[Congressional Record (Bound Edition), Volume 145 (1999), Part 9]
[Senate]
[Pages 13297-13310]
[From the U.S. Government Publishing Office, www.gpo.gov]



          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

                                 ______
                                 
      By Ms. COLLINS (for herself, Mr. Durbin, and Mr. Grassley):
  S. 1231. A bill to amend title XVIII of the Social Security Act to 
establish additional provisions to combat waste, fraud, and abuse 
within the Medicare Program, and for other purposes; to the Committee 
on Finance.


         medicare fraud prevention and enforcement act of 1999

  Ms. COLLINS. Mr. President, on behalf of myself and my distinguished 
colleagues Senator Durbin and Senator Grassley, I rise today to 
introduce the Medicare Fraud Prevention and Enforcement Act of 1999. 
Both of these Senators have been leaders in the fight against Medicare 
fraud.
  This bill will help solve an almost $13 billion problem. According to 
the HHS Inspector General, waste, fraud, abuse, and other improper 
payments drained about that much from the Medicare Trust Fund in fiscal 
year 1998. Fraud and abuse not only compromise the solvency of the 
Medicare program but also, in some cases, directly affect the quality 
of care delivered to the 38 million older and disabled Americans who 
depend upon this program. Although this legislation will not prevent 
all of the waste, fraud, and abuse that now plagues Medicare, it 
represents an important step toward a solution to a problem that 
threatens the financial integrity of this vital social program.
  Unfortunately, there is no line item in the budget called ``Medicare 
Waste, Fraud and Abuse'' that we can simply cut to eliminate this 
insidious problem. It is a complicated, difficult challenge to plug the 
holes that make Medicare at high risk for fraud and abuse.
  In May 1997, the Permanent Subcommittee on Investigations, which I 
chair, started an extensive investigation of the Medicare program. So 
far, my Subcommittee has held three hearings in an effort to expose 
fraud and abuse within Medicare.
  As the Subcommittee's hearings revealed, we are now seeing a 
dangerous and growing problem with Medicare fraud. Career criminals and 
bogus providers with no background in health care are increasingly 
entering the system with the sole purpose of stealing hard-earned 
taxpayer dollars from the Medicare Trust Fund. Only tough deterrents 
can prevent these unscrupulous providers from entering the Medicare 
system. At the same time, however, we must be careful not to make entry 
into the Medicare program so difficult that the process deters 
legitimate health care providers. We owe it to the American public to 
strike this crucial balance.
  During a Subcommittee hearing earlier last year, we heard testimony 
describing egregious examples of fraud committed by unscrupulous health 
care providers. For example, two physicians who submitted in excess of 
$690,000 in fraudulent Medicare claims listed nothing more than a 
Brooklyn laundromat as their office location. We were also told that 
over $6 million in Medicare funds were sent to durable medical 
equipment companies that provided no services; one of these companies 
even listed a fictitious address that would have placed the firm in the 
middle of a runway at the Miami International Airport.
  While the number of unscrupulous providers in the Medicare program is 
very small relative to the number of honest providers, these criminals 
nevertheless are able to steal millions of dollars from Medicare, 
wreaking financial havoc on the program. This fraud contributes to the 
tremendous increase in health care expenditures and adversely affects 
the quality of health care given to our nation's elderly and disabled.
  In response to the serious problems identified through my 
Subcommittee's investigation, Senator Durbin, Senator Grassley, and I 
are introducing legislation designed to prevent waste, fraud, and abuse 
by strengthening the Medicare enrollment process, expanding certain 
standards of participation, and reducing erroneous payments. Among 
other things, this legislation gives additional enforcement tools to 
the federal law enforcement agencies pursuing health care criminals.
  One of the most important steps this bill takes is to prevent scam 
artists and criminals from securing the provider numbers that permit 
them to gain access to the Medicare system. Specifically, this bill 
requires background investigations to be conducted on all new providers 
to prevent career criminals from getting involved with Medicare in the 
first place. In addition, this bill requires site inspections of new 
durable medical equipment suppliers and community mental health centers 
prior to their being given a provider number. This will help close the 
system to those who apply for a provider number from a bogus or 
nonexistent location. Together, these provisions are designed to make 
it more difficult for unscrupulous individuals to obtain a Medicare 
provider number

[[Page 13298]]

and begin submitting fraudulent claims.
  This legislation also requires community mental health centers to 
meet applicable certification or licensing requirements in their state 
before they are issued a provider number, and requires the Secretary of 
Health and Human Services to establish additional standards for such 
centers to participate in the Medicare system.
  In September of last year, Health Care Financing Administration 
Administrator Nancy-Ann DeParle acknowledged the extensive fraud 
associated with community mental health centers as she announced a 10-
point plan to curb abuses within this program. I applaud Administrator 
DeParle for taking a step in the right direction, but we can go 
further.
  Our legislation requires each agency that bills Medicare on behalf of 
physicians or provider groups to register with HCFA and receive a 
unique registration number. Many billing companies receive a percentage 
of the claims they submit that are paid by Medicare. Unethical 
companies, therefore, have a financial incentive to inflate the cost or 
number of claims submitted. Because billing companies do not have a 
Medicare provider number, however, it is difficult for HCFA to sanction 
or exclude them from billing Medicare. Hence, there is little to deter 
unscrupulous billing companies from submitting inflated claims. This 
bill makes all companies accountable for their billings through a 
uniform registration system.
  This legislation also provides that Medicare contractors should be 
held financially accountable for any amounts they improperly pay to 
excluded providers 60 or more days after being notified of the 
exclusion. There have been numerous instances in which a Medicare 
contractor has continued to pay a provider after HCFA had excluded the 
provider from participating in the program. As a result, excluded 
providers have sometimes continued to receive unauthorized payments due 
to the negligence of contractors.
  Why should American taxpayers swallow the cost of improper payments 
when a contractor has been specifically told not to pay a particular 
provider and yet continues to do so? This bill would help deter such 
negligence. I realize, however, that this is a complex issue and that 
this accountability provision may require further refinement.
  Under our legislation, providers also would be required to refund 
overpayments even if they filed for bankruptcy, if the overpayments 
were incurred through fraudulent means. This money would then be 
deposited into the Medicare Trust Fund. Some bad actors have used 
bankruptcy as a shield against repaying Medicare. Essentially, 
unscrupulous individuals steal literally hundreds of thousands of 
dollars from the Medicare program, hide or spend it quickly, and then 
file for bankruptcy protection when they are caught, leaving the 
Medicare Trust Fund in debt. With this bill, we intend to close this 
loophole.
  Another provision of this legislation aims to halt trafficking in 
provider numbers. The bill makes it a felony to knowingly, purchase, 
sell, or distribute Medicare beneficiary or provider numbers with the 
intent to defraud. Our investigation revealed that there is a growing 
problem with unscrupulous providers using ``recruiters'' to 
fraudulently obtain Medicare beneficiary identification numbers, 
thereafter using these numbers to bill for services never delivered. 
This problem must be stopped.
  Our legislation will also grant much needed statutory law enforcement 
authority to qualified special agents of the Department of Health and 
Human Service's Office of Inspector General. Even though one of their 
major responsibilities is to enforce federal criminal laws, these 
special agents have no statutory authority to carry firearms, make 
arrests, or execute search warrants. The office now operates under a 
temporary Memorandum of Understanding with the Department of Justice.
  This lack of full law enforcement authority jeopardizes the safety of 
HHS-OIG special agents and witnesses under their protection. As my 
Subcommittee's hearings have demonstrated, more and more career 
criminals are becoming involved in health care fraud; this increases 
the potential danger to the agents charged with investigating these 
crimes. It is time for Congress to spell out the law enforcement 
authorities of the HHS Office of Inspector General in a more permanent 
way.
  I am very pleased that Senator Grassley, who has been a leader in the 
fight against Medicare fraud, waste, and abuse, has agreed to be an 
original cosponsor of our legislation. Senator Durbin and I have 
incorporated into our legislation a valuable proposal that Senator 
Grassley sponsored, namely requiring the use of Universal Product 
Numbers (``UPNs'') on claims forms for reimbursement under the Medicare 
program. Senator Grassley, and a bi-partisan coalition, introduced this 
concept as a freestanding bill, S.256, which I cosponsored earlier this 
year.
  These provisions of our legislation would require that a UPN that 
uniquely identifies the item would be affixed by the manufacturer to 
medical equipment and supplies. The UPNs would be based on 
commercially-accepted identification standards, however, customized 
equipment would not be required to comply with this requirement. 
Senator Durbin and I believe that this proposal is complementary to our 
package of reforms and strengthens the legislation we are introducing 
today.
  Mr. President, the bill we are introducing today represents our 
concrete commitment to improve the Medicare program by providing 
additional tools that are needed to combat the extensive waste, fraud, 
and abuse that plague our nation's most important health care program. 
The unscrupulous individuals who commit Medicare fraud drive legitimate 
providers out of business, cost taxpayers vast sums of money, deliver 
substandard services and equipment, and endanger our elderly by not 
providing needed services.
  We must use common sense and cost-effective solutions to curtail the 
spreading infection of fraud that threatens the vitality of Medicare. 
Yet, we must do more. We have a serious responsibility to older 
Americans across the country and to the nation's taxpayers to protect 
the Medicare program. We urge our colleagues to join us in this bi-
partisan effort to strengthen and improve the Medicare program.
  Thank you, Mr. President, and I ask unanimous consent that the bill, 
a section-by-section analysis of the bill, and four letters endorsing 
the legislation be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1231

       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 
     Fraud Prevention and Enforcement Act of 1999''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Site inspections and background checks.
Sec. 3. Registration of billing agencies.
Sec. 4. Expanded access to the health integrity protection database 
              (HIPDB).
Sec. 5. Liability of medicare carriers and fiscal intermediaries for 
              claims submitted by excluded providers.
Sec. 6. Community mental health centers.
Sec. 7. Limiting the use of automatic stays and discharge in bankruptcy 
              proceedings for provider liability for health care fraud.
Sec. 8. Illegal distribution of a medicare or medicaid beneficiary 
              identification or provider number.
Sec. 9. Treatment of certain Social Security Act crimes as Federal 
              health care offenses.
Sec. 10. Authority of Office of Inspector General of the Department of 
              Health and Human Services.
Sec. 11. Universal Product Numbers on Claims Forms for Reimbursement 
              Under the Medicare program.

     SEC. 2. SITE INSPECTIONS AND BACKGROUND CHECKS.

       (a) Site Inspections for DME Suppliers, Community Mental 
     Health Centers, and Other Provider Groups.--Title XVIII of 
     the Social Security Act (42 U.S.C. 1395 et seq.) is amended 
     by adding at the end the following:

[[Page 13299]]




``SITE INSPECTIONS FOR DME SUPPLIERS, COMMUNITY MENTAL HEALTH CENTERS, 
                       AND OTHER PROVIDER GROUPS

       ``Sec. 1897. (a) Site Inspections.--
       ``(1) In general.--The Secretary shall conduct a site 
     inspection for each applicable provider (as defined in 
     paragraph (2)) that applies for a provider number in order to 
     provide items or services under this title. Such site 
     inspection shall be in addition to any other site inspection 
     that the Secretary would otherwise conduct with regard to an 
     applicable provider.
       ``(2) Applicable provider defined.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     in this section, the term `applicable provider' means--
       ``(i) a supplier of durable medical equipment (including 
     items described in section 1834(a)(13));
       ``(ii) a supplier of prosthetics, orthotics, or supplies 
     (including items described in paragraphs (8) and (9) of 
     section 1861(s));
       ``(iii) a community mental health center; or
       ``(iv) any other provider group, as determined by the 
     Secretary.
       ``(B) Exception.--In this section, the term `applicable 
     provider' does not include--
       ``(i) a physician that provides durable medical equipment 
     (as described in subparagraph (A)(i)) or prosthetics, 
     orthotics, or supplies (as described in subparagraph (A)(ii)) 
     to an individual as incident to an office visit by such 
     individual; or
       ``(ii) a hospital that provides durable medical equipment 
     (as described in subparagraph (A)(i)) or prosthetics, 
     orthotics, or supplies (as described in subparagraph (A)(ii)) 
     to an individual as incident to an emergency room visit by 
     such individual.
       ``(b) Standards and Requirements.--In conducting the site 
     inspection pursuant to subsection (a), the Secretary shall 
     ensure that the site being inspected is in full compliance 
     with all the conditions and standards of participation and 
     requirements for obtaining medicare billing privileges under 
     this title.
       ``(c) Time.--The Secretary shall conduct the site 
     inspection for an applicable provider prior to the issuance 
     of a provider number to such provider.
       ``(d) Timely Review.--The Secretary shall provide for 
     procedures to ensure that the site inspection required under 
     this section does not unreasonably delay the issuance of a 
     provider number to an applicable provider.''.
       (b) Background Checks.--Title XVIII of the Social Security 
     Act (42 U.S.C. 1395 et seq.) (as amended by subsection (a)) 
     is amended by adding at the end the following:


