[Congressional Record (Bound Edition), Volume 146 (2000), Part 12]
[Senate]
[Pages 17093-17101]
[From the U.S. Government Publishing Office, www.gpo.gov]



               A STRONG MEDICARE FOR OUR SENIORS' FUTURE

  Mr. ABRAHAM. Mr. President, Medicare, that's what seniors and health 
care providers in Michigan talked about with me over the August 
recess--Medicare. Whether it was prescription drug coverage for 
Medicare beneficiaries, Medicare reimbursement restoration so that 
health care providers can continue to provide quality health care for 
beneficiaries, or reining in the excesses in this Administration's 
crusade to ferret out Medicare fraud and

[[Page 17094]]

abuse, even where it does not exist, I have heard the message of my 
constituents, and that is that Medicare needs to be modernized, 
reformed, and refocused on providing the best health care possible for 
seniors and the disabled.
  Nowhere has the national debate on Medicare focused more clearly than 
on prescription drug costs. The increased reliance on prescription 
drugs in health care treatments in recent years means seniors are 
paying a much higher portion of their income on drugs. As new drugs 
come on the market that allow doctors to treat illnesses without 
surgery, or even allow them to treat illnesses for the first time, the 
result is that health care has shifted from inpatient hospital services 
for surgical treatment to outpatient care that utilizes more, better, 
and more specific drugs. The result is that while per unit costs of 
drugs are expected to increase by an average of 3.2 percent over the 
next five years, overall drug expenditures are expected to rise by 
almost 14.5 percent per year as the number of prescriptions per senior 
shoots up by more than 20 percent.
  But Medicare, developed in the late 1960's, and little changed since 
then, is still geared primarily towards the antiquated focus on 
intensive, inpatient care, and continues to miss the fundamental shift 
towards modern care techniques, including prescription drugs. 
Comprehensive Medicare reform, such as that outlined in the 
recommendations of the Bipartisan National Commission on the Future of 
Medicare that embodies choice, competition, and modernization, would 
allow Medicare to continue its guarantee of health coverage, while 
providing the type of health coverage that a modern senior needs. 
Unfortunately, apparently due to the election cycle games of this 
Administration, the necessary super-majority could not be mustered to 
report these proposals to Congress. So, America's seniors continue to 
be denied without a modern Medicare system, including prescription drug 
coverage.
  But these political realities do not lessen the immediacy of the 
problem, nor the need for this Congress to move now on providing a 
prescription drug benefit. I believe we must move on passing a 
prescription drug coverage plan for Medicare seniors, and pass it now. 
I hear the cry of my colleagues who say this will take the wind out of 
the sails for needed overall Medicare reform, but that assumes 
comprehensive reform is possible during this session of Congress. Given 
the politically charged nature of this election, and the fact that our 
colleagues on the other side of the aisle seem to find new excuses 
every week for why they can't vote for even the most non-controversial 
of the appropriations bills, I doubt that will happen. In the short 
term, Medicare will remain solvent and will be able to provide adequate 
medical care for seniors. However, Michigan seniors need prescription 
drug coverage as soon as possible, and I intend to see that happen.
  Twice this summer, once on my own, and once with a bipartisan group 
of 12 other Senators, I have called upon the Senate Leadership to bring 
to the Senate floor a meaningful prescription drug plan that will not 
only cover these increasingly expensive drugs, but also ensure that 
such a plan does not impose additional costs on our seniors, additional 
costs that would wipe out any savings the coverage would provide. It 
makes little sense to me to establish a prescription drug plan that 
pays for 50 percent, or even 100 percent, of a senior's drug expenses, 
which average about $550 per year, but then saddle them with $600 in 
new premiums, and have them end up with greater out-of-pocket expenses 
than if they never had the coverage in the first place. That's not what 
I hear Michigan seniors say they want in a prescription drug plan. No, 
what I hear them say is that they want a prescription drug plan that 
will actually reduce their out-of-pocket expenses, allow them the most 
freedom and choice in determining their own coverage, and protect them 
from unexpectedly high drug expenses, expenses that can make their 
daily choice one between food and drugs.
  That's why I am so excited about the prescription drug plan on which 
I have been working with Senators Hagel and McCain as well as the other 
cosponsors, the Medicare Rx Drug Discount and Security Act of 2000, S. 
2836. Of all the plans we have seen presented before this and the other 
Chamber, I believe this bill most directly addresses the major issues 
of prescription drug coverage. First, unlike any other bill currently 
before Congress, it provides broad and deep discounts for prescription 
drugs, on average 30-39 percent discounts, through multiple, competing 
drug discount buying plans. Much has been made over the last few years 
about the relative price difference American seniors pay for their 
prescription drugs as compared to those paid by their Canadian 
counterparts, where prices are fixed by the Government. But those 
comparisons are of the retail price. When the prices paid by Canadian 
seniors are compared to the prices paid by American seniors that are in 
group buying plans, the American senior pays less.
  And these plans are not uncommon. In fact, 71 percent of all 
prescription drugs paid for by third parties have been administered by 
these group buying plans, such as with the Michigan National Guard's 
drug insurance coverage plan. Furthermore, many group buying plans are 
offered outside of insurance programs, such as those innovative 
programs being offered by Macomb and Wayne Counties in Michigan, where 
price savings of as much as 70 percent on drugs are obtained. But as 
I've pointed out before, Medicare beneficiaries can't take advantage of 
these savings because the Medicare system still employs the antiquated 
priorities and structures of the days in which it was born.
  For the average American senior with drug expenses of about $670 per 
year, in 2002, our plan would provide an immediate savings of $235 per 
year. And, depending upon the drugs they have prescribed, savings could 
be as high as 70-85 percent for the more common drugs where usage is 
higher and competing brands more plentiful. Furthermore, there would be 
even greater market pressure for lower prices under our plan because 
multiple, competing drug discount plans would be available from which 
seniors could choose. If the particular drugs a senior uses were 
cheaper under another plan, that senior could shift over to that plan, 
and enjoy those better discounts. By allowing the market to drive down 
prices we can provide robust market price discounts that no other plan 
before Congress can beat, and which are substantially better than those 
offered under almost every Democrat plan which I've seen. In fact, 
because almost every plan that has been offered by Democrats in both 
the Senate and the House allows for only a single entity to control the 
price discounting for Medicare seniors, there will be little 
competitive pressure to pass along savings to Senior consumers, and 
little incentive to even try to get prices down. The Congressional 
Budget Office recognized this during their analysis of the President's 
prescription drug proposal, and determined that drug discounts would 
only average 12.5 percent, or about a third of those that would be seen 
under the Hagel-Abraham plan.
  But reducing the price of drugs is only half of the prescription drug 
equation. The other half is ensuring that Medicare provides the needed 
protections for Seniors against expensive drug treatments that may 
force them to decide between putting bread on the table or taking a 
life-saving drug. And the Hagel-Abraham bill does just that with the 
best catastrophic drug coverage of any bill before Congress. By tiering 
the coverage to income, we assure all seniors they will not be 
financially devastated by drug expenses for some of the new treatments 
that can approach $500 per month.
  Here is how the prescription drug costs caps break down under the 
Hagel-Abraham plan. Seniors earning less than 200 percent of poverty, 
$16,700 for a single and $22,500 for a couple, would pay no more than 
$1,200 annually. All drug expenses after that would be covered by the 
Federal Government. For those seniors that earn more than that, but 
below 400 percent of poverty, $33,400 for singles and $45,000 for 
couples, costs

