a 
     community mental health center (as described in section 
     1861(ff)(2)(B))''.
       (B) Section 1833(a) of the Social Security Act (42 U.S.C. 
     1395l(a)) is amended--
       (i) in paragraph (2) in the matter preceding subparagraph 
     (A), by striking ``(H), and (I)'' and inserting ``(H), (I), 
     and (J)'';
       (ii) in paragraph (8), by striking ``and'' at the end;
       (iii) in paragraph (9), by striking the period at the end 
     and inserting ``; and''; and
       (iv) by adding at the end the following:
       ``(10) in the case of partial hospitalization services, 80 
     percent of the payment basis under the prospective payment 
     system established under section 1833(p).''.
       (4) Effective date.--The amendments made by paragraphs (2) 
     and (3) apply to services furnished on or after January 1 of 
     the first year that begins at least 6 months after the date 
     on which regulations are issued under section 1833(p) of the 
     Social Security Act (42 U.S.C. 1395l(p)) (as inserted by 
     paragraph (1)).

     SEC. 18. EXPANSION OF MEDICARE SENIOR WASTE PATROL 
                   NATIONWIDE.

       There are authorized to be appropriated $25,000,000 in 
     fiscal year 2000, and such sums as are necessary for fiscal 
     years 2001 through 2003, for the purpose of carrying out, and 
     expanding nationwide, the Health Care Anti-Fraud, Waste and 
     Abuse Community Volunteer Demonstration Projects conducted by 
     the Administration on Aging pursuant to the Omnibus 
     Consolidated Appropriations Act, 1997 (Public Law 104-208).

     SEC. 19. APPLICATION OF INHERENT REASONABLENESS TO ALL PART B 
                   SERVICES OTHER THAN PHYSICIANS' SERVICES.

       (a) Repeal of Certain Provisions of the Balanced Budget Act 
     of 1997.--
       (1) Repeal.--Section 4316 of the Balanced Budget Act of 
     1997 (Public Law 105-33; 111 Stat. 390), and the amendments 
     made by such section, are repealed effective August 5, 1997.
       (2) Applicability.--Effective August 5, 1997, the Social 
     Security Act shall be applied and administered as if section 
     4316 of the Balanced Budget Act of 1997 (Public Law 105-33; 
     111 Stat. 390), and the amendments made by such section, had 
     not been enacted.
       (b) Application of Inherent Reasonableness to All Part B 
     Services Other Than Physicians' Services.--
       (1) In general.--Section 1842(b)(8) of the Social Security 
     Act (42 U.S.C. 1395u(b)(8)) is amended to read as follows:
       ``(8) The Secretary shall describe by regulation the 
     factors to be used in determining the cases (of particular 
     items or services) in which the application of this part 
     (other than to physicians' services paid under section 1848) 
     results in the determination of an amount that, because of 
     its being grossly excessive or grossly deficient, is not 
     inherently reasonable, and provide in those cases for the 
     factors to be considered in establishing an amount that is 
     realistic and equitable.''.
       (2) Effective date.--The amendment made by this subsection 
     shall take effect August 5, 1997.

     SEC. 20. STANDARDS REGARDING PAYMENT FOR CERTAIN ORTHOTICS 
                   AND PROSTHETICS.

       (a) Standards.--
       (1) In general.--Section 1834(h)(1) of the Social Security 
     Act (42 U.S.C. 1395m(h)(1)) is amended by adding at the end 
     the following:
       ``(F) Establishment of standards for certain items.--
       ``(i) In general.--No payment shall be made for an 
     applicable item unless such item is provided by a qualified 
     practitioner or a qualified supplier under the system 
     established by the Secretary under clause (iii). For purposes 
     of the preceding sentence, if a qualified practitioner or a 
     qualified supplier contracts with an entity to provide an 
     applicable item, then no payment shall be made for such item 
     unless the entity is also a qualified supplier.
       ``(ii) Definitions.--In this subparagraph--

       ``(I) Applicable item.--The term `applicable item' means 
     orthotics and prosthetics that require education, training, 
     and experience to custom fabricate such item. Such term does 
     not include shoes and shoe inserts.
       ``(II) Qualified practitioner.--The term `qualified 
     practitioner' means a physician or health professional who--

       ``(aa) is specifically trained and educated to provide or 
     manage the provision of custom-designed, fabricated, 
     modified, and fitted orthotics and prosthetics, and is either 
     certified by the American Board for Certification in 
     Orthotics and Prosthetics, Inc., or is credentialed and 
     approved by a program that the Secretary determines, in 
     consultation with appropriate experts in orthotics and 
     prosthetics, has training and education standards that are 
     necessary to provide applicable items;
       ``(bb) is licensed in orthotics or prosthetics by the State 
     in which the applicable item is supplied; or
       ``(cc) has completed at least 10 years practice in the 
     provision of applicable items.

       ``(III) Qualified supplier.--The term `qualified supplier' 
     means any entity that is--

       ``(aa) accredited by the American Board for Certification 
     in Orthotics and Prosthetics, Inc.; or
       ``(bb) accredited and approved by a program that the 
     Secretary determines has accreditation and approval standards 
     that are essentially equivalent to those of such Board.
       ``(iii) System.--The Secretary, in consultation with 
     appropriate experts in orthotics and prosthetics, shall 
     establish a system under which the Secretary shall--

       ``(I) determine which items are applicable items and 
     formulate a list of such items;
       ``(II) review the applicable items billed under the coding 
     system established under this title; and
       ``(III) limit payment for applicable items pursuant to 
     clause (i).''.

       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to items provided on or after January 1, 2000.
       (b) Revision of Definition of Orthotics.--
       (1) In general.--Section 1861(s)(9) of the Social Security 
     Act (42 U.S.C. 1395x(s)(9)) is amended by inserting 
     ``(including such braces that are used in conjunction with, 
     or as components of, other medical or non-medical equipment 
     when provided by a qualified practitioner (as defined in 
     subclause (II) of section 1834(h)(1)(F))) or a qualified 
     supplier (as defined in subclause (III) of such section)'' 
     after ``braces''.

[[Page 18236]]

       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to items provided on or after January 1, 2000.

     SEC. 21. INCREASED FLEXIBILITY IN CONTRACTING FOR MEDICARE 
                   CLAIMS PROCESSING.

       (a) Carriers To Include Entities That Are Not Insurance 
     Companies.--Section 1842 of the Social Security Act (42 
     U.S.C. 1395u) is amended--
       (1) in subsection (a), in the matter preceding paragraph 
     (1), by striking ``with carriers'' and inserting ``with 
     agencies and organizations (in this section referred to as 
     `carriers')''; and
       (2) by striking subsection (f).
       (b) Secretarial Flexibility in Contracting for and in 
     Assigning Fiscal Intermediary and Carrier Functions.--
       (1) In general.--
       (A) Section 1816(a) of the Social Security Act (42 U.S.C. 
     1395h(a)) is amended to read as follows:
       ``(a)(1) The Secretary may enter into contracts with 
     agencies or organizations to perform any or all of the 
     following functions, or parts of those functions (or, to the 
     extent provided in a contract, to secure performance thereof 
     by other organizations) to--
       ``(A) determine (subject to the provisions of section 1878 
     and to such review by the Secretary as may be provided for by 
     the contracts) the amount of the payments required pursuant 
     to this part to be made to providers of services;
       ``(B) make payments described in subparagraph (A);
       ``(C) provide consultative services to institutions or 
     agencies to enable them to establish and maintain fiscal 
     records necessary for purposes of this part and otherwise to 
     qualify as providers of services;
       ``(D) serve as a center for, and communicate to individuals 
     entitled to benefits under this part and to providers of 
     services, any information or instructions furnished to the 
     agency or organization by the Secretary, and serve as a 
     channel of communication from individuals entitled to 
     benefits under this part and from providers of services to 
     the Secretary;
       ``(E) make such audits of the records of providers of 
     services as may be necessary to ensure that proper payments 
     are made under this part;
       ``(F) perform the functions described by subsection (d); 
     and
       ``(G) perform such other functions as are necessary to 
     carry out the purposes of this part.
       ``(2) As used in this title and title XI, the term `fiscal 
     intermediary' means an agency or organization with a contract 
     under this section.''.
       (B) Section 1816(b)(1)(A) of the Social Security Act (42 
     U.S.C. 1395h(b)(1)(A)) is amended by striking ``after 
     applying the standards, criteria, and procedures'' and 
     inserting ``after evaluating the ability of the agency or 
     organization to fulfill the contract performance 
     requirements''.
       (C) Section 1816(d) of the Social Security Act (42 U.S.C. 
     1395h(d)) is amended to read as follows:
       ``(d) Each provider of services shall have a fiscal 
     intermediary that--
       ``(1) acts as a single point of contact for the provider of 
     services under this part;
       ``(2) makes its services sufficiently available to meet the 
     needs of the provider of services; and
       ``(3) is responsible and accountable for arranging the 
     resolution of issues raised under this part by the provider 
     of services.''.
       (D) Section 1816(e) of the Social Security Act (42 U.S.C. 
     1395h(d)) is amended to read as follows:
       ``(e) The Secretary, in evaluating the performance of a 
     fiscal intermediary, may solicit comments from providers of 
     services.''.
       (E) Section 1816(f)(1) of the Social Security Act (42 
     U.S.C. 1395h(f)(1)) is amended to read as follows:
       ``(f)(1) With respect to performance requirements under 
     subsection (a), the Secretary may consult with--
       ``(A) Medicare+Choice organizations under part C of this 
     title;
       ``(B) providers of services and other persons who furnish 
     items or services for which payment may be made under this 
     title; and
       ``(C) organizations and agencies performing functions 
     necessary to carry out the purposes of this part.''.
       (F) Section 1842(b)(2) of the Social Security Act (42 
     U.S.C. 1395u(b)(2)) is amended--
       (i) in subparagraph (A)--