                          ``BACKGROUND CHECKS

       ``Sec. 1898. (a) Background Check Required.--Except as 
     provided in subsection (b), the Secretary shall conduct a 
     background check on any individual or entity that applies to 
     the Secretary for a provider number for the purpose of 
     furnishing any item or service under this title. In 
     performing the background check, the Secretary shall--
       ``(1) conduct the background check before issuing a 
     provider number to an individual or entity;
       ``(2) include a search of criminal records in the 
     background check; and
       ``(3) provide for procedures that ensure the background 
     check does not unreasonably delay the issuance of a provider 
     number to an eligible individual or entity.
       ``(b) Use of State Licensing Procedure.--The Secretary may 
     use the results of a State licensing procedure as a 
     background check under subsection (a) if the State licensing 
     procedure meets the requirements of subsection (a).
       ``(c) Attorney General Required To Provide Information.--
       ``(1) In general.--Upon request of the Secretary, the 
     Attorney General shall provide the criminal background check 
     information referred to in subsection (a)(2) to the 
     Secretary.
       ``(2) Restriction on use of disclosed information.--The 
     Secretary may only use the information disclosed under 
     subsection (a) for the purpose of carrying out the 
     Secretary's responsibilities under this title.
       ``(d) Refusal To Issue Provider Number.--
       ``(1) Authority.--In addition to any other remedy available 
     to the Secretary, the Secretary may refuse to issue a 
     provider number to an individual or entity if the Secretary 
     determines, after a background check conducted under this 
     section, that such individual or entity has a history of acts 
     that indicate issuance of a provider number to such 
     individual or entity would be detrimental to the best 
     interests of the program or program beneficiaries. Such acts 
     may include, but are not limited to--
       ``(A) any bankruptcy;
       ``(B) any act resulting in a civil judgment against such 
     individual or entity; or
       ``(C) any felony conviction under Federal or State law.
       ``(2) Reporting of refusal to issue provider number to the 
     health integrity protection database (hipdb).--A 
     determination to refuse to issue a provider number to an 
     individual or entity as a result of a background check 
     conducted under this section shall be reported to the health 
     integrity protection database established under section 1128E 
     in accordance with the procedures for reporting final adverse 
     actions taken against a health care provider, supplier, or 
     practitioner under that section.''.
       (c) Regulations; Effective Date.--
       (1) Regulations.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall promulgate such regulations as are necessary 
     to implement the amendments made by subsections (a) and (b).
       (2) Effective date.--The amendments made by subsections (a) 
     and (b) shall apply to applications received by the Secretary 
     of Health and Human Services on or after January 1, 2000.
       (d) Use of Medicare Integrity Program Funds.--The Secretary 
     of Health and Human Services may use funds appropriated or 
     transferred for purposes of carrying out the medicare 
     integrity program established under section 1893 of the 
     Social Security Act (42 U.S.C. 1395ddd) to carry out the 
     provisions of sections 1897 and 1898 of that Act (as added by 
     subsections (a) and (b)).

     SEC. 3. REGISTRATION OF BILLING AGENCIES.

       (a) Registration of Billing Agencies and Individuals.--
     Title XVIII of the Social Security Act (42 U.S.C. 1395 et 
     seq.) (as amended by section 2(b)) is amended by adding at 
     the end the following:


           ``REGISTRATION OF BILLING AGENCIES AND INDIVIDUALS

       ``Sec. 1899. (a) Registration.--The Secretary shall 
     establish procedures for the registration of all applicable 
     persons.
       ``(b) Required Application.--Each applicable person shall 
     submit a registration application to the Secretary at such 
     time, in such manner, and accompanied by such information as 
     the Secretary may require.
       ``(c) Identification Number.--If the Secretary approves an 
     application submitted under subsection (b), the Secretary 
     shall assign a unique identification number to the applicable 
     person.
       ``(d) Requirement.--Every claim for reimbursement under 
     this title that is compiled and submitted by an applicable 
     person shall contain the identification number that is 
     assigned to the applicable person pursuant to subsection (c).
       ``(e) Timely Review.--The Secretary shall provide for 
     procedures that ensure the timely consideration and 
     determination regarding approval of applications under this 
     section.
       ``(f) Definition of Applicable Person.--In this section, 
     the term `applicable person' means an individual or an entity 
     that compiles and submits claims for reimbursement under this 
     title to the Secretary on behalf of any individual or 
     entity.''.
       (b) Permissive Exclusion.--Section 1128(b) of the Social 
     Security Act (42 U.S.C. 1320a-7(b)) is amended by adding at 
     the end the following:
       ``(16) Fraud by applicable person.--An applicable person 
     (as defined in section 1899(f)) that the Secretary determines 
     knowingly submitted or caused to be submitted a claim for 
     reimbursement under title XVIII that the applicable person 
     knows or should know is false or fraudulent.''.
       (c) Regulations; Effective Date.--
       (1) Regulations.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall promulgate such regulations as are necessary 
     to implement the amendment made by subsections (a) and (b).
       (2) Effective date.--The amendment made by subsections (a) 
     and (b) shall take effect on January 1, 2000.

     SEC. 4. EXPANDED ACCESS TO THE HEALTH INTEGRITY PROTECTION 
                   DATABASE (HIPDB).

       (a) In General.--Section 1128E(d)(1) of the Social Security 
     Act (42 U.S.C. 1320a-7e(d)(1)) is amended to read as follows:
       ``(1) Availability.--The information in the database 
     maintained under this section shall be available to--
       ``(A) Federal and State government agencies and health 
     plans, and any health care provider, supplier, or 
     practitioner entering an employment or contractual 
     relationship with an individual or entity who could 
     potentially be the subject of a final adverse action, where 
     the contract involves the furnishing of items or services 
     reimbursed by 1 or more Federal health care programs 
     (regardless of whether the individual or entity is paid by 
     the programs directly, or whether the items or services are 
     reimbursed directly or indirectly through the claims of a 
     direct provider); and
       ``(B) utilization and quality control peer review 
     organizations and accreditation entities as defined by the 
     Secretary, including but not limited to organizations 
     described in part B of title XI and in section 
     1154(a)(4)(C).''.
       (b) Criminal Penalty for Misuse of Information.--Section 
     1128B(b) of the Social Security Act (42 U.S.C. 1320a-7b(b)) 
     is amended by adding at the end the following:
       ``(4) Whoever knowingly uses information maintained in the 
     health integrity protection database maintained in accordance 
     with section 1128E for a purpose other than a purpose 
     authorized under that section shall be imprisoned for not 
     more than 3 years or fined under title 18, United States 
     Code, or both.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.

[[Page 13300]]



     SEC. 5. LIABILITY OF MEDICARE CARRIERS AND FISCAL 
                   INTERMEDIARIES FOR CLAIMS SUBMITTED BY EXCLUDED 
                   PROVIDERS.

       (a) Reimbursement to the Secretary for Amounts Paid to 
     Excluded Providers.--
       (1) Requirements for fiscal intermediaries.--
       (A) In general.--Section 1816 of the Social Security Act 
     (42 U.S.C. 1395h) is amended by adding at the end the 
     following:
       ``(m) An agreement with an agency or organization under 
     this section shall require that such agency or organization 
     reimburse the Secretary for any amounts paid by the agency or 
     organization for a service under this title which is 
     furnished by an individual or entity during any period for 
     which the individual or entity is excluded, pursuant to 
     section 1128, 1128A, or 1156, from participation in the 
     health care program under this title if the amounts are paid 
     after the 60-day period beginning on the date the Secretary 
     provides notice of the exclusion to the agency or 
     organization, unless the payment was made as a result of 
     incorrect information provided by the Secretary or the 
     individual or entity excluded from participation has 
     concealed or altered their identity.''.
       (B) Conforming amendment.--Section 1816(i) of the Social 
     Security Act (42 U.S.C. 1395h(i)) is amended by adding at the 
     end the following:
       ``(4) Nothing in this subsection shall be construed to 
     prohibit reimbursement by an agency or organization pursuant 
     to subsection (m).''.
       (2) Requirements for carriers.--Section 1842(b)(3) of the 
     Social Security Act (42 U.S.C. 1395u(b)(3)) is amended--
       (A) by striking ``and'' at the end of subparagraph (I); and
       (B) by inserting after subparagraph (I) the following:
       ``(J) will reimburse the Secretary for any amounts paid by 
     the carrier for an item or service under this part which is 
     furnished by an individual or entity during any period for 
     which the individual or entity is excluded, pursuant to 
     section 1128, 1128A, or 1156, from participation in the 
     health care program under this title if the amounts are paid 
     after the 60-day period beginning on the date the Secretary 
     provides notice of the exclusion to the carrier, unless the 
     payment was made as a result of incorrect information 
     provided by the Secretary or the individual or entity 
     excluded from participation has concealed or altered their 
     identity; and''.
       (b) Conforming Repeal of Mandatory Payment Rule.--Section 
     1862(e) of the Social Security Act (42 U.S.C. 1395y(e)) is 
     amended--
       (1) in paragraph (1)(B), by striking ``and when the 
     person'' and all that follows through ``person)''; and
       (2) by amending paragraph (2) to read as follows:
       ``(2) No individual or entity may bill (or collect any 
     amount from) any individual for any item or service for which 
     payment is denied under paragraph (1). No individual is 
     liable for payment of any amounts billed for such an item or 
     service in violation of the preceding sentence.''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to claims for payment submitted on or after the date of 
     enactment of this Act.
       (2) Contract modification.--The Secretary of Health and 
     Human Services shall take such steps as may be necessary to 
     modify contracts and agreements entered into, renewed, or 
     extended prior to the date of enactment of this Act to 
     conform such contracts or agreements to the provisions of 
     this section.

     SEC. 6. COMMUNITY MENTAL HEALTH CENTERS.

       (a) In General.--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 community mental health services 
     specified in paragraph (1) of section 1913(c) of the Public 
     Health Service Act;
       ``(ii) meets applicable certification or licensing 
     requirements for community mental health centers in the State 
     in which it is located;
       ``(iii) provides a significant share of its services to 
     individuals who are not eligible for benefits under this 
     title; and
       ``(iv) meets such additional standards or requirements for 
     obtaining medicare billing privileges as the Secretary may 
     specify to ensure--
       ``(I) the health and safety of beneficiaries receiving such 
     services; or
       ``(II) the furnishing of such services in an effective and 
     efficient manner.''.
       (b) Restriction.--Section 1861(ff)(3)(A) of the Social 
     Security Act (42 U.S.C. 1395x(ff)(3)(A)) is amended by 
     inserting ``other than in an individual's home or in an 
     inpatient or residential setting'' before the period.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished after the sixth 
     month that begins after the date of enactment of this Act.

     SEC. 7. LIMITING THE DISCHARGE OF DEBTS IN BANKRUPTCY 
                   PROCEEDINGS IN CASES WHERE A HEALTH CARE 
                   PROVIDER OR A SUPPLIER ENGAGES IN FRAUDULENT 
                   ACTIVITY.

       (a) In General.--
       (1) Civil monetary penalties.--Section 1128A(a) of the 
     Social Security Act (42 U.S.C. 1320a-7a(a)) is amended by 
     adding at the end the following: ``Notwithstanding any other 
     provision of law, amounts made payable under this section are 
     not dischargeable under section 727, 1141, 1228(a) or (b), or 
     1328 of title 11, United States Code, or any other provision 
     of such title.''.
       (2) Recovery of overpayment to providers of services under 
     part a of medicare.--Section 1815(d) of the Social Security 
     Act (42 U.S.C. 1395g(d)) is amended--
       (A) by inserting ``(1)'' after ``(d)''; and
       (B) by adding at the end the following:
       ``(2) Notwithstanding any other provision of law, amounts 
     due to the Secretary under this section are not dischargeable 
     under section 727, 1141, 1228(a) or (b), or 1328 of title 11, 
     United States Code, or any other provision of such title if 
     the overpayment was the result of fraudulent activity, as may 
     be defined by the Secretary.''.
       (3) Recovery of overpayment of benefits under part b of 
     medicare.--Section 1833(j) of the Social Security Act (42 
     U.S.C. 1395l(j)) is amended--
       (A) by inserting ``(1)'' after ``(j)''; and
       (B) by adding at the end the following:
       ``(2) Notwithstanding any other provision of law, amounts 
     due to the Secretary under this section are not dischargeable 
     under section 727, 1141, 1228(a) or (b), or 1328 of title 11, 
     United States Code, or any other provision of such title if 
     the overpayment was the result of fraudulent activity, as may 
     be defined by the Secretary.''.
       (4) Collection of past-due obligations arising from breach 
     of scholarship and loan contract.--Section 1892(a) of the 
     Social Security Act (42 U.S.C. 1395ccc(a)) is amended by 
     adding at the end the following:
       ``(5) Notwithstanding any other provision of law, amounts 
     due to the Secretary under this section are not dischargeable 
     under section 727, 1141, 1228(a) or (b), or 1328 of title 11, 
     United States Code, or any other provision of such title.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to bankruptcy petitions filed after the date of 
     enactment of this Act.

     SEC. 8. ILLEGAL DISTRIBUTION OF A MEDICARE OR MEDICAID 
                   BENEFICIARY IDENTIFICATION OR PROVIDER NUMBER.

       Section 1128B(b) of the Social Security Act (42 U.S.C. 
     1320a-7b(b)), as amended by section 4(b), is amended by 
     adding at the end the following:
       ``(5) Whoever knowingly, intentionally, and with the intent 
     to defraud purchases, sells or distributes, or arranges for 
     the purchase, sale, or distribution of 2 or more medicare or 
     medicaid beneficiary identification numbers or provider 
     numbers shall be imprisoned for not more than 3 years or 
     fined under title 18, United States Code (or, if greater, an 
     amount equal to the monetary loss to the Federal and any 
     State government as a result of such acts), or both.''.

     SEC. 9. TREATMENT OF CERTAIN SOCIAL SECURITY ACT CRIMES AS 
                   FEDERAL HEALTH CARE OFFENSES.

       (a) In General.--Section 24(a) of title 18, United States 
     Code, is amended--
       (1) by striking the period at the end of paragraph (2) and 
     inserting ``; or''; and
       (2) by adding at the end the following:
       ``(3) section 1128B of the Social Security Act (42 U.S.C. 
     1320a-7b).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of enactment of this Act and 
     apply to acts committed on or after the date of enactment of 
     this Act.

