[Congressional Record (Bound Edition), Volume 155 (2009), Part 12]
[Senate]
[Pages 15595-15606]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. ROCKEFELLER:
  S. 1286. A bill to amend part E of title IV of the Social Security 
Act to allow children in foster care to be placed with their parents in 
residential family treatment centers that provide safe environments for 
treating addiction and promoting healthy parenting; to the Committee on 
Finance.
  Mr. ROCKEFELLER. Mr. President, I rise today to introduce the Keeping 
Families Safe Act of 2009 which seeks to keep families together when a 
parent is in a comprehensive residential family treatment program. 
Comprehensive residential family treatment is a unique program that 
serves parents and children together in a safe residential environment 
as the parent undergoes treatment for substance abuse.
  Such programs tend to be small, but their results are impressive. One 
study found that 60 percent of mothers who participated in the Pregnant 
and Postpartum Women and Their Infants program were completely clean 
and sober six months after their discharge. This same study found that 
88 percent of these children were still with their mothers six months 
after the mother was discharged. However, only 5 percent of all 
substance abuse treatment facilities are able to accommodate children. 
The goal of this legislation is to offer support and flexibility to 
such promising programs by allowing children who are in foster care be 
placed with their parent in the comprehensive residential family 
treatment center, and bring their foster care payment with them as 
their placement is transferred. By allowing these funds to follow the 
child to the residential facility, the chances for that family's 
success are much greater.
  Family based substance abuse treatment centers have proven to be an 
effective means of treating substance abuse and reuniting families, but 
most facilities are struggling to make ends meet. Many of the parents 
in treatment are motivated by the hope of overcoming their addiction 
and reuniting with their children. This bill is designed to give them 
that chance, and it will hopefully inspire them by allowing their 
children to be part of the recovery, in a completely safe environment. 
I urge my colleagues to support this important legislation to help keep 
families together and provide another funding source for these 
promising programs for children and parents.
                                 ______
                                 
      By Mr. McCAIN (for himself, Mr. Coburn, and Mr. Grassley):
  S. 1287. A bill to provide for the audit of financial statements of 
the Department of Defense for fiscal year 2017 and fiscal years 
thereafter, and for other purposes; to the Committee on Armed Services.
  Mr. McCAIN. Mr. President, today Senators Coburn, Grassley, and I are 
introducing the Department of Defense Financial Accountability Act of 
2009, which imposes hard legislative deadlines on the Department of 
Defense to finally fix its broken bookkeeping system. This legislation 
is not only necessary, it is long overdue.
  The bill establishes a series of deadlines, beginning next year and 
running through 2017, for DoD and the Services to become audit ready. 
In particular, it compels the Services to account for military 
equipment, real property, inventory, operating materials and supplies, 
environmental liabilities, and fund balances with Treasury. Thereafter, 
DOD must undergo a full, independent audit of its financial statements. 
If DoD fails to meet any deadline set forth in the bill, it must timely 
document and explain its failure to Congress.
  The Department of Defense is the most massive and complex of any 
organization, public or private. It is entrusted with more taxpayer 
dollars than any other federal department or agency. For fiscal year 
2009 alone, Congress appropriated over $513 billion for DoD's base 
budget. It added an additional $7.4 billion for DoD in this year's so-
called stimulus bill.
  To support its business functions, DoD has thousands of separate 
business systems that it has layered upon one another for decades. They 
are archaic, overly complex, and error-prone. They are sometimes 
redundant and often lack standardization. It is no wonder that since 
1995, GAO has classified the Pentagon's financial management as high-
risk, which makes it vulnerable to fraud and waste. Indeed, according 
to GAO, DoD's accounting problems cost the American taxpayer $13 
billion in 2005--that's $35 million a day.
  This has been a problem for decades. In 1975, the Army disclosed that 
it had spent $225 million over its budget because of a serious 
breakdown in its accounting and financial management reporting system. 
For fiscal year 1986, the Navy failed to disclose $58 million in real 
property, $1.7 billion in guaranteed loans, and data on operating 
leases on ships. According to the Government Accountability Office, 
between 1970 and 1980, the Air Force incurred numerous over obligations 
in amounts up to $210 million of its industrial funds. This would never 
be tolerated in the private sector.
  This is not only about numbers and audits--this is also about the 
security of our troops and our nation. These broken systems affect 
operations and endanger our troops. Over the years, the GAO has 
reported that the Pentagon's poor financial management has caused pay 
problems for National Guard and reservists; impeded delivery of food 
and other essential supplies to U.S. troops; and had the Pentagon 
scrambling to identify and locate 250,000 defective chem-bio suits, 
some of which were being sold over the Internet.
  Let me read into the record one account of how this impacted ongoing 
operations in Iraq. According to a February 5, 2006 Star Tribune news 
article: ``When Perry Jeffries was serving in Iraq, the computers 
showed that his 4th Infantry Division troops had access to drinking 
water, a place to shower and working wheels on their vehicles. As the 
first sergeant came to understand when scrounging for water, towing 
immobilized tanks and driving to other posts or to Kuwait to pick up 
needed parts, the Pentagon's bookkeeping doesn't always match reality. 
Jefferies saw the real-life results of what has been a visible 
`accounting' problem in Washington--the Pentagon's inability to keep 
accurate track of transactions and assets.''
  Congress has already enacted several laws mandating financial 
management reform and the Office of Management and Budget has issued 
circulars on internal controls over financial reporting and financial 
management systems. Notably, none contain hard deadlines for an audit.
  Meanwhile, DoD has repeatedly promised Congress that it would fix the

[[Page 15596]]

problem. In 1999 and 2000, then-DoD Comptroller William Lynn testified 
before Congress that financial management reform was his highest 
priority. In fact, Mr. Lynn's successor, Dov Zakheim, set a deadline to 
have the Department of Defense audit ready by 2007. Under DoD's latest 
Financial Improvement and Audit Readiness Plan, that deadline is now 
2017.
  I want to recognize that the Department has tried, with varying 
degrees of effort, to improve financial management, but DoD auditors 
and GAO continue to report significant weaknesses.
  I appreciate that our military is engaged in ongoing operations in 
Iraq and Afghanistan. That is why Senators Coburn, Grassley and I have 
sought to be reasonable and realistic with the deadlines. They are the 
same deadlines in DoD's current Financial Improvement and Audit 
Readiness Plan.
  It has been 19 years since the CFO Act was passed requiring DoD and 
other departments to have an audit. It will be 2019--nearly 30 years 
after the passage of the CFO Act--before the Department of Defense is 
able to get an audit opinion, if we hold them to their current 
timeline. If we do not, this may never happen.
  The ultimate outcome of this legislation will be the implementation 
of effective financial management processes, efficient business systems 
and strong internal controls that are essential to producing timely, 
reliable and useful financial information. Quality information will 
allow DoD to make informed business decisions and ensure accountability 
on an ongoing basis.
  Every dollar we save through improved financial management is another 
dollar for our troops--for body armor, for medical supplies, for 
veterans care. Improved financial systems will ensure that troops in 
the future do not find themselves in the same straits as the 4th 
Infantry Division, searching for supplies that a computer says they 
already have.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1287

       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 ``Department of Defense 
     Financial Accountability Act of 2009''.

     SEC. 2. AUDIT OF FINANCIAL STATEMENTS OF THE DEPARTMENT OF 
                   DEFENSE.

