[Congressional Record (Bound Edition), Volume 145 (1999), Part 19]
[Senate]
[Pages 27650-27653]
[From the U.S. Government Publishing Office, www.gpo.gov]



                     D.C./LABOR-HHS APPROPRIATIONS

  Mr. GRAHAM. Madam President, the business before the Senate will soon 
be the conference report on Labor Department and Health and Human 
Services and Education appropriations bill. We are now considering 
various trade measures. Since we will be taking up the D.C./Labor-HHS 
conference report tomorrow, I appreciate the Presiding Officer's 
generosity in allowing me to discuss this very important piece of 
legislation.
  I think it is fair to describe that one night within the last few 
weeks, through back-door negotiations, various members of the Senate 
and House of Representatives Appropriations Committees crafted the 
conference reports that we have before us today. The end result was 
that a very large elephant, weighing $313.6 billion, The Labor/HHS 
conference report, being placed upon the back of a relatively small and 
not particularly compliant ant weighing $429 million, the District of 
Columbia's Appropriations bill.
  Out of that marriage of elephant and ant, we now have before the 
Senate the conference report on the District of Columbia with the 
enormous addition of a $313 billion of Labor-HHS ``rider''.
  Unfortunately, when these bizarre marriages occur, the public 
interest is not necessarily served. This parliamentary tactic has 
stolen from Members of the Senate the right to offer motions 
instructing the conferees on how we believe they should proceed in 
conference. We have also lost the right to challenge the existence of 
authorizing legislation on an appropriations bill during the process of 
negotiation between the two Houses. There will be no opportunity for 
Congress or the President to independently consider the Labor, Health 
and Human Services and Education Appropriations bill. While one is an 
elephant and one is an ant, they are both important and deserve 
separate and distinct consideration.
  There is not the opportunity to protest the inclusion of items which 
were not included in either the Senate or the House bill, or were so 
altered as to be unrecognizable. This bill is purely the creation of 
that late-night negotiation. This lack of democracy has allowed the 
will of a small minority to triumph on a variety of provisions of great 
importance. I will take the opportunity this afternoon to focus on only 
two of the issues that are a part of this marriage of elephant and ant: 
First, the proposal to terminate competitive bidding for Medicare's 
payment of health maintenance organizations' reimbursement; and, 
second, preventing the Congress from fully funding the Social Service 
Block Grant Program.
  Let me begin the discussion with the absconding of funds from two 
congressionally authorized competitive pricing demonstrations. This 
takes us back 2 years to 1997 during the consideration of the Balanced 
Budget Act. Both Houses of Congress voted to create demonstration 
projects based upon community participation in an attempt to learn more 
about how HMOs, which provided services to Medicare beneficiaries, 
could be priced; that is, how the amount of that reimbursement from the 
Federal Government could be determined by competitive bidding.
  In order to understand what this issue is about, I am afraid some 
discussion of how HMOs currently are priced when they provide services 
for a Medicare beneficiary is required. In a simplified form, the way 
in which an HMO receives reimbursement when it provides funds to a 
Medicare beneficiary is a function of how much is paid within that 
county for fee-for-service payments. While there are some modifications 
to this overly broad statement, basically if, let us say, in a 
particular county the average payment for a fee-for-service Medicare 
patient is $5,000, then the HMO is reimbursed at, more or less, 95 
percent of that level, or $4,500. There is some blending of the 
national fee-for-service rate and the local fee-for-service rate, but 
as of today, and in the past and in the immediate future, the 
description I have given is essentially an accurate representation.
  What has been the result of this reliance on a percentage of fee-for-
service within a narrow, local area on the amount that HMOs are 
reimbursed? It has resulted the fact that in many areas of your State 
and mine, where fee-for-service charges are relatively low--that is 
particularly true in rural areas--there are no HMOs. Why? Because HMOs 
cannot economically justify operating with the reimbursement levels 
they would get based on 95 percent of those relatively low fees for 
service.
  On the other hand, in some areas which have very high fees for 
service--for instance, an area that has a large tertiary hospital, 
particularly one associated with a medical school where costs tend to 
be very high because of the nature of the service they provide--that 
community will have a high fee-for-service rate. Therefore, 95 percent 
of that high level will result in high reimbursement levels for HMOs. 
So, you have not just one HMO, but typically many HMOs that want to 
compete to get that fixed-formula-based percentage of fee-for-service 
reimbursement.
  The purpose of the 1997 action of the Congress was to try a different 
model; to not rely on this central planning use of fee-for-service but 
rather go out and test the marketplace. What will the market in a rural 
area say is called for to engage managed care as an option for Medicare 
beneficiaries? What is the appropriate level of HMO reimbursement in a 
large urban area with high fee-for-service costs? That was the purpose 
of this competitive bidding demonstration project.
  The Balanced Budget Act, in conjunction with the Health Care 
Financing Agency, set up a structure which included area advisory 
committees. These committees consisted of health plans, providers, and 
beneficiary representatives. It was decided the two communities in 
which demonstrations would take place were Kansas City and Phoenix. The 
function of the area advisory committees was to recommend how to best 
implement the competitive pricing demonstrations in these two 
communities.
  Unfortunately, in the bill that will be before us tomorrow, the bill 
that the conference has reported as the funding for Departments of 
Labor, HHS, and the District of Columbia, all funding for these two 
demonstrations in Kansas City and Phoenix has been removed, removed by 
those who do not want to find out if there is a means to use the 
competitiveness of the marketplace to arrive at what should be the 
appropriate reimbursement level for health maintenance organizations.
  Experience has shown us in other areas of the Medicare system that 
there is the potential for preserving high levels of quality and saving 
money by using the dynamism of the marketplace as determined by 
competitive bidding. Let me use an example from my own State. One of 
the other provisions in that 1997 Balanced Budget Act was to set up 
competitive bidding on the Part B, or hospital component of Medicare, 
as it related to a variety of items, including durable medical 
equipment. The demonstration for durable medical equipment was settled 
to be in Lakeland, FL.