     SEC. 10. AUTHORITY OF OFFICE OF INSPECTOR GENERAL OF THE 
                   DEPARTMENT OF HEALTH AND HUMAN SERVICES.

       (a) Authority.--Notwithstanding any other provision of law, 
     upon designation by the Inspector General of the Department 
     of Health and Human Services, any criminal investigator of 
     the Office of Inspector General of such department may, in 
     accordance with guidelines issued by the Secretary of Health 
     and Human Services and approved by the Attorney General, 
     while engaged in activities within the lawful jurisdiction of 
     such Inspector General--
       (1) obtain and execute any warrant or other process issued 
     under the authority of the United States;
       (2) make an arrest without a warrant for--
       (A) any offense against the United States committed in the 
     presence of such investigator; or
       (B) any felony offense against the United States, if such 
     investigator has reasonable cause to believe that the person 
     to be arrested has committed or is committing that felony 
     offense; and
       (3) exercise any other authority necessary to carry out the 
     authority described in paragraphs (1) and (2).
       (b) Funds.--The Office of Inspector General of the 
     Department of Health and Human Services may receive and 
     expend funds that represent the equitable share from the 
     forfeiture of property in investigations in which the Office 
     of Inspector General participated, and that are transferred 
     to the Office of Inspector General by the Department of 
     Justice, the Department of the Treasury, or the United States 
     Postal Service. Such equitable

[[Page 13301]]

     sharing funds shall be deposited in a separate account and 
     shall remain available until expended.

     SEC.   . UNIVERSAL PRODUCT NUMBERS ON CLAIMS FORMS FOR 
                   REIMBURSEMENT UNDER THE MEDICARE PROGRAM.

       (A) (a) Accommodation of UPNS on Medicare Claims Forms.--
     Not later than February 1, 2001, all claims forms developed 
     or used by the Secretary of Health and Human Services for 
     reimbursement under the medicare program under title XVIII of 
     the Social Security Act (42 U.S.C. 1395 et seq.) shall 
     accommodate the use of universal product numbers for a UPN 
     covered item.
       (b) Requirement for Payment of Claims.--Title XVIII of the 
     Social Security Act (42 U.S.C. 1395 et seq.) is amended by 
     adding at the end the following:


                   ``use of universal product numbers

       ``Sec. 1897. (a) In General.--No payment shall be made 
     under this title for any claim for reimbursement for any UPN 
     covered item unless the claim contains the universal product 
     number of the UPN covered item.
       ``(b) Definitions.--In this section:
       ``(1) UPN covered item.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `UPN covered item' means--
       ``(i) a covered item as that term is defined in section 
     1834(a)(13);
       ``(ii) an item described in paragraph (8) and (9) of 
     section 1861(s);
       ``(iii) an item described in paragraph (5) of section 1861 
     (s); and
       ``(iv) any other item for which payment is made under this 
     title that the Secretary determines to be appropriate.
       ``(B) Exclusion.--The term `UPN covered item' does not 
     include a customized item for which payment is made under 
     this title.
       ``(2) Universal product number.--The term `universal 
     product number' means a number that is--
       ``(A) affixed by the manufacturer to each individual UPN 
     covered item that uniquely identifies the item at each 
     packaging level; and
       ``(B) based on commercially acceptable identification 
     standards such as, but not limited to, standards established 
     by the Uniform Code Council-International Article Numbering 
     System or the Health Industry Business Communication 
     Council.''
       (c) Development and Implementation of Procedures.--
       (1) Information included in UPN.--The Secretary of Health 
     and Human Services, in consultation with manufacturers and 
     entities with appropriate expertise, shall determine the 
     relevant descriptive information appropriate for inclusion in 
     a universal product number for a UPN covered item.
       (2) Review of procedure.--From the information obtained by 
     the use of universal product numbers on claims for 
     reimbursement under the medicare program, the Secretary of 
     Health and Human Services, in consultation with interested 
     parties, shall periodically review the UPN covered items 
     billed under the Health Care Financing Administration Common 
     Procedure Coding System and adjust such coding system to 
     ensure that functionally equivalent UPN covered items are 
     billed and reimbursed under the same codes.
       (d) Effective Date.--The amendment made by subsection (b) 
     shall apply to claims for reimbursement submitted on and 
     after February 1, 2002.
       (B) Study and Reports to Congress.
       (a) Study.--The Secretary of Health and Human Services 
     shall conduct a study on the results of the implementation of 
     the provisions in subsections (a) and (c) of section 2 and 
     the amendment to the Social Security Act in subsection (b) of 
     that section.
       (b) Reports.--
       (1) Progress report.--Not later than 6 months after the 
     date of enactment of this Act, the Secretary of Health and 
     Human Services shall submit a report to Congress that 
     contains a detailed description of the progress of the 
     matters studied pursuant to subsection (a).
       (2) Implementation.--Not later than 18 months after the 
     date of enactment of this Act, and annually thereafter for 3 
     years, the Secretary of Health and Human Services shall 
     submit a report to Congress that contains a detailed 
     description of the results of the study conducted pursuant to 
     subsection (a), together with the Secretary's recommendations 
     regarding the use of universal product numbers and the use of 
     data obtained from the use of such numbers.
       (C) Defintions.
       In this Act:
       (1) UPN covered item.--The term `UPN covered item' has the 
     meaning given such term in section 1897(b)(1) of the Social 
     Security Act (as added by section 2(b)).
       (2) Universal product number.--The term `universal product 
     number' has the meaning given such term in section 1897(b)(2) 
     of the Social Security Act (as added by section 2(b)).
       (D) Authorization of Appropriations.
       The are authorized to be appropriated such sums as may be 
     necessary for the purpose of carrying out the provisions in 
     subsections (a) and (c) of section 2, section 3, and section 
     1897 of the Social Security Act (as added by section 2(b)).
                                  ____


   Medicare Fraud Prevention and Enforcement Act of 1999--Section-by-
                            Section Summary

       Sec. 1: Short Title: ``Medicare Fraud Prevention and 
     Enforcement Act of 1999''.
       Sec. 2: Site Inspections and Background Checks
       Requires the Health Care Financing Administration (HCFA) to 
     conduct a site inspection prior to issuing a provider number 
     for all new providers of durable medical equipment, 
     prosthetics, orthotics or supplies, community mental health 
     services, or any other provider group deemed necessary by the 
     Secretary.
       Requires site inspections to include, at a minimum, 
     verification of compliance with all established standards of 
     enrollment relating to a particular provider type.
       Requires background checks on all new providers prior to 
     issuing a provider number. the background check shall include 
     a criminal history background check. Grants the Secretary the 
     authority to substitute state licensing procedures for 
     background checks if it is determined that a State's 
     procedures have the same substantive requirements.
       Requires the Attorney General to provide criminal 
     background information to the Secretary regarding individuals 
     applying for a Medicare provider number. The Secretary may 
     only use this information for determining eligibility for 
     participation in the Medicare program.
       The Secretary may decline to issue a provider number if the 
     Secretary determines, after a background check, that the 
     applicant has a history of acts that the Secretary determines 
     would be detrimental to the best interests of the program or 
     its beneficiaries.
       The Secretary shall report all decisions to refuse a 
     provider number as a result of a background check to the 
     Health Integrity Protection Database.
       HCFA may use Medicare Integrity Program funds to cover the 
     costs of conducting the site visits and background 
     investigations.
       A physician or hospital that provides durable medical 
     equipment, prosthetics, orthotics or supplies incident to an 
     office visit or emergency room visit is exempt from the site 
     visit requirement.
       Explanation: Currently, site inspections and background 
     checks are random and typically only occur in certain areas 
     of the country and on certain types of providers. Mandating 
     site inspections and background checks would significantly 
     enhance the ability of HCFA to keep ``bad apples'' from 
     entering the program. Site inspections must do more than 
     simply verify that a business actually exists at a particular 
     location; they must ensure that the entity meets or exceeds 
     the established participation standards related to their 
     speciality.
       Sec. 3: Registration of Billing Agencies
       Requires agencies that bill Medicare on behalf of 
     physicians or provider groups to register with HCFA.
       Requires HCFA to assign a unique registration number to 
     each billing agency.
       Requires that every claim submitted by a billing agency to 
     Medicare for reimbursement include the agency's unique 
     registration number.
       Allows the Secretary to exclude a billing agency from 
     participating in the Medicare program if it knowingly submits 
     a false or fraudulent claim.
       Explanation: This provision would require HCFA to assign a 
     unique identifying number (similar to a provider number) to 
     each company which would then allow Medicare to sanction or 
     exclude these companies (and principal owners) from billing 
     Medicare. Federal law enforcement agencies have received 
     several allegations involving cases in which billing 
     companies that bill Medicare on behalf of providers submitted 
     fraudulent (upcoded/unbundled/fictitious) claims for payment. 
     Many billing companies receive a percentage of all claims 
     paid by Medicare; therefore, these companies have a financial 
     incentive to inflate the cost or number of claims submitted. 
     This occurs both with and without the knowledge of the 
     provider. Because these billing companies do not have a 
     Medicare provider number (they bill using the particular 
     physician's provider number), HCFA is currently unable to 
     sanction or exclude the companies from billing Medicare.
       Sec. 4: Expand Access to the Health Integrity Protection 
     Database (HIPDB)
       Allows any entity that bills Medicare to query the HIPDB 
     before hiring or initiating a contractual relationship with a 
     health care provider.
       HIPDB is intended to provide a ``one stop shop'' data base 
     for public information on the imposition of health care 
     sanctions. Includes information such as health care-related 
     criminal convictions, civil judgments, exclusions, and 
     adverse license or certification actions.
       Abuse of the information in the HIPDB is a federal felony. 
     Whoever knowingly uses information maintained in the database 
     for unauthorized purposes shall be imprisoned for not more 
     than 3 years or fined under title 18, United States Code, or 
     both.
       Currently, the HIPDB is only available to government 
     investigators and health care plans.
       Explanation: Expanding access to HIPDB for those entities 
     that bill Medicare will

[[Page 13302]]