       (a) Financial Statements of Department of Defense.--
       (1) Validation as ready for audit.--The financial 
     statements of the Department of Defense for a fiscal year 
     shall be validated as ready for audit by not later than 
     September 30, 2017.
       (2) Audit.--The financial statements of the Department of 
     Defense for a fiscal year shall be audited, and an opinion 
     shall be rendered pursuant to such audit, for the first 
     fiscal year for which the financial statements are ready for 
     audit, but not later than fiscal year 2017, and for each 
     fiscal year thereafter.
       (3) Deadline for audit.--The audit of the financial 
     statements of the Department of Defense shall be completed as 
     follows:
       (A) In the event the financial statements for a fiscal year 
     before fiscal year 2017 are ready for audit, by not later 
     than two years after the last day of such fiscal year.
       (B) In the case of the financial statement fiscal year 
     2017, by not later than September 30, 2019.
       (C) In the case of the financial statement for any fiscal 
     year after fiscal year 2017, by not later than one year after 
     the last day of such fiscal year.
       (b) Financial Statements of the Military Departments and 
     DLA.--In furtherance of compliance with the requirements in 
     subsection (a), the following requirements shall apply:
       (1) Department of the army.--
       (A) Validation as ready for audit.--The financial 
     statements of the Department of the Army for a fiscal year 
     shall be validated as ready for audit by not later than March 
     31, 2017.
       (B) Audit.--The financial statements of the Department of 
     the Army for a fiscal year shall be audited, and an opinion 
     shall be rendered pursuant to such audit, for the first 
     fiscal year for which the financial statements are ready for 
     audit, but not later than fiscal year 2017, and for each 
     fiscal year thereafter.
       (C) Deadline for audit.--The audit of the financial 
     statements of the Department of Army shall be completed as 
     follows:
       (i) In the event the financial statements for a fiscal year 
     before fiscal year 2017 are ready for audit, by not later 
     than two years after the last day of such fiscal year.
       (ii) In the case of the financial statement fiscal year 
     2017, by not later than September 30, 2019.
       (iii) In the case of the financial statement for any fiscal 
     year after fiscal year 2017, by not later than one year after 
     the last day of such fiscal year.
       (2) Department of the navy.--
       (A) Validation as ready for audit.--The financial 
     statements of the Department of the Navy for a fiscal year 
     shall be validated as ready for audit by not later than March 
     31, 2016.
       (B) Audit.--The financial statements of the Department of 
     the Navy for a fiscal year shall be audited, and an opinion 
     shall be rendered pursuant to such audit, for the first 
     fiscal year for which the financial statements are ready for 
     audit, but not later than fiscal year 2016, and for each 
     fiscal year thereafter.
       (C) Deadline for audit.--The audit of the financial 
     statements of the Department of Navy shall be completed as 
     follows:
       (i) In the event the financial statements for a fiscal year 
     before fiscal year 2016 are ready for audit, by not later 
     than two years after the last day of such fiscal year.
       (ii) In the case of the financial statement fiscal year 
     2016, by not later than September 30, 2018.
       (iii) In the case of the financial statement for any fiscal 
     year after fiscal year 2016, by not later than one year after 
     the last day of such fiscal year.
       (3) Department of the air force.--
       (A) Validation as ready for audit.--The financial 
     statements of the Department of the Air Force for a fiscal 
     year shall be validated as ready for audit by not later than 
     September 30, 2016.
       (B) Audit.--The financial statements of the Department of 
     the Air Force for a fiscal year shall be audited, and an 
     opinion shall be rendered pursuant to such audit, for the 
     first fiscal year for which the financial statements are 
     ready for audit, but not later than fiscal year 2016, and for 
     each fiscal year thereafter.
       (C) Deadline for audit.--The audit of the financial 
     statements of the Department of the Air Force shall be 
     completed as follows:
       (i) In the event the financial statements for a fiscal year 
     before fiscal year 2016 are ready for audit, by not later 
     than two years after the last day of such fiscal year.
       (ii) In the case of the financial statement fiscal year 
     2016, by not later than September 30, 2018.
       (iii) In the case of the financial statement for any fiscal 
     year after fiscal year 2016, by not later than one year after 
     the last day of such fiscal year.
       (4) Defense logistics agency.--
       (A) Validation as ready for audit.--The financial 
     statements of the Defense Logistics Agency for a fiscal year 
     shall be validated as ready for audit by not later than 
     September 30, 2017.
       (B) Audit.--The financial statements of the Defense 
     Logistics Agency for a fiscal year shall be audited, and an 
     opinion shall be rendered pursuant to such audit, for the 
     first fiscal year for which the financial statements are 
     ready for audit, but not later than fiscal year 2017, and for 
     each fiscal year thereafter.
       (C) Deadline for audit.--The audit of the financial 
     statements of the Defense Logistics Agency shall be completed 
     as follows:
       (i) In the event the financial statements for a fiscal year 
     before fiscal year 2017 are ready for audit, by not later 
     than two years after the last day of such fiscal year.
       (ii) In the case of the financial statement fiscal year 
     2017, by not later than September 30, 2019.
       (iii) In the case of the financial statement for any fiscal 
     year after fiscal year 2017, by not later than one year after 
     the last day of such fiscal year.
       (c) Validation as Ready for Audit of Financial Statements 
     Regarding Particular Matters.--In furtherance of compliance 
     with the requirements in subsections (a) and (b), the 
     following requirements shall apply:
       (1) Military equipment.--
       (A) Department of the army.--The financial statements of 
     the Department of the Army with respect to military equipment 
     shall be validated as ready for audit by not later than 
     December 31, 2013.
       (B) Department of the navy.--The financial statements of 
     the Department of the Navy with respect to military equipment 
     shall be validated as ready for audit by not later than 
     September 30, 2014.
       (C) Department of the air force.--The financial statements 
     of the Department of the Air Force with respect to military 
     equipment shall be validated as ready for audit by not later 
     than March 31, 2016.
       (2) Real property.--
       (A) Department of the army.--The financial statements of 
     the Department of the Army with respect to real property 
     shall be validated as ready for audit by not later than 
     December 31, 2013.
       (B) Department of the navy.--The financial statements of 
     the Department of the Navy with respect to real property 
     shall be validated as ready for audit by not later than March 
     31, 2014.

[[Page 15597]]

       (C) Department of the air force.--The financial statements 
     of the Department of the Air Force with respect to real 
     property shall be validated as ready for audit by not later 
     than September 30, 2014.
       (D) Defense logistics agency.--The financial statements of 
     the Defense Logistics Agency with respect to real property 
     shall be validated as ready for audit by not later than March 
     31, 2015.
       (3) Inventory.--
       (A) Department of the army.--The financial statements of 
     the Department of the Army with respect to inventory shall be 
     validated as ready for audit by not later than March 31, 
     2017.
       (B) Department of the navy.--The financial statements of 
     the Department of the Navy with respect to inventory shall be 
     validated as ready for audit by not later than December 31, 
     2013.
       (C) Department of the air force.--The financial statements 
     of the Department of the Air Force with respect to inventory 
     shall be validated as ready for audit by not later than 
     September 30, 2016.
       (D) Defense logistics agency.--The financial statements of 
     the Defense Logistics Agency with respect to inventory shall 
     be validated as ready for audit by not later than September 
     30, 2015.
       (4) Operating material and supplies.--
       (A) Department of the army.--The financial statements of 
     the Department of the Army with respect to operating material 
     and supplies shall be validated as ready for audit by not 
     later than March 31, 2017.
       (B) Department of the navy.--The financial statements of 
     the Department of the Navy with respect to operating material 
     and supplies shall be validated as ready for audit by not 
     later than March 31, 2016.
       (C) Department of the air force.--The financial statements 
     of the Department of the Air Force with respect to operating 
     materials and supplies shall be validated as ready for audit 
     by not later than September 30, 2016.
       (5) Environmental liabilities.--
       (A) Department of the army.--The financial statements of 
     the Department of the Army with respect to environmental 
     liabilities shall be validated as ready for audit by not 
     later than December 31, 2013.
       (B) Department of the navy.--The financial statements of 
     the Department of the Navy with respect to environmental 
     liabilities shall be validated as ready for audit by not 
     later than March 31, 2010.
       (C) Department of the air force.--The financial statements 
     of the Department of the Air Force with respect to 
     environmental liabilities shall be validated as ready for 
     audit by not later than December 31, 2011.
       (D) Defense logistics agency.--The financial statements of 
     the Defense Logistics Agency with respect to environmental 
     liabilities shall be validated as ready for audit by not 
     later than September 30, 2017.
       (6) Fund balance with the treasury.--
       (A) Department of the army.--The financial statements of 
     the Department of the Army with respect to the fund balance 
     with the Treasury shall be validated as ready for audit by 
     not later than September 30, 2010.
       (B) Department of the navy.--The financial statements of 
     the Department of the Navy with respect to the fund balance 
     with the Treasury shall be validated as ready for audit by 
     not later than December 31, 2010.
       (C) Department of the air force.--The financial statements 
     of the Department of the Air Force with respect to the fund 
     balance with the Treasury shall be validated as ready for 
     audit by not later than December 31, 2011.
       (D) Defense logistics agency.--The financial statements of 
     the Defense Logistics Agency with respect to the fund balance 
     with the Treasury shall be validated as ready for audit by 
     not later than September 30, 2011.
       (d) Performance of Audits and Validations.--Any audit or 
     validation as ready for audit of a financial statement 
     required under subsections (a) through (c) may be performed 
     by an independent auditor qualified for the performance of 
     such audit or validation, as the case may be.
       (e) Action if Compliance Not Achieved.--
       (1) In general.--In the event the Department of Defense or 
     a component of the Department of Defense is unable to achieve 
     compliance with a requirement in subsection (a), (b), or (c) 
     by the completion date for such requirement otherwise 
     specified in the applicable provision of such subsection, the 
     Secretary of Defense or the head of the component, as 
     applicable, shall submit to the appropriate committees of 
     Congress, not later than 30 days after the completion date 
     otherwise so specified, a report setting forth the following:
       (A) A statement of the reasons why compliance with the 
     requirement was not achieved by the completion date for the 
     requirement.
       (B) A description of the actions to be taken to achieve 
     compliance with the requirement.
       (C) A proposed completion date for achievement of 
     compliance with the requirement.
       (2) Construction.--Nothing in this subsection shall be 
     construed to waive any deadline for the completion of a 
     requirement under subsections (a) through (c).
       (f) Semiannual Reports on Financial Improvement Audit 
     Readiness Plan.--
       (1) In general.--Not later than May 15 and November 15 each 
     year, the Under Secretary of Defense (Comptroller) shall 
     submit to the appropriate committees of Congress a report on 
     progress under the financial improvement audit readiness 
     (FIAR) plan during two calendar year quarters ending March 31 
     and September 30, respectively, of such year.
       (2) Elements.--Each report under paragraph (1) shall 
     include, for the two calendar year quarters covered by such 
     report, the following with respect to the portion of such 
     report relating to priority segments:
       (A) A detailed description of any deficiencies identified 
     during discovery.
       (B) A description of the actions to be taken to remedy any 
     deficiency so identified.
       (C) A deadline for the completion of any actions set forth 
     under subparagraph (B).
       (g) Definitions.--In this section:
       (1) Appropriate committees of congress.--The term 
     ``appropriate committees of Congress'' means--
       (A) the Committee on Armed Services and the Committee on 
     Homeland Security and Governmental Affairs of the Senate; and
       (B) the Committee on Armed Services and the Committee on 
     Oversight and Government Reform of the House of 
     Representatives.
       (2) Validation.--The term ``validation'', with respect to 
     the auditability of financial statements, means a 
     determination following an examination engagement that the 
     financial statements comply with generally accepted 
     accounting principles and applicable laws and regulations and 
     reflect reliable internal controls.
                                 ______
                                 
      By Mr. WHITEHOUSE (for himself, Mr. Sessions, and Mr. Leahy):
  S. 1289. A bill to improve title 18 of the United States Code; to the 
Committee on the Judiciary.
  Mr. WHITEHOUSE. Mr. President, I rise to urge my colleagues to 
support the Foreign Evidence Request Efficiency Act, which I have 
introduced on behalf of myself and the Chairman and Ranking Members of 
the Judiciary Committee, Senators Leahy and Sessions. It has been a 
pleasure to work with them on this truly bipartisan effort, and I am 
grateful for their support.
  Chairman Leahy, Ranking Member Sessions, and I have all served as 
prosecutors. I can say with no exaggeration that few responsibilities 
are more important to the rule of law, to the security of our 
communities, and to the rights and freedoms that we enjoy as Americans. 
I served as the U.S. Attorney for Rhode Island--Senator Sessions served 
in that capacity in Alabama--and I know we both will always remember 
the feeling of standing up in court to say: ``Your Honor, may it please 
the Court, I represent the United States of America.'' It was the honor 
of a lifetime.
  As my colleagues know, the United States routinely helps foreign law 
enforcement agencies as they pursue criminal conduct involving activity 
outside their borders, including inside the United States, and they do 
the same for us. This is exactly as it should be. As the world grows 
more interconnected and crime becomes increasingly global, it becomes 
all the more important for law enforcement agencies in the United 
States and around the world to work together to bring criminals to 
justice. Otherwise, it would be very hard to build cases against 
international organized crime organizations, drug cartels, purveyors of 
child pornography on the internet, and other criminal threats from 
outside our borders.
  One way that a law enforcement agency provides assistance to another 
is by gathering evidence from within its borders that a foreign law 
enforcement agency needs to prosecute a case. The United States 
routinely completes requests submitted to it by foreign law enforcement 
agencies just as it receives comparable assistance when it makes 
evidence requests in foreign countries. For example, let's assume that 
Spanish authorities are investigating a complicated financial fraud 
that is being conducted over the internet, apparently from a base in 
the United States. After conducting their investigation in Spain, the 
Spanish authorities submit a request to the United States for financial 
records, internet records, and various other kinds of evidence. U.S. 
Attorneys review the requests and then seek warrants for the evidence 
as appropriate. When the evidence is collected, the United States 
transmits it to Spanish