[[Page 17095]]

 would be limited to $2,500 annually. And Seniors above 400 percent of 
the poverty level, up to $100,000 for singles and $200,000 for couples, 
would pay no more than $5,000 annually. Although some of my colleagues 
may believe that prescription drug insurance should be available to all 
Medicare beneficiaries, and that the government should subsidize the 
insurance of even the wealthiest Americans, I don't think it makes 
sense to subsidize the drug expenditures for those single seniors 
making more than $100,000, and those couples making more than $200,000, 
especially considering they have much easier access to private 
insurance coverage.
  What makes this proposal particularly attractive, in my opinion, is 
that it does not require seniors to pay hundreds of dollars in new 
Medicare premiums, premiums that could be greater than their actual 
drug expenses. In fact, the Congressional Budget Office has determined 
that when the President's prescription drug proposal is fully 
implemented, seniors will have to pay more almost $600 per year in new 
Medicare premiums, on top of the $88 per month they will have to pay 
for their existing Part B Medicare coverage. I can't see how that can 
be a good deal for America's seniors. CBO also recently scored the drug 
proposal offered by Senator Robb as an amendment to the Senate's Labor-
HHS Appropriations Bill. That proposal would, according to CBO, 
increase Medicare's financing gap between revenues and outlays by 25 
percent, while imposing new premiums of $80 per month, or $960 per 
year! Forcing America's seniors to pay almost $1,000 per year, just to 
have the privilege of participating in this big-government drug 
program, is wrong, flat-out wrong. And it will most likely wipe out any 
savings they would gain from the coverage in the first place. I believe 
by the time these plans were fully implemented, Michigan seniors would 
be wishing for the ``good ol' days'' where the government wasn't 
providing them such ``great'' coverage that forced them to spend more 
than they did before.
  I am not merely railing against these plans because they represent a 
big-government view of legislating. No, it's that I am deeply concerned 
with the record of the Health Care Financing Administration and its 
existing prescription drug programs. The fact of the matter is that 
HCFA's centralized, top-down, bureaucratic method of providing it's 
current inpatient drug benefit has led to drug rationing, cutbacks in 
coverage, and price fixing. Just recently this Administration announced 
that it intends to cut back coverage of cancer-fighting drugs 
administered in doctors' offices and set the price for those drugs by 
Executive fiat, even while it says that it's proposed additional drug 
coverage will not result in these same things. There is no escaping the 
fact that when the government controls all aspects of prescription drug 
insurance the quality of care and access are placed in jeopardy. It has 
been happening in Canada and we cannot allow that to happen to whatever 
new prescription drug coverage we provide.
  But we are taking action to stop the Administration's attempts to cut 
back cancer drug coverage for sick seniors. I am cosponsoring with 
Senator Ashcroft the Cancer Care Preservation Act, which will guarantee 
that HCFA cannot implement any reductions in Medicare reimbursements 
for outpatient cancer treatment unless those changes are developed in 
conjunction with the Medicare Payment Advisory Commission and 
representatives of the cancer care community, provides for appropriate 
payment rates for outpatient cancer therapy services, and is 
specifically authorized by an act of Congress. Furthermore, I am 
sending a letter to the President of the United States today, calling 
upon him to rescind HCFA's plan until such time as such changes can be 
fully examined by the cancer care community and Congress. To think that 
the Medicare system could stop covering the most effective cancer 
treatments simply by it's own edict should be a clear warning to all of 
my colleagues on the dangers in having a single agency control the 
access to our senior's prescription drugs.
  And that leads me to the second problem I've been hearing about in 
Michigan the issue of how HCFA and this Administration manage Medicare, 
especially with regard to reimbursement rates. When I first came to the 
Senate, Medicare was going broke quickly, and was bound for bankruptcy 
by 2001. The Balanced Budget Act of 1997 implemented necessary changes 
to contain the growth in Medicare spending to extend the system's 
solvency until 2015, giving us time to implement necessary structural 
and market-based reforms in Medicare, reforms that can make the program 
viable for generations to come. But those modest reductions in the rate 
of growth for Medicare have become full-blown cuts in the face of this 
Administration's refusal to spend the money Congress has authorized 
them to spend.
  In fact, this Administration has short-changed Medicare by $37 
billion in the last two years. The Congressional Budget Office's July 
2000 Budget Projection update indicates that Medicare spending this 
year will be $14 billion below what Congress budgeted, following last 
year's spending by the Administration of only $209 billion for Medicare 
versus the $232 billion Congress provided. The fact of the matter, is 
that most reimbursement rates are set by the Administration and HCFA, 
and this Administration has repeatedly refused to spend the money on 
Medicare that Congress has given them. In fact, while the original 
Balanced Budget Act of 1997 was expected to reduce Medicare growth by 
$103 billion between 1998 and 2002, this Administration's relentless 
ratcheting down of reimbursements over and above that authorized by 
Congress has pushed those cuts to almost $250 billion. And between 2001 
and 2005, the cuts are expected to be even more dramatic, climbing from 
$163 billion to $457 billion, 280 percent greater than Congress 
originally intended.
  The consequences for Michigan's health care industry are devastating. 
According to the March 2000 Michigan Health and Hospital Association 
report, ``The Declining State of Michigan Hospitals'' HCFA's 
implementation of BBA 97 has cost Michigan hospitals an average of $8.5 
million each. As a result, 68 percent of the hospitals have been forced 
to eliminate at least one service, ranging from urgent care and rural 
health clinics, to rehabilitation and pain management centers, to 
screening and preventative health services. Forty-five percent of all 
the hospitals have eliminated at least two of the services, and more 
than half of those who haven't yet eliminated services yet are 
considering it for 2000. Previous reports have put the statewide total 
lost hospital revenue at $2.5 billion, or just over $13.5 million per 
hospital.
  But hospitals are not the only health care provider hit by the 
effects of BBA 97 and the voracious appetite of HCFA bureaucrats. Home 
Heath Care agencies have been particularly hard hit by HCFA policies 
seemingly intent on driving them all out of business. Home health care 
spending was expected to grow by $2 billion even after BBA 97 cost 
containment measures, but have dropped by $9 billion, a 54 percent drop 
in just two years. In fact, the number of home health care claims have 
dropped by 50 percent in just two years, and the average payment per 
patient lowered by 38.5 percent, far lower than originally projected 
with BBA 97. CBO stated this unexpected drop in reimbursements as the 
primary reason that total Medicare spending dropped last year. Over the 
four years covered by BBA 97, CBO now expects home health care spending 
to be reduced by $69 billion, over four times the original $16 billion 
that they originally estimated. Like hospitals, home health care has 
been decimated. Over 2,500 home health agencies have closed or stopped 
serving Medicare patients. Moreover, HCFA estimates that nearly 900,000 
fewer home health patients received services in 1999 than in 1997.
  Finally, I think we need to look at the effects of this 
Administration's policies on reimbursements to skilled nursing 
facilities. Under BBA 97, the rate of growth for skilled nursing 
facility reimbursements was to be slowed