     allow for better tracking and accountability of individuals 
     who have received an adverse action; therefore, allowing the 
     employer to make a more informed hiring decision.
       Sec. 5. Contractor Payments to Excluded Providers
       Requires a Medicare contractor to reimburse the Secretary 
     for any amounts paid by HCFA for claims submitted by excluded 
     providers 60 days after the Secretary has provided notice of 
     the exclusion, unless the payment was made as a result of 
     incorrect information provided by the Secretary or the 
     individual or entity excluded from participation has 
     concealed or altered their identity.
       Prevents an excluded provider from directly billing a 
     Medicare beneficiary.
       Explanation: There have been numerous instances in which 
     Medicare contractors have continued to pay providers after 
     HCFA had excluded the provider from participating in the 
     program. As a result, excluded individuals and entities have 
     continued to receive Medicare payments due to the negligence 
     of contractor personnel. Instead of draining the Medicare 
     Trust Fund, Medicare contractors should be held financially 
     accountable for any amounts they improperly pay to excluded 
     providers 60 days after they have been notified of the 
     exclusion unless the payment was made as a result of 
     incorrect information by HHS or the excluded provider 
     intentionally concealed or altered its identity so that the 
     contractor could not have known the provider was excluded. By 
     making Medicare contractors liable for such erroneous 
     payments, they will be encouraged to exert greater diligence 
     when reviewing new provider applications and paying claims.
       Sec. 6. Community Mental Health Centers (CMHC)
       CMHCs must meet applicable certification or licensing 
     requirements of the state in which they are located before 
     they are issued a provider number.
       CMHCs cannot serve only Medicare patients.
       CMHCs must meet additional standards of participation to be 
     established by the Secretary before they are issued a 
     provider number.
       Explanation: This provision is designed to ensure that 
     fraudulent or fly-by-night companies are not allowed to 
     participate in the CMHC program. Recent subcommittee hearings 
     have highlighted the rampant fraud within the CMHC program. 
     CMHCs are paid by Medicare to provide partial hospitalization 
     services to patients that would otherwise have to be admitted 
     for inpatient psychiatric treatment. The program has grown 
     from about $30 million in 1993 to more than $350 million in 
     1997. Of the approximately 1,500 CMHCs nationwide, more than 
     250 of these centers are located in the State of Florida. On-
     site visits to these facilities in Florida by HCFA personnel 
     revealed that many CMHCs did not meet the criteria for a 
     Medicare provider number, numerous patients did not meet 
     eligibility criteria, and many centers were using non-
     licensed staff to furnish non-therapeutic services. In 
     essence, Medicare was paying for adult daycare, which is not 
     allowed.
       Sec. 7: Bankruptcy Protection
       Provides that any overpayment which is the result of 
     fraudulent activity is not dischargeable through the 
     bankruptcy process.
       Provides that any civil monetary penalty or collection of 
     past-due obligations arising from breach of a scholarship and 
     loan contract are not dischargeable through the bankruptcy 
     process.
       Explanation: Under current law, health care providers and 
     suppliers can use bankruptcy as a shield against recovery of 
     Medicare overpayments. A provider or supplier can assert that 
     any overpayment due to the Medicare program is discharged and 
     does not survive the bankruptcy proceeding. Under this 
     proposal, a provider or supplier would be liable to refund 
     overpayments even in bankruptcy if the provider obtained the 
     overpayment by fraudulent means. This money would eventually 
     be deposited into the Medicare Trust Fund. Additionally, any 
     civil monetary penalties levied or past-due obligations 
     arising from breach of a contract entered into pursuant to 
     the National Health Services Corp Scholarship Program, the 
     Physician Shortage Area Scholarship Program, or the Health 
     Education Assistance Loan Program, are not dischargable.
       Sec. 8: Illegal Distribution of a Medicare or Medicaid 
     Provider Number or Beneficiary Identification Number
       This provision makes it a felony for a person to knowingly, 
     intentionally, and with the intent to defraud, purchase, 
     sell, or distribute two or more Medicare or Medicaid 
     beneficiary identification numbers or provider numbers.
       An individual convicted under this seciton shall be fined 
     under Title 18 of the United States Code or, whichever is 
     greater, an amount equal to the monetary loss to the 
     Government, or imprisoned for not more than 3 years, or both.
       Explanation: There are no specific statutes that prohibit 
     the purchase, sale or distribution of a Medicare or Medicaid 
     provider number or beneficiary identification (billing) 
     number. This provision would address the growing trend of 
     unscrupulous providers using ``recruiters'' to fraudulently 
     obtain beneficiary identification numbers in order to bill 
     for bogus services. In addition, this provision will provide 
     penalties for individuals who ``steal'' legitimate provider 
     numbers and then submit fraudulent claims.
       Sec. 9: Define Certain Crimes as Health Care Offenses
       Defines criminal violations of the Medicare/Medicaid 
     statutes under section 1128B of the Social Security Act 
     (including the illegal sale or distribution of a Medicare 
     provider number or beneficiary identification number) as 
     ``federal health care offenses''.
       Explanation: The Health Insurance Portability and 
     Accountability Act (HIPAA) established several enforcement 
     tools for deterring health care related crime, including 
     authority for injunctive relief, streamlined investigative 
     demand and subpoena procedures, and property forfeitures. 
     These remedies were made applicable to all ``Federal health 
     care offenses''. In identifying these criminal provisions, 
     however, some criminal provisions (i.e., kickbacks, false 
     certifications, and overcharging beneficiaries) were 
     inadvertently omitted. This provision defines the 
     aforementioned crimes as well as the offenses enumerated in 
     Section 8 (Illegal Distribution of a Medicare or Medicaid 
     beneficiary identification or provider number) of this bill 
     as Federal health care offenses.
       Sec. 10: Authority of Inspector General for the Department 
     of Health and Human Services (HHS)
       Gives criminal investigators within HHS' Office of 
     Inspector General the authority to:
       Obtain and execute warrants;
       Arrest without warrant if--a crime committed against the 
     United States is committed in their presence; or the 
     investigator reasonably believes a felony offense has been 
     committed.
       Share in forfeited assets when pursuing a joint 
     investigation with another law enforcement agency.
       The authority provided under this section shall be carried 
     out in accordance with guidelines approved by the Attorney 
     General.
       Exercise those authorities necessary to carry out those 
     functions.
       Explanation: The lack of full law enforcement authority 
     jeopardizes the safety of HHS-OIG agents and witnesses under 
     their protection. HHS-OIG agents currently exercise limited 
     law enforcement authority under a special deputation issued 
     by the Department of Justice through the U.S. Marshals 
     Office. This special deputation allows HHS-OIG agents to 
     exercise only limited law enforcement powers. All HHS-OIG 
     agents receive nine weeks of specialized training at the 
     Federal Law Enforcement Training Center. This is the same 
     training required by the United States Marshal Service, 
     United States Secret Service, and numerous other federal law 
     enforcement agencies. More and more career criminals are 
     becoming involved in health care fraud; this increases the 
     potential danger for those agents charged with investigating 
     these crimes. Both the Federal Law Enforcement Officers 
     Association as well as the Fraternal Order of Police support 
     this provision.
       Sec. 11: Universal Product Numbers on Claims Forms for 
     Reimbursement
       Requires that all Medicare claims forms accommodate a 
     Universal Product Number (UPN) no later than February 1, 
     2001, in order to receive reimbursement under the Medicare 
     program. The UPN requirement would apply to all durable 
     medical equipment and supplies, orthotics and prosthetics, 
     except for any customized items, billed under the Medicare 
     program.
       The Secretary, in consultation with manufacturers and 
     entities with appropriate expertise, shall determine the 
     relevant descriptive information appropriate for inclusion in 
     a UPN.
       The Secretary, in consultation with interested parties, 
     shall review information obtained by the use of UPNs on 
     claims forms and shall adjust the Common Procedure Coding 
     System (Medicare's current coding system) to ensure that 
     functionally equivalent UPN covered items are billed and 
     reimbursed under the same codes.
       The UPN shall be based upon, but not limited to, 
     commercially acceptable identification standards established 
     by the Uniform Code Council-International Article Numbering 
     System or the Health Industry Business Communications 
     Council. The two Councils are not-for-profit organizations 
     that are currently used by the industry to establish and 
     issue bar codes, but should a similar entity develop, the 
     Secretary retains the discretion to use this as well.
       No payments shall be made for claims forms not containing 
     UPNs submitted after February 1, 2002. This grace period 
     provides manufacturers that are not currently using UPNs time 
     to adjust to this new reimbursement system.
       The Secretary shall report to Congress no later than 6 
     months after the date of enactment of this Act on the 
     progress of implementing UPNs on claims forms.
       The Secretary shall report 18 months after the date of 
     enactment and annually thereafter for 3 years a detailed 
     description of the results of using the UPN for 
     reimbursement.
       Explanation: Currently, HCFA does not know which products 
     it is purchasing. The only identification that is reflected 
     on the claims form is a billing code. The billing code for 
     each individual product can cover a wide range of items. For 
     example, GAO determined that one single Medicare code is

[[Page 13303]]

     used for more than 200 different urological catheters and the 
     wholesale price range of the catheters varies from $1 to $18. 
     The use of a UPN would specifically identify the item and, 
     thus, reduce the likelihood of ``upcoding'' and combat fraud 
     and abuse in the Medicare program.
                                  ____

                                                   Health Industry


                                     Distributors Association,

                                 Alexandria, VA, February 8, 1999.
     Hon. Susan Collins,
     Chair, Permanent Subcommittee on Investigations,
     Committee on Governmental Affairs, Washington, DC.
       Dear Madam Chairwoman: On behalf of the Health Industry 
     Distributors Association (HIDA), I applaud you for 
     introducing the Medicare Fraud Prevention and Enforcement 
     Act. HIDA is the national trade association of home care 
     companies and medical products distribution firms. Created in 
     1902, HIDA represents over 700 companies with approximately 
     2500 locations nationwide. HIDA Members provide value-added 
     distribution services to virtually every hospital, 
     physician's office, nursing facility, clinic, and other 
     health care sites across the country, as well as to a growing 
     number of home care patients.
       As a professional trade association, HIDA wholeheartedly 
     supports the rigorous enforcement of laws that ensure that 
     Medicare pays reasonable reimbursement amounts for medically 
     necessary items and services on behalf of Medicare 
     beneficiaries. HIDA has long advocated the responsible 
     administration of the Medicare program, and has repeatedly 
     identified specific abusive or illegal practices occurring in 
     the marketplace to assist the government's anti-fraud 
     efforts. HIDA has also assisted in the development of 
     additional targeted policies designed to aid the government 
     in the administration of the Medicare Program.
       The Medicare Fraud Prevention and Enforcement Act is needed 
     to support the integrity of the Medicare Program. HIDA has 
     advocated more stringent standards for Medicare Part B 
     durable medical equipment, prosthetic, orthotic and supply 
     (DMEPOS) providers for a number of years. HIDA believes that 
     that the current Medicare DMEPOS supplier standards are 
     simply insufficient. Importantly, it is not just the de 
     minimus nature of the standards that is deficient, but also 
     the process Medicare uses to determine whether a provider 
     actually meets those standards. The site visits and increased 
     provider scrutiny included in your bill will address our 
     concerns.
       By enacting this bill, Medicare will realize an immediate 
     benefit by ensuring that beneficiaries receive DMEPOS 
     services only from legitimate firms. Unscrupulous providers 
     will never have an opportunity to engage in abusive behavior 
     because they will never be able to bill the Medicare program 
     on behalf of beneficiaries. Consequently, these increased 
     standards and enforcement tools will significantly contribute 
     to reducing fraud and abuse in the Medicare program. For 
     these reasons HIDA strongly supports the Medicare Fraud 
     Prevention and Enforcement Act.
       Again, thank you for introducing this important bill. 
     Please contact Ms. Erin H. Bush, HIDA's Associate Director of 
     Governmental Relations (703) 838-6110 if we can be of any 
     assistance.
           Sincerely,
                                             Cara C. Bachenheimer,
     Vice President.
                                  ____



                               Pedorthic Footwear Association,

                                     Columbia, MD, April 27, 1999.
     Hon. Susan Collins,
     U.S. Senate, Chair, Government Affairs Permanent Subcommittee 
         on Investigations, Washington, DC.
       Dear Senator Collins: The Pedorthic Footwear Association 
     (PFA) applauds your leadership and ongoing efforts to combat 
     fraud and abuse in the Medicare program. Your legislation, 
     ``The Medicare Fraud Prevention & Enforcement Act of 1999,'' 
     is encouraging as a positive step forward to strengthen 
     current law and further protect both patients and providers.
       PFA strongly shares your concern that only qualified 
     entities should be able to participate and provide health 
     care services to the nation's Medicare patient population. In 
     an effort to protect patients and provide HCFA with improved 
     control of its supplies, PFA greatly appreciates your 
     leadership and introduction of legislation to address these 
     important public policy issues.
       The PFA, founded in 1958, is a not-for-profit organization 
     representing professionals in the field of pedorthics--the 
     design, manufacture, modification and fit of footwear, 
     including foot orthoses, to alleviate foot problems caused by 
     disease, overuse, congenital defect or injury. Pedorthists 
     are one of the four professionals recognized by Congress as 
     suppliers of the Therapeutic Shoes for Diabetics benefit.
       Shoes are simply apparel for most people, but for 
     individuals with severe diabetic foot disease, shoes are a 
     part of their treatment plan. As such, PFA supports all 
     efforts to ensure that these patients are treated and 
     provided services by qualified individuals. Thank you for 
     your efforts to enhance HCFA's overall ability to accomplish 
     its mission of protecting the health of the patient and the 
     integrity of the Medicare program.
           Sincerely,
                                     Roger Marzano, C.P.O, C.Ped.,
     President.
                                  ____

                                         The American Occupational


                                    Therapy Association, Inc.,

                                       Bethesda, MD, May 21, 1999.
     Hon. Susan Collins,
     Chair, Permanent Subcommittee on Investigations, Senate 
         Governmental Affairs Committee, Washington, DC.
       Dear Madam Chairman: On behalf of the 60,000 occupational 
     therapists, occupational therapy assistants, and students who 
     are members of the American Occupational Therapy Association, 
     I want to express support for your Medicare Fraud Prevention 
     and Enforcement Act of 1999.
       As providers whose services are covered under both Parts A 
     and B of the Medicare program, our members are well aware of 
     the importance of assuring that the program is well-run, 
     appropriately administered and monitored and that high 
     standards of quality are maintained, including assurance of 
     the use of qualified personnel.
       Your efforts to require scrutiny of new providers can be an 
     important element of an overall improvement in the Medicare 
     program. We are also pleased that your bill recognizes the 
     validity of state licensure as a proxy for background checks.
       Thank you for your efforts to promote quality, efficient 
     services under Medicare.
           Sincerely,

                                         Christina A. Metzler,

                                                         Director,
     Federal Affairs Department.
                                  ____



                                                         AARP,

                                    Washington, DC, June 17, 1999.
     Hon. Susan M. Collins,
     Chair,
     Governmental Affairs Permanent Subcommittee, on 
         Investigations, U.S. Senate, Washington, DC.
       Dear Madam Chair: AARP commends you and your colleague, 
     Sen. Richard Durbin, for introducing the ``Medicare Fraud 
     Prevention and Enforcement Act of 1999.'' Fraud and abuse 
     remain serious problems in the Medicare program that drain 
     valuable funds which could otherwise be used to help 
     strengthen the program for current and future beneficiaries. 
     Your legislation's focus on deterrence is constructive and 
     should significantly improve Medicare's ability to stop fraud 
     by unscrupulous providers before it happens.
       The provisions in your bill to require site inspections and 
     background checks of certain providers, to require billing 
     agencies to register with the Health Care Financing 
     Administration, to allow entities billing Medicare to access 
     the Health Integrity Protection Database, and to make it a 
     felony to distribute provider or beneficiary identification 
     numbers are powerful tools that should make those intent on 
     defrauding the Medicare program think twice before attempting 
     to do so.
       As we move to strengthen Medicare's ability to identify and 
     eliminate fraud, it is important to do this judiciously so 
     that the vast majority of providers--who are honest and 
     intent on following the rules--are not burdened. The 
     provisions of your bill appear reasonable and seem to reflect 
     this critical balance. While fraud and abuse cannot be 
     completely eliminated, it can be significantly reduced. Your 
     bill will help in this effort.
       AARP is pleased to have the opportunity to comment on this 
     legislation and we appreciate the work you and Sen. Durbin 
     have done to reduce the effect of fraud and abuse on the 
     Medicare program and its beneficiaries. We look forward to 
     continuing to work with you and your colleagues in the House 
     and Senate on a bipartisan basis to find effective ways to 
     address this issue.
       If you have any questions, please feel free to contact me 
     or have your staff contact Michele Kimball of the AARP 
     Federal Affairs Health Team at 202-434-3772.
           Sincerely,
                                                  Horace B. Deets,
                                               Executive Director.