[[Page 15598]]

authorities, leading to prosecution in Spanish courts.
  This process sounds quite simple, but unfortunately in practice it is 
extremely cumbersome. This is because under the existing rules, any 
foreign evidence request must be split up and sent to each district 
where the evidence exists. So take the Spanish example I just gave, and 
imagine that the financial records sought are in banks in six different 
federal judicial districts, that the internet records are in another 
five federal judicial districts, and that other documentary evidence is 
spread over another five districts. Under existing law, sixteen 
different U.S. Attorneys' Offices would have to work on the evidence 
request. This is incredibly inefficient and burdensome for U.S. 
Attorneys across the country.
  The Foreign Evidence Request Efficiency Act would end this problem by 
allowing such foreign evidence requests to be handled centrally, by a 
single or more limited number of U.S. Attorneys offices as appropriate. 
Why, as in my example, should sixteen U.S. Attorneys' Offices have to 
deal with an evidence request that one office can coordinate? Simply 
put, this reform would make life easier for our U.S. Attorneys. We owe 
them no less.
  Of course, respect for civil liberties demands that we not suddenly 
change the types of evidence that foreign governments may receive from 
the United States or reduce the role of courts as gatekeepers for 
searches. The Foreign Evidence Request Efficiency Act would leave those 
important protections in place, while simultaneously reducing the 
paperwork that the cumbersome existing process imposes on our U.S. 
Attorneys.
  Two points merit emphasis. First, by making it easier for U.S. 
Attorneys to collect evidence, the United States can respond more 
quickly to foreign requests for evidence. Setting a high standard of 
responsiveness will allow the United States to urge that foreign 
authorities respond to our requests for evidence with comparable speed. 
The United States will benefit if foreign governments cannot use our 
own delay to justify responding slowly to our requests. Second, the 
Foreign Evidence Request Efficiency Act would not change the United 
States' obligations to foreign nations. It would only make it easier 
for the United States to respond to these requests by allowing them to 
be centralized and by putting the process for handling them within a 
clear statutory system.
  I urge my colleagues to act promptly on this bipartisan legislation. 
I would like to thank the excellent attorneys in the Department of 
Justice who have worked with me on this legislation, and would like to 
request unanimous consent to insert their letter of support into the 
Congressional Record. I again thank Chairman Leahy and Ranking Member 
Sessions for their support.
  Mr. President, I ask unanimous consent that a letter of support be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                       U.S. Department of Justice,


                                Office of Legislative Affairs,

                                 Washington, D.C., March 27, 2009.
     Hon. Sheldon Whitehouse,
     U.S. Senate,
     Washington, DC.
       Dear Senator Whitehouse: Per your request, the Department 
     of Justice (the Department) has examined the draft bill 
     entitled ``To improve Title 18 of the United States Code''. 
     The Department strongly supports early introduction and 
     consideration of the proposed legislation ``[t]o improve 
     title 18 of the United States Code'' which clarifies 
     procedures for executing and fulfilling foreign requests for 
     evidence. We firmly believe this legislation will facilitate 
     the ability of the United States to assist foreign 
     investigations, prosecutions and related proceedings 
     involving organized crime, trafficking in child pornography, 
     intellectual property violations, identity theft, and all 
     other serious crimes. The ability of the United States to 
     assist foreign authorities to obtain evidence and other 
     assistance in an effective and timely manner will improve 
     reciprocal treatment when we seek assistance in foreign 
     countries in all types of U.S. criminal investigations. Thus, 
     facilitating our ability to provide assistance to foreign 
     investigators has a direct impact on the safety and security 
     of Americans.
       The proposed legislation will complement the existing 
     authority in current statutes and self-executing Mutual Legal 
     Assistance Treaties and multilateral conventions. It will 
     greatly facilitate the ability of the U.S. government to meet 
     its obligations under these valuable international 
     instruments and will ensure that we can provide, at our 
     discretion, similar assistance to our non-treaty foreign law 
     enforcement partners. In addition, the filing provision of 
     the new section 3512 will permit the U.S. government to 
     execute foreign assistance requests with greater efficiency 
     than at present, thereby contributing to the effective 
     administration of the federal courts and the Offices of the 
     United States Attorneys.
       The statutes that currently govern the obtaining of 
     electronic and other evidence based upon a foreign request 
     for evidence have two limitations. First, existing law does 
     not make it clear which district court can participate in 
     fulfilling legitimate foreign requests for assistance in 
     criminal and terrorism investigations. The sole statute 
     regarding international requests for evidence is 28 U.S.C. 
     Sec. 1782, which was designed essentially to accommodate the 
     execution of letters rogatory in civil cases via the issuance 
     of subpoenas. Under the statute, the Department is largely 
     relegated to civil practice rules that require prosecutors to 
     file in every district in which evidence or a witness may be 
     found. In complex cases, this inefficiency means involving 
     several U.S. Attorneys' Offices and District Courts in a 
     single case. Even in less complex cases, referring the 
     requests out to the field wastes scarce attorney resources 
     and creates delays.
       Second, in 2001, Congress changed the wording of 18 U.S.C. 
     Sec. 2703 in a way that inadvertently introduced confusion in 
     routine mutual legal assistance cases. For example, section 
     2703(a) requires that the court issuing a search warrant for 
     stored electronic evidence have ``jurisdiction over the 
     offense''. As a U.S. court often has no jurisdiction to try a 
     foreign offender, the wording of 2703(a) needlessly 
     complicates the use of this sort of court process.
       The proposed legislation addresses both of these 
     difficulties by clarifying which courts have jurisdiction and 
     can respond to appropriate foreign requests for evidence in 
     criminal investigations. Under this proposal, a legitimate 
     request for assistance can be filed in the District of 
     Columbia, in any of the districts in which any of several 
     records or witnesses are located, or in any district in which 
     there is a related federal criminal case. The proposal would 
     clarify the ambiguity in section 2703 by re-articulating the 
     bases for courts to act without changing any of the 
     procedural safeguards present in U.S. law.
       We note that the proposed legislation would not in any way 
     change the existing standards that the government must meet 
     in order to obtain evidence, nor would it alter any existing 
     safeguards on the proper exercise of such authority. 
     Moreover, it would not expand the nature or kind of 
     assistance the Department provides to foreign law enforcement 
     agencies. Indeed, the proposed legislation would not alter 
     U.S. obligations or authorities under existing bilateral and 
     multilateral law enforcement treaties. Instead, by 
     streamlining procedures, the amendment would eliminate 
     needless confusion and wasted time in the government's 
     response to those requests.
       The proposed legislation references ``provider of 
     electronic communication service''. The current reference, 
     however, fails to address the presence of wire services, 
     though 18 U.S.C. 3124(a), (b) references ``provider of wire 
     or electronic service''. To provide consistency throughout 
     Title 18, United States Code, and to cover more fully the 
     providers involved, the Department recommends adding ``wire 
     or'' before ``electronic communication service'' each place 
     it appears.
       Thank you for the opportunity to comment on this proposed 
     legislation. The Office of Management and Budget has advised 
     that there is no objection from the standpoint of the 
     Administration's program to the submission of this letter.
           Sincerely,
                                                  M. Faith Burton,
                                Acting Assistant Attorney General.
                                 ______
                                 
      By Ms. KLOBUCHAR (for herself, Mr. Grassley, and Mrs. Feinstein):
  S. 1292. A bill to amend the Controlled Substances Act to provide for 
take-back disposal of controlled substances in certain instances, and 
for other purposes; to the Committee on the Judiciary.
  Mr. GRASSLEY. Mr. President, I am pleased to join my colleagues, 
Senator Klobuchar, and Senator Feinstein, in introducing the Secure and 
Responsible Drug Disposal Act of 2009. The abuse of prescription 
narcotics such as pain relievers, tranquilizers, stimulants, and 
sedatives is currently the fastest growing drug abuse trend in the 
country. According to the most recent National Survey of Drug Use and 
Health, NSDUH, nearly 7 million people have admitted to using 
controlled substances without a doctor's prescription. People between 
the ages of 12 and

[[Page 15599]]

25 are the most common group to abuse these drugs. However, more and 
more people are dying because of this abuse. The Centers for Disease 
Control and Prevention report that the unintentional deaths involving 
prescription narcotics increased 117 percent from the years 2001 to 
2005. These are statistics that can no longer be ignored.
  Millions of Americans are prescribed controlled substances every year 
to treat a variety of symptoms due to injury, depression, insomnia, and 
other conditions. Many legitimate users of these drugs often do not 
finish their prescriptions. As a result, these drugs remain in the 
family medicine cabinet for months or years because people forget about 
them or do not know how to properly dispose of them. However, these 
drugs, when not properly used or administered, are just as addictive 
and deadly as street drugs like methamphetamine or cocaine.
  According to the NSDUH, more than half of the people who abuse 
prescription narcotics reported that they obtained controlled 
substances from a friend or relative or from the family medicine 
cabinet. As a result, most community anti-drug coalitions, public 
health officials, and law enforcement officials have been encouraging 
people within their communities to dispose of old or unused medications 
in an effort to combat this growing trend.
  Despite these ongoing efforts across the country to eliminate a 
primary source of prescription narcotics from within their communities, 
many people are finding the Controlled Substances Act, CSA, is making 
these efforts difficult. When the CSA was passed in the early 1970's 
many people did not anticipate the large amount of prescription 
narcotics that would be used today or the high potential for these 
drugs to be diverted and abused. Under the CSA, most people who legally 
possess controlled substances cannot legally transfer them to anyone 
for any purpose, including for the purpose of disposal. Because the 
legal method for disposal is unclear, communities interested in 
providing citizens with an easy process of disposal hesitate to do so 
or risk violation of the CSA to offer the service. We need to change 
the CSA so that unused controlled substances do not get diverted in to 
the stream of illicit drug use and to prevent potential environmental 
harms, as many people dispose of controlled substances by flushing them 
down the toilet or dumping them in unlined landfills.
  Accordingly, Senator Klobuchar, Senator Feinstein and I are 
introducing the Secure and Responsible Drug Disposal Act of 2009 to fix 
the CSA so these efforts to eradicate abuse are not impeded by federal 
law. This legislation will amend the CSA to allow a user to transfer 
unused controlled substances to a DEA sanctioned entity for disposal 
without mandating any specific method of disposal upon communities. 
This will enable communities to develop methods of disposal best suited 
for their areas while minimizing the pollution of water supplies or 
increasing the chances that these drugs will be diverted for abuse. 
Since most long-term care facilities store large amounts of 
prescription narcotics for their tenants but are unable to legally 
dispose of them the bill also enables these facilities to dispose of 
old medication on behalf of their past and current patients.
  This legislation will not cost the government any money to implement 
and would not place any financial burden on states or industries. It 
simp ives local communities the option to safely dispose of unused 
controlled substances. I am pleased that the Department of Justice has 
endorsed this legislation. They and many others out there know how 
serious the abuse of prescription narcotics has become in this country. 
Now is the time to act, and I urge my colleagues to join us in 
supporting the Safe and Responsible Drug Disposal Act of 2009.
                                 ______
                                 