       (I) by inserting ``(i)'' before ``No such contract'';
       (II) by striking the second sentence and inserting the 
     following:

       ``(ii) With respect to performance requirements for 
     contracts under subsection (a), the Secretary may consult 
     with--
       ``(I) Medicare+Choice organizations under part C of this 
     title;
       ``(II) providers of services and other persons who furnish 
     items or services for which payment may be made under this 
     title; and
       ``(III) organizations and agencies performing functions 
     necessary to carry out the purposes of this part.'';

       (III) by striking the third sentence; and
       (IV) by striking the fourth sentence and inserting the 
     following:

       ``(iii) The Secretary may not require, as a condition of 
     entering into a contract under this section or under section 
     1871, that a carrier match data obtained other than in its 
     activities under this part with data used in the 
     administration of this part for purposes of identifying 
     situations in which section 1862(b) may apply.'';
       (ii) in subparagraph (B), in the matter preceding clause 
     (i), by striking ``establish standards'' and inserting 
     ``develop contract performance requirements''; and
       (iii) in subparagraph (D), by striking ``standards and 
     criteria'' each place it appears and inserting ``contract 
     performance requirements''.
       (2) Conforming amendments.--
       (A) Section 1816(b) of the Social Security Act (42 U.S.C. 
     1395h(b)) is amended--
       (i) in the matter preceding paragraph (1), by striking ``an 
     agreement'' and inserting ``a contract'';
       (ii) in paragraph (1)(B), by striking ``agreement'' and 
     inserting ``contract''; and
       (iii) in paragraph (2)(A), by striking ``agreement'' and 
     inserting ``contract''.
       (B) Section 1816(c) of the Social Security Act (42 U.S.C. 
     1395h(c)) is amended--
       (i) in paragraph (1)--

       (I) in the first sentence, by striking ``An agreement'' and 
     inserting ``A contract''; and
       (II) in the last sentence, by striking ``an agreement'' and 
     inserting ``a contract'';

       (ii) in paragraph (2)(A), in the matter preceding clause 
     (i)--

       (I) by striking ``agreement'' and inserting ``contract''; 
     and
       (II) by inserting ``that provides for making payments under 
     this part'' after ``this section'';

       (iii) in paragraph (2)(C), by striking ``hospital, rural 
     primary care hospital, skilled nursing facility, home health 
     agency, hospice program, comprehensive outpatient 
     rehabilitation facility, or rehabilitation agency'' and 
     inserting ``provider of services (as defined in section 
     1861(u))''; and
       (iv) in paragraph (3)(A)--

       (I) by striking ``agreement'' and inserting ``contract''; 
     and
       (II) by inserting ``that provides for making payments under 
     this part'' after ``this section''.

       (C) Section 1816(h) of the Social Security Act (42 U.S.C. 
     1395h(h)) is amended--
       (i) by striking ``An agreement'' and inserting ``A 
     contract''; and
       (ii) by striking ``the agreement'' each place it appears 
     and inserting ``the contract''.
       (D) Section 1816(i)(1) of the Social Security Act (42 
     U.S.C. 1395h(i)(1)) is amended by striking ``an agreement'' 
     and inserting ``a contract''.
       (E) Section 1816(j) of the Social Security Act (42 U.S.C. 
     1395h(j)) is amended in the matter preceding paragraph (1)--
       (i) by striking ``An agreement'' and inserting ``A 
     contract''; and
       (ii) by striking ``for home health services, extended care 
     services, or post-hospital extended care services''.
       (F) Section 1816(k) of the Social Security Act (42 U.S.C. 
     1395h(k)) is amended--
       (i) by striking ``An agreement'' and inserting ``A 
     contract''; and
       (ii) by inserting ``(as appropriate)'' after ``submit''.
       (G) Section 1816(l) of the Social Security Act (42 U.S.C. 
     1395h(l)) is amended by striking ``an agreement'' and 
     inserting ``a contract''.
       (H) Section 1842(a) of the Social Security Act (42 U.S.C. 
     1395u(a)) is amended--
       (i) in the matter preceding paragraph (1) (as amended by 
     subsection (a)(1))--

       (I) by striking ``carriers with which agreements'' and 
     inserting ``single contracts under section 1816 and this 
     section together, or separate contracts with eligible 
     agencies and organizations with which contracts''; and
       (II) by striking ``some or all of the following functions'' 
     and inserting ``any or all of the following functions, or 
     parts of those functions''; and

       (ii) in paragraph (3), by inserting ``(to and from 
     individuals enrolled under this part and to and from 
     physicians and other entities that furnish items and 
     services)'' after ``communication''.
       (I) Section 1842(b) of the Social Security Act (42 U.S.C. 
     1395u(b)(2)(C)) is amended--
       (i) in paragraph (2)(C), in the first sentence, by 
     inserting ``(as appropriate)'' after ``carriers'';
       (ii) in paragraph (3), in the matter preceding subparagraph 
     (A), by inserting ``(as appropriate)'' after ``contract'';
       (iii) in paragraph (7)(A), in the matter preceding clause 
     (i), by striking ``the carrier'' and inserting ``a carrier''; 
     and
       (iv) in paragraph (11)(A), in the matter preceding clause 
     (i), by inserting ``(as appropriate)'' after ``each 
     carrier''.
       (J) Section 1842(h) of the Social Security Act (42 U.S.C. 
     1395u(h)) is amended--
       (i) in paragraph (2), in the first sentence--

       (I) by striking ``an agreement'' and inserting ``a 
     contract''; and
       (II) by inserting ``(as appropriate)'' after ``shall'';

       (ii) in paragraph (3)(A), by striking ``an agreement'' and 
     inserting ``a contract'';
       (iii) in paragraph (3)(B), in the third sentence, by 
     striking ``agreements'' and inserting ``contracts'';
       (iv) in paragraph (5)(A), by inserting ``(as appropriate)'' 
     after ``carriers''; and

[[Page 18237]]

       (v) in paragraph (8)--

       (I) by striking ``an agreement'' and inserting ``a 
     contract''; and
       (II) by striking ``such agreement'' and inserting ``such 
     contract''.