  Mr. DURBIN. Mr. President, in summary, I am proud to be a cosponsor 
of this bipartisan legislation. I am also proud to be a member of the 
Permanent Subcommittee on Investigations of the Governmental Affairs 
Committee, which Senator Collins chairs. This has been one of the best 
assignments I have had in the Senate because Senator Collins is not 
afraid to tackle tough issues. We have gone after the issue of food 
safety with fascinating hearings which I believe will lead to improving 
America's food supply and really protecting America's families.
  She has shown extraordinary courage in addressing this issue of 
Medicare fraud. Frankly, it took a very good investigative team and her 
determination to bring us to this moment where this legislation is 
being introduced.
  Mr. President, 39 million Americans rely on Medicare. If you have a 
parent

[[Page 13304]]

or grandparent who is elderly or disabled, they may view Medicare as 
their health insurance plan. Without it, think where America would be 
if elderly people and disabled folks had to rely on their own resources 
to pay for their medical care.
  We pay a great deal of money each year in America to keep Medicare, 
this health insurance plan, solvent and working; about $218 billion a 
year. What Senator Collins is addressing is the fact that we know for a 
fact that each year we waste anywhere from $13 billion to $21 billion a 
year. You say: How does that happen? Is it a matter of the bureaucrats 
moving the paper around, and they get it wrong? No, for the most part, 
it comes down to people who are setting out to intentionally defraud 
the Government, and they are so good at it, we lose at least $35 
million a day--a day--to these smoothies, these swindlers, these con 
artists who prey upon the Medicare system as an open pot of money they 
can reach into and grab.
  When Senator Collins' investigators went out, they found that some of 
the people who claimed to be providing medical services and medical 
equipment do not even exist. The addresses they gave, when we traced 
them, turned out, if they were true addresses, would be smack dab in 
the middle of a runway at the Miami International Airport, and no one 
checked up on it. Year after year, we send out money automatically to 
these folks without verification.
  The legislation I am introducing with Senator Collins will really put 
some teeth in the law and say we are not going to tolerate this 
anymore. The money that is being taken out of this program is at the 
expense of the elderly and disabled and certainly at the expense of 
America's taxpayers.
  Can I give one illustration of this? Nursing homes provide care for 
elderly people who suffer from incontinency. It is something which 
happens to many older folks. Nursing homes are supposed to provide 
adult diapers for seniors who find themselves in this predicament. 
However, one of the groups that we discovered decided they would try to 
invent a way to bill the Federal Government for these 30-cent diapers 
that are needed for elderly people, so they changed the name of the 
diaper to ``female urinary collection device'' and billed the Federal 
Government $8 an item: a 30-cent diaper, billed them $8--clearly 
fraudulent, taking money right out of the Treasury, money that, 
frankly, should be there for the real needs of senior citizens.
  The stories go on and on. With this bill, we try to step forward and 
say we are going to put an end to it or at least reduce it 
dramatically. We are going to create incentives for people who take the 
time, as many seniors should with the help of their families, to go 
through their medical bills. Really, that is the first line of defense. 
When a senior under Medicare receives a medical bill, I know it has to 
be a challenge--it is for me and I am an attorney--they should go 
through it page by page and look for things that do not make sense. 
When they discover these things and call into the hotline under 
Medicare, we can many times track down abuses and fraud and help not 
only that senior, but every senior and Americans in general.
  I salute the Senator from Maine. Her leadership on this issue is 
absolutely essential.
                                 ______
                                 
      By Mr. COCHRAN (for himself and Mr. Akaka):
  S. 1232. A bill to provide for the correction of retirement coverage 
errors under chapters 83 and 84 of title 5, United States Code; to the 
Committee on Governmental Affairs.


       The Federal Erroneous Retirement Coverage Corrections Act

  Mr. COCHRAN. Mr. President, today I am introducing a bill to provide 
relief to many Federal employees and their families who, through no 
fault of their own, find themselves the victims of retirement coverage 
errors.
  In 1984, the Federal government made a transition from the Civil 
Service Retirement System (CSRS) to the Federal Employees Retirement 
System (FERS). As government agencies carried out the complex job of 
applying two sets of transition rules, mistakes were made, and 
thousands of employees were placed in the wrong retirement system--many 
learning that their pensions would be less than expected. Under the 
current statutory scheme, federal agencies have no choice but to 
correct a retirement coverage error when it is discovered, effectively 
forcing employees into a new retirement plan. Unfortunately, the 
correction of a retirement coverage error can have a harmful impact on 
an employee's financial ability to plan for retirement.
  This proposal, ``The Federal Erroneous Retirement Coverage 
Corrections Act,'' provides comprehensive and equitable relief to 
employees, former employees, retirees, and survivors who are affected 
by retirement coverage errors. The bill provides individuals with a 
choice between corrected retirement coverage and the coverage the 
employee expected to receive, without disturbing Social Security 
coverage law. For each type of retirement coverage error, individuals 
are furnished the opportunity to maintain their expected level of 
retirement benefits without a change in their retirement savings and 
planning. Among other provisions, the bill also provides that certain 
employees who missed an opportunity to contribute to the Thrift Savings 
Plan (TSP) due to a coverage error may receive interest on their TSP 
make-up contributions.
  ``The Federal Erroneous Retirement Coverage Corrections Act'' 
provides a comprehensive solution to the problems faced by Federal 
employees due to retirement coverage erros--it does so at a reasonable 
cost and without creating unnecessary administrative burdens.
  I invite my colleagues to support this effort to address a serious 
problem affecting Federal employees and their families.
  Mr. President, I ask unanimous consent that a copy of the section-by-
section analysis of the bill be printed in the Record.
  There being no objection, the item was ordered to be printed in the 
Record, as follows:

 The Federal Erroneous Retirement Coverage Corrections Act--Section-by-
                            Section Analysis

       The ``Federal Erroneous Retirement Coverage Corrections 
     Act'' would provide a remedy to federal employees who have 
     been placed in the wrong retirement system.
       Section 1: Provides the short title (``Federal Erroneous 
     Retirement Coverage Corrections Act'') and the Table of 
     Contents.
       Section 2: Defines the terms used throughout the Act.
       Section 3: Provides coverage for all errors that have been 
     in effect for at least three years of service after December 
     31, 1986.
       Section 4: Provides that elections made under this Act are 
     irrevocable.


  title i: description of retirement coverage errors and measures for 
                             rectification

       This title details the specific types of retirement 
     coverage errors and the remedies provided by the Act.
       Subtitle A: Covers employees and annuitants who should have 
     been FERS covered, but were erroneously covered under CSRS or 
     CSRS Offset. These individuals have a choice between 
     correction to FERS or be covered by CSRS Offset. Includes 
     provisions that allow all employee contributions, and 
     earnings thereon, to remain in the TSP account if CSRS Offset 
     is elected.
       Subtitle B: Covers employees who should have been covered 
     by a retirement plan (CSRS, CSRS Offset, or FERS), but were 
     erroneously covered by Social Security only. In all cases, 
     coverage is corrected to the appropriate plan so that the 
     employee has retirement coverage.
       Subtitle C: Covers employees who should have been covered 
     by Social Security only, but were erroneously covered by CSRS 
     or CSRS Offset. These individuals have a choice between 
     correction to Social Security only or be covered by CSRS 
     Offset.
       Subtitle D: Covers employees who should have been covered 
     by CSRS, CSRS Offset, or Social Security only, but were 
     erroneously covered by FERS. These individuals have a choice 
     between remaining in FERS or correction to the appropriate 
     plan. Includes provisions that allow all employee 
     contributions, and earnings thereon, to remain in the TSP 
     account if coverage other than FERS is elected.
       Subtitle E: Covers employees who should have been covered 
     by CSRS Offset, but were erroneously covered by CSRS. 
     Coverage is corrected to CSRS Offset to conform with Social 
     Security coverage law.
       Subtitle F: Covers employees who should have been covered 
     by CSRS, but were erroneously covered by CSRS Offset. 
     Coverage is

[[Page 13305]]

     corrected to CSRS to conform with Social Security coverage 
     law.


                      title II: general provisions

       Section 201: Requires that all government agencies make 
     reasonable efforts to identify and notify individuals 
     affected by retirement coverage errors.
       Section 202: Authorizes OPM, SSA, and TSP to obtain any 
     information necessary to carry out the responsibilities of 
     this Act.
       Section 203: Provides for payment of interest on certain 
     deposits made by employees that, due to correction of a 
     retirement coverage error, are returned to the employee. 
     Allows retirement credit for certain periods of service 
     without payment of a service credit deposit. Provides that 
     the retirement or survivor benefit is actuarially reduced by 
     the amount of deposit owed.
       Section 204: Provides that the employing agency pays any 
     employer OASDI taxes due for the period of erroneous 
     coverage, subject to the three-year statute of limitations in 
     the Internal Revenue Code. OPM will transfer excess employee 
     retirement deductions to the OASDI Trust Funds to fund the 
     employee share of the OASDI taxes. In no case will an 
     employee be required to pay additional OASDI taxes.
       Section 205: Provides that certain employees who missed an 
     opportunity to contribute to TSP due to a coverage error may 
     receive interest on their own TSP make-up contributions. 
     ``Lost'' interest will be paid by the employing agency. Note: 
     Current law already provides that certain employees who 
     missed an opportunity to contribute to TSP due to a coverage 
     error may receive agency matching contributions on TSP make-
     up contributions, agency automatic one percent contributions 
     to TSP, and interest on both.
       Section 206: Provides that employing agencies may not 
     remove excess agency retirement contributions from the Civil 
     Service Retirement and Disability Fund.
       Section 207: Requires that agencies obtain written approval 
     from OPM before placing certain employees under CSRS 
     coverage.
       Section 208: Authorizes the Director of OPM to extend 
     deadlines, reimburse individuals for reasonable expenses 
     incurred by reason of the coverage error or for losses, and 
     waive repayments required under the Act.
       Section 209: Authorizes OPM to prescribe regulations to 
     administer the Act.


                      title III: other provisions

       Section 301: Makes remedies provided under the Act also 
     available to employees of the Foreign Service and the Central 
     Intelligence Agency.
       Section 302: Authorizes payments from the Civil Service 
     Retirement and Disability Fund for administrative expenses 
     incurred by OPM and for other payments required under the 
     Act.
       Section 303: Allows individuals to bring suit against the 
     United States Government for matters not covered under this 
     Act.
       Section 304: Provides that the Act is effective from the 
     date of enactment.


                        title iv: tax provisions

       Section 401: Provides that transfers and payments of 
     contributions under this Act will not result in an income tax 
     liability for affected employees.


              title v: miscellaneous retirement provisions

       Section 501: Allows portability of service credit between 
     Federal Reserve service and FERS.
       Section 502: Provides technical amendments to chapter 84 of 
     title 5, United States Code, that allow certain transfers to 
     other federal retirement systems to be treated as separations 
     from federal services for TSP purposes.
                                 ______
                                 
      By Mr. LEAHY (for himself, Mr. Hatch, Mr. Biden, Mr. DeWine, and 
        Mr. Schumer):
  S. 1235. A bill to amend part G of title I of the Omnibus Crime 
Control and Safe Streets Act of 1968 to allow railroad police officers 
to attend the Federal Bureau of Investigation National Academy for law 
enforcement training; to the Committee on the Judiciary.


  national academy for law enforcement training attendance legislation

  Mr. LEAHY. Mr. President, I am pleased to introduce with Senators 
Hatch, Biden, DeWine, and Schumer, a bill to provide railroad police 
officers the opportunity to attend the Federal Bureau of 
Investigation's National Academy for law enforcement training in 
Quantico, Virginia.
  The FBI is currently authorized to offer the superior training 
available at the FBI's National Academy only to law enforcement 
personnel employed by state or local units of government. Police 
officers employed by railroads are not allowed to attend this Academy 
despite the fact that they work closely in numerous cases with Federal 
law enforcement agencies as well as State and local law enforcement. 
Providing railroad police with the opportunity to obtain the training 
offered at Quantico would improve inter-agency cooperation and prepare 
them to deal with the ever increasing sophistication of criminals who 
conduct their illegal acts either using the railroad or directed at the 
railroad or its passengers.
  Railroad police officers, unlike any other private police department, 
are commissioned under State law to enforce the laws of that State and 
any other State in which the railroad owns property. As a result of 
this broad law enforcement authority, railroad police officers are 
actively involved in numerous investigations and cases with the FBI and 
other law enforcement agencies.
  For example, Amtrak has a police officer assigned to the New York 
City Joint Task Force on Terrorism, which is made up of 140 members 
from such disparate agencies at the FBI, the U.S. Marshals Service, the 
U.S. Secret Service, and the Bureau of Alcohol, Tobacco and Firearms. 
This task force investigates domestic and foreign terrorist groups and 
responds to actual terrorist incidents in the Metropolitan New York 
area.
  Whenever a railroad derailment or accident occurs, often railroad 
police are among the first on the scene. For example, when a 12-car 
Amtrak train derailed in Arizona in October 1995, railroad police 
joined the FBI at the site of the incident to determine whether the 
incident was the result of an intentional criminal act of sabotage.
  Amtrak police officers have also assisted FBI agents in the 
investigation and interdiction of illegal drugs and weapons trafficking 
on transportation systems in the District of Columbia and elsewhere. In 
addition, using the railways is a popular means for illegal immigrants 
to gain entry to the United States. According to recent congressional 
testimony, in 1998 alone, 33,715 illegal aliens were found hiding on 
board Union Pacific railroad trains and subject to arrest by railroad 
police.
  With thousand of passengers traveling on our railways each year, 
making sure that railroad police officers have available to them the 
highest level of training is in the national interest. The officers 
that protect railroad passengers deserve the same opportunity to 
receive training at Quantico that their counterparts employed by State 
and local governments enjoy. Railroad police officers who attend the 
FBI National Academy in Quantico for training would be required to pay 
their own room, board and transportation.
  This legislation is supported by the FBI, the International 
Association of Chiefs of Police and the National Railroad Passenger 
Corporation.
  I urge prompt consideration of this legislation to provide railroad 
police officers with the opportunity to receive training from the FBI 
that would increase the safety of the American people. I ask unanimous 
consent that a copy of the bill and letters from the National Railroad 
Passenger Corporation's Chief of Police, Ernest R. Frazier, and 
Amtrak's President and CEO, George Warrington, be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1235

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

     SECTION 1. INCLUSION OF RAILROAD POLICE OFFICERS IN FBI LAW 
                   ENFORCEMENT TRAINING.