[[Page 27651]]

  In its first year, this project has substantially reduced the amount 
Medicare pays for the five products that were included in the 
demonstration, and in that one community has saved Medicare 
approximately $1 million.
  What are the areas that are being competitively bid? Let me say that 
these products, durable medical equipment, for most of America today 
are the subject of a price list. It would be as if you suddenly needed, 
let's say, a wheelchair--you had broken your leg and you had to have a 
wheelchair for temporary use--and the way you would pay for that 
wheelchair, or decide what was the appropriate rental for the 
wheelchair, was to have Government give you a price list and say this 
is what thou shalt pay to purchase or lease that wheelchair. That is 
exactly what Medicare does today for a list of hundreds of durable 
medical equipment items. So we are going to find out, was there a 
different way to establish what those prices should be? Was there a 
means by which we could use the marketplace to set the price? That was 
the purpose of the demonstration in Lakeland, FL.
  What results? Competitive pricing has reduced the price of oxygen 
supplies and equipment by 17.5 percent over what was on that price 
list, for exactly the same oxygen supplies and equipment. Competitive 
bidding for hospital beds and ancillary hospital items has been reduced 
by 29.8 percent by competitive bidding as opposed to the price list. 
For enteral nutrition, where a person is taking his or her nutrition 
through intravenous means rather than more normal oral means, the price 
of that has been reduced by 29.2 percent as a result of competition, 
rather than using the price list. Surgical dressings have been reduced 
by 12.9 percent, and urological supplies by 20 percent. All of these 
savings were accomplished by the use of competitive bidding as opposed 
to relying on almost a Soviet system of a prescribed price list.
  It is estimated, if this Lakeland demonstration were to be applied on 
a nationwide basis and applied to a broader range of items that are 
just as susceptible to competitive bidding as the five which were 
selected for the demonstration in Lakeland, we could save the Medicare 
programs over $100 million a year. The Medicare program is a big 
program, but even for that big program, even for the Federal 
Government, saving $100 million a year is an important achievement.
  It is interesting that, while we are about to take a vote on whether 
we should terminate even a demonstration on competitive bidding to 
establish the appropriate price for HMO reimbursement, we are applying 
competitive bidding in other areas. We are using the competitive 
marketplace, rather than centralized planning, to determine what is a 
fair price.
  For example: In 1998, Congress reformed the means by which national 
parks reimbursed their concessionaires. To put it more accurately, the 
concessionaires paid for the privilege of operating within one of our 
national parks. Previously, prior to 1998, concessionaires had a 
preferential right of renewal allowing them to match any other offers, 
thus eliminating competition.
  You can imagine if, Madam President, there were a firm which had a 
concession in a national park in your beautiful State of Maine and they 
knew that in order to keep that concession, all they had to do was 
match any other competitor who would deign to try to take the 
concession. That would not encourage very many people to go to the 
effort of offering a competitive bid because they knew all the 
incumbent concessionaire had to do was just match their best price and 
they would continue to have the concession.
  In 1998, we changed the system. We said we would go to an open, 
competitive bidding process and let those who could offer the highest 
quality and the best return to the park system be the concessionaires.
  Yesterday, I had the privilege of visiting Bandelier National 
Monument in New Mexico. It exemplified the concession's contract law's 
positive effect on the national parks system. The new concessionaire 