[[Page 17096]]

by $19.8 billion between 1998 and 2004. However, since that original 
projection, reimbursements are now expected to fall by an additional 
$15.8 billion. This even takes into account the $2 billion in 
reimbursement restorations provided by the Balanced Budget Refinement 
Act of 1999. For Michigan, the numbers are equally disconcerting. 
Michigan has lost $643 million in nursing facility reimbursements, over 
and above those projected with BBA 97, over 75 percent more than 
originally projected. Is it any wonder then, that 25 percent of all 
skilled nursing facilities serving Medicare patients are operating in 
bankruptcy and that why the number one problem for hospital discharge 
coordinators is that they can't find nursing facilities for their 
patients needing them?
  We have provided some important reimbursement relief in the Balanced 
Budget Refinement Act of 1999. But it was only a first step and by no 
means a complete response to the Administration's policies. While 
Medicare reimbursements over the next five years are projected to be 
cut by $295 billion more than originally projected, BBRA 99 only 
restored about $16 billion of that, or less than 5 percent of the 
additional cuts. Containing the growth of Medicare was necessary to 
ensure Medicare did not go bankrupt, but this continuous, unsustainable 
ratcheting down of reimbursements is simply wrong, and we must reverse 
it now. That is why this body must bring to the floor real, 
substantive, Medicare reimbursement restoration legislation. And we 
must do it very soon. We cannot wait until next Congress, or even until 
next month. We must do it now. Ensuring Medicare's fiscal solvency on 
the backs of Medicare providers is not only wrong, but 
counterproductive, and will ultimately lead to the insolvency of 
Medicare's health care guarantees as we know it.
  I have been working very hard to provide specific reimbursement 
relief for Michigan's health care providers. First, Senator Hutchison 
of Texas and I have been fighting for two years now to improve the 
inpatient reimbursements for hospitals. Our American Hospital 
Preservation Acts of 1999 and 2000 would do just that. This year's 
version will restore the entirety of the Market Basket Indicator 
inflation adjustment for inpatient hospital reimbursement rates, 
returning over $6.9 billion to hospitals over the next five years, and 
$13.5 billion over the next 10. That will in turn mean more than $536 
million in increased reimbursements for Michigan hospitals over the 
next ten years, or more than $3.4 million per hospital.
  Likewise, I have joined 53 of my colleagues in cosponsoring S. 2365, 
the Home Health Payment Fairness Act to eliminate the automatic 15 
percent reduction to home health payments currently scheduled to go 
into effect on October 1, 2001. The home health care industry cannot 
survive with the current reimbursement reductions, let alone another 15 
percent across-the-board cut. Finally, I am working closely with a 
number of my colleagues to craft a bill that will provide for adequate 
nursing home reimbursements through a refinement of the inflation 
adjustment factors. We believe appropriate legislation will be 
available this week or next, and if any of my colleagues are interested 
in joining this effort, I encourage them to contact me immediately.
  The third concern I hear from Michiganians about Medicare, is that 
even with the steps we have taken to improve its financial standing and 
the quality of care, it is still headed towards bankruptcy in the very 
near future. Seniors in Michigan are scared, scared that they will lose 
their Medicare benefits because we cannot modernize Medicare so that it 
will stay solvent for generations to come. But it looks like things are 
getting better with Medicare and that at least in the short term, we 
have the fiscal breathing room to make the necessary changes to avoid a 
train wreck down the way.
  This summer the Board of Trustees of the Federal Hospital Insurance 
Trust Fund issued a correction to their 2000 Annual Report. In it, the 
Trustees reported that the financial projections were more favorable 
than those made in 1999, that the Trust Fund income exceeded 
expenditures for the second year in a row, and that the Fund now met 
the Trustees' test of short-range financial adequacy. In fact, income 
is now projected to continue to exceed expenditures for the next 17 
years, a substantial increase over previous estimates.
  Now 2017 is still too soon for us to rest in our efforts to ensure 
the permanent solvency of Medicare through market-based modernization 
and reform, as well as provide seniors' access to the full spectrum of 
health care options. First, we need to shift Medicare from a centrally-
controlled government system to a market-based system, one that 
maximizes choice and can best respond to changing medical care needs, 
such as recommended by the National Bipartisan Commission on the Future 
of Medicare.
  Second, to ensure that we don't raid the Medicare Trust Funds to pay 
for non-Medicare spending, as repeatedly proposed by this 
Administration, we need to wall off the Medicare Trust Fund surpluses 
so that they can only be used for Medicare. I have been proud to vote 
for a Medicare lockbox proposal. But recent analysis by conservative 
groups such as the Heritage Foundation, and liberal groups such as the 
Center on Budget and Policy Priorities have raised serious questions 
about the efficacy of each of these proposals, and so I will be working 
with my colleagues on both sides of the aisle, especially my fellow 
Budget Committee Members, to draft a Medicare lockbox that not only 
protects the Medicare surpluses, but also enhances our ability to 
provide for the long-term solvency of the system. Even after providing 
for a new prescription drug benefit, and after providing for healthier 
reimbursements for health care providers, we will still have about $110 
billion in Medicare surpluses available to fund this reform. Given that 
the Bipartisan Medicare Commission's reform proposal would actually end 
up costing less than the current Medicare system through competition 
and choice, I believe this is more than adequate to fix our problems 
with Medicare. Regardless, the Medicare lockbox will ensure those 
surpluses are still there when the need comes for any funds to finance 
reform.
  Third, I believe we need to allow Americans to prepare for their 
retirement health care needs outside of Medicare through Medical 
Savings Accounts, or MSAs, long-term care insurance, and existing 
health care benefit flexibility. Today's able-bodied workers will be 
tomorrow's seniors, and to the extent that we can set in motion now 
provisions that will allow them more choices, more options, and more 
access to quality health care, the healthier our entire retirement 
health care system will be, including Medicare. As we all know, MSAs 
are a market-based alternative for quality health care. They offer 
maximum flexibility for the self-employed, employees, and employers 
while reducing the out-of-pocket cost of insurance. MSAs are an 
alternative health insurance plan with real cost-control benefits for 
the millions of Americans who have been forced into managed care and 
feel they have lost control of their health care decisions. By 
establishing these MSAs now, tomorrow's seniors will have sizable 
balances available in their retirement years to supplement whatever 
coverage is available under Medicare. To that end, I believe we should 
make MSAs permanent and affordable by removing eligibility 
restrictions, including allowing Federal employees to have MSAs, 
lowering the minimum deductible, permitting both employer and employee 
MSA contributions, and allowing MSAs in cafeteria plans. Furthermore, I 
believe we should also waive the 15 percent penalty tax on non-medical 
distributions if the remaining balance at least equals the plan 
deductible.
  As for long-term care insurance, I support legislation phasing-in 100 
percent deductibility of long-term care insurance premiums, when they 
are not substantially subsidized by an employer. Under my plan, 
individuals age 60 and older would not be subject to such a phase-in 
period, and would qualify for 100 percent deductibility immediately. I 
believe we should also allow