       (a) In General.--Section 701(a) of part G of title I of the 
     Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 
     3771(a)) is amended--
       (1) in paragraph (1)--
       (A) by striking ``State or unit of local government'' and 
     inserting ``State, unit of local government, or rail 
     carrier''; and
       (B) by inserting ``, including railroad police officers'' 
     before the semicolon; and (2) in paragraph (3)--
       (A) by striking ``State or unit of local government'' 
     inserting ``State, unit of local government, or rail 
     carrier'';
       (B) by inserting ``railroad police officer,'' after 
     ``deputies,'';
       (C) by striking ``State or such unit'' and inserting 
     ``State, unit of local government, or rail carrier''; and
       (D) by striking ``State or unit.'' and inserting ``State, 
     unit of local government, or rail carrier.''.

[[Page 13306]]

       (b) Rail Carrier Costs.--Section 701 of part G of title I 
     of the Omnibus Crime Control and Safe Streets Act of 1968 (42 
     U.S.C. 3771) is amended by adding at the end the following:
       ``(d) Rail Carrier Costs.--No Federal funds may be used for 
     any travel, transportation, or subsistence expenses incurred 
     in connection with the participation of a railroad police 
     officer in a training program conducted under subsection 
     (a).''.
       (c) Definitions.--Section 701 of part G of title I of the 
     Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 
     3771) is amended by adding at the end the following:
       ``(e) Definitions.--In this section--
       ``(1) the terms `rail carrier' and `railroad' have the 
     meanings given such terms in section 20102 of title 49, 
     United States Code; and
       ``(2) the term `railroad police officer' means a peace 
     officer who is commissioned in his or her State of legal 
     residence or State of primary employment and employed by a 
     rail carrier to enforce State laws for the protection of 
     railroad property, personnel, passengers, or cargo.''.
                                  ____

         National Railroad Passenger Corp., Police Department,
                                 Philadelphia, PA, March 29, 1999.
     Senator Patrick Leahy,
     Russell Senate Office Building,
     U.S. Senate, Washington, DC.
       Dear Senator Leahy: I am very grateful that you have agreed 
     to support legislation which will allow railroad police 
     officers to attend the FBI Training Academy. Your recognition 
     of the importance of this bill speaks highly of your respect 
     for law enforcement.
       The FBI Training Academy offers training for upper and 
     middle-level law enforcement officers. The curriculum focuses 
     on leadership and management training. The completion of this 
     training allows the law enforcement professional to play a 
     significant role in developing a higher level of competency, 
     cooperation, and integrity within the law enforcement 
     community.
       Railroad police officers are sworn officers charged with 
     the responsibility of enforcing state and local laws in any 
     jurisdiction in which the rail carrier owns property. In 
     their efforts to provide quality law enforcement services to 
     our transportation systems, railroad police officers should 
     have access to the premier training that is currently offered 
     to other police agencies.
       Thank you again for your support of the legislation that 
     will provide FBI Training to railroad police officers. Please 
     do not hesitate to contact me on this issue, or any matter of 
     mutual concern.
           Sincerely,
     Ernest R. Frazier, Sr., Esq.
                                  ____



                            National Railroad Passenger Corp.,

                                    Washington, DC, April 6, 1999.
     Hon. Patrick Leahy,
     U.S. Senate,
     Washington, DC.
       Dear Senator Leahy: I want to take this opportunity to 
     express my thanks for your support of the Amtrak Police by 
     introducing legislation that would allow railroad police 
     officers to attend the Federal Bureau of Investigation 
     Training Academy.
       Amtrak relies on its well-trained officers to serve and 
     protect its customers, employees, trains and stations. It is 
     critical that they are afforded quality training 
     opportunities, such as what the FBI Academy offers, to 
     effectively carry out their duties. I am proud that Amtrak 
     has the privilege of working with this fine group of men and 
     women, and I wholeheartedly support any measure that would 
     enhance their job performance.
       Again, thank you for your support of passenger rail and the 
     dedicated law enforcement officers who help make safe travel 
     possible.
           Sincerely,
                                              George D. Warington,
                                                President and CEO.
                                 ______
                                 
      By Mr. GRAHAM (for himself, Mr. Mack, Mr. Bingaman, Mr. Inouye, 
        Mr. Inhofe, Mr. Burns, Mr. Baucus, Mr. Crapo, Mr. Craig, and 
        Mrs. Feinstein):
  S. 1239. A bill to amend the Internal Revenue Code of 1986 to treat 
spaceports like airports under the exempt facility bond rules; to the 
Committee on Finance.


                        spaceport investment act

  Mr. GRAHAM. Mr. President, today I rise with my colleagues, Senators 
Mack, Bingaman, Inouye, Inhofe, Burns, Baucus, Crapo, Craig, and 
Feinstein, to introduce legislation entitled the Spaceport Investment 
Act.
  On May 25th, the Cox Commission Report revealed alarming and long-
standing instances of Chinese espionage that have damaged our national 
security. In addition to the theft of nuclear secrets at our National 
Laboratories, the Cox Report highlighted assistance provided by U.S. 
satellite manufacturers to Chinese military and civilian launch 
vehicles. Mr. President, we have helped to create the conditions 
leading to this sorry state of affairs. To borrow from Pogo, we have 
met the enemy, and it is us.
  U.S. satellite manufacturers have faced increasing pressure to 
consider the use of foreign launch vehicles, due to a lack of a 
sufficient domestic launch capability.
  The Cox Report recognized these facts specifically at recommendation 
number 24. I quote from the Report: ``In light of the impact on U.S. 
national security of insufficient domestic, commercial space-launch 
capacity and competition, the Select Committee recommends that 
appropriate congressional committees report legislation to encourage 
and stimulate further the expansion of such capacity and competition.''
  Mr. President, we must address this problem.
  Last year, along with Senator Mack, I proposed, Congress passed, and 
the President signed into law the Commercial Space Act. Congressman 
Dave Weldon provided crucial leadership in the House on this issue.
  The Commercial Space Act helped break the federal government's 
monopoly on space travel by establishing a licensing framework for 
private sector reusable launch vehicles. The Act also provided for the 
conversion of excess ballistic missiles into space transportation 
vehicles, helping to reduce the cost of access to space.
  Mr. President, to follow-up on the Commercial Space Act this year, I 
plan to introduce a number of initiatives to further help the 
commercial space industry in this country. The first of these 
initiatives is my proposal to stimulate infrastructure development by 
attracting private sector investment capital to our nation's launch 
facilities. My proposal achieves this purpose by addressing an issue of 
great importance to our country's commercial space transportation 
industry--tax exempt status for spaceport facility bonds. The 
legislation clarifies that spaceports are eligible for tax exempt 
financing to the same extent as publicly-owned airports and seaports. 
This bill will stimulate the growth of spaceports in this country by 
attracting private sector investment capital for infrastructure 
improvement, leading directly to the expansion of U.S. launch capacity 
and competition.
  Spaceports are subdivisions of state government. They attract and 
promote the U.S. commercial space transportation industry by providing 
launch infrastructure in addition to that available at federal 
facilities. Spaceport authorities operate much like airport authorities 
by providing economic and transportation incentives to industry and 
surrounding communities.
  The Spaceport Florida Authority was the first such entity, created as 
a subdivision of state government by Florida's Governor and State 
Legislature in 1989. Its purpose is to attract space related businesses 
by providing a supportive and coordinated environment for space related 
economic growth and educational development. Since its creation, 
Spaceport Florida estimates that it has been involved in space-related 
construction and investment projects worth more than $100 million. 
These efforts include the modification and conversion of Launch Complex 
46 from a military to commercial facility. NASA's Lunar Prospector was 
launched from this site on January 6, 1998, the first launch conducted 
from a spaceport.
  There are presently four spaceports throughout the country in 
Florida, California, Virginia, and Alaska, and more than ten others are 
under consideration. States considering the development of spaceports 
include Mississippi, Texas, New Mexico, Oklahoma, Montana, Nevada, 
North Carolina, Louisiana, Utah, and Idaho.
  Our Nation's commercial space transportation industry includes not 
only spaceports themselves and providers of launch services, but also 
companies which develop needed infrastructure for testing and servicing 
launch vehicles and their components. This industry faces increasing 
pressure from government sponsored or subsidized competition from 
Europe, China, Japan, India, Australia, and Russia. The French 
Government, for example, indirectly provides Arianespace with most

[[Page 13307]]

of its infrastructure, including real and personal property. In 
countries with non-market economies, such as China, the government 
provides all real and personal property as well as labor necessary to 
build satellites and launch vehicles.
  Mr. President, my proposal does not provide direct federal spending 
for our commercial space transportation industry. Instead, it creates 
the conditions necessary to stimulate private sector capital investment 
in infrastructure. This is an efficient means of achieving our ends.
  Mr. President, to be state of the art in space requires state of the 
art financing on the ground.
  I urge my colleagues in the Senate to join us in this important 
effort by co-sponsoring this bill.
  Mr. President, I ask unanimous consent that the text of this bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1239

       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 ``Spaceport Investment Act''.

     SEC. 2. SPACEPORTS TREATED LIKE AIRPORTS UNDER EXEMPT 
                   FACILITY BOND RULES.

       (a) In General.--Paragraph (1) of section 142(a) of the 
     Internal Revenue Code of 1986 (relating to exempt facility 
     bond) is amended to read as follows:
       ``(1) airports and spaceports,''.
       (b) Treatment of Ground Leases.--Paragraph (1) of section 
     142(b) of the Internal Revenue Code of 1986 (relating to 
     certain facilities must be governmentally owned) is amended 
     by adding at the end the following new subparagraph:
       ``(C) Special rule for spaceport ground leases.--For 
     purposes of subparagraph (A), spaceport property which is 
     located on land owned by the United States and which is used 
     by a governmental unit pursuant to a lease (as defined in 
     section 168(h)(7)) from the United States shall be treated as 
     owned by such unit if--
       ``(i) the lease term (within the meaning of section 
     168(i)(3)) is at least 15 years, and
       ``(ii) such unit would be treated as owning such property 
     if such lease term were equal to the useful life of such 
     property.''.
       (c) Bond May Be Federally Guaranteed.--Paragraph (3) of 
     section 149(b) of the Internal Revenue Code of 1986 (relating 
     to exceptions) is amended by adding at the end the following 
     new subparagraph:
       ``(E) Exception for spaceports.--Paragraph (1) shall not 
     apply to any exempt facility bond issued as part of an issue 
     described in paragraph (1) of section 142(a) to provide a 
     spaceport in situations where--
       ``(i) the guarantee of the United States (or an agency or 
     instrumentality thereof) is the result of payment of rent, 
     user fees, or other charges by the United States (or any 
     agency or instrumentality thereof), and
       ``(ii) the payment of the rent, user fees, or other charges 
     is for, and conditioned upon, the use of the spaceport by the 
     United States (or any agency or instrumentality thereof).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after the date of the 
     enactment of this Act.
                                 ______
                                 

By Mr. MURKOWSKI (for himself, Mr. Breaux, Mr. Gorton, Mr. Cochran, Mr. 
  Hutchinson, Ms. Collins, Mrs. Lincoln, Mr. Shelby, Ms. Snowe, Mrs. 
 Murray, Mr. Sessions, Mr. Smith of Oregon, Mrs. Hutchison, Mr. Grams, 
                           and Ms. Landrieu):

  S. 1240. a bill to amend the Internal Revenue Code of 1986 to provide 
a partial inflation adjustment for capital gains from the sale or 
exchange of timber; to the Committee on Finance.