improved the quality of products and provided such things as 
handicapped access to facilities that had not been available 
previously.
  We can anticipate that the rates of return to the Government at 
Bandelier and other national parks will increase because we have a good 
example at Yosemite National Park. At Yosemite, the application of 
competitive bidding resulted in almost a 15-percent increase in the 
rate of return to the Government of the lease of their various 
concession facilities.
  I commend Senator Craig Thomas, our colleague, who was the leader in 
assuring this movement towards a fair price and quality goods and 
services for the users of our national parks. Unfortunately, the 
zeroing out of funds for competitive bidding demonstrations in Phoenix 
and Kansas City, as this conference report on the Labor-HHS/District of 
Columbia appropriations will do--it ensures that we will never know if 
we can achieve similar savings in the Medicare+Choice Program; that is, 
we can never know there will be a better, fairer way of reimbursing 
health maintenance organizations, which provide services to Medicare 
beneficiaries than what we are getting today through this percentage of 
fee-for-service formula.
  Here is a riddle for the Senate to answer: Why would the 
appropriators eliminate funding for a program that saves money without 
harming quality, that gives us the opportunity to learn if there is a 
free-enterprise approach to reimbursing HMOs as opposed to a socialist 
approach?
  Madam President, it does not take a Sherlock Holmes to solve this 
mystery.
  Chapter 1 of our mystery: It is July, 1999. The United States spends 
a full week debating managed care reform. The end result of this debate 
is vapid, weak legislation that impacts less than one-third of all 
Americans whose health care is covered by HMOs. It has weak standards 
on issues such as emergency room, access to specialists, a woman's 
right to use an OB/GYN as a primary physician, the right to continue to 
use a doctor if an HMO changes its plan. The legislation the Senate 
passed earlier this summer also had very limited enforcement and no 
right to sue.
  It is interesting that the House of Representatives has written a 
different chapter with a much stronger and more effective bill of 
patients' rights when they are members of a health maintenance 
organization.
  We have a second chapter in our book. The Senate is about to 
eliminate two demonstration projects that will allow us learn whether 
the marketplace might be an appropriate determinant of how Medicare 
HMOs should be reimbursed. Chapter 2 continues with the Senate Finance 
Committee designing a bill to give funds back to providers who have 
made the case they have been negatively, excessively impacted by the 
Balanced Budget Act of 1997. It is the same Balanced Budget Act that 
weaves its way through this whole volume.
  What does the Senate Finance Committee decide to do? Nearly one-third 
of the money that will be provided back to physicians, hospitals, home 
health care agencies, skilled nursing facilities --a whole variety of 
medical providers--nearly one-third of the total money goes to the 
health maintenance organizations that provide services under the 
Medicare+Choice Program.
  The irony is that only about 15 percent of the beneficiaries of 
Medicare receive their health care through a health maintenance 
organization. The remaining 85 percent of Medicare beneficiaries get 
their Medicare through the traditional fee-for-service system; that is, 
they make an unrestrained choice as to what doctor they want to see and 
then receive the services of that physician, and they, along with 
Medicare, then reimburse that physician.
  The 85 percent of Medicare beneficiaries who use fee for service get 
only two-thirds of the additional payback money. Clearly, there is 
something fishy about the way these critical funds, intended to allow 
for the providers of health care to Medicare beneficiaries avoid 
draconian cuts in their service levels, were divided. Clearly, there is 
something amiss when one-third of the money in the Balanced