       (c) Elimination of Special Provisions for Terminations of 
     Contracts.--
       (1) Section 1816 of the Social Security Act (42 U.S.C. 
     1395h) is amended--
       (A) in subsection (b), in the matter preceding paragraph 
     (1), by striking ``or renew'';
       (B) in subsection (c)(1), in the last sentence, by striking 
     ``or renewing''; and
       (C) by striking subsection (g).
       (2) Section 1842(b) of the Social Security Act (42 U.S.C. 
     1395u(b)(2)) is amended by striking paragraph (5).
       (d) Repeal of Fiscal Intermediary Requirements That Are Not 
     Cost-Effective.--Section 1816(f)(2) of the Social Security 
     Act (42 U.S.C. 1395h(f)(2)) is amended to read as follows:
       ``(2) The contract performance requirements described in 
     paragraph (1) shall include--
       ``(A) with respect to claims for services furnished under 
     this part by any provider of services (as defined in section 
     1861(u)) other than a hospital, whether such agency or 
     organization is able to process 75 percent of 
     reconsiderations within 60 days and 90 percent of 
     reconsiderations within 90 days; and''.
       (e) Repeal of Cost Reimbursement Requirements.--
       (1) Section 1816(c)(1) of the Social Security Act (42 
     U.S.C. 1395h(c)(1)) is amended--
       (A) in the first sentence--
       (i) by striking the comma after ``appropriate'' and 
     inserting ``and''; and
       (ii) by striking ``, and shall provide for payment'' and 
     all that follows before the period; and
       (B) by striking the second and third sentences.
       (2) Section 1842(c)(1) of the Social Security Act (42 
     U.S.C. 1395h(c)(1)) is amended--
       (A) in the first sentence--
       (i) by striking ``section shall provide'' and inserting 
     ``section may provide''; and
       (ii) by striking ``, and shall provide'' and all that 
     follows before the period; and
       (B) by striking the second and third sentences.
       (3) Section 2326 of the Deficit Reduction Act of 1984 (42 
     U.S.C. 1395h note) is amended by striking subsection (a).
       (f) Secretarial Flexibility With Respect to Renewing 
     Contracts and Transfer of Functions.--
       (1) Section 1816(c) of the Social Security Act (42 U.S.C. 
     1395h(c)) is amended by adding at the end the following:
       ``(4)(A) Except as provided in laws with general 
     applicability to Federal acquisition and procurement or in 
     subparagraph (B), the Secretary shall use competitive 
     procedures when entering into contracts under this section.
       ``(B)(i) The Secretary may renew a contract with a fiscal 
     intermediary under this section from term to term without 
     regard to section 5 of title 41, United States Code, or any 
     other provision of law requiring competition, if the fiscal 
     intermediary has met or exceeded the performance requirements 
     established in the current contract.
       ``(ii) Functions may be transferred among fiscal 
     intermediaries without regard to any provision of law 
     requiring competition. However, the Secretary shall ensure 
     that performance quality is considered in such transfers.''.
       (2) Section 1842(b)(1) of the Social Security Act (42 
     U.S.C. 1395u(b)(1)) is amended to read as follows:
       ``(b)(1)(A) Except as provided in laws with general 
     applicability to Federal acquisition and procurement or in 
     subparagraph (B), the Secretary shall use competitive 
     procedures when entering into contracts under this section.
       ``(B)(i) The Secretary may renew a contract with a carrier 
     under subsection (a) from term to term without regard to 
     section 5 of title 41, United States Code, or any other 
     provision of law requiring competition, if the carrier has 
     met or exceeded the performance requirements established in 
     the current contract.
       ``(ii) Functions may be transferred among carriers without 
     regard to any provision of law requiring competition. 
     However, the Secretary shall ensure that performance quality 
     is considered in such transfers.''.
       (g) Year 2000 Compliance.--
       (1) Section 1816(f)(2) of the Social Security Act (42 
     U.S.C. 1395h(f)(2)) (as amended by subsection (d)) is amended 
     by adding at the end the following:
       ``(B) a requirement that, by such time as the Secretary 
     considers reasonable, the information technology that is used 
     or acquired by the agency or organization to carry out its 
     responsibilities under this title (to the extent that the 
     Secretary finds such information technology is under the 
     control of such agency or organization)--
       ``(i) meets the definition of `Year 2000 compliant' under 
     the Federal Acquisition Regulation (concerning accurate 
     processing of date and time data (including calculating, 
     comparing, and sequencing) from, into, and between the 20th 
     and 21st centuries, and the years 1999 and 2000 and leap year 
     calculations) but without regard to whether the information 
     technology is being acquired; and
       ``(ii) meets such other criteria for Year 2000 compliance 
     as the Secretary considers appropriate.''.
       (2) Section 1842(b)(2)(A)(i) of the Social Security Act (42 
     U.S.C. 1395u(b)(2)(A)(i)) (as amended by subsection 
     (b)(1)(F)) is amended by striking the period and inserting 
     ``, including a requirement that, by such time as the 
     Secretary considers reasonable, the information technology 
     that is used or acquired by such carrier to carry out its 
     responsibilities under this title (to the extent that the 
     Secretary finds such information technology is under the 
     control of such carrier) meets--
       ``(I) the definition of `Year 2000 compliant' under the 
     Federal Acquisition Regulation (concerning accurate 
     processing of date and time data (including calculating, 
     comparing, and sequencing) from, into, and between the 20th 
     and 21st centuries, and the years 1999 and 2000 and leap year 
     calculations) but without regard to whether the information 
     technology is being acquired; and
       ``(II) such other criteria for Year 2000 compliance as the 
     Secretary considers appropriate.''.
       (h) Waiver of Competitive Requirements for Initial 
     Contracts.--Contracts that have periods that begin before or 
     during the 1-year period that begins on the first day of the 
     fourth calendar month that begins after the date of enactment 
     of this Act may be entered into under section 1816(a) or 
     1842(a) of the Social Security Act (42 U.S.C. 1395h(a) and 
     1395u(a)) without regard to any provision of law requiring 
     use of competitive procedures.
       (i) Effective Dates.--
       (1) The amendments made by subsection (c) apply to 
     contracts that have periods ending on or after the end of the 
     third calendar month that begins after the date of enactment 
     of this Act.
       (2) The amendments made by subsections (a), (b), (d), and 
     (e) apply to contracts that have periods beginning after the 
     third calendar month that begins after the date of enactment 
     of this Act.
       (3) The amendments made by subsection (f) apply to 
     contracts that have periods that begin after the end of the 
     1-year period specified in paragraph (1) of this subsection.
       (4) The amendment made by subsection (g) shall take effect 
     on the date of enactment of this Act.

     SEC. 22. EXEMPTION OF INSPECTORS GENERAL FROM PAPERWORK 
                   REDUCTION ACT REQUIREMENTS.

       (a) In General.--Chapter 35 of title 44, United States 
     Code, is amended by inserting after section 3502 the 
     following:

     ``Sec. 3502a. Exemption of any Office of Inspector General

       ``This chapter shall not apply with respect to any Office 
     of Inspector General established within an agency under the 
     Inspector General Act of 1978.''.
       (b) Table of Contents Amendment.--The table of contents of 
     chapter 35 of title 44, United States Code, is amended by 
     adding after the item relating to section 3502 the following 
     new item:

``3502a. Exemption of any Office of Inspector General.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.
                                 ______
                                 
      By Mr. SHELBY (for himself, Mr. Bayh, Mr. Bryan, Mr. Rockefeller, 
        and Mr. Bingaman):
  S. 1452. A bill to modernize the requirements under the National 
Manufactured Housing Construction and Safety Standards Act of 1974 and 
to establish a balanced consensus process for the development, 
revision, and interpretation of Federal construction and safety 
standards for manufactured homes; to the Committee on Banking, Housing, 
and Urban Affairs.


                 MANUFACTURING HOUSING IMPROVEMENT ACT.

 Mr. SHELBY. Mr. President, today I rise to introduce a 
bipartisan bill with my colleagues, Senators Bayh, Bryan, Rockefeller 
and Bingaman. Entitled the ``Manufactured Housing Improvement Act,'' 
(MHIA) this bill is designed to modernize the requirements under the 
National Manufactured Housing Construction and Safety Standards Act of 
1974 and to establish a balanced consensus process for the development, 
revision, and interpretation of Federal construction and safety 
standards for manufactured homes.
  Many do not realize that the majority of new manufactured homes of 
today are completely different from those of twenty or even ten years 
ago, and that this is the fastest growing segment of the housing 
industry. Today nearly one out of four new single family homes is a 
manufactured home, and the industry recently set a twenty-year sales 
record. There are good consumer-oriented reasons for this tremendous 
growth--manufactured homes offer quality and aesthetically pleasing 
housing at an average cost of $41,100, excluding the land.