      By Mr. BENNET (for himself, Mr. Brown, and Mr. Casey):
  S. 1293. A bill to amend the Richard B. Russell National School Lunch 
Act to improve automatic enrollment procedures for the national school 
lunch and school breakfast programs, and for other purposes; to the 
Committee on Agriculture, Nutrition, and Forestry.
  Mr. BENNET. Mr. President, I rise today to introduce a bill with 
Senators Brown of Ohio and Casey of Pennsylvania called the Enhancing 
Child Health with Automatic Enrollment for School Meals Act. We wrote 
this legislation because too many kids across this country are not 
getting the free school meals their families are qualified to receive. 
As members of the Agriculture Committee's subcommittee on Nutrition, 
Senators Brown, Casey and I share an interest in eradicating childhood 
hunger and increasing the efficiency of the National School Lunch and 
Breakfast programs.
  Our bill builds on the foundation laid during the 2004 child 
nutrition reauthorization which included a mandatory phase-in of an 
automatic enrollment process called `direct certification.' Our bill 
stipulates that schools, districts, and states must directly certify at 
least 95 percent of children who can be enrolled in the national school 
lunch and breakfast programs using this method. The intent of this 
provision is to modernize the enrollment process by reducing reliance 
on paper applications and to improve access to school meal programs by 
ensuring kids who should be receiving free school meals actually 
receive them.
  Because we want to reward achievement and encourage improvements to 
the school meal enrollment process, our bill includes performance 
awards for the five states which make the best use of direct 
certification and for the five states which show the most improvement 
from one school year to the next. Additionally, our bill requires 
states which are unable to meet the 95 percent standard to submit a 
report to Congress and the U.S. Department of Agriculture that 
identifies the challenges prohibiting effective use of direct 
certification and maps out a plan for improvement.
  As former Superintendent of Denver Public Schools I cannot stress 
enough the importance of reducing red tape and administrative costs in 
schools. We cannot expect our children to focus on fractions when their 
stomachs are growling nor can we expect teachers, principals and school 
administrators to prepare our children to be tomorrow's leaders if they 
are spending their time filling out paperwork. That's why modernizing 
the National School Lunch and Breakfast programs is one of my top 
priorities for the child nutrition reauthorization this Fall and that 
is why I am introducing this bill today.
  Two additional provisions in the bill would eliminate paperwork and 
improve the existing system of determining whether or not kids qualify 
for free meals. The first is a clarification that sending a letter in 
the mail to a child's household letting them know they are eligible for 
free school meals is not an acceptable means of direct certification. A 
child who can be enrolled for free school meals automatically should be 
enrolled without any action on behalf of the child's household. We make 
this clarification because a vast number of paper notifications sent to 
families are not returned and, therefore, kids miss out on meals they 
should receive.
  The second is a request for a study from the U.S. Department of 
Education that would help determine how data the Department of 
Education is currently collecting is being used currently and could be 
used in the future to ensure all kids who should receive free school 
meals are provided those meals.
  Initially, Senators Brown, Casey and I were working on ways to expand 
access to free school meals independently, but now we are working 
collaboratively. Meeting President Obama's goal of ending childhood 
hunger by 2015 will require all hands on deck. Last week Senator Casey, 
along with Senator Specter and myself, introduced the Paperless 
Enrollment for School Meals Act to make it easier for schools and 
districts to serve free meals to all children. The bill we are 
introducing today is yet another installment in the ongoing dialog with 
Chairman Harkin, members of the Agriculture Committee and the USDA in 
preparation for reauthorizing child nutrition and WIC programs in the 
coming months.

[[Page 15600]]

  In Colorado and around the nation there is a renewed call for common 
sense measures to improve existing programs and provide assistance to 
those who need them most during these tough economic times. I encourage 
all Senators to do right by our children and support this legislation 
and the principles of the National School Lunch and Breakfast Programs 
Senators Brown, Casey and I have outlined.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1293

       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 ``Enhancing Child Health with 
     Automatic School Meal Enrollment Act of 2009''.

     SEC. 2. IMPROVING DIRECT CERTIFICATION.

       (a) Performance Awards.--Section 9(b)(4) of the Richard B. 
     Russell National School Lunch Act (42 U.S.C. 1758(b)(4)) is 
     amended--
       (1) in the paragraph heading, by striking ``food stamp'' 
     and inserting ``supplemental nutrition assistance program''; 
     and
       (2) by adding at the end the following:
       ``(E) Performance awards.--
       ``(i) In general.--Effective for each of the schools years 
     beginning July 1, 2010, July 1, 2011, and July 1, 2012, the 
     Secretary shall offer performance awards to States to 
     encourage the States to ensure that all children eligible for 
     direct certification under this paragraph are certified in 
     accordance with this paragraph.
       ``(ii) Requirements.--For each school year described in 
     clause (i), the Secretary shall--

       ``(I) consider State data from the prior school year, 
     including estimates contained in the report required under 
     section 4301 of the Food, Conservation, and Energy Act of 
     2008 (42 U.S.C. 1758a); and
       ``(II) make performance awards to, as determined by the 
     Secretary--

       ``(aa) 5 States that demonstrate outstanding performance; 
     and
       ``(bb) 5 States that demonstrate substantial improvement.
       ``(iii) Funding.--

       ``(I) In general.--On October 1, 2009, and on each October 
     1 thereafter through October 1, 2011, out of any funds in the 
     Treasury not otherwise appropriated, the Secretary of the 
     Treasury shall transfer to the Secretary, to remain available 
     until expended--

       ``(aa) $2,000,000 to carry out clause (ii)(I); and
       ``(bb) $2,000,000 to carry out clause (ii)(II).

       ``(II) Receipt and acceptance.--The Secretary shall be 
     entitled to receive, shall accept, and shall use to carry out 
     this clause the funds transferred under subclause (I), 
     without further appropriation.''.

       (b) Corrective Action Plans.--Section 9(b)(4) of the 
     Richard B. Russell National School Lunch Act (42 U.S.C. 
     1758(b)(4)) (as amended by subsection (a)) is amended by 
     adding at the end the following:
       ``(F) Corrective action plans.--
       ``(i) In general.--Each school year, the Secretary shall--

       ``(I) identify, using estimates contained in the report 
     required under section 4301 of the Food, Conservation, and 
     Energy Act of 2008 (42 U.S.C. 1758a), States that directly 
     certify less than 95 percent of the total number of children 
     in the State who are eligible for direct certification under 
     this paragraph; and
       ``(II) require the States identified under subclause (I) to 
     implement a corrective action plan to fully meet the 
     requirements of this paragraph.

       ``(ii) Improving performance.--A State may include in a 
     corrective action plan under clause (i)(II) methods to 
     improve direct certification required under this paragraph or 
     paragraph (15) and discretionary certification under 
     paragraph (5).
       ``(iii) Failure to meet performance standard.--

       ``(I) In general.--A State that is required to implement a 
     corrective action plan under clause (i)(II) shall be required 
     to submit to the Secretary, for the approval of the 
     Secretary, a direct certification improvement plan for the 
     following school year.
       ``(II) Requirements.--A direct certification improvement 
     plan under subclause (I) shall include--

       ``(aa) specific measures that the State will use to 
     identify more children who are eligible for direct 
     certification;
       ``(bb) a timeline for the State to implement those 
     measures; and
       ``(cc) goals for the State to improve direct certification 
     results.''.
       (c) Without Further Application.--Section 9(b)(4) of the 
     Richard B. Russell National School Lunch Act (42 U.S.C. 
     1758(b)(4)) (as amended by subsection (b)) is amended by 
     adding at the end the following:
       ``(G) Without further application.--
       ``(i) In general.--In this paragraph, the term `without 
     further application' means that no action is required by the 
     household of the child.
       ``(ii) Clarification.--A requirement that a household 
     return a letter notifying the household of eligibility for 
     direct certification or eligibility for free school meals 
     does not meet the requirements of clause (i).''.

     SEC. 3. REPORT ON USING STATEWIDE EDUCATION DATABASES FOR 
                   DIRECT CERTIFICATION.