[[Page 27652]]

Budget Act ``add back'' measure goes to one-sixth of the Medicare 
beneficiaries.
  Adding to this peculiar situation is the Congressional Budget 
Office's estimate that up until the end of this decade, the number of 
Medicare beneficiaries receiving their reimbursement through an HMO 
will still be less than the one-third of the total Medicare population. 
Yet, one-third of the money in the Balanced Budget Act ``add back'' 
bill is allocated to Medicare HMOs.
  Chapter 3: A Republican Member of the House of Representatives 
introduces a bill to give doctors the right to collectively bargain 
with HMOs. The chairman of the Judiciary Committee brings this bill up 
before his committee for consideration. What happens? Let me read from 
the Daily Monitor of Wednesday, October 27. I ask unanimous consent 
that this article be printed in the Record immediately after my 
remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (Exhibit 1.)
  Mr. GRAHAM. Under the headline ``GOP Leaders Order Hyde To Kill Bill 
On Doctor Bargaining'':

       Managed care lobby pushed to halt measure allowing doctors 
     to negotiate with health plans.
       After an intense lobbying campaign by managed care plans, 
     House GOP leaders have killed for this year--at least--a bill 
     that would allow doctors to bargain collectively with health 
     plans.
       The bill (H.R. 1304), sponsored by Tom Campbell, R-Calif., 
     had been scheduled for a markup in the House Judiciary 
     Committee Tuesday. But Speaker J. Dennis Hastert, R-Ill., on 
     Monday asked committee Chairman Henry J. Hyde, R-Ill., to 
     yank it.
       ``It won't be dealt with this year,'' Hyde said. ``The 
     leadership decided that they were involved with other health 
     care issues and this was the. . .one that broke the camel's 
     back. It's extra weight on a complicated issue. They felt it 
     was another area of focus they don't need right now.''
       On Oct. 7, after months of heated negotiations and debate, 
     the House passed a broad patients' rights measure (H.R. 2723, 
     later H.R. 2990) after voting down a much narrower package 
     backed by Hastert. The issue has long been a thorn in the 
     side of the GOP leadership, which favors allowing the 
     marketplace--rather than government--to regulate managed 
     care.
       The Campbell bill would for the first time allow 
     independent doctors who contract with health plans to bargain 
     collectively on everything from fees to who determines the 
     treatment a patient receives. Health insurance groups 
     strongly oppose the bill, arguing that doctors would be able 
     to fix prices and drive up health insurance premiums. 
     Doctors, led by the American Medical Association, backed the 
     measure. They say health plans are beginning to monopolize 
     the patient market, and that doctors often have no choice but 
     to sign restrictive contracts in order to stay in business.
       Hyde said that, along with Hastert, rank-and-file members 
     who had been contacted by the health insurance industry asked 
     him to pull the bill.
       The chairman said he still wants to pursue the issue in the 
     future but could not say if he would ever mark up the 
     Campbell bill. ``I don't know,'' he said. ``I'm interested in 
     doing something with the difficult relationship between 
     doctors, HMOs and insurers. I don't think the problem will go 
     away, nor will our responsibility [to address it].''