[[Page 17097]]

long-term care insurance to be offered as a cafeteria plan benefit. By 
providing for more accessible long-term care options, retirees can 
build insurance against the catastrophic expenses of long-term home and 
nursing facility care that is becoming increasingly difficult to obtain 
under Medicare.
  Finally, we should allow for greater health insurance plan 
flexibility, especially with regards to the multipurpose Flexible 
Spending Accounts. Flexible Spending Accounts and cafeteria plans have 
become a popular means of providing health benefits to employees, but 
under current law, unused benefits are forfeited. This ``use it or lose 
it'' rule has limited the appeal of these plans as well as forfeiting 
substantial amounts of money that could be available for retirement 
health care needs. I support legislation which will allow transferring 
up to $500 in unused Flexible Spending Account balances from one year 
to the next, or to roll-over that amount into an IRA, 401(k) retirement 
plan, or a Medical Savings Account.
  All of these proposals will help retirees better plan for and provide 
for their health care needs. But regardless of these supplemental 
programs, Medicare will still be at the base of any retirees health 
care program. That's why it's even more heartening to see in the 
corrected Medicare Trustees' report that some of the more drastic 
measures we once thought would be required are no longer necessary to 
keep Medicare sound. For example, in 1997, when Medicare was on the 
verge of bankruptcy by 2001, many of us, on a bipartisan basis, voted 
in favor of a limited move to raise the retirement age for Medicare 
eligibility from 65 to 67 years of age starting in 2003 and phased-in 
over the following twenty-four years. We did that on a near emergency 
basis, because the Medicare system was threatened. But I noted at the 
time, if the situation improved, such a change would not be necessary. 
In my opinion, that is now the case, and that kind of approach no 
longer needs to be considered in light of the improved financial 
condition of Medicare and the emergence of significant Medicare trust 
fund surpluses.
  In fact, at the time I cast my vote on this question, I entered into 
the Record on July 14, 1997, a number of prerequisites which I 
indicated would have to be met in order for me to support the actual 
implementation of the proposal. In that none of these prerequisites--
the development of a viable system for low- and middle-income seniors 
to obtain and maintain affordable health care until eligible for 
Medicare, as well as concurrence by the National Bipartisan Medicare 
Commission on the Future of Medicare on raising the eligibility age--
have been addressed in the two to three year time-frame that I set 
forth in my statement, I have withdrawn my support for raising the 
eligibility age. I no longer believe this change is necessary in light 
of the improved financial status of Medicare, or prudent in light of 
the failure of its sponsors to adequately address the concerns I 
raised.
  Finally, the fourth Medicare issue on which I have been inundated 
with complaints is how hard it is to navigate the regulatory complexity 
of the Medicare system. I have heard from doctors and hospital 
administrators, home health care agencies and skilled nursing 
facilities, about how even a simple mistake, or even a difference of 
opinion, can embroil them in legal controversies that take years to 
resolve, and many times more in legal bills than the amount of the 
originally contested bill. HCFA has now produced over 111,000 pages of 
Medicare regulations, three times the size of the incredibly complex 
Internal Revenue Code. These regulations make it nearly impossible to 
operate efficiently, and make simple administrative errors appear to be 
criminal fraud. In fact, on August 10th, 1998, Dr. Robert Walker, 
president emeritus of the Mayo Foundation, told the National Bipartisan 
Commission on the Future of Medicare, ``The public has been led to 
believe that the, Medicare, program is riddled with fraud, when in 
reality, complexity is the root of the problem. This has contributed to 
the continuing erosion in public confidence in our health care system. 
We must all have zero tolerance for real fraud, but differences in 
interpretation and honest mistakes are not fraud.''
  Recently, the Association of American Physicians and Surgeons 
conducted a survey of its members as to the impact of HCFA regulations 
on their ability to treat patients. They found that it costs on average 
27 percent more to process a Medicare claim as it does a private health 
insurer claim, and that doctors and their staffs spend more than a 
fifth of their time on Medicare compliance issues. Furthermore, more 
than half of all doctors say they will retire from active patient care 
at a younger age because of ``increased hassles with Medicare.'' This 
is bad news for Medicare seniors, as further pointed out by the survey. 
Almost a quarter of all doctors are no longer accepting new Medicare 
patients, and of those that do, 34 percent are restricting services to 
those patients, such as difficult surgical procedures or comprehensive 
medical work-ups. Last, these are not changes simply to stop previously 
fraudulent activity. Thirty-eight percent of all doctors surveyed 
stated they submitted Medicare claims that they knew were for less than 
for which they were entitled, or ``downcoding'' in the Medicare 
regulatory parlance, but did not want to subject themselves to the 
potential of erroneous HCFA reviews and claim denials. Similar 
``downcoding'' results have been found with hospitals who deny patients 
the most appropriate regimen of care in complex cases because they do 
not believe they will be fully reimbursed by Medicare if they submit 
such a complex care claim.
  That is why on July 27, I introduced S. 2999, the Health Care 
Providers Bill of Rights, a bill aimed at addressing the numerous 
regulatory and law enforcement abuses in the Medicare system that have 
brought to my attention by Michigan health care providers. This bill 
addresses many of the specific regulatory ``hassles'' experienced by 
doctors and providers everyday as they try to provide the best possible 
care for our Seniors.
  The bill is divided into six titles: Title I--Reform of HCFA 
Regulatory Process; Title II--Reform of Appeals Process; Title III--
Reform of Overpayment Procedure; Title IV--Reform of Voluntary 
Disclosure Procedure; Title V--Criminal Law Enforcement Reforms; and 
Title VI--Provider Compliance Education.
  Provisions that should be of particular interest to my colleagues are 
those that rescind HCFA's ability to withhold future reimbursements in 
order to offset alleged prior underpayments, a strict 180 day time line 
for completion of the Medicare administrative appeals cases, placing 
program participation terminations and suspensions in abeyance while 
appeals are pending, prohibiting the use of sample audit results to 
reduce future reimbursement rates, stopping overpayment collections 
while appeals are pending, and establishing voluntary disclosure 
procedures that also bring the Department of Justice and U.S. Attorneys 
into the process, as well as providing safe harbor from prosecution for 
those that enter into and abide by the voluntary disclosure 
requirements.
  Some further provisions that were specifically recommended by 
providers include requiring HCFA, fiscal intermediaries, and carriers 
to all spend a portion of their Medicare funds on provider education, 
requiring them to provide legally binding advisory opinions on Medicare 
coverage, billing, documentation, coding, and cost reporting 
requirements, as well as extending the current anti-kickback, civil 
monetary penalty, and physician self-referral advisory opinion 
requirements that are set to expire August 21st of this year.
  A number of organizations have expressed their strong support for 
this legislation, including the Michigan Health & Hospital Association, 
the Federation of American Hospitals, the National Association for Home 
Care, the American Federation of Home Care Providers, the Healthcare 
Leadership Council, and the American Health Care Association. I ask 
unanimous consent these letters of support be printed in the Record.