[[Page 18238]]

Today, manufactured housing has lowered the threshold to the American 
Dream of home ownership for millions of Americans, including first-time 
home buyers, senior citizens, young families, and single parents.
  With 5.3 million American households in need of affordable housing, I 
believe it is imperative to update the laws that regulate the private 
sector solution to affordable housing. In order for the manufactured 
housing industry to remain competitive, Congress must modernize the 
National Manufactured Housing Construction and Safety Standards Act of 
1974.
  My bill would do just that. MHIA would establish a consensus 
committee that would submit recommendations to the Secretary of Housing 
and Urban Development (HUD) for developing, amending, and revising the 
Federal Manufactured Home Construction and Safety Standards. In 
addition, the committee would be authorized to interpret the standards 
and recommend appropriate regulations. Consumers will still be 
protected by HUD because the Secretary will have absolute authority to 
reject any recommendations, for any reason, submitted by the consensus 
committee.
  The Manufactured Housing Improvement Act would authorize the 
Secretary of HUD to use industry label fees for the administration of 
the consensus committee and the hiring of additional HUD staff in order 
to assure adequate consumer protection. The Secretary of HUD would also 
be authorized to use industry label fees to facilitate the availability 
and affordability of manufactured homes.
  This legislation is a very significant step forward in that both 
consumer and industry groups such as the Seniors Coalition, 60 Plus, 
and the Council for Affordable and Rural Housing, the National 
Association of Affordable Housing Lenders, the North American Steel 
Framing Alliance, and the Community Associations Institute, along with 
the Manufactured Housing Institute and the Manufactured Housing 
Association for Regulatory Reform, have endorsed this legislation.
  The industry participants have modernized the quality and technology 
of manufactured housing. It's time for Congress to modernize the laws 
that regulate an industry that provides affordable housing and 
contributes more than $33 billion annually to our nation's economy.
  Similar legislation passed the House at the end of last Congress on a 
bipartisan basis under suspension of the rules and has been introduced 
again this year. I hope this year the Senate will take the lead and 
send the MHIA to the House as soon as possible.
 Mr. BAYH. Mr. President, I am pleased to join with my 
colleague from Alabama, Senator Shelby, to introduce the Manufactured 
Housing Improvement Act. This important legislation is designed to 
ensure that the manufactured housing industry continues to provide 
safe, affordable housing by modernizing the requirements under the 
National Manufactured Housing Construction and Safety Standards Act of 
1974. The bill also provides the Department of Housing and Urban 
Development (HUD) with the resources necessary to meet its obligations 
to manufactured homeowners.
  Manufactured housing has evolved significantly in the last twenty-
five years; it's no longer the stereotypical mobile home. In fact, the 
vast majority of manufactured homes installed today are never moved 
once they have been sited. At an average cost of $40,000 for a new 
manufactured home, excluding land, manufactured housing is the fastest 
growing sector of the housing industry. One in every four new single 
family homes sold in the United States is a manufactured home. 
Manufactured housing provides many American families with the 
opportunity to not only own their own homes, but to live in safe, 
comfortable, and affordable housing. In addition, improvements in 
construction have led to the development of aesthetically pleasing 
homes. Most manufactured homes built today are manufactured to resemble 
traditional site built homes and are enjoyed by an array of Americans, 
including first time home buyers, senior citizens, and single parent 
families. Manufactured housing is an industry that not only provides 
affordable housing but also creates jobs. In my home state of Indiana, 
the manufactured housing industry employees more than 20,000 Hoosiers 
and has a total economic impact in my state of nearly $3 billion per 
year.
  The Manufactured Housing Program at HUD, which oversees the industry, 
has faced many administrative challenges in the last decade. Lack of 
resources has prevented the program from keeping up with the changing 
needs of manufactured housing. While the industry has voluntary 
implemented numerous code changes in recent years, many requests to 
review standards or regulations currently await action by HUD or have 
taken numerous years to process, because of inadequate resources at the 
Department. Ten years ago, the number of HUD employees assigned to this 
program was 34. Today, only 8 HUD employees are responsible for this 
program. With the rapid growth in housing technology, it is imperative 
that HUD not only address these standards but do so in a timely 
fashion, allowing the industry to remain competitive while providing 
homeowners with the most advanced housing technology.
  Our legislation will remedy this situation by modernizing the program 
by implementing procedures in which all proposed construction and 
safety standards are addressed and considered in a reasonable time 
frame. The Manufactured Housing Improvement Act requires that action on 
any proposed standard or regulation be taken within one year after it 
has been proposed to the Secretary. This is an important provision. It 
requires the Secretary to act, but protects consumers by authorizing 
the Secretary to reject any proposal which is deemed to be adverse to 
consumers.
  Finally, through the use of industry labeling fees, this legislation 
provides economic resources to the Secretary for the hiring of 
additional HUD program staff. The costs of operating this program and 
the re-staffing of the manufactured housing program will continue to be 
borne by the manufactured housing industry, not the taxpayer. I note 
that the industry is willing to bear this expense in order to improve 
the efficiency of the regulatory system.
  As we strive to ensure that all Americans have access to safe, 
affordable, and quality housing, we need to ensure that best practices 
are applied to the housing industry and that we support the 
modernization of housing technology. Manufactured housing is a valuable 
housing resource and provides access to home ownership for many 
Americans. I look forward to working with my colleagues to enact this 
legislation.
 Mr. ROCKEFELLER. Mr. President, Once again, I am joining 
Senator Shelby and other colleagues to introduce legislation intended 
to strengthen the manufactured housing industry. Manufactured housing 
provides a major source of affordable housing for American families, 
including seniors. This industry represents almost thirty percent of 
new single-family homes sold in the United States. In my state of West 
Virginia, manufactured housing represents over 60 percent of new homes.
  Manufactured housing should play a strong role to increase the 
availability of affordable housing. This issue will be especially 
important to seniors who, according to a national survey, forty-five 
percent of households living in manufactured homes are headed by a 
person over 50 years old.
  Manufactured housing is affordable housing, and it is the fastest 
growing type of housing nationally. The average cost of a new 
manufactured home without land in 1997 was $38,400, and even with land 
and installation fees this cost is well below the typical costs of a 
newly constructed site-built home.
  But this industry faces challenges. Unlike other housing, 
manufactured housing is regulated by the 1974 National Manufactured 
Housing Construction and Safety Standards Act by the Department of 
Housing and Urban Development, (HUD). Because of reform in HUD 
management, the federal officials overseeing manufactured housing

[[Page 18239]]