  We have had the HMO industry delude, almost to total lack of 
effectiveness, the Patients' Bill of Rights in the Senate. We have had 
the industry increase its reimbursement at twice the rate that fee-for-
service medicine is having its reimbursement increased as a part of the 
Balanced Budget Act ``add-backs'' legislation that we will soon be 
considering. We have had the House kill a bill to allow doctors to 
collectively bargain when they negotiate with HMOs. And now, after the 
HMOs have said what they want is to have the marketplace, not 
Government, run their business, they seem to have said they do not want 
to participate in the competitive bidding process to determine their 
levels of reimbursement. It appears that they would rather rely on the 
socialist-based theory of percentage of fee-for-service cost.
  The managed care industry has successfully used its influence to move 
forward one of its key policy objectives: To strengthen Medicare 
managed care at the expense of Medicare fee for service. You might 
think that my statement is extreme, but I assure you it is accurate.
  The policy objective is very clear. Using the words of the former 
Speaker of the House, Speaker Newt Gingrich, which he used to describe 
his view of Medicare reform, I quote from an Associated Press article 
of July 30, 1996, in a speech given to the Health Insurance Association 
of America. This is what the Speaker said:

       We don't get rid of it [Medicare] in round one because we 
     don't think that's politically smart, and we don't think 
     that's the right way to go through a transition. But we 
     believe it [traditional Medicare] is going to wither on the 
     vine.

  ``Wither on the vine.''
  If you had to have a series of events that all had as their common 
objective diverting energy, resources, and attention away from the 
program where 85 percent of the Medicare beneficiaries receive their 
health care services towards the program where 15 percent receive their 
health care services--and nobody is estimating that within the next 10 
years any more than 30 percent of the Medicare beneficiaries will 
receive their health care through HMOs--you couldn't have had a better 
strategy than the chapters that we have either written or are in the 
process of writing in the Congress in 1999.
  On behalf of the 39 million Medicare beneficiaries in America today, 
and the millions more who will rely on the program tomorrow, I pledge 
to make certain that when Congress embarks upon true Medicare reform it 
will be focused on what is best for all beneficiaries, both fee-for-
service and Medicare+ Choice participants alike.
  We must reverse the course of this Congress. This Congress has 
shielded HMOs from patient protections, balanced negotiations with 
physicians, and competition in pricing. This Congress has rewarded HMOs 
with one-third of the additional money for one-sixth of the Medicare 
beneficiaries. And this Congress has refused to enhance the fee-for-
service programs for 85 percent of the Medicare beneficiaries.
  This Congress can begin to reverse this record by sustaining the 
President's veto of the outrage which describes itself as the Labor-
HHS/District of Columbia appropriations bill. I am confident that the 
President will reject this legislation. We will have our next 
opportunity when we sustain his veto.
  Madam President, having talked about just one of the outrages in this 
bill, let me turn to a second. That is the funding of the social 
services block grant.
  On September 30, by a 57-39 vote, the Senate placed its strong 
bipartisan support behind the continued funding of the Social Services 
Block Grant Program at its authorized level of $2.38 billion.
  The Social Services Block Grant allocates funds to States, enabling 
them to provide services to vulnerable, low-income children and 
elderly, disabled people. The Social Services Block Grant is a 
mandatory program established under Title XX of the Social Security 
Act.
  The purpose of Title XX is to intervene with vulnerable populations 
before they reach the point of disability or other condition that might 
make them eligible for a Social Security entitlement program.
  In 1996, the Senate Finance Committee joined the House Ways and Means 
Committee, and then the full Chambers, in promising that this program 
of social services block grants would be funded at the authorized level 
of $2.38 billion for the fiscal year 2000. In fact, we made a 
commitment to the States that the social services block grant would be 
guaranteed at the $2.38 billion annual level until welfare reform was 
fully completed in the year 2002.
  When this commitment was recommended to be breached by the Senate 
version of the Labor-HHS appropriations bill, on September 30, the 
Senate stood up, and by that vote of 57-39 voted to restore full 
funding to comply with our commitment to our constituents and to the 
States.
  Once again, the appropriators have nullified our vote. They have 
voided our promise to the States. In the conference report that will be 
before us, the Labor-HHS/District of Columbia appropriations bill, the 
Social Services