       (a) Report.--Not later than 2 years after the date of 
     enactment of this Act, the Secretary of Education shall 
     prepare and submit to Congress a report regarding how 
     statewide databases developed by States to track compliance 
     with the requirements of part A of title I of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 6311 et seq.) 
     can be used for purposes of direct certification under 
     section 9(b) of the Richard B. Russell National School Lunch 
     Act (42 U.S.C. 1758(b)).
       (b) Contents.--The report described in subsection (a) 
     shall--
       (1) identify the States that have, as of the time of the 
     report, developed statewide databases to track compliance 
     with the requirements of part A of title I of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 6311 et seq.);
       (2) describe best practices regarding how such statewide 
     databases can be used for purposes of direct certification 
     under section 9(b) of the Richard B. Russell National School 
     Lunch Act (42 U.S.C. 1758(b));
       (3) include case studies of States that have expanded such 
     statewide databases so that such statewide databases can be 
     used for direct certification purposes; and
       (4) identify States with such statewide databases that 
     would be appropriate for expansion for direct certification 
     purposes.
       (c) Funding.--
       (1) In general.--On October 1, 2009, out of any funds in 
     the Treasury not otherwise appropriated, the Secretary of the 
     Treasury shall transfer to the Secretary to carry out this 
     section $500,000, to remain available through September 30, 
     2012.
       (2) Receipt and acceptance.--The Secretary shall be 
     entitled to receive, shall accept, and shall use to carry out 
     this section the funds transferred under paragraph (1), 
     without further appropriation.
                                 ______
                                 
      By Mrs. SHAHEEN (for herself, Ms. Collins, and Mrs. Lincoln):
  S. 1295. A bill to amend title XVIII of the Social Security Act to 
cover transitional care services to improve the quality and cost 
effectiveness of care under the Medicare program; to the Committee on 
Finance.
  Mrs. SHAHEEN. Mr. President, I rise today to introduce the Medicare 
Transitional Care Act of 2009. Time and again, we have heard that our 
health care system is not working. Costs are too high, outcomes too 
poor and access too limited. I agree with so many of my colleagues that 
we need to work together to ensure that all Americans have access to 
quality and affordable health care.
  Everyone deserves stable health care coverage that they can count on, 
regardless of the job they hold or the curveballs life may throw. All 
Americans should be able to count on insurance premiums and deductibles 
that will not continue to rise and eat away more and more of our 
paychecks. Finally, all Americans deserve stable care that lets you 
keep your doctor, and your health care plan, that you trust and with 
whom you have built a relationship.
  Let me be clear: health care costs are too high. Every day in New 
Hampshire and across our country, families are struggling with the 
crushing cost of health care that threatens their financial stability, 
leaving them exposed to higher premiums and deductibles, and putting 
them at risk for a possible loss of health insurance coverage and even 
bankruptcy. In 2007 our Nation spent $2.2 trillion--or 16.2 percent of 
the GDP on health care. This is twice the average of other developed 
nations. As a Nation, our health outcomes are no better. We still lag 
behind other countries when it comes to efficiency, access, patient 
safety and adoption of information technology.
  It is essential that we cut our Nation's health care costs and 
improve the quality of care our patients receive.
  I rise today to offer a solution that can help address this crisis. I 
rise to introduce the Medicare Transitional Care Act of 2009--
legislation that will reduce costly hospital readmissions, improve 
Medicare patients' care and cut Medicare costs. I thank Representative 
Blumenauer and Representative Boustany for their leadership on this 
issue in the House and I am pleased to be joined by

[[Page 15601]]

colleagues, Senator Collins, and Senator Lincoln, in introducing this 
legislation.
  This bill is about reducing costs and offering better support and 
coordination of care to Medicare patients. It will help keep seniors 
who are discharged from the hospital from going back. Simply put, it 
will improve the health care we offer our seniors while saving money.
  According to a report from the New England Journal of Medicine, 
almost one third of Medicare beneficiaries discharged from the hospital 
were re-hospitalized within 90 days. One half of the individuals re-
hospitalized had not visited a physician since their discharge, 
indicating a lack of follow-up care. The study also estimated that in 
2004 Medicare spent $17.4 billion on unplanned re-hospitalizations. 
This problem is costly for our government and troublesome for our 
seniors. But the good news is that this problem is avoidable.
  Research shows that the transition from the hospital to the patient's 
next place of care--be it home, or a nursing facility or rehabilitation 
center--can be complicated and risky. This is especially true for older 
individuals with multiple chronic illnesses. These patients talk about 
the difficulty remembering instructions, confusion over correct use of 
medications, and general uncertainty about their own conditions.
  For example, take Michael, a 71-year-old patient who lives with his 
73-year-old wife, and has diabetes. Michael had a knee replacement that 
required two surgical revisions. He uses a walker and has been 
hospitalized four times. He says ``they would discharge me and the same 
day I'd be back in the ER. The wound would burst apart.'' Under this 
legislation, a transitional care clinician could be there to help make 
sure that Michael and his wife do not need to go back to the hospital.
  Let me also tell you about Bill. Over time, Bill has endured a heart 
attack that required open heart surgery, angioplasty with stent 
placement, stroke, kidney disease, HIV and depression. He has been 
hospitalized three times, underwent rehabilitation therapy in an 
inpatient facility once and lives alone. He says ``there was no help at 
home [after surgery]. My mother came and took care of household stuff. 
I was flat on my back for two weeks. The hospital called to make sure I 
was okay--`Hey how are you doing?'--but what could they do?'' Bill also 
notes the difficulty he had with discharge instructions: ``By the time 
I'm home,'' he says, ``I don't remember what the doctor said. Sometimes 
they write it down, but I have comprehension problems.''
  Stories like Bill's and Michael's demonstrate that patients need 
support and assistance to manage their health needs along with their 
caregivers. This legislation provides that opportunity.
  Under the Medicare Transitional Care Act, a transitional care 
clinician would help ensure that appropriate follow-up care is provided 
to patients during the vulnerable time after discharge from a 
hospital--and help ensure that they are not re-hospitalized 
unnecessarily.
  The benefit would be phased-in and provided first for the most at-
risk individuals. It will be tailored to their needs. It may be as 
simple as making sure each patient understands how and when to take 
their medication; or helping to make sure they schedule and are able to 
get to follow-up appointments with the doctors, or it may be helping 
patients and caregivers coordinate support services, such as medical 
equipment, meal delivery, transportation or assistance with other daily 
activities.
  I am pleased that the legislation has the strong support of the AARP.
  Proper transitional care is important not only to reduce hospital 
readmissions, but also to improve patient outcomes and satisfaction. 
Experts estimate that this legislation could save as much as $5,000 per 
Medicare beneficiary.
  I look forward to working with my colleagues in the Senate to pass 
comprehensive health care reform to fix our broken system. I urge them 
to join me in supporting a transitional care benefit that will support 
patients during the very vulnerable time after discharge from the 
hospital. The evidence is clear. We can implement a transitional care 
option that will save money by reducing hospital re-admisssions while 
improving the quality of care we deliver to patients in New Hampshire 
and all across this country.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1295

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Transitional Care 
     Act of 2009''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) More than 20 percent of older Americans suffer from 
     five or more chronic conditions and these older adults 
     typically require health care services from numerous 
     providers across several care settings each year.
       (2) Insufficient communication among older adults, family 
     caregivers, and health care providers contributes to poor 
     continuity of care, inadequate management of complex health 
     care needs, and preventable hospital admissions.
       (3) Research suggests that family caregivers often lack the 
     knowledge, skills, and resources to effectively address the 
     complex needs of older adults coping with multiple coexisting 
     conditions.
       (4) In 2005, health care services for Medicare 
     beneficiaries with five or more chronic conditions accounted 
     for 75 percent of total Medicare spending. The vast majority 
     of these costs were due to high rates of hospital admission 
     and readmission.
       (5) According to Medicare claims data from 2003-2004, 
     almost one fifth (19.6 percent) of the 11,855,702 Medicare 
     beneficiaries who had been discharged from a hospital were 
     rehospitalized within 30 days, and 34.0 percent were 
     rehospitalized within 90 days.
       (6) A New England Journal of Medicine study estimates that 
     the cost to Medicare of unplanned rehospitalizations in 2004 
     was $17.4 billion.
       (7) The MetLife Caregiving Cost Study demonstrates that 
     American businesses lose an estimated $34 billion each year 
     due to employees' need to care for loved ones.
       (8) The Transitional Care Model, developed by the 
     University of Pennsylvania, is a care management strategy 
     that identifies patients' health goals, coordinates care 
     throughout acute episodes of illness, develops a streamlined 
     plan of care to prevent future hospitalizations, and prepares 
     the beneficiary and family caregivers to implement this care 
     plan.
       (9) The major goal of the Transitional Care Model is to 
     interrupt cycles of avoidable hospitalizations and promote 
     longer-term positive health outcomes.
       (10) The Transitional Care Model has shown through multiple 
     randomized clinical trials to produce significant health 
     outcome improvements, reductions in health care costs among 
     at-risk and chronically ill older adults, and increased 
     patient satisfaction.
       (11) Preliminary results from a clinical trial of the 
     Guided Care Model (based on a Medical Home which includes 
     transitional care) demonstrated reductions in hospital days, 
     skilled nursing facility days, and home health episodes, as 
     well as preliminary findings of net savings.
       (12) A clinical trial of the Care Transitions Intervention 
     demonstrated lower re-hospitalization rates and lower 
     hospital costs per patient.

     SEC. 3. MEDICARE COVERAGE OF TRANSITIONAL CARE.

       Title XVIII of the Social Security Act is amended by adding 
     at the end the following new section:


   ``coverage of transitional care services for qualified individuals

       ``Sec. 1899.  (a) Coverage Under Part B.--
       ``(1) In general.--In the case of a qualified individual 
     (as defined in subsection (b)), the Secretary shall provide 
     under part B for benefits for transitional care services (as 
     defined in subsection (c)) furnished by a transitional care 
     clinician (as defined in subsection (d)) acting as an 
     employee of (or pursuant to a contract with) a qualified 
     transitional care entity (as defined in paragraph (3)(A)) in 
     accordance with this section during the transitional care 
     period (as defined in paragraph (3)(B)) for the qualified 
     individual.
       ``(2) Initial implementation.--The Secretary shall first 
     implement this section for services furnished on or after 
     January 1, 2010.
       ``(3) General definitions.--In this section:
       ``(A) Qualified transitional care entity.--The term 
     `qualified transitional care entity' means--
       ``(i) a hospital or a critical care hospital;
       ``(ii) a home health agency;
       ``(iii) a primary care practice;
       ``(iv) a Federally qualified health center; or
       ``(v) another entity approved by the Secretary for purposes 
     of this section.