[[Page 17098]]

  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                                 Michigan Health &


                                         Hospital Association,

                                      Lansing, MI, August 9, 2000.
     Hon. Spencer Abraham,
     U.S. Senate, Dirksen Senate Building, Washington, DC.
       Dear Senator Abraham: The Michigan Health and Hospital 
     Association (MHA) appreciates the opportunity to comment on 
     the Health Care Provider Bill of Rights and Access Assurance 
     Act. The legislation includes many provisions aimed at 
     ensuring that health care providers are treated in a fair, 
     equitable and civil manner.
       Michigan's hospitals and health systems must contend with 
     an array of complex Medicare laws and regulations. Too often, 
     Medicare billing errors, due to confusing and conflicting 
     regulations and instructions, are presumed to be purposeful 
     and intentional acts. Title I of the bill positively 
     addresses this regulatory maze, mandating that the Health 
     Care Financing Administration follow clear and specific 
     procedures when issuing regulations.
       Another provision that will be particularly beneficial is 
     the inclusion of criminal law enforcement reform. 
     Establishing specific search warrant rules as well as 
     revising current law enforcement powers of the Health and 
     Human Services Office of Inspector General will greatly 
     assist in minimizing any disruption of patient care or 
     threats to the confidentiality of patient records.
       We commend you for addressing these areas of concern. The 
     MHA also would like to express its gratitude for your 
     leadership on hospital issues as we work to maintain the 
     highest quality of care for Medicare beneficiaries.
           Sincerely,
                                                     Brian Peters,
     Vice President, Advocacy.
                                  ____



                             Federation of American Hospitals,

                                    Washington, DC, July 27, 2000.
     Hon. Spencer Abraham,
     Dirksen Senate Office Building, Washington, DC.
       Dear Senator Abraham: The Federation of American Hospitals 
     commends you for your work to clarify and improve the 
     regulatory burdens and administration of the Medicare 
     program. The regulatory burden health care providers face is 
     massive, growing every day, and diverts us from our primary 
     mission of delivering high quality health care to the 
     patients in our communities. Hospitals and other health care 
     providers take their responsibility to comply with Medicare 
     laws and regulations very seriously and have devoted 
     significant amounts of energy and resources to these 
     obligations. While HHS has been diligent in its efforts to 
     implement an unprecedented number of regulatory changes in 
     the program, more work is needed to address problem areas in 
     the current administration of the Medicare Program and to 
     develop a more active partnership with health care providers 
     to promote the integrity of the Program.
       The ``Health Care Provider Bill of Rights and Access 
     Assurance Act'' proposes some important changes to the status 
     quo to address some key problem areas. One of the most 
     important checks and balances on the validity of the 
     regulations HCFA promulgates is the ability of health care 
     providers to challenge those regulations in a court of law 
     when they believe that the regulations are excessive, 
     unconstitutional, beyond the scope of statutory authority or 
     have been promulgated in violation of the Administrative 
     Procedures Act. This legislation solidifies timely judicial 
     review of these challenges. Another important provision in 
     the legislation promotes greater health care provider 
     participation in program integrity efforts by improving the 
     voluntary disclosure and overpayment repayment processes.
       The bill also contributes to health care provider education 
     and compliance efforts by providing for the reauthorization 
     of the existing advisory opinion provisions subject to expire 
     in August and setting some new advisory opinion requirements. 
     The existing advisory opinion statutes provide guidance on 
     the application of the antikickback and physician self-
     referral laws. The bill also adds a new requirement that 
     HCFA, acting through its contractors, provide written answers 
     to health care providers on nuts and bolts billing, coding 
     and cost report questions. In a program this complex, errors 
     are likely and providers need greater assistance to navigate 
     the myriad of law, regulation and policy. Hospitals want to 
     be active partners in the effort to promote program integrity 
     and hope to work closely with HCFA and its program integrity 
     partners on education and prevention efforts.
       We appreciate your interest in these matters and look 
     forward to working with you on this important legislation.
           Sincerely,
                                                 Thomas A. Scully,
     President and CEO.
                                  ____

                                              National Association


                                                for Home Care,

                                    Washington, DC, July 27, 2000.
     Hon. Spencer Abraham,
     U.S. Senate, Dirksen Senate Office Building, Washington, DC.
       Dear Senator Abraham: On behalf of the National Association 
     for Home Care (NAHC), the nation's largest organization 
     representing home care providers and the patients they serve, 
     I want to extend my sincerest appreciation and support for 
     your legislation, ``The Health Care Provider Bill of Rights 
     and Access Assurance Act.'' This legislation to reform the 
     regulatory processes used by the Health Care Financing 
     Administration (HCFA) to administer the Medicare program is 
     greatly needed.
       Home health agencies are currently instituting an 
     overwhelming number of administrative changes. Many of these 
     changes are costly and significantly increase the workloads 
     of already strained agency staffs, affecting the ability of 
     agencies to retain staff and continue to provide high-
     quality, appropriate care. HCFA frequently ignores public 
     notice and comment requirements in implementing programmatic 
     changes, and often underestimates or downplays the impact of 
     new requirements on struggling agencies. As a result, 
     providers are subject to onerous and burdensome requirements 
     without an opportunity for input, and are given insufficient 
     time to make operational changes in order to comply with 
     regulations.
       This legislation would ensure public input in HCFA's 
     regulatory process and prevent arbitrary actions and 
     erroneous decisions by HCFA from having a devastating impact 
     on home care providers and their patients before corrective 
     action is taken. Too often today home care agencies are 
     bankrupted and their patients lose care before faulty 
     policies are corrected. This bill would provide an 
     opportunity to correct errors before irreparable harm is 
     done. It would also prevent sanctions for conduct which 
     providers did not know was against the rules. Providers have 
     every intention of following the rules, but they must have 
     advance notice of what the rules are.
       The Medicare home health benefit is at great risk due to 
     severe financial reductions and onerous and unnecessary 
     administrative burdens. Direct intervention by the Congress 
     is necessary to ensure the integrity and future of this 
     important and popular benefit. We deeply appreciate your 
     concern for home health patients and those who care for them. 
     Enactment of the provisions in this bill would make a major 
     contribution to expanding access to home health care and 
     strengthening the home care infrastructure. Our hats are off 
     to you for this groundbreaking legislation.
       With best regards,
           Sincerely,
                                                 Val Halamandaris,
     President.
                                  ____