                     reforestation tax act of 1999

  Mr. MURKOWSKI. Mr. President, I rise to offer bipartisan legislation 
that would help ensure that our Nation maintains its position as a 
world leader in the forest products industry. I am pleased to be joined 
by Senators Breaux, Gorton, Cochran, Tim Hutchinson, Collins, Lincoln, 
Shelby, Snowe, Murray, Sessions, Gordon Smith, Kay Bailey Hutchison, 
Rod Grams, and Mary Landrieu.
  This industry is vital to the United States' economy. It ranks in the 
top ten of the country's manufacturing industries, representing 7.8 of 
the manufacturing work force. It employs 1.5 million workers, with a 
payroll of $40.8 billion. I ask my colleagues to attempt to imagine a 
single minute of their day that does involve the utilization of a 
forest product--from the paper this speech is written on, to the desk 
and chair in my office, to the lumber in my house, to the box my 
computer arrives in. Clearly, the health of the world economy is 
dependent on a vibrant forest products industry.
  At the same time, the industry is facing serious international 
competitive threats. New capacity growth is now taking place in other 
countries, where forestry, labor and environmental practices may not be 
as responsible as those in the U.S. Additionally, a recent study using 
the Joint Committee on Taxation's estimating model shows that the U.S. 
forest products industry has the second highest tax burdens in the 
world--55 percent.
  The Reforestation Tax Act recognizes the unique nature of timber and 
the overwhelming risks that accompany investment in this essential 
natural asset, and attempts to place the industry on a more competitive 
footing with our competitors. In short, it would reduce the capital 
gains paid on timber for both individuals and corporations and expand 
the current reforestation credit. Because it often takes decades for a 
tree to grow to a marketable size, it is important that we look 
carefully at the long-term return on investment and the treatment of 
the costs associated with owning and planting of timber.
  The first part of the Reforestation Tax Act would provide a sliding 
scale reduction in the amount of taxable gain based on the number of 
years the asset is held (3% per year). The maximum reduction allowed 
would be 50 percent. Thus, if the taxpayer held the timber for 17 
years, the effective tax rate for corporate holdings would be 17.5% and 
the rate for most individuals would be 10%.
  The second part of the bill would encourage replanting by lifting the 
existing cap on the reforestation tax credit and amortization 
provisions of the tax code. Currently, the first $10,000 of 
reforestation expenses are eligible for a 10 percent tax credit and can 
be amortized over 7 years. No additional expenses are eligible for 
either the credit or the deduction, meaning that most reforestation 
expenses are not recoverable until the timber is harvested. The 
legislation removes the $10,000 cap and allows all reforestation 
expenses to qualify for the tax credit and to be amortized over a 5-
year period. This change in the law will provide a strong incentive for 
increased reforestation by eliminating the arbitrary cap on such 
expenses.
  These tax changes will provide a strong incentive for landowners of 
all sizes to not only plant and grow trees, but also to reforest their 
land after harvest. This is key to maintaining a long-term sustainable 
supply of fiber and to keeping land in a forested state.
  Besides ensuring fairness, the Reforestation Tax Act will encourage 
sound forestry practices that keep our environment healthy for the 
future. Timberlands held by corporations help reduce the demand for 
timber from public lands. Moreover, by sequestering carbon, managed 
forests help to offset emissions that contribute to the ``greenhouse 
effect.'' Unfortunately, the current high tax burden on forest assets 
runs counter to our nation's commitment to preserve and invest in the 
environment. This bill would encourage reforestation--or reinvestment 
in the environment--by extending tax credits for all reforestation 
expenses and shortening the amortization period for reforestation costs 
and by making investment in timber viable. As we consider policies to 
counteract global warming and improve water quality, we need to ensure 
that our tax policy is aligned with and encourages sound forestry 
practices.
  Mr. President, this legislation is supported by labor and business--
large and small. I ask unanimous consent that a copy of the bill and a 
letter signed by over 75 CEOs from the forest products industry and a 
letter from the United Brotherhood of Carpenters and Joiners of America 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

[[Page 13308]]



                                S. 1240

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

     SECTION 1. PARTIAL INFLATION ADJUSTMENT FOR TIMBER.

       (a) In General.--Part I of subchapter P of chapter 1 of the 
     Internal Revenue Code of 1986 (relating to treatment of 
     capital gains) is amended by adding at the end the following 
     new section:

     ``SEC. 1203. PARTIAL INFLATION ADJUSTMENT FOR TIMBER.

       ``(a) In General.--At the election of any taxpayer who has 
     qualified timber gain for any taxable year, there shall be 
     allowed as a deduction from gross income an amount equal to 
     the qualified percentage of such gain.
       ``(b) Qualified Timber Gain.--For purposes of this section, 
     the term `qualified timber gain' means gain from the 
     disposition of timber which the taxpayer has owned for more 
     than 1 year.
       ``(c) Qualified Percentage.--For purposes of this section, 
     the term `qualified percentage' means the percentage (not 
     exceeding 50 percent) determined by multiplying--
       ``(1) 3 percent, by
       ``(2) the number of years in the holding period of the 
     taxpayer with respect to the timber.
       ``(d) Estates and Trusts.--In the case of an estate or 
     trust, the deduction under subsection (a) shall be computed 
     by excluding the portion of (if any) the gains for the 
     taxable year from sales or exchanges of capital assets which, 
     under sections 652 and 662 (relating to inclusions of amounts 
     in gross income of beneficiaries of trusts), is includible by 
     the income beneficiaries as gain derived from the sale or 
     exchange of capital assets.''
       (b) Coordination With Maximum Rates of Tax on Net Capital 
     Gains.--
       (1) Section 1(h) of such Code (relating to maximum capital 
     gains rate) is amended by adding at the end the following new 
     paragraph:
       ``(14) Qualified timber gain.--For purposes of this 
     section, net capital gain shall be determined without regard 
     to qualified timber gain (as defined in section 1203) with 
     respect to which an election is in effect under section 
     1203.''
       (2) Subsection (a) of section 1201 of such Code (relating 
     to the alternative tax for corporations) is amended by 
     inserting at the end the following new sentence:

     ``For purposes of this section, net capital gain shall be 
     determined without regard to qualified timber gain (as 
     defined in section 1203) with respect to which an election is 
     in effect under section 1203.''
       (c) Allowance of Deduction in Computing Adjusted Gross 
     Income.--Subsection (a) of section 62 of such Code (relating 
     to definition of adjusted gross income) is amended by 
     inserting after paragraph (17) the following new paragraph:
       ``(18) Partial inflation adjustment for timber.--The 
     deduction allowed by section 1203.''
       (d) Technical Amendments.--
       (1) Subparagraph (B) of section 172(d)(2) of such Code is 
     amended to read as follows:
       ``(B) the exclusion under section 1202 and the deduction 
     under section 1203 shall not be allowed.''
       (2) The last sentence of section 453A(c)(3) of such Code is 
     amended by striking ``(whichever is appropriate)'' and 
     inserting ``or the deduction under section 1203 (whichever is 
     appropriate)''.
       (3) Section 641(c)(2)(C) of such Code is amended by 
     inserting after clause (iii) the following new clause:
       ``(iv) The deduction under section 1203.''
       (4) The first sentence of section 642(c)(4) of such Code is 
     amended to read as follows: ``To the extent that the amount 
     otherwise allowable as a deduction under this subsection 
     consists of gain described in section 1202(a) or qualified 
     timber gain (as defined in section 1203(b)), proper 
     adjustment shall be made for any exclusion allowable under 
     section 1202, and any deduction allowable under section 1203, 
     to the estate or trust.''
       (5) The last sentence of section 643(a)(3) of such Code is 
     amended to read as follows: ``The exclusion under section 
     1202 and the deduction under section 1203 shall not be taken 
     into account.''
       (6) The last sentence of section 643(a)(6)(C) of such Code 
     is amended by inserting ``(i)'' before ``there shall'' and by 
     inserting before the period ``, and (ii) the deduction under 
     section 1203 (relating to partial inflation adjustment for 
     timber) shall not be taken into account''.
       (7) Paragraph (4) of section 691(c) of such Code is amended 
     by inserting ``1203,'' after ``1202,''.
       (8) The second sentence of paragraph (2) of section 871(a) 
     of such Code is amended by striking ``section 1202'' and 
     inserting ``sections 1202 and 1203''.
       (e) Clerical Amendment.--The table of sections for part I 
     of subchapter P of chapter 1 of such Code is amended by 
     adding at the end the following new item:

``Sec. 1203. Partial inflation adjustment for timber.''

       (f) Effective Date.--The amendments made by this section 
     shall apply to sales or exchanges after December 31, 1998.
                                  ____

          United Brotherhood of Carpenters and Joiners of America,
                                       Portland, OR, May 27, 1999.
     Hon. Bill Archer,
     Chairman, U.S. House Ways and Means Committee, Washington, 
         DC.
     Hon. Charles Rangel,
     Ranking Minority Member, U.S. House Ways and Means Committee, 
         Washington, DC.
       Dear Chairman Archer and Representative Rangel: On behalf 
     of the United Brotherhood of Carpenters and Joiners of 
     America (UBC), I am asking you to support HR 1083, ``The 
     Reforestation Tax Act,'' introduced by Representative 
     Jennifer Dunn (R-WA).
       The UBC represents 500,000 members across the country, 
     including 30,000 sawmill, pulp and paper workers in the 
     forest products industry. Our members manufacture the wood 
     and paper products used around the globe every day and are 
     concerned with the industry's ability to compete in the 
     future.
       The forest products industry has changed dramatically over 
     the last decade, and today we find ourselves at a competitive 
     disadvantage in the global market. Foreign companies, whose 
     wages are far below American standards, have easy access to 
     the American market. At the same time they are keeping 
     American products out of their own markets through tariff and 
     other barriers to trade. U.S. negotiators and the U.S. forest 
     products industry are working to lessen this trade threat, 
     but there is obviously no guarantee our foreign competitors 
     will agree to eliminate what is a significant benefit for 
     them. Progress could take additional years our industry may 
     not have.
       The U.S. tax code, however, is one area where the U.S. 
     government can help to mitigate these factors. And that is 
     why we ask for your support of the Reforestation Tax Act. HR 
     1083 eliminates current inequities between our tax code and 
     the tax treatment given to our competitor industries 
     overseas. It levels the playing field for the U.S. forest 
     products industry, ensuring the long-term viability of high-
     paying, high skilled jobs. The bill also provides incentives 
     for reforestation activities critical to the future of our 
     industry, our workers and our forests.
       Please support this legislation that is important to the 
     working men and women in the forest products industry. Thank 
     you for your consideration.
           Sincerely,
     Michael Draper
                                  ____

                                                 American Forest &


                                            Paper Association,

                                     Washington, DC, May 26, 1999.
     Hon. Bill Archer,
     Chairman, Committee on Ways and Means, U.S. House of 
         Representatives, Washington, DC.
     Hon. Charles Rangel,
     Ranking Member, Committee on Ways and Means, U.S. House of 
         Representatives, Washington, DC.
       Dear Mr. Chairman and Rep. Rangel: As the committee begins 
     its work on tax legislation to be considered by Congress 
     later this year, the American Forest & Paper Association 
     (AF&PA), including the undersigned chief executives within 
     the forest products industry, strongly urge you to include in 
     the committee's bill the provisions of H.R. 1083, the 
     Reforestation Tax Act of 1999. Our industry is united in the 
     conviction that this legislation is critically needed to help 
     American companies and workers complete in a global economy, 
     restore equity to the tax code, and encourage future 
     investments in sound, sustainable forestry.
       The planting, growing, harvesting and sustained management 
     of timberlands is a vital component of the U.S. economy. The 
     forest products industry employs more than 1.5 million 
     workers, and in 46 states, our industry ranks as one of the 
     top ten manufacturing industries. More than 9.3 million 
     private owners hold and manage more than 390 million acres of 
     timberlands in the U.S.
       While our products and businesses may vary, all of us are 
     affected by policies that make it increasingly difficult for 
     U.S. companies and workers to compete in international 
     markets. Just last year, the respected firm of Price 
     Waterhouse Coopers--using the same economic model used by the 
     Joint Committee on Taxation--found that the effective tax 
     rate for U.S. forest products companies was 55%--the second 
     highest among major competitors (Brazil, Canada, Finland, 
     Indonesia, and Japan).
       The competitive factors we now face have changed 
     dramatically over the past 10 years. We are not competing on 
     a level playing field with our major international 
     competitors, and this inequity is very obvious in the area of 
     tax.
       H.R. 1083 would address some of the government-imposed 
     obstacles to U.S. competitiveness. The legislation would 
     assure that all taxpayers that own timber and manage it 
     sustainably over many years are treated equitably, and it 
     would restore the historical balance in tax rates among 
     various forms of timberland ownership. Additionally, the bill 
     offers incentives to landowners of all sizes to plant and 
     grow trees and to reforest their land after harvest. Thus, 
     H.R. 1083 offers environmentally sound, pro-growth policies 
     to promote sustainable forestry, encourage reforestation and 
     help U.S. workers and companies compete.

[[Page 13309]]