[[Page 15602]]

       ``(B) Transitional care period.--The term `transitional 
     care period' means, with respect to a qualified individual, 
     the period--
       ``(i) beginning on the date the individual is admitted to a 
     subsection (d) hospital (as defined for purposes of section 
     1886) for inpatient hospital services, or is admitted to a 
     critical care hospital for inpatient critical access hospital 
     services, for which payment may be made under this title; and
       ``(ii) ending on the last day of the 90-day period 
     beginning on the date of the individual's discharge from such 
     hospital or critical care hospital.
       ``(b) Qualified Individuals.--
       ``(1) Limiting first phase of implementation to high-risk 
     individuals.--Except as provided in this subsection, 
     qualified individuals are limited to individuals who--
       ``(A) have been admitted to a subsection (d) hospital (as 
     defined for purposes of section 1886) for inpatient hospital 
     services or to a critical care hospital for inpatient 
     critical access hospital services; and
       ``(B) are identified by the Secretary as being at highest 
     risk for readmission or for a poor transition from such a 
     hospital to a post-hospital site of care.

     The identification under subparagraph (B) shall be based on 
     achieving a minimum hierarchical condition category score 
     (specified by the Secretary) in order to target eligibility 
     for benefits under this section to individuals with multiple 
     chronic conditions and other risk factors, such as cognitive 
     impairment, depression, or a history of multiple 
     hospitalizations.
       ``(2) Second phase of implementation.--After submitting to 
     Congress the evaluation under subsection (i)(2) and 
     considering any cost-savings and quality improvements from 
     the prior implementation of this section, the Secretary may 
     expand eligibility of qualified individuals to include 
     moderate-risk and lower-risk individuals, as determined in 
     accordance with eligibility criteria specified by the 
     Secretary. In expanding eligibility, the Secretary may modify 
     or scale transitional care services to meet the specific 
     needs of moderate- and lower-risk individuals.
       ``(3) Avoiding duplication of services.--The Secretary 
     shall ensure that qualified individuals receiving 
     transitional care services are not receiving duplicative 
     services under this title.
       ``(c) Transitional Care Services Defined.--In this section, 
     the term `transitional care services' means services that 
     support a qualified individual during the transitional care 
     period and includes the following:
       ``(1) A comprehensive assessment prior to discharge 
     including an assessment of the individual's physical and 
     mental condition, cognitive and functional capacities, 
     medication regimen and adherence, social and environmental 
     needs, and primary caregiver needs and resources.
       ``(2) Development of a comprehensive, evidenced-based plan 
     of transitional care for the individual developed with the 
     individual and the individual's primary caregiver and other 
     health team members, identifying potential health risks, 
     treatment goals, current therapies, and future services for 
     both the individual and any primary caregiver.
       ``(3) A visit at the care setting within 24 hours after 
     discharge from the hospital or critical access hospital.
       ``(4) Home visits to implement the plan of care.
       ``(5) Implementation of the plan of care, including--
       ``(A) addressing symptoms;
       ``(B) teaching and promoting self-management skills for the 
     individual and any primary caregiver;
       ``(C) teaching and counseling the individual and the 
     individual's primary caregiver (as appropriate) to assure 
     adherence to medications and other therapies and avoid 
     adverse events;
       ``(D) promoting individual access to primary care and 
     community-based services;
       ``(E) coordinating services provided by other health team 
     members and community caregivers; and
       ``(F) facilitating transitions to palliative or hospice 
     care, where appropriate.
       ``(6) Accompanying the individual to follow-up physician 
     visits, as appropriate.
       ``(7) Providing information and resources about conditions 
     and care.
       ``(8) Educating and assisting the individual and the 
     individual's primary caregiver to arrange and coordinate 
     clinician visits and health care services.
       ``(9) Informing providers of services and suppliers of 
     those items and services that have been ordered for and 
     received by the individual from other providers.
       ``(10) Working with providers of services and suppliers to 
     assure appropriate referrals to specialists, tests, and other 
     services.
       ``(11) Educating and assisting the individual and the 
     individual's primary caregiver with arranging and 
     coordinating community resources and support services (such 
     as medical equipment, meals, homemaker services, assistance 
     with daily activities, shopping, and transportation).
       ``(12) Providing to the qualified individual, primary 
     caregiver, and appropriate clinicians and qualified 
     transitional care entity providing ongoing care at the 
     conclusion of the transitional care period a written summary 
     that includes the goals established in the plan of care 
     described in paragraph (2), progress in achieving such goals, 
     and remaining treatment needs.
       ``(13) Other services that the Secretary determines are 
     appropriate.

     The Secretary shall determine and update the services to be 
     included in transitional care services as appropriate, based 
     on the evidence of their effectiveness in reducing hospital 
     readmissions and improving health outcomes.
       ``(d) Transitional Care Clinicians.--
       ``(1) In general.--In this section, the term `transitional 
     care clinician' means, with respect to a qualified 
     individual, a nurse or other health professional who--
       ``(A) has received specialized training in the clinical 
     care of people with multiple chronic conditions (including 
     medication management) and communication and coordination 
     with multiple providers of services, suppliers, patients, and 
     their primary caregivers;
       ``(B) is supported by an interdisciplinary team in a manner 
     that assures continuity of care throughout a transitional 
     care period and across care settings (including the 
     residences of qualified individuals);
       ``(C) is employed by (or has a contract with) with a 
     qualified transitional care entity for the furnishing of 
     transitional care services; and
       ``(D) meets such participation criteria as the Secretary 
     may specify consistent with this subsection.
       ``(2) Participation criteria.--In establishing 
     participation criteria under paragraph (1)(C), the Secretary 
     shall assure that transitional care clinicians meet relevant 
     experience and training requirements and have the ability to 
     meet the individual needs of qualified individuals.
       ``(3) Encouragement of hit.--The Secretary may provide for 
     an additional payment to encourage transitional care 
     clinicians and qualified transitional care entities to use 
     health information technology in the provision of 
     transitional care services.
       ``(e) Payment.--
       ``(1) In general.--The Secretary shall determine the method 
     of payment for transitional care services under this section, 
     including appropriate risk adjustment that reflects the 
     differences in resources needed to provide transitional care 
     services to individuals with differing characteristics and 
     circumstances and, when applicable, the performance measures 
     under subsection (f). The payment amount shall be sufficient 
     to ensure the provision of necessary transitional care 
     services throughout the transitional care period. The payment 
     shall be structured in a manner to explicitly recognize 
     transitional care as an episode of services that crosses 
     multiple care settings, providers of services, and suppliers. 
     The payment with respect to transitional care services 
     furnished by a transitional care clinician shall be made, 
     notwithstanding any other provision of this title, to the 
     qualified transitional care entity which employs, or has a 
     contract with, the clinician for the furnishing of such 
     services.
       ``(2) No cost-sharing.--Notwithstanding section 1833, there 
     shall be no deductible or cost-sharing applicable to payment 
     under this section for transitional care services.
       ``(f) Performance Measures.--
       ``(1) Accountability.--
       ``(A) In general.--The Secretary shall establish a method 
     whereby qualified transitional care entities responsible for 
     furnishing transitional care services would be held 
     accountable for process and outcome performance measures 
     specified by the Secretary from those that have been endorsed 
     by the National Quality Forum.
       ``(B) Development and endorsement of performance measure 
     set.--For purposes of carrying out subparagraph (A), the 
     Secretary shall enter into an arrangement--
       ``(i) with the National Quality Forum for the evaluation, 
     endorsement, and recommendation of an appropriate set of 
     performance measures for transitional care services and for 
     the identification of gaps in available measures; and
       ``(ii) with the Agency for Healthcare Research and Quality 
     to support measure development, to fill gaps in available 
     measures, and to provide for the ongoing maintenance of the 
     set of performance measures for transitional care services.
       ``(2) Pay for performance.--As soon as practicable after 
     reliable process and outcome performance measures have been 
     endorsed and specified under subparagraph (A), the Secretary 
     shall provide that the payment amounts under subsection (e) 
     for transitional care services shall be linked to performance 
     on such measures.
       ``(3) Public reporting.--The Secretary shall establish a 
     mechanism to publicly report on a qualifying entity's 
     transitional care performance on such measures, including 
     providing benchmarks to identify high performers and those 
     practices that contribute to lower hospital readmission 
     rates.
       ``(4) Dissemination of information on best practices.--The 
     Secretary shall disseminate information on best practices 
     used by transitional care clinicians and qualifying 
     transitional care entities in furnishing transitional care 
     services for purposes of application in other settings, such 
     as in conditions of participation under this title, under

[[Page 15603]]

     the Quality Improvement Organization (QIO) Program under part 
     B of title XI, and public-private quality alliances, such as 
     the Hospital Quality Alliance.
       ``(g) Notification of Eligibility and Coordination With 
     Hospital Discharge Planning.--In establishing standards for 
     discharge planning under section 1861(ee)(1), the Secretary 
     shall require each subsection (d) hospital and each critical 
     care hospital--
       ``(1) to identify, as soon as practicable after admission, 
     those patients who are qualified individuals under this 
     section; and
       ``(2) to provide to such patients and their primary 
     caregivers a list of qualified transitional care entities 
     available to arrange for the provision of transitional care 
     services, a list of transitional services provided under this 
     section, and a notice that the transitional care service 
     benefit is provided to qualified individuals with no 
     deductible or cost-sharing.