                                             Healthcare Leadership


                                                      Council,

                                    Washington, DC, July 26, 2000.
     Hon. Spencer Abraham,
     U.S. Senate, Dirksen Senate Office Building, Washington, DC.
       Dear Senator Abraham: On behalf of the Healthcare 
     Leadership Council (HLC), I would like to express our deep 
     appreciation for your proposal to help health care providers 
     comply with Medicare's increasingly burdensome regulatory 
     maze.
       The HLC is a chief executive coalition of over 50 of the 
     largest health care organizations in the country, including 
     hospital systems, insurers, pharmaceutical companies, and 
     medical device companies. The HLC has zero tolerance for true 
     fraud and abuse. True fraud and abuse in our health care 
     system undermines quality, threatens patients' trust and 
     should not be tolerated.
       However, the public's confidence in the nation's health 
     care system has been eroded by headlines of health care fraud 
     investigations that are most often not the result of true, 
     intentional fraud--but rather errors or misunderstandings due 
     to countless, complex regulations. We believe strongly that 
     Medicare's complexity actually undermines compliance and, 
     ultimately, the quality of patient care.
       The Provider Bill of Rights and Access Assurance Act 
     contains several provisions that will improve communication 
     and relations among Medicare's providers, regulators, and 
     enforcers. Provisions that we particularly support are those 
     that would expand providers' appeals rights, coordinate 
     voluntary disclosure procedures among enforcement agencies, 
     and educate providers regarding the application of certain 
     regulations through advisory opinions and other means.
       The Healthcare Leadership Council commends you for your 
     leadership on this very important issue and we stand ready to 
     help you further refine this legislation so that it will 
     serve to greatly improve the Medicare program for providers 
     and patients alike.
           Sincerely,
                                                   Mary R. Grealy,
     President.
                                  ____

                                            American Federation of


                                     HomeCare Providers, Inc.,

                                 Silver Spring, MD, July 25, 2000.
     Sen. Spencer Abraham,
     U.S. Senate, Washington, DC.
       Dear Senator Abraham: The American Federation of HomeCare 
     Providers is pleased to endorse your legislation, the 
     ``Medicare Provider Bill of Rights.''

[[Page 17099]]

       Our members are small business health care providers who 
     say that they would much rather deal with the Internal 
     Revenue Service than with the Health Care Financing 
     Administration (HCFA) and its contractors. Home care 
     businesses have no rights that the Fiscal Intermediaries, 
     carriers, and state surveyors appear to feel obligated to 
     respect. There is no penalty for incorrect contractor 
     decisions and no viable system to resolve disputes. Even 
     instances of blatant abuse of providers and beneficiaries go 
     without remedy because there is nothing to hold HCFA and its 
     agents accountable when they are wrong and when their 
     behavior goes beyond the bounds of ethical and legal 
     behavior. Contractors routinely refuse to consider 
     documentation, deny that they received records sent by 
     providers, deny the obvious wording of the law and 
     regulation, and sometimes even refuse to abide by court 
     decisions.
       Health care providers also believe that speaking out for 
     the right of patients to receive an appropriate level of care 
     and standing up for their own rights become grounds to target 
     them for harassment. They believe that they are held to 100 
     percent standards of excellence and accuracy, which they are 
     proud to meet, and those who serve as HCFA's contractors are 
     held to no standards of excellence and accuracy in their 
     dealings with the provider community. It is now time to 
     ensure due process rights so that conscientious health care 
     companies, who render critical and appropriate services in 
     their communities and abide by the tenets of the Medicare law 
     and regulation, are not subject to arbitrary and abusive 
     behavior that has the potential to put them out of business, 
     literally on the spot. Favorable decisions by Administrative 
     Law Judges are of little comfort to a home health agency that 
     has unjustifiably been shut down, on specious surveyor claims 
     that it does not meet the Medicare Conditions of 
     Participation, or by massive statistical sampling overpayment 
     assessments, later overturned on appeal.
       Medicare providers must be accorded the same type of 
     protections that Congress saw fit to enact for the American 
     pubic in the Taxpayer Bill of Rights. We believe that your 
     legislation would do just that.
           Sincerely yours,
                                                    Ann B. Howard,
     Vice President for Policy.
                                  ____



                             American Health Care Association,

                                    Washington, DC, July 28, 2000.
     Hon. Spencer Abraham,
     U.S. Senate, Dirksen Senate Office Building, Washington, DC.
       Dear Senator Abraham: On behalf of the American Health Care 
     Association (AHCA), a federation of state affiliates 
     representing more than 12,000 non-profit and for-profit 
     nursing facility, assisted living, residential care, 
     intermediate care for the mentally retarded, and subacute 
     care providers I am writing to thank you and express our 
     support for your legislation, The Health Care Provider Bill 
     of Rights and Access Assurance Act.
       This legislation is extremely important to long term care 
     providers for a number of reasons. Recently, in, Shalala v. 
     Illinois Council on Long Term Care, Inc., the U.S. Supreme 
     Court ruled that virtually all challenges to the legality of 
     Medicare regulations or policy must be brought through the 
     same Department of Health and Human Services (``HHS'') 
     administrative review process used to address individual 
     provider reimbursement and certification issues before 
     proceeding to federal court. The Court's decision means that 
     a provider or beneficiary cannot challenge the legality of 
     any Medicare regulation or policy without accepting an 
     adverse agency action and proceeding through a time-consuming 
     and costly administrative process. It is particularly 
     problematic for nursing homes because many components of 
     HHS's survey and enforcement regulations and policies 
     conflict with federal law and are fundamentally flawed. Your 
     legislation would give Medicare providers the right to 
     challenge directly the constitutionality and statutory 
     authority of HCFA's regulations and policies.
       Additionally, the bill will suspend the termination and 
     sanction process while appeals on deficiencies are pending, 
     as well as prohibit the public dissemination of deficiency 
     determinations while an appeal is pending, absent clear and 
     convincing evidence of criminal activity. In the current 
     survey system, skilled nursing facilities are cited and then 
     may be terminated for highly questionable deficiencies which 
     do not present a risk to resident health and safety. 
     Additionally, these citations may be posted on a public 
     website and this plus the risk of closure of a facility can 
     confuse and scare the residents and their families. Your bill 
     would prevent facilities from closing while they appeal a 
     citation. Also, the bill establishes precedence for 
     administrative appeals so that providers will have an 
     affirmative defense in appeals where other providers have 
     gone through similar appeals. This would add must needed 
     certainly to the complex rules and regulations under the 
     Medicare program. We appreciate your commitment to this 
     important provision.
       Among many other provisions in the legislation, the bill 
     will make needed changes to the False Claims Act. It will 
     require that claims brought under the Act for damages alleged 
     to have been sustained by the government must be of a 
     material amount, which will limit False Claims Act claims to 
     those that have a significant impact on the Medicare program.
       Senator Abraham, we commend your efforts and praise your 
     leadership. As the nation's largest association of long term 
     care providers, AHCA is available to assist you in any way 
     that we can to advance this legislation.
           Sincerely,
                                      Charles H. Roadman II, M.D.,
                                                President and CEO.