[[Page 27653]]

Block Grant Program will be recommended for funding at $1.7 billion--
over a half billion dollars below what is our authorized level, what is 
our commitment to the States. This figure is below what was approved by 
the Senate. This figure is also below the $1.9 billion that the House 
Labor, Health and Human Services and Education Appropriations 
Subcommittee approved for this program.
  The raiding of the Title XX program should serve as an example of 
what can happen when a program is block granted. Our experience with 
the social services block grant should serve as a red flag as we 
structure other social services funding.
  Those, for instance, who might succumb to the siren call of block 
grants for education should take note. A Federal program which serves a 
largely politically voiceless group of Americans, as Hubert Humphrey 
described, those who live in the dawn of life, our children, those who 
live in the twilight of life, our elderly, and those who live in the 
shadows of life, the disabled, these are the Americans who will be at 
risk, just as they are at risk today with the slashing of funding of 
the social services block grant. They will be at risk if we move 
towards the same pattern of funding for important national programs 
such as education. Because they will not have the HMOs' lobbyists, they 
will not have the PACs to represent their interests, to ensure they get 
their share when the Federal largess is divided, they are likely to get 
the scraps that are left over.
  I urge the President of the United States to veto this legislative 
elephant which is squashing the ant. I urge that he veto the 
legislation that would fund the Departments of Labor and HHS, and the 
District of Columbia because we, the Congress, can do better. We need 
to be given the opportunity and the challenge to do so.

                               Exhibit 1

               [From the CQ Daily Monitor, Oct. 27, 1999]

        GOP Leaders Order Hyde To Kill Bill on Doctor Bargaining

                          (By Karen Foerstel)

       After an intense lobbying campaign by managed care plans, 
     House GOP leaders have killed for the year--at least--a bill 
     that would allow doctors to bargain collectively with health 
     plans.
       The bill (HR 1304), sponsored by Tom Campbell, R-Calif., 
     had been scheduled for a markup in the House Judiciary 
     Committee Tuesday. But Speaker J. Dennis Hastert, Ill., on 
     Monday asked committee Chairman Henry J. Hyde, R-Ill., to 
     yank it.
       ``It won't be dealt with this year,'' Hyde said. ``The 
     leadership decided that they were involved with other health 
     care issues and this was the . . . one that broke the camel's 
     back. It's extra weight on a complicated issue. They felt it 
     was another area of focus they don't need right now.''
       On Oct. 7, after months of heated negotiations and debate, 
     the House passed a broad patients' rights measure (HR 2723, 
     later HR 2990) after voting down a much narrower package 
     backed by Hastert. The issue has long been a thorn in the 
     side of the GOP leadership, which favors allowing the market 
     place--rather than government--to regulate managed care.
       The Campbell bill would for the first time allow 
     independent doctors who contract with health plans to bargain 
     collectively on everything from fees to who determines the 
     treatment a patient receives. Health insurance groups 
     strongly oppose the bill, arguing that doctors would be able 
     to fix prices and drive up health insurance premiums. 
     Doctors, led by the American Medical Association, back the 
     measure. They say health plans are beginning to monopolize 
     the patient market, and that doctors often have no choice but 
     to sign restrictive contracts in order to stay in business.
       Hyde said that, along with Hastert, rank-and-file members 
     who had been contacted by the health insurance industry asked 
     him to pull the bill.
       The chairman said he still wants to pursue the issue in the 
     future but could not say if he would ever mark up the 
     Campbell bill. ``I don't know,'' he said. ``I'm interested in 
     doing something with the difficult relationship between 
     doctors, HMOs and insurers. I don't think the problem will go 
     away, nor will our responsibility [to address it].''

  Mr. GRAHAM. I thank the Chair and suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Voinovich). The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. FITZGERALD. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________