     Nothing in this section shall be construed as preventing such 
     a hospital from entering into an agreement with a qualified 
     transitional care entity or a transitional care clinician for 
     the furnishing of transitional care services to the 
     hospital's patients.
       ``(h) Prevention of Inappropriate Steering.--The Secretary 
     shall promulgate such regulations as the Secretary deems 
     necessary to address any protections needed, beyond those 
     otherwise provided under law and regulations, to prevent 
     inappropriate steering of qualified individuals to providers 
     of services, suppliers, qualified transitional care entities, 
     or transitional care clinicians, under this section or 
     inappropriate limitations on access to needed transitional 
     care services under this section.
       ``(i) Evaluation of Benefit.--
       ``(1) In general.--The Secretary shall evaluate the 
     performance of the transitional care benefit under this 
     section by measuring the following (for those receiving 
     transitional care services and those not receiving such 
     services):
       ``(A) Admission rates to health care facilities.
       ``(B) Hospital readmission rates.
       ``(C) Cost of transitional care and all other health care 
     services.
       ``(D) Quality of transitional care experiences.
       ``(E) Measures of quality and efficiency.
       ``(F) Beneficiary, primary caregiver, and provider 
     experience.
       ``(G) Health outcomes.
       ``(H) Reductions in expenditures under this title over 
     time.
       ``(2) Report.--The Secretary shall submit a report to 
     Congress no later than April 1, 2013, on the performance 
     measures achieved by the transitional care benefit in the 
     first 2 years of implementation. After submitting such 
     report, the Secretary may expand the benefit to moderate-risk 
     and lower-risk individuals in accordance with subsection 
     (b)(2).''.
                                 ______
                                 
      By Mr. CONRAD (for himself and Mr. Roberts):
  S. 1297. A bill to amend the Internal Revenue Code of 1986 to 
encourage guaranteed lifetime income payments from annuities and 
similar payments of life insurance proceeds at dates later than death 
by excluding from income a portion of such payments; to the Committee 
on Finance.
  Mr. CONRAD. Mr. President, I am pleased to be joined by my friend and 
Finance Committee colleague, Senator Pat Roberts from Kansas, in 
introducing legislation that can help Americans enjoy a more secure 
retirement. In these economically challenging times, financial 
security--especially during retirement--can be a frustrating and 
elusive goal. In retirement, the chief anxiety for most people is 
protecting the savings they have accumulated while working and deciding 
how best to manage those assets.
  In 21st century America, there is another crucial challenge for 
retirees. The good news is that Americans are living longer, but it 
also means that people have to plan for a longer period of retirement. 
A successful long-term retirement income plan is difficult even in a 
bullish market. How much more difficult is this task in today's 
market--particularly for the millions of Americans with limited 
investment experience?
  We believe in encouraging people to save for retirement. Through the 
tax code, we encourage asset-building through home ownership. We 
provide significant tax incentives for employer-based pension plans and 
for retirement savings programs by individuals, such as IRAs and 401(k) 
plans.
  One of the biggest threats to retirement income security for baby 
boomers is their own longevity. It will not be easy to manage their 
accumulated assets so that they will last a lifetime. Unprecedented 
numbers of Americans are now living into their 90s and even past 100. 
Consequently, people are going to spend more time in retirement than 
previous generations.
  Now our society is witnessing the beginning of the retirement wave we 
knew was already building. Before it recedes, 77 million baby boomers 
will have entered their retirement years. Many of them will not have 
the guaranteed monthly retirement checks that many of their parents 
enjoyed as a result of employer-based pension plans. Traditional 
defined benefit pension plans have given way to defined contribution 
plans, which have shifted the retirement income security risk from the 
employer to the individual.
  Of course, there are still many Americans who have no access at all 
to employer-provided pension plans. Some have never been in the 
traditional workforce; others work in seasonal jobs or part time. In my 
state of North Dakota, as well as in rural and farming communities 
across America, there is an acute need for retirement vehicles that 
will provide a secure lifetime payout. Others who could face difficulty 
in securing retirement income are widowed individuals--both men and 
women--who suddenly find themselves having to make a life insurance 
benefit or proceeds from the sale of a business or family home last a 
lifetime.
  The proposal we are introducing today will provide a valuable tool 
for helping people avoid the risk of outliving their assets. 
Specifically, we are proposing a tax incentive to encourage Americans 
to annuitize a portion of their assets available for retirement. If 
they annuitize--in other words, elect to receive their money from an 
annuity in a series of payments for the rest of their lives, no matter 
how long that may be--they would be able to exclude from income 50 
percent of the annuity benefit that represents the accumulation in the 
annuity above and beyond the original investment. The exclusion would 
be capped at $20,000, indexed, to ensure that tax sheltering activity 
is not encouraged and that the incentive will be effective for people 
who would benefit most from securing a lifetime income stream.
  This proposal we offer today would apply only to life-contingent, 
non-qualified annuities. A life-contingent annuity that is subsequently 
modified to a fixed-term payout would be subject to a recapture tax.
  Baby boomers represent an unprecedented challenge to our retirement 
security policies. They should have a wide range of options available 
for responsible retirement planning. Our proposal focuses on non-
qualified annuities because it is important to have this option 
considered as part of the larger retirement income security debate that 
Congress should have before baby boomers begin retiring in large 
numbers. Options for making qualified plans more secure should be part 
of that debate as well.
  I hope that Congress will tackle this matter promptly because over 
the last few years too many people have seen their retirement savings 
severely eroded. This legislation will provide an important incentive 
to help them preserve what they have.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1297

       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 ``Retirement Security for Life 
     Act of 2009''.

     SEC. 2. EXCLUSION FOR LIFETIME ANNUITY PAYMENTS.

       (a) Lifetime Annuity Payments Under Annuity Contracts.--
     Section 72(b) of the Internal Revenue Code of 1986 is amended 
     by adding at the end the following new paragraph:
       ``(5) Exclusion for lifetime annuity payments.--
       ``(A) In general.--In the case of lifetime annuity payments 
     received under one or more annuity contracts in any taxable 
     year, gross income shall not include 50 percent of the 
     portion of lifetime annuity payments otherwise includible 
     (without regard to this paragraph) in gross income under this 
     section. For purposes of the preceding sentence, the amount 
     excludible from gross income in any taxable year shall not 
     exceed $20,000.

[[Page 15604]]

       ``(B) Cost-of-living adjustment.--In the case of taxable 
     years beginning after December 31, 2010, the $20,000 amount 
     in subparagraph (A) shall be increased by an amount equal 
     to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2009' 
     for `calendar year 1992' in subparagraph (B) thereof.

     If any amount as increased under the preceding sentence is 
     not a multiple of $500, such amount shall be rounded to the 
     next lower multiple of $500.
       ``(C) Application of paragraph.--Subparagraph (A) shall not 
     apply to--
       ``(i) any amount received under an eligible deferred 
     compensation plan (as defined in section 457(b)) or under a 
     qualified retirement plan (as defined in section 4974(c)),
       ``(ii) any amount paid under an annuity contract that is 
     received by the beneficiary under the contract--

       ``(I) after the death of the annuitant in the case of 
     payments described in subsection (c)(5)(A)(ii)(III), unless 
     the beneficiary is the surviving spouse of the annuitant, or
       ``(II) after the death of the annuitant and joint annuitant 
     in the case of payments described in subsection 
     (c)(5)(A)(ii)(IV), unless the beneficiary is the surviving 
     spouse of the last to die of the annuitant and the joint 
     annuitant, or

       ``(iii) any annuity contract that is a qualified funding 
     asset (as defined in section 130(d)), but without regard to 
     whether there is a qualified assignment.
       ``(D) Investment in the contract.--For purposes of this 
     section, the investment in the contract shall be determined 
     without regard to this paragraph.''.
       (b) Definitions.--Subsection (c) of section 72 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new paragraph:
       ``(5) Lifetime annuity payment.--
       ``(A) In general.--For purposes of subsection (b)(5), the 
     term `lifetime annuity payment' means any amount received as 
     an annuity under any portion of an annuity contract, but only 
     if--
       ``(i) the only person (or persons in the case of payments 
     described in subclause (II) or (IV) of clause (ii)) legally 
     entitled (by operation of the contract, a trust, or other 
     legally enforceable means) to receive such amount during the 
     life of the annuitant or joint annuitant is such annuitant or 
     joint annuitant, and
       ``(ii) such amount is part of a series of substantially 
     equal periodic payments made not less frequently than 
     annually over--

       ``(I) the life of the annuitant,
       ``(II) the lives of the annuitant and a joint annuitant, 
     but only if the annuitant is the spouse of the joint 
     annuitant as of the annuity starting date or the difference 
     in age between the annuitant and joint annuitant is 15 years 
     or less,
       ``(III) the life of the annuitant with a minimum period of 
     payments or with a minimum amount that must be paid in any 
     event, or
       ``(IV) the lives of the annuitant and a joint annuitant 
     with a minimum period of payments or with a minimum amount 
     that must be paid in any event, but only if the annuitant is 
     the spouse of the joint annuitant as of the annuity starting 
     date or the difference in age between the annuitant and joint 
     annuitant is 15 years or less.

       ``(iii) Exceptions.--For purposes of clause (ii), annuity 
     payments shall not fail to be treated as part of a series of 
     substantially equal periodic payments--

       ``(I) because the amount of the periodic payments may vary 
     in accordance with investment experience, reallocations among 
     investment options, actuarial gains or losses, cost of living 
     indices, a constant percentage applied not less frequently 
     than annually, or similar fluctuating criteria,
       ``(II) due to the existence of, or modification of the 
     duration of, a provision in the contract permitting a lump 
     sum withdrawal after the annuity starting date,
       ``(III) because the period between each such payment is 
     lengthened or shortened, but only if at all times such period 
     is no longer than one calendar year, or
       ``(IV) because, in the case of an annuity payable over the 
     life of an annuitant and a joint annuitant, the amounts paid 
     to the surviving annuitant after the death of the first 
     annuitant are less than the amounts payable during the joint 
     lives of the two annuitants.

       ``(B) Annuity contract.--For purposes of subparagraph (A) 
     and subsections (b)(5) and (x), the term `annuity contract' 
     means a commercial annuity (as defined by section 
     3405(e)(6)), other than an endowment or life insurance 
     contract.
       ``(C) Minimum period of payments.--For purposes of 
     subparagraph (A), the term `minimum period of payments' means 
     a guaranteed term of payments that does not exceed the 
     greater of 10 years or--
       ``(i) the life expectancy of the annuitant as of the 
     annuity starting date, in the case of lifetime annuity 
     payments described in subparagraph (A)(ii)(III), or
       ``(ii) the life expectancy of the annuitant and joint 
     annuitant as of the annuity starting date, in the case of 
     lifetime annuity payments described in subparagraph 
     (A)(ii)(IV).