  Mr. ABRAHAM. I am continuing to reach out to additional organizations 
to garner their support, as well as to my colleagues in the Senate to 
join Senators Cochran of Mississippi and Senator Grams of Minnesota as 
cosponsors. Furthermore, Members of the other body will soon introduce 
companion legislation to S. 2999 in the hope that we can incorporate 
these necessary reforms in a Medicare reimbursement restoration bill or 
other reform legislation that may pass this Congress. Finally, I am 
joining Senator Craig in calling on the Senate Finance Committee to 
hold immediate hearings on this legislation, and the broader issue of 
HCFA regulatory complexity. With this legislation, I believe we can 
break down one of the primary obstacles to assuring access to quality 
health care in this country, the seemingly unfettered abuses of 
Medicare bureaucrats against doctors and providers alike. I urge my 
colleagues to join me on this important measure.
  I believe I have laid out a comprehensive and sensible policy for 
ensuring the continued viability of Medicare. Medicare has provided 
millions of seniors access to quality health care where otherwise they 
would go without. But more must be done, and must be done soon: we must 
modernize Medicare so that it provides for coverage of prescription 
drug expenses; we must improve reimbursements to providers so that 
reform and cost containment does not come at the expense of the very 
access to health care Medicare is trying to provide; we must implement 
comprehensive Medicare reform that improves beneficiaries choices in 
their health care decisions, mirrors the health care needs of the 
modern senior, and is fiscally sound for generations to come; and we 
must rein in the abusive and incredibly complex bureaucratic behemoth 
that has crippled health care providers' ability to operate efficiently 
in the Medicare system. We can do all of this, but time is running very 
short. Our seniors need these changes, and the time to act is now.
  I ask unanimous consent a section-by-section analysis of the measure 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

      THE ABRAHAM HEALTH CARE PROVIDERS' BILL OF RIGHTS (S. 2999)


                       Section-by-Section Summary

                       Title I--Regulatory Reform

     Section 101. Prohibiting the Retroactive Application of 
         Regulations
       Providers have complained that HCFA, its Financial 
     Intermediaries (FI's; the private firms that administer the 
     Part A payments), and its carriers (the private firms that 
     administer the Part B payments), issue retroactive rules and 
     policies that are not subject to the Administrative 
     Procedures Act. In fact, they show where HCFA has often 
     issued these rules and policies rather than regulations 
     specifically to avoid the requirements of the Administrative 
     Procedures Act (public hearings, public discussion periods, 
     publication in the Federal Register, etc.), and that they do 
     so retroactively. This section will prohibit HCFA from 
     issuing anything regarding the legal standards governing the 
     scope of benefits, the payments rates, or eligibility rules 
     except by regulation, and then only prospectively, so that no 
     retroactive regulations are issued.
     Section 102. Requiring HCFA to Follow Normal Regulation 
         Issuance Procedures
       Providers also complain about how HCFA circumvents the 
     Administrative Procedures Act regulatory process by issuing 
     interim final rules, which are implemented without the public 
     discussion period and hearings, under emergency powers called 
     the ``Good Cause'' clause, but fails to provide any 
     justification other than simply that they have good cause. In 
     order to prevent these tautologies from continuing, this 
     section prohibits HCFA from issuing interim final regulations 
     that haven't gone through the normal regulation public 
     vetting process.

[[Page 17100]]


     Section 103. GAO Report on HCFA Compliance with Regulatory 
         Procedure Laws
       Given the extensive reports of HCFA abusing its regulatory 
     issuance authority, this section directs GAO to conduct an 
     audit of, and report to Congress within 18 months on, HCFA's 
     compliance with the Administrative Procedures Act and the 
     Regulatory Flexibility Act.
     Section 104. Providing for Summary Judicial Challenges of 
         HCFA Regulations on Constitutional or Other Broad Grounds
       Before the Supreme Court Decision of Shalala v. Illinois 
     Council this spring, providers had a right to prospective 
     judicial challenges to HCFA regulations they thought were 
     either unconstitutional or were beyond HCFA's statutory 
     authority to issue. After this decision, however, the only 
     recourse providers have to challenge these regulations is to 
     wait until they are found in violation, then appeal the HCFA 
     decision. This section reestablishes a prospective regulatory 
     and judicial challenge process of those HCFA regulations to 
     challenge the constitutionality or statutory authority of a 
     regulation, or to preemptively challenge an interim final 
     rule issued under the Good Cause clause.
     Section 105. Delineating Procedures for National Coverage 
         Determination Changes
       There is a regulatory process that is exempt from even the 
     currently liberal HCFA regulatory issuance rules, called 
     National Coverage Determinations. These determine what will, 
     and will not, be covered by the Medicare program, and can 
     change rules on what medical procedures that will be covered 
     rules overnight. This section establishes a National Coverage 
     Determination review process that requires a 30-day prior 
     notice of initiating such a process, and allows for adequate 
     public comment before implementing the new coverage 
     determination.

                    Title II--Appeals Process Reform

     Section 201. Expanding Providers' Overpayment Appeal Rights
       Current appeal regulations only allow providers three 
     options when HCFA tells them they have been overpaid: admit 
     the overpayment and pay it; submit evidence in mitigation to 
     reduce the amount of alleged overpayment but waive all appeal 
     rights; or appeal the decision, but be subjected to a 
     Statistically Valid Random Sample Audit (SVRS), a process 
     which essentially shuts the provider down. This section will 
     allow providers to exercise the second option (submitting 
     evidence in mitigation) without waiving their appeal rights.
     Section 202. Deadlines for Appeal Adjudication
       This section requires the Medicare appeals process to be 
     completed within 180 days, 90 days for the Administrative Law 
     Judge first level appeal and 90 days for the Departmental 
     Appeals Board second level appeal. Where the appeals process 
     does not meet these deadlines, this section provides for the 
     appeals process to be automatically advanced to the next 
     stage.
     Section 203. Provider Appeals on the Part of Deceased 
         Beneficiaries
       This section allows providers to pursue appeals on behalf 
     of deceased beneficiaries where no substitute party is 
     available.
     Section 204. Suspending Terminations and Sanctions During 
         Appeals
       Currently, if HCFA makes a determination that a provider is 
     abiding by HCFA standards, it can terminate that provider's 
     participation in Medicare, publicly disseminate that 
     deficiency information, and impose sanctions short of 
     termination, even if the provider appeals the determination. 
     This section suspends the termination and sanction process 
     while appeals on deficiencies are pending, as well as 
     prohibits the public dissemination of deficiency 
     determinations while the appeal is pending, absent clear and 
     convincing evidence of criminal activity.
     Section 205. Establishing Precedence for Administrative 
         Appeals
       Ninety-eight percent of all appeals that are adjudicated at 
     the first level of the appeals process (the Administrative 
     Law Judge level), are determined in favor of the provider. 
     This appears to be due in large part because HCFA apparently 
     tries to squeeze providers into not fighting overpayment 
     determinations in the hope that some providers simply will 
     pay rather than fight. This section will give Departmental 
     Appeals Board decisions national precedence in the Medicare 
     appeals process so that providers will not have to fight the 
     same appeal over and over.
     Section 206. Safe Harbor for Substantial Compliance With HCFA 
         Procedures
       Providers can try their very best to comply with HCFA 
     regulations but then be told by HCFA that they have violated 
     some policy or rule, and be subject to fines and overpayment 
     determinations. This section gives providers protection from 
     HCFA action where a claim was submitted by a provider in 
     reliance on erroneous information or written statements 
     supplied by a Federal agency.
     Section 207. GAO Audit of HCFA's Statistical Sampling 
         Procedures
       HCFA bases much of its compliance determinations on 
     statistical sample audits, either through random audits as 
     part of the Medicare Integrity Program, or through 
     overpayment audits. However, there is substantial evidence 
     that HCFA's statistical sampling procedures do not follow 
     generally accepted procedures, and don't interpret the data 
     in a statistically valid manner. This section direct GAO to 
     conduct an audit of HCFA's (and its Financial Intermediaries' 
     and Carriers') statistical sampling and utilization 
     procedures.