have declined from 34 staff members at its peak to less than a dozen 
professional staff now. This decline in staff has occurred at the same 
time that the industry has grown. Unfortunately, due to a lack of 
staff, HUD cannot keep pace with the need to update the code on a 
consistent basis and timely manner. In fact, between 1989 and 1996, a 
consensus committee made 140 suggestions to HUD about changes for the 
federal codes on manufactured housing, and 80 of these provisions are 
still pending in the Department. For example, the 1999 National 
Electrical Code has new, state-of-the-art standards but given staffing 
shortage, how long will it take to update the electrical standards? 
Shouldn't we address the staffing shortage, and get action on the 
lingering recommendations?
  In 1990, Congress established a National Commission on Manufactured 
Housing, and pushed the commission to forge consensus on key issues for 
this important industry, unfortunately that effort collapsed in 1994.
  This legislation is a new effort to address the challenges facing the 
industry. Introduction of the bill is just a first step. We all 
understand that the legislative process is designed to seek consensus 
and improve legislation. I believe that we must work hard to forge 
consensus among the industry and the consumers. This will be a 
challenge, but the potential rewards can be great for both sides. The 
industry can win and prosper with a more effective, streamlined 
regulatory process that keeps pace with improvements and standards. 
Consumers will win if safety standards and regulations are adopted more 
efficiently. Also, if the industry uses new standards to provide better 
housing, manufactured housing could be designed to meet a wider variety 
of needs including modules for assisted living.
  The current system of regulations and oversight is not working for 
the industry, nor is it working as well as it should for consumers, 
according to a survey by seniors. But when there are problems and 
concerns, all groups need to work together on a strategy for change.
  This legislation is intended to promote reform that will help both 
the industry and the consumers of manufactured housing. My hope is that 
all sides will work together to forge consensus about reform.
  We should use this as an opportunity to come together and develop a 
new, improved strategy for manufactured housing. Affordable housing is 
a major issue for families and communities. Manufactured housing is 
playing a key role in affordable housing, but more could and should be 
done. To achieve success, we need to develop a bipartisan, consensus 
approach. We need to help the industry and assure consumers that safety 
and standards will be retained and improved, not weakened. This is 
worth our combined effort to provide more affordable housing.
 Mr. BINGAMAN. Mr. President, I am pleased to rise today as a 
cosponsor of the Manufactured Housing Improvement Act. This Act has 
come about as a result of much negotiation between buyers of 
manufactured housing, the Housing and Urban Development Agency and 
manufacturers and dealers of manufactured housing. I commend the 
industry for coming to Congress with its plan to modify the Federal 
Manufactured Home Construction and Safety Standards Act of 1974. Over 
twenty years has elapsed since we comprehensively addressed the topic 
of safety and manufactured housing. Manufactured housing has changed 
significantly in the past twenty years. With the rise in the number of 
buyers of manufactured housing, it is time we ensure that safety 
standards are up-to-date and adequate to address consumers' concerns.
  The Senate bill has eleven sections that cover everything from the 
establishment of a Consensus Committee to a section encouraging 
secondary market securitization programs for FHA manufactured home 
loans and other loan programs. The new Consensus Committee will consist 
of 25 voting members and one non-voting member representing the 
Secretary of HUD. The Committee will represent a wide spectrum of 
interested parties, including but not limited to, home producers, 
retailers, lenders, insurers, consumers, consumer organizations, local 
public officials, and fire marshals. The Committee will be responsible 
for recommending amendments to the current safety standards and 
enforcement regulations to HUD.
  Most notably, there is no funding being authorized in this bill. The 
Secretary of HUD is authorized to use the industry label fees to carry 
out the responsibilities under the Act and to administer the Consensus 
Committee.
  Not only does manufactured housing provide an affordable housing 
option for New Mexicans, the overall economic impact of the 
manufactured housing industry on New Mexico is significant. In 1998, 
the total economic impact on the state was over $264 million. Although 
most New Mexicans are familiar with the 157 retailers in the state, 
many are not aware that we also have two manufacturers located in the 
state. Last year, these manufacturers produced over 1,000 homes and the 
entire industry was responsible for employing more than 2,000 people. 
Anyone driving the highways of New Mexico is familiar with the site of 
a manufactured home moving across Interstate 40 or Interstate 25. 
However, many New Mexicans may not know that almost 7,000 homes were 
shipped into the state in 1998 alone.
  Manufactured housing serves an important role in New Mexico. With the 
rising cost of homes in the metropolitan areas, and even in the smaller 
northern communities, manufactured housing that have an average cost of 
only $42,900 enable many more individuals and families to become 
homeowners. Currently, 41.8% of the housing in New Mexico is 
manufactured housing.
  I think this bill is important not only to New Mexico but to all 
owners of manufactured housing. With a focus on construction safety 
standards, consumers will be safer and more secure in their new homes. 
Both the manufactured Housing Industry and the Congress need to take 
the concerns raised in the survey conducted by the American Association 
of Retired Persons seriously. The Consensus Committee created by this 
bill will play an important role in raising the standards for 
construction and safety. I hope the Committee thoroughly evaluates the 
construction concerns and safety issues raised by those responding to 
AARP's survey. It is critical to the success of this program that the 
owners, the builders and the regulators work together to achieve a 
higher level of safety and consumer satisfaction.
  I thank Senator Shelby for introducing this bill and I encourage the 
Senate to take up this bill and pass this worthwhile 
legislation.
                                 ______
                                 
      By Mr. FRIST (for himself, Mr. Feingold, Mr. Brownback, and Mr. 
        Lieberman):
  S. 1453. A bill to facilitate relief efforts and a comprehensive 
solution to the war in Sudan; to the Committee on Foreign Relations.


                            sudan peace act

 Mr. FRIST. Mr. President, the United States has a tradition of 
defining our national interests overseas to reflect our values: freedom 
from persecution, freedom from religious intolerance, and the 
inalienable rights of self-determination and economic opportunity. In 
the twentieth century alone, we have sacrificed so much to defend those 
interests worldwide, based on the belief that freedom is truly an 
inalienable right, not simply for Americans, but for all peoples. Even 
now, in Kosovo and in Bosnia, we have been the world leaders in 
defending against tyranny and oppression, believing that, although far 
away, injustice must be met with resolve.
  Our response to the tragedy and injustice in Sudan has not been quite 
so aggressive. The radical Islamic regime in power in Sudan has 
coordinated a systematic campaign of terror against southern Sudan 
which includes calculated starvation, slavery, and the killing of 
innocent women and children. The war of low-level ethnic cleansing in 
Sudan has ground on for 16 years, claiming the lives of nearly 2 
million and displacing over 4 million. That staggering number 
represents

[[Page 18240]]

more dead than the wars in Bosnia, Kosovo, Somalia, Afghanistan, and 
Chechnya combined. In terms of loss of life, it has been the costliest 
war this century since the Second World War. After 10 years of feeding 
the starving, with the war no closer to resolution than it was in 1983 
when it began, we must change our approach. While we have been very 
generous as a Nation in terms of humanitarian relief, we have done 
little to address the causes of the war.
  Along with my colleagues, Senator Feingold, Senator Brownback, and 
Senator Lieberman, I am introducing the ``Sudan Peace Act,'' which aims 
to strengthen American policy and resolve to end the status quo.
  The timing of this initiative is critical. The Government of Sudan 
has publicly announced that they will use incoming oil revenues to 
increase the tempo and lethality of the war. An increase in the 
lethality and tempo of the war would translate into more death and 
destruction, more shattered lives and more slaves. Thus, time is of the 
essence in supporting efforts to reach a comprehensive conclusion to 
the hostilities. Even under such grim circumstances, a glimmer of 
opportunity to push for a comprehensive solution to the conflict may be 
at hand. We must take full advantage of that chance, for without the 
leadership of the United States, the war will certainly drag on for 
many more years.
  International relief operations have been in existence for 10 years 
with little change. The current arrangement allows Khartoum to 
manipulate our food donations as a weapon of mass destruction by 
vetoing United Nations' relief flight plans in areas of rebel activity. 
Also, at a cost of over $1 million per day, the effort is wrought with 
the potential for extreme donor fatigue.
  We need a new policy using all points of pressure and directing all 
efforts toward a comprehensive negotiated solution. Reinvigorating and 
pursuing a peace process based on the Declaration of Principles, signed 
by the combatants in 1994, is the best means we have to push for a 
comprehensive solution at this time. So far, the Government of Sudan 
has refused to negotiate in good faith, choosing instead to continue 
the brutal war and create political diversions to any credible, binding 
process.
  With a set of new or strengthened political and humanitarian tools, 
this legislation aims to push all players toward a comprehensive 
negotiated solution.
  The Government of Sudan has long abetted the practice of slavery. 
Additionally, it has helped organize and coordinate militia, Popular 
Defense Forces, and paramilitary holy warriors (``muraheleen'') to 
terrorize and sometimes enslave traditional agricultural and 
pastoralist tribes in the south and in the Nuba Mountains.
  The legislation condemns the gross violations of human rights in 
Sudan--including slavery, the use of the denial of access to food as a 
weapon of mass destruction, and targeting of civilians--and increases 
pressure for action in the United Nations Security Council and for UN 
human rights monitors to be deployed in contested areas.
  The effort to stop the conflict in Sudan has the best chance of 
success if it is a multinational effort. The shameful lack of resolve 
among the international community to pressure the combatants has been a 
factor in the perpetuation of the conflict.
  The legislation does more than simply highlight the shameful lack of 
resolve internationally, it seeks to change our own policy to address 
the causes of the famine and the war.
  The legislation gives the Secretary of State clear authority to 
commit all necessary diplomatic efforts toward reinvigorating the 
Inter-governmental Authority on Development (IGAD) peace process, 
including any necessary support for implementation of a settlement. It 
calls upon the leadership of the members of IGAD and the IGAD Partners 
Forum (IPF--a grouping of donors and multilateral organizations) to 
give all necessary support.
  The combination of a Declaration of Principles on which a peace 
process should be based and the engagement of the IGAD Partners' Forum 
bodes well for a reinvigoration of what has been a foundering process. 
The fact that IGAD is a credible regional organization adds to its 
potential success. The Declaration of Principles provides a first 
critical, measurable step to which the combatants can be held 
accountable.
  The legislation supports the President's sanctions against Sudan, 
codifying them into law and protecting them from piecemeal erosion 
until Sudan makes substantial and verifiable progress toward peace. The 
existing sanctions must be used as a pressure point for peace.
  The United States must maintain or strengthen every possible point on 
which to pressure Sudan to engage in a meaningful peace process. Any 
relaxation of any portion of the sanctions would essentially be a 
reward to Khartoum.
  The legislation also requires the President to report to Congress on 
the status and means of financing the new oil fields in Sudan and that 
financing's relationship to the sanctions, the number and circumstances 
of bombings of civilian targets by the Government of Sudan, the extent 
to which humanitarian operations are being compromised, and whether 
progress is being made toward peace by all parties.
  The issue of financing oil fields is especially important. The 
revenues from the new sources of oil will add a new source of hard 
currency to finance the war. A key player in making that influx of hard 
currency into Khartoum is a Canadian company that is listed on the New 
York Stock Exchange. Considering the wording of the sanctions in the 
President's Executive order of 1997, such a financial instrument would 
seem to be something the United States would not be able to legally 
facilitate. It is certainly not something the United States should want 
to facilitate.
  The United Nations-coordinated relief effort in Sudan, known as 
Operation Lifeline Sudan (OLS), was founded in 1989 in response to the 
starvation deaths of 250,000 people in southern Sudan. In March and 
April 1998 the Government of Sudan denied OLS access to much of Bahr el 
Ghazal in an effort to starve out rebels. The ban caused severe famine.
  The ability of the Government of Sudan to veto OLS relief flight 
plans has allowed Khartoum to use food as a weapon of mass destruction. 
It indiscriminately targets combatants and noncombatants alike. Only 
with the cooperation and pressure from the members of the Security 
Council and those countries which continue normal trade relations with 
Sudan can we ever hope to achieve success on this point. Having a 
viable alternative to OLS would not only allow for the distribution of 
relief should a flight ban be imposed, it will immediately discourage 
Khartoum's use of flight bans as an instrument of war.
  This legislation continues to press for reform of all humanitarian 
assistance in Sudan. The bill includes measures to press for reform of 
OLS, for the continued use of relief organizations outside OLS to 
deliver the United States' relief assistance, and directs the 
Administration to develop a possible alternative organization to 
deliver relief, should Khartoum again place bans on relief flights.
  The use of non-OLS groups to distribute relief has two primary 
benefits. First, it fills in holes where OLS is prohibited from 
operating either by Khartoum or by its own security concerns. It can 
also strengthen the hand of OLS with respect to flight bans because 
Khartoum is reluctant to exercise its veto power when it clearly 
strengthens organizations outside its control.
  The legislation provides new and expanded authority for the Sudan 
Transition Assistance for Rehabilitation (STAR) program, which seeks to 
build the basic civil and economic institutions in areas devastated by 
the war.
  The move away from providing only disaster assistance toward 
providing development assistance is critical. STAR seeks to build the 
basic administrative and social institutions in areas outside of 
government control essential for a self sustaining Sudan: civil 
administration, civil society, agricultural extension services, courts, 
etc. One of the greatest advantages Khartoum enjoys is a destroyed 
society in