     For purposes of this subparagraph, life expectancy shall be 
     computed with reference to the tables prescribed by the 
     Secretary under paragraph (3). For purposes of subsection 
     (x)(1)(C)(ii), the permissible minimum period of payments 
     shall be determined as of the annuity starting date and 
     reduced by one for each subsequent year.
       ``(D) Minimum amount that must be paid in any event.--For 
     purposes of subparagraph (A), the term `minimum amount that 
     must be paid in any event' means an amount payable to the 
     designated beneficiary under an annuity contract that is in 
     the nature of a refund and does not exceed the greater of the 
     amount applied to produce the lifetime annuity payments under 
     the contract or the amount, if any, available for withdrawal 
     under the contract on the date of death.''.
       (c) Recapture Tax for Lifetime Annuity Payments.--Section 
     72 of the Internal Revenue Code of 1986 is amended by 
     redesignating subsection (x) as subsection (y) and by 
     inserting after subsection (w) the following new subsection:
       ``(x) Recapture Tax for Modifications to or Reductions in 
     Lifetime Annuity Payments.--
       ``(1) In general.--If any amount received under an annuity 
     contract is excluded from income by reason of subsection 
     (b)(5), and--
       ``(A) the series of payments under such contract is 
     subsequently modified so that any future payments are not 
     lifetime annuity payments,
       ``(B) after the date of receipt of the first lifetime 
     annuity payment under the contract an annuitant receives a 
     lump sum and thereafter is to receive annuity payments in a 
     reduced amount under the contract, or
       ``(C) after the date of receipt of the first lifetime 
     annuity payment under the contract the dollar amount of any 
     subsequent annuity payment is reduced and a lump sum is not 
     paid in connection with the reduction, unless such reduction 
     is--
       ``(i) due to an event described in subsection 
     (c)(5)(A)(iii), or
       ``(ii) due to the addition of, or increase in, a minimum 
     period of payments within the meaning of subsection (c)(5)(C) 
     or a minimum amount that must be paid in any event (within 
     the meaning of subsection (c)(5)(D)),

     then gross income for the first taxable year in which such 
     modification or reduction occurs shall be increased by the 
     recapture amount.
       ``(2) Recapture amount.--
       ``(A) In general.--For purposes of this subsection, the 
     recapture amount shall be the amount, determined under rules 
     prescribed by the Secretary, equal to the sum of--
       ``(i) the excess of--

       ``(I) the amount that was excluded from the taxpayer's 
     gross income under subsection (b)(5) for all taxable years 
     prior to the modification or reduction described in paragraph 
     (1), over
       ``(II) the amount that would have been excludible under 
     such subsection for such taxable years had such modifications 
     or reductions been in effect at all times, plus

       ``(ii) interest for the deferral period at the underpayment 
     rate established by section 6621.
       ``(B) Deferral period.--For purposes of this subsection, 
     the term `deferral period' means the period beginning with 
     the taxable year in which (without regard to subsection 
     (b)(5)) the payment would have been includible in gross 
     income and ending with the taxable year in which the 
     modification described in paragraph (1) occurs.
       ``(3) Exceptions to recapture tax.--Paragraph (1) shall not 
     apply in the case of any modification or reduction that 
     occurs because an annuitant--
       ``(A) dies or becomes disabled (within the meaning of 
     subsection (m)(7)),
       ``(B) becomes a chronically ill individual (within the 
     meaning of section 7702B(c)(2)), or
       ``(C) encounters hardship.''.
       (d) Lifetime Distributions of Life Insurance Death 
     Benefits.--
       (1) In general.--Section 101(d) of the Internal Revenue 
     Code of 1986 (relating to payment of life insurance proceeds 
     at a date later than death) is amended by adding at the end 
     the following new paragraph:
       ``(4) Exclusion for lifetime annuity payments.--
       ``(A) In general.--In the case of amounts to which this 
     subsection applies, gross income shall not include the lesser 
     of--
       ``(i) 50 percent of the portion of lifetime annuity 
     payments otherwise includible in gross income under this 
     section (determined without regard to this paragraph), or
       ``(ii) the amount determined under section 72(b)(5).
       ``(B) Rules of section 72(b)(5) to apply.--For purposes of 
     this paragraph, rules similar to the rules of section 
     72(b)(5) and section 72(x) shall apply, substituting the term 
     `beneficiary of the life insurance contract' for the term 
     `annuitant' wherever it appears, and substituting the term 
     `life insurance contract' for the term `annuity contract' 
     wherever it appears.''.

[[Page 15605]]

       (2) Conforming amendment.--Section 101(d)(1) of such Code 
     is amended by inserting ``or paragraph (4)'' after ``to the 
     extent not excluded by the preceding sentence''.
       (e) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to amounts received in calendar years beginning after 
     the date of the enactment of this Act.
       (2) Special rule for existing contracts.--In the case of a 
     contract in force on the date of the enactment of this Act 
     that does not satisfy the requirements of section 72(c)(5)(A) 
     of the Internal Revenue Code of 1986 (as added by this 
     section), or requirements similar to such section in the case 
     of a life insurance contract, any modification to such 
     contract (including a change in ownership) or to the payments 
     thereunder that is made to satisfy the requirements of such 
     section (or similar requirements) shall not result in the 
     recognition of any gain or loss, any amount being included in 
     gross income, or any addition to tax that otherwise might 
     result from such modification, but only if the modification 
     is completed prior to the date that is 2 years after the date 
     of the enactment of this Act.
                                 ______
                                 
      By Mr. McCONNELL:
  S. 1302. A bill to provide for the introduction of pay-for-
performance compensation mechanisms into contracts of the Department of 
Veterans Affairs with community-based outpatient clinics for the 
provisions of health care services, and for other purposes; to the 
Committee on Veterans' Affairs.
  Mr. McCONNELL. Mr. President, I rise today to introduce the Veterans 
Health Care Improvement Act of 2009.
  As we all know, the Department of Veterans Affairs strives to provide 
the best possible health care for our nation's heroes. However, it has 
come to my attention that the quality of care provided to our nation's 
veterans has been inconsistent among community-based outpatient 
clinics. Some of these clinics, including two in my home state of 
Kentucky, are operated by private health care providers under VA 
contracts. These VA-contracted health care providers are compensated 
for their work at community-based outpatient clinics on a capitated 
basis, which means they are essentially paid based on how many new 
veterans they see during a pay period. These firms are therefore 
rewarded for the number of veterans they sign up, not for the quality 
of treatment provided to our veterans. I am concerned this provides 
contractors with the wrong incentives. Contracted health care providers 
should have the incentive to provide the best possible care for 
veterans, not simply get as many veterans as possible through the door 
once.
  As a result of the capitated system, it has been reported that too 
many of our nation's heroes have faced difficulties at these clinics in 
scheduling appointments, have suffered from neglect or have received 
substandard health care. This occurred under the last administration 
and I am concerned it may be continuing in the current one.
  As such, I am introducing the Veterans Health Care Improvement Act of 
2009, which attempts to fix the way VA-contracted health care providers 
are compensated at clinics. This bill would require the VA to begin to 
introduce a pay-for-performance compensation plan for contractors, 
thereby gradually incentivizing a higher quality of care for veterans 
seen at privately-administered community-based outpatient clinics.
  This bill gives the VA the flexibility to begin to implement such a 
system through a pilot program and leaves the VA the discretion as to 
how to adopt and best implement the pay-for-performance standards. In 
this respect, the bill defers to the VA on how to execute these 
changes. It is my hope that my colleagues will support this measure.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1302

       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 ``Veterans Health Care 
     Improvement Act of 2009''.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Veterans of the Armed Forces have made tremendous 
     sacrifices in the defense of freedom and liberty.
       (2) Congress recognizes these great sacrifices and 
     reaffirms America's strong commitment to its veterans.
       (3) As part of the on-going congressional effort to 
     recognize the sacrifices made by America's veterans, Congress 
     has dramatically increased funding for the Department of 
     Veterans Affairs for veterans health care in the years since 
     September 11, 2001.
       (4) Part of the funding for the Department of Veterans 
     Affairs for veterans health care is allocated toward 
     community-based outpatient clinics (CBOCs).
       (5) Many CBOCs are administered by private contractors.
       (6) CBOCs administered by private contractors operate on a 
     capitated basis.
       (7) Some current contracts for CBOCs may create an 
     incentive for contractors to sign up as many veterans as 
     possible, without ensuring timely access to high quality 
     health care for such veterans.
       (8) The top priorities for CBOCs should be to provide 
     quality health care and patient satisfaction for America's 
     veterans.
       (9) The Department of Veterans Affairs currently tracks the 
     quality of patient care through its Computerized Patient 
     Record System. However, fees paid to contractors are not 
     currently adjusted automatically to reflect the quality of 
     care provided to patients.
       (10) A pay-for-performance payment model offers a promising 
     approach to health care delivery by aligning the payment of 
     fees to contractors with the achievement of better health 
     outcomes for patients.
       (11) The Department of Veterans Affairs should begin to 
     emphasize pay-for-performance in its contracts with CBOCs.

     SEC. 3. PAY-FOR-PERFORMANCE UNDER DEPARTMENT OF VETERANS 
                   AFFAIRS CONTRACTS WITH COMMUNITY-BASED 
                   OUTPATIENT HEALTH CARE CLINICS.

       (a) Plan Required.--Not later than one year after the date 
     of the enactment of this Act, the Secretary of Veterans 
     Affairs shall submit to Congress a plan to introduce pay-for-
     performance measures into contracts which compensate 
     contractors of the Department of Veterans Affairs for the 
     provision of health care services through community-based 
     outpatient clinics (CBOCs).
       (b) Elements.--The plan required by subsection (a) shall 
     include the following:
       (1) Measures to ensure that contracts of the Department for 
     the provision of health care services through CBOCs begin to 
     utilize pay-for-performance compensation mechanisms for 
     compensating contractors for the provision of such services 
     through such clinics, including mechanisms as follows:
       (A) To provide incentives for clinics that provide high-
     quality health care.
       (B) To provide incentives to better assure patient 
     satisfaction.
       (C) To impose penalties (including termination of contract) 
     for clinics that provide substandard care.
       (2) Mechanisms to collect and evaluate data on the outcomes 
     of the services generally provided by CBOCs in order to 
     provide for an assessment of the quality of health care 
     provided by such clinics.
       (3) Mechanisms to eliminate abuses in the provision of 
     health care services by CBOCs under contracts that continue 
     to utilize capitated-basis compensation mechanisms for 
     compensating contractors.
       (4) Mechanisms to ensure that veterans are not denied care 
     or face undue delays in receiving care.
       (c) Implementation.--The Secretary shall commence the 
     implementation of the plan required by subsection (a) unless 
     Congress enacts an Act, not later than 60 days after the date 
     of the submittal of the plan, prohibiting or modifying 
     implementation of the plan. In implementing the plan, the 
     Secretary may initially carry out one or more pilot programs 
     to assess the feasability and advisability of mechanisms 
     under the plan.
       (d) Reports.--Not later than 180 days after the date of the 
     enactment of this Act and every 180 days thereafter, the 
     Secretary shall submit to Congress a report setting forth the 
     recommendations of the Secretary as to the feasability and 
     advisability of utilizing pay-for-performance compensation 
     mechanisms in the provision of health care services by the 
     Department by means in addition to CBOCs.

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