                Title III--Overpayment Procedure Reform

     Section 301. Prohibit Retroactive Overpayment Determinations 
         through New Policies
       HCFA currently has the authority to change policy 
     interpretations and implement them so as to make retroactive 
     overpayments determinations, even though the previous policy 
     may have allowed the charges. This section bars HCFA from 
     making overpayment determinations based upon the retroactive 
     application of a new policy interpretation.
     Section 302. Prohibit Reductions of Future Payments Based on 
         Sample Audits of Past Claims
       HCFA currently reduces future payments by whatever error 
     rate they derive from their statistical sample audits, even 
     where there is no evidence that the pending or future 
     payments are similarly in error, they simply assume that they 
     are so, even if under appeal. Furthermore, the provider has 
     no way to stop that withholding until the appeal is decided 
     in their favor. This section bars HCFA from making such 
     blanket withholdings from future payments, without clear and 
     convincing evidence of fraud.
     Section 303. Prohibit Withholding of Underpayments or Future 
         Payments for Past Overpayments
       In addition to withholding future payments by whatever 
     error rate a HCFA sample audits produce, HCFA also regularly 
     withholds underpayments owed the provider, as well as the 
     full amount of future payments, and applies them to past 
     overpayments, regardless of whether the provider is appealing 
     the overpayment determination, or has entered into a 
     repayment agreement. This can effectively strangle a 
     provider's entire revenue flow, and has forced many providers 
     into bankruptcy, even when such overpayments are being 
     appealed. This section prohibits HCFA from withholding 
     underpayments or future payments to pay for past 
     overpayments, unless clear and convincing evidence of fraud 
     exists.
     Section 304. Suspend Overpayment Collections While Appeals 
         are Pending
       Even if a provider decides to be subjected to the lengthy 
     and expensive appeals process, they are still required to 
     immediately repay HCFA for alleged overpayments. This section 
     suspends overpayment recoupment while appeals are pending. 
     Given that appeals will be expedited under this bill to 180 
     days, the Medicare system will still have timely access to 
     any overpayment funds.

            Title IV--Voluntary Disclosure Procedure Reform

     Section 401. Effective Voluntary Disclosure Procedures
       Many times the first person to discover that a provider has 
     been overpaid or has not been in compliance with Medicare 
     regulations is the provider himself. However, the Department 
     of Health and Human Services voluntary disclosure procedures 
     still allow the Attorney General and U.S. Attorneys to use 
     the exact same information provided by the provider to the 
     Department Office of Inspector General under the current 
     voluntary disclosure process against the provider for 
     prosecution. This section directs the Secretary of Health and 
     Human Services (HCFA's parent department) and the Attorney 
     General to make joint voluntary disclosure procedures which 
     provide a safe harbor from prosecution for providers who 
     report the violation so long as these agencies haven't 
     already approached them about the possible violation or 
     overpayment, and there isn't previously and independently 
     obtained clear and convincing evidence of fraud.

                Title V--Criminal Law Enforcement Reform

     Section 501. Rescind Law Enforcement Powers of HHS OIG 
         Investigators
       Currently, the Department of Health and Human Services' 
     Office of Inspector General investigators are the enforcement 
     arm of the Medicare program for HCFA, and are deputized by 
     the U.S. Marshal Service to execute those duties. This has 
     turned into their being granted near carte blanche authority 
     for enforcing Medicare laws and regulations. With that, it is 
     increasingly evident that OIG investigators may abuse that 
     power, such as raiding hospitals and physicians offices with 
     the same tactics that SWAT teams use on crack houses. This 
     section rescinds OIG's deputation, and bars those 
     investigators from carrying weapons in the execution of their 
     duties.
     Section 502. Codify More Stringent Search Warrant Rules for 
         Health Care Facilities
       Many health care providers who find themselves on the wrong 
     side of an HHS OIG investigation are subjected to 
     unnecessarily intrusive search warrant executions, with 
     doctors and nurses accosted by gun-wielding investigators, 
     and patients removed from medical care. This section codifies 
     search warrant rules that so as to protect the 
     confidentiality of medical records, the provider-

[[Page 17101]]

     patient relationship, and the uninterrupted continuation of 
     medical care. Specifically, it requires the law enforcement 
     agency requesting the search warrant to take the least 
     intrusive approach to executing the warrant, consistent with 
     vigorous and effective law enforcement. It also directs the 
     law enforcement agency seeking the warrant to work closely 
     with the Department of Justice and the relevant U.S. 
     Attorney's office to ensure the warrant is indeed necessary 
     and that the search minimizes disruption to patient care or 
     threats to the confidentiality of patient records.

                Title VI--Provider Compliance Education

     Section 601. Provider Education Funding
       This section requires Financial Intermediaries and Carriers 
     to spend 3 percent of their Medicare funds on provider 
     billing and compliance education, and HCFA to dedicate 10% of 
     their Medicare Integrity Program funds to such education, so 
     as to try to decrease the rate of provider non-compliance, as 
     well as over- and under-billing.
     Section 602. Advisory Opinions for Health Care Providers
       This section requires HCFA to provide written answers to 
     questions about coverage, billing, documentation, coding, 
     cost reporting and procedures under the Medicare program, 
     answers which can be used as an affirmative defense against 
     an overpayment determination or an allegation of violating 
     Medicare regulations.
     Section 603. Extension of Existing Advisory Opinion 
         Provisions of Law
       The Health Insurance Portability and Accountability Act 
     (HIPAA) included a provision requiring the Secretary to issue 
     written advisory opinions on certain specified topics under 
     the anti-kickback statute and civil monetary penalty 
     provisions. However, that provision sunsets on August 21st, 
     2000. The Balanced Budget Act of 1997 (BBA 97) provides a 
     similar provision regarding the legality of referrals under 
     the physician self-referral laws, which also sunsets August 
     21st, 2000. This section extends these advisory opinion 
     provisions permanently.

                        Supporting Organizations

       Michigan Health & Hospital Association.
       Federation of American Hospitals.
       National Association for Home Care.
       American Federation of Home Care Providers.
       Healthcare Leadership Council.
       American Health Care Association.

                          ____________________