[[Page 18241]]

the south. Again, a stronger society and economy in the south serves to 
disabuse Khartoum of the notion that it can win outright on the 
battlefield and is thus a pressure point to push for commitment to a 
viable peace process. The reconciliation efforts between the Dinka and 
Nuer peoples is arguably the most significant development in recent 
years in terms of strengthening the areas outside of the government's 
control and putting pressure on Khartoum to come to the table. Support 
for those efforts are critical. Finally, this position makes no 
assumption nor policy statement with regard to the eventual political 
status of the south.
  The legislation also provides for an independent assessment of the 
humanitarian needs of certain regions in Sudan, which are heavily 
contested and thus excluded from most multilateral humanitarian 
operations. The Nuba Mountains and its unique and fast-disappearing 
people and culture is especially vulnerable.
  In an effort to reduce the diversion of food assistance to 
combatants, to strengthen the targeted population's ability to defend 
themselves, and to provide for separation of combatants from ongoing 
humanitarian operations and the personnel who run them, the bill gives 
the President authority to provide direct food assistance to those 
forces protecting noncombatants from attacks by government or 
government-sponsored forces. However, such a program may only be 
conducted completely separate from current or future humanitarian 
operations and without compromising them.
  Currently, the majority of relief agencies, both within and outside 
OLS, provide assistance only to noncombatants. As a consequence, hungry 
rebel forces routinely divert food aid away from delivery areas, either 
by taxation, or by taking the food outright. The result is that normal 
food distribution is disrupted and any reasonable separation between 
combatants and noncombatants is breached. Providing a separate 
mechanism to feed combatants--who will be receiving food aid in one 
form or another, regardless of the distribution scheme--hOLSs the 
possibility of reducing diversions, maintaining a clear separation 
between combatant and noncombatants, and thus helping to minimize risk 
to relief agency personnel. Additionally, the necessity of pursuing 
food has seriously undermined the effectiveness of those forces to 
defend the population in areas outside of government control, as they 
must often demobilize for long periods of time to exact food from 
relief supplies or tend to farming or herding responsibilities. The 
Administration should make a determination on the potential for such a 
program to meet the goals outlined in the section. This legislation 
gives the President the authority to do so, with strong provisions to 
protect current humanitarian operations. Like other capacity building 
measures in this legislation, enhancing the ability of those in areas 
outside of government control to defend themselves from government 
aggression will ultimately help to dissuade the government from 
continued prosecution of the war and will thus strengthen the push to 
engage in a comprehensive peace process.
  These are all critical measures and opportunities which the United 
States must seize. Our policy has not done enough to change the status 
quo. Our generous response, which began in 1989, has grown and 
continued to feed more of the starving, yet as a response to the war, 
it has grown tepid. Unless we do all we can to end the conflict in 
Sudan, we are part of the problem. For sixteen years we have witnessed 
the destruction of a nation and the loss of millions of lives, ground 
into dust as the world misses opportunity after opportunity to stop 
it.
                                 ______
                                 
      By Mr. ROBB (for himself, Mr. Lautenberg, Mr. Conrad, Mr. Harkin, 
        Mr. Kennedy, Mr. Daschle, Mr. Reid, Mrs. Murray, Mr. Levin, Mr. 
        Cleland, Mr. Dodd, Mr. Torricelli, Mr. Schumer, Mrs. Lincoln, 
        Mr. Johnson, Mr. Wellstone, Mr. Kerry, Mr. Kerrey, and Mr. 
        Akaka):
  S. 1454. A bill to amend the Internal Revenue Code of 1986 to expand 
the incentives for the construction and renovation of public schools 
and to provide tax incentives for corporations to participate in 
cooperative agreements with public schools in distressed areas; to the 
Committee on Finance.