       The Reforestation Tax Act represents a balanced, bipartisan 
     approach to structural problems that affect an important 
     American industry, and we urge your support for this 
     legislation.
           Sincerely,
       W. Henson Moore, President & CEO, American Forest & Paper 
     Association.
       John Luke, Chairman, President & CEO, Westvaco Corporation.
       George W. Mead, Chairman, Consolidated Papers, Inc.
       Rick Holley, Chairman, AF&PA, President & CEO, PlumCreek 
     Timber Company.
       Kenneth Jastrow, President & COO, Temple-Inland Inc.
       David B. Ferraro, President & COO, Buckeye Technologies 
     Inc.
       Colin Moseley, Chairman, Simpson Timber Co.
       Mark A. Suwyn, President, Chairman & CEO, Louisiana-Pacific 
     Corporation.
       Richard E. Olsen, Chairman & CEO, Champion International 
     Corporation.
       Jerome F. Tatar, Chairman, President & CEO, Mead 
     Corporation.
       Joe Gonyea, II, President & CEO, Timber Products Company.
       Thomas M. Hahn, President & CEO, Garden State Paper 
     Company.
       Duane C. McDougall, President & CEO, Willamette Industries, 
     Inc.
       Alex Kwader, President & CEO, Fibermark, Inc.
       R.P. Wollenberg, Chairman, President & CEO, Longview Fibre 
     Company.
       William C. Blanker, Chairman & CEO, Esleeck Manufacturing 
     Co., Inc.
       Paul T. Stecko, Chairman & CEO, Packaging Corporation of 
     America.
       Robert A. Olah, President & CEO, Crown Vantage.
       B. Bond Starker, President, Starker Forest Inc.
       Leroy J. Barry, President & CEO, Madison Paper Industries.
       Raymond M. Curan, President & CEO, Smurfit-Stone Container 
     Corp.
       Steven R. Rogel, Chairman, President & CEO, Weyerhauser 
     Company.
       John T. Dillon, Chairman & CEO, International Paper 
     Company.
       Richard G. Verney, Chairman & Chairman, Monadnock Paper 
     Mills, Inc.
       Arnold M. Nemirow, Chairman & CEO, Bowater Inc.,
       Marvin Pomerantz, Chairman & CEO, Gaylord Container 
     Corporation.
       Edward P. Foote, Jr., President & CEO, Cellu Tissue 
     Coporation.
       J.M. Richards, President & CEO, Potlatch Corporation
       Bradley Currey, Jr., Chairman & CEO, Rock-Tenn Company.
       David C. Hendrickson, President & CEO, FSC Paper Company.
       W. L. Nutter, Chairman, President & CEO, Rayonier Inc.
       Dan M. Dutton, President & CEO, Stimson Lumber Company.
       Wayne J. Gullstad, President, CityForest Corporation.
       James H. Stoehr, III, President, Robbins, Inc.
       Gerald J. Fitzpatrick, President, Fitzpatrick & Weller, 
     Inc.
       J. Edward French, President, French Paper Company.
       Jack Rajala, President, Rajala Companies.
       Robert D. Bero, President & CEO, Mensaha Corporation.
       Gorton M. Evans, President & CEO, Consolidated Papers, Inc.
       Gerard J. Griffin, Jr., Chairman, Merrimac Paper Company.
       Paul D. Webster, President, Webster Industries.
       Edward A. Leinss, Chairman, Ahlstron Filtration Inc.
       James L. Burke, President & CEO, Southwest Paper 
     Manufacturing Co.
       L. N. Thompson, III, President, T & S Hardwoods Inc.
       James E. Warjone,, Chairman & CEO, Port Blakely Tree Farms, 
     L.P.
       Richard Connor, Jr., President Pine River Lumber Company, 
     LTD.
       Pierre Monahan, President & CEO, Alliance Forest Products, 
     Inc.
       L.T. Murray, II, Vice President, Murrary Pacific 
     Corporation.
       Stephen W. Schley, President, Pingree Associates, Inc.
       Galen Weaber, President, Weaber, Inc.
       George Jones, III, President, Seaman Paper Company.
       Bartow S. Shaw, Jr., Chairman, Shaw McLeod, Belser, and 
     Hurlbutt
       Richard J. Carota, Chairman, President & CEO, Finch, Pruyn 
     & Company, Inc.
       William G. Hopkins, CEO, Paper-Pak Products.
       A. W. Kelly, President, The Crystal Tissue Company.
       Jay J. Gurandiano, President & CEO, St. Laurent Paperboard 
     Inc.
       William H. Davis, Chairman, President & CEO, Gilman Paper 
     Company.
       Terry Freeman, President, Bibler Brothers Lumber Company.
       James F. Kress, Chairman, Green Bay Packaging Inc.
       Joseph H. Torras, Chairman, & CEO, Eastern Pulp & Paper 
     Company, Inc.
       Charles R. Chandler, Vice Chairman, Greif Brothers 
     Corporation.
       D.A. Schirmer, President, Newsprint Sales, Abitibi 
     Consolidated.
       J. Edward Woods, President & CEO, Gulf States Paper 
     Corporation.
       William B. Johnson, President, Johnson Timber Corporation.
       W.T. Richards, Chairman & CEO, Idaho Forest Industries, 
     Inc.
       William New, President & CEO, Plainwell Inc.
       J.K. Lyden, President & CEO, Blandin Paper Company.
       John Begley, President & CEO, Port Townsend Paper 
     Corporation.
       Harold C. Stowe, CEO, Canal Industries, Inc.
       Thomas D. O'Connor, Sr., Chairman & CEO, Mohawk Paper 
     Mills, Inc.
       L.M. Giustina, Partner, Giustina.
       Glen H. Duysen, Corporate Secretary, Sierra Forest 
     Products.
       Norman S. Hansen, Jr., President, Monadnock Forest 
     Products.
       D. Kent Tippy, President & CEO, Little Rapids Corporation.
       Bert Martin, President, Frasier Papers, Inc.
       Edwin Nagel, President, Nagel Lumber Company, Inc.
       William B. Hull, President, Hull Forest Products Inc.
       Charles E. Carpenter, President, North Pacific Paper 
     Company.
       Edward J. Dwyer, Vice President, Operations, Lyons Falls 
     Pulp & Paper.
       Thomas E. Gallagher, Senior Vice President, Coastal Paper 
     Company.
       Chris A. Robbins, President, EHV Weidmann Industries, Inc.
       Robert Collez, General Manager, Augusta Newsprint Company.
       William D. Quigg, President, Grays Harbor Paper, L.P.
       Todd W. Nystrom, Vice President & General, Hull-Oakes 
     Lumber Company.
       Julius W. Nagy, Vice President, Sales and Marketing, 
     Menominee Paper Company, Inc.
       A.D. Correll, Chairman & CEO, Georgia-Pacific Corporation.
       John Roadman, President, Banner Fibreboard Company.
       Charles S. Nothstine, Vice President, Straubel Paper 
     Company.
                                  ____

                                              National Association


                                           of State Foresters,

                                     Washington, DC, May 12, 1999.
     Hon. Bill Archer,
     Chairman, House Ways and Means Committee, U.S. House of 
         Representatives, Washington, DC.
       Dear Mr. Chairman: We are writing to you today in strong 
     support of several important tax proposals that are going to 
     come before your committee in the near future. As you know, 
     the tax code has a major impact on the management of private 
     forest lands, lands which are coming under increasing 
     pressure from a number of directions. As land prices and 
     timber demand escalate, forest landowners are faced with 
     tough decisions about the management of their lands. The 
     current tax code can provide a major disincentive to them to 
     properly manage their lands for long-term forestry benefits 
     including sustainable timber production, soil erosion 
     control, wildlife habitat, and carbon sequestration. Several 
     changes to the tax code can help provide incentives to 
     landowners to reforest their lands and keep them in forest 
     cover for the foreseeable future.
       First, we'd strongly encourage you to support the 
     Reforestation Tax Act (H.R. 1083), introduced by Rep. 
     Jennifer Dunn and Rep. John Tanner. This bill provides a 
     lower capital gains rate for timber investments, which 
     recognizes the inherent risks and long-term nature of forest 
     management. It also allows landowners to claim tax credits 
     for all of their reforestation expenses, which are currently 
     limited to $10,000. This will provide a major incentive to 
     landowners to make the investment to reforest, a risky 
     commitment of capital over the long-term which provides 
     numerous societal benefits beyond the landowner's property 
     lines.
       Representatives Dunn and Tanner have also introduced the 
     Death Tax Elimination Act (HR 8), which we believe would have 
     a positive impact on forest conservation as well. We 
     encourage you to work with them to ensure that Federal estate 
     taxes do not provide yet another incentive to forest land 
     fragmentation.
       In addition, we understand that Representative Rob Portman 
     will introduce the Conservation Tax Incentives Act. This bill 
     will provide a level playing field to rural landowners who 
     want to see their lands protected from development over the 
     long-term, but who cannot afford to simply donate their lands 
     for conservation purposes. This is an extremely low-cost 
     approach that will help public agencies and private land 
     trusts protect working lands and acquire sensitive lands for 
     future generations.
       We hope you will also consider providing targeted tax 
     incentives for landowners to manage their lands in ways that 
     benefit species of wildfire that are listed or are candidates 
     for listing under the Endangered Species Act.
       The National Association of State Foresters is a national 
     non-profit organization made up of the directors of the State 
     Forestry agencies from all 50 States, several U.S. 
     territories, and the District of Columbia. Our membership 
     supports legislation

[[Page 13310]]

     that helps provide incentives to landowners to engage in 
     long-term, sustainable forest management. We hope you will 
     give the proposals discussed above your strongest 
     consideration.
           Sincerely,
                                              Gary L. Hergenrader,
                                                        President.
                                 ______
                                 
      By Mr. ASHCROFT (for himself, Mrs. Hutchison, Mr. Abraham, Mr. 
        Allard, Mr. Bond, Mr. Brownback, Mr. Bunning, Mr. Burns, Mr. 
        Chafee, Mr. Cochran, Ms. Collins, Mr. Coverdell, Mr. Craig, Mr. 
        DeWine, Mr. Domenici, Mr. Enzi, Mr. Frist, Mr. Gramm, Mr. 
        Grassley, Mr. Gregg, Mr. Hagel, Mr. Hatch, Mr. Helms, Mr. 
        Hutchinson, Mr. Jeffords, Mr. Kyl, Mr. Lott, Mr. McCain, Mr. 
        McConnell, Mr. Nickles, Mr. Roberts, Mr. Sessions, Mr. Smith of 
        Oregon, Mr. Smith of New Hampshire, Mr. Thomas, Mr. Thurmond, 
        and Mr. Shelby):
  S. 1241. A bill to amend the Fair Labor Standards Act of 1938 to 
provide private sector employees the same opportunities for time-and-a-
half compensatory time off and biweekly work programs as Federal 
employees currently enjoy to help balance the demands and needs of work 
and family, to clarify the provisions relating to exemptions of certain 
professionals from minimum wage and overtime requirements of the Fair 
Labor Standards Act of 1938, and for other purposes; to the Committee 
on Health, Education, Labor, and Pensions.


                     family friendly workplace act

  Mr. ASHCROFT. Mr. President, on behalf of the Senator from Texas, 
Senator Hutchison, and myself, I am pleased to reintroduce the Family 
Friendly Workplace Act. I also am pleased to include a list of 34 
colleagues as original cosponsors. It is an opportunity to address a 
very important need for American families--spending more time together.
  Over the past four years, we have been talking about the difficulty 
that parents have balancing work and family obligations. I do not think 
there are two values that are more highly or intensely admired in 
America than these. The first one is the value we place on our 
families. We understand that more than anything else the family is an 
institution where important things are learned, not just knowledge 
imparted but wisdom is obtained and understood in a family which 
teaches us not just how to do something but teaches us how to live.
  The second value which is a strong value in America and reflects our 
heritage is the value of work. Americans admire and respect work. We 
are a culture that says if you work well, you should be paid well. If 
you have merit, you should be rewarded. If you take risks and succeed--
you represent the engine that drives America forward.
  The difficult issue that faces us as a nation, is how are we going to 
resolve these tensions? I think that is one of the jobs, that we have 
to try and make sure we build a framework where people can resolve 
those tensions and where Government somehow does not have rules or 
interference that keeps people from resolving those tensions.
  For example, there are a lot of times when an individual would say on 
Friday afternoon to his boss or her boss, ``My daughter is getting an 
award at the high school assembly today. Can I have an extended lunch 
hour, maybe just 1 hour so that I can see my daughter get the award? I 
would like to reinforce, I would like to give her an `atta girl,' I 
would like to hug her and say, `You did a great job, this is the way 
you ought to work and conduct yourself, it is going to mean a lot to 
yourself and our family and our country if you keep it up.' ''
  Right now, it is illegal for the boss to say, ``I will let you take 
an hour on Friday and you can make it up on Monday,'' because it is in 
a different 40-hour week. You cannot trade 1 hour for 1 hour from one 
week to the next. That will make one week a 41-hour week and will go 
into overtime calculation. Since most bosses do not want to be involved 
in overtime, it just does not happen.
  This tension between the workplace and the home place, juxtaposed or 
set in a framework of laws created in the 1930's that does not allow us 
flexibility, is a problem. For example, you might be asked to do 
overtime over and over and over again, and you do overtime, and then 
you are paid time and a half for your overtime. But at some point, you 
would rather have the time than the money. If the employer agreed to it 
voluntarily--both parties--we ought to let that happen. It is against 
the law.
  Some employers even want to go so far as to help their families by 
saying instead of doing 1 week for 40 hours, we would be willing, if 
you wanted to and on a voluntary basis, let the worker average 40 hours 
over a 2-week period regularly, so you would only work 9 days in the 2 
weeks, but you would work 45 hours the first week and 35 hours the 
second week and have every other Friday off so you could take the kids 
to the dentist or drop by the department of motor vehicles and get the 
car licensed or visit the governmental offices that are not open on 
Saturday. It is against the law to do that now.
  What I have described are two ways to tackle these time problems. 
First, is the option--when you work overtime, to get in time rather 
than money--if that is what you want to do. Second, you could schedule 
a work schedule to fill your needs by spreading 80 hours over two weeks 
to better accommodate your needs and the needs of your families.
  Both of these things are available in the Federal Government and for 
governmental entities. Since 1978, the Federal Government has said it 
is OK to swap comp time off instead of overtime pay. The Federal 
Government also said if you want to have some flexible scheduling so 
that every other Friday or every other Monday is off, that is something 
we can work with you on.
  It is totally voluntary--voluntary for the worker, it is voluntary 
for the Federal Government employer or administrator. Neither can force 
the other because we do not want to force people to work overtime or 
take comp time, but we want to allow Americans to make choices which 
will help them resolve the tensions between the home place and the 
workplace, these two values that are in competition.
  These potentials, which exist for Federal workers, it occurs to me, 
ought to be able to be available to workers in the private sector as 
well, were we not to be locked into the hard and fast rules of the 
1930's. That was a time when Henry Ford said, ``You can have your Ford 
any color you want so long as it is black.'' Things were not quite as 
flexible then as they are now, and families did not need the 
flexibility then as they do now. With 70 to 80 percent of all mothers 
of school-age children now working and two parents working in all those 
settings, and the tension between work and home, I think we ought to 
have more flexibility at the option of both the employer and the 
worker, only when it is agreed to.
  That is really the subject of the Family Friendly Workplace Act which 
we reintroduce today. It is a way of saying we need to allow families 
to work out the conflict that exists between these important values 
that are crucial and so fundamental to the success of this culture in 
the next century, not just fundamental to the success of our culture, 
but fundamental to the success of our own families.

                          ____________________