    PUBLIC SCHOOL MODERNIZATION AND OVERCROWDING RELIEF ACT OF 1999

  Mr. ROBB. Mr. President, I have come before this chamber on numerous 
occasions to urge our colleagues to find a way to give states and 
localities the additional resources they so urgently need to build and 
renovate our nation's schools. In January, Senator Lautenberg and I, 
with several other colleagues, introduced the Public School 
Modernization Act of 1999. In March, Senators Lautenberg, Harkin, and I 
were successful in offering an amendment to this year's budget 
resolution which called for $24.8 billion in zero-interest bonds as 
well as direct grants for school construction and repair. That 
amendment passed the Senate unanimously. Regrettably the Senate Finance 
Committee tax bill includes only minimal school infrastructure 
assistance, despite the opportunity we had in Committee to include much 
more substantial infrastructure relief.
  Proposals regarding school construction have been offered from both 
sides of the aisle. Unfortunately, however, the debate about education 
infrastructure needs and the federal role to address those needs has 
too often been partisan and has been characterized by an inability or 
an unwillingness to recognize that there is no one-size-fits-all 
solution to the school construction dilemma facing many of our nation's 
school districts.
  So today, I am pleased to be joined by Senators Lautenberg, Conrad, 
Harkin, Kennedy, Daschle, Reid, Murray, Levin, Cleland, Dodd, 
Torricelli, Schumer, Lincoln, Johnson, Wellstone, Kerry, Kerrey, and 
Akaka in introducing legislation designed to combine various bipartisan 
school construction proposals to create a menu of school construction 
financing options. The Public School Modernization and Overcrowding 
Relief Act of 1999 will help school districts build new schools to 
accommodate the record enrollments of elementary and secondary students 
we know are coming. It will also help modernize schools to ensure that 
our children have the benefit of modern technology. And it will help 
repair old schools which have become outdated and unsafe.
  Mr. President, 14 million children attend schools in need of 
extensive repair or replacement. Twelve million attend schools with 
leaky roofs, and 7 million attend schools with safety code violations. 
The President of the Maine Education Association testified before the 
Health, Education, Labor and Pensions Committee recently and stated 
that there are schools in Maine that actually turn the lights out when 
it rains because the electrical wiring is exposed under their leaky 
roofs.
  Compounding the safety problem is the significant overcrowding in the 
nation's schools. Across the country, there are thousands and thousands 
of trailers used for instruction--over 3,000 are in use in Virginia 
alone. So instead of attending science class equipped with the latest 
technology to conduct biology experiments, our children are going to 
class in poorly-ventilated portable trailers that can actually be 
harmful to their health.
  Mr. President, Loudon County, Virginia will need to build 22 new 
schools over the next six years to accommodate its enormous population 
growth. Despite the help that our own Virginia General Assembly has 
approved, the state will only provide two to three percent of 
Virginia's total school infrastructure needs. This isn't just a 
Virginia phenomenon; it's a national crisis. The National Center for 
Education Statistics estimates that by 2003, the nation will need to 
build 2,400 new schools to accommodate record enrollments in our 
elementary and secondary schools.
  In short, school boards should not be forced to choose between hiring 
an additional teacher or fixing a leaky roof. School superintendents 
should be installing computer labs, not basic air

[[Page 18242]]

conditioning. And students should attend schools of the future, not 
relics of the past.
  The legislation we offer today will allow school districts to issue 
tax-exempt bonds for school construction. Localities will be able to 
save significant amounts of money on capital improvement projects, as 
the federal government would give bondholders a tax credit in the 
amount of the interest that the locality would otherwise be required to 
pay. The legislation also knocks down a statutory hurdle which 
currently hinders more private sector involvement in public education 
by allowing private entities to pool resources with states and 
localities to build and renovate school buildings. Furthermore, if a 
state or locality has previously issued bonds at a time when interest 
rates were high, this legislation would allow them to essentially 
refinance that debt to take advantage of today's lower interest rates. 
The legislation will also make it easier for small communities to issue 
a greater number of bonds without being subject to onerous arbitrage 
requirements. All of these provisions provide states and localities 
with choices. Under this legislation, our states and localities will be 
able to avail themselves of those provisions that best suit their 
financial needs. The bill creates a menu of options through which 
states and localities can assemble their own financing packages.
  Mr. President, as a former governor, I acknowledge that education is 
primarily a state and local responsibility. The federal government, 
however, can be a helpful partner in education by helping to defray the 
cost of capital improvements without interfering with the substantive 
decisions that states and localities are struggling to make regarding 
their academic reform efforts. Providing a variety of financing options 
to fund capital improvements, therefore, is an imminently constructive 
role for the federal government to play. For our public education 
system to be the best in the world, all three levels of government--
local, state, and federal--will have to work together.
  I thank my colleagues who have co-sponsored this legislation, and I 
look forward to working with them to pass it. It's flexible. It's 
sensible. And it provides the most financing options of any school 
construction proposal to date. I hope this legislation brings us one 
step closer to the compromise I know we can reach.
  Mr. President, in the 1930's and again in the 1950's, our 
grandparents and parents summoned the political will to build the vast 
majority of our nation's existing school buildings. It is my hope that 
we can summon that will again. Our nation's students and families 
deserve no less.
                                 ______
                                 
      By Mr. ABRAHAM (for himself and Mr. Feingold):
  S. 1455. A bill to enhance protections against fraud in the offering 
of financial assistance for college education, and for other purposes; 
to the Committee on the Judiciary.


          the college scholarship fraud prevention act of 1999

  Mr. ABRAHAM. Mr. President, I rise today with my colleague from 
Wisconsin, Senator Feingold, to introduce the College Scholarship Fraud 
Prevention Act of 1999. This legislation will prevent unscrupulous 
businesses from defrauding students seeking to finance a college 
education.
  Students in Michigan and across the nation are targeted by corrupt 
companies preying on their hopes and dreams of a college education. A 
college diploma is the key that opens the door to many of today's 
career opportunities, but the reality is that this diploma is becoming 
more and more expensive to obtain. A number of organizations have 
sprung up to address this problem, and many of them perform an 
invaluable service in providing student financing, or in providing 
information to students concerning institutions to which those students 
may apply for financial assistance. Unfortunately, however, a growing 
number of individuals are turning student need into a scam opportunity, 
taking financial advantage of students in need of assistance.
  Each year, individuals and businesses send thousands of letters out 
to hopeful students, offering bogus scholarships. The tactics used by 
these con-artists vary, but they nearly always involve 
misrepresentation and fraud. Some exclusively use the mails to conduct 
their illegal activities, while others, like the National Scholarship 
Foundation have sent hundreds of thousands of postcards to potential 
college students, encouraging them to call an ``800'' number for ``free 
money''. Students calling the NSF number were told that they were 
guaranteed $1000 or more in scholarships if they would pay a $189 
processing fee, to be refunded if they did not receive the scholarship. 
Students sending $189 to the NSF received only general information 
about the college application process and the costs of a college 
education--information readily available for free from other sources. 
NSF never provided refunds.
  The Federal Trade Commission has been aware of this growing problem; 
and we have sought their input while drafting this legislation. In 
1996, the FTC initiated ``Project $cholarship- $cam,'' a nationwide 
crackdown on fraudulent scholarship search services. But although the 
FTC is dedicated to stopping these con artists, it can only pursue 
civil remedies; the Justice Department is responsible for prosecuting 
these scam-artists criminally upon FTC referral, and unfortunately, 
such prosecutions are a rare occurrence.
  Even when the Justice Department does prosecute scholarship scam-
artists, the penalties are so light as to provide little deterrent 
effect. For example, this past May a federal jury in Maryland convicted 
Christopher Nwaigwe of defrauding more than 50,000 college students of 
more than $500,000. Mr. Nwaigwe had mailed letters to students 
announcing scholarship offers of $2,500 to $7,500, in exchange for 
which students were requested to send Mr. Nwaigwe a $10 processing fee. 
In reality, after the students sent the check, they waited in vain for 
a response.
  Nwaigwe was ordered by the U.S. Postal Service to stop sending 
misleading letters in 1993, yet, he chose to ignore this warning and 
continue to defraud students. In 1996, Nwaigwe was the subject of a 
civil action in U.S. District Court, in which he was permanently 
enjoined from using materials to solicit money from students. Yet it 
was only in May--six years after the first official action taken 
against him--that he finally faced a jury. And the maximum penalty he 
faces for his long course of fraudulent conduct is five years' 
imprisonment and a fine of $250,000--half the dollar amount we know to 
be the minimum he gained through his fraud.
  Mr. President, the rapid spread of scholarship scams such as 
Christopher Nwaigwe's makes it imperative that we step up prosecutions 
and impose tougher sentences. My legislation would encourage the 
Justice Department of pursue and prosecute more scholarship scam-
artists, by providing an additional ten years' imprisonment and 
additional fines in fraud cases which involve the offering of 
educational services.
  In addition, this legislation would improve the FTC's ability to 
enforce orders for disgorgement and redress to consumers. Senator 
Feingold and I have been briefed by the FTC on its current problems 
enforcing judgments, and one particularly offensive example involves an 
abuse of consumer bankruptcy protections. Often, scholarship scam-
artists use their fraudulent gains to buy expensive homes. When hit 
with disgorgement and redress orders, they file for bankruptcy. And 
because most states exempt at least a portion of the value of 
residential property from bankruptcy estates, these con-artists are 
able to retain their ill-gotten gains in the form of their trophy 
homes. After the bankruptcy proceeding clears their debts, the scam-
artists may then sell their estates, keeping the money they have 
defrauded from students.
  Our legislation would prevent con-artists from using their technique 
to avoid paying court judgments in this fashion. Residential property 
exemptions from bankruptcy estimates are intended to aid law-abiding 
people who find themselves in financial difficulty; they were not meant 
to help scam-artists launder and protect ill-gotten

[[Page 18243]]

gains. This legislation takes a cue from Congress' response to the 
savings and loan crisis, and amends the bankruptcy code so that debts 
derived from college financial assistance fraud would be excluded from 
homestead bankruptcy exemptions. Legitimate homeowners will still be 
protected by the bankruptcy laws. But con-artists will no longer be 
able to use these laws for their own, fraudulent ends.
  In addition to these punitive and deterrent measurers. Mr. President, 
this legislation also includes measures to help student and their 
families obtain financing help from legitimate organizations. We need 
to make it easier for students and their families to differentiate 
legitimate companies from con-artists. The FTC currently warns students 
about fraudulent scholarship services; while this is commendable, 
however, in my view, the larger number of students who visit the 
Department of Education web site to find out about financing option 
makes it the logical choice for an anti-scam public relations 
initiative. To that end, this legislation would call on the Secretary 
of Education to maintain a web page on the Department's web site 
listing legitimate sources of scholarship information. To ensure that 
this web page is not misused by unscrupulous companies and individuals, 
and other provision would require the Education Department to consult 
with the FTC before including any name on its list.
  No organization would be listed on the web page if it or its operator 
has been prosecuted by the FTC and convicted of using unfair or 
deceptive practices. In addition, a business or organization would not 
be listed if the Department of Education receives a significant number 
of complaints from students alleging that the business has not in good 
faith delivered on its promises, or if it is under investigation by the 
FTC.
  Taken together, Mr. President, these provision discouraging fraud 
disseminating information concerning legitimate sources of scholarship 
information will help students find the assistance they need to finance 
a college education. Through this legislation we can fight scholarship 
scams, put those who would defraud students out of business and 
increase our Nation's pool of educated workers.
  I ask my colleagues for their support, and ask unanimous consent that 
the bill and a section-by-section analysis of the bill be printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1455

       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 ``College Scholarship Fraud 
     Prevention Act of 1999''.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) A substantial amount of fraud occurs in the offering of 
     college education financial assistance services to consumers.
       (2) Such fraud includes the following:
       (A) Misrepresentations regarding the provision of sources 
     from which consumers may obtain financial assistance 
     (including scholarships, grants, loans, tuition, awards, and 
     other assistance) for purposes of financing a college 
     education.
       (B) Misrepresentations regarding the provision of 
     portfolios of such assistance tailored to the needs of 
     specific consumers.
       (C) Misrepresentations regarding the pre-selection of 
     students as eligible to receive such assistance.
       (D) Misrepresentations that such assistance will be 
     provided to consumers who purchase specified services from 
     specified entities.
       (E) Misrepresentations regarding the business relationships 
     between particular entities and entities that award or may 
     award such assistance.
       (F) Misrepresentations regarding refunds of processing fees 
     if consumers are not provided specified amounts of such 
     assistance, and other misrepresentations regarding refunds.

     SEC. 3. ENHANCED CRIMINAL PENALTIES FOR COLLEGE EDUCATION 
                   FINANCIAL SERVICE ASSISTANCE FRAUD.

       (a) Enhanced Penalties.--Chapter 63 of title 18, United 
     States Code, is amended by adding at the end the following:

     ``Sec. 1348. Enhanced penalties for college education 
       financial service assistance fraud

       ``(a) In General.--A person who is convicted of an offense 
     under section 1341, 1342, or 1343 of this title in connection 
     with the obtaining or providing of any scholarship, grant, 
     loan, tuition, discount, award, or other financial assistance 
     for purposes of financing an education at an institution of 
     higher education shall be fined under this title, imprisoned 
     not more than 10 years, or both.
       ``(b) Other Penalties.--Any penalties imposed under this 
     section shall be in addition to any penalties under any of 
     the sections referred to in subsection (a).
       ``(c) Institution of Higher Education Defined.--In this 
     section, the term `institution of higher education' has the 
     meaning given that term in section 101 of the Higher 
     Education Act of 1965 (20 U.S.C. 1001).''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of that chapter is amended by adding at the end the 
     following:

``1348. Enhanced penalties for college education financial service 
              assistance fraud.''.

     SEC. 4. EXCLUSION OF DEBTS RELATING TO COLLEGE FINANCIAL 
                   ASSISTANCE SERVICES FRAUD FROM PERMISSIBLE 
                   EXEMPTIONS OF PROPERTY FROM ESTATES IN 
                   BANKRUPTCY.

       Section 522(c) of title 11, United States Code, is 
     amended--
       (1) by striking ``or'' at the end of paragraph (2);
       (2) by striking the period at the end of paragraph (3) and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(4) a debt in connection with fraud in the obtaining or 
     providing of any scholarship, grant, loan, tuition, discount, 
     award, or other financial assistance for purposes of 
     financing an education at an institution of higher education 
     (as that term is defined in section 101 of the Higher 
     Education Act of 1954 (20 U.S.C. 1001)).''.

     SEC. 5. LIST OF BUSINESSES AND ORGANIZATIONS OFFERING COLLEGE 
                   EDUCATION FINANCIAL ASSISTANCE SERVICES.

       (a) List.--The Secretary of Education shall maintain on the 
     Internet web site of the Department of Education a web page 
     that--
       (1) lists businesses and organizations that offer financial 
     assistance (including scholarships, grants, loans, tuition, 
     awards, and other assistance) for purposes of financing an 
     education at institutions of higher education; and
       (2) provides the Internet web site address of such 
     businesses and organizations.
       (b) Application for Placement on the List.--A business or 
     organization may apply to the Secretary of Education for 
     placement on the list.
       (c) Consultation.--The Secretary of Education shall consult 
     with the Chairman of the Federal Trade Commission in an 
     effort to ensure that a business or organization applying for 
     placement on the list is a legitimate business or 
     organization.
       (d) Ineligibility.--A business or organization shall not be 
     listed on the page if--
       (1) the business or organization was prosecuted by the 
     Federal Trade Commission and convicted of using an unfair or 
     deceptive act or practice under the Federal Trade Commission 
     Act (15 U.S.C. 41 et seq.) during the 5-year period preceding 
     the submission of an application under subsection (b);
       (2) the business or organization is operated by an 
     individual who operated a business or organization that was 
     prosecuted by the Federal Trade Commission and convicted of 
     using an unfair or deceptive act or practice under such Act 
     during the 5-year period preceding the submission of an 
     application under subsection (b);
       (3) the Department of Education receives a significant 
     number of complaints, as determined by the Secretary of 
     Education, from students alleging the business or 
     organization has not in good faith delivered on promises made 
     by the business or organization; or
       (4) the business or organization is under investigation by 
     the Federal Trade Commission.
                                  ____


   The College Scholarship Fraud Prevention Act of 1999--Section-by-
                            Section Analysis

       A bill to enhance protections against fraud in the offering 
     of financial assistance for college education, and for other 
     purposes.


                          section 1: findings

       This section sets out Congressional findings concerning the 
     high level of fraud that occurs in the offering of college 
     education financial assistance services to consumers.


section 2: enhanced criminal penalties for college education financial 
                          service definitions

       This section amends Chapter 63 of Title 18, United States 
     Code by adding a section that provides for a fine, 
     imprisonment for not more than 10 years, or both, for college 
     education financial service assistance fraud.


section 3: exclusion of Debts relating to college financial assistance 
services fraud from permissible exemptions of property from estates in 
                               bankruptcy

       This provision amends Section 522(c) of Title 11 of the 
     United States Code to allow property otherwise exempted in 
     bankruptcy to be subject to disgorgement and redress orders 
     resulting from college financial assistance services fraud.

[[Page 18244]]




   section 4: List of businesses and organizations offering college 
                education financial assistance services

       This section requires the Secretary of Education to 
     maintain a web page listing businesses and organizations 
     offering financial assistance for purposes of financing an 
     education. The section also requires consultation between the 
     Secretary of Education and the Federal Trade Commission to 
     ensure that a listed business is a legitimate offeror of 
     services, and specifies the circumstances under which a 
     business or organization would be ineligible to be listed.

                          ____________________